x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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NORTH CAROLINA
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56-0578072
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1000 Lowe’s Blvd., Mooresville, NC
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28117
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code
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704-758-1000
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Securities registered pursuant to Section 12(b) of the Act:
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||
Title of each class
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Name of each exchange on which registered
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Common Stock, $0.50 Par Value
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New York Stock Exchange (NYSE)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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CLASS
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OUTSTANDING AT 3/24/2016
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Common Stock, $0.50 par value
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897,438,629
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Document
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Parts Into Which Incorporated
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Portions of the Proxy Statement for Lowe’s 2016 Annual Meeting of Shareholders
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Part III
|
•
|
Growth in real disposable personal income is projected to moderate to 2.9% in 2016 as compared with 3.4% growth in 2015, based on the March 2016 Blue Chip Economic Indicators
®
. *
|
•
|
The average unemployment rate for 2016 is forecasted to decline to 4.7%, according to the March 2016 Blue Chip Economic Indicators, which would be an improvement from the 5.3% average in 2015. The unemployment rate should continue to trend lower as the job market continues to expand at a moderate pace.
|
•
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Recent evidence suggests that home prices will continue to increase. In 2015, home price appreciation increased 5.5% which was consistent with the 2014 increase, according to the Federal Housing Finance Agency index. Economists generally expect the rate of home price growth to moderate to 3.2% in 2016.
|
•
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Housing turnover increased an estimated 7.4% in 2015 after a 2.6% decrease in 2014, according to The National Association of Realtors and U.S. Census Bureau. Turnover is generally expected to continue to increase in 2016, supported by a strengthening jobs market, rising incomes, and historically low mortgage rates.
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Name
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Age
|
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Title
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Robert A. Niblock
|
|
53
|
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Chairman of the Board, President and Chief Executive Officer since 2011; Chairman of the Board and Chief Executive Officer, 2006 – 2011.
|
|
|
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Marshall A. Croom
|
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55
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|
Chief Risk Officer since 2012; Senior Vice President and Chief Risk Officer, 2009 – 2012.
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|
|
|
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Rick D. Damron
|
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53
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Chief Operating Officer since 2012; Executive Vice President, Store Operations, 2011 – 2012; Senior Vice President, Logistics, 2009 – 2011.
|
|
|
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Matthew V. Hollifield
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49
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Senior Vice President and Chief Accounting Officer since 2005.
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|
|
|
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Robert F. Hull, Jr.
|
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51
|
|
Chief Financial Officer since 2012; Executive Vice President and Chief Financial Officer since 2004.
|
|
|
|
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Michael A. Jones
|
|
53
|
|
Chief Customer Officer since 2014; Chief Merchandising Officer 2013 – 2014; President, North and Latin America, The Husqvarna Group, 2009 – 2013.
|
|
|
|
|
|
Richard D. Maltsbarger
|
|
40
|
|
Chief Development Officer and President of International since 2015; Chief Development Officer, 2014 – 2015; Business Development Executive, 2012 – 2014; Senior Vice President, Strategy, 2011 – 2012; Vice President, Strategic Planning 2010 – 2011; Vice President, Research, 2006 – 2010.
|
|
|
|
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Ross W. McCanless
|
|
58
|
|
General Counsel, Secretary and Chief Compliance Officer since 2015; Chief Legal Officer, Extended Stay America, Inc. and ESH Hospitality, Inc., 2013 – 2014; Chief Legal Officer, HVM, L.L.C., 2012 – 2013; Private Investor, 2007 – 2011.
|
|
|
|
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N. Brian Peace
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50
|
|
Corporate Administration Executive since 2012; Senior Vice President, Corporate Affairs, 2006 – 2012.
|
|
|
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Paul D. Ramsay
|
|
51
|
|
Chief Information Officer since 2014; Senior Vice President, Information Technology, 2011 – 2014; Vice President, Information Technology, Exploration and Production, Hess Corporation, 2010 – 2011
|
|
|
|
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Jennifer L. Weber
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49
|
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Chief Human Resources Officer since 2016; Executive Vice President, External Affairs and Strategic Policy, Duke Energy Corporation, 2014 – 2016; Executive Vice President and Chief Human Resources Officer, Duke Energy Corporation, 2011 – 2014.
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Fiscal 2015
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|
Fiscal 2014
|
||||||||||||||||||||
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High
|
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Low
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Dividend
|
|
High
|
|
Low
|
|
Dividend
|
||||||||||||
1st Quarter
|
$
|
76.25
|
|
|
$
|
66.17
|
|
|
$
|
0.23
|
|
|
$
|
51.28
|
|
|
$
|
44.45
|
|
|
$
|
0.18
|
|
2nd Quarter
|
73.93
|
|
|
65.83
|
|
|
0.28
|
|
|
48.54
|
|
|
44.13
|
|
|
0.23
|
|
||||||
3rd Quarter
|
74.78
|
|
|
64.22
|
|
|
0.28
|
|
|
57.41
|
|
|
47.52
|
|
|
0.23
|
|
||||||
4th Quarter
|
78.13
|
|
|
66.93
|
|
|
0.28
|
|
|
71.11
|
|
|
56.76
|
|
|
0.23
|
|
|
1/28/2011
|
|
|
2/3/2012
|
|
|
2/1/2013
|
|
|
1/31/2014
|
|
|
1/30/2015
|
|
|
1/29/2016
|
|
||||||
Lowe’s
|
$
|
100.00
|
|
|
$
|
110.16
|
|
|
$
|
159.30
|
|
|
$
|
194.27
|
|
|
$
|
289.06
|
|
|
$
|
310.38
|
|
S&P 500
|
100.00
|
|
|
107.66
|
|
|
123.87
|
|
|
149.02
|
|
|
170.22
|
|
|
169.09
|
|
||||||
S&P Retail Index
|
$
|
100.00
|
|
|
$
|
114.50
|
|
|
$
|
144.15
|
|
|
$
|
180.63
|
|
|
$
|
216.93
|
|
|
$
|
253.36
|
|
(In millions, except average
price paid per share)
|
Total Number of
Shares Purchased
1
|
|
|
Average Price
Paid per Share
|
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
2
|
|
|
Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
2
|
|
||
October 31, 2015 – November 27, 2015
3
|
2.5
|
|
|
$
|
73.08
|
|
|
2.5
|
|
|
$
|
4,018
|
|
November 28, 2015 – January 1, 2016
|
2.8
|
|
|
75.92
|
|
|
2.7
|
|
|
3,809
|
|
||
January 2, 2016 – January 29, 2016
|
3.3
|
|
|
71.18
|
|
|
3.3
|
|
|
3,576
|
|
||
As of January 29, 2016
|
8.6
|
|
|
$
|
73.27
|
|
|
8.5
|
|
|
$
|
3,576
|
|
1
|
During the fourth quarter of fiscal 2015, the Company repurchased an aggregate of
8.6 million
shares of its common stock. The total number of shares purchased also includes an insignificant number of shares withheld from employees to satisfy either the exercise price of stock options or the statutory withholding tax liability upon the vesting of restricted stock awards.
|
2
|
On February 26, 2014, the Company announced that its Board of Directors authorized a
$5.0 billion
repurchase program with no expiration. On March 20, 2015, the Company announced that its Board of Directors authorized an additional $5.0 billion of share repurchases with no expiration. As of
January 29, 2016
, the Company had
$3.6 billion
remaining available under the program. In fiscal 2016, the Company expects to repurchase shares totaling
$3.5 billion
through purchases made from time to time either in the open market or through private off market transactions in accordance with SEC regulations.
|
3
|
In September 2015, the Company entered into an ASR agreement with a third-party financial institution to repurchase $500 million of the Company’s common stock. Pursuant to the agreement, the Company paid $500 million to the financial institution and received an initial delivery of 6.2 million shares. In November 2015, the Company finalized the transaction and received an additional 0.9 million shares. The average price paid per share in settlement of the ASR agreement included in the table above was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. See Note
7
to the consolidated financial statements included in this report.
|
Selected Statement of Earnings Data
(In millions, except per share data)
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
1
|
|
|||||
Net sales
|
$
|
59,074
|
|
|
$
|
56,223
|
|
|
$
|
53,417
|
|
|
$
|
50,521
|
|
|
$
|
50,208
|
|
Gross margin
|
20,570
|
|
|
19,558
|
|
|
18,476
|
|
|
17,327
|
|
|
17,350
|
|
|||||
Net earnings
|
2,546
|
|
|
2,698
|
|
|
2,286
|
|
|
1,959
|
|
|
1,839
|
|
|||||
Basic earnings per common share
|
2.73
|
|
|
2.71
|
|
|
2.14
|
|
|
1.69
|
|
|
1.43
|
|
|||||
Diluted earnings per common share
|
2.73
|
|
|
2.71
|
|
|
2.14
|
|
|
1.69
|
|
|
1.43
|
|
|||||
Dividends per share
|
$
|
1.07
|
|
|
$
|
0.87
|
|
|
$
|
0.70
|
|
|
$
|
0.62
|
|
|
$
|
0.53
|
|
Selected Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
2
|
$
|
31,266
|
|
|
$
|
31,721
|
|
|
$
|
32,471
|
|
|
$
|
32,441
|
|
|
$
|
33,369
|
|
Long-term debt, excluding current maturities
2
|
$
|
11,545
|
|
|
$
|
10,806
|
|
|
$
|
10,077
|
|
|
$
|
9,022
|
|
|
$
|
7,028
|
|
1
|
Fiscal 2011 contained 53 weeks, while all other years contained 52 weeks.
|
2
|
Prior period balances have been retrospectively adjusted as a result of the Company’s adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, and ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The adoption of these accounting standards required reclassification of current deferred tax assets and liabilities to non-current, as well as reclassification of debt issuance costs from other assets to long-term debt, excluding current maturities.
|
•
|
Executive Overview
|
•
|
Operations
|
•
|
Lowe’s Business Outlook
|
•
|
Financial Condition, Liquidity and Capital Resources
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Contractual Obligations and Commercial Commitments
|
•
|
Critical Accounting Policies and Estimates
|
|
|
|
Basis Point Increase / (Decrease) in
Percentage of Net Sales from
Prior Year
|
|
|
Percentage Increase / (Decrease) in Dollar Amounts from Prior Year
|
|
||
|
2015
|
|
2014
|
|
2015 vs. 2014
|
|
|
2015 vs. 2014
|
|
Net sales
|
100.00%
|
|
100.00%
|
|
N/A
|
|
|
5.1
|
%
|
Gross margin
|
34.82
|
|
34.79
|
|
3
|
|
|
5.2
|
|
Expenses:
|
|
|
|
|
|
|
|
||
Selling, general and administrative
|
23.90
|
|
23.62
|
|
28
|
|
|
6.3
|
|
Depreciation
|
2.51
|
|
2.64
|
|
(13
|
)
|
|
—
|
|
Interest - net
|
0.93
|
|
0.92
|
|
1
|
|
|
7.0
|
|
Total expenses
|
27.34
|
|
27.18
|
|
16
|
|
|
5.7
|
|
Pre-tax earnings
|
7.48
|
|
7.61
|
|
(13
|
)
|
|
3.3
|
|
Income tax provision
|
3.17
|
|
2.81
|
|
36
|
|
|
18.6
|
|
Net earnings
|
4.31%
|
|
4.80%
|
|
(49
|
)
|
|
(5.6
|
)%
|
Adjusted EBIT margin
1
|
9.31%
|
|
8.53%
|
|
78
|
|
|
14.8
|
%
|
|
|
|
|
|
|
|
|
||
|
|
|
Basis Point Increase / (Decrease) in
Percentage of Net Sales from Prior Year
|
|
|
Percentage Increase / (Decrease) in Dollar Amounts from Prior Year
|
|
||
|
2014
|
|
2013
|
|
2014 vs. 2013
|
|
|
2014 vs. 2013
|
|
Net sales
|
100.00%
|
|
100.00%
|
|
N/A
|
|
|
5.3
|
%
|
Gross margin
|
34.79
|
|
34.59
|
|
20
|
|
|
5.9
|
|
Expenses:
|
|
|
|
|
|
|
|
||
Selling, general and administrative
|
23.62
|
|
24.08
|
|
(46
|
)
|
|
3.2
|
|
Depreciation
|
2.64
|
|
2.74
|
|
(10
|
)
|
|
1.6
|
|
Interest - net
|
0.92
|
|
0.89
|
|
3
|
|
|
8.3
|
|
Total expenses
|
27.18
|
|
27.71
|
|
(53
|
)
|
|
3.2
|
|
Pre-tax earnings
|
7.61
|
|
6.88
|
|
73
|
|
|
16.4
|
|
Income tax provision
|
2.81
|
|
2.60
|
|
21
|
|
|
13.8
|
|
Net earnings
|
4.80%
|
|
4.28%
|
|
52
|
|
|
18.0
|
%
|
EBIT margin
1
|
8.53%
|
|
7.77%
|
|
76
|
|
|
15.5
|
%
|
Other Metrics
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Comparable sales increase
2
|
4.8
|
%
|
|
4.3
|
%
|
|
4.8
|
%
|
|||
Total customer transactions (in millions)
|
878
|
|
|
857
|
|
|
828
|
|
|||
Average ticket
3
|
$
|
67.26
|
|
|
$
|
65.61
|
|
|
$
|
64.52
|
|
At end of year:
|
|
|
|
|
|
||||||
Number of stores
|
1,857
|
|
|
1,840
|
|
|
1,832
|
|
|||
Sales floor square feet (in millions)
|
202
|
|
|
201
|
|
|
200
|
|
|||
Average store size selling square feet (in thousands)
4
|
109
|
|
|
109
|
|
|
109
|
|
|||
Return on average assets
5, 8
|
7.8
|
%
|
|
8.2
|
%
|
|
6.9
|
%
|
|||
Return on average shareholders’ equity
6
|
28.8
|
%
|
|
24.4
|
%
|
|
17.7
|
%
|
|||
Return on invested capital
7
|
14.1
|
%
|
|
13.9
|
%
|
|
11.5
|
%
|
1
|
EBIT margin, also referred to as operating margin, is defined as earnings before interest and taxes (EBIT) as a percentage of sales. EBIT margin for fiscal year 2015 was adjusted to exclude the negative 90 basis points impact of the non-cash impairment charge on the Australian joint venture with Woolworths (Adjusted EBIT margin). Adjusted EBIT is a non-GAAP financial measure. See below for additional information and a reconciliation to the most comparable GAAP measure.
|
2
|
A comparable location is defined as a location that has been open longer than 13 months.
A location that is identified for relocation is no longer considered comparable one month prior to its relocation. The relocated location must then remain open longer than 13 months to be considered comparable. A location we have decided to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Acquired locations are included in the comparable sales calculation beginning in the first full month following the first anniversary of the date of the acquisition. Comparable sales include online sales, which did not have a meaningful impact for the periods presented.
|
3
|
Average ticket is defined as net sales divided by the total number of customer transactions.
|
4
|
Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period. The average Lowe’s home improvement store has approximately 112,000 square feet of retail selling space, while the average Orchard store has approximately 37,000 square feet of retail selling space.
|
5
|
Return on average assets is defined as net earnings divided by average total assets for the last five quarters.
|
6
|
Return on average shareholders’ equity is defined as net earnings divided by average shareholders’ equity for the last five quarters.
|
7
|
Return on invested capital is a non-GAAP financial measure. See below for additional information and a reconciliation to the most comparable GAAP measure.
|
8
|
Fiscal years 2014 and 2013 have been adjusted as a result of the Company’s retrospective adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, and ASU 2015-17, Balance Sheet Classification of Deferred Taxes. The adoption of these accounting standards required reclassification of current deferred tax assets and liabilities to non-current, as well as reclassification of debt issuance costs from other assets to long-term debt, excluding current maturities.
|
Calculation of Return on Invested Capital
(In millions, except percentage data)
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Numerator
|
|
|
|
|
|
||||||
Net earnings
|
$
|
2,546
|
|
|
$
|
2,698
|
|
|
$
|
2,286
|
|
Plus:
|
|
|
|
|
|
||||||
Interest expense - net
|
552
|
|
|
516
|
|
|
476
|
|
|||
Provision for income taxes
|
1,873
|
|
|
1,578
|
|
|
1,387
|
|
|||
Earnings before interest and taxes
|
4,971
|
|
|
4,792
|
|
|
4,149
|
|
|||
Less:
|
|
|
|
|
|
||||||
Income tax adjustment
1
|
2,058
|
|
|
1,769
|
|
|
1,567
|
|
|||
Net operating profit after tax
|
$
|
2,913
|
|
|
$
|
3,024
|
|
|
$
|
2,581
|
|
Effective tax rate
|
42.4
|
%
|
|
36.9
|
%
|
|
37.8
|
%
|
|||
Denominator
|
|
|
|
|
|
||||||
Average debt and equity
2, 3
|
$
|
20,693
|
|
|
$
|
21,744
|
|
|
$
|
22,501
|
|
Return on invested capital
4
|
14.1
|
%
|
|
13.9
|
%
|
|
11.5
|
%
|
|||
|
|
|
|
|
|
||||||
Calculation of Return on Average Debt and Equity
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Numerator
|
|
|
|
|
|
||||||
Net earnings
|
$
|
2,546
|
|
|
$
|
2,698
|
|
|
$
|
2,286
|
|
Denominator
|
|
|
|
|
|
||||||
Average debt and equity
2, 3
|
$
|
20,693
|
|
|
$
|
21,744
|
|
|
$
|
22,501
|
|
Return on average debt and equity
|
12.3
|
%
|
|
12.4
|
%
|
|
10.2
|
%
|
1
|
Income tax adjustment is defined as earnings before interest and taxes multiplied by the effective tax rate.
|
2
|
Average debt and equity is defined as average debt, including current maturities and short-term borrowings, plus total equity for the last five quarters.
|
3
|
Fiscal years 2014 and 2013 have been adjusted as a result of the Company’s retrospective adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The adoption of this accounting standard required reclassification of debt issuance costs from other assets to long-term debt, excluding current maturities.
|
4
|
ROIC for fiscal year 2015 was negatively impacted by approximately 238 basis points due to the non-cash impairment charge on the Australian joint venture with Woolworths.
|
Calculation of Adjusted Net Earnings, Adjusted EBIT, and Adjusted Diluted Earnings per Common Share
|
2015
|
|||||
(In millions, except per share and percentage data)
|
Amount
|
|
% Sales
|
|||
Net earnings, as reported
|
$
|
2,546
|
|
|
4.31
|
%
|
Non-cash impairment charge
|
530
|
|
|
0.90
|
|
|
Adjusted net earnings
|
$
|
3,076
|
|
|
5.21
|
%
|
Interest - net
|
552
|
|
|
0.93
|
|
|
Income tax provision
|
1,873
|
|
|
3.17
|
|
|
Adjusted EBIT
|
$
|
5,501
|
|
|
9.31
|
%
|
|
|
|
|
|||
|
|
|
|
|||
Diluted earnings per common share, as reported
|
$
|
2.73
|
|
|
|
|
Non-cash impairment charge
|
0.56
|
|
|
|
||
Adjusted diluted earnings per common share
|
$
|
3.29
|
|
|
|
(In millions)
|
2015
|
|
|
2014
|
|
||
Interest expense, net of amount capitalized
|
$
|
548
|
|
|
$
|
515
|
|
Amortization of original issue discount and loan costs
|
8
|
|
|
7
|
|
||
Interest income
|
(4
|
)
|
|
(6
|
)
|
||
Interest - net
|
$
|
552
|
|
|
$
|
516
|
|
(In millions)
|
2014
|
|
|
2013
|
|
||
Interest expense, net of amount capitalized
|
$
|
515
|
|
|
$
|
474
|
|
Amortization of original issue discount and loan costs
|
7
|
|
|
6
|
|
||
Interest income
|
(6
|
)
|
|
(4
|
)
|
||
Interest - net
|
$
|
516
|
|
|
$
|
476
|
|
1
|
Operating margin growth excludes the impact of the non-cash impairment charge on the Australian joint venture. The non-cash impairment charge negatively impacted operating margin by approximately 90 basis points in fiscal year 2015.
|
(In millions)
|
2015
|
|
|
2014
|
|
|
2013
|
|
Net cash provided by (used in):
|
|
|
|
|
|
|||
Operating activities
|
4,784
|
|
|
4,929
|
|
|
4,111
|
|
Investing activities
|
(1,343
|
)
|
|
(1,088
|
)
|
|
(1,286
|
)
|
Financing activities
|
(3,493
|
)
|
|
(3,761
|
)
|
|
(2,969
|
)
|
Debt Ratings
|
S&P
|
|
Moody’s
|
Commercial Paper
|
A-2
|
|
P-2
|
Senior Debt
|
A-
|
|
A3
|
Outlook
|
Stable
|
|
Stable
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
(in millions)
|
Total
|
|
|
Less Than 1 Year
|
|
|
1-3 Years
|
|
|
4-5 Years
|
|
|
After 5 Years
|
|
|||||
Long-term debt (principal amounts, excluding discount and debt issuance costs)
|
$
|
12,190
|
|
|
$
|
1,028
|
|
|
$
|
1,002
|
|
|
$
|
951
|
|
|
$
|
9,209
|
|
Long-term debt (interest payments)
|
8,236
|
|
|
522
|
|
|
946
|
|
|
905
|
|
|
5,863
|
|
|||||
Capitalized lease obligations
1, 2
|
991
|
|
|
76
|
|
|
127
|
|
|
118
|
|
|
670
|
|
|||||
Operating leases
1
|
5,394
|
|
|
494
|
|
|
959
|
|
|
855
|
|
|
3,086
|
|
|||||
Purchase obligations
3
|
1,046
|
|
|
718
|
|
|
173
|
|
|
111
|
|
|
44
|
|
|||||
Total contractual obligations
|
$
|
27,857
|
|
|
$
|
2,838
|
|
|
$
|
3,207
|
|
|
$
|
2,940
|
|
|
$
|
18,872
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Amount of Commitment Expiration by Period
|
||||||||||||||||||
Commercial Commitments
(in millions)
|
Total
|
|
|
Less Than 1 Year
|
|
|
1-3 Years
|
|
|
4-5 Years
|
|
|
After 5 Years
|
|
|||||
Letters of Credit
4
|
$
|
67
|
|
|
$
|
66
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
1
|
Amounts do not include taxes, common area maintenance, insurance, or contingent rent because these amounts have historically been insignificant.
|
2
|
Amounts include imputed interest and residual values.
|
3
|
Purchase obligations include agreements to purchase goods or services that are enforceable, are legally binding, and specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase obligations include firm commitments related to certain marketing and information technology programs, as well as purchases of merchandise inventory.
|
4
|
Letters of credit are issued primarily for insurance and construction contracts.
|
|
January 29, 2016
|
|
|
% Sales
|
|
|
January 30, 2015
|
|
|
% Sales
|
|
|
January 31, 2014
|
|
|
% Sales
|
|
|||
Fiscal years ended on
|
||||||||||||||||||||
Net sales
|
$
|
59,074
|
|
|
100.00
|
%
|
|
$
|
56,223
|
|
|
100.00
|
%
|
|
$
|
53,417
|
|
|
100.00
|
%
|
Cost of sales
|
38,504
|
|
|
65.18
|
|
|
36,665
|
|
|
65.21
|
|
|
34,941
|
|
|
65.41
|
|
|||
Gross margin
|
20,570
|
|
|
34.82
|
|
|
19,558
|
|
|
34.79
|
|
|
18,476
|
|
|
34.59
|
|
|||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Selling, general and administrative
|
14,115
|
|
|
23.90
|
|
|
13,281
|
|
|
23.62
|
|
|
12,865
|
|
|
24.08
|
|
|||
Depreciation
|
1,484
|
|
|
2.51
|
|
|
1,485
|
|
|
2.64
|
|
|
1,462
|
|
|
2.74
|
|
|||
Interest - net
|
552
|
|
|
0.93
|
|
|
516
|
|
|
0.92
|
|
|
476
|
|
|
0.89
|
|
|||
Total expenses
|
16,151
|
|
|
27.34
|
|
|
15,282
|
|
|
27.18
|
|
|
14,803
|
|
|
27.71
|
|
|||
Pre-tax earnings
|
4,419
|
|
|
7.48
|
|
|
4,276
|
|
|
7.61
|
|
|
3,673
|
|
|
6.88
|
|
|||
Income tax provision
|
1,873
|
|
|
3.17
|
|
|
1,578
|
|
|
2.81
|
|
|
1,387
|
|
|
2.60
|
|
|||
Net earnings
|
$
|
2,546
|
|
|
4.31
|
%
|
|
$
|
2,698
|
|
|
4.80
|
%
|
|
$
|
2,286
|
|
|
4.28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per common share
|
$
|
2.73
|
|
|
|
|
$
|
2.71
|
|
|
|
|
$
|
2.14
|
|
|
|
|||
Diluted earnings per common share
|
$
|
2.73
|
|
|
|
|
$
|
2.71
|
|
|
|
|
$
|
2.14
|
|
|
|
|||
Cash dividends per share
|
$
|
1.07
|
|
|
|
|
$
|
0.87
|
|
|
|
|
$
|
0.70
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
January 29, 2016
|
|
|
% Sales
|
|
|
January 30, 2015
|
|
|
% Sales
|
|
|
January 31, 2014
|
|
|
% Sales
|
|
|||
Fiscal years ended on
|
|
|
||||||||||||||||||
Net earnings
|
$
|
2,546
|
|
|
4.31
|
%
|
|
$
|
2,698
|
|
|
4.80
|
%
|
|
$
|
2,286
|
|
|
4.28
|
%
|
Foreign currency translation adjustments - net of tax
|
(291
|
)
|
|
(0.49
|
)
|
|
(86
|
)
|
|
(0.15
|
)
|
|
(68
|
)
|
|
(0.13
|
)
|
|||
Net unrealized investment losses - net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|||
Other comprehensive loss
|
(291
|
)
|
|
(0.49
|
)
|
|
(86
|
)
|
|
(0.15
|
)
|
|
(69
|
)
|
|
(0.13
|
)
|
|||
Comprehensive income
|
$
|
2,255
|
|
|
3.82
|
%
|
|
$
|
2,612
|
|
|
4.65
|
%
|
|
$
|
2,217
|
|
|
4.15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 29, 2016
|
|
|
% Total
|
|
|
January 30, 2015
|
|
|
% Total
|
|
||
|
|||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
|
$
|
405
|
|
|
1.3
|
%
|
|
$
|
466
|
|
|
1.5
|
%
|
Short-term investments
|
|
|
307
|
|
|
1.0
|
|
|
125
|
|
|
0.4
|
|
||
Merchandise inventory - net
|
|
|
9,458
|
|
|
30.3
|
|
|
8,911
|
|
|
28.1
|
|
||
Other current assets
|
|
|
391
|
|
|
1.3
|
|
|
349
|
|
|
1.1
|
|
||
Total current assets
|
|
|
10,561
|
|
|
33.9
|
|
|
9,851
|
|
|
31.1
|
|
||
Property, less accumulated depreciation
|
|
|
19,577
|
|
|
62.6
|
|
|
20,034
|
|
|
63.2
|
|
||
Long-term investments
|
|
|
222
|
|
|
0.7
|
|
|
354
|
|
|
1.1
|
|
||
Deferred income taxes - net
|
|
|
241
|
|
|
0.8
|
|
|
133
|
|
|
0.4
|
|
||
Other assets
|
|
|
665
|
|
|
2.0
|
|
|
1,349
|
|
|
4.2
|
|
||
Total assets
|
|
|
$
|
31,266
|
|
|
100.0
|
%
|
|
$
|
31,721
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||
Liabilities and shareholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||
Short-term borrowings
|
|
|
$
|
43
|
|
|
0.1
|
%
|
|
$
|
—
|
|
|
—
|
%
|
Current maturities of long-term debt
|
|
|
1,061
|
|
|
3.4
|
|
|
552
|
|
|
1.7
|
|
||
Accounts payable
|
|
|
5,633
|
|
|
18.0
|
|
|
5,124
|
|
|
16.2
|
|
||
Accrued compensation and employee benefits
|
|
|
820
|
|
|
2.6
|
|
|
773
|
|
|
2.4
|
|
||
Deferred revenue
|
|
|
1,078
|
|
|
3.4
|
|
|
979
|
|
|
3.1
|
|
||
Other current liabilities
|
|
|
1,857
|
|
|
6.1
|
|
|
1,920
|
|
|
6.1
|
|
||
Total current liabilities
|
|
|
10,492
|
|
|
33.6
|
|
|
9,348
|
|
|
29.5
|
|
||
Long-term debt, excluding current maturities
|
|
|
11,545
|
|
|
36.9
|
|
|
10,806
|
|
|
34.1
|
|
||
Deferred revenue - extended protection plans
|
|
|
729
|
|
|
2.3
|
|
|
730
|
|
|
2.3
|
|
||
Other liabilities
|
|
|
846
|
|
|
2.7
|
|
|
869
|
|
|
2.7
|
|
||
Total liabilities
|
|
|
23,612
|
|
|
75.5
|
|
|
21,753
|
|
|
68.6
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
||||||
Preferred stock - $5 par value, none issued
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Common stock - $.50 par value;
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares issued and outstanding
|
|
|
|
|
|
|
|
|
|
||||||
January 29, 2016
|
910
|
|
|
|
|
|
|
|
|
||||||
January 30, 2015
|
960
|
|
455
|
|
|
1.5
|
|
|
480
|
|
|
1.5
|
|
||
Capital in excess of par value
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Retained earnings
|
|
|
7,593
|
|
|
24.3
|
|
|
9,591
|
|
|
30.2
|
|
||
Accumulated other comprehensive loss
|
|
|
(394
|
)
|
|
(1.3
|
)
|
|
(103
|
)
|
|
(0.3
|
)
|
||
Total shareholders’ equity
|
|
|
7,654
|
|
|
24.5
|
|
|
9,968
|
|
|
31.4
|
|
||
Total liabilities and shareholders’ equity
|
|
|
$
|
31,266
|
|
|
100.0
|
%
|
|
$
|
31,721
|
|
|
100.0
|
%
|
|
Common Stock
|
|
Capital in Excess
of Par Value |
|
|
Retained Earnings
|
|
|
Accumulated Other Comprehensive
Income/(Loss) |
|
|
Total
Shareholders’ Equity |
|
|||||||||
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|||||||||||||
Balance February 1, 2013
|
1,110
|
|
|
$
|
555
|
|
|
$
|
26
|
|
|
$
|
13,224
|
|
|
$
|
52
|
|
|
$
|
13,857
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net earnings
|
|
|
|
|
|
|
2,286
|
|
|
|
|
|
||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(69
|
)
|
|
|
||||||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
2,217
|
|
||||||||||
Tax effect of non-qualified stock options exercised and restricted stock vested
|
|
|
|
|
25
|
|
|
|
|
|
|
25
|
|
|||||||||
Cash dividends declared, $0.70 per share
|
|
|
|
|
|
|
(741
|
)
|
|
|
|
(741
|
)
|
|||||||||
Share-based payment expense
|
|
|
|
|
102
|
|
|
|
|
|
|
102
|
|
|||||||||
Repurchase of common stock
|
(88
|
)
|
|
(44
|
)
|
|
(312
|
)
|
|
(3,414
|
)
|
|
|
|
(3,770
|
)
|
||||||
Issuance of common stock under share-based payment plans
|
8
|
|
|
4
|
|
|
159
|
|
|
|
|
|
|
163
|
|
|||||||
Balance January 31, 2014
|
1,030
|
|
|
$
|
515
|
|
|
$
|
—
|
|
|
$
|
11,355
|
|
|
$
|
(17
|
)
|
|
$
|
11,853
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net earnings
|
|
|
|
|
|
|
2,698
|
|
|
|
|
|
||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(86
|
)
|
|
|
||||||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
2,612
|
|
||||||||||
Tax effect of non-qualified stock options exercised and restricted stock vested
|
|
|
|
|
41
|
|
|
|
|
|
|
41
|
|
|||||||||
Cash dividends declared, $0.87 per share
|
|
|
|
|
|
|
(858
|
)
|
|
|
|
(858
|
)
|
|||||||||
Share-based payment expense
|
|
|
|
|
111
|
|
|
|
|
|
|
111
|
|
|||||||||
Repurchase of common stock
|
(75
|
)
|
|
(37
|
)
|
|
(286
|
)
|
|
(3,604
|
)
|
|
|
|
(3,927
|
)
|
||||||
Issuance of common stock under share-based payment plans
|
5
|
|
|
2
|
|
|
134
|
|
|
|
|
|
|
136
|
|
|||||||
Balance January 30, 2015
|
960
|
|
|
$
|
480
|
|
|
$
|
—
|
|
|
$
|
9,591
|
|
|
$
|
(103
|
)
|
|
$
|
9,968
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net earnings
|
|
|
|
|
|
|
2,546
|
|
|
|
|
|
||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(291
|
)
|
|
|
||||||||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
2,255
|
|
|||||||||
Tax effect of non-qualified stock options exercised and restricted stock vested
|
|
|
|
|
61
|
|
|
|
|
|
|
61
|
|
|||||||||
Cash dividends declared, $1.07 per share
|
|
|
|
|
|
|
(991
|
)
|
|
|
|
(991
|
)
|
|||||||||
Share-based payment expense
|
|
|
|
|
112
|
|
|
|
|
|
|
112
|
|
|||||||||
Repurchase of common stock
|
(54
|
)
|
|
(27
|
)
|
|
(298
|
)
|
|
(3,553
|
)
|
|
|
|
(3,878
|
)
|
||||||
Issuance of common stock under share-based payment plans
|
4
|
|
|
2
|
|
|
125
|
|
|
|
|
|
|
127
|
|
|||||||
Balance January 29, 2016
|
910
|
|
|
$
|
455
|
|
|
$
|
—
|
|
|
$
|
7,593
|
|
|
$
|
(394
|
)
|
|
$
|
7,654
|
|
|
January 29, 2016
|
|
|
January 30, 2015
|
|
|
January 31, 2014
|
|
|||
Fiscal years ended on
|
|||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
2,546
|
|
|
$
|
2,698
|
|
|
$
|
2,286
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
1,587
|
|
|
1,586
|
|
|
1,562
|
|
|||
Deferred income taxes
|
(68
|
)
|
|
(124
|
)
|
|
(162
|
)
|
|||
Loss on property and other assets – net
|
33
|
|
|
25
|
|
|
64
|
|
|||
Loss on equity method investments
|
591
|
|
|
57
|
|
|
52
|
|
|||
Share-based payment expense
|
117
|
|
|
119
|
|
|
100
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Merchandise inventory – net
|
(582
|
)
|
|
170
|
|
|
(396
|
)
|
|||
Other operating assets
|
(34
|
)
|
|
83
|
|
|
(5
|
)
|
|||
Accounts payable
|
524
|
|
|
127
|
|
|
291
|
|
|||
Other operating liabilities
|
70
|
|
|
188
|
|
|
319
|
|
|||
Net cash provided by operating activities
|
4,784
|
|
|
4,929
|
|
|
4,111
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of investments
|
(934
|
)
|
|
(820
|
)
|
|
(759
|
)
|
|||
Proceeds from sale/maturity of investments
|
884
|
|
|
805
|
|
|
709
|
|
|||
Capital expenditures
|
(1,197
|
)
|
|
(880
|
)
|
|
(940
|
)
|
|||
Contributions to equity method investments – net
|
(125
|
)
|
|
(241
|
)
|
|
(173
|
)
|
|||
Proceeds from sale of property and other long-term assets
|
57
|
|
|
52
|
|
|
75
|
|
|||
Acquisition of business - net
|
—
|
|
|
—
|
|
|
(203
|
)
|
|||
Other – net
|
(28
|
)
|
|
(4
|
)
|
|
5
|
|
|||
Net cash used in investing activities
|
(1,343
|
)
|
|
(1,088
|
)
|
|
(1,286
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net change in short-term borrowings
|
43
|
|
|
(386
|
)
|
|
386
|
|
|||
Net proceeds from issuance of long-term debt
|
1,718
|
|
|
1,239
|
|
|
985
|
|
|||
Repayment of long-term debt
|
(552
|
)
|
|
(48
|
)
|
|
(47
|
)
|
|||
Proceeds from issuance of common stock under share-based payment plans
|
125
|
|
|
137
|
|
|
165
|
|
|||
Cash dividend payments
|
(957
|
)
|
|
(822
|
)
|
|
(733
|
)
|
|||
Repurchase of common stock
|
(3,925
|
)
|
|
(3,905
|
)
|
|
(3,710
|
)
|
|||
Other – net
|
55
|
|
|
24
|
|
|
(15
|
)
|
|||
Net cash used in financing activities
|
(3,493
|
)
|
|
(3,761
|
)
|
|
(2,969
|
)
|
|||
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash
|
(9
|
)
|
|
(5
|
)
|
|
(6
|
)
|
|||
|
|
|
|
|
|
||||||
Net increase/(decrease) in cash and cash equivalents
|
(61
|
)
|
|
75
|
|
|
(150
|
)
|
|||
Cash and cash equivalents, beginning of year
|
466
|
|
|
391
|
|
|
541
|
|
|||
Cash and cash equivalents, end of year
|
$
|
405
|
|
|
$
|
466
|
|
|
$
|
391
|
|
(In millions)
|
January 29, 2016
|
|
|
January 30, 2015
|
|
||
Self-insurance liabilities
|
$
|
343
|
|
|
$
|
346
|
|
Accrued dividends
|
255
|
|
|
222
|
|
||
Accrued interest
|
179
|
|
|
165
|
|
||
Sales tax liabilities
|
140
|
|
|
131
|
|
||
Accrued property taxes
|
111
|
|
|
124
|
|
||
Other
|
829
|
|
|
932
|
|
||
Total
|
$
|
1,857
|
|
|
$
|
1,920
|
|
(In millions)
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Deferred revenue - extended protection plans, beginning of year
|
$
|
730
|
|
|
$
|
730
|
|
|
$
|
715
|
|
Additions to deferred revenue
|
350
|
|
|
318
|
|
|
294
|
|
|||
Deferred revenue recognized
|
(351
|
)
|
|
(318
|
)
|
|
(279
|
)
|
|||
Deferred revenue - extended protection plans, end of year
|
$
|
729
|
|
|
$
|
730
|
|
|
$
|
730
|
|
Cost of Sales
|
|
Selling, General and Administrative
|
n
Total cost of products sold, including:
- Purchase costs, net of vendor funds;
- Freight expenses associated with moving merchandise inventories from vendors to retail stores;
- Costs associated with operating the Company’s distribution network, including payroll and benefit costs and occupancy costs;
n
Costs of installation services provided;
n
Costs associated with delivery of products directly from vendors to customers by third parties;
n
Costs associated with inventory shrinkage and obsolescence.
n
Costs of services performed under the extended protection plan.
|
|
n
Payroll and benefit costs for retail and corporate employees;
n
Occupancy costs of retail and corporate facilities;
n
Advertising;
n
Costs associated with delivery of products from stores and distribution centers to customers;
n
Third-party, in-store service costs;
n
Tender costs, including bank charges, costs associated with credit card interchange fees and amounts associated with accepting the Company’s proprietary credit cards;
n
Costs associated with self-insured plans, and premium costs for stop-loss coverage and fully insured plans;
n
Long-lived asset impairment losses and gains/losses on disposal of assets;
n
Other administrative costs, such as supplies, and travel and entertainment.
|
•
|
Level 1
-
inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities
|
•
|
Level 2
-
inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly
|
•
|
Level 3
-
inputs to the valuation techniques that are unobservable for the assets or liabilities
|
|
|
|
Fair Value Measurements at
|
||||||
(In millions)
|
Measurement Level
|
|
January 29, 2016
|
|
|
January 30, 2015
|
|
||
Available-for-sale securities:
|
|
|
|
|
|
||||
Money market funds
|
Level 1
|
|
$
|
192
|
|
|
$
|
81
|
|
Certificates of deposit
|
Level 1
|
|
56
|
|
|
17
|
|
||
Municipal obligations
|
Level 2
|
|
38
|
|
|
21
|
|
||
Municipal floating rate obligations
|
Level 2
|
|
21
|
|
|
6
|
|
||
Total short-term investments
|
|
|
$
|
307
|
|
|
$
|
125
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
||
Municipal floating rate obligations
|
Level 2
|
|
$
|
212
|
|
|
$
|
348
|
|
Municipal obligations
|
Level 2
|
|
5
|
|
|
2
|
|
||
Certificates of deposit
|
Level 1
|
|
5
|
|
|
4
|
|
||
Total long-term investments
|
|
|
$
|
222
|
|
|
$
|
354
|
|
|
January 29, 2016
|
|
January 30, 2015
|
||||||||||||
(In millions)
|
Fair Value Measurements
|
|
|
Impairment Losses
|
|
|
Fair Value Measurements
|
|
|
Impairment Losses
|
|
||||
Assets-held-for-use:
|
|
|
|
|
|
|
|
||||||||
Operating locations
|
$
|
4
|
|
|
$
|
(8
|
)
|
|
$
|
9
|
|
|
$
|
(26
|
)
|
Excess properties
|
4
|
|
|
(2
|
)
|
|
11
|
|
|
(2
|
)
|
||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Equity method investments
|
393
|
|
|
(530
|
)
|
|
N/A
|
|
|
N/A
|
|
||||
Total
|
$
|
401
|
|
|
$
|
(540
|
)
|
|
$
|
20
|
|
|
$
|
(28
|
)
|
|
January 29, 2016
|
|
January 30, 2015
|
||||||||||||
(In millions)
|
Carrying Amount
|
|
|
Fair Value
|
|
|
Carrying Amount
|
|
|
Fair Value
|
|
||||
Unsecured notes (Level 1)
1
|
$
|
12,073
|
|
|
$
|
13,292
|
|
|
$
|
10,850
|
|
|
$
|
12,739
|
|
Mortgage notes (Level 2)
|
7
|
|
|
8
|
|
|
16
|
|
|
17
|
|
||||
Long-term debt (excluding capitalized lease obligations)
|
$
|
12,080
|
|
|
$
|
13,300
|
|
|
$
|
10,866
|
|
|
$
|
12,756
|
|
1
|
Prior period balances have been retrospectively adjusted as a result of the Company’s adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The adoption of the accounting standard required reclassification of debt issuance costs from other assets to long-term debt.
|
(In millions)
|
Estimated
Depreciable Lives, In Years |
|
January 29, 2016
|
|
|
January 30, 2015
|
|
||
Cost:
|
|
|
|
|
|
||||
Land
|
N/A
|
|
$
|
7,086
|
|
|
$
|
7,040
|
|
Buildings and building improvements
|
5-40
|
|
17,451
|
|
|
17,247
|
|
||
Equipment
|
2-15
|
|
10,863
|
|
|
10,426
|
|
||
Construction in progress
|
N/A
|
|
513
|
|
|
730
|
|
||
Total cost
|
|
|
35,913
|
|
|
35,443
|
|
||
Accumulated depreciation
|
|
|
(16,336
|
)
|
|
(15,409
|
)
|
||
Property, less accumulated depreciation
|
|
|
$
|
19,577
|
|
|
$
|
20,034
|
|
(In millions)
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Accrual for exit activities, balance at beginning of year
|
$
|
53
|
|
|
$
|
54
|
|
|
$
|
75
|
|
Additions to the accrual - net
|
34
|
|
|
14
|
|
|
11
|
|
|||
Cash payments
|
(20
|
)
|
|
(15
|
)
|
|
(32
|
)
|
|||
Accrual for exit activities, balance at end of year
|
$
|
67
|
|
|
$
|
53
|
|
|
$
|
54
|
|
Debt Category
(In millions) |
Weighted-Average Interest Rate at January 29, 2016
|
|
|
January 29, 2016
|
|
|
January 30, 2015
3
|
|
||
Secured debt:
|
|
|
|
|
|
|||||
Mortgage notes due through fiscal 2027
1
|
6.32
|
%
|
|
$
|
7
|
|
|
$
|
16
|
|
Unsecured debt:
|
|
|
|
|
|
|||||
Notes due through fiscal 2020
|
3.13
|
%
|
|
2,969
|
|
|
3,217
|
|
||
Notes due fiscal 2021-2025
|
3.50
|
%
|
|
3,464
|
|
|
2,720
|
|
||
Notes due fiscal 2026-2030
|
6.76
|
%
|
|
813
|
|
|
813
|
|
||
Notes due fiscal 2031-2035
|
5.50
|
%
|
|
494
|
|
|
494
|
|
||
Notes due fiscal 2036-2040
2
|
6.16
|
%
|
|
1,537
|
|
|
1,536
|
|
||
Notes due fiscal 2041-2045
|
4.67
|
%
|
|
2,796
|
|
|
2,071
|
|
||
Capitalized lease obligations due through fiscal 2035
|
|
|
526
|
|
|
491
|
|
|||
Total long-term debt
|
|
|
12,606
|
|
|
11,358
|
|
|||
Less current maturities
|
|
|
(1,061
|
)
|
|
(552
|
)
|
|||
Long-term debt, excluding current maturities
|
|
|
$
|
11,545
|
|
|
$
|
10,806
|
|
1
|
Real properties with an aggregate book value of
$33 million
were pledged as collateral at
January 29, 2016
, for secured debt.
|
2
|
Amount includes
$100 million
of notes issued in
1997
that may be put at the option of the holder on the
20
th anniversary of the issue at par value. None of these notes are currently puttable.
|
3
|
In connection with the Company’s adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, prior year debt balances have been retrospectively adjusted to include a direct deduction of unamortized debt issuance costs. Prior to the Company’s adoption of ASU 2015-03, these unamortized debt issuance costs were included in other assets on the Company’s consolidated balance sheets.
|
|
2015
|
|
2014
|
||||||||||
(In millions)
|
Shares
|
|
|
Cost
1
|
|
|
Shares
|
|
|
Cost
1
|
|
||
Share repurchase program
|
53.6
|
|
|
$
|
3,811
|
|
|
73.8
|
|
|
$
|
3,880
|
|
Shares withheld from employees
|
0.9
|
|
|
67
|
|
|
0.9
|
|
|
47
|
|
||
Total share repurchases
|
54.5
|
|
|
$
|
3,878
|
|
|
74.7
|
|
|
$
|
3,927
|
|
1
|
Reductions of
$3.6 billion
were recorded to retained earnings, after capital in excess of par value was depleted, for both
2015
and
2014
.
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Weighted-average assumptions used:
|
|
|
|
|
|
||||||
Expected volatility
|
31.3
|
%
|
|
34.2
|
%
|
|
34.2
|
%
|
|||
Dividend yield
|
1.69
|
%
|
|
1.73
|
%
|
|
1.45
|
%
|
|||
Risk-free interest rate
|
1.99
|
%
|
|
2.26
|
%
|
|
1.31
|
%
|
|||
Expected term, in years
|
7.00
|
|
|
7.00
|
|
|
7.39
|
|
|||
|
|
|
|
|
|
||||||
Weighted-average grant date fair value
|
$
|
20.27
|
|
|
$
|
17.00
|
|
|
$
|
12.24
|
|
|
Shares
(In thousands) |
|
|
Weighted-Average Exercise Price Per Share
|
|
|
Weighted-Average Remaining Term (In years)
|
|
Aggregate Intrinsic Value (In thousands)
|
|
||
Outstanding at January 30, 2015
|
6,311
|
|
|
$
|
35.98
|
|
|
|
|
|
||
Granted
|
862
|
|
|
69.44
|
|
|
|
|
|
|||
Canceled, forfeited or expired
|
(215
|
)
|
|
54.21
|
|
|
|
|
|
|||
Exercised
|
(1,527
|
)
|
|
30.26
|
|
|
|
|
|
|||
Outstanding at January 29, 2016
|
5,431
|
|
|
$
|
42.18
|
|
|
6.04
|
|
$
|
160,105
|
|
Vested and expected to vest at January 29, 2016
1
|
5,357
|
|
|
$
|
41.91
|
|
|
6.00
|
|
$
|
159,387
|
|
Exercisable at January 29, 2016
|
3,200
|
|
|
$
|
32.88
|
|
|
4.28
|
|
$
|
124,067
|
|
1
|
Includes outstanding vested options as well as outstanding nonvested options after a forfeiture rate is applied.
|
|
Shares
(In thousands) |
|
|
Weighted-Average Grant-Date Fair Value Per Share
|
|
|
Nonvested at January 30, 2015
|
5,574
|
|
|
$
|
39.91
|
|
Granted
|
997
|
|
|
69.44
|
|
|
Vested
|
(1,959
|
)
|
|
29.28
|
|
|
Canceled or forfeited
|
(401
|
)
|
|
48.18
|
|
|
Nonvested at January 29, 2016
|
4,211
|
|
|
$
|
51.06
|
|
|
Units
(In thousands) 1 |
|
|
Weighted-Average Grant-Date Fair Value Per Unit
|
|
|
Nonvested at January 30, 2015
|
957
|
|
|
$
|
37.00
|
|
Granted
|
257
|
|
|
71.52
|
|
|
Vested
|
(327
|
)
|
|
26.66
|
|
|
Canceled or forfeited
|
(95
|
)
|
|
49.77
|
|
|
Nonvested at January 29, 2016
|
792
|
|
|
$
|
50.93
|
|
¹
|
The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of
January 29, 2016
, the maximum number of nonvested units that could vest under the provisions of the agreements was
1.2 million
for the RONCAA awards.
|
|
Units
(In thousands) 1 |
|
|
Weighted-Average Grant-Date Fair Value Per Unit
|
|
|
Nonvested at January 30, 2015
|
300
|
|
|
$
|
31.20
|
|
Canceled or forfeited
|
(173
|
)
|
|
27.36
|
|
|
Nonvested at January 29, 2016
|
127
|
|
|
$
|
36.47
|
|
¹
|
The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of
January 29, 2016
, the maximum number of nonvested units that could vest under the provisions of the agreements was
0.2 million
units for the brand differentiation awards.
|
|
Shares
(In thousands) |
|
|
Weighted-Average Grant-Date Fair Value Per Share
|
|
|
Nonvested at January 30, 2015
|
285
|
|
|
$
|
43.00
|
|
Granted
|
104
|
|
|
66.24
|
|
|
Vested
|
(49
|
)
|
|
28.05
|
|
|
Canceled or forfeited
|
(26
|
)
|
|
48.87
|
|
|
Nonvested at January 29, 2016
|
314
|
|
|
$
|
52.52
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
Statutory federal income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal tax benefit
|
3.6
|
|
|
3.3
|
|
|
2.9
|
|
Valuation allowance - impairment
|
4.2
|
|
|
—
|
|
|
—
|
|
Other, net
|
(0.4
|
)
|
|
(1.4
|
)
|
|
(0.1
|
)
|
Effective tax rate
|
42.4
|
%
|
|
36.9
|
%
|
|
37.8
|
%
|
(In millions)
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
1,688
|
|
|
$
|
1,475
|
|
|
$
|
1,342
|
|
State
|
248
|
|
|
221
|
|
|
203
|
|
|||
Total current
|
1,936
|
|
|
1,696
|
|
|
1,545
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(59
|
)
|
|
(112
|
)
|
|
(133
|
)
|
|||
State
|
(4
|
)
|
|
(6
|
)
|
|
(25
|
)
|
|||
Total deferred
|
(63
|
)
|
|
(118
|
)
|
|
(158
|
)
|
|||
Total income tax provision
|
$
|
1,873
|
|
|
$
|
1,578
|
|
|
$
|
1,387
|
|
(In millions)
|
January 29, 2016
|
|
|
January 30, 2015
|
|
||
Deferred tax assets:
|
|
|
|
||||
Self-insurance
|
$
|
369
|
|
|
$
|
378
|
|
Share-based payment expense
|
83
|
|
|
81
|
|
||
Deferred rent
|
91
|
|
|
88
|
|
||
Impairment of equity method investment
|
270
|
|
|
—
|
|
||
Foreign currency translation
|
107
|
|
|
62
|
|
||
Net operating losses
|
159
|
|
|
152
|
|
||
Other, net
|
156
|
|
|
131
|
|
||
Total deferred tax assets
|
1,235
|
|
|
892
|
|
||
Valuation allowance
|
(447
|
)
|
|
(170
|
)
|
||
Net deferred tax assets
|
788
|
|
|
722
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Property
|
(507
|
)
|
|
(534
|
)
|
||
Other, net
|
(40
|
)
|
|
(55
|
)
|
||
Total deferred tax liabilities
|
(547
|
)
|
|
(589
|
)
|
||
|
|
|
|
||||
Net deferred tax asset
|
$
|
241
|
|
|
$
|
133
|
|
(In millions)
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Unrecognized tax benefits, beginning of year
|
$
|
7
|
|
|
$
|
62
|
|
|
$
|
63
|
|
Additions for tax positions of prior years
|
—
|
|
|
2
|
|
|
—
|
|
|||
Reductions for tax positions of prior years
|
(2
|
)
|
|
(57
|
)
|
|
—
|
|
|||
Settlements
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Unrecognized tax benefits, end of year
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
62
|
|
(In millions, except per share data)
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Basic earnings per common share:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
2,546
|
|
|
$
|
2,698
|
|
|
$
|
2,286
|
|
Less: Net earnings allocable to participating securities
|
(12
|
)
|
|
(16
|
)
|
|
(16
|
)
|
|||
Net earnings allocable to common shares, basic
|
$
|
2,534
|
|
|
$
|
2,682
|
|
|
$
|
2,270
|
|
Weighted-average common shares outstanding
|
927
|
|
|
988
|
|
|
1,059
|
|
|||
Basic earnings per common share
|
$
|
2.73
|
|
|
$
|
2.71
|
|
|
$
|
2.14
|
|
Diluted earnings per common share:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
2,546
|
|
|
$
|
2,698
|
|
|
$
|
2,286
|
|
Less: Net earnings allocable to participating securities
|
(12
|
)
|
|
(16
|
)
|
|
(16
|
)
|
|||
Net earnings allocable to common shares, diluted
|
$
|
2,534
|
|
|
$
|
2,682
|
|
|
$
|
2,270
|
|
Weighted-average common shares outstanding
|
927
|
|
|
988
|
|
|
1,059
|
|
|||
Dilutive effect of non-participating share-based awards
|
2
|
|
|
2
|
|
|
2
|
|
|||
Weighted-average common shares, as adjusted
|
929
|
|
|
990
|
|
|
1,061
|
|
|||
Diluted earnings per common share
|
$
|
2.73
|
|
|
$
|
2.71
|
|
|
$
|
2.14
|
|
(In millions)
Fiscal Year |
Operating Leases
|
|
|
Capitalized Lease Obligations
|
|
|
Total
|
|
|||
2016
|
$
|
494
|
|
|
$
|
76
|
|
|
$
|
570
|
|
2017
|
489
|
|
|
65
|
|
|
554
|
|
|||
2018
|
470
|
|
|
62
|
|
|
532
|
|
|||
2019
|
440
|
|
|
60
|
|
|
500
|
|
|||
2020
|
415
|
|
|
58
|
|
|
473
|
|
|||
Later years
|
3,086
|
|
|
670
|
|
|
3,756
|
|
|||
Total minimum lease payments
|
$
|
5,394
|
|
|
$
|
991
|
|
|
$
|
6,385
|
|
Less amount representing interest
|
|
|
(465
|
)
|
|
|
|||||
Present value of minimum lease payments
|
|
|
526
|
|
|
|
|||||
Less current maturities
|
|
|
(34
|
)
|
|
|
|||||
Present value of minimum lease payments, less current maturities
|
|
|
$
|
492
|
|
|
|
(In millions)
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Long-term debt
|
$
|
505
|
|
|
$
|
470
|
|
|
$
|
431
|
|
Capitalized lease obligations
|
42
|
|
|
42
|
|
|
40
|
|
|||
Interest income
|
(4
|
)
|
|
(6
|
)
|
|
(4
|
)
|
|||
Interest capitalized
|
(3
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|||
Interest on tax uncertainties
|
(1
|
)
|
|
(1
|
)
|
|
6
|
|
|||
Other
|
13
|
|
|
13
|
|
|
7
|
|
|||
Interest - net
|
$
|
552
|
|
|
$
|
516
|
|
|
$
|
476
|
|
(In millions)
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||
Cash paid for interest, net of amount capitalized
|
$
|
535
|
|
|
$
|
504
|
|
|
$
|
454
|
|
Cash paid for income taxes, net
|
$
|
2,055
|
|
|
$
|
1,534
|
|
|
$
|
1,505
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Non-cash property acquisitions, including assets acquired under capital lease
|
$
|
102
|
|
|
$
|
44
|
|
|
$
|
15
|
|
Cash dividends declared but not paid
|
$
|
255
|
|
|
$
|
222
|
|
|
$
|
186
|
|
|
2015
|
|
2014
1
|
|
2013
1
|
|||||||||||||||
(Dollars in millions)
|
Total Sales
|
|
|
%
|
|
|
Total Sales
|
|
|
%
|
|
|
Total Sales
|
|
|
%
|
|
|||
Lumber & Building Materials
|
$
|
7,110
|
|
|
12
|
%
|
|
$
|
6,877
|
|
|
12
|
%
|
|
$
|
6,591
|
|
|
12
|
%
|
Tools & Hardware
|
6,505
|
|
|
11
|
|
|
6,193
|
|
|
11
|
|
|
5,803
|
|
|
11
|
|
|||
Appliances
|
6,477
|
|
|
11
|
|
|
5,710
|
|
|
10
|
|
|
5,276
|
|
|
10
|
|
|||
Fashion Fixtures
|
5,812
|
|
|
10
|
|
|
5,600
|
|
|
10
|
|
|
5,278
|
|
|
10
|
|
|||
Rough Plumbing & Electrical
|
5,218
|
|
|
9
|
|
|
4,996
|
|
|
9
|
|
|
4,751
|
|
|
9
|
|
|||
Lawn & Garden
|
4,756
|
|
|
8
|
|
|
4,622
|
|
|
8
|
|
|
4,419
|
|
|
8
|
|
|||
Seasonal Living
|
3,953
|
|
|
7
|
|
|
3,735
|
|
|
7
|
|
|
3,620
|
|
|
7
|
|
|||
Paint
|
3,716
|
|
|
6
|
|
|
3,619
|
|
|
6
|
|
|
3,472
|
|
|
6
|
|
|||
Flooring
|
3,338
|
|
|
6
|
|
|
3,218
|
|
|
6
|
|
|
3,061
|
|
|
6
|
|
|||
Millwork
|
3,277
|
|
|
6
|
|
|
3,141
|
|
|
6
|
|
|
2,943
|
|
|
6
|
|
|||
Kitchens
|
3,245
|
|
|
5
|
|
|
3,138
|
|
|
6
|
|
|
3,074
|
|
|
6
|
|
|||
Outdoor Power Equipment
|
2,499
|
|
|
4
|
|
|
2,340
|
|
|
4
|
|
|
2,218
|
|
|
4
|
|
|||
Home Fashions
|
2,470
|
|
|
4
|
|
|
2,414
|
|
|
4
|
|
|
2,350
|
|
|
4
|
|
|||
Other
|
698
|
|
|
1
|
|
|
620
|
|
|
1
|
|
|
561
|
|
|
1
|
|
|||
Totals
|
$
|
59,074
|
|
|
100
|
%
|
|
$
|
56,223
|
|
|
100
|
%
|
|
$
|
53,417
|
|
|
100
|
%
|
1
|
Certain prior period amounts have been reclassified to conform to current product category classifications.
|
|
2015
|
|
||||||||||||||
(In millions, except per share data)
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
||||
Net sales
|
$
|
14,129
|
|
|
$
|
17,348
|
|
|
$
|
14,360
|
|
|
$
|
13,236
|
|
|
Gross margin
|
5,012
|
|
|
5,981
|
|
|
4,990
|
|
|
4,588
|
|
|
||||
Net earnings
|
673
|
|
|
1,126
|
|
|
736
|
|
|
11
|
|
1
|
||||
Basic earnings per common share
|
0.70
|
|
|
1.20
|
|
|
0.80
|
|
|
0.01
|
|
|
||||
Diluted earnings per common share
|
$
|
0.70
|
|
|
$
|
1.20
|
|
|
$
|
0.80
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
2014
|
|
||||||||||||||
(In millions, except per share data)
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
||||
Net sales
|
$
|
13,403
|
|
|
$
|
16,599
|
|
|
$
|
13,681
|
|
|
$
|
12,540
|
|
|
Gross margin
|
4,758
|
|
|
5,735
|
|
|
4,718
|
|
|
4,346
|
|
|
||||
Net earnings
|
624
|
|
|
1,039
|
|
|
585
|
|
|
450
|
|
|
||||
Basic earnings per common share
|
0.61
|
|
|
1.04
|
|
|
0.59
|
|
|
0.46
|
|
|
||||
Diluted earnings per common share
|
$
|
0.61
|
|
|
$
|
1.04
|
|
|
$
|
0.59
|
|
|
$
|
0.46
|
|
|
1
|
During the fourth quarter, the Company decided to exit its Australian joint venture investment with Woolworths and recorded a $530 million impairment of its equity method investment due to the determination that there was a decrease in value that was other than temporary.
|
|
|
Page No.
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
(In Millions)
|
Balance at beginning of period
|
|
|
Charges to costs
and expenses
|
|
|
|
|
Deductions
|
|
|
|
|
Balance at
end of period
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
January 29, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reserve for loss on obsolete inventory
|
$
|
52
|
|
|
$
|
—
|
|
|
|
|
$
|
(6
|
)
|
|
1
|
|
$
|
46
|
|
Reserve for inventory shrinkage
|
162
|
|
|
345
|
|
|
|
|
(336
|
)
|
|
2
|
|
171
|
|
||||
Reserve for sales returns
|
65
|
|
|
1
|
|
|
3
|
|
—
|
|
|
|
|
66
|
|
||||
Deferred tax valuation allowance
|
170
|
|
|
277
|
|
|
4
|
|
—
|
|
|
|
|
447
|
|
||||
Self-insurance liabilities
|
905
|
|
|
1,357
|
|
|
|
|
(1,379
|
)
|
|
5
|
|
883
|
|
||||
Reserve for exit activities
|
53
|
|
|
34
|
|
|
|
|
(20
|
)
|
|
6
|
|
67
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
January 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reserve for loss on obsolete inventory
|
$
|
68
|
|
|
$
|
—
|
|
|
|
|
$
|
(16
|
)
|
|
1
|
|
$
|
52
|
|
Reserve for inventory shrinkage
|
158
|
|
|
326
|
|
|
|
|
(322
|
)
|
|
2
|
|
162
|
|
||||
Reserve for sales returns
|
58
|
|
|
7
|
|
|
3
|
|
—
|
|
|
|
|
65
|
|
||||
Deferred tax valuation allowance
|
164
|
|
|
6
|
|
|
4
|
|
—
|
|
|
|
|
170
|
|
||||
Self-insurance liabilities
|
904
|
|
|
1,323
|
|
|
|
|
(1,322
|
)
|
|
5
|
|
905
|
|
||||
Reserve for exit activities
|
54
|
|
|
14
|
|
|
|
|
(15
|
)
|
|
6
|
|
53
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
January 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reserve for loss on obsolete inventory
|
$
|
57
|
|
|
$
|
11
|
|
|
1
|
|
$
|
—
|
|
|
|
|
$
|
68
|
|
Reserve for inventory shrinkage
|
142
|
|
|
325
|
|
|
|
|
(309
|
)
|
|
2
|
|
158
|
|
||||
Reserve for sales returns
|
59
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
3
|
|
58
|
|
||||
Deferred tax valuation allowance
|
142
|
|
|
22
|
|
|
4
|
|
—
|
|
|
|
|
164
|
|
||||
Self-insurance liabilities
|
899
|
|
|
1,164
|
|
|
|
|
(1,159
|
)
|
|
5
|
|
904
|
|
||||
Reserve for exit activities
|
75
|
|
|
11
|
|
|
|
|
(32
|
)
|
|
6
|
|
54
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Represents the net increase/(decrease) in the required reserve based on the Company’s evaluation of obsolete inventory.
|
2
|
Represents the actual inventory shrinkage experienced at the time of physical inventories.
|
3
|
Represents the net increase/(decrease) in the required reserve based on the Company’s evaluation of anticipated merchandise returns.
|
4
|
Represents an increase in the required reserve based on the Company’s evaluation of deferred tax assets.
|
5
|
Represents claim payments for self-insured claims.
|
6
|
Represents lease payments, net of sublease income.
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
2.1
|
|
Arrangement Agreement, dated as of February 2, 2016, among Lowe’s Companies, Inc., Lowe’s Companies Canada, ULC and RONA Inc.
(1)
‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Restated Charter of Lowe’s Companies, Inc.
|
|
10-Q
|
|
001-07898
|
|
3.1
|
|
September 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Bylaws of Lowe’s Companies, Inc., as amended and restated March 18, 2016.
|
|
8-K
|
|
001-07898
|
|
3.1
|
|
March 24, 2016
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Indenture, dated as of April 15, 1992, between Lowe’s Companies, Inc. and The Bank of New York, as successor trustee.
|
|
S-3
|
|
033-47269
|
|
4.1
|
|
April 16, 1992
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York, as successor trustee.
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
December 15, 1995
|
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
Form of Lowe’s Companies, Inc.’s 6 7/8% Debentures due February 15, 2028.
|
|
8-K
|
|
001-07898
|
|
4.2
|
|
February 20, 1998
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
First Supplemental Indenture, dated as of February 23, 1999, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York, as successor trustee.
|
|
10-K
|
|
001-07898
|
|
10.13
|
|
April 19, 1999
|
|
|
|
|
|
|
|
|
|
|
|
4.5
|
|
Form of Lowe’s Companies, Inc.’s 6 1/2% Debentures due March 15, 2029.
|
|
10-K
|
|
001-07898
|
|
10.19
|
|
April 19, 1999
|
|
|
|
|
|
|
|
|
|
|
|
4.6
|
|
Third Supplemental Indenture, dated as of October 6, 2005, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York, as trustee, including as an exhibit thereto a form of Lowe’s Companies, Inc.’s 5.5% Notes maturing in October 2035.
|
|
10-K
|
|
001-07898
|
|
4.5
|
|
April 3, 2007
|
|
|
|
|
|
|
|
|
|
|
|
4.7
|
|
Fourth Supplemental Indenture, dated as of October 10, 2006, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York Trust Company, N.A., as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 5.40% Notes maturing in October 2016 and a form of Lowe’s Companies, Inc.’s 5.80% Notes maturing in October 2036.
|
|
S-3 (POSASR)
|
|
333-137750
|
|
4.5
|
|
October 10, 2006
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
4.8
|
|
Fifth Supplemental Indenture, dated as of September 11, 2007, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York Trust Company, N.A., as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 6.10% Notes maturing in September 2017 and a form of Lowe’s Companies, Inc.’s 6.65% Notes maturing in September 2037.
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
September 11, 2007
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
Sixth Supplemental Indenture, dated as of April 15, 2010, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 4.625% Notes maturing in April 2020 and a form of Lowe’s Companies, Inc.’s 5.800% Notes maturing in April 2040.
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
April 15, 2010
|
|
|
|
|
|
|
|
|
|
|
|
4.10
|
|
Seventh Supplemental Indenture, dated as of November 22, 2010, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 2.125% Notes maturing in April 2016 and a form of Lowe’s Companies, Inc.’s 3.750% Notes maturing in April 2021.
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
November 22, 2010
|
|
|
|
|
|
|
|
|
|
|
|
4.11
|
|
Eighth Supplemental Indenture, dated as of November 23, 2011, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 3.800% Notes maturing in November 2021 and a form of Lowe’s Companies, Inc.’s 5.125% Notes maturing in November 2041.
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
November 23, 2011
|
|
|
|
|
|
|
|
|
|
|
|
4.12
|
|
Ninth Supplemental Indenture, dated as of April 23, 2012, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 1.625% Notes maturing in April 2017, a form of Lowe’s Companies, Inc.’s 3.120% Notes maturing in April 2022 and a form of Lowe’s Companies, Inc.’s 4.650% Notes maturing in April 2042.
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
April 23, 2012
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
4.13
|
|
Tenth Supplemental Indenture, dated as of September 11, 2013, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s 3.875% Notes maturing in September 2023 and a form of Lowe’s Companies, Inc.’s 5.000% Notes maturing in September 2043.
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
September 11, 2013
|
|
|
|
|
|
|
|
|
|
|
|
4.14
|
|
Eleventh Supplemental Indenture, dated as of September 10, 2014, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s Floating Rate Notes maturing in September 2019, a form of Lowe’s Companies, Inc.’s 3.125% Notes maturing in September 2024 and a form of Lowe’s Companies, Inc.’s 4.250% Notes maturing in September 2044.
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
September 10, 2014
|
|
|
|
|
|
|
|
|
|
|
|
4.15
|
|
Twelfth Supplemental Indenture, dated as of September 16, 2015, to the Amended and Restated Indenture, dated as of December 1, 1995, between Lowe’s Companies, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, including as exhibits thereto a form of Lowe’s Companies, Inc.’s Floating Rate Notes maturing in September 2018, a form of Lowe’s Companies, Inc.’s 3.375% Notes maturing in September 2025 and a form of Lowe’s Companies, Inc.’s 4.375% Notes maturing in September 2045.
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
September 16, 2015
|
|
|
|
|
|
|
|
|
|
|
|
4.16
|
|
Credit Agreement, dated as of August 29, 2014, by and among Lowe’s Companies, Inc., Bank of America, N.A., as administrative agent, swing line lender and an l/c issuer, Wells Fargo Bank, National Association, as syndication agent and an l/c issuer, Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., SunTrust Bank and U.S. Bank National Association, as co-documentation agents, and the other lenders party thereto.
|
|
8-K
|
|
001-07898
|
|
10.1
|
|
September 2, 2014
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Lowe’s Companies, Inc. Directors’ Deferred Compensation Plan, effective July 1, 1994.*
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
December 2, 2008
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
Amendment No. 1 to the Lowe’s Companies, Inc. Directors’ Deferred Compensation Plan, effective January 31, 2009.*
|
|
10-K
|
|
001-07898
|
|
10.21
|
|
March 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
10.3
|
|
Lowe’s Companies Employee Stock Purchase Plan – Stock Options for Everyone, as amended and restated effective June 1, 2012.*
|
|
DEF 14A
|
|
001-07898
|
|
Appendix B
|
|
April 13, 2012
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
Lowe’s Companies, Inc. 1997 Incentive Plan.*
|
|
S-8
|
|
333-34631
|
|
4.2
|
|
August 29, 1997
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
Amendments to the Lowe’s Companies, Inc. 1997 Incentive Plan, dated January 25, 1998.*
|
|
10-K
|
|
001-07898
|
|
10.16
|
|
April 19, 1999
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
Amendments to the Lowe’s Companies, Inc. 1997 Incentive Plan, dated September 17, 1998 (also encompassing as Exhibit I thereto the Lowe’s Companies, Inc. Deferred Compensation Program).*
|
|
10-K
|
|
001-07898
|
|
10.17
|
|
April 19, 1999
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
Amendment No. 1 to the Lowe’s Companies, Inc. Deferred Compensation Program, effective as of January 1, 2005.*
|
|
10-K
|
|
001-07898
|
|
10.25
|
|
March 29, 2011
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
Amendment No. 2 to the Lowe’s Companies, Inc. Deferred Compensation Program, effective as of December 31, 2008.*
|
|
10-K
|
|
001-07898
|
|
10.22
|
|
March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
Lowe’s Companies Benefit Restoration Plan, as amended and restated as of January 1, 2008.*
|
|
10-Q
|
|
001-07898
|
|
10.2
|
|
December 12, 2007
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
Amendment No. 1 to the Lowe’s Companies Benefit Restoration Plan.*
|
|
10-K
|
|
001-07898
|
|
10.10
|
|
March 29, 2011
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
Amendment No. 2 to the Lowe’s Companies Benefit Restoration Plan.*
|
|
10-K
|
|
001-07898
|
|
10.11
|
|
March 29, 2011
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
Amendment No. 3 to the Lowe’s Companies Benefit Restoration Plan.*
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
December 1, 2011
|
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
Amendment No. 4 to the Lowe’s Companies Benefit Restoration Plan.*
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
September 4, 2012
|
|
|
|
|
|
|
|
|
|
|
|
10.14
|
|
Amendment No. 5 to the Lowe’s Companies Benefit Restoration Plan.*
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
December 3, 2013
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
Amendment No. 6 to the Lowe’s Companies Benefit Restoration Plan.*
|
|
10-K
|
|
001-07898
|
|
10.1
|
|
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
Form of Lowe’s Companies, Inc. Management Continuity Agreement for Tier I Senior Officers used for agreements entered into prior to June 1, 2012.*
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
September 3, 2008
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
10.17
|
|
Form of Lowe’s Companies, Inc. Management Continuity Agreement for Tier I Senior Officers used for agreements entered into on or after June 1, 2012.*
|
|
10-Q
|
|
001-07898
|
|
10.2
|
|
September 4, 2012
|
|
|
|
|
|
|
|
|
|
|
|
10.18
|
|
Form of Lowe’s Companies, Inc. Management Continuity Agreement for Tier II Senior Officers.*
|
|
10-Q
|
|
001-07898
|
|
10.2
|
|
September 3, 2008
|
|
|
|
|
|
|
|
|
|
|
|
10.19
|
|
Lowe’s Companies Cash Deferral Plan.*
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
June 4, 2004
|
|
|
|
|
|
|
|
|
|
|
|
10.20
|
|
Amendment No. 1 to the Lowe’s Companies Cash Deferral Plan.*
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
December 12, 2007
|
|
|
|
|
|
|
|
|
|
|
|
10.21
|
|
Amendment No. 2 to the Lowe’s Companies Cash Deferral Plan.*
|
|
10-Q
|
|
001-07898
|
|
10.2
|
|
December 1, 2010
|
|
|
|
|
|
|
|
|
|
|
|
10.22
|
|
Lowe’s Companies, Inc. Amended and Restated Directors’ Stock Option and Deferred Stock Unit Plan.*
|
|
8-K
|
|
001-07898
|
|
10.1
|
|
June 3, 2005
|
|
|
|
|
|
|
|
|
|
|
|
10.23
|
|
Form of Lowe’s Companies, Inc. Deferred Stock Unit Agreement for Directors.*
|
|
8-K
|
|
001-07898
|
|
10.2
|
|
June 3, 2005
|
|
|
|
|
|
|
|
|
|
|
|
10.24
|
|
Form of Lowe’s Companies, Inc. Restricted Stock Award Agreement.*
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
September 1, 2005
|
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
Form of Lowe’s Companies, Inc. Performance Share Unit Award Agreement.*
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
May 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
10.26
|
|
Lowe’s Companies, Inc. 2011 Annual Incentive Plan, effective as of January 29, 2011.*
|
|
DEF 14A
|
|
001-07898
|
|
Appendix B
|
|
April 11, 2011
|
|
|
|
|
|
|
|
|
|
|
|
10.27
|
|
Lowe’s Companies, Inc. 2006 Long Term Incentive Plan, as amended and restated effective as of March 21, 2014.*
|
|
DEF 14A
|
|
001-07898
|
|
Appendix B
|
|
April 14, 2014
|
|
|
|
|
|
|
|
|
|
|
|
10.28
|
|
Form of Lowe’s Companies, Inc. 2006 Long Term Incentive Plan Non-Qualified Stock Option Agreement.*
|
|
10-K
|
|
001-07898
|
|
10.24
|
|
March 29, 2011
|
|
|
|
|
|
|
|
|
|
|
|
12.1
|
|
Statement re Computation of Ratio of Earnings to Fixed Charges.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
List of Subsidiaries.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
Consent of Deloitte & Touche LLP.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
LOWE’S COMPANIES, INC.
|
|
|
(Registrant)
|
|
|
|
March 28, 2016
|
|
By: /s/ Robert A. Niblock
|
Date
|
|
Robert A. Niblock
Chairman of the Board, President and Chief Executive Officer
|
|
|
|
March 28, 2016
|
|
By: /s/ Robert F. Hull, Jr.
|
Date
|
|
Robert F. Hull, Jr.
Chief Financial Officer
|
|
|
|
March 28, 2016
|
|
By: /s/ Matthew V. Hollifield
|
Date
|
|
Matthew V. Hollifield
Senior Vice President and Chief Accounting Officer
|
/s/ Robert A. Niblock
|
Chairman of the Board, President,
Chief Executive Officer and Director
|
March 28, 2016
|
Robert A. Niblock
|
|
Date
|
|
|
|
/s/ Raul Alvarez
|
Director
|
March 28, 2016
|
Raul Alvarez
|
|
Date
|
|
|
|
/s/ David W. Bernauer
|
Director
|
March 28, 2016
|
David W. Bernauer
|
|
Date
|
|
|
|
/s/ Angela F. Braly
|
Director
|
March 28, 2016
|
Angela F. Braly
|
|
Date
|
|
|
|
/s/ Sandra B. Cochran
|
Director
|
March 28, 2016
|
Sandra B. Cochran
|
|
Date
|
|
|
|
/s/ Laurie Z. Douglas
|
Director
|
March 28, 2016
|
Laurie Z. Douglas
|
|
Date
|
|
|
|
/s/ Richard W. Dreiling
|
Director
|
March 28, 2016
|
Richard W. Dreiling
|
|
Date
|
|
|
|
/s/ Robert L. Johnson
|
Director
|
March 28, 2016
|
Robert L. Johnson
|
|
Date
|
|
|
|
/s/ Marshall O. Larsen
|
Director
|
March 28, 2016
|
Marshall O. Larsen
|
|
Date
|
|
|
|
/s/ Richard K. Lochridge
|
Director
|
March 28, 2016
|
Richard K. Lochridge
|
|
Date
|
|
|
|
/s/ James H. Morgan
|
Director
|
March 28, 2016
|
James H. Morgan
|
|
Date
|
|
|
|
/s/ Bertram L. Scott
|
Director
|
March 28, 2016
|
Bertram L. Scott
|
|
Date
|
|
|
|
/s/ Eric C. Wiseman
|
Director
|
March 28, 2016
|
Eric C. Wiseman
|
|
Date
|
Section 1.1
|
Defined Terms
|
1
|
Section 1.2
|
Certain Rules of Interpretation
|
15
|
Section 2.1
|
Arrangement
|
17
|
Section 2.2
|
Interim Order
|
17
|
Section 2.3
|
The Company Meeting
|
18
|
Section 2.4
|
The Company Circular
|
19
|
Section 2.5
|
Final Order
|
21
|
Section 2.6
|
Court Proceedings
|
21
|
Section 2.7
|
Incentive Compensation Plans and Purchaser Compensation Covenants
|
22
|
Section 2.8
|
Articles of Arrangement and Effective Date
|
24
|
Section 2.9
|
Payment of Consideration
|
24
|
Section 2.10
|
Withholding Taxes
|
24
|
Section 2.11
|
Parent Guarantee
|
25
|
Section 3.1
|
Representations and Warranties of the Company
|
25
|
Section 3.2
|
Representations and Warranties of the Parent and the Purchaser
|
26
|
Section 4.1
|
Conduct of Business of the Company
|
26
|
Section 4.2
|
Covenants of the Company Relating to the Arrangement
|
31
|
Section 4.3
|
Covenants of the Purchaser and the Parent Relating to the Arrangement
|
33
|
Section 4.4
|
Regulatory Approvals
|
35
|
Section 4.5
|
Access to Information; Confidentiality
|
37
|
Section 4.6
|
Pre-Acquisition Reorganization
|
38
|
Section 4.7
|
Public Communications
|
40
|
Section 4.8
|
Notice and Cure Provisions
|
40
|
Section 4.9
|
Insurance and Indemnification
|
41
|
Section 5.1
|
Non-Solicitation
|
42
|
Section 5.2
|
Notification of Acquisition Proposals
|
44
|
Section 5.3
|
Responding to an Acquisition Proposal
|
45
|
Section 5.4
|
Right to Match
|
45
|
Section 6.1
|
Mutual Conditions Precedent
|
48
|
Section 6.2
|
Additional Conditions Precedent to the Obligations of the Purchaser
|
48
|
Section 6.3
|
Additional Conditions Precedent to the Obligations of the Company
|
50
|
Section 6.4
|
Satisfaction of Conditions
|
50
|
Section 7.1
|
Term
|
51
|
Section 7.2
|
Termination
|
51
|
Section 7.3
|
Effect of Termination/Survival
|
53
|
Section 8.1
|
Amendments
|
53
|
Section 8.2
|
Termination Fees
|
54
|
Section 8.3
|
Expenses and Expense Reimbursement
|
56
|
Section 8.4
|
Notices
|
56
|
Section 8.5
|
Time of the Essence
|
58
|
Section 8.6
|
Injunctive Relief
|
58
|
Section 8.7
|
Third Party Beneficiaries
|
59
|
Section 8.8
|
Waiver
|
59
|
Section 8.9
|
Entire Agreement
|
59
|
Section 8.10
|
Successors and Assigns
|
60
|
Section 8.11
|
Severability
|
60
|
Section 8.12
|
Governing Law
|
60
|
Section 8.13
|
Rules of Construction
|
60
|
Section 8.14
|
No Liability
|
60
|
Section 8.15
|
Language
|
61
|
Section 8.16
|
Counterparts
|
61
|
(a)
|
any change affecting the retail and distribution of hardware, home improvement and gardening industry as a whole;
|
(b)
|
any change in general economic, business, regulatory, political, financial, capital, securities or credit market conditions in Canada;
|
(c)
|
any change in Law or GAAP;
|
(d)
|
any fluctuation in interest or inflation rates or Canadian and U.S. currency exchange rates;
|
(e)
|
any action taken (or omitted to be taken) by Company or any of its Subsidiaries which is required to be taken (or omitted to be taken) pursuant to this Agreement or requested by the Parent or the Purchaser in writing, or the failure to take any actions prohibited by this Agreement;
|
(f)
|
the announcement of this Agreement or consummation of the Arrangement or the transactions contemplated hereby;
|
(g)
|
any matter which has been expressly disclosed by the Company in the Company Disclosure Letter;
|
(h)
|
the failure of the Company to meet any internal or published projections, forecasts, guidance or estimates of revenues, earnings or cash flows or any seasonal fluctuation in the Company’s results (it being understood that the causes underlying such failure may be taken into account in determining whether a Material Adverse Effect has occurred); or
|
(i)
|
any change in the market price or trading volume of any securities of the Company or the credit ratings of the Company, or any suspension of trading in securities generally on any securities exchange on which any securities of the Company trade (it being understood that the causes underlying such change in market price or trading volume may be taken into account in determining whether a Material Adverse Effect has occurred);
|
(a)
|
easements, servitudes, restrictions, restrictive covenants, party wall agreements, rights of way, licenses, permits and other similar rights in land or real property, including rights of way and servitudes for highways and other roads, railways, sewers, drains, gas and oil pipelines, gas and water mains, electric light, power, telephone, telegraph or cable television conduits, poles, wires and cables that do not materially adversely affect the
|
(b)
|
Liens imposed by Law and incurred in the Ordinary Course for obligations not yet due or delinquent;
|
(c)
|
Liens in respect of pledges or deposits under workers’ compensation, social security or similar laws, other than with respect to any amounts which are due or delinquent, unless such amounts are being contested in good faith by appropriate proceedings;
|
(d)
|
zoning and building by-laws and ordinances and regulations made by public authorities that do not materially adversely affect the use of the Company Assets or otherwise materially impair business operations at the affected properties;
|
(e)
|
Liens for indebtedness arising in the Ordinary Course which was incurred to pay all or a part of the purchase price of any personal or moveable property;
|
(f)
|
Liens incurred, created and granted in the Ordinary Course to a public utility or private supplier of services, municipality or Governmental Entity in connection with operations conducted with respect to any Company Assets that do not materially adversely affect the use of the Company Assets or otherwise materially impair business operations at the affected properties;
|
(g)
|
the reservations, limitations, provisos and conditions in any original grant from the applicable Governmental Entity of any of the lands forming part of any Company Assets, or interests in them and statutory exceptions to title that do not materially adversely affect the use of the Company Assets or otherwise materially impair business operations at the affected properties;
|
(h)
|
Liens for Taxes which are not due or delinquent, or which are being contested in good faith by appropriate proceedings;
|
(i)
|
inchoate or statutory Liens of contractors, subcontractors, mechanics, workers, suppliers, materialmen, carriers and others in respect of the construction, maintenance, repair or operation of any Company Assets, provided that such Liens are related to obligations not due or delinquent, are not registered against title to any Company Assets and in respect of which adequate holdbacks are being maintained as required by Law;
|
(j)
|
the right reserved to or vested in any Governmental Entity by any statutory provision or by the terms of any lease, licence, franchise, grant or permit forming part of any Company Assets, to terminate any such lease, licence, franchise, grant or permit, or to require annual or other payments as a condition of their continuance;
|
(k)
|
such other non-financial rights, imperfections or irregularities of title, encroachments and encumbrances or Liens as do not materially affect the use of the properties or assets subject thereto or affected thereby or otherwise materially impair business operations at such properties;
|
(l)
|
Liens, other than those described above, registered, as at the date of this Agreement, against the Company Assets in a public personal property registry, personal and real rights registry, land registry or register, or similar registry; and
|
(m)
|
Liens or royalties described in Section 1.1(iii)
of the Company Disclosure Letter.
|
(1)
|
Headings, etc.
The provision of a Table of Contents, the division of this Agreement into Articles and Sections and the insertion of headings are for convenient reference only and do not affect the construction or interpretation of this Agreement.
|
(2)
|
Currency.
All references to dollars or to $ are references to Canadian dollars.
|
(3)
|
Gender and Number.
Any reference to gender includes all genders. Words importing the singular number only include the plural and vice versa.
|
(4)
|
Certain Phrases, etc.
The words (i) “including”
,
“includes” and “include” mean “including (or includes or include) without limitation,” (ii)
“
the aggregate of”
,
“the total of”
,
“the sum of”
,
or a phrase of similar meaning means
“the aggregate (or total or sum), without duplication, of,” and (iii) unless stated otherwise, “Article”,
“Section”, and “Schedule”
followed by a number or letter mean and refer to the specified Article or Section of or Schedule to this Agreement. The term “Agreement” and any reference in this Agreement to this Agreement or any other agreement or document includes, and is a reference to, this Agreement or such other agreement or document as it may have been, or may from time to time be, amended, restated, replaced, supplemented or novated and includes all schedules to it. The term “made available” means (i) copies of the subject materials were included in the Data Room (ii) copies of the subject materials were
|
(5)
|
Capitalized Terms.
All capitalized terms used in any Schedule or in the Company Disclosure Letter have the meanings ascribed to them in this Agreement.
|
(6)
|
Knowledge.
Where any representation or warranty is expressly qualified by reference to the knowledge of the Company, it is deemed to refer to the actual knowledge of (i) Robert Sawyer (President and Chief Executive Officer), (ii) Dominique Boies (Executive Vice-President and Chief Financial Officer), (iii) France Charlebois (Corporate Secretary and Chief Legal Officer), (iv) Christian Proulx (Senior Vice President, Human Resources and Communications), (v) Alain Brisebois (Executive Vice-President and Chief Commercial Officer), (vi) Luc Rodier (Executive Vice-President, Retail) and (vii) Stéphane Milot (Vice-President, Expansion, Development and Real Estate), in their respective capacities as officers of the Company and not in their personal capacity, after reasonable and diligent inquiry.
|
(7)
|
Accounting Terms.
All accounting terms are to be interpreted in accordance with GAAP and all determinations of an accounting nature in respect of the Company required to be made shall be made in a manner consistent with GAAP.
|
(8)
|
Statutes.
Any reference to a statute refers to such statute and all rules and regulations made under it, as it or they may have been or may from time to time be amended or re-enacted, unless stated otherwise.
|
(9)
|
Computation of Time.
A period of time is to be computed as beginning on the day following the event that began the period and ending at 4:30 p.m. on the last day of the period, if the last day of the period is a Business Day, or at 4:30 p.m. on the next Business Day if the last day of the period is not a Business Day.
|
(10)
|
Time References.
References to time are to local time, Montreal, Québec.
|
(11)
|
Subsidiaries.
To the extent any covenants or agreements relate, directly or indirectly, to a Subsidiary of the Company, each such provision shall be construed as a covenant by the Company to cause (to the fullest extent to which it is legally capable) such Subsidiary to perform the required action.
|
(12)
|
Schedules. The schedules attached to this Agreement form an integral part of this Agreement for all purposes of it.
|
(a)
|
for the class of persons to whom notice is to be provided in respect of the Arrangement and the Company Meeting and for the manner in which such notice is to be provided;
|
(b)
|
that the required level of approval for the Arrangement Resolution shall be two-thirds of the votes cast on the Arrangement Resolution by Common Shareholders present in person or represented by proxy at the Company Meeting and that the required level of approval for the Preferred Shareholder Resolution shall be two-thirds of the votes cast on such resolution by Preferred Shareholders present in person or represented by proxy at the Company Meeting;
|
(c)
|
that, subject to the foregoing and in all other respects, the terms, restrictions and conditions of the Company’s Constating Documents, including quorum requirements and all other matters, shall apply in respect of the Company Meeting;
|
(d)
|
for the grant of the Dissent Rights to those Company Shareholders who are registered Company Shareholders as contemplated in the Plan of Arrangement;
|
(e)
|
for the notice requirements with respect to the presentation of the application to the Court for the Final Order;
|
(f)
|
that the Company Meeting may be adjourned or postponed from time to time by the Company with the consent of the Parent in accordance with the terms of this Agreement without the need for additional approval of the Court;
|
(g)
|
that the record date for the Company Shareholders entitled to notice of and to vote at the Company Meeting will not change in respect of any adjournment(s) of the Company Meeting, unless required by Law; and
|
(h)
|
for such other matters as the Purchaser or the Company (with the prior consent of the other) may reasonably require.
|
(1)
|
The Company shall:
|
(a)
|
convene and conduct the Company Meeting in accordance with the Interim Order, the Company’s Constating Documents and Law as soon as reasonably possible, but in any event on or before April 8, 2016, for the purpose of considering the Arrangement Resolution and the Preferred Shareholder Resolution and for any other proper purpose as may be set out in the Company Circular and agreed to by the Purchaser, and not adjourn, postpone or cancel (or propose the adjournment, postponement or cancellation of) the Company Meeting without the prior written consent of the Purchaser except as required or permitted under Section 2.3(1)(i), Section 4.8(3) or Section 5.4(5), or as required for quorum purposes (in which case, the Company Meeting, shall be adjourned and not cancelled) or as required by applicable Law or by a Governmental Entity;
|
(b)
|
subject to the terms of this Agreement, use its commercially reasonable efforts to solicit proxies in favour of the approval of the Arrangement Resolution and the Preferred Shareholder Resolution and against any resolution submitted by any Person that is inconsistent with the Arrangement Resolution or the Preferred Shareholder Resolution and the completion of any of the transactions contemplated by this Agreement, including, at the Company’s discretion or if so requested by the Purchaser, acting reasonably, using dealer and proxy solicitation services firms and cooperating with any Persons engaged by the Purchaser to solicit proxies in favour of the approval of the Arrangement Resolution
and the Preferred Shareholder Resolution;
|
(c)
|
provide the Purchaser with copies of or access to information regarding the Company Meeting generated by any dealer or proxy solicitation services firm, as requested from time to time by the Purchaser;
|
(d)
|
consult with the Purchaser in fixing the date of the Company Meeting and
the record date of the Company Meeting, give notice to the Purchaser of the Company Meeting and allow the Purchaser’s representatives and legal counsel to attend the Company Meeting;
|
(e)
|
promptly advise the Purchaser, at such times as the Purchaser may reasonably request, including, as applicable, on a daily basis on each of the last 10 Business Days prior to the date of the Company Meeting, as to the aggregate tally of the proxies received by the Company in respect of the Arrangement Resolution
and the Preferred Shareholder Resolution;
|
(f)
|
promptly advise the Purchaser of any communication (written or oral) from or claims brought by (or threatened to be brought by) any Person in opposition to the Arrangement and/or purported exercise or withdrawal of Dissent Rights by Company Shareholders. The Company shall not settle or compromise, or agree to settle or compromise, any such claims without the prior written consent of the Purchaser;
|
(g)
|
not change the record date for the Company Shareholders entitled to vote at the Company Meeting in connection with any adjournment or postponement of the Company Meeting unless required by Law;
|
(h)
|
at the reasonable request of the Purchaser from time to time, provide the Purchaser with a list (in both written and electronic form) of (i) the registered Common Shareholders, together with their addresses and respective holdings of Common Shares, (ii) the registered Preferred Shareholders, together with their addresses and respective holdings of Preferred Shares, (iii) the names, addresses and holdings of all Persons having rights issued by the Company to acquire Common Shares (including holders of Options, holders of DSUs, holders of RSUs and holders of PSUs), and (iv) participants and book-based nominee registrants such as CDS & Co., CEDE & Co. and DTC, and non-objecting beneficial owners of Common Shares and Preferred Shares, together with their addresses and respective holdings of Common Shares
and/or Preferred Shares, all as can be reasonably obtained by the Company using the procedure set forth under Securities Laws. The Company shall from time to time require that its registrar and transfer agent furnish the Purchaser with such additional information, including updated or additional lists of Common Shareholders
and Preferred Shareholders, and lists of securities positions and other assistance as the Purchaser may reasonably request; and
|
(i)
|
if the Company Meeting is to be held during a Matching Period, at the request of the Purchaser, adjourn or postpone the Company Meeting to a date specified by the Purchaser that is not later than 10 Business Days after the date on which the Company Meeting was originally scheduled and in any event to a date that is not later than five Business Days prior to the Outside Date.
|
(1)
|
The Company shall, as promptly as reasonably practicable, prepare and complete, in consultation with the Purchaser, the Company Circular together with any other documents required by Law in connection with the Company Meeting and the Arrangement, and the Company shall, as promptly as reasonably practicable after obtaining the Interim Order, cause the Company Circular and such other documents to be filed and sent to each Company Shareholder and other Person as required by the Interim Order and Law, in each case so as to permit the Company Meeting to be held by the date specified in Section 2.3(1), provided that the Purchaser shall have complied with Section 2.4(4).
|
(2)
|
The Company shall ensure that the Company Circular complies in all material respects with Law, does not contain any Misrepresentation (other than, in each case, with respect to any written information provided by the Purchaser, its affiliates and their respective representatives for inclusion in the Company Circular, as applicable) and provides the Company Shareholders with sufficient information to permit them to form a reasoned judgement concerning the matters to be placed before the Company Meeting. Without limiting the generality of the foregoing, the Company Circular must include: (i) a copy of the Fairness Opinions, (ii) a statement that the Special Committee has received the Fairness Opinions, and has, after receiving legal and financial advice, unanimously recommended that the Board approve the Arrangement Agreement and that the Company Shareholders vote in favour of the Arrangement Resolution and the Preferred Shareholder Resolution, as applicable, (iii) a statement that the Board has received the Fairness Opinions, and has unanimously, after receiving legal and financial advice and the recommendation of the Special Committee, determined that the Arrangement Resolution is in the best interests of the Company and recommends that the Company Shareholders vote in favour of the Arrangement Resolution and the Preferred Shareholder Resolution, as applicable
(the “
Board Recommendation
”) and (iv) a statement that each director and executive officer of the Company intends to vote all of such individual’s Company Shares in favour of the Arrangement Resolution and the Preferred Shareholder Resolution, as applicable.
|
(3)
|
The Company shall give the Purchaser and its legal counsel a reasonable opportunity to review and comment on drafts of the Company Circular and other related documents, and shall give reasonable consideration to any comments made by the Purchaser and its counsel, and agrees that all information relating solely to the Purchaser included in the Company Circular must be in a form and content satisfactory to the Purchaser or the Parent, acting reasonably.
|
(4)
|
Each of the Parent and the Purchaser shall provide all necessary information concerning the Parent and the Purchaser that is required by Law to be included by the Company in the Company Circular or other related documents to the Company in writing, and shall ensure that such information does not contain any Misrepresentation.
|
(5)
|
Each Party shall promptly notify the other Parties if, at any time before the Effective Date, it becomes aware (in the case of the Purchaser, only in respect of information relating to the Purchaser or the Parent) that the Company Circular contains a Misrepresentation, or otherwise requires an amendment or supplement. The Parties shall cooperate in the preparation of any such amendment or supplement as required or appropriate, and the Company shall promptly mail, file or otherwise publicly disseminate any such amendment or supplement to the Company Shareholders
and, if required by the Court or by Law, file the same with the Securities Authorities or any other Governmental Entity as required.
|
(1)
|
diligently pursue, and cooperate with the Purchaser in diligently pursuing, the Interim Order and the Final Order;
|
(2)
|
provide the Purchaser and its legal counsel with a reasonable opportunity to review and comment upon drafts of all material to be filed with the Court in connection with the Arrangement, and give reasonable and due consideration to all comments of the Purchaser and its legal counsel;
|
(3)
|
provide legal counsel to the Purchaser on a timely basis with copies of any notice of appearance, evidence or other documents served on the Company or its legal counsel in respect of the application for the Interim Order or the Final Order or any appeal therefrom, and any notice, written or oral, indicating the intention of any Person to appeal, or oppose the granting of, the Interim Order or the Final Order;
|
(4)
|
ensure that all material filed with the Court in connection with the Arrangement is consistent in all material respects with the terms of this Agreement and the Plan of Arrangement;
|
(5)
|
subject to applicable Law, not file any material with the Court in connection with the Arrangement or serve any such material, or agree to modify or amend any material so filed or served, except as contemplated by this Agreement or with the Purchaser’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned, provided that nothing herein shall require the Purchaser to agree or consent to any increase in, or variation of the form of, the Consideration or other modification or amendment to such filed or served materials that expands or increases the Purchaser’s obligations, or diminishes or limits the Purchaser’s rights, set forth in any such filed or served materials or under this Agreement;
|
(6)
|
oppose any proposal from any Person that the Final Order contain any provision inconsistent with this Agreement, and if, at any time after the issuance of the Final Order and prior to the Effective Time, the Company is required by the terms of the Final Order or by Law to return to Court with respect to the Final Order, do so only after notice to, and in consultation and cooperation with, the Purchaser; and
|
(7)
|
not object to legal counsel to the Purchaser making such submissions on the application for the Interim Order and the application for the Final Order as such counsel considers appropriate, acting reasonably, provided the Purchaser’s legal counsel advises the Company of the nature of such submissions at least the day before the hearing and such submissions are consistent with this Agreement and the Plan of Arrangement.
|
(1)
|
Subject to the terms and conditions of this Agreement, pursuant to the Arrangement, the Company will take all reasonable steps necessary or desirable to acquire and/or cancel the securities identified below that are outstanding immediately prior to the Effective Time and in exchange for such acquisition and/or cancellation will pay the amounts set out below to the holders of such securities, subject to withholding taxes where applicable:
|
(a)
|
in respect of each Option, whether vested or unvested, an amount equal to the Consideration per Common Share less the applicable exercise price in respect of such Option (for greater certainty, where such amount is a negative, neither the Company nor the Purchaser shall be obligated to pay the holder of such Option any amount in respect of such Option); and
|
(b)
|
in respect of each DSU, RSU or PSU, whether vested or unvested, an amount equal to the Consideration per Common Share, except that the Consideration per Common Share in respect of each PSU granted in calendar 2013 shall be multiplied by the applicable level of achievement percentage determined by the Company’s Human Resources and Compensation Committee of the Company in accordance with the terms of the Share Unit Plans and the PSU agreements awarding such PSUs. For greater certainty, in respect of PSUs awarded during calendar 2013 which will not have fully vested in accordance with their terms prior to the next regularly scheduled meeting of the Company’s Human Resources and Compensation Committee, the determination by the Company’s Human Resources and Compensation Committee of the performance level of such PSUs shall be made on the basis that such PSUs vested immediately prior to the date of such determination.
|
(2)
|
All Options, DSUs, RSUs and PSUs outstanding on the Effective Time shall be deemed terminated in accordance with the Plan of Arrangement.
|
(3)
|
The Parties acknowledge that no deduction will be claimed by the Company in respect of any payment made to a holder of Options in respect of the Options pursuant to the Plan of Arrangement who is a resident of Canada or who is employed in Canada (both within the meaning of the Tax Act) in computing the Company’s taxable income under the Tax Act, and the Company shall: (i) where applicable, make an election pursuant to subsection 110(1.1) of the Tax Act in respect of the cash payments made in exchange for the surrender of Options, and (ii) provide evidence in writing of such election to holders of Options, it being understood that holders of Options shall be entitled to claim any deductions available to such persons pursuant to the Tax Act in respect of the calculation of any benefit arising from the surrender of Options.
|
(4)
|
Unless otherwise agreed in writing between the Parties, for a period of one year from the Effective Date, each of the Parent and the Purchaser covenant and agree, and after the Effective Time will cause the Company and any successor to the Company to covenant and agree that the Company Employees, unless their employment is terminated, shall be provided with compensation not less than, and benefits that are, in the aggregate, no less favourable than, those provided to such Company Employees immediately prior to the Effective Time.
|
(5)
|
Each of the Parent and the Purchaser covenant and agree, and after the Effective Time will cause the Company and any successor to the Company, to honour and comply in all material respects with the terms of all existing employment, indemnification, change in control, severance, termination or other compensation agreements and employment and severance obligations of the Company or any of its Subsidiaries and all obligations of the Company and its Subsidiaries under the Employee Plans.
|
(6)
|
Each of the Parent and the Purchaser agree and acknowledge that the Company shall institute special retention and/or transition bonus programs in connection with the Arrangement, the particulars of which have been set forth in Section 2.7(6) of the Company Disclosure Letter and, subject to completion of the Arrangement, each of the Parent and the Purchaser covenant and agree to cause the Company to allocate and pay out to the eligible Company Employees bonus amounts pursuant to the terms of such special retention and/or transition bonus programs.
|
(7)
|
Notwithstanding anything in this Section 2.7 to the contrary, the terms of this Section 2.7 shall not apply to any Company Employee who is covered by a Collective Agreement and instead, the terms and conditions of employment of each such Company Employee following the Effective Time shall be governed by the terms of the applicable Collective Agreement.
|
(1)
|
The Articles of Arrangement shall implement the Plan of Arrangement. The Articles of Arrangement shall include the form of the Plan of Arrangement attached to this Agreement as Schedule A, as it may be amended from time to time by written agreement of the Parties hereto.
|
(2)
|
The Company shall file the Articles of Arrangement with the Enterprise Registrar as soon as reasonably practicable and in any event within five (5) Business Days after the satisfaction or, where not prohibited, the waiver by the applicable Party or Parties in whose favour the condition is, of the conditions set out in Article 6 (excluding conditions that, by their terms, cannot be satisfied until the Effective Date, but subject to the satisfaction or, where not prohibited, the waiver by the applicable Party or Parties in whose favour the condition is, of those conditions as of the Effective Date), unless another time or date is agreed to in writing by the Parties.
|
(3)
|
From and after the Effective Time, the Plan of Arrangement shall have all of the effects provided by applicable Law, including the QBCA. The closing of the Arrangement will take place at the offices of Stikeman Elliott LLP, or at such other location as may be agreed upon by the Parties.
|
(1)
|
Except as set forth in the Company Disclosure Letter (it being expressly understood and agreed that the disclosure of any fact or item in the Company Disclosure Letter shall only be deemed to be an exception to (or, as applicable, disclosure for the purposes of) the representations and warranties of the Company that are contained in the corresponding Paragraph of Schedule D and any other representations or warranties of the Company only to the extent that the relevance of such disclosed fact or item to such other representation or warranty is reasonably apparent on its face), the Company represents and warrants to the Purchaser and to the Parent as set forth in Schedule D and acknowledges and agrees that the Purchaser and the Parent are relying upon such representations and warranties in connection with the entering into of this Agreement.
|
(2)
|
Except for the representations and warranties set forth in this Agreement, neither the Company nor any other Person has made or makes any other express or implied representation and warranty, either written or oral, on behalf of the Company. In particular, without limiting the foregoing disclaimer, except for the representations and warranties made by the Company in this Agreement as set forth in Schedule D, neither the Company nor any other Person makes or has made any representation or warranty to the Parent or any of its Representatives, with respect to (a) any financial projection, forecast, estimate, budget or prospective information relating to the Company, any of the Company’s Subsidiaries or their respective businesses or operations or (b) any oral or written information furnished or made available to the Parent or any of its Representatives in the course of their due diligence investigation of Company, the negotiation of this Agreement or the consummation of the Arrangement and the other transactions contemplated by this Agreement, including the accuracy, completeness or currentness thereof, and neither the Company nor any other Person will have any liability to the Parent or any other Person in respect of such information, including any subsequent use of such information, except in the case of fraud.
|
(3)
|
The representations and warranties of the Company contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms. This Section 3.1(3) will not limit any covenant or agreement of any of the Parties, which, by its terms, contemplates performance after the Effective Time or the date on which this Agreement is terminated, as the case may be.
|
(4)
|
The Company shall be permitted to include an express cross-reference to an item in the Company Filings in the Company Disclosure Letter provided that the disclosure in the Company Filings that is expressly cross-referenced is meaningful and not misleading and further provided that no qualification or disclosure shall include any reference to any forward-looking information or anything in the risk factors section of the Company Filings or similar language contained therein. The mere inclusion of any item in any section or subsection of the Company Disclosure Letter as an exception to any representation or warranty or otherwise shall not be deemed to constitute an admission by the Company, or to otherwise imply, that any such item has had or would reasonably be expected to have a Material Adverse Effect, or otherwise represents an exception or material fact, circumstance, change, effect, event or occurrence for the purposes of this Agreement, or that such item meets or exceeds a monetary or other threshold specified for disclosure in this Agreement.
|
(1)
|
The Parent and the Purchaser jointly and severally represent and warrant to the Company as set forth in Schedule E and acknowledge and agree that the Company is relying upon such representations and warranties in connection with the entering into of this Agreement.
|
(2)
|
Except for the representations and warranties set forth in this Agreement, neither the Parent nor the Purchaser nor any other Person has made or makes any other express or implied representation and warranty, either written or oral, on behalf of the Parent or the Purchaser.
|
(3)
|
The representations and warranties of the Parent and the Purchaser contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms. This Section 3.2(3) will not limit any covenant or agreement of any of the Parties, which, by its terms, contemplates performance after the Effective Time or the date on which this Agreement is terminated, as the case may be.
|
(1)
|
The Company covenants and agrees that, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except (i) with the express prior written consent of the Purchaser, acting reasonably, (ii) as required by Law or a Governmental Entity, (iii) as required or permitted by this Agreement, (iv) as contemplated by the Company 2016 Budget, or (v) as contemplated by Section 4.1(1) of the Company Disclosure Letter, (A) the Company shall, and shall cause each of its Subsidiaries to, conduct its business in the Ordinary Course and in accordance with applicable Law, use its
|
(a)
|
amend its articles of incorporation, articles of amalgamation or by-laws or, in the case of any Subsidiary which is not a corporation, its similar organizational documents;
|
(b)
|
split, combine or reclassify any shares of the Company or of any Subsidiary;
|
(c)
|
except as disclosed in Section 4.1(1)(c) of the Company Disclosure Letter, redeem, repurchase, or otherwise acquire or offer to redeem, repurchase or otherwise acquire any shares of capital stock of the Company or any of its Subsidiaries;
|
(d)
|
issue, grant, deliver, sell, pledge or otherwise encumber, or authorize the issuance, grant, delivery, sale, pledge or other encumbrance of any shares of capital stock, securities, options, warrants or similar rights exercisable or exchangeable for or convertible into such capital stock, of the Company or any of its Subsidiaries, except for (i) the issuance of Preferred Shares upon the conversion of currently outstanding Preferred Shares in accordance with their terms, (ii) the issuance of Common Shares issuable upon the exercise of the currently outstanding Options specified in Section 4.1(1)(d)(ii)
of the Company Disclosure Letter, (iii) pursuant to outstanding PSUs or RSUs in accordance with the terms of the Share Unit Plans, (iv) the grant of Options, RSUs, PSUs or DSUs in the Ordinary Course for the annual grant of such options and awards as described in Section 4.1(1)(d)(iv)
of the Company Disclosure Letter, or (v) the issuance of Common Shares to new or existing dealer-owners pursuant to their respective commercial licence agreements and ancillary documents with the Company;
|
(e)
|
other than as provided for in Section 4.1(1)(e) of the Company Disclosure Letter
acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, in one transaction or in a series of related transactions, assets, securities, properties, interests or businesses (other than in the Ordinary Course, such as the purchase of supplies, equipment and inventory) having a cost, on a per transaction or series of related transactions basis, in excess of $3,000,000 and subject to a maximum of $10,000,000
for all such transactions;
|
(f)
|
reorganize, amalgamate or merge the Company, or, to the extent prejudicial to the Arrangement or to the Purchaser, any Subsidiary;
|
(g)
|
reduce the stated capital of the shares of the Company or any of its Subsidiaries;
|
(h)
|
adopt a plan of liquidation or resolutions providing for the liquidation or dissolution of the Company or any of its Subsidiaries;
|
(i)
|
except as disclosed in Section 4.1(1)(i) of the Company Disclosure Letter, sell, pledge, lease, dispose of, surrender, lose the right to use, mortgage, license, encumber or otherwise dispose of or transfer any assets of the Company or of any of its Subsidiaries or any interest in any assets of the Company or its Subsidiaries having a value greater than $3,000,000 in the aggregate, other than
inventory sold in the Ordinary Course and other than leases for a partial and temporary occupancy by a third party of an Owned Property in the Ordinary Course;
|
(j)
|
other than as reflected in the Company 2016 Budget, make any capital expenditure or commitment to do so which individually or in the aggregate exceeds $3,000,000;
|
(k)
|
except as disclosed in Section 4.1(1)(k) of the Company Disclosure Letter, make any material Tax election, information schedule, return or designation, except as required by Law and in a manner consistent with past practice, settle or compromise any material Tax claim, assessment, reassessment or liability, file any amended Tax Return, enter into any material agreement with a Governmental Entity with respect to Taxes, surrender any right to claim a material Tax abatement, reduction, deduction, exemption, credit or refund, consent to the extension or waiver of the limitation period applicable to any material Tax matter or materially amend or change any of its methods or reporting income, deductions or accounting for income Tax purposes except as may be required by Law;
|
(l)
|
make any loan or advance to, or any capital contribution or investment in, or assume, guarantee or otherwise become liable with respect to the liabilities or obligations of any Person, other than the Company, any wholly-owned Subsidiary of the Company or dealer-owners in the Ordinary Course, in an amount on a per transaction or series of related transactions basis in excess of
$3,000,000 individually and $10,000,000 in the aggregate;
|
(m)
|
prepay any long-term indebtedness before its scheduled maturity or increase, create, incur, assume or otherwise become liable, in one transaction or in a series of related transactions, with respect to any indebtedness for borrowed money or guarantees thereof
|
(n)
|
enter into any equity or commodity swaps, hedges, derivatives, forward sales contracts or similar financial instruments or, except in the Ordinary Course, enter into any interest rate or currency swaps, hedges, derivatives, forward sales contracts or similar financial instruments;
|
(o)
|
make any bonus or profit sharing distribution or similar payment of any kind, other than in accordance with an Employee Plan, as provided in the Company 2016 Budget or as disclosed in Section 4.1(1)(o) of the Company Disclosure Letter, or except as may be required by the terms of a Collective Agreement;
|
(p)
|
make any material change in the Company’s methods of accounting, except as required by concurrent changes in GAAP or pursuant to written instructions, comments or orders of a Securities Authority;
|
(q)
|
grant any general increase in the rate of wages, salaries, bonuses or other remuneration of any Company Employees, other than as disclosed in Section 4.1(1)(o) and Section 4.1(1)(q) of the Company Disclosure Letter, or as may be required by the terms of a Collective Agreement;
|
(r)
|
except as required by Law or as disclosed in Section 4.1(1)(r) of the Company Disclosure Letter: (i) adopt, enter into or amend any Employee Plan (other than in conjunction with entering into an employment agreement in the Ordinary Course with a new employee who was not employed by the Company or a Subsidiary on the date of this Agreement); (ii) pay any benefit to any director or officer of the Company or any of its Subsidiaries or to any Company Employee that is not required under the terms of any Employee Plan in effect on the date of this Agreement; (iii) grant, accelerate, increase or otherwise amend any payment, award or other benefit payable to, or for the benefit of, any director or officer of the Company or any of its Subsidiaries or to any Company Employee (other than in the Ordinary Course or as provided herein);
(iv) make any material determination under any Employee Plan that is not in the Ordinary Course; or (v) take or propose any action to effect any of the foregoing;
|
(s)
|
cancel, waive, release, assign, settle or compromise any material claims or rights other than insured claims;
|
(t)
|
commence, waive, release, assign, settle or compromise any litigation, proceedings or governmental investigations in excess of an amount of $1,000,000 individually or $2,500,000 in the aggregate or which would reasonably be expected to impede, prevent or delay the consummation of the transactions contemplated by this Agreement, other than insured claims;
|
(u)
|
except as disclosed in Section 4.1(1)(u) of the Company Disclosure Letter and other than entering into new Leases that represent less than $3,000,000 in total future payments individually or $10,000,000 in the aggregate, amend or modify or terminate or waive any material right under any Material Contract or enter into any contract or agreement that would be a Material Contract if in effect on the date hereof, provided that the foregoing shall not apply in respect of any Contract with customers, dealers or suppliers relating to the purchase or supply of goods or the purchase or sale of inventory or services by the Company or any of its Subsidiaries, in each case, in the Ordinary Course, which would not be a Material Contract pursuant to clauses (i) through (iv) or (vi) through (xii) of the definition thereof;
|
(v)
|
except as required by Law, enter into, amend or modify any union recognition agreement, Collective Agreement or similar agreement with any trade union or representative body, other than those listed in Section 3.1(34)(a) of the Company Disclosure Letter;
|
(w)
|
except as contemplated in Section 4.9 and except for scheduled renewals in the Ordinary Course, amend, modify, terminate, cancel or let lapse any material insurance (or re-insurance) policy of the Company or any Subsidiary in effect on the date of this Agreement, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance and re-insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the terminated, cancelled or lapsed policies for substantially similar premiums are in full force and effect;
|
(x)
|
in respect of any Company Assets, waive, release, surrender, let lapse, grant or transfer any material right or value or amend, modify or change, or agree to amend, modify or change, in any material respect any existing material Authorization, production sharing agreement, Intellectual Property, other than in the Ordinary Course;
|
(y)
|
abandon or fail to diligently pursue any application for any material Authorizations or registrations or take any action, or fail to take any action, that could lead to the termination of any material Authorizations or registrations;
|
(z)
|
enter into or amend any Contract with any broker, finder or investment banker (other than a real estate broker), including any amendment of any of the Contracts listed in Section 4.1(1)(z) of the Company Disclosure Letter, provided that the foregoing shall not prohibit the Company from entering into an agreement with any dealer and proxy solicitation services firm for purposes of soliciting proxies in connection with the Arrangement; or
|
(aa)
|
authorize, agree, resolve or otherwise commit, whether or not in writing, to do any of the foregoing.
|
(2)
|
If, on or after the date of this Agreement, the Company declares or pays any dividend or other distribution on the Company Shares prior to the Effective Time (other than Permitted Dividends), the Consideration per Company Share shall be reduced by the amount of such dividends or distributions.
|
(1)
|
The Company shall perform, and shall cause its Subsidiaries to perform, all obligations required or desirable to be performed by the Company or any of its Subsidiaries under this Agreement, cooperate with the Purchaser and the Parent in connection therewith, and do all such other commercially reasonable acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement and, without limiting the generality of the foregoing, the Company shall and, where appropriate, shall cause each of its Subsidiaries to:
|
(a)
|
use all commercially reasonable efforts to satisfy all conditions precedent in this Agreement and take all steps set forth in the Interim Order and Final Order applicable to it;
|
(b)
|
use all commercially reasonable efforts to obtain and maintain all third party or other consents, waivers, permits, exemptions, orders, approvals, agreements, amendments or confirmations that are (A) necessary to be obtained under the Material Contracts in connection with the Arrangement or (B) required in order to maintain the Material Contracts in full force and effect following completion of the Arrangement,
in each case, on terms that are reasonably satisfactory to the Purchaser, and without paying, and without committing itself or the Purchaser to pay, any consideration or incur any liability or obligation without the prior written consent of the Purchaser;
|
(c)
|
use all commercially reasonable efforts to effect all necessary registrations, filings and submissions of information required by Governmental Entities from the Company and its Subsidiaries relating to the Arrangement;
|
(d)
|
use all commercially reasonable efforts to, upon reasonable consultation with the Purchaser, oppose, lift or rescind any injunction, restraining or other order, decree, judgment or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement or this Agreement;
|
(e)
|
not take any action, or refrain from taking any commercially reasonable action, or permitting any action to be taken or not taken, which is inconsistent with this Agreement or which would reasonably be expected to prevent, materially delay or otherwise impede the consummation of the Arrangement or the transactions contemplated by this Agreement;
|
(f)
|
assist in obtaining the resignations and releases (in a form satisfactory to the Purchaser, acting reasonably) of each member of the Board and each member of the board of directors of the Company’s Subsidiaries, and causing them to be replaced by Persons nominated by the Purchaser effective as of the Effective Time; and
|
(g)
|
use all commercially reasonable efforts to cause each of its directors to comply with and perform his or her obligations under their respective Voting Agreement.
|
(2)
|
The Company shall promptly notify the Purchaser in writing of:
|
(a)
|
any Material Adverse Effect or any change, effect, event, development, occurrence, circumstance or state of facts which could reasonably be expected to have a Material Adverse Effect, subject to compliance with applicable competition or antitrust Laws;
|
(b)
|
any notice or other communication from any Person alleging that the consent (or waiver, permit, exemption, order, approval, agreement, amendment or confirmation) of such Person (or another Person) is or may be required in connection with this Agreement or the Arrangement;
|
(c)
|
any notice or other communication from any supplier, marketing partner, licensor of Intellectual Property or Technology, customer, distributor, dealer-owner or reseller to the effect that such supplier, marketing partner, licensor of Intellectual Property or Technology, customer, distributor, dealer-owner or reseller is terminating, may terminate or is otherwise materially adversely modifying or may materially adversely modify its relationship with the Company or any of its Subsidiaries as a result of this Agreement or the Arrangement;
|
(d)
|
any notice or other communication from a customer alleging a defect or claim in respect of any products supplied or sold by the Company or its Subsidiaries to the customer which is reasonably likely to be reflective of a material recurring product defect, to lead to a product recall or to form the basis for a potential class action recourse by customers;
|
(e)
|
any notice or other communication from any bargaining agent representing Company Employees giving notice to bargain and as permitted by Law, copies of any proposals tabled by any such bargaining agent that, if implemented, would materially modify the terms of a Collective Agreement;
|
(f)
|
any notice or other communication from any Governmental Entity in connection with the Agreement (and, subject to Law, contemporaneously provide a copy of any such written notice or communication to the Purchaser); or
|
(g)
|
any material filing, actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Company, its Subsidiaries or the Company Assets.
|
(3)
|
The Company will, in all material respects, subject to applicable Law, conduct itself so as to keep the Purchaser and the Parent informed as to the material decisions outside of the Ordinary Course required to be made or actions required to be taken outside of the Ordinary Course with respect to the operation of its business, provided that such disclosure is not otherwise prohibited by reason of confidentiality obligation owed to a third party in which case it will be provided, subject to Law, to the Purchaser’s outside counsel on an “external counsel” basis.
|
(4)
|
The Company shall keep the Purchaser informed of the status of any ongoing collective bargaining negotiations with any union between the date of the Agreement and the Effective Time and provide the Purchaser with copies of all material documents tabled by either party in the course of collective bargaining negotiations, in a timely fashion during said designed period.
|
(5)
|
The Company shall discharge the Liens listed in Section 3.1(27)(k)
of the Company Disclosure Letter and to deliver to the Purchaser satisfactory evidence of same.
|
(1)
|
Each of the Purchaser and the Parent shall perform all obligations required or desirable to be performed by it under this Agreement, cooperate with the Company in connection therewith, and do all such other commercially reasonable acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions
|
(a)
|
use all commercially reasonable efforts to satisfy all conditions precedent in this Agreement and take all steps set forth in the Interim Order and Final Order applicable to it;
|
(b)
|
use all commercially reasonable efforts to effect all necessary registrations, filings and submissions of information required by Governmental Entities from it relating to the Arrangement;
|
(c)
|
use all commercially reasonable efforts, upon reasonable consultation with the Company, to oppose, lift or rescind any injunction, restraining or other order, decree, judgment or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement or this Agreement; and
|
(d)
|
subject to Section 4.4 in respect of Regulatory Approvals, not take any action, or refrain from taking any commercially reasonable action, or permit any action to be taken or not taken, which is inconsistent with this Agreement or the Arrangement or which would reasonably be expected to prevent, delay or otherwise impede the consummation of the Arrangement or the transactions contemplated by this Agreement, provided that nothing in this Agreement prevents the Purchaser and the Parent and all of their affiliates from conducting business in the ordinary course.
|
(2)
|
In addition, in connection with the Debentures: (i) to the extent the Effective Time shall have occurred before October 20, 2016, being the date on which the Debentures are due, each of the Purchaser and the Parent covenant and agree, and after the Effective Time will cause the Company and any successor to the Company to covenant and agree, to cause the Company to take all such actions as are necessary in order to ensure that the Company has the necessary available funds to effect the repayment at maturity of the Debentures in accordance with their terms, and (ii) each of the Purchaser and the Parent covenant and agree to ensure compliance with the trust indenture dated as of October 20, 2006 among the Company, Computershare Trust Company of Canada and the guarantors thereto.
|
(3)
|
Each of the Purchaser and the Parent shall promptly notify the Company in writing of (i) any notice or other communication from any Person alleging that the consent (or waiver, permit, exemption, order, approval, agreement, amendment or confirmation) of such Person (or another Person) is or may be required in connection with this Agreement or the Arrangement, or (ii) any material filings, actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving the Parent or the Purchaser that relate to this Agreement or the Arrangement, in the case of each of (i) and (ii) to the extent that such
|
(1)
|
As soon as reasonably practicable but not later than 15 Business Days after the date hereof:
|
(a)
|
(i) the Purchaser and the Company shall each file with the Commissioner of Competition the notice and information required under Subsection 114(1) of the Competition Act, and (ii) the Purchaser shall file with the Commissioner of Competition a submission requesting that an advance ruling certificate be issued under Section 102 of the Competition Act or, in the alternative, that the Commissioner of Competition issue a No Action Letter in respect of the transactions contemplated by this Agreement;
|
(b)
|
the Purchaser will file an application for review pursuant to Part IV of the ICA with the Industry Minister in respect of the transactions contemplated by this Agreement; and
|
(c)
|
the Purchaser will file an application for review pursuant to Part IV of the ICA with the Heritage Minister in respect of the transactions contemplated by this Agreement.
|
(2)
|
The Parties shall cooperate in good faith to obtain the Regulatory Approvals but, in the case of a disagreement over the strategy, tactics or decisions relating to obtaining the Regulatory Approvals, the Parent and the Purchaser shall have the final and ultimate authority over the appropriate strategy, tactics and decisions. To this end the Parties shall cooperate in connection with obtaining the Regulatory Approvals including providing or submitting on a timely basis, and as promptly as practicable, all documentation and information that is required, or in the opinion of the Purchaser, acting reasonably, advisable, and shall cooperate in the preparation and submission of all applications, notices, filings, and submissions to Governmental Entities.
|
(3)
|
Subject to Section 4.4(4), each Party will:
|
(a)
|
promptly inform the other Party of any material communication received by that Party in respect of obtaining or concluding the Regulatory Approvals;
|
(b)
|
use commercially reasonable efforts to respond promptly to any request or notice from any Governmental Entity requiring the Parties, or any one of them, to supply additional information that is relevant to the review of the transactions contemplated by this Agreement in respect of obtaining or concluding the Regulatory Approvals;
|
(c)
|
permit the other Party to review in advance any proposed applications, notices, filings and submissions to Governmental Entities (including responses to requests for information and inquiries from any Governmental Entity) in respect of obtaining or concluding the Regulatory Approvals, and will provide the other Parties a reasonable opportunity to comment thereon and consider those comments in good faith;
|
(d)
|
promptly provide the other Party with any filed copies of applications, notices, filings and submissions, (including responses to requests for information and inquiries from any Governmental Entity) that were submitted to a Governmental Entity in respect of obtaining or concluding the Regulatory Approvals;
|
(e)
|
not participate in any substantive meeting or discussion (whether in person, by telephone or otherwise) with Governmental Entities in respect of obtaining or concluding the Regulatory Approvals unless it consults with the other Party in advance and gives the other Party or its legal counsel the opportunity to attend and participate thereat, unless a Governmental Entity requests otherwise; and
|
(f)
|
keep the other Party promptly informed of the status of discussions relating to obtaining or concluding the Regulatory Approvals.
|
(4)
|
Notwithstanding any other requirement in this Section 4.4, where a Party (a “
Disclosing Party
”) is required under this Section 4.4 to provide information to another Party (a “
Receiving Party
”) that the Disclosing Party deems to be competitively sensitive information or otherwise reasonably determines in respect thereof that disclosure should be restricted, the Disclosing Party may restrict the provision of such competitively sensitive and other information only to external legal counsel of the Receiving Party, provided that the Disclosing Party also provides the Receiving Party a redacted version of such information which does not contain any such competitively sensitive or other restricted information.
|
(5)
|
The Parent and the Purchaser shall use their commercially reasonable efforts to obtain the Regulatory Approvals. For greater certainty, in relation to the ICA Approvals, commercially reasonable efforts shall require that: (i) the application for review submitted by the Parent and the Purchaser include a package of substantial proposed undertakings; and, (ii) if required to secure ICA Approvals, the Parent and the Purchaser agree to propose enhanced and/or additional commitments that are acceptable to the Parent and the Purchaser, acting in good faith and reasonably. For greater certainty, in relation to the Competition Act Approval, commercially reasonable efforts shall not require the Parent and the Purchaser to take any action, and shall not permit the Company to take any action without the express written consent of the Purchaser and the Parent, that would result in a material negative impact on the Company, the Parent and the Purchaser, taken together.
|
(6)
|
In no circumstance shall the Company state or suggest that the Purchaser and the Parent are prepared to provide or agree to particular undertakings or requirements without the prior consent of the Purchaser and the Parent.
|
(7)
|
The Parent and the Purchaser will pay the government filing fee required in connection with making a filing under the Competition Act.
|
(1)
|
From the date hereof until the earlier of the Effective Time and the termination of this Agreement, subject to applicable Law and the terms of any existing Contracts, and strictly for the purposes of business integration, the Company shall, upon reasonable prior notice: (a) give the Purchaser and the Parent and their respective officers, employees, advisors and representatives reasonable access during normal business hours to its and its Subsidiaries’ offices, properties, officers, books and records; and (b) furnish to the Purchaser and the Parent and their respective officers, employees, advisors and representatives such financial and operating data or other information with respect to the assets or business of the Company as the Purchaser may reasonably request, including for the purpose of facilitating integration planning; provided that the Company’s compliance with any request under this Section 4.5(1) shall not unduly interfere with the conduct of the Company’s business. Without limiting the foregoing: (a) the Purchaser and the Parent and their officers, employees, agents, advisors, representatives, lenders and potential lenders shall, upon reasonable prior notice, have the right to conduct inspections of each of the Owned Properties and Leased Properties; and (b) the Company shall, upon either of the Parent’s or the Purchaser’s request, facilitate discussions between the Parent or the Purchaser and any third party from whom consent may be required.
|
(2)
|
None of the Purchaser, the Parent or any of their representatives will contact any Company Employee, agent, customer, dealer, supplier, or other person having a business relationship with the Company except after consultation with the President and Chief Executive Officer or the Executive Vice President and Chief Financial Officer.
|
(3)
|
Investigations made by or on behalf of the Purchaser, whether under this Section 4.5 or otherwise, will not waive, diminish the scope of, or otherwise affect any representation or warranty made by the Company in this Agreement.
|
(4)
|
This Section 4.5 shall not require the Company or its Subsidiaries to permit any access, or to disclose any information that in the reasonable good faith judgment of the Company, after consultation with outside legal counsel, is likely to result in the breach of any Contract, any violation of any Law or cause any privilege (including attorney-client privilege) that the Company or its Subsidiaries would be entitled to assert to be undermined with respect to such information; provided that, the Parties hereto shall cooperate in seeking to find a way to allow disclosure of such information to the extent doing so could reasonably (in the good faith belief of such disclosing Party, after consultation with counsel) be managed through the use of customary “clean-room” arrangements.
|
(5)
|
The Purchaser acknowledges that the Confidentiality Agreement continues to apply and that any information provided under Section 4.5(1) above that is non-public and/or proprietary in nature shall be subject to the terms of the Confidentiality Agreement; provided that to the extent any provision of the Confidentiality Agreement conflicts with the terms of this Agreement, the terms of this Agreement shall prevail. For greater certainty, if this Agreement is terminated in accordance with its terms, any obligations of the Parties and their respective representatives under the Confidentiality Agreement shall survive the termination of this Agreement in accordance with the terms of the Confidentiality Agreement.
|
(1)
|
Subject to Section 4.6(2), the Company agrees that, upon request of the Purchaser, the Company shall use its commercially reasonable efforts to (i) perform such reorganizations of its corporate structure, capital structure,
business, operations and assets or such other transactions as the Purchaser may request, acting reasonably (each a “
Pre-Acquisition Reorganization
”), (ii) cooperate with the Purchaser and its advisors to determine the nature of the Pre-Acquisition Reorganizations that might be undertaken and the manner in which they would most effectively be undertaken, and (iii) cooperate with the Purchaser and its advisors to seek to obtain consents or waivers which might be required from the Company’s lenders under its existing credit facilities in connection with the Pre-Acquisition Reorganizations, if any, provided that any costs, fees or expenses associated therewith shall be at the Purchaser’s sole expense.
|
(2)
|
The Company will not be obligated to participate in any Pre-Acquisition Reorganization under Section 4.6(1) unless the Company determines in good faith that such Pre-Acquisition Reorganization:
|
(a)
|
can be completed prior to the Effective Date, and can be reversed or unwound in the event the Arrangement does not become effective without adversely affecting the Company, any of its Subsidiaries, the Company Securityholders or holders of Debentures;
|
(b)
|
is not prejudicial to the Company, any of its Subsidiaries, the Company Securityholders or holders of Debentures;
|
(c)
|
does not impair, impede, delay or prevent the receipt of any Regulatory Approvals or the satisfaction of any conditions set forth in Article 6 or the ability of the Company, the Parent or the Purchaser to consummate, and will not materially delay the consummation of, the Arrangement;
|
(d)
|
does not require the Company to obtain the approval of any Company Securityholders or holders of Debentures or, after the mailing of the Company Circular, to require any amendment thereto;
|
(e)
|
is effected as close as reasonably practicable prior to the Effective Time;
|
(f)
|
does not require the Company or its Subsidiaries to take any action that could reasonably be expected to result in Taxes being imposed on, or any adverse Tax or other consequences to, any Company Securityholders or holders of Debentures incrementally greater than the Taxes or other consequences to such party in connection with the completion of the Arrangement in the absence of action being taken pursuant to this Section 4.6;
|
(g)
|
does not result in any material breach by the Company or any of its Subsidiaries of any Contract or any breach by the Company or any of its Subsidiaries of their respective organizational documents or Law;
|
(h)
|
does not require the directors, officers, employees or agents of the Company or its Subsidiaries to take any action in any capacity other than as a director, officer, employee or agent; and
|
(i)
|
shall not become effective unless the Parent and the Purchaser each has irrevocably waived or confirmed in writing the satisfaction of all conditions in its favour under Section 6.1 and Section 6.2 and shall have confirmed in writing that each of them is prepared to promptly and without condition (other than compliance with this Section 4.6) proceed to effect the Arrangement.
|
(3)
|
The Purchaser must provide written notice to the Company of any proposed Pre-Acquisition Reorganization at least 15 Business Days prior to the Effective Date. Upon receipt of such notice, the Company and the Purchaser shall work cooperatively and use their commercially reasonable efforts to prepare prior to the Effective Time all documentation necessary and do such other acts and things as are necessary to give effect to such Pre-Acquisition Reorganization, including any amendment to this Agreement or the Plan of Arrangement (provided that such amendments do not require the Company to obtain approval of Company Securityholders or holders of Debentures). Such Pre-Acquisition Reorganization shall be made effective as of the last moment of the Business Day ending immediately prior to the Effective Date.
|
(4)
|
The Purchaser agrees that (i) it will be responsible, pay for, reimburse and indemnify the Company and each Subsidiary, for all direct and indirect costs and expenses, losses, liabilities, fees and Taxes associated with any proposed Pre-Acquisition Reorganization (including out-of-pocket costs and expenses for filing fees and external counsel and auditors which may be incurred) and (ii) if the Arrangement is not completed as contemplated herein, it shall indemnify and save harmless the Company, its affiliates, Company Securityholders and holders of
|
(5)
|
The Purchaser and the Parent waive any breach of a representation, warranty or covenant by the Company, where such breach is a result of an action taken by the Company or a Subsidiary in good faith pursuant to a request by the Purchaser in accordance with this Section 4.6.
|
(1)
|
Each Party shall promptly notify the other Parties of the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would, or would be reasonably likely to:
|
(a)
|
cause any of the representations or warranties of such Party (and, in the case of the Parent, any of the representations or warranties of the Purchaser) contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date of this Agreement to the Effective Time; or
|
(b)
|
result in the failure, in any material respect, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such Party (and, in the case of the Parent, likely to result in the failure, in any material respect, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by the Purchaser) under this Agreement.
|
(2)
|
Notification provided under this Section 4.8 will not affect the representations, warranties, covenants, agreements or obligations of the Parties (or remedies with respect thereto) or the conditions to the obligations of the Parties under this Agreement.
|
(3)
|
The Parent and the Purchaser may not elect to exercise their right to terminate this Agreement pursuant to Section 7.2(1)(d)(i) and the Company may not elect to exercise its right to terminate this Agreement pursuant to Section 7.2(1)(c)(i), unless the Party seeking to terminate the Agreement (the “
Terminating Party
”) has delivered a written notice (“
Termination Notice
”) to the other Party (the “
Breaching Party
”) specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Terminating Party asserts as the basis for termination. After delivering a Termination Notice, provided the Breaching Party is proceeding diligently to cure such matter and such matter is capable of being cured prior to the Outside Date, the Terminating Party may not exercise such termination right until the earlier of (a) the Outside Date, and (b) the date that is 15 Business Days following receipt of such Termination Notice by Breaching Party, if such matter has not been cured by such date. If the Terminating Party delivers a Termination Notice prior to the date of the Company Meeting, unless the Parties agree otherwise, the Company shall postpone or adjourn the Company Meeting to the earlier of (a) five (5) Business Days prior to the Outside Date and (b) the date that is 15 Business Days following receipt of such Termination Notice by the Breaching
Party.
|
(1)
|
Prior to the Effective Date, the Company shall purchase customary “tail” policies of directors’ and officers’ liability insurance providing protection no less favourable in the aggregate than the protection provided by the policies maintained by the Company and its Subsidiaries which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date and the Purchaser will, or will cause the Company and its Subsidiaries to maintain such tail policies in effect without any reduction in scope or coverage for six (6) years from the Effective Date; provided that the Purchaser will not be required to pay any amounts in respect of such coverage prior to the Effective Time and provided further that the cost of such policies shall not exceed 200% of the Company’s and its Subsidiaries’ current annual aggregate premium for policies currently maintained by the Company and its Subsidiaries.
|
(2)
|
The Parent and the Purchaser shall honour all rights to indemnification or exculpation now existing in favour of present and former employees, officers and directors of the Company and its Subsidiaries to the extent that they are disclosed in Section 4.9(2) of the Company Disclosure Letter, and acknowledges that such rights, to the extent that they are disclosed in Section 4.9(2) of the Company Disclosure Letter, shall survive the completion of the Plan of Arrangement and shall continue in full force and effect in accordance with their terms for a period of not less than six (6) years from the Effective Date. The provisions of this Section 4.9 shall be binding, jointly and severally, on all successors of the Purchaser and the Parent.
|
(3)
|
If the Company or any of its Subsidiaries or any of their respective successors or assigns (i) consolidates or amalgamates with or merges or liquidates into any other Person and is not a continuing or surviving corporation or entity of such consolidation, amalgamation, merger or liquidation, or (ii) transfers all or substantially all of its properties and assets to any Person, the Purchaser and the Parent shall ensure that any such successor or assign (including, as applicable, any acquirer of substantially all of the properties and assets of the Company or its Subsidiaries) assumes all of the obligations set forth in this Section 4.9.
|
(1)
|
Except as expressly provided in this Article 5, the Company, shall not, and shall cause its Subsidiaries not to, directly or indirectly, through any officer, director, employee, representative (including any financial or other adviser) or agent of the Company or of any of its Subsidiaries (collectively “
Representatives
”), or otherwise, and not permit any such Person to:
|
(a)
|
solicit, assist, initiate, encourage or otherwise knowingly facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any Subsidiary or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal;
|
(b)
|
enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than the Parent, the Purchaser and their affiliates) regarding any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an
Acquisition Proposal;
|
(c)
|
withdraw, amend, modify or qualify, or publicly propose or state an intention to withdraw, amend, modify or qualify, the Board Recommendation;
|
(d)
|
accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend, or take no position or remain neutral with respect to, any Acquisition Proposal (it being understood that publicly taking no position or a neutral position with respect to a publicly announced, or otherwise publicly disclosed, Acquisition Proposal for a period of no more than five Business Days following such public announcement or public disclosure will not be considered to be in violation of this Section 5.1 (or in the event that the Company Meeting is scheduled to occur within such five Business Day period, prior to the third Business Day prior to the date of the Company Meeting)); or
|
(e)
|
accept or enter into (other than a confidentiality agreement permitted by and in accordance with Section 5.3) or publicly propose to accept or enter into any agreement, understanding or arrangement in respect of an Acquisition Proposal.
|
(2)
|
The Company shall, and shall cause its Subsidiaries and its Representatives to, immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiation, or other activities commenced prior to the date of this Agreement with any Person (other than the Parent, the Purchaser and their affiliates) with respect to any inquiry, proposal or offer that constitutes, or may reasonably be expected to constitute or lead to, an Acquisition Proposal, and in connection therewith, the Company will:
|
(a)
|
discontinue access to and disclosure of all information regarding the Company or any of its Subsidiaries in respect of any inquiry, proposal or offer that constitutes, or may reasonably be expected to constitute or lead to, an Acquisition Proposal, including any data room and any confidential information, properties, facilities, books and records of the Company or any of its Subsidiaries; and
|
(b)
|
to the extent that such information has not previously been returned, promptly request, and exercise all rights it has to require, (i) the return or destruction of all copies of any confidential information regarding the Company or its Subsidiaries and (ii) the destruction of all material including or incorporating or otherwise reflecting such confidential information regarding the Company of any Subsidiary, in each case, provided to any Person other than the Parent and the Purchaser since January 1, 2014 in respect of any inquiry, proposal or offer that constitutes, or may reasonably be expected to constitute or lead to, an Acquisition Proposal, using its commercially reasonable efforts to ensure that such requests are fully complied with in accordance with the terms of such rights or entitlements.
|
(3)
|
The Company represents and warrants that the Company has not waived any confidentiality, standstill or similar agreement or restriction in effect as of the date of this Agreement to which the Company or any Subsidiary is a Party, and further covenants and agrees (i) that the Company shall take all necessary action to enforce each confidentiality, standstill, non-disclosure, non-solicitation, use, business purpose or similar agreement or covenant to which the Company or any Subsidiary is a party, and (ii) not release, and cause its Subsidiaries not to release, any Person from, or waive, amend, suspend or otherwise modify such Person’s obligations respecting the Company, or any of its Subsidiaries, under any confidentiality, standstill, non-disclosure, non-solicitation, use, business purpose or similar agreement or covenant to which the Company or any Subsidiary is a party, without the prior written consent of the Purchaser (which may be withheld or delayed in the Purchaser’s sole and absolute discretion) (it being acknowledged by the Purchaser that the automatic termination or release of any standstill restrictions of any such agreements as a result of entering into and announcing this Agreement shall not be a violation of this Section 5.1(3)), nor will the Company waive the application of the Rights Plan in favour of any third party.
|
(1)
|
If the Company or any of its Subsidiaries or any of their respective Representatives, receives or otherwise becomes aware of any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to an Acquisition Proposal, or any request for copies of, access to, or disclosure of, confidential information relating to the Company or any Subsidiary in connection with an Acquisition Proposal, including but not limited to information, access, or disclosure relating to the properties, facilities, books or records of the Company or any Subsidiary, the Company shall promptly notify the Purchaser, at first orally, and then as soon as practicable and in any event within 24 hours in writing, of such Acquisition Proposal, inquiry, proposal, offer or request, including a description of its material terms and conditions, the identity of all Persons making the Acquisition Proposal, inquiry, proposal, offer or request, and shall provide the Purchaser with copies of all written documents, material or substantive correspondence or other material received in respect of, from or on behalf of any such Persons. The Company shall keep the Purchaser fully informed on a current basis of the status of material developments and (to the extent permitted by Section 5.3) negotiations with respect to such Acquisition Proposal, inquiry, proposal, offer or request, including any changes, modifications or other amendments to any such Acquisition Proposal, inquiry, proposal, offer or request and shall provide to the Purchaser copies of all material or substantive correspondence if in writing or electronic form, and if not in writing or electronic form, a description of the material terms of such correspondence communicated to the Company by or on behalf of any Person making any such Acquisition Proposal, inquiry, proposal, offer or request.
|
(1)
|
Notwithstanding Section 5.1, if at any time prior to obtaining the approval by the Common Shareholders of the Arrangement Resolution, the Company receives a written Acquisition Proposal, the Company may (i) contact the Person making such Acquisition Proposal and its Representatives solely for the purpose of clarifying the terms and conditions of such Acquisition Proposal, and (ii) engage in or participate in discussions or negotiations with such Person regarding such Acquisition Proposal, and may provide copies of, access to or disclosure of information, properties, facilities, books or records of the Company or its Subsidiaries, if and only if, in the case of this clause (ii):
|
(a)
|
the Board first determines in good faith, after consultation with its financial advisors and its outside legal counsel, that such Acquisition Proposal constitutes or would reasonably be expected to constitute or lead to a Superior Proposal;
|
(b)
|
such Person was not restricted from making such Acquisition Proposal pursuant to an existing confidentiality, standstill, non-disclosure, use, business purpose or similar restriction with the Company or any of its Subsidiaries;
|
(c)
|
the Company has been, and continues to be, in compliance with its obligations under this Article 5;
|
(d)
|
prior to providing any such copies, access, or disclosure, the Company enters into a confidentiality and standstill agreement with such Person that contains a standstill provision that is no less onerous or more beneficial to such Person than that in the Confidentiality Agreement and is otherwise on terms that are no less favourable to the Company than those found in the Confidentiality Agreement, and any such copies, access or disclosure provided to such Person shall have already been (or simultaneously be) provided to the Purchaser (by posting such information to the Data Room or otherwise); and
|
(e)
|
prior to providing any such copies, access or disclosure, the Company provides the Purchaser with a true, complete and final executed copy of the confidentiality and standstill agreement referred to in Section 5.3(1)(d).
|
(1)
|
If the Company receives an Acquisition Proposal that constitutes a Superior Proposal prior to the approval of the Arrangement Resolution by the Common Shareholders the Board may, subject to compliance with Article 7 and Section 8.2, enter into a definitive agreement with respect to such Superior Proposal, if and only if:
|
(a)
|
the Person making the Superior Proposal was not restricted from making such Superior Proposal pursuant to an existing confidentiality, standstill, non-disclosure, use, business purpose or similar restriction with the Company or any of its Subsidiaries;
|
(b)
|
the Company has been, and continues to be, in compliance with its obligations under this Article 5;
|
(c)
|
the Company has delivered to the Purchaser a written notice of the determination of the Board that such Acquisition Proposal constitutes a Superior Proposal and of the intention of the Board to enter into such definitive agreement with respect to such Superior Proposal, together with a written notice from the Board regarding the value and financial terms that the Board, in consultation with its financial advisors, has determined should be ascribed to any non-cash consideration offered under such Superior Proposal
(the “
Superior Proposal Notice
”);
|
(d)
|
the Company has provided the Purchaser a copy of the proposed definitive agreement for the Superior Proposal and all supporting materials, including any financing documents supplied to the Company in connection therewith;
|
(e)
|
at least five Business Days (the “
Matching Period
”) have elapsed from the date that is the later of the date on which the Purchaser received the Superior Proposal Notice and the date on which the Purchaser received all of the materials set forth in Section 5.4(1)(d);
|
(f)
|
during any Matching Period, the Purchaser has had the opportunity (but not the obligation), in accordance with Section 5.4(2), to offer to amend this Agreement and the Arrangement in order for such Acquisition Proposal to cease to be a Superior Proposal;
|
(g)
|
after the Matching Period, the Board (i) has determined in good faith, after consultation with its outside legal counsel and financial advisors, that such Acquisition Proposal continues to constitute a Superior Proposal (if applicable, compared to the terms of the Arrangement as proposed to be amended by the Purchaser under Section 5.4(2)) and (ii) has determined in good faith, after consultation with its outside legal counsel, that the failure by the Board to recommend that the Company enter into a definitive agreement with respect to such Superior Proposal would be inconsistent with its fiduciary duties; and
|
(h)
|
prior to or concurrently with entering into such definitive agreement the Company terminates this Agreement pursuant to Section 7.2(1)(c)(ii) and pays the Termination Fee pursuant to Section 8.2.
|
(2)
|
During the Matching Period, or such longer period as the Company may approve (in its sole discretion) in writing for such purpose: (a) the Board shall review any offer made by the Purchaser under Section 5.4(1)(e) to amend the terms of this Agreement and the Arrangement in good faith in order to determine whether such proposal would, upon acceptance, result in the Acquisition
|
(3)
|
Each successive amendment or modification to any Acquisition Proposal that results in an increase in, or modification of, the consideration (or value of such consideration) to be received by the Company Shareholders or other material terms or conditions thereof shall constitute a new Acquisition Proposal for the purposes of this Section 5.4, and the Purchaser shall be afforded a new five Business Day Matching Period from the later of the date on which the Purchaser received the Superior Proposal Notice and the date on which the Purchaser received all of the materials set forth in Section 5.4(1)(d) with respect to the new Superior Proposal from the Company.
|
(4)
|
The Board shall promptly reaffirm the Board Recommendation by press release after any Acquisition Proposal which the Board has determined not to be a Superior Proposal is publicly announced or publicly disclosed or the Board determines that a proposed amendment to the terms of this Agreement as contemplated under Section 5.4(2) would result in an Acquisition Proposal no longer being a Superior Proposal. The Company shall provide the Purchaser and its outside legal counsel with a reasonable opportunity to review the form and content of any such press release and shall make all reasonable amendments to such press release as requested by the Purchaser and its counsel.
|
(5)
|
If the Company provides a Superior Proposal Notice to the Purchaser on a date that is less than 10 Business Days before the Company Meeting, the Company shall either proceed with or postpone the Company Meeting to a date that is not more than 15 Business Days after the scheduled date of the Company Meeting, as directed by the Purchaser.
|
(6)
|
Nothing contained in this Agreement shall prevent the Board from complying with Section 2.17 of Multilateral Instrument 62-104 –
Takeover Bids and Issuer Bids
and similar provisions under Securities Laws relating to the provision of a directors’ circular in respect of an Acquisition Proposal.
|
(1)
|
Arrangement Resolution.
The Arrangement Resolution has been approved and adopted by the Common Shareholders at the Company Meeting in accordance with the Interim Order.
|
(2)
|
Interim and Final Order.
The Interim Order and the Final Order have each been obtained on terms consistent with this Agreement, and have not been set aside or modified in a manner unacceptable to either the Company or the Purchaser, each acting reasonably, on appeal or otherwise.
|
(3)
|
Illegality.
No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether temporary, preliminary or permanent), in any case which is in effect and which prevents, prohibits or makes the consummation of the Arrangement illegal or otherwise prohibits or enjoins the Company, the Parent or the Purchaser from consummating the Arrangement or any of the other transactions contemplated in this Agreement.
|
(1)
|
Representations and Warranties.
(i) The representations and warranties of the Company set forth in this Agreement were true and correct as of the date of this Agreement and are true and correct as of the Effective Time (except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of such specified date), except to the extent that the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, would not have a Material Adverse Effect (and, for this purpose, any reference to “material”, “Material Adverse Effect” or other concepts of materiality in such representations and warranties shall be ignored), (ii) the representations and warranties of the Company set forth in Paragraphs (1), (2), (3), (5)(a), (8), (9) and (24) of Schedule D were true and correct as of the date of this Agreement and are true and correct as of the Effective Time in all material respects (and, for this purpose, any reference to “material”, “Material Adverse Effect” or other concepts of materiality in such representations and warranties shall be ignored) and (iii) the representations and warranties of the Company set forth in Paragraph (6) of Schedule D were true and correct as of the date of this Agreement and are true and correct as of the Effective Time in all but
de minimis
respects, in each case except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of such specified date, and the Company has delivered a certificate confirming same to the Purchaser, executed by two
|
(2)
|
Performance of Covenants
. The Company has fulfilled or complied in all material respects with each of the covenants of the Company contained in this Agreement to be fulfilled or complied with by it on or prior to the Effective Time, and the Company has delivered a certificate confirming same to the Purchaser, executed by two senior officers of the Company (in each case without personal liability) addressed to the Purchaser and dated the Effective Date.
|
(3)
|
Regulatory Approvals.
Each of the Regulatory Approvals has been made, given or obtained on terms acceptable to the Purchaser taking into account the covenants of the Parent and the Purchaser in this respect at Section 4.4, and each such Regulatory Approval is in force and has not been modified.
|
(4)
|
No Legal Action.
There is no action or proceeding (whether, for greater certainty, by a Governmental Entity or any other Person) pending or threatened in any jurisdiction to:
|
(a)
|
cease trade, enjoin, prohibit, or impose any limitations, damages or conditions on, the Parent’s or the Purchaser’s ability to acquire, hold, or exercise full rights of ownership over, any Company Shares, including the right to vote the Common Shares;
|
(b)
|
impose terms or conditions on completion of the Arrangement or on the ownership or operation by the Parent or the Purchaser of the business or assets of the Parent, the Purchaser, their affiliates and related entities, the Company or any of the Company’s Subsidiaries and related entities, or compel the Parent or the Purchaser to dispose of or hold separate any of the business or assets of the Parent, the Purchaser, their affiliates and related entities, the Company or any of the Company’s Subsidiaries and related entities as a result of the Arrangement, in each case, beyond what the Parent and the Purchaser are required to accept or agree to pursuant to Section 4.4; or
|
(c)
|
prevent or materially delay the consummation of the Arrangement, or if the Arrangement were to be consummated, have a Material Adverse Effect.
|
(5)
|
Dissent Rights.
Dissent Rights have not been exercised with respect to more than 10% of the issued and outstanding Common Shares.
|
(6)
|
Material Adverse Effect
. There shall not have been or occurred a Material Adverse Effect.
|
(1)
|
Representations and Warranties.
The representations and warranties of the Parent and the Purchaser which are qualified by references to materiality and the representations and warranties set forth in Paragraphs (1), (2), (3), (5)(a) and (9) of Schedule E were true and correct as of the date of this Agreement and are true and correct as of the Effective Time, in all respects, and all other representations and warranties of the Parent and the Purchaser were true and correct as of the date of this Agreement and are true and correct as of the Effective Time, in all material respects, in each case except for representations and warranties made as of a specified date, the accuracy of which shall be determined as of such specified date, except where the failure of such representations and warranties to be true and correct, individually or in the aggregate, would not materially impede completion of the Arrangement, and the Parent and the Purchaser have delivered a certificate confirming same to the Company, executed by two senior officers of the Parent and the Purchaser (in each case without personal liability) addressed to the Company and dated the Effective Date.
|
(2)
|
Performance of Covenants.
The Parent and the Purchaser have fulfilled or complied in all material respects with each of the covenants of the Parent and the Purchaser contained in this Agreement to be fulfilled or complied with by them on or prior to the Effective Time, and the Parent and the Purchaser have delivered a certificate confirming same to the Company, executed by two senior officers of the Parent and the Purchaser (in each case without personal liability) addressed to the Company and dated the Effective Date.
|
(3)
|
Deposit of Consideration.
Subject to obtaining the Final Order and the satisfaction or waiver of the other conditions precedent contained herein in its favour (other than conditions which, by their nature, are only capable of being satisfied as of the Effective Time), the Purchaser has deposited or caused to be deposited with the Depositary in escrow in accordance with Section 2.9 the funds required to effect payment in full of the aggregate Consideration to be paid pursuant to the Arrangement and the Depositary has confirmed to the Company receipt of such funds.
|
(1)
|
This Agreement may be terminated prior to the Effective Time by:
|
(a)
|
the mutual written agreement of the Parties; or
|
(b)
|
either the Company, on the one hand, or the Parent or the Purchaser, on the other hand, if:
|
(i)
|
the Arrangement Resolution is not approved by the Common Shareholders at the Company Meeting in accordance with the Interim Order provided that a Party may not terminate this Agreement pursuant to this Section 7.2(1)(b)(i) if the failure to obtain the approval of the Common Shareholders has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under this Agreement;
|
(ii)
|
after the date of this Agreement, any Law is enacted, made, enforced or amended, as applicable, that makes the consummation of the Arrangement illegal or otherwise permanently prohibits or enjoins the Company, the Parent or the Purchaser from consummating the Arrangement, and such Law has, if applicable, become final and non-appealable, provided the Party seeking to terminate this Agreement pursuant to this Section 7.2(1)(b)(ii) has used its commercially reasonable efforts to, as applicable, appeal or overturn such Law or otherwise have it lifted or rendered non-applicable in respect of the Arrangement; or
|
(iii)
|
the Effective Time does not occur on or prior to the Outside Date, provided that a Party may not terminate this Agreement pursuant to this Section 7.2(1)(b)(iii) if the failure of the Effective Time to so occur has been caused by, or is a result of, a breach by such Party (including, in the case of the Purchaser, the Parent)
|
(c)
|
the Company if:
|
(i)
|
a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Parent or the Purchaser under this Agreement occurs that would cause any condition in Section 6.3(1) or Section 6.3(2) not to be satisfied, and such breach or failure is incapable of being cured on or prior to the Outside Date or is not cured in accordance with the terms of Section 4.8(3); provided that any wilful breach shall be deemed to be incurable and the Company is not then in breach of this Agreement so as to cause any condition in Section 6.2(1) or Section 6.2(2) not to be satisfied; or
|
(ii)
|
prior to the approval by the Common Shareholders of the Arrangement Resolution, the Board authorizes the Company to enter into a written agreement (other than a confidentiality agreement permitted by and in accordance with Section 5.3) with respect to a Superior Proposal in accordance with Section 5.4, provided the Company is then in compliance with Article 5 and that prior to or concurrent with such termination the Company pays the Termination Fee in accordance with Section 8.2.
|
(d)
|
the Parent or the Purchaser if:
|
(i)
|
a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Company under this Agreement occurs that would cause any condition in Section 6.2(1) or Section 6.2(2) not to be satisfied, and such breach or failure is incapable of being cured on or prior to the Outside Date or is not cured in accordance with the terms of Section 4.8(3); provided that any wilful breach shall be deemed to be incurable and the Parent and the Purchaser are not then in breach of this Agreement so as to cause any condition in Section 6.3(1) or Section 6.3(2) not to be satisfied;
|
(ii)
|
(A) the Board or any committee of the Board fails to unanimously recommend or withdraws, amends, modifies or qualifies, or publicly proposes or states an intention to withdraw, amend, modify or qualify, the Board Recommendation, (B) the Board or any committee of the Board accepts, approves, endorses or recommends, or publicly proposes to accept, approve, endorse or recommend an Acquisition Proposal or takes no position or remains neutral with respect to a publicly announced, or otherwise publicly disclosed, Acquisition Proposal for more than five Business Days (or beyond the third Business Day prior to the date of the Company Meeting, if sooner)), (C) the Board or any committee of the Board accepts or enters into (other than a confidentiality agreement permitted by and in accordance with Section 5.3) or publicly proposes to accept or enter into any agreement, understanding or arrangement in respect of an Acquisition Proposal, (D) the Board or any committee of the Board fails to
|
(iii)
|
the condition set forth in Section 6.2(5) is not capable of being satisfied by the Outside Date; or
|
(iv)
|
there has occurred a Material Adverse Effect which is incapable of being cured on or prior to the Outside Date.
|
(2)
|
The Party desiring to terminate this Agreement pursuant to this Section 7.2 (other than pursuant to Section 7.2(1)(a)) shall give notice of such termination to the other Party, specifying in reasonable detail the basis for such Party’s exercise of its termination right.
|
(1)
|
If this Agreement is terminated pursuant to Section 7.1 or Section 7.2, this Agreement shall become void and of no further force or effect without liability of any Party (or any shareholder, director, officer, employee, agent, consultant or representative of such Party) to any other Party to this Agreement, except that: (a) in the event of termination under Section 7.1 as a result of the Effective Time occurring, Section 2.7 and Section 4.9 shall survive for a period of six (6) years following such termination; (b) in the event of termination under Section 7.1 as a result of the Effective Time occurring, Section 4.6(4), Section 4.6(5) shall survive any termination hereof for the maximum limitation period permitted under the Law and, (c) in the event of termination under Section 7.2, Section 4.6(4), Section 4.6(5), this Section 7.3 and Section 8.2 through to and including Section 8.16 shall survive, and provided further that, subject to Section 8.2(4), no Party shall be relieved of any liability for any wilful breach by it of this Agreement.
|
(a)
|
change the time for performance of any of the obligations or acts of the Parties;
|
(b)
|
modify any representation or warranty contained in this Agreement or in any document delivered pursuant to this Agreement;
|
(c)
|
modify any of the covenants contained in this Agreement and waive or modify performance of any of the obligations of the Parties; and/or
|
(d)
|
modify any mutual conditions contained in this Agreement.
|
(1)
|
Despite any other provision in this Agreement relating to the payment of fees and expenses, including the payment of brokerage fees, if a Termination Fee Event occurs, the Company shall pay the Purchaser the Termination Fee in accordance with Section 8.2(3).
|
(2)
|
For the purposes of this Agreement, “
Termination Fee
” means $100,000,000, and “
Termination Fee Event
” means the termination of this Agreement:
|
(a)
|
by the Parent or the Purchaser, pursuant to Section 7.2(1)(d)(ii);
|
(b)
|
by the Company, pursuant to Section 7.2(1)(c)(ii);
|
(c)
|
pursuant to any Subsection of Section 7.2(1) if at such time the Parent or the Purchaser is entitled to terminate this Agreement pursuant to Section 7.2(1)(d)(ii); or
|
(d)
|
by the Company or the Parent or the Purchaser pursuant to Section 7.2(1)(b)(i) or Section 7.2(1)(b)(iii), or by the Parent or the Purchaser pursuant to Section 7.2(1)(d)(i) (due to a willful breach or fraud), if;
|
(i)
|
prior to such termination, an Acquisition Proposal is made or publicly announced or otherwise publicly disclosed by any Person (other than the Purchaser, the Parent or any of their respective affiliates) or any Person (other than the Parent, the Purchaser or any of their respective affiliates) shall have publicly announced an intention to make an Acquisition Proposal; and
|
(ii)
|
within 365 days following the date of such termination (A) an Acquisition Proposal (whether or not such Acquisition Proposal is the same Acquisition Proposal referred to in clause (i) above) is consummated or effected, or (B) the Company or one or more of its Subsidiaries, directly or indirectly, in one or more transactions, enters into a contract, other than a confidentiality agreement permitted by and in accordance with Section 5.3, in respect of an Acquisition Proposal (whether or not such Acquisition Proposal is the same Acquisition Proposal referred to in clause (i) above) and such Acquisition Proposal is later consummated or effected (whether or not such Acquisition Proposal is later consummated or effected within 365 days after such termination).
|
(3)
|
If a Termination Fee Event occurs due to a termination of this Agreement by the Company pursuant to Section 7.2(1)(c)(ii), the Termination Fee shall be paid prior to or simultaneously with the occurrence of such Termination Fee Event. If a Termination Fee Event occurs (i) due to a termination of this Agreement by the Parent or the Purchaser pursuant to Section 7.2(1)(d)(ii) or (ii) in the circumstances set out in Section 8.2(2)(c), the Termination Fee shall be paid within two Business Days following such Termination Fee Event. If a Termination Fee Event occurs in the circumstances set out in Section 8.2(2)(d), the Termination Fee shall be paid upon the consummation/closing of the Acquisition Proposal referred to therein. Any Termination Fee shall be paid by the Company to the Purchaser (or as the Purchaser may direct by notice in writing), by wire transfer in immediately available funds to an account designated by the Purchaser.
|
(4)
|
The Company acknowledges that the agreements contained in Section 8.2 are an integral part of the transactions contemplated by this Agreement, and that without these agreements the Parent and the Purchaser would not enter into this Agreement, and that the amounts set out in this Section 8.2 represent liquidated damages which are a genuine pre-estimate of the damages, including opportunity costs, reputational damage, and out-of-pocket expenditures, which the Parent and the Purchaser will suffer or incur as a result of the event giving rise to such damages and resultant termination of this Agreement, and are not penalties. The Company irrevocably waives any right it may have to raise as a defence that any such liquidated damages are excessive or punitive. In the event the Termination Fee is paid in full to the Purchaser (or as it directs) in the manner provided in this Section 8.2, the Parent and the Purchaser agree that the payment of the Termination Fee is the sole and exclusive remedy of the Parent and the Purchaser in connection with this Agreement (and the termination hereof), the transactions contemplated hereby or any matter forming the basis for such termination, and following such receipt neither the Parent nor the Purchaser shall be entitled to bring or maintain any claim, action or proceeding against the Company or any of its affiliates arising out of or in connection with this Agreement (or the termination thereof) or the transactions contemplated herein and neither the Company nor any of its affiliates shall have any further liability with respect to this Agreement or the transactions contemplated hereby to the Parent or the Purchaser or any of their respective affiliates. Notwithstanding anything in this Agreement to the contrary, while the Parent and the Purchaser
|
(1)
|
Except as expressly otherwise provided in this Agreement, all out-of-pocket third party transaction expenses incurred in connection with this Agreement and the Plan of Arrangement and the transactions contemplated hereunder and thereunder, including all costs, expenses and fees of the Company incurred prior to or after the Effective Time in connection with, or incidental to, the Plan of Arrangement, shall be paid by the Party incurring such expenses, whether or not the Arrangement is consummated. Except as provided in Section 4.4(7), the Purchaser and the Company shall each pay one-half of the filing fees required to obtain Regulatory Approvals, including applicable Taxes.
|
(2)
|
In addition to the rights of the Purchaser under Section 8.2(1), if this Agreement is terminated by the Parent or the Purchaser pursuant to Section 7.2(1)(d)(i), then the Company shall, within two Business Days of such termination, pay or cause to be paid to the Purchaser (or as the Purchaser may direct by notice in writing), by wire transfer in immediately available funds to an account designated by the Purchaser, an expense reimbursement fee of $15,000,000. In no event shall the Company be required to pay under Section 8.2(1), on the one hand, and this Section 8.3(2), on the other hand, in the aggregate, an amount in excess of the Termination Fee.
|
(3)
|
The Company confirms that other than the fees disclosed in Section 8.3(3) of the Company Disclosure Letter, no broker, finder or investment banker is or will be entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement.
|
(a)
|
to the Purchaser and the Parent at:
|
(b)
|
to the Company at:
|
(1)
|
Except as provided in Section 4.6(4) and Section 4.9 which, without limiting their terms, are intended as stipulations for the irrevocable benefit of, and shall be enforceable by, the third Persons mentioned in such provisions (such third Persons referred to in this Section 8.7 as the “
Indemnified Persons
”), the Company, the Purchaser and the Parent intend that this Agreement will not benefit or create any right or cause of action in favour of any Person, other than the Parties and that no Person, other than the Parties, shall be entitled to rely on the provisions of this Agreement in any action, suit, proceeding, hearing or other forum.
|
(2)
|
Despite the foregoing, the Parties acknowledge to each of the Indemnified Persons their direct rights against the applicable Party under Section 4.6(4) and Section 4.9, respectively, of this Agreement, which (i) are intended for the irrevocable benefit of, and shall be enforceable by, each Indemnified Person, his or her heirs, executors, administrators and legal representatives, and for such purpose, the Company or the Purchaser, as applicable, confirms that it is acting as trustee on their behalf, and agrees to enforce such provisions on their behalf, and (ii) shall not be deemed exclusive of any other rights to which an Indemnified Party has under Law, Contract or otherwise, and shall be binding on the Purchaser, the Parent and any of their successors. The Parties reserve their right to vary or rescind the rights at any time and in any way whatsoever, if any, granted by or under this Agreement to any Person who is not a Party, without notice to or consent of that Person, including any Indemnified Person.
|
(1)
|
This Agreement becomes effective only when executed by the Company, the Purchaser and the Parent. After that time, it will be binding upon and enure to the benefit of the Company, the Purchaser, the Parent and their respective successors and permitted assigns.
|
(2)
|
Neither this Agreement nor any of the rights or obligations under this Agreement are assignable or transferable by any Party without the prior written consent of the other Party, provided that the Purchaser may assign all or part of its rights under this Agreement to, and its obligations under this Agreement may be assumed by, any of its affiliates, provided that if such assignment and/or assumption takes place, the Purchaser shall continue to be liable joint and severally with such affiliate, as the case may be, for all of its obligations hereunder.
|
(1)
|
This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Québec and the federal laws of Canada applicable therein.
|
(2)
|
Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Québec courts situated in the City of Montreal and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.
|
|
|
RONA INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Robert Sawyer
|
|
|
|
Name: Robert Sawyer
Title: Authorized Signing Officer
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dominique Boies
|
|
|
|
Name: Dominique Boies
Title: Authorized Signing Officer
|
|
|
LOWE’S COMPANIES, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Richard D. Maltsbarger
|
|
|
|
Name: Richard D. Maltsbarger
Title: Chief Development Officer and President - International
|
|
|
|
|
|
|
|
|
|
|
LOWE’S COMPANIES CANADA, ULC
|
|
|
|
|
|
|
|
By:
|
/s/ Sylvain Prud’homme
|
|
|
|
Name: Sylvain Prud’homme
Title: President
|
(1)
|
Headings, etc.
The division of this Plan of Arrangement into Articles and Sections and the insertion of headings are for convenient reference only and do not affect the construction or interpretation of this Plan of Arrangement.
|
(2)
|
Currency.
All references to dollars or to $ are references to Canadian dollars, unless specified otherwise.
|
(3)
|
Gender and Number.
Any reference to gender includes all genders. Words importing the singular number only include the plural and vice versa.
|
(4)
|
Certain Phrases, etc.
The words (i) “including”, “includes” and “include” mean “including (or includes or include) without limitation,” (ii) “the aggregate of”, “the total of”, “the sum of”, or a phrase of similar meaning means “the aggregate (or total or sum), without duplication, of,” and (iii) unless stated otherwise, “Article”, “Section”, and “Schedule”
followed by a number or letter mean and refer to the specified Article or Section of or Schedule to this Plan of Arrangement.
|
(5)
|
Statutes.
Any reference to a statute refers to such statute and all rules, resolutions and regulations made under it, as it or they may have been or may from time to time be amended or re-enacted, unless stated otherwise.
|
(6)
|
Computation of Time.
A period of time is to be computed as beginning on the day following the event that began the period and ending at 4:30 p.m. on the last day of the period, if the last day of the period is a Business Day, or at 4:30 p.m. on the next Business Day if the last day of the period is not a Business Day. If the date on which any action is required or permitted to be taken under this Plan of Arrangement by a Person is not a Business Day, such action shall be required or permitted to be taken on the next succeeding day which is a Business Day.
|
(7)
|
Time References.
References to time herein or in any Letter of Transmittal are to local time, Montreal, Québec.
|
(a)
|
At the Effective Time each of the following events shall occur and shall be deemed to occur sequentially as set out below without any further authorization, act or formality, in each case, unless stated otherwise, effective as at five minute intervals starting at the Effective Time:
|
(b)
|
notwithstanding the terms of the Rights Plan, the Rights Plan shall be terminated and all rights issued pursuant to the Rights Plan shall be cancelled without any payment in respect thereof;
|
(c)
|
each Option outstanding immediately prior to the Effective Time (whether vested or unvested), notwithstanding the terms of the Stock Option Plans, shall be deemed to be unconditionally vested and exercisable, and such Option shall, without any further action by or on behalf of a holder of Options, be deemed to be assigned and transferred by such holder to the Company in exchange for a cash payment from the Company equal to the amount (if any) by which the Consideration per Common Share exceeds the exercise price of such Option less applicable withholdings, and such Option shall immediately be cancelled and, for greater certainty, where such amount is a negative, neither the Company nor the Purchaser shall be obligated to pay the holder of such Option any amount in respect of such Option;
|
(d)
|
each DSU, RSU or PSU outstanding immediately prior to the Effective Time (whether vested or unvested), notwithstanding the terms of the DSU Plan or the Share Unit Plans, as applicable, shall, without any further action by or on behalf of a holder of DSUs, RSUs or PSUs, be deemed to be assigned and transferred by such holder to the Company in exchange for a cash payment from the Company equal to the Consideration per Common Share in respect of each DSU, RSU or PSU, except that the Consideration per Common Share in respect of each PSU granted in calendar 2013 shall be multiplied by
l
%, in each case, less applicable withholdings, and each such DSU, RSU or PSU shall immediately be cancelled;
|
(e)
|
(i) each holder of Options,
DSUs, RSUs or PSUs shall cease to be a holder of such Options,
DSUs, RSUs or PSUs, (ii) such holder’s name shall be removed from each applicable register, (iii) the Stock Option Plans, the DSU Plan and the Share Unit Plans and all agreements relating to the Options, DSUs, RSUs and PSUs shall be terminated and shall be of no further force and effect, and (iv) such holder shall thereafter have only the right to receive the consideration to which they are entitled pursuant to Section 2.3(c) and Section 2.3(d) at the time and in the manner specified in Section 2.3(c) and Section 2.3(d);
|
(f)
|
each of the Common Shares or Preferred Shares held by Dissenting Holders in respect of which Dissent Rights have been validly exercised shall be deemed to have been transferred without any further act or formality to the Purchaser (free and clear of all Liens) in consideration for the right to be paid the fair value of their Common Shares or Preferred Shares, as applicable, in accordance with Article 3, and:
|
(i)
|
such Dissenting Holders shall cease to be the holders of such Common Shares or Preferred Shares, as applicable, and to have any rights as holders of such Common Shares or Preferred Shares, as applicable, other than the right to be paid fair value for such Common Shares or Preferred Shares, as applicable, as set out in Section 3.1;
|
(ii)
|
such Dissenting Holders’ names shall be removed as the holders of such Common Shares or Preferred Shares, as applicable, from the registers of Common Shares and Preferred Shares, as applicable, maintained by or on behalf of the Company; and
|
(iii)
|
the Purchaser shall be deemed to be the transferee of such Common Shares and Preferred Shares, as applicable, free and clear of all Liens, and shall be entered in the registers of Common Shares and Preferred Shares, as applicable, maintained by or on behalf of the Company;
|
(g)
|
each Common Share outstanding immediately prior to the Effective Time, other than Common Shares held by a Dissenting Holder who has validly exercised such holder’s Dissent Right, shall, without any further action by or on behalf of a holder of Common Shares, be deemed to be assigned and transferred by the holder thereof to the Purchaser (free and clear of all Liens) in exchange for the applicable Consideration for each Common Share held, and:
|
(i)
|
the holders of such Common Shares shall cease to be the holders thereof and to have any rights as holders of such Common Shares other than the right to be paid the Consideration per Common Share in accordance with this Plan of Arrangement;
|
(ii)
|
such holders’ names shall be removed from the register of the Common Shares maintained by or on behalf of the Company; and
|
(iii)
|
the Purchaser shall be deemed to be the transferee of such Common Shares (free and clear of all Liens) and shall be entered in the register of the Common Shares maintained by or on behalf of the Company; and
|
(h)
|
simultaneously with Section 2.3(g), each Preferred Share outstanding immediately prior to the Effective Time, other than Preferred Shares held by a Dissenting Holder who has validly exercised such holder’s Dissent Right, shall, without any further action by or on behalf of a holder of Preferred Shares, be deemed to be assigned and transferred by the holder thereof to the Purchaser (free and clear of all Liens) in exchange for the applicable Consideration for each Preferred Share held, and:
|
(i)
|
the holders of such Preferred Shares shall cease to be the holders thereof and to have any rights as holders of such Preferred Shares other than the right to be paid the Consideration per Preferred Share in accordance with this Plan of Arrangement;
|
(ii)
|
such holders’ names shall be removed from the register of the Preferred Shares maintained by or on behalf of the Company; and
|
(iii)
|
the Purchaser shall be deemed to be the transferee of such Preferred Shares (free and clear or all Liens) and shall be entered in the register of the Preferred Shares maintained by or on behalf of the Company.
|
(a)
|
ultimately are entitled to be paid fair value for such Common Shares or Preferred Shares, as applicable: (i) shall be deemed not to have participated in the transactions in Article 2 (other than Section 2.3(f)); (ii) will be entitled to be paid the fair value of such Common Shares and Preferred Shares, as applicable, which fair value, notwithstanding anything to the contrary contained in Chapter XIV of the QBCA, shall be determined as of the close of business, in respect of the Common Shares, on the day before the Arrangement Resolution was adopted and, in respect of the Preferred Shares, on the day before the Preferred Shareholder Resolution was adopted; and (iii) will not be entitled to any other payment or consideration, including any payment that would be payable under the Arrangement had such holders not exercised their Dissent Rights in respect of such Common Shares or Preferred Shares; or
|
(b)
|
ultimately are not entitled, for any reason, to be paid fair value for such Common Shares or Preferred Shares, as applicable, shall be deemed to have participated in the Arrangement on the same basis as a non-dissenting holder of Common Shares or Preferred Shares, as applicable.
|
(a)
|
In no circumstances shall the Parent, the Purchaser, the Company or any other Person be required to recognize a Person exercising Dissent Rights unless such Person is the registered holder of those Common Shares or Preferred Shares, as applicable, in respect of which such rights are sought to be exercised.
|
(b)
|
For greater certainty, in no case shall the Parent, the Purchaser, the Company or any other Person be required to recognize Dissenting Holders as holders of Common Shares or Preferred Shares in respect of which Dissent Rights have been validly exercised after the completion of the transfer under Section 2.3(f), and the names of such Dissenting Holders shall be removed from the registers of holders of the Common Shares and Preferred Shares, as applicable, in respect of which Dissent Rights have been validly exercised at the same time as the event described in Section 2.3(f) occurs. In addition to any other restrictions under Chapter XIV of the QBCA, none of the following shall be entitled to exercise Dissent Rights: (i) holders of Options, holders of DSUs, holders of RSUs or holders of PSUs; (ii) Common Shareholders who have failed to exercise all the voting rights carried by the Common Shares held by such holders against the Arrangement Resolution; and (iii) Preferred Shareholders who have failed to exercise all the voting rights carried by the Preferred Shares held by such holders against the Preferred Shareholder Resolution.
|
(a)
|
Prior to the filing of the Articles of Arrangement the Purchaser shall deposit, or arrange to be deposited, for the benefit of holders of Common Shares and for the benefit of holders of Preferred Shares, cash with the Depositary in the aggregate amount equal to the payments in respect thereof required by this Plan of Arrangement, with the amount per Common Share and Preferred Share, as applicable, in respect of which Dissent Rights have been exercised being deemed to be the Consideration per Common Share or Preferred Share, as applicable, for this purpose, net of applicable withholdings for the benefit of the holders of Common Shares and Preferred Shares, as applicable. The cash deposited with the Depositary by or on behalf of the Purchaser shall be held in an interest-bearing account, and any interest earned on such funds shall be for the account of the Purchaser.
|
(b)
|
Upon surrender to the Depositary for cancellation of a certificate which immediately prior to the Effective Time represented outstanding Common Shares and Preferred Shares that were transferred pursuant to Section 2.3(g) and Section 2.3(h), respectively, together with a duly completed and executed Letter of Transmittal and such additional documents and instruments as the Depositary may reasonably require, the Common Shareholders and Preferred Shareholders, as the case may be, represented by such surrendered certificate shall be entitled to receive in exchange therefor, and the Depositary shall deliver to such holder, the cash which such holder has the right to receive under the Arrangement for such Common Shares and Preferred Shares, as applicable, less any amounts withheld pursuant to Section 4.3, and any certificate so surrendered shall forthwith be cancelled.
|
(c)
|
As soon as practicable after the Effective Date, the Company shall pay the amounts, net of applicable withholdings, to be paid to holders of Options, DSUs, RSUs and PSUs, either (i) pursuant to the normal payroll practices and procedures of the Company, or (ii) in the event that payment pursuant to the normal payroll practices and procedures of the Company is not practicable for any such holder, by cheque (delivered to such holder of Options, DSUs, RSUs or PSUs, as applicable, as reflected on the register maintained by or on behalf of the Company in respect of the Options, DSUs, RSUs and PSUs).
|
(d)
|
Until surrendered as contemplated by this Section 4.1, each certificate that immediately prior to the Effective Time represented Common Shares or Preferred Shares, as applicable, shall be deemed after the Effective Time to represent only the right to receive upon such surrender a cash payment in lieu of such certificate as contemplated in this Section 4.1, less any amounts withheld pursuant to Section 4.3. Any such certificate formerly representing Common Shares or Preferred Shares, as applicable, not duly surrendered on or before the third anniversary of the Effective Date shall cease to represent a claim by or interest of any former holder of Common Shares or Preferred Shares, as applicable, of any kind or nature against or in the Company, the Parent or the Purchaser. On such date, all cash to which such former holder was entitled shall be
|
(e)
|
Any payment made by way of cheque by the Depositary (or the Company, if applicable) pursuant to this Plan of Arrangement that has not been deposited or has been returned to the Depositary (or the Company) or that otherwise remains unclaimed, in each case, on or before the third anniversary of the Effective Time, and any right or claim to payment hereunder that remains outstanding on the third anniversary of the Effective Time shall cease to represent a right or claim of any kind or nature and the right of the holder to receive the applicable consideration for the Common Shares, the Preferred Shares, the Options, the DSUs, the RSUs and the PSUs pursuant to this Plan of Arrangement shall terminate and be deemed to be surrendered and forfeited to the Purchaser or the Company, as applicable, for no consideration.
|
(f)
|
No holder of Common Shares, Preferred Shares, Options, DSUs, RSUs or PSUs shall be entitled to receive any consideration with respect to such Common Shares, Preferred Shares, Options, DSUs, RSUs or PSUs other than any cash payment to which such holder is entitled to receive in accordance with Section 2.3 and this Section 4.1 and, for greater certainty, no such holder will be entitled to receive any interest, dividends, premium or other payment in connection therewith.
|
(a)
|
The Company and the Purchaser may amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Time, provided that each such amendment, modification and/or supplement must (i) be set out in writing, (ii) be approved by the Company and the Purchaser, each acting reasonably, (iii) filed with the Court and, if made following the Company Meeting, approved by the Court, and (iv) communicated to the Company Shareholders if and as required by the Court.
|
(b)
|
Any amendment, modification or supplement to this Plan of Arrangement may be proposed by the Company or the Purchaser at any time prior to the Company Meeting (provided that the Company or the Purchaser, as applicable, shall have consented thereto) with or without any other prior notice or communication, and if so proposed and accepted by the Persons voting at the Company Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes.
|
(c)
|
Any amendment, modification or supplement to this Plan of Arrangement that is approved or directed by the Court following the Company Meeting shall be effective only if (i) it is consented to in writing by each of the Company and the Purchaser (in each case, acting reasonably), and (ii) if required by the Court, it is consented to by some or all of the Common Shareholders and/or Preferred Shareholders voting in the manner directed by the Court.
|
(d)
|
The Company and the Purchaser may, at any time following the Effective Date, amend, modify or supplement this Plan of Arrangement without the approval of Company Shareholders provided that each amendment, modification or supplement (i) must be set out in writing, (ii) must concern a matter which, in the reasonable opinion of each of the Company and the Purchaser is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement, (iii) is not adverse to the economic interests of any former Common Shareholders and/or former Preferred Shareholders, and (iv) need not be filed with the Court or communicated to former Common Shareholders and/or former Preferred Shareholders.
|
1.
|
The arrangement (the “
Arrangement
”) under Chapter XVI – Division II of the
Business Corporations Act
(Quebec) of RONA inc. (the “
Company
”), pursuant to the arrangement agreement (the “
Arrangement Agreement
”) among the Company, Lowe’s Companies Canada, ULC and Lowe’s Companies, Inc. dated February 2, 2016, all as more particularly described and set forth in the management information circular of the Company dated
l
, 2016 (the “
Circular
”), accompanying this notice of meeting (as the Arrangement may be modified or amended in accordance with its terms) is hereby authorized, approved and adopted.
|
2.
|
The plan of arrangement (as it has been or may be amended, modified or supplemented in accordance with the Arrangement Agreement and its terms, the “
Plan of Arrangement
”), the full text of which is set out as Appendix
l
to the Circular, is hereby authorized, approved and adopted.
|
3.
|
The (i) Arrangement Agreement and related transactions, (ii) actions of the directors of the Company in approving the Arrangement Agreement, and (iii) the actions of the directors and officers of the Company in executing and delivering the Arrangement Agreement, and any amendments, modifications or supplements thereto, are hereby ratified and approved.
|
4.
|
Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the Common Shareholders (as defined in the Arrangement Agreement) or that the Arrangement has been approved by the Quebec Superior Court (the “
Court
”), the directors of the Company are hereby authorized and empowered, at their discretion, without notice to or approval of the Common Shareholders: (i) to amend, modify or supplement the Arrangement Agreement or the Plan of Arrangement to the extent permitted by the Arrangement Agreement; and (ii) subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement.
|
5.
|
Any officer or director of the Company be and is hereby authorized for and on behalf of the Company to make an application to the Court for an order approving the Arrangement and to execute, under corporate seal or otherwise, and to deliver or cause to be delivered, for filing with the enterprise registrar appointed by the Minister of Revenue of Quebec, articles of arrangement and all such other documents and instruments as are necessary or desirable to give effect to the Arrangement in accordance with the Arrangement Agreement, such determination to be conclusively evidenced by the execution and delivery of such articles of arrangement or any such other document or instrument.
|
6.
|
Any officer or director of the Company is hereby authorized and directed for and on behalf of the Company to execute or cause to be executed and to deliver or cause to be delivered, all such other documents and instruments and to perform or cause to be performed all such other acts and things as, in such person’s opinion, may be necessary or desirable to give full force and
|
1.
|
The arrangement (the “
Arrangement
”) under Chapter XVI – Division II of the
Business Corporations Act
(Quebec) of RONA inc. (the “
Company
”), pursuant to the arrangement agreement (the “
Arrangement Agreement
”) among the Company, Lowe’s Companies Canada, ULC and Lowe’s Companies, Inc. dated February 2, 2016, all as more particularly described and set forth in the management information circular of the Company dated
l
, 2016 (the “
Circular
”), accompanying this notice of meeting (as the Arrangement may be modified or amended in accordance with its terms) is hereby authorized, approved and adopted.
|
2.
|
The plan of arrangement (as it has been or may be amended, modified or supplemented in accordance with the Arrangement Agreement and its terms, the “
Plan of Arrangement
”), the full text of which is set out as Appendix
l
to the Circular, is hereby authorized, approved and adopted.
|
3.
|
The (i) Arrangement Agreement and related transactions, (ii) actions of the directors of the Company in approving the Arrangement Agreement, and (iii) the actions of the directors and officers of the Company in executing and delivering the Arrangement Agreement, and any amendments, modifications or supplements thereto, are hereby ratified and approved.
|
4.
|
Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the Preferred Shareholders (as defined in the Arrangement Agreement) or that the Arrangement has been approved by the Quebec Superior Court (the “
Court
”), the directors of the Company are hereby authorized and empowered, at their discretion, without notice to or approval of the Preferred Shareholders: (i) to amend, modify or supplement the Arrangement Agreement or the Plan of Arrangement to the extent permitted by the Arrangement Agreement; and (ii) subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement.
|
5.
|
Any officer or director of the Company be and is hereby authorized for and on behalf of the Company to make an application to the Court for an order approving the Arrangement and to execute, under corporate seal or otherwise, and to deliver or cause to be delivered, for filing with the enterprise registrar appointed by the Minister of Revenue of Quebec, articles of arrangement and all such other documents and instruments as are necessary or desirable to give effect to the Arrangement in accordance with the Arrangement Agreement, such determination to be conclusively evidenced by the execution and delivery of such articles of arrangement or any such other document or instrument.
|
6.
|
Any officer or director of the Company is hereby authorized and directed for and on behalf of the Company to execute or cause to be executed and to deliver or cause to be delivered, all such other documents and instruments and to perform or cause to be performed all such other acts and things as, in such person’s opinion, may be necessary or desirable to give full force and
|
(1)
|
Organization and Qualification.
The Company and each of its Subsidiaries is a corporation or other entity duly incorporated or organized, as applicable, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, as applicable, and has all requisite power and authority to own, lease and operate its assets and properties and conduct its business as now owned and conducted. The Company, each of its Subsidiaries is duly qualified, licensed or registered to carry on business and is in good standing in each jurisdiction in which the character of its assets and properties, owned, leased, licensed or otherwise held, or the nature of its activities make such qualification, licensing or registration necessary, and has all Authorizations required to own, lease and operate its properties and assets and to conduct its business as now owned and conducted, except for those Authorizations the absence of which do not have and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
|
(2)
|
Corporate Authorization.
The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance by the Company of its obligations under this Agreement and the consummation of the Arrangement and the other transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or the consummation of the Arrangement and the other transactions contemplated hereby other than approval by the Common Shareholders in the manner required by the Interim Order and Law and approval by the Court.
|
(3)
|
Execution and Binding Obligation.
This Agreement has been duly executed and delivered by the Company, and constitutes a legal, valid and binding agreement of the Company enforceable against it in accordance with its terms subject only to any limitation under bankruptcy, insolvency or other Laws affecting the enforcement of creditors’ rights generally and the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction.
|
(4)
|
Governmental Authorization.
The execution, delivery and performance by the Company of its obligations under this Agreement and the consummation of the Arrangement and the other transactions contemplated hereby do not require any Authorization or other action by or in respect of, or filing with, or notification to,
any Governmental Entity by the Company or by any of its Subsidiaries other than: (i) the Interim Order and any approvals required by the Interim Order; (ii) the Final Order; (iii) filings with the Enterprise Registrar under the QBCA; (iv) in relation to the Regulatory Approvals; and (v) filings with the Securities Authorities and the Exchange.
|
(5)
|
Non-Contravention.
The execution, delivery and performance by the Company of its obligations under this Agreement and the consummation of the Arrangement and the other
|
(a)
|
contravene, conflict with, or result in any violation or breach of the Company’s Constating Documents or the organizational documents of any of its Subsidiaries;
|
(b)
|
assuming compliance with the matters referred to in Paragraph (4) above, contravene, conflict with or result in a violation or breach of Law;
|
(c)
|
except as disclosed in Section 3.1(5)(c) of the Company Disclosure Letter, allow any Person to exercise any rights, require any consent or other action by any Person, or constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which the Company or any of its Subsidiaries are entitled (including by triggering any rights of first refusal or first offer, change in control provision or other restriction or limitation) under any Contract, lease or other instrument, indenture, deed of trust, mortgage, bond or any Authorization to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; or
|
(d)
|
result in the creation or imposition of any Lien upon any of the properties or assets of the Company or its Subsidiaries;
|
(6)
|
Capitalization.
|
(a)
|
The authorized capital of the Company consists of an unlimited number of Common Shares and an unlimited number of Class “A”, Class “B”, Class “C” and Class “D” preferred shares, of which classes “A” and “C” are issuable in series. As of the close of business on the date of this Agreement, there were 106,904,501 Common Shares issued and outstanding, 6,900,000 Series 6 Class A Preferred Shares issued and outstanding and no Series 7 Class A Preferred Shares issued and outstanding. In addition, as of the date hereof, the Company has issued and outstanding $116,829,000 aggregate principal amount of Debentures. All outstanding Common Shares and Preferred Shares have been duly authorized and validly issued, are fully paid and non-assessable. All of the Common Shares issuable upon the exercise of rights under the Stock Option Plans, including outstanding Options, have been duly authorized and, upon issuance in accordance with their respective terms, will be validly issued as fully paid and non-assessable and are not and will not be subject to or issued in violation of, any pre-emptive rights. No Common Shares or Preferred Shares have been issued and no Options have been granted in violation of any Law or any pre-emptive or similar rights applicable to them.
|
(b)
|
Section 3.1(6)(b) of the Company Disclosure Letter sets forth, in respect of each Option outstanding as of the date of this Agreement: (i) the number of Common Shares issuable upon exercise (including the aggregate total of all Common Shares issuable upon exercise of all outstanding Options); (ii) the purchase price payable; (iii) the date of grant; (iv) the date of expiry; and (v) the name of the registered holder, identifying whether such holder is not an employee of the Company or of its Subsidiaries. The Stock Option Plans and the issuance of Common Shares under such plan (including all outstanding Options) have been duly authorized by the Board in compliance with Law and the terms of the applicable Stock Option Plan, and have been recorded on the Company’s financial statements in accordance with GAAP, and no such grants involved any “back dating,” “forward dating,” “spring loading” or similar practices.
|
(c)
|
Section 3.1(6)(c) of the Company Disclosure Letter sets forth, as of the date of this Agreement, the number of outstanding DSUs, RSUs and PSUs, the name of the holder of each DSU, RSU and PSU, identifying whether such holder is not an employee of the Company or of its Subsidiaries and the exercise price or issuance price, vesting schedule, vested percentage and expiration dates, as applicable, of such DSUs, RSUs and PSUs.
|
(d)
|
Except for rights under the Stock Option Plans, including outstanding Options, the rights under the Rights Plan and pursuant to the terms of the Preferred Shares as set out in Section 3.1(6)(d) of the Company Disclosure Letter, there are no issued, outstanding or authorized options, equity-based awards, warrants, calls, conversion, pre-emptive, redemption, repurchase, stock appreciation or other rights, or any other agreements, arrangements, instruments or commitments of any kind that obligate the Company or any of its Subsidiaries to, directly or indirectly, issue or sell any securities of the Company or of any of its Subsidiaries, or give any Person a right to subscribe for or acquire, any securities of the Company or of any of its Subsidiaries.
|
(e)
|
There are no issued, outstanding or authorized:
|
(i)
|
obligations to repurchase, redeem or otherwise acquire any securities of the Company or of any of its Subsidiaries, or qualify securities for public distribution in Canada, the U.S. or elsewhere, or with respect to the voting or disposition of any securities of the Company or of any of its Subsidiaries; or
|
(ii)
|
notes, bonds, debentures or other evidences of indebtedness or any other agreements, arrangements, instruments or commitments of any kind that give any Person, directly or indirectly, the right to vote with holders of Common Shares on any matter.
|
(f)
|
All dividends or distributions on securities of the Company that have been declared or authorized have been paid in full.
|
(7)
|
Shareholders’ and Similar Agreements.
Except as
disclosed in
Section 3.1(7) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is subject to, or affected by, any unanimous shareholders agreement and is not a party to any shareholder, pooling, voting, or other similar arrangement or agreement relating to the ownership or voting of the securities of the Company or of any of its Subsidiaries or pursuant to which any Person may have any right or claim in connection with any existing or past equity interest in the Company or in any of its Subsidiaries.
|
(8)
|
Rights Plan.
The Company has taken all necessary action so that neither the execution and delivery of this Agreement nor the consummation of the Arrangement and the transactions contemplated hereby will: (i) cause the rights under the Rights Plan to become exercisable; (ii) cause any person to become an Acquiring Person (as defined in the Rights Plan); or (iii) give rise to a Separation Time or a Flip-in Event (each as defined in the Rights Plan).
|
(9)
|
Subsidiaries.
|
(a)
|
The following information with respect to each Subsidiary of the Company is accurately set out in
Section 3.1(9)(a)
of the Company Disclosure Letter: (i) its name; (ii) the number, type and principal amount, as applicable, of its outstanding equity securities or other equity interests and a list of registered holders of capital stock or other equity interests; and (iii) its jurisdiction of incorporation, organization or formation.
|
(b)
|
Except as disclosed in
Section 3.1(9)(b)(i)
of the Company Disclosure Letter, the Company is, directly or indirectly, the registered and beneficial owner of all of the outstanding common shares or other equity interests of each of its Subsidiaries, free and clear of any Liens, all such shares or other equity interests so owned by the Company have been validly issued and are fully paid and non-assessable, as the case may be, and no such shares or other equity interests have been issued in violation of any pre-emptive or similar rights. Except for the shares or other equity interests owned by the Company in any Subsidiary and except as disclosed in
Section 3.1(9)(b)(ii)
of the
Company Disclosure Letter, the Company does not own, beneficially or of record, any equity interests of any kind in any other Person.
|
(10)
|
Securities Law Matters.
The Company is a “reporting issuer” under Canadian Securities Laws in each of the provinces of Canada. The Common Shares and the Preferred Shares are listed and posted for trading on the Exchange. None of the Company’s Subsidiaries are subject to any continuous or periodic, or other disclosure requirements under any securities laws in any jurisdiction. The Company is not in default of any material requirements of any Securities Laws or the rules and regulations of the Exchange. The Company has not taken any action to cease to be a reporting issuer in any province of Canada nor has the Company received notification from any Securities Authority seeking to revoke the reporting issuer status of the Company. No delisting, suspension of trading or cease trade or other order or restriction with respect to any securities of the Company is pending, in effect, has been threatened, or is expected to be implemented or undertaken, and to the knowledge of the Company, the Company is not subject
|
(11)
|
U.S. Securities Law Matters.
|
(a)
|
The Company does not have, nor is it required to have, any class of securities registered under the
Securities Exchange Act of 1934
of the United States of America, nor is the Company subject to any reporting obligation (whether active or suspended) pursuant to section 15(d) of the
Securities Exchange Act of 1934
of the United States of America.
|
(b)
|
The Company is not, and has never been, subject to any requirement to register any class of its equity securities pursuant to Section 12(g) of the
Securities Exchange Act of 1934
of the United States of America, is not an investment company registered or required to be registered under the
Investment Company Act of 1940
of the United States of America, and is a “foreign private issuer” (as such term is defined in Rule 3b-1 under the
Securities Exchange Act of 1934
of the United States of America).
|
(c)
|
No securities of the Company are listed on any national securities exchange in the United States.
|
(12)
|
Financial Statements.
|
(a)
|
The audited consolidated financial statements and the consolidated interim financial statements of the Company (including, in each case, any the notes or schedules to and the auditor’s report on such financial statements) included in the Company Filings: (i) were prepared or shall be prepared, as applicable, in accordance with GAAP and Law; (ii) complied or shall comply, as applicable, as to form in all material respects with applicable accounting requirements in Canada; and (iii) fairly present or shall fairly present, as applicable, in all material respects, the assets, liabilities (whether accrued,
|
(b)
|
The financial books, records and accounts of the Company and each of its Subsidiaries: (i) have been maintained, in all material respects, in accordance with GAAP; (ii) are stated in reasonable detail; (iii) accurately and fairly reflect all the material transactions, acquisitions and dispositions of the Company and its Subsidiaries; and (iv) accurately and fairly reflect the basis of the Company’s financial statements.
|
(13)
|
Disclosure Controls and Internal Control over Financial Reporting.
|
(a)
|
The Company has established and maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under Securities Laws is recorded, processed, summarized and reported within the time periods specified in Securities Laws. Such disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted under Securities Laws are accumulated and communicated to the Company’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosed.
|
(b)
|
The Company has established and maintains a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
|
(c)
|
To the knowledge of the Company, there is no material weakness (as such term is defined in National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings)) relating to the design, implementation or maintenance of its internal control over financial reporting, or fraud, whether or not material, that involves
|
(14)
|
Auditors.
The auditors of the Company are independent public accountants as required by applicable Laws and there is not now, and there has never been, any reportable event (as defined in National Instrument 51-102 –
Continuous Disclosure Obligations
) with the present or any former auditors of the Company.
|
(15)
|
No Undisclosed Liabilities.
There are no material liabilities or obligations of the Company or of any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, other than liabilities or obligations: (i) disclosed in the Company’s financial statements or in the notes thereto; (ii) incurred in the Ordinary Course since December 31, 2014; or (iii) incurred in connection with this Agreement. The principal amount of all indebtedness for borrowed
money of the Company and its Subsidiaries as of the date hereof, including capital leases, is disclosed in
Section 3.1(15)
of the Company Disclosure Letter.
|
(16)
|
Absence of Certain Changes or Events.
Since December 31, 2014, other than the transactions contemplated in this Agreement, the business of the Company and its Subsidiaries has been conducted in the Ordinary Course and there has not occurred a Material Adverse Effect.
|
(17)
|
Ordinary Course
.
|
(a)
|
Except as disclosed in Section 3.1(17)(a) of the Company Disclosure Letter, since December 31, 2014:
|
(i)
|
the Company and each of its Subsidiaries has conducted their respective business only in the Ordinary Course;
|
(ii)
|
no liability or obligation of any nature (whether absolute, accrued, contingent or otherwise) which has had, or is reasonably likely to have, a Material Adverse Effect has been incurred;
|
(iii)
|
there has not been any material change in the accounting practices used by the Company and its Subsidiaries;
|
(iv)
|
except for Ordinary Course adjustments to employees (other than directors or officers), there has not been any increase in the salary, bonus, or other remuneration payable to any non-executive employees of any of Company or its Subsidiaries;
|
(v)
|
there has not been a material change in the level of accounts receivable or payable, inventories or employees, other than those changes in the Ordinary Course;
|
(vi)
|
there has not been any entering into, or an amendment of, any Material Contract other than in the Ordinary Course;
|
(vii)
|
there has not been any satisfaction or settlement of any material claims or material liabilities that were not reflected in the Company’s audited financial statements, other than the settlement of claims or liabilities incurred in the Ordinary Course; and
|
(viii)
|
except for Ordinary Course adjustments, there has not been any increase in the salary, bonus, or other remuneration payable to any officers of the Company or its Subsidiaries or any amendment or modification to the vesting or exercisability schedule or criteria, including any acceleration, right to accelerate or acceleration event or other entitlement under any stock option, restricted stock, deferred compensation or other compensation award of any officer of the Company or any of its Subsidiaries.
|
(18)
|
Long-Term and Derivative Transactions.
Neither the Company nor any of its Subsidiaries have any material obligations or liabilities, direct or indirect, vested or contingent in respect of any rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, equity or equity index swaps, equity or equity index options, bond options, interest rate options, foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions or currency options or any other similar transactions (including any option with respect to any of such transactions) or any combination of such transactions, except in the Ordinary Course.
|
(19)
|
Related Party Transactions.
Neither the Company nor any of its Subsidiaries is indebted to any director, officer, employee or agent of, or independent contractor to, the Company or any of its Subsidiaries or any of their respective affiliates or associates (except for amounts due in the Ordinary Course as salaries, bonuses and director’s fees or the reimbursement of Ordinary Course expenses). There are no Contracts (other than employment arrangements) with, or advances, loans, guarantees, liabilities or other obligations to, on behalf or for the benefit of, any shareholder, officer or director of the Company or any of its Subsidiaries, or any of their respective affiliates or associates.
|
(20)
|
No “Collateral Benefit”
. To the knowledge of the Company, no related party of the Company (within the meaning of Multilateral Instrument 61-101) together with its associated entities,
|
(21)
|
Compliance with Laws.
Each of the Company and each of its Subsidiaries is, and since January 1, 2011 has been, in compliance in all material respects with Law. Since January 1, 2013, neither the Company nor any of its Subsidiaries is or has been, to the knowledge of the Company, under any investigation with respect to, is or has been charged or, to the knowledge of the Company, threatened to be charged with, or has received notice of, any violation or potential violation of any Law or disqualification by a Governmental Entity.
|
(22)
|
Authorizations and Licenses.
|
(a)
|
The Company and each of its Subsidiaries own, possess or have obtained all Authorizations that are required by Law in connection with the operation of the business of the Company and its Subsidiaries as presently or previously conducted, or in connection with the ownership, operation or use of the Company Assets, except as would not, individually or in the aggregate, have a Material Adverse Effect.
|
(b)
|
The Company or its Subsidiaries, as applicable, lawfully hold, own or use, and have complied with, all such Authorizations, except as would not, individually or in the aggregate, have a Material Adverse Effect. Each Authorization is valid and in full force and effect, and is renewable by its terms or in the Ordinary Course, except as would not, individually or in the aggregate have a Material Adverse Effect.
|
(c)
|
Except as disclosed in Section 3.1(22)(c) of the Company Disclosure Letter, to the knowledge of the Company, no action, investigation or proceeding is, (i) pending in respect of or regarding any such Authorization and (ii) none of the Company or any of its Subsidiaries has received notice, whether written or oral, of revocation, non-renewal or material amendments of any such Authorization, or of the intention of any Person to revoke, refuse to renew or materially amend any such Authorization.
|
(23)
|
Opinions of Financial Advisors.
|
(24)
|
Finders’ Fees.
|
(25)
|
Board and Special Committee Approval
.
|
(a)
|
The Special Committee, after consultation with its financial and legal advisors, has unanimously recommended that the Board approve the Arrangement and that the Common Shareholders vote in favour of the Arrangement Resolution and the Preferred Shareholders vote in favour of the Preferred Shareholder Resolution.
|
(b)
|
The Board, acting on the unanimous recommendation in favour of the Arrangement by the Special Committee, has unanimously: (i) determined that the Consideration to be received by the Company Shareholders pursuant to the Arrangement and this Agreement is fair to such holders and that the Arrangement is in the best interests of the Company and the Company Shareholders; (ii) resolved to unanimously recommend that the Common Shareholders vote in favour of the Arrangement Resolution and the Preferred Shareholders vote in favour of the Preferred Shareholder Resolution; and (iii) authorized the entering into of this Agreement and the performance by the Company of its obligations under this Agreement, and no action has been taken to amend, or supersede such determinations, resolutions, or authorizations.
|
(c)
|
Each of the directors and executive officers of the Company listed in Section 1.2(6) of this Agreement has advised the Company and the Company believes that they intend to vote or cause to be voted all Company Shares beneficially held by them in favour of the Arrangement Resolution and the Preferred Shareholder Resolution, as applicable, and the Company shall make a statement to that effect in the Company Circular.
|
(26)
|
Material Contracts.
|
(a)
|
Section 3.1(26)(a)
of the Company Disclosure Letter sets out a complete and accurate list of all Material Contracts other than Leases. True and complete copies of the Material Contracts other than Leases have been disclosed in the Data Room and no such Contract has, since such disclosure, been modified, rescinded or terminated.
|
(b)
|
Each Material Contract other than Leases is legal, valid, binding and in full force and effect and is enforceable by the Company or a Subsidiary, as applicable, in accordance
|
(c)
|
Except as disclosed in Section 3.1(26)(c)
of the Company Disclosure Letter,
each of the Company and each of its Subsidiaries has performed in all material respects all respective obligations required to be performed by them to date under the Material Contracts other than the Leases and neither the Company nor any of its Subsidiaries is in material breach or default under any Material Contract other than the Leases, nor does the Company have knowledge of any condition that with the passage of time or the giving of notice or both would result in such a material breach or default.
|
(d)
|
Except as disclosed in Section 3.1(26)(d)
of the Company Disclosure Letter,
none of the Company or any of its Subsidiaries knows of, or has received any notice (whether written or oral) of, any breach or default under nor, to the knowledge of the Company, does there exist any condition which with the passage of time or the giving of notice or both would result in such a breach or default under any such Material Contract by any other party to a Material Contract.
|
(e)
|
None of the Company or any of its Subsidiaries has received any written notice, that any party to a Material Contract other than Leases intends to cancel, terminate or otherwise modify or not renew its relationship with the Company or with any of its Subsidiaries, and, to the knowledge of the Company, no such action has been threatened.
|
(27)
|
Real Property.
|
(a)
|
Section 3.1(27)(a)
of the Company Disclosure Letter sets out a complete and accurate list of all real and immoveable property owned by the Company and/or its Subsidiaries (each such property disclosed, or required to be disclosed, in
Section 3.1(27)(a)
of the Company Disclosure Letter, an “
Owned Property
”), in each case
by reference to their municipal addresses.
|
(b)
|
Other than as disclosed in Section 3.1(27)(b) of the Company Disclosure Letter, (i) the Company or one of its Subsidiaries has valid, good and marketable title to the Owned Properties and leasehold title to the Leased Properties free and clear of all Liens except for Permitted Liens, (ii) there are no options or rights of first refusal to purchase the Owned Properties or any portion thereof or interest therein, and (iii) neither the Company nor any of its Subsidiaries is the owner of, or is bound by or subject to any agreement or option to own, any real or immoveable property other than the Owned Properties.
|
(c)
|
Section 3.1(27)(c)
of the Company Disclosure Letter sets out a complete and accurate list of all real and immoveable property leased, subleased, licensed and/or (other than the Owned Properties) occupied by the Company and/or its Subsidiaries, other than
de minimis
leases for immaterial, non-retail, leased premises within joint venture entities
|
(d)
|
Section 3.1(27)(d)
of the Company Disclosure Letter sets out a complete and accurate list of all of the Leases. True and complete copies of the Leases have been disclosed in the Data Room and no Lease has been modified, rescinded or terminated since such disclosure and other than as disclosed in
Section 3.1(27)(e)
of the Company Disclosure Letter
.
|
(e)
|
Except as disclosed in Section 3.1(27)(e) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to, or under any agreement to become a party to, any lease, licence or occupancy agreement with respect to real or immoveable property other than the Leases in respect of the Leased Properties.
|
(f)
|
Each Lease creates a good and valid leasehold estate in the Leased Properties thereby demised and is in full force and effect without amendment.
|
(g)
|
With respect to each Lease (i) except as disclosed in Section 3.1(27)(g) of the Company Disclosure Letter, all rents and additional rents have been paid, (ii) no waiver, indulgence or postponement of the lessee’s obligations has been granted by the lessor, (iii) there exists no event of default or event, occurrence, condition or act (including the transactions contemplated herein) which, with the giving of notice, the lapse of time or the happening of any other event or condition, would become a default under the Lease, and (iv) to the knowledge of the Company, all of the covenants to be performed by any other party under the Lease have been performed in all material respects.
|
(h)
|
No third party has repudiated or has the right to terminate or repudiate any such lease, sublease, license or occupancy agreement (except for the normal exercise of remedies in connection with a default thereunder or any termination rights set forth in the lease, sublease, license or occupancy agreement) or any provision thereof.
|
(i)
|
Except as disclosed in Section 3.1(27)(i) of the Company Disclosure Letter, none of the Leases has been assigned, and none of the Leased Properties or Owned Properties has been leased, subleased or sublicensed by the Company or any of its Subsidiaries, to any Person.
|
(j)
|
None of the Leased Properties or Owned
Properties or the buildings and/or fixtures thereon, nor their use, operation or maintenance for the purpose of carrying on the business of the Company in the ordinary course violates in any material respect any restrictive covenant binding upon the Company or any Owned Property or any Leased Property or any provision of any Law.
|
(k)
|
Neither the Company nor any of its Subsidiaries owes any sums in respect of the Liens described in Section 3.1(27)(k) of the Company Disclosure Letter and such Liens are not in respect of any current binding obligation of the Company and its Subsidiaries.
|
(28)
|
Personal Property.
The Company and/or its Subsidiaries have valid, good and marketable title to all material personal or movable property of any kind or nature which the Company or any of its Subsidiaries purports to own, free and clear of all Liens (other than Permitted Liens), except as would not, individually or in the aggregate, have a Material Adverse Effect. The Company and its Subsidiaries, as lessees, have the right under valid and subsisting leases to use, possess and control all personal or movable property leased by and material to the Company or any of its Subsidiaries as used, possessed and controlled by the Company or its Subsidiaries, as applicable, except as would not, individually or in the aggregate, have a Material Adverse Effect.
|
(29)
|
Intellectual Property.
Except as would not and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect: (i) the Company, and/or its Subsidiaries own all right, title and interest in and to, or have validly licensed (and are not in material breach of such licenses), all Intellectual Property that is material to the conduct of the business, as presently conducted, of the Company and its Subsidiaries (collectively, the “
Intellectual Property Rights
”); (ii) all such Intellectual Property Rights that are owned by or licensed to the Company, and/or its Subsidiaries are sufficient, in all material respects, for conducting the business, as presently conducted, of the Company and its Subsidiaries; (iii) to the knowledge of the Company, all Intellectual Property Rights owned or leased by the Company and/or its Subsidiaries are valid and enforceable, and to the knowledge of the Company, the carrying on of the business of the Company and its Subsidiaries and the use by the Company and its Subsidiaries of any of the Intellectual Property Rights or Technology (as defined below) owned by or licensed to them does not breach, violate, infringe or interfere with any rights of any other Person; (iv) except as disclosed in Section 3.1(29)(iv) of the Company Disclosure Letter, to the knowledge of the Company, no third party is infringing upon the Intellectual Property Rights owned or licensed by the Company or its Subsidiaries; (v) all computer hardware and associated firmware and operating systems, application software, database engines and processed data, technology infrastructure and other computer systems used in connection with the conduct of the business, as presently conducted, of the Company and its Subsidiaries (collectively, the “
Technology
”) are sufficient, in all material respects, for conducting the business, as presently conducted, of the Company and its Subsidiaries; and (vi) the Company and its Subsidiaries own or have validly licensed or leased (and are not in material breach of such licenses or leases) such Technology.
|
(30)
|
Restrictions on Conduct of Business.
Except as disclosed in Section 3.1(30) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to or bound by any non-competition agreement, any non-solicitation agreement, or any other agreement, obligation, judgment, injunction, order or decree which purports to: (i) limit in any material respect the
|
(31)
|
Litigation.
There are no claims, actions, suits, arbitrations, inquiries, investigations or proceedings pending, or, to the knowledge of the Company threatened, against or relating to the Company or any of its Subsidiaries, the business of the Company or of any of its Subsidiaries or affecting any of their respective current or former properties or assets by or before any Governmental Entity that, if determined adverse to the interests of the Company or its Subsidiaries, could potentially result in criminal sanction, have or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect, would or would be reasonably expected to prevent or delay the consummation of the Arrangement or the transactions contemplated hereby, nor to the knowledge of the Company are there any events or circumstances which could reasonably be expected to give rise to any such claim, action, suit, arbitration, inquiry, investigation or proceeding. There is no bankruptcy, liquidation, winding-up or other similar proceeding pending or in progress, or, to the knowledge of the Company, threatened against or relating to the Company or any of its Subsidiaries before any Governmental Entity.
|
(32)
|
Environmental Matters.
|
(a)
|
Except as disclosed in Section 3.1(32)(a) of the Company Disclosure Letter, no written notice, order, complaint or penalty has been received by the Company or any of its Subsidiaries alleging that the Company or any of its Subsidiaries is in violation of, or has any liability or potential liability under, any Environmental Law, and there are no judicial, administrative or other actions, suits or proceedings pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries which allege a violation of, or any liability or potential liability under, any Environmental Laws; and except as disclosed in Section 3.1(32)(a) of the Company Disclosure Letter, the Company is not aware of any facts or circumstances that reasonably could be expected to give rise to any such notice, claim, order, complaint or penalty.
|
(b)
|
The Company and each of its Subsidiaries has all material environmental permits necessary for the operation of their respective businesses and to comply with all Environmental Laws;
|
(c)
|
The operations of the Company and each of its Subsidiaries are, and since January 1, 2011 have been, in compliance in all material respects with Environmental Laws.
|
(d)
|
Except as disclosed in Section 3.1(32)(d) of the Company Disclosure Letter, to the knowledge of the Company, there are no Hazardous Substances in the soil or groundwater at any Owned Property or Leased Property that would result or reasonably be expected to result in material liability to the Company or any of its Subsidiaries.
|
(33)
|
Employees.
|
(a)
|
Section 3.1(33)(a) of the Company Disclosure Letter sets out (without names or employee numbers) a true and complete list of all Senior Management Employees, whether actively at work or not, including their respective location, hire date and cumulative length of service, position, compensation (including but not limited to salary, bonus and commissions), eligibility to participate in short-term and long-term incentive plans (and grants received under these plans, if any), benefits, vacation entitlement in days, current status (full time or part-time, active or non-active (and if non-active, the reason for leave)) and whether they are subject to a written employment Contract as well as a list of all former Senior Management Employees to whom the Company or any of its Subsidiaries has or may have any outstanding obligations, indicating the nature and the value of such obligations.
|
(b)
|
Section 3.1(33)(b) of the Company Disclosure Letter contains a correct and complete list of each independent contractor engaged by the Company or any subsidiary with an aggregate annual compensation in excess of $100,000, including their consulting fees, any other forms of compensation or benefits to which they are entitled and whether they are subject to a written Contract. Current and complete copies of all such independent contractor Contracts that provide for base fees in excess of $100,000 per annum have been disclosed in the Data Room. Each independent contractor of the Company has been properly classified as an independent contractor and neither the Company nor any Subsidiary has received any notice from any Governmental Entity disputing such classification.
|
(c)
|
All written Contracts in relation to Senior Management Employees have been disclosed in the Data Room. No such employee has indicated to the Company or its Subsidiaries that he or she intends to resign, retire or terminate his or her engagement with the Company as a result of the transactions contemplated by this Agreement or otherwise.
|
(d)
|
The Company and its Subsidiaries are in material compliance with all terms and conditions of employment and all Law respecting employment, including pay equity, wages, hours of work, overtime, vacation, human rights and occupational health and
|
(e)
|
All amounts due or accrued due for all salary, wages, bonuses, commissions, vacation with pay, sick days and benefits under Employee Plans and other similar accruals have either been paid or are accurately reflected in the books and records of the Company or of the applicable Subsidiary.
|
(f)
|
Except as disclosed in Section 3.1(33)(f) of the Company Disclosure Letter, no Company Employee has any agreement as to length of notice or severance payment required to terminate his or her employment, other than such as results from Law from the employment of an employee without an agreement as to notice or severance.
|
(g)
|
Except as disclosed in Section 3.1(33)(g) of the Company Disclosure Letter, there are no change of control payments, golden parachutes, severance payments, retention payments, Contracts or other agreements with current or former Company Employees providing for cash or other compensation or benefits upon the consummation of, or relating to, the Arrangement, including a change of control of the Company or of any of its Subsidiaries.
|
(h)
|
Except as disclosed in Section 3.1(33)(h) of the Company Disclosure Letter, there are no material outstanding assessments, penalties, fines, liens, charges, surcharges, or other amounts due or owing pursuant to any workplace safety and insurance legislation and neither the Company nor any Subsidiary has been reassessed in any material respect under such legislation during the past three years and, to the knowledge of the Company, no audit of the Company or any Subsidiary is currently being performed pursuant to any applicable workplace safety and insurance legislation. As of the date of this Agreement, there are no claims or potential claims which may materially adversely affect the Company or any Subsidiary’s accident cost experience.
|
(i)
|
The Company has disclosed in the Data Room all orders and material inspection reports under applicable occupational health and safety legislation (“
OHSA
”). There are no charges pending under OHSA. The Company has complied in all material respects with any orders issued under OHSA and there are no appeals of any orders under OHSA currently outstanding.
|
(j)
|
The Company and its Subsidiaries are in compliance with all terms and conditions of any work permits and Labour Market Impact Assessments received in respect of the engagement of foreign workers. No audit by any Governmental Authority is being conducted, or to the knowledge of the Company pending, in respect of any foreign workers and no such prior audit has resulted in the revocation of any work permit or Labour Market Impact Assessment.
|
(34)
|
Collective Agreements.
|
(a)
|
Section 3.1(34)(a) of the Company Disclosure Letter sets forth a complete list of all Collective Agreements. The Company and its Subsidiaries are in compliance in all material respects with the terms and conditions of such Collective Agreements.
|
(b)
|
Other than the Collective Agreements disclosed in Section 3.1(34)(b) of the Company Disclosure Letter, no Collective Agreement is currently being negotiated in respect of Company Employees. The only Collective Agreements in force with respect to the Company Employees are the Collective Agreements, true, correct and complete copies of which have been disclosed in the Data Room, except for documents which do not materially modify any term or condition of employment of any Company Employees.
|
(c)
|
Other than as disclosed in Section 3.1(34)(c) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has any material unresolved grievances, notice of default or statement of offence or material pending proceedings outstanding under any Collective Agreement or decree.
|
(d)
|
Other than the Collective Agreements disclosed in Section 3.1(34)(d) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a party, either directly or indirectly, or by operation of law to any other Collective Agreement and there are no outstanding material labour tribunal proceedings of any kind, including any proceedings which could result in certification of a trade union as bargaining agent for any Company Employees not already covered by a Collective Agreement, other than as disclosed in Section 3.1(34)(c) of the Company Disclosure Letter.
|
(e)
|
Except in respect of the Collective Agreements disclosed in Section 3.1(34)(d)
of the Company Disclosure Letter, no trade union, council of trade unions, employee bargaining agency or affiliated bargaining agent holds bargaining rights with respect to any of the employees of the Company by way of certification, interim certification, voluntary recognition, or succession rights, or has applied or, to the knowledge of the Company, threatened to apply to be certified as the bargaining agent of any employees of the Company.
|
(f)
|
There are no pending or, to the Knowledge of the Company, threatened union organizing activities involving any Company Employees. There is no labour strike, dispute, work slowdown or stoppage pending or involving or, to the knowledge of the Company, threatened against the Company and, except as disclosed in in Section 3.1(34)(f)
of the Company Disclosure Letter, no such event has occurred within the last five (5) years.
|
(g)
|
None of the Company or any of its Subsidiaries has engaged in any lay-off activities within the past three (3) years that would violate group termination or lay-off requirements of the applicable provincial employment standards Law or other Law.
|
(h)
|
The Company has not and is not engaged in any unfair labour practice and no unfair labour practice complaint, grievance or arbitration proceeding is pending or, to the knowledge of the Company, threatened against the Company.
|
(i)
|
There are no outstanding labour tribunal proceedings of any kind or other event of any nature whatsoever, including any
proceedings which could result in certification, interim certification, voluntary recognition, or succession rights of a trade union, council of trade unions, employee bargaining agencies, affiliated bargaining agent or any other Person as bargaining agent for any Company Employees not already covered by a Collective Agreement.
|
(j)
|
To the knowledge of the Company, no trade union has applied to have the Company or any of its Subsidiaries declared a common, related or successor employer pursuant to the
Labour Relations Act
(Ontario), the
Labour Code
(Quebec) or any similar legislation in any jurisdiction in which the Company or any of its Subsidiaries carries on business.
|
(35)
|
Employee Plans.
|
(a)
|
Section 3.1(35)(a) of the Company Disclosure Letter lists all material Employee Plans. The Company has disclosed in the Data Room true, correct and complete copies of all such material Employee Plans as amended as of the date hereof, together with all related documentation including, without limitation, funding and investment management agreements, summary plan descriptions, the most recent actuarial reports (including, for greater certainty, actuarial valuations in respect of any multi-employer pension plan), financial statements, asset statements, and all material opinions and memoranda (whether externally or internally prepared) and material correspondence with all regulatory authorities or other relevant Persons. No changes have occurred or are reasonably expected to occur which would materially affect the information contained in the actuarial reports, financial statements or asset statements required to be provided to the Purchaser pursuant to this provision.
|
(b)
|
Each material Employee Plan is and has been established, registered, administered, communicated, invested and qualified in accordance with Law, and in accordance with their terms, the terms of the material documents that support such Employee Plan and the terms of agreements between the Company and/or any of the Subsidiaries, as the case may be, and their respective employees and former employees who are members of, or beneficiaries under, the Employee Plan. No fact or circumstance exists which could adversely affect the registered status of any such material Employee Plan. Neither the Company, nor any of its agents or delegates, has breached any fiduciary obligation with respect to the administration or investment of any material
Employee Plan.
|
(c)
|
The Company and/or its Subsidiaries, as the case may be, have made all contributions and paid all premiums and taxes in respect of each material Employee Plan in a timely fashion in accordance with Law, the terms of each Employee Plan, and the Collective Agreements.
|
(d)
|
No material Employee Plan, no administrator of any material Employee Plan, and no member of any body which administers any material
Employee Plan, nor the Company nor any of its Subsidiaries, is subject to any pending investigation, examination, action, claim (including claims for income taxes, interest, penalties, fines or excise taxes) or any other proceeding initiated by any Person (other than routine claims for benefits) and, to the knowledge of the Company, there exists no state of facts which could reasonably be expected to give rise to any such investigation, examination, action, claim or other proceeding.
|
(e)
|
No insurance policy or any other agreement affecting any material Employee Plan requires or permits a retroactive increase in contributions, premiums or other payments due under such insurance policy or agreement. The level of insurance reserves under each insured material Employee Plan is reasonable and sufficient to provide for all incurred but unreported claims.
|
(f)
|
None of the Employee Plans (other than pension plans) and none of the Collective Agreements provide for retiree or post-termination benefits or for benefits to retired or terminated employees or to the beneficiaries or dependants of retired or terminated employees, except as required by Law.
|
(g)
|
Subject to the requirements of Laws and Collective Agreements, no provision of any material Employee Plan or of any agreement, and no act or omission of the Company or its Subsidiaries, in any way limits, impairs, modifies or otherwise affects the right of the Company or its Subsidiaries to unilaterally amend or terminate any material Employee Plan, and no commitments to improve or otherwise amend any material Employee Plan have been made.
|
(h)
|
No advance tax rulings been sought or received in respect of any material
Employee Plan.
|
(i)
|
All employee data necessary to administer each material Employee Plan in accordance with its terms and conditions and Law is in possession of the Company and, to the knowledge of the Company, such data is complete, correct, and in a form which is sufficient for the proper administration of each Employee Plan.
|
(j)
|
Except as disclosed in Section 3.1(35)(j) of the Company Disclosure Letter, each Employee Plan that is a funded plan is fully funded on both a going concern pursuant to the actuarial assumptions and methodology utilized in the most recent actuarial valuation therefore and solvency basis.
|
(k)
|
With respect to each material Employee Plan that is a registered pension plan: (i) all contribution holidays under and surplus withdrawals from the Employee Plan have been taken in accordance with Law; (ii) no Employee Plan that is a defined benefit pension plan has received a transfer of assets from or been merged with another registered pension plan; (iii) no Employee Plan that is a defined benefit pension plan has been subject to a partial wind-up in respect of which surplus assets relating to the partial wind-up group were not dealt with at the time of partial wind-up; (iv) no assets have been applied other than for proper payments of benefits, refunds of over-contributions and permitted payments of reasonable expenses incurred by or in respect of an Employee Plan; and (v) no conditions have been imposed by any Person and no undertakings or commitments have been given to any employee, union or any other Person concerning the use of assets relating to any Employee Plan or any related funding medium.
|
(l)
|
With respect to any Employee Plan that is a multi-employer pension plan, no current or former employee, officer or director of the Company is or was ever a member of the administrative body of any such Employee Plan.
|
(m)
|
No Employee Plan is a multi-employer pension plan with participants who are resident in Quebec.
|
(36)
|
Insurance.
|
(a)
|
Each of the Company and each of its Subsidiaries is, and has been continuously since January 1, 2013, insured by reputable third party insurers with reasonable and prudent policies appropriate for the size and nature of the business of the Company and its Subsidiaries and their respective assets.
|
(b)
|
A true and complete list of all material insurance policies currently in effect that insure the physical properties, business, operations and assets of the Company and its Subsidiaries has been provided in the Data Room. To the knowledge of the Company each material insurance policy currently in effect that insures the physical properties, business, operations and assets of the Company and its Subsidiaries is valid and binding and in full force and effect and there is no material claim pending under any such policies as to which coverage has been questioned, denied or disputed. There is no material claim pending under any insurance policy of the Company or its Subsidiaries that has been denied, rejected, questioned or disputed by any insurer or as to which any insurer has made any reservation of rights or refused to cover all or any material portion of such claims. All material proceedings covered by any insurance policy of the Company or its Subsidiaries have been properly reported to and accepted by the applicable insurer.
|
(37)
|
Taxes.
|
(a)
|
Except as disclosed in Section 3.1(37)(a) of the Company Disclosure Letter, the Company and each of its Subsidiaries has duly and timely filed all material Tax Returns
|
(b)
|
Except as disclosed in Section 3.1(37)(b) of the Company Disclosure Letter, the Company and each of its Subsidiaries has paid all material Taxes which are due and payable, all assessments and reassessments, and all other material Taxes due and payable by them on or before the date hereof, other than those which are being or have been contested in good faith and in respect of which reserves have been provided in the most recently published consolidated financial statements of the Company. The Company and its Subsidiaries have provided adequate accruals in accordance with GAAP in the most recently published consolidated financial statements of the Company for any Taxes of the Company and each of its Subsidiaries for the period covered by such financial statements that have not been paid whether or not shown as being due on any Tax Returns. Since such publication date, no material liability in respect of Taxes not reflected in such statements or otherwise provided for has been assessed, proposed to be assessed, incurred or accrued, other than in the ordinary course of business. None of the Company or its Subsidiaries has received a refund to which it was not entitled.
|
(c)
|
Except as disclosed in Section 3.1(37)(c) of the Company Disclosure Letter, no material deficiencies, litigation, proposed adjustments or matters in controversy exist or have been asserted with respect to Taxes of the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries is a party to any action or proceeding for assessment or collection of Taxes and no such event has been asserted or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their respective assets.
|
(d)
|
No claim has been made by any Government Entity in a jurisdiction where the Company and any of its Subsidiaries does not file Tax Returns that the Company or any of its Subsidiaries is or may be subject to Tax by that jurisdiction.
|
(e)
|
There are no Liens (other than Permitted Liens) with respect to Taxes upon any of the assets of the Company or any of its Subsidiaries.
|
(f)
|
The Company and each of its Subsidiaries has withheld or collected all material amounts required to be withheld or collected by it on account of Taxes and has remitted all such amounts to the appropriate Governmental Entity when required by Law to do so.
|
(g)
|
Except as disclosed in Section 3.1(37)(g) of the Company Disclosure Letter, there are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period for the collection or assessment or reassessment
|
(h)
|
The Company and each of its Subsidiaries has made available to the Purchaser true, correct and complete copies of all Tax Returns for which the applicable statutory periods of limitations have not expired.
|
(i)
|
Except as disclosed in Section 3.1(37)(i) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries has ever directly or indirectly transferred any property to or supplied any services to or acquired any property or services from a non-resident of Canada (within the meaning of the Tax Act) with whom it was not dealing at arm’s length for consideration other than consideration equal to the fair market value of the property or services at the time of transfer, supply or acquisition of the property or services.
|
(j)
|
There are no circumstances in which the Company or a Subsidiary could be liable under Section 160 of the Tax Act for the Taxes of another Person.
|
(k)
|
The tax attributes of the assets of the Company and each of its Subsidiaries are accurately reflected, in all material respects, in the Tax Returns of the Company and each of its Subsidiaries, as applicable, and have not materially and adversely changed since the date of such Tax Returns.
|
(l)
|
Except as disclosed in Section 3.1(37)(l) of the Company Disclosure Letter, there are no circumstances existing which could result in the application of Section 78 or Sections 80 to 80.04 of the Tax Act, or any equivalent provision under provincial Law, to the Company or any of its Subsidiaries.
|
(38)
|
Disclosure.
The Company has made available to the Purchaser all material information concerning the Company, its Subsidiaries and their respective businesses through SEDAR, information disclosed in the Data Room or the Company Disclosure Letter and all such information as made available to the Purchaser is accurate, true and correct in all material respects. No forecast, budget or projection provided by or on behalf of the Company to the Purchaser contains any Misrepresentation and such forecasts, budgets and projections were prepared in good faith and at the time they were prepared contained reasonable estimates of the prospects of the business of the Company and its Subsidiaries.
|
(39)
|
Confidentiality Agreements
. All agreements entered into by the Company or any of its Subsidiaries with Persons other than the Parent regarding the confidentiality of information provided to such Person or reviewed by such Persons with respect to any transaction in the nature described in the definition of Acquisition Proposal contain customary provisions, including standstill provisions, which do not provide for any waiver or release thereof other than with the consent of the Company or its Subsidiary and the Company or, if applicable, its Subsidiary has not waived, released or amended the standstill or other provisions of any such agreements. The Company or any of its Subsidiaries have not negotiated or engaged in any discussions with
|
(40)
|
Funds Available.
The Company has sufficient funds available to pay the Termination Fee.
|
(1)
|
Organization and Qualification.
Each of the Parent and the Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority to own, lease and operate its assets and properties and conduct its business as now owned and conducted.
|
(2)
|
Corporate Authorization
. Each of the Parent and the Purchaser has the requisite corporate power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance by each of the Parent and the Purchaser of their respective obligations under this Agreement and the consummation of the Arrangement and the other transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of each of the Parent and the Purchaser and no other corporate proceedings on the part of each of the Parent and the Purchaser are necessary to authorize this Agreement or the consummation of the Arrangement and the other transactions contemplated hereby
.
|
(3)
|
Execution and Binding Obligation
. This Agreement has been duly executed and delivered by each of the Parent and the Purchaser, and constitutes a legal, valid and binding agreement of each of them enforceable against each of them in accordance with its terms subject only to any limitation under bankruptcy, insolvency or other Laws affecting the enforcement of creditors’ rights generally and the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction.
|
(4)
|
Governmental Authorization
. The execution, delivery and performance by each of the Parent and the Purchaser of their respective obligations under this Agreement and the consummation by the Parent and the Purchaser of the Arrangement and the transactions contemplated hereby do not require any Authorization or other action by or in respect of, or filing with, or notification to, any Governmental Entity by the Parent and the Purchaser other than: (i) the Interim Order and any approvals required by the Interim Order; (ii) the Final Order; (iii) filings with the Enterprise Registrar under the QBCA; (iv) in relation to the Regulatory Approvals; (v) filings with the U.S. Securities and Exchange Commission; and (vi) any Authorizations which, if not obtained, or any other actions by or in respect of, or filings with, or notifications to, any Governmental Entity which, if not taken or made, would not, individually or in the aggregate, materially impede the ability of the Parent or the Purchaser to consummate the Arrangement and the transactions contemplated hereby.
|
(5)
|
Non-Contravention.
The execution, delivery and performance by the Parent and the Purchaser of their respective obligations under this Agreement and the consummation of the Arrangement and the transactions contemplated hereby do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event or condition):
|
(a)
|
contravene, conflict with, or result in any violation or breach of the organizational documents of the Parent or the Purchaser; or
|
(b)
|
assuming compliance with the matters referred to in Paragraph (4) above, contravene, conflict with or result in a violation or breach of Law except as would not, individually or in the aggregate, materially impede the ability of the Parent or the Purchaser to consummate the Arrangement and the transactions contemplated hereby.
|
(6)
|
Litigation.
There are no claims, actions, suits, arbitrations, inquiries, investigations or proceedings pending, or, to the knowledge of the Parent and the Purchaser threatened, against or relating to the Parent or the Purchaser before any Governmental Entity nor are the Parent or the Purchaser subject to any outstanding judgment, order, writ, injunction or decree that, either individually or in the aggregate, is reasonably likely to prevent or materially delay consummation of the Arrangement or the transactions contemplated hereby.
|
(7)
|
Funds Available.
The Parent has, and the Purchaser will have at the Effective Time, sufficient funds available to satisfy the aggregate Consideration payable by the Purchaser pursuant to the Arrangement in accordance with the terms of this Agreement and the Plan of Arrangement, to effect the repayment at maturity of the Debentures in accordance with their terms,
and to satisfy all other obligations payable by the Purchaser pursuant to this Agreement and the Arrangement.
|
(8)
|
Security Ownership.
Neither the Parent, nor any of its affiliates (including the Purchaser) or any Person acting jointly or in concert with the Parent, beneficially owns or exercises control or direction over any securities of the Company.
|
(9)
|
Ownership of the Purchaser.
The Parent is, directly or indirectly, the registered and beneficial owner of all of the outstanding securities of the Purchaser.
|
|
Fiscal Years Ended On
|
||||||||||||||||||
|
February 3, 2012
|
|
|
February 1, 2013
|
|
|
January 31, 2014
|
|
|
January 30, 2015
|
|
|
January 29, 2016
4
|
|
|||||
Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings Before Income Taxes
|
$
|
2,906
|
|
|
$
|
3,137
|
|
|
$
|
3,673
|
|
|
$
|
4,276
|
|
|
$
|
4,419
|
|
Fixed Charges
|
524
|
|
|
605
|
|
|
623
|
|
|
677
|
|
|
720
|
|
|||||
Capitalized Interest
1
|
—
|
|
|
6
|
|
|
8
|
|
|
9
|
|
|
9
|
|
|||||
Adjusted Earnings
|
$
|
3,430
|
|
|
$
|
3,748
|
|
|
$
|
4,304
|
|
|
$
|
4,962
|
|
|
$
|
5,148
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest Expense
2
|
385
|
|
|
463
|
|
|
478
|
|
|
525
|
|
|
559
|
|
|||||
Rental Expense
3
|
139
|
|
|
142
|
|
|
145
|
|
|
152
|
|
|
161
|
|
|||||
Total Fixed Charges
|
$
|
524
|
|
|
$
|
605
|
|
|
$
|
623
|
|
|
$
|
677
|
|
|
$
|
720
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges
|
6.5
|
|
|
6.2
|
|
|
6.9
|
|
|
7.3
|
|
|
7.1
|
|
1
|
Includes the net of subtractions for interest capitalized and additions for amortization of previously-capitalized interest.
|
2
|
Interest accrued on uncertain tax positions is excluded from Interest Expense in the computation of Fixed Charges.
|
3
|
The portion of rental expense that is representative of the interest factor in these rentals.
|
4
|
Earnings for the fiscal year ended January 29, 2016 included a $530 million non-cash impairment charge related to the investment in the Australia joint venture with Woolworths Limited. Excluding this charge from the calculation would result in a ratio of earnings to fixed charges of 7.9 for the fiscal year ended January 29, 2016.
|
NAME AND DOING BUSINESS AS:
|
|
STATE OF INCORPORATION
|
|
|
|
Lowe’s Home Centers, LLC
|
|
North Carolina
|
|
|
|
All other subsidiaries were omitted pursuant to Item 601(21)(ii) of Regulation S-K under the Securities and Exchange Act of 1934, as amended.
|
Description
|
Registration
Statement Number
|
|
|
Form S-3 ASR
|
|
Lowe’s Stock Advantage Direct Stock Purchase Plan
|
333-200115
|
Debt Securities, Preferred Stock, Common Stock
|
333-206537
|
|
|
Form S-8
|
|
Lowe’s 401(k) Plan
|
33-29772
|
Lowe’s Companies, Inc. 1994 Incentive Plan
|
33-54499
|
Lowe’s Companies, Inc. 1997 Incentive Plan
|
333-34631
|
Lowe’s Companies, Inc. Directors’ Stock Option Plan
|
333-89471
|
Lowe’s Companies Benefit Restoration Plan
|
333-97811
|
Lowe’s Companies Cash Deferral Plan
|
333-114435
|
Lowe’s Companies, Inc. 2006 Long Term Incentive Plan
|
333-138031; 333-196513
|
Lowe’s Companies Employee Stock Purchase Plan - Stock Options for Everyone
|
333-143266; 333-181950
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
March 28, 2016
|
|
/s/ Robert A. Niblock
|
Date
|
|
Robert A. Niblock
Chairman of the Board, President and Chief Executive Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
March 28, 2016
|
|
/s/ Robert F. Hull, Jr.
|
Date
|
|
Robert F. Hull, Jr.
Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
LOWE’S COMPANIES, INC.
|
|
|
|
|
|
By:
|
/s/ Maureen K. Ausura
|
|
|
Maureen K. Ausura
Chief Human Resources Officer
|
|
LOWE’S COMPANIES, INC.
|
|
|
|
|
|
By:
|
/s/ Maureen K. Ausura
|
|
|
Maureen K. Ausura
Chief Human Resources Officer
|