Voting, Support and Exchange Trust Agreement - Smithfield Foods Inc., Smithfield Canada Ltd. and CIBC Mellon Trust Co.
VOTING, SUPPORT AND EXCHANGE TRUST AGREEMENT
AGREEMENT made as of the 10th day of November, 1998
BETWEEN:
SMITHFIELD FOODS, INC., a corporation existing under the laws of the
Commonwealth of Virginia (the "Parent"),
- and -
SMITHFIELD CANADA LIMITED, a corporation existing under the laws of the
Province of Ontario (the "Corporation"),
- and -
CIBC MELLON TRUST COMPANY, a trust company existing under the laws of
Canada (the "Trustee").
WHEREAS the Corporation has offered, by way of a public take-over bid, to
acquire any and all of the outstanding Common Shares and Class A Shares of
Schneider Corporation in consideration for Exchangeable Shares of the
Corporation;
AND WHEREAS holders of Exchangeable Shares will be entitled to require the
Corporation to redeem such Shares and upon such redemption each Exchangeable
Share shall be exchanged by the Corporation for one share of Parent Common
Stock (as hereinafter defined);
AND WHEREAS the Parent intends to grant to and in favour of Non-Affiliated
Holders (as hereinafter defined) from time to time of Exchangeable Shares the
right, in the circumstances set forth herein, to require the Parent or, at the
option of the Parent, Smithfield Sub (as hereinafter defined) to purchase from
each Non-Affiliated Holder all or any part of the Exchangeable Shares held by
the Non-Affiliated Holder;
AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in the Parent shall be exercisable
by Non-Affiliated Holders from time to time of Exchangeable Shares by and
through the Trustee, which will hold legal title to the Voting Share (as
hereinafter defined) to which voting rights attach for the benefit of
Non-Affiliated Holders and whereby the rights to require the Parent or, at the
option of the Parent, Smithfield Sub to purchase Exchangeable Shares from the
Non-Affiliated Holders shall be exercisable by Non-Affiliated Holders from time
to time of Exchangeable Shares by and through the Trustee, which will hold
legal title to such rights for the benefit of Non-Affiliated Holders;
AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby the Parent will take certain actions and make
certain payments and deliveries necessary to ensure that the Corporation and
Smithfield Sub will be able to make certain payments and to deliver or cause to
be delivered shares of Parent Common Stock in satisfaction of the obligations
of the Corporation and/or Smithfield Sub under the Exchangeable Share
Provisions (as hereinafter defined) and this trust agreement;
AND WHEREAS these recitals and any statements of fact in this trust
agreement are made by the Parent and the Corporation and not by the Trustee;
NOW THEREFORE, in consideration of the respective covenants and agreements
provided in this trust agreement and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. In this trust agreement, unless something in the subject
matter or context is inconsistent therewith:
"AUTOMATIC EXCHANGE RIGHTS" means the automatic exchange of shares of
Parent Common Stock for Exchangeable Shares pursuant to Section 5.3 of the
Exchangeable Share Provisions.
"BOARD OF DIRECTORS" means the board of directors of the Corporation.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a day when
banks are not open for business in either or both of Norfolk, Virginia and
Toronto, Ontario.
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"CANADIAN DOLLAR EQUIVALENT" means in respect of an amount expressed in a
foreign currency (the "Foreign Currency Amount") at any date the product
obtained by multiplying (a) the Foreign Currency Amount by (b) the official
noon spot exchange rate on such date for such foreign currency as reported by
the Bank of Canada or, in the event such spot exchange rate is not available,
such exchange rate on such date for such foreign currency as may be deemed by
the Board of Directors to be appropriate for such purpose.
"COMPANY REDEMPTION DATE" has the meaning set out in Section 1.1 of the
Exchangeable Share Provisions.
"CURRENT MARKET PRICE" means, in respect of a share of Parent Common Stock
on any date, the Canadian Dollar Equivalent of the average closing sales price
of shares of Parent Common Stock during a period of 20 consecutive trading days
ending not more than five trading days before such date on Nasdaq or, if the
shares of Parent Common Stock are not then listed on Nasdaq, on such other
stock exchange or automated quotation system on which the shares of Parent
Common Stock are listed or quoted, as the case may be, as may be selected by
the Board of Directors for such purpose; provided, however, that if in the
opinion of the Board of Directors the public distribution or trading activity
of Parent Common Stock during such period is inadequate to create a market that
reflects the fair market value of the Parent Common Stock, then the Current
Market Price of a share of the Parent Common Stock shall be determined by the
Board of Directors based upon the advice of such qualified independent
financial advisors as the Board of Directors may deem to be appropriate, and
provided further that any such selection, opinion or determination by the Board
of Directors shall be conclusive and binding.
"DIVIDEND AMOUNT" has the meaning set out in Section 1.1 of the
Exchangeable Share Provisions.
"EFFECTIVE DATE" means the date on which the Corporation first takes up
shares of Schneider Corporation under the Offer.
"EXCHANGE RIGHT" has the meaning set out in section 5.1 hereof.
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares.
"EXCHANGEABLE SHARES" means the exchangeable shares to be issued by the
Corporation pursuant to the Offer.
"INSOLVENCY EVENT" means the institution by the Corporation of any
proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or
wound up, or the consent of the Corporation to the institution of bankruptcy,
insolvency, dissolution or winding-up proceedings against it, or the filing by
the Corporation of a petition, answer or consent seeking dissolution or winding
up under any bankruptcy, insolvency or analogous laws, including without
limitation the COMPANIES CREDITORS' ARRANGEMENT ACT (Canada) and the BANKRUPTCY
AND INSOLVENCY ACT (Canada), and the failure by the Corporation to contest in
good faith any such proceedings commenced by a third party in respect of the
Corporation within 15 days of becoming aware thereof, or the consent by the
Corporation to the filing of any such petition or to the appointment of a
receiver, or the making by the Corporation of a general assignment for the
benefit of creditors, or the admission in writing by the Corporation of its
inability to pay its debts generally as they become due, or the Corporation not
being permitted, pursuant to solvency requirements or other provisions of
applicable law, to redeem any Retracted Shares pursuant to Section 6.1(4) of
the Exchangeable Share Provisions.
"LIQUIDATION AMOUNT" has the meaning set out in Section 5.1(1) of the
Exchangeable Share Provisions.
"LIQUIDATION CALL RIGHT" has the meaning set out in Section 5.2(1) of the
Exchangeable Share Provisions.
"LIST" has the meaning set out in section 4.6 hereof.
"NASDAQ" means the Nasdaq National Market segment of The Nasdaq Stock
Market, an electronic securities market operated by The Nasdaq National Market
Stock Market, Inc., a wholly-owned subsidiary of the National Association of
Securities Dealers, Inc.
"NON-AFFILIATED HOLDER VOTES" has the meaning set out in section 4.2
hereof.
"NON-AFFILIATED HOLDERS" means the registered holders of Exchangeable
Shares other than the Parent and its Subsidiaries.
"OFFER" means the offer, by way of a public take-over bid, by the
Corporation to acquire any and all of the outstanding Common Shares, Class A
Shares and options to purchase Class A Shares of Schneider Corporation.
"OFFICER'S CERTIFICATE" means, with respect to the Parent or the
Corporation, as the case may be, a certificate signed by any one of the
Chairman of the Board, the President, any Vice-President or any other executive
officer of the Parent or the Corporation, as the case may be.
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"PARENT BOARD OF DIRECTORS" means the board of directors of the Parent.
"PARENT COMMON STOCK" means the shares of Common Stock of the Parent, par
value US$0.50 per share, having voting rights of one vote per share, and any
other securities into which such shares may be changed or for which such shares
may be exchanged (whether or not the Parent shall be the issuer of such other
securities) or any other consideration which may be received by the holders of
such shares, pursuant to a recapitalization, reconstruction, reorganization or
reclassification of, or amalgamation, merger, liquidation or similar
transaction, affecting such shares.
"PARENT CONSENT" has the meaning set out in section 4.2 hereof.
"PARENT MEETING" has the meaning set out in section 4.2 hereof.
"PARENT SUCCESSOR" has the meaning set out in section 11.1 hereof.
"REDEMPTION CALL RIGHT" has the meaning set out in Section 7.2(1) of the
Exchangeable Share Provisions.
"REDEMPTION PRICE" has the meaning set out in Section 7.1(1) of the
Exchangeable Share Provisions.
"RETRACTED SHARES" has the meaning set out in section 5.7 hereof.
"RETRACTION CALL RIGHT" has the meaning set out in Section 6.2(1) of the
Exchangeable Share Provisions.
"RETRACTION PRICE" has the meaning set out in Section 6.1(1) of the
Exchangeable Share Provisions.
"SHAREHOLDER RIGHTS PLAN" means the Rights Agreement, as amended, dated as
of May 1, 1998 between the Parent and Harris Trust and Savings Bank, as the
same may be further amended or replaced from time to time.
"SMITHFIELD SUB" means Smithfield Sub Limited, a wholly-owned Subsidiary
of the Parent existing under the laws of the Province of Ontario.
"SUBSIDIARY" of the Parent means any corporation more than 50% of the
outstanding stock of which is owned, directly or indirectly, by the Parent, by
one or more other Subsidiaries of the Parent or by the Parent and one or more
other Subsidiaries of the Parent.
"TENDER OFFER" has the meaning set out in section 6.8 hereof.
"TRANSFER AGENT" has the meaning set out in Section 1.1 of the
Exchangeable Share Provisions.
"TRUST" means the trust created by this trust agreement.
"TRUST ESTATE" means the Voting Share, any other securities, the Exchange
Right and any money or other rights or assets that may be held by the Trustee
from time to time pursuant to this trust agreement.
"TRUSTEE" means CIBC Mellon Trust Company and, subject to the provisions
of Article 10 hereof, includes any successor trustee or permitted assigns.
"VOTING RIGHTS" means the voting rights attached to the Voting Share.
"VOTING SHARE" means the one share of Series B Special Voting Preferred
Share, par value US$1.00, issued by the Parent to and deposited with the
Trustee, which entitles the holder of record to a number of votes at meetings
of holders of Parent Common Stock equal to the number of Exchangeable Shares
outstanding from time to time that are held by Non-Affiliated Holders.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
trust agreement into articles and sections and the insertion of headings are
for reference purposes only and shall not affect the interpretation of this
trust agreement. Unless otherwise indicated, any reference in this trust
agreement to an article or section refers to the specified article or section
of this trust agreement.
1.3 NUMBER, GENDER AND PERSONS. In this trust agreement, unless the
context otherwise requires, words importing the singular number include the
plural and vice versa, words importing any gender include all genders and words
importing persons include individuals, corporations, partnerships, companies,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind.
1.4 DATE FOR ANY ACTION. If any date on which any action is required to be
taken under this trust agreement is not a Business Day, such action shall be
required to be taken on the next succeeding Business Day.
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1.5 PAYMENTS. All payments to be made hereunder will be made without
interest and less any tax required by Canadian law to be deducted and withheld.
1.6 CURRENCY. In this trust agreement, unless stated otherwise, all dollar
amounts are in Canadian dollars.
ARTICLE 2
TRUST
2.1 ESTABLISHMENT OF TRUST. One of the purposes of this trust agreement is
to create the Trust for the benefit of the Non-Affiliated Holders, as herein
provided. The Trustee will hold the Voting Share in order to enable the Trustee
to exercise the Voting Rights and will hold the Exchange Right in order to
enable the Trustee to exercise such right and will hold the other rights
granted in or resulting from the Trustee being a party to this trust agreement
in order to enable the Trustee to exercise or enforce such rights, in each case
as trustee for and on behalf of the Non-Affiliated Holders as provided in this
trust agreement.
ARTICLE 3
VOTING SHARE
3.1 ISSUE AND OWNERSHIP OF THE VOTING SHARE. Simultaneously with the
execution and delivery of this trust agreement, the Parent will issue to and
deposit with the Trustee the Voting Share to be hereafter held of record by the
Trustee as trustee for and on behalf of, and for the use and benefit of, the
Non-Affiliated Holders, in accordance with the provisions of this trust
agreement. The Parent hereby acknowledges receipt from the Trustee as trustee
for and on behalf of the Non-Affiliated Holders of good and valuable
consideration (and the adequacy thereof) for the issuance of the Voting Share
by the Parent to the Trustee. During the term of the Trust and subject to the
terms and conditions of this trust agreement, the Trustee shall possess and be
vested with full legal ownership of the Voting Share and shall be entitled to
exercise all of the rights and powers of an owner with respect to the Voting
Share, provided that the Trustee shall:
(a) hold the Voting Share and the legal title thereto as trustee solely
for the use and benefit of the Non-Affiliated Holders in accordance with
the provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement, have no
power or authority to sell, transfer, vote or otherwise deal in or with
the Voting Share and the Voting Share shall not be used or disposed of by
the Trustee for any purpose other than the purposes for which the Trust is
created pursuant to this trust agreement.
3.2 LEGENDED SHARE CERTIFICATES. The Corporation will cause each
certificate representing Exchangeable Shares to bear an appropriate legend
notifying the Non-Affiliated Holders of their right to instruct the Trustee
with respect to the exercise of the Voting Rights with respect to the
Exchangeable Shares held by a Non-Affiliated Holder.
3.3 SAFEKEEPING OF CERTIFICATE. The certificate representing the Voting
Share shall at all times be held in safe keeping by the Trustee or its agent.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 VOTING RIGHTS. The Trustee, as the holder of record of the Voting
Share, shall be entitled to all of the Voting Rights, including the right to
consent to or to vote in person or by proxy the Voting Share, on any matter,
question or proposition whatsoever that may come before the shareholders of the
Parent at a Parent Meeting or in connection with a Parent Consent. The Voting
Rights shall be and remain vested in and exercised by the Trustee. Subject to
section 7.15 hereof, the Trustee shall exercise the Voting Rights only on the
basis of instructions received pursuant to this Article 4 from Non-Affiliated
Holders entitled to instruct the Trustee as to the voting thereof at the time
at which the Parent Consent is sought or the Parent Meeting is held. To the
extent that no instructions are received from a Non-Affiliated Holder with
respect to the Voting Rights to which such Non-Affiliated Holder is entitled,
the Trustee shall not exercise or permit the exercise of the Voting Rights
relating to such Non-Affiliated Holder's Exchangeable Shares.
4.2 NUMBER OF VOTES. With respect to all meetings of shareholders of the
Parent at which holders of shares of Parent Common Stock are entitled to vote
(a "Parent Meeting") and with respect to all written consents sought from the
holders of shares of Parent Common Stock (a "Parent Consent"), each
Non-Affiliated Holder shall be entitled to instruct the Trustee
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to cast and exercise, in the manner instructed, one vote for each Exchangeable
Share owned of record by such Non-Affiliated Holder on the record date
established by the Parent or by applicable law for such Parent Meeting or
Parent Consent, as the case may be (the "Non-Affiliated Holder Votes") in
respect of each matter, question or proposition to be voted on at such Parent
Meeting or to be consented to in connection with such Parent Consent.
4.3 MAILINGS TO SHAREHOLDERS. With respect to each Parent Meeting and
Parent Consent, the Trustee will use its reasonable best efforts to mail or
cause to be mailed (or otherwise communicate in the same manner that the Parent
utilizes in communications to holders of Parent Common Stock, subject to the
Trustee being advised in writing of such method and its ability to provide this
method of communication) to each of the Non-Affiliated Holders named in the
List on the same day as the initial mailing or notice (or other communication)
with respect thereto is given by the Parent to its shareholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to shareholders of the
Parent;
(b) a statement that such Non-Affiliated Holder is entitled, subject to
the provisions of section 4.7 hereof, to instruct the Trustee as to the
exercise of the Non-Affiliated Holder Votes with respect to such Parent
Meeting or Parent Consent, as the case may be, or, pursuant and subject to
section 4.7 hereof, to attend such Parent Meeting and to exercise
personally the Non-Affiliated Holder Votes thereat;
(c) a statement as to the manner in which such instructions may be given
to the Trustee, including, in the case of a Parent Meeting, an express
indication that instructions may be given to the Trustee to give:
(i) a proxy to such Non-Affiliated Holder or its duly appointed
designee to exercise personally such holder's Non-Affiliated Holder
Votes; or
(ii) a proxy to a duly appointed designated agent or other
representative of the management of the Parent to exercise such
Non-Affiliated Holder Votes;
(d) a statement that if no such instructions are received from the
Non-Affiliated Holder, the Non-Affiliated Holder Votes to which such
Non-Affiliated Holder is entitled will not be exercised;
(e) a form of direction whereby the Non-Affiliated Holder may so direct
and instruct the Trustee as contemplated herein; and
(f) a statement of (i) the time and date by which such instructions must
be received by the Trustee in order to be binding upon it, which in the
case of a Parent Meeting shall not be earlier than the close of business
on the second Business Day prior to such meeting, and (ii) the method for
revoking or amending such instructions.
The materials referred to above are to be provided by the Parent to the
Trustee, but shall be subject to review and comment by the Trustee. For the
purpose of determining Non-Affiliated Holder Votes to which a Non-Affiliated
Holder is entitled in respect of any such Parent Meeting or Parent Consent, the
number of Exchangeable Shares owned of record by the Non-Affiliated Holder
shall be determined at the close of business on the record date established by
the Parent or by applicable law for purposes of determining shareholders
entitled to vote at such Parent Meeting or to give written consent in
connection with such Parent Consent. The Parent will notify the Trustee in
writing of any decision of the board of directors of the Parent with respect to
the calling of any such Parent Meeting or the seeking of any such Parent
Consent and shall provide all necessary information and materials to the
Trustee in each case promptly and in any event in sufficient time to enable the
Trustee to perform its obligations contemplated by this section 4.3.
4.4 COPIES OF SHAREHOLDER INFORMATION. The Parent will deliver to the
Trustee copies of all proxy materials (including notices of Parent Meetings but
excluding proxies to vote shares of Parent Common Stock), information
statements, reports (including without limitation all interim and annual
financial statements) and other written communications that are to be
distributed from time to time to holders of Parent Common Stock in sufficient
quantities and in sufficient time so as to enable the Trustee to send those
materials to each Non-Affiliated Holder at the same time as such materials are
first sent to holders of Parent Common Stock. The Trustee will mail or
otherwise send to each Non-Affiliated Holder, at the expense of Parent, copies
of all such materials (and all materials specifically directed to the
Non-Affiliated Holders or to the Trustee for the benefit of the Non-Affiliated
Holders by the Parent) received by the Trustee from the Parent at the same time
as such materials are first sent to holders of Parent Common Stock. The Trustee
will make copies of all such materials available for inspection by any
Non-Affiliated Holder at the Trustee's principal office in Toronto.
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4.5 OTHER MATERIALS. Immediately after receipt by the Parent or any
shareholder of the Parent of any material sent or given generally to the
holders of Parent Common Stock by or on behalf of a third party, including
without limitation dissident proxy and information circulars (and related
information and material) and tender and exchange offer circulars (and related
information and material), the Parent shall use reasonable efforts to obtain
and deliver to the Trustee copies thereof in sufficient quantities so as to
enable the Trustee to forward such material (unless the same has been provided
directly to Non-Affiliated Holders by such third party) to each Non-Affiliated
Holder as soon as practicable thereafter. As soon as practicable after receipt
thereof, the Trustee will mail or otherwise send to each Non-Affiliated Holder,
at the expense of the Parent, copies of all such materials received by the
Trustee from the Parent. The Trustee will also make copies of all such
materials available for inspection by any Non-Affiliated Holder at the
Trustee's principal office in Toronto.
4.6 LIST OF PERSONS ENTITLED TO VOTE. The Corporation shall, (a) prior to
each annual, general and special Parent Meeting or the seeking of any Parent
Consent and (b) forthwith upon each request made at any time by the Trustee in
writing, prepare or cause to be prepared a list (a "List") of the names and
addresses of the Non-Affiliated Holders arranged in alphabetical order and
showing the number of Exchangeable Shares held of record by each such
Non-Affiliated Holder, in each case at the close of business on the date
specified by the Trustee in such request or, in the case of a List prepared in
connection with a Parent Meeting or a Parent Consent, at the close of business
on the record date established by the Parent or pursuant to applicable law for
determining the holders of Parent Common Stock entitled to receive notice of
and/or to vote at such Parent Meeting or to give consent in connection with
such Parent Consent. Each such List shall be delivered to the Trustee promptly
after receipt by the Corporation of such request or the record date for such
meeting or seeking of consent, as the case may be, and, in any event, within
sufficient time as to enable the Trustee to perform its obligations under this
trust agreement. The Parent agrees to give the Corporation written notice (with
a copy to the Trustee) of the calling of any Parent Meeting or the seeking of
any Parent Consent, together with the record dates therefor, sufficiently prior
to the date of the calling of such meeting or seeking of such consent so as to
enable the Corporation to perform its obligations under this section 4.6.
4.7 ENTITLEMENT TO DIRECT VOTES. Any Non-Affiliated Holder named in a List
prepared in connection with any Parent Meeting or any Parent Consent will be
entitled (a) to instruct the Trustee in the manner described in section 4.3
hereof with respect to the exercise of the Non-Affiliated Holder Votes to which
such Non-Affiliated Holder is entitled or (b) to attend such meeting and
personally to exercise thereat (or to exercise with respect to any written
consent), as the proxy of the Trustee, the Non-Affiliated Holder Votes to which
such Non-Affiliated Holder is entitled or (c) to appoint a third party as the
proxy of the Trustee to attend such meeting and exercise thereat the
Non-Affiliated Holder's voting rights to which such Non-Affiliated Holder is
entitled except, in each case, to the extent that such Non-Affiliated Holder
has transferred the ownership of any Exchangeable Shares in respect of which
such Non-Affiliated Holder is entitled to Non-Affiliated Holder Votes after the
close of business on the record date for such meeting or seeking of consent and
the transferee establishes ownership of the Exchangeable Shares and demands,
not later than ten days before the Parent Meeting, that the transferee be
entitled to the Non-Affiliated Votes attaching to such Exchangeable Shares at
the Parent Meeting.
4.8 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT
MEETING.
(1) In connection with each Parent Meeting and Parent Consent, the Trustee
shall exercise, either in person or by proxy, in accordance with the
instructions received from a Non-Affiliated Holder pursuant to section 4.3
hereof, the Non-Affiliated Holder Votes as to which such Non-Affiliated Holder
is entitled to direct the vote (or any lesser number thereof as may be set
forth in the instructions); provided, however, that such written instructions
are received by the Trustee from the Non-Affiliated Holder prior to the time
and date fixed by it for receipt of such instructions in the notice given by
the Trustee to the Non-Affiliated Holder pursuant to section 4.3 hereof.
(2) The Trustee shall cause such representatives as are empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights enabling
a Non-Affiliated Holder to attend each Parent Meeting. Upon submission by a
Non-Affiliated Holder (or its duly appointed designee) of identification
satisfactory to the Trustee's representatives, and at the Non-Affiliated
Holder's request, such representatives shall sign and deliver to such
Non-Affiliated Holder (or its duly appointed designee) a proxy to exercise
personally the Non-Affiliated Holder Votes as to which such Non-Affiliated
Holder is otherwise entitled hereunder to direct the vote, if such
Non-Affiliated Holder either (i) has not previously given the Trustee
instructions pursuant to section 4.3 hereof in respect of such meeting, or (ii)
submits to the Trustee's representatives written revocation of any such
previous instructions in accordance with the requirements specified by the
Trustee in the materials provided to the Non-Affiliated Holder pursuant to
section 4.3(f)(ii) hereof. At such meeting, the Non-Affiliated Holder
exercising such Non-Affiliated Holder Votes shall have the same rights as the
Trustee to speak at the meeting in respect of any matter, question or
proposition, to vote by way of ballot at the meeting in respect of any matter,
question or proposition and to vote at such meeting by way of a show of hands
in respect of any matter, question or proposition.
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4.9 DISTRIBUTION OF WRITTEN MATERIALS. Any written materials to be
distributed by the Trustee to the Non-Affiliated Holders pursuant to this trust
agreement shall be delivered or sent by mail (or otherwise communicated in the
same manner as the Parent utilizes in communications to holders of Parent
Common Stock, subject to the Trustee being advised in writing of such method of
communication and its ability to provide same) to each Non-Affiliated Holder at
its address as shown on the books of the Corporation. The Corporation shall
provide or cause to be provided to the Trustee for this purpose, on a timely
basis and without charge or other expense:
(a) current lists of the Non-Affiliated Holders; and
(b) upon the request of the Trustee, mailing labels to enable the Trustee
to carry out its duties under this trust agreement.
The materials referred to above are to be provided by the Parent to the
Trustee, but shall be subject to review and comment by the Trustee.
4.10 TERMINATION OF VOTING RIGHTS. All the rights of a Non-Affiliated
Holder with respect to the Non-Affiliated Holder Votes exercisable in respect
of the Exchangeable Shares held by such Non-Affiliated Holder, including the
right to instruct the Trustee as to the voting of or to vote personally such
Non-Affiliated Holder Votes, shall be deemed to be surrendered by the
Non-Affiliated Holder to the Parent and such Non-Affiliated Holder Votes and
the Voting Rights represented thereby shall cease immediately upon the delivery
by such Non-Affiliated Holder to the Trustee of the certificates representing
such Exchangeable Shares in connection with the exercise by the Non-Affiliated
Holder of the Exchange Right or the occurrence of the automatic exchange of
Exchangeable Shares for shares of Parent Common Stock, as specified in Article
5 hereof, or upon the redemption of Exchangeable Shares pursuant to Article 6
or Article 7 of the Exchangeable Share Provisions, or upon the effective date
of the liquidation, dissolution or winding-up of the Corporation or any other
distribution of the assets of the Corporation among its shareholders for the
purpose of winding up its affairs pursuant to Article 5 of the Exchangeable
Share Provisions, or upon the purchase of Exchangeable Shares from the holder
thereof by the Parent or Smithfield Sub pursuant to the exercise by the Parent
or Smithfield Sub of the Retraction Call Right, the Redemption Call Right or
the Liquidation Call Right (unless in any case the Corporation, the Parent or
Smithfield Sub shall not have delivered the requisite shares of Parent Common
Stock and cheque, if any, deliverable in exchange therefor to the Transfer
Agent or the Trustee for delivery to the Non-Affiliated Holders).
ARTICLE 5
EXCHANGE RIGHT AND PARENT SUPPORT
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT. The Parent hereby grants to
the Trustee as trustee for and on behalf of, and for the use and benefit of,
the Non-Affiliated Holders the right (the "Exchange Right"), upon the
occurrence and during the continuance of an Insolvency Event, to require the
Parent to purchase or to cause Smithfield Sub to purchase from each or any
Non-Affiliated Holder all or any part of the Exchangeable Shares held by the
Non-Affiliated Holder, all in accordance with the provisions of this trust
agreement. The Parent hereby acknowledges receipt from the Trustee, as trustee
for and on behalf of the Non-Affiliated Holders, of good and valuable
consideration (and the adequacy thereof) for the grant of the Exchange Right by
the Parent to the Trustee. During the term of the Trust and subject to the
terms and conditions of this trust agreement, the Trustee shall possess and be
vested with full legal ownership of the Exchange Right and shall be entitled to
exercise all of the rights and powers of an owner with respect to the Exchange
Right, provided that the Trustee shall:
(a) hold the Exchange Right and the legal title thereto as trustee solely
for the use and benefit of the Non-Affiliated Holders in accordance with
the provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement, have no
power or authority to exercise or otherwise deal in or with the Exchange
Right, and the Trustee shall not exercise such right for any purpose other
than the purposes for which this Trust is created pursuant to this trust
agreement.
5.2 LEGENDED SHARE CERTIFICATES. The Corporation will cause each
certificate representing Exchangeable Shares to bear an appropriate legend
notifying the Non-Affiliated Holders of their right to instruct the Trustee
with respect to the exercise of the Exchange Right in respect of the
Exchangeable Shares held by a Non-Affiliated Holder.
5.3 GENERAL EXERCISE OF EXCHANGE RIGHT. The Exchange Right shall be and
remain vested in and exercisable by the Trustee. Subject to section 7.15
hereof, the Trustee shall exercise the Exchange Right only on the basis of
instructions received pursuant to this Article 5 from Non-Affiliated Holders
entitled to instruct the Trustee as to the exercise thereof. To
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the extent that no instructions are received from a Non-Affiliated Holder with
respect to the Exchange Right, the Trustee shall not exercise or permit the
exercise of the Exchange Right.
5.4 PURCHASE PRICE. The purchase price payable by the Parent or Smithfield
Sub for each Exchangeable Share to be purchased by the Parent or Smithfield Sub
under the Exchange Right shall be an amount per share equal to (a) the Current
Market Price of a share of Parent Common Stock on the last Business Day prior
to the day of closing of the purchase and sale of such Exchangeable Share under
the Exchange Right, which shall be satisfied in full by causing to be delivered
to such holder one share of Parent Common Stock, plus (b) the Dividend Amount,
if any. The purchase price for each such Exchangeable Share so purchased may be
satisfied only by the Parent or Smithfield Sub delivering or causing to be
delivered to the Trustee, on behalf of the relevant Non-Affiliated Holder, one
share of Parent Common Stock and a cheque for the balance, if any, of the
purchase price, without interest.
5.5 EXERCISE INSTRUCTIONS. Subject to the terms and conditions herein set
forth, a Non-Affiliated Holder shall be entitled, upon the occurrence and
during the continuance of an Insolvency Event, to instruct the Trustee to
exercise the Exchange Right with respect to all or any part of the Exchangeable
Shares registered in the name of such Non-Affiliated Holder on the books of the
Corporation. To cause the exercise of the Exchange Right by the Trustee, the
Non-Affiliated Holder shall deliver to the Trustee, in person or by certified
or registered mail, at its principal office in Toronto, Ontario or at such
other places in Canada as the Trustee may from time to time designate by
written notice to the Non-Affiliated Holders, the certificates representing the
Exchangeable Shares which such Non-Affiliated Holder desires the Parent to
purchase, duly endorsed in blank, and accompanied by such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares
under the Business Corporations Act (Ontario) and such additional documents and
instruments as the Trustee, the Parent or the Corporation may reasonably
require together with (a) a duly completed form of notice of exercise of the
Exchange Right, contained on the reverse of or attached to the Exchangeable
Share certificates, stating (i) that the Non-Affiliated Holder thereby
instructs the Trustee to exercise the Exchange Right so as to require the
Parent or Smithfield Sub to purchase from the Non-Affiliated Holder the number
of Exchangeable Shares specified therein, (ii) that such Non-Affiliated Holder
has good title to and owns all such Exchangeable Shares to be acquired by the
Parent or Smithfield Sub free and clear of all liens, claims and encumbrances,
(iii) the names in which the certificates representing Parent Common Stock
issuable in connection with the exercise of the Exchange Right are to be issued
and (iv) the names and addresses of the persons to whom such new certificates
should be delivered and (b) payment (or evidence satisfactory to the Trustee,
the Corporation and the Parent of payment) of the taxes (if any) payable as
contemplated by section 5.8 of this trust agreement. If only a portion of the
Exchangeable Shares represented by any certificate delivered to the Trustee are
to be purchased by the Parent or Smithfield Sub under the Exchange Right, a new
certificate for the balance of such Exchangeable Shares shall be issued to the
holder at the expense of the Corporation.
5.6 DELIVERY OF PARENT COMMON STOCK; EFFECT OF EXERCISE. Promptly after
receipt of the certificates representing the Exchangeable Shares that a
Non-Affiliated Holder desires the Parent or Smithfield Sub to purchase under
the Exchange Right (together with such documents and instruments of transfer
and a duly completed form of notice of exercise of the Exchange Right) duly
endorsed for transfer to the Parent or Smithfield Sub, the Trustee shall notify
the Parent and the Corporation of its receipt of the same, which notice to the
Parent and the Corporation shall constitute exercise of the Exchange Right by
the Trustee on behalf of the holder of such Exchangeable Shares, and the Parent
shall immediately thereafter deliver or cause Smithfield Sub to deliver to the
Trustee, for delivery to the Non-Affiliated Holder of such Exchangeable Shares
(or to such other persons, if any, properly designated by such Non-Affiliated
Holder), a certificate for the number of shares of Parent Common Stock
deliverable in connection with such exercise of the Exchange Right (which
shares shall be duly issued as fully paid and non-assessable and shall be free
and clear of any lien, claim or encumbrance, security interest or adverse
claim) and a cheque for the balance, if any, of the purchase price therefor,
without interest; provided, however, that no such delivery shall be made unless
and until the Non-Affiliated Holder requesting the same shall have paid (or
provided evidence satisfactory to the Trustee, the Corporation and the Parent
of the payment of) the taxes (if any) payable as contemplated by section 5.8 of
this trust agreement. Immediately upon the giving of notice by the Trustee to
the Parent and the Corporation of the exercise of the Exchange Right, as
provided in this section 5.6, the closing of the transaction of purchase and
sale contemplated by the Exchange Right shall be deemed to have occurred, and
the Non-Affiliated Holder of such Exchangeable Shares shall be deemed to have
transferred to the Parent (or, at the Parent's option, to Smithfield Sub) all
of its right, title and interest in and to such Exchangeable Shares and the
related interest in the Trust Estate and shall not be entitled to exercise any
of the rights of a holder in respect thereof, other than the right to receive
its proportionate part of the total purchase price therefor, unless the
requisite number of shares of Parent Common Stock (together with a cheque for
the balance, if any, of the total purchase price therefor, without interest) is
not delivered by the Parent or Smithfield Sub to the Trustee, for delivery to
such Non-Affiliated Holder (or to such other persons, if any, properly
designated by such Non-Affiliated Holder), within five Business Days of the
date of the giving of such notice by the Trustee, in which case the
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rights of the Non-Affiliated Holder shall remain unaffected until such shares
of Parent Common Stock are so delivered and any such cheque is so delivered and
paid. Concurrently with the closing of the transaction of purchase and sale
contemplated by the Exchange Right, such Non-Affiliated Holder shall be
considered and deemed for all purposes to be the holder of the shares of Parent
Common Stock delivered to it pursuant to the Exchange Right.
5.7 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION. In the event that
a Non-Affiliated Holder has exercised its right under Article 6 of the
Exchangeable Share Provisions to require the Corporation to redeem any or all
of the Exchangeable Shares held by the Non-Affiliated Holder (the "Retracted
Shares") and is notified by the Corporation pursuant to Section 6.1(4) of the
Exchangeable Share Provisions that the Corporation will not be permitted as a
result of solvency requirements of applicable law to redeem all such Retracted
Shares, subject to receipt by the Trustee of written notice to that effect from
the Corporation and provided that neither the Parent nor Smithfield Sub shall
have exercised its Retraction Call Right with respect to the Retracted Shares
and that the Non-Affiliated Holder shall not have revoked the retraction
request delivered by the Non-Affiliated Holder to the Corporation pursuant to
Section 6.1(5) of the Exchangeable Share Provisions, the retraction request
will constitute and will be deemed to constitute notice from the Non-Affiliated
Holder to the Trustee instructing the Trustee to exercise the Exchange Right
with respect to those Retracted Shares that the Corporation is unable to
redeem. In any such event, the Corporation hereby agrees with the Trustee and
in favour of the Non-Affiliated Holder immediately to notify the Trustee of
such prohibition against the Corporation redeeming all of the Retracted Shares
and immediately to forward or cause to be forwarded to the Trustee all relevant
materials delivered by the Non-Affiliated Holder to the Corporation or to the
Transfer Agent (including without limitation a copy of the retraction request
delivered pursuant to Section 6.1(1) of the Exchangeable Share Provisions) in
connection with such proposed redemption of the Retracted Shares and the
Trustee will thereupon exercise the Exchange Right with respect to the
Retracted Shares that the Corporation is not permitted to redeem and will
require the Parent or, at the Parent's option, Smithfield Sub, to purchase such
shares in accordance with the provisions of this Article 5.
5.8 STAMP OR OTHER TRANSFER TAXES. Upon any sale of Exchangeable Shares to
the Parent or Smithfield Sub pursuant to the Exchange Right, the share
certificate or certificates representing the Parent Common Stock to be
delivered in connection with the payment of the total purchase price therefor
shall be issued in the name of the Non-Affiliated Holder of the Exchangeable
Shares so sold or in such names as such Non-Affiliated Holder may otherwise
direct in writing without charge to the holder of the Exchangeable Shares so
sold, provided, however, that such Non-Affiliated Holder (a) shall pay (and
none of the Parent, Smithfield Sub, the Corporation or the Trustee shall be
required to pay) any documentary, stamp, transfer or other similar taxes that
may be payable in respect of any transfer involved in the issuance or delivery
of such shares to a person other than such Non-Affiliated Holder or (b) shall
have established to the satisfaction of the Trustee, the Parent and the
Corporation that such taxes, if any, have been paid.
5.9 NOTICE OF INSOLVENCY EVENT. Immediately upon the occurrence of an
Insolvency Event or any event that with the giving of notice or the passage of
time or both would be an Insolvency Event, the Corporation and the Parent shall
give written notice thereof to the Trustee. As soon as practicable after
receiving notice from the Corporation or the Parent or from any other person of
the occurrence of an Insolvency Event, the Trustee will mail to each
Non-Affiliated Holder, at the expense of the Parent (such expenses to be
prepaid to the Trustee by the Corporation or the Parent), a notice of such
Insolvency Event in the form provided by the Parent, which notice shall contain
a brief statement of the right of the Non-Affiliated Holders with respect to
the Exchange Right.
5.10 PARENT SUPPORT OF SMITHFIELD SUB. Notwithstanding any of the other
provisions of this trust agreement, so long as any Exchangeable Shares are
outstanding at least 50% of the common shares of Smithfield Sub shall be owned,
directly or indirectly, by the Parent and the Parent will take all actions and
do all such things as are necessary or desirable to enable and permit
Smithfield Sub, in accordance with applicable law, to perform its obligations
and exercise its rights with respect to the satisfaction of the Liquidation
Call Right, the Redemption Call Right and the Retraction Call Right, including
without limitation, all such actions and all such things as are necessary or
desirable to enable and permit Smithfield Sub to cause to be delivered Parent
Common Stock to the holders of Exchangeable Shares in accordance with the
Exchangeable Share Provisions. In furtherance of the foregoing obligations,
upon notice of any event which requires Smithfield Sub to cause to be delivered
shares of Parent Common Stock to any holder of Exchangeable Shares, the Parent
shall, in any manner deemed appropriate by it, provide such shares or cause
such shares to be provided to Smithfield Sub, which shall forthwith deliver the
requisite shares of Parent Common Stock to or to the order of the former holder
of the surrendered Exchangeable Shares. All such shares of Parent Common Stock
shall be duly issued as fully paid, non-assessable, free of pre-emptive rights
and shall be free and clear of any lien, claim, encumbrance, security interest
or adverse claim.
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5.11 CALL RIGHTS. The Liquidation Call Right, the Redemption Call Right,
the Retraction Call Right and the Automatic Exchange Right are hereby agreed,
acknowledged and confirmed, and it is agreed and acknowledged that such rights
are granted as part of the consideration for the obligations of the Parent
under this trust agreement.
5.12 GRANT AND OWNERSHIP OF AUTOMATIC EXCHANGE RIGHTS
The Parent hereby grants the Automatic Exchange Rights to the Trustee as
trustee for and on behalf of, and for the use and benefit of, the
Non-Affiliated Holders. The Parent hereby acknowledges receipt from the
Trustee, as trustee for and on behalf of the Non-Affiliated Holders, of good
and valuable consideration (and the adequacy thereof) for the grant of the
Automatic Exchange Rights by the Parent to the Trustee. During the term of the
Trust and subject to the terms and conditions of this trust agreement and the
Exchangeable Share Provisions, the Trustee shall possess and be vested with
full legal ownership of the Automatic Exchange Rights and shall be entitled to
exercise all of the rights and powers of an owner with respect to the Automatic
Exchange Rights, provided that the Trustee shall:
(a) hold the Automatic Exchange Rights and the legal title thereto as
trustee solely for the use and benefit of the Non-Affiliated Holders in
accordance with the provisions of this trust agreement; and
(b) except as specifically authorized by this trust agreement, have no
power or authority to exercise or otherwise deal in or with the Automatic
Exchange Rights, and the Trustee shall not exercise such rights for any
purpose other than the purposes for which this Trust is created pursuant to
this trust agreement.
ARTICLE 6
COVENANTS, REPRESENTATIONS AND WARRANTIES
6.1 COVENANTS OF PARENT REGARDING EXCHANGEABLE SHARES. So long as any
Exchangeable Shares are outstanding, the Parent will:
(a) not declare or pay any dividend on the Parent Common Stock unless (i)
the Corporation will have sufficient money or other assets or authorized
but unissued securities available to enable the due declaration and the
due and punctual payment in accordance with applicable law, of an
equivalent dividend on the Exchangeable Shares and (ii) the Corporation
shall simultaneously declare or pay, as the case may be, an equivalent
dividend on the Exchangeable Shares; (b) advise the Corporation
sufficiently in advance of the declaration by the Parent of any dividend
on the Parent Common Stock and take all such other actions as are
necessary, in cooperation with the Corporation, to ensure that the
respective declaration date, record date and payment date for a dividend
on the Exchangeable Shares shall be the same as the declaration date,
record date and payment date for the corresponding dividend on the Parent
Common Stock and that such dividend on the Exchangeable Shares shall
correspond with any requirements of the stock exchange on which the
Exchangeable Shares are listed;
(c) ensure that the record date for determining shareholders entitled to
receive any dividend declared on the Parent Common Stock is not less than
10 Business Days after the declaration date for such dividend or such
shorter period within which applicable law may be complied with;
(d) take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation, in accordance with
applicable law, to pay and otherwise perform its obligations with respect
to the satisfaction of the Liquidation Amount in respect of each issued
and outstanding Exchangeable Share upon the liquidation, dissolution or
winding up of the Corporation or any other distribution of the assets of
the Corporation among its shareholders for the purpose of winding up its
affairs, including without limitation all such actions and all such things
as are necessary or desirable to enable and permit the Corporation to
cause to be delivered shares of Parent Common Stock to the holders of
Exchangeable Shares in accordance with the provisions of Article 5 of the
Exchangeable Share Provisions;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit the Corporation, in accordance with
applicable law, to pay and otherwise perform its obligations with respect
to the satisfaction of the Retraction Price and the Redemption Price,
including without limitation all such actions and all such things as are
necessary or desirable to enable and permit the Corporation to cause to be
delivered shares of Parent Common Stock to the holders of Exchangeable
Shares, upon the redemption of the Exchangeable Shares in accordance with
the provisions of Article 6 or Article 7 of the Exchangeable Share
Provisions, as the case may be;
(f) use its best efforts to enable the Corporation to maintain the
listing of the Exchangeable Shares on The Toronto Stock Exchange or
another stock exchange in Canada prescribed under the Income Tax Act
(Canada); and
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(g) not exercise its vote as a shareholder to initiate the voluntary
liquidation, dissolution or winding up of the Corporation or any other
distribution of the assets of the Corporation among its shareholders for
the purpose of winding up its affairs nor take any action or omit to take
any action that is designed to result in the liquidation, dissolution or
winding up of the Corporation or any other distribution of the assets of
the Corporation among its shareholders for the purpose of winding up its
affairs.
6.2 SEGREGATION OF FUNDS. The Parent will cause the Corporation to deposit
a sufficient amount of funds in a separate account and segregate a sufficient
amount of such other assets as is necessary to enable the Corporation to pay or
otherwise satisfy the applicable dividends, Liquidation Amount, Retraction
Price or Redemption Price, once such amounts become payable under the terms of
this trust agreement or the Exchangeable Share Provisions, in each case for the
benefit of Non-Affiliated Holders from time to time of the Exchangeable Shares,
and to use such funds and other assets so segregated exclusively for the
payment of dividends and the payment or other satisfaction of the Liquidation
Amount, the Retraction Price or the Redemption Price, as applicable.
6.3 CERTAIN REPRESENTATIONS. The Parent hereby represents, warrants and
covenants that:
(a) it has irrevocably reserved for issuance and will at all times keep
available, free from pre-emptive and other rights, out of its authorized
and unissued capital stock such number of shares of Parent Common Stock
(or other shares or securities into which the Parent Common Stock may be
reclassified or changed as contemplated by section 6.7 hereof) (i) as is
equal to the sum of (x) the number of Exchangeable Shares issued and
outstanding from time to time and (y) the number of Exchangeable Shares
issuable upon the exercise of all rights to acquire Exchangeable Shares
outstanding from time to time and (ii) as is now and may hereafter be
required to enable and permit each of the Corporation, the Parent and
Smithfield Sub to meet its obligations hereunder, under the Exchangeable
Share Provisions and under any other security or commitment pursuant to
which the Corporation, the Parent or Smithfield Sub may now or hereafter
be required to issue and/or deliver shares of Parent Common Stock; and
(b) it is not as of the Effective Date, and has not been at any time
within the last year prior to the Effective Date, a "United States real
property holding corporation" within the meaning of Section 897 of the
Internal Revenue Code of 1987, as amended.
6.4 NOTIFICATION OF CERTAIN EVENTS. In order to assist the Parent to
comply with its obligations hereunder, the Corporation will give the Parent
notice of each of the following events at the time set forth below:
(a) in the event of any determination by the Board of Directors to
institute voluntary liquidation, dissolution or winding-up proceedings
with respect to the Corporation or to effect any other distribution of the
assets of the Corporation among its shareholders for the purpose of
winding up its affairs, at least 60 days prior to the proposed effective
date of such liquidation, dissolution, winding up or other distribution;
(b) immediately, upon the earlier of (i) receipt by the Corporation of
notice of, and (ii) the Corporation otherwise becoming aware of, any
threatened or instituted claim, suit, petition or other proceeding with
respect to the involuntary liquidation, dissolution or winding up of the
Corporation or to effect any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding up its
affairs;
(c) immediately, upon receipt by the Corporation of a Retraction Request
(as defined in the Exchangeable Share Provisions);
(d) at least 130 days prior to any Company Redemption Date determined by
the Board of Directors in accordance with the Exchangeable Share
Provisions; and
(e) as soon as practicable upon the issuance by the Corporation of any
Exchangeable Shares or rights to acquire Exchangeable Shares.
6.5 DELIVERY OF SHARES OF PARENT COMMON STOCK. Upon notice of any event
that requires the Corporation to cause to be delivered shares of Parent Common
Stock to any holder of Exchangeable Shares, the Parent shall, in any manner
deemed appropriate by it, provide such shares or cause such shares to be
provided to the Corporation, which shall forthwith deliver the requisite shares
of Parent Common Stock to or to the order of the former holder of the
surrendered Exchangeable Shares, as the Corporation shall direct. All such
shares of Parent Common Stock shall be duly issued as fully paid,
non-assessable, free of pre-emptive rights and shall be free and clear of any
lien, claim, encumbrance, security interest or adverse claim.
6.6 QUALIFICATION OF SHARES OF PARENT COMMON STOCK. The Parent covenants
that it will make such filings and seek such regulatory consents and approvals
as are necessary so that the shares of Parent Common Stock to be issued on the
exchange
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of Exchangeable Shares will be issued in compliance with the applicable
securities laws in Canada and the United States and may be freely traded (other
than by holders who are Affiliates of the Parent within the meaning of U.S.
securities laws) on Nasdaq or on such other United States exchange as such
shares may be listed, quoted or posted for trading from time to time. The
Parent will also take such steps as are commercially reasonable to cause the
Exchangeable Shares to be listed and posted for trading on a stock exchange in
Canada prescribed under the Income Tax Act (Canada).
6.7 ECONOMIC EQUIVALENCE.
(1) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in
accordance with Section 9.2 of the Exchangeable Share Provisions:
(a) issue or distribute shares of Parent Common Stock (or securities
exchangeable for or convertible into or carrying rights to acquire shares
of Parent Common Stock (excluding any rights issuable under the
Shareholder Rights Plan)) to the holders of all or substantially all of
the then outstanding Parent Common Stock by way of stock dividend or other
distribution, other than an issue of shares of Parent Common Stock (or
securities exchangeable for or convertible into or carrying rights to
acquire shares of Parent Common Stock) to holders of shares of Parent
Common Stock who exercise an option to receive dividends in Parent Common
Stock (or securities exchangeable for or convertible into or carrying
rights to acquire shares of Parent Common Stock) in lieu of receiving cash
dividends;
(b) issue or distribute rights (excluding rights issuable under the
Shareholder Rights Plan), options or warrants to the holders of all or
substantially all of the then outstanding shares of Parent Common Stock
entitling them to subscribe for or to purchase shares of Parent Common
Stock (or securities exchangeable for or convertible into or carrying
rights to acquire shares of Parent Common Stock); or
(c) issue or distribute to the holders of all or substantially all of the
then outstanding shares of Parent Common Stock (i) shares or securities of
the Parent of any class other than Parent Common Stock (other than shares
convertible into or exchangeable for or carrying rights to acquire shares
of Parent Common Stock), (ii) rights (excluding any rights issuable under
the Shareholder Rights Plan), options or warrants other than those
referred to in section 6.7(1) (b) above, (iii) evidences of indebtedness
of the Parent or (iv) assets of the Parent;
unless (x) the Corporation is permitted under applicable law to issue or
distribute the economic equivalent on a per share basis of such rights,
options, securities, shares, evidences of indebtedness or other assets to
holders of the Exchangeable Shares and (y) the Corporation shall issue or
distribute such rights, options, securities, shares, evidences of indebtedness
or other assets simultaneously to holders of the Exchangeable Shares.
(2) The Parent will not without the prior approval of the Corporation and
the prior approval of the holders of the Exchangeable Shares given in
accordance with Section 9.2 of the Exchangeable Share Provisions:
(a) subdivide, redivide or change the then outstanding shares of Parent
Common Stock into a greater number of shares of Parent Common Stock; or
(b) reduce, combine or consolidate or change the then outstanding shares
of Parent Common Stock into a lesser number of shares of Parent Common
Stock; or
(c) reclassify or otherwise change the shares of Parent Common Stock or
effect an amalgamation, merger, reorganization or other transaction
affecting the shares of Parent Common Stock;
unless (x) the Corporation is permitted under applicable law to simultaneously
make the same or an economically equivalent change to, or in the rights of
holders of, the Exchangeable Shares and (y) the same or an economically
equivalent change is made to, or in the rights of the holders of, the
Exchangeable Shares.
(3) The Parent will ensure that the record date for any event referred to
in section 6.7(1) or 6.7(2) above, or (if no record date is applicable for such
event) the effective date for any such event, is not less than 20 Business Days
after the date on which such event is declared or announced by the Parent (with
simultaneous notice thereof to be given by the Parent to the Corporation).
(4) The Board of Directors shall determine, in good faith and in its sole
discretion (with the assistance of such reputable and qualified independent
financial advisors and/or other experts as the board may require), economic
equivalence for the purposes of any event referred to in section 6.7(1) or
6.7(2) and each such determination shall be conclusive and binding on the
Parent. In making each such determination, the following factors shall, without
excluding other factors determined by the board to be relevant, be considered
by the Board of Directors:
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(a) in the case of any stock dividend or other distribution payable in
shares of Parent Common Stock, the number of such shares issued in
proportion to the number of shares of Parent Common Stock previously
outstanding;
(b) in the case of the issuance or distribution of any rights (excluding
any rights issuable under the Shareholder Rights Plan), options or
warrants to subscribe for or purchase shares of Parent Common Stock (or
securities exchangeable for or convertible into or carrying rights to
acquire shares of Parent Common Stock), the relationship between the
exercise price of each such right, option or warrant and the current
market value (as determined by the Board of Directors in the manner above
contemplated) of a share of Parent Common Stock;
(c) in the case of the issuance or distribution of any other form of
property (including without limitation any shares or securities of the
Parent of any class other than Parent Common Stock, any rights, options or
warrants other than those referred to in section 6.7(4)(b) above, any
evidences of indebtedness of the Parent or any assets of the Parent), the
relationship between the fair market value (as determined by the Board of
Directors in the manner above contemplated) of such property to be issued
or distributed with respect to each outstanding share of Parent Common
Stock and the current market value (as determined by the Board of
Directors in the manner above contemplated) of a share of Parent Common
Stock;
(d) in the case of any subdivision, redivision or change of the then
outstanding shares of Parent Common Stock into a greater number of shares
of Parent Common Stock or the reduction, combination or consolidation or
change of the then outstanding shares of Parent Common Stock into a lesser
number of shares of Parent Common Stock or any amalgamation, merger,
reorganization or other transaction affecting the Parent Common Stock, the
effect thereof upon the then outstanding shares of Parent Common Stock;
and
(e) in all such cases, the general taxation consequences of the relevant
event to holders of Exchangeable Shares to the extent that such
consequences may differ from the taxation consequences to holders of
shares of Parent Common Stock as a result of differences between taxation
laws of Canada and the United States (except for any differing
consequences arising as a result of differing marginal taxation rates and
without regard to the individual circumstances of holders of Exchangeable
Shares).
For purposes of the foregoing determinations, the current market value of
any security listed and traded or quoted on a securities exchange shall be the
weighted average of the daily trading prices of such security during a period
of not less than 20 consecutive trading days ending not more than five trading
days before the date of determination on the principal securities exchange on
which such securities are listed and traded or quoted; provided, however, that
if in the opinion of the Board of Directors the public distribution or trading
activity of such securities during such period does not create a market that
reflects the fair market value of such securities, then the current market
value thereof shall be determined by the Board of Directors, in good faith and
in its sole discretion (with the assistance of such reputable and qualified
independent financial advisors and/or other experts as the board may require),
and provided further that any such determination by the Board of Directors
shall be conclusive and binding on the Parent.
6.8 TENDER OFFERS, ETC. In the event that a cash offer, share exchange
offer, issuer bid, take-over bid or similar transaction with respect to Parent
Common Stock (each, a "Tender Offer") is proposed by the Parent or is proposed
to the Parent or its shareholders and is recommended by the board of directors
of the Parent, or is otherwise effected or to be effected with the consent or
approval of the board of directors of the Parent, the Parent will use
reasonable efforts (to the extent, in the case of a Tender Offer by a third
party, within its control) expeditiously and in good faith to take all such
actions and do all such things as are necessary or desirable to enable and
permit holders of Exchangeable Shares to participate in such Tender Offer to
the same extent and on an economically equivalent basis as the holders of
shares of Parent Common Stock, without discrimination. Without limiting the
generality of the foregoing, the Parent will use reasonable efforts
expeditiously and in good faith to ensure that holders of Exchangeable Shares
may participate in all such Tender Offers without being required to retract
Exchangeable Shares as against the Corporation (or, if so required, to ensure
that any such retraction shall be effective only upon, and shall be conditional
upon, the closing of the Tender Offer and only to the extent necessary to
tender or deposit to the Tender Offer).
6.9 PARENT NOT TO VOTE EXCHANGEABLE SHARES. The Parent covenants and
agrees that it will appoint and cause to be appointed proxyholders with respect
to all Exchangeable Shares held by the Parent and its Subsidiaries for the sole
purpose of attending each meeting of holders of Exchangeable Shares in order to
be counted as part of the quorum for each such meeting. The Parent further
covenants and agrees that it will not, and will cause its Subsidiaries not to,
exercise any voting rights that may be exercisable by holders of Exchangeable
Shares from time to time pursuant to the Exchangeable Share Provisions or
pursuant to the provisions of the BUSINESS CORPORATIONS ACT (Ontario) (or any
successor or other corporate
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statute by which the Corporation may in the future be governed) with respect to
any Exchangeable Shares held by it or by its direct or indirect Subsidiaries in
respect of any matter considered at any meeting of holders of Exchangeable
Shares.
6.10 DUE PERFORMANCE. On and after the Effective Date, the Parent shall,
and shall cause Smithfield Sub to, duly and timely perform all of its
obligations provided for herein and that may arise under the Exchangeable Share
Provisions, and Parent shall be responsible for the due performance of all of
such obligations hereunder and under the Exchangeable Share Provisions.
6.11 ISSUE OF ADDITIONAL SHARES. During the term of this trust agreement,
the Parent will not issue any shares of Parent Series B Special Voting
Preferred Shares, par value US$1.00 (the "Special Voting Share") in addition to
the one Special Voting Share to be issued to the Trustee.
ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE. The rights, powers and authorities
of the Trustee under this trust agreement, in its capacity as trustee of the
trust, shall include:
(a) receipt and deposit of the Voting Share from the Parent as trustee
for and on behalf of the Non-Affiliated Holders in accordance with the
provisions of this trust agreement;
(b) granting proxies and distributing materials to Non-Affiliated Holders
as provided in this trust agreement;
(c) voting the Non-Affiliated Holder Votes in accordance with the
provisions of this trust agreement;
(d) receiving the grant of the Exchange Right and the Automatic Exchange
Rights from the Parent as trustee for and on behalf of the Non-Affiliated
Holders in accordance with the provisions of this trust agreement;
(e) exercising the Exchange Right in accordance with the provisions of
this trust agreement, and in connection therewith receiving from
Non-Affiliated Holders Exchangeable Shares and other requisite documents
and distributing to such Non-Affiliated Holders the shares of Parent
Common Stock and cheques, if any, to which such Non-Affiliated Holders are
entitled upon the exercise of the Exchange Right;
(f) holding title to the Trust Estate;
(g) investing any money forming, from time to time, a part of the Trust
Estate as provided in this trust agreement;
(h) taking action at the direction of a Non-Affiliated Holder to enforce
the obligations of the Corporation and/or the Parent under this trust
agreement and under the Exchangeable Share Provisions; and
(i) taking such other actions and doing such other things as are
specifically provided in this trust agreement.
In the exercise of such rights, powers and authorities the Trustee shall have
(and is granted) such incidental and additional rights, powers and authority
not in conflict with any of the provisions of this trust agreement as the
Trustee, acting in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the purpose of the
Trust. Any exercise of such discretionary rights, powers and authorities by the
Trustee shall be final, conclusive and binding upon all persons. For greater
certainty, the Trustee shall have only those duties as are set out specifically
in this trust agreement. The Trustee in exercising its rights, powers, duties
and authorities hereunder shall act honestly and in good faith with a view to
the best interests of the Non-Affiliated Holders and shall exercise the care,
diligence and skill that a reasonably prudent trustee would exercise in
comparable circumstances. The Trustee shall not be bound to give any notice or
do or take any act, action or proceeding by virtue of the powers conferred on
it hereby unless and until it shall be specifically required to do so under the
terms hereof; nor shall the Trustee be required to take any notice of, or to do
or to take any act, action or proceeding as a result of any default or breach
of any provision hereunder, unless and until notified in writing of such
default or breach, which notice shall distinctly specify the default or breach
desired to be brought to the attention of the Trustee and in the absence of
such notice the Trustee may for all purposes of this trust agreement
conclusively assume that no default or breach has been made in the observance
or performance of any of the representations, warranties, covenants, agreements
or conditions contained herein.
7.2 NO CONFLICT OF INTEREST. The Trustee represents to the Corporation and
the Parent that at the date of execution and delivery of this trust agreement
there exists no material conflict of interest in the role of the Trustee as a
fiduciary hereunder and the role of the Trustee in any other capacity. The
Trustee shall, within 90 days after it becomes aware that such a
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material conflict of interest exists, either eliminate such material conflict
of interest or resign in the manner and with the effect specified in Article 10
hereof. If, notwithstanding the foregoing provisions of this section 7.2, the
Trustee has such a material conflict of interest, the validity and
enforceability of this trust agreement shall not be affected in any manner
whatsoever by reason only of the existence of such material conflict of
interest. If the Trustee contravenes the foregoing provisions of this section
7.2, any interested party may apply to the Ontario Court of Justice (General
Division) for an order that the Trustee be replaced as trustee hereunder.
7.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC. The Corporation and
the Parent irrevocably authorize the Trustee, from time to time, to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any such subsequent registrar or
transfer agent, of the Exchangeable Shares and the Parent Common Stock;
and
(b) requisition, from time to time, from any such registrar or transfer
agent any information readily available from the records maintained by it
which the Trustee may reasonably require for the discharge of its duties
and responsibilities under this trust agreement. The Parent covenants that
it will supply, and will cause Smithfield Sub to supply, the Trustee, or
the Transfer Agent, as the case may be, in a timely manner with duly
executed share certificates for the purpose of completing the exercise
from time to time of all rights to acquire Parent Common Stock hereunder,
under the Exchangeable Share Provisions and under any other security or
commitment given to the Non-Affiliated Holders pursuant thereto, in each
case pursuant to the provisions hereof or of the Exchangeable Share
Provisions or otherwise.
7.4 BOOKS AND RECORDS. The Trustee shall keep available for inspection by
the Parent and the Corporation, at the Trustee's principal office in Toronto,
Ontario, correct and complete books and records of account relating to the
Trustee's actions under this trust agreement, including without limitation all
information relating to mailings and instructions to and from Non-Affiliated
Holders and all transactions pursuant to the Voting Rights and the Exchange
Right for the term of this Agreement. On or before June 30, 1998, and on or
before June 30 in every year thereafter, so long as the Voting Share is on
deposit with the Trustee, the Trustee shall transmit to the Parent and the
Corporation a brief report, dated as of the last Saturday of the preceding
April, with respect to: (a) the property and funds comprising the Trust Estate
as of that date; (b) the number of exercises of the Exchange Right, if any, and
the aggregate number of Exchangeable Shares received by the Trustee on behalf
of Non-Affiliated Holders in consideration of the issue and delivery by the
Parent or Smithfield Sub of shares of Parent Common Stock in connection with
the Exchange Right, during the calendar year ended on such date; and (c) all
other actions taken by the Trustee in the performance of its duties under this
trust agreement which it had not previously reported.
7.5 INCOME TAX RETURNS AND REPORTS. The Trustee shall, to the extent
necessary, prepare and file on behalf of the Trust appropriate Canadian and
United States income tax returns and any other returns or reports as may be
required by applicable law or pursuant to the rules and regulations of any
securities exchange or other trading system through which the Exchangeable
Shares are traded and, in connection therewith, may obtain the advice and
assistance of such experts as the Trustee may consider necessary or advisable.
The Parent shall retain such experts as may be required for the purposes of
providing such advice and assistance.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE. The Trustee shall
exercise any or all of the rights, duties, powers or authorities vested in it
by this trust agreement at the request, order or direction of any
Non-Affiliated Holder upon such Non-Affiliated Holder furnishing to the Trustee
reasonable funding, security and indemnity against the costs, expenses and
liabilities that may be incurred by the Trustee therein or thereby, provided
that no Non-Affiliated Holder shall be obligated to furnish to the Trustee any
such funding, security or indemnity in connection with the exercise by the
Trustee of any of its rights, duties, powers and authorities with respect to
the Voting Share pursuant to Article 4 hereof and with respect to the Exchange
Right pursuant to Article 5 hereof, subject to the provisions of section 7.15
hereof. None of the provisions contained in this trust agreement shall require
the Trustee to expend or risk its own funds or otherwise incur financial
liability in the exercise of any of its rights, powers, duties or authorities
unless given funds, security and indemnified as aforesaid.
7.7 ACTIONS BY NON-AFFILIATED HOLDERS. No Non-Affiliated Holder shall have
the right to institute any action, suit or proceeding or to exercise any other
remedy authorized by this trust agreement for the purpose of enforcing any of
its rights or for the execution of any trust or power hereunder unless the
Non-Affiliated Holder has requested the Trustee to take or institute such
action, suit or proceeding and furnished the Trustee with the funding, security
and indemnity referred to in section 7.6 hereof and the Trustee shall have
failed to act within a reasonable time thereafter. In such case, but not
otherwise, the Non-Affiliated Holder shall be entitled to take proceedings in
any court of competent jurisdiction such as the Trustee might have taken; it
being understood and intended that no one or more Non-Affiliated Holders shall
have any right in any manner whatsoever to affect, disturb or prejudice the
rights hereby created by any such action, or to enforce any right
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hereunder, including without limitiation, under the Voting Rights or the
Exchange Right, except subject to the conditions and in the manner herein
provided, and that all powers and trusts hereunder shall be exercised and all
proceedings at law shall be instituted, had and maintained by the Trustee,
except only as herein provided, and in any event for the equal benefit of all
Non-Affiliated Holders.
7.8 RELIANCE UPON DECLARATIONS. The Trustee shall not be considered to be
in contravention of any of its rights, powers, duties and authorities hereunder
if, when required, it acts and relies in good faith upon lists, mailing labels,
notices, statutory declarations, certificates, opinions, reports or other
papers or documents furnished pursuant to the provisions hereof or required by
the Trustee to be furnished to it in the exercise of its rights, powers, duties
and authorities hereunder and such lists, mailing labels, notices, statutory
declarations, certificates, opinions, reports or other papers or documents
comply with the provisions of section 7.9 hereof, if applicable, and with any
other applicable provisions of this trust agreement.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE. The Corporation and/or the Parent
shall furnish to the Trustee evidence of compliance with the conditions
provided for in this trust agreement relating to any action or step required or
permitted to be taken by the Corporation, the Parent, Smithfield Sub or the
Trustee under this trust agreement or as a result of any obligation imposed
under this trust agreement, including, without limitation, in respect of the
Voting Rights or the Exchange Right and the taking of any other action to be
taken by the Trustee at the request of or on the application of the Corporation
and/or the Parent forthwith if and when:
(a) such evidence is required by any other section of this trust
agreement to be furnished to the Trustee in accordance with the terms of
this section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this trust agreement, gives the Corporation and/or the
Parent written notice requiring it to furnish such evidence in relation to
any particular action or obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of the Corporation
and/or the Parent or a statutory declaration or a certificate made by persons
entitled to sign an Officer's Certificate stating that any such condition has
been complied with in accordance with the terms of this trust agreement.
Whenever such evidence relates to a matter other than the Voting Rights or the
Exchange Right and except as otherwise specifically provided herein, such
evidence may consist of a report or opinion of any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert or any other person
whose qualifications give authority to a statement made by such person,
provided that if such report or opinion is furnished by a director, officer or
employee of the Corporation and/or the Parent it shall be in the form of an
Officer's Certificate or a statutory declaration. Each statutory declaration,
certificate, opinion or report furnished to the Trustee as evidence of
compliance with a condition provided for in this trust agreement shall include
a statement by the person giving the evidence:
(a) declaring that such person has read and understands the provisions of
this trust agreement relating to the condition in question;
(b) describing the nature and scope of the examination or investigation
upon which such person based the statutory declaration, certificate,
statement or opinion; and
(c) declaring that such person has made such examination or investigation
as such person believes is necessary to enable such person to make the
statements or give the opinions contained or expressed therein.
7.10 EXPERTS, ADVISERS AND AGENTS. The Trustee may:
(a) in relation to these presents act and rely on the opinion or advice
of or information obtained from or prepared by any solicitor, auditor,
accountant, appraiser, valuer, engineer or other expert, whether retained
by the Trustee or by the Corporation and/or the Parent or otherwise, and
may employ such assistants as may be necessary to the proper determination
and discharge of its powers and duties and determination of its rights
hereunder and may pay proper and reasonable compensation for all such
legal and other advice or assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably require
for the proper determination and discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all services performed
for it (and shall be entitled to receive reasonable remuneration for all
services performed by it) in the discharge of the trusts hereof and
compensation for all disbursements, costs and expenses made or incurred by
it in the determination and discharge of its duties hereunder and in the
management of the Trust.
7.11 INVESTMENT OF MONEY HELD BY TRUSTEE. Unless otherwise provided in
this trust agreement, any money held by or on behalf of the Trustee which under
the terms of this trust agreement may or ought to be invested or which may be
on
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deposit with the Trustee or which may be in the hands of the Trustee may be
invested and reinvested in the name or under the control of the Trustee in
securities in which, under the laws of the Province of Ontario, trustees are
authorized to invest trust money, provided that such securities are stated to
mature within two years after their purchase by the Trustee, and the Trustee
shall so invest such money on the written direction of the Corporation. Pending
the investment of any money as herein before provided, such money may be
deposited in the name of the Trustee in any chartered bank in Canada or, with
the consent of the Corporation, in the deposit department of the Trustee or any
other loan or trust company authorized to accept deposits under the laws of
Canada or any province thereof at the rate of interest then current on similar
deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY. The Trustee shall not be
required to give any bond or security in respect of the execution of the
trusts, rights, duties, powers and authorities of this trust agreement or
otherwise in respect of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON CORPORATION'S REQUEST. Except as in this
trust agreement otherwise specifically provided, the Trustee shall not be bound
to act in accordance with any direction or request of the Corporation and/or
the Parent or of the directors thereof until a duly authenticated copy of the
instrument or resolution containing such direction or request shall have been
delivered to the Trustee, and the Trustee shall be empowered to act and rely
upon any such copy purporting to be authenticated and believed by the Trustee
to be genuine.
7.14 AUTHORITY TO CARRY ON BUSINESS. The Trustee represents to the
Corporation and the Parent that at the date of execution and delivery by it of
this trust agreement it is authorized to carry on the business of a trust
company in the Province of Ontario but if, notwithstanding the provisions of
this section 7.14, it ceases to be so authorized to carry on business, the
validity and enforceability of this trust agreement and the Voting Rights, the
Exchange Right and the other rights granted in or resulting from the Trustee
being a party to this trust agreement shall not be affected in any manner
whatsoever by reason only of such event but the Trustee shall, within 90 days
after ceasing to be authorized to carry on the business of a trust company in
the Province of Ontario, either become so authorized or resign in the manner
and with the effect specified in Article 10 hereof.
7.15 CONFLICTING CLAIMS. If conflicting claims or demands are made or
asserted with respect to any interest of any Non-Affiliated Holder in any
Exchangeable Shares, including any disagreement between the heirs,
representatives, successors or assigns succeeding to all or any part of the
interest of any Non-Affiliated Holder in any Exchangeable Shares resulting in
conflicting claims or demands being made in connection with such interest, then
the Trustee shall be entitled, at its sole discretion, to refuse to recognize
or to comply with any such claim or demand. In so refusing, the Trustee may
elect not to exercise any Voting Rights, the Exchange Right or other rights
subject to such conflicting claims or demands and, in so doing, the Trustee
shall not be or become liable to any person on account of such election or its
failure or refusal to comply with any such conflicting claims or demands. The
Trustee shall be entitled to continue to refrain from acting and to refuse to
act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Exchange Right or other rights subject to such conflicting claims
or demands have been adjudicated by a final judgment of a court of
competent jurisdiction and all rights of appeal have expired; or
(b) all differences with respect to the Voting Rights, Exchange Right or
other rights subject to such conflicting claims or demands have been
conclusively settled by a valid written agreement binding on all such
adverse claimants, and the Trustee shall have been furnished with an
executed copy of such agreement.
If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require such
claimant to furnish such surety bond or other security satisfactory to the
Trustee as it shall deem appropriate fully to indemnify it as between all
conflicting claims or demands.
7.16 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust created and
provided for by and in this trust agreement and agrees to perform the same upon
the terms and conditions herein set forth and to hold all rights, privileges
and benefits conferred hereby and by law in trust for the various persons who
shall from time to time be Non-Affiliated Holders, subject to all the terms and
conditions herein set forth.
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ARTICLE 8
COMPENSATION
8.1 FEES AND EXPENSES OF THE TRUSTEE. The Trustee will invoice the Parent
for its fees and expenses under this trust agreement. The Parent and the
Corporation jointly and severally agree to pay to the Trustee reasonable
compensation for all of the services rendered by it under this trust agreement
and will reimburse the Trustee for all reasonable expenses (including but not
limited to taxes, compensation paid to experts, agents and advisors and travel
expenses) and disbursements, including the cost and expense of any suit or
litigation of any character and any proceedings before any governmental agency
reasonably incurred by the Trustee in connection with its rights and duties
under this trust agreement; provided that the Parent and the Corporation shall
have no obligation to reimburse the Trustee for any expenses or disbursements
paid, incurred or suffered by the Trustee in any suit or litigation in which
the Trustee is determined to have acted in bad faith or with negligence or
wilful misconduct.
ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE. The Parent and the Corporation jointly
and severally agree to indemnify and hold harmless the Trustee and each of its
directors, officers, employees and agents appointed and acting in accordance
with this trust agreement (collectively, the "Indemnified Parties") against all
claims, losses, damages, costs, penalties, fines and reasonable expenses
(including reasonable expenses of the Trustee's legal counsel) which, without
fraud, negligence, wilful misconduct or bad faith on the part of such
Indemnified Party, may be paid, incurred or suffered by the Indemnified Party
by reason of or as a result of the Trustee's acceptance or administration of
the Trust, its compliance with its duties set forth in this trust agreement, or
any written or oral instructions (when confirmed in writing) delivered to the
Trustee by the Parent or the Corporation pursuant hereto. In no case shall the
Parent or the Corporation be liable under this indemnity for any claim against
any of the Indemnified Parties if such claim is incurred or suffered by reason
of or as a result of the fraud, negligence, wilful misconduct or bad faith of
an Indemnified Party and unless the Parent and the Corporation shall be
notified by the Trustee of the written assertion of a claim or of any action
commenced against the Indemnified Parties, promptly after any of the
Indemnified Parties shall have received any such written assertion of a claim
or shall have been served with a summons or other first legal process giving
information as to the nature and basis of the claim. Subject to (ii), below,
the Parent and the Corporation shall be entitled to participate at their own
expense in the defence and, if the Parent or the Corporation so elect at any
time after receipt of such notice, any of them may assume the defence of any
suit brought to enforce any such claim. The Trustee shall have the right to
employ separate counsel in any such suit and participate in the defence thereof
but the fees and expenses of such counsel shall be at the expense of the
Trustee unless: (i) the employment of such counsel has been authorized by the
Parent or the Corporation, such authorization not to be unreasonably withheld;
or (ii) the named parties to any such suit include both the Trustee and the
Parent or the Corporation and the Trustee shall have been advised by counsel
acceptable to the Parent or the Corporation that there may be one or more legal
defences available to the Trustee that are different from or in addition to
those available to the Parent or the Corporation and that an actual or
potential conflict of interest exists (in which case the Parent and the
Corporation shall not have the right to assume the defence of such suit on
behalf of the Trustee but shall be liable to pay the reasonable fees and
expenses of counsel for the Trustee). Such indemnification shall survive the
resignation or removal of the Trustee and the termination of this trust
agreement.
9.2 LIMITATION OF LIABILITY. The Trustee shall not be held liable for any
loss which may occur by reason of depreciation of the value of any part of the
Trust Estate or any loss incurred on any investment of funds pursuant to this
trust agreement, except to the extent that such loss is attributable to the
fraud, negligence, wilful misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION. The Trustee, or any trustee hereafter appointed, may at
any time resign by giving written notice of such resignation to the Parent and
the Corporation specifying the date on which it desires to resign, provided
that such notice shall never be given less than 60 days before such desired
resignation date unless the Parent and the Corporation otherwise agree and
provided further that such resignation shall not take effect until the date of
the appointment of a successor trustee and the acceptance of such appointment
by the successor trustee. Upon receiving such notice of resignation, the Parent
and the Corporation shall promptly appoint a successor trustee by written
instrument in duplicate, one copy of which shall be
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delivered to the resigning trustee and one copy to the successor trustee.
Failing acceptance by a successor trustee, a successor trustee may be appointed
by an order of the Ontario Court of Justice (General Division) upon application
of one or more of the parties hereto. If the retiring Trustee applies to the
Ontario Court (General Division) for the appointment of a successor trustee,
the retiring Trustee's costs of such application shall be at the joint and
several expense of the Parent and the Corporation.
10.2 REMOVAL. The Trustee, or any trustee hereafter appointed, may be
removed with or without cause, at any time on 60 days' prior notice by written
instrument executed by the Parent and the Corporation, in duplicate, one copy
of which shall be delivered to the trustee so removed and one copy to the
successor trustee, provided that such removal shall not take effect until the
date of appointment of a successor trustee and the acceptance of such
appointment by the successor trustee.
10.3 SUCCESSOR TRUSTEE. Any successor trustee appointed as provided under
this trust agreement shall execute, acknowledge and deliver to the Parent and
the Corporation and to its predecessor trustee an instrument accepting such
appointment. Thereupon the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor under this trust agreement, with like effect as
if originally named as trustee in this trust agreement. However, on the written
request of the Parent and the Corporation or of the successor trustee, the
trustee ceasing to act shall, upon payment of any amounts then due it pursuant
to the provisions of this trust agreement, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act. Upon the request of any such successor trustee, the Parent
and the Corporation and such predecessor trustee shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming
to such successor trustee all such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE. Upon acceptance of appointment by a
successor trustee as provided herein, the Parent and the Corporation shall
cause to be mailed notice of the succession of such trustee hereunder to each
Non-Affiliated Holder specified in a List. If the Parent or the Corporation
shall fail to cause such notice to be mailed within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Parent and the Corporation.
ARTICLE 11
PARENT SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC. The Parent shall
not enter into any transaction (whether by way of reconstruction,
reorganization, consolidation, merger, transfer, sale, lease or otherwise)
whereby all or substantially all of its undertaking, property and assets would
become the property of any other person or, in the case of a merger, of the
continuing corporation resulting therefrom unless, but may do so if:
(a) such other person or continuing corporation (the "Parent Successor"),
by operation of law, becomes, without more, bound by the terms and
provisions of this trust agreement or, if not so bound, executes, prior to
or contemporaneously with the consummation of such transaction a trust
agreement supplemental hereto and such other instruments (if any) as are,
in the opinion of legal counsel to the Trustee, necessary or advisable to
evidence the assumption by the Parent Successor of liability for all money
payable and property deliverable hereunder and the covenant of such Parent
Successor to pay and deliver or cause to be delivered the same and its
agreement to observe and perform all the covenants and obligations of the
Parent under this trust agreement; and
(b) such transaction shall, in the opinion of legal counsel to the
Trustee, be upon such terms as substantially to preserve and not to impair
in any material respect any of the rights, duties, powers and authorities
of the Trustee or of the Non-Affiliated Holders hereunder.
11.2 VESTING OF POWERS IN SUCCESSOR. Whenever the conditions of section
11.1 hereof have been duly observed and performed, if required by section 11.1
hereof, the Trustee, the Parent Successor and the Corporation shall execute and
deliver the supplemental trust agreement provided for in Article 12 hereof and
thereupon the Parent Successor shall possess and from time to time may exercise
each and every right and power of the Parent under this trust agreement in the
name of the Parent or otherwise and any act or proceeding by any provision of
this trust agreement required to be done or performed by the board of directors
of the Parent or any officers of the Parent may be done and performed with like
force and effect by the directors or officers of such Parent Successor.
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11.3 WHOLLY-OWNED SUBSIDIARIES. Except as provided in section 5.10,
nothing herein shall be construed as preventing the amalgamation or merger of
any wholly-owned Subsidiary of the Parent with or into the Parent or the
winding up, liquidation or dissolution of any wholly-owned Subsidiary of the
Parent provided that all of the assets of such Subsidiary are transferred to
the Parent or another wholly-owned Subsidiary of the Parent, and any such
transactions are expressly permitted by this Article 11.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC. This trust agreement may not be
amended or modified except by an agreement in writing executed by the
Corporation, the Parent and the Trustee and, unless the amendment or
modification is expressly authorized or permitted by this trust agreement,
approved by the Non-Affiliated Holders in accordance with Section 9.2 of the
Exchangeable Share Provisions.
12.2 AMENDMENTS WITH THE APPROVAL OF NON-AFFILIATED HOLDERS.
Notwithstanding the provisions of section 12.1 hereof, the parties to this
trust agreement may in writing, at any time and from time to time, without the
approval of the Non-Affiliated Holders, amend, modify or supplement this trust
agreement for the purposes of:
(a) adding to the covenants of any or all of the parties hereto for the
protection of the Non-Affiliated Holders hereunder;
(b) evidencing the succession of Parent Successors and the covenants of
and obligations assumed by each such Parent Sucessor in accordance with
the provisions of Article 11 and the succession of any successor trustee
in accordance with Article 10;
(c) making such amendments or modifications not inconsistent with this
trust agreement as may be necessary or desirable with respect to matters
or questions which, in the opinion of the Board of Directors and the board
of directors of the Parent, having in mind the best interests of the
Non-Affiliated Holders as a whole, it may be expedient to make, provided
that such boards of directors shall be of the opinion that such amendments
and modifications will not be prejudicial in any material respect to the
interests of the Non-Affiliated Holders as a whole; or
(d) making such changes or corrections which, on the advice of counsel to
the Corporation and the Parent, are required for the purpose of curing or
correcting any ambiguity or defect or inconsistent provision or clerical
omission or mistake or manifest error, provided that the Board of
Directors and the board of directors of the Parent shall be of the opinion
that such changes or corrections will not be prejudicial in any material
respect to the interests of the Non-Affiliated Holders as a whole.
12.3 MEETING TO CONSIDER AMENDMENTS. The Corporation, at the request of
the Parent, shall call a meeting or meetings of the Non-Affiliated Holders for
the purpose of considering any proposed amendment or modification requiring
approval pursuant hereto. Any such meeting or meetings shall be called and held
in accordance with the by-laws of the Corporation, the Exchangeable Share
Provisions and all applicable laws.
12.4 CHANGES IN CAPITAL OF PARENT AND THE CORPORATION. At all times after
the occurrence of any event effected pursuant to section 6.7 or section 6.8 of
this trust agreement, as a result of which either the Parent Common Stock or
the Exchangeable Shares or both are in any way changed, this trust agreement
shall forthwith be amended and modified as necessary in order that it shall
apply with full force and effect, mutatis mutandis, to all new securities into
which the Parent Common Stock or the Exchangeable Shares or both are so changed
and the parties hereto shall execute and deliver a supplemental trust agreement
giving effect to and evidencing such necessary amendments and modifications.
12.5 EXECUTION OF SUPPLEMENTAL TRUST AGREEMENTS. No amendment to or
modification or waiver of any of the provisions of this trust agreement
otherwise permitted hereunder shall be effective unless made in writing and
signed by all of the parties hereto. From time to time the Corporation, the
Parent and the Trustee may, subject to the provisions of these presents, and
they shall, when so directed by these presents, execute and deliver by their
proper officers, trust agreements or other instruments supplemental hereto,
which thereafter shall form part hereof. In executing or accepting the
supplemental trusts created by any supplemental indenture permitted by this
Article 12, the Trustee will be entitled to receive and (subject to Article 7)
will be fully protected in relying upon an Officers' Certificate and opinions
of counsel stating that the execution of such supplemental indenture is
authorized or permitted in this trust agreement.
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ARTICLE 13
TERMINATION
13.1 TERM. The Trust created by this trust agreement shall continue until
the earliest to occur of the following events:
(a) no outstanding Exchangeable Shares are held by any Non-Affiliated
Holder;
(b) each of the Corporation and the Parent elects in writing to terminate
the Trust and such termination is approved by the Non-Affiliated Holders
of the Exchangeable Shares in accordance with Section 9.2 of the
Exchangeable Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants of
His Majesty King George VI of the United Kingdom of Great Britain and
Northern Ireland living on the date of the creation of the Trust.
13.2 SURVIVAL OF AGREEMENT. This trust agreement shall survive any
termination of the Trust and shall continue until there are no Exchangeable
Shares outstanding held by any Non-Affiliated Holder; provided, however, that
the provisions of Articles 8 and 9 hereof and the representation contained in
section 6.3(b) hereof shall survive any such termination of this trust
agreement.
ARTICLE 14
GENERAL
14.1 SEVERABILITY. If any provision of this trust agreement is held to be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remainder of this trust agreement shall not in any way be affected or
impaired thereby and this trust agreement shall be carried out as nearly as
possible in accordance with its original terms and conditions.
14.2 ENUREMENT. This trust agreement shall be binding upon and enure to
the benefit of the parties hereto and their respective successors and permitted
assigns and to the benefit of the Non-Affiliated Holders.
14.3 NOTICES TO PARTIES. All notices and other communications between the
parties hereunder shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed telecopy to the parties at the following
addresses (or at such other address for such party as shall be specified in
like notice):
(a) if to the Parent at: Smithfield Foods, Inc.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Corporate Secretary
Telecopy: (757) 365-3017
(b) if to the Corporation at: Smithfield Canada Limited
c/o McCarthy Tetrault
Suite 4700
Toronto Dominion Bank Tower
Toronto-Dominion Centre
Toronto, Ontario
M5K 1E6
Attention: Rene R. Sorell
Telecopy: (416) 868-0673
(c) if to the Trustee at: CIBC Mellon Trust Company
199 Bay Street
Commerce Court West
Securities Level
Toronto, Ontario M5L 1G9
Attention: Courier Window
Telecopy: (416) 643-3148
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Any notice or other communication given personally shall be deemed to have
been given and received upon delivery thereof and if given by telecopy shall be
deemed to have been given and received on the date of receipt thereof unless
such day is not a Business Day in which case it shall be deemed to have been
given and received upon the immediately following Business Day.
14.4 NOTICE TO NON-AFFILIATED HOLDERS. Any notice, request or other
communication to be given to a Non-Affiliated Holder shall be in writing and
shall be valid and effective if given by mail (postage pre-paid or by delivery
to the address of the holder recorded in the securities register of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received on the fifth day following the date of mailing and, if given
by delivery, shall be deemed to have been given and received on the date of
delivery. Accidental failure or omission to give any notice, request or other
communication to one or more holders of Exchangeable Shares, or any defect in
such notice, shall not invalidate or otherwise alter or affect any action
proceeding to be taken pursuant thereto.
14.5 RISK OF PAYMENTS BY POST. Whenever payments are to be made or
certificates or documents are to be sent to any Non-Affiliated Holder by the
Trustee or by the Corporation, the Parent or by such Non-Affiliated Holder to
the Trustee or to the Parent or the Corporation, the making of such payment or
sending of such certificate or document sent through the post shall be at the
risk of the Corporation, in the case of payments made or documents sent by the
Trustee or the Corporation or the Parent and the Non-Affiliated Holder, in the
case of payments made or documents sent by the Non-Affiliated Holder.
14.6 COUNTERPARTS. This trust agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
14.7 JURISDICTION. This trust agreement shall be construed and enforced in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein.
14.8 ATTORNMENT. The Parent agrees that any action or proceeding arising
out of or relating to this trust agreement may be instituted in the courts of
Ontario, waives any objection which it may have now or hereafter to the venue
of any such action or proceeding, irrevocably submits to the jurisdiction of
the said courts in any such action or proceeding, agrees to be bound by any
judgment of the said courts and agrees not to seek, and hereby waives, any
review of the merits of any such judgment by the courts of any other
jurisdiction and hereby appoints the Corporation at its registered office in
the Province of Ontario as its attorney for service of process.
IN WITNESS WHEREOF, the parties hereto have caused this trust agreement to
be duly executed as of the date first above written.
SMITHFIELD FOODS, INC.
By: /s/ Aaron D. Trub
---------------------------------------
Name: Aaron D. Trub
Title: Vice President Chief Financial Officer
and Secretary
/s/ C. Larry Pope
-----------------------------------------
Name: C. Larry Pope
Title: Vice President, Finance
SMITHFIELD CANADA LIMITED
By: /s/ Aaron D. Trub
---------------------------------------
Name: Aaron D. Trub
Title: Vice President, Finance and Secretary
/s/ Robert J. Richardson
-----------------------------------------
Name: Robert J. Richardson
Title: Director
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CIBC MELLON TRUST COMPANY
By: /s/ M. M. Donald
---------------------------------------
Name: M. M. Donald
Title: Senior Client Manager
/s/
-----------------------------------------
Name:
Title:
EACH PRESENT OR FUTURE HOLDER OR
BENEFICIAL OWNER OF EXCHANGEABLE SHARES,
BY SMITHFIELD CANADA, AS ATTORNEY IN FACT
By: /s/ Aaron D. Trub
---------------------------------------
Name: Aaron D. Trub
Title: Vice President, Finance and Secretary
By: /s/ Robert J. Richardson
------------------------------------
Name: Robert J. Richardson
Title: Director
23