EXHIBIT 99.1
FORM OF SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT is made as of the o day of o , 1998
BETWEEN:
o[, a corporation incorporated under the laws of o] (the "Seller")
- and -
o, a corporation incorporated under the laws of o (the "Holdco")
- and -
SMITHFIELD CANADA LIMITED, a corporation incorporated under the laws
of Ontario ("Smithfield Canada")
WHEREAS the Seller is the beneficial and registered owner of o [common]
shares in the capital stock of Holdco (collectively, the "Holdco Shares");
AND WHEREAS the sole asset of Holdco is o common shares ("Common
Shares") and o Class A non-voting shares ("Class A Shares") in the capital of
Schneider Corporation ("Schneider");
AND WHEREAS Smithfield Canada has made an offer to purchase any and all
of the issued and outstanding Common Shares (the "Common Share Offer") and an
offer to purchase any and all of the issued and outstanding Class A Shares (the
"Class A Offer"), in each case subject to the relevant terms and conditions set
forth in the Offers to Purchase (the "Offers to Purchase") and Offering Circular
dated o , 1998 (collectively, the "Offer Documents");
AND WHEREAS the Offers to Purchase provide for an acceptance of the
Common Share Offer and the Class A Offer (collectively, the "Offers") by way of
a tender of shares in a holding company (the "Holdco Alternative"), provided,
among other things, that the tenderer of shares enters into this Agreement and
an indemnity agreement substantially in the form attached as Schedule "A" hereto
(the "Indemnity Agreement");
AND WHEREAS all of the shareholders of Holdco, including the Seller,
have agreed to tender all of the outstanding shares in the capital of Holdco to
the Offers pursuant to the Holdco Alternative;
AND WHEREAS, in satisfaction thereof, the parties have agreed that the
Seller shall sell and Smithfield Canada shall purchase the Holdco Shares upon
the terms and conditions set out herein;
NOW THEREFORE WITNESSETH THAT, in consideration of the premises and
covenants herein contained and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
1. INTERPRETATION
1.1 As used in this Agreement, the masculine gender includes the feminine and
neuter genders, and vice versa, and the singular includes the plural, and vice
versa, where the context so requires. All dollar amounts stated in this
Agreement are in Canadian dollars.
1.2 This Agreement, the Indemnity Agreement and the applicable letter of
transmittal (the "Letter of Transmittal") constitute the entire agreement
between the parties with respect to the subject matter hereof and there are no
representations and warranties of any kind not contained herein, in the
Indemnity Agreement or in the Letter of Transmittal. This Agreement may not be
amended or modified in any respect except by written instrument signed by all
parties.
2. PURCHASE OF HOLDCO SHARES
2.1 Subject to the terms and conditions of the Offer Documents, including the
terms and conditions set forth in Section 2 of the Offers to Purchase, the
Seller agrees to sell to Smithfield Canada and Smithfield Canada agrees to
purchase from the Seller the Holdco Shares.
2.2 The purchase price (the "Purchase Price") for the Holdco Shares shall be
satisfied by the issue by Smithfield Canada of that number of Exchangeable
Shares determined as follows:
Purchase Price = 0.5415 Exchangeable Shares x (A x B)
where "A" represents the total number of Common Shares and Class A Shares owned
by Holdco (collectively, the "Schneider Shares") and "B" represents the Seller's
proportionate ownership interest in Holdco expressed as a decimal value. The
Purchase Price shall be payable on the date established by Smithfield Canada for
Schneider Shares taken up and paid for under the Offers. Smithfield will not
issue any fractional Exchangeable Share. Instead of any fractional Exchangeable
Share, the Seller will be paid, at the option of Smithfield Canada, either a
cash payment based on a value of $25.00 per Schneider Share, or a whole
Exchangeable Share. Settlement will be made by Smithfield Canada causing to be
issued to the Seller a certificate or certificates representing the aggregate
number of Exchangeable Shares to which the Seller is entitled,
together with a cheque in Canadian dollars in lieu of any fraction of an
Exchangeable Share (if Smithfield Canada elects to satisfy any fractional
interest in cash). Unless otherwise specified in the Letter of Transmittal, the
certificate representing the Exchangeable Shares issuable in satisfaction of the
Purchase Price shall be issued in the name of the Seller.
2.3 For the purposes of the Offers, the acquisition by Smithfield Canada of the
Holdco Shares pursuant hereto shall constitute a purchase of Schneider Shares.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations of Seller
The Seller represents and warrants to Smithfield Canada that, as of the
date of this Agreement and as of the time of the acquisition of the Holdco
Shares by Smithfield Canada (the "Acquisition Time"):
(a) Incorporation and Registration
(i) Holdco is a corporation duly incorporated and validly
existing under the o (the "Act");
(ii) [If a corporation,] the Seller is duly incorporated
and validly existing under the laws of o ;
(iii) Each of the Seller and Holdco has the power and
capacity and has received all requisite approvals to
enter into this Agreement and perform its obligations
hereunder;
(iv) Each of the Seller and Holdco has duly executed and
delivered this Agreement and, upon due execution and
delivery of this Agreement by Smithfield Canada, this
Agreement shall be a valid and binding agreement
enforceable against the Seller and Holdco in
accordance with its terms, subject to the
availability of equitable remedies and the
enforcement of creditors' rights generally; and
(v) Holdco is not required to be registered, licensed or
otherwise qualified as an extra-provincial or foreign
corporation or to be in good standing in any
jurisdiction other than Ontario.
(b) Capitalization
(i) The authorized capital of Holdco consists solely of
[an unlimited number of common shares] of which o
[common shares] are issued and outstanding;
(ii) The paid-up capital and stated capital of the Holdco
Shares is $o;
(iii) The Holdco Shares have been duly and validly issued
and are outstanding as fully paid and non-assessable
shares of Holdco;
(iv) No options, warrants or other rights of any kind
giving anyone a claim against, or a right or ability
to acquire any of or any interest in the Holdco
Shares have been authorized or agreed to be issued or
are outstanding; and
(v) No securities or obligations convertible into or
exchangeable for shares or any other securities of
Holdco have been authorized or agreed to be issued or
are outstanding.
(c) Ownership of the Schneider Shares
(i) Holdco is the sole registered and beneficial owner of
the Schneider Shares with good and valid title free
and clear of all mortgages, liens, charges, pledges,
encumbrances, claims, security interests,
restrictions or rights of others of any nature
whatsoever ("Liens"); and
(ii) No options, warrants or other rights of any kind
giving anyone a claim against or a right or ability
to acquire any of or any interest in the Schneider
Shares (other than the agreement dated December 18,
1997 (the "Lock-up Agreement") made between
Smithfield Foods, Inc. and the members of the
Schneider Family named therein, this Agreement and
similar deposit agreements which will be entered into
between Holdco, Smithfield Canada and each of the
other shareholders of Holdco) and no securities or
obligations convertible into or exchangeable for the
Schneider Shares have been authorized or agreed to be
issued or are outstanding.
(d) Right to Sell
(i) The Seller is the sole registered and beneficial
owner of the Holdco Shares;
(ii) The Seller has the exclusive right to dispose of the
Holdco Shares pursuant to this Agreement;
(iii) The Seller will deliver to Smithfield Canada at the
Acquisition Time good and valid title to the Holdco
Shares free and clear of any and all Liens; and
(iv) The Holdco Shares are not subject to any shareholders
agreement, voting trust agreement, share pledge
agreement or similar agreement.
(e) Restricted Activity
(i) Since incorporation, the sole activity of Holdco has
been the acquisition and holding for investment
purposes of the Schneider Shares, other marketable
securities and cash and the undertaking of ancillary
activities relating to maintaining its corporate
existence and capitalization;
(ii) Holdco has no assets other than the Schneider Shares;
and
(iii) Holdco has no indebtedness or any outstanding
liabilities or obligations of any other manner or
amount whatsoever, whether accrued, absolute,
contingent or otherwise (collectively,
"liabilities"), including, without limitation, any
liabilities as a result of any actual or potential
litigation and any tax liability accrued or payable
in respect of any taxation year of Holdco ending on
or prior to the Acquisition Time (whether or not
known at that time).
(f) No Joint Venture Interests, etc.
Holdco is not a partner, co-tenant, joint venturer or
otherwise a participant in any partnership, joint venture,
co-tenancy or other similar jointly-owned business.
(g) Agreements
(i) Holdco is not a party to or bound or affected by any
Contract (as defined below) except for the Lock-up
Agreement, this Agreement, the other deposit
agreements which will be entered into between Holdco,
Smithfield Canada and each of the other shareholders
of Holdco, and the agreement pursuant to which Holdco
purchased the Schneider Shares;
(ii) Holdco is not a party to or bound by any agreement of
guarantee, support, indemnification, assumption or
endorsement or any other like commitment of the
obligations, liabilities or indebtedness of any other
person, firm or corporation; and,
(iii) Holdco has not had, and does not have, any employees
(other than directors and officers) and has no
liabilities whatsoever in respect of its directors or
officers.
(h) Dividends or other Distributions
Holdco has not, other than by way of stock dividends, declared or paid
any dividends or other distributions in respect of the Holdco Shares,
except in an aggregate amount equal to the sum of (i) the after-tax
amount of the dividends received by Holdco on the Schneider Shares and
any other marketable securities held by Holdco, and (ii) the after-tax
amount of any interest received by Holdco on any cash held by Holdco.
(i) Tax Matters
(i) Holdco is not a non-resident of Canada for the
purposes of the Income Tax Act (Canada) (the
"Canadian Tax Act");
(ii) Holdco is not a non-resident owned investment
corporation for the purposes of Section 133 of the
Canadian Tax Act;
(iii) The Seller is not a non-resident of Canada for the
purposes of the Canadian Tax Act or, if it is a
non-resident, it shall comply with clauses 4.3(h) and
(i) below; and
(iv) Holdco is a private holding corporation as that term
is defined for the purposes of Part VI.1 of the
Canadian Tax Act.
(j) No Undisclosed Facts
There are no facts which may materially affect Holdco or the Holdco
Shares or the ability to wind up Holdco under the voluntary dissolution
procedures of the Act or to amalgamate Holdco with any other
corporation immediately following the Acquisition Time which have not
previously been disclosed in writing to Smithfield Canada.
(k) Litigation
There is no suit, action, litigation, investigation, claim, complaint,
grievance or proceeding, including, without limitation, any appeal or
application for review, in progress, pending or threatened against or
relating to Holdco or affecting its assets, at law or in equity, before
any court, governmental department, commission, board, bureau, agency
or arbitrator or instrumentality, domestic or foreign.
(l) Compliance
(i) Holdco has conducted no business and had no
activities other than those activities set out in
paragraph 3.1(e)(i) above; and
(ii) Holdco has, since its incorporation, complied with
all applicable laws, rules and regulations of any
governmental, administrative or regulatory authority,
including any supranational authority, judgments,
orders, rulings or awards of any court arbitrator or
any governmental, administrative or regulatory
authority.
(m) Consents
No consent, waiver, approval, authorization, exemption, registration,
license or declaration of or by or filing with or notification to any
governmental, administrative or regulatory authority is required to be
made or obtained by Holdco or the Seller in connection with (i) the
execution and delivery by the Seller or enforcement against the Seller
of this Agreement; or (ii) the consummation of any transactions
provided for herein.
(n) No Conflict
(i) The execution and delivery of this Agreement by the
Seller and the consummation of the transactions
provided for herein do not and will not (1) conflict
with or violate the articles or by-laws or any
provision of any charter document of either the
Seller or Holdco; (2) conflict with or violate any
law, rule, regulation, order, judgment or decree
applicable to either the Seller or Holdco; or (3)
violate, conflict with, or result in the breach of or
(with or without notice or lapse of time or both) a
default under, result in or give any person any right
of termination, cancellation, acceleration or
modification with respect to, or require any consent,
waiver, approval, authorization from or exemption by
or notification to, any party under any Contract (as
defined below) or permits, authorizations, approvals,
registrations and licenses granted by or obtained
from any governmental, administrative or regulatory
authority to which either the Seller or Holdco is a
party or is bound.
(o) Voting
The Seller has not previously granted or agreed to grant any proxy in
respect of the Holdco Shares or entered into any voting trust, vote
pooling or other agreement with respect to the right to vote, call
meetings of shareholders or give consents or approvals of any kind as
to the Holdco Shares.
(p) Bank Accounts, etc.
Holdco does not maintain any depositary account, trust account, safety
deposit box or other bank account with any financial institution other
than an account with an investment dealer maintained for the purpose of
holding the Schneider Shares.
(q) Articles and By-laws
The Seller has made available to Smithfield Canada a true and complete
copy of the articles and by-laws of Holdco, including any and all
amendments thereto, and such articles and by-laws are in full force and
effect.
(r) Books and Records
(i) The Seller has made available to Smithfield Canada
all books and records of Holdco (the "Books and
Records"), including, without limitation, the
corporate minute book and any income tax filings;
(ii) The Books and Records fairly and accurately set out
and disclose in all material respects the financial
position of Holdco and all financial transactions
relating to Holdco have been accurately recorded in
the Books and Records;
(iii) Holdco's corporate minute book includes complete and
accurate minutes of all meetings of the directors and
shareholders of Holdco held to date and resolutions
passed by the directors and shareholders on consent
since the date of its incorporation; and
(iv) The share certificate book, register of shareholders,
register of transfers and register of directors of
Holdco are complete and accurate.
(s) Full Disclosure
None of the foregoing representations or statements of fact contains
any untrue statement of material fact or omits to state any material
fact necessary to make any such statement or representation not
misleading to a prospective purchaser of the Holdco Shares seeking full
information as to Holdco or its business and affairs.
(t) Meaning of "Contract"
(i) In this Agreement, "Contacts" shall mean all
contracts (whether or not in writing), agreements,
commitments, understandings, leases, licenses,
mortgages, indentures, bonds, notes and other
instruments.
3.2 Representations of Smithfield Canada
Smithfield Canada hereby represents and warrants to the Seller, as of
the date of this Agreement and as of the Acquisition Time, that:
(a) it is duly incorporated and validly existing under the laws of
Ontario and it has the corporate power and authority and has
received all requisite corporate approvals to enter into this
Agreement and to complete the transactions contemplated
hereby;
(b) this Agreement has been duly executed and delivered by it and
constitutes a valid and binding agreement enforceable against
it in accordance with its terms, subject to the availability
of equitable remedies and the enforcement of creditors' rights
generally; and
(c) the consummation by Smithfield Canada of the transactions
contemplated hereby will not constitute a violation or default
under or conflict with any contract, commitment, agreement,
understanding, arrangement or restriction of any kind to which
Smithfield Canada is or will be a party or by which Smithfield
Canada is or will be bound at the time of such consummation.
4. CLOSING
4.1 The Seller shall tender the Holdco Shares to the Offers concurrently with
the execution of this Agreement (the "Deposit Time") by depositing the Holdco
Shares with Smithfield Canada's counsel, McCarthy Tetrault, at its Toronto
offices. The Seller shall promptly notify Smithfield Canada of the deposit of
the Holdco Shares.
4.2 The parties agree that the obligation of Smithfield Canada to take up and
pay for the Holdco Shares is conditional upon:
(a) satisfaction of the conditions set out at Section 2 of the
Offers to Purchase;
(b) delivery of the documentation described in Section 4.3 of this
Agreement; and
(c) written agreements in a form satisfactory to Smithfield Canada
being entered into between (i) each Holdco shareholder other
than the Seller; (ii) Holdco and (iii) Smithfield Canada,
respectively, providing for the tender of all remaining issued
and outstanding shares of Holdco (which, for greater
certainty, does not include the Holdco Shares) to the Offers
pursuant to the Holdco Alternative;
each such condition being a condition in favour of Smithfield Canada (one or all
of which may be waived by Smithfield Canada).
4.3 At the Deposit Time, the Seller shall or shall cause Holdco to deliver, in
addition to this Agreement and the Letter of Transmittal, each of the following
documents to McCarthy Tetrault, Canadian counsel to Smithfield Canada:
(a) the Indemnity Agreement duly executed by the Seller and, where
the Seller does not have net assets as reflected on its
audited financial statements for its most recently ended
fiscal year which are satisfactory to Smithfield Canada,
security satisfactory to Smithfield Canada in respect of the
Seller's indemnification obligations under the Indemnity
Agreement (which security may include a pledge by the Seller
of all or a portion of the Exchangeable Shares issuable
hereunder in favour of an affiliate of Smithfield Canada);
(b) a legal opinion of counsel to each of the Seller and Holdco,
in form and substance satisfactory to Smithfield Canada and
McCarthy Tetrault, with respect to the following (which
counsel may, in respect of factual matters, rely on a
certificate of an officer of Holdco):
(i) [each of the Seller and] Holdco is a corporation
incorporated under the laws of its jurisdiction of
incorporation;
(ii) the authorized share capital of Holdco consists of o
[common shares];
(iii) the issued and outstanding share capital of Holdco
consists of o common shares and all such issued and
outstanding shares have been validly issued and are
outstanding as fully paid and non-assessable shares
of Holdco;
(iv) Holdco is the sole registered and beneficial owner of
o Common Shares and o Class A Shares;
(v) the Seller is the sole registered and beneficial
owner of the Holdco Shares;
(vi) Holdco has all necessary corporate power and capacity
to enter into this Agreement and to carry out its
obligations hereunder;
(vii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated
hereunder have been duly authorized by all necessary
corporate action on the part of [each of the Seller
and] Holdco;
(viii) all necessary corporate action has been taken on the
part of Holdco to authorize the transfer of the
Holdco Shares as contemplated in this Agreement;
(ix) this Agreement has been duly executed and delivered
by each of the Seller and Holdco and is enforceable
against each of the Seller and Holdco in accordance
with its terms, subject to usual qualifications
regarding creditors' rights and equitable rights;
(x) none of the Seller and Holdco is a party to, bound or
affected by, or subject to any provision of its
constating documents, or any law or regulation which
is or will be violated, contravened or breached by
the execution and delivery by the Seller or Holdco of
this Agreement or the performance by the Seller or
Holdco of any of the terms thereof; and
(xi) there are no governmental or regulatory
authorizations, approvals, orders, consents or
filings (excluding filings of an administrative
nature) required in the Province of Ontario or under
the federal laws of Canada on the part of the Seller
or Holdco in connection with the execution, delivery
and performance of this Agreement or the performance
of their respective obligations under this Agreement;
(c) a certificate of compliance or status, as the case may be, for
Holdco [and the Seller] of recent date issued pursuant to the
o ;
(d) all of the share certificates representing the Holdco Shares
duly endorsed for transfer to Smithfield Canada;
(e) resignations and releases of all present officers, directors
and shareholders of Holdco on terms and in form satisfactory
to Smithfield Canada;
(f) the corporate minute book, books of account, and copies of tax
returns and tax elections and workpapers, files and all other
Books and Records, including all corporate documents
pertaining to Holdco, together with its corporate seal, if
any;
(g) all of the share certificates representing the Schneider
Shares held by Holdco;
(h) where the Seller is not a resident of Canada for the purposes
of the Canadian Tax Act, evidence satisfactory to Smithfield
Canada that Holdco has withheld and remitted, on a timely
basis, any amounts required to be withheld or remitted
pursuant to Part XIII of the Canadian Tax Act; and
(i) where the Seller is not a resident of Canada for the purposes
of the Canadian Tax Act, an Agreement Respecting Withholding
Taxes entered into between the Seller and Smithfield Canada.
4.4 The representations and warranties made by the Seller herein shall survive
from the Acquisition Time for an unlimited period of time, subject to applicable
law. No investigations made by or on behalf of either Smithfield Canada or any
of its authorized agents at any time shall have the effect of waiving,
diminishing the scope of or otherwise affecting any representation, warranty or
covenant made by the Seller herein or pursuant hereto.
5. TERMINATION
5.1 This Agreement shall forthwith terminate upon the occurrence of the issuance
of a notice by Smithfield Canada that it has terminated the Offers and will not
take up and pay for any Schneider Shares deposited thereunder.
6. MISCELLANEOUS
6.1 The provisions hereof shall enure to the benefit of and be binding upon the
parties hereto and their permitted successors and assigns. Smithfield Canada may
assign this Agreement to an affiliate provided that Smithfield Canada remains
liable as the primary obligor for the performance of its obligations hereunder.
6.2 This Agreement is to be governed by the laws of the Province of Ontario and
the federal laws of Canada applicable therein.
6.3 Each of the parties agrees that, in the event of any breach of this
Agreement, the aggrieved party (or parties) shall be entitled to the remedy of
specific performance of such covenants or commitments and preliminary and
permanent injunctive and other equitable relief in addition to any other remedy
to which it may be entitled, at law or in equity, and the parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such injunctive or other equitable relief.
6.4 Smithfield Canada hereby covenants that, provided arrangements regarding
confidentiality of information on terms satisfactory to Smithfield Canada,
acting reasonably, are agreed to between Smithfield Canada and the Seller (i)
from and after the Deposit Time, it shall provide to the representatives of the
Seller, upon reasonable notice by the Seller and during normal business hours,
the opportunity to review and copy all Books and Records relating to the period
before the Deposit Time; and (ii) it shall preserve and keep all Books and
Records for a period of six years from the Deposit Time. Smithfield Canada
agrees that in furtherance of the foregoing it shall maintain all minute books
pertaining to Holdco and any other documents specifically requested in writing
by the Seller prior to the expiry date of the Offers for the above noted period.
6.5 The Canadian federal and provincial income and capital tax returns to be
filed for Holdco for any taxation year of Holdco ending on or before the
Acquisition Time shall be prepared and filed on a timely basis by the Seller, in
conjunction with the other shareholders of Holdco, subject to the prior written
approval as to form and substance of such returns by Smithfield Canada. The
income tax return of Holdco for its taxation year ending immediately prior to
the Acquisition Time shall include a copy of any election form pursuant to
section 85 of the Canadian Tax Act, relating to the acquisition of the Schneider
Shares. The Seller, together with the other shareholders of Holdco, shall cause
Holdco's return of income under Part I of the Canadian Tax Act to be prepared on
the basis that Holdco will elect for its taxation year ending immediately before
the Acquisition Time not to have subsection 256(9) of the Canadian Tax Act
apply. Smithfield Canada and the Seller shall co-operate with each other and
each shall provide access to all Books and Records to effect such filings. All
expenses of or related to such filings shall be borne by the Seller.
IN WITNESS WHEREOF the parties have executed this Agreement as
of the day, month and year first above written.
[SELLER]
By: _______________________
[HOLDCO]
By: _______________________
SMITHFIELD CANADA LIMITED
By: _______________________
SCHEDULE A
FORM OF INDEMNITY AGREEMENT