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EXHIBIT 99.2
FORM OF INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT dated as of the o day of o, 1998.
B E T W E E N:
o, a corporation governed by the laws of Ontario
(the "Seller")
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SMITHFIELD CANADA LIMITED, a corporation incorporated
under the laws of Canada
("Smithfield Canada")
WHEREASo ("Seller"), o ("Holdco") and Smithfield Canada have entered into
a share purchase agreement of even date hereof (the "Share Purchase Agreement");
and
WHEREAS the Seller has agreed to provide an indemnity in favour of
Smithfield Canada regarding the representations and warranties of Seller and
Holdco contained in the Share Purchase Agreement and in respect of certain
liabilities and other obligations of Seller and Holdco;
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 consideration is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE 1
INTERPRETATION AND DEFINITIONS
1.1 In this Agreement, capitalized terms not defined herein shall have the
meaning ascribed thereto in the Share Purchase Agreement.
ARTICLE 2
INDEMNITY
2.1 Subject to section 2.2, the Seller hereby covenants and agrees with
Smithfield Canada to pay, satisfy, discharge, observe, perform, fulfil,
indemnify and save harmless
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Smithfield Canada on an after tax basis, from and against the amount of any
claim, demand, action, cause of action, demand, loss, cost, liability or expense
(including, without limitation, reasonable professional fees and all costs
incurred in investigating or pursuing any of the foregoing or any proceeding
relating to the foregoing) (a "Claim") which may be made or brought against
Smithfield Canada or Holdco or which either may suffer or incur, directly or
indirectly, as a result of or in connection with any nonfulfilment of any
covenant or agreement on the part of either of Seller or Holdco under, or any
incorrectness in or breach of any representation or warranty of either of Seller
or Holdco in the Share Purchase Agreement (the "Indemnity").
2.2 Smithfield Canada shall notify the Seller of any Claim which is covered by
the Indemnity within 30 days of the date on which Smithfield Canada becomes
aware that the Seller may be liable in respect of such Claim, provided that in
the event of a failure to give such notice, such failure shall not preclude
Smithfield Canada from seeking and obtaining indemnification; provided, however,
that the Indemnity shall not extend to any amounts arising, directly or
indirectly, from the failure of Smithfield Canada to give such notice on a
timely basis.
2.3 Provided that the Seller has acknowledged in writing its indemnity
obligation to Smithfield Canada in respect of any third party Claim, and in the
case of a Claim for taxes, has paid the amount of such Claim to Smithfield
Canada, Smithfield Canada shall permit the Seller directly or through its
counsel and at its own expense, to participate in any negotiations with respect
to, or to assist in the defence of, such third party Claim against Smithfield
Canada which is covered by the Indemnity. At the option of the Seller, the
Seller and its counsel may also assume control of and diligently pursue the
defence of or objection to any such Claim, liability, duty or obligation in the
name of Smithfield Canada, provided that such assumption shall, by its terms, be
without cost to Smithfield Canada and provided that the Seller acknowledges in
writing its obligation to indemnify Smithfield Canada in accordance with this
Agreement in respect of that Claim, liability, duty or obligation and Smithfield
Canada is satisfied the Seller has the financial capability to attend to any
such Claim.
2.4 Smithfield Canada and the Seller each agree to cooperate fully, but at the
expense of the Seller with respect to any out-of-pocket expenses incurred, with
the other in connection with any negotiations or in any defence pursuant to
Section 2.3 hereof and all files, books, records and documents relating to
Holdco or the Seller in the possession or control of Smithfield Canada shall be
made available to the Seller for such purposes. No settlement with any third
party of any Claim covered by this indemnity shall be made by Smithfield Canada
without the prior written consent of the Seller, such consent not to be
unreasonably withheld, and consent shall only be required if the Seller
acknowledges in writing its indemnity obligation to Smithfield Canada after
provision of all of the relevant particulars of the Claim known to Smithfield
Canada or, in the case of any Claim relating to taxes, Seller shall have paid to
Smithfield Canada the amount of such Claim.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 The Seller hereby represents and warrants to Smithfield Canada that it has
good and sufficient power, authority and right to provide the Indemnity and that
the Indemnity is a valid and binding indemnity enforceable by Smithfield Canada
against the Seller in accordance with its terms subject to the availability of
equitable remedies and the enforcement of creditors rights generally.
ARTICLE 4
MISCELLANEOUS
4.1 Any notice given pursuant to this Agreement shall be in writing and shall be
sufficiently given or made if served personally, or telecopied, in the case of:
(a) Smithfield Canada Limited, addressed as follows:
Smithfield Canada Limited
x/x XxXxxxxx Xxxxxxxx
Xxxxx 0000
Xxxxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxxxx-Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Smithfield Foods, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Corporate Counsel
Facsimile No.: (000) 000-0000
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(b) the Seller addressed as follows:
o [insert address]
Attention: o [insert name]
Facsimile No.: o [insert number]
or such other address as the relevant party may from time to time advise by
notice in writing given pursuant to this section 4.1. The date of receipt of any
such notice, request, consent, agreement or approval if served personally shall
be deemed to be the date of delivery thereof or, if sent by facsimile, shall be
deemed to be the next business day following the date on which such
communication was sent.
4.2 The Indemnity shall survive for an unlimited period of time after the date
hereof, but subject to applicable laws. The Indemnity shall enure to the benefit
of and be binding on the parties to this Agreement and their respective heirs,
executors, administrators, successors and assigns. For greater certainty, the
parties to this Agreement acknowledge that the Indemnity will survive the
dissolution, winding-up or amalgamation of Holdco or any successor corporation
thereto, and the amalgamation, dissolution, winding-up or of Smithfield Canada
or any successor corporation thereto and will accrue to the benefit of any such
successor corporation.
4.3 This Agreement may not be assigned, in whole or in part, by any party
without the express written consent of the other parties hereto.
4.4 This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein.
4.5 Time shall be of the essence of this Agreement.
4.6 This Agreement may not be modified, amended, altered or supplemented, except
upon the execution and delivery of a written agreement executed by each of the
parties.
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IN WITNESS WHEREOF the parties hereto have duly executed and delivered
this Agreement effective as of the day first above written.
o [SELLER]
By: c/s
SMITHFIELD CANADA LIMITED
By:
