EXHIBIT 2.1
LOCK-UP AGREEMENT
THIS AGREEMENT made as of the 18th day of December, 1997;
BETWEEN:
SMITHFIELD FOODS, INC., a corporation
incorporated under the laws of the
Commonwealth of Virginia
(hereinafter referred to as "SFI")
- and -
THE MEMBERS OF THE XXXXXXXXX
FAMILY individually or through holding
companies as set out in Schedule B to this
Agreement (hereinafter referred to as the "Family")
WHEREAS a take-over bid has been made by SCH Acquisition Inc., a
subsidiary of Maple Leaf Foods Inc., for all the outstanding shares of
Xxxxxxxxx Corporation (the "Company");
AND WHEREAS SFI has agreed to cause its subsidiary to offer to acquire all
the outstanding shares of the Company and the Family has agreed to tender their
shares of the Company into the offer;
AND WHEREAS the Family owns 549,587 common shares and 1,019,212 Class A
shares of the Company (the "Family Shares");
NOW THEREFORE, in consideration of the mutual covenants set out herein,
SFI and the Family agree as follows:
1. Tender Offer
A. SFI agrees to incorporate a new single purpose Canadian subsidiary (the
"Offeror") and to cause the Offeror to make an offer (the "Tender Offer")
to purchase any and all outstanding Common Shares, Class A Shares and
options to purchase Common Shares and Class A Shares of the Company on the
terms set out in this Agreement. Pursuant to the Tender Offer, the Offeror
will offer to acquire each Common Share and Class A Share for 0.5415 of an
Exchangeable Share of the Offeror. The Exchangeable Shares will entitle
their holders to dividends economically equivalent to dividends paid on
SFI common shares and will entitle the holders to vote at meetings of the
stockholders of SFI. They will also be exchangeable (one for one) at any
time for SFI common stock at the option of the holder and will be
redeemed, if not previously exchanged, at the expiry of ten years after
the effective date of the transaction. The Company will become a
subsidiary of SFI upon consummation of the Tender Offer. SFI will use its
best efforts, acting in a commercially reasonable manner, to have the
Exchangeable Shares listed for trading on a Canadian stock exchange. SFI
will enter into such support agreements and other arrangements as are
customary to give effect to all of the foregoing. The only conditions
attaching to the Tender Offer shall be as set out on Schedule A.
B. The Tender Offer shall provide that the currently outstanding options to
purchase the Company's Shares that are in the money (Cdn. $25 less option
exercise price) shall be exchangeable for Exchangeable Shares, which will
in turn be exchangeable for SFI common shares having an issue price of
U.S. $32.50. For this purpose, SFI will reserve 145,978 common shares for
issuance.
C. SFI agrees to file with the Securities and Exchange Commission in the
United States as soon after the date hereof as reasonably practicable, a
registration statement to register the Exchangeable Shares and the common
shares of SFI issuable on the exchange of the Exchangeable Shares. SFI
will thereby cause its common shares issued on the exchange of
Exchangeable Shares to be freely tradeable in the United States. SFI shall
mail its Tender Offer documentation to shareholders as soon as practicable
and in any event within 90 days of the date of this Agreement unless the
delay is due solely to the regulatory review process.
D. SFI agrees to use its best efforts, acting in a commercially reasonable
manner, to obtain all regulatory orders and consents required in
connection with the Tender Offer and to otherwise complete the Tender
Offer by taking up and paying for the Shares of the Company, including the
Family Shares, deposited into the Tender Offer.
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E. The Family shall tender all of the Family Shares under the Tender Offer
within three business days after the Tender Offer documentation is mailed
to shareholders and, notwithstanding rights of withdrawal otherwise
available under applicable securities legislation, shall not withdraw any
of the Family Shares unless section 5 of this Agreement shall be
applicable.
F. The Family agrees not to sell, transfer, pledge or otherwise encumber
the Family Shares while this Agreement remains in effect except pursuant
to the terms of this Agreement.
G. The Family agrees to use its best efforts, acting in a commercially
reasonable manner, to take such further steps as may be within its rights
as a shareholder of the Company as are necessary to give effect to the
terms of this Agreement including such steps as may be necessary to
prevent the Company from entering into any agreement or taking any step
that would lead to a material change at the Company or otherwise frustrate
SFI's ability to complete the Tender Offer. The Family shall not solicit
any third parties for the purchase of the Family Shares or otherwise take
any action that would interfere with or delay the completion of the
transactions described herein provided that the Family shall be deemed not
to be in breach of this Agreement if it takes such steps to prevent such
action even if the Company nonetheless proceeds with that action.
H. SFI shall reserve for issuance sufficient common shares to meet its
obligations under this Agreement.
2. Representations and Warranties of The Family
Each member of the Family hereby represents and warrants to SFI as
follows:
(a) if it is a company, it is a validly subsisting corporation and has all
necessary corporate power and authority to execute and deliver this
Agreement and to sell its Shares and to perform its obligations hereunder;
(b) this Agreement has been duly executed and delivered by and on its
behalf and constitutes a valid and binding obligation of the Family member
enforceable in accordance with its terms;
(c) the Family member is the sole beneficial and registered owner of all
Shares listed on Schedule B beside the Family member's name, free and
clear of any mortgages, liens or other encumbrances (except those created
hereunder);
(d) no person, firm or corporation has any agreement or option for the
purchase or other acquisition of the Family Shares except for SFI pursuant
hereto;
(e) the Family has had full knowledge and access to information concerning
the Company such that the underlying value of the Company was a material
factor considered by such member of the Family in arriving at the ratio
for exchanging Common Shares and Class A Shares of the Company for
Exchangeable Shares. There are no non-financial factors or factors
peculiar to the Family which are considered relevant by the Family in
assessing such exchange ratio which have the effect of reducing the price
which would otherwise have been considered acceptable by the Family; and
(f) the Company has waived both its Shareholder Rights Plan and the
restrictions in the Confidentiality Agreement signed by SFI with the
Company in respect of the Tender Offer.
3. Representations and Warranties of SFI
SFI hereby represents and warrants to the Family as follows:
(a) SFI is a validly subsisting corporation and has all necessary corporate
power and authority to execute and deliver this agreement, to undertake
the transactions described in this Agreement and to perform its
obligations hereunder;
(b) the entering into of this Agreement by SFI has been duly authorized by
all necessary corporate action on the part of SFI;
(c) this Agreement has been duly executed and delivered by and on behalf of
SFI and constitutes a valid and binding obligation of SFI enforceable in
accordance with its terms;
(d) the execution and delivery of this Agreement and the performance by SFI
of its obligations hereunder does not conflict with or breach in any
material respect (i) the articles or by-laws of SFI or the resolutions of
its directors or shareholders or any committee thereof, (ii) any contract
binding on SFI, or (iii) any law or order applicable to SFI or its
business;
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(e) the public filings made by SFI under U.S. securities legislation do not
contain any material mis-statement or any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and
(f) there has been no material change in the business, operations or
capital of SFI which has not previously been publicly disclosed, nor has
there been any other material fact concerning the business, assets,
liabilities, capital, prospects, financial condition or affairs of SFI
which has not been previously publicly disclosed.
4. Survival and Effect of Representations and Warranties
A. The representations and warranties made hereunder by each of the parties
shall be deemed to be repeated by such party at the time the Tender Offer
is made and when the Family Shares are taken up and paid for under the
Tender Offer.
B. All representations and warranties shall survive for a period of three
years from the date on which SFI (or its subsidiary) takes up shares under
the Tender Offer.
5. Termination of Obligations of The Family
The obligations of the Family hereunder shall terminate, subject to its
rights and recourses, if any, available hereunder or at law, if SFI, through
its subsidiary, fails to make the Tender Offer in accordance with the terms of
this Agreement as soon as practicable and in any event within 90 days of the
date of this Agreement or such later date as may be contemplated by Section 1C
hereof or, SFI having made the Tender Offer and all conditions thereto having
been satisfied or waived, SFI through its subsidiary shall fail to take-up and
pay for the Family Shares. Notwithstanding any such termination, SFI shall
continue to be entitled to pursue any remedies that may be available to it
pursuant to this Agreement or otherwise at law if the Family shall have failed
to perform any of its covenants set out herein or if any representation and
warranty made by the Family herein shall be untrue or incorrect.
6. Authorized Family Representatives
Each member of the Family hereby designates Xxxx Xxxxxxx and Xxxx
Xxxxxxxxx (collectively the "Family Representatives") to represent such member
in all dealings with SFI in connection with this Agreement. Any notice provided
to Xxxx Xxxxxxx and Xxxx Xxxxxxxxx shall be deemed provided to all Family
members and any representation or commitment made by Xxxx Xxxxxxx and Xxxx
Xxxxxxxxx to SFI shall be deemed to have been made on behalf of all Family
members and shall be binding on them.
7. Nominee on SFI Board
SFI covenants to use its reasonable commercial efforts to have a
representative of the Family appointed to its Board of Directors at its next
annual shareholders meeting. A statement in writing executed by the Family
Representatives to the effect that any individual has been selected the board
nominee shall be conclusive evidence of such individual's nomination to the
board by the Family.
8. No Resale of Family Shares or Sale of Company Assets
SFI covenants and agrees that it will not resell any shares of the Company
or cause to be sold any substantial portion of the assets thereof within the
period of two years from the date SFI takes up and pays for Company Shares
under the Tender Offer.
9. Pooling of Interests
SFI intends to account for its acquisition of the Company on a "pooling of
interests" basis. The Family agrees to enter into such reasonable agreements as
may be necessary with respect to not trading its Exchangeable Shares for a
period of time so that SFI will achieve "pooling of interests" accounting. The
inability of SFI to so account for the acquisition shall not release the Family
from its obligations hereunder.
10. Disclosure
A. Except as required by applicable laws or regulations, or as required by
any competent governmental, judicial or other authority, or in accordance
with the requirements of any stock exchange, this Agreement shall be kept
strictly
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confidential and neither SFI nor the Family shall make any public
announcement or statement with respect to this Agreement, or the proposed
transactions, without the approval of the other of them, which approval
(i) shall not be unreasonably withheld or delayed,
(ii) may be oral, and
(iii) may be given on behalf of a party by its counsel.
B. Each of the Family and SFI shall consult with the other as to the timing
and wording of press releases relating to the proposed transactions.
11. Assignment
A. SFI may assign its rights and obligations under this Agreement to one or
more wholly-owned subsidiaries but in such event SFI shall continue to be
liable to the Family hereunder for any default in performance by the
assignee. This Agreement shall not otherwise be assignable by either party
hereto.
B. This Agreement shall be binding upon and shall enure to the benefit of
and be enforceable by the parties hereto and their respective successors
and permitted assigns.
12. Expenses
Each party to this Agreement shall pay its own expenses incurred in
connection with this Agreement and the completion of the transactions
contemplated hereby.
13. Time
Time shall be of the essence of this Agreement in each and every matter or
thing herein provided.
14. Notices
A. SFI agrees that any notices given by it to shareholders of the Company
pursuant to or in connection with this Agreement shall concurrently be
provided to the Family and its counsel.
B. Any notice or other communication required or permitted to be given
hereunder shall be sufficiently given if delivered or if sent by
telecopier or facsimile transmission (provided such transmission is
confirmed):
(a) In the case of SFI, to the following address:
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, III
Chairman of the Board and Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
000 Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx,
Vice-President, Secretary and Treasurer
Fax: (000) 000-0000
and, in the case of the Family, to the following address:
Mr. Xxxx Xxxxxxxxx
000 Xxxxxxxxx Xxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
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with a copy to:
Xx. Xxxx Xxxxxx
Xxxxxx & Xxxxxx
Scotia Plaza
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax: (000) 000-0000
or at such other address as the party to which such notice or other
communication is to be given has last notified the party giving the same in
the manner provided in this section, and, if so given, the same shall be
deemed to have been received on the date of such delivery or sending.
15. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable therein.
16. Currency
All sums of money referred to in this Agreement are expressed and shall be
payable in Canadian funds.
17. Waivers
None of the terms, covenants, representations, warranties or conditions
hereof may be waived other than by written instrument executed by the parties
hereto (or, in the case of the Family, the Family Representatives) entitled to
the benefit thereof, and no waiver shall be construed by a failure to exercise
or delay in exercising any right or remedy in any one or more circumstances. No
waiver in any one or more instances of rights pursuant hereto shall be deemed
to be a further or continuing waiver of any condition or of any breach of any
other term, covenant, representation or warranty in this Agreement.
18. Entire Agreement
This Agreement and the documents referred to herein constitute the entire
obligations of the parties hereto with respect to the subject matter hereof and
supersede any prior expressions of intent or understandings with respect to
this transaction. This Agreement may be amended only by an instrument in
writing signed by the parties hereto.
19. Counterparts
This Agreement may be signed in any number of counterparts.
IN WITNESS WHEREOF the parties have signed this Agreement as of the date
set out above.
SMITHFIELD FOODS, INC.
by: /s/ XXXXXX X. XXXXX, III
-------------------------------------
Xxxxxx X. Xxxxx, III
Chairman of the Board and Chief Executive
Officer
THE MEMBERS OF THE XXXXXXXXX
FAMILY
by: Attached Schedule B
-------------------------
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SCHEDULE A
CONDITIONS TO TENDER OFFER
The Offeror's obligation to take up and pay for the Class A Shares
pursuant to the Tender Offer (herein referred to as the "Bid") shall be subject
to the condition that the Offeror shall have taken up and paid for Common
Shares under the Bid.
The Offeror's obligation to take up and pay for the Common Shares pursuant
to the Bid shall be subject to the following conditions:
(a) there shall not have occurred or, if there shall have previously
occurred, there shall not have been disclosed prior to the commencement of the
Bid, any change (or any condition, event or development involving a prospective
change) in the business, operations, assets, capitalization, financial
condition, prospects, licenses, permits, rights, privileges or liabilities,
whether contractual or otherwise, of the Company which, in the judgment of the
Offeror, acting reasonably, is materially adverse to a purchaser of Shares;
(b) the applicable waiting period under the Competition Act (Canada) shall
have expired and the Director of Investigation and Research (the "Director")
appointed under the Competition Act (Canada) shall have advised the Offeror
that the Director shall not oppose or threaten to oppose the purchase of any of
the Shares under the Offers, nor make or threaten to make an application under
Part VIII of the Competition Act (Canada) in respect of the purchase of any of
the Shares;
(c) all governmental or regulatory consents or approvals that the Offeror,
in its sole discretion, views as necessary or desirable to enable the Offeror
to consummate the Bid shall have been received on terms and conditions
satisfactory to the Offeror;
(d) there shall not be (i) any outstanding act, action, suit or proceeding
taken before or by any domestic or foreign arbitrator, court or tribunal or any
governmental agency or other regulatory authority or any administrative agency
or commission by any elected or appointed public official or private person
(including without limitation any individual, corporation, firm, group or other
entity) in Canada or elsewhere, whether or not having the force of law, or (ii)
any law, regulation or policy proposed, enacted, promulgated or applied, in
each case: (A) to cease trade, enjoin, prohibit or impose material limitations
or conditions on the purchase by or the sale to the Offeror of the Shares or
the right of the Offeror to own or exercise full rights of ownership of the
Shares, (B) which has had or would have a material adverse effect upon the
Company or (C) which would prevent completion of the acquisition by the Offeror
of the Shares pursuant to a subsequent going-private transaction;
(e) there shall not exist any prohibition at law against the Offeror
taking up and paying for the Shares pursuant to the Bid;
(f) the Offeror shall not have become aware of, in any document filed by
or on behalf of the Company with any securities commissions or similar
securities regulatory authority in any of the provinces of Canada prior to the
date of the Bid, any untrue statement of material fact or any omission to state
a material fact that is required to be stated or that is necessary to make a
statement not misleading in light of the circumstances in which it was made and
at the date it was made (after giving effect to all subsequent filings in
relation to all matters covered in earlier filings), including without
limitation as contained in any annual information form, financial statement,
material change report or management proxy circular or in any document so filed
or released by the Company to the public;
(g) the Company shall not, or permit any of its subsidiaries to, have
entered into any new agreements, commitments or undertakings of a material
nature or undertaken any other material action except in the ordinary course of
business;
(h) the Company shall not have declared or paid any dividend (other than
its regular, historical dividend), authorized any redemption of securities or
otherwise proposed a distribution of assets to shareholders;
(i) the Company shall not have entered into any agreement for the issuance
of any securities other than with respect to the issuance of shares by the
Company pursuant to currently outstanding stock options;
(j) all stock options or other rights to acquire the Shares that are "out
of the money" options or rights shall have been terminated;
(k) SFI shall have determined in its discretion, acting reasonably, that
no material right, franchise or license of the Company or any of its
subsidiaries has been or may be impaired (which impairment has not been cured
or waived) or otherwise adversely affected, whether as a result of the making
of the Bid, the taking up and paying for the Shares deposited under the Bid or
otherwise, which might make it inadvisable for the Offeror to proceed with the
Bid and/or the taking up and paying for the Shares under the Bid and/or
completing a subsequent going-private transaction;
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(l) the Company shall have received waivers relating to any change of
control provisions in any note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which the Company or
any of its subsidiaries is a party or by which any of them of any of their
properties or assets may be bound, except such waivers the absence of which
would not in the aggregate materially and adversely affect the Company and its
subsidiaries;
(m) The Xxxxxxxxx Family shall not be in breach of or default under any
material provision of the Lock-Up Agreement and neither The Xxxxxxxxx Family
nor the Offeror shall have exercised its right to terminate the Lock-Up
Agreement or any portion thereof.
SCHEDULE B
XXXXXXXXX FAMILY MEMBERS
Total
No. of No. of Number of
Name Common Shares Class A Shares Signatures
-------------------------------- --------------- ------------ ------------ ---------------------------
Xxxx X. Xxxxxxx ................ 1,000 6,200 13,017 /s/ XXXX X. XXXXXXX
3,783 2,034 ---------------------------
Xxxxxxx Xxxx ................... -- 293,422 308,912 /s/ XXXXX X. XXXXXXXXX
Securities Limited 15,490 ---------------------------
Kinspan Investment ............. -- 141,490 141,490 /s/ XXXXXXX X. XXXXXXXXX
Limited ---------------------------
Xxxxxx Xxxxx ................... -- 328,930 328,930 /s/ XXXXXXXXX X. XXXXXXXXX
Investment Limited ---------------------------
Xxxxxxxxx X. Xxxxxxxxx ......... 4,236 3,876 8,112 /s/ XXXXXXXXX X. XXXXXXXXX
---------------------------
Jadebridge Investments ......... 227,070 227,070 /s/ XXXX X. XXXXXXXX
Limited ---------------------------
Xxxx X. Xxxxxxxxx .............. 24,890 700 /s/ XXXX X. XXXXXXXXX
44 25,634 ---------------------------
X.X. Xxxxxxxxx Family .......... 515,104 515,104 /s/ XXXXXXX XXXXXXXXX
Holding Limited ---------------------------
Xxxxxxx X. Xxxxxxxxx ........... 530 530 /s/ XXXXXXX X. XXXXXXXXX
------- ----------- ------- ---------------------------
549,587 1,019,212 1,568,799
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