------------ r R. G. 1. NOV 19 3snOH HOSONIAk X3-131 1261 AON S: z Fi=1951 2ATIND G 5NIwoom TELI-AASC MTL 3 ATTENT I ON: HR. PAT SHEEHY TExT OF LETTER SENT TO THE HONOURABLE HERB GRAY, MINISTER 07- IfIrOUSTRY, TRADE A111.) CO,'A,'-IERCE CANADA ON NOVEMBER 20. 1981 --------------------------------------------------- - ------------- le@l - _AR MR. GRAY: AS YOU ARE kjARE, ON DECEMBER 22. 196I Jr4ASCO SUBMITTED AN APPI-1- CAT I CAq TO YOU FOR AN 00 I NJ ON UNIDER SUBSECT I ON 4(1 ) OF. THE FORE I GN INVEST<-NT REVIEw ACT ( 'FIR ACT') THAT IMASCO IS NOT A NOt+- ELIGIBLE PERSON. V-A-ASCO SELIEVES THAT IT HAS ESTABLISHED THAT, NOTvqIT1WSTAI`0-1NG 1HE FACT THAT B.A.T@ INDUSTRIES LIMITED (THE 'SENIOR SHAREHOLDER') D,-,;@--S OR CONTROLS 49.8 PER CENT OF THE VOTING SHARES OFF IMIASCO, IHE RELATIONSHIP BETWEEN THE SENIOR SHAREHOLDER AND KMASCO 1-@S 5ECN AND CONTINUES TO BE ONE t4HERE IMASCO PROVIDES AP!PROPRIATE INFORMATION TO AND HAS CONSULTATIONS WITH TI-E SENIOFZ SJARF-HOLDER SO THAT 1,%1kSCO CAN RECEIVE THE BENEFIT OF THE ADVICE AND EIXPE- RIENCE OF THE SENIOR SHAREHOLDER, IT BEING RECOGNIZED Hao-VER THAT THE ULTIr4ATE DECISION.-MAKING AUTHORITY 2'N IWASCO, r "'CLUDING DECI 5 IONS AS TO THE SELECTION OF DIRECTORS, IS WITH THE ,JARD OF DIRECTORS OF IMASCO AND ITS SENIOR MANAGEMEIWT. N-07---117HSTANOING THE FOREGOING, YOU INDICATED AT OUR i.-I.F-ETING ON DTEM:S@ER 18 LAST THAT YOU wOULD HAVE DIFFICULTY IN FURNISHING COHNION TO IMASCO L14DER SUBSECTION 40) OF THE FIR ACT:-THAT ,As,- 0 IS NOT A NON-ELIG(BLE PERSON IN THAT, BECAU-'=-' OFTHE AFORE- 'ENTIONCO VOTING SHARE OldblERSHIP, THE SENIOR SHAAREHM@_DER HAS THE OC@-,IER TO COKTROL IMASCO. AS A RESULT OF THE FOREGOIN@G JkiASCO HAS HAD DISCUSS10,4S WITHITS =E'JARD CFF DIRECTORS AND 5EI-41OR 5HAREHOLOER -:11TH A %;IF-,--! TO FII,0twG 5wLU_1 I ON TO THE PROBLEM.' AS A RESULT, W I TH THE AP=ROVAL OF I TS =r.&RD Cr DIRrCTORS AND ITS SEKIOR SHAREHOLDER, IMASCM AAKES THE rrjLLC@!11qG PPOPOSAL @,!ITH A VIEW TO RESOLVINS THE PROBt-EA: (A) THE SENIOR SHAREHOLDER WOULD LEGALLY SIND ITSELF TO GIVE THE ;Ia-@T TO THE CANADIAN W13N-ExE%1'.UTI\,E DIRECTORS OF IALASICO TO VOTE ro ITS SHARES C:) AT THEIR DISCRETION. SUBJECT TO THE WHICH FOLLC-/. T@-tERE WOULD BE NO TIr4E LIAIT ON THIS RICZ-47 TO SO VOTE OK THE SENIOR'SHAREHOLDERIS SHARES. THIS RIGHT wDUIX EX I ST FRO,.i CD Ti-< UATE Oz' A FAVOURAdLE MINISTERIAL CP114ION. TH-E CURRENT __4 C'MA"DIAN NICN-EXECUT IVEE DIRECTORS OF 11,%SCO ARE Kr-;.. JOHN COLEMAN. SIR. PURDY CRAWFORD, AN. PETER KILBURN AfvD ;4R. RICHER. ARE OISTINK;UISHED CANADIAN KATIONALS IN THEI@w C-111! k I GHT. at S R \T E 103PAPHY OF' EACH PE PSOIN I S ATT ACHED AS IX A BAT Industries document for Province of British Columbia 13 April 1999 C---! 70 ISSU:. 4 &)IN16% ri-AL, Early NO SIGNIFICAiJ CHAN-1-E IN Trn-: L> :_T@kIAL ;A,:TS JjUh TrE FAvtDURAbLL_; 114INISH,: IAL 0 INI BLEN BASED. A'- T-I-i;- S-;7iJOk 5-'-tA@@HOLDER -GUL; RETAIN Th@ -IU tll T@ U.;k ! THE GI' i-N TO THE Cki@@ACIIAN i-@Oi,@-INECjTlvE 01'RECTORS To No \-&TE ITS SHARES BY NOTICE IN --.1RITIN3 TO THE MINISTER IN Ti-i=_ EVL11JT CT' t"JE\'EL0Pi-`_E14T5 ';.fHICH MIGHT IN A SIGNIFICANT WAf ADVERSELY It EHOLDER'S INTERESTS. '-CICIECT THE SE141OR SHAR' I.. K (D) IN THE E\JENT O@' 1qITH0KA1.-!AL OF THESE AkRANGERIEWTS, IiAASCO WOULD V-447-DIATELY CEASE TO REGARD ITSELF AS AN ELIGH31;-: PERSON A140 Irp.)+ k-.-'CL;LD SUd4IT ALL FUTURE AC)UISITIONS OF' CAIqADIAIL COMEPANIES AND KEh, BUSINESS VENTUKES, 70 THE i@,IIWISTER FOR APPROVAL. MORE(VEk. ANY AC_';UISITION AADE OR UiJk@;LATED BUSINESS COAMI:NCED OURING THE T@%/O YEAR PERIOD PPIOR TO ANY I-11THDRAI.-AL BY THE SE141OR SHAREHOLpER '.-!OULD BECO.'AE SUBJECT TO RE\4IEw BY THE MINISTER. +I t-f- %t-,--, (E) THE RELATIONSHID BETwEEEN THE SEIN11OR SHAREHOLDER AND 1-AASC(@'r;1vLL %..0N-TINLF_ TO BE 01'-.'E hHERE IMASCO PROVIDES APPROPRIATE II',FOR;-IATIOIj TO AND HAS CONSULTATION wITH THE SENIOR SHAREHOLDER SO THAT 1-.-.;.ASC:O CAN RECEIVE THE BENEFIT OF THE ADVICE AND EYDERIENCE, OF THE SEKIOR SHAREHOLDER. IT WCULD BE AGREED, tiD.VEVER, THAT THE ULTIMATE DECISION MAKING AUTHORITY IN IMASCO. INCLL)DING DECISICk'S AS TO THE SELECTION OF DIRECTORS, WOULD BE EXCLUSiVELY VITH THE BOARD O__ DIRECTORS OF IKASC0. (F) A PROaDURE wILL BE ESTABLISHED :@ROVIDING FOR HWIMLIM NUASERS OFF NON-EXECUTIVE DIRECTORS, THE :ETHOD OF THEIR @_IFCTIOW AND THE PPOCEDURE FOR EYERCISING THEIP RIGHT TO VOTE 'THE SHARES OF THE SENIOP SHAREHOLDER. (G) THE SENIOR SHAREHOLDER WOULD NOT INCREASE ITS ti-ETEREST 114 U, IAASCO AND EVERY REASONABLE EFFORT WOULD BE MADE 8Y 1AASC0 (IN LINE WITH EARLIER FIFA U1,r_jERTAKIN-GS) TO REDUCE Tf`=@ SENIOR SHAREHOLDERIS INTEREST TO 40 PER CENT. IN THIS CSX-i4ECTION IT WOULD BE PROPOSED THAT AT THE NExT ANNUAL GENERAL MEETING OF SHAREHOLDERS THE CHARTER OF IKASCO wOULD BE AWEtOIED TO PROVIDE FOR A MAXIAJM L[-i[T ON THE NU.-ABER OF SHARES WH10-f MAY BE ISSUED BY THE DIRECTORS WITHOUT THE FURTHER APPROVAL OF A SHAREHOLDERIS :-FEETING. THE MAYI'.U.-i WILL BE CALCULATED SO THAT 'WHE SENIOR SHAREHOLDER'S INTEREST WO1JLD NOT FFALL BELCY...1 40 PM CENT. Cn) NOT LESS THAN 80 PER =-NT OF THE BOARD OF -DIRECToRS Cc. IMASCO WO 110ULD BE CANADIANS. THIS PERCENTAG:' IS ACTUALLY E-ESS -THAN HAS BEEN THE CASE OVER THE PAST LO YEARS BUT HAS SEEN. iE_LE-CTE_D TO r.t,,A!-;LE INDIVIDUALS ASSOCIAT;:D wITH HARDEEIS FOOD SYSTEAS, L-C., OUR RECENT U.S. ACjUISITION1, TO PARTICL:DATE. ON THE BOARD. 14ASCOIS CHIEF EXECuTIvE OFr71CER -.10ULD ALwAYS BE A `CANADIAN. Tri= SE;flOR s@j.Ar-EHOLDEP wOULD NOT HAVE ANN. NOXIIZE-5 ON THE EOARD vPr DI;;c.-_TOPS OF IAASCO. THIS MkTINUcS INTO THE 11.114DEFINITE r1_JT1U!E A SITUATION '..HICH HAS EYI_5TE_D -OR AORE TFiAU 33 'rr.ARS. HEAD OFFICE AND ExEZ:uT1\-E. VDFFICE tryOUCD. AT ALL TI'AES BE PQ LOZATED IN CANADA. THESE 07t:laiS HAO-E EEE14 LOCATE3) IN 14UHTP.-AL 11 -= I ZHE CriaRANY1 5 I W"DT I CN. CD -.OT LESS THAN TrkEE )UA.:RT---;;S OF BELL AsEETINGS OF 'EHE 60AkD DIPECTOkS AND Cc THE EyECUTIVE CO-JE41TTEE OF THEZ BOARD OF I,i4SCO -OULD BE HELD 1;,q CANADA. IT mAS ISEEN OUR ?`%;ACTICE C) 10 HOLD ALL SUCH '*_ETINGS IN CANADA bUT AGAINI, H-1 !RECOGNITION C,-- THE A-_-sUI5ITI01q OF 'HARDEE15, 1.1E 11-IOULD LI@a TO RETAIN SO'-f:E rLr_yI:iILITY r,@ THIS APEA. 0 7,- BAT Industries document for Province of British Columbia 13 April 1999 T:ZUST THAT TSE vOR-EGOING PROOOSAL WILL SERVE AS A BASIS, -Zp'@UPRIATIELY DOCUALErITED,'FOR THE ISSUANCE CF A FAVOUPABLE ir I :-,A STATUS 6@1i--JICN TO I.MASCO. 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C) .. ..... BAT Industries document for Province of British Columbia 13 April 1999