MOH vosawk
X3131
1961 AON E Z
9151 05 SAT I NO G
.r@ LIi*SC MTL 9NIWOONI
NO-39
ATTENTION: IAR. PAT SHEEHY
RE: TEXT OF LETTER SENT TO THE HONOURABLE HERB GRAY, MINISTER
1--' INDUSTRY, TRADE AW M-AMERCE CANADA 01-4 NOVEMBER 20. 1981
--------------------------------------- - ------------------------
-r-A MR. GRAY:
AS YOU ARE Al-JARE, ON DECEMBER 22. 1981 I MASCO SUBMITTED AN APPLI-
CAT I 0q TO YOU FOR A14 OP I NI ON UNDER SUBSE CT I ON' 4(I ) OF THE FORE I GN
I NVESTMENT RE V I EW A CT F I R A CT THAT I MASCO I S NOT A NON--
ELIGIBLE PERSON.
1.4ASCO BELIEVES THAT IT HAS ESTABLISHED TKAT. NOTWITHSTANDING
THE FACT THAT B.A.T.. INDUSTRIES LIMITED (THE 'SENIOR SHAREHOLDER')
6.ZS OR CONTROLS 49.8 PER CENT OF THE VOTINEG SHARES OF 114ASCO,
THE RELATIONSHIP BETWEEN THE SENIOR SHAREHOLDER AND I MASCO HAS
BEEN AND CONTINUES TO BE ONE UMERE I MA SCO PROVIDES APPROPRIATE
INFORMATION TO AND HAS CONSULTATIONS WITH THE SENIOR SHAREHOLDER
SO THAT I N%Sco CAN RECEIVE THE BENEFIT OF THE ADVICE AND EXPE-
RIENCE OF THE SENIOR SHAREHOLDER, IT BEING RECOGNIZED
HOWEVER THAT THE UL DECISION-MAKING AUTHORITY IN I MASCO,
.,4CLUDING DECISIONS AS TO THE SELECTION OF DIRECTORS, IS wITH THE
RD OF DIRECTORS OF I MASCO AND ITS SENIOR MANAGEMENT.
NOT,,-! I THSTAND I NG THE FOREGOING, YOU INDICATED AT OUR MEETING ON
SEPTEMBER 18 LAST THAT YOU WDJLD HAVE DIFFICULTY IN FURNISHING
OP I N 1 014 TO I MASCO UNDER SUBSE CT I ON 40 ) OF THE F I R ACT `THAT
,ASCO 15 NOT A NOW- EL I PERSON IN THAT, BECAUSE OFT AFORE-
'El VOTING SHARE OWNERSHIP. THE SENIOR SHAREHOLDER HAS THE
D--/E TO CONTROL I MASCO.
AS A RESULT OF THE FOREGOING I MASCO HAS HAD DISCUSSIONS WITHITS
BOARD OF DIRECTORS AND SENIOR SHAREHOLDER WITH A VIEW TO FINDIN'
A SOLUTION Tri THE PROBLEM. AS A RESULT, WITH THE APPROVAL OF ITS
BOARD OF DIRECTORS AND ITS SENIOR SHAREHOLDER, I MASCO MAKES THE
FOLLOwING PROPOSAL WITH A VIEW TO RESOLW@@ THE PROBLEM:
(A) THE SE141OR SHAREHOLDER WOULD TO GIVE THE 15 I< NJ
RIGHT TO THE CANADIAN NOW-EXECUTIVE DIRECTORS OF IMASCO TO VOTE CD
ITS SHARES AT THEIR DISCRETION. Is
-Fat la I I H iF am T4 4-9 IR. OK C:)
ST FRO,
TH I 5 R I GHT WOULD Ex I ST FR OM
W'DATE OF A FAVOURAdLE MINISTERIAL OP IN ION. THE CURRENT
IFIL
CANADIAN NONL- Ex DIRECTORS OF I MASCO ARE MR. JOHN COLEMAN,
MR. PURDY CRAhIFORD, MR. PETER KILBURN AND MR. JEAN RICHER.
EACH ARE DIST114GUISHED CANADIAN NATIONALS IN THE I 0@11,1 RI GHT.
A SHORT BIOG14APHY OF EACH PERSON IS ATTACHED AS APPENDIX 'Al.
BAT Industries document for Province of British Columbia 13 April 1999

1 E31 ;iZ-4-AY6WRA66F-
THE SEN-10k SHAREHOLDER WOULD RETAIN THE POhOER TO -ITHL)kA-d
THL R16HT GIVEN TO THE CANADIAN NON-EXECUTIVE DIRE'C'TORS TO No
VOTE ITS SHARES BY NOTICE IN WRITING TO THE MIN15TER 114 THE EVENT
4 N IV ---
OF DEVELOPt4ENTS WHICK
AFFECT THE SENIOR SHAREHOLDER'S INTERESTS.
4G
114 THE EVENT OF WITHDRAWAL OF THESE AkRAI- EMENTS. 114ASCO WOULD
(D)
I-KAEDIATELY CEASE TO REGARD ITSELF AS AN ELIGIBLE PERSON AND
WOULD SUB141T ALL FUTURE AC.)UISITIONS OF CANADIAN COMPANIES.AND
wEw BUS114ESS VENTURES TO THE M1141STER FOR APPROVAL. MOREOVER,
m""ei!tq I stoi emompoeo 'OR
-w 11K T
1- Or 'r I I.S4r.A.
(E) THE RELATIONSHIP BETWEEN THE SENIOR SHAREHOLDER AND I-MASCAILL
CaNTINUE TO BE OI,,FE WHERE IMASCO PROVIDES APPROPRIATE INFORMATION
TO AND HAS CONSULTATION WITH THE SENIOR SHAREHOLDER SO THAT
IMASCO CAN RECEIVE THE BENEFIT OF THE ADVICE AND EXPERIENCE
OF THE SENIOR SHAREHOLDER. IT WOULD BE AGREED, HOWEVER, THAT
THE ULTIMATE DECISION MAK114G AUTHORITY IN IMASCO, INCLUDIbr.
DECISIONS AS TO THE SELECTION OF DIRECTORS, WOULD BE EXCLUSIVELY
WITH THE BOARD OF DIRECTORS OF IMASCO.
(F) A PROCEDURE 14ILL BE ESTABLISHED PkOVIDINGG FOR MINIMLEA NUABERS
OF NOW-EYECUTIVE DIRECTORS, THE i-f-THOD OF THEIR SELECTIO14 AKD
THE PPOCEDURE FOR EXERCISING THEIR RIGHT TO VOTE THE SHARES
OF THE SE141OR SHAREHOLDER.
(G) WftftV-"01 111CREwASE 4;f8-Hi;;;ERE9;F
J;4ASe&o*I4D EVERY REASONABLE EFFORT %-.1OULD BE MADE BY IMASCO (II
LINE WITH EARLIER FIRA UNDERTAKINGS) TO REDUCE THE SENIOR
SHAREHOLDER'S INTEREST TO 40 PER CENT. IN THIS CO1,JNECT1ON IT
WOULD BE PROPOSED THAT AT THE NExT ANNUAL GENERAL MEETING OF
5HAREHOLOERS THE CHARTER OF IMASCO WOULD BE AMENDED TO PROVIDE
FOR A tAAXI-'4UM LIMIT ON THE NUABER OF SHARES WHICH MAY BE ISSUED
BY THE DIRECTORS WITHOUT THE FURTHER APPROVAL OF A SHAREHOLDER'S
'IFEETING. THE MAXIMUM WILL BE CALCULATED SO THAT THE SENIOR
SHAREHOLDER'S INTEREST WOULD NOT FALL BELOW 40 PER CENT.
(H) NOT LESS THAN 80 PER CENT OF THE BOARD OF DI RECTORS OF I MASCO WO
WOULD BE CANADIANS. THIS PERCENTAGE IS ACTUALLY LESS THAN HAS
BEE14 THE CASE OVER THE PAST 40 YEARS BUT HAS BEEN SEL5CTED TO
ENABLE INDIVIDUALS ASSOCIATED WITH HARDEE'S FOOD SYSTEMS,
INC., OUR RECEIT U.S. AC--)UISITION. TO PARTICIPATE ON THE BOARD.
(1) IHASCOIS CHIEF EXECUTIVE OFFICER IVIOULD ALWAYS BE A CANADIAN.
(J) THE SENIOR SHLAREHOLDER w0lLD NOT HAVE ANY, NOMINEES ON THE BOARD
OF DIRECTORS. OF IAASC:0. THIS -CONTINUEES INTO THE INDEFINITE
FUTURE A SITUATIO14 WHICH HAS EVISTED FOR MORE THAN 33 YEARS.
(K) VIASCO'S HEAD OUICE AND ExECUTIVE OFFICE WOUCI) AT ALL TIAES BE
LOCATED IN CANADA. THESE OFFICES HAVE BEEN LOCATED IN MOWFTR@-AL r4\.)
S114CE TRHE CO.',PANY'S INCEPTION. C:)
(L) NOT LESS THAN THREE JUARTERS OF ALL MEETINGS OF THE BOARD C=)
OF DIRECTORS AND OF THE EYECUTiVE C0,44ITTEE OF THE BOARD OF
1 j-IASCO iOLJLD BE HELD I N CANADA. IT HAS BEEN OUR PRACT ICE
TO HOLD ALL SUCH MEETINGS IN CANADA bUT AGAIN, IN RECOGNITION
Oc' THE ACPUISITION OF HARDEE'S, WE WOULD LIKE TO RETAIN SOME: NO
FLExIBILITY IN THIS AREA.
an
BAT Industries document for Province of British Columbia 13 April 19919

I TRUST THAT THE FOREGOING PROPOSAL wILL SERVE AS A BASIS, wHEN
APPROPRIATELY DOCUAENTED. FOR THE ISSUANCE OF A FAVOURABLE FIRA
SfATUS OPINION TO IMASCO.
I A1,.q) OTHER REPRESENTATIVES OF IMASCO ARE AVAILABLE TO WET WITH
YOU OR YOUR OFFICIALS AT YOUR CONVENIENCE TO DISCUSS THIS MATTER.
SINCERELY,
PALL PARE
015-c3
C)
BAT Industries document for Province of British Columbia 13 April 1999