d. Description of clauses relating to the exercise of voting rights and control

Transcription

1 1. VDQ SALIC Shareholders Agreement a. Parties VDQ Holdings S.A. ( VDQ ) and Salic (UK) Limited ( SALIC ), a company controlled by Saudi Agricultural and Livestock Investment Company (SALIC and VDQ, together, Binding Shareholders and, each individually, Binding Shareholder ). b. Date of execution The shareholder agreement between VDQ and SALIC was entered into on December 22, 2015 and its first amendment was entered into on December 20, 2018 ( VDQ SALIC Shareholders Agreement ). c. Term of validity The VDQ SALIC Shareholders Agreement has a term of validity (i) of 15 (fifteen) years as of January 22, 2016, or; (ii) until the date on which one of the Binding Shareholders ceases to hold any bound shares. The agreement will be terminated within a period of 15 (fifteen) days from the date a notice to that effect is sent, if the bound shares held by any of the Binding Shareholders represent less than 10% (ten percent) of the Company s total capital stock. Furthermore, the VDQ SALIC Shareholders Agreement may be terminated in the event of transfer of control of VDQ. In that case, SALIC may within a period of 30 (thirty) days from the date a notice is sent by VDQ informing the transfer of control send a written notice to VDQ terminating the VDQ SALIC Shareholders Agreement, with immediate effect. Failure to send such notice of termination within the period established in the VDQ SALIC Shareholders Agreement will imply, for all purposes, the waiver, by SALIC, of said withdrawal right. d. Description of clauses relating to the exercise of voting rights and control Pursuant to clause 5.1, the Binding Shareholders shall meet ( VDQ SALIC Preliminary Meeting ) before any general meeting or board of directors meeting of the Company convened to discuss any of the following matters ( VDQ SALIC Special Matters ): (i) (ii) execution of any act that results in the leverage ratio to exceed the maximum leverage ratio (as set forth in the VDQ SALIC Shareholders Agreement); approval of operations and transactions in general between the Company or its subsidiaries and any of the Binding Shareholders or their related parties, other than businesses involving confinement, livestock and transportation activities, or transactions with accumulated amount less than 5% (five percent) of the cost of all goods sold (COGS) of the Company and its subsidiaries, calculated in the period of 12 (twelve) months prior to the date of the most recent quarterly or annual financial statements, excluding, for the purposes of calculating the

2 percentage above, the transactions related to the supply agreement entered into between BRF and the Company dated November 1, 2013, as amended on June 1, 2015, and subsequent amendments (being agreed that, in any event, such operations and transactions will only be allowed if they are entered into without conflict of interest and under market conditions, in the interest of the Company and/or its subsidiaries, as the case may be); (iii) (iv) (v) provision of guarantees to third parties, including surety by the Company or any subsidiary, to guarantee any operations outside the corporate purpose of the Company or its subsidiaries, as the case may be; sale, encumbrance or lease of assets of the Company or its subsidiaries, during any period of 12 (twelve) consecutive months, in amounts equal to or greater than 15% (fifteen percent) of the value of the fixed assets of the Company and its subsidiaries, according to the latest quarterly or annual financial statements, excluding, however, the Company s holding in Minerva Dawn Farms Indústria e Comércio de Proteínas S.A.; expansion or acquisition of Capex that exceeds the amount approved in the annual budget, in accordance with Clause of the VDQ SALIC Shareholders Agreement, in more than US$2,000, (two million dollars) in any fiscal year; (vi) maintenance of Capex in any fiscal year exceeding an amount equivalent to 12% (twelve percent) of the value of the consolidated fixed assets of the Company and its subsidiaries, according to the most recent quarterly or annual financial statements (vii) (viii) (ix) (x) (xi) (xii) (xiii) operations with derivatives, other than transactions in the ordinary course of business that are effective hedges for the activities of the Company or its subsidiaries, and which are in compliance with the hedging policy approved by the Company; the appointment of an audit firm other than Deloitte, PwC, EY or KPMG, except for the next rotating period for which Grant Thornton was appointed; execution of any of the acts provided for in Clause 4.1 of the VDQ SALIC Shareholders Agreement in relation to any of the Company s subsidiaries; approval of relevant changes in the branding, media and public relations strategy of the Company; any change or relocation of the Company s headquarters; liquidation or dissolution of the Company or any of its subsidiaries; execution of any loans (including issuance of bonds or securities) conditioned to the approval of the Board of Directors, other than ordinary course of business transactions;

3 (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi) (xxii) (xxiii) (xxiv) increase the powers of the Board of Executive Officers to initiate any form of judicial insolvency proceedings; entrance into new markets outside the countries where the company already operates, but only to the extent that this entry is through the acquisition or development of production facilities in such a market; any modification of the Company s corporate purpose; any merger (including of shares), spin-off, transformation, reorganization or consolidation or transactions involving the Company and/or any of its subsidiaries, except for corporate restructurings that (a) involve only the Company and/or its subsidiaries and do not result in changes in the percentages of ownership interest of the Binding Shareholders held directly in the Company or indirectly in the subsidiaries; or (b) involve only the corporate transformation of any of the Company s subsidiaries; any split or reverse split, cancellation or redemption of shares issued by the Company and/or any of its subsidiaries, except when the acts involve only the Company and/or any of its subsidiaries and do not result in changes in the percentages of ownership interest of the Binding Shareholders held directly in the Company or indirectly in the subsidiaries or in case of cancellation of treasury shares, which will depend on the Company s Board of Directors resolution; approval of capital calls or increases in the Company s capital stock, through the issuance of new shares to be paid in with the capitalization of assets, other than cash; reduction of the Company s capital stock, except in the event of reduction of the capital stock in order to absorb losses arising from accumulated losses; approval of changes in relation to the mandatory minimum dividend or to the creation of new statutory reserves, pursuant to Article 32 of the Company s Bylaws; approval of the Company s delisting from B3 s Novo Mercado listing segment, as well as approval of the cancellation of the Company s registration as a publicly-held company with CVM; approval of amendments and modifications to the Bylaws or social contract, as the case may be, of the Company and/or any of its subsidiaries that adversely affect the interests of SALIC provided for in the VDQ SALIC Shareholders Agreement; approval of the Company s or any of its subsidiaries participation in any group of corporations pursuant to Chapter XXI of the Brazilian Corporate Law;

4 (xxv) (xxvi) discussion of the presentation of the management report, accounts of the executive committee and the financial statements of the Company at a general meeting; decision on payment or opening of credit line with interest on shareholders equity; (xxvii) decision, in accordance with the management proposal, on the allocation of accumulated profits for the year; (xxviii) approval of any Capex required to comply with new applicable laws, as defined in the VDQ SALIC Shareholders Agreement; (xxix) (xxx) (xxxi) appointment or dismissal of Company s officers, as well as establishment of their duties; establishment of the total annual remuneration of directors and of the members of the fiscal council, if installed; establishment of remuneration, indirect benefits and other incentives of directors, within the overall limit of the annual management remuneration, approved at the general meeting; (xxxii) approval and review of the Company s business plan; (xxxiii) approval of stock option plans for directors, employees or individuals who provide services to the Company and/or its subsidiaries, within the limit of 5% (five percent) of the Company s capital stock, as the case may be; (xxxiv) granting of stock options to directors, employees or individuals who provide services to the Company or its subsidiaries, without preemptive right to shareholders, pursuant to the stock option terms approved at a general meeting; (xxxv) selection of the specialized company or institution responsible for the preparation of an appraisal report on the Company s shares in case of cancellation of the Company s registration as a publicly-held company with the CVM or in case of delisting of the Company from B3 s Novo Mercado listing segment, among the companies indicated by the board of directors; (xxxvi) definition of a list of three institutions or companies specialized in economic valuation of companies, for the preparation of an appraisal report of the Company s shares, in the case of public offering of shares for cancellation of the Company s registration as a publicly-held company with the CVM or delisting of the Company from B3 s Novo Mercado listing segment, as defined in Article 45 of the Company s Bylaws; (xxxvii) resolution on the trading of shares issued by the Company for cancellation or to be held in treasury and respective disposal;

5 (xxxviii) resolution on the issue of simple debentures and, subject to the limits of the authorized capital, of debentures convertible into shares; (xxxix) approval of leases by the Company and/or its subsidiaries of industrial plants owned by third parties; (xl) (xli) (xlii) approval of the hiring of an institution to provide registration services in relation to the shares issued by the Company; request for judicial or extrajudicial recovery or bankruptcy of the Company or any of its subsidiaries; and selection or dismissal of the independent auditor of the Company or any of its subsidiaries. Qualified majority. The matters listed between items (i) to (xxiv) above shall be approved, at the VDQ SALIC Preliminary Meeting, by a favorable vote of holders of at least 80% (eighty percent) of the shares related to the VDQ SALIC Shareholders' Agreement. Simple majority. The matters listed between items (xxv) to (xlii) above, in turn, shall be approved by a favorable vote of holders of at least 51% (fifty-one percent) of the shares bound under the VDQ SALIC Shareholders Agreement. Pursuant to clause 5.3, any resolution taken by the VDQ SALIC Preliminary Meeting shall have binding effect on all votes and acts of the Binding Shareholders, the Company and the members of the Company s board of directors elected by the Binding Shareholders, who shall exercise their respective voting rights in order to comply with said resolution. If any of the Binding Shareholders or the members of the board of directors appointed by them vote against what was resolved at the VDQ SALIC Preliminary Meeting, the other Binding Shareholder or the other members of the board of directors, as the case may be, may perform any and all acts and take any and all measures to render this vote null and void. Also, as provided in clause 7.4.5, if the poison pill clause provided for in Article 46 of the Company s Bylaws is applied, as a result of the exercise of preemptive rights by SALIC, VDQ undertakes to exercise its powers and rights, within the limits set forth in the applicable law, in order to obtain the waiver by the Company s general meeting of the obligation to make a public offer, pursuant to paragraph 8 of Article 46. e. Description of clauses relating to appointment of directors Pursuant to clause 3.3, each Binding Shareholder shall be entitled to appoint a certain number of members to the Company s board of directors, in accordance with the participation of their respective bound shares in relation to the Company s capital stock, as shown in the following table:

6 Shareholder VDQ SALIC Bound shares related to the Company s capital stock At least 20% Between 15% and 20% Less than 15% At least 15% Between 10% and 15% Members of the board of directors 5 (five) members and their respective alternates, including the chairperson and 1 (one) vice-chairperson 4 (four) members and their respective alternates, including the chairperson and 1 (one) vice-chairperson 3 (three) members and their respective alternates, including the chairperson and 1 (one) vice-chairperson 3 (three) members and their respective alternates, including one vice-chairperson 2 (two) members and their respective alternates, including one vice-chairperson Regarding the appointment of Chief Executive Officer and Chief Financial Officer, a nomination committee must be convened to hire a substitute who fulfills the qualifications for the position, in compliance with clauses 3.8 and 3.9 of the VDQ SALIC Shareholders Agreement. Pursuant to clause 3.4 of the VDQ SALIC Shareholders Agreement, VDQ shall have the right to request the dismissal of any of the members of the board of directors appointed by VDQ, and SALIC shall have the right to request the dismissal of any of the members of the board of directors appointed by SALIC. In both cases, the Binding Shareholders will exercise their voting rights in order to dismiss such member of the board of directors, as well as to elect a substitute appointed by the Binding Shareholder who requested the dismissal, in compliance with the rules for the appointment of officers. For the purposes of election and dismissal of the members of the board of directors, the Binding Shareholders undertake to vote in proportion to the number of shares held by them (including unbound shares). Regarding the dismissal of Company Officers, if the dismissal is based on misconduct, it will be subjected to a unanimous or majority decision of the Board of Directors, pursuant to clause of the VDQ SALIC Shareholders Agreement. Additionally, SALIC may, at its discretion, propose the dismissal of any of the Company s Financial Officer at the Board of Directors Meeting, with or without misconduct, even if such dismissal was not approved at a Preliminary Meeting, provided that (i) in the case of dismissal based on misconduct, the rules set forth in clause of the VDQ SALIC Shareholders Agreement shall be observed; and (ii) in case of dismissal not based on misconduct, it shall be approved by the majority of the Board of Directors. f. Description of the clauses relating to the transfer of shares and the right of first refusal

7 Permitted transfers The Binding Shareholders may transfer all or part of their bound shares to any entity under their control. Furthermore, VDQ may transfer its bound shares to related parties of VDQ, subject to the other provisions of the VDQ SALIC Shareholders Agreement. During the lock-up period (see below), restrictions on the transfer of bound shares do not apply if the shares to be transferred represent, in any consecutive 12 (twelve) months, less than (i) 2.5% (two point five percent) of the Company s capital stock, in case of transfers by VDQ; or (ii) 1.99% (one point ninety-nine percent) of the Company s capital stock, in case of transfers by SALIC. After the lock-up period, restrictions on the transfer of shares do not apply if the shares to be transferred represent, in any consecutive 12 (twelve) months, less than 2.5% (two point five percent) of the Company s capital stock. Lock-up SALIC may not transfer any of its bound shares for a period of 5 (five) years as of December 20, However, this restriction shall cease to be applicable (i) in case of transfer of control of VDQ or the Company during the lock-up period or; (ii) in case the totality of losses incurred by SALIC that are subject to indemnification, pursuant to the investment agreement entered into on December 22, 2015 between the Company, VDQ and SALIC, exceeds the amount of R$440 million. Right of first refusal If any of the Binding Shareholders intends to make a transfer, in full or in part, of its bound shares (provided it is not a permitted transfer), it shall first offer them to the other Binding Shareholder, pursuant to clause 7.4 of the VDQ SALIC Shareholders Agreement. Secondary Public Offering Pursuant to clause 8 of the VDQ SALIC Shareholders Agreement, SALIC may request the Company s management to cause the Company to take all necessary measures to make a secondary public offering of shares, the object of which would be all or any portion of the shares issued by the Company held by SALIC. g. Description of clauses restricting or binding the right to vote of members of the board of directors Pursuant to clause 5.3, any resolution taken by the Binding Shareholders at the VDQ SALIC Preliminary Meeting shall have binding effect on all votes and acts of the members of the Company s Board of Directors elected by the Binding Shareholders (see item 1.d above). If any of the members of the board of directors appointed by the Binding Shareholders votes against the VDQ SALIC Preliminary Meeting, the Binding Shareholders or other

8 members of the board of directors, as the case may be, may perform any and all acts and take all and any measures to render this vote null and void.