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ARRANGEMENT AGREEMENT
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BETWEEN
CELESTICA INC.
and
PRIMETECH ELECTRONICS INC.
MAY 31, 2001
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
1.1 Definitions.........................................................2
1.2 Construction........................................................7
1.3 Currency............................................................8
1.4 Knowledge...........................................................8
ARTICLE 2
THE ARRANGEMENT
2.1 Interim Order.......................................................8
2.2 Final Order.........................................................9
2.3 Articles of Arrangement and Effective Date..........................9
2.4 Meeting.............................................................9
2.5 Shareholder and Optionholder Approval..............................10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CELESTICA
3.1 Organization and Qualification.....................................10
3.2 Authority Relative to this Agreement...............................10
3.3 Issuances of Celestica Subordinate Voting
Shares Pursuant to the Plan of Arrangement................11
3.4 Public Filings.....................................................12
3.5 Financial Statements...............................................12
3.6 Absence of Certain Changes or Events...............................13
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PRIMETECH
4.1 Organization and Qualification.....................................13
4.2 Authority Relative to this Agreement...............................13
4.3 Capitalization.....................................................14
4.4 Subsidiary.........................................................15
4.5 Title to Properties................................................15
4.6 Inventories........................................................16
4.7 Intellectual Property..............................................16
4.8 Insurance..........................................................16
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4.9 Contracts...........................................................17
4.10 Compliance with Laws; Licences......................................17
4.11 Financial Statements................................................17
4.12 Books and Records...................................................18
4.13 Absence of Changes..................................................18
4.14 Taxes...............................................................19
4.15 Litigation, Etc.....................................................20
4.16 Environmental.......................................................20
4.17 Employees...........................................................22
4.18 Benefit Plans.......................................................23
4.19 Customers...........................................................23
4.20 Public Filings......................................................24
4.21 Approval of Arrangement.............................................24
4.22 Full Disclosure.....................................................24
ARTICLE 5
COVENANTS
5.1 Public Statements...................................................25
5.2 Listing of Celestica Subordinate Voting Shares......................25
5.3 Covenants of Primetech..............................................25
5.4 Covenants of Celestica..............................................30
5.5 Covenants Regarding Non-Solicitation................................32
5.6 Notice by Primetech of Superior Proposal Determination..............34
5.7 Break Fee Event.....................................................34
5.8 Employment Agreements, Pension Plan and Options.....................35
5.9 Access to Information and Properties................................35
5.10 Further Assurances..................................................36
5.11 Directors' and Officers' Insurance..................................36
ARTICLE 6
CONDITIONS TO THE ARRANGEMENT
6.1 Mutual Conditions Precedent.........................................36
6.2 Celestica Conditions Precedent......................................37
6.3 Primetech Conditions Precedent......................................40
6.4 No Waiver, Etc......................................................42
6.5 Merger of Conditions................................................42
ARTICLE 7
AMENDMENT, TERMINATION AND WAIVER
7.1 Amendment...........................................................42
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7.2 Mutual Understanding Regarding Amendments..........................43
7.3 Termination........................................................43
7.4 Waiver.............................................................44
7.5 Effect of Termination..............................................44
ARTICLE 8
GENERAL
8.1 Expenses...........................................................44
8.2 Remedies...........................................................44
8.3 Notices............................................................45
8.4 Investigation......................................................46
8.5 Severability.......................................................46
8.6 Entire Agreement, Assignment and Governing Law.....................46
8.7 Binding Effect.....................................................47
8.8 Counterparts.......................................................47
8.9 English Language...................................................47
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ARRANGEMENT AGREEMENT
THIS AGREEMENT made the 31st day of May, 2001.
B E T W E E N:
CELESTICA INC.,
a corporation incorporated under the
laws of the Province of Ontario,
(hereinafter, "CELESTICA"),
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PRIMETECH ELECTRONICS INC.,
a corporation incorporated under the
CANADA BUSINESS CORPORATIONS ACT
(hereinafter, "PRIMETECH").
WHEREAS Primetech intends to propose to its shareholders at
the Meeting (as hereinafter defined) a statutory plan of arrangement under
section 192 of the CANADA BUSINESS CORPORATIONS ACT on the terms of the Plan of
Arrangement (as hereinafter defined);
AND WHEREAS Xxxx XxXxxxxxxx Holdings Inc. ("JM Holdings") and
Xxxxxxx Xxxxx Holdings Inc. ("TC Holdings") are the registered and beneficial
owners of 3,152,502 and 3,103,821 Primetech Common Shares (as hereinafter
defined), respectively, representing approximately 20.4% and 20.0% of the issued
and outstanding Primetech Common Shares, respectively, and XxXxxxxxxx is the
registered and beneficial owner of all of the issued and outstanding shares of
JM Holdings;
AND WHEREAS each Principal Shareholder has expressed its
intention to vote the Primetech Common Shares and Primetech Options held by such
Principal Shareholder, or in respect of which such Principal Shareholder is
entitled to exercise the voting rights attaching thereto, in favour of the
Arrangement and has entered into a Support Agreement (as hereinafter defined);
AND WHEREAS the Primetech Board of Directors, after
consultation with its legal and financial advisors, has unanimously determined
that the Arrangement is fair to the Shareholders and Optionholders and in the
best interests of Primetech and has resolved to enter into this Agreement and to
recommend that the Shareholders and Optionholders vote in favour of the
Arrangement, all on the terms and subject to the conditions contained herein;
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NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration
of the premises and the covenants and agreements herein contained and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each Party to the others, the Parties covenant and agree as
follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS.
In this Agreement and, unless otherwise defined, in the
Exhibits, the following terms have the following meanings, respectively:
"ACQUISITION PROPOSAL" means any merger, amalgamation, take-over bid, sale of
material assets (or any lease, long-term supply agreement or other arrangement
having the same economic effect as a sale), any material issue or sale of
treasury shares or rights or interests therein or thereto or similar
transactions or series of transactions involving Primetech or the Subsidiary, or
a proposal to do so, excluding the Arrangement;
"AGREEMENT" means this agreement including the Exhibits hereto and all
amendments hereto made in accordance with Section 7.1;
"ARRANGEMENT" means the proposed arrangement involving Primetech and its
Shareholders and Optionholders under the provisions of section 192 of the CBCA,
on and subject to the terms and conditions set forth in the Plan of Arrangement
and all amendments thereto made in accordance with Section 7.1;
"BUSINESS DAY" means a day other than a Saturday, Sunday or day on which
Canadian chartered banks are authorized or required by Law to be closed in
Toronto, Ontario or Montreal, Quebec;
"CBCA" means the CANADA BUSINESS CORPORATIONS ACT;
"CELESTICA MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, operations (including results of operations), assets, properties or
condition (financial or otherwise) of Celestica and its subsidiaries taken as a
whole, but excluding any change, event or occurrence that: (a) relates to the
Canadian or United States economy or securities markets in general; (b) is
reasonably attributable to the announcement of this Agreement and the
transactions contemplated hereby; or (c) applies to the electronics
manufacturing services industry generally;
"CELESTICA NDA" means the non-disclosure, exclusivity and standstill agreement
dated March 21, 2001 between Celestica, Primetech, JM Holdings and TC Holdings,
as amended;
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"CELESTICA PUBLIC DOCUMENTS" means documents or information filed by Celestica
under applicable securities Laws since and including January 1, 2000 to and
including the date hereof, including Celestica's: (a) annual report to the
shareholders for the year ended December 31, 2000; (b) management information
circular and proxy statement dated March 9, 2001 in respect of the annual and
special meeting of the shareholders held April 18, 2001; (c) annual report on
Form 20-F for the year ended December 31, 1999, dated May 18, 2000; (d) interim
consolidated financial statements for the three-month period ended March 31,
2001; and (e) press releases and material change reports filed under applicable
securities Laws since and including January 1, 2000;
"CELESTICA SUBORDINATE VOTING SHARES" means subordinate voting shares in the
capital of Celestica;
"COMPETITION ACT" means the COMPETITION ACT (Canada);
"COURT" means the Superior Court of Quebec, District of Montreal, unless
otherwise agreed to by Celestica and Primetech;
"DIRECTOR" means the Director appointed pursuant to section 260 of the CBCA;
"DISSENT RIGHTS" means the right of a Shareholder to dissent in respect of the
Arrangement pursuant to the procedures set forth in section 190 of the CBCA and
Section 3.1 of the Plan of Arrangement;
"EFFECTIVE DATE" means the effective date of the Arrangement, being the date
shown on the certificate of arrangement to be issued by the Director under the
CBCA giving effect to the Arrangement;
"EFFECTIVE TIME" means 12:01 a.m. (Montreal time) on the Effective Date;
"EMPLOYEE" has the meaning set out in Subsection 4.17(d);
"EMPLOYMENT AGREEMENTS" means, collectively, (a) the employment agreement dated
June 12, 1998 between Primetech and Xxxx XxXxxxxxxx; (b) the employment
agreement dated June 12, 1998 between Primetech and Xxxxxx Xxxx; (c) the
employment agreement dated March 16, 2001 between Primetech and Xxxxx Xxxxx; and
(d) the employment agreement dated March 16, 2001 between Primetech and Xxx
Xxxxxxxx;
"ENCUMBRANCE" includes any mortgage, pledge, assignment, charge, lien, claim,
security interest, adverse interest in property, other third party interest or
encumbrance of any kind, whether contingent or absolute, and any agreement,
option, right or privilege (whether by Law, contract or otherwise) capable of
becoming any of the foregoing;
"ENVIRONMENTAL LAWS" has the meaning set out in Subsection 4.16(a);
"EXCHANGED OPTION" has the meaning set out in the Plan of Arrangement;
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"FINAL ORDER" means the final order of the Court approving the Arrangement, as
such may be amended or varied at any time prior to the Effective Date;
"GOVERNMENTAL ENTITY" means any: (a) multinational, federal, provincial, state,
regional, municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body, commission, board,
bureau or agency, domestic or foreign; (b) any subdivision, agent, commission,
board or authority of any of the foregoing; or (c) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing;
"HAZARDOUS SUBSTANCE" has the meaning set out in Subsection 4.16(a);
"INFORMATION CIRCULAR" means the management proxy circular of Primetech in both
the English and French languages seeking approval of the Arrangement to be sent
to Shareholders and Optionholders in connection with the Meeting;
"INTELLECTUAL PROPERTY" means industrial and intellectual property under the
Laws of Canada and other jurisdictions, including all:
(a) trade secrets, confidential information and confidential
know-how, including all unpatented inventions, customer and
supplier lists, formulae, systems, methodologies, processes,
documents, works, designs, prototypes, materials,
technologies, inventor's notes, unpublished studies and data,
research designs, research results and notes, prototypes,
drawings, design and construction specifications, production,
operating and quality control manuals, marketing strategies,
and current or proposed business opportunities;
(b) copyrights and all waivers of moral rights associated with
copyrights, including all copyrights and moral rights in
software and world wide web pages, and also rights to graphic
design and user interface elements and "look and feel", and
databases;
(c) industrial designs, design patents and other designs;
(d) mask works and integrated circuit topographies;
(e) patents;
(f) registered and unregistered trade-marks, service marks, sound
marks, trade names, brand names, trade dress, indicia,
distinguishing guises, logos, designs, business names, domain
names, Internet protocol addresses and classes of Internet
protocol addresses, any other source or business identifiers
and fictitious characters, and all goodwill associated with
the foregoing; and
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(g) all rights to take legal action in respect of past
infringement of the property described in (i) to (vi) above,
and all registrations, applications for registration, reissues, extensions,
renewals, divisions, continuations, continuations-in-part, proprietary
information, documentation, Licences, registered user agreements and other
agreements relating to the foregoing;
"INTERIM ORDER" means the interim order of the Court to be issued pursuant to
the application referred to in Section 2.1;
"INVENTORY" means all of the inventory of Primetech and the Subsidiary,
including the raw material, work-in-process and finished goods inventory of
Primetech and the Subsidiary and all inventory subject to purchase orders of
Primetech or the Subsidiary or that Primetech or the Subsidiary otherwise has
committed or commits to purchase;
"LAWS" means all applicable laws, by-laws, rules, regulations, orders,
ordinances, protocols, codes, guidelines, policies, notices, decrees, directions
and judgments or other requirements of any Governmental Entity;
"LICENCES" has the meaning set out in Section 4.10;
"MAILING DATE" means the date on which the Information Circular is mailed to
Shareholders and Optionholders;
"MAILING DEADLINE" has the meaning set out in Subsection 2.4(a)(ii);
"MEETING" means the special meeting of Shareholders and Optionholders to be held
for the purpose of considering the Arrangement and any adjournment(s) or
postponement(s) thereof;
"MEETING DEADLINE" has the meaning set out in Subsection 2.4(a)(i);
"NYSE" means The New York Stock Exchange, Inc.;
"OPTIONHOLDER" means a holder of Primetech Options;
"PARTY" means a party to this Agreement;
"PENSION AGREEMENTS" means, collectively: (i) the executive compensation
agreement dated August 11, 1983 between Tech-Rep Electronics Ltd. (now
Primetech) and Xxxxxx Xxxx; (ii) the executive compensation agreement dated
August 11, 1983 between Tech-Rep Electronics Ltd. (now Primetech) and Xxxx
XxXxxxxxxx; and (iii) the retirement agreement dated June 12, 1998 between
Primetech and Xxxxxxx Xxxxx;
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"PLAN OF ARRANGEMENT" means the plan of arrangement of Primetech set out as
Exhibit A hereto and forming a part hereof and all amendments thereto made in
accordance with Section 7.1 or section 5.1 of the Plan of Arrangement or the
direction of the Court in the Final Order;
"PRIMETECH ARTICLES" means the Articles of Amalgamation of Primetech dated
October 7, 1997, as amended;
"PRIMETECH BENEFIT PLAN" means any registered or supplementary pension,
retirement, profit sharing, bonus, savings, deferred compensation, stock option,
purchase, appreciation, group insurance or other material employee or retiree
benefit plans, programmes or arrangements, formal or informal, oral or written,
maintained or contributed to by Primetech or the Subsidiary;
"PRIMETECH BOARD OF DIRECTORS" means the board of directors of Primetech;
PRIMETECH COMMON SHARES" means common shares in the capital of Primetech;
"PRIMETECH DISCLOSURE STATEMENT" means the disclosure statement dated the date
hereof provided by Primetech to Celestica contemporaneously with the entering
into of this Agreement;
"PRIMETECH MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, operations (including results of operations), assets, properties,
condition (financial or otherwise) or prospects of Primetech and the Subsidiary,
taken as a whole, but excluding any change, event or occurrence that (a) relates
to the Canadian or United States economy or securities markets in general; (b)
is reasonably attributable to the announcement of this Agreement and the
transactions contemplated hereby; or (c) applies to the electronics
manufacturing services industry generally;
"PRIMETECH OPTIONS" means options exercisable for Primetech Common Shares
granted pursuant to the Primetech Option Plan;
"PRIMETECH OPTION PLAN" means the stock option plan of Primetech known as the
1998 Stock Option Plan, as amended;
"PRIMETECH PUBLIC DOCUMENTS" means documents or information filed by Primetech
under applicable securities Laws since and including October 1, 1999 to and
including the date hereof, including Primetech's: (a) annual report to
shareholders for the financial year ended September 30, 2000; (b) management
proxy circular dated January 10, 2001 in respect of the annual meeting of
shareholders held February 16, 2001; (c) annual information form for the year
ended September 30, 2000, dated December 31, 2000; (d) interim consolidated
financial statements for the three months ended December 31, 2000 and the six
months ended March 31, 2001; and (e) press releases and material change reports
filed under applicable securities Laws since and including October 1, 1999;
"PRINCIPAL SHAREHOLDERS" means, collectively, XxXxxxxxxx, XX Holdings and TC
Holdings;
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"SECURITIES AUTHORITIES" means the securities commissions and similar regulatory
authorities in each of the provinces and territories of Canada;
"SHARE EXCHANGE RATIO" has the meaning set out in the Plan of Arrangement;
"SHAREHOLDER" means a holder of Primetech Common Shares;
"SUBSIDIARY" means Primetech Electronics (Amherst) Inc., a corporation governed
by the CBCA;
"SUPERIOR PROPOSAL" has the meaning set out in Subsection 5.5(a);
"SUPPORT AGREEMENTS" means, collectively: (i) the agreement dated May 31, 2001
between Celestica, JM Holdings and Xxxx XxXxxxxxxx; (ii) the agreement dated May
31, 2001 between Celestica and TC Holdings; (iii) the agreement dated May 31,
2001 between Celestica and Xxxxx Xxxxx; (iv) the agreement dated May 31, 2001
between Celestica and Xxxxxx X. Xxxx; and (v) the agreement dated May 30, 2001
between Celestica and Galileo Equity Management Inc.;
"TAXES" means any taxes, charges, fees, levies or other assessments, including
all net income, gross income, premiums, sales and use, goods and services,
harmonized sales, employer health, ad valorem, transfer, gains, profits,
windfall profits, excise, franchise, real and personal property, gross receipts,
capital stock, production, business and occupation, employment, disability,
payroll, licence, stamp, customs duties, severance or withholding taxes, other
taxes or similar charges of any kind whatsoever imposed by any Governmental
Entity and includes any interest, fines and penalties on or additions to any
such taxes or charges or in respect of a failure to comply with any requirement
relating to any tax return; and
"TSE" means the Toronto Stock Exchange.
1.2 CONSTRUCTION.
In this Agreement, unless otherwise expressly stated or the
context otherwise requires:
(a) references to "herein", "hereby", "hereunder", "hereof" and
similar expressions are references to this Agreement and not
to any particular Article, Section, Subsection, Clause or
Exhibit of or to this Agreement;
(b) references to an "Article", "Section", "Subsection", "Clause"
or "Exhibit" are references to an Article, Section,
Subsection, Clause or Exhibit of or to this Agreement;
(c) words importing the singular shall include the plural and VICE
VERSA, words importing gender shall include the masculine,
feminine and neuter genders, and references to
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a "person" or "persons" shall include individuals,
corporations, partnerships, associations, bodies politic and
other entities, all as may be applicable in the context;
(d) the use of headings is for convenience of reference only and
shall not affect the construction or interpretation hereof;
(e) the words "includes" and "including", when following any
general term or statement, is not to be construed as limiting
the general term or statement to the specific items or matters
set forth or to similar items or matters, but rather as
referring to all other items or matters that could reasonably
fall within the broadest possible scope of the general term or
statement; and
(f) a reference to a statute or code includes every regulation
made pursuant thereto, all amendments to the statute or code
or to any such regulation in force from time to time, and any
statute, code or regulation which supplements or supersedes
such statute, code or regulation.
1.3 CURRENCY.
All references to currency herein are to lawful money of
Canada unless otherwise specified.
1.4 KNOWLEDGE.
In this Agreement, "BEST OF THE KNOWLEDGE" when used in
relation to any person that is not a natural person, means knowledge of an
appropriate senior manager of such person with responsibility for the matter in
question after due enquiry.
1.5 PRIMETECH DISCLOSURE STATEMENT.
Disclosure by Primetech in any particular schedule or exhibit
in the Primetech Disclosure Statement shall constitute disclosure only with
respect to that schedule or exhibit and not with respect to any other schedule
or exhibit in the Primetech Disclosure Statement.
ARTICLE 2
THE ARRANGEMENT
2.1 INTERIM ORDER.
As soon as practicable following the execution of this
Agreement, but in any event not later than June 21, 2001, Primetech shall apply
to the Court pursuant to subsection 192(3) of the
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CBCA for the Interim Order providing for, among other things, the calling and
holding of the Meeting for the purpose of obtaining the approval of Shareholders
and Optionholders set out in Section 2.5.
2.2 FINAL ORDER.
If the Interim Order and the approval of Shareholders and
Optionholders set out in Subsection 2.5 are obtained, Primetech shall promptly
thereafter, and, unless otherwise agreed to by the Parties, in any event no
later than five Business Days after all other conditions to the Arrangement
specified in Article 5 have been satisfied or waived, take all steps necessary
or desirable to submit the Arrangement to the Court and apply for the Final
Order.
2.3 ARTICLES OF ARRANGEMENT AND EFFECTIVE DATE.
As soon as practicable following receipt of the Final Order,
and subject to the satisfaction or waiver of all other conditions provided for
in Article 5, Primetech shall file, pursuant to subsection 192(6) of the CBCA,
articles of arrangement to give effect to the Arrangement. The steps of the
Arrangement shall become effective in the order set out in the Plan of
Arrangement.
2.4 MEETING.
Subject to receipt of the Interim Order:
(a) the Meeting shall be held as soon as practicable following the
Interim Order but in any event not later than August 5, 2001
(the "MEETING DEADLINE"), and shall be held on a day to be
agreed upon by Celestica and Primetech;
(b) Primetech shall: (i) by no later than June 30, 2001 (the
"MAILING DEADLINE"), prepare the Information Circular in form
and substance satisfactory to Celestica, acting reasonably,
and will provide Celestica with an opportunity to review,
comment on and amend as reasonably necessary or desirable the
Information Circular; (ii) file the Information Circular in
all jurisdictions where the same is required to be filed by
it; and (iii) mail the Information Circular to Shareholders
and Optionholders in accordance with the Interim Order and
applicable Law; and
(c) Primetech shall, subject to Section 5.6: (i) through the
Primetech Board of Directors, recommend that Shareholders and
Optionholders vote in favour of the Arrangement; (ii) use its
best efforts to secure the approval of the Arrangement by
Shareholders and Optionholders; and (iii) solicit proxies from
Shareholders and Optionholders to be voted at the Meeting in
favour of the Arrangement;
provided, however, that if the mailing of the Information Circular or the
calling or holding of the Meeting is delayed by an injunction or order made by a
Governmental Entity of competent
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jurisdiction or the Parties not having obtained any regulatory waiver, consent
or approval which is necessary to permit the calling and holding of the Meeting,
then, provided that such injunction or order is being contested or appealed or
such regulatory waiver, consent or approval is being actively sought, as
applicable, (x) the Mailing Deadline shall be extended for a period ending on
the earlier of July 30, 2001 and the fifth Business Day following the date on
which such injunction or order ceases to be in effect or such regulatory waiver,
consent or approval is obtained, as applicable, and (y) the Meeting Deadline
shall be extended for a period ending on the earlier of September 5, 2001 and
such date as is the earliest possible date on which the Meeting may be held
under the CBCA following the date on which such injunction or order ceases to be
in effect or such regulatory waiver, consent or approval is obtained, as
applicable.
2.5 SHAREHOLDER AND OPTIONHOLDER APPROVAL.
The Arrangement shall be subject to the approval of two-thirds
of the votes cast by Shareholders and Optionholders present or represented by
proxy at the Meeting voting together as a single class (with each Optionholder
being entitled to one vote for each Primetech Common Share such holder would
have received on a valid exercise of such holder's unexercised Primetech
Options) on the record date set by the Primetech Board of Directors for the
purpose of determining the Shareholders and Optionholders entitled to receive
notice of and to vote at the Meeting.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CELESTICA
Celestica hereby represents and warrants to and in favour of
Primetech as follows, and acknowledges that Primetech is relying upon such
representations and warranties in connection with the entering into of this
Agreement:
3.1 ORGANIZATION AND QUALIFICATION.
Celestica is validly existing under the Laws of the Province
of Ontario and has full corporate power and authority to own its assets and
conduct its business as now owned and conducted. Celestica is duly qualified to
carry on business in each jurisdiction in which the character of its properties,
owned or leased, or the nature of its activities, makes such qualification
necessary, except where the failure to be so qualified would not be reasonably
likely to have a Celestica Material Adverse Effect.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT.
(i) Celestica has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by Celestica and the consummation by
Celestica of the transactions contemplated hereby (including the
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Arrangement) have been duly authorized by the board of directors of Celestica
and no other corporate proceedings on the part of Celestica are necessary to
authorize this Agreement and the transactions contemplated hereby.
(ii) This Agreement has been duly executed and delivered by
Celestica and constitutes its valid and binding obligation, enforceable by
Primetech against Celestica in accordance with its terms, except as the
enforcement of this Agreement may be limited by bankruptcy, insolvency and
other Laws affecting the enforcement of creditors' rights generally and
subject to the qualification that equitable remedies may only be granted in
the discretion of a court of competent jurisdiction.
(iii) The execution and delivery by Celestica of this Agreement and
the performance by it of its obligations hereunder, after obtaining any
necessary regulatory approvals, will not:
(i) violate, conflict with or result in a breach of any
provision of:
(A) the constating documents of Celestica;
(B) any agreement, contract, indenture, deed of
trust, mortgage, bond, instrument, licence,
franchise or permit to which Celestica is a
party or by which it is bound; or
(C) any Law to which Celestica is subject or by
which it is bound;
(ii) give rise to any right of termination, or
acceleration of indebtedness, or cause any
indebtedness to come due before its stated maturity
or give rise to any right of termination under any
agreement, contract, licence, franchise or permit
which is material to Celestica and its subsidiaries
taken as a whole; or
(iii) result in the imposition of any Encumbrance upon any
of the assets of Celestica or any of its
subsidiaries,
other than any such violations, conflicts, breaches, rights or Encumbrances as
will not, individually or in the aggregate, have a Celestica Material Adverse
Effect or prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
3.3 ISSUANCES OF CELESTICA SUBORDINATE VOTING
SHARES PURSUANT TO THE PLAN OF ARRANGEMENT.
(i) The unissued Celestica Subordinate Voting Shares to be issued by
Celestica to Shareholders pursuant to the Plan of Arrangement have been duly
and validly authorized and, when issued and delivered in exchange for any
Primetech Common Shares pursuant to the Plan of Arrangement, will be duly and
validly issued as fully paid and non-assessable shares in the capital of
Celestica.
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(ii) The issuance by Celestica of the Celestica Subordinate Voting
Shares pursuant to the Plan of Arrangement is exempt from the prospectus and
registration requirements of the applicable Canadian and United States
securities Laws and no prospectus or similar document is required to be
delivered by Celestica to Shareholders in Canada or the United States in
connection with such issuance and no other documents are required to be
filed, proceedings taken or approvals, permits, consents or authorizations of
regulatory authorities obtained under securities Laws to permit the issuance
of such Celestica Subordinate Voting Shares to the Shareholders, other than
as contemplated hereby including the requirement to file with the TSE a
notice of the proposed issuance of such Celestica Subordinate Voting Shares
and to obtain the approval of the NYSE of the listing of such Celestica
Subordinate Voting Shares, subject to notice of issuance.
(iii) The Celestica Subordinate Voting Shares to be issued pursuant
to the Plan of Arrangement, when issued pursuant to the Plan of Arrangement,
shall not be subject to resale restrictions in Canada under applicable
securities Laws, other than resale restrictions in respect of control persons
and subject to registration and other non-prospectus requirements of general
application relating to the sale of shares.
(iv) Subject to the receipt by Celestica of any required regulatory
approvals, the unissued Celestica Subordinate Voting Shares to be issued upon
the exercise of the Exchanged Options have been duly and validly authorized
and, when duly and validly issued upon the exercise of such options in
accordance with the terms of the Primetech Option Plan (including the receipt
by Celestica of the exercise price therefor), will be duly and validly issued
as fully-paid and non-assessable shares in the capital of Celestica.
3.4 PUBLIC FILINGS.
Celestica has filed with the Securities Authorities, stock
exchanges and all applicable self-regulatory authorities true and complete
copies of all forms, reports, schedules, statements, material change reports and
other documents required to be filed by it since January 1, 2000. The Celestica
Public Documents did not, as of their respective dates, contain any untrue
statement of a material fact that is materially adverse to Celestica and its
subsidiaries, taken as a whole, or omit to state a material fact that is
materially adverse to Celestica and its subsidiaries, taken as a whole, required
to be stated therein or necessary to make the statements relating to Celestica
and its subsidiaries, taken as a whole, in light of the circumstances under
which they were made, not misleading. Celestica has not filed any confidential
material change or other report or other document with any Securities Authority
or stock exchange or other self-regulatory authority which at the date hereof
remains confidential.
3.5 FINANCIAL STATEMENTS.
The audited consolidated financial statements of Celestica as
at and for the financial year ended December 31, 2000, including the notes
thereto and the report of Celestica's auditors thereon, and the unaudited
consolidated financial statements of Celestica as at and for the three
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months ended March 31, 2001 were prepared in accordance with generally accepted
accounting principles in Canada applied on a basis consistent with prior
periods, are correct and complete and present fairly the assets, liabilities
(whether accrued, absolute, contingent or otherwise) and financial condition of
Celestica and its subsidiaries on a consolidated basis as at the respective
dates thereof and the revenues, earnings and results of operations of Celestica
and its subsidiaries on a consolidated basis for the respective periods covered
thereby.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in the Celestica Public Documents, since
January 1, 2001: (a) Celestica and its subsidiaries have conducted their
respective businesses only in the usual, ordinary and regular course and
consistent with past practice; (b) no liability or obligation of any nature
(whether absolute, accrued, contingent or otherwise) which has had or is
reasonably likely to have a Celestica Material Adverse Effect, has been
incurred; and (c) there has not been any event which has had or is reasonably
likely to have a Celestica Material Adverse Effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PRIMETECH
Primetech represents and warrants to and in favour of
Celestica as follows, and acknowledges that Celestica is relying upon such
representations and warranties in connection with the entering into of this
Agreement:
4.1 ORGANIZATION AND QUALIFICATION.
Primetech is validly existing as a corporation under the CBCA
and has full corporate power and authority to own its assets and conduct its
business as now owned and conducted. Primetech is duly qualified to carry on
business, and is in good standing, in each jurisdiction in which the character
of its properties, owned or leased, or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a Primetech Material Adverse Effect. Copies of the Primetech Articles dated
January 1, 1999 and the by-laws of Primetech previously delivered to Celestica
are accurate and complete as of the date hereof and have not been amended or
superseded, and Primetech has not taken any action to amend or supersede such
documents.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT.
(i) Primetech has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by Primetech and the consummation by Primetech of the
transactions contemplated hereby have been duly authorized by the Primetech
Board of Directors and no other corporate proceedings on the part
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of Primetech are necessary to authorize this Agreement and the transactions
contemplated hereby other than: (i) the approval of the Arrangement by
Shareholders and Optionholders as contemplated herein; and (ii) the approval of
the Information Circular by the Primetech Board of Directors.
(ii) This Agreement has been duly executed and delivered by Primetech
and constitutes its valid and binding obligation, enforceable by Celestica
against Primetech in accordance with its terms, except as the enforcement of
this Agreement may be limited by bankruptcy, insolvency and other Laws affecting
the enforcement of creditors' rights generally and subject to the qualification
that equitable remedies may only be granted in the discretion of a court of
competent jurisdiction.
(iii) The execution and delivery by Primetech of this Agreement and the
performance by it of its obligations hereunder, after obtaining any necessary
regulatory, court and shareholder approvals, will not:
(i) violate, conflict with or result in a breach of any
provision of:
(A) the constating documents of Primetech or the
Subsidiary;
(B) any agreement, contract, indenture, deed of
trust, mortgage, bond, instrument, licence,
franchise or permit to which it or the
Subsidiary is a party or by which it or the
Subsidiary is bound; or
(C) any Law to which it or the Subsidiary is
subject or by which it or the Subsidiary is
bound;
(ii) except as disclosed in the Primetech Disclosure
Statement, give rise to any right of termination, or
acceleration of indebtedness, or cause any
indebtedness to come due before its stated maturity
or give rise to any right of termination under any
agreement, contract, indenture, deed of trust,
mortgage, bond, instrument, licence, franchise or
permit which is material to Primetech and the
Subsidiary taken as a whole; or
(iii) give rise to any rights of first refusal or change in
control or influence or any restriction or limitation
under any such agreement, contract, indenture, deed
of trust, mortgage, bond, instrument, licence,
franchise or permit, or result in the imposition of
any Encumbrance upon any of Primetech's assets or the
Subsidiary's assets,
other than any such violations, conflicts, breaches, rights or Encumbrances as
will not, individually or in the aggregate, have a Primetech Material Adverse
Effect or prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
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4.3 CAPITALIZATION.
(i) The authorized equity capital of Primetech consists of an unlimited
number of Primetech Common Shares, and an unlimited number of preferred shares,
issuable in series. As at May 28, 2001, 15,491,090 Primetech Common Shares and
no preferred shares are issued and outstanding. All outstanding Primetech Common
Shares have been duly authorized and are validly issued and outstanding as fully
paid and non-assessable shares.
(ii) As at May 28, 2001, 1,312,008 Primetech Options are outstanding,
providing for the issuance of 1,312,008 Primetech Common Shares upon the
exercise thereof, and the terms of Primetech Options granted (including exercise
price, vesting and the name of the person to whom they have been granted) have
been disclosed in the Primetech Disclosure Statement. No Primetech Options have
been granted since May 28, 2001.
(iii) Except as described in the Primetech Disclosure Statement, there
are no options, warrants, conversion privileges, calls or other rights (whether
pre-emptive, contingent or otherwise and including any rights pursuant to any
shareholder rights plan of Primetech), agreements, arrangements, commitments or
obligations of Primetech or the Subsidiary to issue or sell any shares of any
capital stock of Primetech or the Subsidiary or securities or obligations of any
kind convertible into or exchangeable for any shares of capital stock of
Primetech or the Subsidiary, nor are there outstanding any stock appreciation
rights, phantom equity or similar rights, agreements, arrangements or
commitments based upon the book value, income or any other attribute of
Primetech or the Subsidiary. There are no outstanding contractual obligations of
Primetech or the Subsidiary to repurchase, redeem or otherwise acquire any
outstanding Primetech Common Shares or with respect to the voting or disposition
of any outstanding Primetech Common Shares.
(iv) There are no outstanding bonds, debentures or other evidences of
indebtedness of Primetech or the Subsidiary having the right to vote (or that
are convertible into or exercisable for securities having the right to vote)
with Shareholders on any matter.
4.4 SUBSIDIARY.
The Subsidiary is the sole subsidiary of Primetech and is
validly existing as a corporation in good standing under the CBCA, has full
corporate power and authority to own its assets and conduct its business as now
owned and conducted by it and is duly qualified to carry on business in each
jurisdiction in which the character of its properties, owned or leased, or the
nature of its activities, makes such qualification necessary, except where the
failure to be so qualified will not have a Primetech Material Adverse Effect.
All of the outstanding shares and other ownership interests of the Subsidiary
are validly issued, fully paid and non-assessable and all such shares and other
ownership interests are owned directly by Primetech free and clear of all
Encumbrances. Neither Primetech nor the Subsidiary has any interest in any other
corporation or entity.
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4.5 TITLE TO PROPERTIES.
Each of Primetech and the Subsidiary has sufficiently good and
valid title to, or an adequate leasehold interest in, its respective material
properties and assets (including real property), in order to allow it to
conduct, and continue to conduct, its business as currently conducted in all
material respects.
4.6 INVENTORIES.
Except as described in the Primetech Disclosure Statement and
except for reasonable variation in the normal course of an electronics
manufacturing services business, the Inventory does not include any material
items of obsolete, custom or customer specific inventory that is not supported
by customer demand or appropriate customer forecasts communicated to Primetech,
the value of which has not been written down on its books of account to net
realizable market value. The Inventory levels of Primetech and the Subsidiary
have been maintained at such amounts as are reasonable and required for the
ongoing operation of their respective businesses.
4.7 INTELLECTUAL PROPERTY.
The Primetech Disclosure Statement includes a complete and
accurate list of all Intellectual Property owned or used by Primetech or the
Subsidiary. Primetech and the Subsidiary own or possess the right to use all
Intellectual Property necessary or desirable for the conduct of their respective
businesses in a manner consistent with past practices, free and clear of any
Encumbrances. No claim has been made that the conduct of the business of
Primetech or the Subsidiary infringes or breaches any Intellectual Property
rights of any person, nor has Primetech or the Subsidiary received any notice
that the conduct of the business, including the use of the Intellectual Property
owned or used by Primetech, infringes upon or breaches any Intellectual Property
rights of any person, and, to the best of the knowledge of Primetech, there has
been no infringement or violation of any of the rights of Primetech or the
Subsidiary in such Intellectual Property. The conduct of the business of
Primetech or the Subsidiary does not infringe upon the Intellectual Property
rights, domestic or foreign, of any person. Primetech is not aware of any state
of facts which casts doubt on the validity or enforceability of any of the
Intellectual Property owned or used by Primetech or the Subsidiary. Primetech
has provided to Celestica a true and complete copy of all contracts and
amendments thereto which comprise or relate to the Intellectual Property owned
or used by Primetech or the Subsidiary. Primetech or the Subsidiary, as
applicable, has renewed or made application to renew all registrations of
Intellectual Property owned by Primetech or the Subsidiary and has paid all
applicable fees, all within the applicable renewal periods. All of the licences
of Intellectual Property used by Primetech or the Subsidiary and, to the best of
the knowledge of Primetech, all of the Intellectual Property licensed under such
licences, are in full force and effect. Neither Primetech nor the Subsidiary is
in breach of or in default in any material respect under any licences of
Intellectual Property owned or used by Primetech. Primetech or the Subsidiary,
as applicable, has employed commercially reasonable measures to identify and
protect all Intellectual Property owned or used by Primetech.
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4.8 INSURANCE.
Policies of insurance in force as of the date hereof naming
Primetech or the Subsidiary as an insured adequately cover all risks reasonably
and prudently foreseeable in the operation and conduct of the business of
Primetech and the Subsidiary. All such policies of insurance shall remain in
full force and effect and shall not be cancelled or otherwise terminated as a
result of the Arrangement and the transactions contemplated hereby.
4.9 CONTRACTS.
Neither Primetech nor the Subsidiary is a party to or bound by
any non-competition agreement or other agreement, obligation, judgment,
injunction, order or decree that purports to: (a) limit the manner or the
localities in which all or a material portion of the business of Primetech or
the Subsidiary is or would be conducted; (ii) limit any business practice of
Primetech or the Subsidiary; or (iii) restrict any acquisition of property by
Primetech or the Subsidiary, other than such contracts which would not,
individually or in the aggregate, have a Primetech Material Adverse Effect.
Neither Primetech nor the Subsidiary is in default under and there exists no
event, condition or occurrence which, after notice or lapse of time or both,
would constitute a default under, any contract, agreement or licence to which it
is a party or by which it is bound which would, if terminated due to such
default, individually or in the aggregate, have a Primetech Material Adverse
Effect.
4.10 COMPLIANCE WITH LAWS; LICENCES.
Each of Primetech and the Subsidiary has complied with and is
in compliance with all Laws and regulations applicable to the operation of their
respective businesses, except where failure so to comply will not, individually
or in the aggregate, have a Primetech Material Adverse Effect, and each of them
has all licences, permits, approvals, consents, certificates, registrations and
authorizations (whether governmental, regulatory or otherwise) ("LICENCES") and
has made all required registrations with, and has submitted all required
regulatory reports and tariff payments to, any Governmental Entity, except where
the failure to so obtain such Licences, or make such registrations, filings or
payments, would not, individually or in the aggregate, have a Primetech Material
Adverse Effect.
4.11 FINANCIAL STATEMENTS.
The audited consolidated financial statements of Primetech for
the financial year ended September 30, 2000, including the notes thereto and the
report of Primetech's auditors thereon, and the unaudited consolidated financial
statements of Primetech as at and for the three months ended December 31, 2000
and the six months ended March 31, 2001, all as contained in the Primetech
Public Documents, in each case prepared in accordance with Canadian generally
accepted accounting principles applied on a basis consistent with prior periods,
are correct and complete and
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present fairly the assets, liabilities (whether accrued, absolute, contingent or
otherwise) and financial condition of Primetech and the Subsidiary on a
consolidated basis as at the respective dates thereof and the revenues, earnings
and results of operations of Primetech and the Subsidiary on a consolidated
basis for the respective periods covered thereby.
4.12 BOOKS AND RECORDS.
The corporate records and minute books of Primetech and the
Subsidiary have been maintained substantially in accordance with all applicable
Laws and are complete and accurate in all material respects. Financial books and
records and accounts of Primetech and the Subsidiary in all material respects:
(a) have been maintained in accordance with good business practices on a basis
consistent with prior years; (b) are stated in reasonable detail and accurately
and fairly reflect the transactions of Primetech and the Subsidiary; and (c)
accurately and fairly reflect the basis for Primetech's consolidated financial
statements. Primetech has devised and maintains a system of internal accounting
control sufficient to provide reasonable assurances that, in all material
respects: (a) transactions are executed in accordance with management's general
or specific authorization; and (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with Canadian generally
accepted accounting principles and to maintain accountability for assets.
4.13 ABSENCE OF CHANGES.
Except as disclosed in the Primetech Disclosure Statement and
the Primetech Public Documents, since October 1, 2000:
(a) Primetech and the Subsidiary have conducted their respective
businesses only in the ordinary and regular course of business
consistent with past practice;
(b) Primetech and the Subsidiary have not incurred any liabilities
or obligations of any nature (whether absolute, accrued,
contingent or otherwise) which would, individually or in the
aggregate, be reasonably likely to have a Primetech Material
Adverse Effect;
(c) there has not been any event which has had or is reasonably
likely to have a Primetech Material Adverse Effect;
(d) there has not occurred any damage, destruction or loss that is
not covered by insurance that would, individually or in the
aggregate, have a Primetech Material Adverse Effect;
(e) there has not been any acquisition or sale by Primetech or the
Subsidiary of property or assets aggregating 5% or more of
Primetech's total consolidated property and assets as at
September 30, 2000;
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(f) other than in the ordinary course of business consistent with
past practice, there has not been any incurrence, assumption
or guarantee by Primetech or the Subsidiary of any debt for
borrowed money, any creation or assumption by Primetech or the
Subsidiary of any Encumbrance, any making by Primetech or the
Subsidiary of any loan, advance or capital contribution to or
investment in any other person or any entering into, amendment
of, relinquishment, termination or non-renewal by Primetech or
the Subsidiary of any contract, agreement, licence, franchise,
lease transaction, commitment or other right or obligation
that would, individually or in the aggregate, have a Primetech
Material Adverse Effect;
(g) Primetech has not declared or paid any dividends or other
distributions on any outstanding securities;
(h) Primetech has not effected or passed any resolution to approve
a split, combination or reclassification of any of its
outstanding securities;
(i) neither Primetech nor the Subsidiary has granted any increase
in aggregate cash compensation payable to any director,
officer or employee, except in the ordinary course of business
consistent with past practice, or granted to any such
director, officer or employee any increase in severance or
termination pay or any increase or modification in any bonus,
pension, insurance or benefit arrangement (including the
granting of any Primetech Options) made to, for or with any
such directors, officers or employees;
(j) there has not been any labour dispute or charge of unfair
labour practice, any activity or proceeding to the best of the
knowledge of Primetech by a labour union or representative
thereof to organize any of the employees of Primetech or the
Subsidiary or any campaign to solicit authorization from
employees to be represented by such labour union; and
(k) Primetech has not effected any material change in its
accounting methods, principles or practices.
4.14 TAXES.
(i) Each of Primetech and the Subsidiary has duly and timely filed all
tax returns required to be filed by it and all such tax returns are true,
complete and correct in all material respects.
(ii) Each of Primetech and the Subsidiary has paid all Taxes which
are due and payable by it on or before the date hereof, other than those
which are being contested in good faith and in respect of which adequate
reserves have been provided in the most recently published financial
statements of Primetech.
- 20 -
(iii) There are no actions, suits, proceedings, investigations or
claims pending against, or to the best of the knowledge of Primetech,
threatened against, Primetech or the Subsidiary in respect of Taxes or any
matters under discussion with any Governmental Entity relating to Taxes
asserted by any such authority, in each case which are likely to have a
Primetech Material Adverse Effect.
(iv) There are no liens for Taxes upon any asset of Primetech or the
Subsidiary except liens for Taxes not yet due.
(v) There are no agreements, waivers or other arrangements providing
for an extension of time with respect to the filing, assessment or
reassessment of any Taxes payable by Primetech or the Subsidiary.
(vi) Each of Primetech and the Subsidiary has collected or withheld
all amounts required to be collected or withheld by it on account of Taxes or
otherwise, and has remitted the same to the appropriate governmental
authority in the manner and within the time required under any applicable
legislation or has set it aside in appropriate accounts for payment when due.
4.15 LITIGATION, ETC.
There is no claim, action, proceeding or investigation pending
or, to the best of the knowledge of Primetech, threatened against or relating to
Primetech or the Subsidiary or affecting any of their properties or assets
before or by any court or governmental or regulatory authority or body or other
Governmental Entity which, if adversely determined, is likely to have a
Primetech Material Adverse Effect or prevent or materially delay the
consummation of the transactions contemplated by this Agreement, nor is
Primetech aware of any basis for any such claim, action, proceeding or
investigation. Neither Primetech nor the Subsidiary is subject to any
outstanding order, writ, injunction or decree which has had or is reasonably
likely to have a Primetech Material Adverse Effect or which would prevent or
materially delay the consummation of the transactions contemplated by this
Agreement.
4.16 ENVIRONMENTAL.
(i) Except for matters that individually or in the aggregate would
not have a Primetech Material Adverse Effect, each of Primetech and the
Subsidiary has been and is in full compliance with and has not been and is
not liable under any applicable federal, provincial, municipal, local or
foreign Laws, statutes, ordinances and regulations, and orders, directives
and decisions rendered by, and policies, instructions, guidelines and similar
guidance of, any ministry, department or administrative or regulatory agency
or other Governmental Entity, including the common law, each as supplemented
or amended from time to time ("ENVIRONMENTAL LAWS") relating to pollution or
the protection of the environment or natural resources, occupational or
public health and safety or the manufacture, processing, distribution, use,
treatment, storage, disposal, discharge, packaging, transport, handling,
containment, clean-up or other remediation or corrective action of any
pollutants, contaminants, chemicals, deleterious substances or industrial,
toxic, hazardous or radioactive wastes
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or substances, including any admixture thereof and specifically including
petroleum and all derivatives thereof or synthetic substitutes therefor and
asbestos or asbestos containing materials ("HAZARDOUS SUBSTANCES").
(ii) Except for matters that individually or in the aggregate would
not have a Primetech Material Adverse Effect, each of Primetech and the
Subsidiary has all Licences required under Environmental Laws for the
operation of its business as currently conducted.
(iii) Except for matters that individually or in the aggregate would
not have a Primetech Material Adverse Effect, neither Primetech nor the
Subsidiary has used or permitted to be used, except in compliance with all
Environmental Laws, any of its properties or facilities or any property or
facility which it previously owned, operated, occupied, used or leased
(during the period of that corporation's ownership, operation, occupation,
use or lease) to generate, manufacture, process, distribute, use, treat,
store, dispose of, transport or handle any Hazardous Substance. To the best
of the knowledge of Primetech and the Subsidiary, no underground storage
tanks are or have been located on the any such property or facility.
(iv) Neither Primetech nor the Subsidiary has ever received any
notice of, or been prosecuted for, non-compliance with any Environmental Laws
or has ever settled any allegation of non-compliance prior to prosecution.
Neither Primetech nor the Subsidiary has received any notices, orders or
directions relating to environmental matters notifying Primetech or the
Subsidiary that it is or may be responsible for or requiring any
investigation, containment, clean-up, remediation or corrective action or any
work, repairs, construction or capital expenditures to be made under
Environmental Laws with respect to the business or any current or former
property or facility owned, operated, occupied, used or leased by Primetech
or the Subsidiary.
(v) Except for matters that individually or in the aggregate would
not have a Primetech Material Adverse Effect, each of Primetech and the
Subsidiary has not caused, contributed to, or permitted, nor has there been,
any release, emission, spill or discharge, in any manner whatsoever, by
Primetech or the Subsidiary or, to the best of the knowledge of Primetech and
the Subsidiary, any other person or entity whatsoever, of any Hazardous
Substance, nor has either of Primetech and the Subsidiary owned, had custody
of or controlled any Hazardous Substance, on, in, around, from or in
connection with any of the current or former properties, assets or facilities
owned, operated, occupied, used or leased by, or under the care, management
or control of, Primetech or the Subsidiary, as principal or agent, or any
entity of which either of Primetech or the Subsidiary is a successor,
assignee, administrator, receiver, receiver manager or trustee (as those
terms are used in the definition of "person responsible" in the NOVA SCOTIA
ENVIRONMENT ACT) or their use, or any such release or presence on or from a
property or facility owned or operated by any third party but with respect to
which Primetech or the Subsidiary, as the case may be, is or may reasonably
be alleged to have liability. All Hazardous Substances and all other wastes
and other materials and substances used, generated or handled in whole or in
part by Primetech or the Subsidiary or resulting from their respective
business have been disposed of, treated and stored by Primetech or the
Subsidiary, as the case may be, in full compliance with all Environmental
Laws and none have been disposed of
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outside of Canada. Except in compliance with Environmental Laws, there are no
Hazardous Materials on any property owned, operated, occupied, used or leased by
Primetech or the Subsidiary, as principal or agent, or any entity of which
either of Primetech or the Subsidiary is a successor, assignee, administrator,
receiver, receiver manager or trustee (as those terms are used in the definition
of "person responsible" in the NOVA SCOTIA ENVIRONMENT ACT).
(vi) Primetech has delivered to Celestica true and complete copies
of all environmental audits, evaluations, assessments, studies, reports,
tests and internal memoranda relating to Primetech, the Subsidiary, their
respective businesses, properties or any other premises for whose conduct
Primetech or the Subsidiary, as the case may be, is or may be held
responsible and its use which is within the possession or control of
Primetech or the Subsidiary, as the case may be.
4.17 EMPLOYEES.
(i) Except for the Employment Agreements, neither Primetech nor the
Subsidiary has entered into any written or oral agreement providing for
severance or termination payments upon a change of control to any director,
officer or employee of Primetech or the Subsidiary.
(ii) Neither Primetech nor the Subsidiary:
(i) is a party to any collective bargaining agreement;
(ii) is subject to any application for certification or,
to the best of the knowledge of Primetech, threatened
or apparent union-organizing campaigns for employees
not covered under a collective bargaining agreement;
or
(iii) has any current, pending or, to the best of the
knowledge of Primetech, threatened strike or
lock-outs.
(iii) Primetech and the Subsidiary have operated in accordance with
all applicable Laws in all material respects with respect to employment and
labour, including, but not limited to, employment and labour standards,
occupational health and safety, employment equity, pay equity, workers'
compensation, human rights and labour relations, and there are no current,
pending or threatened proceedings before any board or tribunal with respect
to any of the areas listed herein.
(iv) The Primetech Disclosure Statement sets out a complete and
accurate list of the names of all individuals who are full-time, part-time or
casual employees or individuals engaged on contract to provide employment
services or sales or other agents or representatives of Primetech or the
Subsidiary ("EMPLOYEES") specifying the date of hire, title or classification
and rate of salary or hourly pay, vacation accrued, and date of hire for each
such Employee. Such list includes all Employees as at the date hereof
including those on lay-off or leave of absence, who have been absent
continually from work for a period in excess of one month, as well as the
reason for their absence.
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(v) Neither Primetech nor the Subsidiary has made any commitment to
provide, or any representation in respect of, any general increase in the
compensation of any Employees (including any increase pursuant to a Primetech
Benefit Plan) or any increase in any such compensation or bonus payable to
any Employee, or to make any loan to, or to engage in any transaction with,
any Employee.
(vi) All accruals for unpaid vacation pay, premiums for unemployment
insurance, health premiums, Canadian Pension Plan premiums, accrued wages,
salaries and commissions, severance pay and employee benefit plan payments
have been reflected in the books and records of Primetech. Neither Primetech
nor the Subsidiary has any liabilities or any obligations whatsoever in
respect of any retired or former Employee.
4.18 BENEFIT PLANS.
(a) Except as disclosed in the Primetech Disclosure Statement:
(i) each Primetech Benefit Plan has been administered,
operated and funded in material compliance with its
terms and all applicable Laws and there are no
unfunded liabilities in respect of such Primetech
Benefit Plan and all required contributions
thereunder have been made in compliance with:
(A) all applicable Laws; and
(B) the terms of such Primetech Benefit Plan; and
(ii) neither Primetech nor the Subsidiary has any pension
or retirement plan or other similar arrangement,
other than the Pension Agreements, and Primetech has
delivered to Celestica true and complete copies of
the Pension Agreements and all actuarial assessments
of Primetech's obligations under the Pension
Agreements.
(ii) Primetech has not taken any action under the Primetech Option
Plan to accelerate the time at which any Primetech Options may be exercised
or to affect the time during which any Primetech Options will be exercisable.
4.19 CUSTOMERS.
Except for changes regarding pricing previously communicated
to Celestica by Primetech, there has been no termination or cancellation of, and
no modification or change in, the business relationship of Primetech or the
Subsidiary with any material customer or material group of customers since
September 30, 2000. There is no reason to believe that the benefits of any
relationship with any of such customers will not continue after the Effective
Date in substantially the same manner as prior to the date of this Agreement.
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4.20 PUBLIC FILINGS.
Primetech has filed with the Securities Authorities, stock
exchanges and all applicable self-regulatory authorities true and complete
copies of all forms, reports, schedules, statements, material change reports and
other documents required to be filed by it since October 1, 1999. The Primetech
Public Documents are, as of their respective dates, in compliance in all
material respects with applicable securities Laws and did not contain any untrue
statement of a material fact that is materially adverse to Primetech and the
Subsidiary and their respective businesses or omit to state a material fact that
is materially adverse to Primetech and the Subsidiary and their respective
businesses required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Primetech has not filed any confidential material change or other
report or other document with any Securities Authority or stock exchange or
other self-regulatory authority which at the date hereof remains confidential.
4.21 APPROVAL OF ARRANGEMENT.
(i) The Primetech Board of Directors unanimously has determined,
after consultation with its financial and legal advisors, that the
Arrangement is fair to the Shareholders and Optionholders and in the best
interests of Primetech and the Primetech Board of Directors has unanimously
resolved to recommend that Shareholders and Optionholders vote in favour of
the Arrangement; provided, however, that the Primetech Board of Directors
expressed no opinion as to the fairness, from a financial point of view, to
the Principal Shareholders of the consideration offered under the Arrangement.
(ii) The Primetech Board of Directors has received a written opinion
from CIBC World Markets Inc. that the consideration to be received under the
Arrangement by Shareholders is fair from a financial point of view to
Shareholders, and such opinion has not been withdrawn or amended or modified
in any material way; provided, however, that CIBC World Markets Inc.
expressed no opinion as to the fairness, from a financial point of view, to
the Principal Shareholders of the consideration offered under the Arrangement.
(iii) After reasonable enquiry, the Primetech Board of Directors has
been advised and believes that each of the members of the Primetech Board of
Directors and the Named Executive Officers (as defined in Primetech's
Management Proxy Circular dated January 10, 2001) intends to vote in favour
of the Arrangement all Primetech Common Shares (including any Primetech
Common Shares issued on the exercise of Primetech Options) of which he or she
is the beneficial owner or over which he or she has direction or control and
all Primetech Options issued to such person.
4.22 FULL DISCLOSURE.
Primetech has disclosed to Celestica all material facts
relating to the business, operations, financial condition, capitalization,
assets, obligations, liabilities and prospects of
- 25 -
Primetech and the Subsidiary, taken as a whole, which would reasonably be
expected to be material to an intending purchaser of all of the outstanding
Primetech Common Shares.
ARTICLE 5
COVENANTS
5.1 PUBLIC STATEMENTS.
Except as required by applicable Law or the requirements of
any stock exchange on which the Primetech Common Shares or Celestica Subordinate
Voting Shares are listed, no Party shall make any public announcement or
statement with respect to the Arrangement or this Agreement without the approval
of Primetech and Celestica, such approval not to be unreasonably withheld or
delayed, except to the extent necessary to comply with Law. Moreover, in any
event, each Party agrees to give prior notice to the other of any public
announcement relating to the Arrangement or this Agreement or the affairs of
Primetech, the Subsidiary or Celestica, and agrees to consult with each other
and to provide the other Parties with a reasonable opportunity to review and
comment on such public announcement prior to issuing each such public
announcement.
5.2 LISTING OF CELESTICA SUBORDINATE VOTING SHARES.
Celestica hereby covenants and agrees with Primetech that,
unless Primetech otherwise agrees, Celestica shall use its best efforts to
obtain: (i) the acceptance of the TSE of the notice of the proposed issuance of
the Celestica Subordinate Voting Shares to be issued pursuant to the Plan of
Arrangement and to be issued upon the exercise of Exchanged Options; (ii)
conditional approval of the listing of such Celestica Subordinate Voting Shares
on the TSE, subject to Celestica filing customary documents with the TSE; and
(iii) the approval of the NYSE of the listing of such Celestica Subordinate
Voting Shares, subject to notice of issuance.
5.3 COVENANTS OF PRIMETECH.
Primetech hereby covenants and agrees with Celestica that
unless Celestica otherwise agrees or as expressly contemplated or permitted by
this Agreement:
(a) in a timely and expeditious manner and in cooperation with
Celestica, it will file, proceed with and diligently prosecute
an application to the Court for the Interim Order on a date
acceptable to Celestica and in any event no later than June
21, 2001;
(b) in a timely and expeditious manner it will:
(i) carry out or cause to be carried out such terms of
the Interim Order as are required under the terms
thereof to be done by Primetech or the Subsidiary;
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(ii) prepare the Information Circular and provide
Celestica with reasonable opportunity to review and
comment thereon, file the Information Circular in all
jurisdictions where the same is required to be filed
and mail the Information Circular as ordered by the
Interim Order in any event not later than the Mailing
Deadline and in accordance with all applicable Laws
of Canada and the United States, complying in all
material respects with all such Laws on the date of
mailing thereof and containing full, true and plain
disclosure of all material facts relating to the
Arrangement and Primetech and the Subsidiary and not
containing any misrepresentation (as defined under
applicable securities Laws) with respect thereto,
where such information has been supplied by or
relates to Primetech or the Subsidiary;
(iii) convene the Meeting in accordance with the Interim
Order;
(iv) provide notice to Celestica of the Meeting and allow
Celestica's representatives to attend the Meeting
unless such attendance is prohibited by the Interim
Order; and
(v) conduct the Meeting in accordance with the Interim
Order, the by-laws of Primetech and applicable Laws,
and in cooperation with Celestica;
(c) in a timely and expeditious manner, it will prepare (in
consultation with Celestica) and file any mutually agreed (or
otherwise required by applicable securities Laws) amendments
or supplements to the Information Circular and mail the same
as required by the Interim Order and in accordance with all
applicable securities Laws, in all jurisdictions where the
same is required, complying in all material respects with all
applicable legal requirements on the date of mailing thereof;
(d) subject to the approval of the Arrangement at the Meeting in
accordance with the provisions of the Interim Order, it will:
(i) as soon as possible thereafter file, proceed with and
diligently prosecute an application for the Final Order in
cooperation with Celestica, and in applying for the Final
Order, it will seek to cause the terms thereof to be
consistent with the provisions of this Agreement and will
oppose any proposal from any interested party that the Final
Order contain any provision inconsistent with this Agreement;
and (ii) if, at any time after the issuance of the Final Order
and prior to the Effective Date, Primetech is required by the
terms of the Final Order or by Law to return to Court with
respect to the Final Order, it shall do so after notice to,
and in consultation and cooperation with, Celestica;
(e) it will carry out the terms of the Interim Order and the Final
Order as soon as possible after the issuance of the Interim
Order and the Final Order and, subject to the receipt of the
Final Order, the satisfaction of the conditions precedent in
favour of Primetech
- 27 -
and the receipt of the written confirmation of Celestica that
the conditions precedent in favour of Celestica have been
satisfied or waived (which such confirmation Celestica shall
provide upon the satisfaction or waiver of all of the said
conditions precedent), file Articles of Arrangement and the
Final Order with the Director in order for the Arrangement to
become effective;
(f) except for proxies and other non-substantive communications,
it will furnish promptly to Celestica a copy of each notice,
report, schedule or other document or communication delivered,
filed or received by Primetech or the Subsidiary in connection
with the Arrangement or the Interim Order, the Meeting, or any
other meeting that securityholders of Primetech are entitled
to attend in such capacity, and any filings under Laws and any
dealings with regulatory agencies in connection with, or in
any way affecting, the transactions contemplated herein;
(g) it shall use commercially reasonable efforts to satisfy (or
cause the satisfaction of) the conditions precedent to its and
Celestica's obligations hereunder set forth in Article 6 to
the extent the same are within its control and to take, or
cause to be taken, all other action and to do, or cause to be
done, all other things necessary, proper or advisable under
all Laws to complete the Arrangement, to the extent
applicable, including using commercially reasonable efforts
to:
(i) obtain all necessary consents, approvals and
authorizations as are required to be obtained by it
under any Law, provided such consents, approvals or
authorizations are satisfactory to Primetech, acting
reasonably;
(ii) effect all necessary registrations, notifications and
filings and submissions of information requested by
Governmental Entities required to be effected by it
in connection with the transactions contemplated
hereby and participate and appear in any proceedings
relating to the transactions contemplated hereby
before Governmental Entities;
(iii) oppose, lift or rescind any injunction or restraining
order or other order or action seeking to stop, or
otherwise adversely affecting the ability of the
Parties to consummate the Arrangement;
(iv) fulfill all conditions precedent to the obligations
of any of the Parties under this Agreement (to the
extent that the fulfilment of such conditions is
under the control of Primetech or the Subsidiary) and
satisfy all provisions of this Agreement and the
Arrangement applicable to it; and
(v) cooperate with Celestica in connection with the
performance by Celestica of its obligations
hereunder;
- 28 -
provided, however, that nothing in this Subsection 5.3(g)
shall require Primetech to waive any condition hereto or limit
the exercise of any right or discretion enjoyed by Primetech
under this Agreement;
(h) it shall not, and shall cause the Subsidiary not to, take any
action, refrain from taking any action, or permit any action
to be taken or not taken, inconsistent with this Agreement or
which would reasonably be expected to significantly delay or
impede the consummation of the Arrangement, provided that
where Primetech is required to take any such action or refrain
from taking such action as a result of this Agreement,
Primetech shall immediately notify Celestica in writing of
such circumstances;
(i) it will, and will cause the Subsidiary to, conduct its and
their respective businesses only in, not take any action
except in, and maintain their respective facilities in, the
ordinary and regular course of business;
(j) it will not directly or indirectly do or permit to occur any
of the following: (i) issue, sell, pledge, lease, dispose of,
encumber or grant rights to use in or agree to issue, sell,
pledge, lease, dispose of, encumber or grant rights to use in:
(A) any additional shares of, or any options, warrants, calls,
conversion privileges or rights of any kind to acquire any
shares of, any capital stock of Primetech (other than pursuant
to the exercise of Primetech Options currently outstanding);
or (B) except in the ordinary course of business, any assets
of Primetech or the Subsidiary; (ii) amend or propose to amend
the articles, by-laws or other constating documents of
Primetech or the Subsidiary; (iii) split, combine or
reclassify any outstanding Primetech Common Shares, or
declare, set aside or pay any dividend or other distribution
payable in cash, stock, property or otherwise with respect to
the Primetech Common Shares; (iv) redeem, purchase or offer to
purchase (or permit the Subsidiary to redeem, purchase or
offer to purchase) any Primetech Common Shares or other
securities of Primetech; (v) approve or adopt a shareholder
rights plan; (vi) reorganize, amalgamate or merge Primetech or
the Subsidiary with any other person, corporation, partnership
or other business organization whatsoever; (vii) reduce the
stated capital of Primetech; (viii) acquire or agree to
acquire (by merger, amalgamation, acquisition of stock or
assets or otherwise) any person, corporation, partnership or
other business organization or division or make any investment
either by purchase of shares or securities, contributions of
capital (other than to the Subsidiary), property transfer or
purchase of, any property or assets of any other person,
corporation, partnership or other business organization; (ix)
incur or commit to incur any indebtedness for borrowed money
or any other material liability or obligation or issue any
debt securities, except for the borrowing of working capital
in the ordinary course of business and consistent with past
practice, or guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any
other person, corporation, partnership or other business
organization, or make any loans or advances, except in the
ordinary course of business consistent with past practice; (x)
except as disclosed in the Primetech
- 29 -
Disclosure Statement, incur or commit to incur capital
expenditures not contemplated by Primetech's existing business
plan as provided to Celestica; (xi) adopt a plan of
liquidation or resolutions providing for the liquidation or
dissolution of Primetech or the Subsidiary; (xii) pay,
discharge or satisfy any material claims, liabilities or
obligations other than the payment, discharge or satisfaction,
in the ordinary course of business consistent with past
practice, of liabilities reflected or reserved against in
Primetech's financial statements scheduled to be paid in the
relevant period of time or incurred in the ordinary course of
business consistent with past practice; or (xiii) authorize,
recommend or propose any release or relinquishment of any
contractual right material to it;
(k) it will not, and will cause the Subsidiary not to: (i) enter
into or modify any employment, severance, or similar
agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination pay to, any officers or
directors other than pursuant to agreements already entered
into and disclosed in the Primetech Public Documents or as
contemplated herein; or (ii) in the case of employees who are
not officers or directors, take any action other than in the
ordinary and regular course of business and consistent with
past practice (none of which actions shall be unreasonable or
unusual) with respect to the grant of any bonuses, salary
increases, severance or termination pay or with respect to any
increase of benefits payable in effect on the date hereof;
(l) it will not, and will cause the Subsidiary not to, adopt or
amend any bonus, profit sharing, incentive, compensation,
stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust,
fund or arrangement for the benefit or welfare of any
employee;
(m) it will use its reasonable commercial efforts to cause its
current insurance (or reinsurance) policies not to be
cancelled or terminated or any of the coverage thereunder to
lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by
insurance and re-insurance companies of nationally recognized
standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies
for substantially similar premiums are in full force and
effect;
(n) it will promptly notify Celestica in writing of any material
adverse change in the normal course of its or the Subsidiary's
business or in the operation of its or the Subsidiary's
properties, of any material governmental or third party
complaints, investigations or hearings (or communications
indicating that the same may be contemplated) and of any event
that has had or is reasonably likely to have a Primetech
Material Adverse Effect;
(o) it will and will cause the Subsidiary to:
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(i) duly and timely file all tax returns required to be
filed by it on or after the date hereof and ensure
that all such tax returns are true, complete and
correct in all material respects;
(ii) timely pay all Taxes which are due and payable (other
than those which are being contested in good faith);
(iii) not make or rescind any material expressed or deemed
election or waiver relating to Taxes;
(iv) not make a request for a tax ruling or enter into a
closing agreement with any taxing authorities;
(v) not settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to
Taxes;
(vi) not change in any material respect any of its methods
of reporting income, deductions or accounting for
income tax purposes from those employed in the
preparation of its income tax return for the taxation
year ended September 30, 2000, except as may be
required by applicable Law; and
(p) it will not authorize or propose, or enter into or modify any
contract, agreement, commitment or arrangement, to do any of
the matters prohibited by the other paragraphs of this Section
5.3.
5.4 COVENANTS OF CELESTICA
Celestica hereby covenants and agrees with Primetech that
unless Primetech otherwise agrees or as expressly contemplated or permitted by
this Agreement:
(a) it shall use its commercially reasonable efforts to satisfy
(or cause the satisfaction of) the conditions precedent to its
and Primetech's obligations hereunder set forth in Article 6
to the extent the same are within its control and to take, or
cause to be taken, all other action and to do, or cause to be
done, all other things necessary, proper or advisable under
Laws to complete the Arrangement, to the extent applicable,
including using commercially reasonable efforts to:
(i) obtain all necessary consents, approvals and
authorizations as are required to be obtained by it
under any Laws, provided such consents, approvals or
authorizations are satisfactory to Celestica, acting
reasonably;
- 31 -
(ii) effect all necessary registrations, notifications and
filings and submissions of information requested by
Governmental Entities required to be effected by it
in connection with the transactions contemplated
hereby and participate and appear in any proceedings
relating to the transactions contemplated hereby
before Governmental Entities;
(iii) oppose, lift or rescind any injunction or restraining
order or other order or action seeking to stop, or
otherwise adversely affecting the ability of the
Parties to consummate the Arrangement;
(iv) fulfill all conditions precedent to the obligations
of any of the Parties (to the extent that the
fulfilment of such conditions is under the control of
Celestica) and satisfy all provisions of this
Agreement and the Arrangement applicable to it; and
(v) cooperate with Primetech in connection with the
performance by Primetech of its obligations
hereunder;
provided, however, that nothing in this Subsection 5.4(a)
shall require Celestica to waive any condition hereto or limit
the exercise of any right or discretion enjoyed by Celestica
under this Agreement;
(b) it shall promptly notify Primetech in writing of any event
that has had or is reasonably likely to have a Celestica
Material Adverse Effect;
(c) it shall cooperate with Primetech in the preparation of the
Information Circular;
(d) all information to be contained in the Information Circular or
any amendment thereto (including any information incorporated
by reference therein) relating solely to Celestica that is
provided to Primetech by Celestica expressly for use in the
Information Circular will be accurate and complete in all
material respects with respect to the subject matter thereof
as at the date thereof and will not contain a
"misrepresentation", as such term is defined in the SECURITIES
ACT (Ontario), with respect to the subject matter thereof;
(e) it shall cooperate with Primetech to cause the transactions
contemplated by this Agreement to be closed within three
business days following the Effective Date;
(f) it shall not make any change in the Celestica Subordinate
Voting Shares, including by way of a consolidation,
subdivision (whether by stock dividend or otherwise) or a
similar transaction, unless Celestica agrees to amend the Plan
of Arrangement to provide that upon the completion of the
Arrangement each holder of Primetech Common Shares shall
receive the securities or other property that such holder
would
- 32 -
have received upon such change in the Celestica Subordinate
Voting Shares on the assumption that the Arrangement had been
completed immediately prior to such change becoming effective;
provided that nothing in this Subsection 5.4(f) shall in any
way whatsoever restrict the right of Celestica to issue
additional Celestica Subordinate Voting Shares or other
securities; and
(g) it shall cause Primetech, following the Effective Date,
either: (i) to continue its currently existing commitments
under the Pension Agreements with Xxxx XxXxxxxxxx and Xxxxxx
Xxxx, including continuing to fund any insurance policies
necessary to fund such obligations, or (ii) to provide
alternative arrangements satisfactory to Xxxx XxXxxxxxxx and
Xxxxxx Xxxx, acting reasonably, that provide Xxxx XxXxxxxxxx
and Xxxxxx Xxxx with, in each case, benefits of equal value to
those contemplated in the Pension Agreements, and Celestica
agrees to assume such obligations in the event that Primetech
ceases to exist as a corporate entity due to liquidation,
winding-up, amalgamation, merger, reorganization or otherwise.
5.5 COVENANTS REGARDING NON-SOLICITATION.
(a) Primetech shall not, directly or indirectly, through any
officer, director, employee, representative or agent of
Primetech or the Subsidiary, solicit, initiate or encourage
(including by way of furnishing information or entering into
any form of agreement, arrangement or understanding) the
initiation of any inquiries or proposals regarding an
Acquisition Proposal, participate in or continue any
discussions or negotiations regarding any Acquisition Proposal
other than with Celestica, and shall not approve or recommend
any Acquisition Proposal or enter into or cause Primetech or
the Subsidiary to enter into any agreement related to any
Acquisition Proposal; provided, however, that subject to
Section 5.7 but notwithstanding the preceding part of this
Subsection 5.5(a) and any other provision of this Agreement,
nothing shall prevent the Primetech Board of Directors from
considering, negotiating, participating in discussions,
approving, recommending to its shareholders or entering into
an agreement and providing information and entering into a
confidentiality agreement pursuant to Subsection 5.5(d) in
respect of an unsolicited BONA FIDE written Acquisition
Proposal (which, if in the form of a take-over bid, may only
be a take- over bid made for all the shares of Primetech) made
by a third party to Primetech or the Primetech Board of
Directors after the date hereof for which adequate financial
arrangements have been made that the Primetech Board of
Directors determines in good faith could reasonably, if
consummated in accordance with its terms, result in a
transaction more favourable from a financial point of view to
Shareholders than the transaction contemplated by this
Agreement, provided that any such determination of the
Primetech Board of Directors shall only be made if the
Primetech Board of Directors has received: (i) advice of
outside counsel to the effect that the Primetech Board of
Directors is required to do so in order to discharge properly
its fiduciary duties; and (ii) an opinion of a
nationally-recognized financial adviser to Primetech
- 33 -
to the effect that such Acquisition Proposal clearly provides
at least 7.5% more value to holders of Primetech Common Shares
than the Arrangement) (any such Acquisition Proposal being
referred to herein as a "SUPERIOR PROPOSAL"), and provided
further that immediately upon receipt of such advice and
opinion Primetech advises Celestica in writing that Primetech
has received such advice and opinion and provides the details
thereof to Celestica in writing.
(b) Primetech shall, and shall cause the Subsidiary to,
immediately cease and cause to be terminated any existing
discussions or negotiations with any parties (other than
Celestica) with respect to any potential Acquisition Proposal.
Primetech agrees that neither it nor the Subsidiary shall
release any third party from any confidentiality agreement or
standstill agreement to which such third party is a party.
Primetech shall immediately request the return or destruction
of all information provided to any third parties who have
entered into confidentiality agreements with Primetech or the
Subsidiary thereof with respect to a possible Acquisition
Proposal, and shall use all reasonable efforts to ensure that
such requests are honoured.
(c) Primetech shall notify Celestica forthwith, at first orally
and then, as soon as possible thereafter, in writing, of any
current Acquisition Proposals, any future Acquisition Proposal
and any potential Acquisition Proposal of which directors or
senior officers of Primetech or the Subsidiary become aware,
or any amendments to the foregoing, or any request for
non-public information relating to Primetech or the Subsidiary
in connection with an Acquisition Proposal or for access to
the properties, books or records of Primetech or the
Subsidiary by any person or entity that informs Primetech or
the Subsidiary that it is considering making, or has made, an
Acquisition Proposal. Such notice shall include a description
of the material terms and conditions of any proposal and
provide such details of the proposal, inquiry or contact as
Celestica may reasonably request, including the identity of
the person making such proposal, inquiry or contact.
(d) If Primetech receives a request for material non-public
information from a person who proposes a BONA FIDE Acquisition
Proposal (the existence and content of which have been
disclosed to Celestica), and the Primetech Board of Directors
determines that such proposal could reasonably be a Superior
Proposal pursuant to Subsection 5.5(a), having received the
advice and opinion referred to therein, then, and only in such
case, the Primetech Board of Directors may, subject to the
execution of a confidentiality and standstill agreement which,
in any event, is no less favourable to Primetech and no more
favourable to the counterparty than the confidentiality and
standstill provisions of the Celestica NDA, provide such
person with access to information regarding Primetech or the
Subsidiary; provided, however, that the person making the
Acquisition Proposal shall not be precluded thereunder from
making the Acquisition Proposal; and provided further that
Primetech sends a copy of any such confidentiality agreement
to Celestica immediately upon its execution
- 34 -
and Celestica is provided with a list of or copies of the
information provided to such person and immediately provided
with access to similar information to which such person was
provided.
(e) Primetech shall ensure that its and the Subsidiary's officers,
directors and employees and any financial advisors or other
advisors or representatives retained by it are aware of the
provisions of this Section 5.5, and it shall be responsible
for any breach of this Section 5.5 by its financial advisors
or other advisors or representatives.
5.6 NOTICE BY PRIMETECH OF SUPERIOR PROPOSAL DETERMINATION.
(a) Primetech shall not accept, approve, recommend or enter into
any agreement in respect of an Acquisition Proposal (other
than a confidentiality agreement contemplated by Subsection
5.5(d)) on the basis that it constitutes a Superior Proposal
unless (i) it has provided Celestica with a copy of the
Acquisition Proposal document which the Primetech Board of
Directors has determined could reasonably be a Superior
Proposal pursuant to Subsection 5.5(a), and (ii) five Business
Days shall have elapsed from the later of the date Celestica
received notice of the determination to accept, approve,
recommend or enter into an agreement in respect of such
Acquisition Proposal and the date Celestica received a copy of
the Acquisition Proposal.
(b) During such five Business Day period, Primetech acknowledges
that Celestica shall have the opportunity, but not the
obligation, to offer to amend the terms of this Agreement and
the Arrangement. The Primetech Board of Directors will review
any offer by Celestica to amend the terms of this Agreement in
good faith in order to determine, in its discretion exercising
its fiduciary duties, whether Celestica's offer upon
acceptance by Primetech would be at least as favourable from a
financial point of view as the Acquisition Proposal. If the
Primetech Board of Directors so determines, it will enter into
an amended agreement with Celestica reflecting Celestica's
amended proposal. If the Primetech Board of Directors
continues to believe, in good faith and after consultation
with financial advisors and outside counsel, that the
Acquisition Proposal is nonetheless more favourable from a
financial point of view and therefore rejects Celestica's
amended proposal, Primetech will forthwith pay to Celestica
the payment payable to Celestica under Section 5.7 as required
thereunder.
(c) Primetech also acknowledges and agrees that each successive
modification of any Acquisition Proposal shall constitute a
new Acquisition Proposal for purposes of the requirement under
Clause (ii) of Subsection 5.6(a) to initiate an additional
five Business Day notice period.
- 35 -
5.7 BREAK FEE EVENT.
If (a) this Agreement is terminated by Primetech pursuant to
Section 7.3(e); (b) this Agreement is terminated by Celestica pursuant to
Section 7.3(c); (c) this Agreement is terminated by Celestica pursuant to
Section 7.3(b): (i) through the fault (whether by commission or omission) of
Primetech failing to submit the Arrangement for approval to the Shareholders and
Optionholders as obligated hereunder, or (ii) as a result of a breach by
Primetech of any of the covenants in Section 5.5 or 5.6; or (d) an Acquisition
Proposal shall have been made to Primetech and made known to the Shareholders
generally or have been made directly to the Shareholders generally or any person
shall have publicly announced an intention to make an Acquisition Proposal and
such Acquisition Proposal or announced intention shall not have been withdrawn
prior to the Meeting, there is a failure to obtain the approval of the
Arrangement by the Shareholders and Optionholders at the Meeting, and this
Agreement is terminated by either Celestica or Primetech pursuant to Section
7.3(d) and within twelve months after such termination Primetech shall have
entered into an agreement (a "SUBSEQUENT AGREEMENT") with respect to a
transaction that would constitute an Acquisition Proposal if it were the subject
of a proposal and such transaction is thereafter completed or within such
twelve-month period a transaction that would constitute an Acquisition Proposal
is completed with or by any third party and whether or not a Subsequent
Agreement is entered into by Primetech with respect to such transaction, then
Primetech shall pay to Celestica, one Business Day following the termination of
this Agreement and, in the case of (d) above, one Business Day following the
completion of such transaction, Cdn.$11.5 million in immediately available funds
to an account designated by Celestica.
5.8 EMPLOYMENT AGREEMENTS AND OPTIONS.
(a) Primetech shall use its best efforts to enter into agreements, in
form and substance satisfactory to Celestica, to terminate and replace the
Employment Agreements, effective at or prior to the Effective Time.
(b) Primetech shall not take any action under the Primetech Option Plan
to accelerate the time at which any Primetech Options may be exercised or to
affect the time during which any Primetech Options will be exercisable.
5.9 ACCESS TO INFORMATION AND PROPERTIES.
Subject to the Celestica NDA and applicable Law, upon
reasonable notice, Primetech shall (and shall cause the Subsidiary to) afford
Celestica's officers, employees, counsel, accountants and other authorized
representatives and advisors reasonable access, during normal business hours
from the date hereof and until the earlier of the Effective Date or the
termination of this Agreement, to its properties, books, contracts and records
as well as to its management personnel as Celestica may reasonably request.
Without limiting the foregoing, Celestica and its representatives, agents and
contractors may enter upon the real properties owned, operated, occupied, used
or leased by Primetech or the Subsidiary and conduct such environmental and
public and occupational health and
- 36 -
safety investigations as Celestica may consider to be desirable, including Phase
II or other intrusive testing, sampling and analysis, and each of Primetech and
the Subsidiary shall fully cooperate in all reasonable ways and ensure that its
employees and others under its direction or control fully cooperate in
connection with the conduct thereof. Nothing in the foregoing shall require
Primetech to disclose information subject to a written confidentiality agreement
with third parties, provided that Primetech shall use reasonable commercial
efforts to obtain the consent of any third party to such disclosure, if
requested by Celestica and (ii) Primetech shall disclose such information as may
be reasonably necessary for the purpose of preparing submissions or applications
in order to obtain any regulatory approvals required in connection with the
Arrangement.
5.10 FURTHER ASSURANCES.
Subject to the conditions herein provided, each Party agrees,
as soon as reasonably practicable following the date hereof: (i) to actively and
diligently pursue all regulatory and other approvals and consents (including, if
required in the case of Celestica, exemptions from the requirements of any stock
exchange or securities regulatory authority for shareholder approval for the
issuance of Celestica Subordinate Voting Shares hereunder) necessary to
consummate the Arrangement; (ii) to use reasonable commercial efforts to make
all necessary registrations and filings (including filings under applicable Laws
and submissions of information requested by Governmental Entities) to obtain
same; and (iii) to use all reasonable commercial efforts to take, or cause to be
taken, all action and to do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective as promptly as is
practicable the Arrangement and the other transactions contemplated by this
Agreement, including the execution and delivery of such documents as the other
Parties hereto may reasonably require. Each of the Parties hereto, where
appropriate, shall reasonably co-operate with the other Parties in taking such
actions.
5.11 DIRECTORS' AND OFFICERS' INSURANCE.
Celestica agrees that for the period from the Effective Date
until the sixth anniversary of the Effective Date, Celestica shall cause
Primetech or any successor to Primetech to maintain directors' and officers'
insurance coverage having terms and conditions no less beneficial in all
material respects to the directors and officers of Primetech than those
contained in the policy in effect on the date hereof, for all present and former
directors and officers of Primetech, covering claims made prior to or within six
years after the earlier of the resignation of such director or officer or the
Effective Date.
- 37 -
ARTICLE 6
CONDITIONS TO THE ARRANGEMENT
6.1 MUTUAL CONDITIONS PRECEDENT.
The respective obligations of Celestica and Primetech to
complete the Arrangement and to file articles of arrangement to give effect to
the Arrangement shall be subject to the satisfaction of the following
conditions:
(a) the Plan of Arrangement, either with or without amendment,
shall have been approved at the Meeting in accordance with the
Interim Order;
(b) the Arrangement shall have been approved by Shareholders and
Optionholders at the Meeting in accordance with Section 2.5;
(c) the Interim Order and the Final Order shall have been obtained
in form and substance satisfactory to each of Celestica and
Primetech, acting reasonably and shall not have been set aside
or modified in a manner unacceptable to such Parties on appeal
or otherwise;
(d) there shall not exist any prohibition at Law against the
completion of the Arrangement or the acquisition by Celestica
of Primetech Common Shares pursuant thereto; and
(e) the TSE shall have provided conditional listing approval of
the Celestica Subordinate Voting Shares to be issued pursuant
to the Plan of Arrangement or to be issued pursuant to the
exercise of Exchanged Options, subject to Celestica filing
customary documents with the TSE, and the NYSE shall have
approved of the listing of such Celestica Subordinate Voting
Shares, subject to notice of issuance.
The foregoing conditions are for the mutual benefit of
Celestica on the one hand and Primetech on the other hand and may be waived, in
whole or in part, by either of them at any time. If any of the said conditions
precedent shall not be complied with or waived as aforesaid on or before August
31, 2001 or, if earlier, the date required for the performance thereof, then
either Celestica or Primetech may terminate this Agreement by written notice to
the other Parties in circumstances where the failure to satisfy any such
condition is not the result, directly or indirectly, of such terminating Party's
breach of this Agreement; provided, however, that if any such condition that has
not been waived by the terminating Party cannot be complied with on or before
August 31, 2001 as a result of an injunction or order made by a court or
regulatory authority of competent jurisdiction (provided that such injunction or
order is being contested or appealed) the deadline for complying with such
condition shall be extended for a period ending on the earlier of September 30,
2001 and
- 38 -
such date as is the earliest date on which such condition may be complied with
following the date on which such injunction or order ceases to be in effect.
6.2 CELESTICA CONDITIONS PRECEDENT.
The obligations of Celestica to complete the Arrangement shall
be subject to the satisfaction of the following conditions:
(a) the representations and warranties made by Primetech in this
Agreement which are qualified by materiality shall be true and
correct as of the Effective Date as if made on and as of such
date (except in each case to the extent such representations
and warranties speak as of an earlier date, in which event
such representations and warranties shall be true and correct
as of such earlier date), and all other representations and
warranties made by Primetech in this Agreement which are not
so qualified shall be true and correct in all material
respects as of the Effective Date as if made on and as of such
date (except in each case to the extent such representations
and warranties speak as of an earlier date, in which event
such representations and warranties shall be true and correct
as of such earlier date), and Primetech shall have provided to
Celestica the certificate of two officers of Primetech
certifying such accuracy on the Effective Date;
(b) Primetech shall have complied with its covenants herein, and
Primetech shall have provided to Celestica the certificate of
two officers of Primetech certifying that Primetech has so
complied with its covenants herein;
(c) all requisite regulatory approvals, reviews or decisions
(including those of any stock exchanges or securities or other
regulatory authorities) required for the completion of the
Arrangement shall have been obtained or concluded on terms
satisfactory to Celestica, acting reasonably;
(d) (i) no act, action, suit or proceeding shall have been
threatened or taken before or by any Governmental Entity or
private person (including any individual, corporation, firm,
group or other entity) in Canada or elsewhere, whether or not
having the force of Law, and (ii) no Law shall have been
proposed, enacted, promulgated or applied:
(A) to cease trade, enjoin, prohibit or impose
materially adverse limitations or conditions
on the consummation of the Arrangement or on
the right of Celestica to own or exercise
full rights of ownership of the Primetech
Common Shares to be acquired by it under the
Arrangement or any of them; or
(B) which, if the Arrangement was consummated,
(x) would require Primetech or the
Subsidiary to dispose of a material asset,
impose
- 39 -
materially adverse limitations or conditions
on the business or operations of Primetech
and the Subsidiary, or impose material fines
or penalties on Primetech or the Subsidiary
and (y) such disposition, limitations, fines
or penalties would have a Primetech Material
Adverse Effect or a Celestica Material
Adverse Effect;
(e) either: (i) the Commissioner of Competition under the
Competition Act (the "COMMISSIONER") shall have issued an
advance ruling certificate under section 102 of the
Competition Act in respect of the Arrangement and shall not
have subsequently withdrawn or purported to have withdrawn
such advance ruling certificate prior to Effective Date or
shall not have stated or otherwise indicated that he has
obtained new information as a result of which he is no longer
satisfied that he would not have sufficient grounds on which
to apply to the Competition Tribunal under section 92 of the
Competition Act with respect to the Arrangement; (ii) the
applicable waiting period under section 123 of the Competition
Act shall have expired, and the Commissioner or his authorized
representative shall have advised Celestica (on terms and in a
form satisfactory to Celestica) that the Commissioner does not
intend to make an application under section 92 of the
Competition Act in respect of the Arrangement and neither the
Commissioner nor any of his representatives shall have
rescinded or amended such advice; or (iii) the Commissioner or
his authorized representative shall have advised Celestica (on
terms and in a form satisfactory to Celestica) that the
Commissioner does not intend to make an application under
section 92 of the Competition Act in respect of the
Arrangement and neither the Commissioner nor any of his
representatives shall have rescinded or amended such advice
and the Commissioner or his authorized representative shall
have provided the Parties with a waiver from complying with
Part IX of the Competition Act under section 113(c);
(f) the number of Primetech Common Shares held by Shareholders
that have exercised Dissent Rights at or prior to the Meeting
shall not exceed 10% of the number of Primetech Common Shares
outstanding immediately prior to the Effective Time;
(g) Primetech shall have entered into agreements, in form and
substance satisfactory to Celestica, to terminate and replace
the Employment Agreements, effective at or prior to the
Effective Time;
(h) Primetech shall have entered into agreements, in form and
substance satisfactory to Celestica, to terminate and replace
the Pension Agreements effective at or prior to the Effective
Time;
(i) there shall not exist and shall not have occurred (or, if
there does exist or shall have previously occurred, there
shall not have been disclosed, generally or to Celestica in
writing) any change that has a Primetech Material Adverse
Effect and no fact or
- 40 -
information shall have come to Celestica's attention that
materially and adversely affects its assessment of Primetech's
business, operations, assets, properties, conditions
(financial or otherwise) or prospects;
(j) Celestica shall not have become aware of any untrue statement
of a material fact in the Primetech Public Documents, or an
omission to state a material fact that is required to be
stated or that is necessary to make a statement not misleading
in the light of the circumstances in which it was made, in
either case that is adverse to Primetech; and
(k) Celestica shall have received certificates signed by each of
Xxxx XxXxxxxxxx, Xxxxxx Xxxx and Xxxxx Xxxxx, in each case
without personal liability, certifying that: (a) such
individual has read the representations and warranties of
Primetech contained in the Arrangement Agreement and has made
or has caused to be made such enquiries and investigations as
are necessary or advisable in the circumstances to verify the
accuracy of such representations and warranties; and (b) the
representations and warranties of Primetech contained in this
Agreement which are qualified by materiality are true and
correct on and as of the Effective Date as if made on and as
of such date (except in each case to the extent such
representations and warranties speak as of an earlier date, in
which event such representations and warranties were true and
correct as of such earlier date), and all other
representations and warranties of Primetech made in this
Agreement which are not so qualified are true and correct in
all material respects on and as of the Effective Date as if
made on and as of such date (except in each case to the extent
such representations and warranties speak as of an earlier
date, in which event such representations and warranties were
true and correct as of such earlier date).
The foregoing conditions precedent are for the benefit of
Celestica and may be waived, in whole or in part, by Celestica in writing at any
time. If any of the said conditions shall not be complied with or waived by
Celestica on or before August 31, 2001 or, if earlier, the date required for the
performance thereof, then Celestica may terminate this Agreement by written
notice to the other Parties in circumstances where the failure to satisfy any
such condition is not the result, directly or indirectly, of Celestica's breach
of this Agreement; provided, however, that if any such condition that has not
been waived by the Celestica cannot be complied with on or before August 31,
2001 as a result of an injunction or order made by a court or regulatory
authority of competent jurisdiction (provided that such injunction or order is
being contested or appealed) the deadline for complying with such condition
shall be extended for a period ending on the earlier of September 30, 2001 and
such date as is the earliest date on which such condition may be complied with
following the date on which such injunction or order ceases to be in effect.
- 41 -
6.3 PRIMETECH CONDITIONS PRECEDENT.
The obligations of Primetech to complete the Arrangement shall
be subject to the satisfaction of the following conditions:
(a) the representations and warranties made by Celestica in this
Agreement which are qualified by materiality shall be true and
correct as of the Effective Date as if made on and as of such
date (except in each case to the extent such representations
and warranties speak as of an earlier date, in which event
such representations and warranties shall be true and correct
as of such earlier date), and all other representations and
warranties made by Celestica in this Agreement which are not
so qualified shall be true and correct in all material
respects as of the Effective Date as if made on and as of such
date (except in each case to the extent such representations
and warranties speak as of an earlier date, in which event
such representations and warranties shall be true and correct
as of such earlier date), and Celestica shall have provided to
Primetech the certificate of two officers of Celestica
certifying such accuracy on the Effective Date;
(b) Celestica shall have complied with its covenants herein, and
Celestica shall have provided to Primetech the certificate of
two officers of Celestica certifying that Celestica has so
complied with its covenants herein;
(c) all requisite regulatory approvals, reviews or decisions
(including those of any stock exchanges or securities or other
regulatory authorities) required for the completion of the
Arrangement shall have been obtained or concluded on terms
satisfactory to Primetech, acting reasonably;
(d) (i) no act, action, suit or proceeding shall have been
threatened or taken before or by any Governmental Entity or
private person (including any individual, corporation, firm,
group or other entity) in Canada or elsewhere, whether or not
having the force of Law, and (ii) no Law shall have been
proposed, enacted, promulgated or applied:
(A) to cease trade, enjoin, prohibit or impose
materially adverse limitations or conditions
on the consummation of the Arrangement or on
the issuance of the Celestica Subordinate
Voting Shares to be issued pursuant to this
Agreement; or
(B) which, if the Arrangement was consummated,
(x) would require Celestica or any of its
subsidiaries to dispose of a material asset,
impose materially adverse limitations or
conditions on the business or operations of
Celestica and its subsidiaries, taken as a
whole, or impose material fines or penalties
on Celestica or any of its subsidiaries and
(y) such disposition, limitations, fines or
penalties
- 42 -
would have a Primetech Material Adverse
Effect or a Celestica Material Adverse
Effect; and
(e) there shall not exist and shall not have occurred (or, if
there does exist or shall have previously occurred, there
shall not have been disclosed, generally or to Primetech in
writing) any change that has a Celestica Material Adverse
Effect.
The foregoing conditions precedent are for the benefit of
Primetech and may be waived, in whole or in part, by Primetech in writing at any
time. If any of the said conditions shall not be complied with or waived by
Primetech on or before August 31, 2001 or, if earlier, the date required for the
performance thereof, then Primetech may terminate this Agreement by written
notice to Celestica in circumstances where the failure to satisfy any such
condition is not the result, directly or indirectly, of Primetech's breach of
this Agreement; provided, however, that if any such condition that has not been
waived by Celestica cannot be complied with on or before August 31, 2001 as a
result of an injunction or order made by a court or regulatory authority of
competent jurisdiction (provided that such injunction or order is being
contested or appealed) the deadline for complying with such condition shall be
extended for a period ending on the earlier of September 30, 2001 and such date
as is the earliest date on which such condition may be complied with following
the date on which such injunction or order ceases to be in effect.
6.4 NO WAIVER, ETC.
The conditions under Section 6.1 are for the benefit of
Primetech and Celestica only, the conditions under Section 6.2 are for the
exclusive benefit of Celestica and the conditions under Section 6.3 are for the
exclusive benefit of Primetech, and may be asserted by Celestica or Primetech,
as the case may be, at any time, regardless of the circumstances giving rise to
such assertion, including any action or inaction by Celestica or Primetech, as
the case may be. Celestica or Primetech may waive any condition for its benefit
in whole or in part at any time and from time to time, both before and after the
Effective Date, without prejudice to any of their other respective rights. The
failure of Celestica or Primetech at any time to exercise any of the foregoing
rights will not be deemed a waiver of any such right and each such right will be
deemed an ongoing right which may be asserted at any time and from time to time.
6.5 MERGER OF CONDITIONS.
The conditions set out in Section 6.1, 6.2 and 6.3 shall be
conclusively deemed to have been satisfied, waived or released upon filing of
the Articles of Arrangement as contemplated by this Agreement and the issuance
of a certificate of arrangement in respect thereof under the CBCA. Primetech
acknowledges and agrees that it shall have no right to file Articles of
Arrangement unless such conditions have been satisfied, fulfilled or waived.
- 43 -
ARTICLE 7
AMENDMENT, TERMINATION AND WAIVER
7.1 AMENDMENT.
(i) This Agreement (excluding Exhibit A, which may be amended as
provided therein), may be amended by written agreement of the Parties at any
time and from time to time before or after the holding of the Meeting but not
later than the Effective Date without, subject to applicable Law, further notice
to or authorization on the part of the Shareholders or Optionholders.
(ii) The Parties mutually agree that if a Party proposes any amendment
or amendments to this Agreement or to the Plan of Arrangement, the other Parties
will act reasonably in considering such amendment and if the other Parties and
the Shareholders are not prejudiced by reason of any such amendment, the other
Parties will cooperate in a reasonable fashion with the Party proposing the
amendment so that such amendment can be effected subject to applicable Law and
the rights of the Shareholders.
7.2 MUTUAL UNDERSTANDING REGARDING AMENDMENTS.
In addition to the transactions contemplated hereby or at the
request of a Party, the Parties will continue from and after the date hereof and
through and including the Effective Date, to use their respective commercially
reasonable efforts to maximize present and future planning opportunities for
Shareholders, for Celestica and for Primetech and the Subsidiary as and to the
extent that the same shall not prejudice any Party or its securityholders. The
Parties will ensure that such planning activities do not impede the progress of
the Arrangement in any material way.
The Parties mutually agree that if a Party proposes any other
amendment or amendments to this Agreement or to the Plan of Arrangement,
Primetech on the one hand and Celestica on the other hand will act reasonably in
considering such amendments and, if the other Party or Parties and their
shareholders are not prejudiced by reason of any such amendment, the other Party
or Parties will cooperate in a reasonable fashion with the Party proposing the
amendment so that the amendment can be effected subject to applicable Laws and
the rights of the Shareholders.
7.3 TERMINATION.
This Agreement may be terminated at any time prior to the
Effective Date:
(a) by mutual written consent of Celestica and Primetech;
(b) as provided in Sections 6.1, 6.2 and 6.3;
- 44 -
(c) by Celestica, if the Primetech Board of Directors shall have
withdrawn or modified in a manner adverse to Celestica its
approval or recommendation of the Arrangement, or approved or
recommended any Superior Proposal;
(d) by Celestica or by Primetech, if the Meeting shall have been
held and completed and the approval of the Arrangement by the
Shareholders and Optionholders required by Section 6.1(b)
shall not have occurred; or
(e) by Primetech, upon any determination by Primetech, after the
conclusion of the process set out in Sections 5.5 and 5.6,
that an Acquisition Proposal constitutes a Superior Proposal.
7.4 WAIVER.
At any time prior to the Effective Time, any Party may: (a)
extend the time for the performance of any of the obligations or other acts of
any other Party thereto; or (b) waive compliance with any of the agreements of
any other Party or with any conditions to its own obligations, in each case only
to the extent such obligations, agreements and conditions are intended for its
benefit; provided that no such extension or waiver shall be binding unless made
in writing.
7.5 EFFECT OF TERMINATION.
If this Agreement is terminated as provided in Section 7.3,
there shall be no liability or further obligation on the part of any Party or
any of their respective shareholders, officers or directors, except for
liability arising from a wilful breach of any representations, warranties or
covenants in this Agreement or fraud (and any action with respect thereto must
be commenced within two years of the date hereof) and except for the obligation
of Primetech to pay any amounts payable by it in accordance with Section 5.7 of
this Agreement which shall survive any termination of this Agreement; provided,
however, that any termination of this Agreement shall not affect the obligations
of the Parties under the Celestica NDA.
ARTICLE 8
GENERAL
8.1 EXPENSES.
The Parties agree that all out-of-pocket third party
transaction expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including legal fees, financial advisor fees
and all disbursements by advisors, shall be paid by the Party incurring such
expenses.
- 45 -
Celestica and Primetech represent and warrant to each other
that, except for the fees payable by Primetech to PricewaterhouseCoopers
Securities Inc. and CIBC World Markets Inc. that are set out in the Primetech
Disclosure Statement and any soliciting dealer fees payable by Primetech, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission, or to the reimbursement of any of its expenses, in
connection with the Arrangement.
8.2 REMEDIES.
The Parties acknowledge and agree that an award of money
damages would be inadequate for any breach of this Agreement by any Party or its
representatives and advisors and that such breach would cause the non-breaching
Party irreparable harm. Accordingly, the Parties agree that, in the event of any
such breach or a threatened breach of this Agreement by one of the Parties,
Primetech (if Celestica is the breaching Party) or Celestica (if Primetech is
the breaching party) will be entitled, without the requirement of posting a bond
or other security, to seek equitable relief, including injunctive relief and
specific performance. Subject to any other provision hereof including Section
7.3 and Section 7.5, such remedies will not be the exclusive remedies for any
breach of this Agreement but will be in addition to all other remedies available
at Law or in equity to each of the Parties.
8.3 NOTICES.
All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or delivered,
or if sent by facsimile transmission, upon receipt of confirmation that such
transmission has been received, to the person at the address set forth below, or
such other address as may be designated in writing hereafter, in the same
manner, by such person. The date of receipt of any such notice or other
communication if delivered personally shall be deemed to be the date of delivery
thereof, or if sent by facsimile transmission the date of such transmission if
sent during normal business hours on a business day, failing which it shall be
deemed to have been received on the next business day.
If to Celestica:
Celestica Inc.
0xx Xxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxx, XX X0X 0X0
Attention: Vice-President and General Counsel
Fax No.: (000) 000-0000
- 46 -
with a copy to:
Celestica Inc.
0xx Xxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxx, XX X0X 0X0
Attention: Senior Vice-President, Mergers & Acquisitions
Fax No.: (000) 000-0000
if to Primetech:
00000 XxxxxXxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: President and Chief Executive Officer
Fax No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx
0000 XxXxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx X. Xxxxxxxxx
Fax No.: (000) 000-0000
Any party may change its address for service from time to time by giving notice
to the other parties in accordance with this Section 8.3.
8.4 INVESTIGATION.
Any investigation by a Party and its advisors shall not
mitigate, diminish or affect the representations and warranties of the other
Party or Parties, as applicable, contained in this Agreement or any document or
certificate given pursuant hereto.
8.5 SEVERABILITY.
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions,
- 47 -
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated and the parties
shall negotiate in good faith to modify the agreement to preserve each Party's
anticipated benefits under the Agreement.
8.6 ENTIRE AGREEMENT, ASSIGNMENT AND GOVERNING LAW.
(i) This Agreement, the Celestica NDA and the Support Agreements, as
the same have been or may be waived or amended, together with all other
documents and instruments referred to herein, constitute the entire agreement
and supersede all other prior agreements and undertakings, both written and
oral, among the Parties or any of them with respect to the subject matter
hereof.
(ii) This Agreement: (i) is not intended to confer upon any other
person any rights or remedies hereunder; (ii) shall not be assigned by operation
of Law or otherwise (except that Celestica may assign all or any portion of its
rights under this Agreement to any wholly-owned subsidiary of Celestica, but no
such assignment shall relieve Celestica of its obligations hereunder); and (iii)
shall be governed in all respects, including validity, interpretation and
effect, by the Laws of the Province of Ontario and the Laws of Canada applicable
therein, without giving effect to the principles of conflict of Laws thereof and
all actions and proceedings arising out of or relating to this Agreement shall
be heard and determined exclusively in the courts of the Province of Ontario.
8.7 BINDING EFFECT.
This Agreement shall be binding upon and shall enure to the
benefit of the Parties hereto and their respective successors and specific
references to "successors" elsewhere in this Agreement shall not be construed to
be in derogation of the foregoing.
8.8 COUNTERPARTS.
This Agreement and any amendment, supplement or restatement
thereof may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of which taken together shall be deemed to
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement to produce more than one counterpart.
8.9 ENGLISH LANGUAGE.
The parties hereto have expressly requested that this
Agreement and the Exhibits thereto be drafted in the English language. Les
parties a la presente ont expressement demande que cette entente ainsi que les
cedules s'y rattachant soient redigees dans la langue anglaise.
- 48 -
IN WITNESS WHEREOF the Parties hereto have executed this
Agreement.
CELESTICA INC.
by /s/ XXXXX XXXX
-----------------------------------------
Xxxxx Xxxx
Senior Vice-President,
Mergers and Acquisitions
PRIMETECH ELECTRONICS INC.
by /s/ XXXX XXXXXXXXXX
-----------------------------------------
Xxxx XxXxxxxxxx
President and Chief Executive Officer
EXHIBIT A
TO THE ARRANGEMENT AGREEMENT
MADE MAY 31, 2001
BETWEEN CELESTICA INC.
AND PRIMETECH ELECTRONICS INC.
PLAN OF ARRANGEMENT UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS.
In this Plan of Arrangement, unless something in the subject
matter or context is inconsistent therewith:
(a) "ARRANGEMENT" means the proposed arrangement under the
provisions of section 192 of the CBCA on the terms and
conditions set forth in this Plan of Arrangement and any
amendment thereto made in accordance with Section 7.1 of the
Arrangement Agreement;
(b) "ARRANGEMENT AGREEMENT" means the agreement made between
Celestica and Primetech dated May 31, 2001 to which this Plan
of Arrangement is attached as Exhibit A and all amendments
thereto;
(c) "ARRANGEMENT RESOLUTION" means the special resolution passed
by the holders of Primetech Common Shares and Primetech
Options at the Meeting (voting together as a single class)
approving the Arrangement;
(d) "BUSINESS DAY" means a day other than a Saturday, Sunday or
day on which Canadian chartered banks are authorized or
required by law to be closed in Toronto, Ontario or Montreal,
Quebec;
(e) "CBCA" means the CANADA BUSINESS CORPORATIONS ACT;
(f) "CELESTICA" means Celestica Inc., a corporation governed by
the OBCA;
(g) "CELESTICA SUBORDINATE VOTING SHARES" means subordinate voting
shares in the capital of Celestica;
A-2
(h) "CELESTICA WEIGHTED AVERAGE TRADING PRICE" means the weighted
average trading price of the Celestica Subordinate Voting
Shares on the TSE for the twenty trading days ending on the
fifth Business Day immediately preceding the Effective Date;
(i) "CONSIDERATION" or "SHARE EXCHANGE RATIO" means, in respect of
each Primetech Common Share or Holdco Share, that portion of a
Celestica Subordinate Voting Share that is equal to:
(i) if the Celestica Weighted Average Trading Price is
less than $68.19 the ratio equal to $15.00 divided by
the Celestica Weighted Average Trading Price
(expressed to two decimal places with amounts less
than 0.005 being rounded down and amounts equal to or
greater than 0.005 being rounded up, in each case to
the nearest one-hundredth of a Celestica Subordinate
Voting Share);
(ii) if the Celestica Weighted Average Trading Price is
greater than $90.91, the ratio equal to $20.00
divided by the Celestica Weighted Average Trading
Price (expressed to two decimal places with amounts
less than 0.005 being rounded down and amounts equal
to or greater than 0.005 being rounded up, in each
case to the nearest one-hundredth of a Celestica
Subordinate Voting Share); and
(iii) in all other circumstances, the ratio equal to 0.22.
(j) "COURT" means the Superior Court of Quebec, District of
Montreal, unless otherwise agreed to by Celestica and
Primetech;
(k) "DEPOSITARY" means CIBC Mellon Trust Company;
(l) "DISSENT RIGHTS" means the right of a Shareholder to dissent
in respect of the Arrangement pursuant to the procedures set
forth in section 190 of the CBCA and Section 3.1;
(m) "EFFECTIVE DATE" means the effective date of the Arrangement,
being the date shown on the certificate of arrangement to be
issued by the Director under the CBCA giving effect to the
Arrangement;
(n) "EFFECTIVE TIME" means 12:01 a.m. (Montreal time) on the
Effective Date;
(o) "EXCHANGED OPTION" has the meaning ascribed thereto in
Subsection 2.2(d);
(p) "HOLDCO" has the meaning ascribed thereto in Section 2.3;
(q) "HOLDCO AGREEMENT" has the meaning ascribed thereto in Section
2.3;
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(r) "HOLDCO ELECTION" has the meaning ascribed thereto in Section
2.3;
(s) "HOLDCO ELECTION DEADLINE" means 5:00 p.m. (Montreal time) on
the day which is seven Business Days immediately preceding the
date of the Meeting;
(t) "HOLDCO SHAREHOLDER" has the meaning ascribed thereto in
Section 2.3;
(u) "HOLDCO SHARE" means a common share in the capital of a Holdco
in respect of which a valid Holdco Election is made;
(v) "INTERIM ORDER" means the interim order of the Court providing
for, among other things, the calling and holding of the
Meeting;
(w) "MEETING" means the meeting of holders of Primetech Common
Shares and Primetech Options to be held for the purpose of
considering the Arrangement and any adjournment(s) or
postponement(s) thereof;
(x) "OBCA" means the BUSINESS CORPORATIONS ACT (Ontario);
(y) "PLAN OF ARRANGEMENT" means this plan of arrangement as the
same may be amended from time to time in accordance with the
terms of Section 5.1;
(z) "PRIMETECH" means Primetech Electronics Inc., a corporation
governed by the CBCA;
(aa) "PRIMETECH ARTICLES" means the Articles of Amalgamation of
Primetech dated October 7, 1997, as amended;
(bb) "PRIMETECH COMMON SHARES" means common shares in the capital
of Primetech;
(cc) "PRIMETECH DISSENTING SHAREHOLDER" means a Shareholder who
exercises such holder's Dissent Rights;
(dd) "PRIMETECH OPTION" means an option to acquire Primetech Common
Shares granted prior to the Effective Date pursuant to the
Primetech Option Plan;
(ee) "PRIMETECH OPTION PLAN" means the stock option plan of
Primetech known as the 1998 Stock Option Plan, as amended;
(ff) "SHAREHOLDER" means a holder of Primetech Common Shares;
(gg) "TAX ACT" means the INCOME TAX ACT (Canada); and
(hh) "TSE" means the Toronto Stock Exchange.
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1.2 APPENDICES.
The following Appendix is attached to this Plan of Arrangement
and forms part hereof:
Appendix 1 - Provisions to be included in Holdco
Agreement
1.3 CONSTRUCTION.
In this Plan of Arrangement, unless otherwise expressly stated
or the context otherwise requires:
(a) references to "herein", "hereby", "hereunder", "hereof" and
similar expressions are references to this Plan of Arrangement
and not to any particular Section, Subsection or Clause;
(b) references to an "Article", "Section", "Subsection" or
"Clause" are references to an Article, Section, Subsection,
Clause or Appendix of or to this Plan of Arrangement;
(c) words importing the singular shall include the plural and VICE
VERSA, words importing gender shall include the masculine,
feminine and neuter genders, and references to a "person" or
"persons" shall include individuals, corporations,
partnerships, associations, bodies politic and other entities,
all as may be applicable in the context;
(d) the use of headings is for convenience of reference only and
shall not affect the construction or interpretation hereof;
(e) the words "includes" and "including", when following any
general term or statement, is not to be construed as limiting
the general term or statement to the specific items or matters
set forth or to similar items or matters, but rather as
referring to all other items or matters that could reasonably
fall within the broadest possible scope of the general term or
statement; and
(f) a reference to a statute or code includes every regulation
made pursuant thereto, all amendments to the statute or code
or to any such regulation in force from time to time, and any
statute, code or regulation which supplements or supersedes
such statute, code or regulation.
1.4 CURRENCY.
All references to currency herein are to lawful money of
Canada unless otherwise specified.
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ARTICLE 2
THE ARRANGEMENT
2.1 ARRANGEMENT AGREEMENT.
This Plan of Arrangement is made pursuant to the provisions of
the Arrangement Agreement and constitutes an arrangement as referred to in
section 192 of the CBCA.
2.2 THE ARRANGEMENT.
Commencing at 12:01 a.m. (Montreal time) on the Effective
Date, subject to the Dissent Rights referred to in Section 3.1, the following
shall occur and be deemed to occur in the following order without any further
act or formality and, except as otherwise noted in this Section 2.2, with each
transaction or event being deemed to occur immediately after the occurrence of
the transaction or event immediately preceding it:
(a) Each Primetech Common Share (other than those held by
Primetech Dissenting Shareholders or any Holdco in respect of
which a valid Holdco Election is made) and each Holdco Share
will be transferred to Celestica in exchange for the
Consideration.
(b) In respect of each Primetech Common Share transferred pursuant
to Section 2.2(a), the name of the holder of such Primetech
Common Share will be removed from the register of holders of
Primetech Common Shares and added to the register of holders
of Celestica Subordinate Voting Shares, and Celestica will be
added to the register of holders of Primetech Common Shares.
The stated capital account in respect of the Celestica
Subordinate Voting Shares issued as consideration for such
Primetech Common Shares shall be increased by an amount equal
to the lesser of: (i) the maximum amount permitted to be added
to the paid-up capital of such Celestica Subordinate Voting
Shares without resulting in a deduction in computing paid-up
capital of the Celestica Subordinate Voting Shares pursuant to
Subsection 85.1(2.1) of the Tax Act, and (ii) the amount
permitted to be added pursuant to the OBCA.
(c) In respect of each Holdco Share transferred pursuant to
Section 2.2(a), the name of the Holdco Shareholder will be
removed from the register of holders of common shares of the
Holdco and Celestica will be added to the register of the
common shares of the Holdco and the name of such Holdco
Shareholder will be added to the register of holders of
Celestica Subordinate Voting Shares. The stated capital
account in respect of the Celestica Subordinate Voting Shares
issued as consideration for such Holdco Shares shall be
increased by an amount equal to the lesser of (i) the maximum
amount permitted to be added to the paid-up capital of such
Celestica Subordinate Voting Shares without resulting in a
deduction in computing paid-up
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capital of the Celestica Subordinate Voting Shares pursuant to
Subsection 85.1(2.1) of the Tax Act, and (ii) the amount
permitted to be added pursuant to the OBCA.
(d) Primetech Options will be treated as follows: (i) each
Primetech Option (including each unvested Primetech Option)
that has not been exercised prior to the Effective Date will
be disposed of and exchanged for a new option (an "EXCHANGED
OPTION") with the same terms as the Primetech Option except as
set out herein (including as to vesting and termination, but
subject to Clause (ii) of this Subsection 2.2(d)); (ii)
thereafter, each such Exchanged Option will entitle its holder
to purchase the number of Celestica Subordinate Voting Shares
equal to the product of (A) the Share Exchange Ratio and (B)
the number of Primetech Common Shares subject to such
Primetech Option immediately prior to the exchange, for an
exercise price per Celestica Subordinate Voting Share equal to
the exercise price per share of such Primetech Option
immediately prior to the exchange divided by the Share
Exchange Ratio; and (iii) Celestica will assume Primetech's
obligations under the Primetech Option Plan and will be
entitled to Primetech's rights thereunder, including the right
to receive the exercise price upon the exercise of Exchanged
Options. If the foregoing calculations result in any Exchanged
Option being exercisable for a fraction of a Celestica
Subordinate Voting Share, then the number of Celestica
Subordinate Voting Shares subject to such Exchanged Option
will be rounded down to the next whole number, and the
aggregate exercise price for such Exchanged Option will be
reduced by the exercise price of such fractional Celestica
Subordinate Voting Share. The Primetech Option Plan will be
deemed to be and shall be amended to give effect to the
foregoing provisions of this Subsection 2.2(d).
(e) In lieu of delivery of fractional Celestica Subordinate Voting
Shares to the holders of Primetech Common Shares or of Holdco
Shares, each holder of Primetech Common Shares or of Holdco
Shares who would otherwise be entitled to receive a fraction
of a Celestica Subordinate Voting Share shall be paid an
amount in cash determined in accordance with Section 4.3
hereof.
2.3 HOLDCO ELECTION.
(a) Shareholders that are resident in Canada for purposes of the
Tax Act ("HOLDCO SHAREHOLDERS") of a corporation ("HOLDCO")
which: (i) was incorporated under the laws of Canada on or
after May 1, 2001; (ii) has never had any assets other than
Primetech Common Shares or cash; (iii) has no liabilities
whatsoever; and (iv) on the Effective Date has, as its only
issued and outstanding securities, a number of common shares
of Holdco equal to the number of Primetech Common Shares which
are owned by such Holdco, may jointly elect in respect of all
the Primetech Common Shares held by such Holdco (the "HOLDCO
ELECTION"), prior to the Holdco Election Deadline, to have all
the issued and outstanding common shares of the Holdco
transferred to Celestica in exchange for the Consideration.
For greater certainty, the Consideration received for such
Holdco Shares shall be identical to the Consideration
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which such Holdco would have been entitled to receive if the
Primetech Common Shares held by such Holdco were acquired
directly by Celestica under the Plan of Arrangement.
(b) Each Holdco Shareholder that has made the Holdco Election will
be required to enter into a share purchase agreement (the
"HOLDCO AGREEMENT") with Celestica providing for the
acquisition by Celestica of all the issued and outstanding
Holdco Shares in accordance with Section 2.2(a) hereof and
containing such representations and warranties, terms and
conditions and indemnities as Celestica may reasonably request
in connection therewith, including, without limitation, the
representations and warranties, terms and conditions and
indemnities set out in Appendix A hereto, and containing the
requirement for the Holdco Shareholders to arrange for the
provision of a legal opinion of such holders' legal counsel in
form satisfactory to Celestica, acting reasonably, in
connection with the purchase and sale of such Holdco Shares.
Failure of any holder of Primetech Common Shares to properly
make a Holdco Election on or prior to the Holdco Election
Deadline or failure of Holdco Shareholders to properly enter
into a Holdco Agreement will disentitle such shareholders to
the Holdco Election.
ARTICLE 3
RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT.
Holders of Primetech Common Shares may exercise Dissent Rights
pursuant to and in the manner set forth in Section 190 of the CBCA and in this
Section 3.1 in connection with the Arrangement as the same may be modified by
the Interim Order or the Final Order; provided that, notwithstanding subsection
190(5) of the CBCA, the written objection to the Arrangement Resolution referred
to in subsection 190(5) of the CBCA must be received by Primetech before 5:00
p.m. (Montreal time) on the Business Day preceding the Meeting. Holders who duly
exercise such Dissent Rights and who:
(a) are ultimately entitled to be paid by Primetech the fair value
for their Primetech Common Shares shall be deemed to have
transferred such shares to Primetech for cancellation on the
Effective Date immediately prior to the first step of the Plan
of Arrangement set out in Subsection 2.2(a) being effective;
or
(b) are ultimately not entitled to be paid by Primetech the fair
value for their Primetech Common Shares shall be deemed to
have participated in the Arrangement on the same basis as any
non-dissenting Shareholder as at and from the Effective Date,
but in no case shall Primetech, Celestica or any other person be required to
recognize such holders as holders of Primetech Common Shares after the Effective
Date, and the names of such holders
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shall be deleted from the applicable register of shareholders on the Effective
Date. For greater certainty, in addition to any other restrictions in section
190 of the CBCA, neither of the following shall be entitled to exercise Dissent
Rights: (i) Holdcos in respect of which a Holdco Election has been made; and
(ii) Shareholders or Holdco Shareholders who vote in favour of the Plan of
Arrangement, enter into a Holdco Agreement or make a Holdco Election.
ARTICLE 4
CERTIFICATES
4.1 ENTITLEMENT OF HOLDERS OF PRIMETECH COMMON SHARES.
Subject to the provisions of Section 4.3, after the Effective
Date, the former holders of Primetech Common Shares will be entitled to receive,
on surrender to the Depositary of the certificates evidencing the Primetech
Common Shares held by them together with such other documents or instruments as
would have been required to effect the transfer of the Primetech Common Shares
under the articles and by-laws of Primetech and such additional documents and
instruments as the Depositary may reasonably require, and the Depositary shall
deliver to such holder, (i) a certificate representing the number of Celestica
Subordinate Voting Shares (rounded down to the nearest whole number) which such
holder has the right to receive, (ii) any dividends or distributions thereon
pursuant to Section 4.2 and (iii) any cash to which such holder is entitled in
lieu of a fractional Celestica Subordinate Voting Share pursuant to Section 4.3,
and the certificate representing such Primetech Common Shares shall be
cancelled. Until surrendered as contemplated by this Section 4.1, each
certificate which immediately prior to the Effective Date represented Primetech
Common Shares shall be deemed on and after the Effective Date to represent only
the right to receive on such surrender (i) the certificate representing
Celestica Subordinate Voting Shares as contemplated by this Section 4.1, (ii)
any dividends or distributions with a record date on or after the Effective Date
theretofore paid or payable with respect to Celestica Subordinate Voting Shares,
as contemplated by Section 4.2, and (iii) a cash payment in lieu of any
fractional Celestica Subordinate Voting Shares as contemplated by Section 4.3.
4.2 DISTRIBUTIONS.
No dividends or other distributions declared or made on or
after the Effective Date with respect to Celestica Subordinate Voting Shares
with a record date on or after the Effective Date shall be paid to the holder of
any unsurrendered certificate which immediately prior to the Effective Date
represented outstanding Primetech Common Shares or Holdco Shares that were
exchanged pursuant to Section 2.2, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 4.3, unless and
until the holder of record of such certificate shall surrender such certificate
in accordance with Section 4.1. Prior to such time, such dividends,
distributions, cash payments in lieu of fractional shares or other amounts will
be made or paid to the Depositary to be held by it in trust for that holder. All
monies so held in trust by the Depositary shall be deposited in an
interest-bearing account and any interest earned on such funds shall be for the
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account of Celestica. Such amount will be provided to the Depositary by
Celestica upon request by the Depositary.
4.3 FRACTIONAL SHARES.
No certificates or scrip representing fractional Celestica
Subordinate Voting Shares will be issued upon the surrender for exchange of
certificates pursuant to Section 4.1 and no dividend, stock split, or other
change in the capital structure of Celestica shall relate to any such fractional
security and such fractional interests shall not entitle the owner thereof to
vote or to exercise any rights as a securityholder of Celestica. In lieu of such
fractional securities, such person otherwise entitled thereto shall receive a
cash payment equal to the amount obtained by multiplying the fraction of a
Celestica Subordinate Voting Share otherwise issuable by the Celestica Weighted
Average Trading Price.
ARTICLE 5
AMENDMENTS
5.1 AMENDMENTS TO PLAN OF ARRANGEMENT.
(a) Celestica and Primetech reserve the right to amend, modify
and/or supplement this Plan of Arrangement at any time and
from time to time prior to the Effective Date, provided that
each such amendment, modification and/or supplement must be
(i) set out in writing, (ii) approved by the other, (iii)
filed with the Court and, if made following the Meeting,
approved by the Court, and (iv) communicated to holders of
Primetech Common Shares and Primetech Options if and as
required by the Court.
(b) Any amendment, modification or supplement to this Plan of
Arrangement may be proposed by Celestica or Primetech at any
time prior to or at the Meeting (provided that the other shall
have consented thereto) with or without any other prior notice
or communication, and if so proposed and accepted by the
persons voting at the Meeting (other than as may be required
under the Interim Order), shall become part of this Plan of
Arrangement for all purposes.
(c) Any amendment, modification or supplement to this Plan of
Arrangement that is approved by the Court following the
Meeting shall be effective only if it is consented to by each
of Celestica and Primetech.
(d) Any amendment, modification or supplement to the Plan of
Arrangement may be made following the Effective Date
unilaterally by Primetech, provided that it concerns a matter
which, in the reasonable opinion of Primetech, is of an
administrative nature required to better give effect to the
implementation of this Plan
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of Arrangement and is not adverse to the financial or economic
interests of Celestica or any holder of Primetech Common
Shares.
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APPENDIX 1
PROVISIONS TO BE INCLUDED IN
HOLDCO AGREEMENT
Each Holdco Agreement shall include the following
representations and warranties, terms and conditions, and indemnities in favour
of Celestica:
I. REPRESENTATIONS AND WARRANTIES OF THE HOLDCO SHAREHOLDERS
Each of the Holdco Shareholders hereby represents and warrants
to Celestica as follows and hereby acknowledges and confirms that Celestica is
relying on such representations and warranties in connection with the purchase
by Celestica of the Holdco Shares:
(a) the execution and delivery of this Holdco Agreement by the
Holdco Shareholders and Holdco and the completion by the
Holdco Shareholders and Holdco of the transactions
contemplated hereby:
(i) will not conflict with, result in the breach of or
constitute a default under the articles, by-laws or
resolutions of Holdco or any agreement, indenture,
contract, lease, deed of trust, licence, option,
instrument or other commitment, whether written or
oral (a "Contract") to which the Holdco Shareholders
or Holdco is a party; and
(ii) do not and will not violate any provision of law or
administrative regulation or any judicial or
administrative award, judgment or decree binding upon
the Holdco Shareholders or Holdco;
(b) each of the Holdco Shareholders is not a non-resident of
Canada for the purposes of the Tax Act;
(c) each Holdco is a resident of Canada for the purposes of the
Tax Act;
(d) this Holdco Agreement has been duly executed and delivered by
each of the Holdco Shareholders and Holdco and is a valid and
binding obligation of each of the Holdco Shareholders and
Holdco enforceable against each of the Holdco Shareholders and
Holdco in accordance with its terms, subject to applicable
bankruptcy, insolvency and other laws affecting the
enforcement of creditors' rights generally and provided that
equitable remedies will only be awarded in the discretion of a
court of competent jurisdiction;
(e) all of the Holdco Shares are registered in the name of, and
beneficially owned by, not more than five Holdco Shareholders
free and clear of all liens, charges, encumbrances, claims and
equities (collectively, "Liens");
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(f) no person has any Contract, warrant or option or any right
capable of becoming a Contract, warrant or option for the
purchase from any of the Holdco Shareholders of any of the
Holdco Shares or from Holdco of any shares or other securities
of Holdco or of any of the [insert number] Primetech Common
Shares held by Holdco (the "Subject Shares");
(g) the Holdco Shares are validly issued and outstanding as fully
paid and non-assessable shares in the capital of Holdco and
are the only issued and outstanding shares in the capital of
Holdco and, as of the Effective Date, the number of Holdco
Shares outstanding is equal to the number of Subject Shares;
(h) Holdco is a corporation duly incorporated on or after May 1,
2001 and duly organized and validly existing under the laws of
Canada;
(i) Holdco is the beneficial and registered holder of the Subject
Shares all of which are held by Holdco free and clear of all
Liens;
(j) Holdco does not own or hold and has never owned or held
property or assets or any interests therein of any nature or
kind whatsoever other than the Subject Shares and cash and
Holdco does not carry on, and has never carried on, an active
business;
(k) Holdco has no obligations, liabilities (whether actual or
contingent) or indebtedness to any person, including without
limitation any liabilities in respect of federal or provincial
income, corporate, goods and services, capital, harmonized
sales, sales, excise, employer health, surtaxes, education,
social services, social security, employment insurance, health
insurance, Canada, Quebec and other governmental pension plan
premiums or contributions, land transfer or any other taxes,
duties or imposts of any nature or kind whatsoever, or in
respect of any judgments, orders, fines, interest, penalties,
awards or decrees of any court, tribunal or governmental,
administrative or regulatory department, commission, board,
bureau, agency or instrumentality, domestic or foreign;
(l) Holdco has no subsidiaries and is not bound by any Contract to
acquire or lease in any manner any shares or assets of any
nature or kind whatsoever;
(m) Holdco does not have, and has never had, any employees and its
directors and officers receive no remuneration or compensation
from Holdco;
(n) Holdco is not a party to any Contract of any nature or kind
whatsoever except for the Contract with the Holdco
Shareholder(s) pursuant to which Holdco acquired the Subject
Shares (a true and complete copy of which has been provided to
Celestica);
(o) there are no claims, investigations, actions, suits or
proceedings pending or threatened against or affecting Holdco
or the Holdco Shareholders, whether at law
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or in equity or before or by any federal, provincial,
municipal or other governmental or administrative or
regulatory department, commission, board, tribunal, bureau,
agency or instrumentality, domestic or foreign, that would
adversely affect in any manner the ability of Holdco and the
Holdco Shareholders to enter into this Holdco Agreement and
perform their obligations hereunder;
(p) there are no claims, investigations, actions, suits or
proceedings pending or threatened against or affecting Holdco,
whether at law or in equity or before or by any federal,
provincial, municipal or other governmental or administrative
or regulatory department, commission, board, tribunal, bureau,
agency or instrumentality, domestic or foreign;
(q) Holdco is in full compliance with all laws, rules or
regulations to which Holdco or the Subject Shares may be
subject;
(r) the books and records of Holdco fairly and correctly set out
and disclose in all respects, in accordance with generally
accepted accounting principles in Canada consistently applied,
the financial position of Holdco as of the date hereof and all
financial transactions of Holdco have been accurately recorded
in such books and records; and
(s) the corporate records and minute books of Holdco contain
complete and accurate minutes of all meetings of the directors
and shareholders of Holdco held since its incorporation and
all such meetings were duly called and held and the share
certificate books, register of shareholders, register of
transfers and register of directors and officers of Holdco are
complete and accurate;
II. COVENANTS
(a) HOLDCO DOCUMENTS. The Holdco Shareholders and Holdco shall
forthwith make available to Celestica and its authorized
representatives all minute books, share certificate books,
share registers, books of account, accounting records,
corporate documents and all other books or records, documents,
information or data relating to Holdco (collectively the
"Holdco Documents"). At the time of closing, all of the Holdco
Documents shall be delivered to Celestica by the Holdco
Shareholders and Holdco.
(b) NO SHARE ISSUANCES. No Holdco Shareholder that is a
corporation shall issue any shares from and after the date
hereof to and including the Effective Date in connection with
any direct or indirect transfer of Primetech Common Shares.
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III. INDEMNIFICATION
(a) OBLIGATIONS TO INDEMNIFY. Each of the Holdco Shareholders
agrees to indemnify and save harmless Celestica from all
claims, demands, proceedings, losses, damages, liabilities,
deficiencies, costs and expenses (including, without
limitation, reasonable legal and other professional fees and
disbursements, interest, penalties and amounts paid in
settlement) (singly a "Loss" and collectively "Losses")
suffered or incurred by Celestica as a result of or arising
directly or indirectly out of or in connection with any breach
by the Holdco Shareholders or Holdco of any representation,
warranty, obligation or covenant of the Holdco Shareholders or
Holdco contained in this Holdco Agreement. Celestica agrees to
indemnify and save harmless the Holdco Shareholders from all
Losses suffered or incurred by them as a result of or arising
directly or indirectly out of or in connection with any breach
by Celestica of any representation, warranty, obligation or
covenant of Celestica contained in the Holdco Agreement.
(b) NOTICE OF CLAIM. In the event that a party (the "Indemnified
Party") shall become aware of any claim, proceeding or other
matter (a "Claim") in respect of which another party (the
"Indemnifying Party") agreed to indemnify the Indemnified
Party pursuant to the Holdco Agreement, the Indemnified Party
shall promptly give written notice thereof to the Indemnifying
Party. Such notice shall specify whether the Claim arises as a
result of a claim by a person against the Indemnified Party (a
"Third Party Claim") or whether the Claim does not so arise (a
"Direct Claim"), and shall also specify with reasonable
particularity (to the extent that the information is
available) the factual basis for the Claim and the amount of
the Claim, if known. If, through the fault of the Indemnified
Party, the Indemnifying Party does not receive notice of any
Claim in time to contest effectively the determination of any
liability susceptible of being contested, the Indemnifying
Party shall be entitled to set off against the amount claimed
by the Indemnified Party the amount of any Losses incurred by
the Indemnifying Party resulting directly from the Indemnified
Party's failure to give such notice on a timely basis.
(c) DIRECT CLAIMS. With respect to any Direct Claim, following
receipt of notice from the Indemnified Party of the Claim, the
Indemnifying Party shall have 60 days to make such
investigation of the Claim as is considered necessary or
desirable. For the purpose of such investigation, the
Indemnified Party shall make available to the Indemnifying
Party the information relied upon by the Indemnified Party to
substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request.
If both parties agree at or prior to the expiration of such
60-day period (or any mutually agreed upon extension thereof)
to the validity and amount of such Claim, the Indemnifying
Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim.
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(d) THIRD PARTY CLAIMS. With respect to any Third Party Claim, the
Indemnified Party shall have the exclusive right, at the
expense of the Indemnifying Party, to contest, settle or pay
the amount claimed and to retain counsel and other experts or
advisers selected by the Indemnified Party in its sole
discretion in connection therewith; provided, however, that
the Indemnified Party shall not settle any Third Party Claim
without the written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed. If the
Indemnified Party elects to assume such control, the
Indemnifying Party shall have the right, at its sole expense,
to participate in the negotiation, settlement or defence of
such Third Party Claim. If any Third Party Claim is of a
nature such that the Indemnified Party is required by
applicable law to make a payment to any person (a "Third
Party") with respect to the Third Party Claim before the
completion of settlement negotiations or related legal
proceedings, the Indemnified Party may make such payment and
the Indemnifying Party shall, forthwith after demand by the
Indemnified Party, reimburse the Indemnified Party for such
payment. If the amount of any liability of the Indemnified
Party under the Third Party Claim in respect of which such
payment was made, as finally determined, is less than the
amount that was paid by the Indemnifying Party to the
Indemnified Party, the Indemnified Party shall, forthwith
after receipt of the difference from the Third Party, pay the
amount of such difference to the Indemnifying Party.
(e) PAYMENT AND COOPERATION. The Indemnifying Party shall pay to
the Indemnified Party all amounts for which the Indemnifying
Party is liable pursuant to this section promptly after the
Indemnified Party incurs the Loss in respect of which such
liability arises. The Indemnified Party and the Indemnifying
Party shall co-operate fully with each other with respect to
Third Party Claims, and shall keep each other fully advised
with respect thereto (including supplying copies of all
relevant documentation promptly as it becomes available).
(f) TAX EFFECT. If any payment received by an Indemnified Party
hereunder (an "Indemnity Payment") would constitute income for
tax purposes to such Indemnified Party, the Indemnifying Party
shall pay a Tax Gross Up to the Indemnified Party at the same
time and on the same terms, as to interest and otherwise, as
the Indemnity Payment. The amount of any Loss for which
indemnification is provided shall be adjusted to take into
account any tax benefit realized by the Indemnified Party or
any of its affiliates by reason of the Loss for which
indemnification is so provided or the circumstances giving
rise to such Loss. For purposes of this paragraph (f), any tax
benefit shall be taken into account at such time as it is
received by the Indemnified Party or its affiliate. For
purposes of this paragraph (f), "Tax Gross Up" shall mean,
with respect to any Indemnity Payment, such additional amount
(calculated in accordance with the Calculation Method) as is
necessary to place the Indemnified Party in the same after tax
position as it would have been in had such Indemnity Payment
been received tax free; and "Calculation Method" with respect
to the calculation of any Tax Gross Up on any Indemnity
Payments, shall mean that such Tax Gross Up shall be
calculated by using the combined Canadian federal and
A-16
Canadian provincial income tax rate applicable to the
Indemnified Party and, except as provided in this paragraph
(f), without regard to any losses, credits, refunds or
deductions that the Indemnified Party may have which could
affect the amount of tax payable on any such Indemnity
Payment.
