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Title: |
Acquisition Agreement |
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Entities: |
Royal Bank of Canada; Toronto-Dominion Bank; U.S. Energy Systems, Inc.; Countryside Power Income Fund; Countryside Canada Acquisition Inc.; US Canada Holdings Corp.; USE Canada Energy Corp.; Goodmans Goodmans LLP |
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Date: |
2004 |
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Size: |
Preview shows 21KB of 130KB total |
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Price: |
$43 |
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ID: |
#294680 |
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COUNTRYSIDE POWER INCOME FUND
- and -
COUNTRYSIDE CANADA ACQUISITION INC.
- and -
U.S. ENERGY SYSTEMS, INC.
- and -
US CANADA HOLDINGS CORP.
- and -
USE CANADA ENERGY CORP.
================================================================================
ACQUISITION AGREEMENT
================================================================================
April 8, 2004
-----------------------------------
GOODMANS GOODMANS LLP
BARRISTERS & SOLICITORS
-----------------------------------
{PAGE}
TABLE OF CONTENTS
{TABLE}
{CAPTION}
Page
{S} {C}
Article 1 INTERPRETATION .................................................................... 2
1.1 Definitions ............................................................... 2
1.2 Schedules ................................................................. 6
1.3 Headings .................................................................. 7
1.4 Gender and Number ......................................................... 7
1.5 Currency .................................................................. 7
1.6 Day Not a Business Day .................................................... 7
1.7 Accounting Principles ..................................................... 7
1.8 Waiver, Amendment ......................................................... 7
1.9 Construction .............................................................. 7
Article 2 PURCHASE AND SALE OF THE PURCHASED SECURITIES ..................................... 8
2.1 Purchase and Sale ......................................................... 8
2.2 Satisfaction of Sale Price ................................................ 8
Article 3 REPRESENTATIONS AND WARRANTIES .................................................... 8
3.1 Representations and Warranties of the Fund ................................ 8
3.2 Representations and Warranties of Countryside Acquisition ................. 9
3.3 Representations and Warranties of USE Canada Holdings ..................... 9
3.4 Representations and Warranties of USE Canada .............................. 10
3.5 Representations and Warranties of USEY, USE Canada Holdings and USE Canada 11
3.6 No Finders' Fee ........................................................... 18
3.7 Survival of Representations and Warranties ................................ 18
Article 4 CLOSING CONDITIONS ................................................................ 19
4.1 Conditions Precedent to Closing ........................................... 19
Article 5 COVENANTS OF THE PARTIES .......................................................... 21
5.1 Covenant Regarding Representations, Warranties and Conditions ............. 21
5.2 Conduct of Business Prior to Closing ...................................... 21
5.3 Transfer of the Purchased Shares .......................................... 21
5.4 Filings and Authorizations ................................................ 21
5.5 Cooperation ............................................................... 21
5.6 Section 116 Certificate ................................................... 21
5.7 U.S. Energy Agreements .................................................... 22
Article 6 REMEDIES 22
6.1 Indemnification ........................................................... 22
6.2 Indemnified Persons ....................................................... 23
6.3 Limitations of Liability .................................................. 23
6.4 Notice of Claim ........................................................... 24
6.5 Procedure for Indemnification ............................................. 24
6.6 Injunctive Relief ......................................................... 25
6.7 No Requirement to Exhaust Claims .......................................... 25
6.8 Claims .................................................................... 25
Article 7 TERMINATION ....................................................................... 25
{/TABLE}
- i -
{PAGE}
{TABLE}
{S} {C}
7.1 Termination ............................................................... 25
Article 8 CLOSING 26
8.1 Location and Time of the Closing .......................................... 26
8.2 Closing Procedures ........................................................ 26
Article 9 GENERAL MATTERS ................................................................... 27
9.1 Severability .............................................................. 27
9.2 Enurement ................................................................. 27
9.3 Assignment ................................................................ 27
9.4 Notices ................................................................... 28
9.5 Non-Merger ................................................................ 29
9.6 Governing Law ............................................................. 29
9.7 Attornment ................................................................ 29
9.8 Limitation of Liability in Respect of the Fund ............................ 29
9.9 Time of Essence ........................................................... 29
9.10 Entire Agreement .......................................................... 30
9.11 Counterparts .............................................................. 30
9.12 Further Assurances ........................................................ 30
9.13 Corporate Name ............................................................ 30
9.14 Public Announcements ...................................................... 30
9.15 Cooperation with Respect to Government Filings and Reports ................ 30
Schedule "A" - Form Of Undertaking To Release Security ...................................... 33
{/TABLE}
- ii -
{PAGE}
ACQUISITION AGREEMENT
THIS AGREEMENT is made as of the 8th day of April, 2004.
B E T W E E N:
COUNTRYSIDE POWER INCOME FUND, a trust formed
under the laws of the Province of Ontario,
(the "Fund")
- and -
COUNTRYSIDE CANADA ACQUISITION INC., a corporation
existing under the laws of Canada,
("Countryside Acquisition")
- and -
U.S. ENERGY SYSTEMS, INC., a corporation existing
under the laws of the State of Delaware,
("USEY")
- and -
USE CANADA HOLDINGS CORP., a corporation existing
under the laws of Canada,
("USE Canada Holdings")
- and -
USE CANADA ENERGY CORP., a corporation existing
under the laws of Canada.
("USE Canada")
RECITALS:
A. The Fund intends to complete an offering (the "Offering") of its trust units
(the "Units") to the public under the Prospectus (as defined herein) filed with
the securities regulatory authorities in each of the provinces and territories
of Canada.
B. The Fund will use a portion of the net proceeds of the Offering (after
deducting certain fees and expenses of the Offering payable by the Fund) to
subscribe for notes of Countryside Canada Power Inc. ("Countryside Canada").
C. The Fund will use the remaining net proceeds of the Offering to subscribe for
common shares of Countryside Canada, representing all of the outstanding shares
of Countryside Canada.
{PAGE}
D. Countryside Canada will use a portion of the net proceeds from the Offering
($21,678,522) to subscribe for shares of Countryside Acquisition.
E. Countryside Acquisition will borrow $30 million from third party lenders
under a $35 million senior secured credit facility (the "New Credit Facility").
F. Countryside Acquisition will use $17,635,090 of the proceeds from the New
Credit Facility and the share issuance to Countryside Canada to purchase all of
the outstanding shares of USE Canada Holdings.
G. Countryside Acquisition will use the balance of the proceeds from the New
Credit Facility and the share issuance to Countryside Canada ($29,343,432) to
subscribe for additional shares of USE Canada Holdings which USE Canada Holdings
will, in turn, use to subscribe for additional shares of USE Canada. USE Canada
will use a portion of the proceeds from the subscription by USE Canada Holdings
to repay in full debt owing to The Toronto-Dominion Bank under its current
credit facility (the "Current Credit Facility") and a portion to repay
intercompany loans from USEY.
H. Immediately following the completion of the transaction of purchase and sale
described in Article 2 below (the "Closing"), the Fund will, indirectly through
Countryside Canada, hold 100% of the shares of Countryside Acquisition,
Countryside Acquisition will own 100% of the shares of USE Canada Holdings and
USE Canada Holdings will own 100% of the shares of USE Canada which owns the
Business (as defined below).
I. The Underwriting Agreement provides that, as a condition to the completion of
the Offering, the Fund, Countryside Acquisition, and USEY enter into this
Agreement.
NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by each of the
parties), the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement:
(a) "Affiliate" has the meaning attributed to such term in s. 2(1) and
2(2) of the Canada Business Corporations Act, as the same may be
amended from time-to-time and any successor legislation thereto;
(b) "Agreement", "hereto", "herein", "hereby", "hereunder", "hereof",
and similar expressions refer to this Acquisition Agreement and not
to any particular Article, Section, subsection, clause, subdivision
or other portion hereof and include any and every instrument
supplemental or ancillary hereto;
(c) "Ancillary Agreements" means the Countryside Canada Note Indenture,
the New Credit Facility, the Underwriting Agreement, the Development
Agreement and the Improvement Agreement;
(d) "Business" means the business currently owned and operated by USE
Canada which consists of owning, operating and managing district
energy systems and cogeneration and renewable energy facilities in
London, Ontario and Charlottetown, Prince Edward Island;
- 2 -
{PAGE}
(e) "Business Day" means any day except Saturdays, Sundays and statutory
holidays in the Province of Ontario as specified in s. 29(1) of the
Interpretation Act (Ontario), as the same may be amended from
time-to-time and any successor legislation thereto;
(f) "Claim" has the meaning attributed to such term in Section 6.4;
(g) "Closing" means the completion of the transaction of purchase and
sale contemplated in Article 2;
(h) "Closing Time" means 8:30 a.m. (Toronto time) on the Date of Closing
or such other time on such date as may be agreed upon in writing by
the parties;
(i) "Code" means the United States Internal Revenue Code of 1986, as the
same may be amended from time-to-time and any successor legislation
thereto;
(j) "Collective Bargaining Agreement" means the collective agreement
between USE Canada (doing business as Core Energy London) and the
Canadian Union of Operating Engineers and General Workers effective
August 1, 2002, as amended;
(k) "Current Credit Facility" shall mean the loans currently outstanding
from The Toronto-Dominion Bank to USE Canada and all agreements,
guarantees and Liens relating thereto;
(l) "Damages" means any damages, losses, expenses or claims suffered by,
imposed upon or asserted against an Indemnified Party under the
Securities Laws, other Laws, at common law or otherwise, together
with the expenses incurred in defence of same, such amount being
correspondingly reduced by: (i) any insurance proceeds actually
received by the Indemnified Party in respect of the same claim; or
(ii) the present value of the net benefit, if any, that will be
received by such party in the current or any future tax period as a
result of the payment of Damages;
(m) "Date of Closing" means the date on which the completion of the
Offering occurs;
(n) "Declaration of Trust" means the declaration of trust of the Fund
made as of the 16th day of February, 2004, as amended and restated
from time-to-time;
(o) "Disclosure Letter" means the letter dated the date of this
Agreement from USEY and Countryside Acquisition to the applicable
parties hereto in respect of the representations and warranties
related to the Business, in a form satisfactory to such other
parties;
(p) "Environmental Laws" means all Laws relating to environmental, human
health or worker health and safety matters, including Laws governing
the labelling, use and storage of Hazardous Substances;
(q) "Equipment" means the assets and tangible personal or movable
property used in connection with the Business including all
machinery and equipment whether affixed to, situate in, on or about,
or normally situate in, on or about or forming part of the Project
Land or buildings ordered but not delivered or warehoused, and all
tools, handling equipment, spare parts and accessories;
(r) "Governmental Charges" means all taxes, duties, levies, assessments,
reassessments and other charges together with all related penalties,
interest and fines, payable in respect of periods ending on or
before the Date of Closing to any domestic or foreign
- 3 -
{PAGE}
government (federal, provincial, state, municipal or otherwise) or
to any regulatory authority, agency, commission or board of any
domestic or foreign government, or imposed by any court or any other
law, regulation or rule-making entity having jurisdiction in the
relevant circumstances;
(s) "Governmental Entity" means any: (i) multinational, federal,
provincial, state, municipal, local or other governmental or public
department, regulatory authority, central bank, court, commission,
board, bureau, agency or instrumentality, domestic or foreign; (ii)
any subdivision or authority of any of the foregoing; (iii) any
quasi-governmental, self-regulatory organization or private body
exercising any regulatory, expropriation or taxing authority under
or for the account of its members or any of the above; or (iv) any
arbitrator exercising jurisdiction over the affairs of the
applicable Person, asset, obligation or other matter;
(t) "Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by, or with, any
Governmental Entity;
(u) "Hazardous Substance" means any substance or material which is
defined or regulated pursuant to Environmental Laws, including those
defined or listed as "hazardous", "toxic", "deleterious", "caustic",
"dangerous", a "contaminant", a "pollutant", a "dangerous good" or a
"waste";
(v) "Indemnifying Party" means a party to this Agreement providing
indemnification to its Indemnified Persons pursuant to Article 6;
(w) "Indemnified Persons" has the meaning attributed to such term in
Section 6.2;
(x) "Intellectual Property" means trademarks (including common law
trademarks), trade names, certification marks, patents and patent
applications, copyrights, confidential information, know-how,
formulae, processes, inventions, technical expertise, research data,
trade secrets, industrial designs and other similar property and all
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