BYLAW - Sale of Aurora Hydro Connections Ltd to PowerStream - 20050322 - 465005LTHE CORPORATION OF THE TOWN OF AURORA
By-law Number 4650-0S.L
A By-law to authorize the
actions and proceedings
of Council at its special
meeting held on the 22nd
day of March, 2005
(Sale of Aurora Hydro
Connection Limited)
WHEREAS under subsection 5(3) of the Municipal Act, 2001, the powers of a
council of a municipal corporation shall be exercised by by-law unless the
municipality is specifically authorized to do otherwise;
AND WHEREAS it is deemed expedient that the actions and proceedings of the
Council of The Corporation of the Town of Aurora at its special meeting held on the
22"d day of March, 2005 be authorized and adopted by by-law;
THE COUNCIL OF THE CORPORATION OF THE TOWN OF AURORA ENACTS
AS FOLLOWS:
1. The recommendations contained in the report referred to in Schedule "A"
attached to this By-law are adopted and confirmed.
2. The Mayor, any other appropriate member of Council and the proper Town
officials are authorized and directed to do all things necessary and execute
and deliver all documents and agreements necessary to give effect to the
recommendations referred to in Section 1.
3. The attached Transaction Agreement (as defined in the Report) is approved
in the form attached hereto, subject to any final adjustments agreed to by the
Mayor and GAO provided that said adjustments reflect the direction of
Council.
4. Any document or agreement required to be signed on behalf of the Town
shall be signed by the Mayor or the Deputy Mayor and by the Town Clerk or
the Deputy Clerk or other authorized official, and the Town Clerk or the
Deputy Clerk are authorized and directed to affix the Town Seal to such
document.
READ A FIRST AND SECOND TIME THIS 22N° DAY OF MARCH, 2005.
READ A THIRD TIME AND FINALLY PASSED THIS 22N° DAY OF MARCH, 2005.
bo
P. MORRIS, DEPUTY MAYOR ·cLERK
Schedule "A"
By-law 4650-05.L
TOWN OF AURORA
SPECIAL COUNCIL REPORT No. ADM05-007
SUBJECT: Sale of Aurora Hydro Connections Ltd. to PowerStream Inc.
DATE: March 22, 2005
RECOMMENDATIONS
Share Sale
THAT the Mayor and Clerk be authorized to execute a share purchase agreement,
on terms substantially similar to the share purchase agreement attached hereto,
as amended by Council to remove regulatory rate risk, between the Corporation
of the Town of Aurora, Borealis Hydro Electric Holdings Inc. and PowerStream
Inc., for the purchase of all of the shares of Aurora Hydro Connections Limited
(the "Transaction Agreement'J, and to execute and deliver all other ancillary
agreements and documents necessary to give effect thereto;
THAT Council hereby directs Borealis Hydro Electric Holdings Inc. and, where
required, Aurora Hydro Connections Limited to execute and deliver the
Transaction Agreement and to execute and deliver all other ancillary agreements
and documents necessary to give effect thereto and that the Mayor, any member
of Council or any proper Town official be hereby authorized to direct or deliver
such notices to Borealis Hydro Electric Holdings Inc. and Aurora Hydro
Connections Limited to do so; and
THAT Council authorizes the submission of all necessary applications to all
Ministries, Boards and Government Agencies, including the Ontario Energy
Board, to obtain approval of the transaction (the "Applications'J. Council hereby
directs Borealis Hydro Electric Holdings Inc. and Aurora Hydro Connections
Limited to assist with, execute and deliver the Applications, any amendments to
the Applications and any responses to the Applications required by such
Ministries, Boards, Government Agencies and the Ontario Energy Board and to
execute and deliver all other ancillary agreements and documents necessary to
give effect thereto and that the Mayor, any member of Council or any proper
Town official be hereby authorized to direct or deliver such notices to Borealis
Hydro Electric Holdings Inc. and Aurora Hydro Connections Limited to do so.
THE CORPORATION OF THE TOWN OF AURORA
-and-
BOREALIS HYDRO ELECTRIC HOLDINGS INC.
-and-
POWERSTREAM INC.
SHARE PURCHASE AGREEMENT
Dated as of the 24th day of March, 2005
Gowling Lafleur Henderson LLP
Scotia Plaza, Suite 5 800
40 King Street West
Toronto, Ontario
M5H3Z7
TABLE OF CONTENTS
ARTICLE I INTERPRETATION ........................................................................................ 2
1.1 Defined Terms ....................................................................................................... 2
1.2 Currency ............................................................................................................... 15
1.3 Sections and Headings ......................................................................................... 15
1.4 Number and Gender .................................... ; ..... , .................................................. 15
1.5 Generally Accepted Accounting Principles ......................................................... 15
1.6 Statutes and Agreement ....................................................................................... 16
1.7 Time ofEssence ................................................................................................... 16
1.8 Construction ......................................................................................................... 16
1.9 Schedules and Exhibits:, ...................................................................................... 16
ARTICLE II PURCHASE AND SALE OF PURCHASED SHARES ............................... 17
2.1 Purchase and Sale of Purchased Shares ............................................................... 17
2.2 Purchase Price ...................................................................................................... 17
2.3 Payment of Purchase Price ................................................................................... 17
2.4 Deposit ........................................................................................ ; ........................ 17
ARTICLE III REPRESENTATIONS AND WARRANTIES .............................................. 18
3.1 Representations and Warranties ofthe Vendor ................................................... 18
3 .2 Representations and Warranties of the Purchaser. ............................................... 24
ARTICLE IV JOINT AND SEVERAL OBLIGATIONS .................................................... 26
4.1 Joint and Several Liability for Obligations ofVendor ......................................... 26
ARTICLE V COVENANTS ............................................................................................... 26
5.1 Covenants ofVendor ........................................................................................... 26
5.2 Rights of Access .................................................................................................. 27
5.3 Exclusivity ........................................................................................................... 27
5.4 Rate Filings .......................................................................................................... 28
5.5 No Amendment to Articles or Transfer By-law .................................................. 28
5.6 Shareholder Debt ................................................................................................. 28
5. 7 Employees ............................................................................................................ 28
5.8 Affiliate Service Agreements ............................................................................... 28
5.9 Lease Amendment ............................................................................................... 29
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TABLE OF CONTENTS
(continued)
ARTICLE VI COVENANTS OF THE PURCHASER ........................................................ 29
6.1 Confidentiality ..................................................................................................... 29
6.2 System Reliability, Quality of Service and System Expansion: General ............ 30
6.3 Books and Records .............................................................................................. 31
6.4 Customer Advisory Committee ........................................................................... 31
6.5 Feeder Lines ......................................................................................................... 31
6.6 Rates Harmonization ............................................................................................ 31
ARTICLE VII MUTUAL COVENANTS ............................................................................. 32
7.1 Cooperation with OEB MAAD Application ........................................................ 32
7.2 Public Statements ................................................................................................. 32
7.3 Consents, Approvals and Waivers ....................................................................... 32
7.4 Co-operation and Compliance ............................................................................. 32
ARTICLE VIII CONDITIONS ...................................................... : ........................................ 33
8.1
8.2
8.3
8.4
ARTICLE IX
9.1
9.2
9.3
ARTICLE X
' 10.1
10.2
ARTICLE XI
Conditions to Obligations of Purchaser·······'······················································· 33
Conditions to Obligations ofVendor. .................................................................. 34
Mutual Conditions ............................................................................................... 35
Failure to Satisfy Conditions ............................................................................... 35
INDEMNIFICATION .................................................................................... 36
Indemnification by Vendor····"············································································· 36
Defence of Claim ................................................................................................. 39
Indemnification by Purchaser .............................................................................. 44
CLOSING ARRANGEMENTS ·····························································'······ 44
Place of Closing ................................................................................................... 44
Transfer ................................................................................................................ 44
GENERAL PROVISIONS ............................................................................ 44
11.1 Notices ................................................................................................................. 44
11.2 Mediation and Arbitration Procedures ................................................................. 45
11.3 . Survival of Representations and Warranties, Covenants and Obligations .......... 46
11.4 · Brokerage Fees and Commissions ....................................................................... 47
11.5 Expenses .............................................................................................................. 47
11.6 Entire Agreement ................................................................................................. 47
11.7 Further Assurances ............................................................................................... 48
11.8 Remedies Cumulative .......................................................................................... 48
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TABLE OF CONTENTS
(continued)
11.9 Waiver, Amendment ...................................................................... : ..................... 48
11.10 Counterparts ................................................................................. , ....................... 48
11.11 Governing Law ......................................................................... , .......................... 48
11.12 TimeofEssence ................................................................................................... 48
11.13 Severability .......................................................................................................... 49
11.14 Assignment .......................................................................................................... 49
11.15 Successors and Assigns ........................................................................................ 49
11.16 Amalgamation ...................................................................................................... 49
11.17 Counterparts and Telecopy .................................................................................. 50
SCHEDULE l.l(DD) EXCLUDED ASSETS
SCHEDULE 2.2 PURCHASE PRICE ADWSTMENTS
SCHEDULE 3.1(J) REAL PROPERTY AND LEASED PROPERTY
SCHEDULE 3.1(K) INTELLECTUAL PROPERTY
SCHEDULE 3.1(L) CONTRACTS AND COMMITMENTS
SCHEDULE 3.1(M) EMPLOYEE BENEFITS
SCHEDULE 3.1(N) COLLECTIVE AGREEMENTS
SCHEDULE 3.1(0) EMPLOYEES
SCHEDULE 3.1(P) INSURANCE
SCHEDULE 3.1(Q) ENVIRONMENT
SCHEDULE 3.1(R) LITIGATION
SCHEDULE 3.1(S) TAXES
SCHEDULE 3.l(W) MUNICIPAL ACCESS AGREEMENT
SCHEDULE 5.6 AURORA PROMISSORY NOTE
SCHEDULE 11.2 DISPUTE RESOLUTION PROCEDURES
-lll-
SHARE PURCHASE AGREEMENT
THIS AGREEMENT made as of the 24th day of March, 2005.
BETWEEN:
RECITALS:
THE CORPORATION OF THE TOWN OFAURORA, a municipal
corporation under the laws of the Province of Ontario,
("Aurora")
-and-
BOREALIS HYDRO ELECTRIC HOLDINGS INC., a corporation
under the laws ofthe Province of Ontario,
("Aurora Holdco")
(Aurora and Aurora Holdco hereinafter collectively referred to as the
"Vendor")
-and-
POWERSTREAM INC., a corporation under the laws of the Province of
Ontario,
("Purchaser")
(i) The Vendor has incorporated, pursuant to section 142 of the Electricity Act, 1998
(Ontario) (the "Electricity Act"), Aurora Hydro Connections Limited (the "Corporation")
under the Business Corporations Act (Ontario) as successor to Aurora Hydro-Electric
Conunission (the "Commission") and has, transferred the assets, liabilities and
undertaking of the Commission to the Corporation pursuant to a transfer by-law enacted
by the Council of Aurora pursuant to Part XI of the Electricity Act;
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(ii) The Vendor wishes to sell to the Purchaser, and the Purchaser wishes to purchase from
the Vend or, all of the issued and outstanding shares of the Corporation on and subject to
the terms and conditions set forth herein; and
(iii) All covenants and obligations of the Vendor set out herein are joint and several
obligations of Aurora and Aurora Holdco.
THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants,
agreements, representations and warranties of the Parties herein contained and for other good and
valuable consideration (the receipt and sufficiency of which are acknowledged by each Party),
the Parties covenant and agree as follows:
1.1
ARTICLE I
INTERPRETATION
Defined Terms. In this Agreement, including the recitals, Schedules and Exhibits
hereto, unless the context otherwise specifies or requires, the following terms shall have the
respective meanings specified or referred to below and grammatical variations of such terms
shall have corresponding meanings:
(a) "Aurora Hydro Collective Agreements" means the collective agreement
effective May 1, 2002 between the Corporation and the International Brotherhood
of Electrical Workers (Local Union 636);
(b) "Affiliate" means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls or is controlled by such
Person, or is under the common control of a third Person;
(c) "Affiliate Relationships Code" means the Affiliate Relationships Code for
Electricity Distributors and Transmitters issued by the OEB and revised
November 24, 2003;
(d) "Affiliate Services Agreement" means any Contract between the Corporation
and any Affiliate;
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(e) "Agreement", "hereto", "herein", "hereof', "hereby", "hereunder" and sinUlar
expressions refer to this share purchase agreement, not to any particular Article,
section, subsection, paragraph, clause, Schedule, Exhibit or other portion thereof,
and include any and every amendment hereto, and the expressions "Article",
"section", "subsection", "paragraph", "clause", "Schedule" and ~'Exhibit"
followed by a number mean and refer to the specified Article, section, subsection,
paragraph, clause, Schedule or Exhibit of this share purchase agreement;
(f) "Applicable Law" means, collectively, all applicable federal, provincial,
territorial and municipal laws, statutes, ordinances, decrees, rules, regulations, by-
laws, legally enforceable policies, codes, or guidelines, judicial, arbitral,
administrative, ministerial, departmental or regulatory judgments, orders,
decisions, directives, rulings or awards, and conditions of any grant of approval,
permission, certification, consent, registration, authority or licence by any court,
statutory body, self-regulatory authority, stock exchange or other Governmental
Authority, including all Employment Law and Environmental Law;
(g) "Arm's Length" has the same meaning as for the purposes of the Tax Act;
(h) "Aurora Hydro Easements" means all of the following real property interests of
the Business: (i) all easements and rights of way, registered and umegistered; (ii)
the right to use, transverse, enjoy or have access to, over, in or under any real
property, whether public or private; and (iii) all perlnits, licences and permissions
received, used or enjoyed in respect of any of the foregoing and any right or
benefit in the nature or character of any of the foregoing;
(i) "Business" means the business carried on by the Corporation as successor to the
Commission including, withont limitation, the distribution of electricity, and the
provision of utility and ancillary services to third parties (including customers,
other municipal electrical utilities and Aurora and its Affiliates) and, where such
third parties so elect, the provision of Standard Supply Services;
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· (j) "Business Day" means a day other thana Saturday, Sunday, statutory holiday in
Ontario or any other day on which the principal chartered banks located in the
Town of Aurora are not open for business during normal banking hours;
(k) "Capital Assets" means fixed assets, net of accumulated depreciation, and net of
contributions for capital construction, determined in accordance with GAAP and
with past practice, which Capital Assets were in the amount of TWENTY ONE
MILLION FOUR HUNDRED & TWENTY-SEVEN THOUSAND THREE
HUNDRED & SEVENTY-THREE DOLLARS ($21,427,373) as atDecember31,
2003 as set out on the Financial Statements;
(1) "CRA" means the Canada Revenue Agency;
(m) "Claim" means any demand, action, cause of action, suit, proceeding, claim,
assessment, order or settlement, cost, liability, expense or compromise relating
thereto;
(n) "Closing" means the completion of the transactions contemplated herein;
(o) "Closing Balance Sheet" shall have the meaning ascribed thereto in Schedule 2.2
-Purchase Price Adjustments;
(p) "Closing Date" means the first Business Day of the month commencing at least
14 days following the later of the date on which the OEB delivers the OEB
Approval or the date on which the Competition Bureau issues an advance ruling
certificate or no action letter under the Competition Act (Canada), or such earlier
or later date as may be agreed in writing by the Parties provided that in no event
shall any such date be on or after December 31, 2006;
(q) "Common Shares" means the issued and outstanding common shares in the share
capital of the Corporation;
(r) "Confidentiality Agreements" means the confidentiality agreement between the
Corporation and the Purchaser dated March 18, 2005;
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( s) "Confidential Information" has the meaning ascribed thereto m subsection
6.1(a);
(t) Consents, Approvals and Waivers" means declarations, filings or registrations
with, or notices to, or authorizations, consents, waivers, approvals or permits or
permissions of, any Governmental Authority or any other Person;
(u) "Contract" means, in respect of a particular Person, any contract, note, bond,
mortgage, agreement, indenture, lease, agreement to lease, licence, personal
property lease, commitment, understanding, instrument, option or any other
instrument or obligation, oral or written, to which such Person is a party or
whereby such Person's assets may be bound;
(v) "Deposit" has the meaning ascribed thereto in subsection 2.3(a);
(w) "Direct Claim" means has the meaning set out in Section 9.l(a);
(x) "Electricity Act" has the meaning set out in the recitals hereto;
(y) "Employment Law" means the Canadian Human Rights Act, the Canada Labour
Code, the Employment Equity Act (Canada), the Employment Standards Act,
2000 (Ontario), the Labour Relations Act, 1995 (Ontario), the Pay Equity Act
(Ontario) and the Human Rights Code (Ontario) and any other applicable statute
as it relates to employment matters;
(z) "Employees" means all full time and part time, contract (independent contractor),
union and non-union employees of the Corporation;
(aa) "Encumbrance" means any encumbrance, lien, charge, hypothec, pledge,
mortgage, title retention agreement, security interest of any nature, adverse claim;
exception, reservation, easem<;mt, right of occupation, any matter capable Clf
registration against title, option, right of pre-emption, privilege or any Contract to
create any of the foregoing;
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(bb) "Environment" means the ambient air, all layers of the atmosphere, surface
water, underground water, all land, all living organisms and the interacting natural
systems that include components of air, land, water, organic and inorganic matter
and living organisms;
(cc) "Environmental Claim" means any and all threatened and/or pending
administrative or judicial actions, suits, orders, written directives, claims, liens,
notices, notices of violation, investigations or proceedings, whether criminal,
statutory or civil, pursuant to or relating to any applicable Environmental Law by
any Person (including any Governmental Authority or private person or citizens'
group), of which the Vendor or the Corporation has received notice in writing,
based upon, alleging, asserting, or claiming any actual or potential (i) violation of,
or liability under, any Environmental Law, (ii) violation of any Envirorunental
Permit which has been issued to the Vendor or the Corporation in connection with
the Business, or (iii) liability for investigatory costs, cleanup costs, removal costs,
remedial costs, response costs, natural resource damages, property damage,
personal injury, fines, or penalties arising out of, based on, resulting from or
related to, the presence, Release, or threatened Release into the Environment of
any Hazardous Substances at any location related to the Real Property, including
any off-site location to which Hazardous Substances, or materials containing
Hazardous Substances, were sent by or on behalf of the Vendor or the
Corporation for handling, storage, treatment or disposal prior to the Closing Date;
( dd) "Environmental Law" means all applicable statutes, regulations, ordinances, by-
laws, Environmental Permits, orders, decisions and rules and any legally
enforceable policies, codes or guidelines of a Governmental Authority (whether
federal, provincial or municipal) relating to the Environment or the Release, use,
transport, disposal or handling of Hazardous Substances, including without
limitation the Envirornnental Protection Act, (Ontsrio), Canadian Environmental
Assessment Act, Canadian Environmental Protection Act, Dangerous Goods
Transportation Act (Ontario), Energy Act (Ontario), Environmental Bill of Rights
(Ontario), Fisheries Act (Canada), Technical Standards and Safety Act (Ontario),
-7-
Ontario Water Resources Act, Pest Control Products Act (Canada), Pesticides Act
(Ontario), Transportation of Dangerous Goods Act (Canada) and any applicable
municipal noise or sewer use by-law;
(ee) "Environmental Permits" includes all orders, permits, certificates, approvals,
consents, registrations and licences issued by any Governmental Authority under
Environmental Laws;
(ff) "Excluded Assets" means all those assets of the Corporation set out in Schedule
l.l(ff) hereto;
(gg) "Financial Statements" means the Corporation's audited consolidated financial
statements consisting of a consolidated balance sheet, a consolidated statement of
earnings and retained earnings and a consolidated statement of cash flows as at
and for the period ended December 31, 2003;
(hb) "Fixtures" means fixtures, plants, buildings, structures, erections, improvements,
appurtenances, machinery, equipment, substations, transformers, vaults,
distribution lines, transmission lines, conduits, ducts, pipes, wires, rods, cables,
fibre optic strands, devlices, appliances, equipment, material, poles, pipelines,
fittings and any other similar or related item;
(ii) "Good Utility Practices" means any of the practices, methods and acts engaged
in or approved by a significant portion of the electric utility industry in Ontario;
(jj) "Goods and Services T:ax" means, all tax payable under Part IX of the Excise Tax
Act (Canada);
(kk) "Governmental Authority" means any government or political subdivision
(including without limitation, any municipality or federal or provincial ministry)
or quasi-governmental or regulatory agency, authority, commission, department
or instrumentality of a:E!Y government or political subdivision, or any court or
tribunal, and specifically includes the OEB, OPA and the IESO;
(11) "Hazardous Substanceo" means:
-8-
(i) any petrochemical or petroleum product, oil or coal ash, mercury,
radioactive material, radon gas, asbestos in any form that is friable, urea
formaldehyde foam insulation or substance that contains or may contain
PCBs;
(ii) any chemical, material or substance defined as or included in the
definition of "hazardous substance", "hazardous waste", "hazardous
material", "hazardous constituent", "restricted hazardous material",
"extremely hazardous substance", "toxic substance", "deleterious
substance", "contaminant", pollutant", "toxic pollutant" or words of
similar meaning and regulatory effect under any applicable Environmental
Law; and
(iii) any other material or substance, exposure to which is prohibited, limited
or regulated by any applicable Environmental Law;
(mm) "IESO" means the Independent Electricity System Operator for Ontario;
(nn) "Income Tax" means any federal, provincial, territorial or municipal tax (i) based
upon, measured by or calculated with respect to net income, income as specially
defmed, earnings, gross or net profits or selected items of income, earnings or
profits (including capital gains taxes and minimum taxes), or (ii) based upon,
measured by or calculated with respect to multiple bases (including corporate
franchise taxes) ifone or more of the bases on which such tax may be based,
measured by or calculated with respect to, is described in (i), in each case together
with any interest, penalties or additions to such tax;
( oo) "Intellectual Property" means all intellectual property of whatever nature and
kind, including patents and patent applications, trademarks and trademark
applications, trade names, trading styles, domain names, certification marks,
industrial designs and copyrights (whether registered or unregistered and all
applications for registration thereof), computer software, information technology,
inventions, works, designs, formulae, processes, procedures, know-how, trade
-9-
secrets, industrial designs and plans, engineering designs and plans, blueprints
and as built plans and specifications, training, operating, safety, maintenance and
any other manuals, documentation of procedures and processes, design, user and
maintenance information and service records and warranty records;
(pp) "Interim Period" means the period from and including the date of this
Agreement to and including the Closing Date or the earlier termination of this
Agreement;
(qq) "Laws" means all laws, statutes, ordinances, regulations, rules, judgments,
decrees or orders;
(rr) "Leased Property" means all leasehold interests in real property held by the
Corporation and described in Schedule 3.1(j);
(ss) "Loss" includes any and all damages, costs, charges, liabilities, awards, fines,
fees, penalties, assessments, reassessments, claims, judgements, deficiencies,
losses and expenses (including all Remediation costs, fees oflawyers, accountants
and other professionals and experts, or other expenses of litigation or proceedings
or of any claim, default or assessment and interest thereon);
(tt) "MAAD Application" has the meaning set out in section 7.1;
(uu) "Material Adverse Effect" means any change or effect, that has a material
adverse effect on the property and assets of the Corporation taken as a whole or
the operations or results of operations of the Business taken as a whole, after
taking into account any insurance which may be available with respect to such a
change or effect, and for greater certainty, shall not include any of the following:
(i) any change or effect resulting solely from a decision or order of the OEB;
(ii) the enactment, introduction or tabling of any Canadian federal, provincial
or municipal legislation (whether by statute, regulation, order-in-council,
notice of ways and means motion, by-law or otherwise) which materially
and adversely affects or may materially and adversely affect the Business;
-10-
where the aggregate value of such adverse effect (but without duplication)
' exceeds TWO HUNDRED THOUSAND. DOLLARS ($200,000);
(vv) "Material Contract" means any Contract in respect of the Business:
(i) which expires or may expire, if the same is not renewed or extended at the
unilateral option of any other Person, more than two years after the date of
this Agreement, and which requires payment (including contingent
payments) of more than SIXTY THOUSAND DOLLARS ($60,000) in
aggregate during the term thereof;
(ii) for the purchase of materials, supplies or services which requires payment
of more than SIXTY THOUSAND DOLLARS ($60,000);
(iii) for the purchase or sale of any equipment or fixed or capital assets which
requires payment of more than SIXTY THOUSAND DOLLARS
($60,000);
(iv) in respect of Real Property or personal property, including any Contract in
the nature of a lease, where the aggregate annual payments under such
Contract and under any related service or maintenance or similar Contract
exceeds SIXTY THOUSAND DOLLARS ($60,000); or
any other Contract, the termination of which would result in a Material Adverse
Effect on the Corporation;
(ww) "Municipal Access Agreement" means an agreement providing for the
Corporation's right to install and maintain its wires, cables, ducts, conduits,
manholes and other accessories, structures and equipment including service
connections, in, on, under, over, along or across Aurora owned highways, street
road allowances, lanes and bridges open to public use;
(xx) "Normal Course of Bnsiness" when used in reference to a particular Person
means the nonnal course of business of such Person, including actions consistent
with Good Utility Practices;
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(yy) "OBCA" means the Business Corporations Act (Ontario), as in effect on the date
hereof;
(zz) "OEB" means the Ontario Energy Board;
(aaa) "OEB Act" means the Ontario Energy Board Act, 1998 (Ontario), as in effect on
the date hereof;
(bbb) "OEB Approval" means the approval of the OEB of the sale of the Purchased
. Shares from the Vendor to the Purchaser, pursuant to the OEB Act;
(ccc) "OPA" means the Ontario Power Authority;
( ddd) "Party" means a party to this Agreement, including its successors and assigns,
and "Parties" means all of them;
( eee) "Permitted Encumbrances" means:
(i) statutory liens for any Taxes not yet due or delinquent or the validity of
which is being contested in good faith by appropriate proceedings;
(ii) construction, materialmens', carriers', workers', repairers' and other
similar liens arising or incurred in the Normal Course of Business, as to
which there is no default on the part of the Corporation, or the validity of
which is being contested in good faith by appropriate proceedings;
(iii) zoning restrictions, easements, rights of way, leases or other similar
encumbrances or privileges in respect of real property which in the
aggregate do not materially impair the use of such property by such Person
in the operation of its business, and which are not violated in any material
respect by existing or proposed structures or land use;
(iv) security given by such Person to a public utility or any Governmental
Authority, when required by such utility or Governmental Authority in
connection with the operations of such Person, in the ordinary course of its
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business, which singly or in the aggregate do not materially detract from
the value of the \!Sset concerned or materially impair its use in the
operation of the business of such Person;
(v) the reservation in any original grants from the Crown of any land or
interest therein and statutory exceptions to title;
(vi) any Encumbrance evidenced by a Personal Property Security Act
(Ontario) fmancing statement filed prior to the date of this Agreement to
the extent the Encumbrance does not secure an amount in excess of the
amount outstanding and secured at the date of this Agreement unless it is a
purchase money security interest incurred in the Normal Course of
Business; and
(vii) such other security interests, liens, imperfections in or failures of title,
charges, restrictions, encroachments and defects in title which do not
materially, individually or in the aggregate, detract from the value of the
Corporation, nor, individually or in the aggregate, result in a Material
Adverse Effect;
(fft) "Person" includes any individual, partnership, limited partnership, joint venture,
syndicate, sole proprietorship, company or corporation with or without share
capital, unincorporated association, trust, trustee, executor, administrator or other
legal personal representative, regulatory body or agency, municipal government
or Governmental Authority or entity however designated or constituted;
(ggg) "Property" means all of the property, assets and liabilities of the Business, except
for the Excluded Assets;
(hhh) "Purchase Price" has the meaning ascribed thereto in section 2.2;
(iii) "Purchased Shares" has the meaning ascribed thereto in section 2.1;
(jjj) "Purchaser's Counsel" means Gowling Lafleur Henderson LLP;
-13-
(kkk) "Rate Order" means any order issued by the OEB approving or fixing the Rates;
(Ill) "Rates" means the rates approved by the OEB for the distribution of electricity;
(mmm)"Real Property" means all real property that is owned by the Corporation and
described in Schedule 3.l(j);
(nnn) · "Release" means any release, spill, leak, emission, discharge, leaching, dumping,
escape or other disposal;
( ooo) "Remediation" means action of any kind to address a Release, the threat of a
Release or the presence of any Hazardous Substance at or from the site of any
Real Property or Leased Property, including any or all of the following activities
to the extent they relate to or arise from a Release, the threat of a Release or the
presence of any Hazardous Substances at or from any such site (including
activities carried out by consultants, engineers and legal advice related thereto):
(i) monitoring, investigation, assessment, treatment, clean-up, containment,
removal, transportation and permanent disposal, mitigation, response or
restoration work;
(ii) obtaining any permits, consents, approvals or authorizations of any
Governmental Authority necessary to conduct any such activity;
(iii) preparing and implementing any plans or studies for any such activity;
(iv) reporting on the progress or results of any such activity to an applicable
Governmental Authority;
(v) the use, implementation, application, installation, operation, maintenance
or decommissioning of technologies for the remediation or treatment of
surface or subsurface soils, off-site treatment of surface water or
groundwater, including engineering controls or institutional controls; and
-14-
any other activities reasonably determined by a Party to be necessary or
appropriate or required under Environmental Laws to address the presence or
Release of Hazardous Substances at any such site or off-site location;
(ppp) "Representatives" of a Party means its Affiliates and directors, officers,
employees, agents, partners and advisors of the party and/or its Affiliates
(including external accountants, lawyers, environmental consultants, financial
advisors and other authorized representatives);
(qqq) "Shareholder Debt" means all indebtedness of the Corporation to the Vendor,
whether created pursuant to the Transfer By-Law or otherwise;
(rrr) "Shareholder Declaration" means the written shareholder declaration with
respect to the Corporation by Aurora Holdco dated September 30, 2002;
(sss) "Standard Supply Service" means the obligation of a distributor to sell
electricity to Persons connected to the distributor's distribution system pursuant to
section 29 of the Electricity Act; · 1
(ttl) "Subsidiaries" means subsidiaries within the meaning of such term in the OBCA;
(uuu) "Tax Act" means the Income Tax Act (Canada);
(vvv) "Tax Return" means any returo, report, information return, declaration,
statement, election, notice, filing, form, or other document (including any
schedule or related or supporting information) required to be supplied to or filed
with any Governmental. Authority with respect to Taxes, including any attached
schedules or amendments thereto;
(www) "Taxes" means all Income Taxes and all capital taxes, gross receipts taxes,
surtaxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value
added taxes, excise taxes, transfer taxes (including land transfer taxes and
Transfer Tax), franchise taxes, license taxes, withholding taxes, payroll taxes,
health taxes and premiums, employment taxes, Canada Pension Plan premiums,
severance, social security premiums, workers' compensation premiums,
1.2
-15 -
employment or unemployment insurance or compensation premiums, stamp taxes,
occupation taxes, premium taxes, property taxes, windfall profits taxes,
alternative or add-on minimum taxes, goods and services taxes (including the
Goods and Services Tax), customs duties, rates, levies, all special payments
pursuant to Part V.l and Part VI of the Electricity Act and the regulations thereto
and all other taxes, fees, imposts, duties, assessments or charges of any kind
whatsoever imposed by any Governmental Authority, and any interest, penalties,
additions to tax and other additional amounts imposed \vith respect to the
foregoing;
(xxx) "Third Paiiy Claim" has the meaning set forth in section 9.2(a);
(yyy) "Time of Closing" means 10:00 a.m. (Toronto time) on the Closing Date or such
other time acceptable to Vendor and Purchaser;
(zzz) "Transfer By-Law" means the transfer by-law enacted by the Council of Aurora,
pursuant to Part XI of the Electricity Act transferring all of the assets and property
of the Commission to the Corporation;
(aaaa) "Transfer Tax" means the tax payable pursuant to section 94 of the Electricity
Act or any similar tax or replacement or substitution thereof;
(bbbb) "Working Capital" means current assets minus. current liabilities, minus
customer deposits, determined in accordance with GAAP and with past practice,
which Working Capital was in the amount of THREE MILLION FIVE
HUNDRED & NINE THOUSAND EIGHT HUNDRED & EIGHTY-TWO
DOLLARS ($3,509,882) on December 31, 2003 as set out on the Financial
Statements;
(ecce) "Vendor's Counsel" means Borden Ladner Gervais LLP.
Currency. Unless otherwise indicated, all dollar amounts referred to m this
Agreement are expressed in Canadian funds.
-16-
1.3 Sections and Headings. The division of this Agreement into Articles, sections,
subsections, paragraphs and clauses and the insertion of headings are for convenience of
reference only and shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to an Article, section, subsection, paragraph, clause,
Schedule or Exhibit refers to the specified Article, section, subsection, paragraph, clause,
Schedule or Exhibit to this Agreement.
1.4 Number and Gender. In this Agreement, words importing the singular number
only shall include the plural and vice versa, words importing gender shall include all genders and
words importing persons shall include individuals, corporations, partnerships, associations,
trusts, unincorporated organizations, governmental bodies and other legal or business entities of
any kind whatsoever. The word "including" means "inclnding without limitation".
1.5 Generally Accepted Accounting Principles. Except as otherwise specifically
provided in this Agreement, all accounting terms shall be applied and construed in accordance
with generally accepted accounting principles consistently applied. References in this
Agreement to "generally accepted accounting principles" or "GAAP" mean, for all principles
stated from time to time in the Handbook of the Canadian Institute of Chartered Accountants, the
principles as so stated.
1.6 Statutes and Agreement. Any reference in this Agreement to an agreement, or to
a statute, regulation or rule promulgated under a statute or to any provision of an agreement, a
statute, regulation or rule shall be a reference to the agreement, statute, regulation, rule or
provision, as amended, restated, re-enacted or replaced from time to time.
1.7 Time of Essence. Time shall be of the essence of this Agreement.
1.8 Construction. The Parties agree that each Party and its counsel have reviewed
and revised this Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting Party shall not be employed in the
interpretation of this agreement or any amendments or Schedules hereto.
1.9 Schedules and Exhibits. The following Schedules and Exhibits are attached to
and form part of this Agreement.
Schedule 1.1 ( dd)
Schedule 2.2
Schedule 3.1 G)
Schedule 3.1 (k)
Schedule 3.1 (1)
Schedule 3.1 (m)
Schedule 3.1 (n)
Schedule 3.1 (o)
Schedule 3.1 (p)
Schedule 3 .I ( q)
Schedule 3.1 (r)
Schedule 3.1(s)
Schedule 3.1 (w)
Schedule 5.6
Schedule 11.2
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Excluded Assets
Purchase Price Adjustments
Real Property and Leased Property
Intellectual Property
Contracts and Commitments
Employee Benefits
Collective Agreements
Employees
Insurance
Environment
Litigation
Taxes
Municipal Access Agreement
Aurora Promissory Note
Dispute Resolution Procedures
ARTICLE II
PURCHASE AND SALE OF PURCHASED SHARES
2.1 Purchase and Sale of Purchased Shares. Subjec~ to the terms and conditions
hereof, the Vendor agrees to sell, assign and transfer to the Purchaser and the Purchaser agree to
purchase from the Vendor all of the one thousand (1,000) Common Shares of the Corporation
issued and outstandingas at the Time of Closing (the "Purchased Shares").
2.2 Purchase Price. The purchase price payable by the Purchaser to Aurora Holdco
or as directed by it the Vendor for the Purchased Shares (the "Purchase Price") shall be the sum
of THIRTY-FOUR MILLION, FIVE HUNDRED THOUSAND DOLLARS ($34,500,000), plus
or minus the amounts determined in accordance with Schedule 2.2 -Purchase Price Adjustments
all subject to a maximum Purchase Price of THIRTY SIX MILLION DOLLARS ($36,000,000).
Provided the Vendor complies with its covenants and obligations set out in this Agreement,
including without limitation the Interim Period covenants set out in Section 5.1, the Purchase
Price shall be a minimum of THIRTY MILLION DOLLARS ($30,000,000).
2.3 Payment of Purchase Price. The Purchase Price shall be payable as follows:
2.4
-18-
(a) as to THREE MILLION FOUR HUNDRED AND FIFTY THOUSAND
DOLLARS ($3,450,000), by delivery to Vendor's Counsel concurrently with the
execution and delivery of this Agreement of a certified cheque or bank draft
payable at ·par in Toronto, in trust, as a deposit to be credited to the Purchaser on
account of the Purchase Price and, subject to section 2.4, remitted to the Vendor
at the Time of Closing (the "Deposit"); and
(b) as to the balance of the Purchase Price, by the delivery by the Purchaser to Aurora
Holdco at the Time of Closing of a certified cheque or bank draft payable at par in
Toronto to the order of Aurora Holdco, or in such other manner as Aurora Holdco
may in writing direct prior to the Closing Date, subject to Schedule 2.2 -Purchase
Price Adjustments.
Deposit. The Deposit delivered pursuant to subsection 2.3 (a) hereof shall be held
by the Vendor's counsel, in trust, and shall be invested in an interest bearing account with
interest accruing to the Purchaser. At the Time of Closing, the Deposit shall be applied on
account of the Purchase Price and any and ·all interest accrued thereon shall be paid to the
Purchaser forthwith following Closing. Notwithstanding the foregoing, if the Closing is not
completed as herein contemplated solely by reason of the default of the Vendor in the fulfillment
or performance of any of its obligations hereunder and the Purchaser does not waive compliance
therewith in whole or in part, then, unless due to the default of the Purchaser as provided in
subsection 2.4(a) below (in which case subsection 2.4(a) below applies), the Deposit together
with any interest earned thereon, shall be refunded to the Purchaser. If, however, the Closing is
not completed as herein contemplated by reason of the default of the Purchaser in the fulfillment
or perfonnance of any of its obligations hereunder, the Deposit together with any interest earned
thereon shall be dealt with as follows:
(a) if the Closing is not completed solely by reason of the default of the Purchaser in
the fulfillment or performance of any of its obligations hereunder, then the
Deposit shall be retained by the Vendor as liquidated damages and not as a
penalty;
)
3.1
-19-
(b) if the Closing is not completed solely by reason of the non-fulfillment of the
conditions precedent set forth in subsections 8.1 or 8.3 or if such conditions
precedent have not been fulfilled so as to permit Closing to take place on or prior
to December 31,2006, then, unless due to the default of the Purchaser as provided
in subsection 2.4(a) above (in which case subsection 2.4(a) above applies), the
Deposit, together with any interest earned thereon, shall be refunded to the
Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Representations and Warranties of the Vendor. The Vendor represents and
warrants to the Purchaser as follows and acknowledges that, except as otherwise expressly
provided herein, the Purchaser is relying on such representations and warranties in connection
with the transactions contemplated herein:
(a) Organization. The Corporation is a corporation duly incorporated and validly
subsisting under the laws of the Province of Ontario and has the corporate power
to own or lease the property and assets transferred to it pursuant to the Transfer
By-Law and to carry on the Business.
(b) Corporate Power of Aurora Ho1dco and Due Authorization. Aurora is a
municipal corporation and Aurora Holdco is a corporation, each of which is all
requisite statutory power, authority and capacity to enter into, and to perform its
obligations under this Agreement and to transfer the legal and beneficial title and
ownership of the Purchased Shares to the Purchaser free and clear of all
Encumbrances. The Vendor has duly taken, or has caused to be taken, all action
required to be taken by the Vendor to authorize the execution and delivery of this
Agreement by the Vendor and the performance of its obligations hereunder, in
respect of Aurora, and to pass the Transfer By-Law.
(c) Binding Agreement. This Agreement has been duly executed by tl1e Vendor and
will, upon delivery, constitute a valid and binding obligation of the Vendor,
enforceable against it in accordance with its terms, except as enforcement may be
-20-
limited by bankruptcy, insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only in the discretion
of a court of competent jurisdiction.
(d) Authorized. and Issued Capital of the Corporation. On Closing, the authorized
share capital of the Corporation shall consist of an unlimited number of Common
Shares, of which only the Purchased Shares shall be duly issued and outstanding
as fully paid non-assessable shares to Aurora Holdco. The Corporation has no
outstanding rights, options or warrants to acquire equity capital.
(e) Ownership of Purchased Shares. On Closing, Aurora Holdco shall be the
beneficial and registered owner of the Purchased Shares, with good and
marketable title thereto, free and clear of all Encumbrances (other than the rights
of the Purchaser hereunder) and shall have the exclusive right to dispose of the
Purchased Shares as herein provided. Without limiting the generality of the
foregoing, none of the Purchased Shares on Closing will be subject to any voting
trust, shareholder agreement or voting agreement.
(f) No Other Agreements to Purchase. No Person (other than the Purchaser under
this Agreement) has any Contract or any right or privilege (whether by law, pre-
emptive or contractual) binding upon or which at any time in the future may
become binding upon the Vendor to acquire or obtain in any other way an interest
in any of the Purchased Shares or to require the Corporation to allot or issue any
shares.
(g) No Violations. Neither the execution nor delivery of this Agreement nor the
completion ofthe transactions herein contemplated will result in the violation of:
(i) any provision of the by-laws of the Vendor,
(ii) any Contract to which the Vendor or the Corporation is a party or by
which the Vendor, the Corporation or any of their respective properties or
assets is bound, which would have a Material Adverse Effect on the
Vendor's ability to perform its obligations under this Agreement; or
' !
-21 -
(iii) subject to obtaining the regulatory approvals set forth in Section 8.3, any
terms or provisions of any Law of any governmental authority having
jurisdiction over the Vendor or the Corporation which would have a
Material Adverse Effect on the Vendor's ability to perform its obligations
under this Agreement.
(h) Consents and Approvals. Except as set out in Article VIII, there is no
requirement for the Vendor to make any filing with, give any notice to or obtain
any licence, permit, certificate, registration, authorization, consent or approval of,
any governmental or regulatory authority as a condition to the lawful
consummation of the transactions contemplated by this Agreement.
(i) Compliance with Applicable Laws. The Corporation has complied m all
material respects with all Laws applicable to the Business, the failure to comply
with which, either individually or in the aggregate, would have a Material
Adverse Effect.
{j) Real Property. Schedule 3.1 G) sets forth a list of Real Property in which the
Corporation has an interest including lands owned in fee simple and the Aurora
Hydro Easements, together with all Leased Property. Schedule 3.l(j) is complete
and accurate and the Corporation has good title to such interests in owned Real
Property, and all leases for such Leased Property are in good standing, subject
only in each case to Permitted Encumbrances;
(k) Intellectual Property. Schedule 3.1 (k) sets forth and describes all Intellectual
Property used in whole or in part by the Business, and all material trademarks,
trade names, service marks, brand names, patents, copyrights, industrial designs
and other industrial property rights, and all applications therefor, in each case
specifying whether the item is owned by the Corporation or is used by the
Corporation under a licence agreement or arrangement from another Person.
(I) Contracts and Commitments. Except as set forth in Schedule 3.1 (1), the
Corporation is not a party to or bound by any of the following:
-22-
(i) any employment or consulting Contract or any other written Contract with
any officer, employee or consultant other than oral Contracts of indefinite
hire terminable by the employer without cause on such notice or such
payment as may be required by Applicable Law;
(ii) any agreement, contract or commitment limiting the freedom of the
Corporation to engage in any line of business or to compete with another
Person; or
(iii) any other Material Contract.
Except in respect of the Shareholder Debt, the Corporation does not have
outstanding any indebtedness in respect of borrowed money or guarantees in
respect of same.
(m) Employee Benefits. Except as set forth in Schedule 3.l(m), the Corporation is not
a party to or bound by or subject to any agreement or arrangement with respect m
salaries, wages, bonuses, commissions, fees, retirement, pension, deferred
compensation, severance or termination pay, insurance, medical, hospital, dentall,
vision care, dmg, sick leave, disability, salary continuation, legal benefits,
unemployment benefits, vacation, incentive or other compensation plan or
arrangement or other similar employee benefits (the "Employee Benefits").
(n) Collective Agreements. Except for the Aurora Hydro Collective Agreements as
set out in Schedule 3.1(n), the Corporation has not made, and at Closing will not
have any Contracts with any labour union or employee association nor made
commitments to or conducted negotiations with any labour union or employee
association with respect to any future agreements.
( o) Employees. Schedule 3.1 ( o) contains a complete and accurate list of the names of
all individuals who are Employees of the Corporation specifying unionized
Employees, non-unionized Employees, years of service, wages, benefits and title.
The Corporation has no unfunded liabilities with respect to its pension plans.
' (p)
-23-
Insurance. Schedule 3.1 (p) sets forth all insurance policies (specifying the
insurer, the amount of the coverage, the type of insurance, the policy number and
any pending claims thereunder) maintained by the Corporation on its property and
assets or personnel.
(q) Environmental.
(i) Except as described in Schedule 3.l(q):
(A) there are no active or abandoned underground storage tanks
located on any Real Property or Leased Property, except those that
comply with applicable Environmental Laws; and
(B) no Release of Hazardous Substances has occurred on or from any
Real Property or Leased Property, except those that do not violate
applicable Environmental Laws.
(ii) The Business and Property have been and are being owned, occupied and
operated in substantial compliance with applicable Environmental Laws
and there are no breaches thereof and no enforcement actions in respect
thereof are threatened or pending which, in any such-case, would, either
individually or in the aggregate, have, a Material Adverse Effect.
(r) Litigation. Except as set out in Schedule 3.l(r), there are no actions, suits or
proceedings pending or, threatened against or affecting the Corporation at law or
in equity, or before or by any federal, provincial, municipal or other governmental
department, court, commission, board, bureau, agency or instrumentality,
domestic or foreign, or by or before an arbitrator or arbitration board which, either
individually or in the aggregate, would have a Material Adverse Effect.
(s) ~· The Corporation is exempt from tax under the Tax Act and the
Corporations Tax Act (Ontario). Except as set out in Schedule 3.l(s), there are no
audits, actions, assessments, suits, proceedings, investigations or claims pending
against the Corporation in respect of Taxes, due to any grounds including
-24-
/
aggressive treatment of income, expenses, credits or other amounts in filing its tax
returns, nor are there any material matters under discussion with any
goverrunental authority relating to Taxes asserted by any such authority. The
Corporation is not party to any agreement or undertaking with respect to Taxes.
(t) Withholding. The Corporation has withheld from each payment made to any of
its past or present employees, officers or directors, and to any non-resident of
Canada, the amount of all Taxes and other deductions required to be withheld
therefrom, including without limitation, all employee and employer portions for
Workers' Compensation, Canada Pension Plan, Unemployment Insurance and
. Employment Insurance and has paid the same to the proper tax or other receiving
officers within the time required under any applicable legislation. The
Corporation has remitted to the appropriate tax authority when required by law to
do so all amounts collected by it on account of sales taxes including goods and
services tax.
(u) Financial Statements. The audited financial statements of the Corporation dated
December 31, 2003 (the "Financial Statements"), in all material respects, fairly
and accurately reflect the financial position, the assets and liabilities of the
Corporation as they existed on December 31, 2003 and the results of the operation
of its business for the twelve (12) month period ended on the date of the Financial
Statements and have been prepared on a basis consistent with the preceding fiscal
years, except where noted in the Financial Statements.
(v) Affiliate Service Agreements. All Affiliate Service Agreements entered into
between the Corporation and or Aurora, Aurora Holdco or any of their respective
Affiliates comply with the Affiliate Relationships Code.
(w) Municipal Access Agreement. The Municipal Access Agreement appended
hereto in Schedule 3.l(w) is in full force and effect, unamended and no party
thereunder is in default.
-25-
3.2 Representations and Warranties of the Purchaser. The Purchaser represents
and warrants to the Vendor as follows and acknowledge that the Vendor is relying on such
representations and warranties in connection with the transactions contemplated herein:
(a) Organization. Purchaser is a corporation duly amalgamated and validly
subsisting under the laws of the Province of Ontario, has the corporate power to
own or lease its property and assets and to carry on the business carried on by it.
(b) Corporate Power of the Purchaser and Due Authorization. The Purchaser has
all requisite corporate power, authority and capacity to enter into, and to perform
its obligations under this Agreement. The Purchaser has duly taken, all action
required to be taken by the Purchaser to authorize the execution and delivery of
this Agreement by the Purchaser and the performance of its obligations hereunder.
(c) Binding Agreement. This Agreement has been duly executed by the Purchaser
and will, upon delivery, constitute a valid and binding obligation of the Purchaser,
enforceable against it in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency and other laws affecting the rights of creditors
generally and except that equitable remedies may be granted only in the discretion
of a court of competent jurisdiction.
(d) No Violations. Neither the execution nor delivery of this Agreement nor the
completion of the transactions herein contemplated will result in the violation of:
(i) any provision of the constating documents, by-laws or any unanimous
shareholder agreement of any of the Purchaser;
(ii) any Contract to which the Purchaser is a party or by which the Purchaser
or any of its property or assets is bound, which would have a material
adverse effect on the Purchaser's ability to perform its obligations under
this Agreement; or
(iii) subject to obtaining the regulatory approvals set forth in Section 8.3, any
terms or provisions of any Law of any Governmental Authority having
4.1
-26-
jurisdiction over the Purchaser which would have a material adverse effect
on the Purchaser's ability to perform its obligations under this Agreement.
(e) Investment Canada Act. The Purchaser is not a "non-Canadian" within the
meaning ofthe Investment Canada Act (Canada).
(f) Consents and Approvals. Except as set out m Section 8.3, there is no
requirement for the Purchaser to make any filing with, give any notice to or obtain
any licence, permit, certificate, registration, authorization, consent or approval of,
any governmental or regulatory authority as a condition to the lawful
consummation of the transactions contemplated by this Agreement.
(g) Litigation. There is no legal proceeding in progress, pending, threatened against
or affecting the Purchaser and, to the best of the knowledge and belief of the
Purchaser, there are no grounds on which any such legal proceeding might be
commenced with any reasonable likelihood of success and there is no judgment,
decree, injunction, ruling, order or award of any tribunal outstanding against. or
affecting the Purchaser which, in any such case, might adversely affect the ability )
of the Purchaser to enter into this Agreement or to perform its obligations
hereunder.
(h) Taxes. The Purchaser is exempt under the Tax Act and the Corporations Tax Act
(Ontario).
ARTICLE IV
JOINT AND SEVERAL OBLIGATIONS
Joint and Several Liability for Obligations of Vendor. All obligations,
covenants, representations and warranties of Aurora and Aurora Holdco set forth in this
Agreement and any documents or agreements delivered pursuant hereto are joint and several.
5.1
-27-
ARTICLEV
COVENANTS
Covenants of Vendor. Vendor covenants to the Purchaser that it will do or cause
to be done the following:
5.2
(a) Conduct of Business. Except as contemplated by this Agreement or with the prior
written consent of Purchaser, acting reasonably, during the Interim Period,
Vendor shall cause the Corporation:
(i) to operate the Business only in the Normal Course of Business, consistent
with past practices;
(ii) to take all reasonable action to preserve the assets and liabilities of the
Business and the goodwill and relationships with customers, suppliers and
others having dealings with the Business, to keep available the services of
all Employees and to maintain in full force and effect all Material
Contracts relating to the Business;
(iii) to maintain the books, records and accounts of the Business in the Normal
Course of Business and record all transactions on a basis consistent w:ith
past practice;
(b) to keep in full force all current insurance policies of the Business, or replacement
or subsequent insurance policies on terms no less favourable to the Corporation;
(c) to perform all of its obligations falling due during the Interim Period under all
Contracts relating to the Corporation to which the Corporation is a party or by
which the Corporation is bound; and
(d) without the prior written consent of Purchaser, not to enter into any Contr.act
relating to the Business which involves obligations of the Corporation greater
than ONE HUNDRED THOUSAND DOLLARS ($100,000).
Rights of Access. During the Interim Period, the Vendor shall cause tthe
Corporation to provide:
5.3
-28-
(a) upon reasonable notice and during normal business hours, subject to compliance
with all Applicable Laws and confidentiality agreements, reasonable access to the
Corporation's management, books, records, Contracts, Intellectual Property,
insurance policies, premises, properties and other information relating to the
Corporation and the Business; and
(b) as Purchaser may reasonably request, such updated financial and operating data
relating to the Business.
Exclusivity. During the Interim Period, the Vendor or its Representatives shall
not, directly or indirectly, solicit offers from, enter into any Contracts with, or provide any
information to (subject to Applicable Law), any third party for or relating to the transfer or sale
of the Vendor's direct or indirect interest in the Corporation, nor shall the Vendor or its
Representatives, directly or indirectly, solicit offers from, enter into any Contracts with, or
provide any information to (subject to Applicable Law), any third party for or relating to the
transfer or sale or merger or amalgamation of any assets or liabilities of the Corporation, other
than in the Normal Course of Business.
5.4 Rate Filings. Any electricity rate filing made by the Corporation to the OEB
during the Interim Period for any Raltes or Rate Order of the Business shall require the approval
of the Purchaser, not to be unreasona!bly withheld or delayed, prior to filing. The Purchaser shall
respond to any draft application submitted to it for approval within three (3) Business Days.
5.5 No Amendment to Articles or Transfer By-law. The Corporation shall not
mal(e any amendment to its articles of incorporation or by-laws, and the Vendor shall not require
or authorize the same or amend the Shareholder Declaration (exempt for any termination of the
Shareholder Declaration in connection with Closing). Aurora shall not amend the Transfer By-
Law that it passed in connection with the Corporation.
5.6 Shareholder Debt. The Shareholder Debt shall have been cancelled and
discharged on or before the Time off Closing, and the Amended and Restated Promissory Note
issued by the Corporation in favoll!lr of Aurora and annexed in Schedule 5.6 shall have been
cancelled in full and evidence thereof delivered to the Purchaser. Purchaser acknowledges that a
)
-29-
portion of the Purchase Price may be utilized at Closing in order to implement release and
termination of the Shareholder Debt. The Corporation shall, at the Time of Closing, have no
third party debt or liabilities whatsoever, excluding current liabilities, customer deposits,
unearned capital contributions, and amounts due to developers, all of which shall be determined
in accordance with GAAP and in accordance with past practice.
5.7 Employees. During the Interim Period, without the prior written consent of
Purchaser, Vendor shall not amend or modify any contracts, salaries, benefits packages, or other
terms of remuneration with any of its Employees, nor implement any bonus or other payment
outside the Normal Course of Business, without the prior written consent of the Purchaser.
5.8 Affiliate Service Agreements. Prior to Closing, the Vendor shall cause all
Affiliate Service Agreements between the Corporation and Aurora or any Affiliate of Aurora to
conform with the Affiliate Relationships Code.
5.9 Lease Amendment. On or before Closing, the Lease of the Corporation's head
office premises between the Corporation and Aurora dated September 25, 2001, shall be
amended to the satisfaction of the Purchaser to provide that it may be tenninated by either Party
in its sole discretion on December 31, 2005, or at any time during 2006, on not less than sixty
(60) days' prior written notice to the other Party thereto.
6.1
(a)
ARTICLE VI
COVENANTSOFTHEPURCHASER
Confidentiality.
The Purchaser hereby covenants and agrees that it shall keep confidential, m
accordance with the terms of the Confidentiality Agreements, any and all
inforination and trade secrets received by the Purchaser from the Vendor and the
Corporation, whether or not received prior to or after the date of this Agreement,
concerning the business and affairs of the Vendor or the Corporation, (the
"Confidential Information").
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(b) In the event that this Agreement is terminated in accordance with the provisions
hereof:
(i) subject to paragraph (ii), the Purchaser shall:
(A) promptly return to the Vendor all documents, computer disks,
other forms of electronic storage or other materials furnished by
the Vendor, or the Corporation or by any of their respective
representatives to the Purchaser or their representatives
constituting Confidential Information, together with all copies and
summaries thereof in the possession or under the control of the
Purchaser or its representatives and materials generated by the
Purch~ser or their representatives that' include or refer to any part
of the Confidential Information, without retaining a copy of any
such material; or
(B) alternatively, provided that the prior written consent of the Vendor
has been obtained, promptly destroy all documents or other matters
constituting Confidential Information in the possession or under
the control of the Purchaser or its representatives;
and the Purchaser shall confirm such return and/or destruction of Confidential
Information to the Vendor in writing and certified by two senior officers of each
of the Purchaser;
(ii) the Purchaser shall promptly destroy the portion of the Confidential
Information which consist of analyses, compilations, forecasts, studies,
other material or documents prepared by the Purchaser or their
·representatives and shall confirm such destruction in writing and certified
by two senior officers of each of the Purchaser;
(iii) any verbal or visual Confidential Information will continue to be subject
to the terms of the Confidentiality Agreements and the terms of this
section 6.1; and
6.2
6.3
(a)
-31-
(iv) the Purchaser shall not, directly, use for its own purposes (unless Closing
is completed), any Confidential Information discovered or acquired by the
Purchaser's representatives as a result of the Vendor or the Corporation
making available to them any Confidential Information.
System Reliability, Quality of Service and System Expansion: General.
As and from the Time of Closing, the Purchaser covenants that if shall maintain
the distribution system reliability and quality of service for customers and
prospective customers of the Corporation within the municipal boundaries of the
Town of Aurora which meet or exceed the minimum service level requirements
established by the OEB and which are comparable to the service and reliability
levels currently enjoyed by the customers of the Corporation. The Purchaser shall
provide the Vendor with copies of all filings and reports required by the OEB
with respect to service and reliability standards and capital expansion plans at the
same time as such filings and reports are made to the OEB.
(b) As and from the Time of Closing, the Purchaser shall comply with the existing
and reasonable future requirements of the Vendor, as stated in its Official Plan
and By-Laws, as amended from time to time, with respect to electric distribution
system planning and underground siting of new distribution infrastructure to the
extent to which such requirements are consistent with capital expansion criteria
and limitations pursuant to the OEB Act and the OEB's Distribution System
Code.
(c) In fulfilling all obligations pursuant to this Section 6.2, the Purchaser shall
comply with all requirements of Law, including Environmental Laws, the
Electricity Act, the OEB Act and the OEB.
Books and Records. The Purchaser shall preserve the books and records of the
Corporation delivered by the Vendor to it for a period of seven (7) years from the Closing Date,
or for such longer period as is required by any applicable law, and will permit the Vendor or its
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authorized representatives reasonable access thereto in connection with the affairs of the Vendor
relating to its matters.
6.4 Customer Advisory Committee. Following Closing, the Purchaser shall cause
the Corporation to create and maintain a customer advisory committee comprised of
representatives resident in Aurora, with such committee to conduct quarterly meetings with
respect to Rates, reliability and customer issues on a consultative basis in order to receive local
input and feedback and shall continue a local presence in the Town of Aurora.
6.5 Feeder Lines. During the period of three (3) years following the Closing Date,
Purchaser shall cause the Corporation to provide sufficient capacity for load growth and
enhanced reliability through redirecting of supply based upon customer requirements within
Aurora by installing three (3) 28 kv feeder lines, subject to regulatory approval.
6.6 Rates Harmonization. Subject to regulatory approval, regulatory or legislative
changes by any applicable Governmental Authority, and subject to Rates being harmonized
based upon current Rates, the Corporation's current customers will benefit from the
harmonization of Rates by a minimum ofTEN MILLION DOLLARS ($10,000,000) over a ten )
(1 0) year period 'following the Closing Date from what they would otherwise be, as compared
both to the Corporation as a stand alone entity or to the customers of the Corporation within a
new merged entity with Newmarket Hydro.
7.1
ARTICLE VII
MUTUAL COVENANTS
Cooperation with OEB MAAD Application. Each of the Parties shall cooperate
with one another to prepare and submit to the OEB immediately upon execution of this
Agreement and in any event not later than the close of business of the OEB on March 24,
2005,an application (the "MAAD Application") requesting approval of transactions prescribed in
this Agreement, and shall further cooperate fully in any and all responses thereto and
interventions with the OEB.
7.2 Public Statements. Upon the completion of this Agreement, the Parties shall
issue a mutually acceptable press release.
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7.3 Consents, Approvals .and Waivers. Each Party shall have the right to review in
advance information which appears in any application, notice, petition or filing made seeking
Consents, Approvals and \Y aivers J;equired in connection with this Agreement and other
transactions contemplated hereby. For greater certainty, no Party shall make or file such an
application, notice, petition or filing in connection with the transactions contemplated hereby
without first providing such application, notice, petition or filing to the other and each of such
Parties having a reasonable opportunity to provide any comments it may have in respect thereof.
7.4 Co-operation and Compliance. Subject to the terms and conditions of this
Agreement and Applicable Law, each of the Parties shall use commercially reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective, as soon as reasonably practicable, this
Agreement and other transactions contemplated hereby, including using commercially
reasonable efforts to ensure satisfaction of the conditions precedent to each Party's obligations
under this Agreement.
7.5 Effect of Disclosure. All disclosure contained in a particular representation and
warranty of a Party set forth in this Agreement (or any Schedule referred to herein) shall be
deemed for the pmposes of this Agreement to have been made with respect to all of the
representations and warranties of such Party in this Agreement to which such disclosure might be
applicable.
8.1
ARTICLE VIII
CONDITIONS
Conditions to Obligations of Purchaser.
The obligations of the Purchaser to complete the transactions described in this
Agreement shall be subject to the fulfilment of the following conditions on or before the Closing
Date:
(a) each Vendor shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement which are required to be
performed and complied with by Vendor respectively, on or prior to the Closing;
-34-
(b) the representations and warranties of Vendor set forth in this Agreement shall be
true and correct in all material respects as of the Closing as though made at and as
of the Closing, except that any representation or warranty qualified by materiality,
Material Adverse Effect or a dollar threshold with respect to a claim shall be true
and correct in all respects as of the Closing as though made at and as of such time
subject to such qualification or dollar threshold as applicable, and the Purchaser
· shall have received a certificate of the Vendor to this effect;
· (c) Purchaser shall have received a favourable opinion from legal counsel to Aurora
and Aurora Holdco dated the Closing Date, and satisfactory in form and substance
to Purchaser, acting reasonably, as to authorization, execution, delivery and
enforceability of this Agreement by the Vendor;
(d) No order of any court of competent jurisdiction or administrative agency shall be
in existence and, no action or proceeding shall be pending or threatened by an
Person, to restrain or prohibit:
(i) the purchases and sale of the Purchased Shares; or
(ii) the Corporation from carrying on the Business as the Business is being
carried on as at the date hereof;
(e) There shall not have occurred any change to the Business which would have a
Material Adverse Effect since the date of the Financial Statements;
(f) All directors of the Corporation shall have tendered their resignations and full and
provide final releases of the Corporation, failing which the Vendor shall
indemnify the Purchaser in respect thereof;
(g) There shall have been delivered to the Purchaser a certificate of status and
certified copies of the constating documents and by-laws of the Corporation and a
certified copy of the by-law of Aurora authorizing Aurora to enter into and
perform its obligations under this Agreement, and certified resolutions of Auror.a
Holdco authorizing this Agreement;
8.2
-35-
(h) There shall have been delivered to the Purchasers a certified copy of the
resolutions of the directors of the Corporation approving the transfer of the
Purchased Shares to the Purchasers; and
(i) since the date of this Agreement, the Business shall have been operated in the
Normal Course of Business.
Conditions to Obligations of Vendor.
The obligations of the Vendor to complete the transactions prescribed herein shall
be subject to the fulfihnent of the following conditions on or before the Closing Date:
(a) Purchaser shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement which are required to be
performed and complied with by the Purchaser, on or prior to the Closing;
(b) the representations and warranties of Purchaser set forth in this Agreement shall
be true and correct in all material respects as of the Closing as though made at and
as of the Closing, eJ(cept that any representation or warranty qualified by
materiality, Material Adverse Effect or a dollar threshold with respect to a claim
shall be true and correct in all respects as of the Closing as though made at and as
of such time subject to such qualification or dollar threshold as applicable, and the
Vendor shall have received a certificate of the Purchaser to this effect;
(c) Vendor shall have received a favourable opinion from legal counsel to Purchaser
dated the Closing Date, and satisfactory in form and substance to Vendor, acting
reasonably, as to authorization, execution, delivery and enforceability of this
Agreement;
(d) No Transfer Tax shall be payable by the Vendor m connection with the
transactions contemplated in this Agreement;
(e) No order of any court of competent jurisdiction or administrative agency shall be
in existence and, no action or proceeding shall be pending or threatened in writing
by any person, to restrain or prohibit:
8.3
-36-
(i) purchase and sale of the Purchased Shares; or
(ii) the Corporation from carrying on the Business as the Business is being
carried on as at the date hereof; and
(f) There shall have been delivered to the Vendor certificates of status and certified
copies of the constating documents, by-laws and authorization resolutions of the
Purchaser; and
(g) The Purchaser shall have paid the Purchase Price in the manner set out in Section
2.3.
Mutual Conditions.
Subject to sections 8.1 and 8.2, the obligations of each of the Parties to complete
this Agreement shall be subject to the fulfilment of the condition, on or before the Closing Date,
that the OEB shall have delivered the OEB Approval provided that no terms or conditions
required by the OEB in connection therewith shall have an adverse effect to Purchaser or the .
Vendor.
8.4
(a)
Failure to Satisfy Conditions.
If any condition in sections 8.1 or 8.3 is not satisfied on or before the Closing
Date, Purchaser may, by notice to the other Parties, terminate this Agreement and
thereupon the Parties shall be released from all obligations then remaining under
this Agreement, other than the obligations contained in Sections 2.4 and 6.1;
provided that Purchaser may also bring a Direct Claim against the Vend or in
accordance with Article IX for Indemnifiable Losses asserted against OJ!f suffered
by Purchaser, as a result of the aborted Closing, where the non-performance or
non-confom1ance of the relevant condition is as a result of a breach of covenant,
representation or warranty by the Vendor, or either of them.
(b) If any condition in sections 8.2 or 8.3 is not satisfied on or before thle Closing
Date, the Vendor may, by notice to the other Party, teffilinate this Agreement and
thereupon the Parties shall be released from all obligations then remaining under
)
9.1
-37-
this Agreement, other than the obligations contained in Sections 2.4 and 6.1;
provided that the Vendor may also bring a Direct Claim against the Purchaser in
accordance with Article IX for Indemnifi.able Losses asserted against or suffered
by the Vendor, as a result of the aborted Closing, where the non-performance or
non-conformance of the relevant condition is as a result of a breach of covenant,
representation or warranty by the Purchaser.
(c) Any condition in this Article VIII may be waived in whole or in part by the Party
entitled to the benefit of such condition, on such terms as may be agreed by such
Party, without prejudice to any of its rights of rescission in the event of non-
performance or non-conformance of any other term, covenant or condition
contained in this Article VIII, in whole or in part.
(a)
ARTICLE IX
INDEMNIFICATION
Indemnification by Vendor.
Subject to the Limitations Act, 2002 (Ontario), Vendor shall indemnify, defend
and hold harmless Purchaser, and its officers, directors, employees, shareholders
and agents, (each, a "Purchaser Indemnitee") from and against any and all
claims, demands, suits, losses, liabilities, damages, obligations, assessments,
reassessments, charges, payments, costs and expenses and accrued interest
thereon (including the costs and expenses of, and accrued interest in respect of,
any and all actions, Slllits, proceedings, assessments, judgments, settlements and
compromises relating thereto and reasonable lawyers' and other professionals'
and experts' fees and Jfeasonable disbursements in connection therewith) (each, an
"Indemnifiable Lossm), asserted against or suffered by any Purchaser Indemnitee
relating to, in connection with or resulting from or arising out of any claim by a
Purchaser Indemnitee on account of an Indemnifiable Loss which does not result
from a Third Party Clmirn (a "Direct Claim") or Third Party Claim in respect of:
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(i) any breach by Vendor of any representation and warranty contained in this
Agreement, or incorrectness in any certificate furnished by Vendor in
accordance with this Agreement:
(A) relating to Taxes provided that the claim is brought within six
months after the expiry of the applicable statutory limitation
periods including any extensions or waivers thereof;
(B) relating to Environmental Claims and any breach of the
representation and warranty contained in subsection 3.13.l(q),
provided that such claim is brought within three (3) years after the
Closing Date;
(C) relating to the representations and warranties and based on fraud or
intentional misrepresentation, brought at any time;
(D) relating to any representation and warranty in this Agreement not
the subject matter of sub-paragraphs ((A), (B) and (C) of this
section 9.l(a)(i) provided that the claim is brought within twenty-
four (24) months after the Closing Date;
(ii) any breach by Vendor, or either of them, of any covenants or agreements
contained in this Agreement provided that the claim is brought within
twenty-four (24) months after the Closing Date;
(b) The expiration or termination of any period of indemnification set out in sections
9.1 shall not affect the Parties' obligations under this Article IX if the Indemnitee
provides to the Person required to provide indemnification under this Agreement
(the "Indemnifying Party") with proper notice of the claim or event for which
indemnification is sought prior to such expiration or termination.
(c) Vendor's obligations under this Article IX shall be limited as follows:
(i) no Purchaser Indemnitee shall be entitled to claim in respect of an
Indemnifiable Loss until the time that the aggregate amount of all
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Indemnifiable Losses of Purchaser Indernnitees exceeds TWO
HUNDRED THOUSAND DOLLARS ($200,000) (for greater certainty,
once such threshold is reached, the Purchaser Indemnitees shall be entitled
to claim for all Indemnifiable Losses except as otherwise expressly
provided for herein); provided that there shall be no such threshold in
respect of Indemnifiable Losses relating to representations and warranties
in and based on fraud or intentional misrepresentation;
(ii) to the extent no threshold applies in respect of an Indernnifiable Loss, the
amount of any such Indemnifiable Loss shall not be included in the
calculation of the TWO HUNDRED THOUSAND DOLLARS ($200,000)
threshold referred to above in section 9.l(c)(i); and
(iii) Vendor's obligations with respect to Indemnifiable Losses of Purchaser's
Indemnitees shall not exceed fifty per cent (50%) of the Purchase Price.
(d) For greater certainty, all Indemnifiable Losses will be calculated without
duplication.
(e) Notwithstanding anything to the contrary in this Agreement:
(i) no Party (including a non-Party Indemnitee) shall be entitled to recover
hereunder any amount in excess of the actual compensatory damages,
court costs and reasonable fees and other expenses of lawyers and other
professionals and experts suffered by such Party; and
(ii) each Party waives any right to recover punitive, special and consequential
damages arising in connection with or with respect to this Agreement.
The provisions ofthis section 9.l(e) shall not apply to indemnification for a Third
Party Claim.
(f) The Parties agree that, from and after Closing, this Article IX sets out the sole and
exclusive manner by which the Parties may seek compensation or otther monetary
relief hereunder for any breach of representation, warranty or covenant, and is in
9.2
(a)
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lieu of any and all other rights and remedies which any Party may have, for any
matter in respect of which it may make a claim on account of an Indemnifiable
Loss.
Defence of Claim.
If any Indemnitee receives notice of the assertion of any claim or of the
commencement of any claim, action or proceeding made or brought by any
Person who is not an Indemnitee (a "Third Party Claim") with respect to which
indemnification is to be sought from an Indemnifying Party, the Indemnitee shall
give such Indemnifying Party reasonably prompt written notice thereof, but in any
event such notice shall not be given later than twenty (20) calendar days after the
Indemnitee's receipt of notice of such Third Party Claim. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and shall indicate
the amount or, if the amount is not then determinable, an appropriate and
reasonable estimate of the potential amount of the Indernnifiable Loss that has
been or may be sustained by the Indemnitee. The Indemnifying Party will have
the right to participate in or, by giving written notice to the Indemnitee, to elect to
assume the defence of any Third Party Claim at such Indemnifying Party's
expense and by such Indemnifying Party's own counsel, provided, however, that:
(i) counsel for the Indemnifying Party shall conduct the defence of such
Third Party Claim in a manner reasonably satisfactory to the Indemnitee;
(ii) if the defendants to the Third Party Claim include both the Indemnifying
Party and the Indemnitee and the Indemnitee shall have reasonably
concluded that there may be legal defences available to it which are
different from, additional to or inconsistent with those available to the
Indemnifying Party, the Indemnitee shall have the right to select separate
counsel to participate in the defence of the Third Party Claim and the
reasonable fees and disbursements of such counsel shall be considered
Indemnifiable Losses for the purpose of this Agreement.
)
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Notwithstanding the provisions of this section 9.2(a), where a Third Party Claim
relates to Taxes, the Indemnifying Party will have the right to participate in or, by
giving written notice to the Indemnitee, to elect to assume jointly with the
Indemnitee the defence of such a Third Party Claim relating to Taxes and both the
Indemnifying Party and the Indemnitee shall act reasonably in connection with
the conduct and management of such defence. The provisions of this section
9 .2( a) shall otherwise apply mutatis mutandis.
(b) · If the Indemnifying Party assumes the defence in accordance with this section
9.2(b) the Indemnitee shall co-operate in good faith in such defence at such
Indemnitee's own expense. If an Indemnifying Party elects not to assume control
of the defence of any Third Party Claim, the Indemnitee shall be entitled to
assume such control and may compromise or settle such Third Party Claim (in
any manner that it determines appropriate, acting reasonably), over the objection
of the Indemnifying Party, which settlement or compromise shall conclusively
establish the Indemnifying Party's liability pursuant to this Agreement and the
Indemnifying Party shall be bound by the results obtained by the Indemnitee witl1
respect to such Third Party Claim.
(c) If, within twenty (20) calendar days after an Indemnitee provides written notice to
the Indemnifying Party of any Third Party Claims, the Indemnitee receives
written notice from the Indemnifying Party that such Indemnifying Party has
elected to assume the defence of such Third Party Claim as provided in section
9.2(a), the Indemnifying Party will not .be liable for any legal expenses
subsequently incurred by the Indemnitee in connection wifu the defence thereof
except as expressly provided in section 9.2(a), provided, however, that if the
Indemnifying Party fails to take reasonable steps necessary to defend diligenrtly
such Third Party Claim within twenty (20) calendar days after receiving notice
from the Indemnitee that the Indemnitee believes the Indemnifying Party lhas
failed to take such steps, the Indemnitee may assume its own defence and ithe
Indemnifying Party shall be liable for all reasonable expenses thereof.
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(d) · Without the prior written consent of the Indemnitee, the Indemnifying Party shall
not enter into any settlement of any Third Party Claim which would lead to
liability or create any financial or other obligation on the part of the Indemnitee
for which the Indemnitee is not entitled to indemnification under this Agreement.
The Indemnifying Party shall not settle any Third Party Claim or conduct any
legal or administrative proceeding in a manner which would, in the opinion of the
Indemnitee, acting reasonably, have a material adverse impact on the Indemnitee.
If a final offer is made to settle a Third Party Claim and the offer creates no
liability or financial or other obligation on the part of the Indemnitee for which
the Indemnitee is not entitled to indemnification under this Agreement and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying
Party shall give written notice to the Indemnitee to that effect. If the Indemnitee
fails to consent to such final offer within twenty (20) calendar days after its
receipt of such notice, the Indemnifying Party shall be relieved of its obligations
to defend such Third Party Claim and the Indemnitee may contest or defend such
Third Party Claim. In such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will be the amount of such settlement offer
plus reasonable costs and expenses paid or incurred by the Indemnitee up to the
date of such notice.
(e) If any Third Party Claim is of a nature such that the Indemnitee is required by
Applicable Law to make a payment to any Person (a "Third Party" for the
purposes of this section 9.2(e)) with respect to such Third Party Claim before the
completion of settlement negotiations or related legal proceedings, the Indemnitee
may make such payment :and the Inderrmifying Party shall, forthwith after demand
by the Indemnitee, reimburse the Indemnitee for any such payment. If the amount
of any liability under the Third Party Claim in respect of which such a payment
was made, as finally determined, is less than the amount which was, paid by the
Indemnifying Party to the Indemnitee, the Inderrmitee shall, forthwith after receipt
of the difference from tbe Third Party, pay such difference to the Indemnifying
Party.
-43-
(f) Except in the circumstances contemplated by section 9.2(b) or as expressly
provided in section 9 .2( e), and whether or not the Indemnifying Party assumes
control of the negotiation, settlement or defence of any Third Party Claim, the
Indemnitee shall not negotiate, settle, compromise or pay any Third Party Claim
except with the prior written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld).
(g) The Indemnitee shall not permit any right of appeal in respect of any Third Party
Claim to terminate without giving .the Indemnifying Party notice thereof and an
opportunity to contest such Third Party Claim.
(h) The Parties shall co-operate fully with each other with respect to Third Party
Claims, shall keep each other fully advised with respect thereto (including
supplying copies of all relevant documentation promptly as it becomes available)
and shall each designate a senior officer who will keep himself informed about
and be prepared to discuss the Third Party Claim with his counterparts and with
. counsel at all reasonable times.
(i) Any claim by an Indemnitee on account of an Indemnifiable Loss which does not
result from a Third Party Claim (a "Direct Claim") shall be asserted by giving the
Indemnifying Party reasonably prompt written notice thereof, stating the nature
and factual basis of the Claim in reasonable detail and indicating the amount, or if
the amount is not then determinable, an approximate and reasonable estimate of
the potential amount of the Direct Claim, but in any event such notice shall not be
given later than twenty (20) calendar days after the Indemnitee becomes aware of
such Direct Claim, and the Indemnifying Party shall have a period of twenty (20)
calendar days within which to investigate and respond to such Direct Claim. For
the purpose of such investigation, the Indemnitee shall make available to the
Indemnifying Party the information relied upon by the Indenmitee to substantiate
the Direct Claim. If the Indemnitee and the Indemnifying Party agree, at or prior
to the expiration of such twenty (20) calendar day period, to the validity and
amount of the Direct Claim, the Indemnifying Party shall immediately pay to the
9.3
-44-
Indemnitee the full agreed upon amount of the Direct Claim. If the Indemnifying
Party does not respond within such twenty (20) calendar day period, the
Indemnifying Party shall be deemed to have accepted the Direct Claim. If the
Indemnifying Party rejects such Direct Claim, the Indemnitee will be free to seek
enforcement of its right to indemnification under this Agreement and shall be
entitled to submit the Dispute to the Dispute arbitration procedure referred to in
section 11.2.
(j) If the amount of any Indemnifiable Loss, at any time subsequent to the making of
an indemnity payment in respect thereof, is reduced by recovery, settlement or
otherwise under or pursuant to any insurance coverage, or pursuant to any claim,
recovery, settlement or payment by, from or against any other entity, the amount
of such reduction, together with any interest earned on such amount, if applicable,
less any deductibles, costs or expenses incurred in connection therewith, shall
promptly be repaid by the Indemnitee to the Indemnifying Party.
(k) A failure to give timely notice as provided in this section 9.2(k) shall not affect
the rights or obligations of any Party under this Agreement except if, and only to
the extent that, as a result of such failure, the party which was entitled to receive
such notice.
Indemnification by Purchaser. Purchaser shall indemnify, defend and hold
harmless Vendor, and its officers, directors, employees, shareholders and agents (each a Vendor
Indemnitee) mutatis mutandis on the same basis as described in Section 9.1 and 9.2 above.
ARTICLE X
CLOSING ARRANGEMENTS
I 0.1 Place of Closing. The closing shall take place at the Time of Closing at the
offices ofGowling Lafleur Henderson LLP, at Toronto, Ontario.
10.2 Transfer. At the Time of Closing, upon fulfilment of all the conditions set out in
Article VIII that have not been waived in writing by the Purchaser or the Vendor, the Vendor
shall deliver to the Purchaser certificates representing all the Purchased Shares, duly endorsed in
J
-45-
blank for transfer and will cause transfers of such shares to be duly and regularly recorded in the
name of the Purchaser whereupon, subject to all other terms and conditions hereof being
complied with, payment ofthe Purchase Price shall be paid and satisfied in the manner provided
in Article II, and receipts shall be given by the recipient of each payment to the payor .
. ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. Any notice or other commmncation required or permitted to be given
under this Agreement shall be in writing and shall be given by facsimile or other means of
electronic communication or by hand-delivery as provided below. Any such notice or other
communication, if sent by facsimile or other means of electronic communication, shall be
deemed to have been received on the Business Day following the sending, or if delivered by
. hand, shall be deemed to have been received at the time it is delivered to the applicable address
noted below either to the individual designated below or to an individual at such address having
apparent authority to accept deliveries on behalf of the addressee. Notice of change of address
shall also be governed by this section 11.1. Notices and other communications shall be
addressed as follows:
(a) in the case of Purchaser:
PowerStream Inc.
2800 Rutherford Road
Vaughan, Ontario
L4K2N9
Attention: President and Executive Vice-President, Corporate Services
Fax No.: (905) 417-6911
(b) in the case of Vend or:
Aurora
100 John West Way
Box No. 1000
Aurora, Ontario
L4G6Jl
Attention: Town Solicitor
Fax No.: (905) 727-4993
-46-
Notwithstanding the foregoing, any notice or other communication required or
permitted to be given by any party pursuant to or in connection with any arbitration procedures
contained in this Agreement or in any Schedule to this Agreement may only be delivered by
hand. The failure to send or deliver a copy of a notice to counsel shall not invalidate any notice
given under this section 11.1.
11.2
(a)
Mediation and Arbitration Procedures.
In the , event of any dispute, disagreement, controversy, question or claims
between Purchaser and Vendor arising out of or relating to this Agreement, the
Parties shall use their good faith best efforts to promptly resolve such matter,
including without limitation recourse to non-binding mediation services. All
disputes, disagreements, controversies, questions or claims between Purchaser
and Vendor, arising out of or relating to this Agreement and not resolved between
the Parties, including with respect to its formation, execution, validity,
application, interpretation, performance, breach, termination or enforcement,
disputes over the validity or the amount of any claim made pursuant to Article IX,
and disputes over a Material Adverse Effect (collectively, "Disputes") shall be
determined in accordance with Schedule 11.2, which sets out the sole and
exclusive procedure for the resolution of Disputes. The resolution of Disputes
pursuant to the terms of Schedule 11.2 shall be final and binding upon the Parties
to this Agreement, and there shall be no appeal therefrom, including, without
limitation, any appeal to a court on a question of law, a question of fact, or a
question of mixed fact and law.
(b) For the purposes of this section 11.2 and Schedule 11.2, a Dispute of Aurora or
Aurora Holdco shall be deemed to be a Dispute of both of them and they
collectively shall be treated as a single Party.
11.3 Survival of Representations and Warranties, Covenants and Obligations.
Subject to the Limitations Act, 2002 (Ontario) and section 9.1:
)
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(a) ·the representations and warranties given or made by any Party in this Agreement
or in any certificate or other writing furnished in connection with this Agreement
shall survive the Closing for a period of twenty-four (24) months after the Closing
Date and shall thereafter tenninate and be of no further force or effect, except that
(i) all representations and warranties relating to Taxes shall survive the Closing
for six ( 6) months after the expiry of the applicable statutory limitation periods
including any extensions or waivers thereof, (ii) all representations and warranties
with respect to environmental matters shall survive the Closing for a period of
three (3) years after the Closing Date, and (iii) any claim relating to the
representations and warranties and based on fraud or intentional
misrepresentation, may be brought at any time; and (iv) any representation and
warranty as to which a claim (including a contingent claim) shall have been
asserted during the survival period shall continue in ·effect with respect to such
claim until such claim shall have been finally resolved or settled. Each Party shall
be entitled to rely upon the representations and warranties of the other Parties set
forth in this Agreement, notwithstanding any investigation or a.udit conducted
before or after the Closing Date or the decision of anY party to complete the
Closing;
(b) the covenants and obligations of the Parties set forth in this Agreement, including
the indemnification obligations of Purchaser and Vendor under Article IX, shall
survive the Closing indefinitely, unless such covenants and obligations by their
terms expire on or before the Closing, and each Party shall be entitled to the full
performance thereof by the other Parties without limitation as to time or amount
(except as otherwise specifically set forth in this Agreement); and
(c) subject to sections 9.3(a) and (b), all of the provisions upon which a claim is made
under this Agreement shall survive until such claim has been disposed of in
accordance with this Agreement.
11.4 Brokerage Fees and Commissions. Purchaser and Vendor each represent and
warrant to the other that no broker, finder or other Person is entitled to any brokerage fees,
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commissions or fmder's fees in connection with the transactions contemplated by this Agreement
by reason of any action taken by the party making such representation, and shall pay to the other
or otherwise discharge, and will indemnifY and hold the other harmless from and against, any
and all claims or liabilities for all brokerage fees, commissions and finder's fees incurred by
reason of any action taken by the indemnifying party.
11.5 Expenses. Except to the extent specifically provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions contemplated
hereby, including the cost of legal, technical and financial advisers and consultants and the cost
of filing for and obtaining any consents or approvals shall be borne by the Party incurring such
costs and expenses, provided that the reasonable costs of obtaining the OEB approval, including
the preparation and settlement of the MAAD Application, shall be shared equally by Vendor and
Purchaser.
11.6 Entire Agreement. This Agreement and the Confidentiality Agreement constitute
the entire agreement between the Parties pertaining to the subject matter hereof and sup~sedes
all prior negotiations, understandings and agreements between the Parties, written or oral, in
respect thereof.
11.7 Further Assurances. Each Party hereby covenants and agrees that at any time
and from time to time after the Closing Date it will, upon the request of the other Parties, m any
one of them, do, execute, acknowledge and deliver or cause to be done, executed, acknowRedged
and delivered all such further acts, deeds, assignments, transfers, conveyances and assurances as
may be required for the better carrying out and performance of all the terms of this Agreement.
11.8 Remedies Cumulative. The rights and remedies of the Parties under this
Agreement are cumulative and in addition to and not in substitution for any rights or remedies
provided by law. Any single or partial exercise by any Party hereto of any right or remedy for
default or breach of any term, coven:ant or condition of this Agreement does not waive, alter,
affect or prejudice any other right or remedy to which such Party may be lawfully entitled for the
same default or breach.
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11.9 Waiver, Amendment. No modification of or amendment to this agreement shall
be valid or binding unless set forth in writing and duly executed by the Party or Parties to be
bound thereby. No waiver of any provision of this Agreement shall be effective or binding
unless made in writing and signed by the Party purporting to give the same and, unless otherwise
provided, no such waiver shall constitute a waiver of any other provision of this Agreement nor
constitute a continuing waiver, or operate as a waiver of, or estoppel with respect to, any
subsequent failure to comply.
11.10 Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed to be an original and all of which taken together will be deemed to
constitute one and the same agreement.
11.11 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Ontario and the laws of Canada applicable therein. The Parties
agree that the courts of Ontario shall have exclusive jurisdiction to determine all disputes and
claims arising under or pursuant to this Agreement.
11.12 Time of Essence. Time shall be of the essence hereof.
11.13 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. In respect of any provision so determined
to be unenforceable or invalid, the Parties agree to negotiate in good faith to replace the
unenforceable or invalid provision with a new provision that is enforceable and valid in order to
give effect to the business intent of the original provision to the extent permitted by law and in
accordance with the intent of this Agreement.
11.14 Assignment. The rights of the Parties hereunder shall not be assignable.
11.15 Successors and Assigns. This Agreement shall be binding upon and enure to the
benefit ofthe Parties hereto and their respective successors. Nothing herein, express or implied,
is intended to confer upon any person, other than the Parties hereto and their respective
successors, any rights remedies, obligations or liabilities under or by reason of this Agreement.
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11.16 Amalgamation. Vendor and Purchaser acknowledge that, on or after the Closing
Date, Purchaser may in its sole discretion amalgamate with the Corporation and Vendor shall
execute all such documents as may be necessary or desirable in order to facilitate such
amalgamation.
c
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• 11.17 Counterparts and Telecopy. Vendor and Purchaser acknowledge that this
. Agreement may be executed in counterparts, and further that ielecopy signatures shall be binding
upon the Parties.
THE CORPORATION OF THE TOWN
OF AURORA
By:
Town Clerk
BOREALIS HYDRO ELECTRIC
HOLDINGS INC.
By:
By:
POWERSTREAM INC.
By:
By:
Brian Bentz
President
Dennis Nolan
Executive Vice President
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11.17 Counterparts and Telecopy. Vendor and Purchaser acknowledge that this
Agreement may be executed in counterparts, and further that telecopy signatures shall be binding
upon the Parties.
THECORPORATIONOFTHETOWN
OF AURORA
By: -------------------------
Mayor
By: --------------------
Town Clerk
BOREALIS HYDRO ELECTRIC
HOLDINGS INC.
By: --------------------
By: -------------------------
POWERSTREAM INC.
By:~ ;¥3
Brian Bentz
President
Executive Vice President
)
SCHEDULE l.l(dd)
EXCLUDED ASSETS
SCHEDULE 2.2
PURCHASE PRICE ADJUSTMENTS
Not later than one hundred and twenty (120) days following the Closing Date, Vendor shall
cause to be delivered a balance sheet of the Corporation effective as at the Closing Date and
prepared by the Corporation's auditors consistent with past practice and in accordance with
GAAP (the "Closing Balance Sheet"). Vendor shall use its best efforts to have the Closing
Balance Sheet produced and delivered to Purchaser for review within ninety (90) days following
the Closing Date.
The Purchase Price shall be adjusted based on the Closing Balance Sheet as follows:
1. In the event that the Working Capital on the Closing Balance Sheet varies from THREE
MILLION FNE HUNDRED & NINE THOUSAND EIGHT HUNDRED & EIGHTY-TWO
($3,509,882), the Purchase Price shall be adjusted upwards or downwards on a dollar for dollar
basis.
2. In the event that the Capital Assets on the Closing Balance Sheet varies from TWENTY-
ONE MILLION FOUR HUNDRED & TWENTY-SEVEN THOUSAND THREE HUNDRED
& SEVENTY-THREE DOLLARS ($21,427,373), the Purchase Price shall be adjusted upwards
or downwards on a dollar for dollar basis; and
3. Any adjustment to the Purchase Price required pursuant to items 1 and/or 2 above shall
be made forthwith upon approval of the Vendor and the Purchaser, acting reasonably, of the
Closing Balance Sheet.
lmy dispute with respect to the Purchase Price Adjustments shall be determined in accordance
with section 11.2.
l
SCHEDULE 3.1(j)
REAL PROPERTY AND LEASED PROPERTY
SCHEDULE 3.1(k)
INTELLECTUAL PROPERTY
)
SCHEDULE 3.1(1)
CONTRACTS AND COMMITMENTS
SCHEDULE 3.1(m)
EMPLOYEE BENEFITS
SCHEDULE 3.l(n)
COLLECTIVE AGREEMENTS
SCHEDULE 3.1(o)
EMPl.OYEES
SCHEDULE 3.l(p)
INSURANCE
SCHEDULE 3.l(q)
ENVIRONMENT
SCHEDULE 3.1(r)
LITIGATION
SCHEDULE 3.1(s)
TAXES
SCHEDULE 3.1(w)
MUNICIPAL ACCESS AGREEMENT
SCHEDULE 5.6
AURORA PROMISSORY NOTE
)
/
SCHEDULE 11.2
DISPUTE RESOLUTION PROCEDURES
1. All Disputes which are to be determined according to the terms of this Schedule pursuant
to section 11.2 of the Agreement shall be arbitrated pursuant to the provisions of the
Arbitrations Act, 1991 (Ontario), except to the extent that those provisions are modified by the
provisions of this Schedule. The decision of the arbitral tribunal in respect of any Dispute shall
be final and binding as between the Parties and shall not be subject to appeal.
2. Any arbitration to be carried out under section 11.2 of the Agreement shall be subject to
the following provisions, namely:
(a) · The Party desiring arbitration shall nominate one arbitrator and shall notify the
other Party of such nomination. Such notice shall set forth a brief description of
the matter submitted for arbitration (and, if appropriate, the section of the
Agreement pursuant to which such matter is so submitted). The notified Party
shall, within 30 days after receiving such notice, nominate an arbitrator and the
two arbitrators shall select a third person as an arbitrator and as chairman of the .
arbitral tribunal to act jointly with them. If said arbitrators are unable to agree on
the selection of such chairman, the chairman shall be appointed by a Judge of the
Ontario Superior Court of Justice upon the application of either Party.
(b) The arbitration shall take place in York Region and the chainnan of the arbitral
tribunal shall fix the time and place for the purpose of hearing such evidence and
representations as the Parties may present and, subject to the provisions hereof,
the decisions of the arbitrators and chairman or of any two of them in writing
shall be binding upon the Parties both in respect of procedure and the conduct of
the Parties during the proceedings and the fmal determination of the issues
therein. Said arbitrators and chairman shall, after hearing any evidence and
representations that the Parties may submit, make their decision and reduce the
same to writing and deliver one copy thereof to each of the Parties. The majority
of the chairman and arbitrators may determine any matters of procedure for the
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arbitration not specified herein.
(c) If the Party receiving the notice of the nomination of an arbitrator by the Party
desiring arbitration fails within the said 30 days to nominate an arbitrator, then the
arbitrator nominated by the Party desiring arbitration may proceed alone to
determine the dispute in such manner and at such time as he shall think fit and his
decision shall, subject to the provisions hereof, be binding on both Parties.
(d) Notwithstanding the foregoing, the arbitration may be carried out by a single
arbitrator if the Parties so agree, in which event the provisions of this paragraph
shall apply, mutatis mutandis.
(e) The cost of the arbitration shall be borne by the Parties as may be determined by
the arbitrators.
(f) Insofar as it does not conflict with the proviSions of this Schedule, the
Arbitrations Act, 1991 (Ontario) shall be applicable to arbitration held under this
Schedule and the arbitrators shall have jurisdiction to do all acts and make such
orders as provided in such Act.
3. Submission to arbitration pursuant to the provisions of this Schedule and the obtaining of
the decision of the arbitral tribunal on the Dispute being arbitrated shall be a condition precedent
to the bringing of any action at law or suit in equity with respect to this Agreement.
TOR_LA W\ 597705716