EXHIBIT 99.3
ASSET AND TRUST UNIT
PURCHASE AND SALE AGREEMENT
AMONG
CALPINE CANADA NATURAL GAS PARTNERSHIP
AND
CALPINE ENERGY HOLDINGS LIMITED
AND
CALPINE CORPORATION
AND
PRIMEWEST GAS CORP.
AND
PRIMEWEST ENERGY TRUST
JULY 1, 2004
TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION.................................................................. 7
1.1 DEFINITIONS....................................................................... 7
1.2 INTERPRETATION................................................................... 20
1.3 INTERPRETATION IF CLOSING DOES NOT OCCUR......................................... 21
1.4 CONFLICTS........................................................................ 21
1.5 SCHEDULES........................................................................ 21
1.6 VENDORS' KNOWLEDGE............................................................... 21
ARTICLE 2 PURCHASE AND SALE............................................................... 22
2.1 PURCHASE AND SALE................................................................ 22
2.2 BID PRICE, PURCHASE PRICE AND ADJUSTED PURCHASE PRICE............................ 22
2.3 PAYMENT OF ADJUSTED ASSET PURCHASE PRICE AND ADJUSTED TRUST UNIT PURCHASE PRICE.. 22
2.4 DEPOSIT.......................................................................... 23
2.5 GST AND OTHER SALES TAXES........................................................ 23
2.6 ALLOCATION OF ADJUSTED ASSET PURCHASE PRICE...................................... 24
2.7 FORM OF PAYMENT.................................................................. 24
ARTICLE 3 CLOSING......................................................................... 24
3.1 PLACE AND DATE OF CLOSING........................................................ 24
3.2 TRANSFER OF OWNERSHIP AND RISK................................................... 25
3.3 VENDOR DELIVERIES AT CLOSING..................................................... 25
3.4 DELIVERIES OF GAS CORP. AND THE TRUST AT CLOSING................................. 26
3.5 SPECIFIC CONVEYANCES.......,..................................................... 26
3.6 POST - CLOSING DELIVERIES........................................................ 27
ARTICLE 4 CONDITIONS OF CLOSING........................................................... 27
4.1 CONDITIONS OF GAS CORP. AND THE TRUST............................................. 27
4.2 VENDOR CONDITIONS............................................................ 29
4.3 EFFORTS TO FULFILL CONDITIONS.......................,........................ 30
4.4 FAILURE OF A CONDITION....................................................... 31
4.5 EFFECT OF TERMINATION........................................................ 31
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.............................................. 31
5.1 REPRESENTATIONS AND WARRANTIES OF CCNGP...................................... 31
5.2 REPRESENTATIONS AND WARRANTIES OF CEHL....................................... 35
5.3 LIMITATION OF REPRESENTATIONS AND WARRANTIES................................. 37
5.4 REPRESENTATIONS AND WARRANTIES OF GAS CORP................................... 38
5.5 REPRESENTATIONS AND WARRANTIES OF THE TRUST.................................. 39
ARTICLE 6 LIABILITIES AND INDEMNITIES................................................. 41
6.1 VENDOR INDEMNITIES........................................................... 41
6.2 PURCHASER'S INDEMNITIES...................................................... 41
6.3 ENVIRONMENTAL LIABILITIES.................................................... 41
6.4 ASSUMED OBLIGATIONS.......................................................... 42
6.5 POST-CLOSING EMPLOYMENT INDEMNITIES OF GAS CORP.............................. 42
6.6 POST-CLOSING EMPLOYMENT INDEMNITIES OF VENDOR................................ 43
6.7 VENDOR'S ADDITIONAL INDEMNITIES.............................................. 43
6.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................... 43
6.9 LIMITATIONS ON VENDOR LIABILITIES............................................ 43
6.10 INDEMNIFICATION PROCEDURE-THIRD PARTY CLAIMS................................. 44
6.11 CONSEQUENTIAL DAMAGES........................................................ 45
ARTICLE 7 ADJUSTMENTS................................................................. 45
7.1 ACCOUNTING ADJUSTMENTS....................................................... 45
7.2 INTERIM STATEMENT OF ADJUSTMENTS............................................. 46
7.3 POST CLOSING ADJUSTMENTS..................................................... 46
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7.4 ARBITRATION................................................................. 47
7.5 CASH CALLS, PREPAYMENTS AND DEPOSITS..................,....,................ 47
ARTICLE 8 MAINTENANCE AND OPERATION OF THE ASSETS.................................... 48
8.1 MAINTENANCE OF ASSETS UNTIL CLOSING......................................... 48
8.2 CONSENT OF PURCHASER TO OPERATIONS BEFORE CLOSING........................... 49
8.3 POST-CLOSING ACCOUNTING..................................................... 49
8.4 TRANSITION PERIOD........................................................... 49
8.5 CCNGP AS AGENT.............................................................. 50
ARTICLE 9 RIGHTS OF FIRST REFUSAL.................................................... 50
9.1 RIGHT OF FIRST REFUSALS...................................................... 50
ARTICLE 10 PRE-CLOSING MATTERS....................................................... 51
10.1 PRODUCTION OF DOCUMENTS...................................................... 51
ARTICLE 11 TITLE REVIEW.............................................................. 51
11.1 NOTICE OF TITLE DEFECTS..................................................... 51
11.2 CURING, INDEMNIFICATION AND UNCURED TITLE DEFECTS VALUE..................... 52
11.3 UNCURED TITLE DEFECTS....................................................... 52
11.4 DISPUTES.................................................................... 53
ARTICLE 12 ACCESS TO BOOKS AND RECORDS............................................... 54
12.1 ACCESS TO INFORMATION....................................................... 54
12.2 MAINTENANCE OF INFORMATION.................................................. 55
ARTICLE 13 EMPLOYMENT MATTERS........................................................ 55
13.1 LISTED EMPLOYEES, LISTED CONSULTANTS AND TRANSITION......................... 55
13.2 COVENANT REGARDING PRIVACY.................................................. 57
ARTICLE 14 LICENCE TRANSFERS......................................................... 57
14.1 LICENCE TRANSFERS........................................................... 57
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ARTICLE 15 GENERAL................................................................ 58
15.1 DISPUTE RESOLUTION....................................................... 58
15.2 COSTS AND EXPENSES....................................................... 58
15.3 FURTHER ASSURANCES....................................................... 58
15.4 NO MERGER................................................................ 58
15.5 ENTIRE AGREEMENT......................................................... 59
15.6 GOVERNING LAW............................................................ 59
15.7 SIGNS AND NOTIFICATIONS.................................................. 59
15.8 NO TRANSFER OF OPERATORSHIP.............................................. 59
15.9 INTEREST ACCRUES ON AMOUNTS OWING........................................ 59
15.10 ASSIGNMENT............................................................... 59
15.11 TIME OF ESSENCE.......................................................... 60
15.12 NOTICES.................................................................. 60
15.13 INVALIDITY OF PROVISIONS................................................. 61
15.14 WAIVER................................................................... 61
15.15 AMENDMENT................................................................ 61
15.16 AGREEMENT NOT SEVERABLE.................................................. 61
15.17 PUBLIC ANNOUNCEMENTS..................................................... 62
15.18 COUNTERPART EXECUTION.................................................... 62
15.19 PRICE SHARING............................................................ 62
15.20 NO LIABILITY OF UNITHOLDERS, THIRD PARTIES............................... 63
ARTICLE 16 PARENTAL GUARANTEE..................................................... 63
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SCHEDULES
Schedule "A"
Part 0 Xxxxx Xxx Xxxx Xxxx Xxxx(x)
Part 2 Description of Scheduled Petroleum and Natural Gas Rights
Schedule "B" Facilities
Schedule "C" General Conveyance
Schedule "D" Claims
Schedule "E" Seismic
Schedule "F" Contracts Disclosure
Schedule "G" Xxxxx
Schedule "H" Officer's Certificate
Schedule "I" Outstanding AFEs
Schedule "J" Call on Production Agreement
Schedule "K" ROFRs
Schedule "L" Listed Material Agreements
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ASSET AND TRUST UNIT
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT made as of the 1st day of July, 2004
AMONG:
CALPINE CANADA NATURAL GAS PARTNERSHIP, a general partnership,
having an office and carrying on business in Calgary, Alberta
(hereinafter referred to as "CCNGP")
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CALPINE ENERGY HOLDINGS LIMITED, a body corporate, having an office
and carrying on business in Calgary, Alberta (hereinafter referred
to as "CEHL")
(CCNGP and CEHL are hereinafter collectively referred to as
"VENDOR")
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CALPINE CORPORATION, a body corporate incorporated under the laws of
Delaware, USA (hereinafter referred to as "CALPINE")
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PRIMEWEST GAS CORP., a body corporate, having an office and carrying
on business in Calgary, Alberta (hereinafter referred to as "GAS
CORP.")
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PRIMEWEST ENERGY TRUST, a trust, having an office and carrying on
business in Calgary, Alberta (hereinafter referred to as the
"TRUST")
(Gas Corp. and the Trust are hereinafter collectively referred to as
"PURCHASER")
WHEREAS CCNGP wishes to sell the Assets to Gas Corp. and Gas Corp. wishes to
purchase the Assets from CCNGP, subject to and in accordance with the terms and
conditions hereof.
WHEREAS CEHL, wishes to sell the Trust Units to the Trust and the Trust wishes
to purchase the Trust Units from CEHL, subject to and in accordance with the
terms and conditions hereof.
IN CONSIDERATION of the premises and the mutual covenants and agreements
hereinafter set forth, the Parties agree as follows:
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ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, including the recitals and the Schedules, the following terms
have the following meanings:
"ABANDONMENT AND RECLAMATION OBLIGATIONS" means all past, present and future
obligations under contracts, Applicable Law, equity or common law to:
(a) abandon the Xxxxx;
(b) close, decommission, dismantle and remove the Tangibles including
associated foundations and structures;
(c) restore, remediate and reclaim the surface or subsurface of the
lands used in connection with the Xxxxx or the Tangibles, including
lands in or on which they are or were located and lands which are or
were used to gain access to them; and
(d) restore, remediate and reclaim the surface or subsurface of lands
affected by seismic or other geological or geophysical exploration
activities conducted by or on behalf of Vendor or any of its
Affiliates in the White Map Area prior to the Effective Time.
"ACCEPTING CONSULTANTS" means those Listed Consultants who agree to provide
services to Gas Corp.
"ACCEPTING EMPLOYEES" means those Employees who accept employment with Gas
Corp.
"ADJUSTED ASSET PURCHASE PRICE" has the meaning specified in Section 2.2.
"ADJUSTED TRUST UNIT PURCHASE PRICE" has the meaning specified in Section 2.2.
"AFEs" means authorities for expenditures, cash calls or mail ballots issued
under the Title and Operating Documents agreements relating to any of the Assets
authorizing expenditures and similar items.
"AFFILIATE" means with respect to CCNGP and CEHL, the other respectively,
Calpine Canada Resources Company and Calpine Canada Energy Ltd. and with respect
to the Trust and Gas Corp., the other respectively, and PrimeWest Energy Inc.
"AGREEMENT" means this Asset and Trust Unit Purchase and Sale Agreement
including the recitals hereto, this Section 1.1 and all schedules hereto.
"APPLICABLE LAW" means all laws, statutes, rules, regulations, official
directives and orders of Government Authorities (whether administrative,
legislative, executive or otherwise) including judgments, orders and decrees of
courts, commissions or bodies exercising similar functions, as amended, and
includes, without limitation, the provisions and conditions of any permit,
license or other governmental or regulatory authorization in respect of the
Assets, the Trust Units or any of them;
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"ASSET BID PRICE" has the meaning specified in Section 2.2.
"ASSET PURCHASE PRICE" means the amount set forth in Section 2.2.
"ASSETS" means the Petroleum and Natural Gas Rights, the Tangibles, the Seismic
Data and the Miscellaneous Interests, including the Scheduled Assets, but
excluding the Excluded Assets.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a statutory
holiday in Calgary, Alberta.
"CALL ON PRODUCTION AGREEMENT" means that call on production agreement attached
hereto as Schedule "J", to be entered into at Closing by Calpine Energy Services
Canada Partnership and Gas Corp. and which provides for the purchase of natural
gas by Calpine Energy Services Canada Partnership from the White Map Area.
"CLAIM" means any claim, demand, lawsuit, proceeding, arbitration or
governmental proceeding or investigation other than a claim in respect of Taxes.
"CLOSING" means the transfer of beneficial ownership of the Assets from CCNGP to
Gas Corp., the payment by Gas Corp. of the amount specified in Section 2.3(b),
the transfer of beneficial ownership of the Trust Units from CEHL to the Trust,
the payment by the Trust of the amount specified in Section 2.3 and the delivery
of all items required to be delivered at Closing pursuant hereto.
"CLOSING DATE" means 10:00 a.m., Calgary time, on the 2nd day of September, 2004
or such other time and date as may be agreed upon in writing by the Parties or
as may otherwise be determined pursuant to the provisions hereof.
"CLOSING PLACE" means the offices of Vendor in Calgary, Alberta or such other
place as may be agreed upon in writing by the Parties.
"CNGT" means Calpine Natural Gas Trust, an unincorporated open-ended trust
established under the laws of Alberta.
"COMPETITION ACT" means the Competition Act R.S.C. 1985, c. C-34.
"COMPETITION ACT APPROVAL" means that:
(a) the Commissioner of Competition (the "COMMISSIONER") appointed under the
Competition Act has issued an advance ruling certificate pursuant to
section 102 of the Competition Act in respect of the Transaction on terms
and conditions satisfactory to the Parties acting reasonably; or
(b) notification of the Transaction pursuant to section 114 of the Competition
Act has been waived pursuant to Section 113(c) of the Competition Act or
given and either:
(i) the applicable waiting period under section 123 of the
Competition Act has expired without the Commissioner having
advised the Parties that he intends to apply to the
Competition Tribunal established by subsection 3(1) of the
Competition Tribunal Act
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for an order under section 92 or section 100 of the
Competition Act in respect of the Transaction; or
(ii) the Commissioner has advised Purchaser that the Commissioner
does not intend to apply to the Competition Tribunal for an
order under section 92 of the Competition Act in respect of
the Transaction.
"CONFIDENTIAL INFORMATION MEMORANDUM" means the confidential information
memorandum issued by Waterous & Co. on or about June, 2004 in respect of the
Assets and the Trust Units.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement dated June 16,
2004 between CCNGP and PrimeWest Energy Inc.;
"CONTRACT OPERATING AGREEMENTS" means all contracts pursuant to which the Vendor
operates, on a fee for services basis, xxxxx or facilities owned by Third
Parties and located in the White Map Area.
"CONTRACTS DISCLOSURE SCHEDULE" means Schedule "F".
"CUSTOMARY POST CLOSING CONSENTS" means consents and approvals from Government
Authorities or Third Parties that are customarily obtained after closing in
connection with transactions similar to the Transaction.
"DATA ROOM" means the room established on behalf of Vendor containing books,
accounts, records, maps, documents, files, materials and information relating to
the Assets, for the purposes of the Transaction; the Confidential Information
Memorandum in respect of assets of the Vendor provided to Gas Corp. or its
Affiliates pursuant to the sale process that resulted in this Agreement, the
computer discs provided to Gas Corp. or its Affiliates in the course of such
sale process and the Waterous Securities' web site established as part of that
sale process.
"DEFAULT" means a Purchaser Default or a Vendor Default.
"DEPOSIT" has the meaning given to such term in Section 2.4.
"DISPUTE" has the meaning specified in Subsection 11.4(a).
"DISPUTE NOTICE" has the meaning specified in Subsection 11.4(a).
"DISTRIBUTIONS" has the meaning set forth in Section 2.2.
"DOLLAR" or "$" means, unless otherwise provided herein, a dollar in the lawful
money of Canada.
"EFFECTIVE TIME" means 8:00 a.m., Calgary time, on the 1st day of July, 2004.
"ENCUMBRANCE" means a lien, mortgage, pledge, claim, option, encumbrance,
charge, Security Interest, penalty, royalty, burden, net profits interest,
carried working interest or other adverse claim.
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"ENVIRONMENT" means the atmosphere, the surface and sub-surface of the earth,
groundwater and surface water and plants and animals and "ENVIRONMENTAL" means
relating to or in respect of the Environment.
"ENVIRONMENTAL LIABILITIES" means all past, present and future Liabilities and
obligations associated with or arising from any of the following and all costs
associated therewith:
(a) the manufacture, construction, processing, distribution, use,
holding, collection, accumulation, generation, treatment,
stabilization, storage, disposal, handling or transportation of
Hazardous Substances, Petroleum Substances, oilfield wastes or
produced water;
(b) compliance with present and future Applicable Law relating to the
Environment or the protection thereof and Applicable Law related to
employee and public health and safety matters;
(c) Abandonment and Reclamation Obligations;
(d) Releases of Hazardous Substances, Petroleum Substances, oilfield
wastes, produced water or other substances;
(e) sampling, assessment and monitoring of the Environment;
(f) the removal, assessment, monitoring, sampling, response, abatement,
clean-up, investigation and reporting of contamination or pollution
of or other adverse effects on the Environment, including
compensation of Third Parties for Losses suffered by them in respect
thereof;
(g) the protection, reclamation, remediation or restoration of the
Environment, including related human health and safety;
that relate to the Assets, or that have arisen or hereafter arise from or in
respect of any past, present or future operations and activities (including
Operations) related to the Assets conducted by or on behalf of Vendor or its
Affiliates in the White Map Area.
"EUB" means the Alberta Energy and Utilities Board.
"ESCROW AGENT" means Xxxxxx Xxxxxxx LLP in its capacity as Escrow Agent.
"EXAMINATION PERIOD" means the period commencing on the date of this Agreement
and terminating at 4:00 p.m. (Calgary time) on August 26, 2004.
"EXCLUDED ASSETS" means:
(a) Retained Production;
(b) unexpended cash call and operating fund advances and deposits made
to or deposited with operators, Government Authorities or other
Persons by Vendor, or any of its Affiliates prior to the Effective
Time to secure obligations or as prepayments of costs or expenses;
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(c) insurance policies, insurance proceeds and rights to insurance
proceeds, including rights to proceeds of JV Insurance except any
insurance proceeds payable in the event of any physical loss to
Tangibles occurring after the Effective Date;
(d) items used, consumed or otherwise disposed of in the ordinary course
of business prior to Closing or with Gas Corp.'s consent;
(e) forecasts, evaluations and reserve estimates;
(f) tax and financial records related to Vendor;
(g) legal opinions except title opinions;
(h) documents prepared by or on behalf of Vendor or any of its
Affiliates in contemplation of litigation (with the exception of
title opinions) and any other documents within the possession of
Vendor or any of its Affiliates which are subject to
solicitor-client privilege under the laws of the Province of Alberta
or any other jurisdiction;
(i) technology which cannot be transferred by Vendor to Gas Corp. unless
one or both of the following occurs: (i) the consent of a Third
Party is obtained (other than a consent which cannot be unreasonably
withheld); or (ii) a transfer fee is paid, provided that if Gas
Corp. obtains such consent or agrees to pay such transfer fee, such
technology shall not be considered Excluded Assets;
(j) all computer hardware and software (excluding such computer hardware
located in field locations and all items described in Subsection (e)
of the definition of Miscellaneous Interests) and all files,
documents, reports, data, intellectual property and geological
information and data, that is owned or licensed by Third Parties
with restrictions on their deliverability or disclosure to Gas
Corp., provided that if Gas Corp. obtains the agreement of Third
Parties to waive such restrictions, such items shall not be
considered Excluded Assets;
(k) Vendors' Calgary office and all leasehold improvements, furniture
and office equipment and supplies located therein; and
(l) subject to subclauses (i) and (j) above, any proprietary policies,
manuals and other confidential business or technical information not
used exclusively in the operation of the Assets.
"FACILITIES" means the gas plants, oil batteries, gas gathering systems and
pipelines described in Schedule "B".
"FINAL STATEMENT OF ADJUSTMENTS" has the meaning given to such term in Section
7.3(a).
"GENERAL CONVEYANCE" means a General Conveyance in the form of Schedule "C".
"GOVERNMENT AUTHORITY" means a federal, provincial, territorial, municipal or
other government or government department, agency, board or other authority
(including a court of law).
"GST" means the goods and services tax prescribed by the GST Legislation.
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"GST LEGISLATION" means the Excise Tax Act, R.S.C. 1985, c. E-15, as amended,
and the regulations thereunder.
"HAZARDOUS SUBSTANCES" means hazardous, deleterious, or toxic substances;
oilfield wastes; radioactive material; asbestos; polychlorinated biphenyls;
pollutants; contaminants; dangerous goods; and unrefined and refined petroleum
products; including all substances, materials and wastes regulated under
Applicable Law relating to Environmental or health and safety matters.
"HUMAN RIGHTS LEGISLATION" means the Human Rights, Citizenship and
Multiculturalism Act, R.S.A. 2000, C.H-14, as amended and the regulations
thereunder.
"INCOME TAX ACT" means the Income Tax Act R.S.C. 1985, c. l (5th Supplement), as
amended, and the Income Tax Regulations.
"INDEMNITEE" has the meaning specified in Section 6.10.
"INDEMNITOR" has the meaning specified in Section 6.10.
"INTEREST ON THE ASSET PURCHASE PRICE" means an adjustment to the Asset Purchase
Price computed as an amount equivalent to simple interest on the Asset Purchase
Price from (and including) the Effective Time to (but excluding) the Closing
Date at the Prime Rate plus one (1%), provided that if Closing is delayed beyond
September 3, 2004 due to the direct and proximate fault of CCNGP or CEHL,
interest shall cease to accrue upon the commencement of such delay.
"INTEREST ON THE TRUST UNIT PURCHASE PRICE" means an adjustment to the Trust
Unit Purchase Price computed as an amount equivalent to simple interest on the
Trust Unit Purchase Price from (and including) the Effective Time to (but
excluding) the Closing Date at the Prime Rate plus one percent (1%), provided
that if Closing is delayed beyond September 3, 2004 due to the direct and
proximate fault of CCNGP or CEHL, interest shall cease to accrue upon the
commencement of such delay.
"INTERIM PERIOD" means the period from the Effective Time until the Closing
Date.
"INTERIM PERIOD NET OPERATION REVENUES" has the meaning given to such term in
Section 7. 1(i).
"INTERIM PERIOD PRODUCTION" means Petroleum Substances which are (i) produced
from the White Map Area during the Interim Period and (ii) owned by the Vendor
at the time they are produced.
"INTERIM STATEMENT OF ADJUSTMENTS" has the meaning given to such term in Section
7.2.
"JV INSURANCE" means insurance, if any, maintained by an operator pursuant to a
Title and Operating Document for the benefit of CCNGP or any of its Affiliates
and one or more Third Parties.
"LIABILITIES" means any and all liabilities and obligations, whether under
common law, in equity, under Applicable Law or otherwise; whether tortious.
contractual, vicarious, statutory or otherwise; whether absolute or contingent;
and whether based on fault, strict liability or otherwise.
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"LICENCE TRANSFERS" means the transfers of Permits related to the Assets that
are in the name of CCNGP.
"LICENCEE LIABILITY RATING" means the licensee liability rating as set forth by
the EUB under ID-2001-8 and related EUB regulations, guidelines, interim
directives, information letters and policies.
"LISTED CONSULTANT" means the consultants of Vendor whose names are on the list
provided by Vendor to Gas Corp. pursuant to subsection 13.1(b).
"LISTED EMPLOYEES" means the employees of Vendor whose names are on the list
provided by Vendor to Gas Corp. pursuant to Subsection 13.1 (a).
"LOSSES" means, in respect of a Person and in relation to a matter, any and all
losses, damages, costs, expenses, charges (including all penalties, assessments
and fines) which such Person suffers, sustains, pays or incurs in connection
with such matter and includes reasonable costs of legal counsel (on a solicitor
and client basis) and other professional advisors and consultants and reasonable
costs of investigating and defending Claims arising from the matter, regardless
of whether such Claims are sustained and also includes Taxes on a settlement
payment or damage award in respect of such matter, but does not include
consequential or indirect losses.
"MATERIAL CONTRACTS" means any agreement that has, or to Vendors' knowledge may
have, a material adverse effect on the Assets or the Trust Units arising as a
result of the Trust's acquisition of the Trust Units, including without
limitation, those agreements listed in Schedule "L" (the "LISTED MATERIAL
CONTRACTS").
"MISCELLANEOUS INTERESTS" means the entire right, title, estate and interest of
CCNGP and its Affiliates (whether absolute or contingent, legal or beneficial)
in and to all property, assets, interests and rights associated with, or used in
connection with the Petroleum and Natural Gas Rights, the Tangibles or the
Seismic Data (other than the Petroleum and Natural Gas Rights, the Tangibles and
the Seismic Data), including the following to the extent they relate to the
Petroleum and Natural Gas Rights, the Tangibles or the Seismic Data:
(a) contracts and agreements, including the Title and Operating
Documents;
(b) records, files, reports, data and information, including well files,
lease files, agreement files and production records;
(c) Surface Interests;
(d) Xxxxx, including the wellbores thereof and the casing therein;
(e) computer hardware, printers, routers and software used exclusively
with SCADA and maintenance management systems and other computer
hardware and software used exclusively with field measurement
facilities;
(f) the Contract Operating Agreements; and
(g) production, accounting, environmental, facility and other records,
files, reports, data, correspondence and documents that, in CCNGP's
reasonable judgment, relate to the Assets, all title reports and
opinions relating to the Assets and all other reports, files, data,
and records prepared for the joint account,
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but excluding only the Excluded Assets.
"OPERATIONS" means any and all operations on or in respect of lands in the White
Map Area including drilling, completion, testing, recompleting, deepening,
plugging back, side tracking, whipstocking, fracing, stimulating, equipping,
operating and abandoning xxxxx; construction, repair, expansion,
decommissioning, maintenance and operation of oilfield facilities and equipment;
production, treatment, storage, processing, gathering, compression and
transportation of Petroleum Substances (including processing, treatment and
storage of sulphur); and geological, geophysical and seismic activities.
"ORIGINAL CLOSING DATE" has the meaning specified in Subsection 11.4(a).
"PARTY" means CCNGP, CEHL, Gas Corp. or the Trust and "PARTIES" means CCNGP,
CEHL, Gas Corp. and the Trust, collectively.
"PERMITS" means permits, licenses, approvals and authorizations issued or
granted by Government Authorities.
"PERMITTED ENCUMBRANCES" means:
(a) liens for Taxes, assessments and governmental charges which are not
due or delinquent or if due the validity of which is being
diligently contested in good faith by or on behalf of Vendor,
provided that any such lien which is being contested must be
disclosed in this Agreement in order to qualify as a Permitted
Encumbrance;
(b) mechanics', builders' and materialmen's liens in respect of services
rendered or goods supplied for which payment is not due;
(c) easements, rights of way, servitudes and other similar rights in
land, including rights of way and servitudes for highways and other
roads, railways, sewers, drains, gas and oil pipelines, gas and
water mains and electric light, power, telephone, telegraph and
cable television conduits, poles, wires and cables;
(d) the right reserved to or vested in any Government Authority by the
terms of any lease, license, franchise, grant or permit or by any
Applicable Law, to terminate any such lease, license, franchise,
grant or permit or to require payment of rent or other periodic
payments as a condition of the continuance thereof, provided that
any existing right of termination that has arisen as a result of a
default of the lessee shall not be considered a Permitted
Encumbrance;
(e) undetermined or inchoate liens (including processors', operators',
mechanics', builders', materialmen's and similar liens) incurred or
created as security in favour of the Person conducting Operations
arising in the ordinary course of business for the Vendors'
proportionate share of the costs and expenses of such Operations
which are not due or delinquent;
(f) liens or security granted in the ordinary course of business to a
public utility, municipality or Government Authority in connection
with Operations;
(g) the reservations, limitations, provisos and conditions in any
original grants or transfers from the Crown and exceptions to title
under Applicable Law;
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(h) rights of general application reserved to or vested in any
Government Authority to levy taxes on any of the Assets or the
income therefrom, or to limit, control or regulate any of the Assets
or Operations in any manner;
(i) any Security Interest held by a Person encumbering CCNGP's interest
in the Assets or any part or portion thereof, in respect of which
the Vendor delivers a release or no interest letter to Purchaser at
or prior to Closing in accordance with Section 4.1(g);
(j) the terms and conditions of the Title and Operating Documents,
including provisions for penalties and forfeitures arising under or
pursuant to any of the Title and Operating Documents, provided that
the following items must be identified in a Schedule to this
Agreement to qualify as Permitted Encumbrances:
(i) any overriding royalties, net profits interests or other
Encumbrances applicable to the Assets for which Purchaser will
assume responsibility;
(ii) any existing or potential alteration of the Vendor's interest
in the Assets because of a payout conversion or farmin,
farmout or other such agreement or as a result of any other
disposition of an interest in any of the Assets; and
(iii) any penalty or forfeiture that applies to the Assets at the
Effective Time because of Vendor's election not to participate
in a particular operation;
(k) the Rights of First Refusal applicable to the Assets described in
Schedule "A";
(l) the Encumbrances described in Schedules "A" and "D";
(m) the rights of Third Parties to purchase Petroleum Substances
pursuant to production sale contracts listed in Schedule "F" and any
other production sales contract terminable by Vendor on notice of 60
days or less;
(n) any Security Interest held by any Third Party encumbering any Third
Party's interest in and to lands within the White Map Area or any
part or portion thereof; and
(o) any defects or deficiencies in title to the Assets disclosed in this
Agreement and any Schedule and Title Defects that are waived or
deemed to be waived under Article 11.
"PERSON" means any individual or entity, including any partnership, body
corporate, trust, unincorporated organization, union, government or Government
Authority and any heir, executor, administrator or other legal representative of
an individual.
"PERSONAL INFORMATION" means the personal information of the Listed Employees
and Listed Consultants to be disclosed or conveyed to Gas Corp. or any of its
Related Parties by or on behalf of Vendor as a result of or in connection with
the Transaction, and includes all such personal information disclosed to Gas
Corp. or any of its Related Parties prior to the Closing Date.
"PETROLEUM AND NATURAL GAS RIGHTS" means all of the right, title, estate and
interest of CCNGP and its Affiliates (whether absolute or contingent, legal or
beneficial) in:
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(a) rights (including fee simple interests, leasehold interests and
working interests) to drill for and produce, save and market
Petroleum Substances from the White Map Area;
(b) lessor royalties, overriding royalties, net profits interests and
similar interests entitling the holder thereof to a share of the
Petroleum Substances produced from the White Map Area or to a
payment calculated by reference to the quantity of such production,
the proceeds from the sale thereof or the profits therefrom; and
(c) rights to acquire any of the foregoing.
"PETROLEUM SUBSTANCES" means petroleum, natural gas and all related hydrocarbons
(including liquid hydrocarbons) and all other substances, whether liquids, gases
or solids and whether hydrocarbons or not (including sulphur) produced in
association with petroleum, natural gas or related hydrocarbons to the extent
rights in respect of which are granted by the Title and Operating Documents.
"PRIME RATE" means for any day, the rate of interest expressed as a rate per
annum which The Bank of Nova Scotia, Main Branch, Calgary, Alberta, announces
publicly in Calgary, Alberta, from time to time as the reference rate used by it
for determining the rates of interest on Canadian dollar commercial loans made
by it in Canada and which it refers to as its "prime rate".
"PRODUCTION" means the Retained Production and the Interim Period Production.
"PURCHASE PRICE" means the amount set forth in Section 2.2.
"PURCHASER DEFAULT" means a breach of a representation or warranty made by Gas
Corp. or the Trust in Sections 5.4 or 5.5 or a breach by Gas Corp. or the Trust
of a covenant or agreement in this Agreement.
"RELATED PARTY" means, in reference to a Party: (i) its Affiliates, successors
and assigns; (ii) its directors, officers and employees; (iii) its Affiliates'
directors, officers and employees and (iv) its Representatives.
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Hazardous
Substance, oilfield wastes or produced water into or through the Environment.
"REPLY" has the meaning specified in Subsection 11.4(g).
"REPRESENTATIVES" means, in reference to a Party, its and its Affiliates'
representatives, agents, legal counsel, consultants and advisors.
"RETAINED PRODUCTION" means Petroleum Substances that are (i) produced from the
White Map Area prior to the Effective Time (ii) owned by CCNGP or its Affiliates
when produced and (iii) not past the point of delivery to the buyer thereof at
the Effective Time.
"RIGHT OF FIRST REFUSAL" or "ROFR" means a right of first refusal, pre-emptive
right of purchase or similar right whereby a Person, other than Gas Corp. or its
Affiliates, has the right to acquire or purchase all or a portion of the Assets
in accordance herewith.
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"ROFR ASSETS" has the meaning specified in Section 9.1.
"SCADA" means supervisory control and data acquisition.
"SCHEDULED ASSETS" means (i) the Petroleum and Natural Gas Rights set forth in
Part 2 of Schedule "A" and the Tangibles and Miscellaneous Interests directly
related thereto; and (ii) the Facilities interests set forth in Schedule "B".
"SECURITY INTEREST" means any mortgage, charge, pledge, lien, hypothec,
assignment by way of or in effect as security, or security interest whatsoever,
but does not include a right of set-off or a set-off.
"SEISMIC DATA" means all of the right, title, estate and interest of CCNGP and
its Affiliates (whether absolute or contingent, legal or beneficial) in data and
information including without limitation, interpretations and reprocessing in
respect of the seismic in the White Map Areas including the seismic described in
Schedule "E", to the extent such information is proprietary to CCNGP, or such
seismic which can be transferred lawfully by CCNGP to Gas Corp. and excluding
any and all other data and information that is owned by a Third Party and
licensed to CCNGP, provided that CCNGP shall use its reasonable efforts to allow
Gas Corp. to review such Third Party and licensed data at Vendors' offices as
requested by Gas Corp. up to the expiration of the Transition Period;
"SPECIFIC CONVEYANCES" means all conveyances, assignments, transfers, novations
and other documents or instruments that are reasonably required or desirable, in
accordance with normal oil and gas industry practices, to convey, assign and
transfer CCNGP's and its Affiliate's title to the Assets to Gas Corp. and to
novate Gas Corp. into the Title and Operating Documents that are contracts in
the place and stead of CCNGP and its Affiliates to the extent they relate to the
Assets.
"SUBMISSION DATE" has the meaning specified in Subsection 11.4(e).
"SURFACE INTERESTS" means all rights of CCNGP to enter upon, use, occupy and
enjoy the surface of lands for purposes related to the use, ownership or
operation of the Petroleum and Natural Gas Rights, the Xxxxx or the Tangibles or
gaining access thereto, whether the same are held in fee simple, by lease, by
right-of-way, or otherwise.
"SUPPORTING STATEMENT" has the meaning specified in Subsection 11.4(e).
"TANGIBLES" means all of the right, title, estate and interest of CCNGP and its
Affiliates (including leasehold interests and whether absolute or contingent,
legal or beneficial) in:
(a) the Facilities; and
(b) the following that are used or held for use in respect of the
Petroleum and Natural Gas Rights, the Xxxxx or the Facilities and
that are located in the White Map Area:
(i) all tangible depreciable equipment and facilities used in the
production, dehydration, processing, gathering, treatment,
measurement, storage or transportation of Petroleum
Substances, including: gas plants; oil batteries; buildings;
compressors; production equipment; active, inactive or
decommissioned pipelines and tangible equipment;
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wellheads, pipelines, gathering lines; flow lines; pipeline
connections; meters; generators; motors; compressors;
treaters; dehydrators; scrubbers; separators; pumps;
pumpjacks; tanks and boilers;
(ii) field offices, including all leasehold improvements, furniture
and office supplies located therein;
(iii) motorized vehicles;
(iv) tangible equipment used exclusively with SCADA, maintenance
management systems and field measurement facilities;
(v) satellite communications equipment, excluding satellite
communications equipment used to send information from the
field to CCNGP's head office in Calgary; and
(vi) all inventory located within the White Map Area and all other
inventory wherever located that was purchased for, is used or
is intended to be used in association with the Assets and the
proceeds of the sale of all inventory sold from and after the
Effective Date,
but excluding only Excluded Assets.
"TAXES" means all income, capital, sales, excise, value added, goods and
services, customs, duties and property taxes; all other fees, assessments
withholdings and charges imposed by Government Authorities; and all penalties,
interest and fines or additions attributable to or imposed on or with respect to
such taxes, fees, assessments withholdings and charges.
"THIRD PARTY" means any Person other than Vendor, Gas Corp., the Trust and their
respective Affiliates.
"THIRTEENTH MONTH ADJUSTMENT" means a reconciliation payment made pursuant to an
agreement which provides that during a period (usually a calendar year) revenues
and/or expenses will be distributed to or paid by one or more parties to the
agreement on the basis of estimates thereof and following the end of the period
(usually the first calendar month after the end of the period), the actual
amount of the revenues or costs will be determined and a reconciliation between
the estimated amounts and the actual amounts will be made.
"TITLE AND OPERATING DOCUMENTS" means:
(a) petroleum and/or natural gas leases, permits and licenses (whether
freehold or Crown), titles evidencing fee simple interests and
similar instruments;
(b) agreements relating to the ownership, operation or development of
the Assets entered into in the normal course of the oil and gas
business, including, without limitation: operating procedures; unit
agreements; unit operating agreements; agreements for the
construction, ownership and operation of gas plants, batteries,
pipelines, gas gathering systems and similar facilities; pooling
agreements; royalty agreements; farmin and farmout agreements; joint
operating agreements, participation and subparticipation agreements;
trust declarations and agreements; purchase and sale agreements,
asset exchange agreements; agreements providing for the gathering,
measurement, processing, compression or transportation of Petroleum
- 18 -
Substances; common stream agreements; well operating contracts and
surface leases, pipeline easements, road use agreements and other
contracts granting Surface Interests; and
(c) Permits pertaining to the ownership of the Assets or Operations;
(d) but excluding only Excluded Assets.
"TITLE DEFECT" means a defect, discrepancy or deficiency in the title of CCNGP
to any of the Assets which is such that a reasonable, prudent and otherwise
willing buyer of the Assets affected thereby would refuse to purchase such
Assets for a price equal to the fair market value thereof (determined as if such
defect, discrepancy or deficiency did not exist) solely because of such defect,
discrepancy or deficiency; but specifically excludes:
(a) CCNGP's interests as described in Schedule "A" having converted from
a before-payout interest to an after-payout interest as a result of
payout having occurred prior to Closing;
(b) Permitted Encumbrances;
(c) failure to confirm delay rental payments, where the failure to pay
such payments will not result in termination or an obligation to pay
material costs or expenses;
(d) CCNGP's or any predecessor's interest being a beneficial interest
rather than a legal interest;
(e) items disclosed in the Schedules hereto; or
(f) any missing or unsigned documents the terms of which could not
result in a reduction of CCNGP's interest or an Encumbrance on
CCNGP's interest reflected in Schedule "A".
"TITLE DEFECT NOTICE" has the meaning specified in Subsection 11.1(a).
"TITLE DEFECT VALUE" has the meaning specified in Subsection 11.1(a).
"TITLE EVALUATOR" has the meaning specified in Subsection 11.4(c).
"TRANSACTION" means the sale and purchase of the Assets and the Trust Units as
contemplated by this Agreement.
"TRANSITION PERIOD" means the period commencing on the day after the Closing
Date and terminating at 4:00 p.m. (Calgary time) on approximately October 29,
2004.
"TRANSITIONAL EMPLOYEES" means those Listed Employees who remain employed by
CCNGP during the Transition Period.
"TRANSITIONAL CONSULTANTS" means those Listed Consultants who agree to provide
services during the Transition Period.
"TRUST UNIT PURCHASE PRICE" means the amount set forth in Section 2.2.
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"TRUST UNITS" means 6,766.540 trust units of CNGT, representing 25% of all of
the issued and outstanding securities of CNGT, including without limitation, all
rights to acquire any such securities;
"UNCURED TITLE DEFECT" has the meaning specified in Subsection 11.2(b).
"UNCURED TITLE DEFECTS VALUE" has the meaning specified in Subsection 11.2(b).
"VENDOR DEFAULT" means a breach of a representation or warranty made by Vendor
in Section 5.1 or Section 5.2, or a breach by Vendor of a covenant or agreement
in this Agreement.
"XXXXX" means all xxxxx located in the White Map Area in which CCNGP has an
interest, including all producing, shut-in, suspended, abandoned, capped,
injection and disposal xxxxx, and without limiting the foregoing, includes any
well set out in Schedule "G".
"WHITE MAP AREA" means all lands outlined on the plat(s) comprising Part 1 of
Schedule "A" and includes, as the context requires, the surface of such lands
and the Petroleum Substances within such lands.
1.2 INTERPRETATION
Unless otherwise stated or the context otherwise necessarily requires, in this
Agreement:
(a) references herein to any agreement or instrument, including this
Agreement, shall be a reference to the agreement or instrument as
varied, amended, modified, supplemented or replaced from time to
time;
(b) the terms "in writing" or "written" include printing, typewriting or
facsimile transmission;
(c) references to a statute shall be a reference to (i) such enactment
as amended or reenacted from time to time and every statute that may
be substituted therefor; and (ii) the regulations, bylaws or other
subsidiary legislation made pursuant to such statute;
(d) words importing the singular number only shall include the plural
and vice versa, and words importing the use of any gender shall
include all genders,
(e) a reference to time shall, unless otherwise specified, refer to
Mountain Standard Time or Mountain Daylight Savings Time during the
respective intervals in which each is in force in Alberta;
(f) "including", "includes" and like terms means "including without
limitation" and "includes without limitation";
(g) the headings of Articles, Sections, Subsections and Paragraphs in
this Agreement are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement;
(h) the terms "this Agreement", "hereof, "hereunder" and similar
expressions refer to this Agreement in its entirety and include any
agreement supplemental hereto;
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(i) unless something in the subject matter or context is inconsistent
therewith, references herein to Articles, Sections, Subsections and
Paragraphs are to Articles, Sections, Subsections and Paragraphs of
this Agreement and references herein to Schedules are references to
Schedules to this Agreement, and
(j) subject to Article 16, all references to Vendor and Purchaser in
this Agreement shall be deemed to include Vendor and Vendors'
Affiliates and Purchaser and Purchasers' Affiliates (as applicable)
and, where appropriate, Vendors' Related Parties and Purchaser's
Related Parties (as applicable) and all such references to Vendor
and Purchaser shall be read according to the context of the
Agreement with respect to applicability to the Assets or the Trust
Units.
1.3 INTERPRETATION IF CLOSING DOES NOT OCCUR
In the event that Closing does not occur, each provision of this Agreement which
presumes that Gas Corp. has acquired the Assets and the Trust has acquired the
Trust Units shall be construed as having been contingent upon Closing having
occurred.
1.4 CONFLICTS
If there is any conflict or inconsistency between a provision of the body of
this Agreement and that of a Schedule or a conveyance document, the provision of
the body of this Agreement shall prevail.
1.5 SCHEDULES
The following Schedules are incorporated herein by reference and made a part of
this Agreement:
Schedule "A"
Part 0 Xxxxx Xxx Xxxx Xxxx Xxxx(x)
Part 2 Description of Scheduled Petroleum and Natural Gas Rights
Schedule "B" Facilities
Schedule "C" General Conveyance
Schedule "D" Claims
Schedule "E" Seismic
Schedule "F" Contracts Disclosure
Schedule "G" Xxxxx
Schedule "H" Officer's Certificate
Schedule "I" Outstanding AFEs
Schedule "J" Call on Production Agreement
Schedule "K" ROFRs
Schedule "L" Listed Material Agreements
1.6 VENDORS' KNOWLEDGE
For all purposes of this Agreement, the knowledge of Vendor consists of the
actual knowledge of its current employees at or above the supervisory level and
who are primarily responsible for the matter in question in the course of their
normal duties after reasonable inquiry. For these purposes, knowledge does not
include the knowledge of any other Person or constructive knowledge. Neither
Vendor nor any of such employees has any obligation to make additional inquiry
of any Person, any files and records or any Government Authority in connection
with representations and warranties that are made to Vendor's knowledge.
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ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE AND SALE
Upon the terms and subject to the conditions of this Agreement: (a) CCNGP agrees
to sell the Assets to Gas Corp., and Gas Corp. agrees to purchase the Assets
from CCNGP on the Closing Date; and (b) CEHL agrees to sell the Trust Units to
the Trust, and the Trust agrees to purchase the Trust Units from CEHL on the
Closing Date.
2.2 BID PRICE, PURCHASE PRICE AND ADJUSTED PURCHASE PRICE
The price to be paid by Gas Corp. to CCNGP for the Assets shall be the following
amount:
(a) SEVEN HUNDRED FORTY SEVEN MILLION DOLLARS ($747,000,000) to CCNGP as
full consideration for the purchase of the Assets (the "ASSET BID
PRICE") less the adjustments (if any) to the Asset Bid Price on
account of exercised Rights of First Refusal and Uncured Title
Defects pursuant to Article 9 and Article 11 (the Asset Bid Price
less the amount of such adjustments is the "ASSET PURCHASE PRICE");
plus
(b) the Interest on the Asset Purchase Price; plus or minus
(c) the net amount of the adjustment pursuant to Article 7 in respect of
the Interim Period;
(collectively the "ADJUSTED ASSET PURCHASE PRICE").
The price to be paid by the Trust to CEHL for the Trust Units shall be the
following amount:
(d) Seventy-Eight Million Dollars ($78,000,000) to CEHL as full
consideration for the purchase of the Trust Units (the "TRUST UNIT
PURCHASE PRICE"); plus
(e) the Interest on the Trust Unit Purchase Price; minus
(f) the aggregate amount of any and all distributions or any other
benefits paid or payable by or on behalf of CNGT to CEHL in respect
of the Trust Units for the period from July 1, 2004 up to the day
immediately prior to the Closing Date (the "DISTRIBUTIONS");
(collectively the "ADJUSTED TRUST UNIT PURCHASE PRICE"). The Adjusted Asset
Purchase Price and the Adjusted Trust Unit Purchase Price shall hereinafter be
referred to collectively as the "PURCHASE PRICE".
2.3 PAYMENT OF ADJUSTED ASSET PURCHASE PRICE AND ADJUSTED TRUST UNIT PURCHASE
PRICE
The Adjusted Asset Purchase Price shall be paid by Gas Corp. to CCNGP as
follows:
(a) the Deposit shall be paid to CCNGP in accordance with Section 2.4;
(b) at Closing, subject to Section 4.4, Gas Corp. shall pay to CCNGP an
amount equal to the aggregate of:
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(i) the Adjusted Asset Purchase Price, minus
(ii) the Deposit (and any interest earned thereon in accordance
with Subsection 2.4(a)).
At Closing, subject to Section 4.4, the Trust shall pay to CEHL an amount equal
to the Adjusted Trust Unit Purchase Price.
2.4 DEPOSIT
(a) Upon execution and delivery of this Agreement, Gas Corp. shall pay
an amount equal to Thirty Seven Million Five Hundred Thousand
($37,500,000) (the "DEPOSIT") as a deposit against the payment of
the Asset Purchase Price. The Deposit shall be held in escrow in an
interest bearing account by the Escrow Agent and shall be dealt with
by the Escrow Agent, all in accordance with the terms of this
Agreement.
(b) If Closing occurs, the Deposit shall be applied to payment of the
Adjusted Asset Purchase Price.
(c) If Closing does not occur due to a Purchaser Default, the Deposit
and the interest earned thereon while held by Escrow Agent shall be
forfeited to CCNGP for its own account absolutely as the genuine
pre-estimate by CCNGP and Gas Corp. of CCNGP's liquidated damages as
a result of Closing not occurring, in full and final satisfaction of
Gas Corp.'s obligations under this Agreement and CCNGP shall have no
further rights or remedies whatsoever under this Agreement or
otherwise as a result of any Purchaser Default.
(d) If Closing does not occur for any reason or circumstance other than
a Purchaser Default, the Deposit plus interest thereon at the Prime
Rate plus one percent (1%) shall be returned to Gas Corp. for the
account of Gas Corp. absolutely.
2.5 GST AND OTHER SALES TAXES
(a) The Asset Purchase Price does not include GST or any provincial
sales taxes that may be applicable to the sale of the Assets
hereunder. Unless Gas Corp. elects to proceed under Subclause 2.5(d)
at Closing, Gas Corp. shall pay to CCNGP an amount equal to seven
percent (7%) of the portion of the Adjusted Asset Purchase Price
allocated to Tangibles, Seismic Data and Miscellaneous Interests
pursuant to Section 2.6. CCNGP shall remit such amount to the
appropriate taxation authorities in accordance with the GST
Legislation. Each of CCNGP and Gas Corp. represents that it holds a
valid GST registration account number at the date of Closing and
that its registration number for GST purposes is:
CCNGP: 897181517
Gas Corp.: 89963 1105 RT0001
(b) At Closing, Gas Corp. will also remit to CCNGP any provincial sales
taxes that CCNGP is required to collect from Gas Corp. under
Applicable Law in respect of the Transaction. CCNGP shall remit such
amounts to the appropriate taxation authorities in accordance with
Applicable Law.
- 23 -
(c) After Closing, Gas Corp. shall be responsible for, and shall
indemnify and save CCNGP and its Related Parties harmless in respect
of, any and all GST and sales taxes imposed by a Government
Authority (including interest and penalties) in respect of the
Transaction which are in excess of the amounts collected by CCNGP
from Gas Corp. at Closing.
(d) If requested by Gas Corp., CCNGP and Gas Corp. shall jointly elect
at Closing pursuant to Section 167 of the Excise Tax Act (Canada) to
have the provisions thereof concerning the acquisition of part of a
business applied to this Transaction and Gas Corp. undertakes to
file such election with the Canada Revenue Agency in a timely and
proper fashion. Gas Corp. shall be liable for and, in addition,
shall indemnify CCNGP from any and all claims, liabilities, actions,
proceedings, demands, losses, costs, penalties, GST payable, fines,
damages, interest and expenses suffered by or sustained by CCNGP
pertaining to this election.
2.6 ALLOCATION OF ADJUSTED ASSET PURCHASE PRICE
(a) CCNGP and Gas Corp. shall allocate the Adjusted Asset Purchase Price
for all purposes (including for purposes of the Income Tax Act and
the GST Legislation) as follows:
(i) Petroleum & Natural Gas Rights: $591,919,999.20
(ii) Tangibles: $147,979,999.80
(iii) Seismic Data: $ 7,100,000.00
(iv) Miscellaneous Interests: $ 1.00
---------------
$747,000,000.00
(b) CCNGP and Gas Corp. shall allocate the Interest on the Asset
Purchase Price and all adjustments to the Asset Purchase Price
calculated pursuant to Article 7 for all purposes (including for
purposes of the Income Tax Act and the GST Legislation) to the
Petroleum and Natural Gas Rights.
2.7 FORM OF PAYMENT
All payments to be made pursuant to this Agreement shall be made in immediately
available Canadian funds. Payments to be made at or prior to Closing shall be
made by wire transfer while payments to be made after Closing may be made by
wire transfer, certified cheque or bank draft.
ARTICLE 3
CLOSING
3.1 PLACE AND DATE OF CLOSING
Closing shall take place at the Closing Place on the Closing Date if there has
been satisfaction or waiver of the conditions of Closing herein contained.
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3.2 TRANSFER OF OWNERSHIP AND RISK
The transfer of the Assets from CCNGP to Gas Corp. and the transfer of the Trust
Units from CEHL to the Trust and the assumption of the benefits, obligations and
risks associated with the Assets by Gas Corp. and the Trust Units by the Trust
will be effective as of the Effective Time, provided Closing occurs. Possession
of the Assets will pass to Gas Corp. upon Closing and transfer of ownership of
the Trust Units to the Trust will occur upon Closing.
3.3 VENDOR DELIVERIES AT CLOSING
At Closing, CCNGP shall deliver, or cause to be delivered, to Gas Corp., the
following:
(a) the General Conveyance executed by CCNGP;
(b) a receipt for payment of the Adjusted Asset Purchase Price payable
pursuant to Subsection 2.3(b);
(c) copies of all Third Party consents to the sale of the Assets
pursuant hereto obtained prior to Closing and copies of all Right of
First Refusal notices sent by CCNGP and notices of exercise and
waivers of Rights of First Refusal provided by Third Parties at or
prior to Closing;
(d) the Specific Conveyances referred to in Section 3.5 executed by
CCNGP;
(e) an officer's certificate of CCNGP in the form of Schedule "H"
attached hereto;
(f) the Call on Production Agreement and any agreed security related
thereto, in each case duly executed by the parties (other than Gas
Corp.) expressed to be party thereto;
(g) the election referred to in Schedule 2.5(d), if applicable, duly
executed by CCNGP;
(h) a certified copy of a partners' resolution approving the
Transaction; and
(i) any other documents required to be delivered by CCNGP to Gas Corp.
at Closing pursuant to this Agreement.
At Closing, CEHL shall deliver, or cause to be delivered, to the Trust, the
following:
(j) documentation evidencing the transfer of ownership of the Trust
Units from CEHL to the Trust in form satisfactory to the Trust, in
its sole discretion;
(k) information acceptable to the Trust, acting reasonably, of the
status and plans relating to following agreements:
(i) the Services Agreement dated October 15, 2003 among Calpine
Natural Gas, L.P., Calpine Natural Gas Limited, Calpine
Natural Gas Holdings Limited and Calpine Natural Gas Services
Limited; and
(ii) the Energy Management Services Agreement dated October 15,
0000 xxxxxxx Xxxxxxx Xxxxxx Natural Gas Partnership and
Calpine Natural Gas, L.P.;
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(l) a certified copy of a resolution of the board of directors of CEHL
approving the sale of the Trust Units from CEHL to the Trust; and
(m) any other documents required to be delivered by CEHL to the Trust at
Closing pursuant to this Agreement.
3.4 DELIVERIES OF GAS CORP. AND THE TRUST AT CLOSING
At Closing, Gas Corp. shall deliver, or cause to be delivered, to CCNGP, the
following:
(a) the amount payable by Gas Corp. at the Closing pursuant to Section
2.3(b);
(b) an officer's certificate of Gas Corp. in the form of Schedule "H";
(c) the election referred to in Section 2.5(d), if applicable, duly
executed by Gas Corp;
(d) copies of the Competition Act Approval; and
(e) any other documents required to be delivered by Gas Corp. to CCNGP
at the Closing pursuant to this Agreement.
In addition, at or before Closing, Gas Corp. shall execute the Specific
Conveyances and the General Conveyance tabled by CCNGP pursuant to Section 3.3.
At Closing, the Trust shall deliver, or cause to be delivered, to CEHL, the
following:
(f) the amount payable by the Trust at the Closing pursuant to Section
2.3;
(g) an officer's certificate of the Trust substantially in the form of
Schedule "H"; and
(h) any other documents required to he delivered by the Trust to CEHL at
the Closing pursuant to this Agreement.
3.5 SPECIFIC CONVEYANCES
(a) CCNGP shall use commercially reasonable efforts to prepare the
Specific Conveyances at its cost prior to Closing, provided that if
all Specific Conveyances are not delivered at Closing, the balance
of the Specific Conveyances outstanding shall be delivered within 30
days following Closing. None of the Specific Conveyances shall
confer or impose upon a Party any greater right or obligation than
contemplated in this Agreement. It shall not be necessary for those
Specific Conveyances that are prepared and circulated to Gas Corp.
in a reasonable time prior to Closing to have been executed prior to
or at Closing by Third Parties. Promptly after Closing, and at Gas
Corp.'s cost, CCNGP shall deliver all Specific Conveyances to Third
Parties and Government Authorities in accordance with normal
industry practices and shall attend to the registration of Specific
Conveyances with Government Authorities in accordance with normal
industry practices. Gas Corp. shall use all reasonable efforts to
become, as soon as reasonably practicable following Closing, the
recognized and beneficial holder of the Assets in the place and
stead of CCNGP, and shall where CCNGP is the registering party,
promptly take whatever steps are necessary to verify such
registrations.
- 26 -
(b) Gas Corp. shall bear all costs, fees and deposits of every nature
and kind incurred (whether by CCNGP or Gas Corp.) in registering any
Specific Conveyances and registering any further assurances required
to convey the Assets to Gas Corp.
(c) By notice delivered to Gas Corp. not later than three Business Days
prior to the Closing Date, CCNGP may request Gas Corp. to pay to
CCNGP at Closing CCNGP's bona fide estimate as set forth in the
notice of the costs, fees and deposits referred to in Subsection
3.5(b). In that event, Gas Corp. shall pay such amount to CCNGP at
Closing and if the estimate is less than the actual amount of the
costs, fees and deposits, Gas Corp. shall pay the deficiency
shortfall to CCNGP promptly after receipt of a request therefor, and
if the estimate exceeds the actual amount of the costs, fees and
deposits, CCNGP shall reimburse the excess to Gas Corp.
3.6 POST - CLOSING DELIVERIES
CCNGP shall deliver or cause to be delivered to Gas Corp. within 30 days
following Closing, the original copies of the Title and Operating Documents and
the original copies of records, documents, licenses, reports and data including,
to the extent available, electronic records comprising Miscellaneous Interests,
which are now in the possession of CCNGP or to which CCNGP has reasonable
access. Notwithstanding the foregoing, if and to the extent such contracts,
agreements, records, documents, licenses, reports and data also pertain to
interests other than the Assets, photocopies or other copies may be provided to
Gas Corp. in lieu of original copies.
ARTICLE 4
CONDITIONS OF CLOSING
4.1 CONDITIONS OF GAS CORP. AND THE TRUST
The obligation of Gas Corp. to complete the acquisition of the Assets pursuant
hereto is subject to the following conditions, which are for the exclusive
benefit of Gas Corp. and may be waived in whole or in part by Gas Corp. by
written notice to CCNGP at or before Closing:
(a) COMPETITION ACT APPROVAL: The Competition Act Approval shall have
been obtained on terms acceptable to Gas Corp. acting reasonably;
(b) REPRESENTATIONS AND WARRANTIES: The representations and warranties
of CCNGP in Section 5.1 shall be true when made and as of the
Closing Date except to the extent that does not, in the aggregate,
have a material adverse effect on the value of the Assets and CCNGP
shall have delivered an officer's certificate in the form of
Schedule "H" to that effect to Gas Corp. at Closing;
(c) COMPLIANCE WITH COVENANTS: CCNGP shall have performed or complied in
all material respects with all of its obligations, covenants and
agreements contained in this Agreement to be performed or complied
with by CCNGP at or prior to Closing, except to the extent that dues
not, in the aggregate, have a material adverse effect on the value
of the Assets;
(d) NO ACTION OR PROCEEDING: At the time Closing occurs, no Claim shall
be pending before any court or Government Authority seeking to
restrain or prohibit the purchase and sale of the Assets
contemplated hereby or to obtain material damages or other relief in
connection with the consummation of the Transaction, excluding
Claims in respect of Rights of First Refusal;
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(e) DAMAGE TO THE TANGIBLES: If there has been physical damage to the
Tangibles, between the date hereof and the Closing Date, the costs
of repairing all of such damage shall not exceed $20,000,000;
(f) CLOSING DELIVERIES: CCNGP shall have complied with its obligations
under Section 3.3; and
(g) DISCHARGES: CCNGP shall have delivered to Gas Corp. releases and
registerable discharges or no-interest letters in form and substance
satisfactory to Gas Corp., acting reasonably, from all parties
holding security interests or similar encumbrances in the Assets,
except to the extent that such security interests or encumbrances do
not, in the aggregate, exceed $20,000,000.
The obligation of the Trust to complete the acquisition of the Trust Units
pursuant hereto is subject to the following conditions, which are for the
exclusive benefit of the Trust and may be waived in whole or in part by the
Trust by written notice to CEHL at or before Closing:
(h) REPRESENTATIONS AND WARRANTIES: The representations and warranties
of CEHL in Section 5.2 shall be true when made and as of the Closing
Date except to the extent that does not, in the aggregate, have a
material adverse effect on the value of the Trust Units and CEHL
shall have delivered an officer's certificate in the form of
Schedule "H" to that effect to the Trust at Closing;
(i) COMPLIANCE WITH COVENANTS: CEHL shall have performed or complied in
all material respects with all of its obligations, covenants and
agreements contained in this Agreement to be performed or complied
with by CEHL at or prior to Closing, except to the extent that does
not, in the aggregate, have a material adverse effect on the value
of the Trust Units;
(j) NO ACTION OR PROCEEDING: At the time Closing occurs, no Claim shall
be pending before any court or Government Authority seeking to
restrain or prohibit the purchase and sale of the Trust Units
contemplated hereby or to obtain material damages or other relief
from CEHL in connection with the completion of the purchase and sale
of the Trust Units contemplated hereby;
(k) RESIGNATION OF DIRECTORS: Xxxx X. Xxxxxxxx, Xxxx Xxxxxx and Xxxx
Xxxx shall have resigned as directors of Calpine Natural Gas Limited
and each of its Affiliates;
(I) AVAILABLE EXEMPTION: If the purchase price per Trust Unit exceeds
115% of the "market price" of the trust units of CNGT, determined in
accordance with section 161(l)(c) of the Securities Act (Alberta)
and section 172 of the Alberta Securities Commission Rules (General)
(and the equivalent provisions of other applicable securities laws),
the Trust shall have available to it an alternative and proper
exemption(s) to satisfy applicable securities laws with respect to
prospectus, registration and take-over bid requirements:
(m) COMPLETION OF ASSET ACQUISITION: Gas Corp. shall have completed the
acquisition of the Assets; and
(n) CLOSING DELIVERIES: CEHL shall have complied with its obligations
under Section 3.3.
(o) AGREEMENTS UNAMENDED: At the time Closing occurs, none of the Listed
Material Contracts shall have been amended, modified or assigned.
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4.2 VENDOR CONDITIONS
The obligation of CCNGP to complete the sale of the Assets pursuant hereto is
subject to the following conditions, which are for the exclusive benefit of
GCNGP and may be waived in whole or in part by CCNGP by written notice to Gas
Corp. at or before Closing:
(a) COMPETITION ACT APPROVAL: The Competition Act Approval shall have
been obtained at or prior to Closing, on terms acceptable to CCNGP
acting reasonably;
(b) REPRESENTATIONS AND WARRANTIES: The representations and warranties
of Gas Corp. in Section 5.4 shall be true when made and as of the
Closing Date, except to the extent that does not, in the aggregate,
have a material adverse effect on CCNGP, and Gas Corp. shall have
delivered an officer's certificate in the form of Schedule "II" to
that effect to CCNGP at Closing;
(c) COMPLIANCE WITH COVENANTS: Gas Corp. shall have performed or
complied in all material respects with all of its obligations,
covenants and agreements contained in this Agreement to be performed
or complied with by Gas Corp. at or prior to Closing, except to the
extent that such non-compliance does not have an adverse effect on
Gas Corp.'s ability to complete the acquisition of the Assets;
(d) TENDER: Gas Corp. shall have tendered or caused to be tendered to
CCNGP, all amounts to be paid by Gas Corp. to CCNGP at Closing in
the form stipulated in this Agreement;
(e) NO ACTION OR PROCEEDING: At the time Closing occurs, no Claim shall
be pending before any court or Government Authority seeking to
restrain or prohibit the purchase and sale of the Assets
contemplated hereby or to obtain material damages or other relief
from CCNGP in connection with the completion of the purchase and
sale of the Assets contemplated hereby excluding Claims in respect
of Rights of First Refusal; and
(f) CLOSING DELIVERIES: Gas Corp. shall have complied with its
obligations under Section 3.4.
(g) CORPORATE APPROVAL: Calpine Corporation shall have approved the
Transaction on behalf of Vendor on or before August 16, 2004.
The obligation of CEHL to complete the sale of the Trust Units pursuant hereto
is subject to the following conditions, which are for the exclusive benefit of
CEHL and may be waived in whole or in part by CEHL by written notice to the
Trust at or before Closing:
(h) REPRESENTATIONS AND WARRANTIES: The representations and warranties
of the Trust in Section 5.5 shall be true when made and as of the
Closing Date, except to the extent that does not, in the aggregate,
have a material adverse effect on CEHL, and the Trust shall have
delivered an officer's certificate substantially in the form of
Schedule "H" to that effect to CEHL at Closing;
(i) COMPLIANCE WITH COVENANTS: The Trust shall have performed or
complied in all material respects with all of its obligations,
covenants and agreements contained in this Agreement to be performed
or complied with by the Trust at or prior to Closing, except to the
extent that such non-compliance does not have an adverse effect on
the Trust's ability to complete the acquisition of the Trust Units;
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(j) TENDER: The Trust shall have tendered or caused to be tendered to
CEHL, all amounts to be paid by the Trust to CEHL at Closing in the
form stipulated in this Agreement;
(k) NO ACTION OR PROCEEDING: At the time Closing occurs, no Claim shall
be pending before any court or Government Authority seeking to
restrain or prohibit the purchase and sale of the Trust Units
contemplated hereby or to obtain material damages or other relief
from CEHL in connection with the completion of the purchase and sale
of the Trust Units contemplated hereby; and
(l) CLOSING DELIVERIES: The Trust shall have complied with its
obligations under Section 3.4.
4.3 EFFORTS TO FULFILL CONDITIONS
(a) Each of the Parties shall proceed diligently, honestly and in good
faith and use all reasonable efforts to satisfy and comply with and
assist in the satisfaction of and compliance with the conditions set
forth in Sections 4.1 and 4.2.
(b) Gas Corp. shall provide Vendor with copies of the Competition Act
Approval immediately upon receipt of same.
(c) The Parties shall use all reasonable efforts to obtain the
Competition Act Approval prior to Closing. Gas Corp. shall promptly
(and in any event, within 14 days following the date of execution of
this Agreement) give the requisite notice of the Transaction under
Section 114 of the Competition Act and/or file a request for an
advance ruling certificate under Section 102 of the Competition Act
in respect of the Transaction and Gas Corp. shall pay the applicable
filing fee and all Taxes thereon. Notwithstanding the foregoing,
Vendor shall co-operate with and provide reasonable assistance to
Gas Corp. in the preparation of such notice and/or request.
Purchaser shall provide to Vendor in advance copies of all
applications and filings for approval by Vendor, not to be
unreasonably withheld.
(d) Notwithstanding Section 3.5, any transfer or assignment of Title and
Operating Documents requiring notice to or consent from a Third
Party (including transfers of Permits requiring approvals of
Government Authorities other than Customary Post Closing Consents)
shall not be assigned or transferred to Gas Corp. until and unless
the notice or consent requirements have been satisfied. Each Party
shall use commercially reasonable efforts, as to matters within its
control, to satisfy such requirements as of the Closing Date, and
Gas Corp. shall furnish any deposits or security reasonably required
to complete such transfers and assignments in accordance with normal
industry practices or the provisions of the Title and Operating
Documents or Applicable Law after the applicable consent or approval
has been obtained. If any such consent or notice requirement (other
than Customary Post Closing Consents) is not satisfied as of
Closing, the Parties shall consider whether to exclude the affected
Title and Operating Documents from the sale of the Assets pursuant
hereto or to enter into alternative arrangements, including escrow
arrangements but, regardless of such circumstances (and subject to a
reasonable materiality standard), the sale of the Assets shall be
completed.
(e) On or after the Closing Date, Gas Corp. shall take reasonable steps
to cause to be released and returned to CCNGP any guarantees, bonds
or other security provided by CCNGP or any of its Affiliates to
Government Authorities or other Third Parties in connection with the
Assets by arranging for and providing substitute security therefor
provided that such obligation shall not arise until after any
required consent or approval has been obtained.
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(f) If a Party for whose benefit a condition has been included in
Section 4.1 or 4.2 fails to notify the other applicable Party at
or prior to Closing as to whether or not the condition has been
satisfied or complied with, the condition shall be conclusively
deemed to have been waived by such Party.
4.4 FAILURE OF A CONDITION
If a condition in Sections 4.1 or 4.2 has not been satisfied on or before the
Closing Date and such condition has not been waived in writing by the Party for
whose benefit such condition has been included herein, such Party may terminate
this Agreement by written notice to the other Parties prior to the Closing,
provided that a Party shall not be permitted to exercise or purport to exercise
any right of termination pursuant to this Section 4.4 if the event or
circumstances giving rise to such right is due to a Default by such Party.
4.5 EFFECT OF TERMINATION
If this Agreement is terminated prior to the Closing occurring pursuant to
Section 4.3(d), 4.4 or 11.3(a)(iii), the Parties shall be released from all
obligations under this Agreement except as follows:
(a) subject to Section 2.4, a Party shall remain liable for Defaults by
it prior to the termination;
(b) the provisions of Section 2.4 shall remain in effect and be binding
and enforceable in accordance with its terms; and
(c) the Confidentiality Agreement shall remain in full force and effect
in accordance with its terms.
Subject to the foregoing provisions of this Section, following such termination,
each Party shall be responsible for the costs and expenses incurred by it in
connection with this Agreement and the Transaction.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF CCNGP
CCNGP represents and warrants to Gas Corp., that, except for matters disclosed
in the Schedules and subject in all instances to the Permitted Encumbrances:
(a) ORGANIZATION AND STANDING: CCNGP is a general partnership, duly
organized and validly subsisting under the laws of its jurisdiction
of organization and is duly qualified under the jurisdictions in
which it is required to be qualified in order for it to own the
Assets;
(b) CAPACITY, POWER, AUTHORIZATION, EXECUTION AND ENFORCEABILITY: CCNGP
has the requisite capacity, power and authority to execute, deliver
and perform its obligations under this Agreement and all of the
agreements, instruments and other documents contemplated hereby. The
execution, delivery and performance of this Agreement and the
completion of the Transaction have been duly and validly authorized
by any and all requisite actions of CCNGP and provided the
Competition Act Approval is obtained, do not and will not result in
any violation of, be in conflict with, or constitute a default
under, its articles, charter, by-laws, partnership agreement or
other governing documents, as the case may be and no other
authorization or approval or other action by. and no notice to or
filing with any Governmental
- 31 -
Authority or regulatory body exercising jurisdiction over the Assets
or CCNGP is required for the due execution, delivery and performance
by CCNGP. This Agreement and any other agreement delivered in
connection herewith, to which CCNGP is party, has been or will at
the appropriate time be validly executed and delivered by CCNGP and
constitute valid and binding obligations of CCNGP and provided the
Competition Act Approval is obtained, will be enforceable against
CCNGP in accordance with their terms, subject to (i) bankruptcy,
insolvency, fraudulent preference, reorganization or other laws
affecting creditors' rights generally, and (ii) general principles
of equity (regardless of whether such enforceability is considered
in a proceeding at law or equity);
(c) NO CONFLICT: The execution and delivery of this Agreement are not,
and, provided the Competition Act Approval is obtained and except
for Customary Post Closing Consents, the completion of the
Transaction in accordance with the terms of this Agreement will not
be, in violation or breach of or in conflict with or require any
consent, authorization or approval under:
(i) any term or provision of the constating documents of CCNGP;
(ii) any agreement, instrument, license, permit or other
governmental authorization to which CCNGP is a party or by
which CCNGP is bound; or
(iii) any judgment, decree, order, statute, regulation, rule, or
license applicable to CCNGP (other than Licence Transfer
approvals);
(d) NO FINDER'S FEE: CCNGP has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of
this Agreement or the Transaction for which Gas Corp. or any of its
Affiliates shall have any obligation or liability;
(e) RESIDENCY: Neither of the partners of CCNGP is a "non-resident" of
Canada for the purposes of the Income Tax Act;
(f) JUDGMENTS AND CLAIMS: Except as set forth in the Schedule "D", there
are no unsatisfied judgments nor any Claims in existence against
CCNGP that relate to the Assets, and to the knowledge of CCNGP no
such Claims have been threatened and there are no particular
circumstances that exist which could give rise to any such judgments
or Claims;
(g) TITLE TO ASSETS: CCNGP does not warrant title to the Assets but does
warrant that it has not done any act or thing whereby any of the
Scheduled Assets may be encumbered, alienated, cancelled or
determined and that the Scheduled Assets are now and will be at the
Closing Date, free and clear of all Encumbrances created by, through
or under CCNGP, or of which CCNGP is aware, except Permitted
Encumbrances;
(h) COMPLIANCE WITH AGREEMENTS: Except as described in Schedule "D", to
CCNGP's knowledge:
(i) CCNGP is not in default under Applicable Law or the Title and
Operating Documents; and
(ii) CCNGP has not failed to comply with, perform, observe or
satisfy, in all material respects, any term, condition,
obligation or liability which has heretofore arisen under the
provisions of Applicable Law or any of the Title and Operating
Documents.
- 32 -
which default or failure would reasonably be expected to materially
adversely affect the value of the Assets taken as a whole;
(i) NO DEFAULT NOTICES: Except as described in Schedule "D", CCNGP has
not received notice of violation of or default under any other
obligation, agreement, document, order, writ, injunction or decree
of any Government Authority that relates to the Assets and to
CCNGP's knowledge, no particular circumstance presently exists which
may give rise to any such violation or default and, additionally, to
CCNGP's knowledge, there are no such outstanding defaults or notices
of default in relation to any Third Party;
(j) FINANCIAL COMMITMENTS: Except as set forth in Schedule "I", and
except for operating costs incurred in the ordinary course of
business, there are no outstanding AFE's or other financial
commitments respecting the Assets which are due as at the date
hereof, pursuant to which individual expenditures of greater than
One Hundred Thousand Dollars ($100,000) may be required by the Gas
Corp. after the Effective Time;
(k) ROYALTIES: All ad valorem, property, royalties, production,
severance and similar taxes and assessments based on or measured by
the ownership of the Assets or the production of Petroleum
Substances or the receipt of proceeds therefrom payable by CCNGP in
respect of the Assets have been paid and discharged, and to CCNGP's
knowledge, all such obligations which are the responsibility of
Third Parties related to the Assets have been paid and discharged;
(l) ENVIRONMENTAL MATTERS: Except as set out in Schedule "D", CCNGP has
not received, nor is it aware that any Third Party has received:
(i) any notice, order or directive under Applicable Law which
relates to Environmental Liabilities and which requires any
work, repairs, construction or capital expenditures which is
outstanding, where such orders or directives have not been
complied with in all material respects; or
(ii) any demand or notice issued with respect to the breach of
Applicable Law from any Third Party pertaining to the Assets
that relates to the Environment, health or safety, including,
without limitation, any matter respecting the release, use,
storage, treatment, transportation or disposition of
environmental contaminants which demand or notice remains
outstanding;
and to CCNGP's knowledge, no particular circumstance presently
exists which may give rise to any such orders, directives, demands
or notices;
(m) OPERATION OF TANGIBLES AND XXXXX: All operations in respect of the
Tangibles and the Xxxxx have been conducted in accordance with good
oilfield industry practices, and to CCNGP's knowledge, all
Applicable Law, all Permits and the requirements of all Government
Authorities have been complied with in all material respects and all
operations in respect of the Tangibles and Xxxxx conducted by Third
Parties have been conducted in accordance with good oilfield
industry practices, (subject to the representations and warranties
set forth in this Section 5.1);
(n) CONTRACTS: Except for contracts disclosed in Schedule "F" and
agreements that can be terminated by CCNGP without penalty on notice
of 60 days or less, to CCNGP's knowledge, CCNGP is not a party to or
bound by any:
- 33 -
(i) contracts for the sale of Petroleum Substances;
(ii) gas balancing, prepayment or similar agreements;
(iii) agreements for the gathering, transportation, compression,
processing treatment, storage or disposal of Petroleum
Substances;
(iv) take or pay arrangements or any other arrangements which
obligate the Vendor to sell or deliver Petroleum Substances
without being entitled to receive and retain full payment for
such Petroleum Substances; or
(v) Contract Operating Agreements or agreements to provide
transportation, processing or disposal capacity or service to
any Third Party
that relate to the Assets;
(o) PERMIT TRANSFERS: CCNGP is eligible under Applicable Law to transfer
the Permits for the Assets operated by it and no circumstance exists
which could reasonably be expected to result in an undue delay or an
inability to register any of the Permit Transfers;
(p) RIGHTS OF FIRST REFUSAL: To CCNGP's knowledge, there are no Rights
of First Refusal by which CCNGP or any Affiliate thereof is bound,
other than those which shall be disclosed in Schedule "K" to this
Agreement;
(q) NO THREATENED COLLECTIVE AGREEMENTS: CCNGP is not the subject of any
existing, threatened or apparent union organizing activities
involving any of the Accepting Employees, Transitional Employees,
Accepting Consultants or Transitional Consultants;
(r) COMPLAINTS OR PROCEEDINGS: There are no claims or complaints against
CCNGP pursuant to any Applicable Law relating to the Accepting
Employees, Transitional Employees, Accepting Consultants or
Transitional Consultants, including employment standards,
occupational health and safety, human rights, labour relations,
worker's compensation, pay equity and employment equity, and to
CCNGP's knowledge, no particular circumstance presently exists which
may give rise to any such claims or complaints;
(s) QUIET ENJOYMENT: Subject to the rents, covenants, conditions and
stipulations in the Leases and subject to the Permitted
Encumbrances, from and after Closing, Gas Corp. will be entitled to
hold and enjoy the interests in the Assets attributed to CCNGP in
the Schedules hereto for Gas Corp.'s own use and benefit without any
interruption of or by CCNGP or any Third Party claiming by, through
or under CCNGP;
(t) EXAMINATION OF ASSETS: CCNGP shall have exercised reasonable efforts
to make available to Gas Corp., prior to Closing, all of the Title
and Operating Documents and documents comprising the Miscellaneous
Interests in its possession or to which it has access and any other
information, documents and agreements that are relevant to the
Assets, including without limitation, information, documents and
agreements relevant to CCNGP's title to the Assets, Abandonment and
Reclamation Obligations, Environmental Liabilities pertaining to the
Assets, production or revenue from the Assets and other information,
documents and agreements that that are reasonably required by Gas
Corp. or which have otherwise been reasonably requested by Gas Corp.
In addition, CCNGP has not knowingly withheld from Gas Corp. any
information, documents and agreements relevant to the Assets;
- 34 -
(u) REDUCTION OF INTERESTS: To CCNGP's knowledge, except as otherwise
disclosed on Schedule "A", CCNGP's interests in the Assets are not
subject to reduction by reference to a payout or production penalty
or otherwise through any right or interest granted by. through or
under CCNGP or of which it has knowledge;
(v) RECEIPT OF REVENUE: To CCNGP's knowledge, CCNGP has been receiving
the share of the net proceeds of production from the Assets
attributable to its interests as shown in the schedules hereto;
(w) INTEREST IN TANGIBLES: To CCNGP's knowledge, the interest ascribed
to CCNGP in the Facilities in Schedule "B" and CCNGP's interest in
the other tangibles, are beneficially owned by CCNGP free and clear
of all Security Interests, Encumbrances, and other third party
claims and interests of any nature whatsoever, except Permitted
Encumbrances, and none of the Tangibles are held through any lease,
license, conditional sale or other similar arrangement, the terms of
which are not disclosed in Schedule "B; and
(x) MATERIAL CONTRACTS: Gas Corp. will not become a party to or be
otherwise bound by the Listed Material Contracts, there are no other
Material Contracts and to CCNGP's knowledge the Listed Material
Contracts will not impose any obligations, Losses or Liabilities on
Gas Corp.
5.2 REPRESENTATIONS AND WARRANTIES OF CEHL
CEHL represents and warrants to the Trust, that:
(a) ORGANIZATION AND STANDING: CEHL is a corporation, duly incorporated
and validly subsisting under the laws of its jurisdiction of
organization and is duly qualified under the jurisdictions in which
it is required to be qualified in order for it to own the Trust
Units;
(b) CAPACITY, POWER, AUTHORIZATION, EXECUTION AND ENFORCEABILITY: CEHL
has the requisite capacity, power and authority to execute, deliver
and perform its obligations under this Agreement and all of the
agreements, instruments and other documents contemplated hereby. The
execution, delivery and performance of this Agreement and the
completion of the Transaction have been duly and validly authorized
by any and all requisite actions of CEHL and provided the
Competition Approval is obtained, do not and will not result in any
violation of, be in conflict with, or constitute a default under,
its articles, charter, by-laws or other governing documents, as the
case may be. This Agreement and any other agreement delivered in
connection herewith, to which CEHL is party, has been or will at the
appropriate time be validly executed and delivered by CEHL and
constitute valid and binding obligations of CEHL and provided the
Competition Act Approval is obtained, will be enforceable against
CEHL in accordance with their terms, subject to (i) bankruptcy,
insolvency, fraudulent preference, reorganization or other laws
affecting creditors' rights generally, and (ii) general principles
of equity (regardless of whether such enforceability is considered
in a proceeding at law or equity);
(c) NO CONFLICT: The execution and delivery of this Agreement are not,
and, provided the Competition Act Approval is obtained and except
for Customary Post Closing Consents, the completion of the
Transaction in accordance with the terms of this Agreement will not
be in violation or breach of or in conflict with or require any
consent, authorization or approval under:
- 35 -
(i) any term or provision of the constating documents of CEIIL;
(ii) any agreement, instrument, license, permit or other
governmental authorization to which CEHL is a party or by
which CEHL is bound; or
(iii) any judgment, decree, order, statute, regulation, rule, or
license applicable to CEHL, except such as may be required
under applicable securities laws;
(d) NO FINDER'S FEE: CEHL has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect of
this Agreement or the Transaction for which the Trust or any of its
Affiliates shall have any obligation or liability;
(e) TRUST UNITS HELD: CEHL is the beneficial and immediately prior to
Closing will be the registered owner of the Trust Units, free and
clear of all Encumbrances. To CEHL's knowledge, all of the Trust
Units were duly authorized and validly issued as fully paid and non
assessable trust units of CNGT;
(f) STATUS OF TRUST UNITS:
(i) There is no contract, option or any other right of another
binding upon CEHL to sell, transfer, assign, pledge, charge,
mortgage or in any other way dispose of or encumber any of the
Trust Units other than pursuant to the provisions of this
Agreement;
(ii) other than the Trust, no Person, firm or corporation has any
right, under preferential rights of purchase clauses or
otherwise, which has not been waived prior to the Closing
Date, to acquire any interest in the Trust Units held by CEHL;
(iii) no securities commission or other regulatory body has issued
any order preventing or suspending trading of Trust Units; and
(iv) there is no restriction on the trade of any of the Trust Units
except that the Trust Units are subject to "control block"
resale restrictions under Canadian provincial securities laws;
(g) JUDGMENTS AND CLAIMS: There are no unsatisfied judgments nor any
Claims in existence against CEHL that relate to the Trust Units, and
to the knowledge of CEHL no such Claims have been threatened and
there are no particular circumstances that exist which could rise to
any such judgments or Claims;
(h) RESIDENCY: CEHL is not a "non-resident" of Canada for the purposes
of the Income Tax Act;
(i) CAPITAL PROPERTY: To CEHL's knowledge, all of the Trust Units are
"capital property" (as that term is defined in the Income Tax Act)
to CEHL;
(j) NO MATERIAL CHANGE: Other than the Transaction, CEHL has no
knowledge of any material fact or material change (as those terms
are defined in the Securities Act (Alberta)) with respect to CNGT
that has not been generally disclosed;
(k) EXAMINATION OF TRUST UNITS: CEHL shall have exercised reasonable
efforts to make available to the Trust, prior to Closing, all
information, documents and agreements in its possession or to which
it has access that are relevant to the Trust Units, including
without
- 36 -
limitation, information, documents and agreements relating to
CEIIL's title to the Trust Units, Liabilities pertaining to the
Trust Units and other information, documents and agreements that
that are reasonably required by the Trust or which have otherwise
been reasonably requested by the Trust, In addition, CEHL has not
knowingly withheld from the Trust any information, documents and
agreements directly related to ownership of the Trust Units; and
(l) MATERIAL CONTRACTS: The Trust will not become a party to or be
otherwise bound by the Listed Material Contracts, there are no other
Material Contracts and to CEHL's knowledge the Listed Material
Contracts will not impose any obligations, Losses or Liabilities on
the Trust.
5.3 LIMITATION OF REPRESENTATIONS AND WARRANTIES
(a) Vendor makes no representations or warranties of any kind or nature,
express or implied, at law or in equity except as expressly set
forth in Sections 5.1 and 5.2, as applicable, and in particular, and
without limiting the generality of the foregoing, Vendor hereby
expressly negates and disclaims, and shall not be liable for, any
and all representations or warranties which may have been made or
alleged to have been made in any other document or instrument or in
any statement or information made or communicated to Gas Corp., the
Trust or their Related Parties in any manner, except for those
expressly set forth in Sections 5.1 and 5.2, as applicable.
(b) Vendor hereby expressly negates and disclaims, and shall not be
liable for, any representations or warranties made or alleged to
have been made to Gas Corp., the Trust or their Related Parties in
this Agreement or otherwise with respect to any of the following
matters:
(i) except for the representations and warranties expressly set
forth in Sections 5.1 and 5.2, as applicable, any data or
information provided or made available to Gas Corp. or the
Trust by Vendors' Representatives in the Data Room, on plant
or site visits, in management presentations, in meetings with
Vendors' management or employees or otherwise;
(ii) the value of the Assets or the future cash flow therefrom;
(iii) except as expressly provided in Section 5.1, the
Environmental condition of any lands or asset or any
Environmental Liability;
(iv) except as provided in Section 5.1, the quality, condition,
fitness, merchantability or suitability of use for any
purpose, of any tangible, depreciable equipment or property
that forms part of the Assets;
(v) any engineering or geological information or interpretations
thereof or any economic evaluations;
(vi) except as provided in Section 5.1, title to the Assets;
(vii) except as expressly provided in Section 5.1, any Liabilities
or Claims related to the Assets or Operations; or
(viii) the value of the Trust Units or the future distributions
generated therefrom.
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(e) Gas Corp. acknowledges and confirms that except as expressly
provided in this Agreement that: (i) it is acquiring the Assets on
an "as is-where is" basis without representation and warranty; (ii)
it has performed its own due diligence and it has not relied on any
data, information, statement or advice provided to Gas Corp. or its
Related Parties by Vendor or its Related Parties, and (iii) in
agreeing to enter into and to consummate the Transaction, it has
relied on its own: (A) inspections and evaluations of the Assets,
the Environmental Liabilities and the Liabilities and obligations
assumed by Gas Corp. pursuant to Section 6.4, and (B) due diligence
on and evaluation of the Trust Units.
(d) Except for its rights under this Agreement, each of Gas Corp. and
the Trust hereby waives all rights and remedies (whether now
existing or hereafter arising and including all common law, tort,
contractual, equitable and statutory rights and remedies) against
Vendor or its Related Parties in respect of any representations or
statements made, or information or data furnished, to Gas Corp., the
Trust or any of their Related Parties in connection herewith or
otherwise (whether made or furnished by Vendor or any of its Related
Parties or Third Parties and whether made or furnished orally or by
electronic, faxed, written or other means).
5.4 REPRESENTATIONS AND WARRANTIES OF GAS CORP.
Gas Corp. represents and warrants to CCNGP that:
(a) ORGANIZATION AND STANDING: Gas Corp. is an Alberta corporation, duly
organized and validly subsisting under the laws of its jurisdiction
or organization and is duly qualified under the jurisdictions in
which it is required to be qualified in order for it to own the
Assets;
(b) CAPACITY, POWER, AUTHORIZATION, EXECUTION AND ENFORCEABILITY: Gas
Corp. has the requisite power and authority to execute, delivery and
perform its obligations under this Agreement and all the agreements,
instruments and other documents contemplated hereby. The execution,
delivery and performance of this Agreement and the acquisition of
the Assets have been duly and validly authorized by any and all
requisite actions and provided the Competition Act Approval is
obtained, do not and will not result in any violation of, be in
conflict with, or constitute a default under, its articles, charter,
by-laws or other governing documents, as the case may be. This
Agreement and any other agreement delivered in connection herewith,
to which Gas Corp. is party, has been or will at the appropriate
time be validly executed and delivered by Gas Corp. and constitute
valid and binding obligations of Gas Corp. and provided the
Competition Act Approval is obtained, will be enforceable against
Gas Corp. in accordance with their terms, subject to (i) bankruptcy,
insolvency, fraudulent preference, reorganization or other laws
affecting creditors' rights generally, and (ii) general principles
of equity (regardless of whether such enforceability is considered
in a proceeding at law or equity);
(c) NO CONFLICT: The execution and delivery of this Agreement are not,
and, provided the Competition Act Approval is obtained and except
for Customary Post Closing Consents, the acquisition of the Assets
in accordance with the terms of this Agreement will not be, in
material violation or breach of or in material conflict with or
require any material consent, authorization or approval under:
(i) any term or provision of the constating documents of Gas
Corp.;
(ii) any agreement, instrument, license, permit or other
governmental authorization to which Gas Corp. is a party or by
which Gas Corp. is bound; or
- 38 -
(iii) any judgment, decree, order, statute, regulation, rule, or
license applicable to Gas Corp. (other than Licence Transfer
approvals);
(d) RESIDENCY: Gas Corp. is not a non-Canadian for the purposes of the
Investment Canada Act;
(e) QUALIFICATION: At Closing, Gas Corp. shall meet all qualification
requirements of Government Authorities to take such transfers,
including the transfer of all Permits for all Xxxxx, Facilities and
Tangibles for which Vendor or an Affiliate is currently the operator
or licensee and shall accede to, comply with and perform the
requirements of such Government Authorities, acting reasonably;
(f) LICENCEE LIABILITY RATING: Gas Corp. is, or at Closing, shall be, a
registrant with the EUB and Purchaser's Licencee Liability Rating:
(i) is greater than or equal to one (1);
(ii) shall, as a result of the acquisition of the Assets, be
greater than or equal to one (1); and
(iii) shall be greater than or equal to one (1) at the time the EUB
considers approval of any specific conveyance documentation
pursuant to this Agreement;
(g) NO CLAIMS: There are no Claims (i) filed by, on behalf of, or
against Gas Corp., or (ii) imposed by any Government Authority or
regulatory body, in either case, whether or not insured and which
may adversely affect Gas Corp.'s ability to acquire the Assets;
(h) AVAILABILITY OF FUNDS: At Closing, Gas Corp. shall have sufficient
cash, available lines of credit, or other sources of immediately
available funds to enable Gas Corp. to make payment of the Adjusted
Asset Purchase Price at Closing and all other amounts to be paid by
Gas Corp. hereunder;
(i) REGULATORY APPROVALS: Except for the Competition Act Approval, there
are no regulatory approvals or rulings required to be obtained by
Gas Corp. in respect of the acquisition of the Assets; and
(j) NO FINDER'S FEE: Gas Corp. has not incurred any obligation or
liability, contingent or otherwise, for broker's or finder's fees in
respect of this Agreement or the acquisition of the Assets for which
Vendor shall have any obligation or liability.
5.5 REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to CEHL that:
(a) ORGANIZATION AND STANDING: The Trust is an Alberta trust, duly
organized and validly subsisting under the laws of its jurisdiction
or organization and is duly qualified under the jurisdictions in
which it is required to be qualified in order for it to own the
Trust Units;
(b) CAPACITY, POWER, AUTHORIZATION, EXECUTION AND ENFORCEABILITY: The
Trust has the requisite power and authority to execute, delivery and
perform its obligations under this Agreement and all the agreements,
instruments and other documents contemplated hereby. The execution,
delivery and performance of this Agreement and the acquisition of
the Trust Units have been
- 39 -
duly and validly authorized by any and all requisite actions and
provided the Competition Act Approval is obtained, do not and will
not result in any violation of, be in conflict with, or constitute a
default under, its articles, charter, by-laws or other governing
documents, as the case may be. This Agreement and any other
agreement delivered in connection herewith, to which the Trust is
party, has been or will at the appropriate time be validly executed
and delivered by the Trust and constitute valid and binding
obligations of the Trust and provided the Competition Act Approval
is obtained, will be enforceable against the Trust in accordance
with their terms, subject to (i) bankruptcy, insolvency, fraudulent
preference, reorganization or other laws affecting creditors' rights
generally, and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or
equity);
(c) NO CONFLICT: The execution and delivery of this Agreement are not,
and, provided the Competition Act Approval is obtained and except
for Customary Post Closing Consents, the acquisition of the Trust
Units in accordance with the terms of this Agreement will not be, in
material violation or breach of or in material conflict with or
require any material consent, authorization or approval under:
(i) any term or provision of the constating documents of the
Trust;
(ii) any agreement, instrument, license, permit or other
governmental authorization to which the Trust is a party or by
which the Trust is bound; or
(iii) any judgment, decree, order, statute, regulation, rule, or
license applicable to the Trust;
(d) RESIDENCY: The Trust is not a non-Canadian for the purposes of the
Investment Canada Act;
(e) NO CLAIMS: There are no Claims (i) filed by, on behalf of, or
against the Trust, or (ii) imposed by any Government Authority or
regulatory body, in either case, whether or not insured and which
may adversely affect the Trust's ability to acquire the Trust Units;
(f) AVAILABILITY OF FUNDS: At Closing, the Trust shall have sufficient
cash, available lines of credit, or other sources of immediately
available funds to enable the Trust to make payment of the Adjusted
Trust Unit Purchase Price at Closing and all other amounts to be
paid by the Trust hereunder;
(g) PURCHASING AS PRINCIPAL: The Trust is purchasing the Trust Units as
principal for its own account and not as agent for any other
Persons;
(h) REGULATORY APPROVALS: Except for the Competition Act Approval, there
are no regulatory approvals or rulings required to be obtained by
the Trust in respect of the acquisition of the Trust Units; and
(i) NO FINDER'S FEE: The Trust has not incurred any obligation or
liability, contingent or otherwise, for broker's or finder's fees in
respect of this Agreement or the acquisition of the Trust Units for
which Vendor shall have any obligation or liability.
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ARTICLE 6
LIABILITIES AND INDEMNITIES
6.1 VENDOR INDEMNITIES
Subject to Sections 6.3, 6.6, 6.7 and 6.9, Vendor shall:
(a) be liable to Purchaser and its Related Parties for all Losses and
Liabilities they suffer, sustain, pay or incur; and
(b) indemnify and save Purchaser and its Related Parties harmless from
and against all Claims made against them;
insofar as such Losses, Liabilities and Claims are a direct result of any Vendor
Default; provided that Vendor shall not be liable to, or be required to
indemnify and save harmless, Purchaser or any of its Related Parties pursuant to
this Section 6.1 in respect of: (i) any representation or warranty in Sections
5.1 or Section 5.2 if Purchaser did not rely upon such representations or
warranty; (ii) any Losses, Liabilities or Claims to the extent they result from
a Purchaser Default; or (iii) Losses, Liabilities or Claims to the extent they
are caused by or result from the gross negligence or wilful misconduct of
Purchaser or its Related Parties.
6.2 PURCHASER'S INDEMNITIES
Subject to Section 6.8, Purchaser shall:
(a) be liable to Vendor and its Related Parties for all Losses and
Liabilities they suffer, sustain, pay or incur; and
(b) indemnify and save harmless Vendor and its Related Parties from and
against all Claims made against them;
insofar as such Losses, Liabilities and Claims are a direct result of any
Purchaser Default; provided that Purchaser shall not be liable to, or be
required to indemnify and save harmless, Vendor or any of its Related Parties
pursuant to this Section 6.2 in respect of: (i) any representation or warranty
in Sections 5.4 or 5.5 if Vendor did not rely upon such representation or
warranty; (ii) any Losses, Liabilities or Claims to the extent they result from
a Vendor Default; or (iii) Losses, Liabilities or Claims to the extent they are
caused by or result from the gross negligence or wilful misconduct of Vendor or
its Related Parties.
6.3 ENVIRONMENTAL LIABILITIES
Subject to Closing occurring, Purchaser hereby:
(a) assumes and agrees to duly and punctually perform, pay and
discharge;
(b) agrees to be liable to Vendor and its Related Parties for all Losses
and Liabilities they suffer, sustain, pay or incur in respect of;
and
(c) agrees to indemnify and save harmless Vendor and its Related Parties
from and against all Claims made against them in respect of;
- 41 -
any and all past, present and future Environmental Liabilities, provided that
Purchaser shall not be liable to, or required to indemnify and save harmless,
Vendor or its Related Parties pursuant to this Section 6.3 in respect of Losses,
Liabilities or Claims to the extent they result from a breach of the
representation and warranty set forth in Section 5.1.
6.4 ASSUMED OBLIGATIONS
Subject to Closing occurring, Purchaser hereby:
(a) assumes and agrees to duly and punctually perform, pay and
discharge;
(b) agrees to be liable to Vendor and its Related Parties for all Losses
and Liabilities they suffer, sustain, pay or incur in respect of;
and
(c) agrees to indemnify and save harmless Vendor and its Related Parties
from and against all Claims made against them in respect of
the following:
(d) all obligations related to the Assets required to be performed or
observed after the Closing Date under Applicable Law or the Title
and Operating Documents; and
(e) all obligations and Liabilities relating to the Assets that arise
from or relate to acts, omissions, events or circumstances occurring
after the Closing Date, including Liabilities and Claims arising
from or related to Operations conducted after the Closing Date;
provided that Purchaser shall not be liable to, or required to indemnify and
save harmless, Vendor or its Related Parties pursuant to this Section 6.4 in
respect of Losses, Liabilities or Claims to the extent they: (i) are caused by
or result from the gross negligence or wilful misconduct of Vendor or any of its
Related Parties; or (ii) result from a breach of a representation and warranty
set forth in Sections 5.1 or 5.2.
6.5 POST-CLOSING EMPLOYMENT INDEMNITIES OF GAS CORP.
(a) Gas Corp. shall assume, bear and discharge all obligations and
Liabilities in respect of the employment of each Accepting Employee
that accrue after such Accepting Employee commences employment with
Gas Corp. (including all such obligations and Liabilities that
result from the termination of the employment of an Accepting
Employee after such Accepting Employee commences employment with Gas
Corp.) and Gas Corp. shall indemnify and save harmless each of
Vendor and its Related Parties from any Losses, Liabilities and
Claims suffered, sustained, paid or incurred: (i) in respect of such
obligations and Liabilities; (ii) with respect to the disclosure of
Vendor's employee records or other records maintained by Vendor that
have been provided to Gas Corp.; and (iii) with respect to employee
evaluation, selection and offer actions taken after the date of this
Agreement and during the Transition Period by Gas Corp. in
connection with the Transaction.
(b) Gas Corp. shall assume, bear and discharge all obligations and
Liabilities in respect of each Accepting Consultant that accrue
after such Accepting Consultant commences the provision of services
to Gas Corp., and Gas Corp. shall indemnify and save harmless each
of Vendor and its Related Parties from any Losses, Liabilities and
Claims suffered, sustained, paid or incurred in respect of such
obligations and Liabilities.
- 42 -
6.6 POST-CLOSING EMPLOYMENT INDEMNITIES OF VENDOR
(a) Subject only to Purchaser's obligations pursuant to Sections 13.1(f)
and 13.1(g), and without application of the limitations contained in
Section 6.9, Vendor shall indemnify and save harmless Purchaser from
and against all Losses and Liabilities that accrue in respect of the
employment of the Listed Employees including without limitation
Losses and Liabilities arising from a breach of Human Rights
Legislation, related to severance, termination, notice or payment in
lieu thereof or related to retention benefits to which such Listed
Employees are entitled;
(b) Subject only to Purchaser's obligations pursuant to Sections 13.1(f)
and 13.1(g), and without application of the limitations contained in
Section 6.9, Vendor shall indemnify and save harmless Purchaser from
and against all Losses and Liabilities that accrue in respect of the
Listed Consultants, including without limitation Losses and
Liabilities arising from a breach of Human Rights Legislation,
related to severance, termination, notice or payment in lieu thereof
or related to retention benefits to which such Listed Consultants
are entitled.
6.7 VENDOR'S ADDITIONAL INDEMNITIES
Without application of the limitations contained in Section 6.9, Vendor hereby:
(a) assumes and agrees to duly and punctually perform, pay and
discharge;
(b) agrees to be liable to Purchaser and its Related Parties for all
Losses and Liabilities they suffer, sustain, pay or incur in respect
of; and
(c) agrees to indemnify and save harmless Purchaser and its Related
Parties from and against,
all Losses and Liabilities in respect of the Claims and Security Interests set
out and described in Schedule "D".
6.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
No Claim under Section 6.1 or Section 6.2 in respect of a representation or
warranty in Sections 5.1, 5.2, 5.4 or 5.5 shall be made or be enforceable by a
Party, whether by legal proceedings or otherwise, unless written notice of such
Claim, with reasonable particulars, is given by such Party to the Party against
whom such Claim is made within a period of 12 months from the Closing Date. No
Claim shall be made by a Party in respect of the representations and warranties
made by another Party in this Agreement except pursuant to this Article 6.
6.9 LIMITATIONS ON VENDOR LIABILITIES
Subject to Vendor's Liabilities and indemnities contained in Section 6.6:
(a) Vendor shall not be liable to Purchaser or its Related Parties in
respect of any individual Vendor Default unless the aggregate amount
of the Losses and Liabilities suffered, sustained, paid or incurred
by or made against Purchaser and its Related Parties in respect of
such individual Vendor Default exceeds $2,000.000, and then only to
the extent that the limitations on the Vendors' liability contained
in Subsections 6.9(b) and 6.9(c) do not apply.
- 43 -
(b) Vendor shall not be liable to Purchaser or its Related Parties in
respect of any Vendor Defaults hereunder unless the aggregate amount
of all of the Losses and Liabilities suffered, sustained, paid or
incurred by Purchaser and its Related Parties in respect of all of
such Vendor Defaults exceeds $15,000,000 and, in that event, Vendor
shall be liable to Purchaser and its Related Parties for all Losses
and Liabilities which exceed $15,000,000.
(c) The aggregate liability of Vendor under this Agreement for all
Losses and Liabilities of Purchaser and its Related Parties in
respect of all Vendor Defaults shall be limited to fifty percent
(50%) of the Purchase Price.
6.10 INDEMNIFICATION PROCEDURE-THIRD PARTY CLAIMS
The following procedures shall be applicable to any Claim by a Party (the
"INDEMNITEE") for indemnification pursuant to this Agreement from another Party
(the "INDEMNITOR") in respect of a Claim by a Third Party:
(a) upon the Third Party Claim being made against or commenced against
the Indemnitee, the Indemnitee shall promptly provide notice thereof
to the Indemnitor. The notice shall describe the Third Party Claim
in reasonable detail and indicate the estimated amount, if
practicable, of the indemnifiable Liabilities and Losses that have
been or may be sustained by the Indemnitee in respect thereof. If
the Indemnitee does not give timely notice to the Indemnitor as
aforesaid, then such failure shall only lessen or limit the
Indemnitee's rights to indemnity hereunder to the extent that the
defence of the Third Party Claim was prejudiced by such lack of
timely notice;
(b) if the Indemnitor acknowledges to the Indemnitee in writing that the
Indemnitor is responsible to indemnify the Indemnitee in respect of
the Third Party Claim pursuant hereto, the Indemnitor shall have the
right to do either or both of the following:
(i) assume carriage of the defence of the Third Party Claim using
legal counsel of its choice and at its sole cost; and\or
(ii) settle the Third Party Claim provided the Indemnitor pays the
full monetary amount of the settlement and the settlement does
not impose any restrictions or obligations on the Indemnitee;
and
(c) if the Indemnitor does not assume carriage of the defence of any
Third Party Claim and/or settle the Third Party Claim, the
Indemnitee shall be entitled to defend and/or settle the Third Party
Claim. If it is determined that such Third Party Claim is a matter
for which the Indemnitor should have indemnified the Indemnitee
pursuant to this Agreement, the Indemnitee shall be entitled to
reimbursement from the Indemnitor of all of its Losses and
Liabilities associated with such Third Party Claim;
(d) each Party shall cooperate with the other in the defence of the
Third Party Claim, including making available to the other Party,
its directors, officers, employees and consultants whose assistance,
testimony or presence is of material assistance in evaluating and
defending the Third Party Claim;
(e) the Indemnitee shall not enter into any settlement, consent order or
other compromise with respect to the Third Party Claim without the
prior written consent of the Indemnitor, (which consent shall not be
unreasonably withheld or delayed) unless the Indemnitee waives its
rights to indemnification in respect of the Third Party Claim;
- 44 -
(f) upon payment of the Third Party Claim, the Indemnitor shall be
subrogatcd to all claims the Indemnitee may have relating thereto.
The Indemnitee shall give such further assurances and cooperate with
the Indemnitor to permit the Indemnitor to pursue such subrogated
claims as reasonably requested by it; and
(g) if the Indemnitor has paid an amount pursuant to the indemnification
obligations herein and the Indemnitee shall subsequently be
reimbursed from any source in respect of the Third Party Claim from
any other Person, the Indemnitee shall promptly pay the amount of
the reimbursement (including interest actually received) to the
Indemnitor, net of Taxes required to be paid by the Indemnitee as a
result of any such receipt.
6.11 CONSEQUENTIAL DAMAGES
In no event shall a Party be liable in respect of the covenants, agreements,
representations, warranties and indemnities contained in this Agreement or in
any certificate, agreement or other document furnished pursuant to this
Agreement for consequential, indirect or punitive damages suffered, sustained,
paid or incurred by another Party or its Related Parties.
ARTICLE 7
ADJUSTMENTS
7.1 ACCOUNTING ADJUSTMENTS
(a) There will be an adjustment to the Asset Purchase Price equal to the
net amount of the adjustments made pursuant to this Section 7.1.
(b) Except as otherwise provided in this Article 7, the Parties will
adjust and apportion all costs and revenues of every kind and nature
incurred, payable or paid in respect of the Assets as at the
Effective Time, including: capital and non-capital costs of
Operations, proceeds from the sale of Production, royalties and
Taxes (other than capital taxes and income taxes). Such adjustments
shall be made on an accrual basis, in accordance with accepted
Canadian oil and gas industry practices, subject to the provisions
of this Article 7.
(c) For purposes of the adjustments made pursuant to this Article 7, all
costs incurred in connection with work performed or goods or
services provided in respect of the Assets shall be deemed to have
accrued as of the date the work was performed or the goods or
services were delivered, regardless of the times such costs become
payable.
(d) Production will be adjusted as follows:
(i) Retained Production is not included in the Assets and will
remain the property of CCNGP; and
(ii) Production will be deemed to be sold on a first in first out
basis.
(e) Where CCNGP is the operator under a Title and Operating Document,
CCNGP will be entitled to all overhead recoveries and operator's
fees payable pursuant thereto for all periods up to the end of the
calendar month in which the Closing occurs, but will not otherwise
be entitled to reimbursement pursuant to this Agreement in respect
of its overhead costs, subject to Section 8.4.
- 45 -
(f) In the adjustments made pursuant to this Article 7, all rentals and
similar payments, property taxes (including Alberta and Saskatchewan
freehold mineral taxes, if applicable) and other periodic costs
(other than capital taxes and income taxes) that relate to the
Assets and are payable in respect of a period of time that straddles
the Effective Time shall be apportioned between CCNGP and Gas Corp.
on a per diem basis as of the Effective Time.
(g) Except as provided in Subsection (e), there will be no adjustments
for general and administrative expenses related to operating and
maintaining CCNGP's head office in Calgary or for royalty tax
credits or similar incentives that accrue to a Party because of
financial or organizational attributes specific to it; provided that
gas cost allowances (or similar cost allowances) shall not be
considered incentives for these purposes.
(h) A Thirteenth Month Adjustment shall be apportioned between CCNGP and
Gas Corp. as at the Effective Time on the same basis (whether on a
throughput, per diem or other basis) as the Thirteenth Month
Adjustment is allocated to the parties to the Title and Operating
Document under which it is made.
(i) There will be no adjustment in favour of CCNGP on account of income
taxes attributable to income from the Assets for the Interim Period.
(j) There will be an adjustment in favour of Purchaser for any
remaining, unpaid portion of the Distributions that Vendor was
unable to calculate and include in the Adjusted Trust Unit Purchase
Price.
(k) There will be an interim cash adjustment to the Asset Purchase Price
in favour of Purchaser in the amount of $5,000,000.
7.2 INTERIM STATEMENT OF ADJUSTMENTS
On or before five Business Days prior to the Closing Date, Vendor shall deliver
to Purchaser an interim statement of all adjustments ("INTERIM STATEMENT OF
ADJUSTMENTS") to be made pursuant to Section 7.1 in respect of the costs paid
and revenues received by Vendor prior to Closing. The Interim Statement of
Adjustments shall be prepared on the basis of Vendors' good faith estimate of
the costs and revenues and Distributions paid or payable and received or
receivable in respect of the Interim Period. Vendor shall make available to
Purchaser all information reasonably necessary for Purchaser to understand and
confirm the calculations in such statement and any amount deemed owing by one
Party to another pursuant to the Interim Statement of Adjustments shall be used
to calculate the payment made by Gas Corp. at Closing pursuant to Section 2.3.
7.3 POST CLOSING ADJUSTMENTS
(a) Within 180 days following the Closing Date, the Parties shall
cooperate in preparing, on the basis of information available within
such period, a final statement of all adjustments and payments
("FINAL STATEMENT OF ADJUSTMENTS") to be made pursuant to Section
7.1 and upon agreement on such adjustments, the net amount thereof
shall be remitted by the Party who is obliged to make payment within
thirty (30) days of determination of such net amount. If amounts are
not paid when due, such amounts will thereafter bear interest until
paid in accordance with Section 15.9.
(b) During the 12 months after the calendar month in which Closing
occurs, the Vendor and the Purchaser may have access to the records
of the other Farty respecting the Assets for the
- 46 -
limited purpose of calculating or verifying adjustments pursuant to
this Article. Any such access shall be provided upon reasonable
notice to the Party whose records are being examined, at such
Party's offices during its normal business hours and shall be
conducted at the sole expense of the examining Party.
(c) After the adjustments pursuant to Section 7.3(a), further
adjustments pursuant to this Article will be made as and when items
arise, provided that, subject to Subsections 7.3(b) and 7.3(d) of
this Section, the Parties shall not be obligated to make an
adjustment more than 12 months after the calendar month in which
Closing occurs, unless such adjustment has been specifically
requested by written notice from one Party to the other Party prior
to the expiry of the 12-month period or through an audit commenced
within such 12-month period.
(d) Notwithstanding Subsection 7.3(c), a Party will be required to make
an adjustment pursuant to this Section more than 12 months after the
calendar month in which Closing occurs if:
(i) the adjustment arises from a Crown royalty audit commenced not
later than 48 months after the calendar year in which Closing
occurs and a written request for the adjustment is given by
one Party to the other Party within one hundred and twenty
(120) days of the requesting Party's receipt of the results of
the audit;
(ii) the adjustment arises from a joint venture audit under a Title
and Operating Document commenced not later than 26 months
after the end of the calendar year in which Closing occurs and
a written request for the adjustment is given by one Party to
the other Party within one hundred and twenty (120) days of
the requesting Party's receipt of the results of the audit; or
(iii) the adjustment arises from a Thirteenth Month Adjustment
within 12 months after the Closing Date and a written request
for the adjustment is given by one Party to the other Party
within One Hundred and Twenty (120) days of the requesting
Party's receipt of the results of the Thirteenth Month
Adjustment.
7.4 ARBITRATION
Any Party may, at any time, refer to arbitration a dispute between the Parties
respecting the requirement for or the amount of an adjustment pursuant to the
provisions of Section 15.1. The decision of the arbitrator shall be final and
binding on the Parties and shall not be subject to review or appeal. All costs
of the arbitration shall be borne by the Parties equally.
7.5 CASH CALLS, PREPAYMENTS AND DEPOSITS
(a) Subject to Subsections 7.5(b) or 7.5(c) unexpended cash or security
deposited by the Vendor to or with operators, Government Authorities
or other Persons prior to the Effective Time to secure Vendors'
obligations or as prepayments of costs or Liabilities shall not be
included in the Assets and shall be returned to Vendor.
(b) No later than three Business Days prior to Closing, provided that
any associated Third Party consents or approvals have been obtained.
Vendor may elect that any cash amount referred to in Subsection
7.5(a) be transferred to Gas Corp., in which event Vendor shall take
all reasonable steps to transfer it to Gas Corp. and Gas Corp. shall
agree to an adjustment to Vendor at Closing equal to the amount of
such item.
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(c) At any time after Closing, provided that any associated Third Party
consents or approvals have been obtained, Vendor may elect that any
item referred to in Subsection 7.5(a) be transferred to Gas Corp.,
in which event Vendor shall take all reasonable steps to transfer
such item to Gas Corp, and Gas Corp. shall make a payment to Vendor
within three Business Days after such election is made, equal to the
amount of such item.
(d) At any time before or after Closing, Vendor may elect that any item
referred to in Subsection 7.5(a) be refunded or returned by the
Third Party or Government Authority who is holding it, in which
event, the Parties will use all reasonable efforts to cause the
Third Party or Government Authority to refund or return the item to
Vendor and Gas Corp. shall provide a replacement for such item to
the Third Party or Government Authority if it is necessary to do so
to cause the Third Party or Government Authority to make the refund
or return the item.
ARTICLE 8
MAINTENANCE AND OPERATION OF THE ASSETS
8.1 MAINTENANCE OF ASSETS UNTIL CLOSING
From the date hereof until the Closing Date, CCNGP shall (to the extent that
CCNGP is reasonably able to do so, having regard to the nature of CCNGP's
interests in the Assets and the Title and Operating Documents):
(a) maintain the Assets in a proper and prudent manner in accordance
with good oilfield practices;
(b) pay or cause to be paid all costs and expenses relating to the
Assets which become due from the date hereof to the Closing Date;
and
(c) perform and comply in all material respects with all of its
obligations under the Title and Operating Documents;
provided that where CCNGP is not the operator, CCNGP shall be obligated to do
only that which a prudent non-operator would be expected to do in similar
circumstances in accordance with accepted industry practices.
Upon the execution of this Agreement, at such times prior to Closing as the
Parties may agree, representatives of Vendor and Purchaser shall meet in
Vendor's offices in Calgary, Alberta to discuss Vendor's plans for drilling,
reworking or other capital expenditure commitments with respect to the Assets,
which proposed expenditures are in excess of $100,000 and are proposed to be
incurred during the period between execution of this Agreement and Closing. At
such meeting(s), Vendor's technical staff will present an overview of the
proposed operations in reasonably sufficient detail to be evaluated by
Purchaser, together with the proposed costs thereof. As soon as reasonably
practicable thereafter, Purchaser will notify Vendor of any objections to the
proposed operations presented by Vendor.
Upon execution of this Agreement, at Purchaser's direction, Vendor shall take
all reasonable steps necessary to prepare for operations that Purchaser plans to
conduct after Closing, including without limitation, submitting applications for
Permits, obtaining necessary consents and arranging for the procurement of
contractors, equipment and supplies.
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8.2 CONSENT OF PURCHASER TO OPERATIONS BEFORE CLOSING
Subject to Section 8.1, CCNGP shall have the right to operate and maintain the
Assets in accordance with good oilfield practices, provided that,
notwithstanding Section 8.1, CCNGP shall not, without the written consent of
Purchaser, which consent shall not be unreasonably withheld and which, if
provided, shall be provided in a timely manner:
(a) make any commitment or propose, initiate or authorize any single
capital expenditure with respect to the Assets if the CCNGP's share
thereof is in excess of $100,000, except in case of: (i) an
emergency; or (ii) amounts which the CCNGP may be committed to
expend, pursuant to an existing approved budget disclosed to
Purchaser, or be deemed to authorize for expenditure without its
consent;
(b) surrender or abandon any of the Assets, except those which have
become obsolete where the rights of CCNGP thereto have expired or
terminated as disclosed in this Agreement or otherwise in the
ordinary course of business;
(c) amend or terminate any agreement or document to which the Assets are
subject, or enter into any new agreement or commitment relating to
the Assets, except in the ordinary course of business and subject to
providing notice to Purchaser of such action(s) taken; or
(d) sell, encumber or otherwise dispose of any of the Assets or any part
or portion thereof, except for the Sale of Petroleum Substances in
the ordinary course of business.
8.3 POST-CLOSING ACCOUNTING
With respect to Assets for which CCNGP is the operator, CCNGP shall invoice all
joint interest owners for all billable costs attributable to such operations for
those periods from the Effective Time until the end of the month after the month
in which Closing occurs. All subsequent joint interest xxxxxxxx for such Assets
shall be prepared and distributed by Purchaser. For a period of one (1) year
after Closing, the Parties shall provide reasonable assistance to each other in
the collection or recoupment of any overpayment or underpayment of accounts
receivable related to the joint operation of the Assets.
8.4 TRANSITION PERIOD
During the Transition Period, which shall extend for approximately 8 weeks after
the Closing Date, Vendor shall make available to Gas Corp. employees which Gas
Corp. requests (such employees to be mutually agreed upon by the Parties) to
facilitate an orderly transition of the operations of Vendor to Gas Corp., Gas
Corp. shall be responsible to pay all costs and expenses associated with such
employees to the extent that their activities relate to the operation of the
Assets. For the avoidance of doubt, such costs and expenses shall include each
employees' base salary, proportionate share of overtime (if applicable),
transportation and parking allowances, statutory holiday pay and actual benefit
burden (which includes vacation accrual) all to be determined in accordance with
reasonable documentation to be supplied by Vendor. During the Transition Period,
Gas Corp. shall have reasonable access to Vendor's office space and equipment,
information technology hardware and software and services (subject to applicable
contractual restrictions related thereto) and support from Transitional
Employees and contractors, as reasonably required. Without restriction, Gas
Corp. shall be responsible to pay all reasonable costs and expenses associated
with office space and equipment, information technology hardware and software
and services during the Transition Period to the extent that these costs relate
to the operation of the Assets.
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8.5 CCNGP AS AGENT
Until Gas Corp. is novated into the Title and Operating Documents to which the
Assets are subject, CCNGP shall act as the Gas Corp.'s agent to receive notices
and information and serve notices as Gas Corp. reasonably and lawfully directs
and shall carry out Gas Corp.'s instructions in relation to the maintenance and
operation of the Assets. Gas Corp. shall be liable to CCNGP and shall, in
addition, indemnify each of CCNGP and its Related Parties from and against, all
Losses, Liabilities and Claims suffered, sustained, paid or incurred by CCNGP or
its Related Parties or made against them in relation to acts or omissions of
CCNGP in its capacity as agent of the Gas Corp. under this Section 8.5, except
to the extent such acts or omissions are caused by or result from CCNGP's or any
of its Related Parties' gross negligence or wilful misconduct. An act or
omission will not be regarded as gross negligence or wilful misconduct under
this Article 8 to the extent that it was done or omitted to be done in
accordance with Gas Corp.'s instructions or concurrence.
ARTICLE 9
RIGHTS OF FIRST REFUSAL
9.1 RIGHT OF FIRST REFUSALS
(a) Vendor and Gas Corp. acknowledge that the some of the Assets are
subject to the Rights of First Refusal as set forth in Schedule "K".
Within five Business Days after the date hereof, Vendor shall
provide to Gas Corp. a written list setting forth the Assets ("ROFR
ASSETS") which are subject to each Right of First Refusal. Within
three Business Days after its receipt of such list, Gas Corp. shall
provide Vendor, in good faith and on a reasonable basis, a written
statement setting forth the portion of the Asset Purchase Price it
proposes to allocate to the ROFR Assets that are subject to each
Right of First Refusal. The Parties will consult with respect to the
allocations as appropriate in the circumstances. Promptly after such
allocations are determined, Vendor shall send notices to the Persons
(and Purchaser) holding Rights of First Refusal in accordance with
the terms of the Right of First Refusal. Such notices shall use the
allocations provided by Gas Corp. to Vendor. Gas Corp. shall be
liable to Vendor and its Related Parties for, and shall, in
addition, indemnify Vendor and its Related Parties from and against,
all Losses, Liabilities and Claims suffered, sustained, paid or
incurred by, or made against, them as a result of, arising out of,
or in connection with, the use of such allocations in respect of the
Rights of First Refusal. Vendor shall notify Gas Corp. forthwith
upon each Person exercising or waiving a Right of First Refusal.
(b) If any Person elects to exercise a Right of First Refusal prior to
Closing:
(i) the terms "ASSETS", "FACILITIES", "MISCELLANEOUS INTERESTS",
"PETROLEUM AND NATURAL GAS RIGHTS", "TANGIBLES" and "XXXXX"
will be deemed to have been amended to reflect the exclusion
of the ROFR Assets to which the Right of First Refusal applies
and such ROFR Assets shall not be conveyed to Gas Corp. and
the Schedules hereto will be deemed to be amended accordingly;
(ii) the Asset Bid Price shall be reduced by the value allocated in
accordance with Section 9.1(a) to such ROFR Assets and the
adjustments will be revised accordingly; and
(iii) Vendor shall promptly amend or revise any filings with
Government Authorities in connection herewith or any
documentation or material provided with or pursuant to such
filings to reflect the amended definition of the Assets and
the amended Purchase Price and adjustments and Gas Corp. shall
co-operate with Vendor in such amendments and revisions.
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(c) If at the Closing Date there is a Right of First Refusal which:
(i) has not been exercised, but has not been extinguished by lapse
of time, waiver or otherwise; or
(ii) is subject to an outstanding Third Party Claim that challenges
the validity of the notice in respect thereof served in
accordance with Section 9.1(a):
(an "OUTSTANDING ROFR"), the Parties will proceed with Closing in
accordance with the other provisions of this Agreement on the basis
that the Outstanding ROFR has been extinguished and without any
reduction in the Asset Bid Price and Gas Corp. shall be responsible
for addressing any Third Party Claim associated with the value
attributed to the ROFR Assets by Gas Corp. and shall indemnify and
hold harmless Vendor from any Claims associated therewith.
ARTICLE 10
PRE-CLOSING MATTERS
10.1 PRODUCTION OF DOCUMENTS
(a) At all reasonable times from the date hereof until the Closing Date,
Vendor shall make available to Purchaser and Purchaser's
Representatives, subject to contractual restrictions of Third
Parties relative to disclosure, in Vendors' offices in Calgary, the
following information pertaining to the Assets and the Trust Units
which are in Vendors' or any of their Affiliates' possession or
control, including:
(i) any agreement and document to which the Assets or the Trust
Units are subject or to which the applicable Vendor is a party
or by which the Vendor is bound and relate to the Assets or
Trust Units, as applicable, including agreements for the
contract operation of the Assets or any of them; and
(ii) all documents and information relevant to Environmental
Liabilities related to the Assets (if any).
(b) Prior to Closing, Purchaser and its Representatives shall keep
confidential all such information disclosed to it by Vendor in
accordance with the Confidentiality Agreement.
ARTICLE 11
TITLE REVIEW
11.1 NOTICE OF TITLE DEFECTS
(a) No later than the last day of the Examination Period, Purchaser may
notify Vendor in writing of Title Defects. Such notice (a "TITLE
DEFECT NOTICE") shall include a detailed description of each Title
Defect and the Scheduled Assets affected thereby, the amount (in
Purchaser's reasonable opinion) by which the value of the Assets has
been reduced by the Title Defect (the "TITLE DEFECT VALUE") and
Purchaser's requirements for remedying such Title Defect.
(b) In determining a Title Defect Value, only the reduction in the value
of the Assets adversely affected by the Title Defect shall be taken
into account.
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(c) Failure to provide a Title Defect Notice in respect of a Title
Defect in accordance with this Section 11.1 prior to expiration of
the Examination Period shall be deemed to be a waiver by Purchaser
of such Title Defect for the purposes of this Agreement.
11.2 CURING, INDEMNIFICATION AND UNCURED TITLE DEFECTS VALUE
(a) Between its receipt of a Title Defect Notice and the third Business
Day prior to the Closing Date, Vendor shall have the obligation to
make reasonable commercial efforts to cure the Title Defect.
(b) In this Agreement:
(i) "UNCURED TITLE DEFECT" means a Title Defect described in the
Title Defect Notice other than a Title Defect which:
(A) is cured to the reasonable satisfaction of Gas Corp. on
or before three Business Days before the Closing Date;
(B) is waived by Gas Corp.; or
(C) has a Title Defect Value of less than $ 1,000,000; and
(ii) "UNCURED TITLE DEFECTS VALUE" means the aggregate amount of
the Title Defects Value of all Uncured Title Defects under
this Agreement.
11.3 UNCURED TITLE DEFECTS
(a) If there are Uncured Title Defects:
(i) if the Uncured Title Defects Value is equal to or less than
five (5%) percent of the Asset Bid Price, the Parties shall
complete the purchase and sale of the Assets pursuant hereto
without adjustment to the Purchase Price on account of such
Title Defects;
(ii) subject to Subsections 11.3(a)(iii) and 11.3(b), if the
aggregate Uncured Title Defects Value in respect of the Assets
is greater than the five (5%) percent of the Asset Bid Price,
the Asset Bid Price shall be reduced in respect of the Assets
by the amount by which the Uncured Title Defects Value in
respect of the Assets exceeds five (5%) percent of the Asset
Bid Price;
(iii) subject to Subsection 11.3(b), if the aggregate of the Uncured
Title Defects Value for the Assets under this Agreement
exceeds fifteen percent (15%) of the Asset Bid Price, either
Vendor or Purchaser may terminate this Agreement upon written
notice to the other Parties at or before Closing (but not
thereafter), in which case Subsection 2.4(d) shall be
applicable and the Parties shall have no further obligation to
each other under this Agreement.
(b) Notwithstanding Subsections 11.3(a)(ii) and 11,3(a)(iii), if the
Uncured Title Defects Value is greater than five (5%) percent of the
Asset Bid Price and the Parties agree to delay Closing:
(i) Vendor shall make reasonable attempts to cure or remove the
Uncured Title Defects prior to the new Closing Date; and
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(ii) The provisions of Sections 11.2, 11.3 and 11.4 shall again be
applicable.
11.4 DISPUTES
(a) If there is a bona fide, good faith dispute (a "DISPUTE") between
the Parties regarding:
(i) the existence of a Title Defect;
(ii) whether a Title Defect has been cured; or
(iii) a Title Defects Value,
(iv) which results in uncertainty as to whether there should be an
adjustment to the Asset Purchase Price pursuant to Section
113(a)(ii) or the amount of such adjustment or whether the
Parties have the right to terminate this Agreement pursuant to
Subsection 11.3(a)(iii), then any Party may give notice (a
"DISPUTE NOTICE") of such dispute to the other Parties not
later than the Business Day prior to the date the Closing
would have occurred but for such Dispute (the "ORIGINAL
CLOSING DATE") specifying the Dispute in reasonable detail. A
Dispute Notice may relate to more than one Dispute.
(b) If a Dispute Notice in respect of the existence or curing of a Title
Defect or the amount of a Title Defect Value is not delivered by any
Party, the last written statement of Purchaser's position in respect
thereof shall be binding on the Parties for all purposes of this
Article 11.
(c) All Disputes raised in the Dispute Notices shall be submitted to
Sproule & Associates ("SPROULE"), or such other firm as may be
agreed to by the Parties if Sproule cannot or will not accept the
engagement (the "TITLE EVALUATOR"). If Sproule is not the Title
Evaluator and the Parties have not agreed on the Title Evaluator
prior to the Original Closing Date, either of them may apply to the
Court of Queen's Bench of Alberta at any time thereafter (unless the
Parties have subsequently agreed on the Tile Evaluator) to appoint a
Title Evaluator.
(d) Vendor shall cause the submission of Disputes to the Title Evaluator
by promptly delivering copies of all of the Dispute Notices to the
Title Evaluator together with written instructions that:
(i) the Title Evaluator may retain legal counsel of its choice to
advise the Title Evaluator on the legal aspects of the
Dispute, provided that such counsel does not have a conflict
of interest preventing it from providing such advice;
(ii) if the Dispute relates to the amount of the Title Defect
Value, the Title Evaluator, in accordance with good
engineering and evaluation practices, shall select as the
Title Defects Value either the value submitted by Vendor or
the value submitted by Purchaser and not a compromise or other
value; and
(iii) its determination must be completed within 21 Business Days
from the date of submission of the Dispute.
(iv) The Disputes shall be submitted to the Title Evaluator not
later than the Original Closing Date, provided that if Sproule
is not the Title Evaluator, the submission will be made not
later than the Business Day after the Title Evaluator is
selected.
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(e) Within 7 Business Days after the date the Disputes arc submitted to
the Title Evaluator (the date the Disputes are submitted to the
Title Evaluator is referred to herein as the "SUBMISSION DATE"),
each Party shall submit to the Title Evaluator and the other
Parties:
(i) a statement of its position with respect to each Dispute,
including its estimate of each Title Defect Value that is in
dispute; and
(ii) any information or documentation supporting such estimate
(collectively, a "SUPPORTING STATEMENT").
(f) If only one Party timely submits a Supporting Statement in respect
of a Dispute, then the Title Evaluator shall select as the
resolution of that Dispute the submission set forth in that
Supporting Statement.
(g) If both Vendor and Purchaser timely submit a Supporting Statement in
respect of a Dispute, each Party shall have the right to submit to
the Title Evaluator and the other Parties, not later than 12
Business Days after the Submission Date, a reply ("Reply") to the
other Party's Supporting Statement.
(h) The Title Evaluator's determination shall be made on the basis of
the Supporting Statements, the Replies and any evidence introduced
and arguments made during a hearing, if there is a hearing.
(i) The Title Evaluator shall make its determination with respect to all
Disputes submitted to it within 21 Business Days of the Submission
Date.
(j) If any Disputes are submitted to the Title Evaluator, the Closing
Date shall be extended automatically to the date that is five
Business Days after the Title Evaluator's decision has been given to
the Parties.
(k) If, after taking into account the determination of the Title
Evaluator, the aggregate Uncured Title Defects Value exceeds 15% of
the Asset Bid Price, each Party shall have the right to elect to
terminate this Agreement pursuant to Section 11.3(a)(iii) not later
than 3 Business Days prior to the Closing Date as extended pursuant
to Subsection 11.4(j).
(1) Except as provided in this Section, any submission of a Dispute to
the Title Evaluator pursuant hereto shall be conducted in accordance
with the provisions of the Arbitration Act (Alberta).
(m) The Vendor and the Purchaser shall each be responsible for one-half
(1/2) of the fees and reimbursable costs and expenses incurred by
the Title Evaluator and each Party shall be responsible for its owns
costs and expenses associated with the arbitration.
ARTICLE 12
ACCESS TO BOOKS AND RECORDS
12.1 ACCESS TO INFORMATION
(a) After Closing and subject to contractual restrictions in favour of
Third Parties relative to disclosure, Purchaser shall, upon request
from Vendor, provide reasonable access to Vendor at Purchaser's
offices during its normal business hours to the agreements and
documents to which
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the Assets and the Trust Units are subject and the contracts,
agreements, records, books, documents, licenses, reports and data
included in the Miscellaneous Interests (including Title and
Operating Documents) which are then in the possession of Purchaser
and to make copies thereof, as Vendor may require for purposes
relating to its ownership of the Assets and the Trust Units prior to
the Closing Date (including taxation matters and Liabilities and
Claims that arise from or relate to acts, omissions, events,
circumstances or Operations prior to the Closing Date), including
for purposes of:
(i) audits relating to periods prior to the Closing Date;
(ii) Taxes relating to periods prior to the Closing Date;
(iii) matters relating to Listed Employees relating to a period
prior to the Closing Date or a matter occurring prior to the
Closing Date;
(iv) compliance with Applicable Law in respect of a period prior to
the Effective Time or any matter occurring prior to the
Closing Date; or
(v) any Claim commenced or threatened by any Third Party against
Vendor or Related Parties.
(b) If Purchaser disposes of any of the Assets or the Trust Units to a
Third Party, Purchaser will take reasonable steps to enable Vendor
to have continued reasonable access to those materials, provided
that Purchaser will not be required to retain copies of those
materials following any such disposition.
12.2 MAINTENANCE OF INFORMATION
All of the information, materials and other records delivered to Purchaser
pursuant to the terms hereof shall be maintained in good order and good
condition and kept in a reasonably accessible location by Purchaser and its
Affiliates for a period of 4 years from the Closing Date or for any longer
period as may be required under Applicable Law (the "RETENTION PERIOD").
ARTICLE 13
EMPLOYMENT MATTERS
13.1 LISTED EMPLOYEES, LISTED CONSULTANTS AND TRANSITION
(a) On or about August 6, 2004, Vendor shall provide to Purchaser the
names and titles of all Employees who may be available to Gas Corp.
(the "LISTED EMPLOYEES") along with other relevant employment
information as may be mutually agreed.
(b) On or about August 6, 2004, Vendor shall provide a written list to
Purchaser setting forth the names, rates, description of services
and term of contract of those consultants who may be available to
Gas Corp. (the "LISTED CONSULTANTS") and other information as may be
mutually agreed.
(c) It is agreed that the status and termination date of all Listed
Employees and Listed Consultants will be determined and communicated
to all Listed Employees and Listed Consultants on or before Closing.
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(d) From the Listed Employees and Listed Consultants, on or before
August 27, 2004 Gas Corp. and Vendor will mutually agree on those
persons required during the Transition Period for necessary
operational and administrative requirements (the "TRANSITIONAL
EMPLOYEES" and the "TRANSITIONAL CONSULTANTS" respectively). It is
agreed that the length of transitional service shall not extend
beyond October 28, 2004. Vendor agrees to make reasonable efforts to
retain those mutually identified Transitional Employees and
Transitional Consultants for Gas Corp. and to make such Transitional
Employees and Transitional Consultants available to the extent
necessary to complete the orderly transition of the operation of the
Assets during the Transition Period. Vendor shall pay all retention
benefits payable to the Transitional Employees and the Transitional
Consultants upon Closing. Vendor shall not pay any severance amounts
to any Transitional Employee or Transitional Consultant until such
time as the relevant Transitional Employee or Transitional
Consultant is severed.
(e) All Listed Employees and Listed Consultants not identified as
Transitional Employees or Transitional Consultants will be
terminated by Vendor at Vendor's expense.
(f) Gas Corp. shall reimburse to Vendor all costs and expenses
associated with the Transitional Employees and Transitional
Consultants in accordance with Section 8.4 and this Section 13.1(f).
At any time, Gas Corp. may by notice to Vendor advise Vendor that it
no longer requires the services of any Transitional Employee or
Transitional Consultant and, two weeks after the receipt of such
notice by Vendor, Gas Corp. shall have no further obligation to
reimburse Vendor for costs and expenses associated with that
Transitional Employee or Transitional Consultant. Vendor shall
terminate all remaining Transitional Employees and Transitional
Consultants at Vendor's expense.
(g) On or before August 27, 2004, Gas Corp. shall post the employment
and consulting positions that it proposes to fill for the purpose of
operating and maintaining the Assets. Any Listed Employee or Listed
Consultant may apply for any of such positions by submitting to Gas
Corp. a resume and a consent to the release of their resume and
performance evaluations. Upon the receipt of a Listed Employee's or
Listed Consultant's resume and duly executed consent, Vendor shall
provide the released information to Gas Corp. and shall otherwise
advise Gas Corp. in the evaluation and assessment of Listed Employee
or Listed Consultant. On or before September 17, 2004, Gas Corp. may
make offers of employment or consulting offers ("OFFERS") to any
Listed Employee or Listed Consultant effective as mutually agreed
between the parties Gas Corp. shall reimburse Vendor for all
severance or termination payments made to the Listed Employees and
Listed Consultants who accept Offers within six months of Closing
(the "ACCEPTING EMPLOYEES AND ACCEPTING CONSULTANTS", respectively).
Such reimbursement shall be made upon the receipt by Gas Corp of
payroll documentation from the Vendor evidencing payment to all
Accepting Employees, provided that under no circumstances whatsoever
shall Gas Corp. be obligated to reimburse Vendor for the cost of
retention benefits payable to Listed Employees or Listed
Consultants.
(h) Upon execution of this Agreement, Vendor shall make reasonable
efforts to provide Gas Corp. access to Applicants for interview
purposes during normal working hours commencing on August 17, 2004.
(i) If Gas Corp. hires a Listed Employee that was not hired in
accordance with this Article 13, prior to the expiry of six (6)
months from the Closing Date, Gas Corp. shall reimburse Vendor for
the severance costs paid to such Listed Employee on a pro rata
basis.
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13.2 COVENANT REGARDING PRIVACY
Gas Corp. covenants and agrees to use and disclose Personal Information only for
those purposes for which the Personal Information was initially collected from
or in respect of the individual to which such Personal Information relates,
unless:
(a) Vendor or Gas Corp. has first notified such individual of such
additional purpose, and where required by Applicable Law, obtained
the consent of such individual to such additional purpose; or
(b) such use or disclosure is permitted or authorized by Applicable Law,
without notice to, or consent from, such individual.
ARTICLE 14
LICENCE TRANSFERS
14.1 LICENCE TRANSFERS
(a) Within ten (10) Business Days following Closing, CCNGP shall prepare
and where applicable, electronically submit an application to the
Government Authorities for the Licence Transfers and Gas Corp.
shall, where applicable, electronically ratify and sign such
application.
(b) Should any Government Authority deny the Licence Transfers because
of misdescription or other minor deficiencies in the application,
CCNGP shall within four (4) Business Days correct the application
and amend and re-submit an application for the Licence Transfers and
Gas Corp. shall, where applicable, electronically ratify and sign
such application.
(c) If, for any reason, a Government Authority requires a Party to make
a deposit or furnish any other form of security in order to approve
the Licence Transfers, such Party shall and covenants to immediately
either (i) make such deposit; or (ii) furnish such other form of
security as the Government Authority requires.
(d) If a Party (the "DEFAULTING PARTY") fails to make a deposit or
furnish security it is required to make or furnish under Section
14.1(c) within ten (10) days of the Defaulting Party's receipt of
notification from the Government Authority that such deposit or
security is required, the other applicable Party (the
"NON-DEFAULTING PARTY") shall have the right to make such deposit or
furnish such security. In such event, the Defaulting Party shall (as
applicable) reimburse the amount of such deposit or the costs of
such security to the Non-Defaulting Party plus interest thereon at
the Prime Rate plus 2% from the date such deposit or security is
made or furnished by the Non-Defaulting Party until such
reimbursement is made and, in the case of security, cause the
security to be returned to the Non-Defaulting Party as soon as
possible and indemnify the Non-Defaulting Party for the amount and
costs of any draws on the security plus interest thereon at the
Prime Rate plus 2% from the date such draw is made until such
indemnification is made. In addition to all other rights to enforce
such reimbursement otherwise available to the Non-Defaulting Party,
it shall have the right to set-off the amount of such reimbursement
or indemnification (including interest) against other monies due to
the Defaulting Party pursuant to this Agreement.
(e) Should Gas Corp. fail to perform the obligations requested, ordered
or directed by a Government Authority respecting Environmental
Liabilities within the time specified by the Government Authority
and the Government Authority declines to approve a Licence Transfer
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as a result thereof, CCNGP shall be entitled to enter upon and
access the Assets to perform such obligations for and on behalf of
Gas Corp., without liability to Gas Corp. for trespass or otherwise
and Gas Corp. shall reimburse CCNGP for all costs, charges and
expenses incurred by CCNGP in the performance of such obligations,
by payment thereof to CCNGP, within thirty (30) days of CCNGP's
delivery to Gas Corp. of an invoice for such costs, charges and
expenses together with interest thereon at the Prime Rate plus 2%
from the date such costs, charges or expenses are paid by CCNGP
until such reimbursement is made.
(f) If a Permit in respect of Assets which is currently in the name of
CCNGP or one of its Affiliates because it is the operator is
transferred to Gas Corp. and a Third Party becomes the operator of
the relevant Assets, the transferee will promptly do all
commercially reasonable acts to transfer such Permit to such Third
Party.
ARTICLE 15
GENERAL
15.1 DISPUTE RESOLUTION
The Parties will attempt to resolve any dispute arising hereunder through
consultation and negotiation in good faith. If those attempts fail, and the
Parties agree to refer the dispute to binding arbitration for final resolution
or if a provision of this Agreement provides that a dispute will be resolved by
binding arbitration, the arbitration will be conducted under the National
Arbitration Rules of The ADR Institute of Canada Inc.
15.2 COSTS AND EXPENSES
Except as specifically provided herein, all legal and other costs and expenses
in connection with this Agreement and the Transaction shall be paid by the Party
which incurred the same.
15.3 FURTHER ASSURANCES
From time to time, as and when reasonably requested by any Party, the other
Parties shall execute and deliver or cause to be executed and delivered all such
documents and instruments and shall take or cause to be taken all such further
or other actions to implement or give effect to the Transaction, provided such
documents, instruments or actions are consistent with the provisions of this
Agreement and accepted industry practices. All such further documents,
instruments or actions shall be delivered or taken at no additional
consideration other than reimbursement of any expenses reasonably incurred by
the Party providing such further documents or instruments or performing such
further acts, by the Party at whose request such documents or instruments were
delivered or acts performed.
15.4 NO MERGER
There shall not be any merger of any of the covenants, representations,
warranties and indemnities contained in this Agreement in any of the Specific
Conveyances or any other document or instruments delivered pursuant hereto, at
or after Closing, notwithstanding any rule of law, equity or statute to the
contrary and such rules are hereby waived. Each Party will have full right of
substitution and subrogation in and to all covenants and warranties by Third
Parties previously given or made in respect of the Assets or any part thereof to
the extent the provisions of the contracts or other arrangements with the Third
Parties so permit.
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15.5 ENTIRE AGREEMENT
The provisions contained in any and all documents and agreements collateral
hereto (including Specific Conveyances) shall at all times be read subject to
the provisions of this Agreement and, in the event of conflict, the provisions
of this Agreement shall prevail. This Agreement supersedes all other agreements,
documents, writings and verbal understandings among the Parties relating to the
subject matter hereof, other than the Confidentiality Agreement and the Title
and Operating Documents, and other than the Confidentiality Agreement and the
Title and Operating Documents, expresses the entire agreement of the Parties
with respect to the subject matter hereof. In the event of a conflict between
the terms of this Agreement and the terms of the Confidentiality Agreement or
the Title and Operating Documents, the terms of this Agreement shall govern.
15.6 GOVERNING LAW
This Agreement shall, in all respects, be subject to, interpreted, construed and
enforced in accordance with and under the laws of the Province of Alberta and
the laws of Canada applicable therein and shall, in all respects, be treated as
a contract made in the Province of Alberta, provided that this does not affect
the obligation of the Parties to comply with Applicable Law respecting any
Assets located outside of the Province of Alberta. Except as provided in
Sections 7.4, 11.4 and 15.1, the Parties irrevocably attorn and submit to the
exclusive jurisdiction of the courts of the Province of Alberta and courts of
appeal therefrom in respect of all matters arising out of or in connection with
this Agreement.
15.7 SIGNS AND NOTIFICATIONS
Within 60 days following Closing, Gas Corp. shall remove any signage which
indicates CCNGP's ownership or operation of the Assets. It shall be the
responsibility of Gas Corp. to erect or install any signage required by
Government Authorities indicating Gas Corp. to be the owner or operator of the
Assets.
15.8 NO TRANSFER OF OPERATORSHIP
Nothing in this Agreement will be interpreted as an assignment of CCNGP's rights
as operator of any of the Assets under the Title and Operating Documents or as
any assurance by CCNGP that Gas Corp. will be able to serve as operator of any
of the Assets at or after Closing. Notwithstanding the foregoing, CCNGP shall
provide commercially reasonable cooperation as Gas Corp. may request to assist
Gas Corp. in acquiring operatorship of any of the Assets for which CCNGP or any
of its Affiliates is currently the operator.
15.9 INTEREST ACCRUES ON AMOUNTS OWING
Any amount owing to a Party by another Party hereunder after Closing and
remaining unpaid will bear interest, compounded and computed monthly at the rate
of one percent (1%) per annum above the Prime Rate, from the day that the amount
was due to be paid until the day it is paid, regardless of whether the Party has
given the other Party prior notice of the accrual of interest hereunder.
15.10 ASSIGNMENT
Prior to Closing, without in any manner whatsoever affecting Article 16, this
Agreement may be assigned by Vendor in its sole and unfettered discretion to an
Affiliate, provided that no such assignment shall effect Purchaser's rights to
acquire the Assets and the Trust Units in accordance with the terms of this
Agreement.
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Prior to Closing, this Agreement may not be assigned by Purchaser without the
prior written consent of Vendor, which consent may be unreasonably and
arbitrarily withheld. This Agreement shall be binding upon and shall enure to
the benefit of the Parties and their respective administrators, trustees,
receivers, successors and permitted assigns. No Person other than the Parties
and their successors and permitted assigns shall be entitled to any rights or
benefits hereunder.
15.11 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
15.12 NOTICES
The addresses for service of the Parties shall be as follows:
CCNGP: CALPINE CANADA NATURAL GAS PARTNERSHIP
0000 - 000 - 0xx Xxxxxx XX
Xxxxxxx, XX X0X 0X0
Attention: Vice President and Managing Counsel
Fax: (000) 000-0000
CEHL: CALPINE ENERGY HOLDINGS LIMITED
0000 - 000 - 0xx Xxxxxx XX
Xxxxxxx, XX X0X 0X0
Attention: Vice President and Managing Counsel
Fax: (000) 000-0000
Calpine: CALPINE CORPORATION
0000 - 000 - 0xx Xxxxxx XX
Xxxxxxx, XX X0X 0X0
Attention: c/o Vice President and Managing Counsel
Fax: (000) 000-0000
Gas Corp.: PRIMEWEST GAS CORP.
0000, 000-0xx Xxxxxx X. X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Vice President, Business Development
Fax: (000) 000-0000
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The Trust: PRIMEWEST ENERGY TRUST
c/o PrimeWest Energy Inc.
4700, 000 - 0xx Xxxxxx X. X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Vice President, Business Development
Fax: (000) 000-0000
Any notice, communication and statement required, permitted or contemplated
hereunder shall be in writing and sent by personal service or facsimile and
shall be deemed received when delivery or reception of the transmission is
complete except that, if such delivery or transmission is sent on a Saturday,
Sunday or day when the receiving Party's office is not open for the regular
conduct of business, or on or after 4:00 p.m., such notice or communication
shall be deemed to be received on the next Business Day that such office is open
for the regular conduct of business. A Party may from time to time change its
address for service or its fax number or both by giving written notice of such
change to the other Parties at its above address.
15.13 INVALIDITY OF PROVISIONS
In case any of the provisions of this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
15.14 WAIVER
Except as otherwise provided in this Agreement, no failure on the part of any
Party in exercising any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or remedy
preclude any other or further exercise thereof or the exercise of any right or
remedy in law or in equity or by statute or otherwise conferred. Except as
otherwise provided in this Agreement, no waiver of any provision of this
Agreement, including, this Section 15.14, shall be effective otherwise than by
an instrument in writing dated subsequent to the date hereof, executed by a duly
authorized representative of the Party making such waiver.
15.15 AMENDMENT
Except as provided in Section 9.1 and Section 15.13, this Agreement shall not be
varied in its terms or amended by oral agreement or otherwise other than by an
instrument in writing dated subsequent to the date hereof, executed by a duly
authorized representative of each Party.
15.16 AGREEMENT NOT SEVERABLE
This Agreement extends to the whole of the Assets and the Trust Units and is not
severable without Purchaser's express written consent or as otherwise herein
provided. Notwithstanding the foregoing, and for certainty, the Parties
acknowledge and agree that if the purchase and sale of the Trust Units does not
proceed to Closing, subject to the provisions of this Agreement, the Parties
shall proceed with the Closing of the purchase and sale of the Assets and in
such circumstances, this Agreement shall be amended accordingly.
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15.17 PUBLIC ANNOUNCEMENTS
No Party will make any press release or other public announcement respecting
this Agreement without the consent of the other Parties except to the extent
another Party unreasonably withholds or delays consent and the Party desiring to
make the press release or other public announcement is advised by its counsel
that the release or announcement is required to comply with any Applicable Law
or the rules of any listing authority or stock exchange with which the
disclosing Party is bound to comply. A Party which proposes to make such a
public disclosure shall, to the extent reasonably possible, provide the other
Parties with a draft of such statement at least 5 Business Days prior to its
release to enable the other Parties to review such draft and advise of any
comments it may have with respect thereto. The Party proposing to make the
public disclosures will not unreasonably refuse to incorporate the requested
changes in the public announcement except to the extent its counsel advises that
doing so will result in non-compliance with Applicable Law or the rules of the
applicable listing authority or stock exchange.
15.18 COUNTERPART EXECUTION
This Agreement may be executed by facsimile and in counterpart, no one copy of
which need be executed by all Parties, provided that any Party executing by
facsimile shall promptly provide the other Parties with an original of its
signed execution page of this Agreement. A valid and binding contract shall
arise if and when counterpart execution pages (including as may be delivered by
facsimile) are executed and delivered by all Parties.
15.19 PRICE SHARING
Vendor and Purchaser agree to a price sharing mechanism with respect to the
sales of natural gas by Purchaser to Vendor after the Effective Date. With
respect to such sales of natural gas by Purchaser, if the simple average of the
actual price received for the sale of each mmbtu of natural gas by Purchaser
pursuant to and in accordance with the Call on Production Agreement exceeds the
prices set out herein for the applicable time period (inclusive from July 1,
2004 to and including December 31, 2006) Vendor and Purchaser shall be entitled
to share 50% of all sale proceeds from the natural gas where such sale proceeds
exceed the product of the specific identified prices, in $/mmbtu at AECO, plus
$1.00/mmbtu multiplied by the number of mmbtu's of natural gas sold by Purchaser
pursuant to the Call on Production Agreement. For the purposes of this Section
15.19, the natural gas sold by Purchaser for the period of July 1, 2004 to
October 31, 2004 shall be deemed to be 50,000 mmbtu per day, notwithstanding
that Vendor has not made an election for those months. All such amounts due and
owing by Purchaser to Vendor hereunder shall be calculated by Purchaser and paid
on a quarterly basis by Purchaser to Vendor within thirty (30) days of the end
of the applicable quarter. The price sharing mechanism set forth herein shall
have a quarterly cap of Two Million Five Hundred Thousand Dollars Canadian
($2,500,000) and a maximum cap of Twenty Five Million Dollars Canadian
($25,000,000) with respect to total payments required to be made by Purchaser to
Vendor. For the avoidance of doubt, the deemed production and elected production
in accordance with the Call on Production Agreement used in this calculation
shall be net of any royalties associated with and payable on the sale of natural
gas. After December 31, 2006, all proceeds of the sale of natural gas shall be
solely for Purchaser's account. The dates and relevant prices are:
July 1, 2004 to Sept. 30, 2004: $6.84 + $1.00 = $7.84
Oct. 1, 2004 to Dec. 31, 2004: $7.31 + $1.00 = $8.31
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Jan. 1, 2005 to March 31, 2005: $7.96 + $1.00 - $8.96
April 1, 2005 to June 30, 2005: $6.91 + $1.00 = $7.91
July 1, 2005 to Sept. 30, 2005: $6.91 + $1.00 = $7.91
Oct. 1, 2005 to Dec. 31, 2005: $7.18 + $1.00 = $8.18
Jan. 1, 2006 to March 31, 2006: $7.54 + $1.00 = $8.54
April 1, 2006 to June 30, 2006: $6.39 + $1.00 = $7.39
July 1, 2006 to Sept. 30, 2006: $6.38 + $1.00 = $7.38
Oct. 1, 2006 to Dec. 31, 2006: $6.74 + $1.00 = $7.74
15.20 NO LIABILITY OF UNITHOLDERS, THIRD PARTIES
The Parties acknowledge that Computershare Trust Company of Canada is entering
into this agreement solely in its capacity as trustee of the Trust and the
obligations of the Trust hereunder shall not be personally binding upon
Computershare Trust Company of Canada or any of the unitholders of the Trust and
that any recourse against the Trust, Computershare Trust Company of Canada or
any unitholder of the Trust in any manner in respect of any indebtedness,
obligation or liability of the Trust arising hereunder or arising in connection
herewith or from the matters to which this Agreement relates, if any, including
without limitation claims based on negligence or otherwise tortious behavior,
shall be limited to, and satisfied only out of, the Trust Fund as defined in the
Declaration of Trust dated August 2, 1996 and restated November 6, 2002, as
amended from time to time.
ARTICLE 16
PARENTAL GUARANTEE
Calpine Corporation guarantees to Purchaser the indemnification obligations of
Vendor pursuant to Sections 6.1, 6.6 and 6.7 hereunder (the "GUARANTEED
OBLIGATIONS"). If Vendor fails to pay any amounts due under the Guaranteed
Obligations, Calpine Corporation shall make payments therefor upon demand from
Purchaser; provided, however, that upon such payment, Calpine Corporation shall
be subrogated to the rights of Purchaser with respect to the amount paid under
the Guaranteed Obligation. Except as provided in this Article 16, Calpine
Corporation makes no covenants, representations or warranties, express or
implied, and has no other obligations under this Agreement.
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IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and
year first above written.
CALPINE CANADA NATURAL GAS CALPINE CORPORATION
PARTNERSHIP, BY ITS MANAGING PARTNER,
CALPINE CANADA RESOURCES COMPANY
Per: /s/ Xxxx Xxxxxx Per: /s/ Xxxx Xxxxxxxx
___________________________ ___________________________
Name: Name:
Title: Title:
Per: /s/ Xxxx Xxxxxxx
___________________________
Name:
Title:
PRIMEWEST GAS CORP. CALPINE ENERGY HOLDINGS LIMITED
Per: /s/ Xxx Xxxxxxx Per: /s/ Xxxx Xxxxxxx
___________________________ ___________________________
Name: Name:
Title: Title:
Per: /s/ Xxxxx Xxxxxxxxx
___________________________
Name:
Title:
PRIMEWEST ENERGY TRUST,
BY ITS TRUSTEE,
COMPUTERSHARE TRUST COMPANY OF CANADA
Per: /s/ Xxxxxxxxxx X. Xxxxx
Name: XXXXXXXXXX X. XXXXX, BSc LLB
Title: PROFESSIONAL, CORPORATE TRUST
W. XXXX XXXXXXX
MANAGER, CORPORATE TRUST
THIS IS THE EXECUTION PAGE TO THE ASSET AND TRUST UNIT PURCHASE AND SALE
AGREEMENT MADE AS OF THE 1ST DAY OF JULY, 0000 XXXXXXX XXXXXXX XXXXXX NATURAL
GAS PARTNERSHIP, CALPINE ENERGY HOLDINGS LIMITED AND CALPINE CORPORATION AS
VENDORS AND PRIMEWEST ENERGY GAS CORP. AND PRIMEWEST ENERGY TRUST, AS PURCHASER
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