**Article 1
**INTERPRETATION
In this Agreement, including the recitals hereto, unless there is something in the context or subject matter inconsistent therewith, the following defined terms have the meanings hereinafter set forth:
| (a) | “Acquisition Proposal” means, other than the Offer and the other transactions contemplated by this Agreement, any written or oral offer, proposal, inquiry or request for discussions or negotiations from any Person or group of Persons “acting jointly or in concert” (within the meaning of National Instrument 62-104 – Takeover Bids and Issuer Bids) (other than Purchaser and its affiliates) which contemplates, relates to or would reasonably be expected to lead to (in either case in one transaction or a series of transactions): |
| (i) | any direct or indirect acquisition or purchase (or any lease, long-term supply agreement or other arrangement having the same economic effect as a purchase but excluding the sale of crude oil production in the ordinary course of business) of: (A) 20% or more of the assets (which shall include equity securities of any subsidiary of Connacher) of the Connacher Group taken as a whole; or (B) 20% or more of any voting or equity securities or any other equity interests (including securities convertible into or exercisable or exchangeable for equity interests) of Connacher (or rights or interests therein or thereto); |
| (ii) | any direct or indirect take-over bid, issuer bid, exchange offer, treasury issuance or similar transaction that, if consummated, would result in a Person or joint actors beneficially owning 20% or more of any class of voting or equity securities or any other equity interests (including securities convertible into or exercisable or exchangeable for equity interests) of Connacher (or rights or interests therein or thereto); |
| (iii) | an arrangement, merger, amalgamation, consolidation, joint venture, partnership, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving any member of the Connacher Group; |
| (iv) | any other transaction or series of transactions, the consummation of which would or would reasonably be expected to interfere with, impede, prevent, impair or materially delay the transactions contemplated by this Agreement or the Offer or which would or would reasonably be expected to materially reduce the benefits to Purchaser under this Agreement or the Offer; or |
| (v) | any announcement or other disclosure of an intention to do any of the foregoing; |
| (b) | “Advance Ruling Certificate” means an advance ruling certificate issued by the Commissioner pursuant to section 102 of the Competition Act with respect to the transactions contemplated by this Agreement; |
| (c) | “affiliate” has the meaning ascribed thereto under the Securities Act; |
| (d) | “Agreement”, “herein”, “hereof”, “hereto”, “hereunder” and similar expressions mean and refer to this Pre-Acquisition Agreement (including the schedules hereto) as supplemented, modified or amended, and not to any particular article, section, schedule or other portion hereof; |
| (e) | “Anti-Corruption Laws” has the meaning given to such term in Section 4.2(fff); |
| (f) | “Applicable Laws”, in the context that refers to one or more persons, means any domestic or foreign, federal, state, provincial, municipal, regional or local law (statutory, common, or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated, or applied by a Governmental Authority and any terms or conditions of any grant of approval, permission, authority or license of any Governmental Authority, that is binding upon or applicable to such person or persons or its business or their business, undertaking, property or securities and emanate from a Governmental Authority having jurisdiction over the person or persons or its or their business, undertaking, property or securities; |
| (g) | “Authorization” means, with respect to any Person, any order, Permit, approval, consent, waiver, license, registration, recognition, certification, accreditation or other authorization issued, granted or given by a Governmental Authority having jurisdiction over the Person; |
| (h) | “Breaching Party” has the meaning given to such term in Section 5.4(b); |
| (i) | “Business Day” means any day, other than Saturday, Sunday or a statutory holiday in the Province of Alberta; |
| (j) | “Certificate Limit” has the meaning given to such term in Section 2.10(a)(i); |
| (k) | “Claim” means any claim, demand, lawsuit, action, proceeding, order, arbitration or governmental investigation, in each case, whether asserted, threatened, pending or existing; |
| (l) | “Closing” means the initial take up and payment of the Connacher Shares by Purchaser and the payment by Purchaser of the Purchase Price payable pursuant to the Offer and the completion of all matters incidental thereto; |
| (m) | “Closing Date” means the date that Closing occurs, being the date that is three Business Days following the Expiry Time, or such other date as the Parties hereto agree in writing, and in any event not later than the Outside Date; |
| (n) | “Closing Date Letters of Credit” means, collectively, the letters of credit issued by The Bank of Nova Scotia, as issuing lender under the Connacher Revolving Credit Agreement, that are outstanding as of the Closing Date; |
| (o) | “Commissioner” means the Commissioner of Competition appointed pursuant to the Competition Act or a Person designated or authorized pursuant to the Competition Act to exercise and perform the duties of the Commissioner of Competition; |
| (p) | “Competition Act” means the Competition Act (Canada); |
| (q) | “Competition Act Approval” means, in respect of the transactions contemplated by this Agreement, that: |
| (i) | the Commissioner shall have issued an Advance Ruling Certificate; or |
| (ii) | both (A) the applicable waiting period under subsection 123(1) of the Competition Act shall have expired or shall have been terminated under subsection 123(2) of the Competition Act, or the obligation to submit a notification under Part IX of the Competition Act shall have been waived pursuant to paragraph 113(c) of the Competition Act and, (B) unless such requirement is waived in writing by Purchaser in its sole discretion, the Commissioner shall have issued a No Action Letter; |
| (r) | “Confidentiality Agreement” means the confidentiality agreement dated May 1, 2026 between Waterous Energy Fund Management Corp. and Connacher; |
| (s) | “Connacher AFEs” means authorizations for expenditure, cash calls, operations notices, amounts budgeted pursuant to joint operating agreements, mail ballots and similar notices and calls for funds pertaining to any of the Connacher Assets; |
| (t) | “Connacher Assets” means all of the assets, properties, Permits, rights or other privileges (whether contractual or otherwise) of the Connacher Group and, for greater certainty, includes the Connacher Leases and the Connacher Interests; |
| (u) | “Connacher Board” means the board of directors of Connacher; |
| (v) | “Connacher Burgess Royalty” means the royalty agreement between Burgess Energy Holdings LLC and Connacher dated January 29, 2018, as amended from time to time; |
| (w) | “Connacher Capital Budget” means Connacher’s forecast for capital expenditures as disclosed in the Connacher Disclosure Letter; |
| (x) | “Connacher Closing Date Net Surplus” has the meaning given to such term in Section 3.11; |
| (y) | “Connacher Disclosure Letter” means the letter of Connacher addressed to Purchaser dated the date of this Agreement providing disclosure of certain information; |
| (z) | “Connacher Employee Plan” means all plans, programs, policies, or agreements with respect to Connacher Employees, former Connacher Group employees, current or former Connacher Group directors, or current or former Connacher Group independent contractors, in each case which a member of the Connacher Group is a party to or bound by or under which the Connacher Group has an obligation to contribute relating to retirement savings, pensions, bonuses, profit sharing, deferred compensation, incentive compensation, stock option, stock purchase, phantom stock, stock appreciation, restricted stock, change of control payments, transaction payments, retention payments, life or accident insurance, hospitalization, health, medical or dental treatment or expenses, employee assistance, training or apprenticeship benefits, disability benefits, unemployment insurance benefits, employee loans, vacation pay, paid time off, severance or termination pay, fringe benefit or other similar benefits; |
| (aa) | “Connacher Employees” means all current employees and officers of the Connacher Group; |
| (bb) | “Connacher Executive Employment Agreements” means the executive employment agreements between certain officers of the Connacher Group and Connacher, copies of which have been provided to Purchaser; |
| (cc) | “Connacher Financial Statements” means, collectively, the audited financial statements of Connacher as at and for the years ended 2024 and 2025, together with the notes thereto and the auditor’s report thereon and the unaudited financial statements of Connacher as at and for the three months ended March 31, 2026, together with the notes thereto; |
| (dd) | “Connacher Group” means, collectively, Connacher, Great Divide Midstream GP and Great Divide Midstream Limited Partnership; |
| (ee) | “Connacher Interests” means the rights of the Connacher Group in and to the Connacher Leases, any and all reservations, Permits, licenses, unit agreements, assignments, trust declarations, operating agreements, royalty agreements, gross overriding royalty agreements, agreements for the construction, ownership and operation of facilities, contract operating agreements, participation agreements, farm-in agreements, sale and purchase agreements, pooling agreements and any other documents and agreements granting, reserving or otherwise conferring rights to: (i) explore for, drill for, produce, take, use or market Petroleum Substances; (ii) share in the production of Petroleum Substances; (iii) share in the proceeds from, or measured or calculated by reference to the value or quantity of, Petroleum Substances which are produced; and (iv) acquire any of the rights described in items (i) to (iii) of this definition, together with all related tangibles and miscellaneous interests, including interests and rights known as working interests, leasehold interests, royalty interests, overriding royalty interests, gross overriding royalty interests, production payments, profits interests, net profits interests, revenue interests, net revenue interests, economic interests and fee simple interests, including fractional or undivided interests in any of the foregoing; |
| (ff) | “Connacher Leases” means the Connacher Group’s leases, Permits, concessions, concession agreements, contracts, subleases, reservations or other agreements, by virtue of which the Connacher Group is entitled to drill for, win, take, own or remove Petroleum Substances, or by virtue of which the holder thereof is deemed to be entitled to a share of Petroleum Substances removed from the lands, and includes, if applicable, all renewals and extensions of such documents and all documents issued in substitution therefor; |
| (gg) | “Connacher LTIP” means the 2026 employee long-term incentive plan of Connacher, a copy of which has been provided to Purchaser; |
| (hh) | “Connacher Net Surplus” means the net surplus of Connacher which includes, without duplication, any and all cash and cash equivalents (including any cash proceeds from the exercise of Connacher Options), accounts receivable (excluding any Tax Refunds), prepaid expenses, deposits, Tax Refunds, long-term debt (including under the Connacher Term Loan Agreement and the Connacher Revolving Credit Agreement), accounts payable (excluding any current Tax liabilities), product inventory and line-fill assets, current Tax liabilities, in each case inclusive of any and all accrued liabilities, calculated in accordance with IFRS, and, for greater certainty, including the Connacher Transaction Costs, calculated in accordance with the methodology and in the form disclosed in Schedule 1.1(hh) of the Connacher Disclosure Letter; |
| (ii) | “Connacher Net Surplus Price Decrease Amount” means if the Connacher Closing Date Net Surplus is less than the Connacher Net Surplus Target, then the difference of (i) the Connacher Net Surplus Target minus (ii) the Connacher Closing Date Net Surplus; |
| (jj) | “Connacher Net Surplus Price Increase Amount” means if the Connacher Closing Date Net Surplus is greater than the Connacher Net Surplus Target, then the difference of (i) the Connacher Closing Date Net Surplus minus (ii) the Connacher Net Surplus Target, provided that the Connacher Net Surplus Price Increase Amount shall not exceed $10,000,000 (and if the Connacher Net Surplus Price Increase Amount would otherwise exceed $10,000,000, Connacher shall make a dividend or other distribution to the Connacher Shareholders to reduce the Connacher Net Surplus Price Increase Amount to $10,000,000 or less); |
| (kk) | “Connacher Net Surplus Target” means $0.00; |
| (ll) | “Connacher Non-Completion Fee” has the meaning given to such term in Section 3.10(a); |
| (mm) | “Connacher Optionholder” means a holder of a Connacher Option; |
| (nn) | “Connacher Options” means outstanding options to purchase Connacher Shares granted pursuant to the Connacher Stock Option Plan; |
| (oo) | “Connacher Pipeline Financing Agreement” means the credit agreement dated as of August 4, 2023 between Great Divide Midstream Limited Partnership, as borrower, and [Redacted – Name], as lender; |
| (pp) | “Connacher Reserves Report” means the independent engineering evaluation of all of Connacher’s oil, natural gas liquids and natural gas interests prepared by GLJ effective December 31, 2025; |
| (qq) | “Connacher Revolving Credit Agreement” means the credit agreement dated as of December 22, 2025 among Connacher, as borrower, the lenders party thereto from time to time, and The Bank of Nova Scotia, as administrative agent, as further amended, supplemented, restated or amended and restated from time to time; |
| (rr) | “Connacher Risk Management Contracts” means the hedges, swaps or other financial instruments, fixed price contracts for physical delivery or like transactions of the Connacher Group; |
| (ss) | “Connacher Shareholders” means the holders from time to time of Connacher Shares; |
| (tt) | “Connacher Shares” means the Class A common shares in the capital of Connacher; |
| (uu) | “Connacher Stock Option Plan” means the stock option plan of Connacher effective as of October 1, 2020, as amended on May 16, 2022, a copy of which has been provided to Purchaser; |
| (vv) | “Connacher Surrender Agreements” means agreements, in form satisfactory to each of Connacher and Purchaser, acting reasonably, to be entered into between Connacher and the holders of Connacher Options whereby each holder of Connacher Options agrees to surrender such Connacher Options in accordance with Section 2.5; |
| (ww) | “Connacher Term Loan Agreement” means the second amended and restated credit agreement dated as of December 22, 2025 among Connacher, as borrower, the lenders party thereto from time to time, and Computershare Advantage Trust of Canada, as administrative agent and as collateral agent, as further amended, supplemented, restated or amended and restated from time to time; |
| (xx) | “Connacher Transaction Costs” means all costs and expenses incurred by Connacher in connection with the transactions contemplated by this Agreement paid or proposed to be made on or prior to the Closing Date, including all short term incentive bonus payments, payments in connection with the Connacher Stock Option Plan (including all payments paid to Connacher Optionholders pursuant to the Connacher Surrender Agreements), Connacher LTIP and the Connacher Transaction Incentive Program, any change of control, severance, separation or similar payments paid to officers of the Connacher Group, “run off” directors’ and officers’ liability insurance costs, legal, accounting, audit, engineering, financial advisory, printing fees, fees to obtain required regulatory approvals and consents and all other administrative or professional fees, costs and expenses of Third Parties incurred by Connacher, all of which costs and expenses are disclosed in the Connacher Disclosure Letter; |
| (yy) | “Connacher Transaction Incentive Program” means the transaction incentive program of Connacher effective for the 2026 calendar year, adopted by the Connacher Board on May 13, 2026, a copy of which has been provided to Purchaser; |
| (zz) | “Data Room” means the virtual data room hosted by Firmex and maintained by TPH&Co on behalf of Connacher for the disclosure of various materials and information of Connacher; |
| (aaa) | “Debt Financing” means the provision of funds as set forth in the Debt Financing Letters; |
| (bbb) | “Debt Financing Commitment Letter” means the commitment letter dated as of July 13, 2026 among Purchaser, Bank of Montreal, BMO Capital Markets, National Bank of Canada and National Bank of Canada Capital Markets, as amended, modified, supplemented or replaced from time to time, pursuant to which certain of the Financing Sources have agreed, subject to the terms and conditions set forth therein, to provide debt financing for the purposes of, among other things, financing the Purchase Price; |
| (ccc) | “Debt Financing Fee Letters” means any fee letters executed by Purchaser in relation to the Debt Financing, in each case, as amended, modified, supplemented or replaced from time to time; |
| (ddd) | “Debt Financing Letters” means, collectively, (i) the Debt Financing Commitment Letter, and (ii) the Debt Financing Fee Letters, in each case, including all exhibits, schedules, annexes and amendments thereto; |
| (eee) | “Disclosing Party” has the meaning given to such term in Section 4.4(a); |
| (fff) | “Drag-Along Notice” means the irrevocable written notice delivered, or caused to be delivered, by the Supporting Connacher Shareholders, as Majority Holders, to all other Connacher Shareholders (with a copy to Connacher) pursuant to Section 6.1 of the Shareholder Agreement expressly invoking the drag-along rights and shareholder obligations set out in Article 6 thereof; |
| (ggg) | “Environment” means the natural environment (including soil, land surface or subsurface strata), surface waters, groundwater, sediment, ambient air (including all layers of the atmosphere), organic and inorganic matter and living organisms, and any other environmental medium or natural resource and all sewer systems; and “Environmental” means pertaining to the Environment; |
| (hhh) | “Environmental Laws” means, with respect to any person or its business, activities, property, assets or undertaking, all Applicable Laws relating to the Environment in the jurisdictions applicable to such person or its business, activities, property, assets or undertaking, including legislation governing abandonment and reclamation obligations, and the use, storage, treatment and release of Hazardous Substances; |
| (iii) | “Exemption Evidence” has the meaning given to such term in Section 2.10(a)(ii); |
| (jjj) | “Expiry Time” has the meaning given to such term in Section 2.1(a)(iv); |
| (kkk) | “Financing” means any financing and funds obtained or intended to be obtained by Purchaser or, following the Closing Date, the Connacher Group, including through prepayment agreements, an offering, the issuance or sale of any commercial paper, debt, equity or equity-linked securities in the capital markets or term or other loans, or any combination thereof, in each case (i) to fund all or any portion of the Purchase Price, including under the Debt Financing, (ii) to refinance, redeem, repurchase or repay any existing indebtedness of the Connacher Group or (iii) otherwise in connection with the Offer or the transactions contemplated hereby, including any financing transactions that are negotiated, arranged or documented following the date hereof and consummated at or after Closing Date |
| (lll) | “Financing Source Parties” means the Financing Sources and each of their respective affiliates and their and their respective affiliates’ respective current, former and future direct or indirect equity holders, controlling persons, shareholders, agents, affiliates, members, managers, general or limited partners, assignees, directors, officers, advisors, agents and employees; |
| (mmm) | “Financing Source Provisions” means, collectively, Section 3.8 (Purchaser Financing and Financing Assistance), Section 7.1 (Amendment), Section 7.2 (Waiver), Section 10.7 (Third Party Beneficiaries) and Section 10.8 (Liability of Financing Source Parties); |
| (nnn) | “Financing Sources” means the agents, arrangers, lenders, underwriters and other Persons that have committed or been engaged to provide or arrange, or otherwise entered into agreements in connection with all or any part of, a Financing, including the parties to the Debt Financing Letters, any joinder or counterpart agreements, or credit agreements entered into in connection therewith, together with their respective successors and assigns; |
| (ooo) | “Fraud” means an act committed by a Party, with the intent to deceive the other Party, and requires:(i) such Party to have made an inaccurate representation or warranty in this Agreement, any ancillary agreement hereto or any certificate delivered pursuant to this Agreement; (ii) with actual knowledge that such representation or warranty is inaccurate; (iii) with an intention to induce the other Party to whom such representation or warranty is made to act or refrain from acting in reliance upon it; (iv) causing the other Party, in justifiable reliance upon such inaccurate representation or warranty, to take or refrain from taking action; and (v) causing such other Party to suffer damages as a result of such inaccuracy. For the avoidance of doubt, “Fraud” shall not include any claim for equitable fraud, constructive fraud, promissory fraud, unfair dealings fraud, fraud by reckless or negligent misrepresentation or any tort based on negligence or recklessness. For purposes of determining whether Fraud exists with respect to this Agreement, the Parties acknowledge and agree that the Parties have justifiably and reasonably relied on the representations and warranties set forth in Section 4.1 and Section 4.2, as applicable, any ancillary agreement hereto and any certificate delivered pursuant to this Agreement as a material inducement to agreeing to the terms of this Agreement and consummating the transactions contemplated hereby; |
| (ppp) | “GLJ” means GLJ Ltd., independent qualified reserves evaluator, Calgary, Alberta; |
| (qqq) | “Governmental Authority” means: (i) any international, multinational, federal, provincial, state, regional, municipal, local or other government, governmental or public department, ministry, central bank, court, tribunal, arbitral body, commission, commissioner, board, bureau or agency, domestic or foreign; (ii) any subdivision, agency, agent or authority of any of the foregoing; or (iii) any quasi-governmental or private body, including any tribunal, commission, regulatory agency, stock exchange (including the Stock Exchanges) or self-regulatory organization, exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; |
| (rrr) | “Great Divide Midstream GP” means Great Divide Midstream GP Inc., a corporation existing under the laws of the Province of Alberta; |
| (sss) | “Great Divide Midstream Limited Partnership” means Great Divide Midstream Limited Partnership, a limited partnership formed under the laws of the Province of Alberta on July 31, 2023; |
| (ttt) | “Hazardous Substances” means any element, waste or other substance whether natural or artificial and whether consisting of gas, liquid, solid or vapour that is prohibited, listed, defined, designated or classified as dangerous, hazardous, radioactive, explosive or toxic or a pollutant or a contaminant under or pursuant to any Environmental Laws, and specifically includes Petroleum Substances and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos containing materials or any substance which is deemed under Environmental Laws to be deleterious to the Environment or worker or public health or safety; |
| (uuu) | “HSR Act” means United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules promulgated thereunder; |
| (vvv) | “IFRS” means Canadian generally accepted accounting principles for publicly accountable enterprises, being International Financial Reporting Standards as adopted by the Canadian Accounting Standards Board; |
| (www) | “Initial Expiry Time” has the meaning given to such term in Section 2.1(a)(iv); |
| (xxx) | “Letter of Transmittal” means the form of letter of acceptance and transmittal related to the Offer, in form satisfactory to each of Connacher and Purchaser, acting reasonably; |
| (yyy) | “Liens” means any hypothecs, mortgages, pledges, assignments, liens, charges, security interests, reductions in interest, demands, royalties, penalties, production payments, encumbrances and adverse rights or Claims, other third person interests or encumbrances of any kind, whether contingent or absolute, and any agreement, options, rights or privileges (whether by Applicable Law, contract or otherwise) capable of becoming any of the foregoing; |
| (zzz) | “Material Adverse Change” or “Material Adverse Effect” means, with respect to a Party, any effect, change, event, development, circumstance or occurrence that, individually or in the aggregate with other such effects, changes, events, developments, circumstances or occurrences is, or would reasonably be expected to be, material and adverse to the condition (financial or otherwise), business, operations, results of operations, assets, liabilities (contingent or otherwise), properties or capitalization of such Party, other than any effect, change, event or development resulting from: |
| (i) | general economic, business, banking, regulatory, currency exchange, interest rate, rates of inflation or market conditions or in national or global financial, credit or capital markets in Canada or elsewhere; |
| (ii) | any change, development or condition generally affecting the oil and gas exploration, exploitation, development and production industry as a whole, and not specifically relating to such Party; |
| (iii) | any change, development or condition resulting from any act of terrorism or any outbreak of hostilities or declared or undeclared war, or any escalation or worsening of such acts of terrorism, hostilities or war; |
| (iv) | any change to any existing, or the imposition of any new, import or export restriction, prohibition, tariff, duty, charge or Tax imposed by: |
| (A) | the federal or a state or other government of the United States of America on goods (including Petroleum Substances) imported from or exported to Canada or any other country; or |
| (B) | the federal or a provincial or other government of Canada on goods (including Petroleum Substances) imported from or exported to the United States of America or any other country; |
| (v) | any decline in Petroleum Substance prices on a current or forward basis; |
| (vi) | changes in Applicable Laws (including Tax laws); |
| (vii) | any changes in IFRS or regulatory accounting requirements, or the interpretation, application or non-application thereof by any Governmental Authority, or changes in regulatory accounting requirements applicable to the oil and gas exploration, exploitation, development and production businesses as a whole; |
| (viii) | any acts of God, riots, terrorism, sabotage, natural disasters, epidemics, pandemics, disease outbreaks, other health crisis or public health event, change in global, national or regional political conditions, civil unrest, or disturbances or similar event or escalation or worsening thereof; |
| (ix) | any matter which has, at or prior to the date hereof, been publicly disclosed by Purchaser or has been disclosed in writing by Connacher to Purchaser in the Connacher Disclosure Letter (but only to the extent the relevance of such disclosure to the applicable representation, warranty, covenant or condition is reasonably apparent); |
| (x) | the announcement of the execution of this Agreement or the transactions contemplated hereby, including any loss or threatened loss of, or adverse change or threatened adverse change in, the relationship of the Party with any Governmental Authority or any of its current or prospective employees, customers, securityholders, financing sources, vendors, distributors, suppliers, counterparties, partners, licensors or lessors; |
| (xi) | the failure of such Party to meet any internal or published projections, forecasts or estimates of revenues, earnings, cash flow or production of Petroleum Substances (it being understood that the causes underlying such failure may be taken into account in determining whether a Material Adverse Effect has occurred); |
| (xii) | any changes in the trading price or trading volumes of the securities of such Party; or |
| (xiii) | any changes or effects arising from matters permitted or contemplated by this Agreement or consented to or approved in writing by the other Party; |
provided, however, that: (A) in the case of(i) through (viii), such change or effect relating to or resulting from the foregoing does not disproportionately affect a Party compared to other entities of similar size operating in the oil and gas exploration, exploitation, development and production industry in Western Canada, in which case the relevant exclusion from this definition of Material Adverse Change or Material Adverse Effect referred to above shall not be applicable; and (B) references in certain Sections of this Agreement to dollar amounts are not intended to be, and shall not be deemed to be, illustrative for purposes of determining whether a Material Adverse Effect has occurred;
| (aaaa) | “material contracts” has the meaning given to such term in Section 4.2(dd); |
| (bbbb) | “misrepresentation” has the meaning ascribed thereto under the Securities Act; |
| (cccc) | “Money Laundering Laws” has the meaning given to such term in Section 4.2(eee); |
| (dddd) | “Mutual Releases” has the meaning given to such term in Section 2.6(b); |
| (eeee) | “No Action Letter” means confirmation in writing by the Commissioner indicating that the Commissioner does not, at that time, intend to make an application under section 92 of the Competition Act in respect of the transactions contemplated by this Agreement; |
| (ffff) | “Non-Resident Escrow Agreement” has the meaning given to such term in Section 2.10(a)(iii); |
| (gggg) | “Non-Resident Shareholder” has the meaning given to such term in Section 2.10(a)(iv); |
| (hhhh) | “Offer” means the offer to purchase all of the Connacher Shares (including any Connacher Shares issuable pursuant to the exercise of Connacher Options) which offer shall be made at the Purchase Price to the Connacher Shareholders substantially in the form attached hereto as Schedule “A” and otherwise in accordance with Section 2.1; |
| (iiii) | “Outside Date” means October 31, 2026, subject to the right of Purchaser to postpone the Outside Date by successive one month periods up to an aggregate of three months if the condition in either of Section 5.2(g) or Section 5.2(h) has not been satisfied, by giving written notice to Connacher to such effect no later than 5:00 p.m. (Calgary time) on the date that is not less than five days prior to the original Outside Date (and any subsequent Outside Date), or such later date as may be agreed to in writing by the Parties, provided that, notwithstanding the foregoing, Purchaser shall not be permitted to postpone the Outside Date if the failure for either of such conditions to be satisfied is primarily the result of Purchaser’s failure to comply with its covenants herein; |
| (jjjj) | “Parties” means Purchaser and Connacher and “Party” means either one of them; |
| (kkkk) | “Permit” means any license, permit, certificate, franchise, consent, order, grant, easement, covenant, approval, classification, registration or other authorization of and from any person, including any Governmental Authority; |
| (llll) | “Permitted Liens” means: |
| (i) | the Connacher Burgess Royalty; |
| (ii) | Liens disclosed in Schedule 1.1(llll) of the Connacher Disclosure Letter; |
| (iii) | contracts for the purchase, processing, transportation, storage or operations in respect of the Connacher Assets that are terminable (without penalty) on 31 days’ notice or less; |
| (iv) | easements, rights of way, servitudes and 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, electric light, power, telephone, telegraph or cable television conduits, poles, wires and cables, in existence on the date of this Agreement; |
| (v) | the right reserved to or vested in any Governmental Authority by the terms of any lease, or Permit forming part of the Connacher Assets, or by any statutory provision, to terminate any lease, Permit, or to require annual or other periodic payments as a condition of the continuance of them; |
| (vi) | the right of general application reserved to or vested in any Governmental Authority to levy Taxes on Petroleum Substances or the revenue from them, and governmental restrictions on production rates or on the operation of any property or otherwise affecting the value of any property; |
| (vii) | rights reserved to or vested in any Governmental Authority to control or regulate the Connacher Assets in any manner; |
| (viii) | Liens for Taxes, assessments or governmental charges which are not due or the validity of which is being diligently contested in good faith by Connacher; |
| (ix) | the right reserved or vested in any person to create or incur a Lien that is a mechanics’ lien, builders’ lien or materialmen’s lien in respect of services rendered or goods supplied but only to the extent such Lien relates to goods or services for which payment is not due or the validity of which is being diligently contested in good faith by Connacher; |
| (x) | undetermined or inchoate Liens incurred or created as security in favor of any Person with respect to the development or operation of any part of the Connacher Assets, in respect of which payment is not due or the validity of which is being diligently contested in good faith by Connacher; |
| (xi) | the reservations, limitations, provisos and conditions in any original grant from the Crown of any of the lands forming part of the Connacher Leases or interests in them, and statutory exceptions to title; |
| (xii) | with respect to any interest in real property, (A) any conditions, rights, reservations, exceptions or restrictions relating to real property that are (I) disclosed on any certificate of title or similar instrument that has been disclosed to Purchaser, (II) contained in the deed or instrument conveying, leasing or licensing such real property, or (III) are otherwise of public record maintained by any Governmental Authority, (B) any conditions that may be shown by a current survey or physical inspection, (C) Liens imposed by Applicable Law, and (D) zoning, building, subdivision and other similar requirements and restrictions and all rights of any Governmental Authority to regulate real property and its use; |
| (xiii) | the terms and conditions of the Connacher Interests and Connacher Leases, provided that any Liens constituting reductions in interest, royalties, penalties, production payments or similar burdens upon the Connacher Interests shall not be Permitted Liens unless they satisfy another paragraph of this Section 1.1(llll), but excluding any Liens resulting from a failure to comply with any pre-emptive or preferential rights, consents or rights on transfer or change of control, or rights of first refusal or other restrictions on transfer or change of control arising under any Connacher Interests or Connacher Leases that are triggered by this Agreement or the Transaction; |
| (xiv) | Liens incurred, created or granted in connection with the Connacher Term Loan Agreement, the Connacher Revolving Credit Agreement or the Connacher Pipeline Financing Agreement; and |
| (xv) | Liens incurred, created or granted in the ordinary course of business to a public utility, municipality or Governmental Authority in connection with operations conducted with respect to the Connacher Assets, but only to the extent those liens relate to costs and expenses for which payment is not due; |
| (mmmm) | “person” or “Person” includes an individual, limited or general partnership, limited liability company, limited liability partnership, trust, joint venture, association, body corporate, corporation, unincorporated organization, trustee, executor, administrator, legal representative, government (including any Governmental Authority) or any other entity, whether or not having legal status; |
| (nnnn) | “Petroleum Substances” means any crude oil, crude bitumen and products derived therefrom, synthetic crude oil, petroleum, natural gas, natural gas liquids and any and all other substances produced in association with and related to any of the foregoing, whether liquid, solid or gaseous and whether hydrocarbons or not, including sulphur; |
| (oooo) | “Pre-Closing Tax Period” means any taxable period that begins before and ends on or before the Closing Date and, in the case of a Straddle Period, the portion of the Straddle Period up to but not including the Closing Date; |
| (pppp) | “Project Assurances Agreement” means the project assurances agreement dated as of August 4, 2023 among Great Divide Midstream Limited Partnership, Great Divide Midstream GP, Connacher, and [Redacted – Name], providing assurances in connection with the Connacher Pipeline Financing Agreement; |
| (qqqq) | “Purchase Price” means the total consideration payable by Purchaser to the Connacher Shareholders in cash consisting of an aggregate of $1,290,000,000.00, plus the Connacher Net Surplus Price Increase Amount or minus the Connacher Net Surplus Price Decrease Amount, as applicable; |
| (rrrr) | “Purchaser Non-Completion Fee” has the meaning given to such term in Section 3.9(a); |
| (ssss) | “Qualified Option” has the meaning given to such term in Section 2.5(d); |
| (tttt) | “Recipient” has the meaning given to such term in Section 4.4(a); |
| (uuuu) | “Relevant Amount” has the meaning given to such term in Section 2.10(a)(v); |
| (vvvv) | “Remittance Date” has the meaning given to such term in Section 2.10(a)(vi); |
| (wwww) | “Representatives” means, with respect to a Party, the officers, directors, advisors, employees, representatives and agents of such Party; |
| (xxxx) | “Returns” shall mean all reports, filings, notices, schedules, estimates, elections, designations, forms, declarations of estimated Tax, information statements and returns including any amendments, attachments or appendices and exhibits thereto, made, prepared or filed or required to be filed with a Governmental Authority in connection with, any Taxes, including any and all amendments, attachments or supplements thereto and whether in paper or electronic form; |
| (yyyy) | “Sanctions” has the meaning given to such term in Section 4.2(ggg); |
| (zzzz) | “Section 116 Certificate” has the meaning given to such term in Section 2.10(a)(vii); |
| (aaaaa) | “Securities Act” means the Securities Act (Alberta); |
| (bbbbb) | “Shareholder Agreement” means the unanimous shareholder agreement of Connacher dated as of September 30, 2019, as amended, restated, modified and supplemented from time to time; |
| (ccccc) | “Stock Exchanges” means, collectively, the Toronto Stock Exchange and the New York Stock Exchange; |
| (ddddd) | “Straddle Period” means any taxable period beginning before and ending on or after the Closing Date; |
| (eeeee) | “subsidiary” means, with respect to a specified entity, any: |
| (i) | corporation or body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof (whether or not shares of any other class or classes shall or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified entity or indirectly by or for the benefit of such specified entity; |
| (ii) | entity which is not a corporation or body corporate, of which more than 50% of the voting or equity interests of such entity (including, for a partnership other than a limited partnership, the voting or equity interests in such partnership) are owned, directly or indirectly, by such specified entity or indirectly by or for the benefit of such specified entity and, in the case of a limited partnership, of which such specified entity, or a subsidiary of such specified entity, is a general partner; or |
| (iii) | issuer that would constitute a subsidiary as defined in the Securities Act; |
| (fffff) | “Support Agreements” means the support agreements entered into in connection with the execution of this Agreement between the Supporting Connacher Shareholders and Purchaser, pursuant to which each Supporting Connacher Shareholder has agreed, among other things, to (i) deposit under the Offer all such Connacher Shares beneficially owned or controlled by such Supporting Connacher Shareholder, directly or indirectly, and (ii) as Majority Holders under the Shareholder Agreement, determine to consummate the transactions contemplated hereby as a Corporate Sale Transaction under the Shareholder Agreement and deliver the Drag-Along Notice to all other Connacher Shareholders in accordance with Section 6.1 of the Shareholder Agreement; |
| (ggggg) | “Supporting Connacher Shareholders” means [Redacted – Names]; |
| (hhhhh) | “Tax” or “Taxes” means (i) any and all taxes, duties, fees, excises, premiums, assessments, imposts, levies and other charges or assessments of any kind whatsoever imposed by any Governmental Authority, whether computed on a separate, consolidated, unitary, combined or other basis, including those levied on, or measured by, or described with respect to, income, gross receipts, profits, escheat, gains, windfalls, capital, capital stock, production, recapture, transfer, land transfer, license, gift, occupation, wealth, environment, net worth, indebtedness, surplus, sales, use, goods and services, harmonized sales, value-added, excise, special assessment, stamp, withholding, business, franchising, real or personal property, health, employee health, payroll, workers’ compensation, employment or unemployment, severance, social services, social security, education, utility, surtaxes, customs, import or export, and including all license and registration fees and all employment insurance, health insurance and government pension plan premiums or contributions; (ii) all interest, penalties, fines, additions to tax or other additional amounts imposed by any Governmental Authority on or in respect of amounts of the type described in clause (i) above or this clause (ii); (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period; and (iv) any liability for the payment of any amounts of the type described in clauses (i) or (ii) as a result of any express or implied obligation to indemnify any other Person or as a result of being a transferee or successor in interest to any party; |
| (iiiii) | “Tax Act” means the Income Tax Act (Canada), including the regulations promulgated thereunder; |
| (jjjjj) | “Tax Escrow Agent” has the meaning given to such term in Section 2.10(a)(viii); |
| (kkkkk) | “Tax Refunds” means all refunds or rebates of Taxes paid or deemed to have been paid or credited that have accrued or are otherwise due to and receivable by Connacher, including any refund of Taxes paid or deemed to have been paid on account of any federal or provincial refundable investment tax credits or other Tax credits for a Pre-Closing Tax Period; |
| (lllll) | “Terminating Party” has the meaning given to such term in Section 5.4(b); |
| (mmmmm) | “Termination Notice” has the meaning given to such term in Section 5.4(b); |
| (nnnnn) | “Third Party” means any Person other than the Parties and their respective Representatives; |
| (ooooo) | “Third Party Beneficiaries” has the meaning given to such term in Section 10.7(a); |
| (ppppp) | “Transaction” means, collectively, the acquisition by Purchaser of all of the Connacher Shares in exchange for payment of the Purchase Price as contemplated by and pursuant to the Offer and upon the terms and conditions set forth in this Agreement and all transactions in furtherance thereof as contemplated by this Agreement; |
| (qqqqq) | “Transferred Information” has the meaning given to such term in Section 4.4(a); |
| (rrrrr) | “United States” means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia; and |
| (sssss) | “Wilful Breach” means a material breach of this Agreement that is the consequence of an act or omission undertaken by the breaching Party with actual knowledge that such act or omission would, or would reasonably be expected to, cause a material breach of this Agreement. |
| 1.2 | Interpretation Not Affected by Headings, etc. |
The division of this Agreement into articles, sections and subsections is for convenience of reference only and does not affect the construction or interpretation of this Agreement. The terms “this Agreement”, “hereof”, “herein” and “hereunder” and similar expressions refer to this Agreement (including the Schedules hereto) and not to any particular article, section, schedule or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. Unless something in the subject matter or context is inconsistent therewith, references herein to Articles, Sections and Schedules are to Articles and Sections of and Schedules to this Agreement.
Words importing the singular number include the plural andvice versa and words importing the use of any gender include all genders.
If any date on which any action is required to be taken hereunder by either of the Parties is not a Business Day, such action is required to be taken on the next succeeding day, which is a Business Day.
This Agreement, the Connacher Disclosure Letter and the Confidentiality Agreement, together with the agreements and documents herein and therein referred to, constitute the entire agreement between the Parties pertaining to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, between the Parties with respect to the subject matter hereof.
All sums of money which are referred to in this Agreement are expressed in lawful money of Canada.
Unless otherwise stated, wherever in this Agreement reference is made to a calculation to be made or an action to be taken in accordance with IFRS, such reference will be deemed to be to the IFRS, as applicable, from time to time approved by the Canadian Accounting Standards Board or any successor institute, and applicable as at the date on which such calculation or action is made or taken or required to be made or taken.
Reference to “disclosure in writing” or similar references herein shall mean actually disclosed in writing by Connacher to Purchaser in the Connacher Disclosure Letter or in the Data Room.
| 1.9 | References to Legislation |
References in this Agreement to any statute or sections thereof shall include such statute as amended or substituted and any regulations promulgated thereunder from time to time in effect.
All representations, warranties, covenants and opinions in or contemplated by this Agreement as to the enforceability of any covenant, agreement or document are subject to enforceability being limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally, and the discretionary nature of certain remedies (including specific performance and injunctive relief and general principles of equity).
Where any representation or warranty contained in this Agreement is expressly qualified by reference to the knowledge of a Party, it refers to the actual knowledge of the executive officers of such Party, after reasonable inquiry in the circumstances. For purposes of this Section 1.11, “executive officers” in the case of Purchaser means Purchaser’s President and Vice President, Finance, and in the case of Connacher means Connacher’s Chief Executive Officer, Chief Financial Officer, Vice President, Legal, General Counsel and Corporate Secretary, Vice President, Subsurface and Vice President, Marketing.
| 1.12 | Interpretation Not Affected by Party Drafting |
The Parties acknowledge that their respective legal counsel have reviewed and participated in negotiating, drafting and settling the terms of this Agreement, and the Parties agree that any rule of construction to the effect that any ambiguity is to be resolved against the drafting party will not be applicable in the interpretation of this Agreement.
The following Schedules attached hereto are incorporated into and form an integral part of this Agreement:
Schedule“A” – Offer to Purchase
Schedule “B” – Non-Resident Escrow Agreements
