EXHIBIT 5
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PARTNERSHIP PURCHASE AGREEMENT
BETWEEN:
NEXEN INC.
- and -
CANADIAN NEXEN YEMEN LTD.
- and -
NEXEN MARKETING
- AND -
HARVEST BREEZE TRUST NO. 1
-and-
HARVEST BREEZE TRUST NO. 2
(NEXEN CANADA NO. 1)
TABLE OF CONTENTS
PAGE
1. INTERPRETATION.........................................................1
2. PURCHASE AND SALE.....................................................15
3. ADJUSTMENTS...........................................................19
4. CLOSING...............................................................21
5. MAINTENANCE OF THE ASSETS.............................................22
6. TITLE AND ENVIRONMENTAL REVIEW........................................26
7. THIRD PARTY RIGHTS AND CONSENTS.......................................29
8. VENDOR'S REPRESENTATIONS..............................................31
9. PURCHASER'S REPRESENTATIONS...........................................38
10. NO MERGER AND SURVIVAL................................................39
11. INDEMNITIES...........................................................39
12. VENDOR'S CLOSING CONDITIONS...........................................42
13. PURCHASER'S CLOSING CONDITIONS........................................42
14. TERMINATION...........................................................44
15. DEFAULT...............................................................44
16. DISPUTE RESOLUTION....................................................45
17. EMPLOYMENT MATTERS....................................................45
18. PROTECTION OF PERSONAL INFORMATION....................................46
19. POST-CLOSING OBLIGATIONS..............................................48
20. CONFIDENTIALITY.......................................................50
21. ATTORNMENT AND PROPER LAW.............................................51
22. MISCELLANEOUS.........................................................51
PARTNERSHIP PURCHASE AGREEMENT
THIS AGREEMENT made as of the 23rd day of June, 2005,
BETWEEN:
NEXEN INC., a body corporate having offices at the City of
Calgary, in the Province of Alberta
(hereinafter referred to as "NEXEN")
- and -
CANADIAN NEXEN YEMEN LTD., a body corporate having offices at
the City of Calgary, in the Province of Alberta,
(hereinafter referred to as "CNYL")
- and -
NEXEN MARKETING, a general partnership having offices at the
City of Calgary, in the Province of Alberta,
(hereinafter referred to as "Nexen Marketing")
- AND -
HARVEST BREEZE TRUST NO. 1, a trust established pursuant to
the laws of Alberta, by its trustee, 1115638 ALBERTA LTD.,
having offices at the City of Calgary, in the Province of
Alberta,
(hereinafter referred to as "BREEZE NO. 1")
-and-
HARVEST BREEZE TRUST NO. 2, a trust established pursuant to
the laws of Alberta, by its trustee, 1115650 ALBERTA LTD.,
having offices at the City of Calgary, in the Province of
Alberta
(hereinafter referred to as "BREEZE NO. 2")
WHEREAS the Vendor desires to sell the Securities, Pipeline,
Nexen Seismic and Office and Administrative Assets to the Purchaser and the
Purchaser desires to purchase the Securities, Pipeline, Nexen Seismic and Office
and Administrative Assets from the Vendor;
NOW THEREFORE in consideration of the premises hereto and of
the covenants, warranties, representations, agreements and payments herein set
forth and provided for, the parties hereto covenant and agree as follows:
1. INTERPRETATION
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(a) In this Agreement (including the premises hereto, this clause
and each Schedule) the words and phrases set forth below shall
have the meaning ascribed thereto below, namely:
(i) "ABANDONMENT AND RECLAMATION OBLIGATIONS" means all
remediation and reclamation obligations whatsoever of
the Partnership or Vendor, as applicable, including,
without limitation:
A. the abandonment and reclamation of any
Wells, and the restoration of the surface in
respect thereof including any related roads;
and
B. the closure, decommissioning and dismantling
of Tangibles, and the restoration of the
surface in respect thereof including any
related roads;
all in accordance with good oil and gas field
practices, and in compliance with the Regulations;
(ii) "ADJUSTED WORKING CAPITAL" means an amount equal to
the Current Assets less the Current Liabilities as at
the Closing Date excluding all amounts receivable by
the Partnership from, or payable by the Partnership
to, NEXEN including amounts accrued;
(iii) "AFFILIATES" means with respect to any Person, any
other Person which is affiliated with such Person,
and for the purposes of this Agreement:
A. two Persons will be considered to be
affiliated with one another if one of them
controls the other, or if both of them are
controlled by a common third Person; and
B. one Person will be considered to control
another Person if it has the power to direct
or cause the direction of the management and
policies of the other Person, whether
directly or indirectly, through one or more
intermediaries or otherwise, and whether by
virtue of the ownership of partnership
interest or other equity interests, the
holding of voting rights or contractual
rights, or otherwise;
and for greater certainty, Nexen Canada No. 1 and
Subco are Affiliates of the Vendor prior to Closing
and Affiliates of Harvest Operations Corp. and
Harvest Energy Trust are Affiliates of the Purchaser
and the Purchasers are Affiliates of Harvest Energy
Trust for the purposes of this Agreement;
(iv) "ASSETS" means the Partnership's entire right, title
and interest in and to all assets within the area
outlined in purple on the land plat contained
attached hereto as Schedule "F" including, without
limitation, the Petroleum and Natural Gas Rights, the
Tangibles, the Technical Information and the
Miscellaneous Interests;
(v) "BUSINESS DAY" means a day other than a Saturday, a
Sunday or a statutory holiday in Calgary, Alberta;
(vi) "CLAIMS PERIOD" means:
A. in respect of the representations and
warranties set out in Clause 8(a) (xviii),
(xxi) and (xxii), and the indemnity for
Subco income taxes in
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Clause 11(a) (B), the period ending on the
day which is sixty (60) days after expiry of
all reassessment periods in respect of the
First Fiscal Period for the Partnership and
any taxation years of Subco which ended or
end prior to the Closing Date; and
B. for all other indemnities, representations,
warranties, covenants and agreements of
Vendor, the period ending twelve (12) months
after the Closing Date;
(vii) "CLOSING" means the conveyance of the Securities,
Pipeline, Nexen Seismic and Office and Administrative
Assets by the Vendor to the Purchaser and the payment
by the Purchaser to the Vendor of the Purchase Price
therefor and the completion of all matters incidental
thereto on the Closing Date at the Place of Closing;
(viii) "CLOSING DATE" means 2:00 p.m. (Calgary, Alberta
time) on the 2nd day of August, 2005 or such other
time as may be agreed to by the Vendor and the
Purchaser;
(ix) "CURRENT ASSETS" means the aggregate of all the
Partnership's current assets calculated in accordance
with GAAP, including in such calculation any balance
of pre-paid amounts, any deposits or advances, and
the entire Intercompany Receivable;
(x) "CURRENT LIABILITIES" means the aggregate of all the
Partnership's current liabilities calculated in
accordance with GAAP, including in such calculation
the entire Intercompany Payable;
(xi) "DATA ROOM MATERIALS" means the documents, files,
data and information which were in the Vendor's data
room during the period April 5, 2005 to May 9, 2005
as set forth in the CD or CD's attached hereto as
Schedule "G";
(xii) "EFFECTIVE DATE" means 12:01 a.m. (Calgary, Alberta
time) on the 1st day of April, 2005;
(xiii) "ENVIRONMENTAL DEFECT" means Environmental
Liabilities relating to the Assets and the Pipeline
or the surface areas associated therewith, provided
however, the following shall be deemed to not be an
Environmental Defect:
A. Environmental Liabilities disclosed in the
Data Room Materials; and
B. Abandonment and Reclamation Obligations but
only to the extent of Environmental
Liabilities that are normally associated
with assets which are similar to the Assets
and which have been operated in compliance
with the Regulations, the Title and
Operating Documents and good oilfield
practices;
(xiv) "ENVIRONMENTAL EVALUATOR" means Earthmaster
Environmental Strategies Inc. or such other party as
agreed to by the Parties;
(xv) "ENVIRONMENTAL LIABILITIES" means all liabilities
pertaining to the Assets and the Pipeline in respect
of the environment, whether or not caused by a breach
of the applicable Regulations and whether or not
resulting from operations however
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and whenever conducted with respect to the Assets and
the Pipeline, including, without limitation,
liabilities related to:
A. the transportation, storage, use or disposal
of toxic or hazardous substances, dangerous
oilfield waste or non-dangerous oilfield
waste;
B. the release, spill, escape or emission of
toxic or hazardous substances;
C. any other pollution or contamination of the
surface, substrate, soil, air, ground water,
surface water or marine environments;
D. damages and losses suffered by Third Parties
as a result of the occurrences in Paragraphs
(A) - (C) of this Clause; and
E. any obligations imposed by the Regulations
to protect the environment or to rectify
environmental problems;
(xvi) "FACILITIES" means all unit facilities under any unit
agreement that applies to the Petroleum and Natural
Gas Rights and all other field facilities that are
not solely located on or under the surface of the
Lands (or lands with which the Lands are pooled) and
that are used for production, gathering, treatment,
compression, transportation, injection, water
disposal, measurement, processing, storage or other
operations respecting the Petroleum and Natural Gas
Rights or the Petroleum Substances produced
therefrom, including, without limitation, any
applicable battery, separator, compressor station,
gathering system, pipeline, production storage
facility or warehouse and all other facilities
specifically identified in Schedule "B" attached
hereto;
(xvii) "FINANCIAL INFORMATION" means financial information
relating to the Partnership, the Assets and the
Pipeline, including (i) source records, books,
general ledger, gathering and processing records,
invoices, operating statements in Vendors' or their
Affiliates' possession or to which it has reasonable
access, and (ii) other financial statements and
summaries previously prepared by the Vendors or their
Affiliates in association with the Partnership and
the Assets (to the extent they are in the possession
and control of the Vendor), including:
A. audited statements of revenue, royalties and
operating expenses associated with the
Assets for the period ended December 31,
2002, December 31, 2003 and December 31,
2004 together with Deloitte & Touche LLP's
audit report thereon in the form prepared;
B. unaudited statements of revenue, royalties
and operating expenses associated with the
Assets for the most recently completed
interim period at or prior to the Closing
Date and the comparable period in the
preceding financial year, together with
Deloitte & Touche LLP's review engagement
report thereon; and
C. such other related information that is
required under securities laws and
Regulations to be disclosed by the Purchaser
in connection with future securities
filings;
(xviii) "FUTURES TRANSACTION" means any derivatives
transaction (including an agreement with respect
thereto) which is commonly referred to as a hedge
transaction, rate swap transaction, basis swap,
forward rate transaction,
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commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond
option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction,
collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option
or any other similar transaction (including any
option with respect to any of these transactions) or
any combination of these transactions;
(xix) "GAAP" means generally accepted accounting principles
established by the Canadian Institute of Chartered
Accountants at the relevant time;
(xx) "INTERCOMPANY PAYABLE" means all accounts payable,
including amounts accrued, by the Partnership to the
Vendor or any Affiliate of the Vendor including any
amount owing under any promissory notes granted by
the Partnership in favor of the Vendor or any
Affiliate of the Vendor, if any, excluding all
amounts payable by the Partnership to NEXEN including
all amounts accrued;
(xxi) "INTERCOMPANY RECEIVABLE" means all accounts
receivable, including amounts accrued, held by the
Partnership for amounts owing by the Vendor or any
Affiliate of the Vendor including any amount owing
under any promissory notes granted by the Vendor or
any Affiliate of the Vendor in favor of the
Partnership, if any, excluding all amounts receivable
by the Partnership from NEXEN including all amounts
accrued;
(xxii) "LANDS" means the Partnership's entire interest in
and to those lands within the areas outlined in
purple on the land plat contained in the CD attached
hereto as Schedule "F" including, without limitation,
the lands set forth and described in attached
Schedule "A" and the Petroleum Substances within,
upon and under such lands, together with the right to
explore for and recover same, all insofar as such are
granted by the Leases;
(xxiii) "LEASES" means, collectively, the various leases,
licences, permits, reservations, certificates of
title and other documents of title which the holder
may explore for, drill for, recover, remove or
dispose of Petroleum Substances within, upon or under
the Lands (or lands with which the Lands are pooled
or unitized) and includes, if applicable, all
renewals and extensions of those documents and all
documents issued in substitution therefore, including
without limitation, those set forth in the CD or CD's
attached hereto as Schedule "A";
(xxiv) "LOSSES AND LIABILITIES" means all claims,
liabilities, actions, proceedings, demands, losses,
costs, penalties, fines, damages and expenses which
may be sustained or incurred by any of a Party, its
directors, officers, agents, and employees,
including, without limitation, reasonable legal fees
and disbursements on a solicitor and client basis;
(xxv) "MISCELLANEOUS INTERESTS" means subject to the
limitations and exclusions in this definition and in
the definition of "Assets", the Partnership's entire
interest in all property and rights, other than the
Petroleum and Natural Gas Rights, Tangibles and
Technical Information, to the extent they pertain
directly to the Petroleum and Natural Gas Rights, the
Tangibles or the Technical Information including,
without limitation:
A. the Title and Operating Documents;
B. the Surface Rights;
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C. the well bores and down hole casing
respecting the Wells; and
D. copies of geological, engineering, facility
and other records, files, reports, data,
correspondence and documents, or portions
thereof, that relate directly to the Assets;
(xxvi) "NEXEN SEISMIC" means with respect to proprietary
seismic data in which NEXEN owns less than 100%
interest: subject to approval of the operators and
NEXEN's partners and only upon terms and conditions
approved by those Persons, licensed copies thereof
including all seismic records, books, documents and
reports (excluding all proprietary and associated
trading rights relating to such data) which seismic
lines are shown on the land plat in Schedule "F" and
which may include, without limitation, data,
documents and information similar to those described
in paragraphs 1(a)(x1v)(A) to (D);
(xxvii) "OFFICE AND ADMINISTRATIVE ASSETS" means NEXEN's
entire right, title and interest (whether leased,
rented or owned) in and to any field offices and
administrative buildings, vehicles, office equipment,
computers, furnishings, furniture, artwork, fittings,
fixtures, oilfield equipment, systems (including,
without limitation, all SCADA systems pertaining to
the Assets but excluding other licensed and
proprietary software that may be excluded as set
forth in Schedule "J"), supplies and inventory,
whether or not affixed, but located within the area
outlined in purple on the land plat contained in the
CD attached hereto as Schedule "F" as at the Closing
Date, including without limitation, those described
in Schedule "J";
(xxviii) "PARTNERSHIP" means Nexen Canada No. 1, an Alberta
general partnership;
(xxix) "PARTNERSHIP AGREEMENT" means that certain
Partnership Agreement dated December 20, 2004, among
Nexen Petroleum Canada and CNYL and any amendments
thereto;
(xxx) "PARTNERSHIP INTEREST" means a partnership interest
in the Partnership on the Closing Date pursuant to
and in accordance with the Partnership Agreement
including, without limitation, the partners in the
Partnership, inherent right, title and interest in
and to the Assets, if any, as provided for in the
Partnership Agreement as at the Closing Date;
(xxxi) "PARTY" means a Person that is bound by this
Agreement, and "Parties" means two or more of such
Persons;
(xxxii) "PERMITTED ENCUMBRANCES" means:
A. the terms and conditions of the Title and
Operating Documents, including, without
limitation, any penalty or forfeiture that
applies to the Assets subsequent to the
Effective Date resulting from the
Purchaser's election under Clause 5 not to
participate in a particular operation, and
provided that the following are only
"Permitted Encumbrances" if and to the
extent that the following are detailed in
Schedule "A":
(1) any overriding royalties, net
profits interests or other
encumbrances applicable to the
Petroleum and Natural Gas Rights
for which the Purchaser will assume
the obligation for payment;
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(2) any existing potential alteration
of the Partnership's interest in
the Assets because of payout
conversion or farmin, farmout or
other such agreement;
(3) any Preferential Rights; and
(4) any penalty or forfeiture that
applies to the Assets at the
Effective Date because of the
Partnership's election not to
participate in a particular
operation;
B. easements, rights of way, servitudes or
other similar rights including, without
limitation, rights of way for highways and
other roads, railways, sewers, drains, gas
or oil pipelines, gas or water mains,
electric light, power, telephone or cable
television towers, poles and wires;
C. the Regulations and any rights reserved to
or vested in any municipality or
governmental, statutory or public authority
to levy taxes or to control or regulate any
of the Assets, Pipeline and Office and
Administrative Assets in any manner,
including, without limitation, the right to
control or regulate the production rates and
the conduct of operations;
D. Statutory exceptions to title and the
reservations, limitations and conditions in
any grants or transfers from the Crown of
any of the Petroleum and Natural Gas Rights
or interests therein;
E. Undetermined or inchoate liens incurred or
created in the ordinary course of business
as security for the Partnership's or
Vendor's, as applicable share of the costs
and expenses of the development or operation
of any of the Assets, Pipeline and Office
and Administrative Assets, which costs and
expenses are not delinquent as of the
Closing Date;
F. Undetermined or inchoate mechanics' liens
and similar liens for which payment for
services rendered or goods supplied is not
delinquent as of the Closing Date;
G. liens granted in the ordinary course of
business to a public utility, municipality
or governmental authority respecting
operations pertaining to any of the Assets,
Pipeline and Office and Administrative
Assets;
H. liens imposed under Regulations securing the
payment of any taxes, assessments or
government charges which are not due or the
validity of which is being contested in good
faith;
I. any lien contemplated by Clauses 1(a)(xxix)
E, F, G and H that is being contested in
good faith by the Vendor; and
J. any defects or deficiencies in title to the
Assets disclosed in the Data Room Materials
or that are waived or deemed to be waived
under Clause 6;
(xxxiii) "PERSON" means an individual, a partnership, a
corporation, a trust, an unincorporated
organization, a union, a governmental authority and
the heirs, executors, administrators or other legal
representatives thereof;
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(xxxiv) "PETROLEUM AND NATURAL GAS RIGHTS" means the entire
interests of the Partnership, including those
described in the CD or CD's attached hereto as
Schedule "A", in respect of the Leases to the extent
they apply to the Lands, including, without
limitation, any existing contractual right of the
Partnership to earn an interest under a farmin or
similar arrangement, any net carried interest and
any overriding royalty, net profits interest or
other encumbrance accruing to the Partnership;
(xxxv) "PETROLEUM SUBSTANCES" means crude oil, natural gas
and every other mineral or substance, the right to
explore for which, or an interest in which, is
granted under the Leases, including, without
limitation, sulphur (subject to such limitations as
to geological formations and Petroleum Substances as
may appear in Schedule "A");
(xxxvi) "PIPELINE" means Nexen Marketing's entire interest
in and to:
A. the "Hay Pipeline" which is approximately 38
kilometers in length and 219.1 mm (8") in
diameter, commencing at b-76-H/94-I-9 in the
Province of British Columbia and terminating
at 11-17-110-9 W6M in the Province of
Alberta;
as shown on the land plat in Schedule "F" and all
tangible property and assets whatsoever relating to
thereto (including all line fill and Petroleum
Substances in the Pipeline as of the Effective Date)
including, without limitation, metering equipment,
the communication system, inventory, pigging stations
and all miscellaneous interests, title and operating
documents (including, without limitation, tie-in and
contract operating agreements and the Well Effluent
Transportation and Processing Agreement dated January
1, 2000 originally between Husky Oil Operations
Limited, CXY Energy Marketing and Wascana Energy
Partnership), surface rights, right of ways and all
records, files, reports, data, correspondence and
documents whatsoever relating thereto;
(xxxvii) "PLACE OF CLOSING" means the offices of the Vendor,
located at 2900, 801 - 7th Avenue S.W., Calgary,
Alberta;
(xxxviii)"PREFERENTIAL RIGHTS" means a right of first refusal,
pre-emptive right of purchase or similar contractual
right under the Title and Operating Documents or
otherwise whereby a Third Party has the right to
purchase or acquire any of the Assets because of the
Vendor's agreement to dispose of the Assets to the
Purchaser hereunder;
(xxxix) "PRIME RATE" means the annual rate of interest in
effect at the Effective Date, based upon a year of
365 days, designated by the Royal Bank of Canada as
its prime rate for Canadian dollar commercial loans;
(xl) "PURCHASE PRICE" means the total consideration
payable by the Purchaser to the Vendor at Closing
pursuant to Subclause 2(b), as modified by the
adjustments and reductions provided for herein;
(xli) "PURCHASER" means:
[ INTENTIONALLY DELETED ]
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[ INTENTIONALLY DELETED ]
as the context requires;
(xlii) "REGULATIONS" means all statutes, laws, rules,
regulations, policies, decrees, orders, judgments or
directives in effect from time to time and made or
issued by a government, governmental body, agency,
board, tribunal or court having jurisdiction over the
Parties, the Assets or the transaction contemplated
herein;
(xliii) "SECURITIES" means:
A. Where NEXEN is the Vendor pursuant to Clause
2(a): NEXEN's entire Partnership Interest in
and to the Partnership on the Closing Date
("NEXEN PARTNERSHIP INTEREST") pursuant to
and in accordance with the Partnership
Agreement and all amounts receivable by
NEXEN from the Partnership as of the Closing
Date including all amounts accrued
(collectively the "NEXEN RECEIVABLES"); and
B. Where CNYL is the Vendor pursuant to Clause
2(a): CNYL's entire interest in and to the
issued and outstanding shares in the capital
of Subco (the "CNYL SUBCO SHARES");
as context requires;
(xliv) "SUBCO" means CNYL No. 1 Ltd., an Alberta corporation
wholly owned by CNYL and which, as of the Closing
Date, owns a 0.1% Partnership Interest in and to the
Partnership;
(xlv) "SURFACE RIGHTS" means all rights to use the surface
of land in connection with the Assets, including,
without limitation, rights to enter upon and occupy
the surface of the land on which the Tangibles and
the Wells are located and rights to cross or
otherwise use the surface of land for access to the
Assets;
(xlvi) "TANGIBLES" means the Partnership's entire interest
in and to:
A. the Facilities;
B. all tangible property and assets, other than
the Facilities, that are located on or under
the surface of the Lands or lands
appurtenant thereto (or lands with which the
Lands are pooled) and are used or useful
solely for
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production, gathering, treatment,
compression, transportation, injection,
water disposal, measurement, processing,
storage or other operations respecting the
Petroleum and Natural Gas Rights, and
including, without limitation, any equipment
and material inventory that has been charged
to and acquired by the Partnership for the
joint account of the particular owners of
the Assets;
C. the pipeline which is approximately 100
meters in length, commencing at 11-17-110-9
W6M in the Province of Alberta and
terminating at Husky Energy Inc.'s Rainbow
Lake Satellite at 10-17-110-9 W6M in the
Province of Alberta (including the metering
station equipment at 11-17-110-09 W6M); and
D. any additional items that are specifically
indicated in a Schedule attached hereto to
be included as Tangibles;
(xlvii) "TAX ACT" means the Income Tax Act (Canada)
R.S.C.1985, 5th Supplemental C-1, and the regulations
thereunder as amended, and any applicable legislation
of any Province or Territory of Canada with respect
to the taxation of income;
(xlviii) "TECHNICAL INFORMATION" means the Partnership's
entire interest in and to copies of NEXEN's 100%
owned proprietary seismic data, including all seismic
records, books, documents and reports (excluding all
proprietary and associated trading rights relating to
such data), which seismic lines are shown on the land
plat in the CD attached hereto as Schedule "F", and
which may include, without limitation:
A. copies of: all permanent records of basic
field data including, but not limited to,
any and all microfilm or paper copies of
seismic, driller's reports, monitor records,
observer's reports and survey notes and any
and all copies of magnetic field tapes or
conversions thereof;
B. copies of: all permanent records of the
processed field data including, but not
limited to, pre- and post-stacked record
sections including amplitude, phase and
structural displays, post-stacked data
manipulations including filters, migrations
and wavelet enhancements, and any and all
copies of final stacked tapes and any
manipulations and conversions thereof;
C. in the case of 3D seismic, in addition to
the foregoing, copies of all permanent
records of bin locations, bin fold, static
corrections, surface elevations and any
other relevant information. For copies of
all 100 % proprietary 3D seismic data sets,
a copy of the existing Geoquest workstation
project for those 3D seismic datasets. The
copy will be in 8 mm exabyte format and the
project will have at least one version of
each 3D purchased, with interpretations
(horizons picked); and
D. copies of: any support data relating to the
foregoing, including surveyors' ground
elevation records, shot point maps,
drillers' logs, shooters' records,
seismograph records, seismograph magnetic
tapes, monitor records, field records and
record sections, including maps and
interpretations made from any of the
foregoing;
(xlix) "THIRD PARTY" means any Person other than the
Parties;
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(l) "THIRTEENTH MONTH ADJUSTMENT" means the accounting
procedure performed annually by an operator of
particular Tangibles for the purpose of
redistributing certain revenues and expenses,
including, without limitation, operating expenses,
processing fee revenues, excess capacity utilization
fees and recoveries, royalties and gas cost
allowances (or similar cost allowances);
(li) "TITLE AND OPERATING DOCUMENTS" means, to the extent
directly related to the Petroleum and Natural Gas
Rights, the Tangibles and the Technical Information,
or any of them:
A. the Leases;
B. agreements affecting the Partnership's
interests in the Petroleum and Natural Gas
Rights, including, without limitation,
operating agreements, royalty agreements,
farmout or farmin agreements, option
agreements, participation agreements,
pooling agreements, sale and purchase
agreements and asset exchange agreements;
C. agreements for the sale of Petroleum
Substances that are terminable on 31 days'
notice or less (without an early termination
penalty or other cost) or that are
identified in Schedule "E" attached hereto;
D. agreements respecting the unitization of any
of the Petroleum and Natural Gas Rights;
E. agreements pertaining to the Surface Rights;
F. agreements for the construction, ownership
and operation of the Tangibles;
G. service agreements for the treating,
gathering, storage, transportation or
processing of Petroleum Substances or other
third party petroleum substances, the
injection or subsurface disposal of
substances, the use of well bores or the
operation of any Wells or Tangibles by a
third party;
H. any approvals, authorizations or licences
required under the Regulations for the
conduct of operations with respect to the
Assets, including, without limitation, Well,
pipeline and plant licences; and
I. all other agreements that relate to the
ownership, operation or exploitation of the
Petroleum and Natural Gas Rights or the
Tangibles;
(lii) "TITLE DEFECTS" means a deficiency or discrepancy in
or affecting the title of the Partnership in and to
any of the Assets or the Vendor in and to the
Pipeline and the Office and Administrative Assets,
but specifically excludes, without limitation:
A. any Title Defect, deficiency, discrepancy,
matter or thing which was disclosed in the
Data Room Materials, PROVIDED HOWEVER,
subject to the terms of this Agreement,
excluding any specific Title Defect in
respect of the Assets, the Pipeline or the
Office and Administrative Assets discovered
during the Purchaser's full title review by
its outside counsel conducted after the date
of this Agreement which could not have
-12-
been reasonably discovered by the Purchaser
as a result of the Purchaser's review of the
Data Room Materials;
B. any deficiency or discrepancy relating to
any preferential rights or similar rights
which may or may not have been applicable as
a result of the Vendor's contribution of the
Assets to the Partnership or as a result of
any previous internal reorganization of the
Vendor and its Affiliates;
C. the loss of lease acreage between the
Effective Date and the Closing Date because
the lease term expires;
D. the Permitted Encumbrances;
E. the mere fact that any beneficial, rather
than legal, interest of the Partnership or
any of its predecessors in the Assets if
that beneficial interest is held in trust
under the Leases or the Title and Operating
Documents;
F. any liens or encumbrances against the
interest of a Third Party that do not
pertain to the interest of the Partnership
in the Assets; and
G. any missing or unsigned documents in the
chain of the Partnership's title to the
Assets or Vendor's title to the Pipeline and
Office and Administrative Assets where such
document is not reasonably required to
confirm the creation, establishment or
maintenance of such title and provided the
current status of title can otherwise be
confirmed with reasonable certainty;
(liii) "TITLE EVALUATOR" means a senior partner of Thackray
Burgess LLP or such other independent oil and gas
solicitor as may be agreed to by the Parties;
(liv) "VENDOR" means:
A. With respect to the sale of the Office and
Administrative Assets and Nexen Seismic,
NEXEN;
B. With respect to the Sale of the Securities,
NEXEN and CNYL as set out in Clause 2(a);
and
C. With respect to the sale of the Pipeline,
Nexen Marketing;
as the context requires;
[ INTENTIONALLY DELETED ]
(lvi) "WELLS" means the Partnership's entire interest in
all wells within the area outlined in purple on the
land plat attached hereto as Schedule "F" including,
without limitation, any producing, capped, shut-in,
suspended, abandoned, disposal, water source,
observation, injection and other wells located on
-13-
the Lands or on lands with which the same have been
pooled or unitized as set out in Schedule "C".
(b) Attached hereto are the following Schedules:
(i) Schedule "A" - Lands, Leases, Petroleum and Natural
Gas Rights
(ii) Schedule "B" - Facilities
(iii) Schedule "C" - Wells
(iv) Schedule "D" - Authorizations for
Expenditure
(v) Schedule "E" - Marketing Contracts
(vi) Schedule "F" - Land Plat
(vii) Schedule "G" - Data Room Materials (CD)
(viii) Schedule "H" - Litigation
(ix) Schedule "I" - Field Employees
(x) Schedule "J" - Office and Administrative
Assets
All Schedules hereto are incorporated into and as part of this
Agreement by this reference as fully as though contained in
the body of this Agreement.
(c) The headings of clauses and subclauses herein and in the
Schedules are inserted for convenience of reference only and
shall not affect or be considered to affect the construction
of the provisions hereof.
(d) Wherever any provision of any Schedule to this Agreement
conflicts with any provision in the body of this Agreement,
the provisions of the body of this Agreement shall prevail.
References herein to a Schedule shall mean a reference to the
applicable Schedule to this Agreement. References in any
Schedule to the "Agreement" shall mean a reference to this
Agreement. References in any Schedule to another Schedule
shall mean a reference to a Schedule to this Agreement.
(e) Any reference herein to a statute shall include and shall be
deemed to be a reference to such statute and to the
regulations made pursuant thereto, and all amendments made
thereto and in force from time to time, and to any statute or
regulation that may be passed which has the effect of
supplementing or superseding the statute so referred to or the
regulations made pursuant thereto.
(f) If any of the provisions of this Agreement should be
determined to be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the
remaining provisions herein shall not in any way be affected
or impaired thereby.
(g) Where in this Agreement a representation and warranty is made
on the basis of the knowledge or awareness of a Party hereto,
such knowledge or awareness consists only of the actual
knowledge or awareness, as the case may be, of the current
officers, servants, agents and employees of such Party who are
responsible for the supervision of the
-14-
subject matter of such representation or warranty, but shall
not include the knowledge or awareness of any other person or
persons.
(h) All references to "Dollars" or "$" herein shall refer to
lawful currency of Canada.
(i) The terms "Agreement", "hereof", "herein", "hereunder" and
similar expressions refer to this Agreement, including any
Schedules hereto, taken as a whole and not to any particular
article, section, subsection, clause, or subclause or other
subdivision thereof and include any agreement or instrument
which amends, modifies or is supplementary to this Agreement.
(j) In this Agreement, words importing persons include
corporations and vice versa, words importing the masculine
gender include the feminine and neuter genders and vice versa,
and words importing the singular include the plural and vice
versa.
(k) Joint Vendor:
(i) Except as otherwise provided herein, all rights,
benefits, obligations and liabilities accruing to or
assumed by the Vendor under this Agreement and the
Regulations shall be: solely NEXEN's responsibility
with respect to a sale of the Nexen Seismic and
Office and Administrative Assets; Nexen Marketing's
responsibility with respect to the sale of the
Pipeline; and, both joint and several as between
NEXEN and CNYL with respect to a sale of Securities.
(ii) With respect to any decision or election to be made
by Vendor under this Agreement, NEXEN and CNYL with
respect to a sale of Securities, shall make such
election jointly so that Purchaser is not required to
pursue different courses of action with each of them.
(iii) If either one of NEXEN and CNYL with respect to a
sale of Securities, but not both, are unable to or
unwilling to close this transaction for any reason
permitted herein, then Purchaser shall not be
required to complete this transaction with the other
party comprising Vendor, and that other Party
comprising Vendor shall be deemed to have defaulted
under this Agreement or elected to terminate this
transaction, as applicable, on the same basis as the
first-mentioned Vendor Party.
(l) Joint Purchaser:
(i) Except as otherwise provided herein, all rights,
benefits, obligations and liabilities accruing to or
assumed by the Purchaser under this Agreement and the
Regulations shall be both joint and several as
between BREEZE NO. 1 and BREEZE NO. 2.
(ii) With respect to any decision or election to be made
by Purchaser under this Agreement, BREEZE NO. 1 and
BREEZE NO. 2, shall make such election jointly so
that Vendor is not required to pursue different
courses of action with each of them.
(iii) If either one of BREEZE NO. 1 and BREEZE NO. 2, but
not both, are unable to or unwilling to close this
transaction for any reason permitted herein, then
Vendor shall not be required to complete this
transaction with the other party comprising
Purchaser, and that other Party comprising Purchaser
shall be deemed to have defaulted under this
Agreement or elected to terminate this transaction,
as applicable, on the same basis as the
first-mentioned Purchaser
-15-
Party
2. PURCHASE AND SALE
(a) Upon the terms and subject to the conditions of this
Agreement, the Purchaser will purchase the Securities,
Pipeline, Nexen Seismic and Office and Administrative Assets
from the Vendor and make payment therefor to the Vendor and
the Vendor will sell, assign and deliver the Securities,
Pipeline, Nexen Seismic and Office and Administrative Assets
to the Purchaser upon receipt of that part of the Purchase
Price payable on Closing as follows:
(i) Purchaser will purchase CNYL's entire interest in and
to the Securities and make payment therefor, as
provided for in Clause 2(b) herein, to NEXEN for and
on behalf of CNYL, and CNYL will sell, assign and
deliver its entire interest in and to the Securities
to Purchaser on the Closing Date;
(ii) Purchaser will purchase NEXEN's entire interest in
and to the Securities and make payment therefor, as
provided for in Clause 2(b) herein, to NEXEN and
NEXEN will sell, assign and deliver its entire
interest in and to the Securities to Purchaser on the
Closing Date;
(iii) Purchaser will purchase NEXEN's entire interest in
and to the Office and Administrative Assets and make
payment therefor, as provided for in Clause 2(b)
herein, to NEXEN and NEXEN will sell, assign and
deliver its entire interest in and to the Office and
Administrative Assets to Purchaser on the Closing
Date;
(iv) Purchaser will purchase Nexen Marketing's entire
interest in and to the Pipeline and make payment
therefor, as provided for in Clause 2(b) herein, to
NEXEN, for and on behalf of Nexen Marketing, and
Nexen Marketing will sell, assign and deliver its
entire interest in and to the Pipeline to Purchaser
on the Closing Date; and
(v) Purchaser will purchase NEXEN's entire interest in
and to the Nexen Seismic and make payment therefor,
as provided for in Clause 2(b) herein, to NEXEN and
NEXEN will sell, assign and deliver its entire
interest in and to the Nexen Seismic to Purchaser on
the Closing Date.
(b) The consideration to be paid by the Purchaser to the Vendor
for the sale, assignment and delivery of the Securities,
Pipeline, Nexen Seismic and Office and Administrative Assets
by the Vendor to the Purchaser shall be the sum of Two Hundred
and Sixty Million ($260,000,000.00) Dollars, plus all amounts
receivable by the Partnership from NEXEN as of the Closing
Date including all amounts accrued (collectively the "NEXEN
PAYABLES"), plus or minus the adjustments to the Purchase
Price as provided for herein, which sum less the Deposit
applied under Clause 2(h) shall be paid in accordance with
Clauses 2(g) and 2(i) on the Closing Date to NEXEN for and on
behalf of the Vendor. [ INTENTIONALLY DELETED ]:
-16-
[ INTENTIONALLY DELETED ]
-17-
(d) Notwithstanding anything contained in this Agreement but
subject to Clauses 6 and 11, the Parties acknowledge and agree
that all revenue, benefits, liabilities and obligations
relating to the Assets accruing prior to the Effective Date
shall be to the sole benefit and account of the NEXEN as a
partner in the Partnership and CNYL as the sole shareholder of
Subco which is a partner in the Partnership and Nexen
Marketing with respect to the Pipeline, and the Purchaser
hereby waives, subject to Clause 11 and in particular Clause
11(c), any and all rights to such revenue, benefits,
liabilities and obligations for the period prior to the
Effective Date which the Purchaser has or may have. The
Parties agree that any final allocations and adjustments that
are required or necessary under this Clause 2(d) shall be
included in the final Adjustment Report prepared in accordance
with Clause 3.
(e) If Vendor is required to collect from the Purchaser any tax,
fee or charge under the Regulations in connection with the
Purchaser acquiring the Securities, Pipeline, Nexen Seismic
and Office and Administrative Assets, then the Purchaser shall
pay the amount of those taxes, fees or charges to the Vendor,
and the Vendor shall remit those amounts in the manner
required by the Regulations. If the amount of any tax, fee or
charge is adjusted as a result of any audit or determination
by any government authority then any increase or decrease and
any related penalties and interest paid or received shall be
paid by or received by the Purchaser.[ INTENTIONALLY DELETED ]
(f) The Parties acknowledge and agree that:
(i) [ INTENTIONALLY DELETED ]
-18-
[ INTENTIONALLY DELETED ]
(iii) [ INTENTIONALLY DELETED ]
(g) Any payment to be made pursuant to this Agreement by the
Purchaser shall be made to the Vendor's Bank Account in
immediately available funds by electronic transfer in Dollars
on the due date for payment. Receipt of such sums in the
relevant bank account shall be an effective discharge of the
obligation of the Purchaser to pay such sums to the Vendor.]
[ INTENTIONALLY DELETED ]
-19-
If Closing occurs, the Vendor will apply the Deposit (without
any adjustment for accrued interest thereon) as partial
payment of the Purchase Price in accordance with Clause 2(b).
(i) On Closing on the Closing Date, NEXEN shall pay to the
Purchaser, as agent of the Partnership, the Nexen Payables.
Vendor and Purchaser acknowledge and agree that the Nexen
Payables will be fully paid and settled by way of off set
against the amount receivable by Vendor from Purchaser
pursuant to Clause 2(b).
3. ADJUSTMENTS
The Purchase Price shall be subject to the following adjustment
procedure:
(a) On or before Closing, the Vendor shall undertake a review of
the Partnership's books and records for the purpose of
preparing a report ("ADJUSTMENT REPORT") which shall set forth
all adjustments to the Purchase Price under this Agreement and
specify the net amount payable under this Clause 3 as follows:
(i) the gross revenue accruing, received or receivable by
the Partnership in respect of the Assets from and
including the Effective Date up to the Closing Date
shall be credited to the account of the Purchaser and
result in a decrease in the Purchase Price;
(ii) the gross operating costs and all other costs
including, without limitation, royalties, overhead
and capital costs determined in accordance with the
PASC Accounting Procedure and all insurance costs
relating to insurance maintained by the Vendor or the
Partnership relating to the Assets accruing, payable
or paid by the Partnership in respect of the Assets
from and including the Effective Date up to the
Closing Date shall be credited to the account of the
Vendor and result in an increase in the Purchase
Price;
(iii) an amount equal to the interest which would have
accrued on the Purchase Price payable on Closing,
less the Deposit and the Nexen Payables, from and
including the Effective Date to but excluding the
Closing Date at the Prime Rate per annum shall be
credited to the account of the Vendor and result in
an increase in the Purchase Price;
(iv) if the Adjusted Working Capital of the Partnership as
of the Closing Date is a positive amount, such amount
shall be credited to the account of Vendor and result
in an increase in the Purchase Price, and if the
Adjusted Working Capital as of the Closing Date is a
negative amount, such amount shall be credited to the
account of the Purchaser and result in a decrease in
the Purchase Price;
(v) if: (A) the current assets, and all accounts
receivable, including amounts accrued, held by Subco,
if any less, (B) current liabilities, and all
accounts payable, including amounts accrued excluding
any liabilities in respect of the accounting for
future income taxes, by Subco, if any, of Subco
determined in accordance with GAAP as of the Closing
Date is: (C) a positive amount, such amount shall be
credited to the account of Vendor and result in an
increase in the Purchase Price; or (D) a negative
amount, such amount shall be credited to the account
of the Purchaser and result in a decrease in the
Purchase Price;
(vi) the gross revenue accruing, received or receivable by
the Vendor in respect of the Pipeline from and
including the Effective Date up to the Closing Date
shall
-20-
be credited to the account of the Purchaser and
result in a decrease in the Purchase Price;
(vii) the gross operating costs and all other costs
including, without limitation, overhead and capital
costs determined in accordance with the PASC
Accounting Procedure and all insurance costs relating
to insurance maintained by the Vendor relating to the
Pipeline accruing, payable or paid by the Vendor in
respect of the Pipeline from and including the
Effective Date up to the Closing Date shall be
credited to the account of the Vendor and result in
an increase in the Purchase Price; and
(viii) the total value, as agreed to by the Vendor and
Purchaser prior to the Closing Date, of the line fill
and inventory amount of all Petroleum Substances
contained within the Pipeline system as of the
Effective Date shall be credited to the account of
the Vendor and result in an increase in the Purchase
Price.
(b) Upon receipt of an Adjustment Report, and subject to Clause
3(g), the net amount payable set forth in the Adjustment
Report shall be paid by the Party, within ten (10) Business
Days following the issuance of the Adjustment Report, who in
the net result is obligated to make payment to the other
Party, pursuant to the terms and conditions of this Agreement,
and such net amount shall result in an increase or decrease,
as the case may be, in the Purchase Price as set forth in
Clause 2(a). To the extent any Intercompany Receivables and
Intercompany Payables have not been settled as of the date of
receipt of the Adjustment Report, the Parties agree to settle
such amounts within ten (10) Business Days of this date.
(c) With respect to any audit which has been commenced, has been
completed or notice of which has been received, within
twenty-four (24) months of the Closing Date, pertaining to any
joint interest or unit operation relating to the Assets
participated in by the Partnership, Subco or the Vendor or
their Affiliates prior to the Effective Date, and the
Partnership (or its assigns) becomes:
(i) obligated to make any refund or other payment and the
amount thereof is not reflected in the Adjustment
Report, then the Vendor shall forthwith pay to the
Purchaser the amount of each such refund or other
payment; or
(ii) entitled to receive any refund or other payment and
the amount thereof is not reflected in the Adjustment
Report, then the Purchaser shall forthwith pay to the
Vendor the amount of each such refund or other
payment;
and the amount of any such payment made shall be deemed to be
an adjustment in the Purchase Price.
(d) Notwithstanding the foregoing, further adjustments on the
basis indicated in this Clause will be made as and when those
items arise if notice requesting that adjustment, including
reasonable particulars thereof, has been given by a Party to
the other Party within thirty (30) days following receipt of a
Thirteenth Month Adjustment or a completed and agreed to audit
or other report and the need for that adjustment arises from:
(i) a Thirteenth Month Adjustment, operator error
adjustments or errors established by joint venture
audits within thirty-six (36) months after the
Closing Date; or
(ii) errors established by an audit or other review of
lessor royalty payments that is
-21-
conducted under applicable Regulations or Title and
Operating Documents within sixty (60) months after
the Closing Date or such later time as may be
prescribed by the Regulations.
(e) In the event the Parties are unable to agree upon the amount
of any adjustment under this Clause 3, the matter may be
referred to arbitration in accordance with the provisions of
Clause 16, provided however, the amount in the Adjustment
Report shall be payable in any event in accordance with Clause
3(b) and any arbitration award amending the Adjustment Report
shall be deemed to be an amendment thereto.
(f) The Purchaser and its nominees, at its sole cost, shall have
the right to audit the books, records and accounts of the
Vendor and the Partnership for the purposes of confirming the
adjustments to the Purchase Price set forth in the Adjustment
Report provided for in this Clause 3 at any time during
regular business hours up to twelve (12) months following the
Closing Date ("AUDIT"). Any disputes relating to an Audit
shall be resolved by the agreement of the Parties, failing
which the dispute shall be resolved in accordance with Clause
16. Notwithstanding the foregoing audit period limitation,
Purchaser's audit rights under this Clause 3(f) shall be
extended for the time period, and in respect of those books,
records and accounts, as may be reasonably necessary to permit
Purchaser to verify refunds or payments to be received or made
by it pursuant to Clause 3(c).
(g) For the purposes of this Clause 3 and the preparation of the
Adjustment Report, the Vendor shall:
(i) At least three (3) Business Days prior to the Closing
Date prepare an interim Adjustment Report which
amounts will be used to adjust the Purchase Price for
purposes of settling amounts owing at Closing; and
(ii) Within one hundred and eighty (180) days of the
Closing Date prepare the final Adjustment Report;
provided that adjustments shall be permitted after this period
if required for the purposes of Clause 3(c).
(h) Notwithstanding anything to the contrary herein, the Vendor
and the Purchaser acknowledge and agree that it is their
intention not to double bill or account, adjust, credit or
debit for the same item twice pursuant to the adjustments made
herein. For greater certainty, one Party shall not receive the
same amount twice or have to pay or account for the same item
twice (i.e. there shall be no "double dipping").
4. CLOSING
(a) Closing shall take place at the Place of Closing on the
Closing Date unless otherwise agreed to by the Vendor and the
Purchaser.
(b) At Closing the Vendor shall deliver or cause to be delivered
to the Purchaser or the Purchaser's solicitors, the following
documents, fully executed by Vendor, where applicable:
(i) certificates representing the Securities, if
required, accompanied by duly executed instruments of
transfer, a bill of sale in respect of the Office and
Administrative Assets, Pipeline and Nexen Seismic and
any other documents
-22-
necessary to transfer to the Purchaser good title to
the Securities, Pipeline, Nexen Seismic and Office
and Administrative Assets; and
(ii) original partnership minute books and within thirty
(30) days of Closing, all environmental, health and
safety files and Worker's Compensation files.
(c) The Vendor and Purchaser acknowledge and agree that at Closing
or as soon as reasonably possible thereafter, the Vendor shall
deliver or cause to be delivered to the Purchaser or the
Purchaser's solicitors, the following documents, fully
executed by the Vendor or Vendor's Affiliates, where
applicable:
(i) such transfers, assignments, declarations of trust,
novations and other instruments conveying the title
to the Assets to the Partnership as may be reasonably
required by the Purchaser, provided however, any
Surface Rights covered under a "Master Agreement" or
similar industry agreement shall not be conveyed;
rather the Purchaser shall have sixty (60) days
following the Closing Date in which to enter into a
"Master Agreement" or similar industry agreement with
the applicable Third Party covering such Surface
Rights; and
(ii) fully executed releases and discharges of any liens,
charges or other encumbrances, other than the
Permitted Encumbrances, whatsoever affecting the
Assets or a letter in form and content satisfactory
to the Purchaser, acting reasonably, from each holder
of such security stating that it has no interest in
the Assets as security or otherwise howsoever and
undertaking to cause to be discharged all
encumbrances on the Assets to which such holder is
entitled to the benefit.
(d) The Vendor shall cooperate, both before and after Closing,
with the Purchaser to secure execution of such documents by
the Third Parties thereto other than the Vendor and Purchaser.
(e) At Closing Vendor shall either provide copies of the documents
included in Miscellaneous Interests or undertake to deliver
copies of them within ten (10) Business Days following the
Closing Date.
(f) Unless otherwise agreed to by the Parties, within thirty (30)
days following the Closing Date the Vendor, as agent of the
Partnership, shall provide the Technical Information and Nexen
Seismic to the Purchaser.
5. MAINTENANCE OF THE ASSETS
(a) From the date hereof until the Closing Date (the "INTERIM
PERIOD"), the Vendor, as agent for the Partnership and its
partners, will maintain the Assets in a proper and prudent
manner in accordance with good oil field practice and the
Regulations, with such consultation with the Purchaser as is
prescribed in this Clause 5 or is otherwise reasonably
appropriate in the circumstances. The Vendor, as agent for the
Partnership and its partners, will comply with all of the
Partnership's obligations with respect to the Assets under the
Title and Operating Agreements, will pay when due all expenses
and other amounts payable in respect of the Assets during the
Interim Period and will maintain any insurance it presently
holds respecting the Assets until Closing. Unless otherwise
specified herein, the Vendor, as agent for the Partnership and
its partners, will not be required to obtain additional
insurance respecting the Assets during the Interim Period,
except to the extent such insurance is required to be
maintained under the Regulations or the Title and Operating
Documents. The Vendor, as agent for the Partnership and its
partners, will remain the beneficiary under all such policies
of
-23-
insurance (subject to the insurance benefit contribution
provisions of Clause 5(d)) and, unless otherwise agreed by the
Parties, the Purchaser will not be entitled to any proceeds of
settlement thereunder, provided however, subject to Closing on
the Closing Date, the Partnership or the Purchaser, as a
partner in the Partnership, or the Purchaser as the purchaser
of the Nexen Seismic, Pipeline or Office and Administrative
Assets shall be entitled to all insurance proceeds accruing
from and after the Effective Date in respect of the Assets,
Nexen Seismic, Pipeline and Office and Administrative Assets,
as applicable. The Vendor will promptly give notice, in
reasonable detail, to the Purchaser upon the Vendor becoming
aware of any Environmental Defects and any damage to the
Tangibles of the type contemplated in Clause 13(a)(vi).
(b) Material Commitments during the Interim Period
(i) During the Interim Period, the Vendor, as agent for
the Partnership and its partners, will provide to the
Purchaser copies of all AFEs, notices and mail
ballots the Vendor, as agent of the Partnership and
its partners, the Partnership or Subco receives
respecting the Assets, and will not, without the
prior written consent of the Purchaser, which consent
may not be unreasonably withheld or delayed:
A. Assume any new obligation or commitment
respecting the Assets, if the Partnership's
share of the associated expenditure is
estimated to exceed $50,000.00, except: (i)
for amounts that the Partnership is
committed to expend or is deemed to
authorize under the Title and Operating
Documents without its specific authorization
or approval; or (ii) to the extent that the
Vendor, as agent for the Partnership and its
partners, reasonably determines that those
expenditures or actions are urgently
necessary for the protection or preservation
of life and property, provided that the
Vendor will promptly notify the Purchaser of
any such expenditures or actions;
B. Sell, transfer, or otherwise dispose of any
of the Assets, except for sales of
production of Petroleum Substances
reasonably made by the Vendor, as agent for
the Partnership and its partners, in the
ordinary course of business under sales
arrangements permitted herein;
C. Surrender or abandon any of the Assets;
D. Subject to this Clause 5, amend any of the
Title and Operating Documents (other than
for processing of assignments by third
parties in the ordinary course of business),
terminate any of the Title and Operating
Documents, enter into any new agreement
respecting the Assets or vote on any mail
ballot or other similar notice issued under
the Title and Operating Documents;
E. Subject to Clauses 5(a), 5(b)(i)A and
5(b)(ii), propose or initiate the exercise
of any option arising as a result of the
ownership of the Assets (including, without
limitation, rights under area of mutual
interest provisions and any right of first
refusal) or propose or initiate any
operations with respect to the Assets that
have not been commenced or committed to by
the Vendor, as agent for the Partnership and
its partners, as of the Effective Date, if
that exercise or option would result in an
obligation of the Partnership after the
Effective Date or a material adverse effect
on the value of the Assets;
-24-
F. Other than for Permitted Encumbrances, grant
a security interest or any encumbrance with
respect to any of the Assets;
G. Subject to Clause 5(e), Vendor shall not:
(1) allow the Partnership to incur,
assume or otherwise become liable
for any debts or charges to the
Vendor, or any affiliate of the
Vendor, except in the ordinary
course of business;
(2) allow the Partnership to amalgamate
with, merge into or otherwise
consolidate with any other Person
or acquire all or substantially all
of the business or assets of any
other Person; and
(3) make any change in the constating
documents or by-laws of the
Partnership including, without
limitation, the Partnership
Agreement.
(ii) If an operation or the exercise of any option
respecting the Assets is proposed in circumstances
which would require the written consent of the
Purchaser under Clause 5(b)(i) ("PROPOSAL"):
A. The Vendor will promptly give notice of the
Proposal to the Purchaser, including with
that notice supporting information in
reasonable detail;
B. The Purchaser will advise the Vendor, by
notice, not later than two (2) Business Days
prior to the time the Vendor, as agent for
the Partnership and its partners, is
required to make its election for the
Proposal, if the Purchaser wishes the
Vendor, as agent for the Partnership and its
partners, to exercise its rights on behalf
of the Purchaser, provided that this period
will be reduced to twelve (12) hours if the
period within which the Partnership is
required to reply by notice to the
applicable third parties, is forty eight
(48) hours or less and provided that failure
to make an election within the applicable
period will be deemed to be the Purchaser's
election not to participate in the Proposal;
C. The Vendor will make the election authorized
by the Purchaser for the Proposal within the
period during which the Vendor, as agent for
the Partnership and its partners, may
respond to the Proposal;
D. An election by the Purchaser not to
participate in a Proposal will not result in
any reduction of the Purchase Price if the
Partnership's interest therein is terminated
or altered as a result of that election, and
that termination or alteration will not
constitute a Title Defect or a breach of the
Vendor's representations and warranties; and
E. The Vendor may require the Purchaser to
advance or otherwise secure any costs to be
incurred by the Vendor, as agent for the
Partnership and its partners, on behalf of
the Purchaser under this Clause in such
manner as may be reasonably appropriate in
the circumstances.
(iii) The Purchaser may not, without the written consent of
the Vendor, request the Vendor, as agent for the
Partnership and its partners, to propose the conduct
of any operation respecting the Assets during the
Interim Period, except to the
-25-
extent provided in this Agreement.
(c) Provided Closing occurs and insofar as the Vendor maintained
the Assets and took action on behalf of the Partnership
pursuant to this Agreement in compliance with the obligations
under this Clause 5, the Vendor will be deemed to have been
the agent of the Partnership and its partners hereunder. The
Purchaser ratifies all actions taken, or refrained from being
taken, by the Vendor, as agent for the Partnership and its
partners, under this Clause 5 in that capacity, with the
intention that all of those actions will be deemed to be those
of the Purchaser, as agent of the Partnership, except to the
extent that the Vendor's actions under this Clause 5
constitute gross negligence or willful misconduct.
(d) Provided Closing occurs, Purchaser and the Partnership jointly
and severally will:
(i) be liable to Vendor for its Losses and Liabilities;
and, in addition,
(ii) indemnify and hold harmless the Vendor and each of
its directors, officers, servants, agents and
employees from and against all Losses and
Liabilities;
incurred by Vendor as a result of Vendor acting as the agent
of the Partnership and its partners pursuant to this Clause 5
including, without limitation, any and all Third Party costs
incurred by Vendor, Vendor's cost of insurance attributable to
such activities (provided however, the Vendor shall cause any
and all such insurance proceeds or rights thereto to be
contributed to the Partnership and to be retained in the
Partnership as of Closing Date such that the Partnership shall
receive the benefit of all such insurance proceeds, provided
further such insurance proceeds shall be excluded from the
Adjusted Working Capital portion of the Adjustment Report),
any claims of Third Parties and that portion of Vendor's costs
attributable to overhead associated with such activities in
accordance with the PASC Accounting Procedure, except any
Losses and Liabilities of Vendor and each of its directors,
officers, servants, agents and employees to the extent that
the same were a direct result of the gross negligence or
willful misconduct of the Vendor or an Affiliate of the
Vendor. An act or omission will not be regarded as gross
negligence or willful misconduct under this Clause 5 to the
extent that it was done or omitted to be done in accordance
with the Purchaser's written instructions or written
concurrence. The provisions of this Clause 5(d) shall survive
Closing on the Closing Date for the benefit of the Vendor.
(e) Notwithstanding anything contained in this Agreement, the
Parties acknowledge and agree that the Vendor and its
Affiliates, in their sole discretion, have or will enter into
various agreements with the Partnership on or prior to the
Closing Date as disclosed to Purchaser prior to the date of
execution of this Agreement to effect or document the prior
arrangements among Vendor and its Affiliates prior to the
Closing Date, and the Purchaser has been advised of the
general nature of these transactions.
(f) Provided Closing occurs, Vendor jointly and severally will:
(i) be liable to Purchaser for its Losses and
Liabilities; and, in addition,
(ii) indemnify and hold harmless the Purchaser and each of
its directors, officers, servants, agents and
employees from and against all Losses and
Liabilities;
incurred by Purchaser as a direct result of the gross
negligence or willful misconduct of the Vendor or an Affiliate
of the Vendor while Vendor acted as the agent of the
Partnership and its partners pursuant to this Clause 5. An act
or omission will not be
-26-
regarded as gross negligence or willful misconduct under this
Clause 5 to the extent that it was done or omitted to be done
in accordance with the Purchaser's written instructions or
written concurrence.
6. TITLE AND ENVIRONMENTAL REVIEW
(a) The Vendor, as agent for the Partnership, will, subject to the
Regulations, the Title and Operating Documents and the terms
and conditions of this Agreement, during the period following
the execution of this Agreement until the Closing Date:
(i) make or cause to be made available for review, during
regular business hours, by the Purchaser, its
employees and agents (subject to their being covered
by a confidentiality agreement), the Vendor's and the
Partnership's records, files and documents directly
relating to the Assets, Office and Administrative
Assets, Nexen Seismic, Pipeline and the Securities,
for the purpose of the Purchaser's review of the
title of the Vendor to the Securities, Nexen Seismic,
Pipeline and the Office and Administrative Assets and
the Partnership's title to the Assets, including,
without limitation, the Title and Operating Documents
and any and all records pertaining to operating
revenues and expenses as are in the possession of the
Vendor or which the Vendor is entitled and provide,
if requested by the Purchaser, copies of same at
Purchaser's cost and expense;
(ii) Subject to Clause 20, Purchaser (and its employees
and agents), at its sole cost, risk and expense, may,
upon prior notice to Vendor, inspect the Assets and
conduct an environmental assessment of the Assets
during regular business hours. If Purchaser
undertakes an environmental assessment, the scope of
the proposed assessment, including testing protocols,
must be acceptable to the Vendor, acting commercially
reasonable, prior to the commencement of the proposed
assessment. If Purchaser takes samples from the
Lands, Vendor shall require splitting of each sample
and Purchaser shall deliver such split sample to
Vendor. Purchaser shall, at its sole cost, provide
Vendor with copies of all final reports, results,
data and analyses of the site visit, inspections and
assessments within five (5) Business Days of
Purchaser's receipt of them. Notwithstanding anything
contained herein, the provisions of this Clause
6(a)(ii) (including the application of Clause 20)
shall survive Closing on the Closing Date for the
benefit of the Vendor;
(b) On or before five (5) Business Days prior to the Closing Date,
the Purchaser shall give the Vendor written notice of all
Title Defects and Environmental Defects which the Purchaser
does not waive. Such notice shall specify:
(i) such Title Defects and Environmental Defects in
reasonable detail;
(ii) the Assets directly affected thereby ("AFFECTED
ASSETS");
(iii) in the case of Title Defects, the Purchaser's bona
fide estimate of the reduction in value of the
Affected Assets, broken down on an asset by asset
basis and a description on how such value was
determined;
(iv) in the case of Environmental Defects, the Purchaser's
bona fide estimate of the aggregate cost of any
required remediation broken down on an itemized and
site by site basis; and
(v) the Purchaser's requirements for the remedying
thereof.
-27-
Notwithstanding the foregoing, the Purchaser shall keep the
Vendor informed on a regular basis as to any Title Defects and
Environmental Defects it discovers.
(c) Prior to the Closing Date, the Vendor shall provide notice to
the Purchaser as to whether it agrees with:
(i) The existence of one or more Title Defects and
Environmental Defects; and
(ii) The Purchaser's estimate of the reduction in the
value of the Affected Assets affected by such Title
Defects and the Purchaser's estimated cost of any
required remediation for such Environmental Defects,
as applicable, and if it does not agree, its reasons
regarding: (A) the non-existence of one or more Title
Defects and Environmental Defects; and (B) the
Purchaser's estimate of the reduction in value of the
Affected Assets affected by the Title Defects or its
estimated aggregate cost of remediating such
Environmental Defects, as applicable.
[ INTENTIONALLY DELETED ]
(e) If the Vendor delivers a notice regarding Title Defects,
identified in the notice pursuant to Clause 6(b), pursuant to
Clause 6(c) disagreeing with the Purchaser, then the Vendor
and the Purchaser shall meet and use reasonable efforts to
agree on the validity of such Title Defect and the amount by
which the value of any Affected Assets has been reduced. In
determining any reduction in value of the Affected Assets and
corresponding reduction in the Purchase Price, it is the
intent of the Parties to include, when possible, only that
portion of the Assets adversely affected by the Uncured Title
Defect. If the Parties cannot mutually agree on the adjustment
to the Purchase Price for an Uncured Title Defect, then within
two (2) Business Days of notice of disagreement being given by
-28-
the Vendor to the Purchaser pursuant to Clause 6(c), each
Party shall submit the determination of the reduction in the
value of the Assets adversely affected by the Uncured Title
Defects (which, in the case of the Purchaser, need not be, but
may not be higher than, the reduction in values of such
Affected Assets set forth in its notice delivered in
accordance with Clause 6(b) or which, in the case of the
Vendor, need not be, but may not be lower than, the reduction
in values of such Affected Assets set forth in its notice
delivered in accordance with Clause 6(c)), together with a
written statement as to how such reduction in values was
determined, to the Title Evaluator, together with written
instructions that:
(i) the Title Evaluator, to the extent that it may be
necessary, may engage an independent petroleum
engineer to advise the Title Evaluator on the value
of an Uncured Title Defect;
(ii) the Title Evaluator, in accordance with good legal,
engineering and evaluation practices, shall determine
the validity of the Uncured Title Defect and shall
select a value for each of the Affected Assets from
and based only upon the written statements and values
submitted by the Parties to the Title Evaluator,
provided that the Title Evaluator must select either
the Purchaser's or the Vendor's proposed value and
shall not be entitled to propose a compromise
settlement; and
(iii) such evaluation and selection must be completed
within two (2) Business Days from the date of
submission.
The fees and other costs to be paid to the Title Evaluator in
respect to the services performed by it shall be paid in equal
shares by the Vendor and the Purchaser. If a Party fails to
provide a written statement of reduction in value to the Title
Evaluator together with its written instructions as set out
herein, then the Title Evaluator shall select the other
Party's determination of reduction in value and the
transaction shall proceed.
[ INTENTIONALLY DELETED ]
-29-
[ INTENTIONALLY DELETED ]
(g) If the Vendor delivers a notice regarding Environmental
Defects, identified in the notice pursuant to Clause 6(b),
pursuant to Clause 6(c) disagreeing with the Purchaser, then
for the purposes of the determination of the costs to
remediate any Environmental Defects for the purposes of Clause
6(f), the Vendor and the Purchaser shall meet and use
reasonable efforts to agree on the validity of the
Environmental Defect and the amount by which the value of any
Affected Assets has been reduced. If the Parties cannot
mutually agree on the adjustment to the Purchase Price for an
Uncured Environmental Defect, then within two (2) Business
Days of notice of disagreement being given by the Vendor to
the Purchaser pursuant to Clause 6(c), each Party shall submit
the determination of the costs (which, in the case of the
Purchaser may not be higher than, the costs set forth in its
notice delivered in accordance with Clause 6(b) or which, in
the case of the Vendor, may not be lower than, the costs set
forth in its notice delivered in accordance with Clause 6(c))
to remediate the Uncured Environmental Defects, together with
a written statement as to how such costs were determined, to
the Environmental Evaluator with written instructions that:
(i) the Environmental Evaluator, in accordance with good
environmental assessment practices, shall determine
the validity of the Environmental Defect and shall
select a cost to remediate each Uncured Environmental
Defect, from and based only upon the written
statements and costs submitted by the Parties to the
Environmental Evaluator, provided that the
Environmental Evaluator must select either the
Purchaser's or the Vendor's proposed costs to
remediate and shall not be entitled to propose a
compromise settlement; and
(ii) such evaluation and selection must be completed
within two (2) Business Days from the date of
submission.
The fees and other costs to be paid to the Environmental
Evaluator in respect of the services performed by it shall be
paid in equal shares by the Vendor and the Purchaser. If a
Party fails to give its written statement of proposed costs to
remediate to the Environmental Evaluator together with written
instructions as set out herein, then the Environmental
Evaluator shall select the other Party's proposed costs to
cure and the transaction shall proceed.
7. THIRD PARTY RIGHTS AND CONSENTS
(a) Prior to and following Closing, at the request of the
Purchaser, Vendor shall use reasonable efforts to obtain and
deliver to the Purchaser all consents, permissions and
approvals by Third Parties and governmental and regulatory
authorities, which the Purchaser has (acting reasonably and in
good faith) identified as reasonably necessary and applicable
in connection with the transaction herein provided for.
(b) Within three (3) Business Days following the execution of this
Agreement by the Parties, the Vendor shall advise the
Purchaser which of the Assets are subject to Preferential
Rights. Within five (5) Business Days following the execution
of this Agreement by the Parties, the Purchaser shall advise
the Vendor in writing of its bona fide allocations of value
for such affected Assets. Provided that the Vendor is
satisfied that such allocations are bona fide and reasonable,
the Vendor shall comply with the applicable
-30-
provisions of such Preferential Rights and shall serve notices
to the Third Parties (and Purchaser if applicable) holding
such Preferential Rights, such notices to be in a form
acceptable to the Purchaser acting reasonably, using the bona
fide allocations of the Purchaser. All such notices shall
include a request for a waiver of the Preferential Rights
held. In the event the Vendor is not satisfied that the
allocations of value made by the Purchaser are bona fide and
reasonable, the Vendor and Purchaser shall forthwith meet in
good faith to discuss the issue. If, after such a meeting, the
Vendor and Purchaser are not able to agree upon the value of
Assets affected by Preferential Rights, either the Vendor or
the Purchaser may, at its option, submit the determination of
such matter to arbitration pursuant to and in accordance with
Clause 16.
(c) The Vendor shall notify the Purchaser in writing forthwith
upon the exercise or waiver, on or before the Closing Date, if
any, of any Preferential Rights held by a Third Party,
provided however, the Parties acknowledge that the time period
in which Third Parties may elect to exercise certain
Preferential Rights will not expire until after the Closing
Date. The following shall apply with respect to Preferential
Rights:
(i) Notwithstanding the exercise of a Preferential Right
prior to the Closing Date, the Parties shall proceed
with Closing on the Closing Date and the definition
of the Assets shall not be amended as a result of the
exercise of any Preferential Right;
(ii) after Closing on the Closing Date, the Purchaser, as
agent for the Partnership, shall cause the
Partnership to forthwith assign and convey such
Assets in which a Preferential Right has been
exercised (whether by notice received before or after
the Closing Date), utilizing the values determined in
accordance with Clause 7(b), to such Third Party and
the cash proceeds shall be received and retained by
the Partnership after Closing; and
[ INTENTIONALLY DELETED ]
(e) Notwithstanding anything contained herein, Purchaser and the
Partnership jointly and severally will:
(i) be liable to the Vendor for its Losses and
Liabilities; and, in addition,
(ii) indemnify and hold harmless the Vendor and each of
its directors, officers, servants, agents and
employees from and against all Losses and
Liabilities;
-31-
incurred by Vendor as a result of or in any way relating to
the failure of the Purchaser, as agent for the Partnership, to
subsequently convey any Assets subject to Preferential Rights
to any Third Party in accordance with Clause 7(c)(ii) and all
third party costs incurred by Vendor, any claims of Third
Parties, and any goods and services tax applicable thereto in
accordance with the Excise Tax Act (Canada). The provisions of
this Clause 7 shall survive the Closing Date for the benefit
of the Vendor.
8. VENDOR'S REPRESENTATIONS
(a) The Vendor hereby represents, warrants and covenants to and
with the Purchaser except as set out in the Data Room
Materials or as otherwise disclosed to the Purchaser hereunder
that:
(i) the Vendor and Subco are, and at the Closing Date
shall continue to be corporations or a general
partnership, as applicable, duly organized, validly
existing and in good standing under the laws of their
jurisdiction of incorporation or registration and the
laws of those jurisdictions in which the Vendor and
Subco are required to be registered in order to give
effect to this Agreement;
(ii) the Vendor has all requisite power and authority to
enter into this Agreement and to perform the Vendor's
obligations under this Agreement;
(iii) the execution and delivery of this Agreement and each
and every agreement or document to be executed and
delivered hereunder and the consummation of the
transactions contemplated herein will not violate,
nor be in conflict with, the constating documents or
bylaws of the Vendor, Subco or the Partnership, or
any provision of any agreement or instrument to which
the Vendor, Subco or the Partnership is a party or is
bound, or any judgment, decree, order, statute, rule
or regulation applicable to the Vendor, Subco or the
Partnership;
(iv) this Agreement has been duly executed and delivered
by the Vendor and all documents required hereunder to
be executed and delivered by the Vendor shall have
been duly executed and delivered and this Agreement
does, and such documents will, constitute legal,
valid and binding obligations of the Vendor
enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, preference,
reorganization, moratorium and other laws affecting
creditors' rights generally, and the discretionary
nature of equitable remedies and defenses;
(v) the Vendor has not incurred any obligation or
liability, contingent or otherwise, for brokers' or
finders' fees in respect of this transaction for
which the Purchaser shall have any obligation or
liability and Vendor's transaction costs, including
legal fees and broker's fees, if any, shall not be
borne by the Partnership or the Purchaser;
(vi) at the Closing Date the Vendor will be the beneficial
owner of all of the Securities and Subco will be the
beneficial owner of a 0.1% Partnership Interest and
each has good title to the same, free and clear of
all security interests, equities, claims, options or
other encumbrances or voting trusts, proxies or other
interests of any nature whatsoever except those in
favor of the Purchaser and the partners of the
Partnership at the Closing Date will be NEXEN and
Subco;
-32-
(vii) the Partnership is, and at the Closing Date shall
continue to be, a general partnership duly organized,
validly existing and in good standing under the laws
of its jurisdiction of registration and the laws of
those jurisdictions in which the Partnership is
required to be registered in order to conduct its
business and own its assets and NEXEN is the managing
partner of the Partnership in accordance with the
Partnership Agreement;
(viii) the execution and delivery of this Agreement and each
and every agreement or document to be executed and
delivered hereunder and the consummation of the
transactions contemplated herein will not violate,
nor be in conflict with, the Partnership Agreement or
any provision of any agreement or instrument to which
the Partnership is a party or is bound, or any
Regulation applicable to the Partnership;
(ix) the Partnership and Subco have no subsidiaries;
(x) Subco is not a "reporting issuer" under relevant
securities legislation or a "distributing
corporation" under relevant corporate legislation;
(xi) the Purchaser has been provided a true, correct and
complete copy of the Partnership Agreement, together
with all amendments thereto, of the Partnership and
no resolutions have been proposed or passed to
further amend the foregoing;
[ INTENTIONALLY DELETED ]
(xiii) the beneficial ownership of 100% of the Partnership
Interests of the Partnership on the Closing Date will
be owned and held as follows: NEXEN - 99.9% and Subco
- 0.1%;
(xiv) other than Preferential Rights set forth in Schedule
"A" and the Purchaser's rights as provided in this
Agreement, there are no outstanding options, calls or
rights of any kind relating to or providing for the
purchase, delivery or transfer of any Securities,
Office and Administrative Assets, Pipeline, Nexen
Seismic or any of the Partnership's interest in the
Assets that are triggered as a result of this
Agreement;
[ INTENTIONALLY DELETED ]
(xvi) the Partnership is a Canadian Partnership with the
meaning of that term as defined in the INCOME TAX ACT
(CANADA);
(xvii) the Partnership is duly registered with the CANADA
REVENUE AGENCY and its GST registration number
[ INTENTIONALLY DELETED ];
(xviii) Subco has filed on or prior to the Closing Date, or
will file after the Closing Date, at its sole cost,
all tax returns required to be filed on or prior to
the Closing Date with respect to any tax for any
period ending before the Closing Date and shall have
made complete and accurate disclosure in such tax
returns and materials accompanying them;
-33-
(xix) Subco and the Partnership have not provided any
waivers to CANADA REVENUE AGENCY or any other taxing
authority for any reason;
(xx) prior to the Closing Date, no deficiency for any tax
has been proposed, asserted or assessed against Subco
or the Partnership and there are not outstanding tax
disputes, audits, proposed adjustments, notices of
objection or other appeals against Subco, or against
the Partnership;
(xxi) prior to the Closing Date, the Vendor and Subco are
residents of Canada and are not non-residents of
Canada for the purposes of the INCOME TAX ACT
(CANADA);
(xxii) all taxes and other assessments and levies which
Subco and the Partnership are required to withhold or
collect have been (and will be up to the Closing
Date) duly withheld and collected and paid over to
the proper government authorities;
(xxiii) except for the Permitted Encumbrances, NEXEN owns a
100% interest in the Office and Administrative Assets
(subject to any applicable leases of equipment and
similar arrangements) and the Pipeline free and clear
of encumbrances, adverse claims and demands;
(xxiv) the Vendor does not warrant its title to the Office
and Administrative Assets, Pipeline and Nexen Seismic
and the Partnership's title to the Assets but does
represent and warrant that at the Closing Date the
Partnership will have no assets other than the Assets
and any related working capital and balances due from
or to Affiliates and to its knowledge it has and
Subco and the Partnership have done no act or thing,
or are aware of no act or thing having been done,
whereby any of its title to the Office and
Administrative Assets, Pipeline and Nexen Seismic and
the Partnership's interest in and to the Assets may
be cancelled or terminated, nor has it or the
Partnership or Subco encumbered or alienated the
Assets, Pipeline, Nexen Seismic and Office and
Administrative Assets or any interest therein (except
for the Permitted Encumbrances), and to its knowledge
that the Assets Pipeline, Nexen Seismic and Office
and Administrative Assets are now and will be at the
Closing Date free and clear of all liens,
encumbrances, adverse claims, demands and royalties
granted by, through or under Partnership, Subco or
Vendor or their Affiliates, except for the Permitted
Encumbrances or as expressly set forth, in the Data
Room Materials;
(xxv) it is not aware of, and has not received:
A. any order or directive which relates to
Environmental Defects, and which requires
any work, repairs, construction, or capital
expenditures, with respect to the Assets; or
B. any demand or notice with respect to the
breach of any environmental health, or
safety law applicable to the Assets,
including, without limitation, any
regulations respecting the use, storage,
treatment, transportation, or disposition of
environmental contaminants;
except as has been disclosed in reasonable detail in
the Data Room Materials;
(xxvi) subject at all times to the Vendor's other
representations and warranties made under this
Agreement, the Permitted Encumbrances, Title Defects
waived by the Purchaser under this Agreement and the
satisfaction of the obligations required to maintain
the Leases in good standing by the applicable
lessees, the Partnership
-34-
may (upon Closing) enter into and upon, hold and
enjoy the Assets for the residue of their respective
terms and all renewals or extensions thereof for the
Partnership's own use and benefit without any lawful
interruption of or by the Vendor or any other person
whomsoever claiming or to claim by, through or under
the Vendor;
(xxvii) to the Vendor's knowledge there are no outstanding
authorizations for expenditures, unit budgets and
mail ballots, pursuant to which expenditures will or
may be made in respect of the Assets, nor are there
any other financial commitments which are outstanding
or due or which hereafter may become due in respect
of the Assets or operations in respect thereof,
except those set out in Schedule "D" and those which
have been approved or deemed approved by Purchaser,
the Partnership or the Vendor and Subco pursuant to
Clause 5 of this Agreement;
(xxviii) to the Vendor's knowledge the Vendor, the Partnership
and Subco have not received notice of default
relating to the Assets or any of them, and to the
Vendor's knowledge all relevant deposits, rentals and
royalties have been paid within the applicable time
limits and in accordance with the applicable
Regulations and Title and Operating Documents, and
all obligations and covenants required to keep the
Leases in full force and effect have been performed
and observed except as has been disclosed
specifically in writing to the Purchaser prior to the
Closing Date or in the Data Room Materials;
(xxix) to the Vendor's knowledge all ad valorem, property,
production, severance and similar taxes and
assessments based on or measured by the ownership of
property or the production of Petroleum Substances or
the receipt of proceeds therefrom payable in respect
of the Assets up to the Closing Date (including all
prior years) have been properly and fully paid and
discharged and there are no unpaid taxes and
assessments which are or could result in a lien or
charge on the Assets;
(xxx) neither Vendor nor the Partnership nor Subco is a
party to any action, suit or other legal,
administrative or arbitration proceeding or
government investigation, actual or, to the Vendor's
knowledge, threatened, which pertains to Vendor's
title to the Securities, Pipeline, Nexen Seismic or
the Office and Administrative Assets or pertains to
the Assets or any part thereof except as set forth in
Schedule "H";
(xxxi) to the Vendor's knowledge, the Wells have been
drilled and, if completed, completed and operated
and, if abandoned, have been abandoned, all in
accordance with good oil and gas field practices and
in compliance with all applicable Regulations and in
accordance with the terms and conditions of all
agreements relative thereto and to the Vendor's
knowledge the Tangibles have been constructed,
installed and maintained in accordance with good oil
and gas field practices and are in good operating
condition, subject to reasonable wear and tear;
(xxxii) the Vendor, Subco or the Partnership have not
received notice of and are not otherwise aware of any
change or proposed change in the production
allowables for any of the Wells producing Petroleum
Substances or any other wells from which production
of Petroleum Substances is allocated to the Lands;
-35-
(xxxiii) to the Vendor's knowledge it has made available to
the Purchaser all information within its possession,
and has not knowingly withheld any such information
from Purchaser, relevant to Environmental Defects;
(xxxiv) except for the agreements set forth in Schedule "E",
the Assets do not include and the Partnership and
Subco are not obligated or bound by any contracts or
agreements for:
A. the sale or delivery of Petroleum Substances
allocable to the Petroleum and Natural Gas
Rights that cannot be terminated on notice
of thirty one (31) days or less without
penalty;
B. gas balancing or similar provision;
C. the sale or delivery of Petroleum Substances
allocable to any of the Petroleum and
Natural Gas Rights without in due course
receiving or being entitled to retain full
payment therefor at the full price which
would otherwise be applicable thereunder;
D. the delivery of gas or the reimbursement to
any person of an amount on account of
payments previously made in respect of
quantities of Petroleum Substances which
were not previously delivered;
E. agreements for the transportation,
processing or disposal of the Petroleum
Substances or any of them or substances
produced in connection with the Petroleum
Substances or any of them, agreements for
the contract operation by a Third Party of
the Assets or any of them, and agreements to
provide transportation, processing or
disposal capacity or service to any Third
Party; or
F. Futures Transactions;
(xxxv) the authorized share capital of Subco consists of an
unlimited number of Class A common shares and an
unlimited number of Class B preferred shares of
which, as of the Closing Date, only two (2) Class A
common shares will be validly issued and outstanding
and all of which will be registered in the name of
CNYL;
(xxxvi) as of the Closing Date no Person shall have any
rights capable of being converted into, exchanged for
or exercised for shares or other securities of Subco
("Share Right") or any other agreement, option or
privilege (whether pre-emptive, contractual or
otherwise) capable of becoming a Share Right and the
execution and delivery of this Agreement shall not
give any Person other than the Purchaser any Share
Right;
(xxxvii) except as it relates to transactions or matters
arising from or contemplated in this Agreement, the
minute book and share ledger of Subco will be true
and correct in all material respects and such minute
books shall contain copies of all meetings of the
directors and shareholders of Subco and all
resolutions by consent (if any) of the directors and
shareholders;
(xxxviii)except for:
A. Current Liabilities;
-36-
B. Nexen Receivables;
C. liabilities as a result of transactions
contemplated by this Agreement;
D. liabilities relating to the accounting for
future income taxes and asset retirement
obligations;
E. liabilities under the Title and Operating
Documents, the Regulations (excluding the
Tax Act) and the Permitted Encumbrances; and
F. liabilities which will be satisfied,
discharged or released or assumed by NEXEN
pursuant to the Operations Agreement dated
January 1, 2005 between NEXEN and the
Partnership, as at the Closing Date;
the Partnership and Subco as of Closing will have no
liabilities;
(xxxix) the Partnership and Subco have not received notice
that the technology owned or used by Subco or the
Partnership infringes upon any patents, trade marks,
trade secrets or copyrights owned by other Persons;
(xl) prior to the Closing Date, the Vendor has provided to
the Purchaser a complete and correct list of all bank
accounts and safety deposit boxes maintained by Subco
and the Partnership;
(xli) to the knowledge of the Vendor, there are no area of
mutual interest or area of exclusion provisions
applicable to and binding upon the Partnership or
Subco except as disclosed in Schedule "A" attached
hereto;
[ INTENTIONALLY DELETED ]
(xliii) except as provided pursuant to the transactions
referred to in Clause 5(e), no Person now holds, or
at the Closing Date will hold, any power of attorney
from the Partnership or Subco other than any power of
attorney granted pursuant to the Partnership
Agreement;
(xliv) except as provided pursuant to the transactions
referred to in Clause 5(e), under this Agreement or
the Partnership Agreement, neither the Partnership
nor Subco has guaranteed, endorsed, assumed or
indemnified, contingently or otherwise, the
obligations or indebtedness of any Person except, in
the ordinary course of the oil and gas business,
pursuant to the Title and Operating Documents; and
(xlv) no material tangible depreciable property, inventory
or equipment that would otherwise form part of the
Tangibles or Office and Administrative Assets has
been removed from its location since the Effective
Date.
(b) The Vendor makes no representations, warranties or covenants
to the Purchaser except those enumerated in Subclause 8(a).
Vendor disclaims any liability and responsibility for any
representation or warranty which may have been made or alleged
to have been made and which is contained in any instrument or
document relative hereto or to the transactions herein
provided for, or contained in any statement or information
made or communicated (orally or in writing) to Purchaser
including, without limitation of the generality of the
foregoing, any opinion, information or advice which may have
been provided to Purchaser by any officer, partner,
shareholder, director, employee, agent,
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consultant or representative of Vendor. Except and to the
extent provided in Subclause 8(a), the Vendor does not warrant
the Partnership's title to the Assets, the Vendor's title to
the Securities or the Vendor's title to the Nexen Seismic,
Pipeline and Office and Administrative Assets or make
representations, warranties or covenants with respect to:
(i) the quantity, quality or recoverability of Petroleum
Substances respecting the Lands;
(ii) any information or data supplied by Vendor pursuant
hereto;
(iii) any estimates of the value of the Securities, Nexen
Seismic, Pipeline and Office and Administrative
Assets or the Assets or the revenues applicable to
future production from the Lands;
(iv) any engineering, geological or other interpretations
or economic evaluations respecting the Assets;
(v) the rates of production of Petroleum Substances from
the Lands;
(vi) the quality, condition or serviceability of the
Assets and the Nexen Seismic, Pipeline and Office and
Administrative Assets;
(vii) the fitness or suitability of the Assets for any
purpose or the merchantability of the Assets and the
Nexen Seismic, Pipeline and Office and Administrative
Assets; or
(viii) the ability or assurance that the Partnership will
continue to serve as operator of the Assets after
Closing or that the Purchaser will be able to assume
and/or serve as operator of any of the Assets.
Without restricting the generality of the foregoing, the
Purchaser acknowledges that it has made its own independent
investigation, analysis, evaluation and inspection of the
Vendor's interest in and to the Securities, Nexen Seismic,
Pipeline and Office and Administrative Assets and the
Partnership's interest in and to the Assets and the state and
condition thereof and that it has relied solely on such
investigation, analysis, evaluation and inspection as to its
assessment of the condition, quantum and value of the
Securities, Nexen Seismic, Pipeline and Office and
Administrative Assets and the Assets.
(c) Except with respect to the representations, warranties and
covenants in Subclause 8(a) or in the event of fraud, the
Purchaser forever releases and discharges the Vendor, its
Affiliates and its directors, officers, servants, agents and
employees from any claims and all liability to the Purchaser
or the Purchaser's assigns and successors, as a result of, the
use of, or reliance upon advice, information or materials
pertaining to the Securities, Nexen Seismic, Pipeline, Office
and Administrative Assets and the Assets which were delivered
or made available to the Purchaser by the Vendor, its
Affiliates or its directors, officers, servants, agents or
employees prior to or pursuant to this Agreement, including,
without limitation, any evaluations, projections, reports and
interpretive or non-factual materials prepared by or for the
Vendor, or otherwise in the Vendor's possession.
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9. PURCHASER'S REPRESENTATIONS
(a) The Purchaser hereby represents, warrants and covenants to and
with the Vendor that:
(i) the Purchaser is, and at the Closing Date shall
continue to be, a trust duly organized and validly
existing under the laws of Alberta and the laws of
those jurisdictions in which it is required to be
qualified in order for it to acquire and own the
Securities, Nexen Seismic, Pipeline and Office and
Administrative Assets;
(ii) the Purchaser has all requisite power and authority
to enter into this Agreement and to purchase and pay
for the Securities, Nexen Seismic, Pipeline and
Office and Administrative Assets on the terms
described herein and to perform its other obligations
under this Agreement and has taken all action
necessary to authorize the execution, delivery and
performance of this Agreement and the purchase of the
Securities, Nexen Seismic, Pipeline and Office and
Administrative Assets in accordance with this
Agreement;
(iii) the execution and delivery of this Agreement and each
and every agreement or document to be executed and
delivered hereunder and the consummation of the
transactions contemplated herein will not violate,
nor be in conflict with, any provision of any trust
indenture or other governing agreement of the
Purchaser, or any judgment, decree, order, statute,
rule or regulation applicable to the Purchaser;
(iv) this Agreement has been duly executed and delivered
by the Purchaser and all documents required hereunder
to be executed and delivered by the Purchaser shall
have been duly executed and delivered and this
Agreement does, and such documents will, constitute
legal, valid and binding obligations of the Purchaser
enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency, preference,
reorganization, moratorium and other laws affecting
creditors' rights generally, and the discretionary
nature of equitable remedies and defenses;
(v) the Purchaser has not incurred any obligation or
liability, contingent or otherwise, for brokers' or
finders' fees in respect of this transaction for
which the Vendor shall have any obligation or
liability;
(vi) the Purchaser shall comply with the provisions of the
INVESTMENT CANADA ACT (Canada) and the COMPETITION
ACT (Canada), if applicable;
(vii) there are no necessary regulatory approvals or
rulings required to be obtained by the Purchaser to
permit the transactions contemplated herein to be
completed except approvals and rulings, if any, under
the COMPETITION ACT (Canada);
(viii) the Purchaser shall comply with all applicable
statutes, laws and Regulations required for the
approval of all Well license transfers from the
Vendor and/or the Partnership to the Purchaser; and
(ix) The Purchaser is acquiring the Securities, Nexen
Seismic, Pipeline and Office and Administrative
Assets on behalf of itself and its Affiliates and not
as agent on behalf of any non-Affiliate Third Party.
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10. NO MERGER AND SURVIVAL
(a) The covenants, representations and warranties set forth in
Clauses 8 and 9 shall be deemed to apply to all assignments,
conveyances, transfers and documents conveying any of the
Securities and the Assets, if applicable, and Nexen Seismic,
Pipeline and Office and Administrative Assets from the Vendor
to the Purchaser and/or the Partnership and there shall not be
any merger of any covenant, representation or warranty in such
assignments, transfers or documents notwithstanding any rule
of law, equity or statute to the contrary and all such rules
are hereby waived.
(b) Notwithstanding anything to the contrary herein expressed or
implied but subject to Clause 11(d), it is expressly agreed
and understood that the covenants, representations and
warranties set forth in Clauses 8 and 9 are true on the date
hereof and shall be repeated at the Closing Date as being true
in all material respects at the Closing Date and,
notwithstanding the Closing or deliveries of covenants,
representations and warranties in any other agreements at
Closing or prior or subsequent thereto or investigations by
the Parties or their counsel, the covenants, representations
and warranties set forth in Clauses 8 and 9 shall survive
Closing for the benefit of the Parties for a period of twelve
(12) months from the Closing Date, PROVIDED HOWEVER, no claim
or action shall be commenced with respect to a breach of any
such representation, warranty or covenant, unless, within such
twelve (12) month period, written notice specifying such
breach in reasonable detail has been provided to the Party
which made such representation, warranty or covenant.
(c) A Party hereto shall have no remedy or cause of action for a
misstatement or inaccuracy of a representation or warranty
actually known to the Party, as at the Closing Date.
(d) The representations and warranties set forth in Clauses 8 and
9 are made for the exclusive benefit of the Purchaser and the
Vendor, as the case may be, and may not be the subject of any
rights of subrogation in favor of any other person. No Party
may transfer such representations and warranties without the
written consent of the Party providing the representation
and/or warranty.
11. INDEMNITIES
(a) Subject to Clauses 2(f), 5 and 11 herein (including, without
limitation, Clauses 11(c) and 11(d)) and provided that Closing
has occurred, the Vendor shall:
(i) be liable to the Purchaser for its Losses and
Liabilities; and, in addition
(ii) indemnify and hold harmless the Purchaser and each of
its directors, officers, servants, agents and
employees from and against all Losses and
Liabilities;
as a direct result of: (A) any act, omission, circumstance or
other matter or thing arising out of, resulting from,
attributable to or connected with Vendor's breach,
misstatement or inaccuracy of any of the representations and
warranties of the Vendor under this Agreement; and (B) any
amounts payable by Subco in respect of the income or loss for
income tax purposes of Subco, pursuant to and in accordance
with the Tax Act, for any taxation year of Subco that ends
prior to the Closing Date except for any current liabilities
of Subco which are taken into account in the Adjustment Report
pursuant to Clause 3(a)(vi), except any Losses and Liabilities
to the extent they are caused by a breach of the Purchaser's
representations or warranties under Clause 9 or by the gross
negligence or willful misconduct of the Purchaser, or any of
its directors, officers, agents, employees or assigns. The
indemnity granted by the Vendor herein, however,
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does not provide either an extension of any representation,
warranty or covenant contained in Clause 8 or an additional
remedy with respect to the Vendor's breach of such
representation, warranty or covenant
(b) Subject to Clauses 2(f), 5 and 11 herein (including, without
limitation, Clause 11(d)) and provided that Closing has
occurred, the Purchaser shall:
(i) be liable to the Vendor for its Losses and
Liabilities; and, in addition
(ii) indemnify and hold harmless the Vendor and each of
its directors, officers, servants, agents and
employees from and against all Losses and
Liabilities;
as a direct result of any act, omission, circumstance or other
matter or thing arising out of, resulting from, attributable
to or connected with:
(iii) all rights, duties, benefits, obligations or
liabilities of Subco and the Partnership whatsoever;
(iv) the Assets, Nexen Seismic, Pipeline and Office and
Administrative Assets; and
(v) any amounts payable in respect of the income or loss
for income tax purposes, and all other amounts that
are allocable for the purposes of the Tax Act, of the
Partnership, pursuant to and in accordance with the
Tax Act, for any fiscal period of the Partnership
that ends on or includes or ends after the Closing
Date;
occurring or accruing subsequent to the Closing Date, except
any Losses and Liabilities insofar as they are caused by the
gross negligence or willful misconduct of the Vendor, Subco or
the Partnership or their directors, officers, servants,
agents, employees or assigns.
(c) Except as set forth in Clause 8, the Purchaser is not relying
upon any representation or warranty of the Vendor as to the
condition, environmental or otherwise, of the Assets, and
acknowledges that it is buying the Securities (which includes
ownership of the Assets), Nexen Seismic, Pipeline and Office
and Administrative Assets on an "as is" basis, as of the
Closing Date. Provided that Closing has occurred, the
Purchaser further agrees that, notwithstanding anything
contained in this Agreement, as of the Closing Date, it shall:
(i) be solely liable and responsible to the Vendor for
its Losses and Liabilities; and, in addition
(ii) indemnify and hold harmless the Vendor and each of
its directors, officers, servants, agents and
employees from and against all Losses and
Liabilities;
as a direct result of any matter or thing arising out of,
resulting from, attributable to or connected with any
Abandonment and Reclamation Obligations, Environmental
Liabilities, Environmental Defects, Uncured Environmental
Defects, environmental matters or any other environmental
liabilities whatsoever of any nature or kind and whenever
occurring, pertaining to the Assets, or any of them. Once
Closing has occurred, the Purchaser shall be solely
responsible for all Abandonment and Reclamation Obligations,
Environmental Liabilities, Environmental Defects, Uncured
Environmental Defects, environmental matters or any other
environmental liabilities whatsoever of any nature or kind and
whenever occurring, respecting the Assets, Pipeline and Office
and Administrative Assets, the abandonment of the Wells and
the Tangibles and the
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reclamation of the Assets, Pipeline and Office and
Administrative Assets as between the Vendor and the Purchaser,
and hereby releases the Vendor from any claims the Purchaser
may have against the Vendor with respect to all such
liabilities and responsibilities. Nothing in this Clause,
however, shall operate either to limit any representation,
warranty or covenant made by the Vendor pursuant to Clause 8
or to affect the Purchaser's right to make a claim against the
Vendor for the breach of such a representation, warranty or
covenant in accordance with Clause 10.
[ INTENTIONALLY DELETED ]
(e) Any Party seeking indemnification shall give reasonably prompt
notice thereof to the Party from whom indemnification is
sought. The Party from whom indemnification is sought shall
have the sole right to conduct, settle or otherwise dispose of
any legal action in respect of which indemnification is sought
in any manner it deems appropriate without the consent of the
Party seeking indemnification but only if it has agreed that
the matters in the action are indemnified pursuant to Clauses
11(a), (b) and (c). If the Party from
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whom indemnification is sought pays the indemnified amount to
the other Party seeking indemnification, the paying Party
shall not be responsible for any costs relating to legal and
other professional fees and disbursements incurred after such
payment.
(f) The provisions of this Clause 11 shall survive Closing on the
Closing Date for the benefit of the Vendor and Purchaser.
12. VENDOR'S CLOSING CONDITIONS
(a) The obligation of the Vendor to complete the sale of the
Securities, Nexen Seismic, Pipeline and Office and
Administrative Assets to the Purchaser pursuant to this
Agreement is subject to the satisfaction at or prior to the
Closing Date of the following conditions precedent:
(i) all representations and warranties of the Purchaser
contained in this Agreement shall be true in all
material respects at and as of the date hereof and
the Closing Date, as applicable, and the Purchaser
shall have provided a certificate of an officer
attesting thereto;
(ii) the Purchaser shall have performed and satisfied all
agreements and obligations required by this Agreement
to be performed and satisfied by the Purchaser at or
prior to the Closing Date and the Purchaser shall
have provided a certificate of an officer attesting
thereto;
(iii) all consents, orders, regulations, approvals and
certificates, including regulatory, judicial and
other approvals required by the Regulations
(including COMPETITION ACT (Canada) Approval), as may
be necessary to enable the Parties to complete the
transactions contemplated in this Agreement shall
have been obtained by the Parties on or before
Closing in form and substance satisfactory to the
Parties, acting reasonably, or where not obtained all
applicable waiting periods for the obtaining of such
approvals and orders will have expired such that the
transactions contemplated in this Agreement may
lawfully proceed without such approvals and orders
being required, which determination shall be made
based on an opinion of counsel;
(iv) the Purchaser shall have tendered to the Vendor in
the form stipulated herein the total amount payable
by the Purchaser to the Vendor pursuant hereto; and
(v) no suit, action or other proceeding shall, at
Closing, be pending against the Vendor, the Purchaser
or the Partnership before any court or governmental
agency seeking to retain, prohibit, obtain damages or
other relief in connection with the consummation of
the transactions contemplated by this Agreement which
would materially and adversely affect the Vendor, the
Purchaser or the Partnership.
The foregoing conditions shall be for the benefit of the
Vendor and may, without prejudice to any of the rights of the
Vendor hereunder (including reliance upon or enforcement of
the warranties or covenants which are preserved dealing with
or similar to the condition waived) be waived by the Vendor in
writing, in whole or in part, at any time. In case any of the
said conditions shall not be complied with, or waived by the
Vendor, at or before the Closing Date, the Vendor may rescind
or terminate this Agreement by written notice to the
Purchaser.
13. PURCHASER'S CLOSING CONDITIONS
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(a) The obligation of the Purchaser to complete the purchase of
the Securities, Nexen Seismic, Pipeline and Office and
Administrative Assets from the Vendor pursuant to this
Agreement is subject to the satisfaction at or prior to the
Closing Date of the following conditions precedent:
(i) all representations and warranties of the Vendor
contained in this Agreement shall be true in all
material respects at and as of the date hereof and at
the Closing Date, as applicable, and the Vendor shall
have provided a certificate of an officer attesting
thereto;
(ii) the Vendor shall have performed and satisfied all
agreements and obligations required by this Agreement
to be performed and satisfied by the Vendor at or
prior to the Closing Date and the Vendor shall have
provided a certificate of an officer attesting
thereto;
(iii) subject to the obligations contained in Clause 4, the
Vendor shall have tendered to the Purchaser documents
and materials satisfying the requirements of Clause 4
hereof;
(iv) all consents, orders, regulations, approvals and
certificates, including regulatory, judicial and
other approvals required by the Regulations
(including COMPETITION ACT (Canada) Approval), as may
be necessary to enable the Parties to complete the
transactions contemplated in this Agreement shall
have been obtained by the Parties on or before
Closing in form and substance satisfactory to the
Parties, acting reasonably, or where not obtained all
applicable waiting periods for the obtaining of such
approvals and orders will have expired such that the
transactions contemplated in this Agreement may
lawfully proceed without such approvals and orders
being required, which determination shall be made
based on an opinion of counsel;
(v) no suit, action or other proceeding shall, at
Closing, be pending against the Vendor, the Purchaser
or the Partnership before any court or governmental
agency seeking to retain, prohibit, obtain damages or
other relief in connection with the consummation of
the transactions contemplated by this Agreement which
would materially and adversely affect the Vendor, the
Purchaser or the Partnership;
(vi) except as provided for in this Agreement or consented
to by the Purchaser, no substantial damage to or
material adverse alteration in or to the Assets or
the Pipeline which have occurred between the date
hereof and the Closing Date which, in the Purchaser's
opinion, acting reasonably and in good faith, would
materially and adversely affect the value of the
Assets excluding all decreases in the value of the
Assets or the Pipeline pursuant to Clauses 6 and 7 or
as otherwise disclosed to the Purchaser in the Data
Room Materials; but for this purpose, standard
production practices or a decline in the value or
valuation of the Petroleum Substances shall not be
events which fall under the auspices of this
condition precedent;
(vii) all requisite approvals of regulatory bodies relative
to the transactions herein provided for shall have
been obtained; and
(viii) all transactions between Vendor and its Affiliates as
referred to in Clause 5(e) have been or will be
completed on or prior to the Closing Date.
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The foregoing conditions shall be for the benefit of the
Purchaser and may, without prejudice to any of the rights of
the Purchaser hereunder (including reliance upon or
enforcement of warranties or covenants which are preserved
dealing with or similar to the condition or conditions waived)
be waived by the Purchaser in writing, in whole or in part, at
any time, provided the Purchaser may not waive the existence
and operation of any Preferential Right to purchase any of the
Assets. In case any of the said conditions shall not be
complied with, or waived by the Purchaser, at or before the
Closing Date, the Purchaser may rescind and terminate this
Agreement by written notice to the Vendor.
14. TERMINATION
Subject to Clauses 2(h) and 15, in the event that this Agreement is
terminated prior to Closing pursuant to any of Clauses 6, 7, 12, 13 or
15, each Party hereto shall be released from all obligations hereunder
and each Party hereto shall take all reasonable action to return each
of the other Parties hereto to the position relative to the Securities,
Nexen Seismic, Pipeline and Office and Administrative Assets and the
Assets which such Party occupied prior to the execution hereof, it
being understood that the Vendor and the Purchaser will each bear all
costs incurred by it prior to such termination.
15. DEFAULT
(a) If a Party (the "DEFAULTING PARTY") fails to comply with an
obligation under this Agreement and Closing does not occur as
a result, the other Party (the "INJURED PARTY") may, by notice
to the Defaulting Party, elect:
(i) to continue to treat this Agreement as binding and
enforceable; or
(ii) to treat this Agreement as terminated by reason of
the non-fulfillment of the Defaulting Party's
obligations and, subject to Clause 16, provided that:
A. the Deposit and interest accrued thereon
will be returned to the Purchaser if the
Purchaser is the Injured Party and the
Purchaser may pursue a claim for damages
against the Vendor; or
B. if the Defaulting Party is the Purchaser,
the Deposit and the interest accrued thereon
will be retained by the Vendor in full
settlement of all damages suffered by Vendor
and to compensate the Vendor for expenses
incurred in connection with the transaction
contemplated herein and the delay or
permanent impairment caused to the Vendor's
efforts to sell the Securities, the
Pipeline, the Nexen Seismic and the Office
and Administrative Assets. For clarity, the
Vendor's retention of the Deposit is a
genuine pre-estimate of liquidated damages
suffered and not a penalty.
Notwithstanding anything contained herein, the Injured Party
will be deemed to treat this Agreement as binding and
enforceable until it elects, by notice to the Defaulting
Party, to apply Clause 15(a)(ii).
(b) Any amount owing to a Party by the other Party hereunder after
Closing and remaining unpaid will bear interest at 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.
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16. DISPUTE RESOLUTION
(a) The Parties will attempt to resolve any dispute arising
hereunder through consultation and negotiation in good faith.
If those attempts fail, the Parties shall, refer the dispute
to binding arbitration. Any such arbitration, and any other
arbitration the Parties may agree to conduct hereunder, will
be conducted under the Commercial Arbitration Rules of The
Canadian Foundation for Dispute Resolution.
(b) All limitation periods respecting the commencement of an
action will be stayed during the period that the Parties are
attempting to resolve a dispute under Clause 16(a) or
otherwise under this Agreement. A Party may, at any time it
believes it necessary to protect its interest during that
period, seek interim or provisional relief, in form of a
temporary restraining order, preliminary injunction or other
interim equitable relief concerning a dispute under this
Agreement, notwithstanding anything to the contrary in this
Clause.
(c) Notwithstanding anything contained herein, the provisions of
this Clause 16 shall not apply to any disputes under Clause 6.
17. EMPLOYMENT MATTERS
[ INTENTIONALLY DELETED ]
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[ INTENTIONALLY DELETED ]
18. PROTECTION OF PERSONAL INFORMATION
The following shall apply with respect to privacy and the collection,
use and disclosure of personal information:
(a) For the purposes of this Clause 18, the following definitions
shall apply:
(i) "APPLICABLE LAW" means, in relation to any person,
transaction or event, all applicable provisions of
laws, statutes, rules, regulations, official
directives and orders of and the terms of all
judgments, orders and decrees issued by any
authorized authority by which such person is bound or
having application to the transaction or event in
question, including applicable privacy laws;
(ii) "APPLICABLE PRIVACY LAWS" means any and all
applicable laws relating to privacy and the
collection, use and disclosure of Personal
Information in all applicable jurisdictions,
including but not limited to the PERSONAL INFORMATION
PROTECTION AND ELECTRONIC DOCUMENTS ACT (CANADA)
and/or any comparable provincial law including the
PERSONAL INFORMATION PROTECTION ACT (ALBERTA);
(iii) "AUTHORIZED AUTHORITY" means, in relation to any
person, transaction or event, any: (a) federal,
provincial, municipal or local governmental body
(whether administrative, legislative, executive or
otherwise), both domestic and foreign; (b) agency,
authority, commission, instrumentality, regulatory
body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or
pertaining to government; (c) court, arbitrator,
commission or body exercising judicial,
quasi-judicial, administrative or similar functions;
and (d) other body or entity created under the
authority of or otherwise subject to the jurisdiction
of any of the foregoing, including any stock or other
securities exchange, in each case having jurisdiction
over such person, transaction or event; and
(iv) "PERSONAL INFORMATION" means information about an
individual transferred to
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one party by the other in accordance with this
Agreement and/or as a condition of the Transaction.
(b) The Parties acknowledge that they are responsible for
compliance at all times with applicable privacy laws which
govern the collection, use and disclosure of Personal
Information acquired by or disclosed to either party pursuant
to or in connection with this Agreement (the "Disclosed
Personal Information").
(c) Prior to Closing, neither party shall use the Disclosed
Personal Information for any purposes other than those related
to the performance of this Agreement and the completion of the
transaction contemplated herein. The Purchaser undertakes
after Closing to only use the Personal Information in
accordance with the purpose for which the Personal Information
was originally collected and to obtain consents where required
by applicable privacy Regulations prior to using or disclosing
the Personal Information.
(d) Each party acknowledges and confirms that the disclosure of
Personal Information is necessary for the purposes of this
Agreement, and that the disclosure of Personal Information
relates solely to the carrying on of the business and the
completion of the transaction contemplated herein.
(e) Each party acknowledges and confirms that it has and shall
continue to employ appropriate technology and procedures in
accordance with applicable law to prevent accidental loss or
corruption of the Disclosed Personal Information, unauthorized
input or access to the Disclosed Personal Information, or
unauthorized or unlawful collection, storage, disclosure,
recording, copying, alteration, removal, deletion, use or
other processing of such Disclosed Personal Information.
(f) Each party shall at all times keep strictly confidential all
Disclosed Personal Information provided to it, and shall
instruct those employees or advisors responsible for
processing such Disclosed Personal Information to protect the
confidentiality of such information in a manner consistent
with the parties' obligations hereunder. Each party shall
ensure that access to the Disclosed Personal Information shall
be restricted to those employees or advisors of the respective
party who have a bona fide need to access to such information
in order to complete the transaction contemplated herein.
(g) Each party shall promptly notify the other party of all
inquiries, complaints, requests for access, and claims of
which the party is made aware in connection with the Disclosed
Personal Information. The parties shall fully co-operate with
one another, with the persons to whom the Personal Information
relates, and any authorized authority charged with enforcement
of applicable privacy laws, in responding to such inquiries,
complaints, requests for access, and claims.
(h) If Closing does not occur, the Purchaser shall return to the
Vendor, and destroy all copies of any Personal Information
disclosed to the Purchaser in connection with this Agreement.
(i) On or before Closing, the Purchaser shall return all Personal
Information acquired by it in connection with this Agreement,
or copies thereof, relating to any Field Employees who are not
offered employment by the Purchaser.
(j) The provisions of this Clause 18 shall survive the Closing
Date.
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19. POST-CLOSING OBLIGATIONS
(a) In the event the purchase and sale contemplated by this
Agreement is completed and if, for any reason, the Parties
while in agreement to Close this transaction are unable on the
Closing Date to cause the Purchaser to become the recognized
owner of the Securities, Nexen Seismic, Pipeline and the
Office and Administrative Assets or the Partnership to become
the recognized holder of any of the Assets in the place and
stead of the Vendor or its Affiliates, then subject to Clause
19(b) (except in the case of specific conveyances comprising
declarations of trust in respect of portions of the Assets),
the Vendor shall:
(i) hold and stand possessed of such Securites, Nexen
Seismic, Pipeline and Office and Administrative
Assets and Assets fully on behalf of the Purchaser or
Partnership, as applicable, as bare trustee, and
receive and hold all proceeds, benefits, and
advantages in respect of the same fully for the
benefit, use and ownership of the Partnership or the
Purchaser, as applicable, pursuant to and in
accordance with Clause 5 and the provisions of Clause
5 shall apply MUTATIS MUTANDIS to such bare trust
created hereunder;
(ii) in a timely manner, deliver to the Partnership or the
Purchaser, as applicable, all revenues, proceeds and
other benefits received by the Vendor from the
Assets;
(iii) in a timely manner, deliver to the Partnership or the
Purchaser, as applicable, all Third Party notices and
communications received by it in respect of the
Assets, the Pipeline, Nexen Seismic and the Office
and Administrative Assets;
(iv) in a timely manner, deliver to Third Parties all such
notices and communications as the Partnership may
reasonably request and all such monies and other
items as the Partnership may reasonably provide in
respect of the Assets, the Pipeline, Nexen Seismic
and the Office and Administrative Assets; and
(v) as agent of the Purchaser and the Partnership, do and
perform all such acts and things and execute and
deliver all such agreements, notices and other
documents and instruments as the Purchaser and the
Partnership may reasonably request in writing for
purposes of facilitating the exercise of rights
incidental to the ownership of the Assets, the
Pipeline, Nexen Seismic and the Office and
Administrative Assets; and
(vi) in a timely manner after Closing, complete all joint
venture billing, computation and payment of
royalties, filing of production reports with
appropriate governmental authorities, payment of
lease rentals and property taxes and similar
administrative activities for all periods prior to
the Closing Date.
(b) The trust created hereunder shall terminate and Vendor's
responsibilities thereto shall cease upon completion of all
registrations, transfers or assignments and novations
pertaining to such Assets, Securities, Nexen Seismic, Pipeline
and/or Office and Administrative Assets, as applicable.
(c) The Vendor and its Affiliates shall not be liable to either
the Purchaser or the Partnership for any loss or damage
suffered by the Purchaser and/or the Partnership in connection
with the arrangement established under Clause 19(a), except to
the extent that the loss or damage is caused by the Vendor's
and its Affiliates gross negligence or its willful misconduct,
and the Purchaser and the Partnership, jointly and severally,
shall indemnify and save harmless the Vendor and its
Affiliates and their directors, officers, servants, agents and
employees from and against all Losses and Liabilities which
may be brought
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against or suffered by any of them arising out of the
performance by the Vendor or its Affiliates of their
obligations under Clause 19(a). An act or omission of the
Vendor, its Affiliates, or their directors, officers,
servants, agents or employees shall not be regarded as gross
negligence or willful misconduct to the extent it was done or
omitted to be done in accordance with the instructions or
concurrence of the Purchaser and the Partnership. Nothing in
this Clause 19 shall be construed as extending or restricting
or limiting in any manner any of the other covenants,
warranties, representations or other obligations of the
Parties under this Agreement.
(d) All costs incurred in connection with the operations of the
Assets, Nexen Seismic, Pipeline and Office and Administrative
Assets after the Closing Date until the Vendor is relieved of
its responsibilities as operator or trustee of the Assets,
shall be reimbursed, within five (5) Business Days of
Purchaser's receipt of Vendor's request for reimbursement, by
the Purchaser and/or the Partnership to the Vendor.
(e) After Closing, Vendor may remove any signs that indicate
ownership or operation of the Assets. It shall be the
responsibility of Purchaser, where necessary, to erect or
install any signs that may be required by governmental
agencies indicating Purchaser and/or the Partnership to be the
operator of the Assets and to notify other working interest
parties, gas purchasers, suppliers, contractors, governmental
agencies and any other parties of Purchaser's and/or the
Partnership's interests in the Assets.
(f) As soon as reasonably possible after Closing and in no event
later than thirty (30) days, Purchaser shall, at its sole cost
and expense:
(i) change the name of the Partnership from "Nexen Canada
No. 1" to another name not infringing or conflicting
with Vendor's corporate names or trademarks, and
Purchaser shall provide Vendor proof, satisfactory to
Vendor, of such name change; or, cause the
Partnership to be dissolved and wound-up and
Purchaser shall provide Vendor proof, satisfactory to
Vendor, of same; and
(ii) change the name of Subco from "CNYL No. 1 Ltd." to
another name not infringing or conflicting with
Vendor's corporate names or trademarks, and Purchaser
shall provide Vendor proof, satisfactory to Vendor,
of such name change; or, cause the Partnership to be
dissolved and wound-up and Purchaser shall provide
Vendor proof, satisfactory to Vendor, of same.
(g) The Vendor shall use reasonable efforts to assist the
Purchaser and/or the Partnership in continuing to act as the
operator or assuming the operation and management of the
Assets, where and to the extent the Vendor and/or the
Partnership is operator of such Assets, however the Purchaser
acknowledges and agrees that nothing in this Agreement shall
be interpreted as any assurance that the Partnership will
continue to operate the Assets or that Purchaser will be able
to serve as operator of any of the Assets it receives
hereunder.
[ INTENTIONALLY DELETED ]
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(i) The provisions of this Clause 19 shall survive the Closing
Date.
20. CONFIDENTIALITY
(a) Subject to Clause 20(c), until Closing has occurred, the
Purchaser shall keep confidential all information obtained
from the Vendor in connection with the Assets, Office and
Administrative Assets, Nexen Seismic, Pipeline and the
Securities. Any additional information obtained as a result of
access under Clause 6 which does not relate to the Assets
shall continue to be treated as confidential and shall not be
used by the Purchaser without the prior written consent of the
Vendor. The restrictions on disclosure and use of information
set forth in this Clause 18(a) shall not apply to information
to the extent it:
(i) is or becomes publicly available through no act or
omission of the Purchaser or its consultants or
advisors;
(ii) is subsequently obtained lawfully from a Third Party
which, after reasonable inquiry, the Purchaser does
not know to be bound to the Vendor to restrict the
use or disclosure of such information;
(iii) is already in the Purchaser's possession at the time
of disclosure, without restriction on disclosure;
(iv) is required to be disclosed by the Purchaser under
legal compulsion, including those public disclosure
requirements as required by securities laws and the
rules and regulations of the applicable Stock
Exchanges and securities commissions;
(v) is required to be disclosed for the purpose of
obtaining consents or complying with Preferential
Rights; or
(vi) is required to be disclosed to obtain the consent of
a lender, or which a Party may choose to disclose to
recognized credit rating agencies in respect of its
credit rating.
(b) If the Purchaser employs consultants, agents or advisors to
assist in its review of the Assets pursuant to Clause 6, the
Purchaser shall be responsible to the Vendor for ensuring that
such consultants, agents and advisors comply with the
restrictions on the use and disclosure of information set
forth in Clause 20(a).
(c) The Vendor and the Purchaser shall cooperate with each other
in releasing information concerning this Agreement and the
transactions provided for by it, and shall furnish to, and
discuss with, the other Party drafts of all press and other
releases, and shall seek the consent of the other Party (which
shall not be unreasonably withheld) prior to the publication
thereof.
(d) Notwithstanding Clause 20(a), the obligations of the Purchaser
under this Clause 20 are in addition to, and not in
substitution for, its obligations under any confidentiality
agreement made between the Vendor and the Purchaser for its
possible acquisition of the Partnership and/or Assets, except
as otherwise provided in this Agreement.
(e) Neither Party hereto shall make any public or private
announcement or communications in respect of the proposed
transactions set forth in this Agreement (including, without
limitation, the existence of this Agreement or that any
investigation, discussions or negotiations are taking place
concerning the evaluation of either of the Parties hereto or
the proposed transaction) unless the prior approval of the
announcement is obtained from
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the other Party hereto. Notwithstanding the foregoing, each
Party understands that the other Party is subject to public
disclosure requirements as required by securities laws and the
rules and regulations of the applicable Stock Exchanges and
securities commissions. In the event that either Party
determines that it is required by such laws, rules and
regulations to make any public disclosure, then the Party
shall give prior notice to the other Party and an opportunity
will be provided for discussion.
21. ATTORNMENT AND PROPER LAW
(a) This Agreement shall be exclusively subject to and be
interpreted, construed and enforced in accordance with the
laws in effect in the Province of Alberta. Each Party
irrevocably attorns to the exclusive jurisdiction of the
courts of the Province of Alberta and all courts of appeal
therefrom.
(b) Pursuant to Section 7 of the Limitations Act (Alberta), the
Parties expressly provide that the limitation period for all
claims as may arise under this Agreement as between the
Parties shall be six (6) years from the day the act giving
rise to the claim was discovered by the Party making the
claim, but in any event shall not be more than fifteen (15)
years from the day the act giving rise to the claim occurred.
22. MISCELLANEOUS
(a) At the date hereof and thereafter as may be necessary and
without further consideration, the Parties hereto shall
execute, acknowledge and deliver such other documents,
novations, transfers, instruments and agreements and shall do
such other things as may be necessary to carry out their
respective obligations under this Agreement.
(b) Time shall be of the essence in this Agreement.
(c) The address for Notices of each of the Parties hereto shall be
as follows:
Vendor: c/o Nexen Inc.
801 - 7th Avenue S.W.
Calgary, Alberta T2P 3P7
Fax: (403) 699-5800
Purchaser: c/o Harvest Operations Corp.
2100, 330 - 5th Avenue S.W.
Calgary, Alberta T2P 0L4
Fax: (403) 265-3490
All notices, communications and statements (collectively,
"NOTICES") required, permitted or contemplated hereunder shall
be in writing, and shall be deemed to be sufficiently given
and received if:
(i) personally served on the other Party by delivery
during the normal business hours of the recipient at
the addresses set forth above (personally served
Notices shall be deemed received by the addressee
when actually delivered);
(ii) by facsimile or other electronic medium (or by any
other like method by which a written or recorded
message may be sent) directed to the Party on whom
they are to be served at that Party's fax number set
forth above, and such Notices so served shall be
deemed to have been received by the addressee thereof
when
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actually received by it if received within the normal
working hours of the recipient on a Business Day, or
at the commencement of the next ensuing Business Day
following transmission thereof; or
(iii) mailed by first class registered post, postage
prepaid, to the other Party (Notices so served shall
be deemed to have been received by the addressee on
the fourth Business Day following the date of mailing
thereof); except in the event of an actual or
threatened postal strike or other labour disruption
that may affect the mail service.
Either of the Parties hereto may from time to time change its
address for service herein by giving Notice to the other
Party.
(d) This Agreement constitutes the entire agreement between the
Parties and supersedes and replaces all previous oral or
written agreements, memoranda, correspondence by the parties
hereto prior to the date entered into and undertakings and
representations made (save other than for these made
fraudulently) hereof.
(e) This Agreement shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective trustees,
receivers, receiver-managers, successors and permitted
assigns.
(f) This Agreement may be executed in as many counterparts as are
necessary and all executed counterparts together shall
constitute one agreement.
(g) Notwithstanding anything contained herein, with respect to the
files, records and other documents included in the
Miscellaneous Interests, for a period of seven (7) years after
the Closing Date, Purchaser shall give Vendor reasonable
access to such files, records and other documents included in
the Miscellaneous Interests acquired from Vendor and will make
its personnel reasonably available for the purpose of
providing Vendor, upon Vendor's reasonable request, with
assistance in locating information from such records,
providing appropriate verifications of documents and
information, developing information, reports, submissions and
the like relating to Vendor's operation of the Assets prior to
the Closing Date, or otherwise providing reasonable assistance
which the Parties mutually deem appropriate.
[ INTENTIONALLY DELETED ]
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[ INTENTIONALLY DELETED ]
(i) Neither Party may assign its interest hereunder without the
prior written consent of the other Party except that the
Purchaser may assign this Agreement to an Affiliate or
Affiliates with Vendor's written consent, not to be
unreasonably withheld.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
NEXEN INC. HARVEST BREEZE TRUST NO. 1, BY ITS
TRUSTEE 1115638 ALBERTA LTD.
Per: _______________________________
Per: _______________________________
Per: _______________________________
CANADIAN NEXEN YEMEN LTD. HARVEST BREEZE TRUST NO. 2, BY ITS
TRUSTEE 1115650 ALBERTA LTD.
Per: _______________________________ Per: _______________________________
Per: _______________________________ Per: _______________________________
NEXEN MARKETING
Per: _______________________________
Per: _______________________________
SCHEDULE "A"
[Intentionally Deleted]
SCHEDULE "B"
[Intentionally Deleted]
SCHEDULE "C"
[Intentionally Deleted]
SCHEDULE "D"
[Intentionally Deleted]
SCHEDULE "E"
TO A PARTNERSHIP PURCHASE AGREEMENT THE 23RD DAY OF JUNE, 2005
BETWEEN
NEXEN INC., CANADIAN NEXEN YEMEN LTD. AND NEXEN MARKETING
AND
HARVEST BREEZE TRUST NO.1 AND HARVEST BREEZE TRUST NO. 2.
MARKETING CONTRACTS
-------------------
ATTACHED HERETO
SCHEDULE "F"
[Intentionally Deleted]
SCHEDULE "G"
[Intentionally Deleted]
SCHEDULE "H"
[Intentionally Deleted]
SCHEDULE "I"
[Intentionally Deleted]
SCHEDULE "J"
[Intentionally Deleted]