EXHIBIT 10.48
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AMENDED AND RESTATED
CHANGE OF CONTROL AGREEMENT
This amended and restated change of control agreement made as of the 31st day
of December, 2001
BETWEEN:
NEXEN INC. (FORMERLY KNOWN AS CANADIAN OCCIDENTAL
PETROLEUM LTD.), a corporation incorporated under
the laws of Canada
(hereinafter referred to as the "CORPORATION")
- and -
XXXXX XXXXXX
(hereinafter referred to as the "EXECUTIVE")
RECITALS:
1. The Executive, as Senior Vice President Canadian Oil & Gas of the
Corporation, is considered by the Board to be an essential officer and
employee of the Corporation, who is both integral to the operation and
development of the Corporation, and has acquired outstanding skills,
unique experience and possesses an extensive background in, and
knowledge of, the Corporation's business, operations and the industry
in which it is engaged.
2. In the event of a Change of Control, there is a possibility that the
employment of the Executive would be terminated without just cause or
adversely modified and the Executive has expressed concern in that
regard to the Corporation.
3. The Board recognizes that it is essential and in the best interests of
the Corporation and its shareholders that the Corporation retain the
continued dedication of the Executive to the Executive's office and
the Executive's employment during the uncertain period prior to,
during and following a Change of Control.
4. The Board further believes that the past service of the Executive and
the Executive's integral role in the development and operation of the
Corporation requires that the Corporation ensure that in the event of
a Change of Control the Executive is treated in a manner that is fair,
reasonable, consistent with industry standards and in the best
interests of the Corporation.
5. The Corporation and the Executive entered into a Change of Control
Agreement on October 22, 1999, which was amended by an Amending
Agreement dated December 25,
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2000 (collectively the "CURRENT AGREEMENT") to agree on the terms and
conditions which will govern the termination or modification of the
employment of the Executive following a Change of Control. The
Corporation and the Executive wish to amend the Current Agreement as
herein provided and, in doing so, wish to restate the Current
Agreement as herein amended (the "RESTATED AGREEMENT").
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Restated Agreement and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by the Parties,
the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 In this Restated Agreement, the following terms mean as follows:
(a) "AFFILIATE" and "ASSOCIATE" have the meaning ascribed to such
terms in the CBCA.
(b) "ACTING JOINTLY OR IN CONCERT" for the purposes of this
Restated Agreement, a Person is acting jointly or in concert
with another Person if such Person has any agreement,
arrangement or understanding (whether formal or informal and
whether or not in writing) with such other Person for the
purpose of acquiring, or offering to acquire, any Common
Shares of the Corporation (other than customary agreements
with and between underwriters and banking group or selling
group members with respect to a distribution of securities by
way of prospectus or private placement or pursuant to a
pledge of securities in the ordinary course of business).
(c) "ANNUAL BASE SALARY" means the annual base salary of the
Executive payable by the Corporation at the end of the month
immediately preceding the Date of Termination.
(d) "ANNUAL TARGET BONUS" means the Executive's annual target
bonus as determined by the Board to be in effect for the
calendar year in which a Change of Control occurs.
(e) "BENEFICIAL OWNER" for the purposes of this Restated
Agreement, a Person shall be deemed to be the "BENEFICIAL
OWNER" and to have "BENEFICIAL OWNERSHIP" of and to
"BENEFICIALLY OWN":
(i) any securities as to which such Person or any of
such Person's Affiliates or Associates is the owner
at law or in equity;
(ii) any securities as to which such Person or any of
such Person's Affiliates or Associates has a right
to acquire (i) upon the exercise of any Convertible
Securities or (ii) pursuant to any agreement,
arrangement or understanding, whether such right is
exercisable immediately within a
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period of sixty (60) days thereafter and whether or
not on condition or the happening of any
contingency, (other than (a) customary agreements
with and between underwriters and banking group and
selling group members with respect to the
distribution to the public or pursuant to a private
placement of securities, or (b) pursuant to a pledge
of securities in the ordinary course of business);
and
(iii) any securities which are Beneficially Owned within
the meaning of clauses (a) or (b) above by any other
Person with which such Person is Acting Jointly or
in Concert,
provided, however, that a Person shall not be deemed the
"Beneficial Owner" or to have "Beneficial Ownership" of or to
"Beneficially Own" any security where such Person is the
registered holder of securities as a result of carrying on
the business of or acting as nominee for a securities
depository.
For purposes of this Restated Agreement, the percentage of
Common Shares Beneficially Owned by any Person, shall be and
be deemed to be the product determined by the formula:
100 x A/B
Where:
A = the number of votes for the election of all directors
generally attaching to the Common Shares Beneficially
Owned by such Person; and
B = the number of votes for the election of all directors
generally attaching to all outstanding Common Shares.
For the purposes of the foregoing formula, where a Person
Beneficially Owns unissued Common Shares which may be
acquired pursuant to Convertible Securities, such Common
Shares shall be deemed to be outstanding for the purpose of
calculating the percentage of Common Shares Beneficially
Owned by such Person in both the numerator and the
denominator, but no other unissued Common Shares which may be
acquired pursuant to any other outstanding Convertible
Securities shall, for the purposes of that calculation, be
deemed to be outstanding.
(f) "BOARD" means the Board of Directors of the Corporation as
constituted from time to time.
(g) "CBCA" means the CANADA BUSINESS CORPORATIONS ACT, as amended
from time to time, and any successor legislation thereto.
(h) "CHANGE OF CONTROL" means the occurrence of any of:
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(i) the purchase or acquisition of any Common Shares or
Convertible Securities by a Beneficial Owner which
results in the Beneficial Owner owning, or
exercising control or direction over, Common Shares
or Convertible Securities such that, assuming only
the conversion of Convertible Securities
Beneficially Owned or over which control or
direction is exercised by the Beneficial Owner, the
Beneficial Owner would own, or exercise control or
direction over, Common Shares carrying the right to
cast more than thirty-five percent (35%) of the
votes attaching to all Common Shares; or
(ii) the substantial completion of: (i) the liquidation,
dissolution or winding-up of the Corporation; or
(ii) the sale, lease or other disposition of all or
substantially all of the assets of the Corporation;
or
(iii) a situation in which individuals who were members of
the Board immediately prior to:
(A) a meeting of the shareholders of the
Corporation involving a contest for, or an
item of business relating to, the election
of directors; or
(B) an amalgamation, arrangement, merger or
other consolidation or combination of the
Corporation with another Person,
shall not constitute a majority of the Board
following such election or transaction; or
(iv) the completion of any transaction or the first of a
series of transactions which would have the same or
similar effect as any transaction or series of
transactions referred to in paragraph (i), (ii) or
(iii) above; or
(v) a determination by the Board that there has been a
change, whether by way of a change in the holding of
the Common Shares, in the ownership of the
Corporation's assets or by any other means, as a
result of which any Person, or group of Persons
Acting Jointly or in Concert, is in a position to
effect a Change of Control.
(i) "COMMON SHARES" means the common shares of the Corporation.
(j) "CONVERTIBLE SECURITIES" means:
(i) any right (contractual or otherwise and regardless
of whether such right constitutes a security) to
acquire Common Shares from the Corporation; or
(ii) any security issued by the Corporation from time to
time (other than the rights issued pursuant to a
shareholders' rights protection plan, if any)
carrying any exercise, conversion or exchange right,
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which is then exercisable or exercisable within a period of
sixty (60) days from that time pursuant to which the holder
thereof may acquire Common Shares or other securities which
are convertible into or exercisable or exchangeable for Common
Shares (in each case, whether such right is then exercisable
or exercisable within a period of sixty (60) days from that
time and whether or not on condition or the happening of any
contingency).
(k) "DATE OF TERMINATION" means the date upon which the
Executive's employment is terminated pursuant to Section 4.1,
5.1 or 6.1. For greater clarity, the Date of Termination
means the date upon which the Corporation provides the
Executive with written, verbal or other notice that the
Executive's employment has been or will be terminated
pursuant to Section 4.1 or 5.1 or the date upon which the
Executive provides the Corporation with written notice
terminating the Executive's employment pursuant to Section
4.1 or for Good Reason pursuant to Section 6.1.
(l) "DISABILITY" means, where due to a physical or mental
condition, the Executive is rendered totally and permanently
unable to perform the Executive's duties for a consecutive
period of two (2) years or more during which the Executive
has been in receipt of long term disability insurance
benefits from the insurance carrier normally utilized by the
Corporation.
(m) "EFFECTIVE DATE" means the date upon which a Change of
Control occurs.
(n) "EMPLOYMENT BENEFITS" means the employment benefits to which
the Executive is entitled by virtue of any written, oral or
implied agreement with the Corporation. For the purposes of
this Restated Agreement, "Employment Benefits" shall include,
but is not limited to, the following:
(i) the Executive's entitlement to any dental or general
medical care;
(ii) the Executive's entitlement to receive long term
disability benefits from the insurance carrier
normally utilized by the Corporation;
(iii) the Executive's entitlement to pension benefits
under the terms of any pension plan with the
Corporation;
(iv) the Executive's entitlement to a monthly car
allowance from the Corporation;
(v) the Executive's entitlement to contributions by the
Corporation to the Corporation's savings plan;
(vi) the Executive's entitlement to receive from the
Corporation financial counseling services, at a cost
of $3,500.00 per year (or as the same may be
increased from time to time by the Corporation); and
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(vii) the Executive's entitlement to receive from the
Corporation security monitoring services at the
Executive's personal residence.
(o) "GOOD REASON" means any of the following, unless the
Executive shall have given the Executive's express written
consent thereto:
(i) INCONSISTENT DUTIES. The assignment to the Executive
of any duties inconsistent with the Executive's
status as an executive officer of the Corporation or
a material alteration in the nature or status of the
Executive's responsibilities or duties or reporting
relationship from those in effect immediately prior
to a Change of Control;
(ii) REDUCED SALARY. A reduction by the Corporation in
the Executive's Annual Base Salary in effect on the
Effective Date or as the same may be increased
thereafter from time to time or the failure by the
Corporation to grant the Executive salary increases
at a rate commensurate with the increases accorded
to other executives of the Corporation;
(iii) RELOCATION. The Corporation requiring the Executive
to be based anywhere other than where the Executive
is based at the time a Change of Control occurs,
except for required travel on the Corporation's
business to an extent substantially consistent with
the Executive's business travel obligations in the
ordinary course of business immediately prior to a
Change of Control;
(iv) INCENTIVE COMPENSATION PLANS. The failure by the
Corporation to continue in effect any incentive
compensation plan in which the Executive
participates, including, but not limited to, the
Incentive Compensation Plan or the Stock Option Plan
or any other similar plans adopted prior to a Change
of Control, unless the Executive is eligible to
participate in, and is entitled to the opportunity
to receive a comparable level of benefits under, an
ongoing, substitute or alternative plan (it being
understood that the manner or method of payment and
the form of consideration need not be the same as
existed in the original plans); or the failure by
the Corporation to continue the Executive's
participation therein on at least as favourable a
basis, both in terms of the amount of benefits
available to the Executive and the level of the
Executive's participation relative to other
participants, as existed at the time a Change of
Control occurs;
(v) EMPLOYMENT BENEFITS AND PERQUISITES. The failure by
the Corporation to continue to provide the Executive
with Employment Benefits at least as favourable as
those enjoyed by the Executive immediately prior to
a Change of Control, including any pension plan,
benefit plan or any retirement arrangement
established for the Executive, or any of the
Corporation's life insurance, medical, health and
accident, disability or savings plans in which the
Executive was participating at the time a
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Change of Control occurs; the taking of any action
by the Corporation that would directly or indirectly
materially reduce any such benefits or deprive the
Executive of any material perquisite enjoyed by the
Executive at the time a Change of Control occurs,
including, without limitation and to the extent
applicable, the use of a car, aircraft, secretarial
services, office space, telephones, computer
facilities, expense reimbursement, financial
counseling, and professional fees and club dues
reimbursement; or the failure by the Corporation to
provide the Executive with the number of paid
vacation days to which the Executive is entitled in
accordance with the Corporation's normal vacation
practice in effect at the time a Change of Control
occurs;
(vi) NO ASSUMPTION BY SUCCESSOR. The failure of the
Corporation to obtain a satisfactory agreement from
a successor to assume and agree to perform this
Restated Agreement. Alternatively, if the business
or undertaking in connection with which the
Executive's services are principally performed is
sold at any time after a Change of Control occurs,
and the Executive's employment is transferred as a
result, the failure or refusal of the purchaser of
such business or undertaking to provide the
Executive with the same or a comparable position,
duties, compensation and benefits, as described in
paragraphs (iv) and (v) above, as provided to the
Executive by the Corporation immediately prior to a
Change of Control;
(vii) DISPOSITION OF "ALL OR SUBSTANTIALLY ALL". The
disposition by the Corporation of all or
substantially all of the assets of the Corporation,
as contemplated herein, notwithstanding that the
Executive's services were or were not principally
performed for such business.
(p) "INCENTIVE COMPENSATION PLAN" means any bonus or incentive
compensation plan of the Corporation in which the Executive
is entitled to receive benefits in the month immediately
preceding a Change of Control.
(q) "JUST CAUSE" means:
(i) the failure by the Executive to substantially
perform the Executive's duties according to the
terms of the Executive's employment in existence
immediately prior to a Change of Control after the
Corporation has given the Executive reasonable
notice of such failure and a reasonable opportunity
to correct it; or
(ii) where the Executive engages in any criminal act or
dishonesty resulting or intended to result, directly
or indirectly, in the personal gain of the Executive
at the Corporation's expense.
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(r) "MONTHLY BASE SALARY" means the monthly salary payable to the
Executive by the Corporation in effect at the end of the
month immediately preceding the Effective Date.
(s) "PARTIES" means the Corporation, and its successors and
permitted assigns, and the Executive and the Executive's
heirs, executors and administrators and "PARTY" means either
one of them.
(t) "PERSON" includes an individual, partnership, association,
body corporate, trustee, executor, administrator, legal
representative and any national, provincial, state or
municipal government or any agency thereof.
(u) "RESTATED AGREEMENT" means this amended and restated change
of control agreement as it may be amended, restated or
supplemented from time to time, and the expressions "hereof",
"herein", "hereto", "hereunder", "hereby", and similar
expressions refer to this Restated Agreement and, unless
otherwise indicated, refer to Articles or Sections in this
Restated Agreement only.
(v) "SECURITIZATION PROCEDURE" means the Statement of Company
Procedure Regarding the Securitization of Nexen Inc. Restated
Executive Benefit Plan, as amended from time to time.
(w) "SEVERANCE PERIOD" means the thirty (30) month period
immediately following the Date of Termination.
(x) "STOCK OPTION PLAN" means any stock option plan or plans of
the Corporation pursuant to which the Executive is granted
options by the Corporation to acquire Common Shares.
(y) "SUBSIDIARY" has the meaning ascribed to it in the CBCA.
(z) "TERM" has the meaning referred to in Section 3.1.
ARTICLE 2
SCOPE OF RESTATED AGREEMENT
2.1 The Parties intend that this Restated Agreement sets out their
respective rights and obligations upon the occurrence of a Change of
Control. This Restated Agreement does not provide for any other terms
of the Executive's employment with the Corporation, and shall create
no rights or obligations of the Parties prior to, or in circumstances
other than, a Change of Control or beyond the Term.
2.2 This Restated Agreement shall automatically terminate upon the death
of the Executive or where due to the Disability of the Executive, the
Executive is materially incapacitated from performing the Executive's
duties. In the event of the death or Disability of the Executive, the
Executive (or the Executive's estate) shall be entitled to receive
from the Corporation all unpaid Annual Base Salary, Employment
Benefits, unpaid business
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expenses and vacation entitlement accrued to the date of the death or
Disability of the Executive. The Executive (or the Executive's estate)
shall also be entitled to receive any and all death or Disability
benefits in a manner consistent with, and at least equal in amount to,
those provided by the Corporation to senior executives (or their
estate) under such plans, programs and policies in effect at the date
of Disability or death of the Executive, and the Corporation shall
have no further obligations to the Executive or the Executive's estate
under this Restated Agreement.
2.3 If the Executive's employment is terminated by either Party, for any
reason, prior to a Change of Control in any manner, other than
expressly provided for in this Restated Agreement, this Restated
Agreement shall automatically terminate and the Corporation shall have
no obligations to the Executive hereunder.
ARTICLE 3
TERM OF RESTATED AGREEMENT
3.1 Subject to termination of this Restated Agreement prior to a change of
control, this Restated Agreement shall remain in effect for a period
concluding twelve (12) months following the Effective Date (the
"TERM"), at which time this Restated Agreement shall terminate;
provided however that the payment of compensation and benefits to the
Executive under this Restated Agreement shall continue beyond the end
of the Term in accordance with the applicable provisions of this
Restated Agreement.
ARTICLE 4
TERMINATION FOR JUST CAUSE OR FOR OTHER THAN GOOD REASON
4.1 If the Executive's employment is terminated for Just Cause, or is
terminated by the Executive, other than for Good Reason, following a
Change of Control, the Corporation shall pay to the Executive, if not
already paid, the fraction of the unpaid Annual Base Salary accrued
during the then current fiscal year of the Corporation, all accrued
Employment Benefits, all unpaid reasonable business expenses and all
unpaid vacation pay accrued up to and including the Date of
Termination, and thereafter, the Corporation shall have no further
obligations to the Executive under this Restated Agreement.
4.2 Nothing in this Restated Agreement shall serve to derogate from the
vested rights of the Executive to pension benefits, Stock Option Plans
or any other Employment Benefits to which the Executive is entitled up
to the Date of Termination.
ARTICLE 5
TERMINATION BY CORPORATION
5.1 If the Executive's employment is terminated by the Corporation within
the twelve (12) month period following the Effective Date, for reason
other than Just Cause, death or Disability, the Corporation shall pay
to the Executive the remuneration referred to in Article 7.
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ARTICLE 6
TERMINATION FOR GOOD REASON
6.1 In the event of a Change of Control, the Executive may, within the
twelve (12) month period following the Effective Date and upon
providing the Corporation with ten (10) days written notice, terminate
the Executive's employment with the Corporation for Good Reason. Upon
being provided with such notice, the Corporation shall pay to the
Executive the remuneration referred to in Article 7.
ARTICLE 7
COMPENSATION UPON TERMINATION
7.1 If the Executive's employment is terminated in accordance with Section
5.1 or 6.1 herein:
(a) the Corporation shall forthwith, but in any event within ten
(10) days from receipt by the Corporation of a Release
executed by the Executive substantially in the form of
Schedule "A", pay to the Executive:
(i) if not previously paid, that portion of the
Executive's accrued but unpaid Monthly Base Salary,
any accrued but unpaid bonus to which the Executive
is entitled for the preceding calendar year under
any Incentive Compensation Plan, all unpaid
reasonable business expenses and all accrued but
unused vacation pay earned or payable to the
Executive by the Corporation for the period from the
beginning of the Corporation's then current fiscal
year, up to and including the Date of Termination;
(ii) a lump sum cash payment equal to the Executive's
Monthly Base Salary and one-twelfth (1/12) of the
Executive's Annual Target Bonus for each month of
the Severance Period;
(iii) a lump sum payment equal to thirteen percent (13%)
of the Executive's Annual Base Salary for the
Severance Period. The Executive may elect to
continue the Executive's then current dental and
general medical care and/or life insurance benefits
and/or long term disability benefits (on such terms
and conditions in effect in the month immediately
preceding the Date of Termination) for the Severance
Period, or until the date on which the Executive
obtains alternative employment if earlier than the
date of termination of the Severance Period. The
cost to the Corporation of continuing these benefits
on behalf of the Executive shall be deducted by the
Corporation from the Executive's thirteen percent
(13%) Annual Base Salary lump sum payment referred
to herein;
(iv) a lump sum payment representing the value of the
Executive's monthly car allowance for the Severance
Period;
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(v) a lump sum payment representing the value of the
Corporation's contributions to the Corporation's
savings plan (at a rate of six percent (6%) of the
Executive's Annual Base Salary) for the Severance
Period;
(vi) a lump sum payment representing the value of the
Executive's entitlement to receive from the
Corporation financial counseling services for the
Severance Period; and
(vii) a lump sum payment representing the value of the
Executive's entitlement to receive from the
Corporation security monitoring services at the
Executive's personal residence for the Severance
Period;
(b) with respect to the Executive's entitlement to pension
benefits under the Pension Plan for Employees of Nexen Inc.
(Defined Benefit Option) (the "Registered Pension Plan") and
the Executive's related entitlement under the Nexen Inc.
Restated Executive Benefit Plan (the "Executive Benefit
Plan"):
(i) the Corporation shall recognize the Severance Period
for purposes of determining the Executive's
entitlement;
(ii) for calculation purposes, the Executive's
entitlement is the benefit which would have been
determined assuming that the Executive had been
employed throughout the Severance Period, including
recognition of:
(A) additional service that would have been
credited for the Severance Period;
(B) monthly salary equal to the Executive's
Monthly Base Salary throughout the
Severance Period;
(C) pensionable bonus for the year of the Date
of Termination, and for each subsequent
year or portion thereof during the
Severance Period, determined at the Annual
Target Bonus level. Average bonus will be
determined over the three years to the end
of the Severance Period, including any
partial calendar years; and
(D) if the Executive would have been eligible
for retirement at the end of the Severance
Period, the Executive shall be deemed to
retire, and the pension to commence, upon
completion of the Severance Period. In such
case, the Executive's attained age at the
end of the Severance Period will be
recognized for purposes of calculating the
early retirement reduction factor, if
applicable;
(iii) the pension entitlements described in this Section
7.1(b) shall, to the extent legally permissible, be
provided through the Registered Pension Plan. To the
extent that it is not legally permissible to provide
such
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pension entitlements through the Registered Pension
Plan, the Corporation shall pay to the Executive a
lump sum payment representing the settlement value
of the additional Executive Benefit Plan benefit
determined in accordance with the assumptions set
forth in Schedule "B"; and
(iv) any entitlements of the Executive under the
Executive Benefit Plan which have previously been
funded in accordance with the terms of the
Securitization Procedure but not previously settled
in accordance with the terms of the Securitization
Procedure shall be settled by the Corporation in
accordance with the settlement mechanism set forth
in the Securitization Procedure and the assumptions
set forth in Schedule "B";
(c) the Corporation shall provide the Executive with executive
outplacement counseling to be provided by a firm to be
selected by the Executive, at a cost to the Corporation not
to exceed $25,000.00;
(d) all of the Executive's outstanding unexercisable stock
options under any Stock Option Plan shall become exercisable;
(e) where the Executive has been relocated, at the request of the
Corporation, within the two (2) year period immediately prior
to the Effective Date, if so requested by the Executive, the
Corporation shall relocate the Executive back to the
Executive's prior location; and
(f) as soon as is reasonably practicable following the execution
of this Restated Agreement, the Corporation shall be required
to provide security for the performance of its obligation to
make the lump sum payments described in this Article 7.
7.2 The estimated value as of October 1, 2001 of Sections 7.1(a)(ii) to
7.1(c) are set out in Schedule "C". Schedule "C" provides estimated
values only and actual values shall be calculated in accordance with
this Restated Agreement at the time of entitlement or payment under
this Restated Agreement.
7.3 Subject to Section 7.1(a)(iii), if the Executive's employment is
terminated in the circumstances described in Section 5.1 or 6.1, the
remuneration and benefits payable under this Article 7 shall not be
reduced if the Executive obtains alternative employment.
7.4 Unless expressly provided otherwise in this Restated Agreement, all
payments to be made to the Executive under this Article 7 shall be
subject to required statutory deductions at source by the Corporation.
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ARTICLE 8
CONFIDENTIAL INFORMATION
8.1 If the Executive's employment is terminated in any manner whatsoever
due to or following a Change of Control, the Executive agrees to keep
confidential all information of a confidential or proprietary nature
concerning the Corporation, its Affiliates, Associates and
Subsidiaries and their respective operations, opportunities, areas of
present, past or future interests, assets, finances, technology,
intellectual property, business and affairs, and further agrees not to
use such information, data or technology for personal advantage,
provided that nothing herein shall prevent the disclosure of
information which is publicly available or which is required to be
disclosed by the Executive under appropriate statute, rules of law or
legal process.
ARTICLE 9
RIGHTS AND OBLIGATIONS OF EXECUTIVE UPON TERMINATION
9.1 Subject to Section 8.1, the Executive shall not be prohibited in any
manner whatsoever from obtaining alternative employment with or
otherwise forming or participating in a business competitive to the
business of the Corporation after the termination of the Executive's
employment with the Corporation.
9.2 Upon the termination of the Executive's employment for any reason, the
Executive shall tender the Executive's resignation from any position
the Executive may hold as an officer or director of the Corporation or
any of its Affiliates, Associates or Subsidiaries.
9.3 If the Executive's employment is terminated in the circumstances
described in Section 5.1 or 6.1, the Corporation shall continue to
purchase and maintain, to the extent available in the marketplace at
reasonable cost to the Corporation, on behalf of the Executive,
director and officer liability insurance for the applicable limitation
period following the date upon which the Executive ceases to serve as
a director or officer of the Corporation, and the Executive's existing
agreement to receive indemnity from the Corporation for acts taken by
the Executive in the Executive's capacity as an officer of the
Corporation shall remain in effect.
9.4 Upon termination of the Executive's employment pursuant to Section 5.1
or 6.1, the Corporation shall reimburse the Executive for ongoing
legal fees and disbursements which the Executive may reasonably incur
in connection with this Restated Agreement (but this Restated
Agreement only), including any litigation concerning the validity or
enforceability of, or liability under, any provision of this Restated
Agreement or any action by the Executive. The Corporation shall pay
such fees and reimbursements to the Executive promptly as such fees
and disbursements become due.
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ARTICLE 10
EXPEDITED ARBITRATION
10.1 If, pursuant to Section 6.1, the Executive provides written notice of
the Executive's intention to terminate the Executive's employment for
Good Reason, and the Corporation believes that there is no Good
Reason, or, alternatively, that Just Cause exists which justified the
Executive's termination, the Corporation shall, within ten (10) days
of having been provided such notice, provide written notice ("Notice
of Dispute") to the Executive of the dispute (the "Dispute").
10.2 The Parties agree that any and all Disputes under Section 10.1 will be
resolved by way of a single Arbitrator.
10.3 (a) Within fifteen (15) days of provision of the Notice of
Dispute, the Parties shall agree upon and appoint a neutral
Arbitrator from the then current roster maintained by the
Alberta Mediation and Arbitration Society to act as
Arbitrator of the Dispute; or
(b) If no person acceptable to both Parties has been agreed upon
and appointed within fifteen (15) days, then either Party may
make immediate application to the Court of Queen's Bench of
Alberta, Judicial District of Calgary, to have an Arbitrator
appointed.
10.4 The Parties acknowledge and agree that the purpose of this Article 10
is to avoid delays and facilitate resolution of the Dispute in a just,
speedy and cost-effective manner.
10.5 Consistent with the expedited nature of arbitration, the Arbitrator
will direct and control the scope and timing of the exchange of
information between the Parties and will take such steps as the
Arbitrator deems necessary to achieve a just, speedy and
cost-effective resolution of the Dispute. The Arbitrator has the
exclusive right and power to resolve all issues related to the
exchange of information in the arbitration process.
10.6 The Parties agree that the Arbitrator is only authorized to determine
whether the Executive had Good Reason for terminating the Executive's
employment, or alternatively, whether the Corporation had Just Cause
to terminate the Executive's employment.
10.7 A hearing will occur within forth-five (45) days of the appointment of
the Arbitrator (the "HEARING"). The time of the Hearing (the "Hearing
Date") will be scheduled by the Arbitrator after consultation with the
Parties. The Hearing will be governed by the rules set out in the
ARBITRATION ACT S.A. 1991, c.A-43, as modified by the Arbitrator in
the interests of achieving a just, speedy and cost-effective
resolution of the Dispute. The Arbitrator may require written
submissions of fact in the Dispute to be provided seven (7) days
before the Hearing Date.
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10.8 The Arbitrator will use best efforts to provide a written decision
within seven (7) days of the conclusion of the Hearing.
10.9 The Parties agree that the decision of the Arbitrator will be final
and binding upon the Parties.
ARTICLE 11
GENERAL
11.1 The headings of the Articles and paragraphs in this Restated Agreement
are inserted for convenience only and shall not affect the meaning or
construction of this Restated Agreement.
11.2 This Restated Agreement shall be construed and interpreted in
accordance with the laws of the Province of Alberta and the federal
laws of Canada as applicable therein.
11.3 If any provision of this Restated Agreement is determined to be void
or unenforceable in whole or in part, it shall be and be deemed to be
severed from this Restated Agreement without affecting or impairing
the validity of any other provision herein.
11.4 Any notice required or permitted to be given under this Restated
Agreement shall be in writing and shall be properly given if
delivered, by hand delivery or mail or other form of electronic
communication capable of transmission confirmation to the following
address:
a. IN THE CASE OF THE CORPORATION TO:
Nexen Inc.
#0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, XX X0X 0X0
Attention: Chief Executive Officer
b. IN THE CASE OF THE EXECUTIVE TO:
the last address of the Executive in the records of the
Corporation or to such other address as the Parties may from
time to time specify by notice given in accordance herewith.
11.5 This Restated Agreement shall enure to the benefit of and be binding
upon the Executive and the Executive's heirs, executors and
administrators and upon the Corporation and its successors and
assigns.
11.6 This Restated Agreement constitutes the entire agreement relating to
the respective rights and obligations of the Parties upon the
occurrence of a Change of Control. No amendment or waiver of this
Restated Agreement shall be binding unless executed in writing by the
Parties.
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11.7 The Parties agree that the rights, entitlements and benefits set out
in this Restated Agreement to be paid to the Executive upon a Change
of Control shall be in full satisfaction of all rights of the
Executive under applicable law in effect from time to time as a result
thereof.
11.8 Neither Party can waive or shall be deemed to have waived any right it
has under this Restated Agreement except to the extent that such
waiver is in writing.
The Parties have executed this Restated Agreement effective the date first
written above.
NEXEN INC.
Per: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Per: /s/ Xxxx X. XxXxxxxxxx
------------------------------
SIGNED, SEALED & DELIVERED
in the presence of
/s/ Xxxx Xxxxxx /s/ Xxxxx Xxxxxx
---------------------------------- -------------------------------------
WITNESS XXXXX XXXXXX
SCHEDULE "A"
AMENDED AND RESTATED
CHANGE OF CONTROL AGREEMENT
In order to receive the entitlements referred to in this Restated Agreement,
the Executive shall execute the attached Release, fully releasing the
Corporation from all further claims in relation to the Executive's employment
or Employment Benefits and the termination thereof upon payment of the
remuneration and benefits referred to in Article 7 of this Restated Agreement.
The attached Release shall not, however, require that the Executive relinquish
or release any rights to indemnity which the Executive may, as an officer or
director of the Corporation or any of its Affiliates, Associates and
Subsidiaries, have as against the Corporation or any of its Affiliates,
Associates and Subsidiaries for costs, charges and expenses reasonably incurred
by the Executive in respect of any civil, criminal or administrative action or
proceeding to which the Executive is made a party by reason of being or having
been a director or officer of the Corporation or any of its Affiliates,
Associates and Subsidiaries where:
(a) the Executive has acted honestly and in good faith with a
view to the best interests of the Corporation or any of its
Affiliates, Associates and Subsidiaries; and
(b) in the case of a criminal or administrative action or
proceeding enforced by a monetary penalty, the Executive had
reasonable grounds for believing the Executive's conduct was
lawful.
FINAL RELEASE
KNOW ALL MEN BY THESE PRESENTS that I, XXXXX XXXXXX, of the City of Calgary, in
the Province of Alberta, in consideration of the amounts provided in that
certain Amended and Restated Change of Control Agreement (the "RESTATED
AGREEMENT") dated as of the ___ day of December, 2001 between myself and NEXEN
INC. (the "CORPORATION") and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, do for myself, my
executors and assigns hereby remise, release and forever discharge the
Corporation, and any associated, affiliated, predecessor or parent corporation
of the Corporation and their present and former directors, officers, agents and
employees (the "RELEASEES"), including each of their respective successors,
heirs, administrators and assigns, from all manner of actions, causes of
action, debts, obligations, covenants, claims or demands, whatsoever which I
may ever have had, now have, or can, shall or may hereafter have against the
Releasees or any of them, by reason of or arising out of any cause, matter or
thing whatsoever done, occurring or existing up to and including the present
date and, in particular, without in any way restricting the generality of the
foregoing, in respect of all claims of any nature whatsoever, past, present or
future, directly or indirectly related to or arising out of or in connection
with my relationship with the Releasees, as an employee, officer or director,
and the termination of my employment from the Corporation including, but not
limited to, any claims related to any entitlement I may have or may have had to
any payment or claim either at common law or under the EMPLOYMENT STANDARDS
CODE, HUMAN RIGHTS, CITIZENSHIP AND MULTICULTURALISM ACT or any other
applicable legislation governing or related to my employment with the
Releasees.
AND FOR THE SAID CONSIDERATION, I, XXXXX XXXXXX, represent and warrant that I
have not assigned to any person, firm or corporation any of the actions, causes
of action, claims, suits, executions or demands which I release by this
Release, or with respect to which I agree not to make any claim or take any
proceeding herein.
IT IS FURTHER ACKNOWLEDGED that the payment to me includes full compensation
and consideration for the loss of my employment benefits, as provided by the
Releasees, and that all of my employment benefits and privileges shall cease on
the date of termination of my
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employment, except as otherwise provided in the Restated Agreement. I further
acknowledge that I have received all benefits due to me and have no further
claim against the Releasees for such benefits. I further accept sole
responsibility to replace such benefits which I wish to continue or to exercise
conversion privileges where applicable with respect to such benefits and, in
particular any life insurance and long-term disability benefits. In the event
that I become disabled following termination of my employment, I covenant not
to xxx the Releasees for insurance or other benefits or loss of same and hereby
release the Releasees from any and all further obligations or liabilities
arising therefrom.
Notwithstanding anything contained herein, this Release shall not extend to or
affect, or constitute a release of, my right to xxx, claim against or recover
from the Releasees and shall not constitute an agreement to refrain from
bringing, taking or maintaining any action against the Releasees in respect of:
(a) any corporate indemnity existing by statute, contract or
pursuant to any of the constating documents of the
Corporation provided in my favour in respect of my having
acted at any time as a director, officer or both of the
Corporation;
(b) my entitlement to any insurance maintained for the benefit or
protection of the directors and/or officers of the
Corporation, including without limitation, directors' and
officers' liability insurance; or
(c) my entitlement to any amounts or compensation due to me under
the terms of my employment pursuant to the Restated
Agreement.
IT IS HEREBY AGREED that the terms of the Restated Agreement and of this
Release will be kept confidential. No party hereto shall communicate any such
terms to any third party under any circumstances whatsoever, excepting any
necessary communication with my legal and financial advisors, as required, on
the express condition that they maintain the confidentiality
-3-
thereof, and any disclosure which is required by law, although either party
shall be at liberty to disclose to third parties that a mutually acceptable
Release was agreed upon. The invalidity and unenforceability of any provision
of this Release shall not affect the validity or enforceability of any other
provision of this Release, which shall remain in full force and effect.
I HEREBY DECLARE that I have read all of this Release, fully understand the
terms of this Release and voluntarily accept the consideration stated herein as
the sole consideration for this Release for the purpose of making a full and
final settlement with the Releasees. I further acknowledge and confirm that I
have been given an adequate period of time to obtain independent legal counsel
regarding the meaning and the significance of the terms herein and the
covenants mutually exchanged.
IT IS HEREBY AGREED THAT as a term of the termination of my employment from the
Corporation, and in consideration of the amount noted above, I hereby resign as
officer and director of the Corporation and its affiliates.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this _____ day of
_________ in the year _____.
-------------------------------------
XXXXX XXXXXX
-------------------------------------
WITNESS (signature)
-------------------------------------
WITNESS (print name)
SCHEDULE "B"
AMENDED AND RESTATED
CHANGE OF CONTROL AGREEMENT
METHODOLOGY AND ASSUMPTIONS FOR DETERMINING SETTLEMENT VALUE
PURPOSE
Pursuant to Section 7.1(b) of the Restated Agreement, the purpose of this
Schedule "B" is to ensure that after tax has been paid on a lump sum settlement
value, the remaining balance shall be sufficient to provide after-tax monthly
payments equivalent to the after-tax monthly payments the Executive would have
received under the terms of the Executive Benefit Plan.
OVERVIEW
Section 7 of the Securitization Procedure provides in part that:
"the Company reserves the right to settle the Obligations
by way of a lump sum payment to each Executive provided
that the amount of each such payment is determined by the
Actuary in such manner so as to be of equivalent present
value after tax to such Executive and persons claiming
through him as the after-tax periodic payments provided
for in the Plan."
The following outlines the actuarial methods, assumptions and calculation
process to be used in determining the lump sum settlement value of pension
entitlements under the Executive Benefit Plan when settlement occurs in
accordance with the Securitization Procedure. Section 300 of the Income Tax
Regulations establishes the procedure applicable in using an after-tax lump sum
to purchase a prescribed annuity:
1. A prescribed annuity payment consists of two components: (a) the
deemed capital element of the annuity payment on which no tax is
payable, and (b) the deemed non-capital portion of the annuity payment
which is taxed at the marginal rate.
2. The capital portion of each future annuity payment is considered to be
a return of the original after-tax lump sum amount.
3. The non-capital portion of each annuity payment is assumed to be
provided by the investment return on the original after-tax lump sum
amount and has therefore not yet been taxed.
4. A constant percentage of each future payment is deemed to be a return
of the original lump sum capital.
CALCULATION METHODOLOGY
1. Equivalent after-tax payments:
a. Determine initial gross annual pension entitlement under the Executive
Benefit Plan.
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b. Determine after-tax annual pension entitlement under the Executive
Benefit Plan based on Individual Tax Rate.
c. Determine the capital element based on the non-indexed present value
of the pension payments divided by life expectancy.
d. Determine the monthly payment which provides an after-tax pension
equal to the after-tax pension determined in 1.b. above in accordance
with the prescribed annuity methodology.
2. Present value of periodic payments from 1 above:
a. Determine the present value of the pension determined in 1.d. above
using the assumptions described below in this Schedule "B". For
greater certainty, the value of the post-retirement indexation is to
be reflected in determining the present value of the accrued pension
entitlement in respect of post-1992 service, and any accrued pension
in respect of service granted during the Severance Period.
3. Tax adjustment:
x. Xxxxx-up the present value determined in 2.a. above to reflect the tax
assumed to be required to be paid on the lump sum.
x. Xxxxx-up the amount determined in 3.a. above to reflect the tax
assumed to be required to be paid on investment earnings in respect of
the lump sum payment during the deferral period prior to assumed
pension commencement, if any.
4. Equivalent present value after tax as the after-tax monthly payments:
a. The amount determined in 3.b. above shall be the lump sum settlement
value of the Executive's pension entitlement.
ASSUMPTIONS
Interest Discount Rate:
-- during deferral period Yield on long-term Government of
Canada bonds as published in the Bank
of Canada Review for month-end
immediately preceding the date of
calculation rounded down to next lower
0.5%.
-- after assumed pension commencement Yield on long-term Government of
Canada bonds as published in the Bank
of Canada Review for month-end
immediately preceding the date of
calculation rounded down to next lower
0.5%, less assumed escalation of
pensions after retirement.
Increase in Consumer Price Index: Yield on long-term Government of
Canada bonds as published in the Bank
of Canada Review for month-
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end immediately preceding the date of
calculation rounded down to next lower
0.5%
less
Yield on long-term Government of
Canada Real Return bonds as published
in the Bank of Canada Review for
month-end immediately preceding the
date of calculation rounded down to
next lower 0.5%.
Mortality:
-- for life expectancy 1994 Uninsured Pensioner Mortality
Table with mortality improvements
projected to 2014.
-- for present values
o prior to assumed pension
commencement Nil.
after assumed pension
commencement 1994 Uninsured Pensioner Mortality
Table with mortality improvements
projected to 2014.
Marital Status: Actual status at Date of Termination.
Age of Spouse: Based on actual date of birth.
Individual Tax Rate: Maximum individual marginal tax rate
for employee's province of employment.
SCHEDULE "C"
ESTIMATED(1) ENTITLEMENT TO COMPENSATION
PURSUANT TO ARTICLE 7 OF THE RESTATED AGREEMENT
MONTHLY BASE SALARY (30 MONTHS) $ 800,000.00
Bonus Target Value 240,000.00
Benefits Uplift (13%) 104,000.00
Car Allowance 48,000.00
Savings Plan 48,000.00
Financial Counselling Services 10,500.00
Security Monitoring Services 2,400.00
Executive Outplacement 25,000.00
--------------
TOTAL VALUE $1,277,900.00
ADDITIONAL LUMP SUM SETTLEMENT VALUE OF PENSION(2) $ 555,000.00
TOTAL ESTIMATED ENTITLEMENT UNDER THIS RESTATED AGREEMENT $1,832,900.00
IN ADDITION to the above pension entitlement under the Restated Agreement, the
Executive has the following pension entitlements under the Registered Pension
Plan and Executive Benefit Plan. As is the case with the figures shown above,
these values are estimated values (as of October 1, 2001) and are for
illustrative purposes only. Actual values will be calculated as of the date of
the entitlement or payment in accordance with the Registered Pension Plan and
the Executive Benefit Plan, respectively, and therefore may be subject to
change.
o Accrued Annual Pension Entitlement (Registered
Pension Plan)(3) $ 19,375.00
o Lump Sum Transfer Value (Registered Pension
Plan)(4) $ 145,161.00
o Lump Sum Settlement Value of Executive Benefit Plan(5) $1,258,000.00
-----------------------------
(1) As stated in Section 7.2 of the Restated Agreement, the above calculations
represent only the current estimated value (as of October 1, 2001) of the
Executive's entitlement to compensation upon a Change of Control.
Accordingly, the above calculations are for illustrative purposes only.
(2) Calculated in accordance with Section 7.1(b) of the Restated Agreement.
(3) Deferred Benefit payable from age 60.
(4) Based on Canadian Institute of Actuaries Recommendations for Computation
of Transfer Values from Registered Pension Plans using rates applicable
for October terminations. Reflects minimum lump sum transfer of two times
employee contributions in respect of post-1992 service, if applicable.
(5) Based on the lump sum settlement value methododlogy and assumptions
outlined in Schedule B as provided in Article 7.1(b) of the Restated
Agreement. Assumes lump sum transfer from the Registered Pension Plan.
