**Exhibit10.51**

 

**CHANGEOF CONTROL AGREEMENT**

 

Thisagreement made as of the 4th day of January, 2002.

 

**BETWEEN:**

 

**NEXEN INC. (formerly known as CanadianOccidental Petroleum Ltd.)**, a corporationincorporated under the laws of Canada

 

(hereinafterreferred to as the “Corporation”)

 

- and –

 

**GARYNIEUWENBURG**

 

(hereinafterreferred to as the “Executive”)

 

**RECITALS:**

 

**1.**             TheExecutive, as Vice President, Corporate Planning and Business Development ofthe Corporation, is considered by the Board to be an essential officer andemployee of the Corporation, who is both integral to the operation anddevelopment of the Corporation, and has acquired outstanding skills, uniqueexperience and possesses an extensive background in, and knowledge of, theCorporation’s business, operations and the industry in which it is engaged.

 

**2.**             Inthe event of a Change of Control, there is a possibility that the employment ofthe Executive would be terminated without just cause or adversely modified andthe Executive has expressed concern in that regard to the Corporation.

 

**3.**             TheBoard recognizes that it is essential and in the best interests of theCorporation and its shareholders that the Corporation retain the continueddedication of the Executive to the Executive’s office and the Executive’semployment during the uncertain period prior to, during and following a Changeof Control.

 

**4.**             TheBoard further believes that the past service of the Executive and the Executive’sintegral role in the development and operation of the Corporation requires thatthe Corporation ensure that in the event of a Change of Control the Executiveis treated in a manner that is fair, reasonable, consistent with industrystandards and in the best interests of the Corporation.

 

5.             Boththe Corporation and the Executive wish formally to agree on the terms andconditions which will govern the termination or modification of the employmentof the Executive following a Change of Control.

 

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**NOWTHEREFORE**, in consideration of the mutualcovenants and agreements set forth in this Agreement and for other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged by the Parties, the Parties agree as follows:

 

**ARTICLE 1DEFINITIONS**

** **

1.1           Forthe purposes of this 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 thisAgreement, a Person is acting jointly or in concert with another Person if suchPerson has any agreement, arrangement or understanding (whether formal orinformal and whether or not in writing) with such other Person for the purposeof acquiring, or offering to acquire, any Common Shares of the Corporation(other than customary agreements with and between underwriters and bankinggroup or selling group members with respect to a distribution of securities byway of prospectus or private placement or pursuant to a pledge of securities inthe ordinary course of business).

 

(c)           “**Agreement**” means this agreement as it may be amended orsupplemented from time to time, and the expressions “hereof”, “herein”, “hereto”,“hereunder”, “hereby”, and similar expressions refer to this Agreement and,unless otherwise indicated, refer to Articles or Sections in this Agreementonly.

 

(d)           **“Annual Base Salary”** means the annual base salary of theExecutive payable by the Corporation at the end of the month immediatelypreceding the Date of Termination.

 

(e)           **“AnnualTarget Bonus”** means the Executive’s annual target bonus asdetermined by the Board to be in effect for the calendar year in which a Changeof Control occurs.

 

(f)            **“Beneficial Owner”** for the purposes of this Agreement, aPerson shall be deemed to be the **“Beneficial Owner”**and to have **“Beneficial Ownership”** of and to **“Beneficially Own”**:

 

(i)            anysecurities as to which such Person or any of such Person’s Affiliates orAssociates is the owner at law or in equity;

 

(ii)           anysecurities as to which such Person or any of such Person’s Affiliates orAssociates has a right to acquire (i) upon the exercise of any ConvertibleSecurities or (ii) pursuant to any agreement, arrangement orunderstanding, whether such right is exercisable immediately within a period ofsixty (60) days thereafter and whether or not on condition or the 

 

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happening of any contingency, (other than (a) customary agreementswith and between underwriters and banking group and selling group members withrespect to the distribution to the public or pursuant to a private placement ofsecurities, or (b) pursuant to a pledge of securities in the ordinarycourse of business); and

 

(iii)          any securities which are Beneficially Ownedwithin the meaning of clauses (a) or (b) above by any other Personwith which such Person is Acting Jointly or in Concert,

 

provided, however, that a Person shall not be deemedthe “Beneficial Owner” or to have “Beneficial Ownership” of or to “BeneficiallyOwn” any security where such Person is the registered holder of securities as aresult of carrying on the business of or acting as nominee for a securitiesdepository.

 

For purposes of this Agreement, the percentage ofCommon Shares Beneficially Owned by any Person, shall be and be deemed to bethe product determined by the formula:

 

100 x A/B

 

Where:

 

**A** =         the number of votes for the election of all directors generallyattaching to the Common Shares Beneficially Owned by such Person; and

 

**B** =          the number of votes for the election of all directors generallyattaching to all outstanding Common Shares.

 

For the purposes of the foregoing formula, where aPerson Beneficially Owns unissued Common Shares which may be acquired pursuantto Convertible Securities, such Common Shares shall be deemed to be outstandingfor the purpose of calculating the percentage of Common Shares BeneficiallyOwned by such Person in both the numerator and the denominator, but no otherunissued Common Shares which may be acquired pursuant to any other outstandingConvertible Securities shall, for the purposes of that calculation, be deemedto be outstanding.

 

(g)           **“Board”** means the Board of Directors of the Corporation asconstituted from time to time.

 

(h)           **“CBCA”** means the *Canada BusinessCorporations Act*, as amended from time to time, and any successorlegislation thereto.

 

(i)            **“Change of Control”** means the occurrence of any of:

 

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(i)            thepurchase or acquisition of any Common Shares or Convertible Securities by aBeneficial Owner which results in the Beneficial Owner owning, or exercisingcontrol or direction over, Common Shares or Convertible Securities such that,assuming only the conversion of Convertible Securities Beneficially Owned orover which control or direction is exercised by the Beneficial Owner, the BeneficialOwner would own, or exercise control or direction over, Common Shares carryingthe right to cast more than thirty-five percent (35%) of the votes attaching toall Common Shares; or

 

(ii)           thesubstantial completion of: (i) the liquidation, dissolution or winding-upof the Corporation; or (ii) the sale, lease or other disposition of all orsubstantially all of the assets of the Corporation; or

 

(iii)          a situation in which individuals who weremembers of the Board immediately prior to:

 

(A)          ameeting of the shareholders of the Corporation involving a contest for, or anitem of business relating to, the election of directors; or

 

(B)           anamalgamation, arrangement, merger or other consolidation or combination of theCorporation with another Person,

 

shall not constitute a majority of the Board followingsuch election or transaction; or

 

(iv)          thecompletion of any transaction or the first of a series of transactions whichwould have the same or similar effect as any transaction or series oftransactions referred to in paragraphs (i), (ii) or (iii) above; or

 

(v)           adetermination by the Board that there has been a change, whether by way of achange in the holding of the Common Shares, in the ownership of the Corporation’sassets or by any other means, as a result of which any Person, or group ofPersons Acting Jointly or in Concert, is in a position to effect a Change ofControl.

 

(j)            **“Common Shares”** means the common shares of the Corporation.

 

(k)           **“Convertible Securities”** means:

 

(i)            anyright (contractual or otherwise and regardless of whether such rightconstitutes a security) to acquire Common Shares from the Corporation; or

 

(ii)           anysecurity issued by the Corporation from time to time (other than the rightsissued pursuant to a shareholders’ rights protection plan, if any) carrying anyexercise, conversion or exchange right,

 

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which is then exercisable or exercisable within aperiod of sixty (60) days from that time pursuant to which the holder thereofmay acquire Common Shares or other securities which are convertible into orexercisable or exchangeable for Common Shares (in each case, whether such rightis then exercisable or exercisable within a period of sixty (60) days from thattime and whether or not on condition or the happening of any contingency).

 

(l)            **“Date of Termination”** means the date upon which theExecutive’s employment is terminated pursuant to Section 4.1, 5.1 or 6.1.  For greater clarity, the Date of Terminationmeans the date upon which the Corporation provides the Executive with written,verbal or other notice that the Executive’s employment has been or will beterminated pursuant to Section 4.1 or 5.1 or the date upon which theExecutive provides the Corporation with written notice terminating theExecutive’s employment pursuant to Section 4.1 or for Good Reason pursuantto Section 6.1.

 

(m)          **“Disability”** means, where due to a physical or mentalcondition, the Executive is rendered totally and permanently unable to performthe Executive’s duties for a consecutive period of two (2) years or moreduring which the Executive has been in receipt of long term disabilityinsurance benefits from the insurance carrier normally utilized by theCorporation.

 

(n)           **“Effective Date”** means the date upon which a Change ofControl occurs.

 

(o)           **“Employment Benefits”** means the employment benefits to whichthe Executive is entitled by virtue of any written, oral or implied agreementwith the Corporation.  For the purposesof this Agreement, “Employment Benefits” shall include, but is not limited to,the following:

 

(i)            theExecutive’s entitlement to any dental or general medical care;

 

(ii)           theExecutive’s entitlement to receive long term disability benefits from theinsurance carrier normally utilized by the Corporation;

 

(iii)          the Executive’s entitlement to pensionbenefits under the terms of any pension plan with the Corporation;

 

(iv)          theExecutive’s entitlement to a monthly car allowance from the Corporation;

 

(v)           theExecutive’s entitlement to contributions by the Corporation to the Corporation’ssavings plan;

 

(vi)          theExecutive’s entitlement to receive from the Corporation financial counselingservices, at a cost of 3,500.00 per year (or as the same may be increased fromtime to time by the Corporation); and

 

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(vii)         the Executive’s entitlement to receive fromthe Corporation security monitoring services at the Executive’s personalresidence.

 

(p)           **“Good Reason”** means any of the following, unless theExecutive shall have given the Executive’s express written consent thereto:

 

(i)            InconsistentDuties.  The assignment to theExecutive of any duties inconsistent with the Executive’s status as anexecutive officer of the Corporation or a material alteration in the nature orstatus of the Executive’s responsibilities or duties or reporting relationshipfrom those in effect immediately prior to a Change of Control;

 

(ii)           ReducedSalary.  A reduction by theCorporation in the Executive’s Annual Base Salary in effect on the EffectiveDate or as the same may be thereafter increased from time to time or thefailure by the Corporation to grant the Executive salary increases at a ratecommensurate with the increases accorded to other executives of theCorporation;

 

(iii)          Relocation.  The Corporation requiring the Executive to bebased anywhere other than where the Executive is based at the time a Change ofControl occurs, except for required travel on the Corporation’s business to anextent substantially consistent with the Executive’s business travelobligations in the ordinary course of business immediately prior to a Change ofControl;

 

(iv)          IncentiveCompensation Plans.  The failure bythe Corporation to continue in effect any incentive compensation plan in whichthe Executive participates, including, but not limited to, the IncentiveCompensation Plan or the Stock Option Plan or any other similar plans adoptedprior to a Change of Control, unless the Executive is eligible to participatein, and is entitled to the opportunity to receive a comparable level ofbenefits under, an ongoing, substitute or alternative plan (it being understoodthat the manner or method of payment and the form of consideration need not bethe same as existed in the original plans); or the failure by the Corporationto continue the Executive’s participation therein on at least as favourable abasis, both in terms of the amount of benefits available to the Executive andthe level of the Executive’s participation relative to other participants, asexisted at the time a Change of Control occurs;

 

(v)           EmploymentBenefits and Perquisites.  Thefailure by the Corporation to continue to provide the Executive with EmploymentBenefits at least as favourable as those enjoyed by the Executive immediatelyprior to a Change of Control, including any pension plan, benefit plan or anyretirement arrangement established for the Executive, or any of the Corporation’slife insurance, medical, health and accident, disability or savings plans inwhich the Executive was participating at the time a 

 

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Change of Control occurs; the taking of any action by the Corporationthat would directly or indirectly materially reduce any such benefits ordeprive the Executive of any material perquisite enjoyed by the Executive atthe time a Change of Control occurs, including, without limitation and to theextent applicable, the use of a car, aircraft, secretarial services, officespace, telephones, computer facilities, expense reimbursement, financialcounseling, and professional fees and club dues reimbursement; or the failureby the Corporation to provide the Executive with the number of paid vacationdays to which the Executive is entitled in accordance with the Corporation’snormal vacation practice in effect at the time a Change of Control occurs;

 

(vi)          NoAssumption by Successor.  The failureof the Corporation to obtain a satisfactory agreement from a successor toassume and agree to perform this Agreement. Alternatively, if the business or undertaking in connection with whichthe Executive’s services are principally performed is sold at any time after aChange of Control occurs, and the Executive’s employment is transferred as aresult, the failure or refusal of the purchaser of such business or undertakingto 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 Changeof Control;

 

(vii)         Disposition of “All or Substantially All”.  The disposition by the Corporation of all orsubstantially all of the assets of the Corporation, as contemplated herein,notwithstanding that the Executive’s services were or were not principallyperformed for such business.

 

(q)           **“Incentive Compensation Plan”** means any bonus or incentivecompensation plan of the Corporation in which the Executive is entitled toreceive benefits in the month immediately preceding a Change of Control.

 

(r)            **“Just Cause”** means:

 

(i)            thefailure by the Executive to substantially perform the Executive’s dutiesaccording to the terms of the Executive’s employment in existence immediatelyprior to a Change of Control after the Corporation has given the Executivereasonable notice of such failure and a reasonable opportunity to correct it;or

 

(ii)           wherethe Executive engages in any criminal act or dishonesty resulting or intendedto result, directly or indirectly, in the personal gain of the Executive at theCorporation’s expense.

 

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(s)           **“Monthly Base Salary”** means the monthly salary payable tothe Executive by the Corporation in effect at the end of the month immediatelypreceding the Effective Date.

 

(t)            **“Parties”** means the Corporation, and its successors andpermitted assigns, and the Executive and the Executive’s heirs, executors andadministrators and “**Party**” meanseither one of them.

 

(u)           **“Person”** includes an individual, partnership, association,body corporate, trustee, executor, administrator, legal representative and anynational, provincial, state or municipal government or any agency thereof.

 

(v)           **“SecuritizationProcedure”** means the Statement of Company Procedure Regarding theSecuritization of Nexen Inc. Restated Executive Benefit Plan, as amended fromtime to time.

 

(w)          **“Severance Period”** means the twenty-four (24) month periodimmediately following the Date of Termination.

 

(x)            **“Stock Option Plan”** means any stock option plan or plans ofthe Corporation pursuant to which the Executive is granted options by theCorporation 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 2SCOPE OF AGREEMENT**

** **

2.1           TheParties intend that this Agreement sets out their respective rights andobligations upon the occurrence of a Change of Control.  This Agreement does not provide for any otherterms of the Executive’s employment with the Corporation, and shall create norights or obligations of the Parties prior to, or in circumstances other than,a Change of Control or beyond the Term.

 

2.2           ThisAgreement shall automatically terminate upon the death of the Executive orwhere due to the Disability of the Executive, the Executive is materially incapacitatedfrom 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 Corporationall unpaid Annual Base Salary, Employment Benefits, unpaid business expensesand vacation entitlement accrued to the date of the death or Disability of theExecutive.  The Executive (or theExecutive’s estate) shall also be entitled to receive any and all death orDisability benefits in a manner consistent with, and at least equal in amountto, those provided by the Corporation to senior executives (or their estate)under such plans, programs and policies in effect at the date of Disability ordeath of the 

 

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Executive, and the Corporation shall have no further obligations to theExecutive or the Executive’s estate under this Agreement.

 

2.3           Ifthe Executive’s employment is terminated by either Party, for any reason, priorto a Change of Control in any manner, other than expressly provided for in thisAgreement, this Agreement shall automatically terminate and the Corporationshall have no obligations to the Executive hereunder.

 

**ARTICLE 3TERM OF AGREEMENT**

** **

3.1           Subjectto termination of this Agreement prior to a Change of Control, this Agreementshall remain in effect for a period concluding twelve (12) months following theEffective Date (the “Term”), at which time this Agreement shall terminate;provided however that the payment of compensation and benefits to the Executiveunder this Agreement shall continue beyond the end of the Term in accordancewith the applicable provisions of this Agreement.

 

**ARTICLE 4TERMINATION FOR JUST CAUSE OR FOR OTHER THAN GOOD REASON**

** **

4.1           Ifthe Executive’s employment is terminated for Just Cause, or is terminated bythe Executive, other than for Good Reason, following a Change of Control, theCorporation shall pay to the Executive, if not already paid, the fraction ofthe unpaid Annual Base Salary accrued during the then current fiscal year ofthe Corporation, all accrued Employment Benefits, all unpaid reasonablebusiness expenses and all unpaid vacation pay accrued up to and including theDate of Termination, and thereafter, the Corporation shall have no furtherobligations to the Executive under this Agreement.

 

4.2           Nothingin this Agreement shall serve to derogate from the vested rights of theExecutive to pension benefits, Stock Option Plans or any other EmploymentBenefits to which the Executive is entitled up to the Date of Termination.

 

**ARTICLE 5TERMINATION BY CORPORATION**

** **

5.1           Ifthe Executive’s employment is terminated by the Corporation within the twelve(12) month period following the Effective Date, for reason other than JustCause, death or Disability, the Corporation shall pay to the Executive theremuneration referred to in Article 7.

 

**ARTICLE 6TERMINATION FOR GOOD REASON**

** **

6.1           In the event of aChange of Control, the Executive may, within the twelve (12) month periodfollowing the Effective Date and upon providing the Corporation with ten (10) 

 

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days written notice, terminate the Executive’semployment with the Corporation for Good Reason.  Upon being provided with such notice, theCorporation shall pay to the Executive the remuneration referred to in Article 7.

 

**ARTICLE 7****COMPENSATION UPON TERMINATION**

** **

7.1           If the Executive’semployment is terminated in accordance with Section 5.1 or 6.1:

 

(a)           the Corporation shallforthwith, but in any event within ten (10) days from receipt by theCorporation of a Release executed by the Executive substantially in the form ofSchedule “A”, pay to the Executive:

 

(i)            if not previouslypaid, that portion of the Executive’s accrued but unpaid Monthly Base Salary,any accrued but unpaid bonus to which the Executive is entitled for thepreceding calendar year under any Incentive Compensation Plan, all unpaidreasonable business expenses and all accrued but unused vacation pay earned orpayable to the Executive by the Corporation for the period from the beginningof the Corporation’s then current fiscal year, up to and including the Date ofTermination;

 

(ii)           a lump sum cash paymentequal to the Executive’s Monthly Base Salary and one-twelfth (1/12) of theExecutive’s Annual Target Bonus for each month of the Severance Period;

 

(iii)          a lump sum payment equalto thirteen percent (13%) of the Executive’s Annual Base Salary for theSeverance Period.  The Executive mayelect to continue the Executive’s then current dental and general medical careand/or life insurance benefits and/or long term disability benefits (on suchterms and conditions in effect in the month immediately preceding the Date ofTermination) for the Severance Period, or until the date on which the Executiveobtains alternative employment if earlier than the date of termination of theSeverance Period.  The cost to theCorporation of continuing these benefits on behalf of the Executive shall bededucted by the Corporation from the Executive’s thirteen percent (13%) AnnualBase Salary lump sum payment referred to herein;

 

(iv)          a lump sum paymentrepresenting the value of the Executive’s monthly car allowance for theSeverance Period;

 

(v)           a lump sum paymentrepresenting the value of the Corporation’s contributions to the Corporation’s savingsplan (at a rate of six percent (6%) of the Executive’s Annual Base Salary) forthe Severance Period;

 

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(vi)          a lump sum paymentrepresenting the value of the Executive’s entitlement to receive from theCorporation financial counselling services for the Severance Period; and

 

(vii)         a lump sum paymentrepresenting the value of the Executive’s entitlement to receive from theCorporation security monitoring services at the Executive’s personal residence forthe Severance Period;

 

(b)           with respect to theExecutive’s entitlement to pension benefits under the Pension Plan forEmployees of Nexen Inc. (Defined Contribution Option) (the “DefinedContribution Pension Plan”) and the Executive’s related entitlement under theNexen Inc. Restated Executive Benefit Plan (the “Executive Benefit Plan”):

 

(i)            the Corporation shallmake a contribution to the Defined Contribution Pension Plan in an amount whichis equal to the additional contributions which would have been made by both theExecutive and the Corporation to the Defined Contribution Pension Plan on theExecutive’s behalf during the Severance Period had the Executive remained inthe employ of the Corporation during such period.  Such contribution shall be calculated at therate in effect in respect of the Executive immediately prior to the Date ofTermination.  To the extent that it isnot legally permissible to make such contribution to the Defined ContributionPension Plan, the Corporation shall make a lump sum payment to the Executive inan amount equal to such contribution;

 

(ii)           the Corporation shallrecognize the Severance Period for purposes of determining the Executive’sentitlement under the Executive Benefit Plan;

 

(iii)          for calculationpurposes, the Executive’s entitlement under the Executive Benefit Plan is thebonus-related benefit which would have been determined assuming that theExecutive had been employed throughout the Severance Period, includingrecognition of:

 

(A)          additional service thatwould have been credited for the Severance Period;

 

(B)           pensionable bonus forthe year of the Date of Termination, and for each subsequent year or portionthereof during the Severance Period, determined at the Annual Target Bonuslevel. Average bonus will be determined over the three years to the end of theSeverance Period, including any partial calendar years; and

 

(C)           if the Executive wouldhave been eligible for retirement at the end of the Severance Period, theExecutive shall be deemed to retire, and the pension to commence, uponcompletion of the Severance Period.  Insuch case, the Executive’s attained age at the end of the 

 

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Severance Period will be recognized for purposes ofcalculating the early retirement reduction factor, if applicable;

 

(iv)          with respect to theentitlement described in Section 7.1(b)(ii), the Corporation shall pay tothe Executive a lump sum payment representing the settlement value thereofdetermined in accordance with the assumptions set forth in Schedule “B”; and

 

(v)           any entitlements of theExecutive under the Executive Benefit Plan which have previously been funded inaccordance with the terms of the Securitization Procedure but not previouslysettled in accordance with the terms of the Securitization Procedure shall besettled by the Corporation in accordance with the settlement mechanism setforth in the Securitization Procedure and the assumptions set forth in Schedule“B”;

 

(c)           the Corporation shallprovide the Executive with executive outplacement counseling to be provided bya firm to be selected by the Executive, at a cost to the Corporation not toexceed $25,000.00;

 

(d)           all of the Executive’soutstanding unexercisable stock options under any Stock Option Plan shallbecome exercisable;

 

(e)           where the Executive hasbeen relocated, at the request of the Corporation, within the two (2) yearperiod immediately prior to the Effective Date, if so requested by theExecutive, the Corporation shall relocate the Executive back to the Executive’sprior location; and

 

(f)            as soon as isreasonably practicable following the execution of this Agreement, theCorporation shall be required to provide security for the performance of itsobligation to make the lump sum payments described in this Article 7.

 

7.2           The estimated value asof October 1, 2001 of Sections 7.l(a)(ii) to 7.1(c) are set outin Schedule “C”.  Schedule “C” providesestimated values only and actual values shall be calculated in accordance withthis Agreement at the time of entitlement or payment under this Agreement.

 

7.3           Subject to Section 7.1(a)(iii),if the Executive’s employment is terminated in the circumstances described in Section 5.1or 6.1, the remuneration and benefits payable under this Article 7 shallnot be reduced if the Executive obtains alternative employment.

 

7.4           Unless expresslyprovided otherwise in this Agreement, all payments to be made to the Executiveunder this Article 7 shall be subject to required statutory deductions atsource by the Corporation.

 

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**ARTICLE 8CONFIDENTIAL INFORMATION**

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8.1                                 Ifthe Executive’s employment is terminated in any manner whatsoever due to orfollowing a Change of Control, the Executive agrees to keep confidential allinformation 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 notto use such information, data or technology for personal advantage, providedthat nothing herein shall prevent the disclosure of information which ispublicly available or which is required to be disclosed by the Executive underappropriate statute, rules of law or legal process.

 

**ARTICLE 9RIGHTS AND OBLIGATIONS OF EXECUTIVE UPON TERMINATION**

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9.1           Subject to Section 8.1,the Executive shall not be prohibited in any manner whatsoever from obtainingalternative employment with or otherwise forming or participating in a businesscompetitive to the business of the Corporation after the termination of theExecutive’s employment with the Corporation.

 

9.2           Upon the termination ofthe Executive’s employment for any reason, the Executive shall tender theExecutive’s resignation from any position the Executive may hold as an officeror director of the Corporation or any of its Affiliates, Associates orSubsidiaries.

 

9.3           If the Executive’semployment is terminated in the circumstances described in Section 5.1 or6.1, the Corporation shall continue to purchase and maintain, to the extentavailable in the marketplace at reasonable cost to the Corporation, on behalfof the Executive, director and officer liability insurance for the applicablelimitation period following the date upon which the Executive ceases to serveas a director or officer of the Corporation, and the Executive’s existingagreement to receive indemnity from the Corporation for acts taken by theExecutive in the Executive’s capacity as an officer of the Corporation shallremain in effect.

 

9.4           Upon termination of theExecutive’s employment pursuant to Section 5.1 or 6.1, the Corporationshall reimburse the Executive for ongoing legal fees and disbursements whichthe Executive may reasonably incur in connection with this Agreement (but thisAgreement only), including any litigation concerning the validity orenforceability of, or liability under, any provision of this Agreement or anyaction by the Executive.  The Corporationshall pay such fees and reimbursements to the Executive promptly as such feesand disbursements become due.

 

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**ARTICLE 10EXPEDITED ARBITRATION**

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10.1         If, pursuant to Section 6.1,the Executive provides written notice of the Executive’s intention to terminatethe Executive’s employment for Good Reason, and the Corporation believes thatthere is no Good Reason, or, alternatively, that Just Cause exists whichjustified the Executive’s termination, the Corporation shall, within ten (10) daysof having been provided such notice, provide written notice (“Notice of Dispute”)to the Executive of the dispute (the “Dispute”).

 

10.2         The Parties agree thatany and all Disputes under Section 10.1 will be resolved by way of asingle Arbitrator.

 

10.3         (a)           Within fifteen (15) days of provision of theNotice of Dispute, the Parties shall agree upon and appoint a neutralArbitrator from the then current roster maintained by the Alberta Mediation andArbitration Society to act as Arbitrator of the Dispute; or

 

(b)           If no person acceptableto 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 Benchof Alberta, Judicial District of Calgary, to have an Arbitrator appointed.

 

10.4         The Parties acknowledgeand agree that the purpose of this Article 10 is to avoid delays andfacilitate resolution of the Dispute in a just, speedy and cost-effectivemanner.

 

10.5         Consistent with theexpedited nature of arbitration, the Arbitrator will direct and control thescope and timing of the exchange of information between the Parties and willtake such steps as the Arbitrator deems necessary to achieve a just, speedy andcost-effective resolution of the Dispute. The Arbitrator has the exclusive right and power to resolve all issuesrelated to the exchange of information in the arbitration process.

 

10.6         The Parties agree thatthe Arbitrator is only authorized to determine whether the Executive had GoodReason for terminating the Executive’s employment, or alternatively, whetherthe Corporation had Just Cause to terminate the Executive’s employment.

 

10.7         A hearing will occurwithin forty-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 setout in the *Arbitration Act* S.A. 1991, c.A-43, asmodified by the Arbitrator in the interests of achieving a just, speedy andcost-effective resolution of the Dispute. The Arbitrator may require written submissions of fact in the Dispute tobe provided seven (7) days before the Hearing Date.

 

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10.8         The Arbitrator will usebest efforts to provide a written decision within seven (7) days of theconclusion of the Hearing.

 

10.9         The Parties agree thatthe decision of the Arbitrator will be final and binding upon the Parties.

 

**ARTICLE 11GENERAL**

** **

11.1         The headings of theArticles and paragraphs in this Agreement are inserted for convenience only andshall not affect the meaning or construction of this Agreement.

 

11.2         This Agreement shall beconstrued and interpreted in accordance with the laws of the Province ofAlberta and the federal laws of Canada as applicable therein.

 

11.3         If any provision of thisAgreement is determined to be void or unenforceable in whole or in part, itshall be and be deemed to be severed from this Agreement without affecting orimpairing the validity of any other provision herein.

 

11.4         Any notice required orpermitted to be given under this Agreement shall be in writing and shall beproperly given if delivered, by hand delivery or mail or other form ofelectronic communication capable of transmission confirmation, to the followingaddress:

 

**a.**             inthe case of the Corporation to:

 

Nexen Inc.

#1500, 635 – 8th Avenue SW

Calgary, AB  T2P3Z7

Attention: Chief Executive Officer

 

**b.**             in the case of theExecutive to:

 

the last address of the Executive in the records ofthe Corporation or to such other address as the Parties may from time to timespecify by notice given in accordance herewith.

 

11.5         This Agreement shallenure to the benefit of and be binding upon the Executive and the Executive’sheirs, executors and administrators and upon the Corporation and its successorsand assigns.

 

11.6         This Agreementconstitutes the entire agreement relating to the respective rights andobligations of the Parties upon the occurrence of a Change of Control.  No amendment or waiver of this Agreementshall be binding unless executed in writing by the Parties.

 

11.7         The Parties agree thatthe rights, entitlements and benefits set out in this Agreement to be paid tothe Executive upon a Change of Control shall be in full satisfaction of allrights of the Executive under applicable law in effect from time to time as aresult thereof.

 

15

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11.8         Neither Party can waiveor shall be deemed to have waived any right it has under this Agreement exceptto the extent that such waiver is in writing.

 

TheParties have executed this Agreement effective the date first written above.

 

 
|                                                      | **NEXEN INC.** |
|-----------------------------------------------------------|----------------|
|                                                      | ** **     |
|                                                      | ** **     |
|                                                      | Per:           | /s/  Charles W. Fischer |   |
|                                                      |           |   |   |
|                                                      |           |   |   |
|                                                      | Per:           | /s/  John B. McWilliams | ** ** |
|                                                      | ** **     |
|                                                      | ** **     |
| **SIGNED, SEALED & DELIVERED**in the presence of | ** **     |
| ** **                                                |           |
| /s/  Marcelle Leveille                                    |           | /s/  Gary Nieuwenburg |   |
| **WITNESS**                                               | ** **     | **GARY NIEUWENBERG** |
|                                                           |                |  |  |  |  |

 

16

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**SCHEDULE“A”**

 

**CHANGEOF CONTROL AGREEMENT**

 

Inorder to receive the entitlements referred to in this Agreement, the Executiveshall execute the attached Release, fully releasing the Corporation from allfurther claims in relation to the Executive’s employment or Employment Benefitsand the termination thereof upon payment of the remuneration and benefits referredto in Article 7 of this Agreement. The attached Release shall not, however, require that the Executiverelinquish or release any rights to indemnity which the Executive may, as anofficer or director of the Corporation or any of its Affiliates, Associates andSubsidiaries, have as against the Corporation or any of its Affiliates,Associates and Subsidiaries for costs, charges and expenses reasonably incurredby the Executive in respect of any civil, criminal or administrative action orproceeding to which the Executive is made a party by reason of being or havingbeen a director or officer of the Corporation or any of its Affiliates,Associates and Subsidiaries where:

 

**(a)**           theExecutive has acted honestly and in good faith with a view to the best interestsof the Corporation or any of its Affiliates, Associates and Subsidiaries; and

 

**(b)**           in thecase of a criminal or administrative action or proceeding enforced by amonetary penalty, the Executive had reasonable grounds for believing theExecutive’s conduct was lawful.

 

----

 

**FINALRELEASE**

 

**KNOWALL MEN BY THESE PRESENTS** that I, **GARY NIEUWENBURG**of the City of Calgary, in the Province ofAlberta, in consideration of the amounts provided in that certain Change ofControl Agreement (the “Change of Control 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 andsufficiency of which is hereby acknowledged, do for myself, my executors andassigns hereby remise, release and forever discharge the Corporation, and anyassociated, affiliated, predecessor or parent corporation of the Corporationand their present and former directors, officers, agents and employees (the “Releasees”),including each of their respective successors, heirs, administrators andassigns, 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, byreason 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 ofall claims of any nature whatsoever, past, present or future, directly orindirectly related to or arising out of or in connection with my relationshipwith the Releasees, as an employee, officer or director, and the termination ofmy employment from the Corporation including, but not limited to, any claimsrelated to any entitlement I may have or may have had to any payment or claimeither at common law or under the *Employment Standards Code,Human Rights, Citizenship and Multiculturalism Act*or any otherapplicable legislation governing or related to my employment with theReleasees.

 

**ANDFOR THE SAID CONSIDERATION**, I, **GARY NIEUWENBURG**, represent and warrant that I have notassigned 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 withrespect to which I agree not to make any claim or take any proceeding herein.

 

**ITIS FURTHER ACKNOWLEDGED** that the payment tome includes full compensation and consideration for the loss of my employmentbenefits, as provided by the Releasees, and that all of my employment benefitsand privileges shall cease on the date of termination of my

 

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employment,except as otherwise provided in the Change of Control Agreement.  I further acknowledge that I have receivedall benefits due to me and have no further claim against the Releasees for suchbenefits.  I further accept soleresponsibility to replace such benefits which I wish to continue or to exerciseconversion privileges where applicable with respect to such benefits and, inparticular any life insurance and long-term disability benefits.  In the event that I become disabled followingtermination of my employment, I covenant not to sue the Releasees for insuranceor other benefits or loss of same and hereby release the Releasees from any andall further obligations or liabilities arising therefrom.

 

Notwithstandinganything contained herein, this Release shall not extend to or affect, orconstitute a release of, my right to sue, claim against or recover from theReleasees and shall not constitute an agreement to refrain from bringing,taking or maintaining any action against the Releasees in respect of:

 

**(a)**                                  anycorporate indemnity existing by statute, contract or pursuant to any of theconstating documents of the Corporation provided in my favour in respect of myhaving acted at any time as a director, officer or both of the Corporation;

 

**(b)**                                 myentitlement to any insurance maintained for the benefit or protection of thedirectors and/or officers of the Corporation, including without limitation,directors’ and officers’ liability insurance; or

 

**(c)**                                  myentitlement to any amounts or compensation due to me under the terms of myemployment pursuant to the Change of Control Agreement.

 

**ITIS HEREBY AGREED** that the terms of the Changeof Control Agreement and of this Release will be kept confidential.  No party hereto shall communicate any suchterms to any third party under any circumstances whatsoever, excepting anynecessary communication with my legal and financial advisors, as required, onthe express condition that they maintain the 

 

2

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confidentialitythereof, and any disclosure which is required by law, although either party shallbe at liberty to disclose to third parties that a mutually acceptable Releasewas agreed upon.  The invalidity andunenforceability of any provision of this Release shall not affect the validityor enforceability of any other provision of this Release, which shall remain infull force and effect.

 

**IHEREBY DECLARE** that I have read all of thisRelease, fully understand the terms of this Release and voluntarily accept theconsideration stated herein as the sole consideration for this Release for thepurpose of making a full and final settlement with the Releasees.  I further acknowledge and confirm that I havebeen given an adequate period of time to obtain independent legal counselregarding the meaning and the significance of the terms herein and the covenantsmutually exchanged.

 

**ITIS HEREBY AGREED THAT**as a term of thetermination of my employment from the Corporation, and in consideration of theamount noted above, I hereby resign as officer and director of the Corporationand its affiliates.

 

**INWITNESS WHEREOF**, I have hereunto set my handand seal this            dayof                             in the year                   .

 

 
|                  |   |
|-----------------------|--------|
| **GARY NIEUWENBURG**  |
|                  |
|                  |   |
| WITNESS  (signature)  |
|                  |
|                  |
|                  |   |
| WITNESS  (print name) |

 

3

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**SCHEDULE“B”**

 

**CHANGEOF CONTROL AGREEMENT**

**Methodologyand Assumptions for Determining Settlement Value**

 

**Purpose**

 

Pursuantto Section 7.1(b)(iv) of the Agreement, the purpose of this Schedule “B”is to ensure that after tax has been paid on a lump sum settlement value, theremaining balance shall be sufficient to provide after-tax monthly paymentsequivalent to the after-tax monthly payments the Executive would have receivedunder the terms of the Executive Benefit Plan.

 

**Overview**

 

Section **7** of the Securitization Procedureprovides in part that:

 

“the Company reserves the right to settle theObligations by way of a lump sum payment to each Executive provided that theamount of each such payment is determined by the Actuary in such manner so asto be of equivalent present value after tax to such Executive and personsclaiming through him as the after-tax periodic payments provided for in thePlan.”

 

Thefollowing outlines the actuarial methods, assumptions and calculation processto be used in determining the lump sum settlement value of pension entitlementsunder the Executive Benefit Plan when settlement occurs in accordance with theSecuritization Procedure.  Section 300of the Income Tax Regulations establishes the procedure applicable in using anafter-tax lump sum to purchase a prescribed annuity:

 

**1.**             Aprescribed annuity payment consists of two components:  (a) the deemed capital element of theannuity payment on which no tax is payable, and (b) the deemed non-capitalportion of the annuity payment which is taxed at the marginal rate.

 

**2.**             Thecapital portion of each future annuity payment is considered to be a return ofthe original after-tax lump sum amount.

 

**3.**             Thenon-capital portion of each annuity payment is assumed to be provided by theinvestment return on the original after-tax lump sum amount and has thereforenot yet been taxed.

 

**4.**             Aconstant percentage of each future payment is deemed to be a return of theoriginal lump sum capital.

 

**CalculationMethodology**

 

1.             Equivalentafter-tax payments:

 

**a.**             Determine initial grossannual pension entitlement under the Executive Benefit Plan.

 

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**b.**             Determineafter-tax annual pension entitlement under the Executive Benefit Plan based onIndividual Tax Rate.

 

**c.**             Determinethe capital element based on the non-indexed present value of the pensionpayments divided by life expectancy.

 

**d.**             Determinethe monthly payment which provides an after-tax pension equal to the after-taxpension determined in 1.b. above in accordance with the prescribed annuitymethodology.

 

**2.**             Present value of periodicpayments from 1. above:

 

**a.**             Determinethe present value of the pension determined in 1.d. above using the assumptionsdescribed below in this Schedule “B”. For greater certainty, the value of the post-retirement indexation is tobe reflected in determining the present value of the accrued pensionentitlement in respect of post-1992 service, and any accrued pension in respectof service granted during the Severance Period.

 

**3.**             Tax adjustment:

 

**a.**             Gross-upthe present value determined in 2.a. above to reflect the tax assumed to berequired to be paid on the lump sum.

 

**b.**             Gross-upthe amount determined in 3.a. above to reflect the tax assumed to be requiredto be paid on investment earnings in respect of the lump sum payment during thedeferral period prior to assumed pension commencement, if any.

 

**4.**             Equivalent present valueafter tax as the after-tax monthly payments:

 

**a.**             Theamount determined in 3.b. above shall be the lump sum settlement value of theExecutive’s pension entitlement.

 

**Assumptions**

 

InterestDiscount 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-end                                                                                                                                         |

 

2

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| ** **                                                      | ** ** | 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                     |       |                                                                                                                                                                                                |   |   |
|                                                            |       |                                                                                                                                                                                                |   |   |
| ·    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.                                                                                                                   |

 

3

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**SCHEDULE“C”**

 

**Estimated(1)Entitlement to Compensation**

**Pursuantto Article 7 of the Agreement**

 
| Monthly Base  Salary (24 Months)                               |       | $             | 446,200.00     |       |
|----------------------------------------------------------------|------------|---------------|----------------|------------|
|                                                           |       |          |           |
| Bonus Target  Value                                            |       | 89,240.00     |           |
|                                                           |       |          |           |
| Benefits  Uplift (13%)                                         |       | 58,006.00     |           |
|                                                           |       |          |           |
| Car  Allowance                                                 |       | 38,400.00     |           |
|                                                           |       |          |           |
| Savings Plan                                                   |       | 26,772.00     |           |
|                                                           |       |          |           |
| Financial  Counselling Services                                |       | 10,500.00     |           |
|                                                           |       |          |           |
| Security  Monitoring Services                                  |       | 2,400.00      |           |
|                                                           |       |          |           |
| Executive  Outplacement                                        |       | 25,000.00     |           |
|                                                           |       |          |           |
| **TOTAL  VALUE**                                               | ** ** | **$**         | **696,518.00** | ** ** |
|                                                           |       |          |           |
| **Additional  Lump Sum Settlement Value of Pension(2)**        | ** ** | **88,000.00** | ** **     |
|                                                           |       |          |           |
| **TOTAL  ESTIMATED ENTITLEMENT under this Restated Agreement** | ** ** | **$**         | **784,518.00** | ** ** |

 

**IN ADDITION** to the above pension entitlement under the Agreement, the Executivehas accrued entitlements under the Defined Contribution Pension Plan andExecutive Benefit Plan.  The value of thebonus related benefit under the Executive Benefit Plan is shown below.  As is the case with the figures shown above,these values are estimated values (as of October 1, 2001) and are forillustrative purposes only.  Actualvalues will be calculated as of the date of the entitlement or payment, andtherefore may be subject to change.

 

·              LumpSum Settlement Value of Executive Benefit Plan(3)                    $102,000.00

 

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(1)           Asstated in Section 7.2 of the Agreement, the above calculations represent onlythe current estimated value (as of October 1, 2001) of the Executive'sentitlement to compensation upon a Change of Control.  Accordingly, the above calculations are forillustrative purposes only.

 

(2)           Calculatedin accordance with Section 7.1(b) of the Agreement, including the bonus relatedbenefit contemplated under the Executive Benefit Plan.

 

(3)           Basedon lump sum settlement value methodology and assumptions outlined in Schedule “B”as provided in Article 7.1(b) of the Agreement.

 

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