Exhibit
10.56


 


NEXEN INC.


 


TANDEM
OPTION PLAN


 


1.             BACKGROUND AND PURPOSE
OF PLAN


 


1.1           The
Plan was established effective February 27, 1998 and subsequently amended December 15,
1998, September 15, 1999, April 17, 2000, May 2, 2001, May 6,
2003, July 1, 2004 (at which time the Plan was renamed the “Tandem Option
Plan”) and June 30, 2007.


 


1.2           The
purpose of the Plan is to assist directors, officers and employees of the
Corporation and any Subsidiary to participate in the growth and development of
the Corporation and its Subsidiaries by providing Eligible Persons with the
opportunity, through share options, to acquire an increased proprietary
interest in the Corporation that will be aligned with the interests of the
shareholders of the Corporation.


 


2              DEFINED TERMS


 


In the Plan, the following terms shall have the
following meanings, respectively:


 


2.1           “Affiliate”
and “Associate” have the meaning ascribed to such terms in the CBCA;


 


2.2           “Acting
Jointly or in Concert” - For the purposes of the Plan, 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 Shares (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);


 


2.3           “Beneficial
Owner” - For the purposes of the Plan, 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 (a) upon the exercise of any Convertible
Securities or (b) pursuant to any agreement, arrangement or understanding,
whether such right is exercisable immediately or within a period of 60 days
thereafter and whether or not on condition or the happening of any contingency,
(other than (I) 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 (II) 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 (i) or (ii) 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
the result of carrying on the business of or acting as nominee for a securities
depository.


 


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


 


100 x A/B


 


A =         the
number of votes for the election of all directors generally attaching to the
Shares Beneficially Owned by such Person; and


 


B =          the
number of votes for the election of all directors generally attaching to all
outstanding Shares.


 


For the purposes of the foregoing formula,
where any Person is deemed to Beneficially Own unissued Shares which may be
acquired pursuant to Convertible Securities, such Shares shall be deemed to be
outstanding for the purpose of calculating the percentage of Shares
Beneficially Owned by such Person in both the numerator and the denominator,
but no other unissued Shares which may be acquired pursuant to any other outstanding
Convertible Securities shall, for the purposes of that calculation, be deemed
to be outstanding;


 


2.4           “Board”
means the board of directors of the Corporation or, if established and duly
authorized to act with respect to this Plan, any committee of the board of
directors of the Corporation;


 


2.5           “Business
Day” means any day, other than a Saturday or a Sunday, on which the
Exchange is open for trading;


 


2.6           “CBCA”
means the Canada Business Corporations Act as
amended from time to time and any successor legislation thereto;


 


2.7           “Change
of Control” means when any Person directly becomes the Beneficial Owner of
50% or more of the Shares;


 


2.8           “Change
of Control Event” has the meaning ascribed to it in Section 8.1;


 


2.9           “Convertible
Securities” means at any time:


 


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(i)            any
right (contractual or otherwise and regardless of whether such right
constitutes a security) to acquire Shares; and


 


(ii)           any
securities issued by the Corporation from time to time (other than the Rights)
carrying any exercise, conversion or exchange right;


 


which is then exercisable or exercisable
within a period of 60 days from that time pursuant to which the holder thereof
may acquire Shares or other securities which are convertible into or exercisable
or exchangeable for Shares (in each case, whether such right is then
exercisable or exercisable within a period of 60 days from that time and
whether or not on condition or the happening of any contingency);


 


2.10         “Corporation”
means Nexen Inc. or any successor entity in relation thereto;


 


2.11         “Eligible
Person” means any director, officer or employee of the Corporation or any
Subsidiary;


 


2.12         “Exchange”
means the Toronto Stock Exchange and, where the context permits, any other
exchange on which the Shares are or may be listed from time to time;


 


2.13         “Exercise
Price” means the price per Share at which Shares may be purchased under the
Option, as the same may be adjusted from time to time in accordance with Article 8;


 


2.14         “Insider”
means:


 


(i)            an
insider as defined under Section 1(aa) of the Securities
Act (Alberta) other than a Person who falls within that definition
solely by virtue of being a director or officer of a Subsidiary; and


 


(ii)           an
associate as defined under Section 1(c) of the Securities
Act (Alberta) of any Person who is an insider by virtue of (i) above;


 


2.15         “In
the Money” means the excess, if any, of the Market Price of a Share at any
time over the Exercise Price;


 


2.16         “Market
Price” at any date in respect of the Shares shall be either:


 


(i)            for
the purposes of determining the Exercise Price, the closing price of the Shares
on the Exchange on the last Business Day preceding the date on which the Option
is approved by the Board; and, for the purposes of determining the In the Money
amount, the closing price of the Shares on the Exchange on the date of
surrender of the Option, or if there is no trading of the Shares on the
Exchange that day, the last Business Day preceding the date of surrender of the
Option; or


 


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(ii)           in
the discretion of the Board, such price as may be determined by any mechanism
for establishing the market value of the Shares approved by the Board.  Any such determination or mechanism shall be
pre-cleared with the Exchange;


 


2.17         “Option”
means an option to purchase Shares granted under the Plan;


 


2.18         “Optionee”
means an Eligible Person to whom an Option has been granted;


 


2.19         “Person”
includes an individual, partnership, association, body corporate, trustee,
executor, administrator, legal representative and any national, provincial,
state or municipal government;


 


2.20         “Plan”
means this Nexen Inc. Tandem Option Plan, as amended from time to time;


 


2.21         “Rights”
means the rights distributed pursuant to the Amended and Restated Shareholder
Rights Plan Agreement between the Corporation and CIBC Mellon Trust Company
dated May 2, 2002, as amended or superseded from time to time;


 


2.22         “Share
Compensation Arrangement” means any stock option, stock option plan, employee
stock purchase plan or any other compensation or incentive mechanism involving
the issuance or potential issuance of Shares, including a share purchase from
treasury which is financially assisted by the Corporation by way of a loan,
guarantee or otherwise;


 


2.23         “Shares”
means the common shares of the Corporation, or, in the event of an adjustment
contemplated by Article 8, such other shares or securities to which an
Optionee may be entitled upon the exercise of an Option as a result of such
adjustment; and


 


2.24         “Subsidiary”
means any subsidiary of the Corporation within the meaning of the CBCA.


 


3.             ADMINISTRATION OF THE
PLAN


 


3.1           The
Plan shall be administered by the Board.


 


3.2           The
Board shall have the power, where consistent with the general purpose and
intent of the Plan and subject to the specific provisions of the Plan, to:


 


(i)            establish
policies and to adopt rules and regulations for carrying out the purposes,
provisions and administration of the Plan;


 


(ii)           interpret
and construe the Plan and to determine all questions arising out of the Plan
and any Option granted pursuant to the Plan, and any such interpretation,
construction or determination made by the Board shall be 


 


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final, binding and conclusive for all purposes on the Corporation and
the Optionee;


 


(iii)          grant Options;


 


(iv)          determine
which Eligible Persons are granted Options;


 


(v)           determine
the number of Shares covered by each Option;


 


(vi)          determine
the Exercise Price;


 


(vii)         determine the time or times when Options will
be granted and exercisable;


 


(viii)        determine if the Shares that are subject to an
Option will be subject to any restrictions or conditions upon the exercise or
surrender of such Option, including conditions in respect of the financial
performance or results of the Corporation or its Subsidiaries; and


 


(ix)           prescribe
the form of documents relating to the grant, exercise, surrender and other
terms of Options.


 


4.             SHARES SUBJECT TO PLAN


 


4.1           Options
may be granted in respect of authorized and unissued Shares, provided that the
aggregate number of Shares reserved for issuance under this Plan, subject to
adjustment or increase of such number pursuant to the provisions of Section 8.4,
shall not exceed 14,250,000 Shares (being the original 6,000,000 Shares
authorized as of February 27, 1998, plus the 3,500,000 additional Shares
authorized in accordance with the requirements of Section 8.4 as of May 2,
2001, and the 2,000,000 additional Shares authorized in accordance with the
requirements of Section 8.4 as of May 6, 2003 plus the 2,750,000
additional Shares authorized effective July 1, 2004), which shall not
include options under stock option agreements outstanding at the date of the
Plan whether continued hereunder pursuant to Section 14.1 hereof or
continued under the terms of the applicable agreement in effect at the date of
the Plan.  Shares in respect of which: i)
Options are not exercised, or ii) Options are surrendered in exchange for the
In the Money amount, shall be available for subsequent Options under the
Plan.  No fractional Shares may be
purchased or issued under the Plan.


 


5.             ELIGIBILITY, GRANT AND
TERMS OF OPTIONS


 


5.1           Options
may be granted to directors, officers or employees of the Corporation or of any
Subsidiary.


 


5.2           Except
as otherwise provided for in this Plan, the number of Shares subject to each
Option, the Exercise Price, the expiration date of each Option, the extent to
which each Option is exercisable or may be surrendered from time to time during
the term of the Option and other terms and conditions relating to each such
Option 


 


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shall be determined by the Board; provided, however, that if no
specific determination is made by the Board with respect to any of the
following matters, each Option shall, subject to any other specific provisions
of the Plan, contain the following terms and conditions:


 


(i)


 


(a)           for
Options granted up to and including February 15, 2001, the period during
which an Option shall be exercisable shall be ten years from the date the
Option is granted to the Optionee; and


 


(b)           for
Options granted from February 16, 2001 forward, the period during which an
Option shall be exercisable shall be five years from the date the Option is
granted to the Optionee; and


 


(ii)


 


(a)           subject
to Section 8.2, for Options granted up to and including February 15,
2001, the Option shall vest as to 20% of the number of Shares granted by each
Option on the date six months after the grant of the Option and as to 25% of
the remaining number of Shares on each of the first through fourth
anniversaries of the initial granting of such Option; and


 


(b)           subject
to Section 8.2, for Options granted from February 16, 2001 forward,
the Option shall vest as to one third of the number of Shares granted by each
Option on each of the first, second and third anniversaries of the initial
granting of such Option; and


 


(c)           the
Exercise Price, unless otherwise determined by the Board and subject to
regulatory approval, shall not be less than the closing price of the Shares on
the Exchange on the last Business Day preceding the date on which the Option is
granted by the Board, or if there is no trading of the Shares on the Exchange
on that day, then a weighted average trading price for the 5 trading days on
the Exchange prior to the date of grant shall be used; and


 


(d)           irrespective
of the date of grant of such Option, the Optionee shall, subject to vesting
requirements and the requirements of Section 7.1, be entitled to elect to
surrender such Option or any portion thereof (as to a whole number of Shares)
in exchange for the In the Money amount of Shares in respect of which such
Option is surrendered.


 


5.3           Notwithstanding
Section 5.2 of the Plan, where new directors or officers are appointed,
new employees hired or directors, officers or employees promoted, the Chief
Executive Officer of the Corporation shall have the authority to grant 


 


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Options to such directors, officers or employees, including the
determination of the matters provided for in Section 5.2.  The Chief Executive Officer shall report to
the Board with respect to all Options granted under this Section 5.3.


 


5.4           Unless
the Board shall otherwise determine, no separate agreement between the
Corporation and the Optionee shall be necessary to create and grant any Option,
and the Board may, by resolution, create and grant Options and stipulate such
additional terms as are consistent with this Plan.


 


5.5           The
Exercise Price on Shares that are subject to any Option shall in no
circumstances be lower than the Market Price of the Shares at the date of the
grant of the Option.  Subsequent to the
date of grant of an Option, subject to adjustments made pursuant to Section 8.4,
the Exercise Price of the Option shall not be reduced except in accordance with
the rules of the Exchange, including any shareholder approval requirements
stipulated by the Exchange in respect of such reduction in the Exercise Price.


 


5.6           The
total number of Shares to be optioned to any Optionee under this Plan and any
other Share Compensation Arrangement shall not exceed 5% of the issued and
outstanding Shares (on a non-diluted basis) at the date of the grant of the
Option.


 


5.7           The
maximum number of Shares which may be reserved for issuance to Insiders under
the Plan shall be 10% of the Shares outstanding at the time of the grant (on a
non-diluted basis), less the aggregate number of Shares reserved for issuance
to Insiders under any other Share Compensation Arrangement.


 


5.8           The
maximum number of Shares which may be issued to Insiders under the Plan within
a one year period shall be 10% of the Shares outstanding at the time of the
issuance (on a non-diluted basis), excluding Shares issued under the Plan or
any other Share Compensation Arrangement over the preceding one year
period.  The maximum number of Shares
which may be issued to any one Insider under the Plan or any other Share
Compensation Arrangement within a one year period shall be 5% of the Shares
outstanding at the time of the issuance (on a non-diluted basis), excluding
Shares issued to such Insider under the Plan or any other Share Compensation
Arrangement over the preceding one year period.


 


5.9           Any
entitlement to acquire Shares granted pursuant to the Plan or any other Share
Compensation Arrangement prior to the Optionee becoming an Insider shall be
excluded for the purposes of the limits set out in Sections 5.7 and 5.8
above.


 


5.10         An
Option is personal to the Optionee and is non-transferable and non-assignable
other than to the estate of an Optionee by operation of law.


 


5.11         Participation
in the Plan shall be entirely voluntary and any decision not to participate
shall not affect any Eligible Person’s employment or appointment with the
Corporation or any of its Subsidiaries.


 


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5.12         Subject
to deletion of this Section 5.12 effective July 1, 2004 pursuant to Section 14.2,
the maximum number of shares which may be issued to all non-executive directors
of the Corporation shall not exceed 0.25% of the outstanding shares of the
Corporation.


 


6.             TERMINATION OF
EMPLOYMENT


 


6.1           An
Optionee’s Options shall terminate and may not be exercised or surrendered
after the earliest of:


 


(i)            eighteen
months after the Optionee’s termination of active employment with the
Corporation or any of its Subsidiaries by reason of death or retirement from
active employment;


 


(ii)           the
Optionee’s termination of active employment with the Corporation or any of its
Subsidiaries for cause;


 


(iii)          ninety days after the Optionee’s termination
of active employment with the Corporation or any of its Subsidiaries, direct or
indirect, in any manner or for any reason, other than death, retirement or
termination of employment for cause; and


 


(iv)          the
expiry of an Option in accordance with the terms thereof.


 


For the purposes of this Plan a director
shall be deemed to be an employee.


 


6.2           Options
shall not be affected by any change of employment of the Optionee or by the
Optionee ceasing to be a director where the Optionee continues to be employed
on a full-time basis by, or continues to be a director or officer of, the
Corporation or any Subsidiary.


 


7.             EXERCISE OR SURRENDER
OF OPTIONS


 


7.1           Subject
to the provisions of the Plan, an Option may be exercised or surrendered from
time to time by delivery to the Corporation at its head office of a written
notice addressed to the Stock Administration Group specifying:


 


(i)            the
number of Shares, if any, with respect to which the Option is being exercised;
and


 


(ii)           the
number of Shares, if any, with respect to which the Optionee is surrendering
such Option and electing to receive the In the Money amount,


 


accompanied by payment in full of the
Exercise Price of the Shares to be purchased as specified pursuant to Section 7.1(i).  Certificates for any Shares purchased by the
Optionee shall be issued and delivered to the Optionee within a reasonable time
following the receipt of such notice and payment.  A cheque or 


 


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similar means of payment for the In the
Money amount of Shares specified in Section 7.1(ii) (subject to any
applicable withholding of taxes) shall be delivered to the Optionee within a
reasonable time following the receipt of such notice.  The effective date of surrender of an Option
shall be deemed to be the date of delivery to the Corporation of a notice
pursuant to Section 7.1(ii).  The
total number of Shares in respect of which an Option is exercised pursuant to Section 7.1(i) from
time to time together with the total number of Shares in respect of which an
Option is surrendered pursuant to Section 7.1(ii) from time to time
shall not exceed the number of Shares subject to such Option.


 


7.2           Notwithstanding
any of the provisions contained in the Plan or in any Option, the Corporation’s
obligation to issue Shares to an Optionee pursuant to the exercise of an Option
shall be subject to:


 


(i)            completion
of such registration or other qualification of such Shares or obtaining
approval of such governmental authority as the Corporation shall determine to
be necessary or advisable in connection with the authorization, issuance or
sale thereof;


 


(ii)           the
listing of such Shares on any stock exchange on which the Shares may then be
listed; and


 


(iii)          the receipt from the Optionee of such
representations, agreements and undertakings, including as to future dealings
in such Shares, as the Corporation or its counsel determines to be necessary or
advisable in order to safeguard against the violation of the securities laws of
any jurisdiction.


 


In this connection the Corporation shall,
to the extent necessary, take all reasonable steps to obtain such approvals,
registrations and qualifications as may be necessary for the issuance of such
Shares in compliance with applicable securities laws and for the listing of
such Shares on any stock exchange on which the Shares are then listed.


 


8.             CHANGE OF CONTROL AND
CERTAIN ADJUSTMENTS


 


8.1           In this Article 8:


 


(i)            “Change of Control
Event” means:


 


(a)           the
entry by the Corporation into an agreement with respect to a reorganization,
merger, amalgamation or other combination, the completion of which would result
in a Change of Control;


 


(b)           a
“formal bid” (as defined under the securities legislation of any Canadian
province) or “tender offer” (as defined under the United States Securities Exchange Act of 1934), the completion of which
would result in a Change of Control; or


 


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(c)           the
determination by the Board that a Change of Control has occurred, other than
pursuant to Section 8.1(i)(a) or 8.1(i)(b) above.


 


8.2           Immediately
after the occurrence of a Change of Control Event, all outstanding Options that
have not yet vested shall vest and become exercisable or may be surrendered.


 


8.3           If
Options have vested pursuant to Section 8.2 and the Change of Control
Event is not completed, the Corporation shall make such arrangements as the
Board of Directors considers advisable in the circumstances to restore the
Corporation and the Optionees to the position they would have been in had the
purported Change of Control Event not occurred.


 


8.4           Appropriate
adjustments as regards Options granted or to be granted, in the number of
Shares optioned and in the Exercise Price, shall be made by the Board to give
effect to adjustments in the number of Shares resulting from subdivisions,
consolidations, capital reorganizations or reclassifications of the Shares, the
payment of stock or extraordinary dividends by the Corporation (other than
dividends in the ordinary course) or other relevant changes in the capital
stock of the Corporation.  The
appropriate adjustment in any particular circumstance shall be conclusively
determined by the Board in its sole discretion, subject to approval by the
shareholders of the Corporation and to acceptance by the Exchange,
respectively, if applicable.


 


9.             AMENDMENT OR
DISCONTINUANCE OF PLAN


 


9.1           The
Board may amend, suspend or discontinue the Plan at any time; provided,
however, that no such amendment may increase the maximum number of Shares that
may be optioned under the Plan, change the manner of determining the Exercise
Price or, without the consent of the Optionee, adversely alter or impair any
Option previously granted to an Optionee under the Plan.


 


9.2           No
amendment, suspension or discontinuance of the Plan may contravene the
requirements of the Exchange or any securities commission or regulatory body to
which the Plan or the Corporation is now or may hereafter be subject to.


 


10.           ACCOUNTS AND STATEMENTS


 


10.1         The
Corporation shall maintain records of the details of each Option granted to
each Optionee under the Plan. Upon request therefor from an Optionee and at
such other times as the Corporation shall determine, the Corporation shall
furnish the Optionee with a statement setting forth details of his or her
Options. Such statement shall be deemed to have been accepted by the Optionee
as correct unless written notice to the contrary is given to the Corporation
within 10 days after such statement is given to the Optionee.


 


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11.           PROHIBITION ON FINANCIAL
ASSISTANCE


 


11.1         The
Corporation shall not arrange for the Corporation or any affiliated entity to
make loans, provide guarantees for loans by financial institutions or provide other
assistance or support to assist an Optionee to purchase Shares upon the
exercise of Options.


 


12.           NOTICES


 


12.1         Any
payment, notice, statement, certificate or other instrument required or
permitted to be given to an Optionee or any Person claiming or deriving any
rights through him shall be given by:


 


(i)            delivering
it personally to the Optionee or the Person claiming or deriving rights to him,
as the case may be; or


 


(ii)           mailing
it, postage paid (provided that the postal service is then in operation) or
delivering it to the address which is maintained for the Optionee in the
Corporation’s or the Subsidiary’s (as the case may be) personnel records.


 


12.2         Any
payment, notice, statement, certificate or instrument required or permitted to
be given to the Corporation shall be given by mailing it, postage prepaid
(provided that the postal service is then in operation) or delivering it to the
Corporation at the following address:


 


Nexen Inc.


801 - 7th Avenue S.W.


Calgary, Alberta, Canada


T2P 3P7


 


Attention:  Stock
Administration Group


 


12.3         Any
payment, notice, statement, certificate or instrument referred to in Article 8
or Sections 12.1 or 12.2, if delivered, shall be deemed to have been given
or delivered, on the date on which it was delivered or, if mailed (provided
that the postal service is then in operation), shall be deemed to have been
given or delivered on the second business day following the date on which it
was mailed.


 


13.           SHAREHOLDER AND
REGULATORY APPROVAL


 


13.1         The
Plan shall be subject to the approval of the shareholders of the Corporation to
be given by a resolution passed at a meeting of the shareholders of the
Corporation in accordance with the Canada Business
Corporations Act and to acceptance by the Exchange.  Any Options granted prior to such approval
and acceptance shall be conditional upon such approval and acceptance being
given and no such Options may be exercised unless and until such approval and
acceptance is given.


 


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14.           TRANSITIONAL PROVISIONS


 


14.1         A
stock option agreement entered into between the Corporation and an Optionee,
that remains outstanding on the effective date of this Plan shall, with the
written consent of the Optionee party thereto, continue in full force and
effect under the terms of this Plan as if initially granted hereunder. If such
written consent is not obtained from such Optionee, such stock option agreement
shall continue in full force and effect under the terms of the applicable
agreement.


 


14.2         Effective
July 1, 2004, “Eligible Person” as defined in Section 2.11 of the
Plan is amended to delete the reference in such definition to “director” and
corresponding and concurrent changes are made to delete use of the word “directors”
in Sections 1.2, 5.1 and 5.3, and to delete Section 5.12 and the last
sentence of Section 6.1 in their entirety. 
Notwithstanding this Section 14.2, any Options granted to a
director of the Corporation or any Subsidiary prior to July 1, 2004 and
outstanding on such date shall remain outstanding and unvaried by the first
sentence of this Section 14.2 until the expiry, exercise or surrender of
such Options in accordance with their terms.


 


15.           MISCELLANEOUS


 


15.1         The
holder of an Option shall not have any rights as a shareholder of the Corporation
with respect to any of the Shares covered by such Option until such holder
shall have exercised such Option in accordance with the terms of the Plan and
the Shares issued by the Corporation.


 


15.2         The
Corporation or a Subsidiary may withhold from any amount payable to an
Optionee, either under this Plan, or otherwise, such amount as may be necessary
so as to ensure that the Corporation or the Subsidiary will be able to comply
with the applicable provisions of any federal, provincial, state or local law
relating to the withholding of tax or other required deductions, including on
the amount, if any, required to be included in the income of an Optionee.


 


15.3         Nothing
in the Plan or any Option shall confer upon any Optionee any right to continue
in the employ of the Corporation or any Subsidiary of the Corporation or affect
in any way the right of the Corporation or any such Subsidiary to terminate his
or her employment at any time; nor shall anything in the Plan or any Option be
deemed or construed to constitute an agreement, or an expression of intent, on
the part of the Corporation or any such Subsidiary to extend the employment of
any Optionee beyond the time that he or she would normally be retired pursuant
to the provisions of any present or future retirement plan of the Corporation
or any Subsidiary or any present or future retirement policy of the Corporation
or any Subsidiary, or beyond the time at which he or she would otherwise be
retired pursuant to the provisions of any contract of employment with the
Corporation or any Subsidiary.


 


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15.4         To
the extent required by law or regulatory policy or necessary to allow Shares
issued on exercise of an Option to be free of resale restrictions, the Corporation
shall report the grant, exercise or termination of the Option to the Exchange
and the appropriate securities regulatory authorities.


 


15.5         This
Plan shall be construed and interpreted in accordance with the laws of Alberta.


 


15.6         In
this Plan, unless the context otherwise requires, words importing gender
include the masculine and feminine and words importing a singular number
include the plural and vice versa.


 


15.7         If
any provision of this Plan is determined to be void, the remaining provisions
shall be binding as though the void parts were deleted.


 


15.8         No
member of the Board shall be liable for any action or determination made in
good faith in connection with the Plan and members of the Board shall be
entitled to indemnification and reimbursement from the Corporation in respect
of any claims relating thereto.


 


Dated June 30,
2007


 


	
   

  	
  NEXEN
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Randy J.
  Jahrig

  
	
   

  	
   

  	
  Vice
  President,

  
	
   

  	
   

  	
  Human
  Resources and Corporate Services

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Sylvia
  L. Groves

  
	
   

  	
   

  	
  Assistant
  Secretary

  



 


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