Document:

Exhibit 10. 6

 

IPSCO Inc.

2005 Form 10-K

 

CHANGE IN CONTROL AGREEMENT

 

THIS IS AN AGREEMENT made
as of this 18TH day of November 2005,

 

B E T W E E N:

 

DAVID STEWART SUTHERLAND

 

(hereinafter referred to as the “Key
Executive”),

OF THE FIRST PART,

- and -

IPSCO INC.

a corporation
incorporated under the laws of Canada

 

(hereinafter referred to as the “Employer”),

OF THE SECOND
PART.

 

WHEREAS, the Key Executive is employed by the
Employer or a subsidiary of the Employer (referred to as the “Employer” herein)
in a senior executive capacity; and

 

WHEREAS,
the Employer considers that the service of the Key Executive to the Employer
entitles the Key Executive to receive the benefits set forth in this Agreement
in the event of the Involuntary Termination of the Key Executive’s employment
within the Qualifying Term before or after a Change in Control; and

 

 

WHEREAS,
the Employer recognizes that the uncertainty and insecurity that may arise as a
result of the occurrence of a Change in Control could lead to the departure of
the Key Executive to the detriment of the Employer and its shareholders; and

 

WHEREAS,
a Change in Control of the Employer, while not currently in contemplation, is a
possibility; and

 

WHEREAS,
the Employer considers it in the best interests of the Employer and its
shareholders that the Key Executive have a strong incentive to remain in the
employ of the Employer so as to maximize the value of the Employer; and

 

WHEREAS,
the Employer considers that in order to assist in the continued dedication of
the Key Executive to the Employer, it is important to establish contractual
arrangements that provide incentives to the Key Executive to continue in the
employ of the Employer notwithstanding the possibility or occurrence of a
Change in Control and provide financial security to the Key Executive in the
event of the Involuntary Termination of the Key Executive’s employment within
the Qualifying Term before or after a Change in Control; and

 

WHEREAS,
the Employer and the Key Executive acknowledge that the compensation and
benefits payable to the Key Executive hereunder and the consideration and
covenants that flow from the Key Executive to the Employer are fair and
reasonable having regard to all of the circumstances of the Key Executive’s
employment with the Employer; and

 

WHEREAS,
the Employer’s Board of Director’s has determined that it is in the best
interests of the Employer that, in exchange for the assurances and undertakings
provided below, it obtain from the Key Executive certain covenants which are of
significant benefit to the Employer;

 

NOW
THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the Employer and the Key Executive agree as follows:

 

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ARTICLE ONE -
DEFINITIONS

1.01        Definitions

 

In this Agreement, the following terms shall have the meanings set out
below unless the context requires otherwise:

 

“Annual Base Salary”
means the dollar value or any cash or non-cash base salary established by the
Management Resources and Compensation Committee of the Employer to be the
salary of the Key Executive, for the financial year covered, for the purposes
of calculation of any bonuses or other benefits, including insurance benefits,
401(k) savings plan, non-qualified compensation deferrals, or pension
entitlements that relate to or are calculated with reference to the salary or
other remuneration of the Key Executive.

“Cause” means:

 

(i)            the willful failure of the Key Executive
to carry out the Key Executive’s reasonable and lawful duties, responsibilities
or tasks after the Employer’s Board of Directors has given the Key Executive
written notice of the willful failure to do so, and the opportunity to correct
the same within a reasonable time from the date of receipt of such written
notice;

 

(ii)           Willful gross
misconduct, gross negligence, the commission of a criminal act, theft, fraud or
dishonesty by the Key Executive involving the property or affairs of the
Employer or the carrying out of the Key Executive’s duties, responsibilities
and tasks; or

 

(iii)          Willful engagement in
conduct that is demonstrably and materially injurious to the Employer,
monetarily or otherwise.

 

For purposes of this Agreement, the Key Executive’s employment shall be
deemed to have terminated for Cause if, after the Key Executive’s employment
has been terminated, facts and circumstances are discovered that would have
justified a termination for Cause.

 

“Change
in Control” means the occurrence at any date following
execution of this Agreement of any of the following events:

 

(i)            any change, either
through the issue, transfer, acquisition, conversion, exchange or otherwise of
shares, or through amalgamation, arrangement, merger or otherwise (the “Transaction”),
as a result of which the Employer ceases to exist as a separate legal entity
and the beneficial

 

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shareholders of the Employer immediately before such
change (not including any other party to the Transaction or any such beneficial
shareholder who was also a shareholder in such other party before the
Transaction) hold less than 50% of the shares or other securities of the entity
resulting from the change entitled to vote generally in the election of the
directors of the entity;

 

(ii)           any
change, either direct or indirect, in the beneficial ownership of Common Shares
as a result of which a Person or a group of Persons acting jointly or in
concert at arm’s length to the Employer, either individually or together with
its or their associates and affiliates, beneficially owns more than 20% of all
of the Common Shares.  For purposes of
this clause (ii), the terms “associate”, “affiliate” and “beneficial ownership”
shall have the same respective meanings as in the Securities Act (Ontario) as
may be amended from time to time;

 

(iii)          the consummation of any
transaction, whether by way of reorganization, consolidation, arrangement,
liquidation, transfer, exchange, sale or otherwise, whereby a Person or a group
of Persons acting jointly or in concert at arm’s length to the Employer, either
individually or together with its or their affiliates, acquires legal or
beneficial ownership of all or substantially all of the assets of the Employer,
other than in a transaction that would result in:

 

(A)          the
holders of Common Shares immediately prior to the completion of such
transaction (not including any such Person or any owner of such Person)
continuing to own more than 50% of the voting shares of the surviving entity
outstanding immediately following the completion of such transaction, and

 

(B)           a
majority of the members of the board of directors of the surviving entity
having been members of the board of directors of the Employer immediately prior
to the completion of such transaction; or

 

(iv)          the replacement by way
of election at any one time, or the appointment at any one or a series of
related times, of more than one-half of the members of the Board, if the
election or appointment of such replacement directors has

 

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not been approved by a majority of the members of the
Board in office immediately before such replacement.

 

If the Key Executive is
employed by IPSCO Enterprises Inc., or a successor subsidiary of the Employee
in the United States, “Employer” for purposes of this definition of “Change in
Control” shall mean either IPSCO Inc. or such United States Subsidiary.  In no event will a Change in Control be
deemed to have occurred, with respect to the Key Executive, if an employee
benefit plan maintained by the Employer or the Key Executive is part of a
purchasing group that consummates the Change in Control transaction.  The employee benefit plan or the Key
Executive will be deemed “part of a purchasing group” for purposes of the
preceding sentence if the plan or the Key Executive is an equity participant in
the purchasing company or group (except: 
(i) passive ownership of less than two percent (2%) of the stock of the
purchasing company; or (ii) ownership of equity participation in the purchasing
company or group that is otherwise not significant, as determined prior to the
Change in Control by a majority of the non-employee continuing directors).

 

“Common
Shares” means the common shares or any other securities of
the Employer entitled to vote generally in the election of members of the Board
as at any particular time.

 

“Communication” has
the meaning given to it in Section 5.08.

 

“Involuntary Termination”
means:

 

(i)            any termination by the
Employer of the Key Executive’s employment following any Change in Control that
is not due to Cause, which shall include a termination of the Key Executive’s
Employment due to:

 

(A)          the
death of the Key Executive; or

 

(B)           a
condition of total and continuing disability which renders the Key Executive
incapable of performing his essential job duties and functions for a period of
six (6) months; or

 

(ii)           any termination by the
Employer of the Key Executive’s employment, which is not due to Cause, that
occurs prior to the Change in Control at the request or direction of a
potential acquirer that ultimately participates in the Change in Control; or

 

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(iii)          the resignation of the
Key Executive from his employment with the Employer within 60 days of the
occurrence of any of the following events:

 

(A)          any
requirement by the Employer following any Change in Control that the Key
Executive’s position be based and principal office located outside a 40-mile
radius from the Key Executive’s principal office immediately prior to the
Change in Control;

 

(B)           any
material reduction in the Key Executive’s position, reporting relationship,
overall responsibilities or authority from that in effect immediately prior to
any Change in Control, or immediately prior to any reduction thereto made in
contemplation of the Change in Control;

 

(C)           any
material reduction in the Key Executive’s overall cash compensation (Annual
Base Salary plus target bonus opportunity) paid to him by the Employer as in
effect immediately prior to any Change in Control or as such overall
remuneration may have been subsequently increased from time to time; or

 

(D)          any
termination or material reduction in the aggregate value of the Key Executive’s
benefit programs, including, but not limited to, any pension plan, stock award
plan, investment plan, savings plan, incentive compensation plan or life
insurance, medical plans or disability plans provided by the Employer to the
Key Executive and in which the Key Executive is participating or under which
the Key Executive is covered, all as in effect immediately prior to any Change
in Control or as such benefit programs may have been subsequently increased
from time to time, that has not been replaced by benefit programs of any other
Person which provide the Key Executive with substantially equivalent benefits
and value under substantially equivalent terms and conditions as were provided
by the benefit programs in effect immediately prior to the Change in Control.

 

“Person”
shall include individuals, partnerships, associations, trusts, unincorporated
organizations and corporations.

 

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“Qualifying Term” means the twenty-four
(24) months following, or the six (6) months preceding, a Change in Control.

 

“Stock
Awards” means all options to purchase Common Shares of the
Employer granted to the Key Executive under the IPSCO Inc. Incentive Share
Option Plan or any successor or replacement of such plan, which have not been
exercised by the Key Executive as of any particular date, whether vested or
unvested, and any awards of equity interests of the Employer issued under an
equity incentive plan of the Employer.

 

“Termination Factor”
means the multiple that will be used to calculate the termination benefits set
forth in Section 3.02, which for the Key Executive shall equal 3.0.

 

 “Willful” means
any act done or omitted to be done by the Key Executive intentionally and
without reasonable belief that such act or omission was in the best interests
of the Employer.  An act shall not be
Willful if taken pursuant to advice of counsel engaged to represent the
Employer.

 

ARTICLE TWO - KEY
EXECUTIVE’S COVENANTS

 

2.01        Non-Disclosure

 

In consideration for the termination benefits described in Section 3.02
(a) through (i) hereof, the Key Executive shall not (either during the
continuance of his employment or at any time thereafter) disclose any
proprietary and confidential information of the Employer, including, without
limitation, the Employer’s financial data, business plans and trade secrets, to
any person other than for the Employer’s purposes and shall not (either during
the continuance of the employment or at any time thereafter) use for his own
purposes or for any purposes other than those of the Employer any such
information or secrets he may acquire in relation to the business of the
Employer.

 

2.02        Key
Executive to Remain Employed

 

In consideration for the termination benefits described in Section 3.02
(a) through (i) hereof, if a Person effects a Change in Control, the Key
Executive shall not voluntarily leave his employment with the Employer, other
than by way of retirement pursuant to the normal retirement plans of the
Employer, and shall continue to perform his duties related to his employment
until such Person has abandoned or terminated his or its efforts to effect a
Change in Control or until after a Change in Control has occurred.  Should the Key Executive voluntarily leave
his employment with the

 

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Employer contrary to this Section, the Key Executive shall, immediately
upon the cessation of his employment with the Employer, cease to be entitled to
any of the benefits provided for under this Agreement, but the Employer shall
have no other recourse against or claim against the Key Executive in respect of
his voluntary leaving his employment contrary to this Section 2.02.

 

2.03        Return
of Property; Assignment of Inventions

 

In consideration for the termination benefits described in Section 3.02
(a) through (i) hereof, immediately following the Involuntary Termination of
the Key Executive’s employment, the Key Executive shall at once:

 

(a)           deliver
or cause to be delivered to the Employer all books or other documents stored in
paper or electronic form, effects, money, securities or other property
belonging to the Employer or for which the Employer is liable to others, which
are in the possession, charge, control or custody of the Key Executive; and

 

(b)           assign
and transfer to the Employer, without any separate remuneration or compensation
other than the compensation already paid to the Key Executive, the Key
Executive’s entire right, title and interest in and to, together with all
United States and foreign patent rights and any other legal protection in and
with respect to, any and all Inventions (i) conceived or made by the Key
Executive while in the employ of the Employer and engaged in the Employer’s
affairs; (ii) developed using equipment, supplies, facilities or trade secrets
of the Employer; or (iii) relating to the Employer’s business or current or
anticipated research and development. 
For purposes of this Agreement, “Invention” shall include, but not be
limited to any discovery, machine, mechanism, device, apparatus, equipment,
idea, process, method, design, development, improvement, concept, application,
technique, formulation, composition of matter, product, technology,
programming, code or any combination of these whether patentable or not, and
whether reduced to practice or not, which relates to the business of the Employer.

 

2.04        Non-Competition;
Non-Solicitation

 

In consideration for the termination benefits described in Section 3.02
(a) through (i) hereof, for the period which is the lesser the termination
factor for the Executive multiplied by twelve (12) or twenty-four (24) months
immediately after the Involuntary Termination of the Key Executive’s

 

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employment with the Employer, in any state in the United States and any
country in the world outside of the United States in which Company conducts
business on the date of termination, the Key Executive shall not:

 

(a)           invest
in (other than in a publicly traded company with a maximum investment of no
more than 1% of outstanding shares), counsel, advise, consult or be otherwise
engaged or employed by any entity engaged in the manufacturing and sale of hot
rolled coiled steel and steel plate products and steel tubular goods.

 

(b)           either
directly or indirectly, either for the Key Executive or for any other person,
firm, company or corporation, call upon, solicit, divert, or take away, or
attempt to solicit, divert or take away any of the customers, prospective
customers, business, vendors or suppliers of the Employer that the Key
Executive had dealings with, or responsibility for, or the Key Executive had
access to confidential information of, such customers, vendors or suppliers;

 

(c)           without
the prior written consent of the Employer, (i) directly or indirectly, solicit
or recruit (whether as an employee, officer, director, agent, consultant or
independent contractor) any person who was or is at any time during the
previous six (6) months an employee, representative, officer or director of the
Employer or (ii) take any action to encourage or induce any employee,
representative, officer or director of the Employer to cease their relationship
with the Employer for any reason.

 

2.05        Enforcement

 

If any of the provisions or subparts of this Article 2 shall be held to
be invalid or unenforceable by a court of competent jurisdiction, the remaining
provisions or subparts thereof shall continue to be valid and enforceable
according to their terms.  Further, if
any restriction contained in the provisions or subparts of this Article Two is
held to be overbroad or unreasonable as written, the parties agree that the
applicable provision should be considered to be amended to reflect the maximum
period, scope or geographical area deemed reasonable and enforceable by the
court and enforced as amended.

 

2.06        Remedy
for Breach

 

Because the Key Executive’s services are unique and because the Key
Executive has access to confidential information and trade secrets of the

 

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Employer, the parties agree that any breach or threatened breach of
this Article Two will cause irreparable harm to the Employer and that money
damages alone would be an inadequate remedy. 
The parties therefore agree that, in the event of any breach or
threatened breach of this Article Two, and in addition to all other rights and
remedies available to it, the Employer may apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief,
without a bond, in order to enforce or prevent any violations of the provisions
of this Article Two.  The Key Executive
acknowledges and agrees that nothing contained herein shall be construed to be
an excessive remedy to prohibit the Employer from pursuing any other remedies
available to it for such actual or threatened breach, including but not limited
to the recovery of money damages, proximately caused by Key Executive’s breach
of this Article Two.

 

2.07        Survival

 

The provisions of this Article Two shall survive and continue in full
force in accordance with their terms notwithstanding any termination of this
Agreement.

 

ARTICLE THREE -
TERMINATION OF EMPLOYMENT

 

3.01        Conditions
Precedent to the Provision of Termination Benefits

 

The termination benefits set forth in Section 3.02 (a) through (i)
shall become due and payable if and only if:

 

(a)           there
has been a Change in Control; and

 

(b)           an
Involuntary Termination of the employment of the Key Executive with the
Employer has occurred within the Qualifying Term.

 

3.02        Termination
Benefits

 

Upon the Involuntary Termination of the employment of the Key Executive
with the Employer, the Employer shall pay to the Key Executive the amount of
any unpaid salary earned by the Key Executive up to and including the date of
such Involuntary Termination, and any unpaid vacation pay earned by him up to
and including the date of such Involuntary Termination.  In addition, if both of the events set forth
in Section 3.01 have occurred, the Employer shall, within 30 days of the date
of the later of such events to occur:

 

(a)           pay to the
Key Executive an amount equal to his or her Annual Base Salary (including any
portion of such salary that is being

 

9

 

deferred in accordance
with any salary or compensation deferral arrangement or agreement then in
effect between the Key Executive and the Employer) in effect immediately before
the Involuntary Termination, but disregarding any reduction in the same made in
contemplation of the Change in Control, multiplied by the Termination Factor,
which payment shall be deemed to include any claim which the Key Executive may
have during such period to sick pay or short-term disability benefits and any
statutory severance pay which may be owed;

 

(b)           pay to the
Key Executive an amount equal to the Key Executive’s target bonus amount for
the fiscal year in which such Involuntary Termination occurs (or, if greater,
for the fiscal year in which the Change in Control occurs) pursuant to any
annual bonus plan maintained by the Employer, multiplied by the Termination
Factor;

 

(c)           continue
to make the Employer contributions necessary to maintain the Key Executive’s
coverage pursuant to the Employer’s benefit plans applicable to the Key
Executive for the life insurance, medical and dental benefit coverage, provided
the Key Executive continues to make the regular Key Executive contributions,
from the date of the Involuntary Termination until the earlier of (i) the
expiry of the ensuing twenty-four (24) month period or (ii) the date on which
the Key Executive receives comparable coverage under the plans and programs of
a subsequent employer; provided, however, that upon expiration of such
continued benefits, the Key Executive shall be further entitled to continued
health, dental and vision insurance benefits as required under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”), subject to the Key
Executive’s timely election of COBRA healthcare continuation coverage;

 

(d)           credit the
Key Executive with an additional 36 months of service for the purposes of any
pension plan or pension arrangements in which the Key Executive participated or
which pertained to the Key Executive immediately prior to such Involuntary
Termination or which were in effect on the effective date of the Change in
Control, whichever were more beneficial to the Key Executive from the date of
the Involuntary Termination until the expiry of the Termination Period.  To the extent that the Employer is prohibited
by applicable law from satisfying this covenant, the Employer shall pay to the
Key Executive, forthwith after the

 

10

 

Change in Control, such
amount as may be necessary to provide the Key Executive with equivalent
value.  To the extent the applicable
pension plan or pension arrangement is a non-qualified, defined benefit pension
plan, the Employer shall pay to the Key Executive a lump sum that is
actuarially equivalent to the additional months of service, rather than
crediting additional months of service within the operation of such plan;

 

(e)           confirm
that all stock options held by the Key Executive immediately prior to the
Involuntary Termination which have not been exercised by the Key Executive
shall continue to be exercisable for the duration of their respective exercise
periods.  All Stock Awards, including
stock options, not vested on the date of a Change in Control shall vest in
accordance with the terms of the applicable equity plan and award agreement;

 

(f)            confirm
the continuation of all salary deferral arrangements or agreements then in
effect between the Key Executive and the Employer;

 

(g)           if any
payment or benefit to or for the benefit of the Key Executive pursuant to the
terms of this Agreement, or any other plan of or arrangement or agreement with
the Employer or any affiliate of the Employer (referred to as “Total Payments”)
is subject to the Excise Tax (as hereinafter defined), the Employer shall pay
to the Key Executive an additional amount such that the net amount retained by
the Key Executive after deduction of any Excise Tax, and any federal, state and
local income and employment tax and Excise Tax imposed upon the additional
amount under this paragraph (g), shall be equal to the Total Payments.  The term “Excise Tax” shall mean the tax
imposed by Section 4999 of the United States Internal Revenue Code of 1986, as
amended (the “Code”), and any similar tax that may hereafter be imposed.

 

The amount of the
payment to the Key Executive under this paragraph (g) shall be estimated by a
nationally recognized firm of certified public accounts or employee benefits
consultants, based upon the following assumptions:

 

(i)            all payments and
benefits to or for the benefit of the Key Executive in connection with a Change
in Control of the Employer or termination of the Key Executive’s employment
following a Change in Control of the Employer shall be deemed to be “parachute
payments” within

 

11

 

the meaning of Section 280G(b)(2) of the Code, and all
“excess parachute payments” shall be deemed to be subject to the Excise Tax
except to the extent that, in the opinion of tax counsel selected by the firm
so charged with estimating the payment to the Key Executive under this
paragraph (g), such payments or benefits are not subject to the Excise Tax; and

 

(ii)           the Key Executive shall
be deemed to pay federal, provincial, state and local taxes at the highest
marginal rate of taxation for the applicable calendar year.

 

The Employer shall
pay the fees charged by such firm in preparing such estimate.

 

The estimated
amount of the payment due the Key Executive pursuant to this paragraph (g)
shall be paid to the Key Executive in a lump sum not later than thirty (30)
business days following the delivery of such estimate to the Key Executive and
the Employer.  In the event that the
amount of the estimated payment is less than the amount actually due to the Key
Executive under this paragraph (g), the amount of any such shortfall shall be
paid to the Key Executive within ten (10) days after the existence of the
shortfall is discovered.

 

(h)           to the
extent that any payment under this Agreement is deemed to be deferred
compensation subject to the requirements of Section 409A of the Code, the
Employer and the Key Executive shall amend this Agreement, as necessary, so
that such payments will be made in accordance with the requirements of Section
409A of the Code; provided, however, that, if any payment due to the Key
Executive is delayed as a result of Section 409A of the Code, the Key Executive
shall be entitled to be paid interest on such amount at an annual rate equal to
the prime rate, as published in the Wall Street Journal, plus 2%, in effect as
of the Key Executive’s date of termination. 
Such delayed payments will be paid at the earliest date permitted under
Section 409A of the Code.  Amendment of
the Agreement to comply with Section 409A of the Code will not result in the
Key Executive being entitled to receive any reduced or enhanced benefit under
this Agreement.  Notwithstanding the
foregoing, in the event the Key Executive is subjected to income or excise
taxes or other penalties under Section 409A of the Code by virtue of any amount
due to him, the Employer will pay an additional amount to the Key Executive to
make the Key

 

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Executive whole for such
taxes.  Such additional amount will be
paid to the Key Executive not later than the due date of the Key Executive’s
tax return for the year in which the tax or penalty is imposed; and

 

(i)            In the
event the Key Executive’s Involuntary Termination occurs as a result of death
or disability following a Change in Control, the cash payments provided in this
Section 3.02 shall be offset by any life insurance, death, or disability
benefits payable to the Key Executive during the 36 months following the
Involuntary Termination pursuant to a life insurance, death benefit or
disability plan maintained by the Employer.

 

3.03        Legal
Costs

 

If a dispute arises regarding:

 

(a)           whether or
not a Change in Control or an Involuntary Termination has occurred;

 

(b)           the
validity, interpretation or enforcement of this Agreement; or

 

(c)           the right
of the Key Executive to receive any termination benefits referred to in this
Agreement;

 

the
Employer shall reimburse to or at the direction of the Key Executive all
reasonable legal fees and expenses incurred by the Key Executive relating to
such dispute if the Key Executive prevails in any material respect.

 

3.04        Fair
and Reasonable

 

The parties confirm that termination benefits described in Section 3.02
(a) through (i) are fair and reasonable and that the termination benefits as
outlined in this Article Three are a reasonable estimate of the damages which
will be suffered by the Key Executive in the event of an Involuntary
Termination within twenty-four (24) months following a Change in Control and that
such termination benefits shall not be construed as a penalty.

 

3.05        No
Duty to Mitigate

 

In the event of an Involuntary Termination within twenty-four (24)
months following a Change in Control, the Key Executive shall not be required
to mitigate his damages by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced in any
respect if the Key Executive shall not reasonably pursue alternate employment.

 

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3.06        Security for Payments

 

If a Change in Control is anticipated to occur, the Employer shall
forthwith make such arrangements as may, in the view of the Board, be prudent
and advisable to assure the ability of the Employer to pay any amounts set
forth in Section 3.02, including, without limitation, by arranging for one or
more letters of credit, depositing funds in trust or making such other
arrangements as then seem appropriate for such purpose.

 

ARTICLE FOUR -
RELEASE

 

4.01        Release

 

As a condition to receiving the termination benefits referred to in
Section 3.02 (a) through (i) hereof, the Key Executive shall execute the
Release and Indemnity in favor of the Employer in the form attached hereto as
Schedule “A”.

 

4.02        Rights
under Agreement

 

Section 4.01 shall not apply to any actions, causes of action, claims
or demands which the Key Executive may have relating to the failure or the
refusal of the Employer to comply with the terms of this Agreement.

 

ARTICLE FIVE -
GENERAL

 

5.01        Sections
and Headings

 

The division of this Agreement into Articles and Sections and the
insertion of headings are for the convenience of reference only and shall not
affect the construction or interpretation of this Agreement.  The terms “this Agreement”, “hereof”, “hereunder”
and similar expressions refer to this Agreement and not to any particular
Article, Section or other portion hereof and include any agreement or
instrument supplemental or ancillary hereto. 
Unless something in the subject matter or context is inconsistent
therewith, references herein to Articles and Sections are to Articles and
Sections of this Agreement.

 

5.02        Number

 

In this Agreement words importing the singular number only shall
include the plural and vice versa and words importing the masculine gender
shall include the feminine and neuter genders and vice versa and words
importing persons shall include individuals, partnerships, associations,
trusts, unincorporated organizations and corporations and vice versa.

 

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5.03        Benefit
of Agreement

 

This Agreement shall inure to the benefit of and be binding upon the
heirs, executors, administrators and legal personal representatives of the Key
Executive and the successors and assigns of the Employer, respectively.  The Employer shall ensure that any Person
acquiring legal or beneficial ownership of all or substantially all of the
assets of the Employer in a transaction which constitutes a Change in Control
pursuant to paragraph (iii) of the definition of “Change in Control” agrees to
assume all of the obligations of the Employer under this Agreement, jointly and
severally with the Employer.  If the Key
Executive dies after becoming entitled to payments made hereunder but before
all such payments are made, all remaining payments will be made to the
beneficiary designated by the Key Executive pursuant to reasonable procedures
established by the Employer, or in the absence thereof, to the estate of the
Key Executive.

 

5.04        Entire
Agreement

 

This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof, cancels, and supersedes any prior understandings and
agreements between the parties hereto with respect thereto.  There are no representations, warranties,
forms, conditions, undertakings or collateral agreements, express, implied or
statutory between the parties other than as expressly set forth in this
Agreement. The Key Executive waives any right to assert a claim based on any
pre-contractual representations, negligent or otherwise, made by the Employer.

 

5.05        Amendments
and Waivers

 

No amendment to this Agreement shall be valid or binding unless set
forth in writing and duly executed by both of the parties hereto.  No waiver of any breach of any provision of
this Agreement shall be effective or binding unless made in writing and signed
by the party purporting to give the same and, unless otherwise provided in the
written waiver, shall be limited to the specific breach waived.

 

5.06        No
Assignment

 

This Agreement may not be assigned by the Employer without the written
consent of the Key Executive.

 

15

 

5.07        Severability

 

If any provision in this Agreement is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability shall
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof shall continue in full force and
effect.

 

5.08        Notices

 

Any demand, notice or other communication (hereinafter in this Section
5.08 referred to as a “Communication”) to be given in connection with this
Agreement shall be given in writing and may be given by personal delivery or by
registered mail addressed to the recipient as follows:

 

To the Key Executive:

 

to the address on file with the Human Resources
Department of the Employer

 

To the Employer:

 

IPSCO Inc.

650 Warrenville Road, Ste. 500

Lisle, Illinois 60532

Attn: General Counsel

 

or
such other address or individual as may be designated by notice by either party
to the other.  Any Communication given by
personal delivery shall be conclusively deemed to have been given on the day of
actual delivery thereof and, if made or given by registered mail, on the third
day, other than a Saturday, Sunday or statutory holiday in Illinois, following
the deposit thereof in the mail.  If the
party giving any Communication knows or ought reasonably to know of any
difficulties with the postal system, which might affect the delivery of mail,
any such Communication shall not be mailed but shall be given by personal
delivery.

 

5.09        Governing
Law

 

This Agreement shall be governed by and construed in accordance with
the law of the State of Illinois, without regard to conflicts of law
principles.

 

5.10        Copy
of Agreement; Counterparts

 

The Key Executive hereby acknowledges receipt of a copy of this
Agreement duly signed by the Employer. 
The Agreement may be executed

 

16

 

in one or more counterparts, all of which together shall constitute but
one Agreement.

 

5.11        Independent
Legal Advice

 

The Key Executive hereby acknowledges that he has had the opportunity
to obtain independent legal advice with respect to the Agreement.

 

IN WITNESS WHEREOF the
parties have executed this Agreement as of the day and year first above
written.

 

	
  SIGNED, AND DELIVERED BY

  	
   

  
	
   

  	
   

  
	
  David Stewart Sutherland

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  in the presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ David
  Stewart Sutherland

  	
   

  
	
  SIGNATURE OF WITNESS

  	
  David Stewart
  Sutherland

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IPSCO INC.

  
	
   

  	
   

  
	
   

  	
  Per: 

  	
  /s/ Raymond J. Rarey

  	
   

  
	
   

  	
   

  	
  Raymond J. Rarey

  
	
   

  	
   

  	
   

  
	
   

  	
  Per: 

  	
  /s/ Leslie T. Lederer

  	
   

  
	
   

  	
   

  	
  Leslie T. Lederer

  
	
   

  	
   

  	
   

  
	
   

  	
  Per: 

  	
  /s/ Burton M. Joyce

  	
   

  
	
   

  	
   

  	
  Burton M. Joyce

  
						

 

17

 

SCHEDULE “A”

 

Release and
Indemnity

 

WHEREAS, my
employment with IPSCO Inc. or any subsidiary of it was terminated within the
meaning of an Agreement dated            ,
20    ;

 

WHEREAS, I have
agreed to accept the termination benefits set out in the Agreement that is
attached hereto, less all applicable deductions, and other good and valuable
consideration in full settlement of any and all claims I may have relating to
my employment with IPSCO or its subsidiary or the termination thereof and the
termination of any employment agreement between me and my employer as a consequence
thereof;

 

NOW, THEREFORE, WITNESSETH, that
in consideration of the terms of settlement outlined above, I hereby release
and forever discharge IPSCO Inc. and any corporations associated therewith or
related thereto and their respective directors, officers, employees and agents
(collectively referred to as the “Releases”) from any and all actions, causes
of action, claims and demands arising from my employment with IPSCO Inc. or any
corporations associated therewith or related thereto or the termination of that
employment, including any claims pursuant to applicable statutes, including any
claims for overtime pay, public holiday pay, vacation pay, termination pay,
severance pay and pay in lieu of reasonable notice and including any and all
actions, causes of action, claims or demands arising under my employment
agreement with IPSCO Inc.

 

FOR THE SAID CONSIDERATION, I
further agree not to make any claim or take any proceedings against any other
individual, partnership, association, trust, unincorporated organization or
corporation with respect to any matters which may have arisen between me and
the Releases or any one of them for contribution or indemnity or other relief
over; and

 

FURTHERMORE, for the
aforesaid consideration, I hereby agree to indemnify and save harmless the
Releases from any and all claims or demands under any applicable income tax,
social security or insurance, pension, employment insurance or other similar
statute providing for the remittance of amounts to any governmental authority
from employment compensation, including any regulations made thereunder and any
other statute or regulations, for or in respect of any failure on the part of
the Releases to withhold income tax, social security or insurance, pension
premiums or employment insurance premiums or benefit overpayments or any other
tax, premium, payment or levy from all or any part of the said

 

1

 

consideration and any interest or penalties relating thereto and any
costs or expenses incurred in defending such claims or demands; and

 

I HEREBY FURTHER DECLARE that
I have had the opportunity to seek independent legal advice with respect to the
terms of settlement as well as this Release and Indemnity and I fully
understand them.  I hereby voluntarily
accept the said terms for the purpose of making full and final compromise,
adjustment and settlement of all claims as aforesaid.

 

NOTWITHSTANDING THE FOREGOING,
this Release and Indemnity shall not apply to any actions, causes of action,
claims or demands which I may have relating to the failure or the refusal of
IPSCO Inc. to comply with the terms of the Agreement or this Release and
Indemnity.

 

THIS RELEASE AND INDEMNITY shall
be deemed to have been made in and shall be construed in accordance with the
laws of Illinois and the laws of Canada applicable therein.

 

THIS RELEASE AND INDEMNITY shall
enure to the benefit of and be binding upon me and the Releases and our
respective heirs, executors, administrators and legal personal representatives,
successors and assigns.

 

IN WITNESS WHEREOF I
have executed this Release and Indemnity as of the         
day of                ,
20    .

 

 

	
  SIGNED, AND DELIVERED BY

  	
   

  
	
   

  	
   

  
	
  David Stewart Sutherland

  	
   

  
	
   

  	
   

  
	
  in the presence of:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATURE OF WITNESS

  	
  David Stewart
  Sutherland

  
			

 

2Exhibit 10.7

 

IPSCO
Inc.

2005 Form 10-K

 

CHANGE
IN CONTROL AGREEMENT

 

THIS IS AN AGREEMENT made
as of this 18TH day of November 2005,

 

 

B E T W E E N:

 

VICKI LEE
AVRIL

 

(hereinafter referred to as the
“Key Executive”),

 

OF THE FIRST PART,

 

- and -

 

IPSCO INC.

a corporation
incorporated under the laws of Canada

 

(hereinafter referred to as the
“Employer”),

 

OF THE SECOND PART.

 

WHEREAS, the Key Executive is employed by the
Employer or a subsidiary of the Employer (referred to as the “Employer” herein)
in a senior executive capacity; and

 

WHEREAS, the
Employer considers that the service of the Key Executive to the Employer
entitles the Key Executive to receive the benefits set forth in this Agreement
in the event of the Involuntary Termination of the Key Executive’s employment
within the Qualifying Term before or after a Change in Control; and

 

 

WHEREAS, the
Employer recognizes that the uncertainty and insecurity that may arise as a
result of the occurrence of a Change in Control could lead to the departure of
the Key Executive to the detriment of the Employer and its shareholders; and

 

WHEREAS, a Change
in Control of the Employer, while not currently in contemplation, is a
possibility; and

 

WHEREAS, the
Employer considers it in the best interests of the Employer and its
shareholders that the Key Executive have a strong incentive to remain in the
employ of the Employer so as to maximize the value of the Employer; and

 

WHEREAS, the
Employer considers that in order to assist in the continued dedication of the
Key Executive to the Employer, it is important to establish contractual
arrangements that provide incentives to the Key Executive to continue in the
employ of the Employer notwithstanding the possibility or occurrence of a
Change in Control and provide financial security to the Key Executive in the
event of the Involuntary Termination of the Key Executive’s employment within
the Qualifying Term before or after a Change in Control; and

 

WHEREAS, the
Employer and the Key Executive acknowledge that the compensation and benefits
payable to the Key Executive hereunder and the consideration and covenants that
flow from the Key Executive to the Employer are fair and reasonable having
regard to all of the circumstances of the Key Executive’s employment with the
Employer; and

 

WHEREAS, the
Employer’s Board of Director’s has determined that it is in the best interests
of the Employer that, in exchange for the assurances and undertakings provided
below, it obtain from the Key Executive certain covenants which are of significant
benefit to the Employer;

 

NOW THEREFORE, in
consideration of the mutual covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the Employer and the
Key Executive agree as follows:

 

1

 

ARTICLE ONE - DEFINITIONS

 

1.01                        Definitions

 

In this Agreement, the following terms shall
have the meanings set out below unless the context requires otherwise:

 

“Annual Base Salary”
means the dollar value or any cash or non-cash base salary established by the
Management Resources and Compensation Committee of the Employer to be the
salary of the Key Executive, for the financial year covered, for the purposes
of calculation of any bonuses or other benefits, including insurance benefits,
401(k) savings plan, non-qualified compensation deferrals, or pension
entitlements that relate to or are calculated with reference to the salary or
other remuneration of the Key Executive.

 

“Cause” means:

 

(i)                                     the willful failure of the Key Executive
to carry out the Key Executive’s reasonable and lawful duties, responsibilities
or tasks after the Employer’s Board of Directors has given the Key Executive
written notice of the willful failure to do so, and the opportunity to correct
the same within a reasonable time from the date of receipt of such written
notice;

 

(ii)                                  Willful
gross misconduct, gross negligence, the commission of a criminal act, theft,
fraud or dishonesty by the Key Executive involving the property or affairs of
the Employer or the carrying out of the Key Executive’s duties,
responsibilities and tasks; or

 

(iii)                               Willful engagement in
conduct that is demonstrably and materially injurious to the Employer,
monetarily or otherwise.

 

For purposes of this Agreement, the Key Executive’s employment shall be
deemed to have terminated for Cause if, after the Key Executive’s employment
has been terminated, facts and circumstances are discovered that would have
justified a termination for Cause.

 

“Change in Control” means the
occurrence at any date following execution of this Agreement of any of the
following events:

 

(i)                                     any
change, either through the issue, transfer, acquisition, conversion, exchange
or otherwise of shares, or through amalgamation, arrangement, merger or
otherwise (the “Transaction”), as a result of which the Employer ceases to
exist as a separate legal entity and the beneficial

 

2

 

shareholders
of the Employer immediately before such change (not including any other party
to the Transaction or any such beneficial shareholder who was also a
shareholder in such other party before the Transaction) hold less than 50% of
the shares or other securities of the entity resulting from the change entitled
to vote generally in the election of the directors of the entity;

 

(ii)                                  any
change, either direct or indirect, in the beneficial ownership of Common Shares
as a result of which a Person or a group of Persons acting jointly or in
concert at arm’s length to the Employer, either individually or together with
its or their associates and affiliates, beneficially owns more than 20% of all
of the Common Shares.  For purposes of
this clause (ii), the terms “associate”, “affiliate” and “beneficial ownership”
shall have the same respective meanings as in the Securities Act (Ontario) as
may be amended from time to time;

 

(iii)                               the consummation of any
transaction, whether by way of reorganization, consolidation, arrangement,
liquidation, transfer, exchange, sale or otherwise, whereby a Person or a group
of Persons acting jointly or in concert at arm’s length to the Employer, either
individually or together with its or their affiliates, acquires legal or
beneficial ownership of all or substantially all of the assets of the Employer,
other than in a transaction that would result in:

 

(A)                              the
holders of Common Shares immediately prior to the completion of such
transaction (not including any such Person or any owner of such Person)
continuing to own more than 50% of the voting shares of the surviving entity
outstanding immediately following the completion of such transaction, and

 

(B)                                a
majority of the members of the board of directors of the surviving entity
having been members of the board of directors of the Employer immediately prior
to the completion of such transaction; or

 

(iv)                              the
replacement by way of election at any one time, or the appointment at any one
or a series of related times, of more than one-half of the members of the
Board, if the election or appointment of such replacement directors has

 

3

 

not been
approved by a majority of the members of the Board in office immediately before
such replacement.

 

If
the Key Executive is employed by IPSCO Enterprises Inc., or a successor
subsidiary of the Employee in the United States, “Employer” for purposes of
this definition of “Change in Control” shall mean either IPSCO Inc. or such
United States Subsidiary.  In no event
will a Change in Control be deemed to have occurred, with respect to the Key
Executive, if an employee benefit plan maintained by the Employer or the Key
Executive is part of a purchasing group that consummates the Change in Control
transaction.  The employee benefit plan
or the Key Executive will be deemed “part of a purchasing group” for purposes
of the preceding sentence if the plan or the Key Executive is an equity
participant in the purchasing company or group (except:  (i) passive ownership of less than two
percent (2%) of the stock of the purchasing company; or (ii) ownership of
equity participation in the purchasing company or group that is otherwise not
significant, as determined prior to the Change in Control by a majority of the
non-employee continuing directors).

 

“Common Shares” means the common
shares or any other securities of the Employer entitled to vote generally in
the election of members of the Board as at any particular time.

 

“Communication” has
the meaning given to it in Section 5.08.

 

“Involuntary
Termination” means:

 

(i)                                     any
termination by the Employer of the Key Executive’s employment following any
Change in Control that is not due to Cause, which shall include a termination
of the Key Executive’s Employment due to:

 

(A)                              the
death of the Key Executive; or

 

(B)                                a
condition of total and continuing disability which renders the Key Executive
incapable of performing his essential job duties and functions for a period of
six (6) months; or

 

(ii)                                  any
termination by the Employer of the Key Executive’s employment, which is not due
to Cause, that occurs prior to the Change in Control at the request or
direction of a potential acquirer that ultimately participates in the Change in
Control; or

 

4

 

(iii)                               the resignation of the
Key Executive from his employment with the Employer within 60 days of the
occurrence of any of the following events:

 

(A)                              any
requirement by the Employer following any Change in Control that the Key
Executive’s position be based and principal office located outside a 40-mile
radius from the Key Executive’s principal office immediately prior to the
Change in Control;

 

(B)                                any
material reduction in the Key Executive’s position, reporting relationship,
overall responsibilities or authority from that in effect immediately prior to
any Change in Control, or immediately prior to any reduction thereto made in
contemplation of the Change in Control;

 

(C)                                any
material reduction in the Key Executive’s overall cash compensation (Annual
Base Salary plus target bonus opportunity) paid to him by the Employer as in
effect immediately prior to any Change in Control or as such overall
remuneration may have been subsequently increased from time to time; or

 

(D)                               any
termination or material reduction in the aggregate value of the Key Executive’s
benefit programs, including, but not limited to, any pension plan, stock award
plan, investment plan, savings plan, incentive compensation plan or life
insurance, medical plans or disability plans provided by the Employer to the
Key Executive and in which the Key Executive is participating or under which the
Key Executive is covered, all as in effect immediately prior to any Change in
Control or as such benefit programs may have been subsequently increased from
time to time, that has not been replaced by benefit programs of any other
Person which provide the Key Executive with substantially equivalent benefits
and value under substantially equivalent terms and conditions as were provided
by the benefit programs in effect immediately prior to the Change in Control.

 

“Person” shall include
individuals, partnerships, associations, trusts, unincorporated organizations
and corporations.

 

5

 

“Qualifying Term”
means the twenty-four (24) months following, or the six (6) months
preceding, a Change in Control.

 

“Stock Awards” means all options
to purchase Common Shares of the Employer granted to the Key Executive under
the IPSCO Inc. Incentive Share Option Plan or any successor or replacement of
such plan, which have not been exercised by the Key Executive as of any particular
date, whether vested or unvested, and any awards of equity interests of the
Employer issued under an equity incentive plan of the Employer.

 

“Termination Factor”
means the multiple that will be used to calculate the termination benefits set
forth in Section 3.02, which for the Key Executive shall equal 2.5.

 

 “Willful” means any act done or omitted to be done by the
Key Executive intentionally and without reasonable belief that such act or
omission was in the best interests of the Employer.  An act shall not be Willful if taken pursuant
to advice of counsel engaged to represent the Employer.

 

ARTICLE TWO - KEY EXECUTIVE’S COVENANTS

 

2.01                        Non-Disclosure

 

In consideration for the termination benefits
described in Section 3.02 (a) through (i) hereof, the Key
Executive shall not (either during the continuance of his employment or at any
time thereafter) disclose any proprietary and confidential information of the
Employer, including, without limitation, the Employer’s financial data,
business plans and trade secrets, to any person other than for the Employer’s
purposes and shall not (either during the continuance of the employment or at
any time thereafter) use for his own purposes or for any purposes other than
those of the Employer any such information or secrets he may acquire in
relation to the business of the Employer.

 

2.02                        Key
Executive to Remain Employed

 

In consideration for the termination benefits
described in Section 3.02 (a) through (i) hereof, if a Person
effects a Change in Control, the Key Executive shall not voluntarily leave his
employment with the Employer, other than by way of retirement pursuant to the
normal retirement plans of the Employer, and shall continue to perform his
duties related to his employment until such Person has abandoned or terminated
his or its efforts to effect a Change in Control or until after a Change in
Control has occurred.  Should the Key
Executive voluntarily leave his employment with the

 

6

 

Employer contrary to this
Section, the Key Executive shall, immediately upon the cessation of his
employment with the Employer, cease to be entitled to any of the benefits
provided for under this Agreement, but the Employer shall have no other
recourse against or claim against the Key Executive in respect of his voluntary
leaving his employment contrary to this Section 2.02.

 

2.03                        Return of
Property; Assignment of Inventions

 

In consideration for the termination benefits
described in Section 3.02 (a) through (i) hereof, immediately
following the Involuntary Termination of the Key Executive’s employment, the
Key Executive shall at once:

 

(a)                                  deliver
or cause to be delivered to the Employer all books or other documents stored in
paper or electronic form, effects, money, securities or other property
belonging to the Employer or for which the Employer is liable to others, which
are in the possession, charge, control or custody of the Key Executive; and

 

(b)                                 assign
and transfer to the Employer, without any separate remuneration or compensation
other than the compensation already paid to the Key Executive, the Key
Executive’s entire right, title and interest in and to, together with all
United States and foreign patent rights and any other legal protection in and
with respect to, any and all Inventions (i) conceived or made by the Key
Executive while in the employ of the Employer and engaged in the Employer’s
affairs; (ii) developed using equipment, supplies, facilities or trade
secrets of the Employer; or (iii) relating to the Employer’s business or
current or anticipated research and development.  For purposes of this Agreement, “Invention”
shall include, but not be limited to any discovery, machine, mechanism, device,
apparatus, equipment, idea, process, method, design, development, improvement,
concept, application, technique, formulation, composition of matter, product,
technology, programming, code or any combination of these whether patentable or
not, and whether reduced to practice or not, which relates to the business of
the Employer.

 

2.04                        Non-Competition;
Non-Solicitation

 

In consideration for the termination benefits
described in Section 3.02 (a) through (i) hereof, for the period
which is the lesser the termination factor for the Executive multiplied by
twelve (12) or twenty-four (24) months immediately after the Involuntary
Termination of the Key Executive’s

 

7

 

employment with the Employer,
in any state in the United States and any country in the world outside of the
United States in which Company conducts business on the date of termination,
the Key Executive shall not:

 

(a)           invest in (other than in a publicly
traded company with a maximum investment of no more than 1% of outstanding
shares), counsel, advise, consult or be otherwise engaged or employed by any
entity engaged in the manufacturing and sale of hot rolled coiled steel and
steel plate products and steel tubular goods.

 

(b)           either directly or indirectly, either
for the Key Executive or for any other person, firm, company or corporation,
call upon, solicit, divert, or take away, or attempt to solicit, divert or take
away any of the customers, prospective customers, business, vendors or
suppliers of the Employer that the Key Executive had dealings with, or
responsibility for, or the Key Executive had access to confidential information
of, such customers, vendors or suppliers;

 

(c)           without the prior written consent of
the Employer, (i) directly or indirectly, solicit or recruit (whether as
an employee, officer, director, agent, consultant or independent contractor)
any person who was or is at any time during the previous six (6) months an
employee, representative, officer or director of the Employer or (ii) take
any action to encourage or induce any employee, representative, officer or
director of the Employer to cease their relationship with the Employer for any
reason.

 

2.05                        Enforcement

 

If any of the provisions or subparts of this Article Two
shall be held to be invalid or unenforceable by a court of competent
jurisdiction, the remaining provisions or subparts thereof shall continue to be
valid and enforceable according to their terms. 
Further, if any restriction contained in the provisions or subparts of
this Article Two is held to be overbroad or unreasonable as written, the
parties agree that the applicable provision should be considered to be amended
to reflect the maximum period, scope or geographical area deemed reasonable and
enforceable by the court and enforced as amended.

 

2.06                        Remedy for
Breach

 

Because the Key Executive’s services are
unique and because the Key Executive has access to confidential information and
trade secrets of the

 

8

 

Employer, the parties agree
that any breach or threatened breach of this Article Two will cause
irreparable harm to the Employer and that money damages alone would be an
inadequate remedy.  The parties therefore
agree that, in the event of any breach or threatened breach of this Article Two,
and in addition to all other rights and remedies available to it, the Employer
may apply to any court of competent jurisdiction for specific performance
and/or injunctive or other relief, without a bond, in order to enforce or
prevent any violations of the provisions of this Article Two.  The Key Executive acknowledges and agrees
that nothing contained herein shall be construed to be an excessive remedy to
prohibit the Employer from pursuing any other remedies available to it for such
actual or threatened breach, including but not limited to the recovery of money
damages, proximately caused by Key Executive’s breach of this Article Two.

 

2.07                        Survival

 

The provisions of this Article Two shall
survive and continue in full force in accordance with their terms
notwithstanding any termination of this Agreement.

 

ARTICLE THREE - TERMINATION OF EMPLOYMENT

 

3.01                        Conditions
Precedent to the Provision of Termination Benefits

 

The termination benefits set forth in Section 3.02
(a) through (i) shall become due and payable if and only if:

 

(a)                                  there
has been a Change in Control; and

 

(b)                                 an
Involuntary Termination of the employment of the Key Executive with the
Employer has occurred within the Qualifying Term.

 

3.02                        Termination
Benefits

 

Upon the Involuntary Termination of the
employment of the Key Executive with the Employer, the Employer shall pay to
the Key Executive the amount of any unpaid salary earned by the Key Executive
up to and including the date of such Involuntary Termination, and any unpaid
vacation pay earned by him up to and including the date of such Involuntary
Termination.  In addition, if both of the
events set forth in Section 3.01 have occurred, the Employer shall, within
30 days of the date of the later of such events to occur:

 

(a)                                  pay
to the Key Executive an amount equal to his or her Annual Base Salary
(including any portion of such salary that is being

 

9

 

deferred in
accordance with any salary or compensation deferral arrangement or agreement
then in effect between the Key Executive and the Employer) in effect
immediately before the Involuntary Termination, but disregarding any reduction
in the same made in contemplation of the Change in Control, multiplied by the
Termination Factor, which payment shall be deemed to include any claim which
the Key Executive may have during such period to sick pay or short-term
disability benefits and any statutory severance pay which may be owed;

 

(b)                                 pay
to the Key Executive an amount equal to the Key Executive’s target bonus amount
for the fiscal year in which such Involuntary Termination occurs (or, if
greater, for the fiscal year in which the Change in Control occurs) pursuant to
any annual bonus plan maintained by the Employer, multiplied by the Termination
Factor;

 

(c)                                  continue
to make the Employer contributions necessary to maintain the Key Executive’s
coverage pursuant to the Employer’s benefit plans applicable to the Key
Executive for the life insurance, medical and dental benefit coverage, provided
the Key Executive continues to make the regular Key Executive contributions,
from the date of the Involuntary Termination until the earlier of (i) the
expiry of the ensuing twenty-four (24) month period or (ii) the date on
which the Key Executive receives comparable coverage under the plans and
programs of a subsequent employer; provided, however, that upon expiration of
such continued benefits, the Key Executive shall be further entitled to
continued health, dental and vision insurance benefits as required under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), subject to
the Key Executive’s timely election of COBRA healthcare continuation coverage;

 

(d)                                 credit
the Key Executive with an additional 30 months of service for the purposes of
any pension plan or pension arrangements in which the Key Executive
participated or which pertained to the Key Executive immediately prior to such
Involuntary Termination or which were in effect on the effective date of the
Change in Control, whichever were more beneficial to the Key Executive from the
date of the Involuntary Termination until the expiry of the Termination
Period.  To the extent that the Employer
is prohibited by applicable law from satisfying this covenant, the Employer
shall pay to the Key Executive, forthwith after the

 

10

 

Change in
Control, such amount as may be necessary to provide the Key Executive with
equivalent value.  To the extent the
applicable pension plan or pension arrangement is a non-qualified, defined
benefit pension plan, the Employer shall pay to the Key Executive a lump sum
that is actuarially equivalent to the additional months of service, rather than
crediting additional months of service within the operation of such plan;

 

(e)                                  confirm
that all stock options held by the Key Executive immediately prior to the
Involuntary Termination which have not been exercised by the Key Executive
shall continue to be exercisable for the duration of their respective exercise
periods.  All Stock Awards, including
stock options, not vested on the date of a Change in Control shall vest in
accordance with the terms of the applicable equity plan and award agreement;

 

(f)                                    confirm
the continuation of all salary deferral arrangements or agreements then in
effect between the Key Executive and the Employer;

 

(g)                                 if
any payment or benefit to or for the benefit of the Key Executive pursuant to
the terms of this Agreement, or any other plan of or arrangement or agreement
with the Employer or any affiliate of the Employer (referred to as “Total
Payments”) is subject to the Excise Tax (as hereinafter defined), the Employer
shall pay to the Key Executive an additional amount such that the net amount
retained by the Key Executive after deduction of any Excise Tax, and any
federal, state and local income and employment tax and Excise Tax imposed upon
the additional amount under this paragraph (g), shall be equal to the Total
Payments.  The term “Excise Tax” shall
mean the tax imposed by Section 4999 of the United States Internal Revenue
Code of 1986, as amended (the “Code”), and any similar tax that may hereafter
be imposed.

 

The amount of the payment to the Key Executive under
this paragraph (g) shall be estimated by a nationally recognized firm of
certified public accounts or employee benefits consultants, based upon the
following assumptions:

 

(i)                                     all
payments and benefits to or for the benefit of the Key Executive in connection
with a Change in Control of the Employer or termination of the Key Executive’s
employment following a Change in Control of the Employer shall be deemed to be “parachute
payments” within the

 

11

 

meaning of Section 280G(b)(2) of the Code, and all “excess
parachute payments” shall be deemed to be subject to the Excise Tax except to
the extent that, in the opinion of tax counsel selected by the firm so charged
with estimating the payment to the Key Executive under this paragraph (g), such
payments or benefits are not subject to the Excise Tax; and

 

(ii)                                  the
Key Executive shall be deemed to pay federal, provincial, state and local taxes
at the highest marginal rate of taxation for the applicable calendar year.

 

The Employer shall pay the fees charged by such firm
in preparing such estimate.

 

The estimated amount of the payment due the Key
Executive pursuant to this paragraph (g) shall be paid to the Key
Executive in a lump sum not later than thirty (30) business days following the
delivery of such estimate to the Key Executive and the Employer.  In the event that the amount of the estimated
payment is less than the amount actually due to the Key Executive under this
paragraph (g), the amount of any such shortfall shall be paid to the Key
Executive within ten (10) days after the existence of the shortfall is
discovered.

 

(h)                                 to
the extent that any payment under this Agreement is deemed to be deferred
compensation subject to the requirements of Section 409A of the Code, the
Employer and the Key Executive shall amend this Agreement, as necessary, so
that such payments will be made in accordance with the requirements of Section 409A
of the Code; provided, however, that, if any payment due to the Key Executive
is delayed as a result of Section 409A of the Code, the Key Executive
shall be entitled to be paid interest on such amount at an annual rate equal to
the prime rate, as published in the Wall Street Journal, plus 2%, in effect as
of the Key Executive’s date of termination. 
Such delayed payments will be paid at the earliest date permitted under Section 409A
of the Code.  Amendment of the Agreement
to comply with Section 409A of the Code will not result in the Key
Executive being entitled to receive any reduced or enhanced benefit under this
Agreement.  Notwithstanding the
foregoing, in the event the Key Executive is subjected to income or excise
taxes or other penalties under Section 409A of the Code by virtue of any
amount due to him, the Employer will pay an additional amount to the Key
Executive to make the Key

 

12

 

Executive
whole for such taxes.  Such additional
amount will be paid to the Key Executive not later than the due date of the Key
Executive’s tax return for the year in which the tax or penalty is imposed; and

 

(i)                                     In
the event the Key Executive’s Involuntary Termination occurs as a result of
death or disability following a Change in Control, the cash payments provided
in this Section 3.02 shall be offset by any life insurance, death, or
disability benefits payable to the Key Executive during the 30 months following
the Involuntary Termination pursuant to a life insurance, death benefit or
disability plan maintained by the Employer.

 

3.03                        Legal
Costs

 

If a dispute arises regarding:

 

(a)                                  whether
or not a Change in Control or an Involuntary Termination has occurred;

 

(b)                                 the
validity, interpretation or enforcement of this Agreement; or

 

(c)                                  the
right of the Key Executive to receive any termination benefits referred to in
this Agreement;

 

the Employer shall reimburse to or at the direction of
the Key Executive all reasonable legal fees and expenses incurred by the Key
Executive relating to such dispute if the Key Executive prevails in any
material respect.

 

3.04                        Fair and
Reasonable

 

The parties confirm that termination benefits
described in Section 3.02 (a) through (i) are fair and
reasonable and that the termination benefits as outlined in this Article Three
are a reasonable estimate of the damages which will be suffered by the Key
Executive in the event of an Involuntary Termination within twenty-four  (24) months following a Change in Control and
that such termination benefits shall not be construed as a penalty.

 

3.05                        No Duty to
Mitigate

 

In the event of an Involuntary Termination
within twenty-four (24) months following a Change in Control, the Key Executive
shall not be required to mitigate his damages by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced in any respect if the Key Executive shall not reasonably
pursue alternate employment.

 

13

 

3.06        Security
for Payments

 

If a Change in Control is anticipated to
occur, the Employer shall forthwith make such arrangements as may, in the view
of the Board, be prudent and advisable to assure the ability of the Employer to
pay any amounts set forth in Section 3.02, including, without limitation,
by arranging for one or more letters of credit, depositing funds in trust or
making such other arrangements as then seem appropriate for such purpose.

 

ARTICLE FOUR - RELEASE

 

4.01                        Release

 

As a condition to receiving the termination
benefits referred to in Section 3.02 (a) through (i) hereof, the
Key Executive shall execute the Release and Indemnity in favor of the Employer
in the form attached hereto as Schedule ”A”.

 

4.02                        Rights
under Agreement

 

Section 4.01 shall not apply to any
actions, causes of action, claims or demands which the Key Executive may have
relating to the failure or the refusal of the Employer to comply with the terms
of this Agreement.

 

ARTICLE FIVE - GENERAL

 

5.01                        Sections
and Headings

 

The division of this Agreement into Articles
and Sections and the insertion of headings are for the convenience of reference
only and shall not affect the construction or interpretation of this
Agreement.  The terms “this Agreement”, “hereof”,
“hereunder” and similar expressions refer to this Agreement and not to any
particular Article, Section or other portion hereof and include any
agreement or instrument supplemental or ancillary hereto.  Unless something in the subject matter or
context is inconsistent therewith, references herein to Articles and Sections
are to Articles and Sections of this Agreement.

 

5.02                        Number

 

In this Agreement words importing the
singular number only shall include the plural and vice versa and words
importing the masculine gender shall include the feminine and neuter genders
and vice versa and words importing persons shall include individuals,
partnerships, associations, trusts, unincorporated organizations and
corporations and vice versa.

 

14

 

5.03                        Benefit of
Agreement

 

This Agreement shall inure to the benefit of
and be binding upon the heirs, executors, administrators and legal personal
representatives of the Key Executive and the successors and assigns of the
Employer, respectively.  The Employer
shall ensure that any Person acquiring legal or beneficial ownership of all or
substantially all of the assets of the Employer in a transaction which
constitutes a Change in Control pursuant to paragraph (iii) of the
definition of “Change in Control” agrees to assume all of the obligations of
the Employer under this Agreement, jointly and severally with the
Employer.  If the Key Executive dies
after becoming entitled to payments made hereunder but before all such payments
are made, all remaining payments will be made to the beneficiary designated by
the Key Executive pursuant to reasonable procedures established by the
Employer, or in the absence thereof, to the estate of the Key Executive.

 

5.04                        Entire
Agreement

 

This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, cancels, and
supersedes any prior understandings and agreements between the parties hereto
with respect thereto.  There are no representations,
warranties, forms, conditions, undertakings or collateral agreements, express,
implied or statutory between the parties other than as expressly set forth in
this Agreement. The Key Executive waives any right to assert a claim based on
any pre-contractual representations, negligent or otherwise, made by the
Employer.

 

5.05                        Amendments
and Waivers

 

No amendment to this Agreement shall be valid
or binding unless set forth in writing and duly executed by both of the parties
hereto.  No waiver of any breach of any
provision of this Agreement shall be effective or binding unless made in
writing and signed by the party purporting to give the same and, unless
otherwise provided in the written waiver, shall be limited to the specific
breach waived.

 

5.06                        No
Assignment

 

This Agreement may not be assigned by the
Employer without the written consent of the Key Executive.

 

15

 

5.07                        Severability

 

If any provision in this Agreement is
determined to be invalid or unenforceable in whole or in part, such invalidity
or unenforceability shall attach only to such provision or part thereof and the
remaining part of such provision and all other provisions hereof shall continue
in full force and effect.

 

5.08        Notices

 

Any demand, notice or other communication (hereinafter
in this Section 5.08 referred to as a “Communication”) to be given in
connection with this Agreement shall be given in writing and may be given by
personal delivery or by registered mail addressed to the recipient as follows:

 

To
the Key Executive:

 

to the
address on file with the Human Resources Department of the Employer

 

To the Employer:

 

IPSCO Inc.

650 Warrenville Road, Ste. 500

Lisle, Illinois 60532

Attn: General Counsel

 

or such other address or individual as may be
designated by notice by either party to the other.  Any Communication given by personal delivery
shall be conclusively deemed to have been given on the day of actual delivery
thereof and, if made or given by registered mail, on the third day, other than
a Saturday, Sunday or statutory holiday in Illinois, following the deposit
thereof in the mail.  If the party giving
any Communication knows or ought reasonably to know of any difficulties with
the postal system, which might affect the delivery of mail, any such
Communication shall not be mailed but shall be given by personal delivery.

 

5.09                        Governing
Law

 

This Agreement shall be governed by and
construed in accordance with the law of the State of Illinois, without regard
to conflicts of law principles.

 

5.10                        Copy of
Agreement; Counterparts

 

The Key Executive hereby acknowledges receipt
of a copy of this Agreement duly signed by the Employer.  The Agreement may be executed

 

16

 

in one or more counterparts,
all of which together shall constitute but one Agreement.

 

5.11                        Independent
Legal Advice

 

The Key Executive hereby acknowledges that he
has had the opportunity to obtain independent legal advice with respect to the
Agreement.

 

IN WITNESS WHEREOF the
parties have executed this Agreement as of the day and year first above
written.

 

 

SIGNED, AND DELIVERED BY

 

Vicki Lee Avril

 

in the presence of:

 

 

	
   

  	
   

  	
  /s/ Vicki L Avril

  	
   

  
	
  SIGNATURE OF WITNESS

  	
  Vicki Lee Avril

  
	
   

  	
   

  
	
   

  	
  IPSCO INC.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Raymond J. Rarey

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/ Leslie T. Lederer

  	
   

  
						

 

17

 

SCHEDULE ”A”

 

Release and Indemnity

 

WHEREAS, my
employment with IPSCO Inc. or any subsidiary of it was terminated within the
meaning of an Agreement dated            ,
20     ;

 

WHEREAS, I have
agreed to accept the termination benefits set out in the Agreement that is
attached hereto, less all applicable deductions, and other good and valuable
consideration in full settlement of any and all claims I may have relating to
my employment with IPSCO or its subsidiary or the termination thereof and the
termination of any employment agreement between me and my employer as a
consequence thereof;

 

NOW, THEREFORE, WITNESSETH that
in consideration of the terms of settlement outlined above, I hereby release
and forever discharge IPSCO Inc. and any corporations associated therewith or
related thereto and their respective directors, officers, employees and agents
(collectively referred to as the “Releases”) from any and all actions, causes
of action, claims and demands arising from my employment with IPSCO Inc. or any
corporations associated therewith or related thereto or the termination of that
employment, including any claims pursuant to applicable statutes, including any
claims for overtime pay, public holiday pay, vacation pay, termination pay,
severance pay and pay in lieu of reasonable notice and including any and all
actions, causes of action, claims or demands arising under my employment
agreement with IPSCO Inc.

 

FOR THE SAID CONSIDERATION, I
further agree not to make any claim or take any proceedings against any other
individual, partnership, association, trust, unincorporated organization or
corporation with respect to any matters which may have arisen between me and
the Releases or any one of them for contribution or indemnity or other relief
over; and

 

FURTHERMORE, for the
aforesaid consideration, I hereby agree to indemnify and save harmless the
Releases from any and all claims or demands under any applicable income tax,
social security or insurance, pension, employment insurance or other similar
statute providing for the remittance of amounts to any governmental authority
from employment compensation, including any regulations made thereunder and any
other statute or regulations, for or in respect of any failure on the part of
the Releases to withhold income tax, social security or insurance, pension
premiums or employment insurance premiums or benefit overpayments or any other
tax, premium, payment or levy from all or any part of the said

 

1

 

consideration and any interest or penalties relating thereto and any
costs or expenses incurred in defending such claims or demands; and

 

I HEREBY FURTHER DECLARE that
I have had the opportunity to seek independent legal advice with respect to the
terms of settlement as well as this Release and Indemnity and I fully
understand them.  I hereby voluntarily
accept the said terms for the purpose of making full and final compromise,
adjustment and settlement of all claims as aforesaid.

 

NOTWITHSTANDING THE FOREGOING,
this Release and Indemnity shall not apply to any actions, causes of action,
claims or demands which I may have relating to the failure or the refusal of
IPSCO Inc. to comply with the terms of the Agreement or this Release and
Indemnity.

 

THIS RELEASE AND INDEMNITY shall
be deemed to have been made in and shall be construed in accordance with the
laws of Illinois and the laws of Canada applicable therein.

 

THIS RELEASE AND INDEMNITY shall
enure to the benefit of and be binding upon me and the Releases and our
respective heirs, executors, administrators and legal personal representatives,
successors and assigns.

 

IN WITNESS WHEREOF I
have executed this Release and Indemnity as of the        day of             ,
20   .

 

 

SIGNED, AND DELIVERED BY

 

Vicki Lee Avril

 

 

in the presence of:

 

	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE OF WITNESS

  	
  Vicki Lee Avril

  

 

2

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