Document:

Exhibit 10.1

 

AGREEMENT FOR THE SETTLEMENT OF

STATE AND LOCAL TAX CREDITS

 

This Agreement for the Settlement of State and Local Tax Credits (this “Agreement”)
made as of December 31, 2007 among ALLSTATE INSURANCE COMPANY, an Illinois
insurance company (“Allstate”), and those affiliates of Allstate whose
signatures appear below.

 

WHEREAS, from time to time, one
company within The Allstate Corporation group of companies may invest in
certain programs, offerings or other arrangements that may allow the company to
claim a credit against state or local taxes, or a company may “purchase” from
third parties the right to claim credits against various state and local taxes
(such investments or purchases collectively referred to hereinafter as “Credit
Generating Investments,” and such credits referred to hereinafter as “Tax
Credits”);

 

WHEREAS, in some cases, it may be
legally permissible for Tax Credits relating to a particular Credit Generating
Investment made by one company to be utilized by a different company within the
Allstate group to offset the latter company’s tax liability;

 

WHEREAS, the Allstate Tax
Department, taking into account limitations under state and local law as well
as the benefit to the Allstate group as a whole, may determine it is
appropriate for a company to claim and utilize all or a portion of a Tax Credit
relating to a particular Credit Generating Investment even though such company
did not make the corresponding Credit Generating Investment;

 

WHEREAS, the parties hereto desire
to institute a formal agreement and mechanism for the intercompany settlement
of Tax Credits utilized by one company but related to a Credit Generating
Investment made by another company.

 

NOW, THEREFORE, it is agreed as follows:

 

1.               Within 30 days after the
filing of a tax return in which one company utilizes a Tax Credit attributable
to a Credit Generating Investment made by another company, the company
utilizing the Tax Credit shall pay to the company that made the Credit
Generating Investment the amount of the Tax Credit so utilized.

 

2.               All payments due hereunder
shall be made in immediately available funds.

 

3.               Absent manifest error, the
Tax Department’s determination of the amount of Tax Credits utilized by one
company attributable to a Credit Generating Investment of another company shall
be final.

 

4.               This Agreement shall be
effective for tax returns filed on or after January 1, 2007.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
effective as set forth above.

 

 

	
   

  	
  Allstate County Mutual Insurance Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name: 

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate Fire and Casualty Insurance Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate Floridian Indemnity Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate Floridian Insurance Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate Indemnity Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Allstate Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate Life Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate Life Insurance Company of New York

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

	
   

  	
  Allstate New Jersey
  Insurance Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name: 

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate New Jersey Property
  and Casualty

  Insurance Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate North American Insurance Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate Property and Casualty Insurance Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Allstate Texas Lloyd’s

  by Allstate Texas Lloyd’s, Inc.

  the Attorney-in-Fact

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  American Heritage Life Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President - Tax

  
	
   

  	
   

  
	
   

  	
  Concord Heritage Life Insurance Company, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President - Tax

  
	
   

  	
   

  
	
   

  	
  Deerbrook Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

	
   

  	
  Encompass Floridian
  Indemnity Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name: 

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Encompass Floridian Insurance
  Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Encompass Home and Auto Insurance Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Encompass Indemnity Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Encompass Independent Insurance
  Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  Encompass Insurance Company of America

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Encompass Insurance Company of Massachusetts

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Encompass Insurance Company of New Jersey

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

 

	
   

  	
  Encompass Property and
  Casualty Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name: 

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Encompass Property and Casualty Insurance Company
  of New Jersey

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  First Colonial Insurance Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen C. Gardner

  
	
   

  	
  Title:

  	
  Vice President - Tax

  
	
   

  	
   

  
	
   

  	
  Lincoln Benefit Life Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice President - Tax

  
	
   

  	
   

  
	
   

  	
  Northbrook Indemnity Company

  
	
   

  	
   

  
	
   

  	
  /s/ Karen C. Gardner

  
	
   

  	
  Name:

  	
  Karen
  C. Gardner

  
	
   

  	
  Title:

  	
  Vice PresidentExhibit
10.51

 

CHANGE
OF CONTROL AGREEMENT

 

This
agreement made as of the 4th day of January, 2002.

 

BETWEEN:

 

NEXEN INC. (formerly known as Canadian
Occidental Petroleum Ltd.), a corporation
incorporated under the laws of Canada

 

(hereinafter
referred to as the “Corporation”)

 

- and –

 

GARY
NIEUWENBURG

 

(hereinafter
referred to as the “Executive”)

 

RECITALS:

 

1.             The
Executive, as Vice President, Corporate Planning and Business Development of
the Corporation, is considered by the Board to be an essential officer and
employee of the Corporation, who is both integral to the operation and
development of the Corporation, and has acquired outstanding skills, unique
experience and possesses an extensive background in, and knowledge of, the
Corporation’s business, operations and the industry in which it is engaged.

 

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

 

3.             The
Board recognizes that it is essential and in the best interests of the
Corporation and its shareholders that the Corporation retain the continued
dedication of the Executive to the Executive’s office and the Executive’s
employment during the uncertain period prior to, during and following a Change
of Control.

 

4.             The
Board further believes that the past service of the Executive and the Executive’s
integral role in the development and operation of the Corporation requires that
the Corporation ensure that in the event of a Change of Control the Executive
is treated in a manner that is fair, reasonable, consistent with industry
standards and in the best interests of the Corporation.

 

5.             Both
the Corporation and the Executive wish formally to agree on the terms and
conditions which will govern the termination or modification of the employment
of the Executive following a Change of Control.

 

 

NOW
THEREFORE, in consideration of the mutual
covenants and agreements set forth in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Parties, the Parties agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1           For
the purposes of this Agreement, the following terms mean as follows:

 

(a)           “Affiliate” and “Associate”
have the meaning ascribed to such terms in the CBCA.

 

(b)           “Acting Jointly or in Concert” for the purposes of this
Agreement, a Person is acting jointly or in concert with another Person if such
Person has any agreement, arrangement or understanding (whether formal or
informal and whether or not in writing) with such other Person for the purpose
of acquiring, or offering to acquire, any Common Shares of the Corporation
(other than customary agreements with and between underwriters and banking
group or selling group members with respect to a distribution of securities by
way of prospectus or private placement or pursuant to a pledge of securities in
the ordinary course of business).

 

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

 

(d)           “Annual Base Salary” means the annual base salary of the
Executive payable by the Corporation at the end of the month immediately
preceding the Date of Termination.

 

(e)           “Annual
Target Bonus” means the Executive’s annual target bonus as
determined by the Board to be in effect for the calendar year in which a Change
of Control occurs.

 

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

 

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

 

(ii)           any
securities as to which such Person or any of such Person’s Affiliates or
Associates has a right to acquire (i) upon the exercise of any Convertible
Securities or (ii) pursuant to any agreement, arrangement or
understanding, whether such right is exercisable immediately within a period of
sixty (60) days thereafter and whether or not on condition or the 

 

2

 

happening of any contingency, (other than (a) customary agreements
with and between underwriters and banking group and selling group members with
respect to the distribution to the public or pursuant to a private placement of
securities, or (b) pursuant to a pledge of securities in the ordinary
course of business); and

 

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

 

provided, however, that a Person shall not be deemed
the “Beneficial Owner” or to have “Beneficial Ownership” of or to “Beneficially
Own” any security where such Person is the registered holder of securities as a
result of carrying on the business of or acting as nominee for a securities
depository.

 

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

 

100 x A/B

 

Where:

 

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

 

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

 

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

 

(g)           “Board” means the Board of Directors of the Corporation as
constituted from time to time.

 

(h)           “CBCA” means the Canada Business
Corporations Act, as amended from time to time, and any successor
legislation thereto.

 

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

 

3

 

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

 

(ii)           the
substantial completion of: (i) the liquidation, dissolution or winding-up
of the Corporation; or (ii) the sale, lease or other disposition of all or
substantially all of the assets of the Corporation; or

 

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

 

(A)          a
meeting of the shareholders of the Corporation involving a contest for, or an
item of business relating to, the election of directors; or

 

(B)           an
amalgamation, arrangement, merger or other consolidation or combination of the
Corporation with another Person,

 

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

 

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

 

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

 

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

 

(k)           “Convertible Securities” means:

 

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

 

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

 

4

 

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

 

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

 

(m)          “Disability” means, where due to a physical or mental
condition, the Executive is rendered totally and permanently unable to perform
the Executive’s duties for a consecutive period of two (2) years or more
during which the Executive has been in receipt of long term disability
insurance benefits from the insurance carrier normally utilized by the
Corporation.

 

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

 

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

 

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

 

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

 

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

 

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

 

(v)           the
Executive’s entitlement to contributions by the Corporation to the Corporation’s
savings plan;

 

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

 

5

 

(vii)         the Executive’s entitlement to receive from
the Corporation security monitoring services at the Executive’s personal
residence.

 

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

 

(i)            Inconsistent
Duties.  The assignment to the
Executive of any duties inconsistent with the Executive’s status as an
executive officer of the Corporation or a material alteration in the nature or
status of the Executive’s responsibilities or duties or reporting relationship
from those in effect immediately prior to a Change of Control;

 

(ii)           Reduced
Salary.  A reduction by the
Corporation in the Executive’s Annual Base Salary in effect on the Effective
Date or as the same may be thereafter increased from time to time or the
failure by the Corporation to grant the Executive salary increases at a rate
commensurate with the increases accorded to other executives of the
Corporation;

 

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

 

(iv)          Incentive
Compensation Plans.  The failure by
the Corporation to continue in effect any incentive compensation plan in which
the Executive participates, including, but not limited to, the Incentive
Compensation Plan or the Stock Option Plan or any other similar plans adopted
prior to a Change of Control, unless the Executive is eligible to participate
in, and is entitled to the opportunity to receive a comparable level of
benefits under, an ongoing, substitute or alternative plan (it being understood
that the manner or method of payment and the form of consideration need not be
the same as existed in the original plans); or the failure by the Corporation
to continue the Executive’s participation therein on at least as favourable a
basis, both in terms of the amount of benefits available to the Executive and
the level of the Executive’s participation relative to other participants, as
existed at the time a Change of Control occurs;

 

(v)           Employment
Benefits and Perquisites.  The
failure by the Corporation to continue to provide the Executive with Employment
Benefits at least as favourable as those enjoyed by the Executive immediately
prior to a Change of Control, including any pension plan, benefit plan or any
retirement arrangement established for the Executive, or any of the Corporation’s
life insurance, medical, health and accident, disability or savings plans in
which the Executive was participating at the time a 

 

6

 

Change of Control occurs; the taking of any action by the Corporation
that would directly or indirectly materially reduce any such benefits or
deprive the Executive of any material perquisite enjoyed by the Executive at
the time a Change of Control occurs, including, without limitation and to the
extent applicable, the use of a car, aircraft, secretarial services, office
space, telephones, computer facilities, expense reimbursement, financial
counseling, and professional fees and club dues reimbursement; or the failure
by the Corporation to provide the Executive with the number of paid vacation
days to which the Executive is entitled in accordance with the Corporation’s
normal vacation practice in effect at the time a Change of Control occurs;

 

(vi)          No
Assumption by Successor.  The failure
of the Corporation to obtain a satisfactory agreement from a successor to
assume and agree to perform this Agreement. 
Alternatively, if the business or undertaking in connection with which
the Executive’s services are principally performed is sold at any time after a
Change of Control occurs, and the Executive’s employment is transferred as a
result, the failure or refusal of the purchaser of such business or undertaking
to provide the Executive with the same or a comparable position, duties,
compensation and benefits, as described in paragraphs (iv) and (v) above,
as provided to the Executive by the Corporation immediately prior to a Change
of Control;

 

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

 

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

 

(r)            “Just Cause” means:

 

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

 

(ii)           where
the Executive engages in any criminal act or dishonesty resulting or intended
to result, directly or indirectly, in the personal gain of the Executive at the
Corporation’s expense.

 

7

 

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

 

(t)            “Parties” means the Corporation, and its successors and
permitted assigns, and the Executive and the Executive’s heirs, executors and
administrators and “Party” means
either one of them.

 

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

 

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

 

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

 

(x)            “Stock Option Plan” means any stock option plan or plans of
the Corporation pursuant to which the Executive is granted options by the
Corporation to acquire Common Shares.

 

(y)           “Subsidiary” has the meaning ascribed to it in the CBCA.

 

(z)            “Term” has the meaning referred to in Section 3.1.

 

ARTICLE 2

SCOPE OF AGREEMENT

 

2.1           The
Parties intend that this Agreement sets out their respective rights and
obligations upon the occurrence of a Change of Control.  This Agreement does not provide for any other
terms of the Executive’s employment with the Corporation, and shall create no
rights or obligations of the Parties prior to, or in circumstances other than,
a Change of Control or beyond the Term.

 

2.2           This
Agreement shall automatically terminate upon the death of the Executive or
where due to the Disability of the Executive, the Executive is materially incapacitated
from performing the Executive’s duties. 
In the event of the death or Disability of the Executive, the Executive
(or the Executive’s estate) shall be entitled to receive from the Corporation
all unpaid Annual Base Salary, Employment Benefits, unpaid business expenses
and vacation entitlement accrued to the date of the death or Disability of the
Executive.  The Executive (or the
Executive’s estate) shall also be entitled to receive any and all death or
Disability benefits in a manner consistent with, and at least equal in amount
to, those provided by the Corporation to senior executives (or their estate)
under such plans, programs and policies in effect at the date of Disability or
death of the 

 

8

 

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

 

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

 

ARTICLE 3

TERM OF AGREEMENT

 

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

 

ARTICLE 4

TERMINATION FOR JUST CAUSE OR FOR OTHER THAN GOOD REASON

 

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

 

4.2           Nothing
in this Agreement shall serve to derogate from the vested rights of the
Executive to pension benefits, Stock Option Plans or any other Employment
Benefits to which the Executive is entitled up to the Date of Termination.

 

ARTICLE 5

TERMINATION BY CORPORATION

 

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

 

ARTICLE 6

TERMINATION FOR GOOD REASON

 

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

 

9

 

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

 

ARTICLE 7

COMPENSATION UPON TERMINATION

 

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

 

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

 

(i)            if not previously
paid, that portion of the Executive’s accrued but unpaid Monthly Base Salary,
any accrued but unpaid bonus to which the Executive is entitled for the
preceding calendar year under any Incentive Compensation Plan, all unpaid
reasonable business expenses and all accrued but unused vacation pay earned or
payable to the Executive by the Corporation for the period from the beginning
of the Corporation’s then current fiscal year, up to and including the Date of
Termination;

 

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

 

(iii)          a lump sum payment equal
to thirteen percent (13%) of the Executive’s Annual Base Salary for the
Severance Period.  The Executive may
elect to continue the Executive’s then current dental and general medical care
and/or life insurance benefits and/or long term disability benefits (on such
terms and conditions in effect in the month immediately preceding the Date of
Termination) for the Severance Period, or until the date on which the Executive
obtains alternative employment if earlier than the date of termination of the
Severance Period.  The cost to the
Corporation of continuing these benefits on behalf of the Executive shall be
deducted by the Corporation from the Executive’s thirteen percent (13%) Annual
Base Salary lump sum payment referred to herein;

 

(iv)          a lump sum payment
representing the value of the Executive’s monthly car allowance for the
Severance Period;

 

(v)           a lump sum payment
representing the value of the Corporation’s contributions to the Corporation’s savings
plan (at a rate of six percent (6%) of the Executive’s Annual Base Salary) for
the Severance Period;

 

10

 

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

 

(vii)         a lump sum payment
representing the value of the Executive’s entitlement to receive from the
Corporation security monitoring services at the Executive’s personal residence for
the Severance Period;

 

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

 

(i)            the Corporation shall
make a contribution to the Defined Contribution Pension Plan in an amount which
is equal to the additional contributions which would have been made by both the
Executive and the Corporation to the Defined Contribution Pension Plan on the
Executive’s behalf during the Severance Period had the Executive remained in
the employ of the Corporation during such period.  Such contribution shall be calculated at the
rate in effect in respect of the Executive immediately prior to the Date of
Termination.  To the extent that it is
not legally permissible to make such contribution to the Defined Contribution
Pension Plan, the Corporation shall make a lump sum payment to the Executive in
an amount equal to such contribution;

 

(ii)           the Corporation shall
recognize the Severance Period for purposes of determining the Executive’s
entitlement under the Executive Benefit Plan;

 

(iii)          for calculation
purposes, the Executive’s entitlement under the Executive Benefit Plan is the
bonus-related benefit which would have been determined assuming that the
Executive had been employed throughout the Severance Period, including
recognition of:

 

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

 

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

 

(C)           if the Executive would
have been eligible for retirement at the end of the Severance Period, the
Executive shall be deemed to retire, and the pension to commence, upon
completion of the Severance Period.  In
such case, the Executive’s attained age at the end of the 

 

11

 

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

 

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

 

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

 

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

 

(d)           all of the Executive’s
outstanding unexercisable stock options under any Stock Option Plan shall
become exercisable;

 

(e)           where the Executive has
been relocated, at the request of the Corporation, within the two (2) year
period immediately prior to the Effective Date, if so requested by the
Executive, the Corporation shall relocate the Executive back to the Executive’s
prior location; and

 

(f)            as soon as is
reasonably practicable following the execution of this Agreement, the
Corporation shall be required to provide security for the performance of its
obligation to make the lump sum payments described in this Article 7.

 

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

 

7.3           Subject to Section 7.1(a)(iii),
if the Executive’s employment is terminated in the circumstances described in Section 5.1
or 6.1, the remuneration and benefits payable under this Article 7 shall
not be reduced if the Executive obtains alternative employment.

 

7.4           Unless expressly
provided otherwise in this Agreement, all payments to be made to the Executive
under this Article 7 shall be subject to required statutory deductions at
source by the Corporation.

 

12

 

ARTICLE 8

CONFIDENTIAL INFORMATION

 

8.1                                 If
the Executive’s employment is terminated in any manner whatsoever due to or
following a Change of Control, the Executive agrees to keep confidential all
information of a confidential or proprietary nature concerning the Corporation,
its Affiliates, Associates and Subsidiaries and their respective operations,
opportunities, areas of present, past or future interests, assets, finances,
technology, intellectual property, business and affairs, and further agrees not
to use such information, data or technology for personal advantage, provided
that nothing herein shall prevent the disclosure of information which is
publicly available or which is required to be disclosed by the Executive under
appropriate statute, rules of law or legal process.

 

ARTICLE 9

RIGHTS AND OBLIGATIONS OF EXECUTIVE UPON TERMINATION

 

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

 

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

 

9.3           If the Executive’s
employment is terminated in the circumstances described in Section 5.1 or
6.1, the Corporation shall continue to purchase and maintain, to the extent
available in the marketplace at reasonable cost to the Corporation, on behalf
of the Executive, director and officer liability insurance for the applicable
limitation period following the date upon which the Executive ceases to serve
as a director or officer of the Corporation, and the Executive’s existing
agreement to receive indemnity from the Corporation for acts taken by the
Executive in the Executive’s capacity as an officer of the Corporation shall
remain in effect.

 

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

 

13

 

ARTICLE 10

EXPEDITED ARBITRATION

 

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

 

10.2         The Parties agree that
any and all Disputes under Section 10.1 will be resolved by way of a
single Arbitrator.

 

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

 

(b)           If no person acceptable
to both Parties has been agreed upon and appointed within fifteen (15) days,
then either Party may make immediate application to the Court of Queen’s Bench
of Alberta, Judicial District of Calgary, to have an Arbitrator appointed.

 

10.4         The Parties acknowledge
and agree that the purpose of this Article 10 is to avoid delays and
facilitate resolution of the Dispute in a just, speedy and cost-effective
manner.

 

10.5         Consistent with the
expedited nature of arbitration, the Arbitrator will direct and control the
scope and timing of the exchange of information between the Parties and will
take such steps as the Arbitrator deems necessary to achieve a just, speedy and
cost-effective resolution of the Dispute. 
The Arbitrator has the exclusive right and power to resolve all issues
related to the exchange of information in the arbitration process.

 

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

 

10.7         A hearing will occur
within forty-five (45) days of the appointment of the Arbitrator (the “Hearing”).  The time of the Hearing (the “Hearing Date”)
will be scheduled by the Arbitrator after consultation with the Parties.  The Hearing will be governed by the rules set
out in the Arbitration Act S.A. 1991, c.A-43, as
modified by the Arbitrator in the interests of achieving a just, speedy and
cost-effective resolution of the Dispute. 
The Arbitrator may require written submissions of fact in the Dispute to
be provided seven (7) days before the Hearing Date.

 

14

 

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

 

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

 

ARTICLE 11

GENERAL

 

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

 

11.2         This Agreement shall be
construed and interpreted in accordance with the laws of the Province of
Alberta and the federal laws of Canada as applicable therein.

 

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

 

11.4         Any notice required or
permitted to be given under this Agreement shall be in writing and shall be
properly given if delivered, by hand delivery or mail or other form of
electronic communication capable of transmission confirmation, to the following
address:

 

a.             in
the case of the Corporation to:

 

Nexen Inc.

#1500, 635 – 8th Avenue SW

Calgary, AB  T2P
3Z7

Attention: 
Chief Executive Officer

 

b.             in the case of the
Executive to:

 

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

 

11.5         This Agreement shall
enure to the benefit of and be binding upon the Executive and the Executive’s
heirs, executors and administrators and upon the Corporation and its successors
and assigns.

 

11.6         This Agreement
constitutes the entire agreement relating to the respective rights and
obligations of the Parties upon the occurrence of a Change of Control.  No amendment or waiver of this Agreement
shall be binding unless executed in writing by the Parties.

 

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

 

15

 

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

 

The
Parties have executed this Agreement effective the date first written above.

 

 

	
   

  	
  NEXEN INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/
  Charles W. Fischer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
  /s/
  John B. McWilliams

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED, SEALED & DELIVERED

  in the presence of

  	
   

  
	
   

  	
   

  
	
  /s/
  Marcelle Leveille

  	
   

  	
  /s/
  Gary Nieuwenburg

  	
   

  
	
  WITNESS

  	
   

  	
  GARY NIEUWENBERG

  
						

 

16

 

SCHEDULE
“A”

 

CHANGE
OF CONTROL AGREEMENT

 

In
order to receive the entitlements referred to in this Agreement, the Executive
shall execute the attached Release, fully releasing the Corporation from all
further claims in relation to the Executive’s employment or Employment Benefits
and the termination thereof upon payment of the remuneration and benefits referred
to in Article 7 of this Agreement. 
The attached Release shall not, however, require that the Executive
relinquish or release any rights to indemnity which the Executive may, as an
officer or director of the Corporation or any of its Affiliates, Associates and
Subsidiaries, have as against the Corporation or any of its Affiliates,
Associates and Subsidiaries for costs, charges and expenses reasonably incurred
by the Executive in respect of any civil, criminal or administrative action or
proceeding to which the Executive is made a party by reason of being or having
been a director or officer of the Corporation or any of its Affiliates,
Associates and Subsidiaries where:

 

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

 

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

 

 

FINAL
RELEASE

 

KNOW
ALL MEN BY THESE PRESENTS that I, GARY NIEUWENBURG of the City of Calgary, in the Province of
Alberta, in consideration of the amounts provided in that certain Change of
Control Agreement (the “Change of Control Agreement”) dated as of the             
day of December, 2001 between myself and NEXEN INC. (the
“Corporation”) and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, do for myself, my executors and
assigns hereby remise, release and forever discharge the Corporation, and any
associated, affiliated, predecessor or parent corporation of the Corporation
and their present and former directors, officers, agents and employees (the “Releasees”),
including each of their respective successors, heirs, administrators and
assigns, from all manner of actions, causes of action, debts, obligations,
covenants, claims or demands, whatsoever which I may ever have had, now have,
or can, shall or may hereafter have against the Releasees or any of them, by
reason of or arising out of any cause, matter or thing whatsoever done,
occurring or existing up to and including the present date and, in particular,
without in any way restricting the generality of the foregoing, in respect of
all claims of any nature whatsoever, past, present or future, directly or
indirectly related to or arising out of or in connection with my relationship
with the Releasees, as an employee, officer or director, and the termination of
my employment from the Corporation including, but not limited to, any claims
related to any entitlement I may have or may have had to any payment or claim
either at common law or under the Employment Standards Code,
Human Rights, Citizenship and Multiculturalism Act or any other
applicable legislation governing or related to my employment with the
Releasees.

 

AND
FOR THE SAID CONSIDERATION, I, GARY NIEUWENBURG, represent and warrant that I have not
assigned to any person, firm or corporation any of the actions, causes of action,
claims, suits, executions or demands which I release by this Release, or with
respect to which I agree not to make any claim or take any proceeding herein.

 

IT
IS FURTHER ACKNOWLEDGED that the payment to
me includes full compensation and consideration for the loss of my employment
benefits, as provided by the Releasees, and that all of my employment benefits
and privileges shall cease on the date of termination of my

 

 

employment,
except as otherwise provided in the Change of Control Agreement.  I further acknowledge that I have received
all benefits due to me and have no further claim against the Releasees for such
benefits.  I further accept sole
responsibility to replace such benefits which I wish to continue or to exercise
conversion privileges where applicable with respect to such benefits and, in
particular any life insurance and long-term disability benefits.  In the event that I become disabled following
termination of my employment, I covenant not to sue the Releasees for insurance
or other benefits or loss of same and hereby release the Releasees from any and
all further obligations or liabilities arising therefrom.

 

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

 

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

 

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

 

(c)                                  my
entitlement to any amounts or compensation due to me under the terms of my
employment pursuant to the Change of Control Agreement.

 

IT
IS HEREBY AGREED that the terms of the Change
of Control Agreement and of this Release will be kept confidential.  No party hereto shall communicate any such
terms to any third party under any circumstances whatsoever, excepting any
necessary communication with my legal and financial advisors, as required, on
the express condition that they maintain the 

 

2

 

confidentiality
thereof, and any disclosure which is required by law, although either party shall
be at liberty to disclose to third parties that a mutually acceptable Release
was agreed upon.  The invalidity and
unenforceability of any provision of this Release shall not affect the validity
or enforceability of any other provision of this Release, which shall remain in
full force and effect.

 

I
HEREBY DECLARE that I have read all of this
Release, fully understand the terms of this Release and voluntarily accept the
consideration stated herein as the sole consideration for this Release for the
purpose of making a full and final settlement with the Releasees.  I further acknowledge and confirm that I have
been given an adequate period of time to obtain independent legal counsel
regarding the meaning and the significance of the terms herein and the covenants
mutually exchanged.

 

IT
IS HEREBY AGREED THAT as a term of the
termination of my employment from the Corporation, and in consideration of the
amount noted above, I hereby resign as officer and director of the Corporation
and its affiliates.

 

IN
WITNESS WHEREOF, I have hereunto set my hand
and seal this            day
of                             
in the year                   .

 

 

	
   

  	
   

  
	
  GARY NIEUWENBURG

  
	
   

  
	
   

  	
   

  
	
  WITNESS
  (signature)

  
	
   

  
	
   

  
	
   

  	
   

  
	
  WITNESS
  (print name)

  

 

3

 

SCHEDULE
“B”

 

CHANGE
OF CONTROL AGREEMENT

Methodology
and Assumptions for Determining Settlement Value

 

Purpose

 

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

 

Overview

 

Section 7 of the Securitization Procedure
provides in part that:

 

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

 

The
following outlines the actuarial methods, assumptions and calculation process
to be used in determining the lump sum settlement value of pension entitlements
under the Executive Benefit Plan when settlement occurs in accordance with the
Securitization Procedure.  Section 300
of the Income Tax Regulations establishes the procedure applicable in using an
after-tax lump sum to purchase a prescribed annuity:

 

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

 

2.             The
capital portion of each future annuity payment is considered to be a return of
the original after-tax lump sum amount.

 

3.             The
non-capital portion of each annuity payment is assumed to be provided by the
investment return on the original after-tax lump sum amount and has therefore
not yet been taxed.

 

4.             A
constant percentage of each future payment is deemed to be a return of the
original lump sum capital.

 

Calculation
Methodology

 

1.             Equivalent
after-tax payments:

 

a.             Determine initial gross
annual pension entitlement under the Executive Benefit Plan.

 

 

b.             Determine
after-tax annual pension entitlement under the Executive Benefit Plan based on
Individual Tax Rate.

 

c.             Determine
the capital element based on the non-indexed present value of the pension
payments divided by life expectancy.

 

d.             Determine
the monthly payment which provides an after-tax pension equal to the after-tax
pension determined in 1.b. above in accordance with the prescribed annuity
methodology.

 

2.             Present value of periodic
payments from 1. above:

 

a.             Determine
the present value of the pension determined in 1.d. above using the assumptions
described below in this Schedule “B”. 
For greater certainty, the value of the post-retirement indexation is to
be reflected in determining the present value of the accrued pension
entitlement in respect of post-1992 service, and any accrued pension in respect
of service granted during the Severance Period.

 

3.             Tax adjustment:

 

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

 

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

 

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

 

a.             The
amount determined in 3.b. above shall be the lump sum settlement value of the
Executive’s pension entitlement.

 

Assumptions

 

Interest
Discount Rate:

 

	
  ·    during deferral period

  	
   

  	
  Yield
  on long-term Government of Canada bonds as published in the Bank of Canada
  Review for month-end immediately preceding the date of calculation rounded
  down to next lower 0.5%.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·    after assumed pension commencement

  	
   

  	
  Yield
  on long-term Government of Canada bonds as published in the Bank of Canada
  Review for month-end immediately preceding the date of calculation rounded
  down to next lower 0.5%,  less assumed
  escalation of pensions after retirement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Increase
  in Consumer Price Index:

  	
   

  	
  Yield
  on long-term Government of Canada bonds as published in the Bank of Canada
  Review for month-end

  

 

2

 

	
   

  	
   

  	
  immediately
  preceding the date of calculation rounded down to next lower 0.5% 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  less

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yield
  on long-term Government of Canada Real Return bonds as published in the Bank
  of Canada Review for month-end immediately preceding the date of calculation
  rounded down to next lower 0.5%.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mortality:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·    for life expectancy

  	
   

  	
  1994
  Uninsured Pensioner Mortality Table with mortality improvements projected to 

  
	
   

  	
   

  	
  2014.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·    for present values

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·    prior to
  assumed pension commencement

  	
   

  	
  Nil.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  after assumed pension commencement

  	
   

  	
  1994
  Uninsured Pensioner Mortality Table with mortality improvements projected to 

  
	
   

  	
   

  	
  2014.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marital
  Status:

  	
   

  	
  Actual
  status at Date of Termination.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Age
  of Spouse:

  	
   

  	
  Based
  on actual date of birth.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Individual
  Tax Rate:

  	
   

  	
  Maximum
  individual marginal tax rate for employee’s province of employment.

  

 

3

 

SCHEDULE
“C”

 

Estimated(1)
Entitlement to Compensation

Pursuant
to Article 7 of the Agreement

 

	
  Monthly Base
  Salary (24 Months)

  	
   

  	
  $

  	
  446,200.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Bonus Target
  Value

  	
   

  	
  89,240.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Benefits
  Uplift (13%)

  	
   

  	
  58,006.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Car
  Allowance

  	
   

  	
  38,400.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Savings Plan

  	
   

  	
  26,772.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Financial
  Counselling Services

  	
   

  	
  10,500.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Security
  Monitoring Services

  	
   

  	
  2,400.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Executive
  Outplacement

  	
   

  	
  25,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL
  VALUE

  	
   

  	
  $

  	
  696,518.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Additional
  Lump Sum Settlement Value of Pension(2)

  	
   

  	
  88,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL
  ESTIMATED ENTITLEMENT under this Restated Agreement

  	
   

  	
  $

  	
  784,518.00

  	
   

  

 

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

 

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

 

(1)           As
stated in Section 7.2 of the Agreement, the above calculations represent only
the current estimated value (as of October 1, 2001) of the Executive's
entitlement to compensation upon a Change of Control.  Accordingly, the above calculations are for
illustrative purposes only.

 

(2)           Calculated
in accordance with Section 7.1(b) of the Agreement, including the bonus related
benefit contemplated under the Executive Benefit Plan.

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]