Preview of our top selling Change of Control Agreement
Nexen - Change of Control Agreement With Gary Nieuwenburg Dated During January 2002.
CHANGE OF CONTROL AGREEMENT
This agreement made as of the 4 th 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")
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GARY NIEUWENBURG
(hereinafter referred to as the "Executive")
RECITALS:
-720 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 Corporation92s 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 Executive92s office
and the Executive92s 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 Executive92s 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.
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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
-720 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 Executive92s 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 Person92s Affiliates or Associates is the owner at law or in equity;
(ii) any securities as to which such Person or any of such Person92s 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
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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
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(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:
-720 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.
-720 (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:
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-720 (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
-720 (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 Corporation92
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 shareholders92 rights protection plan, if any) carrying any exercise, conversion or exchange right,
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which is then exercisable or exercisable within a period of sixty (60) days from that time pursuant to which the holder thereof may acquire Common Shares or other securities which are convertible into or exercisable
or exchangeable for Common Shares (in each case, whether such right is then exercisable or exercisable within a period of sixty (60) days from that time and whether or not on condition or the happening of any contingency).
-720 (l) "Date of Termination" means the date upon which the Executive92s 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 Executive92s 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 Executive92s 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 Executive92s
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 Executive92s entitlement to any dental or general medical care;
(ii) the Executive92s entitlement to receive long term disability benefits from the insurance carrier normally utilized by the Corporation;
(iii) the Executive92s entitlement to pension benefits under the terms of any pension plan with the Corporation;
(iv) the Executive92s entitlement to a monthly car allowance from the Corporation;
(v) the Executive92s entitlement to contributions by the Corporation to the Corporation92s savings plan;
(vi) the Executive92s entitlement to receive from the Corporation financial counseling services, at a cost of 3,500.00 per year (or as the same may be increased from time to time by the Corporation); and
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-720 (vii) the Executive92s entitlement to receive from the Corporation security monitoring services at the Executive92s personal residence.
(p) "Good Reason" means any of the following, unless the Executive shall have given the Executive92s express written consent
thereto:
(i) Inconsistent Duties . The assignment to the Executive of any duties inconsistent with the Executive92s status as an executive officer of the Corporation or a material
alteration in the nature or status of the Executive92s 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 Executive92s 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 Corporation92s
business to an extent substantially consistent with the Executive92s 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 Executive92s 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 Executive92s 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 Corporation92s life insurance, medical, health and accident, disability or savings plans in which the Executive
was participating at the time a
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Change of Control occurs; the taking of any action by the Corporation that would directly or indirectly materially reduce any such benefits or deprive the Executive of any material perquisite enjoyed by the Executive
at the time a Change of Control occurs, including, without limitation and to the extent applicable, the use of a car, aircraft, secretarial services, office space, telephones, computer facilities, expense reimbursement, financial counseling, and professional
fees and club dues reimbursement; or the failure by the Corporation to provide the Executive with the number of paid vacation days to which the Executive is entitled in accordance with the Corporation92s normal vacation practice in effect at the time
a Change of Control occurs;
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(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 Executive92s services are principally performed is sold at any time after a Change of Control occurs, and the Executive92s 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 Executive92 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 Executive92s duties according to the terms of the Executive92s 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 Corporation92s expense.
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(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 Executive92s
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
-720 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 Executive92s 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 Executive92s
duties. In the event of the death or Disability of the Executive, the Executive (or the Executive92s 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 Executive92s 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
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Executive, and the Corporation shall have no further obligations to the Executive or the Executive92s estate under this Agreement.
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2.3 If the Executive92s 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
-720 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
-720 4.1 If the Executive92s 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
-720 5.1 If the Executive92s 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
-720 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)
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days written notice, terminate the Executive92s 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.
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ARTICLE 7
COMPENSATION UPON TERMINATION
-720 7.1 If the Executive92s 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 Executive92s 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 Corporation92s then current
fiscal year, up to and including the Date of Termination;
(ii) a lump sum cash payment equal to the Executive92s Monthly Base Salary and one-twelfth (1/12) of the Executive92s Annual Target Bonus for each month of the Severance Period;
(iii) a lump sum payment equal to thirteen percent (13%) of the Executive92s Annual Base Salary for the Severance Period. The Executive may elect to continue the Executive92s 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 Executive92s thirteen percent
(13%) Annual Base Salary lump sum payment referred to herein;
(iv) a lump sum payment representing the value of the Executive92s monthly car allowance for the Severance Period;
(v) a lump sum payment representing the value of the Corporation92s contributions to the Corporation92s savings plan (at a rate of six percent (6%) of the Executive92
s Annual Base Salary) for the Severance Period;
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-720 (vi) a lump sum payment representing the value of the Executive92s entitlement to receive from the Corporation financial counselling services for the Severance Period; and
(vii) a lump sum payment representing the value of the Executive92s entitlement to receive from the Corporation security monitoring services at the Executive92s personal residence for the Severance Period;
(b) with respect to the Executive92s entitlement to pension benefits under the Pension Plan for Employees of Nexen Inc. (Defined Contribution Option) (the "
Defined Contribution Pension Plan") and the Executive92s 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 Executive92s 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 Executive92s entitlement under the Executive Benefit Plan;
(iii) for calculation purposes, the Executive92s 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 Executive92 s attained age at the end of the
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Severance Period will be recognized for purposes of calculating the early retirement reduction factor, if applicable;
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(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 Executive92s outstanding u...
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