Exhibit 10.2

 

 

 

EMPLOYEE MATTERS AGREEMENT

by and between

THE WILLIAMS COMPANIES, INC.

and

WPX ENERGY, INC.

Dated as of December 30, 2011

 

 

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS

     1   

Section 1.1

  Table of Definitions      1   

Section 1.2

  Certain Defined Terms      2   

Section 1.3

  Other Capitalized Terms      5   

ARTICLE II GENERAL PRINCIPLES; EMPLOYEE TRANSFERS

     5   

Section 2.1

  Assumption of WPX Employee Liabilities      5   

Section 2.2

  Allocation of Liabilities With Respect to Benefit Plans, Employment Agreements
and Equity Compensation Awards      5   

Section 2.3

  WPX Benefit Plans and WPX Employment Agreements      6   

Section 2.4

  Plan-Related Litigation      7   

Section 2.5

  Paid Time Off      7   

Section 2.6

  FMLA      7   

Section 2.7

  Employee Transfers      7   

Section 2.8

  Annual Bonuses      8   

ARTICLE III SERVICE CREDIT

     8   

Section 3.1

  Service Credit for Employee Transfers      8   

Section 3.2

  WMB Benefit Plans      8   

Section 3.3

  WPX Benefit Plans      8   

ARTICLE IV CERTAIN WELFARE BENEFIT PLAN MATTERS

     9   

Section 4.1

  WPX Welfare Plans      9   

Section 4.2

  Continuation of Elections      9   

Section 4.3

  Pre-Existing Conditions      9   

Section 4.4

  Long-Term Disability      9   

Section 4.5

  Short-Term Disability      10   

Section 4.6

  Workers’ Compensation      10   

Section 4.7

  Other Welfare Benefits      10   

ARTICLE V DEFINED BENEFIT PLANS

     10   

Section 5.1

  WMB DB Plans      10   

Section 5.2

  Vesting of Benefits      11   

Section 5.3

  Section 409A      11   

 

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TABLE OF CONTENTS

(Continued)

 

         Page   ARTICLE VI TAX-QUALIFIED DEFINED CONTRIBUTION PLANS      11   

Section 6.1

  WMB DC Plan      11   

Section 6.2

  Vesting of Benefits      11   

Section 6.3

  WPX DC Plan      12   

Section 6.4

  Contributions Due      12    ARTICLE VII EQUITY COMPENSATION      12   

Section 7.1

  General Treatment of Outstanding WMB Equity Compensation Awards      12   

Section 7.2

  Tax Withholding and Reporting      14   

Section 7.3

  Employee Stock Purchase Plan      14    ARTICLE VIII BENEFIT PLAN
REIMBURSEMENTS, BENEFIT PLAN THIRD-PARTY CLAIMS      14   

Section 8.1

  General Principles      14   

Section 8.2

  Benefit Plan Third-Party Claims      14    ARTICLE IX COOPERATION      15   

Section 9.1

  Cooperation      15    ARTICLE X MISCELLANEOUS      15   

Section 10.1

  Further Assurances      15   

Section 10.2

  Employment Tax Reporting Responsibility      15   

Section 10.3

  Data Privacy      15   

Section 10.4

  Third Party Beneficiaries      16   

Section 10.5

  Effect if Distribution Does Not Occur      16   

Section 10.6

  Incorporation of Separation Agreement Provisions      16   

Section 10.7

  No Representation or Warranty      16   

 

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EMPLOYEE MATTERS AGREEMENT

EMPLOYEE MATTERS AGREEMENT, dated as of December 30, 2011 (the “Employee Matters
Agreement”), by and between The Williams Companies, Inc., a Delaware corporation
(“WMB”), and WPX Energy, Inc., a Delaware corporation (“WPX”), which Employee
Matters Agreement shall become effective at the same time as the Separation
Agreement (as defined below).

RECITALS

A. The parties to this Employee Matters Agreement have entered into the
Separation and Distribution Agreement (the “Separation Agreement”), dated as of
the date hereof, pursuant to which WMB intends to separate into two publicly
traded companies: (i) WMB, which will continue to own and conduct, directly and
indirectly, the WMB Business, and (ii) WPX, which will own and conduct, directly
and indirectly, the WPX Business.

B. The parties wish to set forth their agreements as to certain matters
regarding employment, compensation and employee benefits.

AGREEMENT

In consideration of the foregoing and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, the parties agree as
follows:

ARTICLE I

DEFINITIONS

Section 1.1 Table of Definitions. The following terms have the meanings set
forth on the pages referenced below:

 

Definition

   Page  

Applicable Transfer Date

     8   

Benefit Plan

     2   

Benefits Commencement Date

     2   

Converted WPX Equity Compensation Award

     12   

Delayed Transfer Employee

     7   

Employee Matters Agreement

     1   

Employment Agreement

     2   

Equity Compensation Awards

     2   

ERISA

     2   

Fiscal 2011 Employee Bonuses

     8   

Former Employee

     2   

Plan Payee

     2   

Pre-2006 Options

     13   

Separation Agreement

     1   

Definition

   Page  

Welfare Plan

     2   

WMB

     1   

WMB Benefit Plan

     3   

WMB DB Plans

     3   

WMB DC Plan

     3   

WMB Employee

     3   

WMB Employee Liabilities

     3   

WMB Employment Agreement

     3   

WMB Equity Compensation Award

     12   

WMB Group

     4   

WMB Option

     12   

WMB RSUs

     12   

WMB Welfare Plan

     4   

Workers’ Compensation Event

     4   

WPX

     1   

 

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Table of Definitions (cont.)

 

Definition

   Page  

WPX Benefit Plans

     4   

WPX DC Plan

     12   

WPX Employee

     4   

WPX Employee Liabilities

     4   

Definition

   Page  

WPX Employment Agreement

     4   

WPX Exchange Ratio

     3, 5   

WPX Group

     5   

WPX Welfare Plan

     5   

 

 

Section 1.2 Certain Defined Terms. For the purposes of this Employee Matters
Agreement:

“Benefit Plan” means, with respect to an entity, each plan, program, policy,
agreement, arrangement or understanding that is a deferred compensation,
executive compensation, incentive bonus or other bonus, pension, profit sharing,
savings, retirement, severance pay, salary continuation, life, death benefit,
health, hospitalization, paid time off, disability or accident insurance or
other employee benefit plan, program, agreement or arrangement, including any
“employee benefit plan” (as defined in Section 3(3) of ERISA) sponsored,
maintained or contributed to by such entity or to which such entity is a party
or under which such entity has any obligation; provided that no WMB Equity
Compensation Award, nor any plan under which any such WMB Equity Compensation
Award is granted, shall constitute a “Benefit Plan” under this Employee Matters
Agreement. In addition, no Employment Agreement shall constitute a Benefit Plan
for purposes hereof.

“Benefits Commencement Date” means January 1, 2012, or such later date prior to
the Distribution Date as the parties may agree on which WPX Employees shall
commence participation in the WPX Benefit Plans.

“Employment Agreement” means any individual employment, retention, relocation,
change in control, incentive bonus, signing bonus or other individual
compensatory agreement between any current or former employee of WMB or a member
of the WMB Group or the WPX Group, but excluding any Equity Compensation Award.

“Equity Compensation Awards” means, collectively, the WMB Equity Compensation
Award and the Converted WPX Equity Compensation Awards.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Former Employee” means each former employee of WMB, any of its Affiliates and
the WMB Group, but does not include any WMB Employees or WPX Employees.

“Plan Payee” means, as to an individual who participates in a Benefit Plan, such
individual’s dependents, beneficiaries, alternate payees and alternate
recipients, as applicable under such Benefit Plan.

“Welfare Plan” means each Benefit Plan that provides life insurance, health
care, dental care, vision care, employee assistance programs (EAP), accidental
death and dismemberment insurance, disability, severance, or other group welfare
or fringe benefits and is an “employee welfare benefit plan” as described in
Section 3(1) of ERISA, whether or not subject to ERISA.

 

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“WMB Benefit Plan” means any Benefit Plan sponsored or maintained by any member
of the WMB Group or WMB. For the avoidance of doubt, no member of the WMB Group
shall be deemed to sponsor or maintain any Benefit Plan if its relationship to
such Benefit Plan is solely to administer such Benefit Plan or provide to WPX
any reimbursement in respect of such Benefit Plan. The WMB Benefit Plans shall
be those Benefit Plans sponsored solely by one or more members of the WMB Group
following the Benefits Commencement Date.

“WMB DB Plans” means Williams Pension Plan, Williams Inactive Employees Pension
Plan, and The Williams Retirement Restoration Plan. The WMB DB Plans shall be
the responsibility of one or more members of the WMB Group following the
Benefits Commencement Date.

“WMB DC Plan” means The Williams Investment Plus Plan. The WMB DC Plan shall be
the responsibility of one or more members of the WMB Group following the
Benefits Commencement Date.

“WMB Employee” means each individual who is employed by a member of the WMB
Group (including, for the avoidance of doubt, any individual who is on a leave
of absence, whether paid or unpaid, from which such employee is entitled to
return to active employment with a member of the WMB Group (in accordance with
WMB’s applicable personnel policies)), who is not a WPX Employee.

“WMB Employee Liabilities” means all potential or actual employment and employee
benefits-related or other Liabilities, whether arising before, on or after the
Benefits Commencement Date, with respect to: (a) WMB Employees, any other
persons employed by the WMB Group and Former Employees (and their respective
Plan Payees); (b) any other individuals asserting rights or obligations stemming
from their services to or in connection with WMB’s business (excluding the WPX
Business); (c) WMB Employment Agreements; and (d) the WMB Benefit Plans
(including providing COBRA continuation coverage and long-term disability
benefits). WMB Employee Liabilities shall also include any deferred vested
benefits of or other Liabilities with respect to WPX Employees (and their Plan
Payees) under the WMB DB Plans and the WMB DC Plan, and any obligations to issue
WMB common stock under Equity Compensation Awards as provided in Article VII
below, but shall exclude the WPX Employee Liabilities.

“WMB Employment Agreement” means any Employment Agreement to which any member of
the WMB Group or WMB is a party. The WMB Employment Agreements shall be the
responsibility of one or more members of the WMB Group following the Benefits
Commencement Date.

“WMB Exchange Ratio” means a ratio equal to the volume weighted average price of
a share of WMB on December 30, 2011 based on “regular way” trading divided by an
amount equal to the volume weighted average price of a share of WMB on
January 3, 2012 based on “regular way” trading.

 

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“WMB Group” means WMB and each direct or indirect Subsidiary of WMB, other than
Persons in the WPX Group.

“WMB Welfare Plan” means each WMB Benefit Plan that is a Welfare Plan.

“Workers’ Compensation Event” means the event, injury, illness or condition
giving rise to a workers’ compensation claim.

“WPX Benefit Plans” means any Benefit Plan sponsored or maintained by any member
of the WPX Group or WPX.

“WPX Employee” means each individual who, as of the earlier of the Distribution
or the Benefits Commencement Date, is employed by a member of the WPX Group
(including, for the avoidance of doubt, (i) any Delayed Transfer Employee,
(ii) any individual who is on a leave of absence, whether paid or unpaid, from
which such employee is entitled to return to active employment with a member of
the WPX Group (in accordance with applicable personnel policies) and (iii) any
individual who, at the time of the Distribution (or, if earlier, on the Benefits
Commencement Date), is receiving short-term disability benefits under a WMB
Benefit Plan and who, if actively-employed at the time of the Distribution (or,
if earlier, on the Benefits Commencement Date), would have been or become a WPX
Employee on that date).

“WPX Employee Liabilities” means all potential or actual employment and employee
benefits-related or other Liabilities, whether arising before, on or after the
Benefits Commencement Date, with respect to: (a) WPX Employees and any other
persons employed by the WPX Group (and their respective Plan Payees); (b) any
other individuals asserting rights or obligations stemming from their services
to or in connection with the WPX Business; (c) WPX Employment Agreements; or
(d) the WPX Benefit Plans, but excluding, in all cases, any such Liabilities
(including, without limitation, for any deferred vested benefits) arising under
any WMB Benefit Plan, including the WMB DB Plans or the WMB DC Plan. WPX
Employee Liabilities shall also include any obligations to issue WPX common
stock under Equity Compensation Awards as provided in Article VII below and any
obligations specifically assumed by WPX in Article IV below, but shall exclude
the WMB Employee Liabilities.

“WPX Employment Agreement” means any Employment Agreement to which any member of
the WPX Group is a party and to which no member of the WMB Group is a party. WPX
Employment Agreements shall also include cash retention agreements between any
WPX Employee and any member of the WMB Group, but shall not include any change
in control agreements to which any member of the WMB Group is a party or any
other WMB Employment Agreements. The WPX Employment Agreements shall be the sole
responsibility of one or more members of the WPX Group following the Benefits
Commencement Date.

 

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“WPX Exchange Ratio” means a ratio equal to the volume weighted average price of
a share of WMB on December 30, 2011 based on “regular way” trading divided by
the volume weighted average price of a share of WPX on January 3, 2012 based on
“regular way” trading.

“WPX Group” means WPX and each direct or indirect Subsidiary of WPX. For the
purposes of this Employee Matters Agreement, WMB shall not be deemed to be a
member of the WPX Group.

“WPX Welfare Plan” means each WPX Benefit Plan that is a Welfare Plan.

Section 1.3 Other Capitalized Terms. Capitalized terms not defined in this
Employee Matters Agreement shall have the meanings ascribed to them in the
Separation Agreement.

ARTICLE II

GENERAL PRINCIPLES; EMPLOYEE TRANSFERS

Section 2.1 Assumption of WPX Employee Liabilities. Effective as of the Benefits
Commencement Date, except as otherwise specifically provided in this Employee
Matters Agreement, (a) the WPX Group shall be solely responsible for all WPX
Employee Liabilities and the WMB Group shall not retain any WPX Employee
Liabilities and (b) the WMB Group shall be solely responsible for all WMB
Employee Liabilities and the WPX Group shall not retain any WMB Employee
Liabilities.

Section 2.2 Allocation of Liabilities With Respect to Benefit Plans, Employment
Agreements and Equity Compensation Awards. Except as otherwise specifically
provided in this Employee Matters Agreement, effective immediately prior to the
Benefits Commencement Date, each WPX Employee (and each such individual’s Plan
Payees) shall cease active participation in all WMB Benefit Plans, other than
the WMB DB Plans, the WMB DC Plan and, as of such time, WPX shall or shall cause
another member of the WPX Group to have in effect such WPX Benefit Plans as are
necessary to comply with its obligations pursuant to this Employee Matters
Agreement. Effective immediately prior to the Benefits Commencement Date, each
WPX Employee who participates in any of the WMB DB Plans and/or the WMB DC Plan
shall cease active participation in each such plan and, after the Distribution
Date, shall be treated as a participant whose employment with the WMB Group has
terminated (effective as of the Distribution) for all purposes thereunder to the
extent consistent with applicable Law (including Code Section 409A).

(a) Effective as of the Benefits Commencement Date, except as otherwise
specifically provided in this Employee Matters Agreement, WMB shall, or shall
cause one or more members of the WMB Group to, retain, pay, perform, fulfill and
discharge in due course all Liabilities arising out of or relating to all WMB
Employment Agreements and all other WMB Employee Liabilities.

 

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(b) Effective as of the Benefits Commencement Date, except as otherwise
specifically provided in this Employee Matters Agreement, WPX shall, or shall
cause one or more members of the WPX Group to, retain, pay, perform, fulfill and
discharge in due course (i) all Liabilities arising out of or relating to all
WPX Benefit Plans, (ii) all Liabilities arising out of or relating to all WPX
Employment Agreements, (iii) all Liabilities (other than the WMB Employee
Liabilities) with respect to the employment or termination of employment of all
WPX Employees and their Plan Payees to the extent arising in connection with or
as a result of employment with or the performance of services for any member of
the WPX Group, and (iv) all other WPX Employee Liabilities.

(c) Effective as of the Distribution, except as otherwise specifically provided
in this Employee Matters Agreement, WPX shall, or shall cause one or more
members of the WPX Group to, retain, pay, perform, fulfill and discharge in due
course all Liabilities arising out of or relating to the Converted WPX Equity
Compensation Awards (including, without limitation, any and all Liabilities with
respect to any equity award of WMB that, through assumption and conversion,
becomes a Converted WPX Equity Compensation Award, as well as any and all
Liabilities with respect to the assumption and conversion of such an award).

(d) All Liabilities arising out of any Equity Compensation Awards shall be
allocated and handled in accordance with the provisions of Article VII below.
For the avoidance of doubt, from and after the Distribution, in no event will
WPX be required to issue, grant or award any compensation relating to WPX Common
Stock to any employee who is a member of the WMB Group other than pursuant to
any Pre-2006 Options as provided for in Section 7.1, and, subject to the
treatment of the WMB Equity Compensation Awards that are outstanding as of the
Distribution and held by any WPX Employee as provided in Section 7.1, in no
event will WMB be required to issue, grant or award any compensation relating to
WMB Common Stock to any employee who is a member of the WPX Group other than
pursuant to any Pre-2006 Options as provided for in Section 7.1.

Section 2.3 WPX Benefit Plans and WPX Employment Agreements. Effective as of the
Benefits Commencement Date, WPX or another member of the WPX Group shall, in a
manner not inconsistent with this Employee Matters Agreement, assume, adopt,
continue or, to the extent necessary, assume sponsorship of each WPX Benefit
Plan and WPX Employment Agreement, and the WMB Group shall use reasonable
efforts to transfer or cause to be transferred to WPX all plan documents, trust
agreements, insurance policies, administrative agreements, and other agreements
and instruments reasonably required for the maintenance and administration of
the WPX Benefit Plans and the WPX Employment Agreements.

Effective on the Benefits Commencement Date, the WPX Group shall be exclusively
responsible for administering each WPX Benefit Plan and each WPX Employment
Agreement in accordance with its terms and for all obligations and liabilities
with respect to the WPX Benefit Plans and WPX Employment Agreements and all
benefits or rights owed to participants in the WPX Benefit Plans and individuals
who are parties to the WPX Employment Agreements, whether arising before, on or
after the Distribution Date. WPX shall not assume sponsorship, maintenance or
administration of any Benefit

 

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Plan or Employment Agreement that is not a WPX Benefit Plan or a WPX Employment
Agreement or receive any assets or assume any liabilities in connection with any
such Benefit Plan or Employment Agreement. For the avoidance of doubt, WPX shall
not assume sponsorship, maintenance, administration of or any Liability under
any WMB DB Plan or the WMB DC Plan.

Section 2.4 Plan-Related Litigation. Notwithstanding anything herein to the
contrary, the management of the defense of all litigation related to the WMB
Benefit Plans, the WMB Employment Agreements, the WPX Benefit Plans and the WPX
Employment Agreements shall be governed by the Separation Agreement, and this
Employee Matters Agreement shall govern the allocation of Liabilities related to
any such litigation.

Section 2.5 Paid Time Off. WPX shall assume responsibility for accrued paid time
off attributable to WPX Employees upon the earlier of the Distribution or the
Benefits Commencement Date (or, with respect to Delayed Transfer Employees, upon
the Applicable Transfer Date).

Section 2.6 FMLA. Effective as of the earlier of the Benefits Commencement Date
(or, with respect to Delayed Transfer Employees, the Applicable Transfer Date),
WPX shall assume responsibility for and make available to the WPX Employees the
existing eligibility and rights to leave under the Family and Medical Leave Act
of 1993 that such WPX Employees were entitled to from WMB immediately prior to
the Benefits Commencement Date (or, with respect to Delayed Transfer Employees,
the Applicable Transfer Date, but without giving effect to any leave taken
between the Benefits Commencement Date and the Applicable Transfer Date).

Section 2.7 Employee Transfers.

(a) Upon mutual agreement of WPX and WMB any employee whose employment transfers
after the earlier of the Distribution or the Benefits Commencement Date, but on
or before the first anniversary of the Distribution, from the WMB Group to the
WPX Group and who was continuously employed by a member of the WMB Group from
the Benefits Commencement Date through the date such employee commences active
employment with a member of the WPX Group (as applicable) shall be a “Delayed
Transfer Employee.” Except as otherwise specifically provided in this Employee
Matters Agreement, such Delayed Transfer Employees transferring from the WMB
Group to the WPX Group shall be treated in the same manner as the individuals
who were WPX Employees on the Benefits Commencement Date, to the extent
practicable in compliance with applicable Law and the Benefit Plans and without
duplicating benefits for the same period of service. For purposes of this
Employee Matters Agreement, the date on which a Delayed Transfer Employee
actually commences employment with the WPX Group (as applicable) is referred to
as such individual’s “Applicable Transfer Date”. Notwithstanding anything herein
to the contrary, the mutual agreement with respect to, and Applicable Transfer
Date of, any Delayed Transfer Employee must occur on or before the first
anniversary of the Distribution.

 

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(b) In no event shall the transfer of employment from the WMB Group to the WPX
Group or the occurrence of the Distribution be considered a change in control
for purposes of the Benefit Plans, Employment Agreements or Equity Compensation
Awards.

Section 2.8 Annual Bonuses. At the time that annual bonuses are paid generally
to WMB Employees for the 2011 fiscal year, WMB shall inform WPX in writing of
the bonus (if any) payable to each WPX Employee (other than Delayed Transfer
Employees whose Applicable Transfer Date occurs after the date bonuses are paid
for the 2011 fiscal year) under the applicable annual incentive plan or
arrangement of a member of the WMB Group with respect to the 2011 fiscal year
(collectively, the “Fiscal 2011 Employee Bonuses”), determined as if the WPX
Employee had remained employed by the WMB Group through the bonus payment date.
WPX shall, or shall cause its Affiliates to, pay each WPX Employee such bonus
(if any) promptly following such notice and within the time period set forth in
the applicable annual incentive plan or arrangement, and WMB shall promptly
reimburse WPX for the gross amount of such bonus payments, plus the employer
portion of any employment or social insurance taxes paid by WPX in connection
with such bonus payments, but in no event later than March 15, 2012. WPX shall
be solely responsible for payment of all annual bonuses earned by WPX Employees
with respect to periods ending after the Benefits Commencement Date.

ARTICLE III

SERVICE CREDIT

Section 3.1 Service Credit for Employee Transfers. The Benefit Plans shall
provide the following service crediting rules effective as of the Benefits
Commencement Date: if a Delayed Transfer Employee becomes employed by a member
of the WMB Group or WPX Group after the Benefits Commencement Date and on or
before the first anniversary of the Distribution then such Delayed Transfer
Employee’s service with the WPX Group or the WMB Group (as applicable) following
the Benefits Commencement Date shall be recognized for purposes of eligibility
and vesting under the appropriate Benefit Plans, subject to the terms of those
plans.

Section 3.2 WMB Benefit Plans. Service from and after the Benefits Commencement
Date of WPX Employees with any member of the WPX Group or any other employer
other than any member of the WMB Group shall not be taken into account for any
purpose under the WMB Benefit Plans.

Section 3.3 WPX Benefit Plans. From and after the Benefits Commencement Date,
WPX shall, and shall cause the other members of the WPX Group and their
respective successors to, provide credit under the WPX Benefit Plans to WPX
Employees for their service with WPX and its predecessors and affiliates
(including but not limited to the WPX Group, WMB, the WMB Group and, to the
extent applicable, any business previously acquired by the WMB Group or the WPX
Group) to the same extent that such service was recognized prior to the Benefits
Commencement Date under the relevant WMB Benefit Plans. For avoidance of doubt,
service shall be credited for purposes of determining eligibility to participate
and vesting; provided, however, that service shall not be recognized to the
extent that such recognition would result in the duplication of benefits or
duplication of credit for the same period of service.

 

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ARTICLE IV

CERTAIN WELFARE BENEFIT PLAN MATTERS

Section 4.1 WPX Welfare Plans. Effective on the Benefits Commencement Date, WPX
shall, or shall cause another member of the WPX Group to, have in effect the WPX
Welfare Plans to provide welfare benefits to the WPX Employees participating in
any WMB Welfare Plans immediately prior to the Benefits Commencement Date. Each
WPX Welfare Plan shall have terms and features (including benefit coverage
options and employer contribution provisions) as determined by WPX in its sole
discretion. From and after the Benefits Commencement Date, WPX and the WPX Group
shall be solely and exclusively responsible for all obligations and liabilities
with respect to, or in any way related to, the WPX Welfare Plans.

Section 4.2 Continuation of Elections. As of the Benefits Commencement Date, WPX
shall, to the extent applicable, cause the WPX Welfare Plans to recognize and
maintain all elections and designations (including, without limitation, all
coverage and contribution elections and beneficiary designations) in effect with
respect to WPX Employees prior to the Benefits Commencement Date under the
comparable WMB Welfare Plan and apply such elections and designations under the
WPX Welfare Plans for the remainder of the period or periods for which such
elections or designations are by their original terms effective, unless
superseded by new elections made under the WPX Welfare Plans.

Section 4.3 Pre-Existing Conditions. As of the Applicable Transfer Date with
respect to Delayed Transfer Employees, the WPX Welfare Plans will not impose any
limitations on coverage for preexisting conditions other than such limitations
as were applicable under the comparable WMB Welfare Plans prior to the
Applicable Transfer Date.

Section 4.4 Long-Term Disability. Notwithstanding anything herein to the
contrary, any individual receiving long-term disability benefits under a WMB
Welfare Plan as of immediately prior to the Benefits Commencement Date shall
continue to receive such benefits under such WMB Welfare Plan (in accordance
with and subject to the terms and conditions thereof) regardless of whether such
individual would become a WPX Employee if such individual returned to active
employment after the Benefits Commencement Date. For the avoidance of doubt, any
WPX Employee who first becomes eligible for long-term disability benefits on or
after the Benefits Commencement Date shall receive such benefits pursuant to the
terms and conditions of the applicable WPX Welfare Plan and shall not be
eligible for such benefits under a WMB Welfare Plan.

 

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Section 4.5 Short-Term Disability. Notwithstanding anything herein to the
contrary, WPX shall have sole responsibility for providing short-term disability
benefits to any individual who, on the Benefits Commencement Date, qualifies for
short-term

disability benefits under a WMB Benefit Plan and who, if actively-employed at
the time of the Distribution (or, if earlier, on the Benefits Commencement
Date), would have been or become a WPX Employee on that date. In addition,
effective as of the Benefits Commencement Date (or, with respect to Delayed
Transfer Employees, the Applicable Transfer Date), WPX shall assume
responsibility for and make available to the WPX Employees the existing
eligibility and rights to short-term disability benefits that such WPX Employees
were entitled to from WMB immediately prior to the Benefits Commencement Date
(or, with respect to Delayed Transfer Employees, the Applicable Transfer Date,
but without giving effect to any short-term disability leave taken between the
Benefits Commencement Date and the Applicable Transfer Date).

Section 4.6 Workers’ Compensation. Notwithstanding anything herein to the
contrary, WPX shall have sole liability with respect to, any workers’
compensation claims of WPX Employees, regardless of when the event leading to
such claims occurred; provided, however, that with respect to any such claims
arising from injuries covered by the applicable insurance policies occurring
prior to the Benefits Commencement Date, WMB shall have responsibility for
processing and managing such claims and WPX shall reimburse WMB for any payments
borne by WMB in respect of such claims.

Section 4.7 Other Welfare Benefits. Notwithstanding anything herein to the
contrary, WPX shall, as of the Benefits Commencement Date, assume all liability
for providing adoption benefits, educational reimbursement and reimbursement for
relocation expenses to WPX Employees, regardless of when the events leading to
the entitlement of such benefits and/or reimbursements occurred.

ARTICLE V

DEFINED BENEFIT PLANS

Section 5.1 WMB DB Plans. Effective as of the Benefits Commencement Date (or,
with respect to Delayed Transfer Employees, the Applicable Transfer Date), each
WPX Employee and Delayed Transfer Employee who is a participant, as of the
Benefits Commencement Date (or, if applicable the Applicable Transfer Date), in
one or more of the WMB DB Plans shall cease active participation in such WMB DB
Plans and service with any member of the WPX Group or any other employer other
than any member of the WMB Group from and after the Benefits Commencement Date
(or, with respect to Delayed Transfer Employees, the Applicable Transfer Date)
shall not be taken into account for any purpose under such WMB DB Plans, except
for purposes of determining the timing of the payment of compensation or the
provision of benefits under any WMB DB Plan, to the extent that such payment or
provision is triggered under such WMB DB Plan by a WPX Employee’s separation
from service from the WPX Group. Notwithstanding any provision of this Agreement
to the contrary, from and after the Benefits Commencement Date, the WMB Group
shall remain and be exclusively responsible for all obligations and Liabilities
with respect to the WMB DB Plans, all assets of the WMB DB Plans, and all
benefits owed to participants in the WMB DB Plans (including the WPX Employees,
Former Employees and Delayed Transfer Employees), whether accrued before, on or
after the Benefits Commencement Date. In no event shall WMB transfer or cause to
be transferred to WPX or any member of the WPX Group sponsored any of the WMB DB
Plans or any Assets or Liabilities maintained or accrued thereunder.

 

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Section 5.2 Vesting of Benefits. Notwithstanding anything herein to the
contrary, WMB shall take all steps necessary, including amending any WMB DB
Plan, so that, as of the Benefits Commencement Date, each WPX Employee and
Delayed Transfer Employee who is a participant in a WMB DB Plan shall be fully
vested in his or her benefits under each WMB DB Plan in which such WPX Employee
participated while an employee of a member of the WMB Group.

Section 5.3 Section 409A. WMB and WPX shall cooperate in good faith so that the
Distribution and the transactions contemplated by this Employee Matters
Agreement will not result in adverse tax consequences under Code Section 409A to
any current or former employee of any member of the WMB Group or any member of
the WPX Group, or their respective Plan Payees, in respect of his or her
benefits under any WMB DB Plan that is subject to Code Section 409A.

ARTICLE VI

TAX-QUALIFIED DEFINED CONTRIBUTION PLANS

Section 6.1 WMB DC Plan. Effective as of the Benefits Commencement Date (or,
with respect to Delayed Transfer Employees, the Applicable Transfer Date), each
WPX Employee or Delayed Transfer Employee who is a participant, as of the
Benefits Commencement Date (or, if applicable the Applicable Transfer Date), in
the WMB DC Plan shall cease active participation in the WMB DC Plan (and, for
all purposes, be treated as a terminated participant) and service with any
member of the WPX Group or any other employer other than any member of the WMB
Group from and after the Benefits Commencement Date (or, with respect to Delayed
Transfer Employees, the Applicable Transfer Date) shall not be taken into
account for any purpose under the WMB DC Plan. Notwithstanding any provision of
this Agreement to the contrary, from and after the Benefits Commencement Date,
the WMB Group shall be exclusively responsible for all obligations and
Liabilities with respect to the WMB DC Plan, all assets of the WMB DC Plan, and
all benefits owed to participants in the WMB DC Plan (including the WPX
Employees, Former Employees and Delayed Transfer Employees), whether accrued
before, on or after the Benefits Commencement Date. In no event shall WMB
transfer or cause to be transferred to WPX or any member of the WPX Group
sponsorship of the WMB DC Plan or any Assets or Liabilities maintained or
accrued thereunder (except pursuant to an eligible rollover distribution).

Section 6.2 Vesting of Benefits. Notwithstanding anything herein to the
contrary, WMB shall take all steps necessary, including amending the WMB DC
Plan, so that, as of the Benefits Commencement Date, each WPX Employee and
Delayed Transfer Employee shall be fully vested in his or her benefits under the
WMB DC Plan in which such WPX Employee participated while an employee of a
member of the WMB Group.

 

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Section 6.3 WPX DC Plan. Effective as of the Benefits Commencement Date, WPX or
another member of the WPX Group shall establish a defined contribution plan that
qualifies under Code Section 401(a), (such plan, the “WPX DC Plan”). The WPX DC
Plan shall have terms and features (including employer contribution provisions)
that are determined by WPX in its sole discretion. WPX or a member of the WPX
Group shall be solely responsible for taking all necessary, reasonable, and
appropriate actions (including the submission of the WPX DC Plan to the Internal
Revenue Service for a determination of tax-qualified status) to establish,
maintain and administer the WPX DC Plan so that it is qualified under
Section 401(a) of the Code.

Section 6.4 Contributions Due. All contributions payable to the WMB DC Plan with
respect to employee deferrals, matching contributions and employer contributions
for WPX Employees up to the Benefits Commencement Date (and, with respect to the
Delayed Transfer Employees, the Applicable Transfer Date), determined in
accordance with the terms and provisions of the WMB DC Plan, ERISA and the Code,
shall be paid by (and be the sole liability of) WMB or a member of the WMB Group
to the WMB DC Plan.

ARTICLE VII

EQUITY COMPENSATION

Section 7.1 General Treatment of Outstanding WMB Equity Compensation Awards.

(a) Notwithstanding any other provision of this Employee Matters Agreement or
the Separation Agreement to the contrary, from and after the Distribution, each
outstanding option to purchase WMB Common Stock (“WMB Option”) or each
outstanding restricted stock unit with respect to WMB Common Stock (whether or
not subject to performance-based vesting criteria) (“WMB RSUs”), in each case
that was granted under or pursuant to any equity compensation plan or
arrangement of WMB (each such WMB Option or WMB RSU, a “WMB Equity Compensation
Award”), that, as of the Distribution, is held by any WPX Employee (which, for
purposes of this Article VII, shall not include any Delayed Transfer Employees
whose Applicable Transfer Date occurs after the Distribution) or non-employee
member of the WPX board of directors, other than the portion of each Pre-2006
Option allocated to WMB, shall be assumed by WPX (each such assumed WMB Equity
Compensation Award, a “Converted WPX Equity Compensation Award”).

(b) In connection with the assumption by WPX, each Converted WPX Equity
Compensation Award, other than the Pre-2006 Options, shall be adjusted into an
option or restricted stock unit award, as applicable, with respect to shares of
WPX Common Stock having the same intrinsic value as the applicable WMB Equity
Compensation Award, with the number of shares of WPX Common Stock subject to
each such award equal to the number of shares of WMB Common Stock subject to
each such award as in effect immediately prior to the Distribution multiplied by
the WPX Exchange Ratio, rounded down to the nearest whole share and effective
upon the Distribution. The per share exercise price of any Converted WPX Equity
Compensation Award, other than the Pre-2006 Options, that is a stock option
shall also be adjusted effective upon the Distribution by dividing the
applicable per share exercise price of the stock option as in effect immediately
prior to the Distribution by the WPX Exchange Ratio, with the result rounded up
to the nearest whole cent.

 

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(c) The Converted WPX Equity Compensation Awards that relate to WMB Options
granted prior to January 1, 2006, along with each other WMB Option granted prior
to January 1, 2006 that, as of the Distribution, is held by any WMB Employee,
Former Employee or non-employee member of the WMB board of directors
(collectively, the “Pre-2006 Options”), shall be adjusted, in part, into an
option to acquire WPX Common Stock (with the number of shares of WPX Common
Stock subject to such portion of the option generally equal to the number of
shares of WMB Common Stock subject to the original WMB Option as in effect
immediately prior to the Distribution multiplied by the Distribution Ratio) and
shall remain, in part, an option to acquire WMB Common Stock (with the number of
shares of WMB Common Stock subject to such portion of the option generally equal
to the number of shares of WMB Common Stock subject to the original WMB Option
as in effect immediately prior to the Distribution), in each case, having an
aggregate same intrinsic value as the original WMB Option, rounded down to the
nearest whole share and effective upon the Distribution. The per share exercise
price of the Pre-2006 Options shall also be adjusted effective upon the
Distribution by (i) with respect to the portion of the Pre-2006 Option that is
allocated to WPX, dividing the per share exercise price of the stock option as
in effect immediately prior to the Distribution by the WPX Exchange Ratio and
(ii) with respect to the portion of the Pre-2006 Option that is allocated to
WMB, dividing the per share exercise price of the stock option as in effect
immediately prior to the Distribution by the WMB Exchange Ratio, in each case,
with the results rounded up to the nearest whole cent. For the avoidance of
doubt, the portion of the Pre-2006 Options held by any WMB Employee, Former
Employee or non-employee member of the WMB board of directors allocated to WPX
shall be assumed by WPX upon the Distribution. Notwithstanding anything herein
to the contrary, in all events the adjustments to the WMB Options provided for
herein shall be implemented in a manner that complies with Section 424 of the
Code.

(d) The performance criteria applicable to any Converted WPX Equity Compensation
Awards issued in 2010 or 2011 that are performance-based restricted stock units
shall also be modified so that “total stockholder return” for purposes of such
performance-based restricted stock units shall be based on the sum of the 20-day
average closing price of WMB Common Stock at the end of the performance period
and the 20-day average closing price of WPX Common Stock, multiplied by the
Distribution Ratio, at the end of the performance period.

(e) Prior to the Distribution, WPX shall establish equity compensation plans, so
that upon the Distribution, WPX shall have in effect an equity compensation plan
containing substantially the same terms as each original WMB equity compensation
plan under which any Converted WPX Equity Compensation Award was granted. From
and after the Distribution, each Converted WPX Equity Compensation Award shall
be subject to the terms of the applicable WPX equity compensation plan and the
award agreement governing such Converted WPX Equity Compensation Award. From and
after the Distribution, WPX shall retain, pay, perform, fulfill and discharge
all Liabilities arising out of or relating to the Converted WPX Equity
Compensation Awards. Effective as of the Distribution, each WPX Employee and
non-employee member of the WPX board of directors shall cease participation in
all WMB equity compensation plans other than with respect to the Pre-2006
Options.

 

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(f) In all events, the adjustments to the Converted WPX Equity Compensation
Awards provided for in this Section 7.1 shall be made in a manner that, as
determined by WMB and WPX, avoids adverse tax consequences under Code
Section 409A.

Section 7.2 Tax Withholding and Reporting. Effective from and after the
Distribution, WPX shall be solely responsible for all Tax withholding
obligations with respect to the equity compensation awards applicable to WPX
Employees, and WMB shall be solely responsible for all Tax withholding
obligations with respect to equity compensation awards applicable to WMB
Employees.

Section 7.3 Employee Stock Purchase Plan. All WPX Employees shall cease active
participation in The Williams Companies Employee Stock Purchase Plan with
respect to offering periods ending after the Benefits Commencement Date. For the
avoidance of doubt, the WPX Employees who participated in The Williams Companies
Employee Stock Purchase Plan prior to the Benefits Commencement Date shall
continue to participate in the offering period under The Williams Companies
Employee Stock Purchase Plan ending prior to the Benefits Commencement Date.

ARTICLE VIII

BENEFIT PLAN REIMBURSEMENTS, BENEFIT PLAN THIRD-PARTY CLAIMS

Section 8.1 General Principles. From and after the Distribution, any services
that a member of the WMB Group shall provide to the members of the WPX Group
relating to any Benefit Plans shall be set forth in the Transition Services
Agreement.

Section 8.2 Benefit Plan Third-Party Claims. In the event of any conflict or
inconsistency between the following provision on the one hand, and the
Separation Agreement or any of the other Ancillary Agreements on the other hand,
the following provision shall control over the inconsistent provisions to the
extent of the inconsistency:

If a Third-Party Claim (as defined in Section 7.5(a) of the Separation
Agreement) relates solely to the Benefit Plan of the Indemnifying Party, WPX and
WMB shall take all actions necessary to substitute the Indemnifying Party and/or
the relevant Benefit Plan of the Indemnifying Party as the proper party for such
Third-Party Claim. If the Third-Party Claim relates to both a WPX Benefit Plan
and a WMB Benefit Plan, WPX and WMB shall take all actions necessary to separate
or otherwise partition the Third-Party Claim so as to allow each party to solely
defend the claim relating to its own Benefit Plan (unless the parties mutually
agree that such a separation or partition is unnecessary or inadvisable). If the
Third-Party Claim cannot be transferred to the Indemnifying Party or separated
or partitioned so as to allow each party to solely defend the claim relating to
its own Benefit Plan, then WMB shall defend the Third-Party Claim and WPX may
elect to participate in (but not control) the defense, compromise, or settlement
of any such Third-Party Claim at its own expense (including allocated costs of
WPX in-house counsel and other WPX personnel).

 

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ARTICLE IX

COOPERATION

Section 9.1 Cooperation. Following the date of this Employee Matters Agreement,
WMB and WPX shall, and shall cause their respective Subsidiaries and Affiliates
to, use reasonable best efforts to cooperate with respect to any employee
compensation or benefits matters that the WMB Group or the WPX Group, as
applicable, reasonably determines require the cooperation of both the WMB Group
and the WPX Group in order to accomplish the objectives of this Employee Matters
Agreement. Without limiting the generality of the preceding sentence, (a) the
WMB Group and the WPX Group shall cooperate in coordinating each of their
respective payroll systems in connection with the transfers of WPX Employees and
Delayed Transfer Employees to the WPX Group, (b) the WMB Group shall, to the
extent permitted by applicable Law, transfer all employment-related records
relating to WPX Employees to the WPX Group, to the extent such records are in
the WMB Group’s possession or control, and (c) the WMB Group and the WPX Group
shall, to the extent permitted by applicable Law, transfer records to each other
as reasonably necessary for the proper administration of all Equity Compensation
Awards (including the Pre-2006 Options), to the extent such records are in the
other party’s possession or control. The obligations of the WPX Group and the
WMB Group to cooperate pursuant to this Section 9.1 shall remain in effect until
all audits of all Benefit Plans (including, for this purpose, any equity
compensation plan) with respect to which the other party may have information
have been completed and the applicable statute of limitations with respect to
such audits has expired.

ARTICLE X

MISCELLANEOUS

Section 10.1 Further Assurances. Prior to the Distribution Date, if either party
identifies any commercial or other service that is needed to ensure a smooth and
orderly transition of its business in connection with the consummation of the
transactions contemplated hereby, and that is not otherwise governed by the
provisions of this Employee Matters Agreement, the parties will cooperate in
determining whether there is a mutually acceptable arm’s-length basis on which
the other party will provide such service under the Transition Services
Agreement.

Section 10.2 Employment Tax Reporting Responsibility. WPX and WMB hereby agree
to follow the standard procedure for United States employment tax withholding as
provided in Section 4 of Rev. Proc. 2004-53, I.R.B. 2004-35.

Section 10.3 Data Privacy. The parties agree that any applicable data privacy
Laws and any other obligations of the WPX Group and the WMB Group to maintain
the confidentiality of any employee information or information held by any
Benefit Plans in accordance with applicable Law shall govern the disclosure of
employee information among the parties under this Employee Matters Agreement.
WPX and WMB shall ensure that they each have in place appropriate technical and
organizational security measures to protect the personal data of the WPX
Employees and WMB Employees.

 

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Section 10.4 Third Party Beneficiaries. Nothing contained in this Employee
Matters Agreement shall be construed to create any third-party beneficiary
rights in any individual, including without limitation any WPX Employee, WMB
Employee or Former Employee (including any dependent or beneficiary thereof) nor
shall this Employee Matters Agreement be deemed to amend any Benefit Plan or to
prohibit WMB, WPX or their respective Affiliates from amending or terminating
any Benefit Plan (including for this purpose, any equity compensation plan).

Section 10.5 Effect if Distribution Does Not Occur. If the Distribution does not
occur, then all actions and events that are, under this Employee Matters
Agreement, to be taken or occur effective as of the Distribution shall not be
taken or occur except to the extent specifically agreed by the parties.

Section 10.6 Incorporation of Separation Agreement Provisions. The following
provisions of the Separation Agreement are hereby incorporated herein by
reference, and unless otherwise expressly specified herein, such provisions
shall apply as if fully set forth herein (references in this Section 10.6 to an
“Article” or “Section” shall mean Articles or Sections of the Separation
Agreement, and references in the material incorporated herein by reference shall
be references to the Separation Agreement): Article V (relating to Exchange of
Information; Confidentiality); Article VI (relating to Additional Covenants and
Other Matters); Article VII (relating to Mutual Releases; Indemnification);
Article VIII (relating to Termination); Article IX (relating to Dispute
Resolution); and Article X (relating to Miscellaneous).

Section 10.7 No Representation or Warranty. WMB makes no representation or
warranty with respect to any matter in this Employee Matters Agreement,
including, without limitation, any representation or warranty with respect to
the legal or tax status or compliance of any Benefit Plan, compensation
arrangement or Employment Agreement, and WMB disclaims any and all liability
with respect thereto.

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties have caused this Employee Matters Agreement to
be executed by their duly authorized representatives.

 

THE WILLIAMS COMPANIES, INC. By:   /s/ Alan S. Armstrong   Name: Alan S.
Armstrong   Title: Chief Executive Officer

 

WPX ENERGY, INC. By:   /s/ Ralph A. Hill   Name: Ralph A. Hill   Title: Chief
Executive Officer

[Signature Page to Employee Matters Agreement]