Exhibit 10.42


POGO
PRODUCING COMPANY


CHANGE
OF CONTROL


SEVERANCE
AND RETENTION PROGRAM


(Effective
January 1, 2007)
















Table
of Contents


	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1  GENERAL

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1 

  	
  Purpose and Term.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.2 

  	
  Plan Administration.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.3 

  	
  Source of Payments.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.4 

  	
  Notices.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.5 

  	
  Action by Company.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.6 

  	
  Gender and Number.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.7 

  	
  Plan Not Guarantee of Employment.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.8 

  	
  Covered Affiliates.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2  DEFINITIONS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1 

  	
  Administrative Committee

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
  Section 2.2 

  	
  Affiliate

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.3 

  	
  Change of Control

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.4 

  	
  Claimant

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.5 

  	
  COBRA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.6 

  	
  Code

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.7 

  	
  Company

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.8 

  	
  Compensation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.9 

  	
  Effective Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.10 

  	
  Employee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.11 

  	
  Employment Termination Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.12 

  	
  ERISA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.13 

  	
  General Release of Claims or Release

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.14 

  	
  Participant

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.15 

  	
  Plan

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.16 

  	
  Plan Administrator

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.17 

  	
  Plan Year

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.18 

  	
  Qualified Employment

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.19 

  	
  Retention Benefits

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.20 

  	
  Retirement Plan or 401(k) Plan

  	
   

  	
   

  



 



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  Section
  2.21 

  	
  Severance Benefits

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.22 

  	
  Specified Employee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.23 

  	
  Years of Service

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3  ELIGIBILITY AND
  PARTICIPATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1 

  	
  Eligibility for Severance Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.2 

  	
  Eligibility for Retention Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.3 

  	
  General Release of Claims.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4  SEVERANCE BENEFITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1 

  	
  Entitlement to Severance Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.2 

  	
  Amount of Severance Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.3 

  	
  Form and Timing of Severance Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.4 

  	
  Coordination With Other Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.5 

  	
  Nonalienation.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.6 

  	
  Withholding.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.7 

  	
  Benefits on Death.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5  RETENTION BENEFITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1 

  	
  Entitlement to Retention Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.2 

  	
  Amount of Retention Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.3 

  	
  Form and Timing of Retention Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.4 

  	
  Withholding.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.5 

  	
  Benefits on Death.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.6 

  	
  Miscellaneous.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6  PLAN ADMINISTRATOR

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1 

  	
  Duties and Authority of Plan Administrator.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.2 

  	
  Plan Administrator Decision Final.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.3 

  	
  Exercise of Plan Administrator Duties.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7  CLAIMS PROCEDURES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1 

  	
  Explanation of Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.2 

  	
  Claims for Benefits.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.3 

  	
  Review of Claims.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.4 

  	
  Compliance With Regulations.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.5 

  	
  Claims for Benefits Under Other Plans.

  	
   

  	
   

  



 



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  SECTION 8  AMENDMENT OR
  TERMINATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1 

  	
  Amendment and Termination.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE A 

  	
  Affiliates Excluded From Coverage

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULE B 

  	
  Outplacement Services

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 



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POGO
PRODUCING COMPANY


CHANGE
OF CONTROL


SEVERANCE
AND RETENTION PROGRAM


SECTION 1


GENERAL


Section
1.1            Purpose and Term.  Pogo Producing Company (“Pogo”) has
established the Pogo Producing Company Change of Control Severance and
Retention Program (the “Plan”) effective as of January 1, 2007.  The Plan is intended to provide severance
benefits and/or a retention incentive for Employees under the circumstances
described herein, and will apply to Employees who are designated by the Plan
Administrator as eligible for benefits under the Plan.  With respect to Pogo and its subsidiaries,
the Plan replaces all severance programs or policies maintained prior to the
Effective Date except individual written employment agreements.


Section
1.2            Plan Administration.  The authority to control and manage the
operation and administration of the Plan will be vested in a Plan
Administrator.  The Plan Administrator
will be the “named fiduciary” as described in Section 402 of ERISA, with
respect to its authority under the Plan. 
The duties and responsibilities of the Plan Administrator are set forth
in Section 6 of the Plan.


Section
1.3            Source of Payments.  The obligations of the Company under the Plan
are solely contractual.  Any amount
payable under the terms of the Plan will be paid from the general assets of the
Company, and no trust or other separate fund will be established for this
purpose.  Other payments or benefits
referenced in the Plan will be paid in accordance with the terms of those plans
and are not payable under the Plan.


Section
1.4            Notices.  Any notice or document required to be filed
under the Plan will be considered to be properly filed if delivered or mailed
via certified mail, postage prepaid, to Pogo’s corporate office, Attn:  John O. McCoy, Jr., Executive Vice President
and Chief Administrative Officer, 5 Greenway Plaza, Suite 3000, Houston, Texas
77046.  Any notice required under the
Plan may be waived by the person entitled thereto.


Section
1.5            Action by Company.  Any action required or permitted to be taken
by the Company under the Plan will be by resolution of its Board of Directors,
or by a duly authorized officer of the Company, or by such other person as may
be designated by the Board of Directors of the Company; provided, however, that
until otherwise provided by the Board of Directors of the Company, any action
required or permitted to be taken by the Company under the Plan may be taken by
any authorized officer of the Company.



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Section
1.6            Gender and Number.  Where the context admits, words in any gender
will include any other gender, words in the singular will include the plural,
and the plural will include the singular.


Section
1.7            Plan Not Guarantee of
Employment.  The
Plan does not constitute a guarantee of employment by the Company, and
eligibility for or participation in the Plan will not give any individual the
right to be retained in the employ of the Company.  The Company reserves the right to discharge
employees at-will or to amend or modify any of the terms and conditions of
their employment.


Section
1.8            Covered Affiliates.  The Plan covers the Company and any Affiliate
of the Company; provided, however, that the Affiliates designated by the
Company from time to time, as set forth on Schedule A attached hereto, shall be
excluded from coverage under the Plan. 
The Employees of other entities that become Affiliates after the
Effective Date will be covered by the Plan only to the extent that the Company
and such Affiliate expressly agree in writing to participation in the Plan.



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SECTION 2


DEFINITIONS


Section
2.1            Administrative Committee
means the committee appointed by the Board of Directors of Pogo.


Section
2.2            Affiliate
means (i) any corporation other than the Company that is either a subsidiary
corporation or an affiliated or associated corporation of the Company which
together with the Company is a member of a “controlled group” of corporations,
(ii) any organization which together with the Company is under “common control”,
or (iii) any organization which together with the Company is an “affiliated
service group”, as those terms are defined in Sections 414(b), 414(c) and
414(m) of the Code.


Section
2.3            Change of Control
means:


A.            The acquisition by any Person of
beneficial ownership of Outstanding Company Voting Securities (including any
such acquisition of beneficial ownership deemed to have occurred pursuant to
Rule 13d-5 under the Exchange Act) if, immediately thereafter, such
Person is the beneficial owner of 20% or more of either (i) the then
Outstanding Company Common Stock or (ii) the then Outstanding Company Voting
Securities, unless such acquisition is made (a) directly from the Company in a
transaction approved by a majority of the members of the Incumbent Board, (b)
by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (c) by a parent
corporation resulting from a Business Corporation (other than the Company)
pursuant to a Business Combination if, following such Business Combination, the
conditions specified in clauses (i), (ii) and (iii) of subsection (c) of this
Section 2.7 are satisfied;


B.            Individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, except that any such individual shall not be considered a member of the
Incumbent Board if his or her initial assumption of office occurs as a result
of either an actual or threatened election contest (as such term is used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board;


C.            Approval by the shareholders of the
Company of a Business Combination (or if there is no such approval by
shareholders, consummation of such Business Combination) unless, immediately
following such Business Combination, (i) more than 60% of, respectively, the
then outstanding shares of common stock of the parent corporation resulting
from such Business Combination and the combined voting power of the then
outstanding voting securities of such parent corporation entitled to vote
generally in the election of directors will be (or is) then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common



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Stock
and Outstanding Company Voting Securities immediately prior to such Business
Combination in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Person (other than any employee benefit plan (or related trust) of the
Company or any parent corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more, respectively, of the
then outstanding shares of common stock of the parent corporation resulting
from such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and (iii) at least a majority of the members of the
board of directors of the parent corporation resulting from such Business
Combination were members of the Incumbent Board immediately prior to the
consummation of such Business Combination; or


D.            Approval by the shareholders of the
Company of (i) a complete liquidation or dissolution of the Company or (ii) a
Major Asset Disposition unless, immediately following such Major Asset
Disposition, (A) individuals and entities that were beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Major Asset Disposition beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding shares of
voting stock of the Company (if it continues to exist) and of the Acquiring
Entity; (B) no Person, other than any employee benefit plan (or related trust)
of the Company or such entity beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities of the Company
(if it continues to exist) and of the Acquiring Entity and (C) at least a
majority of the members of the board of directors of the Company (if it
continues to exist) and of the Acquiring Entity were members of the Incumbent
Board at the time of the execution of the initial agreement or action of the
Board providing for such Major Asset Disposition.


For purposes of the foregoing definition,


1.             the term “Person”
means an individual, entity or group;


2.             the term “group” is
used as it is defined for purposes of Section 13(d)(3) of the Securities
Exchange Act of 1934 (the “Exchange Act”);


3.             the terms “beneficial
owner”, “beneficial ownership” and “beneficially own” are used as defined for
purposes of Rule 13d-3 under the Exchange Act;


4.             the term “Business
Combination” means (A) a merger or consolidation involving the Company or its
stock or (B) an acquisition by the Company, directly or through one or more
subsidiaries, of another entity or its stock or assets;



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5.             the term “Outstanding
Company Common Stock” shall mean the outstanding shares of Common Stock, par
value $1 per share, of the Company;


6.             the term “Outstanding
Company Voting Securities” means outstanding voting securities of the Company
entitled to vote generally in the election of directors; and any specified
percentage or portion of the Outstanding Company Voting Securities (or of other
voting stock or voting securities) shall be determined based on the relative
combined voting power of such securities;


7.             the term “parent
corporation resulting from a Business Combination” means the Company if its
stock is not acquired or converted in the Business Combination and otherwise
means the entity which as a result of such Business Combination owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries;


8.             the term “Major
Asset Disposition” means the sale or other disposition in one transaction or a
series of related transactions of 60% or more of the assets of the Company and
its subsidiaries on a consolidated basis; and any specified percentage or
portion of the assets of the Company shall be based on fair market value, as
determined by a majority of the members of the Incumbent Board; and


9.             “Acquiring Entity”
means the entity that acquires the largest portion of the assets sold or
otherwise disposed of in a Major Asset Disposition (or the entity, if any, that
owns a majority of the outstanding voting stock of such acquiring entity
entitled to vote generally in the election of directors or members of a
comparable governing body).


Section
2.4            Claimant
means an individual who submits a claim to the Plan Administrator seeking to
obtain benefits, a different amount of benefits or other rights under the Plan.


Section
2.5            COBRA
means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended at
any relevant time.


Section
2.6            Code
means the Internal Revenue Code of 1986, as amended at any relevant time.


Section
2.7            Company
means Pogo Producing Company and/or any Affiliate as defined herein, as
applicable.


Section
2.8            Compensation
means the Employee’s regular base wages or salary for payroll purposes as in
effect on his Employment Termination Date. 
For the purpose of calculating the amount of Severance Benefits under
Section 4.2 or Retention Benefits under Section 5.2, the term Compensation does
not include overtime, incentive pay or bonuses or



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supplemental payments,
including but not limited to the geographical supplement or a parking
supplement.


Section 2.9            Effective Date
means January 1, 2007.


Section
2.10         Employee
means an individual who renders personal services to the Company or an
Affiliate on a full-time basis and who is subject to the control of the
Company.  An individual who is in an
employer-employee relationship with the Company as determined for Federal
Insurance Contribution Act purposes and Federal Employment Tax purposes,
including Code section 3401(c), automatically satisfies the preceding sentence’s
requirements for determinations of whether that individual renders personal
services and is subject to the control of the Company.  All employees who are working outside the
United States will be excluded from coverage regardless of which Company
payroll covers such employees.  Further,
all executives of the Company or a participating Affiliate or employees who
have an individual written employment contract with the Company or an Affiliate
or any agreement with the Company or an Affiliate that provides for the payment
of severance benefits after termination of employment or Change of Control,
including, without limitation, a salary continuation or incentive agreement,
will not be considered an “Employee” for purposes of the Plan.


Section
2.11         Employment Termination
Date means the last day of a Participant’s employment.


Section
2.12         ERISA
means the Employee Retirement Income Security Act of 1974, as amended at any
relevant time.


Section
2.13         General Release of Claims
or Release means a release, in a form satisfactory to the
Company and the Plan Administrator, that waives all claims that the Participant
has or may have against the Company or any Affiliate, including claims for
other severance benefits, retention benefits or compensation, other employee
benefits under plans or programs provided by the Company, workforce reduction
or exit incentive programs now in effect or implemented in the future by the
Company and any other claims that the Participant has or may have that may be
legally waived in connection with the Participant’s employment and termination
of employment.  The Release may also
require the Employee to maintain the confidentiality of any information that is
considered by the Company to be a trade secret, confidential or proprietary to
the Company.


Section
2.14         Participant
means an Employee who has satisfied the eligibility requirements provided in
Section 3 of the Plan.


Section
2.15         Plan
means the Pogo Producing Company Change of Control Severance and Retention
Program, as set forth in this document.


Section
2.16         Plan Administrator
means an administrative committee appointed by the Board of Directors of the
Company, or such other person or committee as may be duly designated by Pogo.


Section 2.17         Plan Year
means the calendar year.



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Section
2.18          Qualified Employment
means continued employment following a Change of Control (i) with total
remuneration including benefits and Compensation being substantially the same
value as the Employee’s total remuneration immediately before a Change of
Control and with a base salary for the first year following a Change of Control
in an amount equal to at least ninety-five percent (95%) of the Employee’s
Compensation from the Company immediately before the effective date of a Change
of Control; (ii) that does not require relocation more than 25  miles from the Employee’s normal working location
immediately prior to a Change of Control; (iii) that provides immediate
eligibility under an active employees’ medical benefits plan, with medical
benefits comparable to benefits provided under the Company’s plans; (iv) that
provides some form of paid time off for vacation and illness; (v) that is in a
position with duties and responsibilities substantially the same as those
applicable to the individual immediately prior to a Change of Control; and (vi)
that provides that if the Employee is terminated (other than by reason of death
or disability) within eighteen (18) months of a Change of Control through no
fault of the Employee, the Employee will be eligible for Severance Benefits
under the Plan taking into account the Employee’s prior service with the
Company.


In no event will a
continuation of employment constitute Qualified Employment if the employment
fails to provide an Employee with total compensation and benefits that, in the
aggregate, are comparable to the Employee’s compensation and benefits
immediately prior to a Change of Control.


Section
2.19          Retention Benefits
means the benefits a Participant is entitled to receive under the Plan in
accordance with Section 5.2, upon satisfying the requirements set forth under
Section 3.2 and Section 3.3.


Section
2.20          Retirement Plan or 401(k)
Plan means with respect to any Participant, the Employees
Retirement Plan for Pogo Producing Company (the “Retirement Plan”) or the
Tax-Advantaged Savings Plan of Pogo Producing Company (the “401(k) Plan”)
(collectively the “Plans”), or both, as applicable, in which such Participant
was a participant on his Employment Termination Date.


Section
2.21          Severance Benefits
means the benefits a Participant is entitled to receive under the Plan in
accordance with Section 4.2, upon satisfying the requirements set forth under
Section 3.1 and Section 3.3.


Section
2.22          Specified Employee
means any Employee who is a “specified employee” as defined in Code Section
409A(2)(B)(i).


Section
2.23          Years of Service
means a Participant’s number of full years of service with the Company ending
on his Employment Termination Date, with each partial year of six (6) or more
months counting as a full year.  If a
Participant has been rehired by the Company after receiving full benefits from
the Plan, the Participant’s service at his subsequent Employment Termination
Date will be calculated based upon the Participant’s most recent rehire date.



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SECTION 3


ELIGIBILITY
AND PARTICIPATION


An
Employee will become a Participant in the Plan and be eligible to receive
Severance Benefits and/or Retention Benefits in accordance with the terms and
conditions set forth in Section 3.  In no
event will an individual covered by a written employment contract or other
agreement be eligible to participate in or receive benefits under the Plan.


Section
3.1            Eligibility for
Severance Benefits. 
The following terms and conditions govern an Employee’s eligibility to
receive Severance Benefits:


A.            An Employee will be
eligible to receive Severance Benefits under the Plan when:


1.             the Plan Administrator has selected
the Employee to participate in the Plan;


2.             a Change of Control has occurred;


3.             such Employee’s


a.             employment is not, or ceases to be,
a continuation of employment that constitutes Qualified Employment,


b.             employment is involuntarily
terminated by the Company, other than for cause, or


c.             duties and responsibilities are
changed, other than an insignificant change in his duties and responsibilities,
as applicable, from those in effect immediately prior to a Change of Control.


An Employee may become eligible to receive Severance Benefits under the
Plan notwithstanding the fact that he is eligible to retire or has retired from
the Company, provided such employee otherwise satisfies the eligibility
requirements of this Section 3.1.


B.            The Company, in its
sole discretion, will make decisions regarding the staffing needs and
employment levels as a part of its business function and in accordance with the
Company’s plans in anticipation of or following a Change of Control.  Actions taken by the Company in making these
business decisions regarding staffing, reassignment, and job elimination will
not be construed as actions of the Plan Administrator acting in its capacity as
fiduciary under the Plan.  The Plan
Administrator, in its sole discretion, will determine whether and when an
Employee is eligible to participate in the Plan.



 8
 









C.            Notwithstanding the
foregoing, an Employee will not be eligible for participation in the Plan if
the Employee receives an offer of Qualified Employment, regardless of whether
the Employee accepts such offer of Qualified Employment.


Section
3.2            Eligibility for
Retention Benefits. 
The following terms and conditions govern an Employee’s eligibility to
receive Retention Benefits.  An Employee
will be eligible to receive Retention Benefits under the Plan when:


A.            the Plan Administrator has selected
the Employee to participate in the Plan; and


B.            the Employee continues his
employment with the Company until the earlier of


1.             his involuntary termination of
employment by the Company, other than for cause,


2.             a Change of Control, or


3.             December 31, 2007.


Section
3.3            General Release of Claims.  To be eligible for Severance Benefits under
the Plan, each Participant must sign and not revoke a General Release of Claims
in a form satisfactory to the Company and the Plan Administrator.  Any Participant who signs a Release and later
revokes such Release (in accordance with its terms and applicable law) will not
be eligible to receive Severance Benefits. 
The General Release of Claims will affect a Participant’s rights when it
becomes effective, and each Participant will be advised to consult an attorney
at his own expense prior to executing the General Release of Claims.  Unless otherwise determined by the Plan
Administrator, the General Release of Claims will give each Participant at
least forty-five (45) days to consider whether to sign it, and each Participant
will have seven (7) days to revoke the General Release of Claims after it is
signed.  If an employee who has been
notified of his eligibility to participate in the Plan does not sign and submit
the General Release of Claims within the time specified by the Plan
Administrator, his employment nonetheless will end on his scheduled Employment
Termination Date.



 9















SECTION 4


SEVERANCE
BENEFITS


Section 4.1            Entitlement
to Severance Benefits.  Subject to the terms and conditions of the
Plan, the Plan Administrator shall grant Severance Benefits to a Participant in
an amount determined in accordance with the provisions of the Plan.  Participants who receive Severance Benefits
under the Plan will not be entitled to receive severance benefits under any
other plan or program of the Company or an Affiliate.


Section
4.2            Amount of Severance
Benefits.  Subject
to the terms and conditions of the Plan, a Participant who is eligible for
Severance Benefits under the Plan will be entitled to an amount determined in
accordance with the following:


A.            Severance Benefit Calculation:
The Severance Benefits of a Participant will be an amount equal to three (3)
weeks of the Participant’s Compensation for each Year of Service, subject to
the provisions of Section 4.2.B.  For
purposes of the Plan, any prior period of part-time service will be treated as
if it had been a period of full-time employment in making the calculation.


B.            Minimum and Maximum Severance
Benefits:  Each Participant will
receive Severance Benefits for a minimum of four (4) months and a maximum of
eighteen (18) months.


C.            Coordination with Deferred
Compensation Rules:  The Plan is
intended to be a welfare benefit plan governed by ERISA that provides for
severance benefits to designated employees in the event of involuntary
termination of employment from the Company. 
The Plan is not intended to be subject to Section 409A of the Code.  The Plan will be administered in compliance
with the regulations issued pursuant to Section 409A under which severance
arrangements may be exempt from those rules. 
Further, to the extent that an Employee is a Specified Employee,
Severance Benefits to such Specified Employee will begin with the first payroll
period following the date that is six months after such Participant’s
Employment Termination Date.  The initial
payment to a Specified Employee will include all installment payments which
otherwise would have been made to the Specified Employee during the six months
following the Employment Termination Date. 
If the Specified Employee is entitled to additional Severance Benefits,
the remaining Severance Benefits will be payable in installments according to
the normal payroll schedule for the Specified Employee.


Section
4.3            Form and Timing of
Severance Benefits. 
Severance Benefits will be payable in installments according to the
normal payroll payment schedules in effect for each Participant immediately
prior to the Participant’s Employment Termination Date.  Severance Benefits will begin with the first
payroll period immediately following the Participant’s Employment Termination
Date.


Section
4.4            Coordination With Other
Benefits.  A
Participant receiving Severance Benefits under the Plan will cease to be
considered an employee of the Company for



 10
 









purposes of eligibility
and participation in other benefit plans sponsored by the Company as of his
Employment Termination Date.  Except as
otherwise provided, each Participant who has signed and not revoked the
applicable General Release of Claims under Section 3.3 will be entitled to the
following benefits:


A.            Medical and Prescription Drug
Coverage.  Each Participant who has
medical and prescription drug coverage under the Company’s health plan options
as of his Employment Termination Date and has signed the applicable General
Release of Claims will be eligible to continue coverage under the active
employees’ medical and prescription drug plan for up to one (1) year following
his Employment Termination Date.  The
COBRA coverage period will begin on the first of the month coincident with or
following the end of the Participant’s coverage under the active plan.  In no event will an individual be eligible
for medical and prescription drug coverage under the Company’s plan once he is
eligible for coverage under any other medical plan, including another employer’s
medical plan.


B.            Dental and Vision Coverage.  Any Participant who is participating in the
Dental Plan or the Vision Plan as of his Employment Termination Date may elect
to continue either or both of such coverages under COBRA by timely submitting a
written application and paying the required COBRA premiums in accordance with
the provisions under the applicable plans.


C.            Other Insurance.  Coverage under the Life Insurance, Long Term
Disability and Accidental Death and Dismemberment plans ends on a Participant’s
Employment Termination Date.  Conversion
rights are not available for extended coverage under these plans.


D.            Outplacement Services.  A Participant will be eligible for
outplacement services commensurate with his position, which will be provided at
Company expense through an independent firm under contract with the Company.  Outplacement services must begin within six
(6) months from the date an Employee is notified of his eligibility to
participate in the Plan.  The maximum
amount provided to a Participant as outplacement services shall be as set forth
in Schedule B, and in no event shall exceed $7,500 for any Participant.  An Employee is not required to execute the
General Release of Claims provided in Section 3.3 to be eligible for
outplacement services.


E.             Specified Employees.  To the extent necessary to make any benefit
or payment provided under this Section 4.4 to a Participant who is a Specified
Employee not subject to tax under Code Section 409A, the benefit or payment
shall be provided or made six months after such Participant’s Employment
Termination Date.


Section
4.5            Nonalienation.  Participants will not have any right to
pledge, hypothecate, anticipate, or in any way create a lien upon any benefits
provided under the Plan, and no benefits payable hereunder will be assignable
in anticipation of payment, either by voluntary or involuntary acts, or by
operation of law. Nothing in this Section 4.5 will limit a Participant’s rights
or powers to dispose of his property by will, limit any rights or powers which
his executor or administrator would otherwise have with regard to benefits to
which a Participant



 11
 









is entitled hereunder, or
restrict any right of set-off, counterclaim or recoupment which the Company may
otherwise have against any Participant.


Section
4.6            Withholding.  All Severance Benefits paid under the Plan
will be subject to applicable withholding of federal, state and local taxes and
other applicable deductions. 
Notwithstanding the foregoing, payments made under the Plan after a
Participant’s Employment Termination Date will not be considered “earnings” or “compensation”
with respect to salary deferral arrangements, including, without limitation,
the 401(k) Plan.


Section
4.7            Benefits on Death.  In the event of the death of a Participant
after becoming entitled to Severance Benefits under the Plan but before
complete payment of his benefits hereunder, any unpaid Severance Benefits will
be paid to his surviving spouse or, if he has no surviving spouse at the time
of his death, to his estate.



 12
 









SECTION 5


RETENTION BENEFITS


Section
5.1            Entitlement to Retention
Benefits.  Subject
to the terms and conditions of the Plan, the Plan Administrator shall grant
Retention Benefits under the Plan to a Participant in an amount determined in
accordance with the provisions of the Plan. 
Participants who receive Retention Benefits under the Plan will not be eligible
to receive retention benefits under any other plan or program of the Company or
an Affiliate.  Further, an Employee who
receives retention benefits during the term of the Plan from any other
retention program, plan or arrangement maintained by the Company or an
Affiliate will not be entitled to receive benefits from the Plan.


Section
5.2            Amount of Retention
Benefits.  Subject
to the terms and conditions of the Plan, a Participant who satisfies the
eligibility requirements set forth in Section 3.2 is entitled to a Retention
Benefit under the Plan equal to four (4) months salary.


Section
5.3            Form and Timing of
Retention Benefits. 
Retention Benefits will be payable in a lump-sum on the earlier of (i)
the Participant’s involuntary termination of employment by the Company, other
than for cause, (ii) the occurrence of a Change of Control, or (iii) December
31, 2007.


Section
5.4            Withholding.  All Retention Benefits paid under the Plan
will be subject to applicable withholding of federal, state and local taxes.  Notwithstanding the foregoing, Retention
Benefits made under the Plan after a Participant’s Employment Termination Date
will not be considered “earnings” or “compensation” as that term is used with
respect to salary deferral arrangements, including, without limitation, the
401(k) Plan.


Section
5.5            Benefits on Death.  In the event of the death of a Participant
after becoming entitled to Retention Benefits under the Plan but before
complete payment of his benefits hereunder, any unpaid Retention Benefits will
be paid to his surviving spouse or, if he has no surviving spouse at the time
of his death, to his estate.


Section
5.6            Miscellaneous.


A.            Specified Employees.  To the extent necessary to make any benefit
or payment provided under this Section 5 not subject to tax under Code Section
409A to a Participant who is a Specified Employee, the benefit or payment shall
be provided or made six months after such Participant’s Employment Termination
Date.


B.            Nonalienation.  Participants will not have any right to
pledge, hypothecate, anticipate, or in any way create a lien upon any benefits
provided under the Plan, and no benefits payable hereunder will be assignable
in anticipation of payment, either by voluntary or involuntary acts, or by
operation of law. Nothing in this Section 5 will limit a Participant’s rights
or powers to dispose of his property by will, limit any rights or powers which
his executor or administrator would otherwise have with regard to benefits to
which a Participant is entitled hereunder, or restrict any right of set-off,
counterclaim or recoupment which the Company may otherwise have against any
Participant.



 13
 









SECTION 6


PLAN
ADMINISTRATOR


Section
6.1            Duties and Authority of
Plan Administrator. 
Except as otherwise specifically provided in this Section 6, in
controlling and managing the operation and administration of the Plan, the Plan
Administrator will have the following discretionary authority, powers, rights
and duties in addition to those vested in it elsewhere in the Plan:


A.            to enforce the Plan in accordance
with its terms and with such applicable rules of procedure and regulations as
may be adopted by the Plan Administrator;


B.            to determine conclusively all
questions arising under the Plan, including the power to determine the eligibility
of employees or Claimants and the rights of Participants or Claimants to
benefits under the Plan, to interpret and construe the provisions of the Plan,
and to remedy any ambiguities, inconsistencies or omissions of whatever kind;
and


C.            to employ or utilize agents,
attorneys, accountants or other persons (who may also be employed by or
represent the Company) for such purposes as the Plan Administrator considers
necessary or desirable to discharge its duties.


Section
6.2            Plan Administrator
Decision Final.  To
the extent permitted by law, any interpretation of the Plan and any decision on
any matter within the discretion of the Plan Administrator made by it in good
faith will be binding on all persons. A misstatement or other mistake of fact
will be corrected when it becomes known, and the Plan Administrator will make
such adjustment on account thereof as it considers equitable and practicable.


Section
6.3            Exercise of Plan
Administrator Duties. 
In exercising its authority under the Plan, the Plan Administrator may
allocate all or any part of its responsibilities and powers to any one or more
of the committees of the Company and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it, including
designated officers or employees of the Company.



 14
 









SECTION 7


CLAIMS
PROCEDURES


Section
7.1            Explanation of Benefits.  Although a Participant does have to sign,
submit and not revoke a General Release of Claims, as described in Section 3.3,
a Participant does not have to file a claim in order to receive Severance
Benefits and other related benefits or Retention Benefits under the Plan. Any
Claimant who has questions about the Plan, including questions about his
eligibility for benefits, the amount of his Severance Benefits or Retention
Benefits, how benefits are calculated or other issues relating to Plan
interpretations is encouraged to submit such questions in writing to the Plan
Administrator. The Plan Administrator will provide a written response to all
such inquiries. If a Claimant believes, after reviewing the Plan Administrator’s
explanation of benefits, that he is eligible for benefits under the Plan or
that the Severance Benefits to which he is entitled under the Plan have been
calculated incorrectly, the Participant may submit a written claim for Plan
benefits in accordance with Section 7.2 of the Plan.


Section
7.2            Claims for Benefits.  A Claimant may submit a written claim for
benefits under the Plan in accordance with the terms and conditions set forth
in this Section 7.2.


A.            Filing of Claims. A claim for
benefits shall be made by filing a written request with the Plan Administrator,
which shall be delivered to the Plan Administrator and accompanied by such
substantiation of the claim as the Plan Administrator considers necessary and
reasonable for the type of claim being filed.


B.            Denial of Claims. If a claim
is denied in whole or in part, the Claimant shall receive a written or
electronic notice explaining the denial of the claim within ninety (90) days
after the Plan Administrator’s receipt of the claim, unless special
circumstances exist that require an extension of the time for processing such
claim. If an extension of time is necessary, the Claimant shall be notified in
writing of the extension and reason for the extension within ninety (90) days
after the Plan Administrator’s receipt of the claim. The written extension
notification shall also indicate the date by which the Plan Administrator
expects to render a final decision. A notice of denial of claim shall contain
the following:


1.             the
specific reason or reasons for the denial;


2.             reference
to the specific Plan provisions on which the denial is based;


3.             a
description of any additional materials or information necessary for such
Claimant to perfect the claim and an explanation of why such material or
information is necessary; and


4.             a
description of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the Claimant’s right to bring a civil
action under Section 502(a) of ERISA following an adverse benefit determination
on review.



 15
 









C.            Payment of Claims. The full
value of a payment made according to the provisions of the Plan satisfies that
much of the claim and all related claims under the Plan against the Plan Administrator
and the Company, each of whom, as a condition to a payment from it or directed
by it, may require the Participant, beneficiary, or legal representative to
execute a receipt and release of the claim in a form determined by the person
requesting the receipt and release.


Section
7.3            Review of Claims.  A Claimant whose claim for benefits has been
denied by the Plan Administrator may request a review of such denial in
accordance with the terms and conditions of this Section 7.3.


A.            Request for Review of Denied
Claims. A Claimant may file a written request for a review of the denial of
a claim within sixty (60) days after receiving written notice of the denial.
The written request should be sent to the Plan Administrator, who will forward
it to the Administrative Committee for review. The Claimant may submit written
comments, documents, records and other relevant information in support of the
claim. A Claimant shall be provided, upon request to the Plan Administrator and
without charge, reasonable access to, and copies of, all documents, records,
and other information relevant to the Claimant’s claim for benefits. A
document, record, or other information shall be considered relevant if it:


1.             was relied upon in denying the
claim;


2.             was submitted, considered or
generated in the course of processing the claim, regardless of whether it was
relied upon;


3.             demonstrates compliance with the
claims procedures process; or


4.             constitutes a statement of Plan
policy or guidance concerning the denied benefit, regardless of whether it was
relied upon.


Relevant
information shall not include any documents or records (or portions thereof)
that would, through their release, violate any other applicable law or
compromise the confidentiality of certain employee data or business records,
including, but not limited to, any documents subject to attorney-client
privilege.


B.            Review Procedures. In
reviewing a denied claim, the Administrative Committee shall take into
consideration all comments, documents, records, and other information submitted
by the Claimant in support of the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.


C.            Decisions on Reviewed Claims.
The Administrative Committee will notify the Claimant in writing of its
decision on the appeal. Such notification will be in writing in a form designed
to be understood by the Claimant. If the claim is denied in whole or in part on
appeal, the notification will also contain:



 16
 









1.             the specific reason or reasons for
the denial;


2.             reference to the specific Plan
provisions on which the determination is based;


3.             a statement that the Claimant is
entitled to receive, upon request to the Plan Administrator and free of charge,
reasonable access to, and copies of, all documents, records, and other
information relevant to the Claimant’s claim for benefits. A document, record,
or other information shall be considered relevant if it:


a.             was relied upon in denying the
claim;


b.                                      was
submitted, considered or generated in the course of processing the claim,
regardless of whether it was relied upon;


c.                                       demonstrates
compliance with the claims procedures process; or


d.                                      constitutes
a statement of Plan policy or guidance concerning the denied benefit,
regardless of whether it was relied upon; and


4.             a statement that the claimant has a
right to bring an action under Section 502(a) of ERISA.


Relevant
information shall not include any documents or records (or portions thereof)
that would, through their release, violate any other applicable law or
compromise the confidentiality of certain employee data or business records,
including, but not limited to, any documents subject to attorney-client
privilege.


Such notification
will be given by the Administrative Committee within sixty (60) days after the
complete appeal is received by the Administrative Committee (or within one
hundred twenty (120) days if the Administrative Committee determines special
circumstances require an extension of time for considering the appeal, and if
written notice of such extension and circumstances is given to the Claimant
within the initial sixty (60) day period). Such written extension notice shall
also indicate the date by which the Administrative Committee expects to render
a decision.


If the Claimant’s
written request for review is received by the Plan Administrator more than
thirty (30) days before an Administrative Committee meeting, the Administrative
Committee’s decision must be rendered at the next meeting after the request for
review is received. If special circumstances require an extension of time for
processing, the Administrative Committee’s decision must be rendered not later
than the Administrative Committee’s third meeting after the request for review
is received, and written notice of the extension must be furnished to the



 17
 









Claimant before
the extension begins. In the case of such regularly scheduled meetings, the
Claimant shall be notified of the review determination as soon as possible, but
no later than five days after the review determination has been made. If notice
that a claim has been denied on review is not received by the Claimant within
the time required in this paragraph, the claim is deemed denied on review.


Section
7.4            Compliance With
Regulations. 
Notwithstanding anything in this Section 7 to the contrary, the Plan
Administrator and the Administrative Committee shall make all determinations
regarding claims for benefits of Participants or Claimants filed on or after
the Effective Date in accordance with Section 2560.503-1 of the Department of
Labor Regulations.


Section
7.5            Claims for Benefits
Under Other Plans. 
Claims for benefits under any of the other plans described in Section
4.4, including claims for eligibility or participation in such other plan or
plans based upon participation in the Plan, shall be made pursuant to and
governed by the claims procedures of such other plans.



 18














SECTION 8


AMENDMENT
OR TERMINATION


Section
8.1            Amendment and
Termination.  For
purposes of amending or terminating the Plan, the Company may act through an
authorized officer.  Subject to the
limitations set forth below in paragraphs A and B, the Company may amend or
terminate the Plan at any time after December 31, 2007.


A.            Severance Benefits.  No amendment or termination of the Plan will
adversely affect the Severance Benefits, if any, payable under the Plan with
respect to Participants whose employment with the Company terminated prior to
such amendment or termination of the Plan; and provided further, that no
amendment or termination of the Plan within two years following a Change of
Control can adversely affect an Employee who has become eligible for Severance
Benefits within the two-year period following a Change of Control, or would
become eligible for Severance Benefits absent such amendment or termination.


B.            Retention Benefits.  No amendment or termination of the Plan will
adversely affect the Retention Benefits, if any, payable under the Plan with
respect to a Participant who has been notified of his eligibility to receive
Retention Benefits under the Plan.


IN WITNESS
WHEREOF, the Company has caused the Plan to be executed this 29th day of December, 2006.


	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
  By:

  	
   /s/ John O.
  McCoy, Jr.

  
	
   

  	
   

  	
  John O. McCoy, Jr.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
  Executive Vice President and

  
	
   

  	
   

  	
   

  	
  Chief Administrative Officer

  



 















 


SCHEDULE A


Affiliates Excluded from
Coverage


 


Northrock
Resources Ltd.















SCHEDULE B


Outplacement Services


	
  Employment Category

  	
   

  	
  Maximum Outplacement Services Benefit

  	
   

  
	
    Nonexempt
  field and technical support staff

  	
   

  	
  $2,500

  	
   

  
	
    Exempt
  professionals

  	
   

  	
  $5,000

  	
   

  
	
    Officers and managers

  	
   

  	
  $7,500