**Exhibit 10.42**

**POGOPRODUCING COMPANY**

**CHANGEOF CONTROL**

**SEVERANCEAND RETENTION PROGRAM**

**(EffectiveJanuary 1, 2007)**

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**Tableof 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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**POGOPRODUCING COMPANY**

**CHANGEOF CONTROL**

**SEVERANCEAND RETENTION PROGRAM**

# **SECTION 1**

# **GENERAL**

**Section1.1            Purpose and Term**.  Pogo Producing Company (“Pogo”) hasestablished the Pogo Producing Company Change of Control Severance andRetention Program (the “Plan”) effective as of January 1, 2007.  The Plan is intended to provide severancebenefits and/or a retention incentive for Employees under the circumstancesdescribed herein, and will apply to Employees who are designated by the PlanAdministrator 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 theEffective Date except individual written employment agreements.

**Section1.2            Plan Administration.**  The authority to control and manage theoperation and administration of the Plan will be vested in a PlanAdministrator.  The Plan Administratorwill be the “named fiduciary” as described in Section 402 of ERISA, withrespect to its authority under the Plan. The duties and responsibilities of the Plan Administrator are set forthin Section 6 of the Plan.

**Section1.3            Source of Payments.**  The obligations of the Company under the Planare solely contractual.  Any amountpayable under the terms of the Plan will be paid from the general assets of theCompany, and no trust or other separate fund will be established for thispurpose.  Other payments or benefitsreferenced in the Plan will be paid in accordance with the terms of those plansand are not payable under the Plan.

**Section1.4            Notices.**  Any notice or document required to be filedunder the Plan will be considered to be properly filed if delivered or mailedvia certified mail, postage prepaid, to Pogo’s corporate office, Attn:  John O. McCoy, Jr., Executive Vice Presidentand Chief Administrative Officer, 5 Greenway Plaza, Suite 3000, Houston, Texas77046.  Any notice required under thePlan may be waived by the person entitled thereto.

**Section1.5            Action by Company.**  Any action required or permitted to be takenby 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 maybe designated by the Board of Directors of the Company; provided, however, thatuntil otherwise provided by the Board of Directors of the Company, any actionrequired or permitted to be taken by the Company under the Plan may be taken byany authorized officer of the Company.

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**Section1.6            Gender and Number.**  Where the context admits, words in any genderwill include any other gender, words in the singular will include the plural,and the plural will include the singular.

**Section1.7            Plan Not Guarantee ofEmployment.**  ThePlan does not constitute a guarantee of employment by the Company, andeligibility for or participation in the Plan will not give any individual theright to be retained in the employ of the Company.  The Company reserves the right to dischargeemployees at-will or to amend or modify any of the terms and conditions oftheir employment.

**Section1.8            Covered Affiliates.**  The Plan covers the Company and any Affiliateof the Company; provided, however, that the Affiliates designated by theCompany from time to time, as set forth on Schedule A attached hereto, shall beexcluded from coverage under the Plan. The Employees of other entities that become Affiliates after theEffective Date will be covered by the Plan only to the extent that the Companyand such Affiliate expressly agree in writing to participation in the Plan.

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# **SECTION 2**

# **DEFINITIONS**

**Section2.1            Administrative Committee**means the committee appointed by the Board of Directors of Pogo.

**Section2.2            Affiliate**means (i) any corporation other than the Company that is either a subsidiarycorporation or an affiliated or associated corporation of the Company whichtogether 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 “affiliatedservice group”, as those terms are defined in Sections 414(b), 414(c) and414(m) of the Code.

**Section2.3            Change of Control**means:

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

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

C.            Approval by the shareholders of theCompany of a Business Combination (or if there is no such approval byshareholders, consummation of such Business Combination) unless, immediatelyfollowing such Business Combination, (i) more than 60% of, respectively, thethen outstanding shares of common stock of the parent corporation resultingfrom such Business Combination and the combined voting power of the thenoutstanding voting securities of such parent corporation entitled to votegenerally in the election of directors will be (or is) then beneficially owned,directly or indirectly, by all or substantially all of the individuals andentities who were the beneficial owners, respectively, of the OutstandingCompany Common

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

D.            Approval by the shareholders of theCompany of (i) a complete liquidation or dissolution of the Company or (ii) aMajor Asset Disposition unless, immediately following such Major AssetDisposition, (A) individuals and entities that were beneficial owners of theOutstanding Company Common Stock and the Outstanding Company Voting Securitiesimmediately prior to such Major Asset Disposition beneficially own, directly orindirectly, more than 60% of, respectively, the then outstanding shares ofcommon stock and the combined voting power of the then outstanding shares ofvoting stock of the Company (if it continues to exist) and of the AcquiringEntity; (B) no Person, other than any employee benefit plan (or related trust)of the Company or such entity beneficially owns, directly or indirectly, 20% ormore of, respectively, the then outstanding shares of common stock and thecombined 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 amajority of the members of the board of directors of the Company (if itcontinues to exist) and of the Acquiring Entity were members of the IncumbentBoard at the time of the execution of the initial agreement or action of theBoard 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” isused as it is defined for purposes of Section 13(d)(3) of the SecuritiesExchange Act of 1934 (the “Exchange Act”);

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

##### 4.             the term “BusinessCombination” means (A) a merger or consolidation involving the Company or itsstock or (B) an acquisition by the Company, directly or through one or moresubsidiaries, of another entity or its stock or assets;

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##### 5.             the term “OutstandingCompany Common Stock” shall mean the outstanding shares of Common Stock, parvalue $1 per share, of the Company;

##### 6.             the term “OutstandingCompany Voting Securities” means outstanding voting securities of the Companyentitled to vote generally in the election of directors; and any specifiedpercentage or portion of the Outstanding Company Voting Securities (or of othervoting stock or voting securities) shall be determined based on the relativecombined voting power of such securities;

##### 7.             the term “parentcorporation resulting from a Business Combination” means the Company if itsstock is not acquired or converted in the Business Combination and otherwisemeans the entity which as a result of such Business Combination owns theCompany or all or substantially all of the Company’s assets either directly orthrough one or more subsidiaries;

##### 8.             the term “MajorAsset Disposition” means the sale or other disposition in one transaction or aseries of related transactions of 60% or more of the assets of the Company andits subsidiaries on a consolidated basis; and any specified percentage orportion of the assets of the Company shall be based on fair market value, asdetermined 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 orotherwise disposed of in a Major Asset Disposition (or the entity, if any, thatowns a majority of the outstanding voting stock of such acquiring entityentitled to vote generally in the election of directors or members of acomparable governing body).

**Section2.4            Claimant**means an individual who submits a claim to the Plan Administrator seeking toobtain benefits, a different amount of benefits or other rights under the Plan.

**Section2.5            COBRA**means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended atany relevant time.

**Section2.6            Code**means the Internal Revenue Code of 1986, as amended at any relevant time.

**Section2.7            Company**means Pogo Producing Company and/or any Affiliate as defined herein, asapplicable.

**Section2.8            Compensation**means the Employee’s regular base wages or salary for payroll purposes as ineffect on his Employment Termination Date. For the purpose of calculating the amount of Severance Benefits underSection 4.2 or Retention Benefits under Section 5.2, the term Compensation doesnot include overtime, incentive pay or bonuses or

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

**Section 2.9**            **Effective Date**means January 1, 2007.

**Section2.10         Employee**means an individual who renders personal services to the Company or anAffiliate on a full-time basis and who is subject to the control of theCompany.  An individual who is in anemployer-employee relationship with the Company as determined for FederalInsurance Contribution Act purposes and Federal Employment Tax purposes,including Code section 3401(c), automatically satisfies the preceding sentence’srequirements for determinations of whether that individual renders personalservices and is subject to the control of the Company.  All employees who are working outside theUnited States will be excluded from coverage regardless of which Companypayroll covers such employees.  Further,all executives of the Company or a participating Affiliate or employees whohave an individual written employment contract with the Company or an Affiliateor any agreement with the Company or an Affiliate that provides for the paymentof 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.

**Section2.11         Employment TerminationDate** means the last day of a Participant’s employment.

**Section2.12         ERISA**means the Employee Retirement Income Security Act of 1974, as amended at anyrelevant time.

**Section2.13         General Release of Claimsor Release** means a release, in a form satisfactory to theCompany and the Plan Administrator, that waives all claims that the Participanthas or may have against the Company or any Affiliate, including claims forother severance benefits, retention benefits or compensation, other employeebenefits under plans or programs provided by the Company, workforce reductionor exit incentive programs now in effect or implemented in the future by theCompany and any other claims that the Participant has or may have that may belegally waived in connection with the Participant’s employment and terminationof employment.  The Release may alsorequire the Employee to maintain the confidentiality of any information that isconsidered by the Company to be a trade secret, confidential or proprietary tothe Company.

**Section2.14         Participant**means an Employee who has satisfied the eligibility requirements provided inSection 3 of the Plan.

**Section2.15         Plan**means the Pogo Producing Company Change of Control Severance and RetentionProgram, as set forth in this document.

**Section2.16         Plan Administrator**means an administrative committee appointed by the Board of Directors of theCompany, 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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**Section2.18          Qualified Employment**means continued employment following a Change of Control (i) with totalremuneration including benefits and Compensation being substantially the samevalue as the Employee’s total remuneration immediately before a Change ofControl and with a base salary for the first year following a Change of Controlin an amount equal to at least ninety-five percent (95%) of the Employee’sCompensation from the Company immediately before the effective date of a Changeof Control; (ii) that does not require relocation more than 25****miles from the Employee’s normal working locationimmediately prior to a Change of Control; (iii) that provides immediateeligibility under an active employees’ medical benefits plan, with medicalbenefits comparable to benefits provided under the Company’s plans; (iv) thatprovides some form of paid time off for vacation and illness; (v) that is in aposition with duties and responsibilities substantially the same as thoseapplicable 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 deathor disability) within eighteen (18) months of a Change of Control through nofault of the Employee, the Employee will be eligible for Severance Benefitsunder the Plan taking into account the Employee’s prior service with theCompany.

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

**Section2.19          Retention Benefits**means the benefits a Participant is entitled to receive under the Plan inaccordance with Section 5.2, upon satisfying the requirements set forth underSection 3.2 and Section 3.3.

**Section2.20          Retirement Plan or 401(k)Plan** means with respect to any Participant, the EmployeesRetirement Plan for Pogo Producing Company (the “Retirement Plan”) or theTax-Advantaged Savings Plan of Pogo Producing Company (the “401(k) Plan”)(collectively the “Plans”), or both, as applicable, in which such Participantwas a participant on his Employment Termination Date.

**Section2.21          Severance Benefits**means the benefits a Participant is entitled to receive under the Plan inaccordance with Section 4.2, upon satisfying the requirements set forth underSection 3.1 and Section 3.3.

**Section2.22          Specified Employee**means any Employee who is a “specified employee” as defined in Code Section409A(2)(B)(i).

**Section2.23          Years of Service**means a Participant’s number of full years of service with the Company endingon his Employment Termination Date, with each partial year of six (6) or moremonths counting as a full year.  If aParticipant has been rehired by the Company after receiving full benefits fromthe Plan, the Participant’s service at his subsequent Employment TerminationDate will be calculated based upon the Participant’s most recent rehire date.

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# **SECTION 3**

# **ELIGIBILITYAND PARTICIPATION**

AnEmployee will become a Participant in the Plan and be eligible to receiveSeverance Benefits and/or Retention Benefits in accordance with the terms andconditions set forth in Section 3.  In noevent will an individual covered by a written employment contract or otheragreement be eligible to participate in or receive benefits under the Plan.

**Section3.1            Eligibility forSeverance Benefits.** The following terms and conditions govern an Employee’s eligibility toreceive Severance Benefits:

### A.            An Employee will beeligible to receive Severance Benefits under the Plan when:

### 1.             the Plan Administrator has selectedthe 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 involuntarilyterminated by the Company, other than for cause, or

### c.             duties and responsibilities arechanged, 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 thePlan notwithstanding the fact that he is eligible to retire or has retired fromthe Company, provided such employee otherwise satisfies the eligibilityrequirements of this Section 3.1.

### B.            The Company, in itssole discretion, will make decisions regarding the staffing needs andemployment levels as a part of its business function and in accordance with theCompany’s plans in anticipation of or following a Change of Control.  Actions taken by the Company in making thesebusiness decisions regarding staffing, reassignment, and job elimination willnot be construed as actions of the Plan Administrator acting in its capacity asfiduciary under the Plan.  The PlanAdministrator, in its sole discretion, will determine whether and when anEmployee is eligible to participate in the Plan.

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### C.            Notwithstanding theforegoing, an Employee will not be eligible for participation in the Plan ifthe Employee receives an offer of Qualified Employment, regardless of whetherthe Employee accepts such offer of Qualified Employment.

**Section3.2            Eligibility forRetention Benefits.** The following terms and conditions govern an Employee’s eligibility toreceive Retention Benefits.  An Employeewill be eligible to receive Retention Benefits under the Plan when:

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

B.            the Employee continues hisemployment with the Company until the earlier of

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

2.             a Change of Control, or

3.             December 31, 2007.

**Section3.3            General Release of Claims.**  To be eligible for Severance Benefits underthe Plan, each Participant must sign and not revoke a General Release of Claimsin a form satisfactory to the Company and the Plan Administrator.  Any Participant who signs a Release and laterrevokes such Release (in accordance with its terms and applicable law) will notbe eligible to receive Severance Benefits. The General Release of Claims will affect a Participant’s rights when itbecomes effective, and each Participant will be advised to consult an attorneyat his own expense prior to executing the General Release of Claims.  Unless otherwise determined by the PlanAdministrator, the General Release of Claims will give each Participant atleast forty-five (45) days to consider whether to sign it, and each Participantwill have seven (7) days to revoke the General Release of Claims after it issigned.  If an employee who has beennotified of his eligibility to participate in the Plan does not sign and submitthe General Release of Claims within the time specified by the PlanAdministrator, his employment nonetheless will end on his scheduled EmploymentTermination Date.

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# **SECTION 4**

# **SEVERANCEBENEFITS**

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

**Section4.2            Amount of SeveranceBenefits.**  Subjectto the terms and conditions of the Plan, a Participant who is eligible forSeverance Benefits under the Plan will be entitled to an amount determined inaccordance 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 tothe provisions of Section 4.2.B.  Forpurposes of the Plan, any prior period of part-time service will be treated asif it had been a period of full-time employment in making the calculation.

### B.            Minimum and Maximum SeveranceBenefits:  Each Participant willreceive Severance Benefits for a minimum of four (4) months and a maximum ofeighteen (18) months.

### C.            Coordination with DeferredCompensation Rules:  The Plan isintended to be a welfare benefit plan governed by ERISA that provides forseverance benefits to designated employees in the event of involuntarytermination 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 compliancewith the regulations issued pursuant to Section 409A under which severancearrangements 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 payrollperiod following the date that is six months after such Participant’sEmployment Termination Date.  The initialpayment to a Specified Employee will include all installment payments whichotherwise would have been made to the Specified Employee during the six monthsfollowing the Employment Termination Date. If the Specified Employee is entitled to additional Severance Benefits,the remaining Severance Benefits will be payable in installments according tothe normal payroll schedule for the Specified Employee.

**Section4.3            Form and Timing ofSeverance Benefits.** Severance Benefits will be payable in installments according to thenormal payroll payment schedules in effect for each Participant immediatelyprior to the Participant’s Employment Termination Date.  Severance Benefits will begin with the firstpayroll period immediately following the Participant’s Employment TerminationDate.

**Section4.4            Coordination With OtherBenefits.**  AParticipant receiving Severance Benefits under the Plan will cease to beconsidered an employee of the Company for

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purposes of eligibilityand participation in other benefit plans sponsored by the Company as of hisEmployment Termination Date.  Except asotherwise provided, each Participant who has signed and not revoked theapplicable General Release of Claims under Section 3.3 will be entitled to thefollowing benefits:

### A.            Medical and Prescription DrugCoverage.  Each Participant who hasmedical and prescription drug coverage under the Company’s health plan optionsas of his Employment Termination Date and has signed the applicable GeneralRelease of Claims will be eligible to continue coverage under the activeemployees’ medical and prescription drug plan for up to one (1) year followinghis Employment Termination Date.  TheCOBRA coverage period will begin on the first of the month coincident with orfollowing the end of the Participant’s coverage under the active plan.  In no event will an individual be eligiblefor medical and prescription drug coverage under the Company’s plan once he iseligible for coverage under any other medical plan, including another employer’smedical plan.

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

### C.            Other Insurance.  Coverage under the Life Insurance, Long TermDisability and Accidental Death and Dismemberment plans ends on a Participant’sEmployment Termination Date.  Conversionrights are not available for extended coverage under these plans.

### D.            Outplacement Services.  A Participant will be eligible foroutplacement services commensurate with his position, which will be provided atCompany 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 toparticipate in the Plan.  The maximumamount provided to a Participant as outplacement services shall be as set forthin Schedule B, and in no event shall exceed $7,500 for any Participant.  An Employee is not required to execute theGeneral Release of Claims provided in Section 3.3 to be eligible foroutplacement services.

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

**Section4.5            Nonalienation.**  Participants will not have any right topledge, hypothecate, anticipate, or in any way create a lien upon any benefitsprovided under the Plan, and no benefits payable hereunder will be assignablein anticipation of payment, either by voluntary or involuntary acts, or byoperation of law. Nothing in this Section 4.5 will limit a Participant’s rightsor powers to dispose of his property by will, limit any rights or powers whichhis executor or administrator would otherwise have with regard to benefits towhich a Participant

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

**Section4.6            Withholding.**  All Severance Benefits paid under the Planwill be subject to applicable withholding of federal, state and local taxes andother applicable deductions. Notwithstanding the foregoing, payments made under the Plan after aParticipant’s Employment Termination Date will not be considered “earnings” or “compensation”with respect to salary deferral arrangements, including, without limitation,the 401(k) Plan.

**Section4.7            Benefits on Death.**  In the event of the death of a Participantafter becoming entitled to Severance Benefits under the Plan but beforecomplete payment of his benefits hereunder, any unpaid Severance Benefits willbe paid to his surviving spouse or, if he has no surviving spouse at the timeof his death, to his estate.

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# **SECTION 5**

# **RETENTION BENEFITS**

**Section5.1            Entitlement to RetentionBenefits.**  Subjectto the terms and conditions of the Plan, the Plan Administrator shall grantRetention Benefits under the Plan to a Participant in an amount determined inaccordance with the provisions of the Plan. Participants who receive Retention Benefits under the Plan will not be eligibleto receive retention benefits under any other plan or program of the Company oran Affiliate.  Further, an Employee whoreceives retention benefits during the term of the Plan from any otherretention program, plan or arrangement maintained by the Company or anAffiliate will not be entitled to receive benefits from the Plan.

**Section5.2            Amount of RetentionBenefits.**  Subjectto the terms and conditions of the Plan, a Participant who satisfies theeligibility requirements set forth in Section 3.2 is entitled to a RetentionBenefit under the Plan equal to four (4) months salary.

**Section5.3            Form and Timing ofRetention 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, otherthan for cause, (ii) the occurrence of a Change of Control, or (iii) December31, 2007.

**Section5.4            Withholding.**  All Retention Benefits paid under the Planwill be subject to applicable withholding of federal, state and local taxes.  Notwithstanding the foregoing, RetentionBenefits made under the Plan after a Participant’s Employment Termination Datewill not be considered “earnings” or “compensation” as that term is used withrespect to salary deferral arrangements, including, without limitation, the401(k) Plan.

**Section5.5            Benefits on Death.**  In the event of the death of a Participantafter becoming entitled to Retention Benefits under the Plan but beforecomplete payment of his benefits hereunder, any unpaid Retention Benefits willbe paid to his surviving spouse or, if he has no surviving spouse at the timeof his death, to his estate.

**Section5.6            Miscellaneous.**

### A.            Specified Employees.  To the extent necessary to make any benefitor payment provided under this Section 5 not subject to tax under Code Section409A to a Participant who is a Specified Employee, the benefit or payment shallbe provided or made six months after such Participant’s Employment TerminationDate.

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

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# **SECTION 6**

# **PLANADMINISTRATOR**

**Section6.1            Duties and Authority ofPlan Administrator.** Except as otherwise specifically provided in this Section 6, incontrolling and managing the operation and administration of the Plan, the PlanAdministrator will have the following discretionary authority, powers, rightsand duties in addition to those vested in it elsewhere in the Plan:

### A.            to enforce the Plan in accordancewith its terms and with such applicable rules of procedure and regulations asmay be adopted by the Plan Administrator;

### B.            to determine conclusively allquestions arising under the Plan, including the power to determine the eligibilityof employees or Claimants and the rights of Participants or Claimants tobenefits 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 orrepresent the Company) for such purposes as the Plan Administrator considersnecessary or desirable to discharge its duties.

**Section6.2            Plan AdministratorDecision Final.**  Tothe extent permitted by law, any interpretation of the Plan and any decision onany matter within the discretion of the Plan Administrator made by it in goodfaith will be binding on all persons. A misstatement or other mistake of factwill be corrected when it becomes known, and the Plan Administrator will makesuch adjustment on account thereof as it considers equitable and practicable.

**Section6.3            Exercise of PlanAdministrator Duties.** In exercising its authority under the Plan, the Plan Administrator mayallocate all or any part of its responsibilities and powers to any one or moreof the committees of the Company and may delegate all or any part of itsresponsibilities and powers to any person or persons selected by it, includingdesignated officers or employees of the Company.

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# **SECTION 7**

# **CLAIMSPROCEDURES**

**Section7.1            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 SeveranceBenefits and other related benefits or Retention Benefits under the Plan. AnyClaimant who has questions about the Plan, including questions about hiseligibility for benefits, the amount of his Severance Benefits or RetentionBenefits, how benefits are calculated or other issues relating to Planinterpretations is encouraged to submit such questions in writing to the PlanAdministrator. The Plan Administrator will provide a written response to allsuch inquiries. If a Claimant believes, after reviewing the Plan Administrator’sexplanation of benefits, that he is eligible for benefits under the Plan orthat the Severance Benefits to which he is entitled under the Plan have beencalculated incorrectly, the Participant may submit a written claim for Planbenefits in accordance with Section 7.2 of the Plan.

**Section7.2            Claims for Benefits.**  A Claimant may submit a written claim forbenefits under the Plan in accordance with the terms and conditions set forthin this Section 7.2.

### A.            Filing of Claims. A claim forbenefits shall be made by filing a written request with the Plan Administrator,which shall be delivered to the Plan Administrator and accompanied by suchsubstantiation of the claim as the Plan Administrator considers necessary andreasonable for the type of claim being filed.

### B.            Denial of Claims. If a claimis denied in whole or in part, the Claimant shall receive a written orelectronic notice explaining the denial of the claim within ninety (90) daysafter the Plan Administrator’s receipt of the claim, unless specialcircumstances exist that require an extension of the time for processing suchclaim. If an extension of time is necessary, the Claimant shall be notified inwriting of the extension and reason for the extension within ninety (90) daysafter the Plan Administrator’s receipt of the claim. The written extensionnotification shall also indicate the date by which the Plan Administratorexpects to render a final decision. A notice of denial of claim shall containthe following:

#### 1.             thespecific reason or reasons for the denial;

#### 2.             referenceto the specific Plan provisions on which the denial is based;

#### 3.             adescription of any additional materials or information necessary for suchClaimant to perfect the claim and an explanation of why such material orinformation is necessary; and

#### 4.             adescription of the Plan’s review procedures and the time limits applicable tosuch procedures, including a statement of the Claimant’s right to bring a civilaction under Section 502(a) of ERISA following an adverse benefit determinationon review.

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### C.            Payment of Claims. The fullvalue of a payment made according to the provisions of the Plan satisfies thatmuch of the claim and all related claims under the Plan against the Plan Administratorand the Company, each of whom, as a condition to a payment from it or directedby it, may require the Participant, beneficiary, or legal representative toexecute a receipt and release of the claim in a form determined by the personrequesting the receipt and release.

**Section7.3            Review of Claims.**  A Claimant whose claim for benefits has beendenied by the Plan Administrator may request a review of such denial inaccordance with the terms and conditions of this Section 7.3.

### A.            Request for Review of DeniedClaims. A Claimant may file a written request for a review of the denial ofa claim within sixty (60) days after receiving written notice of the denial.The written request should be sent to the Plan Administrator, who will forwardit to the Administrative Committee for review. The Claimant may submit writtencomments, documents, records and other relevant information in support of theclaim. A Claimant shall be provided, upon request to the Plan Administrator andwithout charge, reasonable access to, and copies of, all documents, records,and other information relevant to the Claimant’s claim for benefits. Adocument, record, or other information shall be considered relevant if it:

#### 1.             was relied upon in denying theclaim;

#### 2.             was submitted, considered orgenerated in the course of processing the claim, regardless of whether it wasrelied upon;

#### 3.             demonstrates compliance with theclaims procedures process; or

#### 4.             constitutes a statement of Planpolicy or guidance concerning the denied benefit, regardless of whether it wasrelied upon.

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

### B.            Review Procedures. Inreviewing a denied claim, the Administrative Committee shall take intoconsideration all comments, documents, records, and other information submittedby the Claimant in support of the claim, without regard to whether suchinformation was submitted or considered in the initial benefit determination.

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

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#### 1.             the specific reason or reasons forthe denial;

#### 2.             reference to the specific Planprovisions on which the determination is based;

#### 3.             a statement that the Claimant isentitled to receive, upon request to the Plan Administrator and free of charge,reasonable access to, and copies of, all documents, records, and otherinformation 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 theclaim;

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

##### c.                                       demonstratescompliance with the claims procedures process; or

##### d.                                      constitutesa 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 aright to bring an action under Section 502(a) of ERISA.

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

Such notificationwill be given by the Administrative Committee within sixty (60) days after thecomplete appeal is received by the Administrative Committee (or within onehundred twenty (120) days if the Administrative Committee determines specialcircumstances require an extension of time for considering the appeal, and ifwritten notice of such extension and circumstances is given to the Claimantwithin the initial sixty (60) day period). Such written extension notice shallalso indicate the date by which the Administrative Committee expects to rendera decision.

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

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Claimant beforethe extension begins. In the case of such regularly scheduled meetings, theClaimant shall be notified of the review determination as soon as possible, butno later than five days after the review determination has been made. If noticethat a claim has been denied on review is not received by the Claimant withinthe time required in this paragraph, the claim is deemed denied on review.

**Section7.4            Compliance WithRegulations.** Notwithstanding anything in this Section 7 to the contrary, the PlanAdministrator and the Administrative Committee shall make all determinationsregarding claims for benefits of Participants or Claimants filed on or afterthe Effective Date in accordance with Section 2560.503-1 of the Department ofLabor Regulations.

**Section7.5            Claims for BenefitsUnder Other Plans.** Claims for benefits under any of the other plans described in Section4.4, including claims for eligibility or participation in such other plan orplans based upon participation in the Plan, shall be made pursuant to andgoverned by the claims procedures of such other plans.

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# **SECTION 8**

# **AMENDMENTOR TERMINATION**

**Section8.1            Amendment andTermination.**  Forpurposes of amending or terminating the Plan, the Company may act through anauthorized officer.  Subject to thelimitations set forth below in paragraphs A and B, the Company may amend orterminate the Plan at any time after December 31, 2007.

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

B.            Retention Benefits.  No amendment or termination of the Plan willadversely affect the Retention Benefits, if any, payable under the Plan withrespect to a Participant who has been notified of his eligibility to receiveRetention Benefits under the Plan.

IN WITNESSWHEREOF, 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 |

 

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** **

**SCHEDULE A**

**Affiliates Excluded fromCoverage**

** **

**NorthrockResources Ltd.**

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**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                                                   |       |

 

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