Exhibit 10.4


 


POGO PRODUCING COMPANY RETENTION
INCENTIVE PLAN


 


In connection with the
acquisition by Pogo Producing Company (the “Company”) of all the issued and
outstanding shares of Northrock Resources Ltd. (the “Subsidiary”), the
companies agree that there is a need to retain full time employees of Northrock
Resources Ltd. during the period of change. 
Effective as of the “Closing Date” as that term is defined in the Share
Purchase Agreement dated July 8, 2005 by and among Unocal Canada Limited,
Unocal Canada Alberta Hub Limited, Unocal Corporation, Pogo Canada ULC, and
Pogo Producing Company (the “Closing Date”), the Company establishes the Pogo
Producing Company Retention Incentive Plan (the “Plan”) as set forth in this
document.


 


1.                                     Definitions


 


(a)                                  “Base
Salary” means the actual annual base salary rate of a Participant as of the
date a payment is due under this Plan.


 


(b)                                 “Cause”
means (i) the willful failure or refusal by the Participant to perform his
or her assigned duties with the Company or Subsidiary (other than any such
failure resulting from his or her physical or mental incapacity); (ii) the
willful engaging by the Participant in conduct which is contrary to the Company’s
or Subsidiary’s best interests; or (iii) any just cause at common law.


 


(c)                                  “Date
of Termination” means (i) if the Participant’s employment is terminated by
the Participant or by the Company or Subsidiary without Cause, the date the
Company or Subsidiary notifies the Participant of such termination or any later
date specified by the Company or Subsidiary, as the case may be, (ii) if
the Participant’s employment is terminated by the Company or Subsidiary for
Cause, the date on which the Company or Subsidiary notifies the Participant of
such termination.


 


(d)                                 “Disability”
means the absence of the Participant from the Participant’s duties with the
Company or Subsidiary on a full-time basis for 180 consecutive calendar days as
a result of incapacity due to mental or physical illness.


 


(e)                                  “Employee”
means each permanent full-time employee of Northrock Resources Ltd.  The term “Employee” does not include any
part-time or temporary employees or consultants.


 


(f)                                    “Participant”
means an Employee who meets the eligibility requirements specified in Section 2
hereof.


 


(g)                                 “Retention
Period” means the period commencing on the “Closing Date” and ending on the
first anniversary of such date.


 


2.                                     Eligibility.  Employees are eligible to become
Participants in the Plan if they are Employees on the first day of the
Retention Period.


 


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3.                                     Retention Bonus.  Upon the expiration of the
Retention Period, and provided the Participant remains an Employee in good standing until
the expiry of the Retention Period, a Participant will be entitled to a one-time payment equal to one times their annual
Base Salary, subject to delivery by the Participant to the Company or
Subsidiary of an executed full and final Waiver and Release in favor of the
Company and Subsidiary.


 


4.                                     Certain Effects of Employment Termination.


 


(a)                                  By Company or Subsidiary Without Cause.  If, during the Retention Period, the Company or
Subsidiary terminates a Participant’s employment other than for Cause, the
Company shall pay to the Participant, on receipt of an executed Waiver and
Release, a Retention Bonus less any amounts received as termination pay or pay
in lieu of notice in the form of a cash lump sum within 60 days after the Date
of Termination, or, if later, as soon as administratively practicable following
the Company’s or Subsidiary’s receipt from the Participant of an executed full
and final Waiver and Release in favor of the Company and Subsidiary.


 


(b)                                 By Company or Subsidiary with Cause; By the Participant for any Reason.  If a Participant’s employment is terminated
during the Retention Period by the Company or Subsidiary for Cause or by the
Participant for any reason, the Participant will no longer be eligible for a
Retention Bonus and no Retention Bonus will be paid.


 


(c)                                  Death or Disability. 
No Retention Bonus will be paid upon a Participant’s termination due to
death or Disability.


 


5.                                     Miscellaneous.


 


The responsibility for
the administration and operation of the Plan rests with the Compensation
Committee of the Board of Directors of the Company (the “Committee”).  The Committee shall have the authority to
issue and implement such rules as they deem appropriate to administer the
Plan.  The Committee shall also have the
authority to interpret Plan provisions and make factual determinations under
the Plan including the power to determine eligibility for benefits, and the
right to remedy ambiguities, inconsistencies or omissions in Plan
provisions.  Any decision by the
Committee hereunder or with respect hereto shall be final, binding and conclusive
on all persons and parties concerned. 
The Committee shall appoint or designate such person or persons they
deem necessary or advisable to carry out administrative duties under the Plan.


 


(a)                                  This
Plan does not constitute a contract of employment or impose on the Company or
Subsidiary any obligation to retain any Participant as an employee or to change
any employment policies of the Company or Subsidiary.


 


(b)                                 The
invalidity or unenforceability of any provision of the Plan shall not affect
the validity or enforceability of any other provision of the Plan, which shall
remain in full force and effect, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.


 


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6.                                     Notices.  All notices and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
registered or certified mail (return receipt requested and with postage prepaid
thereon) or by facsimile transmission to the respective parties.


 


7.                                     Amendment.  The Plan may be modified or
amended in any respect by decision of the Committee in its sole discretion.


 


8.                                     Governing Law.  This Plan shall be governed by
and construed in accordance with the laws of the State of Delaware (except that
no effect shall be given to any conflicts of law principles thereof that would
require the application of the laws of another jurisdiction).


 


9.                                     Headings.  The headings of the sections contained
in this Agreement are for convenience only and shall not be deemed to control
or affect the meaning or construction of any provision of this Agreement.


 


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