This excerpt taken from the XTO 10-Q filed Nov 7, 2006.
Section 4.01 Right to Severance Benefit.
(a) A Participant shall be entitled to receive from the Employer a Severance Benefit in the amount provided in Section 4.02 if (i) a Change in Control has occurred and (ii) within two (2) years thereafter, the Participants employment with the Employer terminates for any reason other than (A) termination by the Employer for Cause, or (B) termination by the Participant for other than Good Reason.
(b) Notwithstanding any other provision of the Plan, the sale, divestiture or other disposition of a Subsidiary shall not be deemed to be a termination of employment of employees employed by such Subsidiary, and such employees shall not be entitled to benefits from the Company or any Participating Employer under this Plan as a result of such sale, divestiture, or other disposition, or as a result of any subsequent termination of employment.
Section 4.02 Amount of Severance Benefit. If a Participants employment is terminated in circumstances entitling him or her to a Severance Benefit as provided in Section 4.01, such Participant shall be entitled to the following benefits:
(a) The Employer shall pay to the Participant, as severance pay and in lieu of any further salary for periods subsequent to the Termination Date, in a single payment within ten (10) days after his or her Termination Date (without any discount for accelerated payment), an amount in cash equal to: one-twelfth (1/12) of the sum of the Participants Base Salary and Bonus Amount, multiplied by the Participants Severance Units.
(b) For a period of twelve (12) months subsequent to the Participants Termination Date, the Employer shall at its sole expense continue on behalf of the Participant and his or her covered dependents and beneficiaries, all medical, dental, vision, and health benefits and insurance coverage that were being provided to the Participant immediately prior to his or her Termination Date. The benefits provided in this Section 4.02(b) shall be no less favorable to the Participant, in terms of amounts and deductibles and costs to him or her, than the coverage provided the Participant under the plans providing such benefits at the time Notice of Termination is given. The Employers obligation hereunder to provide a benefit shall terminate if the Participant obtains comparable coverage under a subsequent employers benefit plan. For purposes of the preceding sentence, benefits will not be comparable during any waiting period for eligibility for such benefits or during any period during which there is a preexisting condition limitation on such benefits. The Employer also shall pay a lump sum equal to the amount of any additional income tax payable by the Participant and attributable to the
benefits provided under this Section 4.02(b) at the time such tax is imposed upon the Participant. In the event that the Participants participation in any such coverage is barred under the general terms and provisions of the plans and programs under which such coverage is provided, or any such coverage is discontinued or the benefits thereunder are materially reduced, the Employer shall provide benefits to the Participant, or ensure that such benefits are provided to the Participant, that are substantially similar to those which the Participant was entitled to receive under such coverage immediately prior to the Notice of Termination. At the end of the period of coverage set forth above, the Participant shall have the option to have assigned to him or her at no cost to the Participant and with no apportionment of prepaid premiums, any assignable insurance owned by the Employer and relating specifically to the Participant, and the Participant shall be entitled to all health and similar benefits that are or would have been made available to the Participant under law.
(c) (i) Notwithstanding any provision to the contrary in any option agreement, restricted stock agreement, or other agreement relating to equity-type compensation that may be outstanding between the Participant and the Employer, all units, stock options, incentive stock options, performance shares, stock appreciation rights and royalty trust options (under the XTO Energy Inc. Amended and Restated 2004 Stock Incentive Plan, as amended or any other plan or arrangement) (hereafter sometimes referred to as the Rights) held by the Participant immediately prior to the Change in Control, and any such Rights received by the Participant after such Change in Control, (whether or not received in exchange for or in substitution for existing Rights), shall immediately become one hundred percent (100%) vested and exercisable, and the Participant shall become one hundred percent (100%) vested in all shares of restricted stock held by or for the benefit of the Participant; provided, however, that to the extent the Employer is unable to provide for such acceleration of vesting with respect to any such Rights or shares of restricted stock, the Employer shall provide in lieu thereof a lump sum cash payment within thirty (30) days after the Participants Termination Date of an amount equal to the difference between the total value of such unaccelerated Rights or shares of restricted stock (the Stock Rights) as of the Participants Termination Date and the total value of the Stock Rights in which the Participant is vested as of the date of his or her Termination Date. The value of such accelerated vesting in the Participants Stock Rights shall be determined by the Board in good faith based on a valuation performed by an independent consultant selected by the Board; any such Stock Rights which are not in existence on the Participants Termination Date shall be valued as of the date of the Change in Control.
(ii) Notwithstanding any provision to the contrary in any option agreement that may be outstanding between the Participant and the Employer, the Participants right to exercise any previously unexercised options under any such option agreement shall not terminate until the latest date on which the option granted under such agreement would expire under the terms of such agreement but for the Participants termination of employment. However, with respect to any option (or portion of an option) for which either (i) the Employer is unable to provide for the extension of the expiration date as provided in the preceding sentence for any reason, or (ii) providing for the extension of the expiration date as provided in the preceding sentence would cause an option (or a portion of an option) to be subject to Section 409A of the Code, then the expiration date of such option (or portion of an option) shall not be extended beyond the time it would otherwise terminate according to its terms, and the Employer shall make a lump sum cash payment to the Participant within thirty (30) days after the Participants Termination Date of an amount equal to the value, as of the Participants Termination Date, of the extension of the expiration date for all options (or portions of options) which cannot be so extended. Such value of such extension of exercisability shall be determined by the Board in good faith based on a valuation performed by an independent consultant selected by the Board. Notwithstanding the foregoing, if, in accordance with the foregoing, an incentive stock option held by the Participant may be extended without causing application of Section 409A of the Code, the
extension of the right to exercise such options under this Section 4.02(c)(ii) shall only be applicable if the Participant does not exercise such option within three (3) months after the Participants Termination Date, and, in that event, such options shall immediately convert to nonqualified stock options.
(d) A Participant who is entitled to severance benefits under an employment agreement with the Employer may elect, in writing within ten (10) days after his or her Termination Date, to receive the severance benefits provided under this Section 4.02 in lieu of, but not in addition to, such other severance benefits as may be provided by such other agreement. In the event that no election is made, the Participant shall forego his or her right to receive the severance benefits provided under this Section 4.02. In the event a Participants election (or right to make an election) under this Section 4.02(d) would result in a violation of Section 409A of the Code and as a result the Participant would be subject to the taxes described in Section 409A(a)(1) of the Code, the Participant shall not be entitled to make an election and the Participant shall forego his or her right to receive the severance benefits provided under this Section 4.02.
Section 4.03 Limitations on Payments.
(a) Anything in this Article IV to the contrary notwithstanding, in the event it shall be determined that any payment or distribution made, or benefit provided, by the Company and/or the Employer to or for the benefit of the Participant (whether paid or payable or distributed or distributable or provided pursuant to the terms hereof or otherwise) would constitute a parachute payment as defined in Section 280G of the Code, then the lump sum severance payment payable pursuant to Section 4.02(a) shall be reduced so that the aggregate present value of all payments in the nature of compensation to (or for the benefit of) the Participant which are contingent on a change of control (as defined in Section 280G(b)(2)(A) of the Code) is One Dollar ($1.00) less than the amount which the Participant could receive without being considered to have received any parachute payment (the amount of this reduction in the lump sum severance payment is referred to herein as the Excess Amount). The determination of the amount of any reduction required by this Section 4.03 shall be made by an independent accounting firm (other than the Companys independent accounting firm) selected by the Company and acceptable to the Participant, and such determination shall be conclusive and binding on the Company, the Employer and the Participant.
(b) Notwithstanding the provisions of Section 4.03(a), if it is established, pursuant to a final determination of a court or an Internal Revenue Service proceeding which has been finally and conclusively resolved, that an Excess Amount was received by the Participant from the Company, then such Excess Amount shall be deemed for all purposes to be a loan to the Participant made on the date the Participant received the Excess Amount and the Participant shall repay the Excess Amount to the Company on demand (but no less than ten (10) days after written demand is received by the Participant) together with interest on the Excess Amount at the applicable Federal rate (as defined in Section 1274(d) of the Code) from the date of the Participants receipt of such Excess Amount until the date of such repayment.
Section 4.04 Mitigation or Set-off of Amounts Payable Hereunder. The Participant shall not be required to mitigate the amount of any payment provided for in this Article IV by seeking other employment or otherwise, and except at otherwise provided in Section 4.02(b), nor shall the amount of any payment provided for in this Article IV be reduced by any compensation earned by the Participant as the result of employment by another employer after the Termination Date, or otherwise. The Employers obligations hereunder also shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Employer may have against the Participant.
Section 4.05 Company Guarantee of Severance Benefit. In the event a Participant becomes entitled to receive from the Employer a Severance Benefit under Section 4.01 above and such Employer fails to pay such Severance Benefit, the Company shall assume the obligation of such Employer to pay such Severance Benefit. In consideration of the Companys assumption of the obligation to pay such Severance Benefit provided under this Plan, the Company (as the source of payment of benefits under the Plan) shall be subrogated to any recovery (irrespective of whether there is recovery from the third party of the full amount of all claims against the third party) or right to recovery of either a Participant or his or her legal representative against the Employer or any other person or entity. The Participant or his or her legal representative shall cooperate in doing what is reasonably necessary to assist the Company in exercising such rights, including but not limited to notifying the Company of the institution of any claim for such Severance Benefits, and notifying the defendant of the Companys subrogation rights. Neither the Participant nor his or her legal representative shall do anything after a loss to prejudice such rights.
In its sole discretion, the Company reserves the right to prosecute an action in the name of the Participant or his or her legal representative against any party potentially liable to the Participant for such Severance Benefits. The Company shall have the absolute discretion to settle subrogation claims on any basis it deems warranted and appropriate under the circumstances.
The Company shall be entitled, to the extent of any payments made to or on behalf of a Participant, to be paid first from the proceeds of any settlement or judgment that may result from the exercise of any rights of recovery asserted by or on behalf of a Participant or his or her legal representative against any party liable for such Severance Benefits. The Company shall be reimbursed by the Participant or his or her legal representative an amount of money equal to all sums paid by the Employer under the Plan to or on behalf of the Participant. If the Company prosecuted such action, it shall be entitled to reimbursement for all attorneys fees, costs and expenses incurred in such prosecution. The right is also hereby given the Company to receive directly from the Employer or any third party(ies), attorney(s) or insurance company(ies) an amount equal to the amount paid to the Participant.
Section 4.06 Section 409A of the Code; Delay of Payments. The terms of this Plan have been designed to comply with the requirements of Section 409A of the Code, as amended, where applicable, and shall be interpreted and administered in a manner consistent with such intent. Notwithstanding anything to the contrary in this Plan, (i) if upon the Participants Termination Date, the Participant is a specified employee within the meaning of Section 409A of the Code, and the deferral of any amounts otherwise payable under this Plan as a result of the Participants termination of employment is necessary in order to prevent any accelerated or additional tax to the Participant under Section 409A of the Code, then the Employer will delay the payment of any such amounts hereunder until the date that is six (6) months following the Participants Termination Date at which time any such delayed amounts will be paid to the Participant in a single lump sum, with interest from the date otherwise payable, at the prime rate as published in The Wall Street Journal on the Participants Termination Date, and (ii) if any other payments of money or other benefits due to the Participant hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be delayed if such delay will make such payment or other benefits compliant under Section 409A of the Code.