Amended And Restated Change In Control Severance Agreement

Exhibit 10.18

The Williams Companies, Inc.

Amended And Restated
Change In Control Severance Agreement

(Tier One Executives)

The Williams Companies, Inc.
Amended And Restated
Change in Control Severance Agreement

(Tier One Executives)

Table of Contents

The Williams Companies, Inc.

Amended And Restated Change-In-Control Severance Agreement

     THIS AMENDED AND RESTATED AGREEMENT dated as of                      , 200___ (the “ Agreement Date ”) is made by and between The Williams Companies, Inc., a corporation incorporated under the laws of the State of Delaware (“ Williams ”, together with its subsidiaries, affiliates and successors thereto ) and [INSERT EXECUTIVE NAME] (“ Executive ”).

RECITALS

     The Board of Directors of Williams (the “ Board ”) has determined that it is in the best interests of Williams and its shareholders to encourage and motivate the Executive to devote his full attention to the performance of his assigned duties without the distraction of concerns regarding his involuntary or constructive termination of employment due to a Change in Control of Williams. The Executive is employed by Williams or a Subsidiary and may from time to time be employed by one or more Subsidiaries. Williams and its Subsidiaries believe that it is in the best interest of the Executive, their customers, the communities they serve, and the stockholders of Williams to provide financial assistance through severance payments and other benefits to Executive if Executive is involuntarily or constructively terminated upon or within a certain period after a Change in Control. This Agreement is intended to accomplish these objectives.

     This Agreement supersedes and replaces all other written or oral exchanges, agreements, understandings, or arrangements between or among Executive and Williams and/or the Subsidiary entered into prior to the date hereof and relating to severance or benefits in relation to a Change in Control, including, but not limited to The Williams Companies, Inc. Change in Control Severance Protection Plan as effective January 1, 1990 and amended and restated June 1, 1999 and the Change-in-Control Severance Agreement dated as of [INSERT DATE OF PRIOR AGREEMENT] by and between Williams and the Executive, but excluding The Williams Companies Retirement Restoration Plan and any agreements and plans awarding Stock Options and Restricted Shares. Each superseded agreement or understanding is void and of no further force and effect.

Article I.

Definitions

     As used in this Agreement, the terms specified below shall have the following meanings:

     1.1 “ Accrued Annual Bonus ” means the amount of any Annual Bonus earned but not yet paid as of the Termination Date, other than amounts Executive has elected to defer.

     1.2 “ Accrued Base Salary ” means the amount of Executive’s Base Salary that is accrued but not yet paid as of the Termination Date, other than amounts Executive has elected to defer.

     1.3 “ Accrued Obligations ” means, as of the Termination Date, the sum of Executive’s Accrued Base Salary, Accrued Annual Bonus, any accrued but unpaid Paid Time Off under Williams’ Paid Time Off Program, and any other amounts and benefits which are then due to be paid or provided to Executive by Williams, but have not yet been paid or provided (as applicable), provided no payments will be accelerated if such acceleration would violate Code Section 409A.

     1.4 “ Affiliate ” means any Person (including a Subsidiary) that directly or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with Williams. For purposes of this definition the term “control” with respect to any Person means the power to direct or cause the direction of management or policies of such Person, directly or indirectly, whether through the ownership of Voting Securities, by contract or otherwise.

     1.5 “ Agreement Date ” — see the introductory paragraph of this Agreement.

     1.6 “ Agreement Term ” means the period commencing on the Agreement Date and ending on the second anniversary of the Agreement Date or, if later, such later date to which the Agreement Term is extended under the following sentence, unless earlier terminated as provided herein. Commencing on the first anniversary of the Agreement Date, the Agreement Term shall automatically be extended each day by one day to create a new two-year term until, at any time after the first anniversary of the Agreement Date, Williams delivers written notice (an “ Expiration Notice ”) to Executive that the Agreement shall expire on a date specified in the Expiration Notice (the “ Expiration Date ”) that is not less than 12 months after the date the Expiration Notice is delivered to Executive; provided, however, that if a Change Date occurs before the Expiration Date specified in the Expiration Notice, then such Expiration Notice shall be void and of no further effect. Notwithstanding anything herein to the contrary, with respect to a Post-Change Period, the Agreement Term shall end at the end of the Severance Period (as defined in Section 2.1(c)) if applicable, or if there is no such Severance Period, the earliest of the following: (a) the second anniversary of the Change Date, or (b) the Termination Date; provided that (i) the obligations, if any, of Williams to make payments under this Agreement due to a Separation from Service which occurred during the Agreement Term shall continue beyond the Agreement Term until all such obligations are fully satisfied, and (ii) the obligations of Executive under this Agreement shall continue beyond the Agreement Term until all such obligations are fully satisfied. Notwithstanding anything herein to the contrary, the Agreement shall automatically terminate upon the occurrence of a Disqualifying Disaggregation pursuant to Section 1.22(a).

     1.7 “ Annual Bonus ” means the opportunity to receive payment of a cash annual incentive.

     1.8 “ Article ” means an article of this Agreement.

     1.9 “ Base Salary ” means annual base salary in effect on the Termination Date, disregarding any reduction that would qualify as Good Reason.

     1.10 “ Beneficial Owner ” means such term as defined in Rule 13d-3 of the SEC under the Exchange Act.

     1.11 “ Beneficiary ” — see Section 9.3.

     1.12 “ Board ” means the Board of Directors of Williams or, from and after the Change Date that gives rise to a Surviving Corporation other than Williams, the Board of Directors of such Surviving Corporation.

     1.13 “ Cause ” means any one or more of the following:

     (a) Executive’s conviction of or plea of nolo contendere to a felony or other crime involving fraud, dishonesty or moral turpitude;

     (b) Executive’s willful or reckless material misconduct in the performance of his duties which results in an adverse effect on Williams, the Subsidiary or an Affiliate;

     (c) Executive’s willful or reckless violation or disregard of the code of business conduct;

     (d) Executive’s material willful or reckless violation or disregard of a Williams or Subsidiary policy; or

     (e) Executive’s habitual or gross neglect of duties;

provided, however, that for purposes of clauses (b) and (e), Cause shall not include any one or more of the following:

     (i) bad judgment or negligence, other than Executive’s habitual neglect of duties or gross negligence;

     (ii) any act or omission believed by Executive in good faith, after reasonable investigation, to have been in or not opposed to the interest of Williams, the Subsidiary or an Affiliate (without intent of Executive to gain, directly or indirectly, a profit to which Executive was not legally entitled);

     (iii) any act or omission with respect to which a determination could properly have been made by the Board that Executive had satisfied the applicable standard of conduct for indemnification or reimbursement under Williams’ by-laws, any applicable indemnification agreement, or applicable law, in each case as in effect at the time of such act or omission; or

     (iv) during a Post-Change Period, failure to meet performance goals, objectives or measures following good faith efforts to meet such goals, objectives or measures; and

further provided that, for purposes of clauses (b) through (e) if an act, or a failure to act, which was done, or omitted to be done, by Executive in good faith and with a reasonable belief, after

reasonable investigation, that Executive’s act, or failure to act, was in the best interests of Williams, the Subsidiary or an Affiliate or was required by applicable law or administrative regulation, such breach shall not constitute Cause if, within 10 business days after Executive is given written notice of such breach that specifically refers to this Section, Executive cures such breach to the fullest extent that it is curable. With respect to the above definition of “cause”, no act or conduct by Executive will constitute “cause” if Executive acted: (i) in accordance with the instructions or advice of counsel representing Williams or there was a conflict such that Executive could not consult with counsel representing Williams other qualified counsel, or (ii) as required by legal process.

     1.14 “ Cause Determination ” —see Section 2.2(b)(iv)

     1.15 “ Change Date ” means the date on which a Change in Control first occurs during the Agreement Term.

     1.16 “ Change in Control ” means, except as otherwise provided below, the occurrence of any one or more of the following during the Agreement Term:

     (a) any person (as such term is used in Rule 13d-5 of the SEC under the Exchange Act) or group (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other than an Affiliate of Williams or any employee benefit plan (or any related trust) sponsored or maintained by Williams or any of its Affiliates (a “ Related Party ”), becomes the Beneficial Owner of 20% or more of the common stock of Williams or of Voting Securities representing 20% or more of the combined voting power of all Voting Securities of Williams, except that no Change in Control shall be deemed to have occurred solely by reason of such beneficial ownership by a Person (a “ Similarly Owned Company” ) with respect to which both more than 75% of the common stock of such Person and Voting Securities representing more than 75% of the combined voting power of the Voting Securities of such Person are then owned, directly or indirectly, by the persons who were the direct or indirect owners of the common stock and Voting Securities of Williams immediately before such acquisition, in substantially the same proportions as their ownership, immediately before such acquisition, of the common stock and Voting Securities of Williams, as the case may be; or

     (b) Williams Incumbent Directors (determined using the Agreement Date as the baseline date) cease for any reason to constitute at least a majority of the directors of Williams then serving; or

     (c) consummation of a merger, reorganization, recapitalization, consolidation, or similar transaction (any of the foregoing, a “ Reorganization Transaction” ), other than a Reorganization Transaction that results in the Persons who were the direct or indirect owners of the outstanding common stock and Voting Securities of Williams immediately before such Reorganization Transaction becoming, immediately after the consummation of such Reorganization Transaction, the direct or indirect owners, of both at least 65% of the then-outstanding common stock of the Surviving Corporation and Voting Securities representing at least 65% of the combined voting power of the then-outstanding Voting Securities of the Surviving Corporation, in substantially the same respective proportions

as such Persons’ ownership of the common stock and Voting Securities of Williams immediately before such Reorganization Transaction; or

     (d) approval by the stockholders of Williams of a plan or agreement for the sale or other disposition of all or substantially all of the consolidated assets of Williams or a plan of complete liquidation of Williams, other than any such transaction that would result in (i) a Related Party owning or acquiring more than 50% of the assets owned by Williams immediately prior to the transaction or (ii) the Persons who were the direct or indirect owners of the outstanding common stock and Voting Securities of Williams immediately before such transaction becoming, immediately after the consummation of such transaction, the direct or indirect owners, of more than 50% of the assets owned by Williams immediately prior to the transaction.

Notwithstanding the occurrence of any of the foregoing events, a Change in Control shall not occur with respect to Executive if, in advance of such event, Executive agrees in writing that such event shall not constitute a Change in Control. Upon the Board’s determination that a sale or other disposition of all or substantially all of the consolidated assets of Williams or a plan of complete liquidation of Williams that was approved by stockholders, as described in Section 1.16(d), will not occur, a Change in Control shall be deemed not to have occurred from such date of determination forward, and this Agreement shall continue in effect as if no Change in Control had occurred except to the extent termination requiring payments under this Agreement occurs prior to such Board determination.

     1.17 “ Code ” means the Internal Revenue Code of 1986, as amended.

     1.18 “ Competitive Business ” means, as of any date, any energy business and any individual or entity (and any branch, office, or operation thereof) which engages in, or proposes to engage in (with Executive’s assistance) any of the following in which the Executive has been engaged in the twelve (12) months preceding the Termination Date (i) the harnessing, production, transmission, distribution, marketing or sale of oil, gas or other energy product or the transmission or distribution thereof through pipelines, wire or cable or similar medium (ii) any other business actively engaged in by Williams which represents for any calendar year or is projected by Williams (as reflected in a business plan adopted by Williams before Executive’s Termination Date) to yield during any year during the first three-fiscal year period commencing on or after Executive’s Termination Date, more than 5% of the gross revenue of Williams, and, in either case, which is located (x) anywhere in the United States, or (y) anywhere outside of the United States where Williams is then engaged in, or proposes as of the Termination Date to engage in to the knowledge of the Executive, any of such activities.

     1.19 “ Confidential Information ” means any non-public information of any kind or nature in the possession of Williams or any of its Affiliates, including without limitation, ideas, processes, methods, designs, innovations, devices, inventions, discoveries, know-how, data, techniques, models, customer lists, marketing, business or strategic plans, financial information, research and development information, trade secrets or other subject matter relating to Williams’ or its Affiliates’ products, services, businesses, operations, employees, customers or suppliers, whether in tangible or intangible form, including (i) any information that gives Williams or any of its Affiliates a competitive advantage in the harnessing, production, transmission, distribution,

marketing or sale of oil, gas or other energy or the transmission or distribution thereof through pipelines, wire or cable or similar medium or in the energy services or energy trading industry and other businesses in which Williams or an Affiliate is engaged, or (ii) any information obtained by Williams or any of its Affiliates from third parties to which Williams or an Affiliate owes a duty of confidentiality, or (iii) any information that was learned, discovered, developed, conceived, originated or prepared during or as a result of Executive’s performance of any services on behalf of Williams or any Affiliate. Notwithstanding the foregoing, “Confidential Information” shall not include: (i) information that is or becomes generally known to the public through no fault of Executive; (ii) information obtained on a non-confidential basis from a third party other than Williams or any Affiliate, which third party disclosed such information without breaching any legal, contractual or fiduciary obligation; or (iii) information approved for release by written authorization of Williams.

     1.20 “ Consummation Date ” means the date on which a Reorganization transaction is consummated.

     1.21 “ Disability ” means any medically determinable physical or mental impairment of Executive where he or she (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of Executive’s employer. Notwithstanding the forgoing, all determinations of whether an Executive is Disabled shall be made in accordance with Section 409A of the Code.

     1.22 “ Disqualifying Disaggregation ” means

     (a) The cessation of Executive’s employment with Williams and/or its Affiliates prior to the Change Date for any reason, including but not limited to a cessation of employment with Williams and/or its Affiliates which is effected by a sale, spin-off, or other disaggregation (“Disaggregation”) by Williams or an Affiliate of the business unit (including, but not limited to, a sale, spin-off or other disaggregation of a Subsidiary) which employed Executive immediately prior to such Disaggregation; or

     (b) The cessation of Executive’s employment with Williams and/or its Affiliates during the Post-Change Period due to a Disaggregation solely where Executive is employed by the successor in substantially the same position as the position held prior to the Disaggregation, provided the successor assumes all of Williams’ obligations under this Agreement.

     1.23 “ Employer ” means Williams or, if Executive is not employed directly by Williams, the Subsidiary that from time to time employs Executive on or after the Agreement Date, and the successor of either (provided, in the case of a Subsidiary, that such successor is also a Subsidiary).

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

     1.25 “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

     1.26 “ Good Reason ” means a Separation from Service by Executive in accordance with the substantive and procedural provisions of this Section.

     (a) Separation from Service by Executive for “Good Reason” means a Separation from Service initiated by Executive on account of any one or more of the following actions or omissions that, unless otherwise specified, occurs during a Post-Change Period:

     (i) a material adverse reduction in the nature or scope of Executive’s office, position, duties, functions, responsibilities or authority (including reporting responsibilities and authority) during a Post-Change Period from the most significant of those held, exercised and assigned at any time during the 90-day period immediately before the Change Date;

     (ii) any reduction in or failure to pay Executive’s annual Base Salary at an annual rate not less than 12 times the highest monthly base salary paid or payable to Executive by his Employer in respect of the 12-month period immediately before the Change Date;

     (iii) any reduction in the Target Annual Bonus which Executive may earn determined as of the Change Date or failure to pay Executive’s Annual Bonus on terms substantially equivalent to those provided to peer executives of the Employer;

     (iv) a material reduction of Executive’s aggregate compensation and/or aggregate benefits from the amounts and/or levels in effect on the Change Date, unless such reduction is part of a policy applicable to peer executives of the Employer and of any successor entity;

     (v) required relocation during a Post-Change Period of more than 50 miles of (A) Executive’s workplace, or (B) the principal offices of the Employer or its successor (if such offices are Executive’s workplace), in each case without the consent of Executive; provided, however, in both cases of (A) and (B) of this subsection (v), such new location is farther from Executive’s residence than the prior location;

     (vi) the failure at any time of a successor to Executive’s Employer explicitly to assume and agree to be bound by this Agreement; or

     (vii) the giving of a Notice of Consideration pursuant to Section 2.2(b)(ii) and the subsequent failure to terminate Executive for Cause and within a period of 90 days thereafter in compliance with all of the substantive and procedural requirements of Section 2.2.

     (b) Notwithstanding anything in this Agreement to the contrary, no act or omission shall constitute grounds for “Good Reason”:

     (i) Unless Executive gives a Notice of Termination to Williams and the Employer 30 days prior to his intent to terminate his employment for Good Reason which describes the alleged act or omission giving rise to Good Reason; and

     (ii) Unless such Notice of Termination is given within 90 days of Executive’s first actual knowledge of such act or omission; and

     (iii) Unless Williams or the Employer fails to cure such act or omission within the 30 day period after receiving the Notice of Termination.

     (c) No act or omission shall constitute grounds for “Good Reason”, if Executive has consented in writing to such act or omission in a document that makes specific reference to this Section.

     1.27 “Gross-Up Payment ” — see Section 3.1.

     1.28 “including ” means including without limitation.

     1.29 “IRS ” means the Internal Revenue Service of the United States of America.

     1.30 “Legal and Other Expenses ” — see Section 4.1.

     1.31 “Notice of Consideration ” — see Section 2.2(b)(ii).

     1.32 “ Notice of Termination ” means a written notice of a Separation from Service, if applicable, given in accordance with Section 9.7 that sets forth (a) the specific termination provision in this Agreement relied on by the party giving such notice, (b) in reasonable detail the specific facts and circumstances claimed to provide a basis for such Separation from Service, and (c) if the Termination Date is other than the date of receipt of such Notice of Termination, the Termination Date.

     1.33 “ Person ” means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government instrumentality, division, agency, body or department.

     1.34 “ Post-Change Period ” means the period commencing on the Change Date and ending on the earlier of the Termination Date or the second anniversary of the Change Date.

     1.35 “ Potential Parachute Payment ” — see Section 3.1.

     1.36 “ Pro-rata Annual Bonus ” means, in respect of an Employer’s fiscal year during which the Termination Date occurs, an amount equal to the product of Executive’s Target Annual Bonus (determined as of the Termination Date) multiplied by a fraction, the numerator of

which equals the number of days from and including the first day of such fiscal year through and including the Termination Date, and the denominator of which equals 365.

     1.37 “ Reorganization Transaction ” — see clause (c) of the definition of “Change in Control”.

     1.38 “ Restricted Shares ” means shares of restricted stock, restricted stock units, deferred stock or similar awards.

     1.39 “ SEC ” means the United States Securities and Exchange Commission.

     1.40 “ Section ” means, unless the context otherwise requires, a section of this Agreement.

     1.41 “ Separation from Service ” means an Executive’s termination or deemed termination from employment with Williams and its Subsidiaries. For purposes of determining whether a Separation from Service has occurred, the employment relationship is treated as continuing intact while the Executive is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six (6) months, or if longer, so long as the Executive retains a right to reemployment with his or her employer under an applicable statute or by contract. For this purpose, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Executive will return to perform services for his or her employer. If the period of leave exceeds six (6) months and the Executive does not retain a right to reemployment under an applicable statute or by contract, the employment relationship will be deemed to terminate on the first date immediately following such six (6) month period. Notwithstanding the foregoing, if a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, and such impairment causes the Executive to be unable to perform the duties of the Executive’s position of employment or any substantially similar position of employment, a twenty-nine (29) month period of absence shall be substituted for such six (6) month period. For purposes of this Agreement, a Separation from Service occurs at the date as of which the facts and circumstances indicate either that, after such date: (A) the Executive and Williams reasonably anticipate the Executive will perform no further services for Williams and its Subsidiaries (whether as an employee or an independent contractor or (B) that the level of bona fide services the Executive will perform for Williams and its Affiliates (whether as an employee or independent contractor) will permanently decrease to no more than twenty (20%) of the average level of bona fide services performed over the immediately preceding thirty-six (36) month period or, if the Executive has been providing services to Williams and its Subsidiaries for less than thirty-six (36) months, the full period over which the Executive has rendered services, whether as an employee or independent contractor. The determination of whether a Separation from Service has occurred shall be governed by the provisions of Treasury Regulation § 1.409A-1, as amended, taking into account the objective facts and circumstances with respect to the level of bona fide services performed by the Executive after a certain date.

     1.42 “ Stock Options ” means stock options, stock appreciation rights or similar awards.

     1.43 “ Subsidiary ” means a corporation, trade or business, if it and The Williams Companies, Inc. are members of a controlled group of corporations as defined in Code Section 414(b) or under common control as defined under Code Section 414(c); the standard of control under Code Sections 414(b) and 414(c) shall be deemed to be “at least 80%” and all determinations shall be made in accordance with Code Section 409A and the applicable guidance thereunder.

     1.44 “ Surviving Corporation ” means the parent corporation resulting from a Reorganization Transaction or, if securities representing at least 50% of the aggregate voting power of all Voting Securities of a corporation effected by a Change in Control which is not a Reorganization Transaction are directly or indirectly owned by another corporation, such other corporation.

     1.45 “ Target Annual Bonus ” means, as of any date, the amount equal to the product of Executive’s Base Salary determined as of such date multiplied by the percentage of such Base Salary to which Executive would have been entitled immediately prior to such date under any Annual Bonus arrangement for the fiscal year for which the Annual Bonus is awarded if the performance goals established pursuant to such Annual Bonus were achieved at the 100% level as of the end of the fiscal year; provided, however, that if Executive’s Annual Bonus is discretionary and no 100% target level is formally established either under the Annual Bonus arrangement or otherwise, Executive’s “Target Annual Bonus” shall mean the amount equal to the 100% of Executive’s Base Salary.

     1.46 “ Taxes ” means federal, state, local and other income, employment and other taxes.

     1.47 “ Termination Date ” means the date of the receipt of the Notice of Termination by Executive (if such notice is given by Executive’s Employer) or by Executive’s Employer (if such notice is given by Executive), or any later date, not more than 30 days after the giving of such notice, specified in such notice; provided, however, that:

     (a) Executive’s employment is terminated by reason of death or Disability, the Termination Date shall be the date of Executive’s death or the date of deemed termination of employment due to Disability, as applicable, regardless of whether a Notice of Termination has been given; and

     (b) if no Notice of Termination is given, the Termination Date shall be the last date on which Executive is employed by an Employer; and

     (c) for purposes of Article VI (Restrictive Covenants) if the Executive does not have a Separation from Service, the Termination Date shall be the later of the date the entity that employs Executive ceases to be a Subsidiary, or, after a Disaggregation (as defined in Section 1.22), the date Executive’s employment with the successor business unit terminates, whether such termination is initiated by such successor or by Executive.

     1.48 “ Voting Securities ” of a corporation means securities of such corporation that are entitled to vote generally in the election of directors of such corporation.

     1.49 “ Williams ” — see the introductory paragraph of this Agreement.

     1.50 “ Williams Incumbent Directors ” means, determined as of any date by reference to any baseline date:

     (a) the members of the Board on the date of such determination who have been members of the Board since such baseline date, and

     (b) the members of the Board on the date of such determination who were appointed or elected after such baseline date and whose election, or nomination for election by stockholders of Williams or the Surviving Corporation, as applicable, was approved by a vote or written consent of two-thirds of the directors comprising the Williams Incumbent Directors on the date of such vote or written consent, but excluding each such member whose initial assumption of office was in connection with (i) an actual or threatened election contest, including a consent solicitation, relating to the election or removal of one or more members of the Board, (ii) a “tender offer” (as such term is used in Section 14(d) of the Exchange Act), or (iii) a proposed Reorganization Transaction.

     1.51 “ Williams Parties ” means Williams and Executive’s Employer.

     1.52 “ Work Product ” means any and all work product, including, but not limited to, documentation, tools, templates, processes, procedures, discoveries, inventions, innovations, technical data, concepts, know-how, methodologies, methods, drawings, prototypes, trade secrets, notebooks, reports, findings, business plans, recommendations and memoranda of every description, that Executive makes, conceives, discovers or develops alone or with others during the course of Executive’s employment with Williams or during the one year period following Executive’s Termination Date (whether or not protectable upon application by copyright, patent, trademark, trade secret or other proprietary rights).

Article II.

Williams’ Obligations Upon Separation from Service

     2.1 If By Executive for Good Reason or By an Employer Other Than for Cause, Disability, Death or Disqualifying Disaggregation . If Executive has a Separation from Service for Good Reason or there is an Employer-initiated Separation from Service of the Executive for any reason other than Cause, Disability, Death or a Disqualifying Disaggregation during the Post-Change Period, then in addition to payment of all Accrued Obligations, which shall be payable no later than ten (10) business days after the Termination Date, Williams’ and the Employer’s sole obligations to Executive under this Article II shall be as follows:

     (a) Severance Payments . Executive shall be paid a lump-sum cash amount equal to the sum of the following, on the first business day following six (6) months after Executive’s Separation from Service:

     (i) Prorated Annual Bonus for Year of Termination . Executive’s Pro-rata Annual Bonus reduced (but not below zero) by the amount of any Annual

Bonus paid to Executive with respect to the Employer’s fiscal year during which the Termination Date occurs;

     (ii) Retirement Enhancements . The sum of:

     (A) an amount equal to the sum of the value of the unvested portion of Executive’s accounts or accrued benefits under any defined contribution plan qualified under Section 401(a) of the Code maintained by the Williams Parties as of the Termination Date and forfeited by Executive due to Separation from Service; and

     (B) an amount equal to three (3) times the total of the allocations made by Williams for Executive under The Williams Companies Retirement Restoration Plan (or any successor plan) during the calendar year preceding the calendar year in which the Change Date occurs.

     (iii) Multiple of Salary and Bonus . An amount equal to three (3) times the sum of (A) Base Salary plus (B) the Target Annual Bonus, each determined as of the Termination Date; provided, however, that any reduction in Executive’s Base Salary or Target Annual Bonus that would qualify as Good Reason shall be disregarded for this purpose.

     (b) Stock Incentive Awards . To the extent provided in the applicable award agreements and the applicable plan, all of Executive’s Stock Options then outstanding shall immediately become fully vested and remain exercisable until the 18-month anniversary of the Termination Date (or such later date as may be set forth in the applicable award agreement, including, but not limited to, a later exercise date under an award agreement if Executive has met the age and service requirements for retirement) or, if earlier, the option expiration date for any such Stock Option. All of Executive’s Restricted Shares then outstanding shall only vest and payout in accordance with the applicable award agreements for such Restricted Shares.

     (c) Continuation of Welfare Benefits . During the lesser of the period during which Executive or a qualifying beneficiary (as defined in Section 607 of the Employee Retirement Income Security Act of 1974, as amended) has in effect an election for post-termination continuation coverage or conversion rights to welfare benefits under applicable law, including Section 4980 of the Code (“COBRA”), or the period ending on the 18-month anniversary of the Termination Date (“Severance Period”), Executive (or, if applicable, the qualifying beneficiary) shall be entitled to such coverage at an out-of-pocket premium cost that does not exceed the out-of-pocket premium cost applicable to similarly situated active employees (and their eligible dependents); provided, however, that if Executive is eligible to retiree benefits provided under any welfare benefit plan, program, policy, practice or procedure of the Williams Parties, Executive shall be entitled to receive such retiree benefits in lieu of the COBRA coverage provided by this Section 2.1(c).

     (d) Outplacement . Executive shall be reimbursed for reasonable fees and costs for outplacement services incurred by Executive within six (6) months after the Separation from Service, promptly upon presentation of reasonable documentation of such fees and costs, subject to a maximum of $25,000. All requests of Executive for reimbursement must be submitted to Williams within on