Document:

exv10w4

Exhibit 10.4

APACHE CORPORATION

2007 Omnibus Equity Compensation Plan

As amended and restated July 13, 2010; effective December 31, 2009

Section 1

Introduction

1.1 Establishment. Apache Corporation, a Delaware corporation (hereinafter referred to,
together with its Affiliates (as defined below) as the “Company” except where the context otherwise
requires), hereby establishes the Apache Corporation 2007 Omnibus Equity Compensation Plan (the
“Plan”).

1.2 Purpose. The purpose of the Plan is to provide Eligible Persons designated by the
Committee for participation in the Plan with equity-based incentives to: (i) encourage such
individuals to continue in the long-term service of the Company and its Affiliates, (ii) create in
such individuals a more direct interest in the future success of the operations of the Company,
(iii) attract outstanding individuals, and (iv) retain and motivate such individuals. The Plan is
intended to provide eligible individuals with the opportunity to invest in the Company, thereby
relating incentive compensation to increases in stockholder value and more closely aligning the
compensation of such individuals with the interests of the Company’s stockholders.

Accordingly, this Plan provides for the granting of Incentive Stock Options, Non-Qualified Stock
Options, Performance Awards, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights or
any combination of the foregoing, as the Committee determines is best suited to the circumstances
of the particular individual as provided herein.

1.3 Effective Date. The Effective Date of the Plan (the “Effective Date”) is May 2, 2007.
This amendment and restatement is effective as of December 31, 2009.

Section 2

Definitions

2.1 Definitions. The following terms shall have the meanings set forth below:

     (a) “Administrative Agent” means any designee or agent that may be appointed by the
Committee pursuant to subsections 3.1(h) and 3.4 hereof.

     (b) “Affiliate” means any entity other than the Company that is affiliated with the Company
through stock or equity ownership or otherwise and is designated as an Affiliate for purposes of
the Plan by the Committee; provided, however, that,

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notwithstanding any other provisions of the Plan to the contrary, for purposes of NQSOs and SARs,
if an individual who otherwise qualifies as an Eligible Person provides services to such an entity
and not to the Company, such entity may only be designated an Affiliate if the Company qualifies as
a “service recipient,” within the meaning of Internal Revenue Code Section 409A, with respect to
such individual; provided further that such definition of “service recipient” shall
be determined by (a) applying Internal Revenue Code Section 1563(a)(1), (2), and (3), for purposes
of determining a controlled group of corporations under Internal Revenue Code Section 414(b), using
the language “at least 50 percent” instead of “at least 80 percent” each place it appears in
Internal Revenue Code Section 1563(a)(1), (2), and (3), and by applying Treasury Regulations
Section 1.414(c)-2, for purposes of determining trades or businesses (whether or not incorporated)
that are under common control for purposes of Internal Revenue Code Section 414(c), using the
language “at least 50 percent” instead of “at least 80 percent” each place it appears in Treasury
Regulations Section 1.414(c)-2, and (b) where the use of Shares with respect to the grant of an
Option or SAR to such an individual is based upon legitimate business criteria, by applying
Internal Revenue Code Section 1563(a)(1), (2), and (3), for purposes of determining a controlled
group of corporations under Internal Revenue Code Section 414(b), using the language “at least 20
percent” instead of “at least 80 percent” at each place it appears in Internal Revenue Code Section
1563(a)(1), (2), and (3), and by applying Treasury Regulations Section 1.414(c)-2, for purposes of
determining trades or businesses (whether or not incorporated) that are under common control for
purposes of Internal Revenue Code Section 414(c), using the language “at least 20 percent” instead
of “at least 80 percent” at each place it appears in Treasury Regulations Section 1.414(c)-2;
provided further that for purposes of ISOs, “Affiliate” shall mean any present or future
corporation which is or would be a “subsidiary corporation” of the Company as the term is defined
in Section 424(f) of the Internal Revenue Code.

     (c) “Award” means any Stock Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Performance Award, Dividend Equivalent or any other stock-based award granted to a
Participant under the Plan.

     (d) “Board” means the Board of Directors of the Company.

     (e) “Change of Control” shall have the meaning assigned to such term in the Company’s
Income Continuance Plan as in effect on the Effective Date.

     (f) “Committee” means the Stock Option Plan Committee of the Board or such other Committee
of the Board that is empowered hereunder to administer the Plan. The Committee shall be
constituted at all times so as to permit the Plan to be administered by “non-employee directors”
(as defined in Rule 16b-3 of the Exchange Act) and “outside directors” (as defined in Treasury
Regulations Section 1.162-27 (e)(3)) and to satisfy such additional regulatory or listing
requirements as the Board may determine to be applicable or appropriate.

     (g) “Deferred Delivery Plan” means the Company’s Deferred Delivery Plan, as it has been or
may be amended from time to time, or any successor plan.

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     (h) “Dividend Equivalent” means a right, granted to an Eligible Person to receive cash,
Stock, other Awards or other property equal in value to dividends paid with respect to a specified
number of shares of Stock, or other periodic payments.

     (i) “Eligible Persons” means those employees of the Company or of any Affiliates, members
of the Board, and members of the board of directors of any Affiliates who are designated as
Eligible Persons by the Committee. Notwithstanding the foregoing, grants of Incentive Stock
Options may not be granted to anyone who is not an employee of the Company or an Affiliate.

     (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (k) “Exercise Date” means the date of exercise determined in accordance with subsection
6.2(g) hereof.

     (l) “Fair Market Value” means the per share closing price of the Stock as reported on The
New York Stock Exchange, Inc. Composite Transactions Reporting System for a particular date or, if
the Stock is not so listed on such date, as reported on NASDAQ or on such other exchange or
electronic trading system which, on the date in question, reports the largest number of traded
shares of Stock, provided, however, that if on the date Fair Market Value is to be
determined there are no transactions in the Stock, Fair Market Value shall be determined as of the
immediately preceding date on which there were transactions in the Stock; provided
further, however, that if the foregoing provisions are not applicable, the fair
market value of a share of the Stock as determined by the Committee by the reasonable application
of such reasonable valuation method, consistently applied, as the Committee deems appropriate;
provided further, however, that, with respect to ISOs, such Fair Market
Value shall be determined subject to Section 422(c)(7) of the Internal Revenue Code.

     (m) “Incentive Stock Option” or “ISO” means any Option intended to be and
designated as an incentive stock option and which satisfies the requirements of Section 422 of the
Internal Revenue Code or any successor provision thereto.

     (n) “Internal Revenue Code” means the Internal Revenue Code of 1986, as it may be amended
from time to time, and any successor thereto. Any reference to a section of the Internal Revenue
Code or Treasury Regulation shall be treated as a reference to any successor section.

     (o) “Non-Qualified Stock Option” or “NQSO” means any Option that is not intended to
qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code.

     (p) “Option” means an option to purchase a number of shares of Stock granted pursuant to
subsection 6.1.

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     (q) “Option Price” means the price at which shares of Stock subject to an option may be
purchased, determined in accordance with subsection 6.2(b) hereof.

     (r) “Participant” means an Eligible Person designated by the Committee, from time to time
during the term of the Plan to receive one or more Awards under the Plan.

     (s) “Performance Award” is a right to either a number of shares of Stock or SARs
(“Performance Shares”) determined (in either case) in accordance with subsection 9.1 of this Plan
based on the extent to which the applicable Performance Goals are achieved. A Performance Share
shall be of no value to a Participant unless and until earned in accordance with subsection 9.2
hereof.

     (t) “Performance Goals” are the performance conditions, if any, established pursuant to
subsection 9.1 by the Committee in connection with an Award.

     (u) “Performance Period” with respect to a Performance Award is a period not less than one
calendar year or one fiscal year of the Company, beginning not earlier than the year in which such
Performance Award is granted, which may be referred to herein and by the Committee by use of the
calendar of fiscal year in which a particular Performance Period commences.

     (v) “Prior Plans” means the Company’s 2005 Stock Option Plan and the Executive Restricted
Stock Plan.

     (w) “Restricted Stock” means Stock granted to an Eligible Person under Section 8 hereof,
that is subject to certain restrictions and to a risk of forfeiture.

     (x) “Restricted Stock Unit” means a right, granted to an Eligible Person under Section 8
hereof, to receive Stock, cash or a combination thereof at the end of a specified vesting period.

     (y) “Restriction Period” shall have the meaning assigned to such term in subsection 8.1.

     (z) “Stock” means the $0.625 par value common stock of the Company and or any security into
which such common stock is converted or exchanged upon merger, consolidation, or any capital
restructuring (within the meaning of Section 13) of the Company.

     (aa) “Stock Appreciation Right” or “SAR” means a right granted to an Eligible
Person to receive an amount in cash, Stock, or other property equal to the excess of the Fair
Market Value as of the Exercise Date of one share of Stock over the SAR Price times the number of
shares of Stock to which the Stock Appreciation Right relates. Stock Appreciation Rights may be
granted in tandem with Options or other Awards or may be freestanding.

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     (bb) “SAR Price” means the price at which the Stock Appreciation Right was granted, which
shall be determined in the same manner as the Option Price of an Option in accordance with
subsection 6.2 hereof.

     (cc) “Involuntary Termination” means the termination of employment of the Participant by the
Company or its successor for any reason on or after a Change of Control; provided, that the
termination does not result from an act of the Participant that (i) constitutes common-law fraud, a
felony, or a gross malfeasance of duty, or (ii) is materially detrimental to the best interests of
the Company or its successor.

     (dd) “Voluntary Termination with Cause” occurs upon a Participant’s separation from service of his
own volition and one or more of the following conditions occurs without the Participant’s consent
on or after a Change of Control:

          (i) There is a material diminution in the Participant’s base compensation, compared
to his rate of base compensation on the date of the Change of Control.

          (ii) There is a material diminution in the Participant’s authority, duties or
responsibilities.

          (iii) There is a material diminution in the authority, duties or responsibilities
of the Participant’s supervisor, such as a requirement that the Participant (or his
supervisor) report to a corporate officer or employee instead of reporting directly
to the board of directors.

          (iv) There is a material diminution in the budget over which the Participant
retains authority.

          (v) There is a material change in the geographic location at which the Participant
must perform his service, including, for example the assignment of the Participant
to a regular workplace that is more than 50 miles from his regular workplace on the
date of the Change of Control.

The Participant must notify the Company of the existence of one or more adverse conditions
specified in clauses (i) through (v) above within 90 days of the initial existence of the adverse
condition. The notice must be provided in writing to Apache Corporation’s Vice President, Human
Resources or her delegate. The notice may be provided by personal delivery or it may be sent by
email, inter-office mail, regular mail (whether or not certified), fax, or any similar method.
Apache Corporation’s Vice President, Human Resources or her delegate shall acknowledge receipt of
the notice within 5 business days; the acknowledgement shall be sent to the Participant by
certified mail. Notwithstanding the foregoing provisions of this definition, if the Company
remedies the adverse condition within 30 days of being notified of the adverse condition, no
Voluntary Termination with Cause shall occur.

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2.2 Headings; Gender and Number. The headings contained in the Plan are for reference
purposes only and shall not affect in any way the meaning or interpretation of the Plan. Except
when otherwise indicated by the context, the masculine gender shall also include the feminine
gender, and the definition of any term herein in the singular shall also include the plural.

Section 3

Plan Administration

3.1 Administration by the Committee. The Plan shall be administered by the Committee. In
accordance with the provisions of the Plan, the Committee shall, in its sole discretion, adopt
rules and regulations for carrying out the purposes of the Plan, including, without limitation, the
authority to:

     (a) Grant Awards;

     (b) Select the Eligible Persons and the time or times at which Awards shall be granted;

     (c) Determine the type and number of Awards to be granted, the number of shares of Stock
to which an Award may relate and the terms, conditions, restrictions, and Performance
Goals relating to any Award;

     (d) Determine whether, to what extent, and under what circumstances an Award may be
settled, canceled, forfeited, exchanged, or surrendered;

     (e) Construe and interpret the Plan and any Award;

     (f) Prescribe, amend, and rescind rules and procedures relating to the Plan;

     (g) Determine the terms and provisions of agreements;

     (h) Appoint designees or agents (who need not be members of the Committee or employees of
the Company) to assist the Committee with the administration of the Plan; and

     (i) Make all other determinations deemed necessary or advisable for the administration of
the Plan.

3.2 The Committee shall, in its absolute discretion, and without amendment to the Plan, have the
power to accelerate, waive or modify, at any time, any term or condition of an Award that is not
mandatory under this Plan; provided, however, that the Committee

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shall not have any discretion to accelerate, waive or modify any term or condition of an
Award that is intended to qualify as “performance-based compensation” for purposes of Section
162(m) of the Internal Revenue Code if such discretion would cause the Award to not so qualify. In
the event of a Change of Control, the provisions of Section 12 hereof shall be mandatory and shall
govern the vesting and exercisability schedule of any Award granted hereunder.

3.3 No member of the Committee shall be liable for any action, omission, or determination made in
good faith. The Company shall indemnify (to the extent permitted under Delaware law) and hold
harmless each member of the Committee and each other director or employee of the Company to whom
any duty or power relating to the administration or interpretation of the Plan has been delegated
against any cost or expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action, omission or determination
was taken or made by such member, director or employee in bad faith and without reasonable belief
that it was in the best interests of the Company. The determination, interpretations and other
actions of the Committee pursuant to the provisions of the Plan shall be binding and conclusive for
all purposes and on all persons.

3.4 The Committee may from time to time adopt such rules and regulations for carrying out the
purposes of the Plan as it may deem proper and in the best interests of the Company. The Committee
may appoint an Administrative Agent, who need not be a member of the Committee or an employee of
the Company, to assist the Committee in administration of the Plan and to whom it may delegate such
powers as the Committee deems appropriate, except that the Committee shall determine any dispute.
The Committee may correct any defect, supply any omission or reconcile any inconsistency in the
Plan, or in any agreement entered into hereunder, in the manner and to the extent it shall deem
expedient, and it shall be the sole and final judge of such inconsistency.

3.5 Compliance with Section 162(m). Except as expressly otherwise stated in any resolution
of the Committee, the Plan is intended to comply with the requirements of Section 162(m) or any
successor section(s) of the Internal Revenue Code (“Section 162(m)”) as to any “covered employee”
as defined in Section 162(m), and shall be administered, interpreted, and construed consistently
therewith. The Committee is authorized to take such additional action, if any, that may be
required to ensure that the Plan and any Award under the Plan satisfy the requirements of Section
162(m), taking into account any regulations or other guidance issued by the Internal Revenue
Service.

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Section 4

Stock Subject to the Plan

4.1 Number of Shares. Subject to adjustments pursuant to Section 4.4 hereof, up to 15,000,000
shares of Stock, plus any shares of Stock available for issuance under the Prior Plans but not
underlying outstanding stock options or other awards under the Prior Plans or which shares are
allocable to any outstanding stock options or other awards under the Prior Plans to the extent such
stock options or other awards expire, are forfeited or otherwise terminate unexercised, are
authorized for issuance under the Plan in accordance with the Plan’s terms and subject to such
restrictions or other provisions as the Committee may from time to time deem necessary. Of such
total number of shares of Stock so authorized, not more than 10,000,000 may be designated for
Restricted Stock, Restricted Stock Units, and Performance Awards. During the duration of the Plan,
no Eligible Person may be granted Options which in the aggregate cover in excess of 10 percent of
the total shares of Stock authorized under the Plan. No Award may be granted under the Plan on or
after the 10-year anniversary of the Effective Date. The foregoing to the contrary
notwithstanding, the total number of shares of Stock that may be issued pursuant to ISOs granted
under the Plan shall be equal to 5,000,000, subject to adjustments pursuant to Section 4.4 hereof.

4.2 Availability of Shares Not Issued under Awards. If shares of Stock which may be issued
pursuant to the terms of the Plan awarded hereunder are forfeited, cancelled, exchanged or
surrendered or if an Award otherwise terminates or expires without a distribution of shares to the
holder of such Award, the shares of Stock with respect to such Award shall, to the extent of any
such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available
for Awards under the Plan.

4.3 Stock Offered. The Company shall at all times during the term of the Plan retain as
authorized and unissued Stock and/or Stock in the Company’s treasury, at least the number of shares
from time to time required under the provisions of the Plan, or otherwise assure itself of its
ability to perform its obligations hereunder.

4.4 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall at any time
increase or decrease the number of its outstanding shares of Stock or change in any way the rights
and privileges of such shares by means of the payment of a Stock dividend or any other
distribution upon such shares payable in Stock or rights to acquire Stock, or through a Stock
split, reverse Stock split, subdivision, consolidation, combination, reclassification or
recapitalization involving the Stock (any of the foregoing being herein called a “capital
restructuring”), then in relation to the Stock that is affected by one or more of the above events,
the numbers, rights, and privileges of the following shall be, in each case, equitably and
proportionally adjusted to take into account the occurrence of any of the above events, (i) the
number and kind of shares of Stock or other property (including cash) that may thereafter be issued
pursuant to subsections 4.1 and 4.10, (ii) the number and kind of shares of Stock or other property
(including cash) issued or issuable in respect of outstanding Awards; and (iii) the exercise price,
grant price, or

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purchase price relating to any Award; provided that, with respect to Incentive Stock Options, such
adjustment shall be made in accordance with Section 424(h) of the Internal Revenue Code; (iv) the
Performance Goals, and (v) the individual limitations applicable to Awards.

4.5 Other Changes in Stock. In the event there shall be any change, other than as
specified in subsections 4.4 hereof, in the number or kind of outstanding shares of Stock or of any
stock or other securities into which the Stock shall be changed or for which it shall have been
exchanged, and if the Committee shall in its discretion determine that such change equitably
requires an adjustment in the number or kind of shares subject to outstanding Awards or which have
been reserved for issuance pursuant to the Plan but are not then subject to an Award, then such
adjustments shall be made by the Committee and shall be effective for all purposes of the Plan and
on each outstanding Award that involves the particular type of stock for which a change was
effected.

4.6 Rights to Subscribe. If the Company shall at any time grant to the holders of its
Stock rights to subscribe pro rata for additional shares thereof or for any other securities of the
Company or of any other corporation, there shall be reserved with respect to the shares then under
an outstanding Award to any Participant of the particular class of Stock involved the Stock or
other securities which the Participant would have been entitled to subscribe for if immediately
prior to such grant the Participant had exercised his entire Option. If, upon exercise of any such
Option, the Participant subscribes for the additional shares or other securities, the aggregate
Option Price shall be increased by the amount of the price that is payable by the Participant for
such additional shares or other securities as if the Participant had exercised his entire Option
immediately prior to the grant of such additional shares or other securities.

4.7 General Adjustment Rules. No adjustment or substitution provided for in this Section 4
shall require the Company to sell a fractional share of Stock under any Option, or otherwise issue
a fractional share of Stock, and the total substitution or adjustment with respect to each Option
shall be limited by deleting any fractional share. In the case of any such substitution or
adjustment, the aggregate Option Price for the shares of Stock then subject to the Option shall
remain unchanged but the Option Price per share under each such Option shall be equitably adjusted
by the Committee to reflect the greater or lesser number of shares of Stock or other securities
into which the Stock subject to the Option may have been changed.

4.8 Determination by the Committee, Etc. Adjustments under this Section 4 shall be made by
the Committee, whose determinations with regard thereto shall be final and binding upon all
parties.

4.9 Code Section 409A. For any Award that is not subject to Internal Revenue Code Section
409A before the adjustments identified in the preceding sections of this Section 4, no adjustment
shall be made that would cause the Award to become subject to Internal Revenue Code Section 409A.
For an Award that is subject to Internal Revenue Code Section 409A before the adjustments
identified in the preceding sections of this Section

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4, no adjustment shall cause the Award to violate Internal Revenue Code Section 409A, without the
prior written consent of both the Participant and the Committee.

4.10 Award Limits. The following limits shall apply to grants of all Awards under the
Plan:

     (a) Options: The maximum aggregate number of shares of Stock that may be
subject to Options granted in any calendar year to any one Participant shall be 250,000
shares.

     (b) SARs: The maximum aggregate number of shares that may be subject to Stock
Appreciation Rights granted in any calendar year to any one Participant shall be 250,000
shares. Any shares covered by Options which include tandem SARs granted to one Participant
in any calendar year shall reduce this limit on the number of shares subject to SARs that
can be granted to such Participant in such calendar year.

     (c) Restricted Stock or Restricted Stock Units: The maximum aggregate number
of shares of Stock that may be subject to Awards of Restricted Stock or Restricted Stock
Units granted in any calendar year to any one Participant shall be 250,000 shares.

     (d) Performance Awards: The maximum aggregate grant with respect to
Performance Awards granted in any calendar year to any one Participant shall be 250,000
shares (or SARs based on the value of such number of shares).

To the extent required by Section 162(m) of the Code, shares subject to Options or SARs which are
canceled shall continue to be counted against the limits set forth in paragraphs (a) and (b)
immediately preceding.

Section 5

Granting of Awards to Participants

5.1 Participation. Participants in the Plan shall be those Eligible Persons who, in the
judgment of the Committee, are performing, or during the term of their incentive arrangement will
perform, vital services in the management, operation, and development of the Company or an
Affiliate, and significantly contribute, or are expected to significantly contribute, to the
achievement of the Company’s long-term corporate economic objectives. Participants may be granted
from time to time one or more Awards; provided, however, that the grant of each such Award shall be
separately approved by the Committee, and receipt of one such Award shall not result in automatic
receipt of any other Award. Upon determination by the Committee that an Award is to be granted to
a Participant, as soon as practicable, written notice shall be given to such person, specifying the
terms, conditions, rights and duties related thereto. Each
Participant shall, if required by the Committee, enter into an agreement with the

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Company, in such form as the Committee shall determine and which is consistent with the provisions of the Plan,
specifying such terms, conditions, rights, and duties. Awards shall be deemed to be granted as of
the date specified in the grant resolution of the Committee, which date shall be the date of any
related agreement with the Participant. In the event of any inconsistency between the provisions
of the Plan and any such agreement entered into hereunder, the provisions of the Plan shall govern.

Awards granted to members of the Board shall be recommended to the full Board by the Management
Development and Compensation Committee and approved by the full Board.

5.2 Notification to Participants and Delivery of Documents. As soon as practicable after
such determinations have been made, each Participant shall be notified of (a) his/her designation
as a Participant, (b) the date of grant, (c) the number and type of Awards granted to the
Participant, (d) in the case of Performance Awards, the Performance Period and Performance Goals,
(e) in the case of Restricted Stock or Restricted Stock Units, the Restriction Period (as defined
in subsection 8.1), and (f) any other terms or conditions imposed by the Committee with respect to
the Award.

5.3 Delivery of Award Agreement. This requirement for delivery of a written Award
agreement is satisfied by electronic delivery of such agreement provided that evidence of the
Participant’s receipt of such electronic delivery is available to the Company and such delivery is
not prohibited by applicable laws and regulations.

Section 6

Stock Options

6.1 Grant of Stock Options. Coincident with or following designation for participation in
the Plan, an Eligible Person may be granted one or more Options. Grants of Options under the Plan
shall be made by the Committee. In no event shall the exercise of one Option affect the right to
exercise any other Option or affect the number of shares of Stock for which any other Option may be
exercised, except as provided in subsection 6.2(j) hereof.

6.2 Stock Option Agreements. Each Option granted under the Plan shall be identified as
either an Incentive Stock Option or a Non-Qualified Stock Option (or, if no such identification is
made, then it shall be a Non-Qualified Stock Option) and evidenced by a written agreement which
shall be entered into by the Company and the Participant to whom the Option is granted, and which
shall contain the following terms and conditions set out in this subsection 6.2, as well as such
other terms and conditions, not inconsistent therewith, as the Committee may consider appropriate.

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     (a) Number of Shares. Each Stock Option agreement shall state that it covers a
specified number of shares of Stock, as determined by the Committee.

     (b) Price. The price at which each share of Stock covered by an Option may be
purchased, the Option Price, shall be determined in each case by the Committee and set forth in the
Stock Option agreement. The price may vary according to a formula specified in the Stock Option
agreement, but in no event shall the Option Price ever be less than the Fair Market Value of the
Stock on the date the Option is granted.

     (c) No Backdating. There shall be no backdating of Options, and each Option shall be
dated the actual date that the Committee adopts the resolution awarding the grant of such Option.

     (d) Limitations on Incentive Stock Options. No Incentive Stock Option may be granted
to an individual if, at the time of the proposed grant, such individual owns (or is attributed to
own by virtue of the Internal Revenue Code) Stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or any Affiliate unless (i) the
exercise price of such Incentive Stock Option is at least 110 percent of the Fair Market Value of a
share of Stock at the time such Incentive Stock Option is granted and (ii) such Incentive Stock
Option is not exercisable after the expiration of five years from the date such Incentive Stock
Option is granted.

     To the extent that the aggregate Fair Market Value of Stock of the Company with respect to
which Incentive Stock Options are exercisable for the first time by a Participant during any
calendar year under the Plan and any other option plan of the Company (or any Affiliate) shall
exceed $100,000, such Options shall be treated as Non-Qualified Stock Options. Such Fair Market
Value shall be determined as of the date on which each such Incentive Stock Option is granted.

     (e) Duration of Options. Each Stock Option agreement shall state the period of time,
determined by the Committee, within which the Option may be exercised by the Participant (the
“Option Period”). The Option Period must end, in all cases, not more than ten years from the date
an Option is granted.

     (f) Termination of Options. During the lifetime of a Participant to whom a Stock
Option is granted, the Stock Option may be exercised only by such Participant or, in the case of
disability (as determined pursuant to the Company’s Long-Term Disability Plan or any successor
plan) by the Participant’s designated legal representative, except to the extent such exercise
would cause any Award intended to qualify as an ISO not to so qualify. Once a
Participant to whom a Stock Option was granted dies, the Stock Option may be exercised only by the
personal representative of the Participant’s estate. Unless the Stock Option agreement shall
specify a longer or shorter period, at the discretion of the Committee, then the Participant (or
representative) may exercise the Stock Option for a period of up to three months after such
Participant terminates employment or ceases to be a member of the Board.

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     (g) Exercise, Payments, Etc.

          (i) Each Stock Option agreement shall provide that the method for exercising the Option
granted therein shall be by delivery to the Office of the Secretary of the Company or to the
Administrative Agent of written notice specifying the number of shares of Stock with respect to
which such Option is exercised and payment to the Company of the aggregate Option Price. Such
notice shall be in a form satisfactory to the Committee and shall specify the particular Options
(or portions thereof) which are being exercised and the number of shares of Stock with respect to
which the Options are being exercised. The Participant’s obligation to deliver written notice of
exercise is satisfied by electronic delivery of such notice through means satisfactory to the
Committee and prescribed by the Company. The exercise of the Option shall be deemed effective on
the date such notice is received by the Office of the Secretary or by the Administrative Agent and
payment is made to the Company of the aggregate Option Price (the “Exercise Date”); however, if
payment of the aggregate Option Price is made pursuant to a sale of shares of Stock as contemplated
by subsection 6.2(g)(iv)(E) below, the Exercise Date shall be deemed to be the date of such sale.
If requested by the Company, such notice shall contain the Participant’s representation that he or
she is purchasing the Stock for investment purposes only and his or her agreement not to sell any
Stock so purchased in any manner that is in violation of the Exchange Act or any applicable state
law, and such restriction, or notice thereof, shall be placed on the certificates representing the
Stock so purchased. The purchase of such Stock shall take place upon delivery of such notice to
the Office of the Secretary of the Company or to the Administrative Agent, at which time the
aggregate Option Price shall be paid in full to the Company by any of the methods or any
combination of the methods set forth in subsection 6.2(g)(iv) below.

          (ii) The shares of Stock to which the Participant is entitled as a result of the exercise of
the Option shall be issued by the Company and either (A) delivered by electronic means to an
account designated by the Participant or (B) delivered to the Participant in the form of a properly
executed certificate or certificates representing such shares of Stock. If shares of Stock are
used to pay all or part of the aggregate Option Price, the Company shall issue and deliver to the
Participant the additional shares of Stock, in excess of the aggregate Option Price or portion
thereof paid using shares of Stock, to which the Participant is entitled as a result of the Option
exercise.

          (iii) The Company’s obligation to deliver the shares of Stock to which the Participant is
entitled as a result of the exercise of the Option shall be subject to the payment in full to the
Company of the aggregate Option Price and the required tax withholding.

          (iv) The aggregate Option Price shall be paid by any of the following methods or any
combination of the following methods:

               (A) in cash, including the wire transfer of funds in U.S. dollars to one of the Company’s
bank accounts located in the United States, with such bank account to be designated from time to
time by the Company;

13

 

               (B) by personal, certified or cashier’s check payable in U.S. dollars to the order of the
Company;

               (C) by delivery to the Company or the Administrative Agent of certificates representing a
number of shares of Stock then owned by the Participant, the aggregate Fair Market Value of which
(as of the Exercise Date) is equal to the aggregate Option Price of the Option being exercised,
properly endorsed for transfer to the Company, provided that the shares of Stock used for this
purpose must have been owned by the Participant for a period of at least six months;

               D) by certification or attestation to the Company or the Administrative Agent of the
Participant’s ownership (as of the Exercise Date) of a number of shares of Stock, the aggregate
Fair Market Value of which (as of the Exercise Date) is not greater than the aggregate Option Price
of the Option being exercised, provided that the shares of Stock used for this purpose have been
owned by the Participant for a period of at least six months; or

               (E) by delivery to the Company or the Administrative Agent of a properly executed notice of
exercise together with irrevocable instructions to a broker to promptly deliver to the Company, by
wire transfer or check as noted in subsection 6.2(g)(iv)(A) and (B) above, the amount of the
proceeds of the sale of all or a portion of the Stock or of a loan from the broker to the
Participant necessary to pay the aggregate Option Price.

     (h) Tax Withholding. Each Stock Option agreement shall provide that, upon exercise of
the Option, the Participant shall make appropriate arrangements with the Company to provide for not
less than the minimum amount of tax withholding required by law, including without limitation
Sections 3102 and 3402 or any successor section(s) of the Internal Revenue Code and applicable
state and local income and other tax laws, by payment of such taxes in cash (including wire
transfer), by check, or as provided in Section 11 hereof.

     (i) Repricing Prohibited. Subject to Sections 4, 6, 12, 13, and 16, outstanding Stock
Options granted under this Plan shall not be repriced without approval by the Company’s
stockholders. In particular, neither the Board nor the Committee may take any action: (1) to
amend the terms of an outstanding Option or SAR to reduce the Option Price or grant price thereof,
cancel an Option or SAR and replace it with a new Option or SAR with a lower Option Price or grant
price, or that has an economic effect that is the same as any such reduction or cancellation or (2)
to cancel an outstanding Option or SAR having an Option Price or grant price above the then-current
Fair Market Value of the Stock in exchange for the grant of another type of Award, without, in each
such case, first obtaining approval of the stockholders of the Company of such action.

     (j) Stockholder Privileges. No Participant shall have any rights as a stockholder
with respect to any shares of Stock covered by an Option until the Participant becomes the holder
of record of such Stock. Except as provided in Section 4 hereof, no adjustments shall be made for
dividends or other distributions or other rights as to which

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there is a record date preceding the date on which such Participant becomes the holder of
record of such Stock.

     (k) Section 409A Avoidance. Once granted, no Stock Option shall be modified,
extended, or renewed in any way that would cause the Stock Option to be subject to Internal Revenue
Code Section 409A. The Option Period shall not be extended to any date that would cause the Stock
Option to become subject to Internal Revenue Code Section 409A. The Option Price shall not be
adjusted to reflect any dividends declared and paid on the Stock between the date of grant and the
date the Stock Option is exercised; however, the right to one or more dividends declared and paid
on the Stock between the date of grant and the date the Option is exercised may be set forth in a
separate arrangement.

Section 7

7.1 Stock Appreciation Rights. The Committee is authorized to grant SARs to Participants
either alone (“freestanding”) or in tandem with other Awards, including Performance Awards,
Options, and Restricted Stock. Stock Appreciation Rights granted in tandem with any Award must be
granted at the same time as the Award is granted. Stock Appreciation Rights granted in tandem with
Options shall terminate and no longer be exercisable upon the termination or exercise of the
related Stock Options Options granted in tandem with Stock Appreciation Rights shall terminate
and no longer be exercisable upon the termination or exercise of the related Stock Appreciation
Rights. The Committee shall establish the terms and conditions applicable to any Stock
Appreciation Rights, which terms and conditions need not be uniform but may not be inconsistent
with the terms of the Plan. Freestanding Stock Appreciation Rights shall generally be subject to
terms and conditions substantially similar to those described in Section 4 and subsection 6.2 for
Options, including, but not limited to, the requirements of subsections 6.2(b), (d), and (i) and
subsection 4.7 regarding general adjustment rules, minimum price, duration, and prohibition on
repricing.

7.2 Section 409A Avoidance. The SAR Price may be fixed on the date it is granted or the
SAR Price may vary according to an objective formula specified by the Committee at the time of
grant. However, the SAR Price can never be less than the Fair Market Value of the Stock on the
date of grant. The SAR grant must specify the number of shares to which it applies, which must be
fixed at the date of grant (subject to adjustment pursuant to Sections 4, 6, and 11). Once
granted, no SAR shall be modified, extended, or renewed in any way that would cause the SAR to be
subject to Internal Revenue Code Section 409A. The period during which the SAR may be exercised
shall not be extended to any date that would cause the SAR to become subject to Internal Revenue
Code Section 409A. The value of the SAR shall not be adjusted to reflect any dividends declared
and paid on the Stock between the date of grant and the date the SAR is exercised; however, the
right to one or more dividends declared and paid on the Stock between the date of grant and the
date the SAR is exercised may be set forth in a separate arrangement.

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Section 8

Restricted Stock and Restricted Stock Units

8.1 Restriction Period. At the time an Award of Restricted Stock or Restricted Stock Units
is made, the Committee shall establish the terms and conditions applicable to such Award, including
the period of time (the “Restriction Period”) and attainment of performance goals during which
certain restrictions established by the Committee shall apply to the Award. Each such Award, and
designated portions of the same Award, may have a different Restriction Period, at the discretion
of the Committee. Except as permitted or pursuant to Sections 12 and 13 hereof, the Restriction
Period applicable to a particular Award shall not be changed. Restricted Stock or Restricted Stock
Units may or may not be subject to Internal Revenue Code Section 409A. If they are subject to
Internal Revenue Code Section 409A, the grant of the Restricted Stock or Restricted Stock Units
must contain the provisions needed to comply with the requirements of Internal Revenue Code Section
409A, including but not limited to (i) the timing of any election to defer receipt of the
Restricted Stock or Restricted Stock Units beyond the date of vesting, (ii) the timing of any
payout election, and (iii) the timing of the settlement of Restricted Stock or a Restricted Stock
Unit. Restricted Stock or Restricted Stock Units that are subject to Internal Revenue Code Section
409A may be adjusted to reflect any dividends declared and paid on the Stock between the date of
grant and the date the Restricted Stock or Restricted Stock Unit vests, but only to the extent
permitted in IRS guidance of general applicability.

8.2 Certificates for Stock. Restricted Stock shall be evidenced in such manner as the
Committee shall determine. If certificates representing Restricted Stock are registered in the
name of the Participant, the Committee may require that such certificates bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock,
that the Company retain physical possession of the certificates, and that the Participant deliver a
stock power to the Company, endorsed in blank, relating to the Restricted Stock represented by a
stock certificate registered in the name of the Participant.

8.3 Restricted Stock Terms and Conditions. Participants shall have the right to enjoy
all shareholder rights during the Restriction Period except that:

     (a) The Participant shall not be entitled to delivery of the Stock certificate until the
Restriction Period shall have expired.

     (b) The Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of the Stock during the Restriction Period.

     (c) A breach of the terms and conditions established by the Committee with respect to the
Restricted Stock shall cause a forfeiture of the Restricted Stock and any dividends
withheld thereon.

     (d) Dividends and Splits. As a condition to the grant of an Award of Restricted Stock,
the Committee may specify whether any cash dividends paid on a share of Restricted Stock
be automatically reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under this

16

 

Plan. Unless otherwise determined by the Committee, Stock distributed in connection
with a Stock split or Stock dividend, and other property distributed as a dividend,
shall be subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Stock with respect to which such Stock or other property has been
distributed.

8.4 Restricted Stock Units. The Committee is authorized to grant Restricted Stock Units to
Participants, which are rights to receive Stock at the end of a specified deferral period, subject
to the following terms and conditions:

Award and Restrictions. Settlement of an Award of Restricted Stock Units shall occur upon
expiration of the deferral period specified for such Restricted Stock Unit by the Committee
(or, if permitted by the Committee, as elected by the Participant). In addition, Restricted
Stock Units shall be subject to such restrictions (which may include a risk of forfeiture) as
the Committee may impose, if any, which restrictions may lapse at the expiration of the
deferral period or at earlier specified times (including based on achievement of performance
goals and/or future service requirements), separately or in combination, in installments or
otherwise, as the Committee may determine. Restricted Stock Units shall be satisfied by the
delivery of cash or Stock in the amount equal to the Fair Market Value of the specified number
of shares of Stock covered by the Restricted Stock Units, or a combination thereof, as
determined by the Committee at the date of grant or thereafter.

8.5 Deferral of Receipt of Restricted Stock Units. With the consent of the Committee, a
Participant who has been granted a Restricted Stock Unit may by compliance with the then applicable
procedures under the Plan irrevocably elect in writing to defer receipt of all or any part of any
distribution associated with that Restricted Stock Unit Award in accordance with either the terms
and conditions of the Deferred Delivery Plan or the terms and conditions specified under the grant
agreement and related documents. The terms and conditions of any such deferral, including, but not
limited to, the period of time for, and form of, election; the manner and method of payout; and the
use and form of Dividend Equivalents in respect of stock-based units resulting from such deferral,
shall be as determined by the Committee. The Committee may, at any time and from time to time, but
prospectively only except as hereinafter provided, amend, modify, change, suspend, or cancel any
and all of the rights, procedures, mechanics, and timing parameters relating to such deferrals. In
addition, the Committee may, in its sole discretion, accelerate the pay out of such deferrals (and
any earnings thereon), or any portion thereof, either in a lump sum or in a series of payments, but
only to the extent that the payment or the change in timing of the payment will not cause a
violation of Internal Revenue Code Section 409A.

8.6 Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to grant
Stock as a bonus, or to grant Stock or other Awards in lieu of obligations to pay cash or deliver
other property under this Plan or under plans or compensatory arrangements, provided that, in the
case of Participants subject to Section 16 of the Exchange Act, the amount of such grants remains
within the discretion of the Committee

17

 

to the extent necessary to ensure that acquisitions of Stock or other Awards are exempt from
liability under Section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall be
subject to such other terms as shall be determined by the Committee. In the case of any grant of
Stock to an officer of the Company or an Affiliate in lieu of salary or other cash compensation,
the number of shares granted in place of such compensation shall be reasonable, as determined by
the Committee.

8.7 Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to a
Participant, entitling the Participant to receive cash, Stock, other Awards, or other property
equal in value to dividends paid with respect to a specified number of shares of Stock, or other
periodic payments. Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award. The Committee may provide that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or
other investment vehicles, and subject to risk of forfeiture, as the Committee may specify.

Section 9

Performance Awards

9.1 Establishment of Performance Goals for Company. Performance Goals applicable to a
Performance Award shall be established by the Committee in its absolute discretion on or before the
date of grant and within the time period prescribed by, and shall otherwise comply with the
requirements of, Code Section 162(m)(4)(C), or any successor provision thereto, and the regulations
thereunder, for performance-based compensation. Such Performance Goals may include or be based
upon any of the following criteria, either in absolute amount, per share, or per barrel of oil
equivalent (boe): pretax income or after tax income, operating profit, return on equity, capital
or investment, earnings, book value, increase in cash flow return, sales or revenues, operating
expenses (including, but not limited to, lease operating expenses, severance taxes and other
production taxes, gathering and transportation, general and administrative costs, and other
components of operating expenses), stock price appreciation, implementation or completion of
critical projects or processes, production growth, reserve growth, and/or corporate acquisition
goals based on value of assets acquired or similar objective measures.

Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of
a particular criteria or attaining a percentage increase or decrease in a particular criteria, and
may be applied relative to internal goals or levels attained in prior years or related to other
companies or indices or as ratios expressing relationship between Performance Goals, or any
combination thereof, as determined by the Committee.

The Performance Goals may include a threshold level of performance below which no vesting will
occur, levels of performance at which specified vesting will occur, and a maximum level of
performance at which full vesting will occur.

18

 

The Committee may in its discretion classify Participants into as many groups as it determines, and
as to any Participant relate his/her Performance Goals partially, or entirely, to the measured
performance, either absolutely or relatively, of an identified subsidiary, division, operating
company, test strategy, or new venture of the Company and/or its Affiliates.

Notwithstanding any other provision of the Plan, payment or vesting of any Performance Award shall
not be made until the applicable Performance Goals have been satisfied and any other material terms
of such Award were in fact satisfied. The Committee shall certify in writing the attainment of
each Performance Goal. Notwithstanding any provision of the Plan to the contrary, with respect to
any Performance Award, (a) the Committee may not adjust, downwards or upwards, any amount payable,
or other benefits granted, issued, retained, and/or vested pursuant to such an Award on account of
satisfaction of the applicable Performance Goals and (b) the Committee may not waive the
achievement of the applicable Performance Goals, except in the case of the Participant’s death or
disability, or a Change of Control.

9.2 Levels of Performance Required to Earn Performance Awards. At or about the same time
that Performance Goals are established for a specific period, the Committee shall in its absolute
discretion establish the percentage of the Performance Awards granted for such Performance Period
which shall be earned by the Participant for various levels of performance measured in relation to
achievement of Performance Goals for such Performance Period.

9.3 Other Restrictions. The Committee shall determine the terms and conditions applicable
to any Performance Award, which may include restrictions on the delivery of Stock payable in
connection with the Performance Award and restrictions that could result in the future forfeiture
of all or part of any Stock earned. The Committee may provide that shares of Stock issued in
connection with a Performance Award be held in escrow and/or legended. Performance Awards may or
may not be subject to Internal Revenue Code Section 409A. If a Performance Award is subject to
Internal Revenue Code Section 409A, the Performance Award grant agreement shall contain the terms
and conditions needed to comply with the requirements of Internal Revenue Code Section 409A,
including but not limited to (i) the timing of any election to defer receipt of the Performance
Award, (ii) the timing of any payout election, and (iii) the timing of the actual payment of the
Performance Award. Performance Awards that are subject to Internal Revenue Code Section 409A may
be adjusted to reflect any dividends declared and paid on the Stock between the date of grant and
the date the Performance Award is paid, but only to the extent permitted in IRS guidance of general
applicability.

9.4 Notification to Participants. Promptly after the Committee has established the
Performance Goals with respect to a Performance Award, the Participant shall be provided with
written notice of the Performance Goals so established.

19

 

9.5 Measurement of Performance against Performance Goals. The Committee shall, as soon as
practicable after the close of a Performance Period, determine (a) the extent to which the
Performance Goals for such Performance Period have been achieved and (b) the percentage of the
Performance Awards earned as a result.

These determinations shall be absolute and final as to the facts and conclusions therein made and
be binding on all parties. Promptly after the Committee has made the foregoing determination, each
Participant who has earned Performance Awards shall be notified. For all purposes of this Plan,
notice shall be deemed to have been given the date action is taken by the Committee making the
determination. Participants may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of all or any portion of their Performance Awards during the Performance Period.

9.6 Treatment of Performance Awards Earned. Upon the Committee’s determination that a
percentage of any Performance Award has been earned for a Performance Period, Participants to whom
such earned Performance Awards have been granted and who have been in the employ of the Company or
Affiliates continuously from the date of grant until the end of the Performance Period, subject to
the exceptions set forth in the Performance Award agreement and in Sections 10 and 12 hereof, shall
be entitled, subject to the other conditions of this Plan, to payment in accordance with the terms
and conditions of the Performance Awards. Performance Awards shall under no circumstances become
earned or have any value whatsoever for any Participant who is not in the employ of the Company or
its Affiliates continuously during the entire Performance Period for which such Performance Award
was granted, except as provided in Sections 10 and 12.

9.7 Subsequent Performance Award Grants. Following the grant of Performance Awards with
respect to a Performance Period, additional Participants may be designated by the Committee for
grant of Performance Awards for such Performance Period subject to the same terms and conditions
set forth for the initial grants, except that the Committee, in its sole discretion, may reduce the
value of the amounts to which subsequent Participants may become entitled, prorated according to
reduced time spent during the Performance Period, and the applicable Performance Award agreement
shall be modified to reflect such reduction.

9.8 Stockholder Privileges. No Participant shall have any rights as a stockholder with
respect to any shares of Stock covered by a Performance Award until the Participant becomes the
holder of record of such Stock.

Section 10

Termination of Employment, Death, Disability, etc.

10.1 Termination of Employment. Except as provided herein, the treatment of an Award upon
a termination of employment or any other service relationship by and

20

 

between a Participant and the Company or an Affiliate shall be specified in the agreement
controlling such Award.

10.2 Termination for Cause. If the employment of the Participant by the Company is
terminated for cause, as determined by the Committee, all Awards to such Participant shall
thereafter be void for all purposes. As used in subsections 9.1, 10.2, and 10.3 hereof, “cause”
shall mean a gross violation, as determined by the Committee, of the Company’s established policies
and procedures, provided that the effect of this subsection 10.2 shall be limited to determining
the consequences of a termination and that nothing in this subsection 10.2 shall restrict or
otherwise interfere with the Company’s discretion with respect to the termination of any employee.

10.3 Performance Awards. Except as set forth below, each Performance Award shall state
that each such Award shall be subject to the condition that the Participant has remained an
Eligible Person from the date of grant until the applicable vesting date as follows:

     (a) If the Participant voluntarily leaves the employment of the Company or an Affiliates, or
if the employment of the Participant is terminated by the Company for cause or otherwise, any
Performance Award to such Participant not previously vested shall thereafter be void and forfeited
for all purposes.

     (b) A Participant shall become vested in all Performance Awards that have met the Performance
Goals within the Performance Period on the date the Participant retires from employment with the
Company on or after attaining retirement age (which for all purposes of this Plan is determined to
be age 65, unless otherwise designated by the Committee at the time the Award is granted), on the
date the Participant dies while employed by the Company, or on the date the Participant terminates
service with the Company and the Affiliates due to permanent disability (as determined pursuant to
the Company’s Long-Term Disability Plan or any successor plan, unless the Performance award is
subject to Internal Revenue Code Section 409A, in which case “permanent disability” must also fall
within the meaning specified in Internal Revenue Code Section 409A(a)(2)(C) or a more restrictive
meaning established by the Committee) while employed by the Company. Such Participant shall not
become entitled to any payment which may arise due to the occurrence of a Performance Goal after
the Participant dies, terminates service due to permanent disability, or retires. Payment shall
occur as soon as administratively convenient following the date the Participant dies, terminates
service due to permanent disability, or retires, but in no event shall the payment occur later than
March 15 in the calendar year immediately following the calendar year in which the Participant
died, so terminates service, or retired. If the Participant dies before receiving payment, the
payment shall be made to those entitled under the Participant’s will or, if there is no will, to
the Participant’s estate.

10.4 Forfeiture Provisions. Subject to Sections 12 and 14, in the event a Participant
terminates employment during a Restriction Period for the Participant’s Restricted Stock or
Restricted Stock Units, such Awards will be forfeited; provided, however, that the

21

 

Committee may provide for proration or full payout in the event of (a) death, (b) permanent
disability, or (c) any other circumstances the Committee may determine.

Section 11

Tax Withholding

11.1 Withholding Requirement. The Company and any Affiliate is authorized to withhold from
any Award granted, or any payment relating to an Award under this Plan, including from a
distribution of Stock, amounts of withholding and other taxes or social security payments due or
potentially payable in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax or social security obligations
relating to any Award. This authority shall include authority to withhold or receive Stock or
other property and to make cash payments in respect thereof, in satisfaction of a Participant’s tax
obligations, either on a mandatory or elective basis at the discretion of the Committee.

11.2 Withholding Requirement — Stock Options and SARs. The Company’s obligations to
deliver shares of Stock upon the exercise of an Option or SAR shall be subject to the Participant’s
satisfaction of all applicable federal, state, and local income and other tax and social security
withholding requirements.

At the time the Committee grants an Option, it may, in its sole discretion, grant the Participant
an election to pay all such amounts of required tax withholding, or any part thereof:

     (a) by the delivery to the Company or the Administrative Agent of a number of shares of
Stock then owned by the Participant, the aggregate Fair Market Value of which (as of the
Exercise Date) is not greater than the amount required to be withheld, provided that such
shares have been held by the Participant for a period of at least six months;

     (b) by certification or attestation to the Company or the Administrative Agent of the
Participant’s ownership (as of the Exercise Date) of a number of shares of Stock, the
aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the
amount required to be withheld, provided that such shares of Stock have been owned by the
Participant for a period of at least six months; or

     (c) by the Company or the Administrative Agent withholding from the shares of Stock
otherwise issuable to the Participant upon exercise of the Option, a number of shares of
Stock, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater
than the amount required to be withheld. Any such elections by Participants to have shares
of Stock withheld for this purpose will be subject to the following restrictions:

22

 

          (i) all elections shall be made on or prior to the Exercise Date; and

          (ii) all elections shall be irrevocable.

11.3 Section 16 Requirements. If the Participant is an officer or director of the Company
within the meaning of Section 16 or any successor section(s) of the Exchange Act (“Section 16”),
the Participant must satisfy the requirements of Section 16 and any applicable rules and
regulations thereunder with respect to the use of shares of Stock to satisfy such tax withholding
obligation.

11.4 Restricted Stock and Performance Award Payment and Tax Withholding. Each Restricted
Stock and Performance Award agreement shall provide that, upon payment of any entitlement under
such an Award, the Participant shall make appropriate arrangements with the Company to provide for
the amount of minimum tax and social security withholding required by law, including without
limitation Sections 3102 and 3402 or any successor section(s) of the Internal Revenue Code and
applicable state and local income and other tax and social security laws. The withholding may be
deducted from the Award. Any payment under such an Award shall be made in a proportion of cash and
shares of Stock, determined by the Committee, such that the cash portion shall be sufficient to
cover the withholding amount required by this Section. The cash portion of any payment shall be
based on the Fair Market Value of the shares of Stock on the applicable date of vesting to which
such tax withholding relates. Such cash portion shall be withheld by the Company to satisfy
applicable tax and social security withholding requirements.

Section 12

Change of Control

12.1 In General. In the event of the occurrence of a Change of Control of the Company:

     (a) Without further action by the Committee or the Board,

          (i) all outstanding Options granted on or prior to December 31, 2009 shall
automatically vest so as to make all such Options fully vested and exercisable as
of the date of such Change of Control;

          (ii) all outstanding Options granted on or after January 1, 2010 shall fully vest
upon the Participant’s Involuntary Termination or Voluntary Termination with Cause
occurring on or after a Change of Control. Such newly vested Options shall be
fully exercisable as of the date of the Involuntary Termination or Voluntary
Termination with Cause on or after a Change of Control occurs.

23

 

     (b) Without further action by the Committee or the Board,

          (i) all unvested Restricted Stock Awards and Restricted Stock Units granted on or
prior to December 31, 2009 shall automatically vest. Such newly vested Restricted
Stock Units shall be converted to Stock and the Participant shall be issued the
requisite number of shares, after any withholding under Section 11, as soon as
administratively practicable after the Change of Control occurs, unless the
Participant had elected to defer Restricted Stock Units to the Deferred Delivery
Plan in which case the Participant’s account in the Deferred Delivery Plan shall be
credited with deferred Restricted Stock Units as of the date of the Change of
Control;

          (ii) all unvested Restricted Stock Awards and Restricted Stock Units granted on or
after January 1, 2010 shall fully vest upon the Participant’s Involuntary
Termination or Voluntary Termination with Cause occurring on or after a Change of
Control. Such newly vested Restricted Stock Units shall be converted to Stock and
the Participant shall be issued the requisite number of shares, after any
withholding under Section 11, as soon as administratively practicable after the
Involuntary Termination or Voluntary Termination with Cause on or after a Change of
Control occurs, unless the Participant had elected to defer Restricted Stock Units
to the Deferred Delivery Plan in which case the Participant’s account in the
Deferred Delivery Plan shall be credited with deferred Restricted Stock Units as of
the date of the Involuntary Termination or Voluntary Termination with Cause on or
after the Change of Control occurs.

     (c) Assuming the achievement of a Performance Goal, the entitlement to receive cash and
Stock under any outstanding Performance Award grants shall vest automatically, without
further action by the Committee or the Board, and shall become payable as follows:

          (i) For Performance Awards granted on or prior to December 31, 2009, if such Change
of Control occurs subsequent to the achievement of a Performance Goal, any
remainder of such payout amount shall vest as of the date of such Change of Control
and shall be paid by the Company to the Participant within thirty (30) days of the
date of such Change of Control in the manner set out in subsection 12.1 hereof.

          (ii) For Performance Awards granted on or prior to December 31, 2009, if the
achievement of a Performance Goal occurs subsequent to the date of a Change of
Control, the applicable payout amount shall vest in full for which the Performance
Period has not yet ended and shall be paid by the Company to the Participant within
thirty (30) days after the Performance Goal is reached. The payment will occur
only if the Participant is employed at the time that the Performance Goal is
reached

24

 

or if the Performance Goal is reached after the Participant was terminated for any
reason (or without reason) after the Change of Control.

          (iii) For Performance Awards granted on or after January 1, 2010, if such Change of
Control occurs subsequent to the achievement of a Performance Goal, any remainder
of such payout amount shall vest as of the date of the Participant’s Involuntary
Termination or Voluntary Termination with Cause occurring on or after the date of
such Change of Control and shall be paid by the Company to the Participant within
thirty (30) days of the date of such Involuntary Termination or Voluntary
Termination with Cause which occurs on or after the date of the Change of Control
in the manner set out in subsection 12.1 hereof.

          (iv) For Performance Awards granted on or after January 1, 2010, if the achievement
of a Performance Goal occurs subsequent to the date of a Change of Control, the
applicable payout amount shall vest in full for which the Performance Period has
not yet ended as of the date of the Participant’s Involuntary Termination or
Voluntary Termination with Cause occurring on or after such Change of Control and
shall be paid by the Company to the Participant within thirty (30) days after the
later of (1) the date of the Participant’s Involuntary Termination or Voluntary
Termination with Cause or (2) the date that the Performance Goal is reached. The
payment will occur only if the Participant is employed at the time that the
Performance Goal is reached or if the Performance Goal is reached after the
Participant’s Involuntary Termination or Voluntary Termination with Cause occurring
on or after the Change of Control.

     (d) To the extent that any Award is subject to Internal Revenue Code Section 409A, the
Award shall contain appropriate provisions to comply with Internal Revenue Code Section
409A, which shall supersede the provisions of subsections (a), (b), and (c).

Section 13

Reorganization or Liquidation

In the event that the Company is merged or consolidated with another corporation and the Company is
not the surviving corporation, or if all or substantially all of the assets or more than 20 percent
of the outstanding voting stock of the Company is acquired by any other corporation, business
entity or person, or in case of a reorganization (other than a reorganization under the United
States Bankruptcy Code) or liquidation of the Company, then the Committee, or the board of
directors of any corporation assuming the obligations of the Company, shall, as to the Plan and
outstanding Awards make appropriate provision for the adoption and continuation of the Plan by the
acquiring or successor corporation and for the protection of any holders of such outstanding Awards
by the substitution on an equitable basis of appropriate stock of the Company or of the merged,
consolidated, or

25

 

otherwise reorganized corporation which will be issuable with respect to the Stock. Additionally,
upon the occurrence of such an event and provided that a Performance Goal has occurred, upon
written notice to the Participants, the Committee may accelerate the vesting and payment dates of
the entitlement to receive cash and Stock under outstanding Awards so that all such existing
entitlements are paid prior to any such event. If a Performance Goal has not yet been attained,
the Committee in its discretion may make equitable payment or adjustment.

In its discretion, and on such terms and conditions as it deems appropriate, the Committee may
provide, either by the terms of an agreement applicable to any Award or by resolution adopted prior
to the occurrence of a Change of Control or an event described in this Section 13, that any
outstanding Award (or portion thereof) shall be converted into a right to receive cash, on or as
soon as practicable following the closing date or expiration date of the transaction resulting in
the Change of Control or such event in an amount equal to the highest value of the consideration to
be received in connection with such transaction for one share of Stock, or, if higher, the highest
Fair Market Value of a share of Stock during the thirty (30) consecutive business days immediately
prior to the closing date or expiration date of such transaction, less the per-share Option Price
or grant price of SARs, as applicable to the Award, multiplied by the number of shares subject to
such Award, or the applicable portion thereof.

Section 14

Rights of Employees and Participants

14.1 Employment. Neither anything contained in the Plan or any agreement nor the granting
of any Award under the Plan shall confer upon any Participant any right with respect to the
continuation of his or her employment by the Company or any Affiliate, or interfere in any way with
the right of the Company or any Affiliate, at any time, to terminate such employment or to increase
or decrease the level of the Participant’s compensation from the level in existence at the time of
the Award.

An Eligible Person who has been granted an Award in one year shall not necessarily be entitled to
be granted Awards in subsequent years.

14.2 Non-transferability. Except as otherwise determined at any time by the Committee as
to any Awards other than ISOs, no right or interest of any Participant in an Award granted pursuant
to the Plan shall be assignable or transferable during the lifetime of the Participant, either
voluntarily or involuntarily, or subjected to any lien, directly or indirectly, by operation of
law, or otherwise, including execution, levy, garnishment, attachment, pledge, bankruptcy, or court
order; provided that the Committee may permit further transferability of Awards other than
ISOs, on a general or a specific basis, and may impose conditions and limitations on any permitted
transferability, subject to any applicable Restriction Period; provided further,
however, that no Award may be transferred for value or other consideration without first
obtaining approval thereof by the

26

 

stockholders of the Company. In the event of a Participant’s death, a Participant’s rights and
interests in any Award as set forth in an Award agreement, shall be transferable by testamentary
will or the laws of descent and distribution, and payment of any entitlements due under the Plan
shall be made to the Participant’s legal representatives, heirs, or legatees. If in the opinion of
the Committee a person entitled to payments or to exercise rights with respect to the Plan is
disabled from caring for his or her affairs because of mental condition, physical condition, or
age, payment due such person may be made to, and such rights shall be exercised by, such person’s
guardian, conservator, or other legal personal representative upon furnishing the Committee with
evidence satisfactory to the Committee of such status. If any individual entitled to payment or to
exercise rights with respect to the Plan is a minor, the Committee shall cause the payment to be
made to (or the right to be exercised by) the custodian or representative who, under the state law
of the minor’s domicile, is authorized to act on behalf of the minor or is authorized to receive
funds on behalf of the minor. With respect to those Awards, if any, that are permitted to be
transferred to another individual, references in the Plan to exercise or payment related to such
Awards by or to the Participant shall be deemed to include, as determined by the Committee, the
Participant’s permitted transferee. A Participant’s unexercised Option or SAR, or amounts due but
remaining unpaid to such Participant, at the Participant’s death, shall be exercised or paid as
designated by the Participant by will or by the laws of descent and distribution. In the event any
Award is exercised by or otherwise paid to the executors, administrators, heirs or distributees of
the estate of a deceased Participant, or the transferee of an Award, in any such case, pursuant to
the terms and conditions of the Plan and the applicable Award agreement and in accordance with such
terms and conditions as may be specified from time to time by the Committee, the Company shall be
under no obligation to issue shares of Stock thereunder unless and until the Company is satisfied,
as determined in the discretion of the Committee, that the person or persons exercising such Award,
or to receive such payment, are the duly appointed legal representative of the deceased
Participant’s estate or the proper legatees or distributees thereof, or the valid transferee of
such Award, as applicable. Any purported assignment, transfer or encumbrance of an Award that does
not comply with this Section 14.2 shall be void and unenforceable against the Company.

14.3 Noncompliance with Internal Revenue Code Section 409A. If an Award is subject to the
requirements of Internal Revenue Code Section 409A, to the extent that the Company or an Affiliate
takes any action that causes a violation of Internal Revenue Code Section 409A or fails to take
reasonable actions required to comply with Internal Revenue Code Section 409A, in each case as
determined by the Committee, the Company shall pay an additional amount to the Participant (or
beneficiary) equal to the additional income tax imposed pursuant to Internal Revenue Code Section
409A on the Participant as a result of such violation, plus any taxes imposed on this additional
payment.

27

 

Section 15

Other Employee Benefits

The amount of any income deemed to be received by a Participant as a result of the payment under an
Award or exercise shall not constitute “earnings” or “compensation” with respect to which any other
employee benefits of such Participant are determined, including without limitation benefits under
any pension, profit sharing, life insurance, or salary continuation plan.

Section 16

Amendment, Modification, and Termination

The Committee or the Board may at any time terminate, and from time to time may amend or modify the
Plan, and the Committee or the Board may, to the extent permitted by the Plan, from time to time
amend or modify the terms of any Award theretofore granted, including any Award agreement, in each
case, retroactively or prospectively; provided, however, that no amendment or
modification of the Plan may become effective without approval of the amendment or modification by
the Company’s stockholders if stockholder approval is required to enable the Plan to satisfy an
applicable statutory or regulatory requirements, unless the Company, on the advice of outside
counsel, determines that stockholder approval is not necessary.

Notwithstanding any other provision of this Plan, no amendment, modification, or termination of the
Plan or any Award shall adversely affect the previously accrued material rights or benefits of a
Participant under any outstanding Award theretofore awarded under the Plan, without the consent of
such Participant holding such Award, except to the extent necessary to avoid a violation of
Internal Revenue Code Section 409A or the Board or the Committee determines, on advice of outside
counsel or the Company’s independent accountants, that such amendment or modification is required
for the Company, the Plan, or the Award to satisfy, comply with, or meet the requirements of any
law, regulation, listing rule, or accounting standard applicable to the Company.

The Committee shall have the authority to adopt (without the necessity for further stockholder
approval) such modifications, procedures, and subplans as may be necessary or desirable to comply
with the provisions of the laws (including, but not limited to, tax laws and regulations) of
countries other than the United States in which the Company may operate, so as to assure the
viability of the benefits of the Plan to Participants employed in such countries.

28

 

Section 17

Requirements of Law

17.1 Requirements of Law. The issuance of Stock and the payment of cash pursuant to the
Plan shall be subject to all applicable laws, rules, and regulations, including applicable federal
and state securities laws. The Company may require a Participant, as a condition of receiving
payment under an Award, to give written assurances in substance and form satisfactory to the
Company and its counsel to such effect as the Company deems necessary or appropriate in order to
comply with federal and applicable state securities laws.

17.2 Section 16 Requirements. If a Participant is an officer or director of the Company
within the meaning of Section 16 of the Exchange Act, Awards granted hereunder shall be subject to
all conditions required under Rule 16b-3, or any successor rule(s) promulgated under the Exchange
Act, to qualify the Award for any exemption from the provisions of Section 16 available under such
Rule. Such conditions are hereby incorporated herein by reference and shall be set forth in the
agreement with the Participant, which describes the Award.

17.3 Governing Law. The Plan and all agreements hereunder shall be construed in accordance
with and governed by the laws of the State of Texas.

Section 18

Duration of the Plan

The Plan shall terminate on the ten year anniversary of the Effective Date. No grants shall be
awarded after such termination; however, the terms of the Plan shall continue to apply to all
Awards outstanding when the Plan terminates.

Dated: July 13, 2010; Effective December 31, 2009.

	 	 	 	 	 	 	 	 	 

	ATTEST:  	 	APACHE CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	Cheri L. Peper

	 	 	 	By:
	 	Margery M. Harris	 	 
	 

	 	 	 	 	 	 	 	 
	Cheri L. Peper

	 	 	 	 	 	Margery M. Harris	 	 
	Corporate Secretary

	 	 	 	 	 	Vice President, Human Resources	 	 

29exv10w5

Exhibit 10.5

APACHE CORPORATION

INCOME CONTINUANCE PLAN

(As Amended and Restated Effective as of January 1, 2009)

The Company desires to provide income continuance benefits to the following groups of its employees
in case there is a change of control affecting the Company, for the reasons indicated:

     (i) Those 40 years of age and older, a protected class under federal and state
age discrimination laws, because it has been determined that they typically have
more difficulty in finding new employment than younger persons;

     (ii) Those who have been continuously employed by the Company for 10 years or
more, because they have demonstrated their personal commitment to the success of the
Company;

     (iii) Those whose special skills, experience or potential justify their
inclusion in order to acquire or retain their services; and

     (iv) Those who are officers of the Company.

The Company adopted this Plan on January 10, 1986 in order to protect the income and other employee
benefits of the Company’s Employees and in order to induce the Employees to remain in the employ of
the Company for the ultimate benefit of the Company and its shareholders.

The Plan is intended to create a binding legal relationship between the Company and each Employee,
and a copy of the Plan together with applicable conditions will be given to each Employee. It is
also intended that this Plan comply with the requirements of Code §409A, and it shall be
interpreted in this light.

Section 1. Definitions.

     (a) “Benefit Period” shall mean a period of time following an Employee’s Termination Date. An
Employee’s Benefit Period is determined on his Termination Date and is equal to half the number of
months of his continuous service with the Company on that date, up to a maximum Benefit Period of
24 months, with the following exceptions. The Benefit Period for an officer of the Company is 24
months. The Benefit Period may be extended to a maximum of 24 months, if the Company concludes the
extension is reasonably required in order to induce an individual to accept employment or in order
to retain an existing employee.

     (b) “Change of Control” shall mean the event occurring when a person, partnership or
corporation together with all persons, partnerships or corporations acting in concert with each
person, partnership or corporation, or any or all of them, acquires

 

 

more than 20% of the Company’s
outstanding voting securities; provided that a Change of Control shall not occur if such persons,
partnerships or corporations acquiring
more than 20% of the Company’s voting securities is
solicited to do so by the Company’s board of directors, upon its own initiative, and such persons,
partnerships or corporations have not previously proposed to acquire more than 20% of the Company’s
voting securities in an unsolicited offer made either to the Company’s board of directors or
directly to the stockholders of the Company.

     (c) “COBRA Premium” shall mean 100% of the applicable premium, as defined in Code
§4980B(f)(4).

     (d) “Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor.
References to a particular section of the Code shall also refer to any successor section.

     (e) “Committee” shall mean the administrative committee provided for in section 4.

     (f) “Company” shall mean Apache Corporation, a Delaware corporation, whose headquarters is in
Houston, Texas, and, unless the context indicates otherwise, its wholly-owned subsidiaries and
affiliates. “Affiliate” shall mean any and all entities that, together with Apache, would not
cause any portion of this Plan to be treated as a multiple employer welfare arrangement pursuant to
ERISA §3(40).

     (g) “Effective Date” shall mean the date on which a Change of Control takes place.

     (h) “Employee” shall mean each regular exempt or non-exempt employee of the Company on the
Effective Date or the Termination Date who:

     (i) is 40 years of age or older; or

     (ii) has been continuously employed by the Company for 10 years or more; or

     (iii) has been designated by the Board of Directors as having special skills,
experience or potential which warrant extension of the Plan to them; or

     (iv) is an officer of the Company.

     (i) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     (j) “Monthly Compensation” shall mean one-twelfth of the total of all compensation, including
wages, salary, and any other incentive compensation, bonuses,
commissions and non-salary and non-wage cash compensation, that was paid as consideration for
the Employee’s services during the year immediately preceding the

2

 

Termination Date, or that would
have been so paid at the Employee’s usual rate of compensation if the Employee had worked a full
year.

     (k) “Participant” shall mean an Employee who has become entitled to the benefits under the
Plan pursuant to section 2.

     (l) “Plan” shall mean the Income Continuance Plan of the Company, as amended.

     (m) “Separation from Service and Separate from Service” shall mean a separation from service
within the meaning of Code §409A(a)(2)(A)(i). A Participant who has a Separation from Service
“Separates from Service.” For purposes of this Plan, a Separation from Service occurs when the
Company and the Participant both expect that the Participant’s level of services to permanently
drop by more than 50% from his average level of services during the preceding 36 months (or, if
less, the duration of his employment with the Company).

     (n) “Specified Employee” shall have the same meaning as in Code §409A(a)(2)(B)(i) and is
determined using the default rules contained in the regulations and other guidance of general
applicability issued pursuant to Code §409A.

     (o) “Termination Date” shall mean:

     (i) If an Employee’s Separation from Service is involuntary, his Termination
Date is the date on which an authorized written or oral statement is conveyed to the
Employee indicating that the Employee’s employment is terminated; or

     (ii) If an Employee’s Separation from Service in voluntary, his Termination
Date is the date on which the Employee delivers a written notice to the Company or
its successor advising of termination of employment.

Section 2. Eligibility for Benefits.

The benefits described in this Plan shall come into effect only if the Employee is “terminated” on
or within two years after the Change of Control. For this purpose, an Employee is considered
“terminated” in the following circumstances.

     (a) Involuntary Termination. Each of the following three conditions is satisfied.

          (i) The Company or its successor terminates an Employee for any reason on or after the Change
of Control.

          (ii) The termination constitutes a Separation from Service.

          (iii) The termination does not result from an act of the Covered Employee that (A) constitutes
common-law fraud, a felony, or a gross malfeasance of

3

 

duty, and (B) is materially detrimental to
the best interests of the Company or its successor.

     (b) Voluntary Termination with Cause. Either the facts and circumstances indicate
that each of the following five conditions is satisfied or that the Participant’s termination is
properly characterized as involuntary pursuant Treasury Regulation §1.409A-1(n)(2), other IRS
guidance of general applicability, or an IRS private letter ruling applicable to the Participant.

          (i) The Employee Separates from Service of his own volition.

          (ii) The Employee’s Separation from Service occurs during the 24-month period beginning on the
date of the Change of Control.

          (iii) One or more of the following conditions occurs without the Employee’s consent on or
after the Change of Control:

               (A) There is a material diminution in the Employee’s base compensation, compared to his rate
of base compensation on the date of the Change of Control.

               (B) There is a material diminution in the Employee’s authority, duties, or responsibilities.

               (C) There is a material diminution in the authority, duties, or responsibilities of the
Employee’s supervisor, such as a requirement that the Employee (or his supervisor) report to a
corporate officer or employee instead of reporting directly to the board of directors.

               (D) There is a material diminution in the budget over which the Employee retains authority.

               (E) There is a material change in the geographic location at which the Employee must perform
his services, including, for example, the assignment of the Employee to a regular workplace that is
more than 50 miles from his regular workplace on the date of the Change of Control.

          (iv) The Employee must notify the Company of the existence of one or more adverse conditions
specified in paragraph (iii) within 90 days of the initial existence of the adverse condition. The
notice must be provided in writing to Apache’s Vice President, Human Resources or his delegate.
The notice may be provided by personal delivery or it may be sent by email, inter-office mail,
regular mail (whether or not certified), fax, or any similar method. Apache’s Vice President,
Human Resources
or his delegate shall acknowledge receipt of the notice within 5 business days; the acknowledgement
shall be sent to the Covered Employee by certified mail.

4

 

          (v) The Company does not remedy the adverse condition within 30 days of being notified of the
adverse condition.

Section 3. Benefits.

     (a) Income Continuation.

          (i) Timing of Payments, General. Except as provided for Specified Employees in
paragraph (ii) or as reduced in paragraph (iii), each month the Participant will be paid his
Monthly Compensation. The first payment will be made on the first 15th of the month that occurs
after the Participant’s Separation from Service or as soon thereafter as is administratively
practicable, and subsequent payments will be made on the 15th of each succeeding month. The number
of payments the Participant receives is equal to the number of months in his Benefit Period.

          (ii) Exceptions for Specified Employees. This paragraph applies to the payments to a
Participant who is a Specified Employee. The Specified Employee shall be paid as described in
subsection (a) with the following exceptions for his first six payments.

               (A) No Deferral of Compensation. The payments under this Plan generally cease to be
subject to a substantial risk of forfeiture when the Participant Separates from Service. If the
payments cease to be subject to a substantial risk of forfeiture in one year and the Participant
Separates from Service on or before October 15 of that year, the first six payments will be made at
the times specified in subsection (a). If the payments cease to be subject to a substantial risk
of forfeiture in one year and the Participant Separates from Service after October 15 of that year,
regular payments will be made at the times specified in subsection (a) through February 15 in the
year after the Separation from Service and the remainder of the first six payments will be paid on
March 15 (or if March 15 is not a business day, the payment shall be made on the immediately
preceding business day).

                    For example, if the Participant terminates on December 31, he will receive the regular
payments on January 15 and February 15, and will receive four months’ worth of payments on March
15. His next payment will be on July 15.

                    For purposes of Treasury Regulation §§ 1.409A-1(b)(4)(i)(F) and 1.409A-2(b)(2), each payment
from this Plan is considered a separate payment.

               (B) Limited Payments during First Six Months. This subparagraph applies only if
subparagraph (A) does not apply to the Specified Employee, such as when his benefits cease to be
subject to a substantial risk of forfeiture in a year earlier than the year of his Separation from
Service. Each month, the sum of (1) the monthly payment under this paragraph (ii), (2) the amount
of any
gross-up under paragraphs (b)(iii) or (b)(iv), and (3) any payment from any other separation pay
plan (other than those described in Treasury Regulation §1.409A-1(b)(9)(ii), (iv), or (v)) is
limited to the lesser of one-third of the Participant’s annual

5

 

compensation for the year preceding
the year in which he Separated from Service or one-third the of the annual limit in effect under
Code §401(a)(17) for the calendar year containing the Separation from Service. For this purpose,
“annual compensation” means the Participant’s annualized compensation based upon the annual rate of
pay for services provided to Apache for the year preceding the year in which the Participant
Separated from Service, adjusted for any increase during that year that was expected to continue
indefinitely had the Participant not Separated from Service. If any monthly payments are limited
by the foregoing, the reductions in each payment shall be aggregated and that exact sum shall be
paid to the Specified Employee six months after his Separation from Service.

               (C) Reduction in Payments. The payments described in this subsection shall be reduced
by the amount of any severance pay required by foreign law.

     (b) Continued Health Coverage.

          (i) General. The Participant shall continue to be covered by the Company’s medical
plan, dental plan, vision plan, and employee assistance program after Separating from Service for
the number of months in his Benefit Period. The Participant and his family members may also be
able to continue their coverage even after the Benefit Period ends, pursuant to the continuation
coverage rules under those plans. The benefits offered during the Benefit Period shall contain at
least one alternative that is at least as valuable as the benefits offered immediately before the
Change of Control. In addition, the Participant shall have the same coverage options as are
available to current employees of the Company. The Participant may change his coverage from one
alternative to another, and may add or drop coverage for his dependents or spouse, subject to the
same rules as a current employee of the Company.

          (ii) Premiums. The Company may not charge a Participant for coverage under the
employee assistance program. The Company may charge a premium for coverage under the medical,
dental, and vision plans, but the maximum premium for the alternative(s) that are at least as
valuable as the benefits offered immediately before the Change of Control shall not exceed what was
charged under the schedule of premiums that was in effect immediately before the Change of Control.
For example, if the premium was $64 per month for employee-only coverage and $200 per month for
family coverage on the date of the Change of Control, and a male Participant marries a woman with
children two months into their 24-month Benefit Period, their premium will be $200 per month for
next 22 months for coverage that is at least as valuable as the family coverage benefits
immediately before the Change of Control.

          (iii) Cafeteria Plan. Except as provided in paragraph (iv), the Company shall ensure
that it maintains a cafeteria plan allows each Participant in this Plan to reduce their pay
described in subsection (a) to pay their share of the premiums for medical, dental, and vision
coverage generally on a pre-tax basis. If the cafeteria plan

6

 

fails one of its nondiscrimination
tests, a highly paid Participant’s supposedly pre-tax deductions from his pay will generally be
included in his taxable income. In this case, the Company shall pay the Participant a gross-up so
that the highly paid ICP participant’s after-tax income equals what it would have if his deduction
from his pay were made on a pre-tax basis.

          (iv) After-Tax Premiums. Each year, beginning with the year containing the Change of
Control, the Committee shall determine whether each self-funded health plan is discriminatory. If
a self-funded plan is discriminatory, each Participant who was a highly compensated individual
(within the meaning of Code §105(h)(5)) shall pay the COBRA Premium for coverage with after-tax
deductions from his pay described in subsection (a), and for purposes of Code §105 a separate
self-funded health plan shall be considered to have been established for such highly compensated
individuals for that year. If sufficient deductions were not properly withheld, the Participant is
responsible for reimbursing the Company for the underwithholding. The Company shall pay a gross-up
to each Participant who was a highly compensated individual (within the meaning of Code §105(h)(5))
so that his after-tax income equals what it would have if he only had to pay the amount described
in paragraph (ii) for coverage and this amount was withheld on a pre-tax basis from his pay. In
addition, the Committee may project during a year whether a self-funded plan will be
discriminatory, and pay a gross-up to each Participant who is expected to be a highly compensated
individual (within the meaning of Code §105(h)(5)) for that year so that his after-tax income
equals what it would have if he only had to pay the amount described in paragraph (ii) for coverage
and this amount were withheld on a pre-tax basis from his pay.

          (v) Gross-Up. If a Participant receives a gross-up under paragraph (iii) or (iv), the
gross-up shall be paid as quickly as possible and no later than end of the calendar year following
the calendar year in which the Participant’s right to the gross-up arose. However, if the gross-up
is due to a tax audit or litigation addressing the existence or amount of a tax liability, the
gross-up shall be paid as soon as administratively convenient after the litigation or audit is
completed, and no later than the end of the calendar year following the calendar year in which the
audit is completed or there is a final and non-appealable settlement or other resolution of the
litigation.

     (c) Continued Life Insurance. The Company shall continue to provide term-life
insurance for each Participant until (i) the Participant stops paying the premiums or (ii) the
Benefit Period expires. The amount of the available coverage shall be at least as much as was
provided to the Participant on the date of the Change of Control. The Participant-paid portion of
the premiums shall be no larger than the premiums charged to current employees of the Company who
perform the same types of tasks, at the same level, as the Participant performed immediately before
the Change of Control.

     (d) Legal Expenses

          (i) Expenses That Are Not Subject to Code §409A. The Plan shall reimburse the
Participant (or, if the Participant has died, his beneficiary, spouse, and

7

 

dependents —
collectively, the “claimant” in this subsection) for all expenses, including attorneys’ fees, that
the claimant incurs before the end of the calendar year containing the second anniversary of the
Participant’s Separation from Service and that are incurred in enforcing the claimant’s rights
against the Company or its successor under this Plan, regardless of the whether the action is
successful. The Plan shall reimburse the claimant as soon as practicable and no later than the end
of the calendar year containing the third anniversary of the Participant’s Separation from Service.

          (ii) Expenses That Are Subject to Code §409A. The Plan shall reimburse the claimant
for all expenses, including attorneys’ fees, that he incurs after the calendar year containing the
second anniversary of the Participant’s Separation from Service and before the third anniversary of
the Participant’s death and that are incurred in enforcing the claimant’s rights against the
Company or its successor under this Plan, regardless of the whether the action is successful.

     (e) Noncompliance with Code §409A. To the extent that the Company takes any action
that causes a violation of Code §409A or fails to take reasonable actions required to comply with
Code §409A, the Company shall pay an additional amount (the “gross-up”) to the individual(s) who
are subject to the penalty tax under Code §409A(a)(1) that is sufficient to put him in the same
after-tax position he would have been in had there been no violation of Code §409A. The Company
shall not pay a gross-up if the cause of the violation of Code §409A is because the recipient
failed to take reasonable actions (such as failing to timely provide the information required for
tax withholding or failing to timely provide other information reasonably requested by the
Committee — with the result that the delay in payment violates Code §409A). Any gross-up will be
made as soon as administratively convenient after the Committee determines the gross-up is owed,
and no later than the end of the calendar year immediately following the calendar year in which the
additional taxes are remitted. However, if the gross-up is due to a tax audit or litigation
addressing the existence or amount of a tax liability, the gross-up will be paid as soon as
administratively convenient after the litigation or audit is completed, and no later than the end
of the calendar year following the calendar year in which the audit is completed or there is a
final and non-appealable settlement or other resolution of the litigation.

     (f) Death of Participant

          (i) Payments to Beneficiary. If the Participant dies during the Benefit Period, his
Beneficiary shall be paid all remaining payments under subsection (a), (d), and (e), on the same
schedule as they would have been paid to the Participant had he lived. See subsection (g) for
possible delays. The amount paid to the Beneficiary will be reduced by the cost of health coverage
of the surviving spouse and dependents. If
the Beneficiary dies before receiving all such payments, any remaining payments shall be paid to
the Beneficiary’s estate.

          (ii) Health Coverage. If the Participant dies during the Benefit Period, his spouse
and dependents shall continue to receive the benefits identified in

8

 

subsection (b), at the price
specified in subsection (b), for the remaining duration of the Benefit Period. A surviving spouse
or dependent who is not covered by such plans when the Participant dies may elect to be covered by
such plans whenever the Participant could have elected coverage for them had he not died. Any
gross-up under subsection (b)(iii) or (b)(iv) shall be made the surviving spouse, if any, and
otherwise to the dependents. (See section 9 for payments to a minor.)

          (iii) Beneficiary Designation. Each Participant shall designate one or more persons,
trusts, or other entities as his Beneficiary to receive any amounts identified in paragraph (i).
In the absence of an effective beneficiary designation as to part or all of a Participant’s
interest in the Plan, such amount will be distributed to the Participant’s surviving spouse, if
any, otherwise to the personal representative of the Participant’s estate.

          (iv) Special Rules for Spouses. A beneficiary designation may be changed by the
Participant at any time and without the consent of any previously designated Beneficiary. However,
if the Participant is married, his spouse will be his Beneficiary unless such spouse has consented
to the designation of a different Beneficiary. To be effective, the spouse’s consent must be in
writing, witnessed by a notary public, and filed with the Committee. If the Participant has
designated his spouse as a primary or contingent Beneficiary, and the Participant and spouse later
divorce (or their marriage is annulled), then the former spouse will be treated as having
pre-deceased the Participant for purposes of interpreting a beneficiary designation that was
completed prior to the divorce or annulment; this provision will apply only if the Committee is
informed of the divorce or annulment before payment to the former spouse is authorized.

          (v) Disclaiming. Any individual or legal entity who is a Beneficiary may disclaim all
or any portion of his interest in the Plan, provided that the disclaimer satisfies the requirements
of Code §2518(b) and applicable state law. The legal guardian of a minor or legally incompetent
person may disclaim for such person. The personal representative (or the individual or legal
entity acting in the capacity of the personal representative according to applicable state law) may
disclaim on behalf of a Beneficiary who has died. The amount disclaimed will be distributed as if
the disclaimant had predeceased the individual whose death caused the disclaimant to become a
Beneficiary.

     (g) Administrative Delays in Payments. The Committee may delay any payment from this
Plan for as short a period as is administratively necessary. For example, a delay may be imposed
upon all payments from the Plan when there is a change of recordkeeper or trustee, and a delay may
be imposed on payments to any
recipient until they have provided the information needed for tax withholding and tax reporting, as
well as any other information reasonably requested by the Committee. However, no delay may last
long enough for the Plan to be considered a “pension plan” within the meaning of ERISA §3(2).

9

 

     (h) Technical Note. If a Participant or Beneficiary has a taxable year different from
the calendar year, the deadlines under Article II shall be adjusted to the latest date, as
specified in IRS guidance of general applicability, that would permit compliance with Code §409A.

     (i) Cash Payment and Withholding. All payments from the Plan will be made in cash.
The Plan will withhold any taxes or other amounts that it is required to withhold pursuant to any
applicable law. The Plan will also withhold any amounts (such as medical premiums) that the
recipient authorizes the Plan or the Company to withhold.

Section 4. Administration

     (a) Composition of the Committee.

          (i) Current. As of January 1, 2009, the Committee is comprised of the members of the
Retirement Plan Advisory Committee.

          (ii) Before a Change of Control. Before a Change of Control, the board of directors
of Apache shall appoint an administrative Committee consisting of no fewer than three individuals
who may be, but need not be, Participants, officers, directors, or employees of the Company.
Apache’s board of directors may remove Committee members at will. In the absence of any Committee
members, Apache shall become the sole Committee member.

          (iii) After a Change of Control. This paragraph applies on and after the date of a
Change of Control. The only individuals who are able to serve on the Committee after the date of
the Change of Control are those who are not then employed by Apache, its successor, or any related
legal entities. No Committee members may be added on or after the day of the Change of Control,
except that, if the Committee is comprised solely of individuals, (A) the Committee may appoint a
legal entity as a Committee member, who may generally resign by giving 60 days’ notice to the other
Committee members, and (B) if the number of Committee members drops below three, the remaining
member(s) may not resign until having appointed a legal entity or another individual as a Committee
member. If all Committee members leave the Committee (if, for example, all Committee members die
before the last one appoints a new Committee member or if the sole Committee member is a legal
entity that goes out of business), the Committee shall automatically consist of the three
Participants with the largest monthly payments from the Plan who are not then employed by Apache,
its successor, or any related legal entities.

          (iv) Plan Administrator. The Committee is the Plan’s “administrator” within the
meaning of ERISA §3(16)(A). The sole named fiduciaries of the Plan are the Committee and the
trustees of any trusts from which Plan benefits may be paid.

     (b) Committee Duties. The Committee shall administer the Plan and shall have all
discretion and powers necessary for that purpose, including, but not by way of

10

 

limitation, full
discretion and power to interpret the Plan, to determine the eligibility, status, and rights of all
persons under the Plan and, in general, to decide any dispute and all questions arising in
connection with the Plan. The Committee shall direct the Company, the trustee of any rabbi trust
established to pay Plan benefits, or both, as the case may be, concerning payments in accordance
with the provisions of the Plan. The Committee shall maintain all Plan records except records of
any trust. The Committee shall publish, file, or disclose — or cause to be published, filed, or
disclosed — all reports and disclosures required by federal or state laws. The Committee may
authorize one or more of its members or agents to sign instructions, notices, and determinations on
its behalf.

     (c) Organization of Committee. The Committee shall adopt such rules as it deems
desirable for the conduct of its affairs and for the administration of the Plan. It may appoint
agents (who need not be members of the Committee) to whom it may delegate such powers as it deems
appropriate, except that any dispute shall be determined by the Committee. The Committee may make
its determinations with or without meetings. It may authorize one or more of its members or agents
to sign instructions, notices, and determinations on its behalf. If a Committee decision or action
affects a relatively small percentage of Plan Participants including a Committee member, such
Committee member will not participate in the Committee decision or action. The action of a
majority of the disinterested Committee members constitutes the action of the Committee.

     (d) Indemnification. The Committee and all of the agents and representatives of the
Committee shall be indemnified and saved harmless by the Company against any claims, and the
expenses of defending against such claims, resulting from any action or conduct relating to the
administration of the Plan, except claims judicially determined to be attributable to gross
negligence or willful misconduct.

     (e) Agent for Process. Apache’s Vice President, General Counsel, and Secretary shall
be the agents of the Plan for service of all process.

     (f) Determination of Committee Final. The decisions made by the Committee are final
and conclusive on all persons.

     (g) No Bonding. Neither the Committee nor any committee member is required to give
any bond or other security in any jurisdiction in connection with the administration of the Plan,
unless Apache determines otherwise before a Change of Control or any applicable federal or state
law so requires.

Section 5. Terms of Plan; Termination.

This Plan is terminable at any time by the majority vote of the Board of Directors of the Company
or its successor upon six months’ prior written notice delivered to all Employees, provided that
the Company or its successor shall be prohibited from delivering notice of termination of the Plan
after or within six months prior to a Change of Control.

11

 

Section 6. Amendment.

This Plan can be amended at any time by the Company on the following conditions:

     (a) No amendment shall be adopted by the Company or its successor subsequent to the Effective
Date, except to alleviate any material negative tax consequences to one or more actual or expected
recipients of Plan benefits.

     (b) Immediately after adopting any amendment, the Company shall provide to Employees a written
statement of this Plan, as amended, and no amendments shall be effective as to any Employee, until
the Employee has received the statement. An Employee will be deemed to have received the written
statement of the Plan if it is delivered in person or after 48 hours of dispatch by mail or other
suitable means of delivery to the last known address of the Employee.

Section 7. Other Plans and Contracts.

It is the intention of the Company that the benefits provided for in this Plan are in addition to,
and not in lieu of any other rights, privileges or benefits to which the Employee may now or
hereafter be entitled under any contract, arrangement, plan or other policy applicable to any
Employee with the Company or any other employer.

Section 8. Claims Procedure

     (a) General. Each claim for benefits will be processed in accordance with the
procedures established by the Committee. The procedures will comply with the guidelines specified
in this section. Claims for reimbursement under the medical, dental, and vision plans, the
employee assistance program, and claims for life insurance shall be determined under the procedures
specified in those plans; however, this Plan’s procedures shall determine eligibility for continued
participation in such plans. The Committee may delegate its duties under this section.

     (b) Representatives. A claimant may appoint a representative to act on his behalf.
The Plan will only recognize a representative if the Plan has received a written authorization
signed by the claimant and on a form prescribed by the Committee, with the following exceptions.
The Plan will recognize a claimant’s legal representative, once the Plan is provided with
documentation of such representation. If the claimant is a minor child, the Plan will recognize
the claimant’s parent or guardian as the claimant’s representative. Once an authorized
representative is appointed, the Plan will direct all information and notification regarding the
claim to the authorized representative and the
claimant will be copied on all notifications regarding decisions, unless the claimant provides
specific written direction otherwise.

     (c) Extension of Deadlines. The claimant may agree to an extension of any deadline
that is mentioned in this section that applies to the Plan. The Committee or the

12

 

relevant
decision-maker may agree to an extension of any deadline that is mentioned in this section that
applies to the claimant.

     (d) Fees. The Plan may not charge any fees to a claimant for utilizing the claims
process described in this section.

     (e) Filing a Claim. A claim is made when the claimant files a claim in accordance
with the procedures specified by the Committee. Any communication regarding benefits that is not
made in accordance with the Plan’s procedures will not be treated as a claim.

     (f) Initial Claims Decision. The Plan will decide a claim within a reasonable time up
to 90 days after receiving the claim. The Plan will have a 90-day extension, but only if the Plan
is unable to decide within 90 days for reasons beyond its control, the Plan notifies the claimant
of the special circumstances requiring the need for the extension by the 90th day after receiving
the claim, and the Plan notifies the claimant of the date by which the Plan expects to make a
decision.

     (g) Notification of Initial Decision. The Plan will provide the claimant with written
notification of the Plan’s full or partial denial of a claim, reduction of a previously approved
benefit, or termination of a benefit. The notification will include a statement of the reason(s)
for the decision; references to the plan provision(s) on which the decision was based; a
description of any additional material or information necessary to perfect the claim and why such
information is needed; a description of the procedures and deadlines for appeal; a description of
the right to obtain information about the appeal procedures; and a statement of the claimant’s
right to sue.

     (h) Appeal. The claimant may appeal any adverse or partially adverse decision. To
appeal, the claimant must follow the procedures specified by the Committee. The appeal must be
filed within 60 days of the date the claimant received notice of the initial decision. If the
appeal is not timely and properly filed, the initial decision will be the final decision of the
Plan. The claimant may submit documents, written comments, and other information in support of the
appeal. The claimant will be given reasonable access at no charge to, and copies of, all
documents, records, and other relevant information.

     (i) Appellate Decision. The Plan will decide the appeal of a claim within a
reasonable time of no more than 60 days from the date the Plan receives the claimant’s appeal. The
60-day deadline will be extended by an additional 60 days, but only if the Committee determines
that special circumstances require an extension, the Plan notifies the claimant of the special
circumstances requiring the need for the extension
by the 60th day after receiving the appeal, and the Plan notifies the claimant of the date by which
the Plan expects to make a decision. If an appeal is missing any information from the claimant
that is needed to decide the appeal, the Plan will notify the claimant of the missing information
and grant the claimant a reasonable period to provide the missing information. If the missing
information is not timely provided, the Plan will deny

13

 

the claim. If the missing information is
timely provided, the 60-day deadline (or 120-day deadline with the extension) for the Plan to make
its decision will be increased by the length of time between the date the Plan requested the
missing information and the date the Plan received it.

     (j) Notification of Decision. The Plan will provide the claimant with written
notification of the Plan’s appellate decision (positive or adverse). The notification of any
adverse or partially adverse decision must include a statement of the reason(s) for the decision;
reference to the plan provision(s) on which the decision was based; a description of the procedures
and deadlines for a second appeal, if any; a description of the right to obtain information about
the second-appeal procedures; a statement of the claimant’s right to sue; and a statement that the
claimant is entitled to receive, free of charge and upon request, reasonable access to and copies
of all documents, records, and other information relevant to the claim.

     (k) Arbitration. The claimant and the Plan may voluntarily enter into a binding
arbitration to resolve any claim, in which case (i) the Plan and/or Company pays all the
arbitration fees and costs, (ii) the Plan agrees that any statute of limitations or other defense
based on timeliness is tolled during the time between the date the claimant completes and submits
the forms that begin the arbitration process and the date of the arbitrator’s decision (which will
only apply if the claimant files suit after receiving an adverse decision from the arbitrator), and
(iii) the Plan provides the claimant, upon request, sufficient information relating to the
arbitration to enable the claimant to make an informed judgment about whether to submit the dispute
to arbitration, including a statement that the claimant’s decision to choose or not choose
arbitration will have no effect on the claimant’s rights to any other benefits under the Plan, and
information about the applicable rules, the claimant’s right to representation, the process for
selecting the arbitrator, and the circumstances, if any, that may affect the arbitrator’s
impartiality.

Section 9. Distributions Due Infants or Incompetents

If any person entitled to a distribution under the Plan is an infant, or if the Committee
determines that any such person is incompetent by reason of physical or mental disability, whether
or not legally adjudicated as incompetent, the Committee has the power to cause the distributions
becoming due to such person to be made to another for his benefit, without responsibility of the
Committee to see to the application of such distributions. Distributions made pursuant to such
power will operate as a complete discharge of the Company, the trustee, the Plan, and the
Committee.

Section 10. Use and Form of Words

When any words are used herein in the masculine gender, they are to be construed as though they
were also used in the feminine gender in all cases where they would so apply, and vice versa.
Whenever any words are used herein in the singular form, they

14

 

are to be construed as though they were also used in the plural form in all cases where they would so apply, and vice versa.

Section 11. Inalienability of Benefits

Except for disclaimers under section 3(f)(v), no Participant or Beneficiary has the right to
assign, alienate, pledge, transfer, hypothecate, encumber, or anticipate his interest in any
benefits under the Plan, nor are the benefits subject to garnishment by any creditor, nor may the
benefits under the Plan be levied upon or attached. The preceding sentence does not apply to the
enforcement of a federal tax levy made pursuant to Code §6331, the collection by the United States
on a judgment resulting from an unpaid tax assessment, or any debt or obligation that is permitted
to be collected from the Plan under federal law (such as the Federal Debt Collection Procedures Act
of 1977).

Section 12. Applicable Law.

This Plan shall be interpreted to have been made in the State of Texas and the laws of the State of
Texas shall control.

Dated July 14, 2010, effective January 1, 2009.

	 	 	 	 	 	 	 	 	 

	 

	 	 
	 	APACHE CORPORATION 	 	 
	 
	 	 	 	 	 	 	 	 
	ATTEST:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Cheri L. Peper
 

Cheri L. Peper 

Corporate Secretary

	 	 	 	By:
	 	/s/ Margery M. Harris
 

Margery M. Harris 

Vice President
	 	 

15

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