Document:

exv10w6

Exhibit 10.6

APACHE CORPORATION

DEFERRED DELIVERY PLAN

As Amended and Restated July 13, 2010; Effective as of January 1, 2009

 

 

APACHE CORPORATION

DEFERRED DELIVERY PLAN

Apache established this Plan effective as of February 10, 2000. Apache is now amending and
restating the Plan in its entirety effective as of January 1, 2009, except as otherwise provided
herein.

Apache intends for this Plan to provide a select group of management or highly compensated
employees of the Company with the opportunity to defer income, and, in conjunction with the 2007
Omnibus Equity Compensation Plan, to be appropriately rewarded when Apache’s shares increase in
value, to induce such employees to remain in the employ of the Company, and to reward those
employees for their valuable services to the Companies.

Apache intends that the Plan not be treated as a “funded” plan for purposes of either the Code or
ERISA. Apache also intends for this Plan to comply with the requirements of Code §409A, and the
Plan shall be interpreted in that light.

ARTICLE I DEFINITIONS

	1.01	 	Definitions
	 
	 	 	Defined terms used in this Plan shall have the meanings set forth below:

	 	(a)	 	“Account” means the memorandum account maintained for each Participant that is
credited with all Participant Deferrals and any contributions by the Company. Each
Participant’s Account is divided into subaccounts, as determined by the Committee, and in
general each award or deferral will be allocated to its own subaccount.
	 
	 	(b)	 	“Apache” means Apache Corporation or any successor thereto.
	 
	 	(c)	 	“Affiliated Entity” means any legal entity that is treated as a single employer
with Apache pursuant to Code §414(b), §414(c), §414(m), or §414(o).
	 
	 	(d)	 	“Beneficiary” means a Participant’s beneficiary, as determined in section 5.04.
	 
	 	(e)	 	“Change of Control” means a change of control as defined in the Income Continuance
Plan that is also described in Code §409A(a)(2)(A)(v).
	 
	 	(f)	 	“Code” means the Internal Revenue Code of 1986, as amended.
	 
	 	(g)	 	“Committee” means the Stock Option Plan Committee of Apache’s Board of Directors.
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 Securities
Exchange Act of 1934, as amended).
	 
	 	(h)	 	“Company” means Apache and any Affiliated Entity that, with approval of the Board
of Directors of Apache, has adopted the Plan.
	 
	 	(i)	 	“Company Deferrals” means the allocations to a Participant’s Account made pursuant
to section 3.02.
	 
	 	(j)	 	“Compensation” means amounts deferrable under this Plan, as determined by the
Committee. “Election Agreement” means an agreement made by an eligible employee whereby
he elects the amount(s) to be withheld from his Compensation pursuant to section 3.01.
	 
	 	(k)	 	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
	 
	 	(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

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	 	 	 	reasonable application of such reasonable valuation method, consistently applied, as the Committee
deems appropriate.
	 
	 	(m)	 	“Participant” means any eligible employee selected to participate in the Plan.
	 
	 	(n)	 	“Participant Deferrals” means the amounts of a Participant’s Compensation that
elects to defer and have allocated to his Account pursuant to section 3.01.
	 
	 	(o)	 	“Plan” means the plan set forth in this document, as amended.
	 
	 	(p)	 	“Plan Year” means the calendar year.
	 
	 	(q)	 	“Separation from Service” has the same meaning as the term “separation from
service” in Code §409A(a)(2)(A)(i), determined using the default rules in the regulations
and other guidance of general applicability issued pursuant to Code §409A, except that a
Separation from Service occurs only if both the Company and the Participant expect the
Participant’s level of services to permanently drop by more than half. A Participant who
has a Separation from Service “Separates from Service.”
	 
	 	(r)	 	“Spouse” means the individual of the opposite sex to whom a Participant is lawfully
married according to the laws of the state of the Participant’s domicile.
	 
	 	(s)	 	“Stock” means the $0.625 par value common stock of Apache.
	 
	 	(t)	 	“Stock Units” mean investment units and any related units from dividend amounts.
Each Stock Unit is equivalent to one share of Stock.
	 
	 	(u)	 	“Trust” means the trust or trusts, if any, created by the Company to provide
funding for the distribution of benefits in accordance with the provisions of the Plan.
The assets of any such Trust remain subject to the claims of the Company’s general
creditors in the event of the Company’s insolvency.
	 
	 	(v)	 	“Trust Agreement” means the written instrument pursuant to which each separate
Trust is created.
	 
	 	(w)	 	“Trustee” means one or more banks, trust companies, or insurance companies
designated by the Company to hold and invest the Trust fund and to pay benefits and
expenses as authorized by the Committee in accordance with the terms and provisions of
the Trust Agreement.

	1.02	 	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.

ARTICLE II ELIGIBILITY AND PARTICIPATION

	2.01	 	Eligibility and Participation
	 
	 	 	The Committee shall from time to time in its sole discretion select those employees of the
Company who are eligible to participate in the Plan from among a select group of management or
highly compensated employees.
	 
	2.02	 	Election
	 
	 	 	Participants shall complete the election procedures specified by the Committee. The election
procedures may include form(s) for the Participant to designate a Beneficiary, elect
Participant Deferrals by entering into an Election Agreement with the Company, select a
payment option for the eventual distribution of his Account or any subaccount, and provide
such other information as the Committee may reasonably require.
	 
	2.03	 	Failure of Eligibility
	 
	 	 	The Committee shall have the authority to determine that a Participant is no longer eligible
to participate in the Plan. When a Participant becomes ineligible, all outstanding Election
Agreements shall be cancelled. The determination of the Committee with respect to the
termination of participation in the Plan shall be final and binding on all parties affected
thereby. Any benefits vested hereunder at the time the Participant

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	 	 	becomes ineligible to continue participation shall be distributed in accordance with the
provisions of Article V.

ARTICLE III CONTRIBUTION DEFERRALS

	3.01	 	Participant Deferrals

	 	(a)	 	General. A Participant may elect to defer a portion of his Compensation by
filing the appropriate Election Agreement with the Committee’s designee. The Committee
has complete discretion to establish procedures for the completion of Election
Agreements, including the acceptable forms and formats of the deferral election. The
Committee has complete discretion to establish the election periods during which
Participants may make Election Agreements, within the bounds described in subsection (b).
The Committee may establish different election periods for different types of
Compensation, different grants of Compensation, or different groups of Participants.
	 
	 	(b)	 	Deadlines for Election Agreements.

	 	(i)	 	Election Period. In order to make Participant Deferrals, a
Participant must submit an Election Agreement during the election period
established by the Committee. The election period must precede the Plan Year in
which the services giving rise to the Compensation are performed, except in the
following situations.

	 	(A)	 	Performance-Based Compensation. If the
Compensation is “performance-based compensation based on services performed
over a period of at least 12 months” (within the meaning of Code
§409A(a)(4)(B)(iii)), the election period must end at least six months before
the end of the performance period.
	 
	 	(B)	 	New Participant. The election period for a new
Participant must end no later than 30 days after he became eligible to
participate in the Plan; the new Participant’s initial Election Agreement may
only apply to Compensation for which he has not yet performed any services.
However, a Participant who has a lapse in eligibility to participate in the
Plan can only use this special 30-day election when he again becomes eligible
to accrue benefits (other than investment earnings), (1) on the date of his
new eligibility if he has received a complete payout of his benefits from his
prior episode of participation, or (2) if his lapse in eligibility was at
least 24 months in duration.
	 
	 	(C)	 	Unvested Deferrals. The election period for any
Compensation that is subject to the condition that the Participant continue
to provide services for Apache and Affiliated Entities for at least 12
months, such as many grants of restricted stock units, must end within 30
days of the date the Compensation is awarded, provided that (1) the award
does not vest for 12 months following the end of the election period, (2) no
event other than the Participant’s death or disability (within the meaning of
Code §409A(2)(C)), or a Change of Control can cause vesting within the 12
months following the end of the election period, and (3) if the Participant’s
death or disability, or the Change of Control occurs before the first
anniversary of the end of the election period, the Election Agreement shall
be cancelled.

	 	(ii)	 	Duration of and Cancellation of Election Agreements. The
Committee has full discretion to determine which Compensation is subject to each
Election Agreement. The Election Agreement becomes irrevocable by the Participant
at the end of the election period. The Committee shall determine, at the time the
Election Agreement is made, the circumstances in which the Election Agreement shall
be cancelled, such as upon the Participant’s disability or upon a Change of
Control. An Election Agreement is not affected by a hardship withdrawal from the
Non-Qualified Retirement/Savings Plan of Apache Corporation. However, if the
Participant takes a hardship withdrawal from the Apache Corporation 401(k) Savings
Plan, all outstanding Election Agreements that apply to Compensation that would
have been paid to the Participant within six months after the hardship withdrawal
(if the Election Agreements had not been in effect) shall be cancelled and no
further Participant Deferrals made pursuant to such Election Agreements.

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	3.02	 	Company Deferrals
	 
	 	 	Upon prior approval of the Committee, the Company may credit any amount to a Participant’s
Account at any time.

ARTICLE IV INVESTMENT OF DEFERRALS AND ACCOUNTING; VOTING

	4.01	 	Investments
	 
	 	 	All amounts credited to a Participant’s Account shall be invested in Stock Units, with the
number of Stock Units determined using the Fair Market Value of the Stock for the date as of
which the amount is credited to the Participant’s Account. Amounts equal to any cash
dividends declared on the Stock shall be credited to the Participant’s Account as of the
payment date for such dividend in proportion to the number of Stock Units in the Participant’s
Account as of the record date for such dividend. Such dividend amounts shall be invested in
Stock Units, with the number of Stock Units determined using the Fair Market Value of the
Stock on the dividend payment date, and such Stock Units shall vest pursuant to section 5.01.
Nothing contained in this section shall be construed to require the Company or the Committee
to fund any Participant’s Account.
	 
	4.02	 	Voting
	 
	 	 	Participants shall have no right to vote any Stock Units prior to the date on which such Stock
Units are subject to distribution and shares of Stock are issued therefor.

ARTICLE V DISTRIBUTIONS

	5.01	 	Vesting

	 	(a)	 	General. Each award of Compensation to a Participant shall vest in
accordance with the terms of the award, which are determined by the Committee. Upon the
death of a Participant, the award shall specify whether no vesting occurs, whether the
next tranche or some other portion of the award vests, or whether the entire award vests.
	 
	 	(b)	 	Termination for Cause. If the employment of the Participant is terminated
for cause as determined by the Company, the Participant’s entire Account balance, whether
vested or not, shall be forfeited immediately. For this purpose, “cause” shall mean a
gross violation, as determined by the Company, of the Company’s established policies and
procedures.
	 
	 	(c)	 	Earnings. Stock Units attributable to dividend amounts credited to a
Participant’s Account shall vest as the Stock Units on which the dividend amounts are
calculated vest.
	 
	 	(d)	 	Change of Control. If a change of control, within the meaning of Apache’s
Income Continuance Plan or any successor plan, of Apache occurs, all unvested Stock Units
credited to Participants’ Accounts shall become automatically vested, without further
action by the Committee or Apache’s board of directors.

	5.02	 	Payouts of Company Deferrals.

	 	(a)	 	Timing of Payout. The Committee may specify the timing of the distribution
of any grant of Company Deferrals, or the Committee may allow a Participant to make a
payout election for his Company Deferrals. If the Participant is given the opportunity
to make a payout election, the deadline for the election is 30 days after the grant of a
Company Deferral.
	 
	 	(b)	 	Payout Alternatives. A Participant shall receive a lump sum distribution
of the subaccount(s) containing Company Deferrals six months after he Separates from
Service, unless the Committee permits him to elect five installments and he so elects, in
which case the first installment will be paid six months after his Separation from
Service, or as soon as convenient after that date, and subsequent installments will be
paid on the anniversary of the first installment, or as near to that date as is
administratively convenient. If the Participant is given the opportunity to make a payout
election, the deadline for the election is 30 days after the grant of a Company Deferral,
or if later, December 31, 2008.

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	 	(c)	 	Death or Change of Control. If there is a Change of Control or the
Participant dies before receiving all installments, the remaining vested benefits shall
be paid as specified in section 5.04 or 5.05, rather than as provided for in this
section.
	 
	 	(d)	 	Small Accounts. See section 5.03(d) for payouts of small accounts.

	5.03	 	Payouts of Participant Deferrals

	 	(a)	 	Election. Each subaccount containing Participant Deferrals shall be paid
in a lump sum six months after the Participant’s Separation from Service unless the
Committee, in its sole discretion, allows a Participant to elect, and the Participant
does elect, toto have the Participant Deferrals under an Election Agreement paid to him
in one of the following manners. Any payout election that the Participant is permitted
make with respect to deferrals pursuant to an Election Agreement must be made by the end
of the election period for that Election Agreement. The Committee has the discretion to
reduce the possible payout alternatives from the three identified below..

	 	(i)	 	In-Service Withdrawal, Single Payment. The subaccount for
Participant Deferrals from an Election Agreement will be paid in a lump sum five
years after the Stock Units vest, or as near to that date as is administratively
convenient. For example, if the Stock Units under a particular Election Agreement
vest over four years, the Participant will receive four annual lump sums. If the
Participant Separates from Service before receiving all lump sums with respect to
an Election Agreement, (A), if a lump sum is scheduled to be paid during the six
months after the Separation from Service, it will be paid as scheduled, and (B) if
any lump sum is scheduled to be paid more than six months after the Separation from
Service, it will instead be paid 6 months after his Separation from Service, or as
soon thereafter as is administratively convenient.
	 
	 	(ii)	 	In-Service Withdrawal, Limited Installments. This payout
alternative is available only if all Stock Units relating to an Election Agreement
either are vested at the time of the Election Agreement or are scheduled to vest on
a single date; thus, for example, this alternative is not available for a
restricted stock unit award where vesting is scheduled to occur over four years.
The benefits will be paid in five annual installments, with the first installment
paid five years after the Stock Units vest (or, if vested when granted, five years
after the date of the grant), or as near to that date as is administratively
convenient. Subsequent installments are paid on the anniversary of the first
installment or as near to that date as is administratively convenient. The amount
of each installment is equal to the number of remaining Stock Units associated the
Election Agreement, divided by the number of remaining installments, rounded down
to the nearest whole Stock Unit, except that the last installment is equal to the
number of remaining vested Stock Units, with any fractional share paid in cash. If
the Participant Separates from Service before receiving all installments with
respect to an Election Agreement, (A), any installment payment scheduled to be paid
during the six months after the Separation from Service will be paid as scheduled,
and (B) any remaining installment(s) will instead be paid in a lump sum 6 months
after his Separation from Service, or as soon thereafter as is administratively
convenient.
	 
	 	(iii)	 	No In-Service Withdrawal. The subaccount for the Participant
Deferrals from each Election Agreement will be paid out in a single payment or in
five annual installments. The single payment or the first installment payment will
be paid six months after the Participant’s Separation from Service or as soon
thereafter as is administratively convenient; subsequent installments will be paid
on each anniversary of the first installment, or as near thereto as
administratively convenient. Each installment will be equal to the balance in the
subaccount measured as short a period of time before the installment is paid as is
administratively convenient, divided by the number of remaining annual
installments, rounded down to the nearest whole Stock Unit, except that the last
installment shall be equal to the number of remaining Stock Units, with any
fractional share paid in cash.

	 	(b)	 	Existing Elections. If a Participant made an Election Agreement before
2009 for an award that vested over more than one year, such as the restricted stock unit
grants made on September 11, 2007 that vest

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	 		 	over four years, and the Participant elected
to defer such amounts for five years after vesting occurred with each amount paid in five
installments, the payments scheduled to be made on or after January 1, 2009 will, in
spite of the Participant’s previous election, be paid a lump sum on the fifth anniversary
of date of the date such Stock Units vested, or, if later, in January of 2009. If the
Participant Separates from Service before receiving all lump sums with respect to an
Election Agreement, (i) if a lump sum is scheduled to be paid during the six months after
the Separation from Service, it will be paid as scheduled, and (ii) if any lump sum is
scheduled to be paid more than six months after the Separation
from Service, it will instead be paid in January 2009 or if later six months after his
Separation from Service, or as soon thereafter as is administratively convenient
	 
	 	(c)	 	Death or Change of Control. If there is a Change of Control or the
Participant dies before receiving all vested Stock Units, the remaining vested Stock
Units shall be paid as specified in section 5.04 or 5.05, rather than as originally
scheduled.
	 
	 	(d)	 	Small Accounts. If the Fair Market Value of a Participant’s vested Account
six months after he Separates from Service is less than $100,000, he shall receive a lump
sum payment of the vested Account balance six months after the Separation from Service or
as soon thereafter as is administratively convenient.

	5.04	 	Distributions After Participant’s Death
	 
	 	 	This section applies once a Participant dies.

	 	(a)	 	Immediate Payment. When a Participant dies, his remaining vested Account
balance shall be paid to each beneficiary in one lump sum four months after the
Participant’s death, which should give each beneficiary adequate time to decide whether
to disclaim. However, no payment may be made before the Committee’s designee has been
furnished with proof of death and such other information as it may reasonably require,
including information needed for tax reporting purposes. Such distribution shall be paid
in whole shares of Stock, with any fractional shares paid in cash
	 
	 	(b)	 	Designating Beneficiaries. Each Participant shall designate one or more
persons, trusts, or other entities as his Beneficiary to receive any amounts
distributable hereunder after the Participant’s death, by furnishing the Committee with a
beneficiary designation form. 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 Participant’s estate.
Unless the Participant’s beneficiary designation form specifies otherwise, if a
Beneficiary dies after the Participant but before being paid by the Plan, the Plan shall
pay the Beneficiary’s estate.
	 
	 	(c)	 	Changing Beneficiaries. 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 shall 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’s designee. If a Participant has designated his Spouse as a Beneficiary or as
a contingent Beneficiary, and the Participant and that Spouse subsequently divorce, then
the former Spouse will be treated as having pre-deceased the Participant for purposes of
interpreting a beneficiary designation form completed prior to the divorce; this sentence
shall apply only if the Committee’s designee is informed of the divorce before payment to
the former Spouse is authorized.
	 
	 	(d)	 	Disclaimers. 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 applicable state law and Code §2518(b). 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 shall be distributed as if the disclaimant had
predeceased the Participant.

	5.05	 	Change of Control

	 	(a)	 	Former Employees.

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	 	(i)	 	Separated More than Six Months. Each Participant who is not a
“specified employee” (defined below) and each Participant who Separated from
Service more than six months before the date of a Change of Control, including
those who are already receiving installment payments, will be paid a single payment
of his entire remaining vested Account balance on the date of the Change of Control
or as soon thereafter as is administratively practicable.
	 
	 	(ii)	 	Recent Separations. Each Participant who is a specified
employee and who Separated from Service less than six months before the Change of
Control occurred will be paid a single
payment of his entire Account balance six months after his Separation from
Service, or as soon thereafter as is administratively practicable.
	 
	 	(iii)	 	Specified Employee. The term “specified employee” has the
same meaning as the term “specified employee” in Code §409A(a)(2)(B)(i), and is
determined using the default rules in the regulations and other guidance of general
applicability issued pursuant to Code §409A.

	 	(b)	 	Current Employees. Each Participant who is an employee on the date of a
Change of Control will be paid a lump sum of his entire vested Account balance on the
date of the Change of Control or as soon thereafter as is administratively practicable.

	5.06	 	Rehires. If a Participant Separated from Service and then becomes eligible to again
accrue benefits, the payment of his benefits from his first episode of participation will not
be affected by his subsequent participation. He will be treated as a new Participant for
making payout elections for benefits accruing during his second episode of participation,
except as otherwise provided in section 3.01.
	 
	5.07	 	Form of Distribution. Subject to section 5.08, each payment shall be made in whole
shares of Stock, with each Stock Unit being converted into one share of Stock. Any fractional
Stock Units will be converted into cash based on the Fair Market Value of a share of Stock on
the day preceding the day the payment is processed. Upon a change of control as defined in
the Income Continuance Plan or its successor, the payment for each Stock Unit shall be one
share of Stock unless the material characteristics of the Stock were affected by the Change of
Control, in which case the payment for each Stock Unit shall be in the form of cash equal to
the fair market value, determined as of the date of the Change of Control, of the property an
Apache shareholder receives upon the change of control in exchange for one of his Shares.
	 
	5.08	 	Withholding
	 
	 	 	At the time of vesting or payment, as applicable, either the recipient shall pay the Plan cash
sufficient to cover the required withholding or the Plan shall withhold from such payment any
taxes or other amounts that are required to be withheld pursuant to any applicable law; any
Stock Units withheld shall be converted into cash based on the Fair Market Value of a share of
Stock (a) on the day preceding the day the payment is processed or (b) on the day the vesting
occurs.
	 
	5.09	 	Divorce

	 	(a)	 	General. If a Participant has divorced his Spouse, all or a portion of his
Account may be allocated to his former Spouse. The Participant may be a former or
current employee of the Company.
	 
	 	(b)	 	Contents of Order. The allocation will occur as soon as practicable after
the Plan receives a judgment, decree, or order (collectively, an “order”) that (i) is
made pursuant to a state domestic relations law or community property law, (ii) relates
to the marital property rights of the former Spouse, (iii) unambiguously specifies the
amount or percentage of the Participant’s Account that is to be allocated to the former
Spouse, or unambiguously specifies the manner in which the amount or percentage is to be
calculated, (iv) does not allocate any benefits that have already been allocated to a
different former Spouse, (v) contains the name and last known mailing address of the
Participant and eh former Spouse, (vi) the name of the Plan, (vii) does not contain any
provision that violates subsections (c), (d), or (e), and (viii) contains the former
Spouse’s Social Security number (or other similar taxpayer identification number) unless
such number has been provided by the former Spouse to the Plan in a manner acceptable to
the Committee.

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	 	(c)	 	Payout Provisions. The vested portion of the amount allocated to the
former Spouse will be paid to the former Spouse in a single payment as soon as
administratively practicable after (i) the Plan has determined that the order meets the
requirements of subsection (b), (ii) the Plan has communicated its interpretation of the
order to the Participant and former Spouse, and given them a reasonable amount of time
(such as 30 days) to object to the Plan’s interpretation, (and if there is a timely
objection, the parties must submit a revised order or withdraw their objections), and
(iii) the parties agree to the Plan’s interpretation of the order.
	 
	 	(d)	 	Not Fully Vested. If the former Spouse is allocated any unvested amounts,
the Plan will establish a separate account for the former Spouse. Unvested amounts are
forfeited at the same time as the
Participant’s unvested amounts are forfeited. If an amount allocated to the former
Spouse subsequently become vested, the newly-vested amount will be paid to the former
Spouse in a single payment as soon as administratively practicable following the
additional vesting. If the former Spouse dies before award is fully vested, the
unvested amounts shall be returned to the Participant’s Account.
	 
	 	(e)	 	Source of Funds. The order may specify which subaccounts the former
Spouse’s benefits shall be taken from; if the order is silent on this matter, the amount
awarded to the former Spouse shall be taken from the Participant’s subaccounts in the
order determined by the Committee and shall be taken on a pro rata basis from the vested
portion of the Account and the unvested portion.

	5.10	 	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 when there
is a change of recordkeeper or trustee, and a delay may be imposed on payments to any
recipient until the recipient has provided (a) the information needed to determine the
appropriate tax withholding and tax reporting and (b) any other information reasonably
requested by the Committee.
	 
	5.11	 	Noncompliance with Code §409A
	 
	 	 	To the extent that the Company or the Committee takes any action that causes a violation of
Code §409A or fails to take any reasonable action required to comply with Code §409A, Apache
shall pay an additional amount (the “gross-up”) to the individual(s) who are subject to the
penalty tax under Code §409A(a)(1); the gross-up will be sufficient to put the individual 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 the due to
the recipient’s action or due to the recipient’s failure 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 paid 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.

ARTICLE VI ADMINISTRATION

	6.01	 	Committee to Administer and Interpret Plan
	 
	 	 	The Plan shall be administered by the Committee. The Committee shall have all discretion and
powers necessary for administering the Plan, including, but not by way of 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. The Committee shall direct
the Company, the Trustee, or both, as the case may be, concerning distributions in accordance
with the provisions of the Plan. The Committee’s designee shall maintain all Plan records
except records of any Trust. The Committee may delegate any of its administrative duties to a
designee.

Page 8 of 14

 

	6.02	 	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. The Committee may appoint a designee and/or 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 make
its determinations with or without meetings. The Committee may authorize one or more of its
members, designees or agents to sign instructions, notices and determinations on its behalf.
The action of a majority of the Committee’s members shall constitute the action of the
Committee.
	 
	6.03	 	Agent for Process
	 
	 	 	Apache’s General Counsel and Apache’s Corporate Secretary shall each be an agent of the Plan
for service of all process.
	 
	6.04	 	Determination of Committee Final
	 
	 	 	The decisions made by the Committee shall be final and conclusive on all persons.

ARTICLE VII TRUST

	7.01	 	Trust Agreement
	 
	 	 	The Company may, but shall not be required to, adopt a separate Trust Agreement for the
holding and administration of the funds contributed to Accounts under the Plan. The Trustee
shall maintain and allocate assets to a separate account for each Participant under the Plan.
The assets of any such Trust shall remain subject to the claims of the Company’s general
creditors in the event of the Company’s insolvency.
	 
	7.02	 	Expenses of Trust
	 
	 	 	The parties expect that any Trust created pursuant to section 7.01 will be treated as a
“grantor” trust for federal and state income tax purposes and that, as a consequence, such
Trust will not be subject to income tax with respect to its income. However, if the Trust is
separately taxable, the Trustee shall pay all such taxes out of the Trust. All expenses of
administering any such Trust shall be a charge against and shall be paid from the assets of
such Trust.

ARTICLE VIII AMENDMENT AND TERMINATION

	8.01	 	Amendment
	 
	 	 	The Plan may be amended at any time and from time to time, retroactively or otherwise;
however, no amendment shall reduce any vested benefit that has accrued on the effective date
of such amendment. Each Plan amendment shall be in writing and shall be approved by the
Committee and/or Apache’s Board of Directors. An officer of Apache to whom the Committee
and/or Apache’s Board of Directors has delegated the authority to execute Plan amendments
shall execute each such amendment or the Plan document restated to include all such Plan
amendment(s).
	 
	 	 	The Committee shall have the authority to adopt 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. In only certain limited circumstances, as described in the
Treasury Regulations and other guidance of general applicability issued pursuant to Code
§409A, may the termination of a plan affect the timing of the payment of Plan benefits.
	 
	8.02	 	Successors and Assigns; Termination of Plan
	 
	 	 	The Plan is binding upon Apache and its successors and assigns. The Plan shall continue in
effect from year to year unless and until terminated by Apache’s Board of Directors. Any such
termination shall operate only prospectively and shall not reduce any vested benefit that has
accrued on the effective date of such termination.

Page 9 of 14

 

ARTICLE IX STOCK SUBJECT TO THE PLAN

	9.01	 	Number of Shares
	 
	 	 	Subject to Section 4.01, and to adjustment pursuant to Section 9.03 hereof, 350,000 shares of
Stock (adjusted to 735,000 shares for (i) the Company’s five-percent stock dividend, record
date March 12, 2003, paid April 2, 2003, and (ii) the Company’s two-for-one stock split,
record date December 31, 2003, distributed January 14, 2004) are authorized for issuance under
the Plan in accordance with the provisions of the Plan and subject to such restrictions or
other provisions as the Committee may from time to time deem necessary. This authorization
may be increased from time to time by approval of the Board and the stockholders of Apache if,
in the opinion of counsel for the Company, such stockholder approval is required. Shares of
Stock distributed under the terms of the Plan and shares of Stock equal to the number of Stock Units credited to
Participants’ Accounts maintained under the Plan shall be applied to reduce the maximum number
of shares of Stock remaining available for use under the Plan. However, shares of Stock
represented by any Stock Units related to the deferral of income from any plan for which
shares of Stock have been authorized for issuance, such as the 2007 Omnibus Equity
Compensation Plan, shall retain their authorization under such plan, and shall not be applied
to reduce the number of shares of Stock remaining available for use under the Plan. Apache,
at all times during the existence of the Plan and while any Stock Units are credited to
Participants’ Accounts maintained under the Plan, shall retain as Stock in Apache’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.
	 
	9.02	 	Other Shares of Stock
	 
	 	 	The shares of Stock represented by any Stock Units from dividend amounts that are forfeited,
and any shares of Stock that for any other reason are not issued to a Participant or are
forfeited, shall again become available for use under the Plan.
	 
	9.03	 	Adjustments for Stock Split, Stock Dividend, Etc.
	 
	 	 	If Apache 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 through a Stock
split, subdivision, consolidation, combination, reclassification or recapitalization involving
the Stock, 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 increased, decreased or changed
in like manner as if they had been issued and outstanding, fully paid and nonassessable at the
time of such occurrence: (a) the shares of Stock remaining available for use under the Plan;
and (b) the shares of Stock then represented by Stock Units credited to Participants’ Accounts
maintained under the Plan.
	 
	9.04	 	Dividend Payable in Stock of Another Corporation, Etc.
	 
	 	 	If Apache shall at any time pay or make any dividend or other distribution upon the Stock
payable in securities or other property (except cash or Stock), a proportionate part of such
securities or other property shall be set aside for Stock Units credited to Participants’
Accounts maintained under the Plan and delivered to any Participant upon distribution pursuant
to the terms of the Plan. Prior to the time that any such securities or other property are
delivered to a Participant in accordance with the foregoing, Apache shall be the owner of such
securities or other property and shall have the right to vote the securities, receive any
dividends payable on such securities, and in all other respects shall be treated as the owner.
If securities or other property which have been set aside by Apache in accordance with this
Section are not delivered to a Participant because all or part of his Stock Units are
forfeited pursuant to the terms of the Plan, then the applicable portion of such securities or
other property shall remain the property of Apache and shall be dealt with by Apache as it
shall determine in its sole discretion.

Page 10 of 14

 

	9.05	 	Other Changes in Stock
	 
	 	 	In the event there shall be any change, other than as specified in Sections 9.03 and 9.04
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 (a) remaining available for use under the Plan
and/or (b) represented by Stock Units credited to Participants’ Accounts maintained under the
Plan, then such adjustments shall be made by the Committee and shall be effective for all
purposes of the Plan.
	 
	9.06	 	Rights to Subscribe
	 
	 	 	If Apache 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 Apache or of any other corporation,
there shall be reserved with respect to the Stock Units credited to Participants’ Accounts
maintained under the Plan the Stock or other securities which the Participant would have been
entitled to subscribe for if immediately prior to such grant the shares of Stock represented
by such Stock Units had been issued and outstanding. If, at the time of distribution
under the terms of the Plan, the Participant subscribes for the additional shares or other
securities, the price that is payable by the Participant for such additional shares or other
securities shall be withheld from such distribution pursuant to Section 5.08 hereof.
	 
	9.07	 	General Adjustment Rules
	 
	 	 	No adjustment or substitution provided for in this Article IX shall require Apache to sell or
otherwise issue a fractional share of Stock. All benefits payable under the Plan shall be
distributed in whole shares of Stock, with any fractional shares paid in cash.
	 
	9.08	 	Determination by the Committee, Etc.
	 
	 	 	Adjustments under this Article IX shall be made by the Committee, whose determinations with
regard thereto shall be final and binding upon all parties thereto.

ARTICLE X REORGANIZATION OR LIQUIDATION

In the event that Apache is merged or consolidated with another corporation and Apache 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 Apache 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, and if the provisions of Section 9.07 hereof do not apply, the
Committee, or the board of directors of any corporation assuming the obligations of the Company,
shall, as to the Plan and any Stock Units credited to Participants’ Accounts maintained under the
Plan, either (i) make appropriate provision for the adoption and continuation of the Plan by the
acquiring or successor corporation and for the protection of any Stock Units credited to
Participants’ Accounts maintained under the Plan by the substitution on a equitable basis of
appropriate stock of Apache or of the merged, consolidated or otherwise reorganized corporation
which will be issuable with respect to the Stock, provided that no additional benefits shall be
conferred upon the Participants with respect to such Stock Units as a result of such substitution
or (ii) to the extent permitted by the distribution rules under Code §409A, upon written notice to
the Participants, provide that all distributions from the Plan shall be made within a specified
number of days of the date of such notice. In the latter event, the Committee shall accelerate the
vesting of all unvested Stock Units credited to Participants’ Accounts so that all such Stock Units
become fully vested and, to the extent permitted by the distribution rules under Code §409A, all
Stock Units are payable prior to or upon any such event.

ARTICLE XI MISCELLANEOUS

	11.01	 	Funding of Benefits — No Fiduciary Relationship
	 
	 	 	Benefits shall be paid either out of the Trust or, if no Trust is in existence or if the
assets in the Trust are insufficient to provide fully for such benefits, then such benefits
shall be distributed by the Company out of its general assets. Nothing contained in the Plan
shall be deemed to create any fiduciary relationship between the Company and the Participants.
Notwithstanding anything herein to the contrary, to the extent that any

Page 11 of 14

 

	 	 	person acquires a right to receive benefits under the Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company, except to the extent provided in the Trust
Agreement, if any.
	 
	11.02	 	Right to Terminate Employment
	 
	 	 	The Company may terminate the employment of any Participant as freely and with the same effect
as if the Plan were not in existence.
	 
	11.03	 	Inalienability of Benefits
	 
	 	 	Except for disclaimers under section 5.04(d) and payments to a former Spouse pursuant to
section 5.09, 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).
	 
	11.04	 	Claims Procedure

	 	(a)	 	General. Each claim for benefits shall be processed in accordance with the
procedures that may be established by the Committee. The procedures shall comply with
the guidelines specified in this section. The Committee may delegate its duties under
this section.
	 
	 	(b)	 	Representatives. A claimant may appoint a representative to act on his
behalf. The Plan shall 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 shall 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 shall recognize the claimant’s parent or guardian
as the claimant’s representative. Once an authorized representative is appointed, the
Plan shall direct all information and notification regarding the claim to the authorized
representative and the claimant shall 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 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 shall decide a claim within a reasonable
time up to 90 days after receiving the claim. The Plan shall 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 shall 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 shall 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.

Page 12 of 14

 

	 	(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
shall be the final decision of the Plan. The claimant may submit documents, written
comments, and other information in support of the appeal. The claimant shall be given
reasonable access at no charge to, and copies of, all documents, records, and other
relevant information.
	 
	 	(i)	 	Appellate Decision. The Plan shall 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 shall 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 shall 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 shall deny 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 shall 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 shall provide the claimant with written
notification of the Plan’s appellate decision (positive or adverse). The notification of
any adverse or partially adverse decision shall 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)	 	Limitations on Bringing Actions in Court. Once an appellate decision that
is adverse or partially adverse to the claimant has been made, the claimant may file suit
in court only if he does so by the earlier of the following dates: (i) the one-year
anniversary of the date of an appellate decision made on or before a Change of Control or
the three-year anniversary of the date of an appellate decision made after a Change of
Control, or (ii) the date on which the statute of limitations for such claim expires.

	11.05	 	Disposition of Unclaimed Distributions
	 
	 	 	It is the affirmative duty of each Participant to inform the Plan of, and to keep on file with
the Plan, his current mailing address and the mailing address of his Spouse and any
Beneficiaries. If a Participant fails to inform the Plan of these current mailing addresses,
neither the Plan nor the Company is responsible for any late payment of benefits or loss of
benefits. The Plan, the Committee, and the Company have no duty to search for a missing
individual until the date of a Change of Control, at which point the Company has the duty to
undertake reasonable measures to search for the proper recipient of any payment under the Plan
that is scheduled to be paid on or after the date of the Change of Control. If the missing
individual is not found within a year after a payment should have been made to him, all his
benefits will be forfeited. If the missing individual later is found, the exact number of
Stock Units forfeited will be restored to the Account as soon as administratively convenient,
without any adjustment for dividends paid in the interim.
	 
	11.06	 	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 an incompetent, the Committee shall have 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 shall operate as a complete discharge of the Company, the Trustee,
if any, and the Committee.

Page 13 of 14

 

	11.07	 	Addresses
	 
	 	 	Any notice, form, or election required or permitted to be given under the Plan shall be in
writing and shall be given by first class mail, by Federal Express, UPS, or other carrier, by
fax or other electronic means, or by personal delivery to the appropriate party, addressed:

	 	(a)	 	If to the Company, to Apache Corporation at its principal place of business at 2000
Post Oak Boulevard, Suite 100, Houston, Texas 77056-4400 (Attention: Corporate Secretary)
or at such other address as may have been furnished in writing by the Company to a
Participant; or
	 
	 	(b)	 	If to a Participant, at the address the Participant has furnished to the Company in
writing.
	 
	 	(c)	 	If to a Beneficiary or former Spouse, at the address the Participant has furnished
to the Company in writing, or at the address the Beneficiary or former Spouse
subsequently provided in writing.

	11.08	 	Statutory References
	 
	 	 	Any reference to a specific section of the Code or other statute shall be deemed to refer to
the cited section or to the appropriate successor section.
	 
	11.09	 	Governing Law
	 
	 	 	The Plan and all Election Agreements shall be construed in accordance with the Code, ERISA (if
applicable), and, to the extent applicable, the laws of the State of Texas excluding any
conflicts-of-law provisions.

Executed July 13, 2010, effective as of January 1, 2009 except as otherwise specified herein.

	 	 	 	 	 

	ATTEST:

	 	APACHE CORPORATION
	 	 
	 
	 	 	 	 
	/s/ Cheri L. Peper

	 	/s/ Margery M. Harris	 	 
	 

	 	 	 	 
	Cheri L. Peper

	 	Margery M. Harris	 	 
	Corporate Secretary

	 	Vice President, Human Resources	 	 

Page 14 of 14exv10w7

Exhibit 10.7

APACHE CORPORATION

OUTSIDE DIRECTORS’ RETIREMENT PLAN

(As Amended and Restated July 14, 2010, effective as of January 1, 2009)

APACHE CORPORATION (the “Company”) established the Apache Corporation Outside Directors’ Retirement
Plan (the “Plan”), effective as of December 15, 1992, to provide non-employee Directors of the
Company (“Outside Directors”) with certain retirement and death payments. The purpose of the Plan
is to advance the interests of the Company, its subsidiaries, and its stockholders by continuing to
attract and retain outstanding individuals as Outside Directors and to stimulate the efforts of
such individuals by giving suitable recognition to services which will contribute materially to the
success of the Company.

It is the Company’s express intention that this Plan comply with the requirements of Code §409A,
and the Plan shall be interpreted in that light.

ARTICLE I

Eligibility, Participation and Contributions

1.1 Eligibility and Participation.

     Each Outside Director begins to participate in the Plan as of the date his or her Service
begins.

1.2 Contributions.

     All amounts payable under the Plan shall be paid from the general assets of the Company.
Nothing contained in the Plan shall be deemed to create any fiduciary relationship between the
Company and the participating Outside Director (“Participant”). The rights of a Participant under
the Plan are no greater than the rights of an unsecured general creditor of the Company.

ARTICLE II

Retirement Payments

2.1 Definitions.

     The term “Separation from Service” has the same meaning as the term “separation from service”
in Code §409A(a)(2)(A)(i). A Separation from Service is determined using the default rules in the
regulations and other guidance of general applicability issued pursuant to Code §409A, including
the special rules for a member of a board of directors found in Treasury Regulation §1.409A-1(h)(5)
and §1.409A-1(c)(2)(ii). In general, a Separation from Service will occur when a Participant
ceases to be a member of the Company’s Board of Directors.

1

 

     The term “Specified Employee” has the same meaning as the term “specified employee” in Code
§409A(a)(2)(B)(i), and is determined using the default rules in the regulations and other guidance
of general applicability issued pursuant to Code §409A.

2.2 Retirement Payments.

     (a) Eligibility for Benefits. A Participant who Retires with four or more Quarters of
Service is entitled to receive benefits under the Plan.

     (b) Amount of Benefits. The amount of benefits under the Plan is equal to the value
of a series of quarterly payments, with each payment equal in amount to one-sixth of the
Participant’s Annual Director’s Retainer, and with the number of quarterly payments equal to the
number of the Participant’s Quarters of Service. As a consequence, each Participant will generally
receive an annual benefit of 662/3% of his or her Annual Director’s Retainer.

     (c) “Annual Director’s Retainer” means the aggregate annual amount of an Outside
Director’s board retainer fee payable pursuant to section 1 of the Company’s Non-Employee
Directors’ Compensation Plan (or comparable section of any successor plan), whether or not all or a
portion of such amount is deferred or delayed. Such amount will be determined as of the earlier of
the date a Participant ceases to be an Outside Director or the date the Participant dies.

     (d) “Quarter of Service” means the aggregate total full months of Service as an
Outside Director divided by three and rounded up to the next whole number, up to a maximum of 40
Quarters of Service.

     (e) “Retirement, Retired or Retires” means a Participant’s ceasing to hold office as
an Outside Director, for any reason other than death.

     (f) “Service” means the aggregate total, not to exceed 120, of (i) the number of full
months beginning on or after July 1, 1992 (whether or not consecutive) that a Participant held
office as an Outside Director, whether or not a Participant at the time, and (ii) 1/2 the number of
full months prior to July 1, 1992 (whether or not consecutive) that a Participant held office as an
Outside Director; provided, however, that a Participant who, as of December 15, 1992, has held
office as an Outside Director for an aggregate total of 15 years shall automatically be credited
with 120 full months of Service.

     (g) Episodic Participation. If a Participant has a Separation from Service and then
becomes an Outside Director again, (i) the Participant’s benefits from his or her initial episode
of participation shall be paid according to the terms of the Plan on the date of his or her
Separation from Service and shall not be affected by any subsequent Service, and (ii) the
Participant’s benefits from his or her later episodes of participation shall be calculated by
ignoring his or her Service from earlier episodes of participation.

2

 

In calculating the amount of benefits for the most recent episode of participation, the
maximum Quarters of Service is 40, reduced by the number of Quarters of Service for which he or she
earned benefits under this Plan from earlier episodes of participation.

2.3 Retirement Payments Following a Change of Control.

     In the event of a “change of control” of the Company, as defined in the Company’s Income
Continuance Plan (as amended or the corresponding provisions of any successor plan), each then
current Outside Director shall be eligible for the benefits described in section 2.2 even if the
Outside Director has less than four Quarters of Service. If the change of control is a transaction
described in §409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as amended (“Code”), each
Participant shall be paid a single lump-sum payment on the date of the change of control, or as
soon as practicable thereafter, equal to the net present value of the benefit to which the
Participant is entitled, calculated in the manner described in section 2.5, as of the date of the
change of control; however, if the Participant was a Specified Employee whose Separation from
Service occurred less than six months before the change of control, he or she shall be paid a
single lump-sum payment six months after the Separation from Service, or as soon as practicable
thereafter, equal to the net present value of the benefit to which the Participant is entitled,
calculated in the manner described in section 2.5, as of the date six months after the Separation
from Service. If the change of control is not a transaction described in Code §409A(a)(2)(A)(v),
each Participant shall be paid at the time(s) specified in section 2.4 or 2.5, whichever is
applicable.

2.4 Quarterly Payments.

     A Participant may elect to be paid quarterly installments that are paid on the last day of
each calendar quarter (or as near to that date as administratively practicable). See section 2.5
for the deadline for the Participant’s payout election. The first quarterly payment shall be made
as of the last day of the calendar quarter after the date of the Participant’s Separates from
Service, unless the Participant is a Specified Employee, in which case the first two quarterly
payments shall be delayed until, and paid with, the third regularly scheduled quarterly payment.

2.5 Lump-Sum Payments.

     A Participant shall receive a single lump-sum payment unless the Participant elects quarterly
installments. Participants on December 31, 2008 have already made their payout election. A new
Participant’s payout election must be made within 30 days after the individual becomes an Outside
Director. Once the deadline for making a payout election has passed, the payout election is
irrevocable.

     The lump sum shall be paid as soon as administratively practicable after the Participant’s
Separation from Service, unless the Participant is a Specified Employee, in which case the lump sum
shall be paid as soon as administratively practicable after six

3

 

months after the Participant’s Separation from Service. The amount of the lump sum shall be
calculated by the Committee as of the date of the Participant’s Separation from Service. The
amount of the lump sum shall be equal to the net present value of the quarterly payments to which
the Participant would otherwise be entitled, determined using an annual interest rate equal to the
rate on ten-year treasury bonds/notes as reported in The Wall Street Journal published on or most
recently prior to the date of the Participant’s Separation from Service.

2.6 Retirement before 2009.

     A Participant whose Separation from Service occurred between December 31, 2004 and January 1,
2009 shall receive his or her benefit in accordance with the terms of the Plan in effect at the
time of the Separation from Service. A Participant who Retired before January 1, 2005 shall
receive his or her benefit in accordance with the terms of the Plan at the time of the Retirement.

ARTICLE III

Death Payments

3.1 Death Benefits.

     (a) Eligibility for Death Benefits. If a Participant dies before receiving all of his
or her benefits under Article II, the Participant’s Beneficiary, as determined in section 3.2,
shall receive the remaining benefits. If a Participant elected quarterly payments, the
Participant’s Beneficiary shall be paid a lump sum equal to the net present value of any remaining
payments, calculated as of the date of the Participant’s death, and calculated in the manner
specified in section 2.5. If a Participant is scheduled to receive a single lump-sum payment, but
dies before doing so, the Participant’s Beneficiary shall be paid the lump sum.

     (b) Timing. Payment to the Beneficiary shall be made as soon as administratively
practicable four months after the Participant’s death, which provides the Beneficiary with an
opportunity to disclaim, except that no payment shall be made until the Company has been furnished
with proof of death and such other information as it may reasonably require.

     (c) Beneficiary in Pay Status. The Beneficiary of a Participant who died on or before
December 31, 2008 shall receive his or her death benefits in accordance with the terms of the Plan
in effect on the date of the Participant’s death.

4

 

3.2 Beneficiaries.

     (a) “Beneficiary” means the recipient of the Participant’s death benefits under
section 3.1.

     (b) Designation. Each Participant shall designate one or more persons, trusts, or
other entities as his or her Beneficiary. In the absence of an effective Beneficiary designation
as to part or all of a Participant’s death benefits, the Participant’s surviving Spouse, if any,
shall be the Participant’s Beneficiary, and in the absence of a surviving Spouse, the Participant’s
estate shall be the Beneficiary. Unless the Participant’s Beneficiary designation form specifies
otherwise, if a Beneficiary dies after the Participant but before being paid by the Plan, the Plan
shall pay the Beneficiary’s estate.

     (c) Changing Beneficiaries. 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, the Participant’s Spouse shall be the Participant’s Beneficiary
unless the Spouse has consented to the designation of a different Beneficiary. To be effective,
the Spouse’s consent must have been made before January 1, 2005 or, if made on or after January 1,
2005, the Spouse’s consent must be in writing, witnessed by a notary public, and filed with the
Company. If the Participant has designated his or her 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 form completed prior to the divorce or annulment; this provision will apply
only if the Company is notified of the divorce or annulment before payment to the former Spouse is
made.

     (d) “Spouse” shall mean the individual to whom a Participant is lawfully married
according to the laws of the state of the Participant’s domicile.

     (e) Disclaimers. Any individual or legal entity who is a Beneficiary may disclaim all
or any portion of his or her 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 shall be
distributed as if the disclaimant had predeceased the individual whose death caused the disclaimant
to become a Beneficiary.

5

 

ARTICLE IV

Administration, Amendment and Termination

4.1 The Management Development and Compensation Committee.

     The Plan shall be administered by the Management Development and Compensation Committee (the
“Committee”) of the Company’s Board of Directors. All administrative duties, including but not
limited to, the power to interpret the Plan and to decide any dispute, shall be carried out by the
Committee, which shall have full discretion and authority hereunder. All claims under the Plan
shall be filed with the Company and shall be decided by the Committee. The decisions made by the
Committee shall be final and binding on all persons having or claiming to have rights under the
Plan.

4.2 Termination or Amendment of Plan.

     The Plan may be terminated or amended at any time through action of the Company’s Board of
Directors. No termination or amendment, however, shall reduce the payments (a) to a Participant or
Beneficiary where a Participant has already died or reached Retirement, (b) to which a Participant
is or may become entitled, based on such Participant’s Service and Annual Director’s Retainer as
determined on the effective date of such termination or amendment, or (c) to which a Participant is
or may become entitled pursuant to section 2.3 as a result of a change of control. The termination
of the Plan shall not affect the timing of any benefit payments; payments after the Plan has
terminated will be made at the time(s) specified in Articles II and III.

ARTICLE V

Miscellaneous

5.1 Inalienability of Payments.

     No Participant shall have the right to assign, transfer, hypothecate, encumber or anticipate
his or her interest in any payments under the Plan, nor shall the payments under the Plan be
subject to any legal process to levy upon or attach such payments for any claim against the
Participant, Spouse, or Beneficiary.

5.2 Notices.

     Any notice, form, or election required or permitted to be given under the Plan shall be in
writing and shall be given by first class mail, by Federal Express, UPS, or other carrier, by fax
or other electronic means, or by personal delivery to the appropriate party, addressed:

     (a) If to the Company, to Apache Corporation at its principal place of business at 2000 Post
Oak Boulevard, Suite 100, Houston, Texas 77056-4400 (Attention:

6

 

Corporate Secretary) or at such other address as may have been furnished in writing by the Company
to a Participant; or

     (b) If to a Participant or Spouse, at the address the Participant has furnished to the Company
in writing.

     (c) If to a Beneficiary, at the address the Participant has furnished to the Company in
writing for such Beneficiary, unless the Beneficiary has furnished his or her own address to the
Company.

Any such notice to a Participant, Spouse, or Beneficiary shall be deemed to have been given as of
the third day after deposit in the United States Postal Service, postage prepaid, properly
addressed as set forth above, in the case of a mailed notice, or as of the date delivered in the
case of any other method of delivery.

5.3 Disposition of Unclaimed Payments.

     Any communication, statement or notice addressed to a Participant at his or her last post
office address, as provided to the Company under section 5.2, will be binding on the Participant,
Spouse, or Beneficiary for all purposes of the Plan. If the Company cannot ascertain the
whereabouts of any person to whom a payment is due under the Plan within three years from the date
such payment is due, such payment shall be cancelled on the records of the Plan and the amount
thereof forfeited to the Company.

5.4 Administrative Delays.

     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, 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.

5.5 409A Noncompliance.

     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 the individual in the same after-tax position he or she 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 the recipient’s failure 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

7

 

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.

5.6 Gender.

     Any term herein used in the singular shall also include the plural, and the masculine gender
shall also include the feminine gender, and vice versa.

5.7 Statutory References.

     Any reference to a specific section of the Code shall be deemed to refer to that section or to
the appropriate successor section.

5.8 Governing Law.

     The Plan shall be governed by the laws of the State of Texas, ignoring any conflicts-of-law
provisions.

Dated: July 14, 2010

	 	 	 	 	 	 	 	 	 	 	 

	ATTEST:	 	 	 	APACHE CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Cheri L. Peper
	 	 	 	By:
	 	/s/ Margery M. Harris	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Cheri L. Peper
	 	 	 	 	 	Margery M. Harris	 	 
	 

	 	Corporate Secretary
	 	 	 	 	 	Vice President, Human Resources	 	 

8

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