Document:

PH 3.31.2013 EX 10A

Exhibit 10(a)

Parker-Hannifin Corporation 
Long-Term Incentive Performance Plan Under the Performance Bonus Plan
(as Amended and Restated)

1.    Effective Date and Purpose.  Parker-Hannifin Corporation, an Ohio corporation (the "Company"), adopted this Parker-Hannifin Corporation Long-Term Incentive Performance Plan Under the Performance Bonus Plan (the "Plan") effective as of January 26, 2011, and the Plan is amended and restated as set forth herein, effective as of January 23, 2013.  The purpose of the Plan is to attract and retain key executives for the Company and to provide such persons with incentives for superior performance in the form of an opportunity to earn an award that qualifies as a Long-Term Incentive Bonus (as defined in the Company's 2010 Performance Bonus Plan), while preserving the ability of the Company to deduct Long-Term Incentive Bonuses paid under this Plan as "performance-based compensation" within the meaning of Section 162(m)(4)(C) of the Code.  This Plan and each Award Opportunity granted hereunder shall be subject to the terms and conditions set forth below and the terms and conditions of the Company's Performance Bonus Plan and Stock Incentive Plan.  Capitalized terms not defined in this Plan shall have the meanings set forth in the Performance Bonus Plan or the Stock Incentive Plan, as applicable.

2.      Eligibility. The Committee shall designate the Participants, if any, for each Performance Period.  An Eligible Officer who is designated as a Participant for a given Performance Period is not guaranteed of being selected as a Participant for any other Performance Period.

3.      Establishment of Award Opportunities.  Not later than the 90th day of each Performance Period and subject to the terms and conditions of Section 5 of the Performance Bonus Plan (including the limits on a Participant's maximum Long-Term Incentive Bonuses with respect to the Performance Period), the Committee shall establish the Maximum Shares and Target Shares for each Participant's Award Opportunity for the Performance Period.  The Committee shall provide a Notice of Award to each Participant as soon as practical following the establishment of the Maximum Shares and Target Shares under the Participant's Award Opportunity for the Performance Period.

4.    Determination of Amount Payable Under Award Opportunities.   

A.    Committee Certification of Management Objectives.  Subject to potential reduction as set forth in Section 4.B and further subject to the other terms and conditions of this Plan, the full number of Maximum Shares granted to a Participant with respect to a Performance Period shall be earned as of the last day of such Performance Period, provided that (i) following the end of the Performance Period, the Committee has certified that the Company has achieved either (a) average Return on Average Equity of 4% during the Performance Period, or (b) average Free Cash Flow Margin of 4% during the Performance Period; and (ii) the Participant has been continuously employed by the Company and its Affiliates through the last day of the Performance Period.  
B.    Committee Discretion to Reduce Long-Term Incentive Awards.  Notwithstanding Section 4.A, the actual number of shares of Common Stock payable to a Participant with respect to a Performance Period may be reduced (including a reduction to zero) by the Committee in its sole and absolute discretion based on such factors as the Committee determines to be appropriate, including, without limitation, the Company's performance with respect to the performance measures (the "Peer Performance Measures") set out below, with the number of a Participant's Target Shares under an Award Opportunity allocated to each of the Peer Performance Measures in proportion to the percentages set out below.  The Peer Performance Measures shall be determined for the Company at the conclusion of the Performance Period, in comparison to the performance of the members of the Company's Peer Group, determined for each member of the Peer Group based on its performance at the conclusion of the three fiscal year period of such company ending with or immediately prior to the conclusion of the Performance Period:

	
		
	Peer Performance Measure:
	Weight:

	Revenue Growth
	20%

	Earnings Per Share Growth
	40%

	Average Return on Invested Capital
	40%

  
It is the intention of the Committee that the Committee will exercise its discretion as it deems appropriate to reduce the number of shares of Common Stock that may be delivered to a Participant with respect to each Performance Period based upon the Company's percentile ranking among the members of the Peer Group with respect to each Peer Performance Measure in accordance with the following table; provided, however, that the Committee reserves the right to deviate from such approach and may exercise its discretion to reduce the number shares of Common Stock that may be delivered to a Participant with respect to each Performance Period, if any, based on such other factors as the Committee in its sole and absolute discretion determines to be appropriate:

	
		
	Company Percentile Ranking Among Peer Group:
	% of Allocable Target Shares Earned:

	75th percentile or higher
	200%

	50th percentile
	100%  (Target Shares)

	35th percentile
	50%

	lower than 35th percentile
	0%

To the extent that the Company's percentile ranking among the members of the Peer Group with respect to a Peer Performance Measure is between the 35th and the 50th percentile, or between the 50th and the 75th percentile, it is currently intended that the Committee will exercise its discretion to determine the appropriate percentage of the allocable Target Shares that are earned by straight-line interpolation between the percentages set out in the table above.

5.    Payment of Long-Term Incentive Bonuses.  Except as otherwise provided in this Plan, during the fourth month following the end of the applicable Performance Period and following the certification of the achievement of the management objectives in accordance with Section 4.A., the Company shall deliver to each Participant the shares of Common Stock, if any, that the Committee has determined (in accordance with Section 4) to be payable with respect to any Award Opportunity. 

6.    Terminations.  Except as otherwise provided in this Section 6 or Section 7, a Participant must remain continuously employed by the Company and its Affiliates through the last day of a Performance Period in order to be entitled to receive payment of any Long-Term Incentive Bonus pursuant to this Plan for such Performance Period.
A.    Qualifying Retirement.  Notwithstanding the foregoing, in the event of a Participant's termination of employment during a Performance Period due to a Qualifying Retirement with respect to such Performance Period, the Participant will be entitled to receive the Award Opportunity, if any, that the Committee determines (in accordance with Section 4) to be payable for such Performance Period, as if the Participant had remained continuously employed through the end of the Performance Period.  Any such Award Opportunity will be payable at the time provided in Section 5, following the certification of the achievement of the management objectives by the Committee in accordance with Section 4.A.
B.    Death, Disability, Termination Without Cause, Other Retirement.  Notwithstanding the foregoing, in the event of a Participant's termination of employment during a Performance Period due to death, Disability, termination of employment by the Company without Cause, or Other Retirement, the Participant will be entitled to receive a prorated Long-Term Incentive Bonus for that Performance Period equal to the product of the amount of the Award Opportunity, if any, determined to be payable by the Committee pursuant to Section 4 multiplied by a fraction, the numerator of which is the number of full quarters of continuous employment during the Performance Period and the denominator of which is 12.  Any such prorated bonus will be payable at the time provided in Section 5, following the certification of the achievement of the management objectives by the Committee in accordance with Section 4.A.

C.    Other Terminations.  Except as otherwise provided pursuant to Section 7, in the event of a Participant's termination of employment during a Performance Period for any reason other than Qualifying Retirement, Other Retirement, death, Disability, or termination of employment by the Company without Cause, the Participant will forfeit his or her Award Opportunity for such Performance Period, without any further action or notice.

7.    Change in Control.  

A.    In General.  In the event of a Change in Control (as defined in the Stock Incentive Plan) of the Company during a Performance Period, each Participant then holding an outstanding Award Opportunity granted under this Plan for such Performance Period shall receive payment of his or her Award Opportunity as follows: (a) within fifteen (15) days following the date of the Change in Control, each such Participant shall receive a number of shares of Common Stock equal to the number of Target Shares subject to such Award Opportunity; and (b) within forty-five (45) days after the date of such Change in Control, each such Participant shall receive a number of shares of Common Stock equal to the excess, if any, of (i) the number of shares of Common Stock that would be payable in accordance with Section 4 if the Company had achieved the management objectives described in Section 4.A for the Performance Period, the Committee had exercised its discretion to reduce the number of shares of Common Stock payable in accordance with Section 4.B based upon the Company's percentile ranking among the Peer Group with respect to the Peer Performance Measures as described therein, and the Company’s percentile ranking among the Peer Group for each of those Peer Performance Measures during the Performance Period through the end of the fiscal quarter immediately preceding the date of the Change in Control continued throughout the Performance Period at the same level; over (ii) the number of Target Shares subject to such Award Opportunity.  

B.    Anticipatory Termination.  Notwithstanding the foregoing, in the event a Change in Control is deemed to occur during the Performance Period under the Stock Incentive Plan as a result of a Participant's termination of employment prior to a Change in Control at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control ("Anticipatory Termination"), such Participant shall receive payment of his or her Award Opportunity with respect to such Performance Period in accordance with the provisions of Section 6.A, applied as if such Participant had terminated employment due to a Qualifying Retirement on the date of such Anticipatory Termination; provided, however, that if a Change in Control occurs after such Anticipatory Termination and prior to payment of such Award Opportunity, such Participant shall receive payment of his or her Award Opportunity as follows: (a) within fifteen (15) days following such Change in Control, such Participant shall receive a number of shares of Common Stock equal to the number of Target Shares subject to such Award Opportunity; and (b) within forty-five (45) days after the date of such Change in Control, such Participant shall receive a number of shares of Common Stock equal to the excess, if any, of (i) the greater of (x) the number of shares of Common Stock that would be payable in accordance with Section 4 if the Company had achieved the management objectives described in Section 4.A for the Performance Period, the Committee had exercised its discretion to reduce the number of shares of Common Stock payable in accordance with Section 4.B based upon the Company's percentile ranking among the Peer Group with respect to the Peer Performance Measures as described therein, and the Company’s percentile ranking among the Peer Group for each of those Peer Performance Measures during the Performance Period through the end of the fiscal quarter immediately preceding the Anticipatory Termination had continued throughout the Performance Period at the same level, or (y) the number of shares of Common Stock that would have been payable in accordance with Section 4 if the Company had achieved the management objectives described in Section 4.A for the Performance Period, the Committee had exercised its discretion to reduce the number of shares of Common Stock in accordance with Section 4.B based upon the Company's percentile ranking among the Peer Group with respect to the Peer Performance Measures as described therein, and the Company’s percentile ranking among the Peer Group for each of those Peer Performance Measures during the Performance Period through the end of the fiscal quarter immediately preceding the subsequent Change in Control had continued throughout the Performance Period at the same level; over (ii) the number of Target Shares subject to such Award Opportunity.

8.    Promotions and New Hires.  With respect to a Participant who is newly hired or is promoted by the Company during a Performance Period, the Committee shall grant an Award Opportunity, or adjust an Award Opportunity previously granted, to such Participant for such Performance Period pursuant to the provisions of this Section 8; provided, however, that no Award Opportunity shall be granted or adjusted in such a manner as to cause any Long-Term Incentive Bonus payable under this Plan to fail to qualify as "performance-based compensation" within the meaning of section 162(m)(4)(C) of the Code and Section 1.162-27 of the Treasury Regulations promulgated thereunder.

A.    Pro-Rated Award Opportunities for Newly-Eligible Executives.  A Participant who is granted an Award Opportunity more than 90 days after the beginning of the Performance Period, either because the Participant is a newly hired Eligible Officer or is promoted into an Eligible Officer position, will be granted an Award Opportunity under the Plan for such Performance Period based on the number of Maximum Shares and Target Shares established by the Committee during the first 90 days of the Performance Period for the Participant's grade level, with the number of Maximum Shares and Target Shares pro-rated based on the ratio of the number of full quarters remaining in the Performance Period on and after the date of hire or promotion (as applicable) to the total number of quarters in the Performance Period.   For any salary grade created between the salary grades for which the Committee has established the number of Maximum Shares and Target Shares as described above, straight-line interpolation shall be used to determine the pro-rated number of Maximum Shares and Target Shares in accordance with this Section 8.A.

B.    Adjustments to Outstanding Award Opportunities.  If a Participant is promoted after the beginning of a Performance Period, the Participant's outstanding Award Opportunity granted for such Performance Period will be adjusted, effective as of the date of such promotion, based on the number of Maximum Shares and Target Shares established by the Committee during the first 90 days of the Performance Period for the Participant's grade level.  The adjustments to each such Participant's Award Opportunity shall be pro-rated on a quarterly basis, with the number of Maximum Shares and Target Shares for the Participant's original position applicable for the number of full quarters preceding the effective date of the promotion and the number of Maximum Shares and Target Shares for the Participant's new position applicable for the remaining number of quarters in the Performance Period.  For any salary grade created between the salary grades for which the Committee has established the number of Maximum Shares and Target Shares as described above, straight-line interpolation shall be used to determine the pro-rated number of Maximum Shares and Target Shares in accordance with this Section 8.B.

C.    Negative Discretion.  Notwithstanding any other provision of this Section 8, the Committee retains the discretion to reduce the amount of any Long-Term Incentive Bonus, including a reduction of such amount to zero.  By way of illustration, and not in limitation of the foregoing, the Committee may, in its discretion, determine (i) not to grant a pro-rated Award Opportunity pursuant to Section 8.A above, (ii) not to adjust an outstanding Award Opportunity pursuant to Section 8.B above, (iii) to grant a pro-rated Award Opportunity in a smaller amount than would otherwise be provided by Section 8.A above, or (iv) to adjust an outstanding Award Opportunity to produce a smaller Long-Term Incentive Award than would otherwise be provided by Section 8.B above.

9.    Plan Administration.  The Committee shall be responsible for administration of the Plan.  The Committee is authorized to interpret the Plan, to prescribe, amend and rescind regulations relating to the Plan, and to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan, the Performance Bonus Plan and the Stock Incentive Plan.  Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions of the Plan shall be final, binding and conclusive for all purposes and upon all Participants, Eligible Officers, Beneficiaries and all other persons who have or claim an interest herein.  The Committee may, in its discretion, but only to the extent permitted by 162(m) of the Code and applicable law, delegate to one or more directors or employees of the Company any of the Committee’s authority under the Plan.  The acts of any such delegates shall be treated under this Plan as acts of the Committee with respect to any matters so delegated, and any reference to the Committee in the Plan shall be deemed a reference to any such delegates with respect to any matters so delegated.

10.      Tax Withholding.  Each Participant is responsible for any federal, state, local, foreign or other taxes with respect to any Long-Term Incentive Bonus payable under the Plan.  To the extent the Company is required to withhold any federal, state, local, foreign or other taxes in connection with the delivery of Common Stock under this Plan, then the Company may, in its sole discretion, (a) retain a number of shares of Common Stock otherwise deliverable hereunder with a value equal to the required withholding (based on the Fair Market Value (as defined in the Stock Incentive Plan) of the Common Stock on the applicable date), (b) facilitate a sale of shares of Common Stock payable pursuant to the Award Opportunity to cover such tax withholding obligation, or (c) apply any other withholding method determined by the Company; provided that in no event shall the value of the shares of Common Stock retained exceed the minimum amount of taxes required to be withheld or such other amount that will not result in a negative accounting impact.

11.      Unfunded Plan.  Each Award Opportunity granted under this Plan represents only a contingent right to receive all or a portion of the number of Maximum Shares granted subject to the terms and conditions of the Notice of Award, the Plan, the Performance Bonus Plan and the Stock Incentive Plan.  Nothing in this Plan shall be construed to create a trust or to establish or evidence any Participant's claim of any right to payment of a Long-Term Incentive Bonus other than as an unsecured general creditor with respect to any payment to which he or she may be entitled under this Plan.

12.      Rights of Employer.  Neither anything contained in this Plan nor any action taken under this Plan shall be construed as a contract of employment or as giving any Participant or Eligible Officer any right to continued employment with the Company or any Affiliate.

13.    Nontransferability.  Except as otherwise provided in this Plan, the benefits provided under the Plan may not be alienated, assigned, transferred, pledged or hypothecated by or to any person or entity, and these benefits shall be exempt from the claims of creditors of any Participant or other claimants and from all orders, decrees, levies, garnishment or executions against any Participant to the fullest extent allowed by law.  Notwithstanding the foregoing, to the extent permitted by the Company, a Participant may designate a Beneficiary or Beneficiaries (both primary and contingent) to receive, in the event of the Participant's death, any shares of Common Stock remaining to be delivered with respect to the Participant under the Plan.  The Participant shall have the right to revoke any such designation and to re-designate a Beneficiary or Beneficiaries in such manner as may be prescribed by the Company.

14.      Successors.  The rights and obligations of the Company under the Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company. 

15.      Governing Law.  The Plan and all Award Opportunities shall be construed in accordance with and governed by the laws of the State of Ohio, but without regard to its conflict of law provisions.

16.      Amendment or Termination.  The Committee reserves the right, at any time, without either the consent of, or any prior notification to, any Participant, Eligible Officer or other person, to amend, suspend or terminate the Plan or any Award Opportunity granted thereunder, in whole or in part, in any manner, and for any reason; provided that any such amendment shall be subject to approval by the shareholders of the Company to the extent required to satisfy the requirements of Section 162(m) of the Code and the Treasury Regulations promulgated thereunder, and provided further that any such amendment shall not, after the end of the 90-day period described in Section 3 of the Plan, cause the amount payable under an Award Opportunity to be increased as compared to the amount that would have been paid in accordance with the terms established as of the end of such period.  Notwithstanding the foregoing, no amendment, suspension or termination of the Plan following a Change in Control (as defined in the Stock Incentive Plan) may adversely affect in a material way any Award Opportunity that was outstanding on the date of the Change in Control, without the consent of the affected Participant.

17.    Claw-back Policy.  Each Award Opportunity granted, and each Long-Term Incentive Bonus paid, pursuant to this Plan shall be subject to the terms and conditions of the Claw-back Policy. 

18.      Section 409A of the Code.  It is the Company's intent that each Long-Term Incentive Bonus payable under this Plan shall be exempt from the requirements of Section 409A of the Code under the "short-term deferral" exception set out in Section 1.409A-1(b)(4) of the Treasury Regulations.  The Plan shall be interpreted and administered in a manner consistent with such intent.
19.    Plan and Performance Bonus Plan Terms Control.  In the event of a conflict between the terms and conditions of any Notice of Award and the terms and conditions of the Plan, the terms and conditions of the Plan shall prevail.  In the event of a conflict between the terms and conditions of any Notice of Award or of this Plan and the terms and conditions of the Performance Bonus Plan, the terms and conditions of the Performance Bonus Plan shall prevail to the extent necessary for Long-Term Incentive Bonuses paid under this Plan to qualify as "performance-based compensation" for purposes of Section 162(m) of the Code and Section 1.162-27 of the Treasury Regulations promulgated thereunder.  In the event of a conflict between the terms and conditions of any Notice of Award and the terms and conditions of the Stock Incentive Plan, the terms and conditions of the Stock Incentive Plan shall prevail.

20.    Severability.  If any provision of the Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provisions of the Plan.

21.    Waiver.  The waiver by the Company of any breach of any provision of the Plan by a Participant shall not operate or be construed as a waiver of any subsequent breach.

22.    Captions.  The captions of the sections of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

23.    Consent to Transfer Personal Data. By acknowledging an Award Opportunity, each Participant will voluntarily acknowledge and consent to the collection, use, processing and transfer of personal data as described in this Section 23.  Participants are not obliged to consent to such collection, use, processing and transfer of personal data.  However, failure to provide the consent may affect the Participant's ability to participate in the Plan.  The Company and its Affiliates hold certain personal information about each Participant, that may include name, home address and telephone number, fax number, email address, family size, marital status, sex, beneficiary information, emergency contacts, passport / visa information, age, language skills, drivers license information, date of birth, birth certificate, social security number or other employee identification number, nationality, C.V. (or resume), wage history, employment references, job title, employment or severance contract, current wage and benefit information, personal bank account number, tax related information, plan or benefit enrollment forms and elections, option or benefit statements, any shares of stock or directorships in the Company, details of all options or any other entitlements to shares of Common Stock awarded, canceled, purchased, vested, unvested or outstanding in your favor, for the purpose of managing and administering the Plan ("Data").  The Company and its Affiliates will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of each Participant's participation in the Plan, and may further transfer Data to any third parties assisting the Company and its Affiliates in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including the United States.  By acknowledging an Award Opportunity, each Participant will authorize such third parties to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant's participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of stock on the Participant's behalf to a broker or other third party with whom the Participant may elect to deposit any shares of stock acquired pursuant to the Plan.  A Participant may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by contacting the Company; however, withdrawing such consent may affect the Participant's ability to participate in the Plan.

24.    Notification of Change in Personal Data.  If your address or contact information changes prior to the delivery of any shares of Common Stock pursuant to an Award Opportunity, the Company must be notified in order to administer the Plan and such Award Opportunity.  Notification of such changes should be provided to the Company as follows:
A.      U.S. and Canada Participants (employees who are on the U.S. or Canadian payroll system):

		
	▪
	Active employees:  Update your address and contact information directly through your Personal Profile section in the Employee Self-Service site.

		
	▪
	Retired, terminated or family member of deceased Participant:  Contact the Benefits Service Center at 1-800-992-5564.

B.    Rest of World Participants (employees who are not on the U.S. or Canadian payroll system):  Contact your country Human Resources Manager.
    
25.    Electronic Delivery.  By acknowledging an Award Opportunity, each Participant will consent and agree to electronic delivery of any documents that the Company may elect to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports, and all other forms of communications) in connection with any Award Opportunity granted under the Plan.  By acknowledging an Award Opportunity, each Participant will consent to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may elect to deliver, and each Participant will agree that his or her electronic signature is the same as, and shall have the same force and effect as, his or her manual signature.  By acknowledging an Award Opportunity, each Participant will consent and agree that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan.

26.    Prospectus Notification.  Copies of the Stock Incentive Plan, the plan summary and prospectus which describes the Stock Incentive Plan (the "Prospectus") and the most recent Annual Report and Proxy Statement issued by the Company (collectively, the "Prospectus Information") are available for review by Participants on the UBS One Source Web site.  Each Participant shall have the right to receive a printed copy of the Prospectus Information, free of charge, upon request by either calling the third party Plan Administrator at 877-742-7471 or by sending a written request to Parker's Benefits Department.
27.    Definitions.  The following capitalized words as used in this Plan shall have the following meanings:

"Affiliate" means any corporation or other entity (including, but not limited to, partnerships, limited liability companies and joint ventures) controlled by the Company.

"Award Opportunity" means an opportunity granted by the Committee to a Participant to earn a Long-Term Incentive Bonus under this Plan with respect to a Performance Period, payable in shares of Common Stock to be delivered under the Stock Incentive Plan, with such opportunity subject to the terms and conditions of this Plan, the Performance Bonus Plan and the Stock Incentive Plan.

"Beneficiary" means a person designated by a Participant in accordance with Section 13 of the Plan to receive, in the event of the Participant's death, any shares of Common Stock remaining to be delivered with respect to the Participant under the Plan.

"Board" means the Board of Directors of the Company.

"Cause" means any conduct or activity, whether or not related to the business of the Company, that is determined in individual cases by the Committee to be detrimental to the interests of the Company, including without limitation (a) the rendering of services to an organization, or engaging in a business, that is, in the judgment of the Committee, in competition with the Company; (b) the disclosure to anyone outside of the Company, or the use for any purpose other than the Company's business, of confidential information or material related to the Company, whether acquired by the Participant during or after employment with the Company; (c) fraud, embezzlement, theft-in-office or other illegal activity; or (d) a violation of the Company's Code of Conduct or other policies.

"Claw-back Policy" means the Parker-Hannifin Corporation Claw-back Policy, as amended from time to time, or any successor policy.

"Code" means the Internal Revenue Code of 1986, as amended.

"Committee" means the Human Resources and Compensation Committee of the Board, or such other committee appointed by the Board to administer the Performance Bonus Plan; provided, however, that in any event the Committee shall be comprised of not less than two directors of the Company, each of whom shall qualify as an "outside director" for purposes of Section 162(m) of the Code and Section 1.162-27(e)(3) of the Treasury Regulations promulgated thereunder. 
     
"Common Stock" means the common stock of the Company.
 
"Company" has the meaning given such term in Section 1 of the Plan.
 
"Disability" has the meaning set forth in the Parker-Hannifin Corporation Executive Long-Term Disability Plan or such other long-term disability program of the Company or an Affiliate in which the Participant participates.

"Eligible Officer" means any employee of the Company or an Affiliate who is an executive officer of the Company, whether such person is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.
 
"Free Cash Flow Margin" means the Company's net cash flow provided by operating activities less capital expenditures for a calendar year in the Performance Period, expressed as a percentage of the Company's net sales for such calendar year.  Free Cash Flow Margin shall be determined in accordance with generally accepted accounting principles as in effect on the first day of the applicable Performance Period.  Discretionary pension contributions by the Company during the Performance Period are not included in the calculation of Free Cash Flow Margin.  For this purpose, a discretionary pension contribution means a contribution by the Company or one of its subsidiaries to a qualified pension plan for employees of the Company or its subsidiaries where absent actions taken by the Company to affect its funding level in a particular year, no minimum required contribution would have been required under applicable laws and regulations.

"Maximum Shares" means, with respect to an Award Opportunity granted to a Participant for a Performance Period, the notional number of shares of Common Stock equal to 200% of the Participant's Target Shares for such Performance Period.  Each Maximum Share shall represent the contingent right to receive one share of Common Stock and shall at all times be equal in value to one share of Common Stock.  The number of Maximum Shares granted pursuant to each outstanding Award Opportunity is subject to adjustment in accordance with the terms of the Performance Bonus Plan.
 
"Notice of Award" means a written or electronic communication to a Participant with respect to a Performance Period, which provides notice of the Participant's Maximum Shares and Target Shares for such Performance Period, subject to the terms and conditions of the Plan, the Performance Bonus Plan and the Stock Incentive Plan.

"Other Retirement" means a termination of employment by a Participant during a Performance Period that constitutes "retirement" under the policy of the Company or an Affiliate applicable to the Participant at the time of such termination of employment, other than a Qualifying Retirement.  For purposes of clarity, whether a Participant's termination of employment constitutes an Other Retirement will be determined separately with respect to each Performance Period for which such Participant has an outstanding Award Opportunity at the time of termination of employment.

"Participant" means an Eligible Officer who has been granted an Award Opportunity with respect to a Performance Period.

"Peer Group" means the group of peer companies established as such by the Committee and set forth on Appendix A hereto.

"Performance Bonus Plan" means the Parker-Hannifin Corporation 2010 Performance Bonus Plan, as amended from time to time, or any successor plan.

"Performance Period" means a period of three consecutive calendar years.

"Plan" means this Parker-Hannifin Corporation Long-Term Incentive Performance Plan Under the Performance Bonus Plan, as amended from time to time.

"Qualifying Retirement" means termination of employment by a Participant during a Performance Period (i) after attainment of age 65, or (ii) after attainment of age 60 with at least 10 years of service and after completion of at least 12 months of continuous employment during such Performance Period.  For purposes of clarity, whether a Participant's termination of employment constitutes a Qualifying Retirement will be determined separately with respect to each Performance Period for which such Participant has an outstanding Award Opportunity at the time of termination of employment.

"Return on Average Equity" means the Company's net income for a calendar year in the Performance Period, divided by the average of shareholder's equity as of the first and last day of such calendar year.  Return on Average Equity shall be determined in accordance with generally accepted accounting principles as in effect on the first day of the applicable Performance Period.

"Stock Incentive Plan" means the Amended and Restated Parker-Hannifin Corporation 2009 Omnibus Stock Incentive Plan, as amended from time to time, or any successor plan.

"Target Shares" means the notional number of shares of Common Stock specified as such in a Participant's Notice of Award for a Performance Period, which may be used by the Committee in the exercise of its discretion under Section 4.B of the Plan to reduce the amount otherwise payable pursuant to the Participant's Award Opportunity.  
    
APPENDIX A

Peer Group 
 
Caterpillar Inc.
Cummins Inc.
Danaher Corporation
Deere & Company
Dover Corporation
Eaton Corporation
Emerson Electric Co.
Flowserve Corporation
Honeywell International Inc.
Illinois Tool Works Inc.
ITT Industries, Inc.
Ingersoll-Rand Company Limited
Johnson Controls, Inc.
Pall Corporation
Rockwell Automation, Inc.
SPX Corporation
Textron Inc.

642699.4

LT-002O    1APCO EX10.1

Exhibit 10.1

-
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
APCO OIL AND GAS INTERNATIONAL INC.
AND
WPX ENERGY, INC.
May 7, 2013

1

	
			
	 
	TABLE OF CONTENTS
	 

	
						
	1.
	Definitions
	 
	 
	3
	

	2.
	Term
	 
	 
	5
	

	3.
	Provision of Services
	 
	 
	6
	

	4.
	Compensation
	 
	 
	7
	

	5.
	Invoicing and Payments
	 
	 
	9
	

	6.
	Right to Audit
	 
	 
	9
	

	7.
	Independent Contractor Status
	 
	 
	10
	

	8.
	Indemnification
	 
	 
	10
	

	9.
	Insurance
	 
	 
	11
	

	10.
	Confidentiality
	 
	 
	11
	

	11.
	LIMITATION OF LIABILITY
	 
	 
	13
	

	12.
	Notices
	 
	 
	13
	

	13.
	CERTAIN PRACITCES
	 
	 
	14
	

	14.
	Non-Waiver
	 
	 
	15
	

	15.
	Assignment
	 
	 
	15
	

	16.
	Non-Exclusive agreement
	 
	 
	15
	

	17.
	No Third Party Beneficiary
	 
	 
	15
	

	18.
	Headings
	 
	 
	15
	

	19.
	Entire Agreement
	 
	 
	16
	

	20.
	Severability
	 
	 
	16
	

	21.
	Amendments
	 
	 
	16
	

	22.
	Governing Law
	 
	 
	16
	

	23.
	Dispute Resolution
	 
	 
	16
	

	24.
	MUTUAL COOPERATION
	 
	 
	17
	

	25.
	FORCE MAJEURE
	 
	 
	17
	

2

AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
This amended and restated Administrative Services Agreement (this “Agreement”) is entered into as of May 7, 2013 (the “Effective Date”), by and between Apco Oil and Gas International Inc., a Cayman Islands exempted limited company (the “Company” or “Apco”), and WPX Energy, Inc. (“WPX”), a Delaware corporation.  This Agreement supersedes the historical Administrative Services Agreement, effective December 31, 2012, between Apco and WPX.
WHEREAS, Company is a public company whose shares are traded on the NASDAQ but has few employees and is in need of personnel to perform administrative services on behalf of the Company; 
WHEREAS, WPX owns approximately 69% of the issued and outstanding stock of Company and desires to provide or cause to be provided administrative, legal and management services (“Services”) to Company;
WHEREAS, Company desires to engage the services of WPX and its Affiliates to perform various Services, under the terms and conditions hereinafter provided; and
WHEREAS, WPX is willing to perform the Services upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the Parties agree as follows:
		
	1.
	DEFINITIONS:

(a)The following terms have the meanings assigned herein.
(i)“Affiliate” of a Person means a Person (a) which is a Subsidiary of that Person, (b) of which that Person is a Subsidiary, or (c) which is a Subsidiary of a Person of which that Person is a Subsidiary.  However, for purposes of clarification, Apco is not included in references to Affiliates of WPX, and WPX is not included in references to Affiliates of Apco.
(ii)“Agreement” means this Administrative Services Agreement, as amended or supplemented from time to time, and the exhibits hereto, which are incorporated herein by reference.
(iii)“Applicable Law” means, with respect to any Person or any property or asset, all laws, ordinances, codes, rules, regulations, orders, writs, injunctions, decrees, rulings, determinations, awards or standards of any Governmental Authority, all Governmental Authorizations and all agreements with any Governmental Authority applicable to or binding on such Person (or its properties or assets) or to such property or asset from time to time or at the time specified in this Agreement, as the case may be.

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(iv)“Bankruptcy” of a Person means (a) Involuntary Bankruptcy or (b) commence-ment by a Person of a voluntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by such Person to the entry of a decree or order for relief in respect of such Person in an involun--tary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or pro-ceed-ing against such Person, or the filing by such Person of a petition or answer or con-sent seeking reorganization or relief under any Applicable Law; or consent by such Person to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of such Person or of any substantial part of the property of such Person, or the making by such Person of an assignment for the benefit of creditors, or the admission by such Person in writ-ing of its inability to pay its debts generally as they become due, or the taking of corporate action by such Person in furtherance of any such action.
(v)“Business Days” means any day other than Saturday, Sunday or a legal holiday in New York, New York. 
(vi)“Calendar Month” means any of January, February, March, April, May, June, July, August, September, October, November or December, as applicable.
(vii)“Claims” has the meaning specified in Section 8(a).
(viii)“Confidential Information” has the meaning specified in Section 10(a)(i).
(ix)“Governmental Authority” means any judicial, legislative, administrative or other national, state, municipal or local governmental authority, ministry, department, any administrative agency, office, organization or authority having jurisdiction over the Parties.
(x)“Governmental Authorization” means any authorization, consent, ruling, permit, certification, exemption, exoneration or registration by or with any Governmental Authority.
(xi)“Involuntary Bankruptcy” means entry by any competent governmental authority of any jurisdiction or a court having jurisdiction in the premises of (i) a decree or order for relief in respect of such Person in an involun-tary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or (ii) an involuntary or contested decree or order adjudging such Person a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of such Person under any applicable law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of such Person or of any substantial part of the property of such Person, or ordering the winding up or liquidation of the affairs of such Person.
(xii)“Parties” and “Party” mean Company and WPX or either of them.
(xiii)“Person” means any individual, corporation, partnership, joint venture, association, trust, unincorporated organization or government or any agency or political subdivision thereof.

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(xiv)“Representatives” of a Party shall mean directors, officers, employees, auditors, counsel, financial and other advisors and other representatives and Affiliates of such Party, and such Affiliates' directors, officers, employees, auditors, counsel, financial and other advisors and other representatives.
(xv)“Services” shall have the meaning specified in the Recitals.
(xvi)“Subsidiary” of a Person means (i) a corporation more than 50% of the outstanding voting shares of which is owned, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof or (ii) any other Person (other than a corporation) in which such Person, or one or more other Subsidiaries of such Person, or such Person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof.
(xvii)“US Foreign Corrupt Practices Act” means the United States Foreign Corrupt Practices Act of 1977, as amended from time to time.
		
	(b)
	For all purposes of this Agreement, except as otherwise expressly provided or to the extent that the context otherwise requires:

(i)the terms defined herein include the plural as well as the singular and vice versa;
(ii)words importing gender include all genders;
(iii)any reference to an “Article”, “Section” or “Exhibit” refers to an article, section or exhibit, as the case may be, of this Agreement;
(iv)the words “herein”, “hereof”, “hereto” and “hereunder” and other words of similar import refer to this Agreement and its exhibits, as a whole and not to any particular article, section, exhibit or other subdivision; 
(v)the symbol “$”or “US$” means United States dollars; and
(vi)whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.
		
	2.
	TERM:

(a)This Agreement shall be effective commencing upon the date first set forth above (the “Effective Date”).
(b)This Agreement shall remain in effect for one year and shall automatically renew on the anniversary of the Effective Date and each year thereafter unless terminated by either party upon 90 days prior written notice prior to any anniversary of the Effective Date.  Either WPX or Company may terminate any given Service provided hereunder at any time upon 60 days prior written notice.

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(c)Promptly after the date of any termination, WPX shall be paid for any Services rendered by WPX through the date on which WPX ceases to perform such Services.
(d)Termination of this Agreement in accordance with this Section 2 shall not affect the rights, privileges, duties, liabilities or obligations of either Party which arose or accrued prior to the date of termination, and this Section 2 and Sections 8, 9, 10, 11, 14, 17, 18, 19, 20, 22 and 23 shall survive any termination of this Agreement.
3.PROVISION OF SERVICES:
(a)Company hereby appoints and retains WPX to perform or cause to be performed the Services on the terms and conditions set forth in this Agreement.  WPX hereby accepts and agrees to perform or cause to be performed the Services in accordance with the terms and conditions of this Agreement.
(b)Subject to any limitations on availability and resources and such other limitations as set forth in this Agreement, the Services shall be those administrative, legal  and financial services described below and such other services as may be agreed upon from time to time by Company and WPX, which shall be performed or provided subject to and under the direction and supervision of, Company:
(i)internal audit, corporate communications, controller, security, human resources, storage, accounting, legal, tax, risk management and insurance, administration, management, corporate secretarial services and information services, including without limitation, hardware support, systems design, programming, production and distribution services but only to the extent of current capacity levels and subject to limitations set forth in any applicable agreements of WPX;
(ii)right to use third party licensed software licensed to WPX but only to the extent and subject to the limitations set forth in such licenses;
(iii)providing WPX's (or its Affiliates') personnel to hold certain executive positions of the Company;
(iv)establishing and maintaining appropriate administrative, business, accounting and financial systems; maintaining Apco's home office accounts, perform consolidation accounting, account analysis, financial reporting, assure compliance with US GAAP and work with the Company's external auditors in the US and Argentina; 
(v)preparing and issuing monthly operations and financial reports; 
(vi)preparing and/or filing, on behalf of the Company, Securities and Exchange Commission filings and other information required to be filed as a public company in compliance with Applicable Law; 
(vii)obtaining, on behalf of Company, Governmental Authorizations, including completing and executing any related applications and filings; 

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(viii)preparing and executing (upon proper authorization) on behalf of Company agreements for professional services; and
(ix)preparation for and scheduling of meetings of the Board of Directors and preparing agendas for same. 
(c)    In addition, amounts expended pursuant to Company's request with respect to claims and litigation (including settlement costs and reasonable expenses associated therewith, and attorney's fees, expenses and court costs) will be reimbursed by Company to WPX.
(d)    WPX shall determine the number and identity of personnel to be provided to perform the Services but shall ensure that sufficient personnel are provided at all times.  Company agrees that WPX or its Affiliates may employ subcontractors to perform the Services.  Any individuals employed by WPX or its Affiliates and performing Services hereunder shall be and remain the employees of WPX and/or its Affiliates (and not of Company).  Company shall be free at any time to accept, reject or, upon reasonable notice, ask for replacements for any such personnel.  All equipment provided to such personnel by Company shall remain the property of Company and all equipment provided to such personnel by WPX shall remain the property of WPX.
(e)    WPX shall not be required to qualify to do business in any state or foreign country in order to provide Services requested by Company.  
(f)    If Company should discontinue its use of equipment, third party software or related items which items were leased, purchased, or licensed by WPX or its Affiliates on Company's behalf and at Company's request, at any time during the term of this Agreement or prior thereto, the Company shall reimburse to WPX all charges, costs and expenses actually incurred by WPX in connection with the cancellation or assignment of any applicable leases, licenses or other contracts associated with such items; provided, however, that WPX will allow a representative of Company to participate in negotiations with regard to such charges prior to any assessment thereof.  To the extent Company shall have specifically requested WPX or its Affiliates to purchase equipment for the benefit of Company, and such purchase was made, Company shall purchase from WPX any of such equipment owned by WPX, at a price equal to WPX's net book value for such equipment.  Such obligations apply whether the discontinuance of use occurs upon the termination of this Agreement or prior thereto.
		
	4.
	COMPENSATION:

As full and complete compensation for Services, Company agrees to pay WPX the following fees:
(a)Allocation of Cost Centers.
(i)Allocation of Cost Centers - Modified Massachusetts Formula.
The fee for certain services (the “MMF Allocated Services”) will be derived by allocating a percentage of the cost centers under which WPX provides such services using the Modified Massachusetts Formula (the “MMF”).  The MMF is a three-factor formula, which allocates costs to subsidiaries, divisions or business units giving equal weight to operating revenue less cost-of-sales, gross payroll and gross property, plant and equipment.  For purposes of this calculation, revenues will be reported net of royalties.  For purposes

7

 of the MMF calculation, gross payroll shall include total wages, salaries and other compensation, such as would be reportable on IRS form 941 or the Argentine equivalent.  In the event of changes due to acquisitions, mergers or asset sales, this allocation will be adjusted quarterly.
The MMF Allocated Services are listed on Exhibit A.  WPX's cost centers to which the MMF applies will be analyzed at least annually by both WPX and Apco to determine whether the list of cost centers on Exhibit A is complete and appropriate.  The Parties may update the list of cost centers on Exhibit A without amending this Agreement.
(ii)Allocation of Cost Centers - Employee Ratio Formula.
The fee for certain services (the “Employee Ratio Allocated Services”) will be derived by allocating a percentage of the cost centers under which WPX provides such services, such percentage being equal to the number that yields from dividing the number of Apco-Focused Employees listed on Exhibit C by the total number of WPX employees (the “Employee Ratio Formula”).  The Employee Ratio Formula Services are listed on Exhibit B.  WPX's cost centers to which the Employee Ratio Formula applies will be analyzed at least annually by both WPX and Apco to determine whether the list of cost centers on Exhibit B is complete and appropriate.  The Parties may update the list of cost centers on Exhibit B without amending this Agreement.
(iii)Allocation of Cost Centers - Revisions
In the event WPX wishes to adopt a different method for the allocation of corporate expenses to the Company or other of its Affiliates in the future, WPX and the Company shall meet to determine whether the new allocation method will be used hereunder or whether the Parties shall continue the use of the MMF allocation method or the Employee Ratio Formula allocation method.  Should the Parties determine to use a different allocation method, their agreement to do so shall be reflected in an amendment to this Agreement.  In the event the Parties determine to continue the use of the MMF allocation method or the Employee Ratio Formula allocation method, no amendment to this Agreement shall be required.
(b)Apco-Focused Employees.  WPX shall provide the Company with the services of those positions set forth on Exhibit C that perform specific functions for the Company and spend either substantial time in the performance of services for the Company or consistently provide time to the Company every month.  The fee for these services will be derived by (i) allocating the percentage of salary and bonus for each position listed in Exhibit C, and (ii) adding 33% of the cost of the employee benefits and taxes attributable to such position. 
(c)The percentages and positions shall be reviewed by the parties periodically and adjusted but not more than on an annual basis.  The Parties may update the percentages and positions on Exhibit C without amending this Agreement. 
(d)Flat Management Fee.  The Company will also pay WPX $150,000 per year for the services of those WPX employees or employees of its Affiliates that hold the positions of Chairman and Chief Executive Officer and Chief Financial Officer of Apco as compensation for time devoted by those employees in the performance of their duties for the Company.  Such amount was determined by using an estimate of the time actually spent by such employees on behalf of Apco and will be periodically reviewed and adjusted by the Parties as appropriate to

8

 more accurately reflect the actual time spent.  An adjustment to such fee will require an amendment to this Agreement. 
(e)Flat Legal Fee.  The Company shall pay WPX $100,000 per yet for legal services.  The parties shall periodically review such amount and adjust as appropriate.  An adjustment to such fee will require an amendment to this Agreement. 
(f)Rent.  The Company shall pay WPX for use of office spaced by the Apco-focused employees.  The amount of such rent will be derived by multiplying the 3,450 square feet occupied by the Apco-focused employees on the 35th floor of One Williams Center, Tulsa, Oklahoma, by (i) the rent charge per square foot (which includes operating costs) that is listed on Exhibit D, and (ii) the average salary allocation listed on Exhibit C. 
(g)Pass-Through Costs.  The Company shall pay WPX separately for Services that are not included above and are directly identifiable to the Company on an as-used basis.  Such Services include but are not limited to Sarbanes Oxley support services, travel services, telephone, and printing and reproduction services and supplies.  These services will be charged to the Company on the same rate as charged to other WPX Affiliates or Subsidiaries.  The Company shall also reimburse WPX for the cost of any insurance coverage provided to Apco by WPX. 

		
	5.
	INVOICING AND PAYMENTS:

WPX shall at a minimum submit quarterly invoices to Company for Services rendered hereunder and will provide full supporting documentation upon the request of Company.  Company shall pay WPX the amounts of such invoices within thirty (30) days after receipt; provided, that if Company shall have any objection to all or any portion of an invoice, Company shall notify WPX of the same within thirty (30) days after receipt of the invoice, give reasons for its objection and pay only the portion of the invoice which is not in dispute.  Representatives of WPX and Company shall confer within sixty (60) days of receipt of objection by Company regarding a particular invoice to resolve any disputed invoices.  In the event such representatives are unable to reach agreement with regard to such a dispute, the matter shall be resolved in accordance with Section 23.
		
	6.
	RIGHT TO AUDIT:

WPX shall keep such books and records (which books and records shall be maintained on a consistent basis and substantially in accordance with generally accepted accounting principles) as shall readily disclose, as allowed by law, the basis for any charges or credits, ordinary or extraordinary, billed to Company under this Agreement.  Company shall, as allowed by law, have the right, upon reasonable notice from Company to WPX and during regular business hours, to inspect, examine and audit or cause to be audited each year the accounts and records of WPX reasonably related to the Services provided hereunder, except where such accounts and records would otherwise be considered proprietary or confidential, in which case such audit shall be conducted by an independent auditor agreed to by the Parties, provided such right is exercised in a manner that does not interfere with the provision of the Services hereunder by WPX.  Any audit by Company hereunder shall be at Company's sole cost and expense. 

9

		
	7.
	INDEPENDENT CONTRACTOR STATUS:

(a)WPX hereby declares it is engaged in an independent business and agrees to perform the Services as an independent contractor with, except as otherwise provided for hereunder, full responsibility for the control and direction of its employees and subcontractors.  WPX, in its performance of this Agreement, has and hereby retains the right to exercise full control and supervision over the accomplishment of the objectives set forth herein; provided, however, that Company shall be free at any time to accept, reject or request replacement of any WPX personnel providing the Services.  WPX shall make reasonable efforts to complete the Services in a timely manner.  WPX shall not be required to provide personnel to work a specific number of hours per day or specific days of the week.  WPX shall not be an agent, employee or servant for and may not bind Company.  This Agreement is not intended to and shall not create a partnership, joint venture or agency of any kind or type.  It is understood that WPX is free to contract for similar services to be performed for others during the term of this Agreement.
(b)WPX hereby accepts full and exclusive liability for the payment of its employees' compensation and benefits including any and all contributions or taxes for unemployment insurance, old age retirement benefits, pensions or annuities now or hereafter imposed by or under Applicable Law and which are measured by the wages, salaries or other remuneration paid to the persons employed by WPX with respect to Services performed under the terms of this Agreement.  WPX further warrants that it will comply with all other Applicable Law to which it is subject as an employer regarding compensation, hours of work or other conditions of employment, including those applicable to minimum wage and overtime wages.
(c)Neither WPX nor its employees providing Services to Company under this Agreement shall be entitled to participate in or receive benefits under any programs maintained by Company for its employees, including, without limitation, life, medical and disability benefits, pension, profit sharing or other retirement plans or other fringe benefits.  Nor shall any WPX employees be entitled to any direct or indirect compensation or remuneration of any kind from Company as a result of the Services performed under this Agreement.
8.INDEMNIFICATION:
(a)WPX shall be responsible for and shall defend and hold harmless Company from and against all claims, demands, causes of action, liabilities, fines, penalties, loss, or expense (including, without limitation, reasonable attorneys' fees, costs and expenses) (collectively “Claims”) of every kind and character, whether they be direct or indirect, arising from or related to, actions and/or omissions of any kind from personnel providing Services to Company hereunder when not performing tasks or assignments for or on behalf of Company. The above indemnity of this Section 8(a) shall not apply to, and Company shall indemnify, protect, defend and hold harmless WPX, its owners, Affiliates, and all of their officers, directors, employees, consultants and agents (collectively, the “WPX Group”) from, Claims for bodily injury, illness or death of any member of WPX Group, or of any employee of WPX's contractors or subcontractors when arising out of Company's or its contractors' (other than WPX) or subcontractors' gross negligence or willful misconduct.

(b)Company shall be responsible for and shall defend and hold harmless WPX Group from and against all Claims of every kind and character, whether they be direct or indirect, arising

10

from or related to actions and/or omissions of any kind of the personnel providing Services to Company by WPX hereunder when performing tasks or assignments for Company (including the Services), EVEN IF SUCH CLAIMS, DEMANDS, CAUSES OF ACTION, LIABILITIES, LOSSES OR EXPENSES ARE BASED UPON THE NEGLIGENCE (WHETHER JOINT, CONCURRENT, ACTIVE, OR PASSIVE) OF THE WPX GROUP OR ACTIONS OR OMISSIONS  (WHETHER OR NOT THE RESPONSIBILITY OF THE WPX GROUP) WHICH IMPOSE STRICT LIABILITY. The above indemnity of this Section 8(b) shall not apply to, and WPX shall indemnify, protect, defend and hold harmless Company from, Claims for bodily injury, illness or death of any employee of Company or any of WPX's contractors or subcontractors when arising out of any member of the WPX Group's gross negligence or willful misconduct.

(c)Except for claims against Company for failure to make any payments due hereunder, WPX shall defend, protect, indemnify and hold harmless Company from and against all Claims of every kind and character arising from or related to WPX's failure to pay its employees or because of its failure to withhold federal and state income taxes or any other such taxes or state, local, municipal, national or federal governmental charges which WPX may be required to pay with respect to WPX's employees during the period of such employment or which otherwise accrue under any employee plan or benefit arrangement, including without limitation, all obligations of WPX for salaries, vacation, and holiday pay, severance payments, bonuses and other forms of compensation, benefits or other payments, as well as all costs and expenses with respect to any termination by WPX of its employees who performed Services under this Agreement.

9.INSURANCE:    
WPX shall carry or cause to be carried and maintained in force throughout the entire term of this Agreement insurance coverage as described in paragraphs (a) through (c) below.
		
	(a)
	Workers' Compensation insurance complying with the laws of the state or states of the United States of America having jurisdiction over each WPX employee and Employers' Liability insurance with limits of $1,000,000 per each accident, $1,000,000 disease per each employee and a $1,000,000 disease policy limit.

(b)Commercial General Liability insurance on an occurrence basis with a combined single limit of $1,000,000 per each occurrence for bodily injury and property damage.
(c)Automobile Liability insurance with a combined single limit of $1,000,000 per each occurrence for bodily injury and property damage, which insurance shall include coverage for all owned, non-owned and hired vehicles.

		
	10.
	CONFIDENTIALITY:

(a)Confidential Information.    
(i)“Confidential Information” shall mean all information of a Party of a proprietary or confidential nature that any Party (the “Disclosing Party”) furnishes to the other Party (the “Receiving Party”), whether such information is written or oral and in whatever form or medium it is provided.

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(ii)Information shall not be deemed to be Confidential Information and the provisions of this Section 10 shall not apply to: (A) information which is or becomes generally available to the public other than as a result of a disclosure in violation of this Agreement; (B) information which was already known to the Receiving Party or its Representatives prior to being furnished pursuant to this Agreement; (C) information which becomes available to the Receiving Party or its Representatives on a non-confidential basis from a source other than a Disclosing  Party or its Representatives if such Receiving Party or its Representatives had no reason to believe that such source was subject to any prohibition against transmitting the information to such Receiving Party or its Representatives; and (D) information independently developed by the Receiving Party or its Representatives.
		
	(b)
	Confidentiality Obligations.

(i)    Each Receiving Party shall not disclose the Confidential Information to third parties or any of such Receiving Party's Affiliates, or to any other Person without the consent of the other Party other than to:  (A) such Receiving Party's Representatives, (B) a financial advisor, legal counsel, consultant, contractor or subcontractor that has a legitimate business need to be informed; (C) a Governmental Authority, or (D) a Person to which the Disclosing Party or its Affiliate is required by Applicable Laws or the applicable rules of any stock exchange or similar organization to disclose the Confidential Information.
(ii) In case of a disclosure of Confidential Information to a third party permitted by paragraph (b)(i)(A) and (b)(i)(B), the Receiving Party disclosing such information shall ensure that such third party has signed an agreement to protect the Confidential Information from further disclosure to the same extent as the Parties are obligated under this Section 10.    
		
	(c)
	Notice Preceding Compelled Disclosure.  If a Party or any Representative of such Party reasonably believes it is required by Applicable Law or the applicable rules of any stock exchange or similar organization (whether requested by oral question, interrogatory, request for information or documents, subpoena, civil investigative demand, similar law or legal process or otherwise) to disclose any Confidential Information, such Party shall promptly notify the other Party of such requirement as soon as it becomes aware of it.

(d)Return of Information.  All written Confidential Information, except for that portion of the Confidential Information that may be found in analyses, compilations, studies or other documents prepared by the Disclosing Party or its Representatives, shall be promptly returned upon written request of the Disclosing Party or, at the election of the Receiving Party, destroyed, and no copies shall be retained by such Receiving Party or its Representatives.  That portion of the Confidential Information that may be found in analyses, compilations, studies or other documents and Confidential Information not so requested or returned will be held and kept subject to the terms of this Agreement, or destroyed.

(e)Specific Performance.  The Parties recognize and agree that if any of the provisions of this Section 10 are not performed in accordance with their specific terms or are otherwise breached, immediate and irreparable harm or injury would be caused for which money damages would not be an adequate remedy.  Accordingly, each Party agrees that, in addition to other remedies, the Parties shall be entitled to an injunction restraining any violation or threatened violation of the provisions of this Section 10 or to specific performance or other equitable relief

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to enforce the provisions of this Section 10.  In the event that any action should be brought in equity to enforce the provisions of this Section 10, no Party will allege, and each Party hereby waives the defense, that there is adequate remedy at law.    
11.LIMITATION OF LIABILITY:
NEITHER THE COMPANY NOR WPX SHALL BE LIABLE TO THE OTHER OR ITS EMPLOYEES IN ANY EVENT OR FOR ANY REASON FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOSS OF PROFITS, LOSS OF DATA, LOSS OF REVENUE OR LOSS OF GOODWILL ARISING OUT OF OR RELATED TO THIS AGREEMENT.
		
	12.
	NOTICES:

Except as specifically provided otherwise herein, all notices required or permitted under this Agreement shall be in writing and shall be deemed given upon actual receipt.  Such notices may be given by:  (a) personal delivery; (b) facsimile; or (c) certified or registered mail for which postage is prepaid and a return receipt is requested.  Any such notices shall be sent to the respective addresses specified below.  Any Party's address may be changed by notice given to the other Party in accordance with this provision.
If to Company:

Apco Oil and Gas International Inc.
One Williams Center
Suite 3500
Tulsa, Oklahoma  74172
Attention:  Thomas Bueno
President
Phone No.:  (539) 573-2570
Facsimile No.:  (539) 573-3082
With a copy to: 

Apco Oil and Gas International Inc.
One Williams Center
Suite 3500
Tulsa, Oklahoma  74172
Attention:   Ben Holman
 Chief Accounting Officer and Controller
Phone No.:  (539) 573-2509
Facsimile No.:  (539) 573-3082
If to WPX:
WPX Energy, Inc.
One Williams Center
 Suite 2600        
Tulsa, Oklahoma 74172
Attention:  Bryan K. Guderian    
Phone No.:  (539) 573-4680
Facsimile No.:  (573) 573-1324

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With a copy to:

WPX Energy, Inc.
One Williams Center
Suite 3800
Tulsa, Oklahoma  74172
Attention:  Corporate Secretary
Phone No.:  (539) 573-5224
Facsimile No.:  (539) 573-5608
        
		
	13.
	CERTAIN PRACTICES: 

(a)Each of the Parties represents, warrants and covenants that neither it nor its Affiliates, officers, directors, employees or agents has made or shall make, any payments, loans, gifts, or promises or offers of payments, loans, gifts or anything of value, directly or indirectly to or for the use or benefit in whole or in part of, any foreign official or employee of any Governmental Authority or state-owned enterprise, or to or for the use of any political party or official thereof, or candidate for political office, or to any other Person if any such party knows, should have known or has or had reason to suspect, that any part of such payment, loan, gift or promise or offer (i) is for purposes of corruptly (A) influencing any act or decision of the recipient in its official capacity or (B) inducing such recipient to (1) do or omit to do any act in violation of its lawful duty or (2) use its influence to affect or influence any act or decision of the government of any foreign country or instrumentality thereof, or (3) secure any improper advantage, in each case, in order to assist the parties in obtaining or retaining business for or with, or directing business to, any person.
(b)Each Party agrees to advise all of its and its Affiliates' employees and Representatives engaged in implementing this Agreement regarding these practices and Applicable Law.  Each Party agrees to take appropriate steps to ensure that it and its Affiliates and their respective Representatives comply with these practices and Applicable Laws.  Each Party shall respond promptly, and in reasonable detail, to any notice from any other Parties or their auditors pertaining to the above stated warranty and representation and shall furnish documentary support for such response upon request from such other Party.
(c)In carrying out the terms and provisions of this Agreement, each Party agrees: (i) to ensure that all billings and reports rendered to the other Party under the terms of this Agreement will, to the best of its knowledge and belief, properly reflect the facts about all activities and transactions related to this Agreement, and (ii) to promptly notify the other Party upon discovery of any instance in which it fails to comply with this Section 13, or if it has reason to believe that any billings or reports covered by (i) above are no longer accurate and complete in any material respect.

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(d)Each Party, in performing its obligations under this Agreement, shall establish and maintain appropriate business standards, procedures and controls, including those necessary to avoid any real or apparent impropriety or adverse impact on the interests of the other Party.  Each Party shall review with reasonable frequency during the term of this Agreement such business standards and procedures including those related to the activities of its employees and agents in their relations with the other Party's employees, agents and representatives, and other third parties.
14.NON-WAIVER:
(a)No waiver by either Party hereto of any breach or default of any provision hereunder shall be deemed a waiver of any other provision hereof or a waiver of any subsequent breach or default.
(b)Except as specifically provided otherwise herein, no failure or delay on the part of either Party to exercise any right, power, or privilege under this Agreement and no course of dealing between the Parties shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein expressly provided are not exclusive of any rights or remedies which either Party would otherwise have pursuant to law or equity unless specifically provided to the contrary herein.  No notice to or demand on one Party in any case shall entitle the other Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of a Party to any other or further action in any circumstances without notice or demand.
15.ASSIGNMENT:
Neither Party shall assign this Agreement or any of its rights or claims hereunder without the prior written consent of the other, except to any entity which is an Affiliate of a Party or which succeeds to all or substantially all of a Party's assets by merger, consolidation, reorganization or purchase.  Subject to the foregoing, this Agreement shall inure to the benefit of and bind the successors and assigns of the Parties.
		
	16.
	NON-EXCLUSIVE AGREEMENT:  

Nothing herein contained shall be construed to prevent Company from engaging other contractors or other persons during the term of this Agreement to perform the Services.
		
	17.
	NO THIRD PARTY BENEFICIARY

Nothing contained in this Agreement shall be considered or construed as conferring any right or benefit on a Person not a Party, and neither this Agreement nor the performance hereunder shall be deemed to have created a joint venture or partnership between the Parties.
		
	18.
	HEADINGS:  

The headings preceding the text of the sections and subsections hereof are inserted solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect.

15

		
	19.
	ENTIRE AGREEMENT:  

This Agreement is the entire agreement between the Parties with respect to the subject matter hereof.  This Agreement supersedes any and all prior negotiations, promises, understandings, agreements, arrangements, representations, warranties, and/or contracts of any form or nature whatsoever, whether oral or in writing, and whether explicit or implicit, which may have been entered into prior to the execution hereof between the Parties as to the subject matter hereof.  
		
	20.
	SEVERABILITY: 

If, for any reason, any provision of this Agreement is unenforceable, the remaining provisions hereof shall nevertheless be carried into effect.
		
	21.
	AMENDMENTS:  

No amendment, supplement or waiver of this Agreement shall be valid unless evidenced in writing and signed by a duly authorized representative of each Party.
		
	22.
	GOVERNING LAW:

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

		
	23.
	DISPUTE RESOLUTION:

(a)Negotiations; Arbitration.  
(i)Any dispute, controversy or claim arising out of or relating to this Agreement, or the performance, breach, termination or invalidity hereof shall be settled by arbitration in accordance with the American Arbitration Rules in effect on the date hereof.  The arbitration shall be the sole and exclusive forum for resolution of the dispute, controversy or claim, and the award shall be final and binding.  Judgment thereon may be entered by any court having jurisdiction.  The number of arbitrators shall be three, each of whom shall be disinterested in the dispute, controversy or claim and shall have no connection with either Party.  One arbitrator will be selected by each Party and one by mutual agreement of the first two or, if they cannot agree, by the appointing authority designated in accordance with the American Arbitration Rules.  The Parties shall have thirty (30) days to each appoint an arbitrator.  If, after such 30-day period, the Parties have not made such appointment, the appointing authority shall select all three arbitrators.  The Parties and the appointing authority may appoint from among the nationals of any country, whether or not a Party is a national of that country.  The place of arbitration shall be The City of Tulsa, Oklahoma.  The arbitration shall be conducted in the English language and any foreign-language documents presented at such arbitration shall be accompanied by an English translation thereof.  The arbitrators shall apply the laws of the State of Oklahoma without regard to the principles of conflicts of laws.
(ii)In the event that there is an existing arbitration pursuant to paragraph (i) above, and that the same or a similar dispute, controversy or claim should arise between Persons other than the parties to the existing arbitration, the arbitrators shall have the power to allow the other

16

 Persons to be joined in the existing arbitration with their express consent, and to make a single final award determining all disputes, controversies or claims among them.
(iii)Each Party hereby submits to the jurisdiction of the United States District Court for the Northern District of Oklahoma in any action, suit or proceeding with respect to the enforcement of the arbitration provisions of this Agreement and the jurisdiction of such court with respect to the enforcement of any award thereunder.
(iv)The compensation and expenses of the arbitrators shall be borne equally by the Parties.  Each Party shall bear its own costs, expenses and attorneys' fees, provided that, if court proceedings to stay litigation or compel arbitration are necessary, the Party who unsuccessfully opposes such proceedings shall pay all reasonable associated costs, expenses, and attorneys' fees in connection with such court proceedings.
		
	(b)
	Waiver of Immunity.  Each Party hereby irrevocably consents to and waives any objection which it may now or hereafter have to the laying of venue of any proceeding relating to enforcement of the arbitration provisions, or any award thereunder brought in the courts specified, and further irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of any such proceeding in such courts.

(c)Judgment Currency.  The obligation of a Party in respect of any sum due from it to another Party expressed in United States Dollars, notwithstanding any judgment in a currency other than United States Dollars, shall not be discharged until the first Business Day following receipt by such other Party of any sum adjudged to be so due in such other currency on which (and only to the extent that) such other Party may in accordance with normal banking procedures purchase United States Dollars with such other currency.  If the Dollars so purchased are less than the sum originally due to such other Party hereunder, the obligated Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such other Party against such Dollar shortfall.  If the United States Dollars so purchased are greater than the sum originally due to such other Party hereunder, such other Party agrees to the fullest extent permitted by law to pay to the obligated Party an amount equal to the excess of the Dollars so purchased over the sum originally due to such other Party hereunder
24.MUTUAL COOPERATION:
Company and WPX will provide each other with such assistance as may reasonably be required by any of them in connection with the performance of all obligations under this Agreement.
		
	25.
	FORCE MAJEURE:

Neither party hereto shall be liable in any manner for failure or delay of performance of all or part of this Agreement (other than payment obligations), directly or indirectly, owing to any acts of God, governmental orders or restrictions, strikes or other labor disturbances, riots, embargoes, computer equipment failures, power failures, telecommunication line failures, revolutions, wars (declared or undeclared), sabotage, fires, floods, or any other causes or circumstances beyond the control of the parties. The party, however, experiencing such delay or failure shall use reasonable efforts to give prompt notice to the other party and shall use reasonable efforts to remove the causes or circumstances of nonperformance with dispatch and or a consistent basis.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
APCO OIL AND GAS    WPX ENERGY, INC.
INTERNATIONAL INC.

/s/ Michael Kyle                            /s/ Rodney J. Sailor    
By:  Michael Kyle                            By:  Rodney J. Sailor
		
	Title:  Chief Operating Officer
	Title:  Senior Vice President, Chief

 Financial Officer and Treasurer

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EXHIBIT A
COST CENTERS - MMF ALLOCATION
		
	1.
	Risk Management and Insurance

		
	2.
	Investor Relations

		
	3.
	Ethics

		
	4.
	Audit Services

		
	5.
	Real Estate and Facilities

		
	6.
	Record Information Management

		
	7.
	Treasury

		
	8.
	Corporate Overhead

		
	9.
	Chief Accounting Officer

		
	10.
	VP Tax

19

EXHIBIT B
COST CENTERS - EMPLOYEE RATIO ALLOCATION
		
	1.
	HR Business Partners

		
	2.
	HR-Payroll/HRIS

		
	3.
	HR-Benefits

		
	4.
	HR-Total Rewards

		
	5.
	HR-Compensation

		
	6.
	IT-Salaries/Benefits

		
	7.
	IT-Others

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EXHIBIT C
APCO-FOCUSED EMPLOYEES
	
			
	 
	Position
	Salary Allocation

	 
	Vice President-International Exploration & Production
	80%

	 
	Regional Vice President --International Exploration & Production
	90%

	 
	Director of International Accounting
	90%

	 
	Manager of International Accounting & Financial Reporting
	90%

	 
	Senior Accountant
	90%

	 
	Administrative Assistant
	75%

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EXHIBIT D
RENT CHARGE
The annual fee is 3,450 ft2($23.06/ft2)(.86) = $68,419.02.

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