APACHE CORPORATION
OUTSIDE DIRECTORS’ RETIREMENT PLAN
(As Amended and Restated November 20, 2008, 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.
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
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.
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 66 2 / 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. In calculating the amount
of benefits for the most recent episode of participation,
the
2
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.
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.
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 wi
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