EXHIBIT 10.26
APACHE CORPORATION
2000 SHARE APPRECIATION PLAN
"120 BY '04"
(AS AMENDED AND RESTATED FEBRUARY 5, 2003, EFFECTIVE AS OF MARCH 12, 2003)
TABLE OF CONTENTS
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PAGE
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Section 1 - Introduction..............................................................................1
1.1 Establishment..........................................................................1
1.2 Purposes...............................................................................1
Section 2 - Definitions.............................................................................1-6
2.1 Definitions..........................................................................1-6
2.2 Headings; Gender and Number............................................................6
Section 3 - Plan Administration.......................................................................6
Section 4 - Stock Subject to the Plan.................................................................7
4.1 Number of Shares.......................................................................7
4.2 Other Shares of Stock..................................................................7
4.3 Certain Adjustments....................................................................7
Section 5 - Reorganization or Liquidation.............................................................8
Section 6 - Grant of Plan Units....................................................................8-13
6.1 Grants...............................................................................8-9
6.2 Grant Agreements....................................................................9-10
6.2.1 Grant Terms...................................................................9
6.2.2 Payment of Payout Amounts..................................................9-10
6.3 Termination of Employment, Death, Disability, etc..................................10-11
6.4 Payment and Tax Withholding........................................................11-12
6.5 Subsequent Grant Agreements...........................................................12
6.6 Stockholder Privileges................................................................12
6.7 Limitations on Stock Issuable to Officers and Directors............................12-13
6.8 Deferral of Income....................................................................13
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PAGE
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Section 7 - Change of Control.....................................................................13-14
7.1 In General............................................................................13
7.2 Limitation on Payments................................................................14
7.3 Definition............................................................................14
Section 8 - Rights of Employees, Participants.....................................................14-15
8.1 Employment............................................................................14
8.2 Non-transferability................................................................14-15
Section 9 - Other Employee Benefits..................................................................15
Section 10 - Plan Amendment, Modification and Termination............................................15
Section 11 - Requirements of Law.....................................................................16
11.1 Requirements of Law...................................................................16
11.2 Section 16 Requirements...............................................................16
11.3 Governing Law.........................................................................16
Section 12 - Duration of the Plan....................................................................16
</Table>
APACHE CORPORATION
2000 SHARE APPRECIATION PLAN
(AS AMENDED AND RESTATED FEBRUARY 5, 2003, EFFECTIVE AS OF MARCH 12, 2003)
SECTION 1
INTRODUCTION
1.1 Establishment. Apache Corporation, a Delaware corporation (hereinafter
referred to, together with its Affiliated Corporations (as defined below) as the
"Company" except where the context otherwise requires), hereby established the
Apache Corporation 2000 Share Appreciation Plan (the "Plan"), effective as of
October 12, 2000.
1.2 Purposes. The primary purpose of this Plan is to focus the energies of
the Company's employees on significantly increasing shareholder wealth through
stock price appreciation to share prices of $87, $104 and $156 and a doubling of
the Company's currently projected oil and gas production per share for calendar
year 2000 (as adjusted for (i) the Company's ten-percent stock dividend, record
date December 31, 2001, payable January 21, 2002, and (ii) the Company's
five-percent stock dividend, record date March 12, 2003, payable April 2, 2003).
The share price goals of this Plan seek to increase shareholder wealth by
approximately $5.2 to $7.8 billion dollars with the Company's employees sharing
in approximately three percent of the additional shareholder value created. The
production goal is designed to inspire the Company's employees to significantly
improve the one factor that is most within the control of the Company,
production, and that is involved in determining the Company's earnings per share
and cash flow per share. Additional purposes of this Plan include the retention
of existing key employees and as an additional inducement in the recruitment of
talented personnel in a competitive environment.
SECTION 2
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set forth below:
"Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) which is affiliated with Apache
Corporation through stock ownership or otherwise and is treated as a common
employer under the
1
provisions of Sections 414(b) and (c) or any successor section(s) of the
Internal Revenue Code.
"Base Salary" means, with regard to any Participant, such Participant's
base compensation as an employee of the Company at the date of award of a Plan
Unit (except for the calculation of the Independent Production Goal Amount, in
which case the date shall be the Independent Production Goal Date), without
regard to any bonus, pension, profit sharing, stock option, life insurance or
salary continuation plan which the Participant either receives or is otherwise
entitled to have paid on his behalf.
"Board" means the Board of Directors of the Company.
"Category" means one of the three groupings of Participants in the Plan
whose Plan Units represent the right to receive the same multiple of their base
salary for each Payout Amount.
"Committee" means the Stock Option Plan Committee of the Board or such
other Committee of the Board that is empowered hereunder to administer the Plan.
The Committee shall be constituted at all times so as to permit the Plan to be
administered by "non-employee directors" (as defined in Rule 16b-3 of the
Securities Exchange Act of 1934, as amended).
"Deferred Delivery Plan" means the Company's Deferred Delivery Plan,
effective as of February 10, 2000, as it may be amended from time to time, or
any successor plan.
"Eligible Employees" means those full-time employees (including, without
limitation, the Company's executive officers), and certain part-time employees,
of the Company.
"Fair Market Value" means the closing price of the Stock as reported on The
New York Stock Exchange, Inc. Composite Transactions Reporting System
("Composite Tape") for a particular date. If there are no Stock transactions on
such date, the Fair Market Value shall be determined as of the immediately
preceding date on which there were Stock transactions.
"Final Amount" means with regard to any:
(a) Category I Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals two (2) times such
Participant's Base Salary divided by $156;
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(b) Category II Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals one (1) times such
Participant's Base Salary divided by $156; and
(c) Category III Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals 50 percent (.50) times such
Participant's Base Salary divided by $156;
which amount, in each case, shall be fixed and not subject to adjustment
due to market fluctuation.
"Final Price Threshold Date" means the last of any 10 trading days (which
need not be consecutive) during any period of 30 consecutive trading days
occurring prior to January 1, 2005, but not thereafter, on each of which 10 days
the closing price of the Stock as reported on the Composite Tape equaled or
exceeded $156 per share. If the above trading criteria are met more than once,
the first occurrence shall be deemed to be the Final Price Threshold Date.
"Final Plan Unit" means an investment unit convertible into the applicable
Final Amount for a Participant upon occurrence of the Final Price Threshold
Date.
"Grant" has the meaning set forth in Section 6 hereof.
"Grant Agreement" has the meaning set forth in Section 6 hereof.
"Independent Production Goal Amount" means with regard to any:
(a) Category I Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals one and one half (1.5) times
such Participant's Base Salary divided by the Independent Production Goal
Price;
(b) Category II Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals 75 percent (.75) times such
Participant's Base Salary divided by the Independent Production Goal Price;
and
(c) Category III Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals 37.5 percent (.375) times such
Participant's Base Salary divided by the Independent Production Goal Price;
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which amount, in each case, shall be fixed and not subject to adjustment
due to market fluctuation.
"Independent Production Goal Date" means the last day of any fiscal quarter
ending on or before December 31, 2004 during which fiscal quarter the Company's
average daily production (calculated on an annualized basis) equals or exceeds
1.33 barrels of oil equivalent per outstanding share of Stock (calculated on a
fully diluted basis), as confirmed by the Company's independent auditors. If the
above production criterion is met more than once, the first occurrence shall be
deemed to be the Independent Production Goal Date.
"Independent Production Goal Price" means the average daily closing price
of the Stock as reported on the Composite Tape for the quarter ending on the
Independent Production Goal Date.
"Independent Production Goal Plan Unit" means an investment unit
convertible into the applicable Independent Production Goal Amount for a
Participant upon occurrence of the Independent Production Goal Date.
"Initial Amount" means with regard to any:
(a) Category I Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals one (1) times such
Participant's Base Salary divided by $87;
(b) Category II Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals 50 percent (.50) times such
Participant's Base Salary divided by $87; and
(c) Category III Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals 25 percent (.25) times such
Participant's Base Salary divided by $87;
which amount, in each case, shall be fixed and not subject to adjustment
due to market fluctuation.
"Initial Price Threshold Date" means the last of any 10 trading days (which
need not be consecutive) during any period of 30 consecutive trading days
occurring prior to January 1, 2005, but not thereafter, on each of which 10 days
the closing price of the Stock as reported on the Composite Tape equaled or
exceeded $87 per share. If the above trading criteria are met more than once,
the first occurrence shall be deemed to be the Initial Price Threshold Date.
4
"Initial Plan Unit" means an investment unit convertible into the
applicable Initial Amount for a Participant upon occurrence of the Initial Price
Threshold Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as it may
be amended from time to time.
"Participant" means an Eligible Employee designated by the Committee from
time to time during the term of the Plan to receive one or more grants of Plan
Units under the Plan.
"Payout Amounts" means the Initial Amount, the Secondary Amount, the Final
Amount and/or the Independent Production Goal Amount.
"Plan Units" means each of the Initial Plan Units, Secondary Plan Units,
Final Plan Units and/or Independent Production Goal Plan Units.
"Price Threshold Date" means the Initial Price Threshold Date, the
Secondary Price Threshold Date, the Final Price Threshold Date and/or the
Independent Production Goal Date, as the context may require.
"Secondary Amount" means with regard to any:
(a) Category I Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals three (3) times such
Participant's Base Salary divided by $104;
(b) Category II Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals one and one half (1.5) times
such Participant's Base Salary divided by $104; and
(c) Category III Participant, such number of shares of Stock (rounded
down to the nearest full share) which equals 75 percent (.75) times such
Participant's Base Salary divided by $104;
which amount, in each case, shall be fixed and not subject to adjustment
due to market fluctuation.
5
"Secondary Price Threshold Date" means the last of any 10 trading days
(which need not be consecutive) during any period of 30 consecutive trading days
occurring prior to January 1, 2005, but not thereafter, on each of which 10 days
the closing price of the Stock as reported on the Composite Tape equaled or
exceeded $104 per share. If the above trading criteria are met more than once,
the first occurrence shall be deemed to be the Secondary Price Threshold Date.
"Secondary Plan Unit" means an investment unit convertible into the
applicable Secondary Amount for a Participant upon occurrence of the Secondary
Price Threshold Date.
"Stock" means the $1.25 par value Common Stock of the Company.
"Stock Units" means investment units under the Deferred Delivery Plan, each
of which is deemed to be equivalent to one share of Stock.
2.2 Headings; Gender and Number. The headings contained in the Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of the Plan. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.
SECTION 3
PLAN ADMINISTRATION
The Plan shall be administered by the Committee. In accordance with the
provisions of the Plan, the Committee shall, in its sole discretion, adopt rules
and regulations for carrying out the purposes of the Plan, including, without
limitation, selecting the Participants from among the Eligible Employees and the
Category of participation for each Participant, appointing designees or agents
(who need not be members of the Committee or employees of the Company) to assist
the Committee with the administration of the Plan, and establish such other
terms and requirements as the Committee may deem necessary or desirable and
consistent with the terms of the Plan. No member of the Committee shall be
liable for any action or determination made in good faith. The determinations,
interpretations and other actions of the Committee pursuant to the provisions of
the Plan shall be binding and conclusive for all purposes and on all persons.
6
SECTION 4
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to Sections 4.3 and Section 6.1 hereof, up to four
million forty two thousand five hundred (4,042,500) shares of Stock are
authorized for issuance under the Plan upon conversion of any Plan Units in
accordance with the Plan's terms and subject to such restrictions or other
provisions as the Committee may from time to time deem necessary. Shares of
Stock which may be issued pursuant to the conversion of any Plan Units awarded
hereunder shall be applied to reduce the maximum number of shares of Stock
remaining available for use under the Plan. The Company shall at all times
during the term of the Plan and while any Plan Units are outstanding retain as
authorized and unissued Stock and/or Stock in the Company's treasury, at least
the number of shares from time to time required under the provisions of the
Plan, or otherwise assure itself of its ability to perform its obligations
hereunder.
4.2 Other Shares of Stock. Any shares of Stock that are subject to issuance upon
conversion of a Plan Unit which expires, is forfeited, is cancelled, or for any
reason is terminated, and any shares of Stock that for any other reason are not
issued to a Participant or are forfeited shall automatically become available
for use under the Plan.
4.3 Certain Adjustments. If the Company shall at any time increase or decrease
the number of its outstanding shares of Stock (other than by way of issuing
Stock in a public or private offering for cash or property) or change in any way
the rights and privileges of such shares by means of a Stock dividend or any
other distribution upon such shares payable in Stock, or through a Stock split,
subdivision, consolidation, combination, reclassification or recapitalization
involving the Stock or a subscription for shares of Stock that has the effect of
diluting the Company's capital (hereinafter a "capital restructuring"), then for
purposes of determining the entitlement to payments under Section 6, (i) the
number of shares authorized for issuance under this Section 4, and (ii) the $87
per share amount, $104 per share amount and $156 per share amount referenced in
Section 1 and contained in the definitions set forth in Section 2 hereof and the
amount of production required to attain the Independent Production Goal shall
be, in each case, equitably and proportionally adjusted to take into account any
capital restructuring. Any adjustment under this Section shall be made by the
Committee, whose determination with regard thereto, including whether any
adjustment is needed, shall be final and binding upon all parties.
7
SECTION 5
REORGANIZATION OR LIQUIDATION
In the event that the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or if all or substantially all
of the assets or more than 20 percent of the outstanding voting stock of the
Company is acquired by any other corporation, business entity or person, or in
case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, and if the provisions of Section
7 hereof do not apply, the Committee, or the board of directors of any
corporation assuming the obligations of the Company, shall, as to the Plan and
outstanding Plan Units either (i) make appropriate provision for the adoption
and continuation of the Plan by the acquiring or successor corporation and for
the protection of any holders of such outstanding Plan Units by the substitution
on an equitable basis of appropriate stock of the Company or of the merged,
consolidated or otherwise reorganized corporation which will be issuable with
respect to the Stock, provided that no additional benefits shall be conferred
upon the Participants holding such Plan Units as a result of such substitution,
or (ii) provided that a Price Threshold Date has occurred, upon written notice
to the Participants, the Committee may accelerate the vesting and payment dates
of the entitlement to receive cash and Stock under outstanding Plan Units so
that all such existing entitlements are paid prior to any such event. In the
latter event, such acceleration shall only apply to entitlements to cash and
Stock payable as the result of the occurrence of the most recent Price Threshold
Date and shall not by such acceleration, deem the occurrence of a Price
Threshold Date that has not occurred by the date of the notice.
SECTION 6
GRANT OF PLAN UNITS
6.1 Grants. Each Participant may be awarded an initial grant (a "Grant") of Plan
Units under this Plan by the Committee, which Grant shall be composed of one
Initial Plan Unit, Secondary Plan Unit, Final Plan Unit and Independent
Production Goal Unit. The Committee, in its sole discretion, may award
additional Grants to any Participant in connection with such Participant's
receiving a significant increase in salary and/or a promotion within the
Company. Each Grant awarded by the Committee shall be evidenced by a written
agreement entered into by the Company and the Participant to whom the Grant is
awarded (the "Grant Agreement"), which shall contain the terms and conditions
set out in
8
this Section 6, as well as such other terms and conditions as the Committee may
consider appropriate.
6.2 Grant Agreements. Each Grant Agreement entered into by the Company and each
Participant shall specify which Category applies for such Participant and
contain at least the following terms and conditions. In the event of any
inconsistency between the provisions of the Plan and any Grant Agreement, the
provisions of the Plan shall govern.
6.2.1 Grant Terms. Each Grant Agreement shall evidence the Grant of Plan
Units and entitle the Participant to receive the indicated Plan Units which
shall convert into the right to receive a conditional payment of cash and
issuance of Stock upon the occurrence of one or more of the Price Threshold
Dates, all as set forth below.
(a) If at any time prior to January 1, 2005, the Initial Price
Threshold Date occurs, the Participant may become entitled to receive a portion
or all of the Initial Amount payable to Participants in such Category, as
specified in the applicable Grant Agreement, in accordance with the payment
schedule and as otherwise set out in Section 6.2.2.
(b) If at any time prior to January 1, 2005, the Secondary Price
Threshold Date occurs, the Participant may become entitled to receive a portion
or all of the Secondary Amount payable to Participants in such Category, as
specified in the applicable Grant Agreement, in accordance with the payment
schedule and as otherwise set out in Section 6.2.2.
(c) If at any time prior to January 1, 2005, the Final Price Threshold
Date occurs, the Participant may become entitled to receive a portion or all of
the Final Amount payable to Participants in such Category, as specified in the
applicable Grant Agreement, in accordance with the payment schedule and as
otherwise set out in Section 6.2.2.
(d) If at any time prior to January 1, 2005, the Independent Production
Goal Date occurs, the Participant may become entitled to receive a portion or
all of the Independent Production Goal Amount payable to Participants in the
same Category, as specified in the applicable Grant Agreement, in accordance
with the payment schedule and as otherwise set out in Section 6.2.2.
6.2.2 Payment of Payout Amounts. Subject to the provisions of Section 6.3,
the Payout Amounts shall be payable in increments strictly in accordance with
the following schedule:
9
(a) The entitlement to receive the first one-third (1/3) of any Payout
Amount shall vest on the applicable Price Threshold Date and shall be paid by
the Company to the Participant within thirty (30) days of the applicable Price
Threshold Date in the manner set out in Section 6.4 below.
(b) The entitlement to receive the remainder of any Payout Amount shall
vest and become payable in equal parts on the dates occurring, respectively, 12
months and 24 months after the applicable Price Threshold Date, in the same
proportions and amounts as set forth in Section 6.4 below, and shall be paid by
the Company to the Participant within thirty (30) days of such date. If any of
the above dates is not a business day during which the Company is open for
business, such date of vesting or payment shall be the first business date
occurring immediately thereafter.
(c) No Payout Amount or portion thereof shall be payable under this Section
6.2.2 if the applicable Price Threshold Date has not occurred prior to January
1, 2005.
6.3 Termination of Employment, Death, Disability, etc. Except as set forth
below, each Grant Agreement shall state that each Grant, the Plan Units received
thereunder and the right to receive any payment thereunder upon conversion of
the Plan Units shall be subject to the condition that the Participant has
remained an Eligible Employee from the initial award of a Grant until the
applicable vesting date as follows:
(a) If the Participant voluntarily leaves the employment of the Company, or
if the employment of the Participant is terminated by the Company for cause or
otherwise, any Plan Units not previously converted and the right to receive any
Payout Amounts not yet paid in accordance with Section 6.2.2 shall thereafter be
void and forfeited for all purposes.
(b) If the Participant retires from employment with the Company on or after
attaining age 60, the retired Participant shall be entitled to receive the
payments in Stock and cash in accordance with Section 6.2.2, provided that (i)
such Participant has certified in writing to the Committee his commitment not to
enter into full-time employment or a consulting arrangement with a competitor of
the Company, and (ii) the applicable Price Threshold Date has occurred prior to
the Participant's last day of employment with the Company. Such retired
Participant shall not be entitled to any payment which may arise due to the
occurrence of a Price Threshold Date after the effective date of such
Participant's retirement. If the retired Participant dies before receiving all
of the payments to which he or she is entitled under this Section 6.3(b), such
payments shall be made to those entitled under the retired Participant's will or
by the laws of descent
10
and distribution. A failure of the Participant to comply with the undertaking of
clause (i) above shall void such Participant's right to payments hereunder.
(c) If the Participant dies, or if the Participant becomes disabled (as
determined pursuant to the Company's Long-Term Disability Plan or any successor
plan), while still employed, payment in Stock and cash in accordance with
Section 6.2.2 shall be made to the disabled Participant or to those entitled
under the Participant's will or by the laws of descent and distribution,
provided that the applicable Price Threshold Date has occurred prior to the
earlier of such Participant's disability or death. There shall be no entitlement
to any payment, which may arise due to the occurrence of a Price Threshold Date
after the earlier of such Participant's disability or death.
6.4 Payment and Tax Withholding. Each Grant Agreement shall provide that, upon
payment of any entitlement upon conversion of any Plan Units, the Participant
shall make appropriate arrangements with the Company to provide for the amount
of minimum tax withholding required by Sections 3102 and 3402 or any successor
section(s) of the Internal Revenue Code and applicable state and local income
and other tax laws, as follows:
(a) If upon the achievement of a Threshold Date the credit rating of the
Company's long term, unsecured debt is at or above investment grade, then each
payment of the related Payout Amount shall be made in a proportion of cash and
shares of Stock, determined by the Committee, such that the cash portion shall
be sufficient to cover the withholding amount required by this Section. The cash
portion of any payment of a Payout Amount shall be based on the Fair Market
Value of the shares of Stock on the business day immediately preceding the
payment date. Such cash portion shall be withheld by the Company to satisfy
applicable tax withholding requirements.
11
(b) If upon the achievement of a Threshold Date the Company's long term,
unsecured debt has a credit rating below investment grade, the Committee, in its
sole discretion, may either (i) provide for the payment of the withholding
amount required by this Section as set forth in Subsection (a) above or (ii)
specify that each payment of the related Payout Amount to a Participant be made
only after the Participant has made funds available to the Company sufficient to
cover the withholding amount required by this Section. The funds required by
this Subsection (b) may be obtained by the Participant by means of a loan from a
securities broker or dealer, in which case the Participant may satisfy the
requirements hereof by delivering to the Company an irrevocable instruction to
such broker or dealer to promptly deliver to the Company, by wire transfer or
certified or cashier's check, the funds necessary to meet the Participant's
obligations hereunder and such delivery instructions for the shares issuable to
the Participant as the broker or dealer may require. The calculation of the
funds to be provided by the Participant under this paragraph shall be based on
the Fair Market Value of the shares of Stock to be issued to the Participant, on
the business day immediately preceding the payment date.
(c) Upon a request made to the Committee by a Participant, the proportion
of cash and Stock as set forth in Subsection (a) above may be, but need not be,
changed by the Committee, in its sole discretion, to provide for, among other
things, special or additional tax burdens on a Participant but, in no event,
shall the cash portion of any payment exceed fifty percent (50%).
6.5 Subsequent Grant Agreements. Following the award of Grants in 2000,
additional Participants may be designated by the Committee for grants of Plan
Units thereafter subject to the same terms and conditions set forth above for
initial grants except that the Committee, in its sole discretion, may reduce the
value of the Initial Amount, Secondary Amount, Final Amount or Independent
Production Goal Amount to which subsequent Participants may become entitled and
the applicable Grant Agreement shall be modified to reflect such reduction.
6.6 Stockholder Privileges. No Participant shall have any rights as a
stockholder with respect to any shares of Stock into which a Plan Unit is
convertible until the Participant becomes the holder of record of such Stock.
6.7 Limitations on Stock Issuable to Officers and Directors. Any provision of
the Plan notwithstanding, the total number of shares of Stock issuable to
Participants who are directors or officers of the Company (as defined for the
purposes of Section 16 of the Securities Exchange Act of 1934, as amended) shall
not exceed 49 percent of the total shares issuable under the Plan (the "D&O
Limitation"). If the total number of shares of Stock issuable to all of the
Company's directors and officers who are Participants in the Plan shall exceed
12
the D&O Limitation, then the total number of shares of Stock issuable to such
Participants shall be reduced to a number equal to the D&O Limitation and the
number of shares of Stock issuable to each such Participant upon conversion of
any Plan Unit shall be reduced pro rata.
6.8 Deferral of Income. For Participants eligible for participation in the
Deferred Delivery Plan, all or a portion of the income resulting from the
conversion of Plan Units into Payout Amounts is subject to deferral into the
Participant's Deferred Delivery Plan account, if the Participant has made an
irrevocable election to make such a deferral, as follows: (a) with respect to
the first payment to be made upon the occurrence of a Price Threshold Date, no
more than 30 days after the Participant executes the applicable Grant Agreement
and/or (b) with respect to any other payment to be made after the occurrence of
a Price Threshold Date, at least six months prior to the date such payment is to
be made by the Company. If the Participant has complied with the above
requirements, all or a portion of the income resulting from any payment upon the
conversion of Plan Units into Payout Amounts shall be deferred into the
Participant's Deferred Delivery Plan account and no additional cash or shares of
Stock shall be delivered to the Participant.
SECTION 7
CHANGE OF CONTROL
7.1 In General. In the event of the occurrence of a change of control of the
Company as defined in Section 7.3 hereof, and assuming the occurrence of a Price
Threshold Date, the entitlement to receive cash and Stock upon conversion of any
Plan Units shall vest automatically, without further action by the Committee or
the Board, and shall become payable as follows:
(a) If such change of control occurs subsequent to the occurrence of a
Price Threshold Date, (i) the first one-third (1/3) of the applicable Payout
Amount shall vest and be paid pursuant to Section 6.2.2(a) hereof, and (ii) the
remainder of such Payout Amount shall vest as of the date of such change of
control and shall be paid by the Company to the Participant within thirty (30)
days of the date of such change of control in the manner set out in Section 6.4
hereof.
(b) If the occurrence of a Price Threshold Date occurs subsequent to the
date of a change of control, the applicable Payout Amount shall vest in full as
of such Price Threshold Date and shall be paid by the Company to the Participant
within thirty (30) days of such Price Threshold Date in the manner set out in
Section 6.4 hereof.
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7.2 Limitation on Payments. If the provisions of this Section 7 would result in
the receipt by any Participant of a payment within the meaning of Section 280G
or any successor section(s) of the Internal Revenue Code, and the regulations
promulgated thereunder, and if the receipt of such payment by any Participant
would, in the opinion of independent tax counsel of recognized standing selected
by the Company, result in the payment by such Participant of any excise tax
provided for in Sections 280G and 4999 or any successor section(s) of the
Internal Revenue Code, then the amount of such payment shall be reduced to the
extent required, in the opinion of independent tax counsel, to prevent the
imposition of such excise tax; provided, however, that the Committee, in its
sole discretion, may authorize the payment of all or any portion of the amount
of such reduction to the Participant.
7.3 Definition. For purposes of the Plan, a "change of control" shall mean any
of the events specified in the Company's Income Continuance Plan or any
successor plan which constitute a change of control within the meaning of such
plan.
SECTION 8
RIGHTS OF EMPLOYEES, PARTICIPANTS
8.1 Employment. Neither anything contained in the Plan or any Grant Agreement
nor the granting of any Plan Units under the Plan shall confer upon any
Participant any right with respect to the continuation of his or her employment
by the Company or any Affiliated Corporation, or interfere in any way with the
right of the Company or any Affiliated Corporation, at any time to terminate
such employment or to increase or decrease the level of the Participant's
compensation from the level in existence at the time of the award of Plan Units.
8.2 Non-transferability. No right or interest of any Participant in a Plan Unit
granted pursuant to the Plan shall be assignable or transferable during the
lifetime of the Participant, either voluntarily or involuntarily, or subjected
to any lien, directly or indirectly, by operation of law, or otherwise,
including execution, levy, garnishment, attachment, pledge or bankruptcy. In the
event of a Participant's death, a Participant's rights and interests in any Plan
Unit shall, to the extent provided in Section 6.3 hereof, be transferable by
testamentary will or the laws of descent and distribution, and payment of any
entitlements due under the Plan shall be made to the Participant's legal
representatives, heirs or legatees. If in the opinion of the Committee a person
entitled to payments or to exercise rights with respect to the Plan is disabled
from caring for his or her affairs because of mental condition, physical
condition or age, payment due such
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person may be made to, and such rights shall be exercised by, such person's
guardian, conservator or other legal personal representative upon furnishing the
Committee with evidence satisfactory to the Committee of such status.
SECTION 9
OTHER EMPLOYEE BENEFITS
The amount of any income deemed to be received by a Participant as a result of
the payment upon conversion of a Plan Unit shall not constitute "earnings" or
"compensation" with respect to which any other employee benefits of such
Participant are determined, including without limitation benefits under any
pension, profit sharing, life insurance or salary continuation plan.
SECTION 10
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Committee or the Board may at any time terminate, and from time to time may
amend or modify the Plan. No amendment, modification or termination of the Plan
shall in any manner adversely affect any Plan Unit theretofore awarded under the
Plan, without the consent of the Participant holding such Plan Unit.
The Committee shall have the authority to adopt such modifications, procedures
and subplans as may be necessary or desirable to comply with the provisions of
the laws (including, but not limited to, tax laws and regulations) of countries
other than the United States in which the Company may operate, so as to assure
the viability of the benefits of the Plan to Participants employed in such
countries.
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SECTION 11
REQUIREMENTS OF LAW
11.1 Requirements of Law. The issuance of Stock and the payment of cash pursuant
to the Plan shall be subject to all applicable laws, rules and regulations,
including applicable federal and state securities laws. The Company may require
a Participant, as a condition of receiving payment upon conversion of a Plan
Unit, to give written assurances in substance and form satisfactory to the
Company and its counsel to such effect as the Company deems necessary or
appropriate in order to comply with federal and applicable state securities
laws.
11.2 Section 16 Requirements. If a Participant is an officer or director of the
Company within the meaning of Section 16, Grants awarded hereunder shall be
subject to all conditions required under Rule 16b-3, or any successor rule(s)
promulgated under the Securities Exchange Act of 1934, as amended, to qualify
the Plan Units for any exemption from the provisions of Section 16 available
under such Rule. Such conditions are hereby incorporated herein by reference and
shall be set forth in the agreement with the Participant, which describes the
Grant.
11.3 Governing Law. The Plan and all Grant Agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Texas.
SECTION 12
DURATION OF THE PLAN
The Plan shall terminate at such time as may be determined by the Committee, and
no Plan Units shall be awarded after such termination. If not sooner terminated
under the preceding sentence, the Plan shall fully cease and expire at midnight
on December 31, 2004. Payout Amounts for which one or more of the Price
Threshold Dates has occurred and which remain outstanding at the time of the
Plan termination shall continue in accordance with the Grant Agreement
pertaining to such Plan Units.
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Dated: February 5, 2003 effective as of March 12, 2003
APACHE CORPORATION
ATTEST:
/s/ Cheri L. Peper By: /s/ Jeffrey M. Bender
- -------------------------------- ----------------------------------
Cheri L. Peper Jeffrey M. Bender
Corporate Secretary Vice President
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