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EXHIBIT 10.20
APACHE CORPORATION
1995 STOCK OPTION PLAN
(AS AMENDED AND RESTATED DECEMBER 17, 1998)
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TABLE OF CONTENTS
PAGE
Section 1 - Introduction................................................................................ 1
1.1 Establishment......................................................................... 1
1.2 Purposes.............................................................................. 1
1.3 Effective Date........................................................................ 1
Section 2 - Definitions................................................................................. 1
2.1 Definitions........................................................................... 1
2.2 Headings; Gender and Number........................................................... 2
Section 3 - Plan Administration......................................................................... 3
Section 4 - Stock Subject to the Plan................................................................... 3
4.1 Number of Shares...................................................................... 3
4.2 Other Shares of Stock................................................................. 4
4.3 Adjustments for Stock Split, Stock Dividend, Etc...................................... 4
4.4 Dividend Payable in Stock of Another Corporation, Etc................................. 4
4.5 Other Changes in Stock................................................................ 4
4.6 Rights to Subscribe................................................................... 5
4.7 General Adjustment Rules.............................................................. 5
4.8 Determination by the Committee, Etc................................................... 5
Section 5 - Reorganization or Liquidation............................................................... 5
Section 6 - Participation............................................................................... 6
Section 7 - Stock Options............................................................................... 6
7.1 Grant of Stock Options................................................................ 6
7.2 Stock Option Agreements............................................................... 7
7.3 Stockholder Privileges................................................................11
Section 8 - Change in Control...........................................................................11
8.1 In General............................................................................11
8.2 Limitation on Payments................................................................11
8.3 Definition............................................................................12
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Section 9 - Rights of Employees; Participants...........................................................12
9.1 Employment............................................................................12
9.2 Nontransferability....................................................................12
Section 10 - General Restrictions.......................................................................12
10.1 Investment Representations............................................................12
10.2 Compliance with Securities Laws.......................................................13
Section 11 - Other Employee Benefits....................................................................13
Section 12 - Plan Amendment, Modification and Termination...............................................13
Section 13 - Withholding................................................................................14
13.1 Withholding Requirement...............................................................14
13.2 Withholding With Stock................................................................14
Section 14 - Requirements of Law........................................................................14
14.1 Requirements of Law...................................................................14
14.2 Federal Securities Laws Requirements..................................................14
14.3 Governing Law.........................................................................15
Section 15 - Duration of the Plan.......................................................................15
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APACHE CORPORATION
1995 STOCK OPTION PLAN
SECTION 1
INTRODUCTION
1.1. Establishment. Apache Corporation, a Delaware corporation (hereinafter
referred to, together with its Affiliated Corporations (as defined in Section
2.1 hereof) as the "Company" except where the context otherwise requires),
hereby establishes the Apache Corporation 1995 Stock Option Plan (the "Plan")
for certain key employees of the Company. The Plan permits the grant of stock
options to certain key employees of the Company.
1.2. Purposes. The purposes of the Plan are to provide the key management
employees selected for participation in the Plan with added incentives to
continue in the long-term service of the Company and to create in such employees
a more direct interest in the future success of the operations of the Company by
relating incentive compensation to increases in stockholder value, so that the
income of the key management employees is more closely aligned with the
interests of the Company's stockholders. The Plan is also designed to attract
key employees and to retain and motivate participating employees by providing an
opportunity for investment in the Company.
1.3. Effective Date. The Effective Date of the Plan (the "Effective Date")
shall be May 4, 1995. This Plan and each option granted hereunder is conditioned
on and shall be of no force or effect until approval of the Plan by the holders
of the shares of voting stock of the Company unless the Company, on the advice
of counsel, determines that stockholder approval is not necessary. The Committee
(as defined in Section 2.1 hereof) may grant options the exercise of which shall
be expressly subject to the condition that the Plan shall have been approved by
the stockholders of the Company.
SECTION 2
DEFINITIONS
2.1. Definitions. The following terms shall have the meanings set forth below:
(a) "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 provisions of Sections 414(b) and (c) or any successor
section(s) of the Internal Revenue Code.
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(b) "Board" means the Board of Directors of the Company.
(c) "Committee" means the Stock Option Plan Committee of the Board,
which is empowered hereunder to take actions in the administration of the Plan.
The Committee shall be constituted at all times as to permit the Plan to comply
with: (i) Rule 16b-3 or any successor rule(s) promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and (ii) Section 162(m) or
any successor section(s) of the Internal Revenue Code and the regulations
promulgated thereunder.
(d) "Eligible Employees" means those full-time key employees
(including, without limitation, officers and directors who are also employees)
of the Company or any division thereof, upon whose judgment, initiative and
efforts the Company is, or will become, largely dependent for the successful
conduct of its business.
(e) "Fair Market Value" means the closing price of the Stock as
reported on the New York Stock Exchange, Inc. Composite Transactions Reporting
System 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.
(f) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
it may be amended from time to time.
(g) "Option" means a right to purchase Stock at a stated price for a
specified period of time. All Options granted under the Plan shall be Options
which are not "incentive stock options" as described in Section 422 or any
successor section(s) of the Internal Revenue Code.
(h) "Option Price" means the price at which shares of Stock subject to
an Option may be purchased, determined in accordance with subsection 7.2(b)
hereof.
(i) "Participant" means an Eligible Employee designated by the
Committee from time to time during the term of the Plan to receive
one or more Options under the Plan.
(j) "Stock" means the $1.25 par value Common Stock of the Company.
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.
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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, select the
Participants from among the Eligible Employees, determine the Options to be
granted pursuant to the Plan, the number of shares of Stock to be issued
thereunder, the time at which such Options are to be granted, fix the Option
Price, and establish such other terms and requirements as the Committee may deem
necessary, or desirable and consistent with the terms of the Plan. The Committee
shall determine the form or forms of the agreements with Participants which
shall evidence the particular provisions, terms, conditions, rights and duties
of the Company and the Participants with respect to Options granted pursuant to
the Plan, which provisions need not be identical except as may be provided
herein. The Committee may from time to time adopt such rules and regulations for
carrying out the purposes of the Plan as it may deem proper and in the best
interests of the Company. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan, or in any agreement entered
into hereunder, in the manner and to the extent it shall deem expedient and it
shall be the sole and final judge of such expediency. No member of the Committee
shall be liable for any action or determination made in good faith. The
determination, interpretations and other actions of the Committee pursuant to
the provisions of the Plan shall be binding and conclusive for all purposes and
on all persons.
The Plan is intended to comply with the requirements of Section 162 or any
successor section(s) of the Internal Revenue Code ("Section 162") as to any
"covered employee" as defined in Section 162, and shall be administered,
interpreted and construed consistently therewith. In accordance with this
intent, the amount of compensation a Participant may receive from Options
granted under the Plan shall be based solely on an increase in the value of the
Stock after the date of the grant of the Option, or such other bases as may be
permitted by applicable law. The Committee is authorized to take such additional
action, if any, that may be required to ensure that the Plan satisfies the
requirements of Section 162 and the regulations promulgated or revenue rulings
published thereunder.
SECTION 4
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to Section 7.1 and to adjustment pursuant to
Section 4.3 hereof, two million five hundred thousand (2,500,000) shares of
Stock are authorized for issuance under the Plan in accordance with the
provisions of the Plan and subject to such restrictions or other provisions as
the Committee may from time to time deem necessary. This authorization may be
increased from time to time by approval of the Board and the stockholders of the
Company if, in the opinion of counsel for the Company, such stockholder approval
is required. Shares of Stock which may be issued
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upon exercise of Options 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 Options are outstanding retain
as authorized and unissued Stock, or as 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 an Option
which expires, is forfeited, is cancelled, or for any reason is terminated
unexercised, 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 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall at
any time increase or decrease the number of its outstanding shares of Stock or
change in any way the rights and privileges of such shares by means of the
payment of a Stock dividend or any other distribution upon such shares payable
in Stock, or through a Stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or changed
in like manner as if they had been issued and outstanding, fully paid and
nonassessable at the time of such occurrence: (i) the shares of Stock as to
which Options may be granted under the Plan; and (ii) the shares of the Stock
then included in each outstanding Option granted hereunder.
4.4 Dividend Payable in Stock of Another Corporation, Etc. If the Company shall
at any time pay or make any dividend or other distribution upon the Stock
payable in securities or other property (except money or Stock), a proportionate
part of such securities or other property shall be set aside and delivered to
any Participant then holding an Option for the particular type of Stock for
which the dividend or other distribution was made, upon exercise thereof. Prior
to the time that any such securities or other property are delivered to a
Participant in accordance with the foregoing, the Company shall be the owner of
such securities or other property and shall have the right to vote the
securities, receive any dividends payable on such securities, and in all other
respects shall be treated as the owner. If securities or other property which
have been set aside by the Company in accordance with this Section are not
delivered to a Participant because an Option is not exercised, then such
securities or other property shall remain the property of the Company and shall
be dealt with by the Company as it shall determine in its sole discretion.
4.5 Other Changes in Stock. In the event there shall be any change, other than
as specified in Sections 4.3 and 4.4 hereof, in the number or kind of
outstanding shares of Stock or of any stock or other securities into which the
Stock shall be changed or for which it shall have been exchanged, and if the
Committee shall in its discretion determine that such change equitably requires
an adjustment in the number or kind of shares subject
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to outstanding Options or which have been reserved for issuance pursuant to the
Plan but are not then subject to an Option, then such adjustments shall be made
by the Committee and shall be effective for all purposes of the Plan and on each
outstanding Option that involves the particular type of stock for which a change
was effected.
4.6 Rights to Subscribe. If the Company shall at any time grant to the holders
of its Stock rights to subscribe pro rata for additional shares thereof or for
any other securities of the Company or of any other corporation, there shall be
reserved with respect to the shares then under Option to any Participant of the
particular class of Stock involved the Stock or other securities which the
Participant would have been entitled to subscribe for if immediately prior to
such grant the Participant had exercised his entire Option. If, upon exercise of
any such Option, the Participant subscribes for the additional shares or other
securities, the Option Price shall be increased by the amount of the price that
is payable by the Participant for such additional shares or other securities.
4.7 General Adjustment Rules. No adjustment or substitution provided for in this
Section 4 shall require the Company to sell a fractional share of Stock under
any Option, or otherwise issue a fractional share of Stock, and the total
substitution or adjustment with respect to each Option shall be limited by
deleting any fractional share. In the case of any such substitution or
adjustment, the total Option Price for the shares of Stock then subject to the
Option shall remain unchanged but the Option Price per share under each such
Option shall be equitably adjusted by the Committee to reflect the greater or
lesser number of shares of Stock or other securities into which the Stock
subject to the Option may have been changed.
4.8 Determination by the Committee, Etc. Adjustments under this Section 4 shall
be made by the Committee, whose determinations with regard thereto shall be
final and binding upon all parties thereto.
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
8 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 Options 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 such outstanding Options by the substitution on an equitable
basis of appropriate stock of the Company or of the merged, consolidated or
otherwise reorganized
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corporation which will be issuable with respect to the Stock, provided that no
additional benefits shall be conferred upon the Participants holding such
Options as a result of such substitution, and the excess of the aggregate Fair
Market Value of the shares subject to the Options immediately after such
substitution over the Option Price thereof is not more than the excess of the
aggregate Fair Market Value of the shares subject to such Options immediately
before such substitution over the Option Price thereof, or (ii) upon written
notice to the Participants, provide that all unexercised Options shall be
exercised within a specified number of days of the date of such notice or such
Options will be terminated. In the latter event, the Committee shall accelerate
the exercise dates of outstanding Options so that all Options become fully
vested prior to any such event.
SECTION 6
PARTICIPATION
Participants in the Plan shall be those Eligible Employees who, in the judgment
of the Committee, are performing, or during the term of their incentive
arrangement will perform, vital services in the management, operation and
development of the Company or an Affiliated Corporation, and significantly
contribute, or are expected to significantly contribute, to the achievement of
the Company's long-term corporate economic objectives. Participants may be
granted from time to time one or more Options; provided, however, that the grant
of each such Option shall be separately approved by the Committee, and receipt
of one such Option shall not result in automatic receipt of any other Option.
Upon determination by the Committee that an Option is to be granted to a
Participant, written notice shall be given to such person, specifying the terms,
conditions, rights and duties related thereto. Each Participant shall, if
required by the Committee, enter into an agreement with the Company, in such
form as the Committee shall determine and which is consistent with the
provisions of the Plan, specifying such terms, conditions, rights and duties.
Options shall be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date shall be the date of any related
agreement with the Participant. In the event of any inconsistency between the
provisions of the Plan and any such agreement entered into hereunder, the
provisions of the Plan shall govern.
SECTION 7
STOCK OPTIONS
7.1 Grant of Stock Options. Coincident with or following designation for
participation in the Plan, an Eligible Employee may be granted one or more
Options. Grants of Options under the Plan shall be made by the Committee. In no
event shall the exercise of one Option affect the right to exercise any other
Option or affect the number of shares of Stock for which any other Option may be
exercised, except as provided in subsection 7.2(j) hereof. During the life of
the Plan, no Eligible Employee may be granted Options
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which in the aggregate pertain to in excess of 25 percent of the total shares of
Stock authorized under the Plan.
7.2 Stock Option Agreements. Each Option granted under the Plan shall be
evidenced by a written stock option agreement which shall be entered into by the
Company and the Participant to whom the Option is granted (the "Stock Option
Agreement"), and which shall contain the following terms and conditions, as well
as such other terms and conditions, not inconsistent therewith, as the Committee
may consider appropriate in each case.
(a) Number of Shares. Each Stock Option Agreement shall state that it
covers a specified number of shares of Stock, as determined by the Committee.
(b) Price. The price at which each share of Stock covered by an Option
may be purchased shall be determined in each case by the Committee and set forth
in the Stock Option Agreement, but in no event shall the price be less than the
Fair Market Value of the Stock on the date the Option is granted.
(c) Duration of Options; Employment Required For Exercise. Each Stock
Option Agreement shall state the period of time, determined by the Committee,
within which the Option may be exercised by the Participant (the "Option
Period"). The Option Period must end, in all cases, not more than ten years from
the date an Option is granted. Except as otherwise provided in Sections 5 and 8
and subsection 7.2(d)(iv) hereof, each Option granted under the Plan shall
become exercisable in increments such that 25 percent of the Option will become
exercisable on each of the four subsequent one-year anniversaries of the date
the Option is granted, but each such additional 25-percent increment shall
become exercisable only if the Participant has been continuously employed by the
Company from the date the Option is granted through the date on which each such
additional 25-percent increment becomes exercisable.
(d) Termination of Employment, Death, Disability, Etc. Each Stock
Option Agreement shall provide as follows with respect to the exercise of the
Option upon termination of the employment or the death of the Participant:
(i) If the employment of the Participant by the Company is
terminated within the Option Period for cause, as determined by the Company, the
Option shall thereafter be void for all purposes. As used in this subsection
7.2(d), "cause" shall mean a gross violation, as determined by the Company, of
the Company's established policies and procedures, provided that the effect of
this subsection 7.2(d) shall be limited to determining the consequences of a
termination and that nothing in this subsection 7.2(d) shall restrict or
otherwise interfere with the Company's discretion with respect to the
termination of any employee.
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(ii) If the Participant retires from employment by the Company
on or after attaining age 65, the Option may be exercised by the Participant
within 36 months following his or her retirement (provided that such exercise
must occur within the Option Period), but not thereafter. In the event of the
Participant's death during such 36-month period, each Option may be exercised by
those entitled to do so in the manner referred to in (iv) below. In any such
case the Option may be exercised only as to the shares as to which the Option
had become exercisable on or before the date of the Participant's retirement.
(iii) If the Participant becomes disabled (as determined
pursuant to the Company's Long-Term Disability Plan or any successor plan),
during the Option Period while still employed, or within the three-month period
referred to in (v) below, or within the 36-month period referred to in (ii)
above, the Option may be exercised by the Participant or by his or her guardian
or legal representative, within twelve months following the Participant's
disability, or within the 36-month period referred to in (ii) if applicable and
if longer (provided that such exercise must occur within the Option Period), but
not thereafter. In the event of the Participant's death during such twelve-month
period, each Option may be exercised by those entitled to do so in the manner
referred to in (iv) below. In any such case, the Option may be exercised only as
to the shares of Stock as to which the Option had become exercisable on or
before the date of the Participant's disability.
(iv) In the event of the Participant's death while still
employed by the Company, each Option of the deceased Participant may be
exercised by those entitled to do so under the Participant's will or under the
laws of descent and distribution within twelve months following the
Participant's death (provided that in any event such exercise must occur within
the Option Period), but not thereafter, as to all shares of Stock which are
subject to such Option, including each 25-percent increment of the Option, if
any, which has not yet become exercisable at the time of the Participant's
death. In the event of the Participant's death within the 36-month period
referred to in (ii) above or within the twelve-month period referred to in (iii)
above, each Option of the deceased Participant that is exercisable at the time
of death may be exercised by those entitled to do so under the Participant's
will or under the laws of descent and distribution within twelve months
following the Participant's death or within the 36-month period referred to in
(ii), if applicable and if longer (provided that in any event such exercise must
occur within the Option Period). The provisions of this paragraph (iv) of
subsection 7.2(d) shall be applicable to each Stock Option Agreement as if set
forth therein word for word. Each Stock Option Agreement executed by the Company
prior to the adoption of this provision shall be deemed amended to include the
provisions of this paragraph and all Options granted pursuant to such Stock
Option Agreements shall be exercisable as provided herein.
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(v) If the employment of the Participant by the Company is
terminated (which for this purpose means that the Participant is no longer
employed by the Company or by an Affiliated Corporation) within the Option
Period for any reason other than cause, the Participant's retirement on or after
attaining age 65, the Participant's disability or death, the Option may be
exercised by the Participant within three months following the date of such
termination (provided that such exercise must occur within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to the
shares as to which the Option had become exercisable on or before the date of
termination of the Participant's employment.
(e) Transferability. Each Stock Option Agreement shall provide that the
Option granted therein is not transferable by the Participant except by will or
pursuant to the laws of descent and distribution, and that such Option is
exercisable during the Participant's lifetime only by him or her, or in the
event of the Participant's disability or incapacity, by his or her guardian or
legal representative.
(f) Agreement to Continue in Employment. Each Stock Option Agreement
shall contain the Participant's agreement to remain in the employment of the
Company, at the pleasure of the Company, for a continuous period of at least one
year after the date of such Stock Option Agreement, at the salary rate in effect
on the date of such agreement or at such changed rate as may be fixed, from time
to time, by the Company.
(g) Exercise, Payments, Etc.
(i) Each Stock Option Agreement shall provide that the method
for exercising the Option granted therein shall be by delivery to the Office of
the Secretary of the Company of written notice specifying the number of shares
of Stock with respect to which such Option is exercised and payment of the
Option Price. Such notice shall be in a form satisfactory to the Committee and
shall specify the particular Options (or portions thereof) which are being
exercised and the number of shares of Stock with respect to which the Options
are being exercised. The exercise of the Option shall be deemed effective on the
date such notice is received by the Office of the Secretary and payment is made
to the Company of the Option Price (the "Exercise Date"). If requested by the
Company, such notice shall contain the Participant's representation that he or
she is purchasing the Stock for investment purposes only and his or her
agreement not to sell any Stock so purchased in any manner that is in violation
of the Securities Act of 1933, as amended, or any applicable state law. Such
restriction, or notice thereof, shall be placed on the certificates representing
the Stock so purchased. The purchase of such Stock shall take place at the
principal offices of the Company upon delivery of such notice, at which time the
Option Price shall be paid in full by any of the methods or any combination of
the methods set forth in (ii) below. A properly executed certificate or
certificates representing the Stock shall be issued by the Company and delivered
to the Participant. If certificates representing Stock are used to pay all or
part of the Option Price, separate certificates for the same number of shares of
Stock shall be issued by the Company and
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delivered to the Participant representing each certificate used to pay the
Option Price, and an additional certificate shall be issued by the Company and
delivered to Participant representing the additional shares of Stock, in excess
of the Option Price, to which the Participant is entitled as a result of the
exercise of the Option.
(ii) the Option Price shall be paid by any of the following
methods or any combination of the following methods:
(A) in cash;
(B) by personal, certified or cashier's check payable
to the order of the Company;
(C) by delivery to the Company of certificates
representing a number of shares of Stock then owned by the Participant, the Fair
Market Value of which equals the Option Price of the Stock purchased pursuant to
the Option, properly endorsed for transfer to the Company; provided however,
that shares of Stock used for this purpose must have been held by the
Participant for such minimum period of time as may be established from time to
time by the Committee; for purposes of this Plan, the Fair Market Value of any
shares of Stock delivered in payment of the Option Price upon exercise of the
Option shall be the Fair Market Value as of the Exercise Date; the Exercise Date
shall be the day of delivery of the certificates for the Stock used as payment
of the Option Price; or
(D) by delivery to the Company of a properly executed
notice of exercise together with irrevocable instructions to a broker to deliver
to the Company promptly the amount of the proceeds of the sale of all or a
portion of the Stock or of a loan from the broker to the Participant necessary
to pay the Option Price.
(h) Date of Grant. An Option shall be considered as having
been granted on the date specified in the grant resolution of the Committee.
(i) Tax Withholding. Each Stock Option Agreement shall provide
that, upon exercise of the Option, the Participant shall make appropriate
arrangements with the Company to provide for the amount of additional tax
withholding required by Sections 3102 and 3402 or any successor section(s) of
the Internal Revenue Code and applicable state income tax laws, including
payment of such taxes through delivery of shares of Stock or by withholding
Stock to be issued under the Option, as provided in Section 13 hereof.
(j) Adjustment of Options. Subject to the provisions of
Sections 4, 5, 7, 8 and 12 hereof, the Committee may make any adjustment in the
number of shares of Stock covered by, or the terms of an outstanding Option and
a subsequent granting of an Option, by amendment or by substitution for an
outstanding Option; however, except as
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provided in Sections 4, 5, 8 and 12 hereof, the Committee may not adjust the
Option Price of any outstanding Option. Such amendment or substitution may
result in terms and conditions (including the number of shares of Stock covered,
vesting schedule or Option Period) that differ from the terms and conditions of
the original Option. The Committee may not, however, adversely affect the rights
of any Participant to previously granted Options without the consent of such
Participant. If such action is effected by amendment, the effective date of
grant of such amendment will be the date of grant of the original Option.
7.3 Stockholder Privileges. No Participant shall have any rights as a
stockholder with respect to any shares of Stock covered by an Option until the
Participant becomes the holder of record of such Stock. Except as provided in
Section 4 hereof, no adjustments shall be made for dividends or other
distributions or other rights as to which there is a record date preceding the
date on which such Participant becomes the holder of record of such Stock.
SECTION 8
CHANGE IN CONTROL
8.1 In General. In the event of a change in control of the Company as defined in
Section 8.3 hereof, then the Committee may, in its sole discretion, without
obtaining stockholder approval, to the extent permitted in Section 12 hereof,
take any or all of the following actions: (a) accelerate the dates on which any
outstanding Options become exercisable or make all such Options fully vested and
exercisable; (b) grant a cash bonus award to any Participant in an amount
necessary to pay the Option Price of all or any portion of the Options then held
by such Participant; (c) pay cash to any or all Participants in exchange for the
cancellation of their outstanding Options in an amount equal to the difference
between the Option Price of such Options and the greater of the tender offer
price for the underlying Stock or the Fair Market Value of the Stock on the date
of the cancellation of the Options; and (d) make any other adjustments or
amendments to the outstanding Options.
8.2 Limitation on Payments. If the provisions of this Section 8 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.
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8.3 Definition. For purposes of the Plan, a "change in control" shall mean any
of the events specified in the Company's Income Continuance Plan or any
successor plan which constitute a change in control within the meaning of such
plan.
SECTION 9
RIGHTS OF EMPLOYEES, PARTICIPANTS
9.1. Employment. Nothing contained in the Plan or in any Option granted 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, subject to the terms of any separate employment
agreement to the contrary, 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 grant of an Option. Whether an authorized leave
of absence, or absence in military or government service, shall constitute a
termination of employment shall be determined by the Committee at the time.
9.2 Nontransferability. No right or interest of any Participant in an Option
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 Options
shall, to the extent provided in Section 7 hereof, be transferable by
testamentary will or the laws of descent and distribution, and payment of any
amounts due under the Plan shall be made to, and exercise of any Options may be
made by, the Participant's legal representatives, heirs or legatees. If in the
opinion of the Committee a person entitled to payments or to exercise rights
with respect to the Plan is disabled from caring for his or her affairs because
of mental condition, physical condition or age, payment due such person may be
made to, and such rights shall be exercised by, such person's guardian,
conservator or other legal personal representative upon furnishing the Committee
with evidence satisfactory to the Committee of such status.
SECTION 10
GENERAL RESTRICTIONS
10.1 Investment Representations. The Company may require a Participant, as a
condition of exercising an Option, to give written assurances in substance and
form satisfactory to the Company and its counsel to the effect that such person
is acquiring the Stock subject to the Option for his own account for investment
and not with any present intention of selling or otherwise distributing the
same, and to such other effects as the
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Company deems necessary or appropriate in order to comply with federal and
applicable state securities laws.
10.2 Compliance with Securities Laws. Each Option shall be subject to the
requirement that, if at any time counsel to the Company shall determine that the
listing, registration or qualification of the shares of Stock subject to such
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of shares of Stock
thereunder, such Option may not be accepted or exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the Committee. Nothing
herein shall be deemed to require the Company to apply for or to obtain such
listing, registration, qualification, consent or approval.
SECTION 11
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by a Participant as a
result of the exercise of an Option shall not constitute "earnings" 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 12
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time to time may amend or modify
the Plan provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the Company's
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary
or desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Option theretofore granted under the Plan, without the
consent of the Participant holding such Option.
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SECTION 13
WITHHOLDING
13.1 Withholding Requirement. The Company's obligations to deliver shares of
Stock upon the exercise of an Option shall be subject to the Participant's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements.
13.2 Withholding With Stock. At the time the Committee grants an Option, it may,
in its sole discretion, grant the Participant an election to pay all such
amounts of tax withholding, or any part thereof, by the transfer to the Company,
or to have the Company withhold from shares of Stock otherwise issuable to the
Participant upon the exercise of an Option, shares of Stock having a value equal
to the amount required to be withheld or such lesser amount as may be elected by
the Participant. All such elections shall be subject to the approval or
disapproval of the Committee. The value of shares of Stock to be withheld shall
be based on the Fair Market Value of the Stock on the Exercise Date. Any such
elections by Participants to have shares of Stock withheld for this purpose will
be subject to the following restrictions:
(a) All elections shall be made on or prior to the Exercise
Date.
(b) All elections shall be irrevocable.
(c) If the Participant is an officer or director of the
Company within the meaning of Section 16 or any successor section(s) of the 1934
Act ("Section 16"), the Participant must satisfy the requirements of such
Section 16 and any applicable rules and regulations thereunder with respect to
the use of Stock to satisfy such tax withholding obligation.
SECTION 14
REQUIREMENTS OF LAW
14.1 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.
14.2 Federal Securities Laws Requirements. If a Participant is an officer or
director of the Company within the meaning of Section 16, Options granted
hereunder shall be subject to all conditions required under Rule 16b-3, or any
successor rule(s) promulgated under the 1934 Act, to qualify the Option for any
exception 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 Option.
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14.3 Governing Law. The Plan and all Stock Option Agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Texas.
SECTION 15
DURATION OF THE PLAN
The Plan shall terminate at such time as may be determined by the Board, and no
Option shall be granted after such termination. If not sooner terminated under
the preceding sentence, the Plan shall fully cease and expire at midnight on May
4, 2000. Options outstanding at the time of the Plan termination shall continue
to be exercisable in accordance with the Stock Option Agreement pertaining to
such Option.
Dated: December 17, 1998
APACHE CORPORATION
ATTEST:
/s/ CHERI L. PEPER By: /s/ DANIEL L. SCHAEFFER
- --------------------------------- --------------------------------
Cheri L. Peper Daniel L. Schaeffer
Corporate Secretary Vice President
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