<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
APACHE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[APACHE CORPORATION LOGO]
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
March 28, 1996
FELLOW SHAREHOLDERS:
You are cordially invited to attend the annual meeting of shareholders of
Apache Corporation to be held on Thursday, May 2, 1996, at 10:00 a.m. (Houston
time), at the Doubletree Hotel at Post Oak, 2001 Post Oak Boulevard, Houston,
Texas.
At the annual meeting, shareholders will be asked to vote upon the election
of five directors to the board of directors and the approval of amendments to
the 1990 Stock Incentive Plan and to the 1995 Stock Option Plan, and to transact
any other business that may properly come before the meeting. In addition to the
scheduled items of business, management will present a brief report to
shareholders on the Company's results and direction. I hope you will be able to
attend.
Whether or not you plan to be present at the annual meeting, please be sure
to complete, sign, date and promptly return the enclosed proxy card or voting
instruction card, using the postage-paid business reply envelope provided, to
ensure that your shares will be voted in accordance with your wishes.
/s/ RAYMOND PLANK
RAYMOND PLANK
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
APACHE CORPORATION
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
TO THE SHAREHOLDERS OF APACHE CORPORATION:
The 1996 annual meeting of shareholders of Apache Corporation, a Delaware
corporation, will be held on Thursday, May 2, 1996, at 10:00 a.m. (Houston
time), at the Doubletree Hotel at Post Oak, 2001 Post Oak Boulevard, Houston,
Texas, for the following purposes:
1. To elect four directors to serve until the 1999 annual meeting of
shareholders and one director to serve until the 1998 annual meeting of
shareholders;
2. To approve amendments to the 1990 Stock Incentive Plan and to the
1995 Stock Option Plan; and
3. To transact any other business that may properly come before the
meeting or any adjournment thereof.
The board of directors of the Company has fixed the close of business on
March 14, 1996, as the record date for the determination of shareholders
entitled to notice of, and to vote at, the annual meeting. Only holders of
record of the Company's common stock at the close of business on the record date
are entitled to notice of, and to vote at, the annual meeting. The Company's
stock transfer books will not be closed. A complete list of shareholders
entitled to vote at the annual meeting will be available for examination by any
Apache shareholder at 2000 Post Oak Boulevard, Suite 100, Houston, Texas, for
purposes pertaining to the annual meeting, during normal business hours for a
period of ten days prior to the meeting.
You are cordially invited to attend the annual meeting. Whether or not you
expect to attend in person, you are urged to promptly sign, date and mail the
enclosed proxy card so that your shares may be represented and voted at the
annual meeting. You may revoke your proxy by following the procedures set forth
in the accompanying proxy statement.
By order of the Board of Directors
APACHE CORPORATION
/s/ C. L. PEPER
C. L. PEPER
Corporate Secretary
Houston, Texas
March 28, 1996
<PAGE> 4
APACHE CORPORATION
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
March 28, 1996
PROXY STATEMENT
This proxy statement is being furnished in connection with the solicitation
of proxies by and on behalf of the board of directors of Apache Corporation (the
"Company"), a Delaware corporation, to be used at the 1996 annual meeting of
shareholders and at any adjournment or postponement thereof. This proxy
statement and the accompanying form of proxy were first mailed to the holders of
the Company's common stock, par value $1.25 per share, on or about March 29,
1996.
PURPOSE OF ANNUAL MEETING
Shareholders of the Company are scheduled to take action on the following
items at the annual meeting:
1. The election of four directors to serve until the 1999 annual
meeting and one director to serve until the 1998 annual meeting;
2. To approve amendments to the 1990 Stock Incentive Plan and to the
1995 Stock Option Plan; and
3. The transaction of any other business that may properly come before
the meeting or any adjournment thereof.
As of the date of this proxy statement, the Company is not aware of any
business to come before the annual meeting other than the election of directors
and approval of amendments to the 1990 Stock Incentive Plan and to the 1995
Stock Option Plan.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
votes represented by the outstanding shares of the Company's common stock is
necessary to constitute a quorum at the annual meeting. The record date for
determination of shareholders entitled to notice of and to vote at the annual
meeting is the close of business on March 14, 1996. As of the record date, there
were 77,491,422 shares of common stock issued and outstanding. Holders of shares
of common stock are entitled to one vote per share at the annual meeting and are
not allowed to cumulate votes in the election of directors. In accordance with
Delaware law, a shareholder entitled to vote for the election of directors can
withhold authority to vote for all nominees for directors or can withhold
authority to vote for certain nominees for directors.
All shares of the Company's common stock represented by properly executed
proxies will be voted in accordance with the instructions indicated unless the
proxies have been previously revoked. Proxies on which no voting instructions
are indicated will be voted FOR the election of the nominees for directors, FOR
the approval of amendments to the 1990 Stock Incentive Plan and to the 1995
Stock Option Plan, and in the best judgment of the proxy holders on any other
matter that may properly come before the annual meeting. If a broker indicates
on a proxy that it does not have discretionary authority to vote certain shares
on a particular matter, those shares of common stock will not be considered
present and entitled to vote with respect to that matter. If a shareholder
indicates on a proxy card that such shareholder abstains from voting with
respect to amendments to the 1990 Stock Incentive Plan and to the 1995 Stock
Option Plan, the shareholder's shares will be considered as present and entitled
to vote with respect to that matter, and abstention will have the effect of a
vote against the amendments to the 1990 Stock Incentive Plan and to the 1995
Stock Option Plan.
<PAGE> 5
REVOCABILITY OF PROXY
Shareholders have the unconditional right to revoke their proxies at any
time prior to the voting of their proxies at the annual meeting by (i) filing a
written revocation with the corporate secretary of the Company at the address
set forth above, (ii) giving a duly executed proxy bearing a later date, or
(iii) attending the annual meeting and voting in person. Attendance by
shareholders at the annual meeting will not of itself revoke their proxies.
SOLICITATION OF PROXIES
Solicitation of proxies for use at the 1996 annual meeting may be made in
person or by mail, telephone or telegram, by directors, officers and regular
employees of the Company. These persons will receive no special compensation for
any solicitation activities. The Company has requested banking institutions,
brokerage firms, custodians, trustees, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares the Company's common
stock for whom they are record holder, and the Company will, upon request,
reimburse reasonable forwarding expenses. The Company has retained Georgeson &
Company Inc. to assist in soliciting proxies from brokers, bank nominees and
other institutional holders for a fee not to exceed $10,000, plus expenses. All
costs of the solicitation will be borne by the Company.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1 ON PROXY CARD)
The Company's bylaws provide that the board of directors shall consist of a
minimum of seven and a maximum of 13 directors. There are currently 11 directors
on the Company's board of directors and, if all of the nominees are elected at
the 1996 annual meeting, the Company will have 12 directors. The Company's
certificate of incorporation provides that as nearly as numerically possible,
one-third of the directors shall be elected at each annual meeting of
shareholders. Unless directors earlier resign or are removed, their terms are
for three years, and continue thereafter until their successors are elected and
qualify as directors. The affirmative vote of the holders of a plurality of the
shares of common stock present, in person or represented by proxy, at the annual
meeting is required to elect directors to the board of directors.
Each of the nominees for director has been recommended by the Company's
nominating committee and nominated by the board of directors for election by the
shareholders. The terms of incumbent directors G. Steven Farris, Randolph M.
Ferlic, Robert V. Gisselbeck and John A. Kocur will expire at the 1996 annual
meeting. Messrs. Farris, Ferlic, Gisselbeck and Kocur have been nominated to an
additional three-year term and, if elected, each will serve commencing upon his
election and qualification until the annual meeting of shareholders in May 1999.
Mary Ralph Lowe has been nominated for a term of two years and, if elected,
she will serve commencing upon her election and qualification until the annual
meeting of shareholders in May 1998. If Ms. Lowe were to be elected to the usual
three-year term, it would create an imbalance in the number of directors with
terms expiring in 1999 (five directors) given that four directors' terms expire
in 1997 and three directors' terms expire in 1998. The Company's certificate of
incorporation requires that, as nearly as numerically possible, one-third of the
directors should be elected at each annual meeting. In order to avoid an
imbalance, Ms. Lowe has been nominated to a term of two years.
Unless otherwise instructed, all proxies will be voted in favor of these
nominees. If one or more of the nominees is unwilling or unable to serve, the
proxies will be voted only for the remaining named nominees. Proxies cannot be
voted for more than five nominees. The board of directors knows of no proposed
nominee for director who is unwilling or unable to serve.
2
<PAGE> 6
INFORMATION ABOUT NOMINEES FOR
ELECTION AS DIRECTORS
Certain biographical information, including principal occupation and
business experience during the last five years, of each nominee for director is
set forth below. Unless otherwise stated, the principal occupation of each
nominee has been the same for the past five years.
<TABLE>
<CAPTION>
DIRECTOR
SINCE
--------
<S> <C>
G. STEVEN FARRIS, 48, has been president and chief operating officer of the Company 1994
since May 1994, and was elected to the Company's board of directors in December
1994. He was senior vice president of the Company from 1991 to 1994, and vice
president -- exploration and production of the Company from 1988 to 1991. Prior to
that, Mr. Farris was vice president of finance and acquisitions for Terra
Resources, Inc., a Tulsa, Oklahoma oil and gas company, from 1983 to 1988, and
executive vice president for Robert W. Berry, Inc., a Tulsa, Oklahoma oil and gas
company, from 1978 to 1983.
RANDOLPH M. FERLIC, 59, retired in December 1993 from his practice as a thoracic and 1986
cardiovascular surgeon. He is the founder of Surgical Services of the Great
Plains, P.C., and served as its president from 1974 to 1991. Dr. Ferlic is a
member of the audit committee, the executive committee, and the nominating
committee.
ROBERT V. GISSELBECK, 72, is the founder of Gisselbeck & Associates, a real estate 1982
development company in Naples, Florida, and has served as its president since
1960. Mr. Gisselbeck is a member of the audit committee.
JOHN A. KOCUR, 68, is engaged in the private practice of law. He served as vice 1977
chairman of the Company's board of directors from 1988 until 1991. Mr. Kocur was
employed by the Company from 1969 until his retirement in 1991, and served as the
Company's president from 1979 until 1988. He is chairman of the executive
committee, chairman of the nominating committee, and a member of the management
development and compensation committee.
MARY RALPH LOWE, 49, has been president and chief executive officer of Maralo, Inc., --
a Houston, Texas independent oil and gas exploration and production company, since
1988 and a member of its board of directors since 1975. She has been the managing
partner of MLR Partners, LP, an oil and gas exploration and production company,
since 1990 and has been president and the sole director of Lowe Petroleum Company
since 1988 which, in addition to oil and gas exploration and production, owns and
manages commercial real estate in Midland, Texas. Ms. Lowe is a trustee of the
Lowe Foundation, the Houston Museum of Natural Science, and the Houston Museum of
Fine Arts, and is involved in numerous other civic and charitable activities.
</TABLE>
3
<PAGE> 7
CONTINUING DIRECTORS
Certain biographical information, including principal occupation and
business experience during the last five years, for each member of the board of
directors whose term is not expiring at the 1996 annual meeting is set forth
below. Unless otherwise stated, the principal occupation of each nominee has
been the same for the past five years.
<TABLE>
<CAPTION>
DIRECTOR TERM
SINCE EXPIRES
-------- --------
<S> <C> <C>
FREDERICK M. BOHEN, 58, has been executive vice president and chief 1981 1997
operating officer of The Rockefeller University since 1990. He was senior
vice president of Brown University from 1983 to 1990, and served as vice
president of finance and operations at the University of Minnesota from
1981 to 1983. Mr. Bohen worked with the U.S. Department of Health,
Education and Welfare as assistant secretary for management and budget
from 1977 to 1981. He is a director of the College Construction Loan
Insurance Association (Connie Lee), a director of Oppenheimer and Company,
and a director of the Mexico Equity Income Fund, Inc. Mr. Bohen is
chairman of the management development and compensation committee and
chairman of the stock option plan committee.
VIRGIL B. DAY, 80, has been a senior partner in the law firm of Vedder, 1974 1997
Price, Kaufman, Kammholz & Day since 1974. He was the first labor counsel
for General Electric Company, where he subsequently held various
management positions involving employee and union relations, public
affairs and government relations. From 1961 until 1973, Mr. Day was a vice
president of General Electric Company and in 1971, he became chairman of
the industry members of the U.S. Pay Board. Mr. Day is a member of the
management development and compensation committee.
EUGENE C. FIEDOREK, 64, has been the managing director of EnCap Investments 1988 1998
L.C., a Dallas, Texas energy investment banking firm, since 1988. Mr.
Fiedorek was the managing director of the Energy Banking Group of First
RepublicBank Corp. in Dallas, Texas, from 1978 to 1987. He is a director
of Energy Capital Investment Company. Mr. Fiedorek is a member of the
audit committee.
W. BROOKS FIELDS, 77, is retired. From 1984 until 1990, he was president and 1973 1998
chief executive officer of Minnesota Racetrack, Inc., also known as
Canterbury Downs, a racetrack development company. From 1968 to 1990, Mr.
Fields was chairman of the board of Scottland, Inc., a real estate
development company, for which a plan of reorganization pursuant to
Chapter 11 of the Bankruptcy Code was confirmed in June 1990. From 1955
until 1984, he was the executive vice president and a director of Burdick
Grain Company, a grain merchandising company. Mr. Fields is a member of
the audit committee, the executive committee and the nominating committee.
STANLEY K. HATHAWAY, 71, has been a senior partner in the law firm of 1977 1997
Hathaway, Speight, Kunz & Trautwein since 1976. From June through October
1975, Mr. Hathaway served as the U.S. Secretary of the Interior. He was
Governor of the State of Wyoming from 1967 to 1975. Mr. Hathaway is
chairman of the audit committee.
RAYMOND PLANK, 73, has been chairman of the board and chief executive 1954 1998
officer of the Company since 1979, and served as the Company's president
from 1954 until 1979. Mr. Plank is a member of the executive committee and
the nominating committee.
JOSEPH A. RICE, 71, retired in 1988 as chairman of the board, chief 1989 1997
executive officer and a director of Irving Trust Company and Irving Bank
Corporation, having served in those capacities since 1984. Mr. Rice served
as president, chief operating officer and a director of those
organizations from 1975 to 1984. He is a director of Avon Products, Inc.
Mr. Rice is a member of the management development and compensation
committee and the stock option plan committee.
</TABLE>
4
<PAGE> 8
INFORMATION WITH RESPECT TO STANDING COMMITTEES OF
THE BOARD OF DIRECTORS AND MEETINGS
The board of directors held five meetings during 1995. The board of
directors has an audit committee, a management development and compensation
committee, a stock option plan committee, an executive committee, and a
nominating committee. Actions taken by these committees are reported to the
board of directors at the next board meeting. All directors attended at least 75
percent of the meetings of the board of directors and of all committees of which
they were members.
The audit committee members are Stanley K. Hathaway, chairman, Randolph M.
Ferlic, Eugene C. Fiedorek, W. Brooks Fields and Robert V. Gisselbeck. The audit
committee reviews with the independent accountants and internal auditors of the
Company their respective audit and review programs and procedures, and the scope
and results of their audits. It also examines professional services provided by
the Company's independent accountants and evaluates their costs and related
fees. Additionally, the audit committee reviews the Company's financial
statements and the adequacy of the Company's system of internal accounting
controls. The audit committee makes recommendations to the board of directors
concerning the Company's independent accountants and their engagement or
discharge. During the last fiscal year there were four meetings of the audit
committee.
The management development and compensation committee members are Frederick
M. Bohen, chairman, Virgil B. Day, John A. Kocur and Joseph A. Rice. The
committee reviews the Company's management resources and structure, and
administers the Company's compensation programs and retirement, stock purchase
and similar plans. The committee held five meetings during 1995.
In February 1996, the board of directors established a stock option plan
committee and elected as members Frederick M. Bohen, chairman, and Joseph A.
Rice. The duties of the stock option plan committee include the grant and
administration of options under the Company's stock option plans.
The executive committee members are John A. Kocur, chairman, Randolph M.
Ferlic, W. Brooks Fields, and Raymond Plank. The executive committee is vested
with the authority to exercise the full power of the board of directors, within
the policies established by the board of directors, in the intervals between
meetings of the board of directors. In addition to the general authority vested
in it, it may be vested with specific power and authority by resolution of the
board of directors. The executive committee did not meet during 1995.
The nominating committee members are John A. Kocur, chairman, Randolph M.
Ferlic, W. Brooks Fields, and Raymond Plank. The duties of the nominating
committee include recommending to the board of directors the slate of director
nominees submitted to the shareholders for election at the annual meeting, and
proposing qualified candidates to fill vacancies on the board of directors
without regard to race, sex, age, religion or physical disability. The
nominating committee met once during 1995.
Shareholders wishing to recommend candidates for consideration by the
nominating committee should forward written recommendations, together with
appropriate biographical information and details of qualifications, to the
corporate secretary of the Company. In order to be considered, recommendations
must be received by the deadline for submitting shareholder proposals set forth
under the heading "Shareholder Proposals."
5
<PAGE> 9
DIRECTOR COMPENSATION
Employee directors do not receive additional compensation for serving on
the board of directors or any committee of the board. Non-employee directors
were paid an annual retainer of $20,000, plus $1,000 for each board of directors
or committee meeting attended during 1995, together with reimbursement of
expenses incurred in attending meetings. Non-employee directors receive an
annual retainer of $2,000 for each committee of which they are members. In
addition, the chairmen of each committee receive $4,000 annually for chairing
their respective committees.
Non-employee directors are eligible to participate in the Apache
Corporation Director's Deferred Compensation Plan under which they can elect to
defer receipt of all or any portion of their retainers or meeting fees. Deferred
amounts are maintained in separate accounts and are credited interest equal to
the Company's rate of return on its short-term marketable securities. Amounts
are paid out upon the director's retirement in two lump sums or ratably over ten
years. There were no deferrals under the plan during 1995.
An unfunded retirement plan for non-employee directors was established in
December 1992. The plan is administered by the management development and
compensation committee and pays retired non-employee directors benefits equal to
two-thirds of the annual retainer for a period based on length of service.
Payments are made on an annual basis, for a maximum of ten years, and are paid
from the general assets of the Company. In the event of the director's death
prior to receipt of all benefits payable under the plan, the remaining benefits
are payable to the director's surviving spouse until the earlier of the
termination of the payment period or the death of the surviving spouse. There
were no benefits paid under this plan during 1995.
The Company established an equity compensation plan for non-employee
directors in February 1994, which is administered by the management development
and compensation committee. Each non-employee director will be awarded 1,000
restricted shares of the Company's common stock every five years, beginning July
1, 1994. The shares vest at a rate of 200 shares annually, with unvested shares
forfeited upon resignation or retirement from the board. Awards are made from
treasury stock and are automatic and non-discretionary. New directors will
receive 1,000-share awards on the July 1 next succeeding their election to the
board. All shares awarded under the plan have full dividend and voting rights.
The plan expires July 1, 2009, with a maximum of 50,000 shares that may be
awarded during the term of the plan. On July 1, 1994, the first restricted stock
award of 1,000 shares of the Company's common stock was made to each of the
Company's non-employee directors, pursuant to terms of the plan. No awards were
made under the plan during 1995.
6
<PAGE> 10
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth, as of February 29, 1996, the beneficial
ownership of each director or nominee for director of the Company, the chief
executive officer, the four other most highly compensated executive officers,
and all directors and executive officers of the Company as a group. All
ownership information is based upon filings made by such persons with the
Securities and Exchange Commission ("Commission") or upon information provided
to the Company.
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE PERCENT
OF OF
BENEFICIAL CLASS
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP(1) OUTSTANDING
- ------------------ --------------------------------------------- ------------ -----------
<S> <C> <C> <C>
Common Stock, par
value $1.25 Frederick M. Bohen........................... 3,649(2) *
Virgil B. Day................................ 130,438(2)(3) *
G. Steven Farris............................. 87,692(4)(5) *
Randolph M. Ferlic........................... 220,013(2)(6) *
Eugene C. Fiedorek........................... 4,000(2) *
W. Brooks Fields............................. 27,312(2)(7) *
Robert V. Gisselbeck......................... 37,893(2) *
Stanley K. Hathaway.......................... 7,109(2) *
John A. Kocur................................ 40,130(2)(8) *
Mary Ralph Lowe.............................. 5,700 *
Raymond Plank................................ 211,237(4)(5) *
Joseph A. Rice............................... 5,000(2) *
James R. Bauman.............................. 52,658(4) *
H. Craig Clark............................... 14,603(4)(5) *
Floyd R. Price............................... 15,371(4)(5) *
All directors, nominees, and executive
officers as a group (including the above
named persons)............................... 1,120,765(4)(5) 1.45
</TABLE>
- ---------------
* Represents less than one percent of the outstanding shares.
(1) All ownership is sole and direct unless otherwise noted. Inclusion of any
shares not owned directly shall not be construed as an admission of
beneficial ownership. Fractional shares have been rounded to the nearest
whole share.
(2) Includes 1,000 shares of restricted stock awarded in 1994 under the
Company's equity compensation plan for nonemployee directors.
(3) Includes 1,100 shares owned by Mrs. Day.
(4) Includes the following shares issuable upon the exercise of outstanding
stock options which are exercisable within 60 days: Mr. Farris -- 56,875;
Mr. Plank -- 52,500; Mr. Bauman -- 41,125; Mr. Clark -- 8,500; Mr.
Price -- 9,750; and all directors and executive officers as a
group -- 315,625.
(5) Includes units held by the trustee of the Company's Retirement/401(k)
Savings Plan equivalent to the following shares: Mr. Farris -- 14,317; Mr.
Plank -- 1,115; Mr. Clark -- 5,103; Mr. Price -- 5,121; and all directors
and executive officers as a group -- 64,460.
(6) Includes 17,500 shares owned indirectly by Dr. Ferlic through his interest
in Surgical Services of the Great Plains, P.C. Employee Benefit Trust, and
6,000 shares owned directly by Ferlic Investments, Ltd. in which Dr. Ferlic
owns a 36-percent interest. Also includes a total of 1,700 shares held by
Dr. Ferlic's mother, daughters, son and grandchildren, as to which he
disclaims beneficial ownership.
(7) Includes 10,868 shares owned by Mrs. Fields.
(8) Includes 3,940 shares owned by Mrs. Kocur.
7
<PAGE> 11
The following table sets forth the only persons known to the Company, as of
February 29, 1996, to be the owner of more than five percent of outstanding
shares of the Company's common stock, according to reports filed with the
Commission:
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE PERCENT
OF OF
BENEFICIAL CLASS
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
- ------------------ -------------------------------------------- ---------- -----------
<S> <C> <C> <C>
Common Stock,
par value $1.25 Merrill Lynch & Co. Inc..................... 5,615,783(1) 7.25
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
FMR Corp.................................... 4,454,373(2)(3) 5.75
82 Devonshire Street
Boston, MA 02109-3614
College Retirement Equities Fund............ 3,973,088(4) 5.13
TIAA Separate Account VA-1
730 Third Avenue
New York, NY 10017
</TABLE>
- ---------------
(1) As of December 31, 1995, based on information contained in a Schedule 13G
filed with the Commission, dated January 25, 1996.
(2) As of December 31, 1995, based on information contained in a Schedule 13G
filed with the Commission, dated February 14, 1996.
(3) Does not include 894,462 shares held by Fidelity Management Trust Company
("FMTC") as trustee of the Company's Retirement/401(k) Savings Plan. FMTC is
a wholly-owned subsidiary of FMR Corp.
(4) As of December 31, 1995, based on information contained in a Schedule 13G
filed with the Commission, dated February 1, 1996.
In February 1990, Bijan Mossavar-Rahmani, president and a former employee
of Apache International, Inc., was granted 250 shares of Apache International's
common stock, representing five percent of the outstanding shares of Apache
International, pursuant to the terms of the Apache International Common Stock
Award Plan. No voting rights relating to the Company's common stock are
associated with such Apache International stock.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, as well as beneficial owners of ten
percent or more of the Company's common stock, to report their holdings and
transactions in the Company's securities. Based solely on written
representations from the Company's directors and officers and a review of the
copies of reports furnished to the Company pursuant to Section 16(a), it appears
that Roger Plank, an officer of the Company, filed one late report relating to a
gift of shares.
8
<PAGE> 12
EXECUTIVE OFFICERS OF THE COMPANY
Certain biographical information concerning the executive officers of the
Company is set forth below. Biographical information concerning Raymond Plank
and G. Steven Farris is set forth above under the captions "Continuing
Directors" and "Information about Nominees for Election as Directors."
JAMES R. BAUMAN, 60, was senior vice president--business development from
May 1994 until his retirement in March 1996, and had been vice
president--business development of the Company since 1988. He served as vice
president--corporate development of the Company from 1986 to 1988, and vice
president of the Company's Wyoming operations from 1983 to 1986.
H. CRAIG CLARK, 39, has been vice president--North American production
since May 1994. He was general manager of the Company's southern division from
1993 to 1994, and was production manager of the Company's Gulf Coast Region from
1989 to 1993.
LISA A. FLOYD, 38, has been vice president--technical services since
January 1995, having been general manager--technical services of the Company
since May 1994. Ms. Floyd has held positions of increasing responsibility in the
reservoir engineering area since joining the Company in 1984.
MARK A. JACKSON, 40, was appointed vice president and chief financial
officer in March 1996, having been vice president--finance since May 1994. He
was vice president and chief accounting officer of the Company from January 1994
to April 1994, and vice president and controller of the Company from 1988 to
1993. Prior to joining the Company, Mr. Jackson was employed by Maxus Energy
Corporation, a Dallas-based oil and gas company, from 1984 to 1988 in various
positions, most recently as assistant controller.
JON A. JEPPESEN, 48 has been vice president--North American exploration and
development since May 1994, having been manager of the Company's offshore
exploration and development since joining the Company in 1993. Prior to that, he
was vice president of exploration and development for Pacific Enterprises Oil
Company, Dallas, Texas, from 1989 to 1992, and regional exploration manager for
Terra Resources, Inc., a Tulsa, Oklahoma oil and gas company, from 1987 to 1989.
ZURAB S. KOBIASHVILI, 53, has been vice president and general counsel of
the Company since March 1994. From March 1991 through February 1994, he was with
Falcon Seaboard Resources, Inc., a privately-held company involved in the
development, construction and operation of electric cogeneration power plants,
and in oil and gas exploration and production, initially as a legal consultant
and from July 1993 as vice president and general counsel. Mr. Kobiashvili was
vice president and general counsel for Conquest Exploration Company, Houston,
Texas, from 1984 to 1991.
ANTHONY R. LENTINI, JR., 46, has been vice president--public and
international affairs since January 1995. Prior to joining the Company, he was
vice president of public affairs for Mitchell Energy & Development Corp., The
Woodlands, Texas, from 1988 through 1994.
CLYDE E. MCKENZIE, 48, was vice president and treasurer from 1988 to March
1996, and served as the Company's vice president--acquisitions from 1987 to
1988. Prior to that, Mr. McKenzie was senior vice president and manager for the
Energy Banking Group, First Interstate Bank of Denver, Colorado, from 1983 to
1987.
THOMAS J. MULKEY, 48, was vice president--marketing from August 1994
through December 1995. Prior to joining the Company, he was president and chief
executive officer of Municipal Gas Authority of Georgia, Atlanta, Georgia, from
1988 to 1994, and vice president of marketing for El Paso Natural Gas Company,
El Paso, Texas, from 1987 to 1988. In October 1995, Mr. Mulkey became president
and chief operating officer of Producers Energy Marketing, LLC (also known as
"ProEnergy"), a joint-venture natural gas marketing company in which the Company
holds a majority interest.
9
<PAGE> 13
ROGER B. PLANK, 39, was appointed vice president--planning and business
development in March 1996, having been vice president--corporate planning since
May 1994. He was the Company's vice president--external affairs from 1993 to
April 1994, vice president--corporate communications from 1987 to 1993,
director--corporate communications from 1985 to 1987, and an investment
representative for Apache Programs, Inc., a wholly-owned subsidiary of the
Company, from 1981 to 1985. Roger Plank is the son of Raymond Plank.
FLOYD R. PRICE, 46, has been vice president--international exploration and
production since December 1994. He served as exploration manager from 1991 to
1994, and geologic manager from 1990 to 1991, for the Company's Midcontinent
Region. Prior to that, Mr. Price was vice president of exploration and
development from 1988 to 1989, and vice president of mid-continent exploration
from 1989 to 1990, for Pacific Enterprises Oil Company, Dallas, Texas.
ROGER B. RICE, 51, has been vice president--human resources and
administration since December 1993, having been vice president--human resources
of the Company since 1992. He was managing consultant, Barton Raben, Inc., an
executive search firm, from 1989 to 1992. Mr. Rice was a partner in Chancellor
Properties, a real estate consulting firm, from 1986 to 1989, and was vice
president--administration for Superior Oil Company from 1980 to 1985.
R. KENT SAMUEL, 42, was controller and chief accounting officer from July
1994 through December 1995, and had been controller since joining the Company in
April 1994. Prior to that, from 1993 to 1994, he was vice president and chief
financial officer for Aquila Energy Corp., Omaha, Nebraska, and was vice
president, finance and treasurer from 1991 to 1993, and controller from 1984 to
1991, for Pacific Enterprises Oil Company, Dallas, Texas. In October 1995, Mr.
Samuel became vice president, chief financial officer and treasurer of
ProEnergy.
THOMAS L. MITCHELL, 35, was appointed controller and chief accounting
officer in February 1996. He was director of natural gas marketing for the
Company from August 1990 through January 1996, and served as accounting manager
for the Company's Gulf Coast operations from February 1989 through July 1990.
Prior to joining the Company, Mr. Mitchell was a manager with Arthur Andersen &
Co., an independent public accounting firm, from 1982 through 1988.
CHERI L. PEPER, 42, was appointed corporate secretary of the Company in May
1995, having been assistant secretary since October 1992. Prior to joining the
Company, she was assistant secretary for Panhandle Eastern Corporation (now
PanEnergy Corp) since 1988.
MATTHEW W. DUNDREA, 42, was appointed treasurer in March 1996, having been
assistant treasurer since joining the Company in December 1994. Prior to that,
he was assistant treasurer from 1991 to 1994, manager--cash management from 1986
to 1991, and manager--economic analysis from 1984 to 1986, for Union Texas
Petroleum Holdings, Inc., Houston, Texas.
10
<PAGE> 14
SUMMARY COMPENSATION TABLE
The table below summarizes the annual and long-term compensation paid to
the individuals listed below for all services rendered to the Company and its
subsidiaries during the last three fiscal years, in accordance with Commission
rules relating to disclosure of executive compensation. The persons included in
this table are the Company's chief executive officer and the four other most
highly compensated executive officers who were serving as executive officers of
the Company at the end of the last completed fiscal year.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ---------------
---------------------------------- AWARDS
OTHER ---------------
ANNUAL SECURITIES ALL OTHER
SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($) OPTIONS/SARS(#) ($)
- --------------------------------- ---- ------- ------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Raymond Plank.................... 1995 650,016 187,200 0 40,000(2) 120,422(3)
Chairman of the Board and 1994 614,588 353,500 0 30,000(2) 107,495(3)
Chief Executive Officer 1993 604,168 283,200 0 45,000(2) 104,879(3)
G. Steven Farris................. 1995 350,016 100,800 0 21,000(2) 61,274(3)
President and Chief 1994 281,253 160,600 0 65,000(2) 43,852(3)
Operating Officer 1993 235,420 103,900 0 10,000(2) 42,703(3)
James R. Bauman.................. 1995 185,000 148,000 0 7,500(2) 432,600(4)
Senior Vice President, 1994 176,250 170,000 0 7,500(2) 29,445(3)
Business Development 1993 165,000 72,100 0 8,000(2) 29,844(3)
H. Craig Clark................... 1995 182,500 125,000 0 8,500(2) 35,100(3)
Vice President, 1994 165,125 110,000 0 7,000(2) 51,159(5)
North American Production 1993 143,988 92,000 0 3,500(2) 29,086(3)
Floyd R. Price................... 1995 175,000 120,000 4,047(6) 8,000(2) 54,898(7)
Vice President, 1994 143,417 90,000 0 7,000(2) 28,120(3)
International Exploration 1993 132,750 101,000 0 3,500(2) 26,910(3)
and Production
</TABLE>
- ---------------
(1) Includes amounts awarded under the Company's incentive compensation plan
for performance in the year indicated.
(2) Shares of the Company's common stock subject to options awarded during
1995, 1994 and 1993. Such stock options were granted on August 23, 1995
under the terms of the 1995 Stock Option Plan (the "1995 Plan"), and on
December 8, 1994, May 5, 1994, and May 6, 1993 under the terms of the 1990
Stock Incentive Plan. There were no adjustments or amendments during the
last fiscal year to the exercise price of stock options previously granted
to any of the named executive officers.
(3) Represents Company contributions under the Company's Retirement/401(k)
Savings Plan and related Non-Qualified Retirement/Savings Plan.
(4) Includes $42,600 in Company contributions under the Company's
Retirement/401(k) Savings Plan and related Non-Qualified Retirement/Savings
Plan; and, pursuant to the terms of Mr. Bauman's consulting arrangement,
amounts aggregating $390,000 to be paid over a four-year period ending in
March 2000. See "Employment Contracts and Termination of Employment and
Change-in-Control Arrangements."
(5) Includes $31,544 in Company contributions under the Company's
Retirement/401(k) Savings Plan; and $19,615 for accrued, unused vacation.
(6) Reimbursement for the payment of taxes on all reimbursed relocation
expenses and relocation payments.
(7) Includes $33,072 in Company contributions under the Company's
Retirement/401(k) Savings Plan and related Non-Qualified Retirement/Savings
Plan; $11,225 in aggregate relocation and temporary living expenses
reimbursed in connection with move to Houston, Texas; and $10,601 for
accrued, unused vacation.
11
<PAGE> 15
OPTION/SAR GRANTS TABLE
The table below provides supplemental information relating to the Company's
grants of options during 1995 to the executive officers named in the Summary
Compensation Table above, including the relative size of each grant, and each
grant's exercise price and expiration date. There were no stock appreciation
rights ("SARs") granted during the last fiscal year. Also included in compliance
with Commission rules on disclosure of executive compensation is information
relating to the estimated present value of the options granted, based upon
principles of the Black-Scholes option pricing model. The Black-Scholes model
utilizes numerous arbitrary assumptions about financial variables such as
interest rates, stock price volatility and future dividend yield. Neither the
option values reflected in the table nor the assumptions utilized in arriving at
the values should be considered indicative of future stock performance.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------
NUMBERS OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE GRANT DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME (#)(1)(2) FISCAL YEAR ($/SH)(3) DATE VALUE($)(4)
- ---------------------------- ------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Raymond Plank............... 40,000/0 10.08/0 27.25 8/23/2005 566,680
G. Steven Farris............ 21,000/0 5.29/0 27.25 8/23/2005 297,507
James R. Bauman............. 7,500/0 1.89/0 27.25 8/23/2005 106,253
H. Craig Clark.............. 8,500/0 2.14/0 27.25 3/23/2005 120,420
Floyd R. Price.............. 8,000/0 2.02/0 27.25 8/23/2005 113,096
</TABLE>
- ---------------
(1) Number of shares of the Company's common stock subject to options granted
August 23, 1995, under the terms of the 1995 Plan. Options are generally
nontransferable and become exercisable ratably over four years. The options
were granted for a term of ten years, subject to earlier termination in
certain events related to termination of employment, and are not intended to
qualify as incentive stock options under Section 422 of the Internal Revenue
Code. The exercise price and any withholding tax requirements may be paid by
cash and/or delivery of already-owned shares of the Company's common stock.
Options granted under the 1995 Plan are subject to appropriate adjustment in
the event of a reorganization, stock split, stock dividend, combination of
shares, merger, consolidation or other recapitalization of the Company.
If there is a change in control of the Company, the stock option plan
committee may accelerate the exercise date of any outstanding options; make
any outstanding options fully vested and exercisable; grant a cash bonus
award to any participant in an amount necessary to pay the exercise price of
all or any portion of the options then held by the participant; 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
exercise price of the 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 cancellations, or make any other adjustments or amendments to the
outstanding options.
A change in control occurs when a person, partnership or corporation acting
in concert, or any or all of them, acquires more than 20 percent of the
Company's outstanding voting securities. A change in control shall not occur
if, prior to the acquisition of more than 20 percent of the Company's voting
securities, the Company's board of directors by majority vote designates the
person, partnership or corporation as an approved acquirer and resolves that
a change in control will not have occurred.
(2) There were no SARs granted during 1995. There were no adjustments or
amendments during 1995 to the exercise price of stock options previously
granted to any of the named executive officers.
(footnotes continued on following page)
12
<PAGE> 16
(3) Based on the closing market price per share of the Company's common stock on
the date of grant, as reported on The New York Stock Exchange, Inc.
Composite Transactions Reporting System.
(4) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options, using the following assumptions:
volatility -- 35.72 percent; risk free rate of return -- 6.27 percent;
dividend yield -- 1.03 percent; and time of exercise -- end of term. There
were no adjustments made to the model for non-transferability or risk of
forfeiture. The actual value, if any, an executive may realize will depend
on the excess of the market price over the exercise price on the date the
option is exercised. There is no assurance the value realized by an
executive will be at or near the value estimated by the Black-Scholes model.
13
<PAGE> 17
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The table below provides supplemental information relating to the value
realized upon the exercise of stock options during the last fiscal year by the
executive officers named in the Summary Compensation Table above and the number
and intrinsic value of stock options held at year-end. Year-end values are based
arbitrarily on the Company's closing market price at December 29, 1995, do not
reflect the actual amounts, if any, which may be realized upon the future
exercise of remaining stock options, and should not be considered indicative of
future stock performance. There were no SARs settled during the last fiscal year
and no SARs were outstanding at year-end 1995.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-END
AT FY-END ---------------
SHARES ACQUIRED -------------- EXERCISABLE/
ON EXERCISE VALUE REALIZED EXERCISABLE/ UNEXERCISABLE
NAME (#)(1) ($)(2) UNEXERCISABLE ($)(3)
- ----------------------------------------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Raymond Plank
Options.................... 0 0 52,500/97,500 388,125/382,500
SARs....................... 0 0 0/0 0/0
G. Steven Farris
Options.................... 0 0 56,875/78,625 591,969/241,906
SARs....................... 0 0 0/0 0/0
James R. Bauman
Options.................... 0 0 41,125/19,875 494,297/ 80,266
SARs....................... 0 0 0/0 0/0
H. Craig Clark
Options.................... 0 0 8,500/16,750 68,063/ 54,813
SARs....................... 0 0 0/0 0/0
Floyd R. Price
Options.................... 0 0 9,750/16,250 85,969/ 56,781
SARs....................... 0 0 0/0 0/0
</TABLE>
- ---------------
(1) Number of shares with respect to which stock options were exercised during
1995.
(2) Fair market value on date of exercise minus the exercise price of stock
options.
(3) Based on the closing market price of $29.50 per share of the Company's
common stock as reported on The New York Stock Exchange, Inc. Composite
Transactions Reporting System for December 29, 1995.
14
<PAGE> 18
THE MANAGEMENT DEVELOPMENT
AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
This report is issued by the management development and compensation
committee of the board of directors to set out the executive compensation
policies and programs of the Company.
The objective of the Company's executive compensation program is to attract
and retain executives capable of leading the Company in a complex, competitive
and changing industry. A capable, highly-motivated senior management is an
integral part of the Company's continued success. The Company's financial
performance is in large part due to the talent and efforts of the Company's
executive officers. The program ties a significant portion of executive
compensation to the Company's success, and is primarily comprised of a base
salary, an incentive bonus, and a long-term incentive component.
BASE SALARY
The committee believes that the most effective way to compete in the
executive labor market is to offer executives a competitive base salary. To
achieve this balance, the committee analyzes each executive's compensation using
a four-step process. First, the key executive positions within the Company are
defined carefully in terms of scope and responsibility, job complexity,
knowledge and experience required, and other relevant factors. Second, the
positions are ranked internally on the basis of these definitions to establish a
logical relationship among them. Third, the committee identifies the Company's
direct competitors which it believes share comparable operations, employee
composition, and capitalization, and obtains comparative compensation data about
the identified companies from independent, national executive compensation
consultants with expertise in salary and incentive plan structure. Finally,
easily-compared positions are priced in terms of salary ranges by reviewing the
comparative industry data and other surveys, to establish relative salary ranges
for all key executive positions in the Company. Base salaries are targeted to
fall within the 50th to 75th percentiles of executive salaries paid by
comparable companies, and for 1995 they generally correspond to that range. The
committee sets each executive's salary within this range, taking into account
the individual's contribution to the Company's success, how well the
individual's responsibilities are fulfilled, the individual's specific
performance, growth in qualifications for the individual's job, and other
relevant aspects of performance.
Base salaries of all executives are generally reviewed every 12 to 24
months. Salary adjustments are made within updated, market-confirmed salary
ranges according to the committee's assessment of the executive's individual
performance and the performance of the Company as a whole. However, changes in
the circumstances of a particular executive can prompt an interim compensation
adjustment. In 1995, the committee retained the services of an outside
compensation consultant, who was proposed by management and approved by the
committee, to review the base salaries of the Company's executives and confirm
that the salaries correspond to the 50th to 75th percentile target ranges of
comparable companies. Such review includes comparative data from part but not
all of the companies comprising the Secondary Oils Index reflected in the stock
performance chart set forth below, as some of those companies have integrated
operations or operate in diversified industries. Based on the factors discussed
above and taking the outside consultant's review into consideration, nine of the
Company's officers received increases in compensation during 1995 to reflect
market changes and increased responsibilities resulting from internal corporate
restructuring. Each of the executives named in the Summary Compensation Table,
except Mr. Plank, received an increase in base salary during 1995.
INCENTIVE BONUS
Executives are eligible to receive an annual incentive bonus tied directly
to the Company's annual financial performance and achievement of the executive's
personal objectives. In the early months of each year, the committee establishes
specific annual corporate performance factors, and the executive officers submit
personal goals relating to cost reduction, operational improvements or other
objectively determinable
15
<PAGE> 19
goals. Personal goals must be approved by executive's superior and the committee
as a whole. Corporate performance factors are approved by both the committee and
the full board of directors. In 1995, 75 percent of each executive's bonus
depended upon the Company's achievement of the specified corporate performance
factors, with intermediate factors ranging from zero if the minimum factors
established were not met, to 125 percent if the maximum performance factors were
achieved. The remaining 25 percent of each executive's bonus depended upon the
percentage of the executive's personal goals which were successfully
accomplished, as well as the Company's achievement of the corporate performance
factors. The Company's incentive compensation plans effectively correlate a
large portion of executive compensation to predetermined, objectively
determinable financial and managerial goals designed to translate into
shareholder value. Committee policy provides for bonuses targeted at 50 percent
of each executive's base salary, subject to corporate performance.
Executive bonuses paid in 1996 were based on management's achievement
during 1995 of the corporate performance factors established by the committee
relating to earnings per share, cash flow per share, ratio of debt to total
capitalization, and other performance-related measures. The committee set the
performance factors for an achievement level of 100 percent as follows: $.70 per
share for earnings per share (excluding the effect of certain merger costs);
$5.33 per share for cash flow per share; a ratio of debt to total capitalization
of less than 50 percent; and $200 million of property sales. The Company
reported earnings of $.40 per share (excluding the effect of certain merger
costs), and generated a record $356 million in cash flow for the year, or $4.96
per share. At year end, the Company's balance sheet reflected a debt to total
capitalization ratio of 49.6 percent and the sale or other disposition of oil
and gas properties valued at $272 million. Management's achievement of these
corporate performance factors during the year represented attainment of 76.8
percent of the corporate performance factors.
In addition to the Company's regular incentive compensation plan, the
committee may elect to award a special achievement bonus to an executive officer
who has rendered services during the year that substantially exceed those
normally required. Special achievement bonuses reflect the committee's decision
to reward any executive who, through extraordinary effort, has substantially
benefited the Company and its shareholders during the year. The bonuses are
awarded only in exceptional circumstances and are in amounts relative to the
benefit provided to the Company. No special achievement bonuses were awarded or
paid during 1995 to any executive officers.
LONG-TERM INCENTIVE
A long-term incentive in the form of common stock options serves to align
the interests of executive officers with the Company's shareholders by tying a
significant portion of each executive's total long-term compensation to the
continued growth of the Company and appreciation of its common stock. Options
granted to executives benefit the executive only if shareholders benefit from
appreciating stock prices. Individual grants are proportionate to each
executive's base salary and are targeted at the 50th percentile of similar plans
maintained by comparable companies, taking into account options previously
granted. All options vest over four years and have an exercise price equal to
the per share closing market price of the Company's common stock on the date of
grant.
In 1995, the Company's executives received stock option grants under the
Company's 1995 Stock Option Plan. The grants to the Company's officers named in
the Summary Compensation Table presented above are reflected in the Option/SAR
Grants Table.
CHIEF EXECUTIVE OFFICER
Raymond Plank, the Company's chief executive officer, directs Apache's
intensive, on-going programs to monitor, analyze and respond creatively to the
changes and new requirements in the oil and gas industry. His activities include
leadership of the Company's active acquisition program, and maintenance of sound
business relationships with the management of many of the nation's large oil and
gas companies. These relationships are important to Apache's acquisition
approach, which emphasizes privately negotiated transactions that
16
<PAGE> 20
develop and achieve mutual business benefits. Mr. Plank has also been
responsible for the Company's developing interest and successful exploration
efforts going forward in Canada and international areas such as Australia,
Egypt, China, Indonesia and the Ivory Coast. As an active chief executive, he
oversees all of the Company's major business units and guides and develops
Apache's senior management. Reporting directly to Mr. Plank during 1995, were
the president, the vice president and treasurer, the vice president -- finance,
the vice president and general counsel, the vice president -- public and
international affairs, and the director -- investor relations.
Mr. Plank's base salary, incentive bonus and long-term incentive are
determined in the same manner as is the compensation for the Company's other
executive officers and are reflected in the Summary Compensation Table above.
His last base salary adjustment was effective January 1, 1992; and his bonus
paid in 1996 was based on the Company's 1995 performance, as discussed above.
Mr. Plank, as the Company's most senior executive officer, prepares his personal
goals with the consultation of the committee, and periodically reports to the
committee on his progress toward the achievement of his goals. Mr. Plank's
employment agreement prohibits the reduction of his salary below a specified
amount. See "Employment Contracts and Termination of Employment and
Change-in-Control Arrangements."
Mr. Plank's 1995 base salary was within the committee's percentile targets
and took into account the following: Mr. Plank's active role in the Company's
management and leadership of successful acquisitions; the Company's financial
performance during 1994; the challenges and expectations for the Company in
1995; Mr. Plank's recognized stature as a spokesman for the oil and gas
industry; and his role as a Company founder and 41 years of service as the
Company's senior executive officer. Mr. Plank's bonus represented 57.6 percent
of his eligible bonus amount under the incentive compensation plan, reflecting
the Company's overall achievement of 76.8 percent of the corporate performance
factors and his election not to accept the bonus amount related to
accomplishment of personal goals.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") imposes a limit,
with certain exceptions, on the amount that a publicly held corporation may
deduct in any tax year commencing on or after January 1, 1994, for the
compensation paid or accrued with respect to its chief executive officer and its
four most highly compensated executive officers (other than the chief executive
officer). In December 1995, the Internal Revenue Service issued final
regulations implementing the legislation, with the regulations effective as of
January 1, 1994. Certain performance-based compensation is specifically exempt
from the limit if it meets the requirements contained in these final
regulations. The committee has reviewed the Company's compensation plans based
upon these regulations and will determine what further actions or changes to the
Company's compensations plans, if any, are appropriate. The Company anticipates
no loss of deductibility attributable to compensation paid or accrued in 1995.
Grants of stock options made under the Company's 1990 Stock Incentive Plan
or under the Company's 1995 Stock Option Plan qualify as "performance-based"
under the regulations. The Company's existing incentive compensation plans and
special achievement bonuses do not currently meet the requirements of the
regulations, although they are designed to reward the contribution and
performance of employees and to provide a meaningful incentive for achieving the
Company's goals, which in turn enhances shareholder value. While the committee
cannot predict with certainty how the Company's compensation policy will be
impacted by OBRA, it is anticipated that executive compensation paid or accrued
pursuant to any of the Company's compensation plans which do not meet the
requirements of the regulations will not result in any material loss of tax
deductions in the foreseeable future.
17
<PAGE> 21
SUMMARY
According to information provided to the committee by its independent
compensation consultant, the amount of the Company's cash compensation paid to
all of its executive officers during 1995 was in approximately the 75th
percentile of all comparable companies. As shown on the Performance Graph
following this report, the shareholders have received a rewarding cumulative
annual return over the last five years, with the Company's common stock
significantly outperforming the Dow Jones Secondary Oil Stock Index and
substantially equaling the performance of the Standard & Poor's Composite 500
Stock Index. These are visible measures of management's enhancement of
shareholder value. Viewed in light of the Company's performance, the committee
believes that its current executive compensation policy is successful in
providing shareholders with talented, dedicated executives at competitive
compensation levels.
February 8, 1996 Management Development and
Compensation Committee
Frederick M. Bohen
John A. Kocur
Virgil B. Day
Joseph A. Rice
18
<PAGE> 22
PERFORMANCE GRAPH
The following stock price performance graph is included in accordance with
the Commission's executive compensation disclosure rules and is intended to
allow shareholders to review the Company's executive compensation policies in
light of corresponding shareholder returns, expressed in terms of the
appreciation of the Company's common stock relative to two broad-based stock
performance indices. The information is included for historical comparative
purposes only and should not be considered indicative of future stock
performance. The graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's common stock with the cumulative total
return of the Standard & Poor's Composite 500 Stock Index and of the Dow Jones
Secondary Oils Stock Index from December 31, 1990 through December 31, 1995.
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C> <C>
S & P'S DJ SECONDARY
APACHE COMPOSITE 500 OILS STOCK
YEAR ENDED DECEMBER 31, CORPORATION STOCK INDEX INDEX
1990 100 100 100
1991 111 130 98
1992 133 140 99
1993 167 155 110
1994 181 156 106
1995 216 215 123
</TABLE>
19
<PAGE> 23
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Raymond Plank serves the Company under an employment agreement entered
into on December 3, 1975, and amended and restated in 1990. The agreement has an
undefined term and is terminable at will by the Company's board of directors.
Mr. Plank's annual compensation under the agreement is determined by the board
of directors, but may not be less than $450,000. If his service as director and
chief executive officer is terminated by the board of directors, Mr. Plank will
serve as advisor and consultant to the Company for the remainder of his life at
annual compensation equal to 50 percent of his then-current annual compensation
and will receive health, dental and vision benefits for himself, his spouse and
his eligible dependents during the remainder of his life. Pursuant to the
agreement, and in exchange for surrendering life insurance coverage, an annuity
was purchased for Mr. Plank which pays $31,500 annually until 2008. Mr. Plank
has agreed not to render service to any of the Company's competitors for the
entire period covered by the agreement. Upon Mr. Plank's death, an amount equal
to two times his then-current annual executive or advisory compensation, as
appropriate, shall be paid to (i) his surviving spouse in equal monthly
installments over five years, or (ii) if he has no surviving spouse, in a lump
sum to his estate.
Mr. Farris serves the Company pursuant to an employment agreement, dated
June 6, 1988, under which he receives a current annual salary of $350,000. The
agreement has an undefined term and may be terminated by either the Company or
Mr. Farris on 30 days advance written notice. If Mr. Farris' employment is
terminated without cause, or if he terminates his employment within 30 days of a
reduction in his salary without a proportionate reduction in the salaries of all
other Company executives, Mr. Farris will receive, for 36 months thereafter, (i)
an amount equal to his base salary as it existed 60 days prior to termination
and (ii) 50 percent of the maximum amount for which he qualified under the
Company's incentive compensation plan, calculated on his base compensation as it
existed 60 days prior to termination. In the event of Mr. Farris' death during
the 36-month period, the amounts described above shall be paid to his heirs or
estate. Mr. Farris has agreed not to render service to any of the Company's
competitors for the term of his employment or, unless he is terminated without
cause, for 36 months thereafter.
Prior to his retirement in March 1996, Mr. Bauman was the Company's senior
vice president -- business development. At the Company's request, he has agreed
to serve the Company in a non-executive, consulting capacity through March 31,
2000, and will receive during that period $97,500 per year, or an aggregate of
approximately $390,000. Under the consulting arrangement, Mr. Bauman (i)
receives medical, dental and life insurance benefits until age 65, on the same
terms as are extended to the Company's executives, and (ii) has agreed not to
render service, without the prior written consent of the Company, to any of the
Company's competitors or otherwise compete with the Company during the
consulting period. In addition, Mr. Bauman was granted SARs in March 1996,
effective July 1996, relating to 23,000 shares of the Company's common stock at
SAR prices ranging from $26.625 to $27.25.
In addition to the foregoing, the Company has established an income
continuance plan, pursuant to which all officers of the Company, including the
officers named in the Summary Compensation Table, and all employees who have
either reached the age of 40, served the Company for more than ten years, or
have been designated for participation based upon special skills or experience,
will receive monthly payments approximating their monthly income and continued
medical and health benefits from the Company for up to two years if their
employment is terminated as a result of a "change in control" of the Company, as
defined in the plan.
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<PAGE> 24
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Frederick M. Bohen, Virgil B. Day, John A. Kocur and Joseph A. Rice served
on the management development and compensation committee of the Company for the
past fiscal year.
Mr. Kocur, a member of the committee since September 1991 and a director of
the Company since 1977, retired as an executive officer in June 1991. Pursuant
to the terms of an employment agreement in place at the time of his retirement,
Mr. Kocur and his spouse receive health, dental and vision benefits throughout
his life.
CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS
The law firm of Vedder, Price, Kaufman, Kammholz & Day, of which Mr. Day, a
continuing director of the Company, is a senior partner, was retained by the
Company during 1995 to provide certain legal services and was paid approximately
$38,000 by the Company during 1995.
In the normal course of business, Apache paid to Maralo, Inc. ("Maralo")
during 1995 approximately $157,600 for drilling and workover costs and routine
expenses relating to eight oil and gas wells in which Apache owns interests and
for which Maralo is operator, and Apache received in 1995 approximately $100,500
for its proportionate share of revenues from such wells. During 1995, Apache
paid approximately $900 to Maralo relating to three oil and gas wells in which
Maralo has royalty interests and for which the Company is operator. Mary Ralph
Lowe, nominee for election to the Company's board of directors, is president,
chief executive officer and sole shareholder of Maralo.
The Company entered into a stock purchase agreement with the Ucross
Foundation, dated as of January 18, 1995, whereby the Company sold to the Ucross
Foundation all of the issued and outstanding capital stock of Ucross Land
Company, a corporation formed under the laws of the State of Delaware, for a
sale price of $4,576,315. Ucross Land Company is the holder of certain real
property and fixed assets located in Johnson and Sheridan Counties, Wyoming, and
was, prior to the closing of this transaction, a wholly-owned subsidiary of the
Company. The sale price was determined using a marketing analysis dated July 30,
1994 and an appraisal dated November 30, 1994, both prepared by Agricultural and
Land Professionals, Inc., Lakewood, Colorado, and the balance sheet of Ucross
Land Company. Mr. Plank and Mr. Bauman, two of the persons named in the Summary
Compensation Table above, serve as members of the board of trustees and as
officers of the Ucross Foundation, for which they receive no compensation.
In October 1995, wholly-owned affiliates of each of the Company, Oryx
Energy Company and Parker & Parsley Petroleum Company formed ProEnergy, a
natural gas marketing company designed to sell producer-owned gas directly into
the marketplace. Once fully operational (which is expected to occur in the
second quarter of 1996), ProEnergy will purchase and market substantially all of
the Company's domestic natural gas production pursuant to a gas purchase
agreement having an initial term of ten years, subject to earlier termination
following specified events. As noted under "Executive Officers of the Company"
above, Messrs. Mulkey and Samuel recently resigned as officers of the Company in
order to serve as officers of ProEnergy. In connection with their leaving the
Company to join ProEnergy and thereby foregoing certain Apache employee
benefits, Messrs. Mulkey and Samuel were granted SARs effective April 1996,
relating to respective totals of 22,500 shares and 14,400 shares of the
Company's common stock at SAR prices ranging from $24.375 to $27.25.
21
<PAGE> 25
APPROVAL OF AMENDMENTS TO THE 1990 STOCK INCENTIVE PLAN AND TO
THE 1995 STOCK OPTION PLAN
(PROPOSAL NO. 2 ON PROXY CARD)
The board of directors recommends that the shareholders of the Company
approve the proposed amendments (the "Amendments") to the Apache Corporation
1990 Stock Incentive Plan (the "1990 Plan") and to the Apache Corporation 1995
Stock Option Plan (the "1995 Plan") (together, the "Plans"). The affirmative
vote of the holders of a majority of the shares of the Company's common stock
voted, in person or by proxy, and entitled to vote at the 1996 annual meeting is
required to approve the Amendments to the Plans.
PROPOSED AMENDMENTS TO THE PLANS
If the Amendments are approved by the Company's shareholders, the Plans
would provide as follows:
(i) In the event of a participant's death while still employed by the
Company, each of the participant's stock options shall become fully vested
and exercisable, including any increment of the participant's stock options
not already exercisable at the time of death. Presently, the Plans provide
that, in the event of death, the participants options are exercisable only
to the extent that the options had become exercisable on or before the date
of the participant's death.
(ii) In the event of a participant's death during the 36-month period
after retirement, the participant's vested options may be exercised by the
appropriate person(s) within twelve months following the participant's
death or within 36 months after retirement, whichever is later. Presently,
the Plans provide that, in the event of death during the 36-month period
after retirement, the participant's vested options may not be exercised
beyond such 36-month period.
(iii) In the event of a participant's death during the twelve-month
period after disability, the participant's vested options may be exercised
by the appropriate person(s) within twelve months following the
participant's death. Presently, the Plans provide that, in the event of
death during the twelve-month period after disability, the participant's
vested options may not be exercised beyond twelve months after disability.
The Amendments to the Plans were adopted by the board of directors on
February 9, 1996, subject to approval by shareholders at the next annual
meeting. The Amendments are conditional upon, and are of no force and effect
unless they receive, approval by the requisite vote of shareholders. The Company
believes that the benefits provided under the Plans are not materially increased
by the proposed Amendments.
The 1990 Plan was approved by the Company's shareholders at the 1991 annual
meeting, and an increase in the number of shares of the Company's common stock
subject to the terms of the 1990 Plan was approved by the shareholders in 1993.
The 1995 Plan was approved by shareholders at the 1995 annual meeting, after
which time no further grants were made under the 1990 Plan.
MATERIAL FEATURES OF THE PLANS
Stock options granted under the Plans provide the participant the right to
purchase a specified number of shares of the Company's common stock at some time
in the future at a price not less than the fair market value of the stock on the
date the option is granted. The terms and conditions of grants under the Plans,
including number of options granted, number of shares subject to each option,
expiration and exercise price, are determined by the stock option plan committee
at the time of grant. The 1995 Plan, however, does establish that no eligible
employee may be granted options which in the aggregate pertain to in excess of
25 percent of the shares of the Company's common stock authorized for issuance
under the 1995 Plan. Each option granted under the Plans becomes exercisable in
25-percent increments on each of the next four anniversaries of the date the
option is granted. Each 25-percent increment becomes 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 additional 25-percent increment
becomes exercisable. If, however, there is a reorganization, liquidation or
change in control of the Company (as defined in the Plans), the Committee may
take
22
<PAGE> 26
certain actions including, without limitation, acceleration of vesting. Options
are generally nontransferable and are designated as non-qualified stock options
under Section 422 of the Internal Revenue Code. Options may be exercisable for a
maximum of ten years. The exercise price is payable in either cash, by delivery
of already-owned shares of the Company's common stock with a fair market value
equal to the exercise price, or a combination thereof.
Through 1995, the Plans were administered by the management development and
compensation committee of the board of directors. Beginning in 1996, the Plans
are administered by the stock option plan committee (the "Committee") of the
Company's board of directors composed of "outside directors" pursuant to Section
162(m) of the Internal Revenue Code of 1986, as amended, and "disinterested
directors" pursuant to Rule 16b-3 under the Securities Exchange Act of 1934, as
amended. The Committee selects the participants who will receive awards pursuant
to the 1995 Plan, is authorized to adopt rules, guidelines and practices
governing the Plans, and is authorized to interpret the provisions of the Plans
and any related agreements. The decisions of the Committee are final.
The 1995 Plan empowers the Committee, from time to time during a period of
five years following May 4, 1995, unless earlier terminated by the board of
directors, to grant stock options to eligible employees of the Company and its
subsidiaries. Following shareholder approval of the 1995 Plan, the 1990 Plan was
terminated early, subject to the options outstanding thereunder, and no further
grants were made under the 1990 Plan. The maximum number of shares of the
Company's common stock available for issuance under the 1995 Plan, as well as
the shares subject to outstanding options granted under the terms of the 1990
Plan, are subject to appropriate adjustment in the event of a reorganization,
stock split, stock dividend, combination of shares, merger, consolidation or
other recapitalization of the Company.
The board of directors may at any time terminate the 1995 Plan, and may
from time to time amend the Plans. No amendment may become effective without
approval of such amendment by the shareholders, if shareholder approval is
required by statutes or regulations, or if the Company determines that
shareholder approval is otherwise necessary or desirable. Following shareholder
approval of the 1995 Plan, the 1990 Plan was terminated early, subject to the
options outstanding thereunder, and no further grants were made under the 1990
Plan. Unless earlier terminated, options may be granted under the 1995 Plan
until May 4, 2000.
Currently, there are approximately 135 employees eligible for awards under
the 1995 Plan. Mr. Plank and Mr. Farris, both of whom serve as officers and
directors of the Company, are eligible to receive future grants under the 1995
Plan.
BENEFITS UNDER THE 1990 PLAN AND THE 1995 PLAN
Future benefits to be received by participants under the terms of the 1995
Plan are not yet determinable, as such benefits are subject to the discretion
and approval of the Committee as described above. As of February 29, 1996, there
were 870,050 shares and 349,800 shares of the Company's common stock subject to
outstanding option grants under the terms of the 1990 Plan and the 1995 Plan,
respectively. See the Option/SAR Grants Table for information concerning options
granted to officers and other key employees during the most recent fiscal year
pursuant to the 1995 Plan.
From inception of the 1990 Plan until its early termination in 1995,
options covering 1,567,000 shares of the Company's common stock were granted to
officers and other key employees at exercise prices ranging from $13.75 to
$27.88 per share. Through February 29, 1996, options covering 371,600 shares
have been granted under the 1995 Plan, at exercise prices ranging from $27.25 to
$29.00 per share.
The closing market price of the Company's common stock as reported on The
New York Stock Exchange, Inc. Composite Transactions Reporting System for
February 29, 1996, was $26.00 per share.
RECOMMENDATION AND REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the holders of a majority of the shares of the
Company's common stock voted, in person or by proxy, and entitled to vote at the
1996 annual meeting is required to approve the Amendments to
23
<PAGE> 27
the Plans. The Amendments to the Plans are conditional upon, and are of no force
or effect unless they receive, approval by the requisite vote of shareholders at
the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL
TO APPROVE THE AMENDMENTS TO THE 1990 STOCK INCENTIVE PLAN AND TO THE 1995 STOCK
OPTION PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP was the Company's independent public accounting firm
for the fiscal year 1995. As of the date of this proxy statement, the Company's
audit committee and board of directors have not yet recommended or selected the
Company's independent public accountants for the fiscal year 1996.
Representatives of Arthur Andersen LLP will be present at the annual meeting and
will have an opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with regulations of the Securities and Exchange
Commission and the Company's bylaws. Should a shareholder wish to have a
proposal appear in the Company's proxy statement for next year's annual meeting,
under the regulations of the Securities and Exchange Commission, it must be
received by the Company's corporate secretary (at 2000 Post Oak Boulevard, Suite
100, Houston, Texas 77056-4400) on or before November 28, 1996.
OTHER BUSINESS
All items of business intended to be brought before the meeting are set
forth in this proxy statement. Management knows of no other business to be
presented. If other matters of business not presently known to management are
properly raised at the meeting, the proxies will vote on the matters in
accordance with the best judgment of the proxy holders.
By order of the Board of Directors
APACHE CORPORATION
/s/ C. L. PEPER
C. L. PEPER
Corporate Secretary
NOTE: Shareholders are requested to complete, sign, date and promptly
return the enclosed proxy card, using the postage-paid business reply envelope
provided.
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NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
MAY 2, 1996
AND PROXY STATEMENT
[APACHE CORPORATION LOGO]
ONE POST OAK CENTRAL
2000 POST OAK BOULEVARD, SUITE 100
HOUSTON, TEXAS 77056-4400
[LOGO] Printed on recycled paper.
- --------------------------------------------------------------------------------
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<PAGE> 29
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PROXY
APACHE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Raymond Plank, Frederick M. Bohen,
and W. Brooks Fields as Proxies, with the power of substitution,
and authorizes them to represent and to vote at the annual meeting
of shareholders to be held May 2, 1996, or any adjournment
thereof, all the shares of common stock of Apache Corporation held
of record by the undersigned on March 14, 1996, as designated
below.
1. Election of directors -- director nominees:
G. Steven Farris, Randolph M. Ferlic, Robert V. Gisselbeck,
John A. Kocur and Mary Ralph Lowe
<TABLE>
<S> <C> <C>
/ / FOR all nominees listed above / / WITHHOLD AUTHORITY
to vote for all nominees
(except as indicated below)
</TABLE>
Instruction: to withhold authority to vote for any of the
above nominees, write the nominee's name(s) on this line
------------------------------------------------------------------
2. Proposal to approve the amendments to the Apache Corporation
1990 Stock Incentive Plan and 1995 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. The Proxies are authorized to vote in their best judgment
upon such other business as may properly come before the meeting.
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This Proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND TO
APPROVE THE AMENDMENTS TO THE APACHE CORPORATION 1990 STOCK
INCENTIVE PLAN AND 1995 STOCK OPTION PLAN.
Please sign exactly as your name appears below. When shares are
held by joint tenants, both should sign. If acting as attorney,
executor, trustee, or in any other representative capacity, sign
name and title.
Dated _______________, 1996
___________________________
Signature
___________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING
THE ENCLOSED ENVELOPE.
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<PAGE> 31
EXHIBIT INDEX
99.1 -- Apache Corporation 1990 Stock Incentive Plan
(as amended and restated February 9, 1996)
99.2 -- Apache Corporation 1995 Stock Option Plan
(as amended and restated February 9, 1996)
<PAGE> 1
EXHIBIT 99.1
APACHE CORPORATION
1990 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED FEBRUARY 9, 1996)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7.3 Shareholder Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8 - Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.2 Limitation on Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
8.3 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.1 Withholding Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.2 Withholding With Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 14 - Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14.1 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14.2 Federal Securities Law Requirements . . . . . . . . . . . . . . . . . . . . . . 14
14.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 15 - Duration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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<PAGE> 4
APACHE CORPORATION
1990 STOCK INCENTIVE PLAN
SECTION 1
INTRODUCTION
1.1 Establishment. Apache Corporation, a Delaware corporation
(hereinafter referred to, together with its Affiliated Corporations (as defined
in subsection 2.1(a)) as the "Company" except where the context otherwise
requires), hereby establishes the Apache Corporation 1990 Stock Incentive 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 shareholder value,
so that the income of the key management employees is more closely aligned with
the income of the Company's shareholders. 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 September 19, 1990. 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 shareholder approval is not necessary.
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) of the Internal
Revenue Code.
-1-
<PAGE> 5
(b) "Board" means the Board of Directors of the Company.
(c) "Committee" means a committee consisting of members of the
Board who are 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 Rule 16b-3 or any successor rule promulgated under the Securities
Exchange Act of 1934 (the "1934 Act"). Members of the Committee shall be
appointed from time to time by the Board, shall serve at the pleasure of the
Board and may resign at any time upon written notice to the Board.
(d) "Effective Date" means the effective date of the Plan,
September 19, 1990.
(e) "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.
(f) "Fair Market Value" means the closing price of the Stock on
the composite tape on 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.
(g) "Internal Revenue Code" means the Internal Revenue Code of
1986, as it may be amended from time to time.
(h) "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 422A of
the Internal Revenue Code.
(i) "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).
(j) "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.
(k) "Stock" means the $1.25 par value Common Stock of the Company.
2.2 Gender and Number. 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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<PAGE> 6
SECTION 3
PLAN ADMINISTRATION
The Plan shall also 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 and 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.
SECTION 4
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. Two Million Fifty Thousand (2,050,000) 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 by the shareholders of
the Company if, in the opinion of counsel for the Company, such shareholder
approval is required. Shares of Stock which may be issued 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 treasury Stock, 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 or for any reason is terminated unexercised, and any
shares of Stock that for any
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other reason are not issued to an Eligible Employee 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 in 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, 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 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
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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 of other securities, the
Option Price shall be increased by the amount of the price that is payable by
the Participant for such Stock 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% 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 9 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 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
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notice to the Participants, provide that all unexercised Options must be
exercised within a specified number of days of the date of such notice or they
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
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, a Participant may be granted one or more Options.
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).
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 "Option
Holder"), 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.
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(a) Number of Shares. Each stock option agreement shall state
that it covers a specified number of shares of the 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 Option Holder (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% 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% increment shall
become exercisable only if the Option Holder has been continuously employed by
the Company from the date the Option is granted through the date on which each
such additional 25% 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 Option Holder:
(i) If the employment of the Option Holder 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) (i) shall be limited to determining the consequences of a
termination and that nothing in this subsection 7.2(d) (i) shall restrict or
otherwise interfere with the Company's discretion with respect to the
termination of any employee.
(ii) If the Option Holder retires from employment by the
Company or its affiliates on or after attaining age 65, the Option may be
exercised by the Option Holder 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 Option Holder'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 Option Holder's retirement.
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(iii) If the Option Holder becomes disabled (as determined
pursuant to the Company's Long-Term Disability 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 Option Holder or by his or her guardian or legal
representative, within twelve months following the Option Holder'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 Option Holder'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 as to which the Option had become exercisable on or before the
date of the Option Holder's disability.
(iv) In the event of the Option Holder's death while still
employed by the Company, each Option of the deceased Option Holder may be
exercised by those entitled to do so under the Option Holder's will or under
the laws of descent and distribution within twelve months following the Option
Holder'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% increment of the Option, if any, which has
not yet become exercisable at the time of the Option Holder's death. In the
event of the Option Holder'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 Option Holder that is exercisable at the time of death
may be exercised by those entitled to do so under the Option Holder's will or
under the laws of descent and distribution within twelve months following the
Option Holder'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.
(v) If the employment of the Option Holder by the Company is
terminated (which for this purpose means that the Option Holder is no longer
employed by the Company or by an Affiliated Corporation) within the Option
Period for any reason other than cause, retirement on or after attaining age
65, disability or the Option Holder's death, the Option may be exercised by the
Option Holder 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 employment.
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(e) Transferability. Each stock option agreement shall provide
that the Option granted therein is not transferable by the Option Holder except
by will or pursuant to the laws of descent and distribution, and that such
Option is exercisable during the Option Holder's lifetime only by him or her,
or in the event of disability or incapacity, by his or her guardian or legal
representative.
(f) Agreement to Continue in Employment. Each stock option
agreement shall contain the Option Holder'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 Corporate
Secretary of the Company of written notice specifying the number of shares 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 Option (or portion thereof) which is being exercised and the
number of shares with respect to which the Option is being exercised. The
exercise of the Stock Option shall be deemed effective upon receipt of such
notice by the Corporate Secretary and payment to the Company. If requested by
the Company, such notice shall contain the Option Holder'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 purchase price of the Stock 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 Option Holder. If certificates representing
Stock are used to pay all or part of the exercise price, separate certificates
for the same number of shares of Stock shall be issued by the Company and
delivered to the Option Holder representing each certificate used to pay the
Option Price, and an additional certificate shall be issued by the Company and
delivered to the Option Holder representing the additional shares, in excess of
the Option Price, to which the Option Holder is entitled as a result of the
exercise of the Option.
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(ii) the exercise price shall be paid by any of the following
methods or any combination of the following methods:
(A) in cash;
(B) by certified or cashier's check payable to the
order of the Company;
(C) by delivery to the Company of certificates
representing the number of shares then owned by the Option Holder, the Fair
Market Value of which equals the purchase 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 Option
Holder 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 purchase 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 Option Holder
necessary to pay the exercise 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) Withholding. Each stock option agreement shall provide that,
upon exercise of the Option, the Option Holder shall make appropriate
arrangements with the Company to provide for the Amount of additional
withholding required by Sections 3102 and 3402 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.
(j) Adjustment of Options. Subject to the limitations contained
in Sections 7 and 12, the Committee may make any adjustment in the exercise
price, the number of shares subject to, or the terms of an outstanding Option
and a subsequent granting of an Option by amendment or by substitution of an
outstanding Option. Such amendment, substitution, or regrant may result in
terms and conditions (including exercise price, number of shares covered,
vesting schedule or exercise 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
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Participant. If such action is effected by amendment, the effective date of
such amendment will be the date of the original grant.
7.3 Shareholder Privileges. No Option Holder shall have any rights as a
shareholder with respect to any shares of Stock covered by an Option until the
Option Holder becomes the holder of record of such Stock, and no adjustments
shall be made for dividends or other distributions or other rights as to which
there is a record date preceding the date such Option Holder becomes the holder
of record of such Stock, except as provided in Section 4.
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, then the Committee may, in its sole discretion, without
obtaining shareholder approval, to the extent permitted in Section 12, take any
or all of the following actions: (a) accelerate the exercise dates of any
outstanding Options or make all such Options fully vested and exercisable; (b)
grant a cash bonus award to any Option Holder in an amount necessary to pay the
exercise price of all or any portion of the Options then held by such Option
Holder; (c) pay cash to any or all Option Holders in exchange for the
cancellation of their outstanding Options in an amount equal to the difference
between the exercise 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 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 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.
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 which
constitute a change in control within the meaning of that Plan.
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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 compensation of the Participant from the rate 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, 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
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 any person to
whom an Option is granted, as a condition of exercising such 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
Company deems necessary or appropriate in order to comply with Federal and
applicable state securities laws.
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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 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 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 or qualification.
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 employee 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 shareholders
if shareholder 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 shareholder approval is otherwise necessary
or desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options theretofore granted under the Plan, without the
consent of the Participant holding such Options.
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.
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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 electing to transfer
to the Company, or to have the Company withhold from shares otherwise issuable
to the Participant, 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
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 date that the amount of tax to be withheld is to be
determined (the "Tax 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 must be made prior to the Tax 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 of the 1934 Act ("Section 16"), the
Participant must satisfy the requirements of such Section 16 and any applicable
Rules 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 Law 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 promulgated under the 1934 Act, to qualify the Option for any
exception from the provisions of Section 16(b) of the 1934 Act available under
that Rule. Such conditions are hereby incorporated herein by reference and
shall be set forth in the agreement with the Participant which describes the
Option.
14.3 Governing Law. The Plan and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Colorado.
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SECTION 15
DURATION OF THE PLAN
The Plan shall terminate at such time as may be determined by the Board of
Directors, 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 September 18, 1995. Options outstanding at the time of
the Plan termination may continue to be exercised in accordance with their
terms.
Dated: February 9, 1996
APACHE CORPORATION
ATTEST:
/s/ Cheri L. Peper By: /s/ Roger B. Rice
- -------------------------- ------------------------
Cheri L. Peper Roger B. Rice
Corporate Secretary Vice President
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<PAGE> 1
EXHIBIT 99.2
APACHE CORPORATION
1995 STOCK OPTION PLAN
(AS AMENDED AND RESTATED FEBRUARY 9, 1996)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3 - Plan Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4 - Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6 - Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7 - Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.1 Grant of Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.2 Stock Option Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7.3 Stockholder Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8 - Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.2 Limitation on Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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<TABLE>
<S> <C>
8.3 Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 9 - Rights of Employees; Participants . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.1 Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.2 Nontransferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 10 - General Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.1 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.2 Compliance with Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11 - Other Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 12 - Plan Amendment, Modification and Termination . . . . . . . . . . . . . . . . . . . . 14
Section 13 - Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13.1 Withholding Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13.2 Withholding With Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 14 - Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14.1 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14.2 Federal Securities Laws Requirements . . . . . . . . . . . . . . . . . . . . . . 15
14.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 15 - Duration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
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<PAGE> 4
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
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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.
(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.
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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, 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.
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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 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
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<PAGE> 8
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 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.
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<PAGE> 9
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 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
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<PAGE> 10
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 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
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<PAGE> 11
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.
(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
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<PAGE> 12
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.
(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.
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<PAGE> 13
(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 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
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<PAGE> 14
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 limitations contained
in Sections 7 and 12 hereof, the Committee may make any adjustment in the
Option Price, the number of shares of Stock subject to, or the terms of an
outstanding Option and a subsequent granting of an Option, by amendment or by
substitution for an outstanding Option. Such amendment, substitution, or
regrant may result in terms and conditions (including Option Price, 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.
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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.
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
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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 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.
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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.
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.
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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.
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.
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Dated: February 9, 1996
APACHE CORPORATION
ATTEST:
/s/ Cheri L. Peper By: /s/ Roger B. Rice
- -------------------------- ------------------------
Cheri L. Peper Roger B. Rice
Corporate Secretary Vice President
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