EXHIBIT 10biii

                                                                                                                                           

ANADARKO PETROLEUM CORPORATION

Notice of Grant of Stock Options

and Option Agreement

                                                                                                                                            1201
Lake Robbins Drive

                                                                                                                                            The
Woodlands, Texas 77380

 

 

                                                                                                                                            

Option Number:
[Name and
Address]                                                                                                        Plan:

                                                                                                                                            

ID:

 

 

Effective [date], you have been granted a(n) Non-Qualified Stock Option to buy
[number] shares
of ANADARKO PETROLEUM CORPORATION (the Company) stock at [$FMV] per share.

The total option price of the shares granted is [$            ].

Shares in each period will become fully vested on the date shown.

                      Shares                 Vest Type              Full
Vest                Expiration

                            [number]                 On Vest
Date        [vesting date]           [expiration date]
                            [number]                 On Vest
Date        [vesting date]           [expiration date]

 

 

 

 

 

 

By your signature and the Company's signature below, you and the Company agree
that these options
are granted under and governed by the terms and conditions of the Company's
Stock Option Plan as
amended and the Option Agreement, all of which are attached and made a part of
this document.

 

 

ANADARKO PETROLEUM CORPORATION

                            Date

 

Date

 

 

February, 2003

ANADARKO PETROLEUM CORPORATION

1998 DIRECTOR STOCK PLAN
STOCK OPTION AGREEMENT

1.        To the extent that the right to purchase shares has accrued hereunder,
the Options, or any part thereof, may be exercised by giving written notice of
exercise to the Corporate Secretary of the Company specifying the number of
shares to be purchased and the method of purchase. If Anadarko Common Stock is
used to exercise the Options, the fair market value of such Common Stock shall
be the mean of the high and low prices of shares of Common Stock of the Company
traded on the date of exercise as reported on The New York Stock Exchange, Inc.
Composite Transactions Reporting System. Date of exercise shall be deemed to be
the date set forth on the notice of exercise. Such exercise shall be subject to
payment and such approval as may be required under policies and procedures
established by the Committee designated by the Board of Directors of the Company
to administer and interpret the Plan (the "Committee"). No shares shall be
issued or delivered until full payment therefor has been made.

2.        The Options may not be exercised unless the Director is at the time of
such exercise a director of the Company and shall have been continuously a
director of the Company, since the date of this Agreement; provided, however,
that the Options shall be exercisable following the termination or expiration of
the Director's position as a director of the Company during the term of the
Options as follows:

        (i) Retirement or Disability. If the Director shall cease to be a
director of the Company by reason of (a) Retirement (as defined below) or (b)
disability within the meaning of Section 105(d)(4) of the Internal Revenue Code
of 1986, as amended (the "Code"), the Director (or, in the event of Director's
death, the Director's legal representative) may, within a period of not more
than twenty-four (24) months after such cessation, exercise the Option if and to
the extent it was exercisable on the date of such cessation. In no event may the
Options be exercised more than ten (10) years from the date of grant.
"Retirement" for purposes hereof is defined as (i) 10 years of service as a
director of the Company (ii) attainment of age 55 and five years service as a
director of the Company, or (iii) attainment of age 65.

        (ii) Death of Director. In the event of the death of the Director while
a director of the Company, any Option granted to the Director shall vest and be
immediately exercisable with respect to all or any part of the shares as to
which such Option remains unexercised by the Director's legal representative or
other person or persons to whom the Director's rights under the Option shall
pass by the Director's will or the laws of descent and distribution, but only
before the expiration of ten (10) years from the date of grant or of the twelve
(12) month period after the Director's death, whichever event first occurs.

3.        The Options granted hereunder are not transferable by the Director
otherwise than by will or the laws of descent and distribution and are
exercisable, during the Director's lifetime, only by the Director. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
Options, or of any right or privilege conferred hereby, contrary to the
provisions hereof, or upon the levy of any attachment or similar process upon
the Options or any right or privilege conferred hereby, the Options and the
right and privilege conferred hereby shall immediately become null and void.

4.         The Company may, at any time, in its sole discretion and with or
without cause, cancel the Options, in whole or in part, to the extent they have
not become exercisable at the time of such action.

5.        The Director shall have no rights as a stockholder with respect to any
shares of Common Stock subject to the Options prior to the date of issuance to
the Director of a certificate or certificates for such shares.

6.        By accepting the Options, the Director agrees for himself or herself
and his or her legal representative that any and all shares of Common Stock
purchased upon the exercise of either Option shall be acquired for investment
and not with a view to, or for sale in connection with, any distribution
thereof, and that each notice of the exercise of any portion of the Options
shall be accompanied by a representation and agreement in writing signed by the
Director or the Director's legal representative, as the case may be, to the
foregoing effect and, to the effect that no sale of such shares of Common Stock
shall be made other than in compliance with the registration provisions of the
Securities Act of 1933 or pursuant to an exemption therefrom; provided, however,
if at the time such notice of exercise is given the shares issuable upon
exercise of the Options are registered under the Securities Act of 1933, the
Director shall, in lieu of the aforesaid representation and agreement, furnish
an agreement in writing to the effect that he or she shall not offer or sell any
of shares acquired as a result of such exercise unless the Company has
registered such shares for resale under the Securities Act of 1933, or such
Director sells such shares pursuant to an exemption from the registration
requirements of such Act.

7

.        If at any time the Company shall determine in its discretion that the
listing or qualification of the shares of Common Stock subject hereto under any
securities exchange requirements or under any applicable state or federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of the Options
or the issue of shares hereunder, the Options may not be exercised in whole or
in part unless such listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.

8.        This Option may be adjusted or required to be surrendered pursuant to
the provisions of Section 7 of the Plan.

9.        Upon an exercise of this Option, the Company may be required to
withhold federal and local tax with respect to the realization of compensation
by the Director as a result of exercise of this Option. The Company is hereby
authorized to satisfy any such withholding requirement out of (i) any cash or
Common Stock distributable upon such exercise and (ii) any other cash
compensation then or thereafter payable to the Director. To the extent that the
Company in its sole discretion determines that such sources are or may be
insufficient to fully satisfy such withholding requirement, the Director, as a
condition to the exercise of this Option, shall deliver to the Company cash or
Common Stock in an amount determined by the Company to be sufficient to satisfy
any withholding requirement.

10.        Any notice to be given to the Company under this Agreement shall be
addressed to the Corporate Secretary of the Company at 1201 Lake Robbins Drive,
the Woodlands, Texas 77380, and any notice to be given to the Director under
this Agreement shall be addressed to the Director at the address on file with
the Company; provided, however, that either party may substitute a different
address by notice in writing to the other. Except as otherwise provided in this
Agreement, any such notice shall be deemed to have been duly given if and when
enclosed in a properly sealed envelope addressed as aforesaid and deposited,
postage prepaid, in a post office or branch post office regularly maintained by
the United States Government.

11.        This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors, but neither this Agreement nor any rights
hereunder shall be assignable by the Director except as specifically provided
for herein.

12.        This Agreement shall be governed by, and construed in accordance with
the laws of the State of Texas.