Document:

exv10w2

Exhibit 10.2

APACHE CORPORATION

1996 PERFORMANCE STOCK OPTION PLAN

(Amended and Restated August 14, 2008)

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 1996
Performance Stock Option Plan (the “Plan”) for certain employees of the Company.

1.2 Purposes. The primary purpose of this Plan is to provide the participating employees
of the Company with added incentives to focus their energies on achieving significant stock price
appreciation for the balance of the decade by providing a meaningful stock based performance plan
which provides accelerated vesting incentives to attain the prices of $50 and $60 per share of
Apache Corporation common stock, respectively, before January 1, 2000. Additional purposes of this
Plan include the retention of existing valued employees and as an additional inducement in the
recruitment of talented personnel in a competitive environment.

1.3 Effective Date. The Effective Date of the Plan (the “Effective Date”) is October 31,
1996.

Section 2

Definitions

2.1 Definitions. The following terms shall have the meanings set forth below:

     (a) “Administrative Agent” means any designee or agent that may be appointed by the
Committee pursuant to Section 3.1(b) hereof.

     (b) “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

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employer under the provisions of Sections 414(b) and (c) or any successor section(s) of the
Internal Revenue Code.

     (c) “Base Salary” means, with regard to any Participant, such Participant’s base
compensation as an employee of the Company at the date of grant of an Option, without regard to any
bonus, pension, profit sharing, stock option, life insurance or salary continuation plan which the
Participant either receives or is otherwise entitled to have paid on his behalf.

     (d) “Board” means the Board of Directors of the Company.

     (e) “Committee” means the Stock Option Plan Committee of the Board.

     (f) “Depositary Shares” means the depositary shares representing the Company’s
preferred stock convertible into Stock.

     (g) “Eligible Employees” means any full-time employee of the Company or any division
thereof who is not a participant under the Apache Corporation 1996 Share Price Appreciation Plan.

     (h) “Exercise Date” has the meaning set forth in Section 7.3(i).

     (i) “Fair Market Value” means the per share closing price of the Stock as reported on
The New York Stock Exchange, Inc. Composite Transactions Reporting System for a particular date or,
if the Stock is not so listed on such date, as reported on NASDAQ or on such other exchange or
electronic trading system which, on the date in question, reports the largest number of traded
shares of Stock, provided, however, that if on the date Fair Market Value is to be
determined there are no transactions in the Stock, Fair Market Value shall be determined as of the
immediately preceding date on which there were transactions in the Stock; provided
further, however, that if the foregoing provisions are not applicable, the fair
market value of a share of the Stock as determined by the Committee by the reasonable application
of such reasonable valuation method, consistently applied, as the Committee deems appropriate.

     (j) “Final Amount” has the meaning set forth in Section 7.2.

     (k) “Final Price Threshold Date” means the last of any 10 trading days (which need
not be consecutive) during any period of 30 consecutive trading days occurring prior to January 1,
2000, but not thereafter, on each of which 10 days the closing price of the Stock as reported on
The New York Stock Exchange, Inc. Composite Transactions Reporting System has equaled or exceeded
$60 per share. If the above trading criteria is met more than once, the first occurrence shall be
deemed to be the Final Price Threshold Date.

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     (l) “First Category” has the meaning set forth in Section 7.2.

     (m) “Initial Amount” has the meaning set forth in Section 7.2.

     (n) “Initial Price Threshold Date” means the last of any 10 trading days (which need
not be consecutive) during any period of 30 consecutive trading days occurring prior to January 1,
2000, but not thereafter, on each of which 10 days the closing price of the Stock as reported on
The New York Stock Exchange, Inc. Composite Transactions Reporting System has equaled or exceeded
$50 per share. If the above trading criteria is met more than once, the first occurrence shall be
deemed to be the Initial Price Threshold Date.

     (o) “Internal Revenue Code” means the Internal Revenue Code of 1986, as it may be
amended from time to time.

     (p) “Option” means a right to purchase shares of 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.

     (q) “Option Agreement” has the meaning set forth in Section 7.1.

     (r) “Option Period” has the meaning set forth in Section 7.3(c).

     (s) “Option Price” means the price at which shares of Stock subject to an Option may
be purchased, determined in accordance with Section 7.3(b) hereof.

     (t) “Participant” means an Eligible Employee designated by the Committee from time to
time during the term of the Plan to receive an Option under the Plan.

     (u) “Price Threshold Date” means either the Initial Price Threshold Date or the Final
Price Threshold Date, as the context may require.

     (v) “Second Category” has the meaning set forth in Section 7.2.

     (w) “Stock” means the $1.25 par value Common Stock of the Company.

2.2 Headings; Gender and Number. The headings contained in the Plan are for reference
purposes only and shall not affect in any way the meaning or interpretation of the Plan. Except
when otherwise indicated by the context, the

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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

3.1 Administration by the Committee.

     (a) 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 time at which such Options
are to be granted, 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 Option 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.

     (b) 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 appoint an Administrative Agent, who need not be a member of the Committee or an employee of
the Company, to assist the Committee in administration of the Plan and to whom it may delegate such
powers as the Committee deems appropriate, except that the Committee shall determine any dispute.
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 determinations,
interpretations and other actions of the Committee pursuant to the provisions of the Plan shall be
binding and conclusive for all purposes and on all persons.

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Section 4

Stock Subject to the Plan

4.1 Number of Shares. Subject to Section 7.1 and Section 4.3, one million three hundred
thousand (1,300,000) shares of Stock are authorized for issuance under the Plan in accordance with
its terms 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, on the advice of counsel for the Company, such
stockholder approval is required. Shares of Stock which may be issued pursuant to the terms of the
Options granted hereunder shall be applied to reduce the maximum number of shares of Stock
remaining available for use under the Plan. The Company shall at all times during the term of the
Plan and while any Options are outstanding retain as authorized and unissued Stock and/or Stock in
the Company’s treasury, at least the number of shares from time to time required under the
provisions of the Plan, or otherwise assure itself of its ability to perform its obligations
hereunder.

4.2 Other Shares of Stock. Any shares of Stock that are subject to an Option which
expires, is forfeited, is canceled, or for any reason is terminated, and any shares of Stock that
for any other reason are not issued to a Participant or are forfeited shall automatically become
available for use under the Plan.

4.3 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. 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

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accordance with
the foregoing, the Company shall be the owner of such securities or other property, 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 that 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 aggregate 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 aggregate 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.

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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.

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 such Options immediately after such
substitution over the aggregate 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 aggregate 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
vesting dates of outstanding Options so that all Options become fully vested and exercisable prior
to any such event.

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Section 6

Participation

Participants in the Plan receiving First Category Options may be any Eligible Employee in the
discretion of the Committee. Participants in the Plan receiving Second Category Options shall be
those Eligible Employees who, in the judgment of the Committee, are performing, or during the term
of their incentive arrangement are expected to perform, important services in the management,
operation and development of the Company or an Affiliated Corporation, and contribute, or are
expected to contribute, to the achievement of the Company’s long-term corporate economic
objectives. 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. Options shall be deemed to be granted as of the date specified in the granting
resolution of the Committee, which date also shall be the date of the Option Agreement with the
Participant. In the event of any inconsistency between the provisions of the Plan and any Option
Agreement, the provisions of the Plan shall govern.

Section 7

Options

7.1 Grants. Each Participant may be granted only one Option under this Plan. Each Option
granted by the Committee shall be evidenced by a written agreement entered into by the Company and
the Participant to whom the Option is granted (the “Option Agreement”), which shall contain the
terms and conditions set out in this Section 7, as well as such other terms and conditions, not
inconsistent therewith, as the Committee may consider appropriate.

7.2 Option Agreements. There shall be two categories of Options issued under this Plan as
follows:

     (a) The first category of Option (“First Category”) shall have a total of two hundred (200)
shares of Stock issuable to a Participant upon exercise; and

     (b) The second category of Option (“Second Category”) shall vary by Participant and, as to any
Participant, shall have a total number of shares of Stock issuable upon exercise which equals the
sum of the Initial Amount and the Final Amount.

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For purposes of this Plan, the term “Initial Amount” means such number of shares (rounded to the
nearest full share) which equals not more than one (1) times such Participant’s Base Salary divided
by the difference between $50 and the Option Price. The term “Final Amount” means such number of
shares (rounded to the nearest full share) which equals not more than one and one-half (1.5) times
such Participant’s Base Salary divided by the difference between $60 and the Option Price.

7.3 Common Terms. Subject to Section 7.2 and Section 7.5, each Option Agreement entered
into by the Company and the Participants shall contain at least the following terms and conditions:

     (a) Number of Shares. Each Option Agreement shall set forth a specified number of
shares of Stock issuable upon exercise of the Option, as determined by the Committee pursuant to
Section 7.2 hereof.

     (b) Price. The exercise price (the “Option Price”) at which each share of Stock
covered by an Option may be purchased shall be the price specified in the granting resolution of
the Committee.

     (c) Duration. Each Option Agreement shall state the period of time, determined by the
Committee, within which the Option may be exercised (the “Option Period”), which in no event may be
greater than ten (10) years.

     (d) Vesting. Subject to the provisions of Section 7.3(e) and Section 7.3(f), each
Option shall become exercisable in full on the date occurring nine years and six months from the
date of grant or such earlier date as the Committee may determine.

     (e) Acceleration. Each Option may become exercisable earlier, in increments, upon the
occurrence of a Price Threshold Date as follows:

          (i) If the Initial Price Threshold Date occurs prior to January 1, 2000:

               (A) One-half of the shares of Stock subject to the First Category Options become immediately
exercisable as of such date, and

               (B) The Initial Amount of shares of Stock subject to each Second Category Option become
immediately exercisable as of such date.

          (ii) If the Final Price Threshold Date occurs prior to January 1, 2000, the remaining portion
of shares of Stock under each category of Option becomes immediately exercisable as of such date.

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     (f) Termination of Employment, Death, Disability, etc. Subject to the following
provisions, each Option Agreement shall state that each Option and the right to acquire stock
thereunder shall be subject to the condition that the Participant has remained a full-time employee
of the Company from the date of grant of an Option until the applicable exercise date:

          (i) 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 60, or 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. If the employment of the Participant is terminated
within the Option Period for cause, as determined by the Company, any portion of any Option not
previously exercised in accordance with this Section 7 shall thereafter be void for all purposes.
As used in this subsection, “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
7.3(f) shall be limited to determining the consequences of a termination and that nothing in this
subsection 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 60,
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:

               (A) If the Participant is holding a First Category Option and the Participant’s retirement
occurs on or after January 1, 2000, the Option may be exercised as to all shares of Stock which are
subject to the Option, including an increment of the Option, if any, which had not otherwise become
exercisable on or before the date of the Participant’s retirement, or

               (B) If the Participant is holding a First Category Option and the Participant’s retirement
occurs prior to January 1, 2000, 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 retirement, or

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               (C) If the Participant is holding a Second Category Option, 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 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 36-month period referred to in (ii) above, the Option may be exercised by the Participant or by
his or her guardian or legal representative, within twelve months following the Participant’s
disability, or within the 36-month period referred to in (ii) if applicable and if longer (provided
that such exercise must occur within the Option Period), but not thereafter. In the event of the
Participant’s death during such twelve-month period, each Option may be exercised by those entitled
to do so in the manner referred to in (iv) below. In any such case, the Option may be exercised
only as to the shares of Stock as to which the Option had become exercisable on or before the date
of the Participant’s disability.

          (iv) In the event of the Participant’s death while still employed by the Company, each Option
of the deceased Participant may be exercised by those entitled to do so under the Participant’s
will or under the laws of descent and distribution within twelve months following the Participant’s
death (provided that in any event such exercise must occur within the Option Period), but not
thereafter, as to all shares of Stock which are subject to such Option, including any 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 (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).

     (g) Transferability. Each Option Agreement shall state that the Option granted
thereunder 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.

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(h) Exercise, Payments, etc.

          (i) Each 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 or the Administrative
Agent of written notice specifying the number of shares of Stock with respect to which such Option
is exercised and payment to the Company of the aggregate 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 of Stock with respect to which the Option is
being exercised. The exercise of the Option shall be deemed effective on the date such notice is
received by the Office of the Secretary or the Administrative Agent and payment is made to the
Company of the aggregate Option Price (the “Exercise Date”); however, if payment of the aggregate
Option Price is made pursuant to a sale of shares of Stock as contemplated by subsection
7.2(b)(iii)(E) below, the Exercise Date shall be deemed to be the date of such sale. 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 or otherwise
distribute any Stock so purchased in any manner that is in violation of the Securities Act of 1933,
as amended, or any applicable state law, and such restriction, or notice thereof, shall be placed
on the certificates representing the Stock so purchased. The purchase of such Stock shall take
place upon delivery of such notice to the Office of the Secretary of the Company or to the
Administrative Agent, at which time the Option Price shall be paid in full to the Company by any of
the methods or any combination of the methods set forth in 7.2(h)(iii) below.

          (ii) The shares of Stock to which the Participant is entitled as a result of the exercise of
the Option shall be issued by the Company and (A) delivered by electronic means to an account
designated by the Participant, or (B) delivered to the Participant in the form of a properly
executed certificate or certificates representing such shares of Stock. If shares of Stock and/or
Depositary Shares are used to pay all or part of the aggregate Option Price, the Company shall
issue and deliver to the Participant the additional shares of Stock, in excess of the aggregate
Option Price or portion thereof paid using shares of Stock or Depositary Shares, to which the
Participant is entitled as a result of the Option exercise.

          (iii) The aggregate Option Price shall be paid by any of the following methods or any
combination of the following methods:

               (A) in cash, including the wire transfer of funds in U.S. dollars to one of the Company’s bank
accounts located in the United States, with such bank account to be designated from time to time by
the Company;

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               (B) by personal, certified or cashier’s check payable in U.S. dollars to the order of the
Company;

               (C) by delivery to the Company or the Administrative Agent of certificates representing a
number of shares of Stock then owned by the Participant, the aggregate Fair Market Value (as of the
Exercise Date) of which is not greater than the aggregate Option Price of the Option being
exercised, properly endorsed for transfer to the Company; provided that the shares of Stock used
for this purpose must have been owned by the Participant for a period of at least six months;

               (D) by certification or attestation to the Company or the Administrative Agent of the
Participant’s ownership as of the Exercise Date of the number of (1) shares of Stock and/or (2)
Depositary Shares, the aggregate Fair Market Value (as of the Exercise Date) of which is not
greater than the aggregate Option Price of the Option being exercised; provided that the shares of
Stock and/or Depositary Shares used for this purpose must have been owned by the Participant for a
period of at least six months; or

               (E) by delivery to the Company or the Administrative Agent of a properly executed notice of
exercise together with irrevocable instructions to a broker to promptly deliver to the Company, by
wire transfer or check as noted in (A) and (B) above, 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
aggregate Option Price.

          (iv) For purposes of the Plan, the income resulting from an Option exercise shall be based on
the Fair Market Value of the Stock for the Exercise Date; however, if payment of the aggregate
Option Price is made pursuant to a sale of shares of Stock as contemplated by subsection
7.2(h)(iii)(E) hereof, the Fair Market Value shall be deemed to be the per share sale price and the
Exercise Date shall be deemed to be the date of such sale.

7.4 Tax Withholding. Each 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 and local income tax laws, including payment of
such taxes in cash, by check or as provided in Section 13.2 hereof.

7.5 Subsequent Option Agreements. Following the initial grant of Options in 1996,
additional Participants may be designated by the Committee for grant of Options substantially in
accordance with the above terms and conditions, subject

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to such changes and modifications to reflect the circumstances of any subsequent grant as the
Committee, in its discretion, deems appropriate.

7.6 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. No adjustments shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date on which such Participant becomes the
holder of record of such Stock.

Section 8

Change of Control

8.1 In General. In the event of the occurrence of a change of control of the Company, as
defined in Section 8.3 hereof, all outstanding Options shall become automatically vested, without
further action by the Committee or the Board, so as to make all such Options fully vested and
exercisable as of the date of such change of control.

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 of control” shall mean any of the
events specified in the Company’s Income Continuance Plan or any successor plan which constitute a
change of control within the meaning of such plan.

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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
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 of such status satisfactory to the Committee.

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.

15

 

10.2 Compliance with Securities Laws. Each Option shall be subject to the requirement
that, if at any time counsel to the Company shall determine that the listing, registration or
qualification of the shares of Stock subject to such Option upon any securities exchange or under
any state or federal law, or the consent or approval of any governmental or regulatory body, is
necessary as a condition of, or in connection with, the issuance or purchase of shares of Stock
thereunder, such Option may not be accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or obtained on conditions
acceptable to the Committee. Nothing herein shall be deemed to require the Company to apply for or
to obtain such listing, registration, qualification, consent or approval.

Section 11

Other Employee Benefits

The amount of any income deemed to be received by a Participant as a result of an Option exercise
shall not constitute “earnings” or “compensation” with respect to which any other employee benefits
of such Participant are determined including, without limitation, benefits under any pension,
profit sharing, life insurance or salary continuation plan.

Section 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, unless the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary.

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.

The Committee shall have the authority to adopt such modifications, procedures and subplans as may
be necessary or desirable to comply with the provisions of the laws (including, but not limited to,
tax laws and regulations) of countries other

16

 

than the United States in which the Company may operate, so as to assure the viability of the
benefits of the Plan to Participants employed in such countries.

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 Satisfaction of Required Withholding. 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 required
tax withholding, or any part thereof:

     (a) by the delivery to the Company or the Administrative Agent of a number of shares of Stock
then owned by the Participant, the aggregate Fair Market Value (as of the Exercise Date) of which
is not greater than the amount required to be withheld, provided that such shares have been held by
the Participant for a period of at least six months;

     (b) by certification or attestation to the Company or the Administrative Agent of the
Participant’s ownership as of the Exercise Date of a number of shares of Stock and/or Depositary
Shares, the aggregate Fair Market Value (as of the Exercise Date) of which is not greater than the
amount required to be withheld, provided that such shares of Stock and/or Depositary Shares have
been owned by the Participant for a period of at least six months; or

     (c) by the Company or the Administrative Agent withholding from the shares of Stock otherwise
issuable to the Participant upon exercise of the Option, a number of shares of Stock, the aggregate
Fair Market Value (as of the Exercise Date) of which is not greater than the amount required to be
withheld. Any such elections by Participants to have shares of Stock withheld for this purpose
will be subject to the following restrictions:

     (i) all elections shall be made on or prior to the Exercise Date; and

     (ii) all elections shall be irrevocable.

13.3 Excess Withholding. At the time the Committee grants an Option, it may, in its sole
discretion, grant the Participant an election to pay additional or excess

17

 

amounts of tax withholding, beyond the required amounts and up to the Participant’s marginal tax
rate:

     (a) by delivery to the Company or the Administrative Agent of a number of Shares of Stock
then owned by the Participant, the aggregate Fair Market Value (as of the Exercise Date) of which
is not greater than such excess withholding amount, provided that such shares of Stock have been
owned by the Participant for a period of at least six months; or

     (b) by certification or attestation to the Company or the Administrative Agent of the
Participant’s ownership as of the Exercise Date of a number of shares of Stock and/or Depositary
Shares, the aggregate Fair Market Value (as of the Exercise Date) of which is not greater than such
excess withholding amount, provided that such shares of Stock and/or Depositary Shares have been
owned by the Participant for a period of at least six months.

13.4 Section 16 Requirements. 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 shares of Stock and/or Depositary Shares 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, subsequent to the date of grant, a
Participant becomes 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 exemptions 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 Stock Option 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.

18

 

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 December 31, 1998. Any Options outstanding at the time
of the Plan termination shall continue to be exercisable in accordance with the Stock Option
Agreement pertaining to each such Option.

Dated: August 14, 2008

	 	 	 	 	 	 	 	 	 
	 	 	 	 	APACHE CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	ATTEST:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Cheri L. Peper
 

Cheri L. Peper

	 	 	 	By:
	 	/s/ Margery M. Harris
 

Margery M. Harris
	 	 
	Corporate Secretary

	 	 	 	 	 	Vice President, Human Resources	 	 

19exv10w3

Exhibit 10.3

APACHE CORPORATION

1998 STOCK OPTION PLAN

(Amended and Restated August 14, 2008)

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 1998 Stock
Option Plan (the “Plan”) for Eligible Employees (as defined in Section 2.1 hereof). The Plan
permits the grant of stock options to Eligible Employees selected by the Committee (as defined in
Section 2.1 hereof).

1.2 Purposes. The purposes of the Plan are to provide the Eligible Employees designated by
the Committee 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 those employees is more closely aligned with the interests of the
Company’s stockholders. The Plan is also designed to attract outstanding individuals and to retain
and motivate Eligible Employees by providing an opportunity for investment in the Company.

1.3 Effective Date. The Effective Date of the Plan (the “Effective Date”) is February 6,
1998. 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 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) “Administrative Agent” means any designee or agent that may be appointed by the
Committee pursuant to Section 3.1(b) hereof.

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     (b) “Affiliated Corporation” means any corporation or other entity (including but not
limited to a partnership) which is affiliated with Apache Corporation through stock ownership or
otherwise and is treated as a common employer under the provisions of Sections 414(b) and (c) or
any successor section(s) of the Internal Revenue Code.

     (c) “Board” means the Board of Directors of the Company.

     (d) “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 sections(s) of the Internal Revenue Code and the regulations
promulgated thereunder.

     (e) “Deferred Delivery Plan” means the Company’s Deferred Delivery Plan, effective as
of February 10, 2000 and as it may be amended from time to time, or any successor plan.

     (f) “Depositary Shares” means the Depositary shares representing the Company’s
preferred stock convertible into Stock.

     (g) “Eligible Employees” means full-time employees (including, without limitation,
officers and directors who are also employees), and certain part-time employees, of the Company or
any division thereof.

     (h) “Fair Market Value” means the per share closing price of the Stock as reported on
The New York Stock Exchange, Inc. Composite Transactions Reporting System for a particular date or,
if the Stock is not so listed on such date, as reported on NASDAQ or on such other exchange or
electronic trading system which, on the date in question, reports the largest number of traded
shares of Stock, provided, however, that if on the date Fair Market Value is to be
determined there are no transactions in the Stock, Fair Market Value shall be determined as of the
immediately preceding date on which there were transactions in the Stock; provided
further, however, that if the foregoing provisions are not applicable, the fair
market value of a share of the Stock as determined by the Committee by the reasonable application
of such reasonable valuation method, consistently applied, as the Committee deems appropriate.

     (i) “Internal Revenue Code” means the Internal Revenue Code of 1986, as it may be
amended from time to time.

2

 

     (j) “Option” means a right to purchase shares of 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.

     (k) “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.

     (l) “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.

     (m) “Stock” means the $0.625 par value Common Stock of the Company.

     (n) “Stock Units” means investment units under the Deferred Delivery Plan, each of
which is deemed to be equivalent to one share of Stock.

2.2 Headings; Gender and Number. The headings contained in the Plan are for reference
purposes only and shall not affect in any way the meaning or interpretation of the Plan. Except
when otherwise indicated by the context, the masculine gender shall also include the feminine
gender, and the definition of any term herein in the singular shall also include the plural.

Section 3

Plan Administration

3.1 Administration by the Committee.

     (a) 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.

3

 

     (b) 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 appoint an Administrative Agent, who need not be a member of the Committee or an employee of
the Company, to assist the Committee in administration of the Plan and to whom it may delegate such
powers as the Committee deems appropriate, except that the Committee shall determine any dispute.
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.

3.2 Compliance with Section 162(m).

The Plan is intended to comply with the requirements of Section 162(m) or any successor section(s)
of the Internal Revenue Code (“Section 162(m)”) as to any “covered employee” as defined in Section
162(m), and shall be administered, interpreted and construed consistently therewith. In accordance
with this intent, the amount of income 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(m) and the regulations promulgated or revenue rulings published
thereunder.

Section 4

Stock Subject to the Plan

4.1 Number of Shares. Subject to Section 7.1 and to adjustment pursuant to Section 4.3
hereof, 2,500,000 shares of Stock (adjusted to 5,775,000 shares of Stock for (i) the Company’s
ten-percent stock dividend, record date December 31, 2001, paid January 21, 2002, (ii) the
Company’s five-percent stock dividend, record date March 12, 2003, paid April 2, 2003, and (iii)
the Company’s two-for-one stock split, record date December 31, 2003, distributed January 14, 2004)
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, on the advice 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

4

 

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, in each case, equitably and proportionally adjusted to take
into account the occurrence of any of the above events, (i) the shares of Stock as to which Options
may be granted under the Plan; (ii) the shares of Stock then included in each outstanding Option
granted hereunder; and (iii) the Option Price for each outstanding Option granted hereunder.

4.4 Dividend Payable in Stock of Another Corporation, Etc. If the Company shall at any
time pay or make any dividend or other distribution upon the Stock payable in securities or other
property (except money or Stock), a proportionate part of such securities or other property shall
be set aside and delivered to any Participant then holding an Option for the particular type of
Stock for which the dividend or other distribution was made, upon exercise thereof. Prior to the
time that any such securities or other property are delivered to a Participant in accordance with
the foregoing, the Company shall be the owner of such securities or other property and shall have
the right to vote the securities, receive any dividends payable on such securities, and in all
other respects shall be treated as the owner. If securities or other property which have been set
aside by the Company in accordance with this Section are not delivered to a Participant because an
Option is not exercised, then such securities or other property shall remain the property of the
Company and shall be dealt with by the Company as it shall determine in its sole discretion.

4.5 Other Changes in Stock. In the event there shall be any change, other than as
specified in Sections 4.3 and 4.4 hereof, in the number or kind of outstanding shares of Stock or
of any stock or other securities into which the Stock shall be changed or for which it shall have
been exchanged, and if the Committee shall in its discretion determine that such change equitably
requires an adjustment in the number or kind of shares subject to outstanding Options or

5

 

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 aggregate
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 aggregate 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.

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

6

 

 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 aggregate 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 aggregate 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 vesting dates of outstanding
Options so that all Options become fully vested and exercisable prior to any such event.

Section 6

Participation

Participants in the Plan shall be those Eligible Employees who, in the judgment of the Committee,
are performing, or during the term of their incentive arrangement will perform, vital services in
the management, operation and development of the Company or an Affiliated Corporation, and
significantly contribute, or are expected to significantly contribute, to the achievement of the
Company’s long-term corporate economic objectives. Participants may be granted from time to time
one or more Options; provided, however, that the grant of each such Option shall be separately
approved by the Committee, and receipt of one such Option shall not result in automatic receipt of
any other Option. Upon determination by the Committee that an Option is to be granted to a
Participant, written notice shall be given to such person, specifying the terms, conditions, rights
and duties related thereto. Each Participant shall, if required by the Committee, enter into an
agreement with the Company, in such form as the Committee shall determine and which is consistent
with the provisions of the Plan, specifying such terms, conditions, rights and duties. Options
shall be deemed to be granted as of the date specified in the grant resolution of the Committee,
which date shall be the date of any related agreement with the Participant. In the event of any
inconsistency between the provisions of the Plan and any such agreement entered into hereunder, the
provisions of the Plan shall govern.

7

 

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 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.

8

 

     (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 60,
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) above if applicable and if longer (provided that such exercise must
occur within the Option Period), but not thereafter. In the event of the Participant’s death
during such twelve-month period, each Option may be exercised by those entitled to do so in the
manner referred to in (iv) below. In any such case, the Option may be exercised only as to the
shares of Stock as to which the Option had become exercisable on or before the date of the
Participant’s disability.

          (iv) In the event of the Participant’s death while still employed by the Company, each Option
of the deceased Participant may be exercised by those entitled to do so under the Participant’s
will or under the laws of descent and distribution within twelve months following the Participant’s
death (provided that in any event such exercise must occur within the Option Period), but not
thereafter, as to all shares of Stock which are subject to such Option, including each 25-percent
increment of the Option, if any, which has not yet become exercisable at the time of the
Participant’s death. In the event of the Participant’s

9

 

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) above, 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 60, or the Participant’s disability or death, the Option may be exercised by the
Participant within three months following the date of such termination (provided that such exercise
must occur within the Option Period), but not thereafter. In any such case, the Option may be
exercised only as to the shares as to which the Option had become exercisable on or before the date
of termination of the Participant’s employment.

     (e) Transferability. Each Stock Option Agreement shall provide that the Option
granted therein is not transferable by the Participant except by will or pursuant to the laws of
descent and distribution, and that such Option is exercisable during the Participant’s lifetime
only by him or her, or in the event of the Participant’s disability or incapacity, by his or her
guardian or legal representative.

     (f) Agreement to Continue in Employment. Each Stock Option Agreement shall contain
the Participant’s agreement to remain in the employment of the Company, at the pleasure of the
Company, for a continuous period of at least one year after the date of such Stock Option
Agreement, at the salary rate in effect on the date of such agreement or at such changed rate as
may be fixed, from time to time, by the Company.

     (g) Exercise, Payments, Etc.

          (i) Each Stock Option Agreement shall provide that the method for exercising the Option
granted therein shall be by delivery to the Office of the Secretary of the Company or to the
Administrative Agent of written notice specifying the number of shares of Stock with respect to
which such Option is

10

 

exercised and payment to the Company of the aggregate 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 or by the Administrative Agent and payment is made to the Company of the aggregate
Option Price (the “Exercise Date”); however, if payment of the aggregate Option Price is made
pursuant to a sale of shares of Stock as contemplated by subsection 7.2(g)(iii)(F) below, the
Exercise Date shall be deemed to be the date of such sale. 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, and
such restriction, or notice thereof, shall be placed on the certificates representing the Stock so
purchased. The purchase of such Stock shall take place upon delivery of such notice to the Office
of the Secretary or to the Administrative Agent, at which time the aggregate Option Price shall be
paid in full to the Company by any of the methods or any combination of the methods set forth in
7.2(g)(iii) below.

          (ii) Except as referenced below in connection with the Deferred Delivery Plan, the shares of Stock
to which the Participant is entitled as a result of the exercise of the Option shall be issued by
the Company and (A) delivered by electronic means to an account designated by the Participant, or
(B) delivered to the Participant in the form of a properly executed certificate or certificates
representing such shares of Stock. If shares of Stock and/or Depositary Shares are used to pay all
or part of the aggregate Option Price, the Company shall issue and deliver to the Participant the
additional shares of Stock, in excess of the aggregate Option Price or portion thereof paid using
shares of Stock or Depositary Shares, to which the Participant is entitled as a result of the
Option exercise. If the Participant exercising an Option (x) is eligible for participation in the
Deferred Delivery Plan, (y) pays the aggregate Option Price pursuant to 7.2(g)(iii)(A), (B), (C),
(D) or (E) below, and (z) has made an irrevocable election at least six months prior to the
Exercise Date as required under the Deferred Delivery Plan, the income resulting from the Option
exercise shall be deferred into the Participant’s Deferred Delivery Plan account and no additional
shares of Stock shall be delivered to the Participant. The income resulting from the Option
exercise may not be deferred into the Participant’s Deferred Delivery Plan account except to the
extent that the Option was vested by December 31, 2004, the deferral election was made by
December 31, 2004, and the deferral into the Deferred Delivery Plan occurs before January 1, 2006.

          (iii) the aggregate Option Price shall be paid by any of the following methods or any
combination of the following methods:

11

 

               (A) in cash, including the wire transfer of funds in U.S. dollars to one of the Company’s
bank accounts located in the United States, with such bank account to be designated from time to
time by the Company;

               (B) by personal, certified or cashier’s check payable in U.S. dollars to the order of the
Company;

               (C) by delivery to the Company or the Administrative Agent of certificates representing a
number of shares of Stock then owned by the Participant, the aggregate Fair Market Value of which
(as of the Exercise Date) is not greater than the aggregate Option Price of the Option being
exercised, properly endorsed for transfer to the Company; provided that the shares of Stock used
for this purpose must have been owned by the Participant for a period of at least six months;

               (D) by certification or attestation to the Company or the Administrative Agent of the
Participant’s ownership (as of the Exercise Date) of a number of shares of Stock and/or Depositary
Shares, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than the
aggregate Option Price of the Option being exercised, provided that the shares of Stock and/or
Depositary Shares used for this purpose have been owned by the Participant for a period of at least
six months;

               (E) if the income resulting from the Option Exercise is to be deferred into the Participant’s
Deferred Delivery Plan account, by certification or attestation to the Company or the
Administrative Agent of the Participant’s ownership (as of the Exercise Date) of a number of vested
Stock Units held in the Participant’s Deferred Delivery Plan account, the equivalent aggregate Fair
Market Value of which (as of the Exercise Date) is not greater than the aggregate Option Price of
the Option being exercised, provided that the Stock Units used for this purpose were vested as of
the Exercise Date; or

               (F) by delivery to the Company or the Administrative Agent of a properly executed notice of
exercise together with irrevocable instructions to a broker to promptly deliver to the Company, by
wire transfer or check as noted in (A) and (B) above, 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
aggregate Option Price.

          (iv) For purposes of the Plan, the income resulting from an Option exercise shall be based on
the Fair Market Value of the Stock for the Exercise Date; however, if payment of the aggregate
Option Price is made pursuant to a sale of shares of Stock as contemplated by subsection
7.2(g)(iii)(F) hereof, the

12

 

Fair Market Value shall be deemed to be the per share sale price and the
Exercise Date shall be deemed to be the date of such sale.

     (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 tax withholding required by Sections 3102 and 3402 or any successor section(s) of the
Internal Revenue Code and applicable state and local income tax laws, including payment of such
taxes in cash, by check, or as provided in Section 13.2 hereof.

     (j) Adjustment of Options. Subject to the provisions of Sections 4, 5, 7, 8 and 12
hereof, the Committee may make any adjustment in the number of shares of Stock covered by, or the
terms of an outstanding Option and a subsequent granting of an Option, by amendment or by
substitution for an outstanding Option; however, except as provided in Sections 4, 5, 8 and 12
hereof, the Committee may not adjust the Option Price of any outstanding Option. Such amendment or
substitution may result in terms and conditions (including the number of shares of Stock covered,
vesting schedule or Option Period) that differ from the terms and conditions of the original
Option. The Committee may not, however, adversely affect the rights of any Participant to
previously granted Options without the consent of such Participant. If such action is effected by
amendment, the effective date of such amendment will be the date of grant of the original Option.

7.3 Stockholder Privileges. No Participant shall have any rights as a stockholder with
respect to any shares of Stock covered by an Option until the Participant becomes the holder of
record of such Stock. Except as provided in Section 4 hereof, no adjustments shall be made for
dividends or other distributions or other rights as to which there is a record date preceding the
date on which such Participant becomes the holder of record of such Stock.

Section 8

Change of Control

8.1 In General. In the event of the occurrence of a change of control of the Company as
defined in Section 8.3 hereof, all outstanding Options shall become automatically vested, without
further action by the Committee or the Board, so as to make all such Options fully vested and
exercisable as of the date of such change of control.

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

13

 

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 of control” shall mean any of the
events specified in the Company’s Income Continuance Plan or any successor plan which constitute a
change of control within the meaning of such plan.

Section 9

Rights of Employees, Participants

9.1 Employment. Nothing contained in the Plan or in any Option granted under the Plan
shall confer upon any Participant any right with respect to the continuation of his or her
employment by the Company or any Affiliated Corporation, or interfere in any way with the right of
the Company or any Affiliated Corporation, subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment or to increase or decrease the
level of the Participant’s compensation from the level in existence at the time of the grant of an
Option. Whether an authorized leave of absence, or absence in military or government service,
shall constitute a termination of employment shall be determined by the Committee at the time.

9.2 Nontransferability. No right or interest of any Participant in an Option granted
pursuant to the Plan shall be assignable or transferable during the lifetime of the Participant,
either voluntarily or involuntarily, or subjected to any lien, directly or indirectly, by operation
of law, or otherwise, including execution, levy, garnishment, attachment, pledge or bankruptcy. In
the event of a Participant’s death, a Participant’s rights and interests in Options shall, to the
extent provided in Section 7 hereof, be transferable by testamentary will or the laws of descent
and distribution, and payment of any amounts due under the Plan shall be made to, and exercise of
any Options may be made by, the Participant’s legal representatives, heirs or legatees. If, in the
opinion of the Committee, a person entitled to payments or to exercise rights with respect to the
Plan is disabled from caring for his or her affairs because of mental condition, physical condition
or age, payment due such person may be made to, and such rights shall be exercised by, such
person’s guardian, conservator or other legal
personal representative upon furnishing the Committee
with evidence of such status satisfactory to the Committee.

14

 

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.

Section 11

Other Employee Benefits

The amount of any income deemed to be received by a Participant as a result of an Option exercise
shall not constitute “earnings” or “compensation” with respect to which any other employee benefits
of such Participant are determined including, without limitation benefits under any pension, profit
sharing, life insurance or salary continuation plan.

Section 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 unless the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary or desirable.

15

 

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.

The Committee shall have the authority to adopt such modifications, procedures and subplans as may
be necessary or desirable to comply with the provisions of the laws (including, but not limited to,
tax laws and regulations) of countries other than the United States in which the Company may
operate, so as to assure the viability of the benefits of the Plan to Participants employed in such
countries.

Section 13

Withholding

13.1 Withholding Requirement. The Company’s obligations to deliver shares of Stock upon
the exercise of an Option, or to defer income resulting from an Option exercise into the Deferred
Delivery Plan, shall be subject to the Participant’s satisfaction of all applicable federal, state
and local income and other tax withholding requirements.

13.2 Satisfaction of Required Withholding. 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 required
tax withholding, or any part thereof:

     (a) by the delivery to the Company or the Administrative Agent of a number of shares of Stock
then owned by the Participant, the aggregate Fair Market Value of which (as of the Exercise Date)
is not greater than the amount required to be withheld, provided that such shares have been held by
the Participant for a period of at least six months;

     (b) by certification or attestation to the Company or the Administrative Agent of the
Participant’s ownership (as of the Exercise Date) of a number of shares of Stock and/or Depositary
Shares, the aggregate Fair Market Value of
which (as of the Exercise Date) is not greater than the amount required to be withheld, provided
that such shares of Stock and/or Depositary Shares have been owned by the Participant for a period
of at least six months;

     (c) if the income resulting from the Option exercise is to be deferred into the Participant’s
Deferred Delivery Plan account, by certification or attestation to the Company or the
Administrative Agent of the Participant’s ownership (as of the Exercise Date) of a number of vested
Stock Units held in the Participant’s Deferred Delivery Plan account, the equivalent aggregate Fair
Market Value of

16

 

which (as of the Exercise Date) is not greater than the amount required to be
withheld, provided that such Stock Units were vested as of the Exercise Date; or

     (d) by the Company or the Administrative Agent withholding from the shares of Stock otherwise
issuable to the Participant upon exercise of the Option, a number of shares of Stock, the aggregate
Fair Market Value of which (as of the Exercise Date) is not greater than the amount required to be
withheld. Any such elections by Participants to have shares of Stock withheld for this purpose
will be subject to the following restrictions:

     (i) all elections shall be made on or prior to the Exercise Date; and

     (ii) all elections shall be irrevocable.

13.3 Excess Withholding. At the time the Committee grants an Option, it may, in its sole
discretion, grant the Participant an election to pay additional or excess amounts of tax
withholding, beyond the required amounts and up to the Participant’s marginal tax rate:

     (a) by delivery to the Company or the Administrative Agent of a number of Shares of Stock
then owned by the Participant, the aggregate Fair Market Value of which (as of the Exercise Date)
is not greater than such excess withholding amount, provided that such shares of Stock have been
owned by the Participant for a period of at least six months; or

     (b) by certification or attestation to the Company or the Administrative Agent of the
Participant’s ownership (as of the Exercise Date) of a number of shares of Stock and/or Depositary
Shares, the aggregate Fair Market Value of which (as of the Exercise Date) is not greater than such
excess withholding amount, provided that such shares of Stock and/or Depositary Shares have been
owned by the Participant for a period of at least six months.

13.4 Section 16 Requirements. 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 shares of Stock, Depositary Shares and/or Stock Units 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.

17

 

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 Stock
Option 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 February 6, 2003. Options outstanding at the time of
the Plan termination shall continue to be exercisable in accordance with the Stock Option Agreement
pertaining to each such Option, as such Stock Option Agreement may be modified pursuant to Section
12.

Dated: August 14, 2008

	 	 	 	 	 	 	 
	 	 	APACHE CORPORATION	 	 
	 
	 	 	 	 	 	 
	ATTEST:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Cheri L. Peper
 

Cheri L. Peper

	 	By:
	 	/s/ Margery M. Harris
 

Margery M. Harris
	 	 
	Corporate Secretary

	 	 	 	Vice President, Human Resources	 	 

18

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