Document:

<PAGE>   1

                                                                   EXHIBIT 10.26

                               APACHE CORPORATION

                             1998 STOCK OPTION PLAN

                            (AS AMENDED AND RESTATED
                          EFFECTIVE FEBRUARY 10, 2000)

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                      PAGE
                                                                                                      ----
<S>                                                                                                   <C>
Section 1 - Introduction.................................................................................1

         1.1      Establishment..........................................................................1
         1.2      Purposes...............................................................................1
         1.3      Effective Date.........................................................................1

Section 2 - Definitions..................................................................................1

         2.1      Definitions............................................................................1
         2.2      Headings; Gender and Number............................................................3

Section 3 - Plan Administration..........................................................................3

Section 4 - Stock Subject to the Plan....................................................................4

         4.1      Number of Shares.......................................................................4
         4.2      Other Shares of Stock..................................................................4
         4.3      Adjustments for Stock Split, Stock Dividend, Etc.......................................4
         4.4      Dividend Payable in Stock of Another Corporation, Etc..................................4
         4.5      Other Changes in Stock.................................................................5
         4.6      Rights to Subscribe....................................................................5
         4.7      General Adjustment Rules...............................................................5
         4.8      Determination by the Committee, Etc....................................................6

Section 5 - Reorganization or Liquidation................................................................6

Section 6 - Participation................................................................................6

Section 7 - Stock Options................................................................................7

         7.1      Grant of Stock Options.................................................................7
         7.2      Stock Option Agreements................................................................7
         7.3      Stockholder Privileges................................................................12

Section 8 - Change in Control...........................................................................12

         8.1      In General............................................................................12
         8.2      Limitation on Payments................................................................13
         8.3      Definition............................................................................13
</TABLE>

                                       i
<PAGE>   3

<TABLE>
<S>                                                                                                   <C>
Section 9 - Rights of Employees, Participants...........................................................13

         9.1      Employment............................................................................13
         9.2      Nontransferability....................................................................13

Section 10 - General Restrictions.......................................................................14

         10.1     Investment Representations............................................................14
         10.2     Compliance with Securities Laws.......................................................14

Section 11 - Other Employee Benefits....................................................................14

Section 12 - Plan Amendment, Modification and Termination...............................................14

Section 13 - Withholding................................................................................15

         13.1     Withholding Requirement...............................................................15
         13.2     Satisfaction of Required Withholding..................................................15
         13.3     Excess Withholding....................................................................16
         13.4     Section 16 Requirements...............................................................16

Section 14 - Requirements of Law........................................................................16

         14.1     Requirements of Law...................................................................16
         14.2     Federal Securities Laws Requirements..................................................16
         14.3     Governing Law.........................................................................17

Section 15 - Duration of the Plan.......................................................................17
</TABLE>

                                       ii
<PAGE>   4

                               APACHE CORPORATION

                             1998 STOCK OPTION PLAN

                                    SECTION 1

                                  INTRODUCTION

1.1 Establishment. Apache Corporation, a Delaware corporation (hereinafter
referred to, together with its Affiliated Corporations (as defined in Section
2.1 hereof) as the "Company" except where the context otherwise requires),
hereby establishes the Apache Corporation 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") shall
be 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) "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) which is affiliated with Apache
Corporation through

                                       1
<PAGE>   5

stock ownership or otherwise and is treated as a common employer under the
provisions of Sections 414(b) and (c) or any successor section(s) of the
Internal Revenue Code.

         (b) "Board" means the Board of Directors of the Company.

         (c) "Committee" means the Stock Option Plan Committee of the Board,
which is empowered hereunder to take actions in the administration of the Plan.
The Committee shall be constituted at all times as to permit the Plan to comply
with: (i) Rule 16b-3 or any successor rule(s) promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and (ii) Section 162(m) or
any successor section(s) of the Internal Revenue Code and the regulations
promulgated thereunder.

         (d) "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.

         (e) "Depositary Shares" means the Depositary shares representing the
Company's preferred stock convertible into Stock.

         (f) "Eligible Employees" means full-time employees (including, without
limitation, officers and directors who are also employees) of the Company or any
division thereof.

         (g) "Fair Market Value" means the closing price of the Stock or
Depositary Shares, as applicable, as reported on the New York Stock Exchange,
Inc. Composite Transactions Reporting System for a particular date. If there are
no Stock or Depositary Shares, as applicable, transactions on such date, the
Fair Market Value shall be determined as of the immediately preceding date on
which there were Stock or Depositary Shares, as applicable, transactions.

         (h) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
it may be amended from time to time.

         (i) "Option" means a right to purchase Stock at a stated price for a
specified period of time. All Options granted under the Plan shall be Options
which are not "incentive stock options" as described in Section 422 or any
successor section(s) of the Internal Revenue Code.

         (j) "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.

                                       2
<PAGE>   6

         (k) "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.

         (l) "Stock" means the $1.25 par value Common Stock of the Company.

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

                                    SECTION 3

                               PLAN ADMINISTRATION

The Plan shall be administered by the Committee. In accordance with the
provisions of the Plan, the Committee shall, in its sole discretion, select the
Participants from among the Eligible Employees, determine the Options to be
granted pursuant to the Plan, the number of shares of Stock to be issued
thereunder, the time at which such Options are to be granted, fix the Option
Price, and establish such other terms and requirements as the Committee may deem
necessary or desirable and consistent with the terms of the Plan. The Committee
shall determine the form or forms of the agreements with Participants which
shall evidence the particular provisions, terms, conditions, rights and duties
of the Company and the Participants with respect to Options granted pursuant to
the Plan, which provisions need not be identical except as may be provided
herein. The Committee may from time to time adopt such rules and regulations for
carrying out the purposes of the Plan as it may deem proper and in the best
interests of the Company. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan, or in any agreement entered
into hereunder, in the manner and to the extent it shall deem expedient and it
shall be the sole and final judge of such expediency. No member of the Committee
shall be liable for any action or determination made in good faith. The
determination, interpretations and other actions of the Committee pursuant to
the provisions of the Plan shall be binding and conclusive for all purposes and
on all persons.

The Plan is intended to comply with the requirements of Section 162(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

                                       3
<PAGE>   7

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, two million five hundred thousand (2,500,000) shares of
Stock are authorized for issuance under the Plan in accordance with the
provisions of the Plan and subject to such restrictions or other provisions as
the Committee may from time to time deem necessary. This authorization may be
increased from time to time by approval of the Board and the stockholders of the
Company if, in the opinion of counsel for the Company, such stockholder approval
is required. Shares of Stock which may be issued upon exercise of Options shall
be applied to reduce the maximum number of shares of Stock remaining available
for use under the Plan. The Company shall at all times during the term of the
Plan and while any Options are outstanding retain as authorized and unissued
Stock, or as Stock in the Company's treasury, at least the number of shares from
time to time required under the provisions of the Plan, or otherwise assure
itself of its ability to perform its obligations hereunder.

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

4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the Company shall at
any time increase or decrease the number of its outstanding shares of Stock or
change in any way the rights and privileges of such shares by means of the
payment of a Stock dividend or any other distribution upon such shares payable
in Stock, or through a Stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or changed
in like manner as if they had been issued and outstanding, fully paid and
nonassessable at the time of such occurrence: (i) the shares of Stock as to
which Options may be granted under the Plan; and (ii) the shares of the Stock
then included in each outstanding Option granted hereunder.

4.4 Dividend Payable in Stock of Another Corporation, Etc. If the Company shall
at any time pay or make any dividend or other distribution upon the Stock
payable in

                                       4
<PAGE>   8

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
which have been reserved for issuance pursuant to the Plan but are not then
subject to an Option, then such adjustments shall be made by the Committee and
shall be effective for all purposes of the Plan and on each outstanding Option
that involves the particular type of stock for which a change was effected.

4.6 Rights to Subscribe. If the Company shall at any time grant to the holders
of its Stock rights to subscribe pro rata for additional shares thereof or for
any other securities of the Company or of any other corporation, there shall be
reserved with respect to the shares then under Option to any Participant of the
particular class of Stock involved the Stock or other securities which the
Participant would have been entitled to subscribe for if immediately prior to
such grant the Participant had exercised his entire Option. If, upon exercise of
any such Option, the Participant subscribes for the additional shares or other
securities, the Option Price shall be increased by the amount of the price that
is payable by the Participant for such additional shares or other securities.

4.7 General Adjustment Rules. No adjustment or substitution provided for in this
Section 4 shall require the Company to sell a fractional share of Stock under
any Option, or otherwise issue a fractional share of Stock, and the total
substitution or adjustment with respect to each Option shall be limited by
deleting any fractional share. In the case of any such substitution or
adjustment, the total Option Price for the shares of Stock then subject to the
Option shall remain unchanged but the Option Price per share under each such
Option shall be equitably adjusted by the Committee to reflect the greater or
lesser number of shares of Stock or other securities into which the Stock
subject to the Option may have been changed.

                                       5
<PAGE>   9

4.8 Determination by the Committee, Etc. Adjustments under this Section 4 shall
be made by the Committee, whose determinations with regard thereto shall be
final and binding upon all parties thereto.

                                    SECTION 5

                          REORGANIZATION OR LIQUIDATION

In the event that the Company is merged or consolidated with another corporation
and the Company is not the surviving corporation, or if all or substantially all
of the assets or more than 20 percent of the outstanding voting stock of the
Company is acquired by any other corporation, business entity or person, or in
case of a reorganization (other than a reorganization under the United States
Bankruptcy Code) or liquidation of the Company, and if the provisions of Section
8 hereof do not apply, the Committee, or the board of directors of any
corporation assuming the obligations of the Company, shall, as to the Plan and
outstanding Options either (i) make appropriate provision for the adoption and
continuation of the Plan by the acquiring or successor corporation and for the
protection of any such outstanding Options by the substitution on an equitable
basis of appropriate stock of the Company or of the merged, consolidated or
otherwise reorganized corporation which will be issuable with respect to the
Stock, provided that no additional benefits shall be conferred upon the
Participants holding such Options as a result of such substitution, and the
excess of the aggregate Fair Market Value of the shares subject to the Options
immediately after such substitution over the Option Price thereof is not more
than the excess of the aggregate Fair Market Value of the shares subject to such
Options immediately before such substitution over the Option Price thereof, or
(ii) upon written notice to the Participants, provide that all unexercised
Options shall be exercised within a specified number of days of the date of such
notice or such Options will be terminated. In the latter event, the Committee
shall accelerate the 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,

                                       6
<PAGE>   10

however, that the grant of each such Option shall be separately approved by the
Committee, and receipt of one such Option shall not result in automatic receipt
of any other Option. Upon determination by the Committee that an Option is to be
granted to a Participant, written notice shall be given to such person,
specifying the terms, conditions, rights and duties related thereto. Each
Participant shall, if required by the Committee, enter into an agreement with
the Company, in such form as the Committee shall determine and which is
consistent with the provisions of the Plan, specifying such terms, conditions,
rights and duties. Options shall be deemed to be granted as of the date
specified in the grant resolution of the Committee, which date shall be the date
of any related agreement with the Participant. In the event of any inconsistency
between the provisions of the Plan and any such agreement entered into
hereunder, the provisions of the Plan shall govern.

                                    SECTION 7

                                  STOCK OPTIONS

7.1 Grant of Stock Options. Coincident with or following designation for
participation in the Plan, an Eligible Employee may be granted one or more
Options. Grants of Options under the Plan shall be made by the Committee. In no
event shall the exercise of one Option affect the right to exercise any other
Option or affect the number of shares of Stock for which any other Option may be
exercised, except as provided in subsection 7.2(j) hereof. During the life of
the Plan, no Eligible Employee may be granted Options 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.

                                       7
<PAGE>   11

         (c) Duration of Options; Employment Required For Exercise. Each Stock
Option Agreement shall state the period of time, determined by the Committee,
within which the Option may be exercised by the Participant (the "Option
Period"). The Option Period must end, in all cases, not more than ten years from
the date an Option is granted. Except as otherwise provided in Sections 5 and 8
and subsection 7.2(d)(iv) hereof, each Option granted under the Plan shall
become exercisable in increments such that 25 percent of the Option will become
exercisable on each of the four subsequent one-year anniversaries of the date
the Option is granted, but each such additional 25-percent increment shall
become exercisable only if the Participant has been continuously employed by the
Company from the date the Option is granted through the date on which each such
additional 25-percent increment becomes exercisable.

         (d) Termination of Employment, Death, Disability, Etc. Each Stock
Option Agreement shall provide as follows with respect to the exercise of the
Option upon termination of the employment or the death of the Participant:

                  (i) If the employment of the Participant by the Company is
terminated within the Option Period for cause, as determined by the Company, the
Option shall thereafter be void for all purposes. As used in this subsection
7.2(d), "cause" shall mean a gross violation, as determined by the Company, of
the Company's established policies and procedures, provided that the effect of
this subsection 7.2(d) shall be limited to determining the consequences of a
termination and that nothing in this subsection 7.2(d) shall restrict or
otherwise interfere with the Company's discretion with respect to the
termination of any employee.

                  (ii) If the Participant retires from employment by the Company
on or after attaining age 65, the Option may be exercised by the Participant
within 36 months following his or her retirement (provided that such exercise
must occur within the Option Period), but not thereafter. In the event of the
Participant's death during such 36-month period, each Option may be exercised by
those entitled to do so in the manner referred to in (iv) below. In any such
case the Option may be exercised only as to the shares as to which the Option
had become exercisable on or before the date of the Participant's retirement.

                  (iii) If the Participant becomes disabled (as determined
pursuant to the Company's Long-Term Disability Plan or any successor plan),
during the Option Period while still employed, or within the three-month period
referred to in (v) below, or within the 36-month period referred to in (ii)
above, the Option may be exercised by the Participant or by his or her guardian
or legal representative, within twelve months following the Participant's
disability, or within the 36-month period referred to in (ii) above if
applicable and if longer (provided that such exercise must occur within the

                                       8
<PAGE>   12

Option Period), but not thereafter. In the event of the Participant's death
during such twelve-month period, each Option may be exercised by those entitled
to do so in the manner referred to in (iv) below. In any such case, the Option
may be exercised only as to the shares of Stock as to which the Option had
become exercisable on or before the date of the Participant's disability.

                  (iv) In the event of the Participant's death while still
employed by the Company, each Option of the deceased Participant may be
exercised by those entitled to do so under the Participant's will or under the
laws of descent and distribution within twelve months following the
Participant's death (provided that in any event such exercise must occur within
the Option Period), but not thereafter, as to all shares of Stock which are
subject to such Option, including each 25-percent increment of the Option, if
any, which has not yet become exercisable at the time of the Participant's
death. In the event of the Participant's death within the 36-month period
referred to in (ii) above or within the twelve-month period referred to in (iii)
above, each Option of the deceased Participant that is exercisable at the time
of death may be exercised by those entitled to do so under the Participant's
will or under the laws of descent and distribution within twelve months
following the Participant's death or within the 36-month period referred to in
(ii) 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 65, the Participant's disability or death, the Option may be
exercised by the Participant within three months following the date of such
termination (provided that such exercise must occur within the Option Period),
but not thereafter. In any such case, the Option may be exercised only as to the
shares as to which the Option had become exercisable on or before the date of
termination of the Participant's employment.

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

                                       9
<PAGE>   13

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

         (g) Exercise, Payments, Etc.

                  (i) Each Stock Option Agreement shall provide that the method
for exercising the Option granted therein shall be by delivery to the Office of
the Secretary of the Company of written notice specifying the number of shares
of Stock with respect to which such Option is exercised and payment of the
Option Price. Such notice shall be in a form satisfactory to the Committee and
shall specify the particular Options (or portions thereof) which are being
exercised and the number of shares of Stock with respect to which the Options
are being exercised. The exercise of the Option shall be deemed effective on the
date such notice is received by the Office of the Secretary and payment is made
to the Company of the Option Price (the "Exercise Date"). If requested by the
Company, such notice shall contain the Participant's representation that he or
she is purchasing the Stock for investment purposes only and his or her
agreement not to sell any Stock so purchased in any manner that is in violation
of the Securities Act of 1933, as amended, or any applicable state law. Such
restriction, or notice thereof, shall be placed on the certificates representing
the Stock so purchased. The purchase of such Stock shall take place at the
principal offices of the Company upon delivery of such notice, at which time the
Option Price shall be paid in full by any of the methods or any combination of
the methods set forth in (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 Option Price, the Company
shall issue and deliver to the Participant the additional shares of Stock, in
excess of the 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 Option Price pursuant
to (iii)(C) or (D) 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

                                       10
<PAGE>   14

into the Participant's Deferred Delivery Plan account and no additional shares
of Stock shall be delivered to the Participant.

                  (iii) the 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 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
to the order of the Company;

                           (C) by delivery to the Company of certificates
representing a number of shares of Stock then owned by the Participant, the Fair
Market Value (as of the Exercise Date) of which is not greater than the Option
Price of the Option being exercised, properly endorsed for transfer to the
Company; provided however, 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 of
the Participant's ownership as of the Exercise Date of the number of (1) shares
of Stock and/or (2) Depositary Shares, the Fair Market Value (as of the Exercise
Date) of which is not greater than the Option Price of the Option being
exercised; provided however, 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.

                           (E) by delivery to the Company 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
Option Price.

         (h) Date of Grant. An Option shall be considered as having been granted
on the date specified in the grant resolution of the Committee.

         (i) Tax Withholding. Each Stock Option Agreement shall provide that,
upon exercise of the Option, the Participant shall make appropriate arrangements
with the Company to provide for the amount of 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, as provided in Section
13 hereof, payment of such taxes

                                       11
<PAGE>   15

(A) through delivery of shares of Stock, (B) by certification or attestation of
shares of Stock or Depositary Shares, or (C) by withholding shares of Stock
otherwise issuable upon exercise of the Option.

         (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 grant of such amendment will be the
date of grant of the original Option.

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

                                    SECTION 8

                                CHANGE IN CONTROL

8.1 In General. In the event of a change in control of the Company as defined in
Section 8.3 hereof, then the Committee may, in its sole discretion, without
obtaining stockholder approval, to the extent permitted in Section 12 hereof,
take any or all of the following actions: (a) accelerate the dates on which any
outstanding Options become exercisable or make all such Options fully vested and
exercisable; (b) grant a cash bonus award to any Participant in an amount
necessary to pay the Option Price of all or any portion of the Options then held
by such Participant; (c) pay cash to any or all Participants in exchange for the
cancellation of their outstanding Options in an amount equal to the difference
between the Option Price of such Options and the greater of the tender offer
price for the underlying Stock or the Fair Market Value of the Stock on the date
of the cancellation of the Options; and (d) make any other adjustments or
amendments to the outstanding Options.

                                       12
<PAGE>   16

8.2 Limitation on Payments. If the provisions of this Section 8 would result in
the receipt by any Participant of a payment within the meaning of Section 280G
or any successor section(s) of the Internal Revenue Code, and the regulations
promulgated thereunder, and if the receipt of such payment by any Participant
would, in the opinion of independent tax counsel of recognized standing selected
by the Company, result in the payment by such Participant of any excise tax
provided for in Sections 280G and 4999 or any successor section(s) of the
Internal Revenue Code, then the amount of such payment shall be reduced to the
extent required, in the opinion of independent tax counsel, to prevent the
imposition of such excise tax; provided, however, that the Committee, in its
sole discretion, may authorize the payment of all or any portion of the amount
of such reduction to the Participant.

8.3 Definition. For purposes of the Plan, a "change in control" shall mean any
of the events specified in the Company's Income Continuance Plan or any
successor plan which constitute a change in control within the meaning of such
plan.

                                    SECTION 9

                        RIGHTS OF EMPLOYEES, PARTICIPANTS

9.1 Employment. Nothing contained in the Plan or in any Option granted under the
Plan shall confer upon any Participant any right with respect to the
continuation of his or her employment by the Company or any Affiliated
Corporation, or interfere in any way with the right of the Company or any
Affiliated Corporation, subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such 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

                                       13
<PAGE>   17

or age, payment due such person may be made to, and such rights shall be
exercised by, such person's guardian, conservator or other legal personal
representative upon furnishing the Committee with evidence satisfactory to the
Committee of such status.

                                   SECTION 10

                              GENERAL RESTRICTIONS

10.1 Investment Representations. The Company may require a Participant, as a
condition of exercising an Option, to give written assurances in substance and
form satisfactory to the Company and its counsel to the effect that such person
is acquiring the Stock subject to the Option for his own account for investment
and not with any present intention of selling or otherwise distributing the
same, and to such other effects as the Company deems necessary or appropriate in
order to comply with federal and applicable state securities laws.

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

                                   SECTION 11

                             OTHER EMPLOYEE BENEFITS

The amount of any income deemed to be received by a Participant as a result of
the exercise of an Option 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.

                                       14
<PAGE>   18

                                   SECTION 12

                  PLAN AMENDMENT, MODIFICATION AND TERMINATION

The Board may at any time terminate, and from time to time may amend or modify
the Plan provided, however, that no amendment or modification may become
effective without approval of the amendment or modification by the Company's
stockholders if stockholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if the Company, on the
advice of counsel, determines that stockholder approval is otherwise necessary
or desirable.

No amendment, modification or termination of the Plan shall in any manner
adversely affect any Option theretofore granted under the Plan, without the
consent of the Participant holding such Option.

                                   SECTION 13

                                   WITHHOLDING

13.1 Withholding Requirement. The Company's obligations to deliver shares of
Stock upon the exercise of an Option, 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 of a number of shares of Stock then
owned by the Participant, the 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 of the Participant's
ownership as of the Exercise Date of a number of shares of Stock and/or
Depositary Shares, the 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 withholding from the shares of Stock otherwise
issuable to the Participant upon exercise of the Option, a number of shares of
Stock, the Fair Market

                                       15
<PAGE>   19

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

         (a) by delivery to the Company of a number of Shares of Stock then
owned by the Participant, the 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 of the Participant's
ownership as of the Exercise Date of a number of shares of Stock and/or
Depositary Shares, the 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 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

                                       16
<PAGE>   20

Section 16 available under such Rule. Such conditions are hereby incorporated
herein by reference and shall be set forth in the agreement with the Participant
which describes the Option.

14.3 Governing Law. The Plan and all Stock Option Agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Texas.

                                   SECTION 15

                              DURATION OF THE PLAN

The Plan shall terminate at such time as may be determined by the Board, and no
Option shall be granted after such termination. If not sooner terminated under
the preceding sentence, the Plan shall fully cease and expire at midnight on
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 such Option.

Dated: February 10, 2000

                                       APACHE CORPORATION

ATTEST:

/s/ Cheri L. Peper                     By: /s/ Daniel L. Schaeffer
---------------------------                -----------------------
Cheri L. Peper                             Daniel L. Schaeffer
Corporate Secretary                        Vice President

                                       17<PAGE>   1
                                                                  EXHIBIT 10.18

                             EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement") made as of the 5th day of
January, 1999 (the "Effective Date"), by and between First Sierra Financial,
Inc., a Delaware corporation, (the "Employer"), and Fred Van Etten (the
"Employee"). Employer and Employee may be referred to herein collectively as
the "Parties" and individually as a "Party."

                                  ARTICLE I

                                     TERM

         Employer hereby employs Employee and Employee hereby accepts
employment with Employer for a period beginning on the Effective Date and
ending on the third anniversary of the Effective Date (as extended pursuant to
the following provisions, the "Term"). As of the first day of any month
following the Effective Date, the Term shall be extended for an additional one
(1) month period unless either Employee or Employer gives the other party
written notice at least ninety (90) days prior to the first day of such month
that this Agreement shall terminate on the then scheduled expiration date of
the Term. If such notice is given, this Agreement shall automatically terminate
on such expiration date. If this Agreement is extended, the terms in effect
under this Agreement immediately preceding such extension shall apply during
the extension period. If Employee's employment hereunder is terminated by
either Employer or Employee at any time for any reason, the expiration date
shall thereupon no longer be automatically extended. This Agreement replaces
all prior agreements between the parties, oral or written regarding employment
of Employee by Employer and all such prior agreements are void upon the
Effective Date of this Agreement.

                                   ARTICLE II

                               DUTIES OF EMPLOYEE

         2.01 Duties. Employee is engaged to be an Executive Vice President.
Employee's duties and powers shall be determined from time to time by the Chief
Executive Officer of Employer. Employee shall perform and discharge such duties
in a businesslike manner, and faithfully as an officer of Employer, and shall
be subject to the supervision and direction of the Chief Executive Officer of
Employer and the Employer's Board of Directors.

         2.02 Full Time Employment. Subject to the provisions set forth below,
Employee shall devote his productive time, ability, and attention to the
business of Employer during the Term. Employee shall not, directly and
indirectly, during the Term render any services of a business, commercial or
professional nature to any other period, corporation, firm or organization,
whether for compensation or otherwise, without the prior written consent of the
Chief Executive Officer of Employer.

         Notwithstanding the foregoing, Employee may continue to engage in
personal and family investing; provided, however, unless prior approval is
given by Employer's

<PAGE>   2

Chief Executive Officer, such investments may not include equipment leases or
interests in non-publicly traded entities engaged in equipment leasing.

                                  ARTICLE III

                           COMPENSATION AND BENEFITS

         3.01 Base Compensation. As compensation for services rendered and
Employee's covenants and agreements under this Agreement, Employee shall be
entitled to receive from Employer a base salary of one hundred seventy five
thousand and no/100ths dollars ($175,000) per year, payable in equal
semi-monthly installments from Employer's headquarters in Texas. The salary of
Employee may be increased from time to time at the sole discretion of Employer.

         3.02 Bonus. Employee may be entitled to an annual bonus paid by
Employer if and as determined in the sole discretion of the Board of Directors.

         3.03 Benefit Plans. During the Term, and thereafter, to the extent
provided in the applicable plan or under applicable law, Employer agrees to
include Employee in any retirement, insurance and health benefit plans adopted
by Employer for the benefit of the senior employees of Employer. Employer may
enter into and revise these plans in its sole discretion. Employee will have
four weeks paid vacation each year.

         3.04 Expenses. Employer, in accordance with the rules and regulations,
Employer shall issue and may revise from time to time, shall reimburse Employee
for business expenses directly and reasonably incurred in the performance of
his duties. The Employer acknowledges that the Employee will require a travel
and entertainment budget and reimbursement for reasonable travel and
entertainment expenses. Any amounts advanced or reimbursed by Employer to
Employee for travel and entertainment expenses shall be in addition to any
other amounts payable to Employee hereunder.

                                   ARTICLE IV

                                  TERMINATION

         This Agreement shall terminate prior to the expiration of its Term
upon the occurrence of any one of the following events:

         4.01 Disability. In the event that Employee is unable fully to perform
his duties and responsibilities with reasonable accommodation hereunder to the
full extent required by Employer due to illness, injury or incapacity for
ninety (90) consecutive days (during such ninety (90) day period, Employee
shall continue to be compensated as provided in Section 3.01 hereof), this
Agreement may be terminated by Employer, and Employer and Employee shall have
no further liability or obligations hereunder; provided, however, that Employer
shall continue to pay Employee the base compensation specified in Section 3.01
hereof for the duration of the Term at the same time specified in Section 3.01
(as reduced by any payments received by Employee under any Employer sponsored
disability benefits plan in which Employee was participating). In the event of
any dispute under this Section 4.01, Employee shall submit to a physical
examination by

<PAGE>   3

a licensed physician selected by Employer, and acceptable to Employee. If the
physician retained by Employer is not acceptable to Employee, then physicians
selected by the Employer and the Employee shall jointly select a third
physician to perform the examination. All costs related to the physical
examination of the Employee shall be paid by the Employer.

         4.02 Death. In the event that Employee dies during the Term, Employer
shall pay to Employee's executors, legal representatives or administrators, the
base compensation specified in Section 3.01 hereof for the remainder of the
Term at the same time specified in Section 3.01 (as reduced by any payments
received by such executors, legal representatives and administrators under any
Employer sponsored death or disability benefits plan in which Employee was
participating).

         4.03 Cause. Nothing in this Agreement shall be construed to prevent
the termination of this Agreement by Employer at any time for "cause." For
purposes of this Agreement, "cause" shall mean the habitual neglect or willful
breach by Employee of his duties as the Executive Vice President of Employer
which results in a material loss or damage to Employer or embezzlement by
Employee of Employer funds. Upon termination for cause, Employer shall pay to
Employee all sums due to Employee through the date of such termination.
Following such a termination, Employer shall have no further duties or
obligations to Employee.

         4.04 Termination Without Cause by Employer. Employer, in its
discretion and for any reason, may terminate this Agreement at any time by
delivering written notice to Employee prior to such intended termination
("Termination Date"). This Agreement shall terminate on the Termination Date
and the Parties shall have no further duties or obligations to each other,
provided, however, that (i) Employer shall continue to pay Employee the base
compensation specified in Section 3.01 hereof for a period of three years from
the Termination Date at the same times specified in Section 3.01 (ii) Employer
shall pay Employee for each pay period in the three year period following the
Termination Date an amount equal to one/twenty-fourth of the bonus received by
Employee for the year prior to the Termination Date, and (iii) Employer shall
pay Employee at the end of the Term a lump sum amount equal to the bonus
received by Employee for the year prior to the Termination Date multiplied by a
fraction the numerator of which is the number of days in the year prior to the
Termination Date and the denominator is 365.

         4.05 Termination by Employee other than for Good Reason. Employee may
terminate this Agreement at any time by delivering written notice to Employer
of Employee's intent to terminate at least 30 days prior to such intended
termination ("Departure Date"). This Agreement shall terminate on the Departure
Date and the parties shall have no further duties or obligations to each other,
provided, however, that Employee shall remain subject to all of the provisions
of Article V and Employer shall pay to Employee all sums due to Employee
through the Departure Date.

         4.06 Termination by Employee for Good Reason. Employee may terminate
this Agreement at any time for Good Reason (as hereinafter defined) by a
delivering written notice to Employer of Employee's intent to terminate for
Good Reason at least 30 days prior to such intended termination ("Good Reason
Departure Date"). This Agreement shall terminate on the Good Reason Departure
Date and the parties shall have no further duties or obligations to each other,
provided, however, that Employer

<PAGE>   4

shall pay Employee in one lump sum payment within thirty (30) days of the Good
Reason Termination Date an amount equal to Employee's current base annual
compensation specified in Section 3.01 hereof plus the greater of (i) the
amount of bonus received by Employee for the year prior to Employee's
termination of employment or (ii) the amount of bonus received by Employee for
the year prior to a Change in Control (as hereinafter defined).

         "Good Reason" shall mean termination of employment by Employee within
one year after the occurrence of change in Control (as hereinafter defined);

         "Change in Control" shall mean any of the following: (i) the Employer
shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of any entity other than a
previously wholly-owned subsidiary of the Employer), (ii) the Employer sells,
leases or exchanges all or substantially all of its assets to any other person
or entity (other than a wholly-owned subsidiary of the Employer), (iii) the
Employer is dissolved and liquidated, (iv) any person or entity, included a
"group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, other than any person, entity or group which owned shares of
Common Stock of the Company immediately prior to the initial public offering of
the Company's Common Stock, acquires or gains ownership or control (including,
without limitation, power to vote) of more than 50% of the outstanding shares
of the Employer's voting stock (based upon voting power), or (v) during any
consecutive two-year period, individuals who constituted the Board of Directors
of the Employer (together with any new directors whose election by the Board of
Directors or whose nomination for election by the shareholders of the Employer
was approved by a vote of at least three-quarters of the directors still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors then in office.

                                   ARTICLE V

                                PROPERTY RIGHTS

         5.01 Non-Competition. If this Agreement is terminated other than
pursuant to Sections 4.01 or 4.06, Employee shall not for a period of one year
after such termination or expiration (the "One Year Period"), directly or
indirectly, either as an employee, employer, consultant, agent, lender,
principal, partner, stockholder, corporate officer, director, or in any other
individual or representative capacity, engage or participate in any business
that is in competition in any manner whatsoever with the business engaged in by
Employer in the continental United States at the time of such termination or
resignation. The provisions of this Section 5.01 and those contained in Section
5.02 shall not apply to any termination occurring pursuant to Sections 4.04 or
4.06.

         5.02 Solicitation. If this Agreement is terminated other than pursuant
to Sections 4.04 or 4.06 during the One Year Period, Employee agrees not to,
directly or indirectly, (i) call on or solicit, with respect to the activities
prohibited by Section 5.01 of this Agreement, any person, firm, corporation or
other entity who or which at the time of such termination, or within two years
prior thereto, was or had been a customer, referral source or distributor of
Employer or any of its affiliates or (ii) solicit, influence or
<PAGE>   5
recommend the employment of any person who was employed by Employer on a full
or part-time basis at the time of Employee's termination of employment;
provided, if requested by any employee of Employer, Employee shall have the
right to give a reference with respect to such employee.

         5.03 Confidentiality. In return for Employee's promises under this
Article V, Employee shall receive and be entrusted with certain confidential
and/or secret information of a proprietary nature, including without limitation
names and addresses of customers of the Employer and its affiliates and
business plans of the Employer. Employee shall not directly or indirectly
disclose or use, during the term of this Agreement or at any time thereafter,
any such information, which is not otherwise publicly available.

         5.04 Reasonableness of Restrictions. Employee agrees that (i) the
covenants contained in Sections 5.01, 5.02 and 5.03 hereof are necessary for
the protection of Employer's business goodwill, (ii) a portion of the
compensation paid to Employee under this Agreement is paid in consideration of
the covenants herein contained, the sufficiency of which consideration is
hereby acknowledged, (iii) Employee is not, and under this Agreement will not
be, engaged in a common calling, and (iv) if the scope of any restriction
contained in Sections 5.01, 5.02 and 5.03 hereof is too broad to permit
enforcement of such restriction to its full extent, then such restriction shall
be enforced to the maximum permitted by law, and the parties hereto hereby
consent that such scope may be judicially modified accordingly in any
proceeding brought to enforce such restriction. The existence of any claim or
cause of action of Employee against Employer, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of these covenants.

         5.05 Enforcement. If Employee's employment is terminated pursuant to
Sections 4.03 or 4.05, Employer agree to pay Employee his base compensation
during the One Year Period plus for each pay period during the One Year Period
Employer will pay Employee one/twenty-fourth of the amount of the bonus
received by Employee for the year preceding Employee's termination of
employment. If this Agreement is not renewed at the end of its Term, Employer
agrees to pay Employee his salary during the One Year Period plus for each pay
period during the One Year Period Employer will pay employee one/twenty-fourth
of the amount of the bonus received by Employee for the year preceding
Employee's termination of employment. Employer reserves the right to waive the
provisions of Sections 5.01 and 5.02 if Employee terminates this Agreement
pursuant to Sections 4.03 or 4.05 and such waiver will release Employer from
any payment obligations under this Section 5.05. Employee acknowledges that the
restrictions contained in Sections 5.01, 5.02 and 5.03 hereof are reasonable
and necessary to protect the legitimate interests of Employer and its
affiliates, that Employer would not have entered into this Agreement in the
absence of such restrictions, and that any violation of any provision of the
convenants contained in Sections 5.01, 5.02 or 5.03 hereof will result in
irreparable injury to Employer. Employee also acknowledges that Employer shall
be entitled to preliminary and permanent injunctive relief without the
necessity of proving actual damages as well as an equitable accounting of all
earnings, profits and other benefits arising from any such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled.

<PAGE>   6

         5.06 Copy of Covenants. Until the expiration of the applicable
restrictions, Employee will provide, and Employer similarly may provide, a copy
of the covenants contained in Sections 5.01, 5.02 and 5.03 of this Agreement to
any business or enterprise which Employee may (ii) directly or indirectly own,
manage, operate, finance, join, control or participate in the ownership,
management, operation, financing, or control of, (ii) serve as an officer,
director, employee, partner, principal, agent, representative, consultant
leader or otherwise, or (iii) with which he may use or permit his name to be
used.

                                   ARTICLE VI

                               GENERAL PROVISIONS

         6.01 Arbitration. Employee and Employer agree that all disputes
concerning the terms of this Agreement or Employee's employment with Employer
will be subject solely to binding arbitration. The arbitrator selection and
conduct of the arbitration will be pursuant to the Commercial Arbitration Rules
of the American Arbitration Association. The place of the arbitration shall be
Houston, Texas and shall be governed by the laws of Texas.

         6.01 Notices. Any notices to be given hereunder by either party to the
other may be effected by personal delivery in writing or by mail, registered or
certified, postage prepaid with return receipt requested:

                  If to Employer:

                           First Sierra Financial, Inc.
                           Chase Tower
                           600 Travis, Suite 7050
                           Houston, TX 77002
                           Attention:  Chief Executive Officer

                  If to Employee:

                           Fred Van Etten

                           ----------------
                           ----------------

Mailed notices shall be addressed to the parties at the addresses set forth
above, but each party may change his/her address by written notice in
accordance with this Section

         6.02. Notices delivered personally shall be deemed communicated as of
actual receipt; mailed notices shall be deemed communicated as of ten (10) days
after mailing.

         6.03 Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Employee by Employer and contains all of the covenants and
agreements between the parties with respect to such employment in any manner
whatsoever.

<PAGE>   7

         6.04 Certain Acknowledgements. Employee by his execution and delivery
of this Agreement represents to Employer as follows:

         (i)      Employee has been advised by Employer to have this Agreement
                  reviewed by an attorney representing Employee, and Employee
                  has either had this Agreement reviewed by such attorney or
                  has chosen not to have this Agreement reviewed because
                  Employee, after reading the entire Agreement, fully and
                  completely understands each provision and has decided not to
                  obtain the services of an attorney.

         (ii)     Employee either on his own or with the assistance and advice
                  of his attorney has in particular reviewed Article V and
                  understands and accepts (a) the restrictions imposed by
                  Article V and Sections 5.01 and 5.02 and (b) the restrictions
                  imposed upon Employee pursuant to these sections are
                  reasonable and necessary for the protection of the property
                  rights of Employer and its affiliates.

         6.05 Headings. The headings or titles to Sections or Articles in this
Agreement are intended solely for convenience of the parties and no provision
of this Agreement is to be construed by reference to the heading or title of
any section.

         6.06 Amendment or Modification; Waiver. No provision of this Agreement
may be amended, modified or waived unless such amendment, modification or
waiver is authorized by the Employer and is agreed to in writing, signed by
Employee and by the Chief Executive Officer of Employer thereunto duly
authorized. Except as otherwise specifically provided in this Agreement, no
waiver by any party hereto of any breach by any other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or at any prior or subsequent time; nor shall the receipt or
acceptance of Employee's employment be deemed a waiver of any condition or
provision hereof. Employee acknowledges that from time to time, Employer may
establish, maintain and distribute employee manuals or handbooks or personnel
policy manuals, and officers or other representatives of Employer may make
written or oral statements relating to personnel policies or procedures. Such
manuals, handbooks and statements are intended only for general guidance. No
policies, procedures or statements of any nature by or on behalf of Employer
(whether written or oral, and whether or not contained in any employee manual
or handbook or personnel policy manual), and no acts or practices of any nature
shall be construed to modify this Agreement or to create express or implied
obligations of Employer.

         6.07. Assignability. Employee shall not assign, pledge or encumber any
interest in this Agreement or any part thereof without the express written
consent of Employer, this Agreement being personal to Employee. This Agreement
shall, however, inure to the benefit of Employee's estate, dependents,
beneficiaries and legal representatives. This Agreement shall not be assignable
by Employer without the written consent of Employee.

         6.8 Governing Law. THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND
DELIVERED IN THE STATE OF TEXAS, AND SHALL IN ALL RESPECTS BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS.

<PAGE>   8
         6.9 Severability. Each provision of this Agreement constitutes a
separate and distinct undertaking, covenant and/or provisions hereof. In the
event that any provisions of this Agreement shall finally be determined to be
unlawful, such provisions shall be deemed severed from this Agreement, but ever
other provision of this Agreement shall remain in full force and effect, and in
substitution for any such provision held unlawful, there shall be substituted a
provision of similar import reflecting the original intent of the parties
hereto to the maximum extent permissible under law.

         6.10 No Duress. Employee acknowledges that no force, fear or threats
or duress of any kind have been used to obtain the agreements and covenants
contained in this Agreement.

EXECUTED in Houston, Texas, on the day and year first above written.

                                            "EMPLOYER"
                                            First Sierra Financial, Inc.

                                            By: /s/ THOMAS J. DEPPING
                                                ----------------------------
                                                      Thomas J. Depping
                                                   Chief Executive Officer

                                            "EMPLOYEE"

                                                /s/ FRED VAN ETTEN
                                                ----------------------------
                                                       Fred Van Etten

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}]]