Document:

exv10w1

Exhibit 10.1

APACHE CORPORATION

2007 Omnibus Equity Compensation Plan

As amended and restated effective May 4, 2011

Section 1

Introduction

1.1 Establishment. Apache Corporation, a Delaware corporation (hereinafter referred
to, together with its Affiliates (as defined below) as the “Company” except where the context
otherwise requires), hereby establishes the Apache Corporation 2007 Omnibus Equity Compensation
Plan (the “Plan”).

1.2 Purpose. The purpose of the Plan is to provide Eligible Persons designated by the
Committee for participation in the Plan with equity-based incentives to: (i) encourage such
individuals to continue in the long-term service of the Company and its Affiliates, (ii) create in
such individuals a more direct interest in the future success of the operations of the Company,
(iii) attract outstanding individuals, and (iv) retain and motivate such individuals. The Plan is
intended to provide eligible individuals with the opportunity to invest in the Company, thereby
relating incentive compensation to increases in stockholder value and more closely aligning the
compensation of such individuals with the interests of the Company’s stockholders.

Accordingly, this Plan provides for the granting of Incentive Stock Options, Non-Qualified Stock
Options, Performance Awards, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights or
any combination of the foregoing, as the Committee determines is best suited to the circumstances
of the particular individual as provided herein.

1.3 Effective Date. The Effective Date of the Plan (the “Effective Date”) is May 2,
2007. This amendment and restatement is effective as of May 4, 2011.

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 subsections 3.1(h) and 3.4 hereof.

(b) “Affiliate” means any entity other than the Company that is affiliated with the
Company through stock or equity ownership or otherwise and is designated as an Affiliate for
purposes of the Plan by the Committee; provided, however, that, notwithstanding any
other provisions of the Plan to the contrary, for purposes of NQSOs

 

 

and SARs, if an individual who
otherwise qualifies as an Eligible Person provides services to such an entity and not to the
Company, such entity may only be designated an Affiliate if the Company qualifies as a “service
recipient,” within the meaning of Internal Revenue Code Section 409A, with respect to such
individual; provided further that such definition of “service recipient” shall be
determined by (a) applying Internal Revenue Code Section 1563(a)(1), (2), and (3), for purposes of
determining a controlled group of corporations under Internal Revenue Code Section 414(b), using
the language “at least 50 percent” instead of “at least 80 percent” each place it appears in
Internal Revenue Code Section 1563(a)(1), (2), and (3), and by applying Treasury Regulations
Section 1.414(c)-2, for purposes of determining trades or businesses (whether or not incorporated)
that are under common control for purposes of Internal Revenue Code Section 414(c), using the
language “at least 50 percent” instead of “at least 80 percent” each place it appears in Treasury
Regulations Section 1.414(c)-2, and (b) where the use of Shares with respect to the grant of an
Option or SAR to such an individual is based upon legitimate business criteria, by applying
Internal Revenue Code Section 1563(a)(1), (2), and (3), for purposes of determining a controlled
group of corporations under Internal Revenue Code Section 414(b), using the language “at least 20
percent” instead of “at least 80 percent” at each place it appears in Internal Revenue Code Section
1563(a)(1), (2), and (3), and by applying Treasury Regulations Section 1.414(c)-2, for purposes of
determining trades or businesses (whether or not incorporated) that are under common control for
purposes of Internal Revenue Code Section 414(c), using the language “at least 20 percent” instead
of “at least 80 percent” at each place it appears in Treasury Regulations Section 1.414(c)-2;
provided further that for purposes of ISOs, “Affiliate” shall mean any present or future
corporation which is or would be a “subsidiary corporation” of the Company as the term is defined
in Section 424(f) of the Internal Revenue Code.

(c) “Award” means any Stock Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award, Dividend Equivalent or any other stock-based award
granted to a Participant under the Plan.

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

(e) “Change of Control” shall have the meaning assigned to such term in the Company’s
Income Continuance Plan as in effect on the Effective Date.

(f) “Committee” means the Stock Option Plan Committee of the Board or such other
Committee of the Board that is empowered hereunder to administer the Plan. The Committee shall be
constituted at all times so as to permit the Plan to be administered by “non-employee directors”
(as defined in Rule 16b-3 of the Exchange Act) and “outside directors” (as defined in Treasury
Regulations Section 1.162-27 (e)(3)) and to satisfy such additional regulatory or listing
requirements as the Board may determine to be applicable or appropriate.

(g) “Deferred Delivery Plan” means the Company’s Deferred Delivery Plan, as it has been
or may be amended from time to time, or any successor plan.

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(h) “Dividend Equivalent” means a right, granted to an Eligible Person to receive cash,
Stock, other Awards or other property equal in value to dividends paid with respect to a specified
number of shares of Stock, or other periodic payments.

(i) “Eligible Persons” means those employees of the Company or of any Affiliates,
members of the Board, and members of the board of directors of any Affiliates who are designated as
Eligible Persons by the Committee. Notwithstanding the foregoing, grants of Incentive Stock
Options may not be granted to anyone who is not an employee of the Company or an Affiliate.

(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(k) “Exercise Date” means the date of exercise determined in accordance with subsection
6.2(g) hereof.

(l) “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;
provided further, however, that, with respect to ISOs, such Fair Market
Value shall be determined subject to Section 422(c)(7) of the Internal Revenue Code.

(m) “Incentive Stock Option” or “ISO” means any Option intended to be and
designated as an incentive stock option and which satisfies the requirements of Section 422 of the
Internal Revenue Code or any successor provision thereto.

(n) “Internal Revenue Code” means the Internal Revenue Code of 1986, as it may be
amended from time to time, and any successor thereto. Any reference to a section of the Internal
Revenue Code or Treasury Regulation shall be treated as a reference to any successor section.

(o) “Non-Qualified Stock Option” or “NQSO” means any Option that is not
intended to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code.

(p) “Option” means an option to purchase a number of shares of Stock granted pursuant
to subsection 6.1.

(q) “Option Price” means the price at which shares of Stock subject to an option may be
purchased, determined in accordance with subsection 6.2(b) hereof.

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(r) “Participant” means an Eligible Person designated by the Committee, from time to
time during the term of the Plan to receive one or more Awards under the Plan.

(s) “Performance Award” is a right to either a number of shares of Stock or SARs
(“Performance Shares”) determined (in either case) in accordance with subsection 9.1 of this Plan
based on the extent to which the applicable Performance Goals are achieved. A Performance Share
shall be of no value to a Participant unless and until earned in accordance with subsection 9.2
hereof.

(t) “Performance Goals” are the performance conditions, if any, established pursuant to
subsection 9.1 by the Committee in connection with an Award.

(u) “Performance Period” with respect to a Performance Award is a period not less than
one calendar year or one fiscal year of the Company, beginning not earlier than the year in which
such Performance Award is granted, which may be referred to herein and by the Committee by use of
the calendar of fiscal year in which a particular Performance Period commences.

(v) “Prior Plans” means the Company’s 2005 Stock Option Plan and the Executive
Restricted Stock Plan.

(w) “Restricted Stock” means Stock granted to an Eligible Person under Section 8
hereof, that is subject to certain restrictions and to a risk of forfeiture.

(x) “Restricted Stock Unit” means a right, granted to an Eligible Person under Section
8 hereof, to receive Stock, cash or a combination thereof at the end of a specified vesting period.

(y) “Restriction Period” shall have the meaning assigned to such term in subsection
8.1.

(z) “Stock” means the $0.625 par value common stock of the Company and or any security
into which such common stock is converted or exchanged upon merger, consolidation, or any capital
restructuring (within the meaning of Section 13) of the Company.

(aa) “Stock Appreciation Right” or “SAR” means a right granted to an Eligible
Person to receive an amount in cash, Stock, or other property equal to the excess of the Fair
Market Value as of the Exercise Date of one share of Stock over the SAR Price times the number of
shares of Stock to which the Stock Appreciation Right relates. Stock Appreciation Rights may be
granted in tandem with Options or other Awards or may be freestanding.

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(bb) “SAR Price” means the price at which the Stock Appreciation Right was granted,
which shall be determined in the same manner as the Option Price of an Option in accordance with
subsection 6.2 hereof.

(cc) “Involuntary Termination” means the termination of employment of the Participant by the
Company or its successor for any reason on or after a Change of Control; provided, that the
termination does not result from an act of the Participant that (i) constitutes common-law fraud, a
felony, or a gross malfeasance of duty, or (ii) is materially detrimental to the best interests of
the Company or its successor.

(dd) “Voluntary Termination with Cause” occurs upon a Participant’s separation from service of his
own volition and one or more of the following conditions occurs without the Participant’s consent
on or after a Change of Control:

(i) There is a material diminution in the Participant’s base compensation,
compared to his rate of base compensation on the date of the Change of Control.

(ii) There is a material diminution in the Participant’s authority, duties or
responsibilities.

(iii) There is a material diminution in the authority, duties or responsibilities
of the Participant’s supervisor, such as a requirement that the Participant (or his
supervisor) report to a corporate officer or employee instead of reporting directly
to the board of directors.

(iv) There is a material diminution in the budget over which the Participant
retains authority.

(v) There is a material change in the geographic location at which the Participant
must perform his service, including, for example the assignment of the Participant
to a regular workplace that is more than 50 miles from his regular workplace on the
date of the Change of Control.

The Participant must notify the Company of the existence of one or more adverse conditions
specified in clauses (i) through (v) above within 90 days of the initial existence of the adverse
condition. The notice must be provided in writing to Apache Corporation’s Senior Vice President,
Human Resources or her delegate. The notice may be provided by personal delivery or it may be sent
by email, inter-office mail, regular mail (whether or not certified), fax, or any similar method.
Apache Corporation’s Senior Vice President, Human Resources or her delegate shall acknowledge
receipt of the notice within 5 business days; the acknowledgement shall be sent to the Participant
by certified mail. Notwithstanding the foregoing provisions of this definition, if the Company
remedies the adverse condition within 30 days of being notified of the adverse condition, no
Voluntary Termination with Cause shall occur.

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

Section 3

Plan Administration

3.1 Administration by the Committee. The Plan shall be administered by the Committee.
In accordance with the provisions of the Plan, the Committee shall, in its sole discretion, adopt
rules and regulations for carrying out the purposes of the Plan, including, without limitation, the
authority to:

	 	(a)	 	Grant Awards;
	 
	 	(b)	 	Select the Eligible Persons and the time or times at which Awards shall be
granted;
	 
	 	(c)	 	Determine the type and number of Awards to be granted, the number of shares of Stock
to which an Award may relate and the terms, conditions, restrictions, and Performance
Goals relating to any Award;
	 
	 	(d)	 	Determine whether, to what extent, and under what circumstances an Award may be
settled, canceled, forfeited, exchanged, or surrendered;
	 
	 	(e)	 	Construe and interpret the Plan and any Award;
	 
	 	(f)	 	Prescribe, amend, and rescind rules and procedures relating to the Plan;
	 
	 	(g)	 	Determine the terms and provisions of agreements;
	 
	 	(h)	 	Appoint designees or agents (who need not be members of the Committee or employees of
the Company) to assist the Committee with the administration of the Plan; and
	 
	 	(i)	 	Make all other determinations deemed necessary or advisable for the administration of
the Plan.

3.2 The Committee shall, in its absolute discretion, and without amendment to the Plan, have
the power to accelerate, waive or modify, at any time, any term or condition of an Award that is
not mandatory under this Plan; provided, however, that the Committee shall not have any discretion
to accelerate, waive or modify any term or condition of an

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Award that is intended to qualify as
“performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code if
such discretion would cause the Award to not so qualify. In the event of a Change of Control, the
provisions of Section 12 hereof shall be mandatory and shall govern the vesting and exercisability
schedule of any Award granted hereunder.

3.3 No member of the Committee shall be liable for any action, omission, or determination made
in good faith. The Company shall indemnify (to the extent permitted under Delaware law) and hold
harmless each member of the Committee and each other director or employee of the Company to whom
any duty or power relating to the administration or interpretation of the Plan has been delegated
against any cost or expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such action, omission or determination
was taken or made by such member, director or employee in bad faith and without reasonable belief
that it was in the best interests of the Company. 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.

3.4 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 inconsistency.

3.5 Compliance with Section 162(m). Except as expressly otherwise stated in any
resolution of the Committee, 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. The Committee is authorized to take such additional action, if any, that
may be required to ensure that the Plan and any Award under the Plan satisfy the requirements of
Section 162(m), taking into account any regulations or other guidance issued by the Internal
Revenue Service.

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Section 4

Stock Subject to the Plan

4.1 Number of Shares. Subject to adjustments pursuant to Section 4.4 hereof, up to 15,000,000
shares of Stock, plus any shares of Stock available for issuance under the Prior Plans but not
underlying outstanding stock options or other awards under the Prior Plans or which shares are
allocable to any outstanding stock options or other awards under the Prior Plans to the extent such
stock options or other awards expire, are forfeited or otherwise terminate unexercised, are
authorized for issuance under the Plan in accordance with the Plan’s terms and subject to such
restrictions or other provisions as the Committee may from time to time deem necessary. Of such
total number of shares of Stock so authorized, not more than 10,000,000 may be designated for
Restricted Stock, Restricted Stock Units, and Performance Awards. During the duration of the Plan,
no Eligible Person may be granted Options which in the aggregate cover in excess of 10 percent of
the total shares of Stock authorized under the Plan. No Award may be granted under the Plan on or
after the 10-year anniversary of the Effective Date. The foregoing to the contrary
notwithstanding, the total number of shares of Stock that may be issued pursuant to ISOs granted
under the Plan shall be equal to 5,000,000, subject to adjustments pursuant to Section 4.4 hereof.

4.2 Availability of Shares Not Issued under Awards. If shares of Stock which may be
issued pursuant to the terms of the Plan awarded hereunder are forfeited, cancelled, exchanged or
surrendered or if an Award otherwise terminates or expires without a distribution of shares to the
holder of such Award, the shares of Stock with respect to such Award shall, to the extent of any
such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available
for Awards under the Plan.

4.3 Stock Offered. The Company shall at all times during the term of the Plan 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.

4.4 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 rights to acquire Stock, or through a Stock
split, reverse Stock split, subdivision, consolidation, combination, reclassification or
recapitalization involving the Stock (any of the foregoing being herein called a “capital
restructuring”), 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
number and kind of shares of Stock or other property (including cash) that may thereafter be issued
pursuant to subsections 4.1 and 4.10, (ii) the number and kind of shares of Stock or other property
(including cash) issued or issuable in respect of outstanding Awards; and (iii) the exercise price,
grant price, or

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purchase price relating to any Award; provided that, with respect to Incentive
Stock Options, such adjustment shall be made in accordance with Section 424(h) of the Internal
Revenue Code; (iv) the Performance Goals, and (v) the individual limitations applicable to Awards.

4.5 Other Changes in Stock. In the event there shall be any change, other than as
specified in subsections 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 Awards or which have
been reserved for issuance pursuant to the Plan but are not then subject to an Award, then such
adjustments shall be made by the Committee and shall be effective for all purposes of the Plan and
on each outstanding Award 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
an outstanding Award 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 as if the Participant had exercised his entire Option
immediately prior to the grant of 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.

4.9 Code Section 409A. For any Award that is not subject to Internal Revenue Code
Section 409A before the adjustments identified in the preceding sections of this Section 4, no
adjustment shall be made that would cause the Award to become subject to Internal Revenue Code
Section 409A. For an Award that is subject to Internal Revenue Code Section 409A before the
adjustments identified in the preceding sections of this Section

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4, no adjustment shall cause the
Award to violate Internal Revenue Code Section 409A, without the prior written consent of both the
Participant and the Committee.

4.10 Award Limits. The following limits shall apply to grants of all Awards under
the Plan:

     (a) Options: The maximum aggregate number of shares of Stock that may be
subject to Options granted in any calendar year to any one Participant shall be 250,000
shares.

     (b) SARs: The maximum aggregate number of shares that may be subject to Stock
Appreciation Rights granted in any calendar year to any one Participant shall be 250,000
shares. Any shares covered by Options which include tandem SARs granted to one Participant
in any calendar year shall reduce this limit on the number of shares subject to SARs that
can be granted to such Participant in such calendar year.

     (c) Restricted Stock or Restricted Stock Units: The maximum aggregate number
of shares of Stock that may be subject to Awards of Restricted Stock or Restricted Stock
Units granted in any calendar year to any one Participant shall be 250,000 shares.

     (d) Performance Awards: The maximum aggregate grant with respect to
Performance Awards granted in any calendar year to any one Participant shall be 250,000
shares (or SARs based on the value of such number of shares).

To the extent required by Section 162(m) of the Code, shares subject to Options or SARs which are
canceled shall continue to be counted against the limits set forth in paragraphs (a) and (b)
immediately preceding.

Section 5

Granting of Awards to Participants

5.1 Participation. Participants in the Plan shall be those Eligible Persons 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
Affiliate, 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 Awards; provided, however, that the grant of each such Award shall be
separately approved by the Committee, and receipt of one such Award shall not result in automatic
receipt of any other Award. Upon determination by the Committee that an Award is to be granted to
a Participant, as soon as practicable, 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

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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. Awards 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.

Awards granted to members of the Board shall be recommended to the full Board by the Management
Development and Compensation Committee and approved by the full Board.

5.2 Notification to Participants and Delivery of Documents. As soon as practicable
after such determinations have been made, each Participant shall be notified of (a) his/her
designation as a Participant, (b) the date of grant, (c) the number and type of Awards granted to
the Participant, (d) in the case of Performance Awards, the Performance Period and Performance
Goals, (e) in the case of Restricted Stock or Restricted Stock Units, the Restriction Period (as
defined in subsection 8.1), and (f) any other terms or conditions imposed by the Committee with
respect to the Award.

5.3 Delivery of Award Agreement. This requirement for delivery of a written Award
agreement is satisfied by electronic delivery of such agreement provided that evidence of the
Participant’s receipt of such electronic delivery is available to the Company and such delivery is
not prohibited by applicable laws and regulations.

Section 6

Stock Options

6.1 Grant of Stock Options. Coincident with or following designation for participation
in the Plan, an Eligible Person 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 6.2(j) hereof.

6.2 Stock Option Agreements. Each Option granted under the Plan shall be identified as
either an Incentive Stock Option or a Non-Qualified Stock Option (or, if no such identification is
made, then it shall be a Non-Qualified Stock Option) and evidenced by a written agreement which
shall be entered into by the Company and the Participant to whom the Option is granted, and which
shall contain the following terms and conditions set out in this subsection 6.2, as well as such
other terms and conditions, not inconsistent therewith, as the Committee may consider appropriate.

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     (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, the Option Price, shall be determined in each case by the Committee and set forth in the
Stock Option agreement. The price may vary according to a formula specified in the Stock Option
agreement, but in no event shall the Option Price ever be less than the Fair Market Value of the
Stock on the date the Option is granted.

     (c) No Backdating. There shall be no backdating of Options, and each Option shall
be dated the actual date that the Committee adopts the resolution awarding the grant of such
Option.

     (d) Limitations on Incentive Stock Options. No Incentive Stock Option may be
granted to an individual if, at the time of the proposed grant, such individual owns (or is
attributed to own by virtue of the Internal Revenue Code) Stock possessing more than 10 percent of
the total combined voting power of all classes of stock of the Company or any Affiliate unless (i)
the exercise price of such Incentive Stock Option is at least 110 percent of the Fair Market Value
of a share of Stock at the time such Incentive Stock Option is granted and (ii) such Incentive
Stock Option is not exercisable after the expiration of five years from the date such Incentive
Stock Option is granted.

     To the extent that the aggregate Fair Market Value of Stock of the Company with respect to
which Incentive Stock Options are exercisable for the first time by a Participant during any
calendar year under the Plan and any other option plan of the Company (or any Affiliate) shall
exceed $100,000, such Options shall be treated as Non-Qualified Stock Options. Such Fair Market
Value shall be determined as of the date on which each such Incentive Stock Option is granted.

     (e) Duration of Options. 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.

     (f) Termination of Options. During the lifetime of a Participant to whom a Stock
Option is granted, the Stock Option may be exercised only by such Participant or, in the case of
disability (as determined pursuant to the Company’s Long-Term Disability Plan or any successor
plan) by the Participant’s designated legal representative, except to the extent such exercise
would cause any Award intended to qualify as an ISO not to so qualify. Once a
Participant to whom a Stock Option was granted dies, the Stock Option may be exercised only by the
personal representative of the Participant’s estate or, with respect to Stock Options that are not
Incentive Stock Options, as otherwise provided in Section 14.2. Unless the Stock Option agreement
shall specify a longer or shorter period, at the discretion of the Committee, then the Participant
(or representative, or, if applicable pursuant to Section 14.2, designated beneficiary) may
exercise the Stock

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Option for a period of up to three months after such Participant terminates
employment or ceases to be a member of the Board.

     (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 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 Participant’s obligation to deliver written notice of
exercise is satisfied by electronic delivery of such notice through means satisfactory to the
Committee and prescribed by the Company. 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 6.2(g)(iv)(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 any
Stock so purchased in any manner that is in violation of the Exchange Act 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
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 subsection 6.2(g)(iv) 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 either (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 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, to which the Participant is entitled as a result of the Option
exercise.

          (iii) The Company’s obligation to deliver the shares of Stock to which the Participant is
entitled as a result of the exercise of the Option shall be subject to the payment in full to the
Company of the aggregate Option Price and the required tax withholding.

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

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               (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 equal to 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, 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 used for this purpose 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 subsection 6.2(g)(iv)(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.

     (h) 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 not less than the minimum amount of tax withholding required by law, including without
limitation Sections 3102 and 3402 or any successor section(s) of the Internal Revenue Code and
applicable state and local income and other tax laws, by payment of such taxes in cash (including
wire transfer), by check, or as provided in Section 11 hereof.

     (i) Repricing Prohibited. Subject to Sections 4, 6, 12, 13, and 16, outstanding
Stock Options granted under this Plan shall not be repriced without approval by the Company’s
stockholders. In particular, neither the Board nor the Committee may take any action: (1) to
amend the terms of an outstanding Option or SAR to reduce the Option Price or grant price thereof,
cancel an Option or SAR and replace it with a new Option or SAR with a lower Option Price or grant
price, or that has an economic effect that is the same as any such reduction or cancellation or (2)
to cancel an outstanding Option or SAR having an Option Price or grant price above the then-current
Fair Market Value of the Stock in exchange for the grant of another type of Award, without, in each
such case, first obtaining approval of the stockholders of the Company of such action.

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     (j) 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.

     (k) Section 409A Avoidance. Once granted, no Stock Option shall be modified,
extended, or renewed in any way that would cause the Stock Option to be subject to Internal Revenue
Code Section 409A. The Option Period shall not be extended to any date that would cause the Stock
Option to become subject to Internal Revenue Code Section 409A. The Option Price shall not be
adjusted to reflect any dividends declared and paid on the Stock between the date of grant and the
date the Stock Option is exercised; however, the right to one or more dividends declared and paid
on the Stock between the date of grant and the date the Option is exercised may be set forth in a
separate arrangement.

Section 7

7.1 Stock Appreciation Rights. The Committee is authorized to grant SARs to
Participants either alone (“freestanding”) or in tandem with other Awards, including Performance
Awards, Options, and Restricted Stock. Stock Appreciation Rights granted in tandem with any Award
must be granted at the same time as the Award is granted. Stock Appreciation Rights granted in
tandem with Options shall terminate and no longer be exercisable upon the termination or exercise
of the related Stock Options Options granted in tandem with Stock Appreciation Rights shall
terminate and no longer be exercisable upon the termination or exercise of the related Stock
Appreciation Rights. The Committee shall establish the terms and conditions applicable to any
Stock Appreciation Rights, which terms and conditions need not be uniform but may not be
inconsistent with the terms of the Plan. Freestanding Stock Appreciation Rights shall generally be
subject to terms and conditions substantially similar to those described in Section 4 and
subsection 6.2 for Options, including, but not limited to, the requirements of subsections 6.2(b),
(d), and (i) and subsection 4.7 regarding general adjustment rules, minimum price, duration, and
prohibition on repricing.

7.2 Section 409A Avoidance. The SAR Price may be fixed on the date it is granted or
the SAR Price may vary according to an objective formula specified by the Committee at the time of
grant. However, the SAR Price can never be less than the Fair Market Value of the Stock on the
date of grant. The SAR grant must specify the number of shares to which it applies, which must be
fixed at the date of grant (subject to adjustment pursuant to Sections 4, 6, and 11). Once
granted, no SAR shall be modified, extended, or renewed in any way that would cause the SAR to be
subject to Internal Revenue Code Section 409A. The period during which the SAR may be exercised
shall not be extended to any date that would cause the SAR to become subject to Internal Revenue
Code Section 409A. The value of the SAR shall not be adjusted to reflect any dividends

15

 

declared
and paid on the Stock between the date of grant and the date the SAR is exercised; however, the
right to one or more dividends declared and paid on the Stock between the date of grant and the
date the SAR is exercised may be set forth in a separate arrangement.

Section 8

Restricted Stock and Restricted Stock Units

8.1 Restriction Period. At the time an Award of Restricted Stock or Restricted Stock
Units is made, the Committee shall establish the terms and conditions applicable to such Award,
including the period of time (the “Restriction Period”) and attainment of performance goals during
which certain restrictions established by the Committee shall apply to the Award. Each such Award,
and designated portions of the same Award, may have a different Restriction Period, at the
discretion of the Committee. Except as permitted or pursuant to Sections 12 and 13 hereof, the
Restriction Period applicable to a particular Award shall not be changed. Restricted Stock or
Restricted Stock Units may or may not be subject to Internal Revenue Code Section 409A. If they
are subject to Internal Revenue Code Section 409A, the grant of the Restricted Stock or Restricted
Stock Units must contain the provisions needed to comply with the requirements of Internal Revenue
Code Section 409A, including but not limited to (i) the timing of any election to defer receipt of
the Restricted Stock or Restricted Stock Units beyond the date of vesting, (ii) the timing of any
payout election, and (iii) the timing of the settlement of Restricted Stock or a Restricted Stock
Unit. Restricted Stock or Restricted Stock Units that are subject to Internal Revenue Code Section
409A may be adjusted to reflect any dividends declared and paid on the Stock between the date of
grant and the date the Restricted Stock or Restricted Stock Unit vests, but only to the extent
permitted in IRS guidance of general applicability.

8.2 Certificates for Stock. Restricted Stock shall be evidenced in such manner as the
Committee shall determine. If certificates representing Restricted Stock are registered in the
name of the Participant, the Committee may require that such certificates bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock,
that the Company retain physical possession of the certificates, and that the Participant deliver a
stock power to the Company, endorsed in blank, relating to the Restricted Stock represented by a
stock certificate registered in the name of the Participant.

	8.3	 	Restricted Stock Terms and Conditions. Participants shall have the right to enjoy
all shareholder rights during the Restriction Period except that:

	 	(a)	 	The Participant shall not be entitled to delivery of the Stock certificate until the
Restriction Period shall have expired.
	 
	 	(b)	 	The Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of the Stock during the Restriction Period.

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	 	(c)	 	A breach of the terms and conditions established by the Committee with respect to the
Restricted Stock shall cause a forfeiture of the Restricted Stock and any dividends
withheld thereon.
	 
	 	(d)	 	Dividends and Splits. As a condition to the grant of an Award of Restricted Stock,
the Committee may specify whether any cash dividends paid on a share of Restricted Stock
be automatically reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under this Plan. Unless otherwise determined by the
Committee, Stock distributed in connection with a Stock split or Stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Stock with respect to which such Stock or
other property has been distributed.

8.4 Restricted Stock Units. The Committee is authorized to grant Restricted Stock
Units to Participants, which are rights to receive Stock at the end of a specified deferral period,
subject to the following terms and conditions:

Award and Restrictions. Settlement of an Award of Restricted Stock Units shall occur upon
expiration of the deferral period specified for such Restricted Stock Unit by the Committee
(or, if permitted by the Committee, as elected by the Participant). In addition, Restricted
Stock Units shall be subject to such restrictions (which may include a risk of forfeiture) as
the Committee may impose, if any, which restrictions may lapse at the expiration of the
deferral period or at earlier specified times (including based on achievement of performance
goals and/or future service requirements), separately or in combination, in installments or
otherwise, as the Committee may determine. Restricted Stock Units shall be satisfied by the
delivery of cash or Stock in the amount equal to the Fair Market Value of the specified number
of shares of Stock covered by the Restricted Stock Units, or a combination thereof, as
determined by the Committee at the date of grant or thereafter.

8.5 Deferral of Receipt of Restricted Stock Units. With the consent of the Committee,
a Participant who has been granted a Restricted Stock Unit may by compliance with the then
applicable procedures under the Plan irrevocably elect in writing to defer receipt of all or any
part of any distribution associated with that Restricted Stock Unit Award in accordance with either
the terms and conditions of the Deferred Delivery Plan or the terms and conditions specified under
the grant agreement and related documents. The terms and conditions of any such deferral,
including, but not limited to, the period of time for, and form of, election; the manner and method
of payout; and the use and form of Dividend Equivalents in respect of stock-based units resulting
from such deferral, shall be as determined by the Committee. The Committee may, at any time and
from time to time, but prospectively only except as hereinafter provided, amend, modify, change,
suspend, or cancel any and all of the rights, procedures, mechanics, and timing parameters relating
to such deferrals. In addition, the Committee may, in its sole discretion, accelerate the pay out
of such deferrals (and any earnings thereon), or any portion thereof, either in a lump sum or in a
series of payments,

17

 

but only to the extent that the payment or the change in timing of the payment
will not cause a violation of Internal Revenue Code Section 409A.

8.6 Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to
grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations to pay cash or
deliver other property under this Plan or under plans or compensatory arrangements, provided that,
in the case of Participants subject to Section 16 of the Exchange Act, the amount of such grants
remains within the discretion of the Committee to the extent necessary to ensure that acquisitions
of Stock or other Awards are exempt from liability under Section 16(b) of the Exchange Act. Stock
or Awards granted hereunder shall be subject to such other terms as shall be determined by the
Committee. In the case of any grant of Stock to an officer of the Company or an Affiliate in lieu
of salary or other cash compensation, the number of shares granted in place of such compensation
shall be reasonable, as determined by the Committee.

8.7 Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to
a Participant, entitling the Participant to receive cash, Stock, other Awards, or other property
equal in value to dividends paid with respect to a specified number of shares of Stock, or other
periodic payments. Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award. The Committee may provide that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or
other investment vehicles, and subject to risk of forfeiture, as the Committee may specify.

Section 9

Performance Awards

9.1 Establishment of Performance Goals for Company. Performance Goals applicable to a
Performance Award shall be established by the Committee in its absolute discretion on or before the
date of grant and within the time period prescribed by, and shall otherwise comply with the
requirements of, Code Section 162(m)(4)(C), or any successor provision thereto, and the regulations
thereunder, for performance-based compensation. Such Performance Goals may include or be based
upon any of the following criteria, either in absolute amount, per share, or per barrel of oil
equivalent (boe): pretax income or after tax income, operating profit, return on equity, capital
or investment, earnings, book value, increase in cash flow return, sales or revenues, operating
expenses (including, but not limited to, lease operating expenses, severance taxes and other
production taxes, gathering and transportation, general and administrative costs, and other
components of operating expenses), stock price appreciation, implementation or completion of
critical projects or processes, production growth, reserve growth, and/or corporate acquisition
goals based on value of assets acquired or similar objective measures.

18

 

Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of
a particular criteria or attaining a percentage increase or decrease in a particular criteria, and
may be applied relative to internal goals or levels attained in prior years or related to other
companies or indices or as ratios expressing relationship between Performance Goals, or any
combination thereof, as determined by the Committee.

The Performance Goals may include a threshold level of performance below which no vesting will
occur, levels of performance at which specified vesting will occur, and a maximum level of
performance at which full vesting will occur.

The Committee may in its discretion classify Participants into as many groups as it determines, and
as to any Participant relate his/her Performance Goals partially, or entirely, to the measured
performance, either absolutely or relatively, of an identified subsidiary, division, operating
company, test strategy, or new venture of the Company and/or its Affiliates.

Notwithstanding any other provision of the Plan, payment or vesting of any Performance Award shall
not be made until the applicable Performance Goals have been satisfied and any other material terms
of such Award were in fact satisfied. The Committee shall certify in writing the attainment of
each Performance Goal. Notwithstanding any provision of the Plan to the contrary, with respect to
any Performance Award, (a) the Committee may not adjust, downwards or upwards, any amount payable,
or other benefits granted, issued, retained, and/or vested pursuant to such an Award on account of
satisfaction of the applicable Performance Goals and (b) the Committee may not waive the
achievement of the applicable Performance Goals, except in the case of the Participant’s death or
disability, or a Change of Control.

9.2 Levels of Performance Required to Earn Performance Awards. At or about the same
time that Performance Goals are established for a specific period, the Committee shall in its
absolute discretion establish the percentage of the Performance Awards granted for such Performance
Period which shall be earned by the Participant for various levels of performance measured in
relation to achievement of Performance Goals for such Performance Period.

9.3 Other Restrictions. The Committee shall determine the terms and conditions
applicable to any Performance Award, which may include restrictions on the delivery of Stock
payable in connection with the Performance Award and restrictions that could result in the future
forfeiture of all or part of any Stock earned. The Committee may provide that shares of Stock
issued in connection with a Performance Award be held in escrow and/or legended. Performance
Awards may or may not be subject to Internal Revenue Code Section 409A. If a Performance Award is
subject to Internal Revenue Code Section 409A, the Performance Award grant agreement shall contain
the terms and conditions needed to comply with the requirements of Internal Revenue Code Section
409A, including but not limited to (i) the timing of any election to defer receipt of the
Performance Award, (ii) the timing of any payout election, and (iii) the timing of the actual
payment of the Performance Award. Performance Awards that are subject to

19

 

Internal Revenue Code
Section 409A may be adjusted to reflect any dividends declared and paid on the Stock between the
date of grant and the date the Performance Award is paid, but only to the extent permitted in IRS
guidance of general applicability.

9.4 Notification to Participants. Promptly after the Committee has established the
Performance Goals with respect to a Performance Award, the Participant shall be provided with
written notice of the Performance Goals so established.

9.5 Measurement of Performance against Performance Goals. The Committee shall, as soon
as practicable after the close of a Performance Period, determine (a) the extent to which the
Performance Goals for such Performance Period have been achieved and (b) the percentage of the
Performance Awards earned as a result.

These determinations shall be absolute and final as to the facts and conclusions therein made and
be binding on all parties. Promptly after the Committee has made the foregoing determination, each
Participant who has earned Performance Awards shall be notified. For all purposes of this Plan,
notice shall be deemed to have been given the date action is taken by the Committee making the
determination. Participants may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of all or any portion of their Performance Awards during the Performance Period.

9.6 Treatment of Performance Awards Earned. Upon the Committee’s determination that a
percentage of any Performance Award has been earned for a Performance Period, Participants to whom
such earned Performance Awards have been granted and who have been in the employ of the Company or
Affiliates continuously from the date of grant until the end of the Performance Period, subject to
the exceptions set forth in the Performance Award agreement and in Sections 10 and 12 hereof, shall
be entitled, subject to the other conditions of this Plan, to payment in accordance with the terms
and conditions of the Performance Awards. Performance Awards shall under no circumstances become
earned or have any value whatsoever for any Participant who is not in the employ of the Company or
its Affiliates continuously during the entire Performance Period for which such Performance Award
was granted, except as provided in Sections 10 and 12.

9.7 Subsequent Performance Award Grants. Following the grant of Performance Awards
with respect to a Performance Period, additional Participants may be designated by the Committee
for grant of Performance Awards for such Performance Period subject to the same terms and
conditions set forth for the initial grants, except that the Committee, in its sole discretion, may
reduce the value of the amounts to which subsequent Participants may become entitled, prorated
according to reduced time spent during the Performance Period, and the applicable Performance Award
agreement shall be modified to reflect such reduction.

9.8 Stockholder Privileges. No Participant shall have any rights as a stockholder with
respect to any shares of Stock covered by a Performance Award until the Participant becomes the
holder of record of such Stock.

20

 

Section 10

Termination of Employment, Death, Disability, etc.

10.1 Termination of Employment. Except as provided herein, the treatment of an Award
upon a termination of employment or any other service relationship by and between a Participant and
the Company or an Affiliate shall be specified in the agreement controlling such Award.

10.2 Termination for Cause. If the employment of the Participant by the Company is
terminated for cause, as determined by the Committee, all Awards to such Participant shall
thereafter be void for all purposes. As used in subsections 9.1, 10.2, and 10.3 hereof, “cause”
shall mean a gross violation, as determined by the Committee, of the Company’s established policies
and procedures, provided that the effect of this subsection 10.2 shall be limited to determining
the consequences of a termination and that nothing in this subsection 10.2 shall restrict or
otherwise interfere with the Company’s discretion with respect to the termination of any employee.

10.3 Performance Awards. Except as set forth below, each Performance Award shall state
that each such Award shall be subject to the condition that the Participant has remained an
Eligible Person from the date of grant until the applicable vesting date as follows:

     (a) If the Participant voluntarily leaves the employment of the Company or an Affiliates,
or if the employment of the Participant is terminated by the Company for cause or otherwise, any
Performance Award to such Participant not previously vested shall thereafter be void and forfeited
for all purposes.

     (b) A Participant shall become vested in all Performance Awards that have met the
Performance Goals within the Performance Period on the date the Participant retires from employment
with the Company on or after attaining retirement age (which for all purposes of this Plan is
determined to be age 65, unless otherwise designated by the Committee at the time the Award is
granted), on the date the Participant dies while employed by the Company, or on the date the
Participant terminates service with the Company and the Affiliates due to permanent disability (as
determined pursuant to the Company’s Long-Term Disability Plan or any successor plan, unless the
Performance award is subject to Internal Revenue Code Section 409A, in which case “permanent
disability” must also fall within the meaning specified in Internal Revenue Code Section
409A(a)(2)(C) or a more restrictive meaning established by the Committee) while employed by the
Company. Such Participant shall not become entitled to any payment which may arise due to the
occurrence of a Performance Goal after the Participant dies, terminates service due to permanent
disability, or retires. Payment shall occur as soon as administratively convenient following the
date the Participant dies, terminates service due to permanent disability, or retires, but in no
event shall the payment occur later than March 15 in the calendar year immediately following the
calendar year in which the

21

 

Participant died, so terminates service, or retired. If the Participant
dies before receiving payment, the payment shall be made to those entitled pursuant to Section 14.2
of this Plan.

10.4 Forfeiture Provisions. Subject to Sections 12 and 14, in the event a Participant
terminates employment during a Restriction Period for the Participant’s Restricted Stock or
Restricted Stock Units, such Awards will be forfeited; provided, however, that the Committee may
provide for proration or full payout in the event of (a) death, (b) permanent disability, or (c)
any other circumstances the Committee may determine.

Section 11

Tax Withholding

11.1 Withholding Requirement. The Company and any Affiliate is authorized to withhold
from any Award granted, or any payment relating to an Award under this Plan, including from a
distribution of Stock, amounts of withholding and other taxes or social security payments due or
potentially payable in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax or social security obligations
relating to any Award. This authority shall include authority to withhold or receive Stock or
other property and to make cash payments in respect thereof, in satisfaction of a Participant’s tax
obligations, either on a mandatory or elective basis at the discretion of the Committee.

11.2 Withholding Requirement – Stock Options and SARs. The Company’s obligations to
deliver shares of Stock upon the exercise of an Option or SAR shall be subject to the Participant’s
satisfaction of all applicable federal, state, and local income and other tax and social security
withholding requirements.

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, 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 have been owned by the
Participant for a period of at least six months; or

22

 

(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 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.

11.3 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 Exchange Act (“Section
16”), the Participant must satisfy the requirements of Section 16 and any applicable rules and
regulations thereunder with respect to the use of shares of Stock to satisfy such tax withholding
obligation.

11.4 Restricted Stock and Performance Award Payment and Tax Withholding. Each
Restricted Stock and Performance Award agreement shall provide that, upon payment of any
entitlement under such an Award, the Participant shall make appropriate arrangements with the
Company to provide for the amount of minimum tax and social security withholding required by law,
including without limitation Sections 3102 and 3402 or any successor section(s) of the Internal
Revenue Code and applicable state and local income and other tax and social security laws. The
withholding may be deducted from the Award. Any payment under such an Award shall be made in a
proportion of cash and shares of Stock, determined by the Committee, such that the cash portion
shall be sufficient to cover the withholding amount required by this Section. The cash portion of
any payment shall be based on the Fair Market Value of the shares of Stock on the applicable date
of vesting to which such tax withholding relates. Such cash portion shall be withheld by the
Company to satisfy applicable tax and social security withholding requirements.

Section 12

Change of Control

12.1 In General. In the event of the occurrence of a Change of Control of the Company:

(a) Without further action by the Committee or the Board,

(i) all outstanding Options granted on or prior to December 31, 2009 shall
automatically vest so as to make all such Options fully vested and exercisable as
of the date of such Change of Control;

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(ii) all outstanding Options granted on or after January 1, 2010 shall fully
vest upon the Participant’s Involuntary Termination or Voluntary Termination with
Cause occurring on or after a Change of Control. Such newly vested Options shall
be fully exercisable as of the date of the Involuntary Termination or Voluntary
Termination with Cause on or after a Change of Control occurs.

(b) Without further action by the Committee or the Board,

(i) all unvested Restricted Stock Awards and Restricted Stock Units granted on or
prior to December 31, 2009 shall automatically vest. Such newly vested Restricted
Stock Units shall be converted to Stock and the Participant shall be issued the
requisite number of shares, after any withholding under Section 11, as soon as
administratively practicable after the Change of Control occurs, unless the
Participant had elected to defer Restricted Stock Units to the Deferred Delivery
Plan in which case the Participant’s account in the Deferred Delivery Plan shall be
credited with deferred Restricted Stock Units as of the date of the Change of
Control;

(ii) all unvested Restricted Stock Awards and Restricted Stock Units granted on or
after January 1, 2010 shall fully vest upon the Participant’s Involuntary
Termination or Voluntary Termination with Cause occurring on or after a Change of
Control. Such newly vested Restricted Stock Units shall be converted to Stock and
the Participant shall be issued the requisite number of shares, after any
withholding under Section 11, as soon as administratively practicable after the
Involuntary Termination or Voluntary Termination with Cause on or after a Change of
Control occurs, unless the Participant had elected to defer Restricted Stock Units
to the Deferred Delivery Plan in which case the Participant’s account in the
Deferred Delivery Plan shall be credited with deferred Restricted Stock Units as of
the date of the Involuntary Termination or Voluntary Termination with Cause on or
after the Change of Control occurs.

(c) Assuming the achievement of a Performance Goal, the entitlement to receive cash and
Stock under any outstanding Performance Award grants shall vest automatically, without
further action by the Committee or the Board, and shall become payable as follows:

(i) For Performance Awards granted on or prior to December 31, 2009, if such
Change of Control occurs subsequent to the achievement of a Performance Goal, any
remainder of such payout amount shall vest as of the date of such Change of Control
and shall be paid by the Company to the Participant within thirty (30) days of the
date of such Change of Control in the manner set out in subsection 12.1 hereof.

24

 

(ii) For Performance Awards granted on or prior to December 31, 2009, if the
achievement of a Performance Goal occurs subsequent to the date of a Change of
Control, the applicable payout amount shall vest in full for which the Performance
Period has not yet ended and shall be paid by the Company to the Participant within
thirty (30) days after the Performance Goal is reached. The payment will occur
only if the Participant is employed at the time that the Performance Goal is
reached or if the Performance Goal is reached after the Participant was terminated
for any reason (or without reason) after the Change of Control.

(iii) For Performance Awards granted on or after January 1, 2010, if such Change of
Control occurs subsequent to the achievement of a Performance Goal, any remainder
of such payout amount shall vest as of the date of the Participant’s Involuntary
Termination or Voluntary Termination with Cause occurring on or after the date of
such Change of Control and shall be paid by the Company to the Participant within
thirty (30) days of the date of such Involuntary Termination or Voluntary
Termination with Cause which occurs on or after the date of the Change of Control
in the manner set out in subsection 12.1 hereof.

(iv) For Performance Awards granted on or after January 1, 2010, if the
achievement of a Performance Goal occurs subsequent to the date of a Change of
Control, the applicable payout amount shall vest in full for which the Performance
Period has not yet ended as of the date of the Participant’s Involuntary
Termination or Voluntary Termination with Cause occurring on or after such Change
of Control and shall be paid by the Company to the Participant within thirty (30)
days after the later of (1) the date of the Participant’s Involuntary Termination
or Voluntary Termination with Cause or (2) the date that the Performance Goal is
reached. The payment will occur only if the Participant is employed at the time
that the Performance Goal is reached or if the Performance Goal is reached after
the Participant’s Involuntary Termination or Voluntary Termination with Cause
occurring on or after the Change of Control.

(d) To the extent that any Award is subject to Internal Revenue Code Section 409A, the
Award shall contain appropriate provisions to comply with Internal Revenue Code Section
409A, which shall supersede the provisions of subsections (a), (b), and (c).

Section 13

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

25

 

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, then the Committee, or the board of
directors of any corporation assuming the obligations of the Company, shall, as to the Plan and
outstanding Awards make appropriate provision for the adoption and continuation of the Plan by the
acquiring or successor corporation and for the protection of any holders of such outstanding Awards
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. Additionally, upon the occurrence of such an event and provided that a Performance Goal has
occurred, upon written notice to the Participants, the Committee may accelerate the vesting and
payment dates of the entitlement to receive cash and Stock under outstanding Awards so that all
such existing entitlements are paid prior to any such event. If a Performance Goal has not yet
been attained, the Committee in its discretion may make equitable payment or adjustment.

In its discretion, and on such terms and conditions as it deems appropriate, the Committee may
provide, either by the terms of an agreement applicable to any Award or by resolution adopted prior
to the occurrence of a Change of Control or an event described in this Section 13, that any
outstanding Award (or portion thereof) shall be converted into a right to receive cash, on or as
soon as practicable following the closing date or expiration date of the transaction resulting in
the Change of Control or such event in an amount equal to the highest value of the consideration to
be received in connection with such transaction for one share of Stock, or, if higher, the highest
Fair Market Value of a share of Stock during the thirty (30) consecutive business days immediately
prior to the closing date or expiration date of such transaction, less the per-share Option Price
or grant price of SARs, as applicable to the Award, multiplied by the number of shares subject to
such Award, or the applicable portion thereof.

Section 14

Rights of Employees and Participants

14.1 Employment. Neither anything contained in the Plan or any agreement nor the
granting of any Award 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 Affiliate, or interfere in any way
with the right of the Company or any Affiliate, 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 Award.

An Eligible Person who has been granted an Award in one year shall not necessarily be entitled to
be granted Awards in subsequent years.

14.2 Non-transferability. Except as otherwise determined at any time by the Committee
as to any Awards other than ISOs, no right or interest of any Participant in an Award granted
pursuant to the Plan shall be assignable or transferable during the lifetime

26

 

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, bankruptcy, or
court order; provided that the Committee may permit further transferability of Awards other
than ISOs, on a general or a specific basis, and may impose conditions and limitations on any
permitted transferability, subject to any applicable Restriction Period; provided
further, however, that no Award may be transferred for value or other consideration
without first obtaining approval thereof by the stockholders of the Company. In the event of a
Participant’s death, a Participant’s rights and interests in any Award as set forth in an Award
agreement, shall be transferable by testamentary will or the laws of descent and distribution, or
with respect to Awards other than Incentive Stock Options, a beneficiary designation that is in a
form approved by the Committee and in compliance with the provisions of this Plan, applicable law,
and the applicable Award agreement, and payment of any entitlements due under the Plan shall be
made to the Participant’s designated beneficiary, legal representatives, heirs, or legatees, as
applicable. If in the opinion of the Committee a person entitled to payments or to exercise rights
with respect to the Plan is disabled from caring for his or her affairs because of mental
condition, physical condition, or age, payment due such person may be made to, and such rights
shall be exercised by, such person’s guardian, conservator, or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the Committee of such status. If any
individual entitled to payment or to exercise rights with respect to the Plan is a minor, the
Committee shall cause the payment to be made to (or the right to be exercised by) the custodian or
representative who, under the state law of the minor’s domicile, is authorized to act on behalf of
the minor or is authorized to receive funds on behalf of the minor. With respect to those Awards,
if any, that are permitted to be transferred to another individual, references in the Plan to
exercise or payment related to such Awards by or to the Participant shall be deemed to include, as
determined by the Committee, the Participant’s permitted transferee. A Participant’s unexercised
Option or SAR, or amounts due but remaining unpaid to such Participant, at the Participant’s death,
shall be exercised or paid as designated by the Participant by will or by the laws of descent and
distribution, or, with respect to any unexercised Option or SAR other than an Incentive Stock
Option, in accordance with the Participant’s beneficiary designation in a form approved by the
Committee and in compliance with the provisions of this Plan, applicable law and the applicable
Award agreement. In the event any Award is exercised by or otherwise paid to the executors,
administrators, heirs or distributees of the estate of a deceased Participant, or the transferee of
an Award, in any such case, pursuant to the terms and conditions of the Plan and the applicable
Award agreement and in accordance with such terms and conditions as may be specified from time to
time by the Committee, the Company shall be under no obligation to issue shares of Stock thereunder
unless and until the Company is satisfied, as determined in the discretion of the Committee, that
the person or persons exercising such Award, or to receive such payment, are the duly appointed
legal representative of the deceased Participant’s estate or the proper legatees or distributees
thereof, or the valid transferee or designated beneficiary of such Award, as applicable. Any
purported assignment, transfer or encumbrance of an Award that does not comply with this Section
14.2 shall be void and unenforceable against the Company.

27

 

14.3 Noncompliance with Internal Revenue Code Section 409A. If an Award is subject to
the requirements of Internal Revenue Code Section 409A, to the extent that the Company or an
Affiliate takes any action that causes a violation of Internal Revenue Code Section 409A or fails
to take reasonable actions required to comply with Internal Revenue Code Section 409A, in each case
as determined by the Committee, the Company shall pay an additional amount to the Participant (or
beneficiary) equal to the additional income tax imposed pursuant to Internal Revenue Code Section
409A on the Participant as a result of such violation, plus any taxes imposed on this additional
payment.

Section 15

Other Employee Benefits

The amount of any income deemed to be received by a Participant as a result of the payment under an
Award or 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 16

Amendment, Modification, and Termination

The Committee or the Board may at any time terminate, and from time to time may amend or modify the
Plan, and the Committee or the Board may, to the extent permitted by the Plan, from time to time
amend or modify the terms of any Award theretofore granted, including any Award agreement, in each
case, retroactively or prospectively; provided, however, that no amendment or
modification of the Plan 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 an
applicable statutory or regulatory requirements, unless the Company, on the advice of outside
counsel, determines that stockholder approval is not necessary.

Notwithstanding any other provision of this Plan, no amendment, modification, or termination of the
Plan or any Award shall adversely affect the previously accrued material rights or benefits of a
Participant under any outstanding Award theretofore awarded under the Plan, without the consent of
such Participant holding such Award, except to the extent necessary to avoid a violation of
Internal Revenue Code Section 409A or the Board or the Committee determines, on advice of outside
counsel or the Company’s independent accountants, that such amendment or modification is required
for the Company, the Plan, or the Award to satisfy, comply with, or meet the requirements of any
law, regulation, listing rule, or accounting standard applicable to the Company.

28

 

The Committee shall have the authority to adopt (without the necessity for further stockholder
approval) 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 17

Requirements of Law

17.1 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, including applicable
federal and state securities laws. The Company may require a Participant, as a condition of
receiving payment under an Award, to give written assurances in substance and form satisfactory to
the Company and its counsel to such effect as the Company deems necessary or appropriate in order
to comply with federal and applicable state securities laws.

17.2 Section 16 Requirements. If a Participant is an officer or director of the
Company within the meaning of Section 16 of the Exchange Act, Awards granted hereunder shall be
subject to all conditions required under Rule 16b-3, or any successor rule(s) promulgated under the
Exchange Act, to qualify the Award for any exemption from the provisions of Section 16 available
under such Rule. Such conditions are hereby incorporated herein by reference and shall be set
forth in the agreement with the Participant, which describes the Award.

17.3 Governing Law. The Plan and all agreements hereunder shall be construed in
accordance with and governed by the laws of the State of Texas.

29

 

Section 18

Duration of the Plan

The Plan shall terminate on the ten year anniversary of the Effective Date. No grants shall be
awarded after such termination; however, the terms of the Plan shall continue to apply to all
Awards outstanding when the Plan terminates.

Dated: May 4, 2011.

	 	 	 	 	 	 	 

	 

	 	 	APACHE CORPORATION	 	 
	 
	 	 	 	 	 	 
	ATTEST:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Cheri L. Peper
 

Cheri L. Peper

	 	 	By: 	 /s/ Margery M. Harris
 

Margery M. Harris
	 	  
	Corporate Secretary

	 	 	 	Senior Vice President,	 	 
	 

	 	 	 	Human Resources	 	 

30exv10w2

Exhibit 10.2

APACHE CORPORATION

1998 STOCK OPTION PLAN

(Amended and Restated effective May 5, 2011)

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.

1

 

     (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 or as otherwise provided in Section 9.2 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.

9

 

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 or as otherwise provided in Section 9.2 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 or as otherwise provided in Section 9.2, 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, or a beneficiary designation that is in a form approved by the Committee and in
compliance with the provisions of this Plan, applicable law, and the applicable Option, 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 designated beneficiary, legal representatives, heirs or legatees, as applicable. 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

14

 

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.

15

 

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.

16

 

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.

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

17

 

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 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

18

 

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.

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: May 5, 2011

	 	 	 	 	 	 	 

	 

	 	 	APACHE CORPORATION	 	 
	 
	 	 	 	 	 	 
	ATTEST:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Cheri L. Peper
 

Cheri L. Peper

	 	 
	By:  	/s/ Margery M. Harris
 

Margery M. Harris
	 	  
	Corporate Secretary

	 	 	 	Senior Vice President,	 	 
	 

	 	 	 	Human Resources	 	 

19

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