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EXHIBIT 4.10
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
APACHE CORPORATION
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of this 1st day of May, 1997 between APACHE
CORPORATION, a Delaware corporation (together with its Affiliated Corporations,
except where the context otherwise requires, the "Company"), and XXXXXX X.
XXXXXXX ("Xxxxxxx"). Capitalized terms shall have the meaning set herein.
DEFINITIONS
The following terms shall have the meanings set forth below:
(a) "Affiliated Corporation" means any corporation or other entity
(including but not limited to a partnership) which is affiliated with Apache
Corporation through stock ownership or otherwise and is treated as a common
employer under the provisions of Sections 414(b) and (c) or any successor
section(s) of the Internal Revenue Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Consulting Agreement" means that certain Consulting Agreement by and
between Xxxxxx X. Xxxxxxx and the Company dated August 7, 1996, as amended.
(d) "Fair Market Value" means the closing price of the Stock as reported
on the New York Stock Exchange, Inc. Composite Transactions Reporting System
for a particular date. If there are no Stock transactions on such date, the
Fair Market Value shall be determined as of the immediately preceding date on
which there were Stock transactions.
(e) "Internal Revenue Code" means the Internal Revenue Code of 1986, as it
may be amended from time to time.
(f) "Option" means a right to purchase Stock at a stated price for a
specified period of time. All Options granted under this Agreement shall be
Options which are not "incentive stock options" as described in Section 422 or
any successor section(s) of the Internal Revenue Code.
(g) "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.
(h) "Stock" means the $1.25 par value Common Stock of the Company.
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TERMS AND CONDITIONS
1. Grant of Option. Subject to the terms and conditions of this
Agreement, the Company hereby grants to Xxxxxxx an option (the "Option") to
purchase 20,000 shares Stock at a price per share of $* (the "Option Price").
The Option is not intended to qualify as an incentive stock option under
Section 422 or any successor section(s) of the Internal Revenue Code.
Notwithstanding anything to the contrary set forth in this Agreement, the grant
of the foregoing Option shall become unconditional, subject to the vesting,
termination and forfeiture provisions set forth herein.
2. Vesting. The Option shall become exercisable in increments after each
of the first three years of continuous service pursuant to the Consulting
Agreement after the date of this Agreement (defined as the "Vesting Schedule"),
as follows:
Required Number of Years Cumulative Proportion of Shares of
of Continuous Consulting Service after Stock Exercisable
the Date of this after Such Period
Agreement of Continuous Consulting Service
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1 33 percent
2 67 percent
3 100 percent
Except as set forth in Sections 5 or 6 hereof, the Option shall not be
exercisable as to any shares of Stock as to which the continuous consulting
service requirement shall not be satisfied, regardless of the circumstances
which under Patrick's service for the Company shall be terminated. The number
of shares of Stock as to which the Option may be exercised shall be cumulative,
as indicated above, so that once the Option shall become exercisable as to any
shares of Stock it shall continue to be exercisable as to such shares of Stock
until expiration or termination of the Option as provided in Section 7 hereof.
3. Method for Exercising the Option. The Option may be exercised only by
delivery in person or through certified or registered mail, to the Company at
its principal office in Houston, Texas (Attention: Office of the Secretary) of
written notice specifying the Option that is being exercised and the number of
shares of Stock with respect to which the Option is being exercised. The
notice must be accompanied by payment of the total Option Price. At the
request of the Company, such notice shall contain Patrick's representation that
he is purchasing such Stock for investment purposes only and his agreement not
to sell or distribute any
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* The closing price of the Stock as reported on The New York Stock Exchange,
Inc. Composite Transactions Reporting System on the date of grant.
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Stock purchased pursuant to the Option in any manner
or to take any other action with respect to any Stock purchased pursuant to
the Option that is in violation of the Securities Act of 1933, as
amended, or any applicable state law. Xxxxxxx acknowledges that all
certificates representing shares of Stock acquired pursuant to the Option may
have affixed thereto a restrictive legend to evidence the requirement for
compliance with the Securities Act of 1933, as amended, and any applicable
state securities laws. If the shares of Stock acquired pursuant to this Option
are not issued in a registered transaction, the following legend shall be
printed on all certificates representing such shares of Stock:
The shares represented by this Certificate are "restricted
securities" as defined in Rule 144 under the Securities Act of
1933, as amended, and may not be sold or transferred except in
transactions which comply with Rule 144 or, in the opinion of
counsel acceptable to the issuer, are exempt therefrom.
The purchase of such Stock shall take place at the principal offices of
the Company upon delivery of the notice of exercise, at which time the total
Option Price for the Stock shall be paid in full by any of the following
methods or any combination of the following methods:
(a) In cash or by personal, certified or cashier's check payable to the
order of Apache Corporation;
(b) The delivery to the Company of certificates representing a number of
shares of Stock then owned by Xxxxxxx, the Fair Market Value of which equals
the Option Price of the Stock purchased pursuant to the Option, properly
endorsed for transfer to the Company; provided, however, that no Option may be
exercised by delivery to the Company of certificates representing Stock, unless
such Stock has been held by Xxxxxxx for more than six months; for purposes of
this Agreement, the Fair Market Value of any shares of Stock delivered in
payment of the Option Price upon exercise of the Option shall be the Fair
Market Value as of the Exercise Date; or
(c) By delivery to the Company of a properly executed notice of exercise
together with irrevocable instructions to a broker to deliver to the Company
promptly the amount of the proceeds of the sale of all or a portion of the
Stock or of a loan from the broker to Xxxxxxx necessary to pay the Option
Price, in each case in a form satisfactory to the Office of the Secretary.
Upon such notice to the Office of the Secretary and payment of the total
Option Price, the exercise of the Option shall be deemed to be effective, and a
properly executed certificate or certificates representing the Stock so
purchased shall be issued by the Company and delivered to Xxxxxxx. If
certificates representing Stock are used to pay all or part of the Option
Price, separate certificates for the same number of shares of Stock shall be
issued and delivered to Xxxxxxx representing each certificate used to pay the
Option Price, and an additional certificate shall be issued and delivered to
Xxxxxxx representing the additional shares of Stock, in excess of the Option
Price, to which Xxxxxxx is entitled as a result of the exercise of the Option.
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4. Adjustment of the Option.
(a) Adjustment by Stock Split, Stock Dividend, Etc. If at any time the
Company increases or decreases the number of its outstanding shares of Stock,
or changes in any way the rights and privileges of such shares of Stock, by
means of the payment of a Stock dividend or the making of any other
distribution on such shares payable in Stock, or though a stock split or
subdivision of shares of Stock, or a consolidation or combination of shares of
Stock, or through a reclassification or recapitalization involving the Stock,
the numbers, rights and privileges of the shares of Stock included in the
Option shall be increased, decreased or changed in like manner as if such
shares of Stock had been issued and outstanding, fully paid and non-assessable
at the time of such occurrence.
(b) Dividends Payable in Stock of Another Corporation, Etc. If at any
time the Company pays or makes 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 Xxxxxxx upon issuance of Stock purchased at the time of the
exercise of the Option. The securities and other property delivered to Xxxxxxx
upon exercise of the Option shall be in the same ratio to the total securities
and property set aside for Xxxxxxx as the number of shares of Stock with
respect to which the Option is then exercised is to the total shares of Stock
subject to the Option. Prior to the time that any such securities or other
property are delivered to Xxxxxxx 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 4 are not delivered to Xxxxxxx because the 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.
(c) Other Changes in Stock. In the event there shall be any change,
other than as specified in Subsections 4 (a) and (b) 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,
then and if the Company shall in its discretion determine that such change
equitably requires an adjustment in the number or kind of shares subject to the
Option, such adjustments shall be made by the Company and shall be effective
for all purposes of this Agreement.
(d) Apportionment of Option Price. Upon any occurrence described in
Subsections 4 (a), (b) and (c) hereof, the aggregate Option Price for the
shares of Stock then subject to the Option shall remain unchanged and shall be
apportioned ratably over the increased or decreased number or changed kinds of
securities or other properties subject to the Option.
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(e) Rights to Subscribe. If at any time the Company grants, to the
holders of its Stock, rights to subscribe pro rata for additional shares of
Stock or for any other securities of the Company or of any other corporation,
there shall then be reserved with respect to the number of shares subject to
the Option, the Stock or other securities for which Xxxxxxx would have been
entitled to subscribe if immediately prior to such xxxxx Xxxxxxx had exercised
his entire Option. If, upon exercise of the Option, Xxxxxxx subscribes for the
additional Stock or other securities, the Option Price shall be increased by
the amount of the price that would have been payable by Xxxxxxx for such
additional Stock or other securities.
5. Reorganization. If the provisions of Section 6 hereof do not apply and
if 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, entity or person, or in case of a
reorganization (other than a reorganization under the United States Bankruptcy
Code) or upon the liquidation of the Company, the Company or the board of
directors of any corporation assuming the obligations of the Company, shall, as
to the unexercised portion of the Option, either (a) make appropriate provision
for the protection of the Option, 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 Xxxxxxx as a
result of such substitution, and the excess of the aggregate Fair Market Value
of the shares subject to the Option immediately after such substitution over
the Option Price thereof is not more than the excess of the aggregate Fair
Market Value of the shares of Stock subject to the Option immediately before
such substitution over the Option Price thereof, or (b) upon written notice to
Xxxxxxx, provide that the unexercised portion of the Option shall be exercised
within a specified number of days of the date of such notice or the Option will
be terminated. In the latter event, the Company shall accelerate the exercise
dates of the Option so that the Option becomes fully exercisable prior to any
such event.
6. Change in Control.
(a) Effect of Change in Control on Option. Notwithstanding any other
provision of this Agreement to the contrary, in the event of a change in
control of the Company as defined in Subsection 6(c) hereof, the Company may,
in its sole discretion, without obtaining stockholder approval, take any or all
the following actions: (i) accelerate the exercise dates of the Option or make
the Option fully vested and exercisable; (ii) grant a cash bonus award to
Xxxxxxx equal to the amount necessary to pay the Option Price for all or any
portion of the Option; (iii) pay cash to Xxxxxxx in exchange for the
cancellation of the Option in an amount equal to the difference between the
Option Price and the greater of the tender offer price for underlying Stock or
the Fair Market Value of the Stock on the date of the cancellation of the
Option; and (iv) make any other adjustment or amendment to the Option, subject
to the provisions of Subsection 10(b) hereof.
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(b) Limitation on Payments. If the provisions of this Section 6 would
result in the receipt by Xxxxxxx of a payment within the meaning of Section
280G or any successor section(s) of the Internal Revenue Code and the
regulations promulgated thereunder and if the receipt of such payment by
Xxxxxxx would, in the opinion of independent tax counsel of recognized standing
selected by the Company, result in the payment by Xxxxxxx 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 such independent tax counsel, to prevent the
imposition of such excise tax; provided, however, that the Company, in its sole
discretion, may authorize the payment of all or any portion of the amount of
such reduction to Xxxxxxx.
(c) Definitions. For purposes of this Agreement, a "change in control"
shall mean any of the events specified in the Apache Corporation Income
Continuance Plan or any successor plan(s) which constitute a change in control
within the meaning of such plan.
7. Expiration and Termination of the Option. The Option shall expire five
years from the date of this Agreement (the period from the date of this
Agreement to the expiration date is defined as the "Option Period") or prior to
such time as follows:
(a) If the Consulting Agreement is terminated by the Company within the
Option Period for cause, as defined in the Consulting Agreement, the Option
shall thereafter be void for all purposes.
(b) If Xxxxxxx dies, or if Xxxxxxx becomes disabled (such that Xxxxxxx
is unable to provide the services required under the Consulting Agreement),
during the Option Period or within the three-month period referred to in
Subsection 7(c) hereof, the Option may be exercised by Xxxxxxx, or those
entitled to do so under Patrick's will or by the laws of descent and
distribution, as the case may be, within twelve months following Patrick's
death or disability, (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 of Stock as to which the Option had become exercisable on or
before the earlier of the date of Patrick's death or disability.
(c) If the Consulting Agreement is terminated within the Option Period
and prior to May 1, 2000 for any reason other than cause, Patrick's disability
or death, the Option may be exercised by Xxxxxxx 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 early termination of the Consulting Agreement.
8. Transferability. The Option may not be transferred by Xxxxxxx, except
by will or pursuant to the laws of descent and distribution, and it shall be
exercisable during Patrick's lifetime only by him, or in the event of Patrick's
incapacity, by his guardian or legal
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representative, and after Patrick's death, only by those entitled to do so
under his will or the applicable laws of descent and distribution.
9. Miscellaneous.
(a) Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be given by first class registered
or certified mail, postage prepaid, or by personal delivery to the appropriate
party, addressed:
(i) If to the Company, to Apache Corporation at its principal
place of business at 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000-0000 (Attention: Office of the Secretary) or at such other
address as may have been furnished to Xxxxxxx in writing by the
Company; or
(ii) If to Xxxxxxx, at the address indicated below Patrick's
signature, or at such other address as may have been furnished to the
Company by Xxxxxxx.
Any such notice shall be deemed to have been given as of the second day
after deposit in the United States Postal Service, postage prepaid, properly
addressed as set forth above, in the case of mailed notice, or as of the date
delivered in the case of personal delivery.
(b) Amendment. The Company may make any adjustment in the Option
Price, the number of shares of Stock subject to, or the terms of the Option by
amendment or by substitution of an outstanding Option. Such amendment or
substitution may result in terms and conditions (including Option Price, the
number of shares of Stock covered, Vesting Schedule or Option Period) that
differ from the terms and conditions of this Option; however, the Company may
not adversely affect the rights of Xxxxxxx without the consent of Xxxxxxx. If
such action is effected by amendment, the effective date of such amendment will
be the date of the original grant of this Option. Except as provided herein,
this Agreement may not be amended or otherwise modified unless evidenced in
writing and signed by the Company and Xxxxxxx.
(c) Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall
be severable and enforceable to the extent permitted by law.
(d) Waiver. Any provision contained in this Agreement may be waived,
either generally or in any particular instance, by the Company.
(e) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and Xxxxxxx and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
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(f) Scope of Agreement. This Agreement is limited solely to governing
the rights and obligations of Xxxxxxx with respect to the Stock and the Option.
(g) Gender and Number. Except when otherwise indicated by the
context, the masculine gender shall also include the feminine gender, and the
definition of any term herein in the singular shall also include the plural.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
APACHE CORPORATION
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By: Xxxxxx X. Xxxxxxxxx
Director, Human Resources
XXXXXX X. XXXXXXX
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Social Security Number
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Address
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City, State, Zip Code
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