-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vg1yxKj5t+DDZOJf5mMexr8BeeZ2DEfon8GwmdMmg8nYsFUeWdW7p8e8KZjgTYD4 7ffdF9Dt+tuau+IZmCMUNQ== 0000950129-03-003228.txt : 20030618 0000950129-03-003228.hdr.sgml : 20030618 20030618114208 ACCESSION NUMBER: 0000950129-03-003228 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20030618 EFFECTIVENESS DATE: 20030618 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APACHE CORP CENTRAL INDEX KEY: 0000006769 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 410747868 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-106213 FILM NUMBER: 03748303 BUSINESS ADDRESS: STREET 1: 2000 POST OAK BLVD STREET 2: ONE POST OAK CENTER STE 100 CITY: HOUSTON STATE: TX ZIP: 77056-4400 BUSINESS PHONE: 7132966000 MAIL ADDRESS: STREET 1: 2000 POST OAK BLVD STREET 2: STE 100 CITY: HOUSTON STATE: TX ZIP: 77056-4400 FORMER COMPANY: FORMER CONFORMED NAME: APACHE OIL CORP DATE OF NAME CHANGE: 19660830 S-8 1 h06844sv8.txt APACHE CORPORATION AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 2003 REGISTRATION NO. 333-___________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 APACHE CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE NO. 41-0747868 (STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION OR ORGANIZATION) NUMBER) 2000 POST OAK BOULEVARD, SUITE 100, HOUSTON, TEXAS 77056-4400 (713) 296-6000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) APACHE UK SHARE INCENTIVE PLAN (FULL TITLE OF THE PLAN) ERIC L. HARRY, VICE PRESIDENT AND ASSOCIATE GENERAL COUNSEL APACHE CORPORATION 2000 POST OAK BOULEVARD, SUITE 100, HOUSTON, TEXAS 77056-4400 (713) 296-6000 (NAME AND ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) CALCULATION OF REGISTRATION FEE
======================================================================================================================= Title of Proposed Maximum Proposed Maximum Securities to be Amount to be Offering Price Per Aggregate Offering Amount of Registration Registered (1) Registered Share (2) Price (2) Fee (2) - ----------------------------------------------------------------------------------------------------------------------- Common Stock, par value $1.25 per share, and associated Preferred Stock Purchase Rights (3) 100,000 shares $64.43 $6,443,000 $522 =======================================================================================================================
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plan described herein. (2) Estimated solely for the purpose of calculating the registration fee. Pursuant to Rules 457(c) and 457(h), the offering price and registration fee are computed on the basis of the average of the high and low prices of the Common Stock, as reported on The New York Stock Exchange, Inc. Composite Transactions Reporting System for June 16, 2003. (3) Preferred Stock Purchase Rights are evidenced by certificates for shares of the Common Stock and automatically trade with the Common Stock. Value attributable to such Preferred Stock Purchase Rights, if any, is reflected in the market price of the Common Stock. This registration statement on Form S-8 is being filed by the registrant, Apache Corporation ("Apache"), for the purpose of registering 100,000 shares of Apache Common Stock, par value $1.25 per share ("Apache Common Stock"), for issuance under the terms of the Apache UK Share Incentive Plan, and referred to herein as the Plan. Such 100,000 shares of Apache Common Stock have been reserved and authorized for issuance from Apache's authorized and unissued capital stock. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents filed by Apache Corporation (the "Registrant" or "Apache") with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), Commission File No. 1-4300, are incorporated by reference into this Registration Statement: (1) Annual Report on Form 10-K for the year ended December 31, 2002. (2) Quarterly Report on Form 10-Q for the quarter ended March 31, 2003. (3) Current Reports on Form 8-K, filed January 13, 2003, January 16, 2003, April 17, 2003 (as amended June 16, 2003), and May 16, 2003. (4) All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. The descriptions set forth below of the common stock of Apache, par value $1.25 per share ("Apache Common Stock"), the preferred stock and the Rights (as defined below) constitute brief summaries of certain provisions of Apache's Restated Certificate of Incorporation, Apache's Bylaws and the Rights Agreement between Apache and Wells Fargo Bank Minnesota, N. A. ("Wells Fargo"), formerly Norwest Bank Minnesota, N.A., and are qualified in their entirety by reference to the relevant provisions of such documents, all of which are listed under Item 8 as exhibits to this Registration Statement and are incorporated herein by reference. APACHE COMMON STOCK All outstanding shares of Apache Common Stock are fully paid and nonassessable, and all holders of Apache Common Stock have full voting rights and are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. The Board of Directors of Apache is classified into three groups of approximately equal size, one-third elected each year. Stockholders do not have the right to cumulate votes in the election of directors and have no preemptive or subscription rights. Apache Common Stock is neither redeemable nor convertible, and there are no sinking fund provisions relating to such stock. Subject to preferences that may be applicable to any shares of preferred stock outstanding at the time, holders of Apache Common Stock are entitled to dividends when and as declared by the Board of Directors from funds legally available therefor and are entitled, in the event of liquidation, to share ratably in all assets remaining after payment of liabilities. Apache's current policy is to reserve one ten-thousandth (1/10,000) of a share of Series A Preferred Stock (as defined below) for each 1.155 shares of Apache Common Stock issued in order to provide for possible exercises of Rights (as defined below) under Apache's existing Rights Agreement. II-1 The currently outstanding Apache Common Stock and the Rights (as defined below) under Apache's existing Rights Agreement are listed on the New York Stock Exchange and the Chicago Stock Exchange. Wells Fargo is the transfer agent and registrar for Apache Common Stock. Apache typically mails its annual report to stockholders within 120 days after the end of its fiscal year. Notices of stockholder meetings are mailed to record holders of Apache Common Stock at their addresses shown on the books of the transfer agent and registrar. PREFERRED STOCK Apache has five million shares of no par preferred stock authorized, of which (i) 25,000 shares have been designated Series A Junior Participating Preferred Stock ("Series A Preferred Stock") and authorized for issuance pursuant to the Rights (as defined below) that trade with Apache Common Stock, (ii) 100,000 shares have been designated 5.68% Cumulative Preferred Stock, Series B ("Series B Preferred Stock"), and (iii) 140,000 shares have been designated Automatically Convertible Equity Securities, Conversion Preferred Stock, Series C ("Series C Preferred Stock"). A total of 100,000 shares of Series B Preferred Stock are currently outstanding, and shares of Series A Preferred Stock have been reserved for issuance in accordance with the Rights Agreement relating to the Rights. Additional shares of preferred stock may be authorized for issuance and issued by the Board of Directors with such voting powers and in such classes and series, and with such designations, preferences, and relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof (including conversion into or exchange for Apache Common Stock or other securities of Apache or its subsidiaries), as may be stated and expressed in the resolution or resolutions providing for the issuance of such preferred stock adopted by the Board of Directors providing for the issuance of such preferred stock. RIGHTS In December 1995, Apache declared a dividend of one right (a "Right") for each 1.155 shares (adjusted for the ten and five percent stock dividends) of Apache Common Stock outstanding on January 31, 1996. Each full Right entitles the registered holder to purchase from Apache one ten-thousandth (1/10,000) of a share of Series A Preferred Stock at a price of $100 per one ten-thousandth of a share, subject to adjustment. The Rights are exercisable ten calendar days following a public announcement that certain persons or groups have acquired 20 percent or more of the outstanding shares of Apache Common Stock or ten business days following commencement of an offer for 30 percent or more of the outstanding shares of Apache Common Stock. Unless and until the Rights become exercisable, they will be transferred with and only with the shares of Apache Common Stock. In addition, if a person or group becomes the beneficial owner of 20 percent or more of the outstanding shares of Apache Common Stock (a "flip in event"), each Right will become exercisable for shares of Apache Common Stock at 50 percent of the then market price of Apache Common Stock. If a 20-percent stockholder of Apache acquires Apache, by merger or otherwise, in a transaction where Apache does not survive or in which Apache Common Stock is changed or exchanged (a "flip over event"), the Rights become exercisable for shares of the common stock of the corporation acquiring Apache at 50 percent of the then market price of Apache Common Stock. Any Rights that are or were beneficially owned by a person who has acquired 20 percent or more of the outstanding shares of Apache Common Stock, and who engages in certain transactions or realizes the benefits of certain transactions with Apache, will become void. If an offer to acquire all of the outstanding shares of Apache Common Stock is determined to be fair by Apache's board of directors, the transaction will not trigger a flip in event or a flip over event. Apache may also redeem the Rights at $.01 per Right at any time until ten business days after public announcement of a flip in event. The Rights will expire on January 31, 2006, unless earlier redeemed by Apache. Unless the Rights have been previously redeemed, all shares of Apache Common Stock issued by Apache after January 31, 1996, will include Rights, including the II-2 Apache Common Stock issuable under the terms of the Apache UK Share Incentive Plan. CONSENT OF ARTHUR ANDERSEN LLP The consolidated financial statements of Apache and its subsidiaries as of and for the year ended December 31, 2001 incorporated by reference in this registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. Arthur Andersen LLP has not consented to the inclusion of their report in this registration statement, and Apache has dispensed with the requirement to file their consent in reliance upon Rule 437a of the Securities Act of 1933. Because Arthur Andersen LLP has not consented to the inclusion of their report, you will not be able to recover against Arthur Andersen LLP under Section 11 of the Securities Act of 1933 for any untrue statements of a material fact contained in the financial statements audited by Arthur Andersen LLP or any omissions to state a material fact required to be stated therein. ITEM 4. DESCRIPTION OF SECURITIES Not applicable ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law ("DGCL"), inter alia, authorizes a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) because the person is or was a director, officer, employee or agent of another corporation or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the suit or proceeding if the person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reason to believe his conduct was unlawful. Similar indemnity is authorized against expenses (including attorneys' fees) actually and reasonably incurred in defense or settlement of any pending, completed or threatened action or suit if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and provided further that (unless a court of competent jurisdiction otherwise provides) the person shall not have been adjudged liable to the corporation. The indemnification may be made only as authorized in each specific case upon a determination by the stockholders or disinterested directors that indemnification is proper because the indemnitee has met the applicable standard of conduct. Section 145 of the DGCL further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him. Apache maintains policies insuring the officers and directors of Apache and its subsidiaries against certain liabilities for actions taken in their capacities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). II-3 Article VII of Apache's Bylaws provides, in substance, that directors, officers, employees and agents of Apache shall be indemnified to the extent permitted by Section 145 of the DGCL. Additionally, the Seventeenth Article of Apache's Restated Certificate of Incorporation eliminates in certain circumstances the monetary liability of directors of Apache for a breach of their fiduciary duty as directors. These provisions do not eliminate the liability of a director (i) for a breach of a director's duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions by a director not in good faith; (iii) for acts or omissions by a director involving intentional misconduct or a knowing violation of the law; (iv) under Section 174 of the DGCL (relating to the declaration of dividends and purchase or redemption of shares in violation of the DGCL); and (v) for transactions from which the director derived an improper personal benefit. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. II-4 ITEM 8. EXHIBITS. The following exhibits are filed herewith unless otherwise indicated:
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------ ---------------------- 4.1 Restated Certificate of Incorporation of Apache Corporation (incorporated by reference to Exhibit 99.1 to Apache's Current Report on Form 8-K, dated December 17, 1999, Commission File No. 1-4300) 4.2 Bylaws of Apache Corporation, as amended May 2, 2002 (incorporated by reference to Exhibit 3.1 to Apache's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, Commission File No. 1-4300) 4.3 Form of Registrant's Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Apache's Annual Report on Form 10-K for the year ended December 31, 1995, Commission File No. 1-4300) 4.4 Rights Agreement, dated January 31, 1996, between Apache and Norwest Bank Minnesota, N.A., rights agent (incorporated by reference to Exhibit (a) to Apache's Registration Statement on Form 8-A, dated January 24, 1996, Commission File No. 1-4300) *4.5 Trust Deed and Rules of the Apache UK Share Incentive Plan, dated April 2003 *4.6 Apache UK Share Incentive Plan Employee Booklet *4.7 Apache UK Share Incentive Plan Introductory Share Announcement Letter *5.1 Opinion of legal counsel regarding legality of securities being registered *23.1 Consent of Ernst & Young LLP *23.2 Consent of Ryder Scott Company Petroleum Engineers *23.3 Consent of legal counsel included in Exhibit 5.1 *24.1 Power of Attorney included as part of the signature pages of this Registration Statement
- ------------------- *Filed herewith II-5 ITEM 9. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement relating to the securities offered herein shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective. (6) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-6 (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-7 SIGNATURES The Registrant. Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Houston, State of Texas. APACHE CORPORATION Date: June 18, 2003 By: /s/ G. Steven Farris ------------------------------------ G. Steven Farris, President, Chief Executive Officer, and Chief Operating Officer POWER OF ATTORNEY The undersigned directors and officers of Apache Corporation do hereby constitute and appoint G. Steven Farris, Roger B. Plank, P. Anthony Lannie, and Eric L. Harry, and each of them, with full power of substitution, our true and lawful attorneys-in-fact to sign and execute, on behalf of the undersigned, any and all amendments (including post-effective amendments) to this Registration Statement; and each of the undersigned does hereby ratify and confirm all that said attorneys-in-fact shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons, in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ G. Steven Farris Director; - --------------------------- President, Chief Executive Officer, G. Steven Farris and Chief Operating Officer (Principal Executive Officer) June 18, 2003 /s/ Roger B. Plank Executive Vice President and - --------------------------- Chief Financial Officer Roger B. Plank (Principal Financial Officer) June 18, 2003 /s/ Thomas L. Mitchell Vice President and - --------------------------- Controller Thomas L. Mitchell (Principal Accounting Officer) June 18, 2003
SIGNATURE TITLE DATE --------- ----- ---- /s/ Raymond Plank Director and - --------------------------- Chairman of the Board June 18, 2003 Raymond Plank /s/ Frederick M. Bohen Director - --------------------------- Frederick M. Bohen June 18, 2003 /s/ Randolph M. Ferlic Director - --------------------------- Randolph M. Ferlic June 18, 2003 /s/ Eugene C. Fiedorek Director - --------------------------- Eugene C. Fiedorek June 18, 2003 /s/ A. D. Frazier, Jr. Director - --------------------------- A. D. Frazier, Jr. June 18, 2003 /s/ Patricia Albjerg Graham Director - --------------------------- Patricia Albjerg Graham June 18, 2003 /s/ John A. Kocur Director - --------------------------- John A. Kocur June 18, 2003 /s/ George D. Lawrence Director - --------------------------- George D. Lawrence June 18, 2003 /s/ F. H. Merelli Director - --------------------------- F. H. Merelli June 18, 2003 /s/ Rodman D. Patton Director - --------------------------- Rodman D. Patton June 18, 2003 /s/ Charles J. Pitman Director - --------------------------- Charles J. Pitman June 18, 2003 /s/ Jay A. Precourt Director - --------------------------- Jay A. Precourt June 18, 2003
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------ ---------------------- 4.1 Restated Certificate of Incorporation of Apache Corporation (incorporated by reference to Exhibit 99.1 to Apache's Current Report on Form 8-K, dated December 17, 1999, Commission File No. 1-4300) 4.2 Bylaws of Apache Corporation, as amended May 2, 2002 (incorporated by reference to Exhibit 3.1 to Apache's Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, Commission File No. 1-4300) 4.3 Form of Registrant's Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Apache's Annual Report on Form 10-K for the year ended December 31, 1995, Commission File No. 1-4300) 4.4 Rights Agreement, dated January 31, 1996, between Apache and Norwest Bank Minnesota, N.A., rights agent (incorporated by reference to Exhibit (a) to Apache's Registration Statement on Form 8-A, dated January 24, 1996, Commission File No. 1-4300) *4.5 Trust Deed and Rules of the Apache UK Share Incentive Plan, dated April 2003 *4.6 Apache UK Share Incentive Plan Employee Booklet *4.7 Apache UK Share Incentive Plan Introductory Share Announcement Letter *5.1 Opinion of legal counsel regarding legality of securities being registered *23.1 Consent of Ernst & Young LLP *23.2 Consent of Ryder Scott Company Petroleum Engineers *23.3 Consent of legal counsel included in Exhibit 5.1 *24.1 Power of Attorney included as part of the signature pages of this Registration Statement
- ------------------- *Filed herewith EX-4.5 3 h06844exv4w5.txt TRUST DEED & RULES OF APACHE UK SHARE INCENTIVE Exhibit 4.5 - -------------------------------------------------------------------------------- APACHE NORTH SEA LIMITED AND CAPITA IRG TRUSTEES LIMITED - -------------------------------------------------------------------------------- TRUST DEED AND RULES OF THE APACHE U.K. SHARE INCENTIVE PLAN APRIL 2003 - -------------------------------------------------------------------------------- INLAND REVENUE REFERENCE A1777/MW 1 THE APACHE U.K. SHARE INCENTIVE PLAN 1. PURPOSE 2. STATUS 3. DECLARATION OF TRUST 4. NUMBER OF TRUSTEES 5. INFORMATION 6. RESIDENCE OF TRUSTEES 7. CHANGE OF TRUSTEES 8. INVESTMENT AND DEALING WITH TRUST ASSETS 9. LOANS TO TRUSTEES 10. SHARES FROM QUALIFYING SHARE OWNERSHIP TRUSTS 11. TRUSTEES' OBLIGATIONS UNDER THE PLAN 12. POWER OF TRUSTEES TO RAISE FUNDS TO SUBSCRIBE FOR A RIGHTS ISSUE 13. POWER TO AGREE MARKET VALUE OF SHARES 14. PERSONAL INTEREST OF TRUSTEES 15. TRUSTEES' MEETINGS 16. SUBSIDIARY COMPANIES 17. EXPENSES OF PLAN 18. TRUSTEES' LIABILITY, INDEMNITY AND FEES 19. COVENANT BY THE PARTICIPATING COMPANIES 20. ACCEPTANCE OF GIFTS 21. TRUSTEES' LIEN 22. AMENDMENTS TO THE PLAN 23. TERMINATION OF THE PLAN 24. NOTICES 25. PROPER LAW RULES OF THE APACHE U.K. SHARE INCENTIVE PLAN 2 THIS DEED made on 7th May 2003 BETWEEN APACHE NORTH SEA LIMITED (registered number 04614761) whose registered office is situated at Level 1, Exchange House, Primrose Street, London EC2A 2HS ("the Company") and CAPITA IRG TRUSTEES LIMITED (registered number 2729260) whose registered office is situated at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU ("the Trustees"). 1. PURPOSE The purpose of this Deed is to establish a trust for an employee share ownership plan which satisfies Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003. 2. STATUS The Plan consists of this Deed and the attached Rules. The definitions in the Rules apply to this Deed. The Committee shall from time to time determine which of parts A to D of the Rules shall have effect. 3. DECLARATION OF TRUST 3.1 The Participating Companies and the Trustees have agreed that all the Shares and other assets which are issued to or transferred to the Trustees are to be held on the trusts declared by this Deed, and subject to the terms of the Rules. When Shares or assets are transferred to the Trustees by the Participating Companies with the intention of being held as part of the Plan they shall be held upon the trusts and provisions of this Deed and the Rules. 3.2 The Trustees shall hold the Trust Fund upon the following trusts namely: (a) as to Shares which have not been awarded to Participants ("Unawarded Shares") upon trust during the Trust Period to allocate those Shares in accordance with the terms of this Deed and the Rules; 3 (b) as to Shares which have been awarded to a Participant ("Plan Shares") upon trust for the benefit of that Participant on the terms and conditions set out in the Rules; (c) as to Partnership Share Money upon trust to purchase Shares for the benefit of the contributing Qualifying Employee in accordance with the Rules; and (d) as to other assets ("Surplus Assets") upon trust to use them to purchase further Shares to be held on the trusts declared in (a) above, at such time during the Trust Period and on such terms as the Trustees in their absolute discretion think fit. 3.3 The income of Unawarded Shares and Surplus Assets shall be accumulated by the Trustees and added to, and held upon the trusts applying to, Surplus Assets. 3.4 The income of Plan Shares and Partnership Share Money shall be dealt with in accordance with the Rules. 3.5 The perpetuity period and the Trust Period in respect of the trusts and powers declared by this Deed and the Rules shall be the period of 80 years from the date of this Deed. 4. NUMBER OF TRUSTEES Unless a corporate Trustee is appointed, there shall always be at least three Trustees. Where there is no corporate Trustee, and the number of Trustees falls below three, the continuing Trustees have the power to act only to achieve the appointment of a new Trustee. 4 5. INFORMATION 5.1 The Trustees shall be entitled to rely without further enquiry on all information supplied to them by the Participating Companies with regard to their duties as Trustees and in particular, but without prejudice to the generality of the foregoing, any notice given by a Participating Company to the Trustees in respect of the eligibility of any person to become or remain a Participant shall be conclusive in favour of the Trustees. 5.2 Except as otherwise provided, the Trustees may in their discretion agree with the Committee, the Company or any of the Participating Companies matters relating to the operation and administration of the Trust as they may consider advisable in the interest of the Trust and so that no person claiming an interest under this Trust shall be entitled to question the legality or correctness of any arrangement or agreement made between the Committee, the Company or any of the Participating Companies and the Trustees in relation to such operation or administration. 5.3 The decision of the Committee in any dispute affecting Participants or Participating Companies shall be final and conclusive. 5.4 The Trustees may employ on such terms as the Committee may agree as to remuneration, any agent or agents to transact all or any business of whatsoever nature required to be done in the proper administration of the Trust. 6. RESIDENCE OF TRUSTEES Every Trustee shall be resident in the United Kingdom. The Committee shall immediately remove any Trustee who ceases to be so resident and, if necessary, appoint a replacement. 7. CHANGE OF TRUSTEES The Company has the power to appoint or remove any Trustee for any reason. The change of Trustee shall be effected by deed and shall take effect from the date that written notice of such removal is delivered to the Trustees, or such later date as the Committee and the Trustees shall agree. Any Trustee may resign on three months notice given in writing to the Company, provided that there will be at least three Trustees or a corporate Trustee immediately after the retirement. 5 8. INVESTMENT AND DEALING WITH TRUST ASSETS 8.1 Save as otherwise provided for by the Plan the Trustees shall not sell or otherwise dispose of Plan Shares. 8.2 The Trustees shall obey any directions given by a Participant in accordance with the Rules in relation to his Plan Shares and any rights and income relating to those Shares. In the absence of any such direction, or provision by the Plan, the Trustees shall take no action. If no directions are received from Participants in relation to the action they wish the Trustees to take in voting their Plan Shares, those Shares will not be voted. 8.3 The Participating Companies shall, as soon as practicable after deduction from Salary, pass the Partnership Share Money to the Trustees who will put the money into an account with: (a) a person falling within section 840A(1)(b) of ICTA 1988; (b) a building society; or (c) a firm falling within section 840(1)(c) of ICTA 1988, until it is either used to acquire Partnership Shares on the Acquisition Date, or, in accordance with the Plan, returned to the individual from whose Salary the Partnership Share Money has been deducted. The Trustees shall pass on any interest arising on this invested money to the individual from whose Salary the Partnership Share Money has been deducted at least once in each calendar year. The Trustees are, however, not obliged to keep monies in an interest bearing account. 8.4 The Trustees may either retain or sell Unawarded Shares at their absolute discretion. The proceeds of any sale of Unawarded Shares shall form part of Surplus Assets. 8.5 The Trustees shall have all the powers of investment of a beneficial owner in relation to Surplus Assets. 8.6 The Trustees shall not be under any liability to the Participating Companies or to current or former Qualifying Employees by reason of a failure to diversify investments, which results from the retention of Plan Shares or Unawarded Shares. 8.7 The Trustees are not required to interfere in the management or conduct of the business of the Parent Company regardless of the size of the Trustees' holding of Shares, and will not be obliged to seek information about the affairs of the Parent Company and may 6 leave the conduct of the Parent Company's business wholly to the directors or management of the Parent Company. 8.8 The Trustees may delegate powers, duties or discretions to any persons and on any terms. No delegation made under this Clause shall divest the Trustees of their responsibilities under this Deed or under the Schedule. 8.9 The Trustees may allow any Shares to be registered in the name of an appointed nominee or custodian provided that such Shares shall be registered in a designated account. Such registration shall not divest the Trustees of their responsibilities under this Deed or the Schedule. 8.10 The Trustees may at any time, and shall if the Committee so decides, revoke any delegation made under this Clause or require any Plan assets held by another person to be returned to the Trustees, or both. 9. LOANS TO TRUSTEES The Trustees shall have the power to borrow money, with the written consent of the Company, for the purpose of: (a) acquiring Shares; and (b) paying any other expenses properly incurred by the Trustees in administering the Plan. Where a loan is to be provided by the Company or an Associated Company then it shall be made pursuant to a written loan agreement. 10. SHARES FROM QUALIFYING SHARE OWNERSHIP TRUSTS Where Shares are transferred to the Trustees in accordance with paragraph 78 of the Schedule, they shall award such Shares only as Free Shares and Matching Shares, and in priority to other available Shares. 7 11. TRUSTEES' OBLIGATIONS UNDER THE PLAN NOTICE OF AWARD OF FREE SHARES AND MATCHING SHARES 11.1 As soon as practicable after Free Shares and Matching Shares have been awarded to a Participant, the Trustees shall give the Participant a notice stating: (a) the number and description of those Shares; (b) their Initial Market Value on the date of Award; and (c) the Holding Period applicable to them. NOTICE OF AWARD OF PARTNERSHIP SHARES 11.2 As soon as practicable after any Partnership Shares have been acquired for a Participant and at least once in every six months, the Trustees shall give the Participant a notice stating: (a) the number and description of those Shares; (b) the amount of money applied by the Trustees in acquiring those Shares on behalf of the Participant; and (c) the Market Value at the Acquisition Date. NOTICE OF ACQUISITION OF DIVIDEND SHARES 11.3 As soon as practicable after Dividend Shares have been acquired on behalf of a Participant, the Trustees shall give the Participant a notice stating: (a) the number and description of those Shares; (b) their Market Value on the Acquisition Date; (c) the Holding Period applicable to them; and (d) any amount not reinvested and carried forward for acquisition of further Dividend Shares. NOTICE OF ANY FOREIGN TAX DEDUCTED BEFORE DIVIDEND PAID 11.4 Where any foreign cash dividend is received in respect of Plan Shares held on behalf of a Participant, the Trustees shall give the Participant notice of the amount of any foreign tax deducted from the dividend before it was paid. 8 RESTRICTIONS DURING THE HOLDING PERIOD 11.5 During the Holding Period the Trustees shall not dispose of any Free Shares, Matching Shares or Dividend Shares (whether by transfer to the employee or otherwise) except as allowed by the following paragraphs of the Schedule: (a) paragraph 37 (power of Trustees to accept general offers); (b) paragraph 77 (power of Trustees to raise funds to subscribe for rights issue); (c) paragraph 79 (meeting by Trustees of PAYE obligations); and (d) paragraph 90(5) (termination of plan: early removal of shares with Participant's consent). PAYE AND OTHER TAX LIABILITIES 11.6 The Trustees may dispose of a Participant's Shares or accept a sum from the Participant in order to meet any PAYE liability in the circumstances provided in section 503 of ITEP 2003 (PAYE: shares ceasing to be subject to the plan) and any employee's NICs liability. 11.7 Where the Trustees receive a sum of money which constitutes a Capital Receipt in respect of which a Participant is chargeable to income tax under section 501 of ITEP 2003, the Trustees shall pay to the employer a sum equal to that on which income tax is so payable. 11.8 The Trustees shall maintain the records necessary to enable them to carry out their PAYE and NICs obligations, and the PAYE and employee's NICs obligations of the employer company so far as they relate to the Plan. 11.9 Where the Participant becomes liable to income tax under ITEP 2003, Case V of Schedule D, or Schedule F, the Trustees shall inform the Participant of any facts which are relevant to determining that liability. 9 MONEY'S WORTH RECEIVED BY TRUSTEES 11.10 The Trustees shall pay over to the Participant as soon as is practicable, any money or money's worth received by them in respect of or by reference to any shares, other than new shares within paragraph 86 of the Schedule (company reconstructions). This is subject to: (a) the provisions of Part 8 of the Schedule (reinvestment of cash dividends); (b) the Trustees obligations under sections 510 to 514 ITEP 2003 (PAYE: obligations to make payments to employer); and (c) the Trustees' PAYE obligations. GENERAL OFFERS 11.11 If any offer, compromise, arrangement or scheme is made which affects the Plan Shares the Trustees shall notify Participants. Each Participant may direct how the Trustees shall act in relation to that Participant's Plan Shares. In the absence of any direction, the Trustees shall take no action. 12. POWER OF TRUSTEES TO RAISE FUNDS TO SUBSCRIBE FOR A RIGHTS ISSUE If instructed by a Participant in respect of his Plan Shares the Trustees may dispose of some of the rights under a rights issue arising from those Shares to obtain enough funds to exercise the remaining rights. The rights referred to are the rights to buy additional shares or rights in the same company. 13. POWER TO AGREE MARKET VALUE OF SHARES Where the Market Value of Shares is to be determined for the purposes of the Schedule, the Trustees may agree with the Inland Revenue that it shall be determined by reference to such date or dates, or to an average of the values on a number of dates, as specified in the agreement. 10 14. PERSONAL INTEREST OF TRUSTEES Trustees, and directors, officers or employees of a corporate Trustee, shall not be liable to account for any benefit accruing to them by virtue of their: (a) participation in the Plan as a Qualifying Employee; (b) ownership, in a beneficial or fiduciary capacity, of any shares or other securities in any Participating Company; (c) being a director or employee of any Participating Company, being a creditor, or being in any other contractual relationship with any such company. 15. TRUSTEES' MEETINGS If and so long as there is more than one Trustee, the Trustees shall hold meetings as often as is necessary for the administration of the Plan. There shall be at least three Trustees present at a meeting and the Trustees shall give due notice to all the Trustees of such a meeting. Decisions made at such a meeting by a majority of the Trustees present shall be binding on all the Trustees. A written resolution signed by all the Trustees shall have the same effect as a resolution passed at a meeting. 16. SUBSIDIARY COMPANIES 16.1 Any Subsidiary may with the agreement of the Committee become a party to this Deed and the Plan by executing a deed of adherence agreeing to be bound by the Deed and Rules. 16.2 A Participating Company shall cease to be a Participating Company on the date that it ceases to be a Subsidiary or on such date as the Company, acting by the Committee, by deed declares. 17. EXPENSES OF PLAN The Participating Companies shall meet the costs of the preparation and administration of this Plan. 18. TRUSTEES' LIABILITY, INDEMNITY AND FEES 18.1 The Participating Companies shall jointly and severally indemnify each of the Trustees, and the directors, officers and employees of a corporate Trustee, against any expenses and liabilities which are incurred through acting as a Trustee of the Plan and which cannot 11 be recovered from the Trust Fund and in respect of indemnities conferred upon the Trustees by law and the Trustee Act 1925. This does not apply to expenses and liabilities which are incurred through fraud, wilful wrongdoing or negligence or are covered by insurance under Clause 18.3. 18.2 No Trustee shall be personally liable for any breach of trust (other than through fraud, wilful wrongdoing or negligence) over and above the extent to which the Trustee, and the directors, officers and employees of a corporate Trustee, are indemnified by the Participating Companies in accordance with Clause 18.1 above. 18.3 A non-remunerated Trustee may insure the Plan against any loss caused by him or any of his employees, officers, agents or delegates. A non-remunerated Trustee may also insure himself and any of these persons against liability for breach of trust not involving fraud or wilful wrongdoing or negligence of the Trustee or the person concerned. 18.4 A Trustee who carries on a profession or business may charge for services rendered on a basis agreed with the Participating Companies. A firm or company in which a Trustee is interested or by which he is employed may also charge for services rendered on this basis and may, unless otherwise agreed, act in accordance with its general terms and conditions from time to time in force. 19. COVENANT BY THE PARTICIPATING COMPANIES The Participating Companies hereby jointly and severally covenant with the Trustees that they shall pay to the Trustees all sums which they are required to pay under the Rules and shall at all times comply with the Rules. 20. ACCEPTANCE OF GIFTS The Trustees may accept gifts of Shares and other assets which shall be held upon the trusts declared by Clause 3.1 or 3.2 as the case may be. 21. TRUSTEES' LIEN The Trustees' lien over the Trust Fund in respect of liabilities incurred by them in the performance of their duties (including the repayment of borrowed money and tax liabilities) shall be enforceable subject to the following restrictions: 12 (a) the Trustees shall not be entitled to resort to Partnership Share Money for the satisfaction of any of their liabilities; and (b) the Trustees shall not be entitled to resort to Plan Shares for the satisfaction of their liabilities except to the extent that this is permitted by the Plan. 22. AMENDMENTS TO THE PLAN The Committee may, with the Trustees' written consent, from time to time amend the Plan provided that: (a) no amendment which would adversely prejudice to a material extent the rights attaching to any Plan Shares awarded to or acquired by Participants may be made nor may any alteration be made giving to Participating Companies a beneficial interest in Plan Shares; and (b) if the Plan is approved by the Inland Revenue at the time of an amendment or addition, any amendment or addition to a "key feature" (as defined in paragraph 84(6) of the Schedule) of the Plan shall not have effect unless and until the written approval of the Inland Revenue has been obtained in accordance with paragraph 81 of the Schedule; and (c) any amendment to the Deed shall be made by supplemental deed; and (d) any amendment to the Rules may be made by supplemental deed or resolution of the Committee. 23. TERMINATION OF THE PLAN 23.1 The Plan shall terminate: (a) in accordance with a Plan Termination Notice issued by the Committee acting on behalf of the Company to the Trustees under paragraph 89 of the Schedule; or (b) if earlier, on the expiry of the Trust Period. 23.2 The Committee shall immediately upon executing a Plan Termination Notice provide a copy of the notice to the Trustees, the Inland Revenue and each individual for whom the Trustees hold Plan Shares or who has entered into a Partnership Share 13 Agreement which was in force immediately before the Plan Termination Notice was issued. 23.3 Upon the issue of a Plan Termination Notice or upon the expiry of the Trust Period paragraph 90 of the Schedule shall have effect. 23.4 Any Shares or other assets which remain undisposed of after the requirements of paragraph 90 of the Schedule have been complied with shall be held by the Trustees upon trust to pay or apply them to or for the benefit of the Participating Companies as at the termination date in such proportion, having regard to their respective contributions, as the Trustees shall in their absolute discretion think appropriate. 24. NOTICES Each advice, request, or other communication to be given or made under the Plan shall be in writing and delivered or sent to the relevant party at its address as notified to the other party. To the extent agreed by the Company and the Trustees, communications between the parties to this Deed and to Participants may also be by electronic means. 25. PROPER LAW This Deed and the Rules of the Plan shall be governed by and construed in accordance with the laws of England and Wales. 14 IN WITNESS whereof this deed has been executed and delivered the day and year first above written. Executed as a Deed on behalf of APACHE NORTH SEA LIMITED by: Director /s/ John A. Crum -------------------------------------------- Director/Authorised signatory /s/ Eric L. Harry ----------------------- Executed as a Deed on behalf of CAPITA IRG TRUSTEES LIMITED by: Authorised Signatory /s/ [Name] -------------------------------- Authorised Signatory /s/ [Name] -------------------------------- 15 RULES OF THE APACHE U.K. SHARE INCENTIVE PLAN 1. DEFINITIONS 2. PURPOSE OF THE PLAN 3. ELIGIBILITY OF INDIVIDUALS 4. PARTICIPATION ON SAME TERMS 5. PARTNERSHIP SHARES (PART A) 6. MATCHING SHARES (PART B) 7. FREE SHARES (PART C) 8. DIVIDEND SHARES (PART D) 9. ACQUISITION OF SHARES 10. COMPANY RECONSTRUCTIONS 11. RIGHTS ISSUES 12. LEAVERS 16 RULES OF THE APACHE U.K. SHARE INCENTIVE PLAN 1. DEFINITIONS 1.1 The following words and expressions have the following meanings: "ACCUMULATION PERIOD" in relation to Partnership Shares, the period during which the Trustees accumulate a Qualifying Employee's Partnership Share Money before acquiring Partnership Shares or repaying it to the employee "ACQUISITION DATE" (a) in relation to Partnership Shares, where there is no Accumulation Period, the meaning given by paragraph 50(4) of the Schedule; (b) in relation to Partnership Shares, where there is an Accumulation Period, the meaning given by paragraph 52(5) of the Schedule; and (c) in relation to Dividend Shares, the meaning given by paragraph 66(4) of the Schedule "ASSOCIATED COMPANY" the meaning given by paragraph 94 of the Schedule "AWARD DATE" in relation to Free Shares or Matching Shares, the date on which such Shares are awarded "AWARD" (a) in relation to Free Shares and Matching Shares, the appropriation of Free Shares and Matching Shares in accordance with the Plan; and (b) in relation to Partnership Shares, the acquisition of Partnership Shares on behalf of Qualifying Employees in accordance with the Plan 17 "CAPITAL RECEIPT" the same meaning as in section 502 of ITEP 2003 "CLOSE COMPANY" the same meaning as in paragraph 100 of the Schedule "COMMITTEE" the committee appointed and authorised by the board of directors of the Company to operate the Plan "COMPANY" Apache North Sea Limited "CONNECTED COMPANY" the same meaning as in paragraph 18(3) of the Schedule "CONTROL" the same meaning as in paragraph 100 of the Schedule "DEALING DAY" a day on which the Stock Exchange is open for the transaction of business "DEED" the trust deed constituting the Plan with any subsequent amendment thereto "DIVIDEND SHARES" Shares acquired on behalf of a Participant from reinvestment of dividends under Part D of the Plan and which are subject to the Plan "FREE SHARE AGREEMENT" an agreement in such form as is acceptable to the Inland Revenue "FREE SHARES" Shares awarded under Part C of the Plan which are subject to the Plan "GROUP PLAN" the Plan as established by the Company and extending to its Subsidiaries which are Participating Companies "HOLDING PERIOD" (a) in relation to Free Shares, the period specified by the Committee as mentioned in Rule 7.12; 18 (b) in relation to Matching Shares, the period specified by the Committee as mentioned in Rule 6.5; and (c) in relation to Dividend Shares, the period of 3 years from the Acquisition Date "ICTA 1988" the Income and Corporation Taxes Act 1988 "INITIAL MARKET VALUE" the Market Value of a Share on an Award Date. Where the Share is subject to a restriction or risk of forfeiture, the Market Value shall be determined without reference to that restriction or risk "ITEP 2003" Income Tax (Earnings and Pensions) Act 2003 "MARKET VALUE" (a) where the Shares are listed on the Stock Exchange (i) if, and only if, all the Shares acquired for Award on an Acquisition Date or an Award Date are purchased and awarded to all Participants on the same day, the average of the prices paid by the Trustees for those Shares in Sterling or (ii) if all the Shares acquired for Award are not purchased and awarded to all Participants on the same day, the Sterling equivalent of the closing price of a Share on the immediately preceding Dealing Day (as derived from the Stock Exchange) (c) on any day where (a) above does not apply, the market value of a Share determined in accordance with the provisions of Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed 19 for the purposes of the Plan with Inland Revenue Shares Valuation on or before that day "MATCHING SHARES" Shares awarded under Part B of the Plan and which are subject to the Plan "MATERIAL INTEREST" the same meaning as in paragraph 19 of the Schedule "NICs" National Insurance Contributions "PARENT COMPANY" Apache Corporation "PARTICIPANT" an individual who has received under the Plan an Award of Free Shares, Matching Shares or Partnership Shares, or on whose behalf Dividend Shares have been acquired "PARTICIPATING COMPANY" the Company and such of its Subsidiaries as have executed deeds of adherence to the Plan under Clause 16 of the Trust Deed "PARTNERSHIP SHARE an agreement in such form as is acceptable AGREEMENT to the Inland Revenue "PARTNERSHIP SHARES" Shares awarded under Part A of the Plan and which are subject to the Plan "PARTNERSHIP SHARE MONEY" money deducted from a Qualifying Employee's Salary pursuant to a Partnership Share Agreement and held by the Trustees to acquire Partnership Shares or to be returned to such a person "PAYE" pay as you earn as described in Section 684 of ITEP 2003 "PERFORMANCE ALLOWANCES" The criteria for an Award of Free Shares where: (a) whether Shares are awarded; or 20 (b) the number or value of Shares awarded is conditional on performance targets being met "PLAN" this plan, being the Apache U.K. Share Incentive Plan "PLAN SHARES" (a) Free Shares, Matching Shares or Partnership Shares awarded to Participants; (b) Dividend Shares acquired on behalf of Participants; and (c) shares in relation to which paragraph 87(2) (company reconstructions: new shares) of the Schedule applies that remain subject to the Plan "PLAN TERMINATION NOTICE" a notice issued under paragraph 89 of the Schedule "PROFIT SHARING SCHEME" a profit sharing scheme approved by the Board of Inland Revenue under Schedule 9 of ICTA 1988 "QUALIFYING COMPANY" the same meaning as in paragraph 17 of the Schedule "QUALIFYING CORPORATE BOND" the same meaning as in section 117 of the Taxation of Chargeable Gains Act 1992 "QUALIFYING EMPLOYEE" an employee who must be invited to participate in an award in accordance with Rule 3.6 and any employee who the Committee has invited in accordance with Rule 3.7 "QUALIFYING PERIOD" a period as the Committee shall in their absolute discretion so decide being: 21 (a) in the case of Free Shares a period not exceeding 18 months before the Award is made; (b) in the case of Partnership Shares and Matching Shares where there is an Accumulation Period a period not exceeding six months before the start of the Accumulation Period; and (c) in the case of Partnership Shares and Matching Shares where there is no Accumulation Period a period not exceeding 18 months before the deduction of Partnership Share Money relating to the Award "REDUNDANCY" the same meaning as in the Employment Rights Act 1996 "RELEVANT EMPLOYMENT" employment by the Company or any Associated Company "RETIREMENT AGE" for the purposes of this Plan, age 50 "RULES" these Rules together with any amendments thereto effected in accordance with Clause 22 of the Deed "SALARY" the same meaning as in paragraph 43(4) of the Schedule "SCHEDULE" Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003 "SHARES" shares of common stock in the capital of the Parent Company which comply with the conditions set out in paragraph 25 of the Schedule "STOCK EXCHANGE" the New York Stock Exchange (or such successor organisation) "SUBSIDIARY" any company which is for the time being under the Control of the Company 22 "TAX YEAR" a year beginning on 6 April and ending on the following 5 April "TRUSTEES" the trustees or trustee for the time being of the Plan or any subsequent trustee or trustees as provided for in accordance with Clause 7 of the Deed "TRUST FUND" all assets transferred to the Trustees to be held on the terms of the Deed and the assets from time to time representing such assets, including any accumulations of income "TRUST PERIOD" the period of 80 years beginning with the date of the Deed "UK RESIDENT TAXPAYER" the same meaning as in paragraph 8(2) of the Schedule 1.2 References to any Act, or Part, Chapter, or section (including ICTA 1988 and ITEP 2003) shall include any statutory modification, amendment or re-enactment of that Act, for the time being in force. 1.3 Words of the feminine gender shall include the masculine and vice versa and words in the singular shall include the plural and vice versa unless, in either case, the context otherwise requires or it is otherwise stated. 2. PURPOSE OF THE PLAN The purpose of the Plan is to enable employees of Participating Companies to acquire Shares in the Parent Company which give them a continuing stake in the Parent Company. 3. ELIGIBILITY OF INDIVIDUALS 3.1 Subject to Rule 3.4, individuals are eligible to participate in an Award only if: (a) they are employees of a Participating Company; (b) they have been employees of a Qualifying Company at all times during any Qualifying Period; (c) they are eligible on the date(s) set out in paragraph 16(2)-(6) of the Schedule; and 23 (d) they do not fail to be eligible under either or both Rule 3.2 or Rule 3.3. 3.2 Individuals are not eligible to participate in an Award of Shares if they have, or within the preceding twelve months have had, a Material Interest in: (a) a Close Company whose Shares may be appropriated or acquired under the Plan; or (b) a company which has Control of such a company or is a member of a consortium which owns such a company. 3.3 Individuals are not eligible to participate in an Award of Free Shares in any Tax Year if in that Tax Year: (a) they have been awarded shares under a Profit Sharing Scheme established by the Company or a Connected Company, or are to be awarded such shares at the same time; or (b) they have received (or are to receive at the same time) an award under another plan established by the Company or a Connected Company and approved under the Schedule, or if they would have received such an award but for their failure to meet a performance target (see Rule 7.5). 3.4 Individuals are not eligible to participate in an Award of Partnership Shares or Matching Shares in any Tax Year if in that Tax Year they have received (or are to receive at the same time) an award under another plan established by the Company or a Connected Company (as defined in paragraph 18(3) of the Schedule) and approved under the Schedule, or if they would have received such an award but for their failure to meet a performance target (see Rule 7.5). 3.5 Notwithstanding any provision of any other of these Rules whatsoever: (a) the Plan shall not form part of any contract of employment between the Company, the Parent Company, a Subsidiary or any Associated Company and any Participant and it shall not confer on any Participant any legal or equitable rights (other than those constituted by the grant of Awards themselves) whatsoever against the Company, the Parent Company, a Subsidiary or an Associated Company directly 24 or indirectly or give rise to any cause of action at law or in equity against the Company, the Parent Company, a Subsidiary or any Associated Company; (b) participation in an Award is a matter entirely separate from any pension right or entitlement a Participant may have and from his terms or conditions of employment and participation in the Plan shall in no respect whatever affect his pension rights or entitlements or terms or conditions of employment and in particular (but without limiting the generality of the foregoing) any Participant who ceases to be an employee of the Company, the Parent Company, a Subsidiary or an Associated Company shall not be entitled to any compensation for any loss of any right or benefit or prospective right or benefit under the Plan which he might otherwise have enjoyed whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or otherwise howsoever and notwithstanding that he may have been dismissed wrongfully or unfairly (within the meaning of the Employment Rights Act 1996). EMPLOYEES WHO MUST BE INVITED TO PARTICIPATE IN AWARDS 3.6 Individuals shall be eligible to receive an Award of Shares under the Plan if they meet the requirements in Rule 3.1 and are UK Resident Taxpayers. In this case they shall be invited to participate in any Awards of Free Shares, Partnership Shares or Matching Shares, and acquisitions of Dividend Shares, as are set out in the Plan. EMPLOYEES WHO MAY BE INVITED TO PARTICIPATE IN AWARDS 3.7 The Committee may also invite, at their discretion, any employee who meets the requirements in Rule 3.1 to participate in any Award of Free Shares, Partnership Shares or Matching Shares, and acquisitions of Dividend Shares, as are set out in the Plan. The Committee shall notify the Trustees of employees who participate under this Rule. 4. PARTICIPATION ON SAME TERMS 4.1 Every Qualifying Employee shall be invited to participate in an Award on the same terms. All who do participate in an Award shall do so on the same terms. 25 4.2 The Committee may make an Award of Free Shares to Qualifying Employees by reference to their remuneration, length of service or hours worked. 4.3 The Committee may make an Award of Free Shares to Qualifying Employees by reference to their performance as set out in Rule 7.5. 4.4 The Participating Companies shall make contributions to the Trustees to finance any purchase by the Trustees of Free and/or Matching Shares for award on an Award Date. 26 PART A 5. PARTNERSHIP SHARES 5.1 The Committee may at any time invite every Qualifying Employee to enter into a Partnership Share Agreement, should the Committee decide to offer Partnership Shares, in accordance with this Part of the Rules. The Committee shall determine whether there is to be an Accumulation Period. An Accumulation Period may be up to 12 months and shall apply equally to all Qualifying Employees in the Plan. 5.2 Partnership Shares shall not be subject to any provision under which they may be forfeit. MAXIMUM AMOUNT OF DEDUCTIONS 5.3 The amount of Partnership Share Money deducted from an employee's Salary shall not exceed L125 in any month (or such other amount as may from time to time be permitted under paragraph 46(1) of the Schedule and approved by the Committee). If the Salary is not paid monthly, the applicable limit shall be calculated proportionately. 5.4 The amount of Partnership Share Money deducted from an employee's Salary over an Accumulation Period shall not exceed 10% (or such other percentage as may from time to time be permitted under paragraph 46(2) of the Schedule and approved by the Committee) of the total of the payments of Salary made to such employee over that Accumulation Period or if there is no Accumulation Period, 10% (or such other percentage as may be permitted under paragraph 46(2) of the Schedule) of the Salary payment from which the deduction is made. 5.5 Any amount deducted in excess of that allowed by Rule 5.3 or Rule 5.4 shall be paid over to the employee, subject to both deduction of income tax under PAYE and NICs, as soon as practicable. MINIMUM AMOUNT OF DEDUCTIONS 5.6 The minimum amount to be deducted under the Partnership Share Agreement in any month shall be the same in relation to all Partnership Share Agreements entered into in response to invitations issued on the same occasion. It shall not be greater than L10 (or such other amount as may be permitted under paragraph 47(1) of the Schedule and approved by the Committee). 27 NOTICE OF POSSIBLE EFFECT OF DEDUCTIONS ON BENEFIT ENTITLEMENT 5.7 Every Partnership Share Agreement shall contain a notice under paragraph 48 of the Schedule. RESTRICTION IMPOSED ON NUMBER OF SHARES AWARDED 5.8 The Committee may specify the maximum number of Shares to be included in an Award of Partnership Shares. 5.9 The Partnership Share Agreement shall contain an undertaking by the Company to notify each Qualifying Employee of any restriction on the number of Shares to be included in an Award. 5.10 The notification in Rule 5.9 above shall be given: (a) if there is no Accumulation Period, before the deduction of the Partnership Share Money relating to the Award; and (b) if there is an Accumulation Period, before the beginning of the Accumulation Period relating to the Award. PLAN WITH NO ACCUMULATION PERIOD 5.11 The Trustees shall acquire Shares on behalf of the Qualifying Employee using the Partnership Share Money. They shall acquire the Shares on the Acquisition Date. The number of Shares awarded to each employee shall be determined in accordance with the Market Value of the Shares on that date. PLAN WITH ACCUMULATION PERIOD 5.12 If there is an Accumulation Period, the Trustees shall acquire Shares on behalf of the Qualifying Employee, on the Acquisition Date, using the Partnership Share Money. 5.13 The number of Shares acquired on behalf of each Participant shall be determined by reference to the lower of: (a) the Market Value of the Shares at the beginning of the Accumulation Period; and (b) the Market Value of the Shares on the Acquisition Date. 5.14 If a transaction occurs during an Accumulation Period which results in a new holding of shares being equated for the purposes 28 of capital gains tax with any of the shares to be acquired under the Partnership Share Agreement, the employee may agree that the Partnership Share Agreement shall have effect after the time of that transaction as if it were an agreement for the purchase of shares comprised in the new holding. SURPLUS PARTNERSHIP SHARE MONEY 5.15 Any surplus Partnership Share Money remaining after the acquisition of Shares by the Trustees: (a) may, with the agreement of the Participant, be carried forward to the next Accumulation Period or the next deduction date; and (b) in any other case, shall be paid over to the Participant, subject to both deduction of income tax under PAYE and NICs, as soon as practicable. SCALING DOWN 5.16 If the Company receives applications for Partnership Shares exceeding the Award maximum determined in accordance with Rule 5.8 then the following steps shall be taken in sequence until the excess is eliminated. Step 1. the excess of the monthly deduction chosen by each applicant over the minimum amount provided in Rule 5.6 shall be reduced pro rata; Step 2. all monthly deductions shall be reduced to the minimum amount provided in Rule 5.6; Step 3. applications shall be selected by lot, each based on a monthly deduction of the minimum amount provided in Rule 5.6. Each application shall be deemed to have been modified or withdrawn in accordance with the foregoing provisions, and each employee who has applied for Partnership Shares shall be notified of the change. STOPPING AND RE-STARTING DEDUCTIONS 5.17 An employee may stop and re-start deductions under a Partnership Share Agreement at any time by notice in writing to their employing company. Unless a later date is specified in the 29 notice, such notice shall take effect as soon as practicable but in any event no later than 30 days after their employing company receives it. WITHDRAWAL FROM PARTNERSHIP SHARE AGREEMENT 5.18 An employee may withdraw from a Partnership Share Agreement at any time by notice in writing to their employing company. Unless a later date is specified in the notice, such a notice shall take effect 30 days after their employing company receives it. Any Partnership Share Money then held on behalf of an employee shall be paid over to that employee as soon as practicable. This payment shall be subject to income tax under PAYE and NICs. REPAYMENT OF PARTNERSHIP SHARE MONEY ON WITHDRAWAL OF APPROVAL OR TERMINATION 5.19 If approval to the Plan is withdrawn or a Plan Termination Notice is issued in respect of the Plan, any Partnership Share Money held on behalf of employees shall be repaid to them as soon as practicable, subject to deduction of income tax under PAYE, and NICs. 30 PART B 6. MATCHING SHARES 6.1 The Partnership Share Agreement sets out the basis on which a Participant is entitled to Matching Shares, should the Committee decide to offer Matching Shares, in accordance with this Part of the Rules. GENERAL REQUIREMENTS FOR MATCHING SHARES 6.2 Matching Shares shall: (a) be Shares of the same class and carrying the same rights as the Partnership Shares to which they relate; (b) subject to Rule 6.4, be awarded on the same day as the Partnership Shares to which they relate are acquired on behalf of the Participant; and (c) be awarded to all Participants on exactly the same basis. RATIO OF MATCHING SHARES TO PARTNERSHIP SHARES 6.3 The Partnership Share Agreement shall specify the ratio of Matching Shares to Partnership Shares for the time being offered by the Company and that ratio shall not exceed 2:1 (or such other ratio as may from time to time be permitted under paragraph 60(2) of the Schedule and approved by the Committee). The Committee may vary the ratio before Partnership Shares are acquired. Employees shall be notified of the terms of any such variation before the Partnership Shares are awarded under the Partnership Share Agreement. 6.4 If the Partnership Shares acquired on the day referred to in Rule 6.2(b) above are not sufficient to produce a Matching Share, the match shall be made when sufficient Partnership Shares have been acquired to allow at least one Matching Share to be appropriated. HOLDING PERIOD FOR MATCHING SHARES 6.5 The Committee shall, in relation to each Award Date, specify a Holding Period throughout which a Participant shall be bound by the terms of the Partnership Share Agreement. 31 6.6 The Holding Period shall, in relation to each Award, be a specified period of not less than 3 years nor more than 5 years (or such other periods as may be from time to time be specified under paragraph 61 of the Schedule and approved by the Committee), beginning with the Award Date and shall be the same for all Participants who receive an Award at the same time. The Holding Period shall not be increased in respect of Matching Shares awarded under the Plan. 6.7 A Participant may during the Holding Period direct the Trustees: (a) to accept an offer for any of their Matching Shares if the acceptance or agreement shall result in a new holding being equated with those original Shares for the purposes of capital gains tax; or (b) to accept an offer of a Qualifying Corporate Bond (whether alone or with other assets or cash or both) for their Matching Shares if the offer forms part of such a general offer as is mentioned in paragraph (c) below; or (c) to accept an offer of cash, with or without other assets, for their Matching Shares if the offer forms part of a general offer which is made to holders of shares of the same class as their Shares or to the holders of shares in the same company, and which is made in the first instance on a condition such that if it is satisfied the person making the offer shall have control of that company, within the meaning of section 416 of ICTA 1988; or (d) to agree to a transaction affecting their Matching Shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting; (i) all of the ordinary share capital of the Parent Company or, as the case may be, all the shares of the class in question; or (ii) all the shares, or all the shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their participation in a plan approved under the Schedule. 32 PART C 7. FREE SHARES 7.1 The Committee may at any time invite every Qualifying Employee to enter into a Free Share Agreement, should the Committee decide to offer Free Shares, in accordance with this Part of the Rules. 7.2 The Trustees, acting with the prior consent of the Committee, may from time to time award Free Shares. 7.3 The number of Free Shares to be awarded by the Trustees to each Qualifying Employee on an Award Date shall be determined by the Committee in accordance with this Rule. MAXIMUM ANNUAL AWARD 7.4 The Initial Market Value of the Shares awarded to a Qualifying Employee in any Tax Year shall not exceed L3,000 (or such other amount as may be permitted under paragraph 35 of the Schedule and approved by the Committee). ALLOCATION OF FREE SHARES BY REFERENCE TO PERFORMANCE 7.5 The Committee may stipulate that the number of Free Shares (if any) to be awarded to each Qualifying Employee on a given Award Date shall be determined by reference to Performance Allowances. 7.6 If Performance Allowances are used, they shall apply to all Qualifying Employees. 7.7 (a) Performance Allowances shall be determined by reference to such fair and objective criteria (performance targets) relating to business results as the Committee shall determine over such period as the Committee shall specify; (b) performance targets must be set for performance units of one or more employees; and (c) for the purposes of an Award of Free Shares an employee must not be a member of more than one performance unit. 7.8 Where the Committee decides to use Performance Allowances it shall, as soon as reasonably practicable: 33 (a) notify each employee participating in the Award of the performance targets and measures which, under the Plan, shall be used to determine the number or value of Free Shares awarded to him; and (b) notify all Qualifying Employees of the Company or, in the case of a Group Plan, of any Participating Company, in general terms, of the performance targets and measures to be used to determine the number or value of Free Shares to be awarded to each Participant in the Award. 7.9 The Committee shall determine the number of Free Shares (if any) to be awarded to each Qualifying Employee by reference to performance using method 1 or method 2. The same method shall be used for all Qualifying Employees for each Award. PERFORMANCE ALLOWANCES: METHOD 1 7.10 By this method: (a) at least 20% of Free Shares awarded in any performance period shall be awarded without reference to performance; (b) the remaining Free Shares shall be awarded by reference to performance; and (c) the highest Award made to an individual by reference to performance in any period shall be no more than four times the highest Award to an individual without reference to performance. If this method is used: - the Free Shares awarded without reference to performance (paragraph (a) above) shall be awarded on the same terms mentioned in Rule 4; and - the Free Shares awarded by reference to performance (paragraph (b) above) need not be allocated on the same terms mentioned in Rule 4. PERFORMANCE ALLOWANCES: METHOD 2 7.11 By this method: (a) some or all Free Shares shall be awarded by reference to performance; 34 (b) the Award of Free Shares to Qualifying Employees who are members of the same performance unit shall be made on the same terms, as mentioned in Rule 4; and (c) Free Shares awarded for each performance unit shall be treated as separate Awards. HOLDING PERIOD FOR FREE SHARES 7.12 The Committee shall, in relation to each Award Date, specify a Holding Period throughout which a Participant shall be bound by the terms of the Free Share Agreement. 7.13 The Holding Period shall, in relation to each Award, be a specified period of not less than 3 years nor more than 5 years (or such other periods as may from time to time be specified under paragraph 36(2) of the Schedule and approved by the Committee), beginning with the Award Date and shall be the same for all Participants who receive an Award at the same time. The Holding Period shall not be increased in respect of Free Shares already awarded under the Plan. 7.14 A Participant may during the Holding Period direct the Trustees: (a) to accept an offer for any of their Free Shares if the acceptance or agreement shall result in a new holding being equated with those Shares for the purposes of capital gains tax; or (b) to accept an offer of a Qualifying Corporate Bond (whether alone or with other assets or cash or both) for their Free Shares if the offer forms part of such a general offer as is mentioned in paragraph (c) below; or (c) to accept an offer of cash, with or without other assets, for their Free Shares if the offer forms part of a general offer which is made to holders of shares of the same class as their Shares, or to holders of shares in the same company and which is made in the first instance on a condition such that if it is satisfied the person making the offer shall have control of that company, within the meaning of section 416 ICTA 1988; or (d) to agree to a transaction affecting their Free Shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting: 35 (i) all of the ordinary share capital of the Parent Company or, as the case may be, all the shares of the class in question; or (ii) all the shares, or all the shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their participation in a plan approved under the Schedule. 7.15 The performance targets and measures referred to in this Rule 7 may be relaxed, waived, or amended if an event occurs which causes the Committee to consider that any of the existing targets or measures have become unfair or impractical. Provided that any such relaxation, waiver or amendment shall be fair and reasonable and any amended target or measure shall not be any more difficult or any less difficult to satisfy than the original target or measure. 36 PART D 8. DIVIDEND SHARES REINVESTMENT OF CASH DIVIDENDS 8.1 The Free Share Agreement or Partnership Share Agreement, as appropriate, shall set out the rights and obligations of Participants receiving Dividend Shares under the Plan. 8.2 The Committee may decide to direct the Trustees to: (a) apply all Participants' dividends, up to the limit specified in Rule 8.5, to acquire Dividend Shares; (b) to pay all dividends in cash to all Participants; or (c) to offer Participants the choice of either paragraph (a) or (b) above. 8.3 Dividend Shares shall be Shares: (a) of the same class and carrying the same rights as the Shares in respect of which the dividend is paid; and (b) which are not subject to any provision for forfeiture. 8.4 The Committee may revoke any direction for reinvestment of cash dividends. 8.5 The amount applied by the Trustees in acquiring Dividend Shares shall not exceed L1,500 (or such other amount as may be permitted under paragraph 64(1) of the Schedule) in each Tax Year in respect of any Participant. For the purposes of this Rule, the Dividend Shares are those acquired under this Plan and those acquired under any other plan approved under the Schedule. In exercising their powers in relation to the acquisition of Dividend Shares the Trustees must treat Participants fairly and equally. 8.6 If the amounts received by the Trustees exceed the limit in Rule 8.5, the balance shall be paid to the participant as soon as practicable. 8.7 If dividends are to be reinvested, the Trustees shall apply all the cash dividend to acquire Shares on behalf of the Participant on the Acquisition Date. The number of Dividend Shares acquired on 37 behalf of each Participant shall be determined by the Market Value of the Shares on the Acquisition Date. CERTAIN AMOUNTS NOT REINVESTED TO BE CARRIED FORWARD 8.8 Subject to Rule 8.6, any amount that is not reinvested: (a) because the amount of the cash dividend is insufficient to acquire a Share; or (b) because there is an amount remaining after acquiring the Dividend Shares; may be retained by the Trustees and carried forward to be added to the amount of the next cash dividend to be reinvested. 8.9 If, during the period of 3 years (or such other period as may from time to time be specified under paragraph 68(4) of the Schedule) beginning with the date on which the dividend was paid: (a) it is not reinvested; or (b) the Participant ceases to be in Relevant Employment; or (c) a Plan Termination Notice is issued the amount shall be repaid to the Participant as soon as practicable. On making such a payment, the Participant shall be provided with the information specified in paragraph 80(4) of the Schedule. HOLDING PERIOD FOR DIVIDEND SHARES 8.10 The Holding Period shall be a period of 3 years (or such other period as may from time to time be specified under paragraph 67 of the Schedule), beginning with the Acquisition Date. 8.11 A Participant may during the Holding Period direct the Trustees: (a) to accept an offer for any of their Dividend Shares if the acceptance or agreement shall result in a new holding being equated with those Shares for the purposes of capital gains tax; or (b) to accept an offer of a Qualifying Corporate Bond (whether alone or with other assets or cash or both) for their Dividend 38 Shares if the offer forms part of such a general offer as is mentioned in paragraph (c) below; or (c) to accept an offer of cash, with or without other assets, for their Dividend Shares if the offer forms part of a general offer which is made to holders of shares of the same class as their Shares or to holders of shares in the same company, and which is made in the first instance on a condition such that if it is satisfied the person making the offer shall have control of that company, within the meaning of section 416 of ICTA 1988; or (d) to agree to a transaction affecting their Dividend Shares or such of them as are of a particular class, if the transaction would be entered into pursuant to a compromise, arrangement or scheme applicable to or affecting: (i) all of the ordinary share capital of the Parent Company or, as the case may be, all the shares of the class in question; or (ii) all the shares, or all the shares of the class in question, which are held by a class of shareholders identified otherwise than by reference to their employment or their participation in a plan approved under the Schedule. 8.12 Where a Participant is charged to tax in the event of their Dividend Shares ceasing to be subject to the Plan, they shall be provided with the information specified in paragraph 80(4) of the Schedule. 9. ACQUISITION OF SHARES Awards under the Plan may be satisfied by existing Shares which are purchased by the Trustees on the open market or at arms length from any shareholder. The Trustees shall not have the right to subscribe to the Parent Company for newly issued Shares in order to satisfy an Award. 39 10. COMPANY RECONSTRUCTIONS 10.1 The following provisions of this Rule apply if there occurs in relation to any of a Participant's Plan Shares (referred to in this Rule as "the Original Holding"): (a) a transaction which results in a new holding (referred to in this Rule as "the New Holding") being equated with the Original Holding for the purposes of capital gains tax; or (b) a transaction which would have that result but for the fact that what would be the new holding consists of or includes a Qualifying Corporate Bond. 10.2 If an issue of shares of any of the following description (in respect of which a charge to income tax arises) is made as part of a company reconstruction, those shares shall be treated for the purposes of this Rule as not forming part of the New Holding: (a) redeemable shares or securities issued as mentioned in section 209(2)(c) of ICTA 1988 (distributions); (b) share capital issued in circumstances such that section 210(1) of ICTA 1988 (bonus issues) applies; or (c) share capital to which section 249 of ICTA 1988 (stock dividends) applies. 10.3 In this Rule: "Corresponding Shares" in relation to any New Shares, means the Shares in respect of which the New Shares are issued or which the New Shares otherwise represent; "New Shares" means shares comprised in the New Holding which were issued in respect of, or otherwise represent, shares comprised in the Original Holding. 10.4 Subject to the following provisions of this Rule, references in this Plan to a Participant's Plan Shares shall be respectively construed, after the time of the company reconstruction, as being or, as the case may be, as including references to any New Shares. 10.5 For the purposes of the Plan: (a) a company reconstruction shall be treated as not involving a disposal of Shares comprised in the Original Holding; and 40 (b) the date on which any New Shares are to be treated as having been appropriated to or acquired on behalf of the Participant shall be that on which Corresponding Shares were so appropriated or acquired. 10.6 In the context of a New Holding, any reference in this Rule to shares includes securities and rights of any description which form part of the New Holding for the purposes of Chapter II of Part IV of the Taxation of Chargeable Gains Act 1992. 11. RIGHTS ISSUES 11.1 Any shares or securities allotted under Clause 12 of the Deed shall be treated as Plan Shares identical to the shares in respect of which the rights were conferred. They shall be treated as if they were awarded to or acquired on behalf of the Participant under the Plan in the same way and at the same time as those Plan Shares in respect of which they are allotted. 11.2 Rule 11.1 does not apply: (a) to shares and securities allotted as the result of taking up a rights issue where the funds to exercise those rights were obtained otherwise than by virtue of the Trustees disposing of rights in accordance with this Rule; or (b) where the rights to a share issue attributed to Plan Shares are different from the rights attributed to other ordinary shares of the Parent Company. 12. LEAVERS A Participant who ceases to be in Relevant Employment must remove his Shares from the trust. Unless the Participant provides the requisite funds to the Company or the Trustees to cover any income tax and employee's NICs liability that may arise due to his Shares ceasing to be subject to the Plan, the Trustees shall have the discretion to dispose of sufficient of the Participant's Shares to meet such liabilities on behalf of the Participant. 41 EX-4.6 4 h06844exv4w6.txt APACHE UK SHARE INCENTIVE PLAN EMPLOYEE BOOKLET EXHIBIT 4.6 EMPLOYEE BOOKLET APACHE UK SHARE INCENTIVE PLAN GLOSSARY OF TERMS APACHE GROUP Apache Corporation and PLAN CHANGE FORM the form you need to any of its subsidiary complete to alter, companies. suspend or cease your contributions. APPLICATION FORM the Partnership Share PLAN STATEMENT bi-annual personalised Agreement form that you statement. It shows a need to complete to join summary of the the Plan. transactions during the previous six months. THE COMPANY Apache North Sea Limited. SALE FORM the form you need to complete to sell your Shares. DIVIDEND the portion of a SHARE a unit of ownership in company's earnings that Common Stock of Apache is periodically paid to Corporation. They are its shareholders. bought by people who Dividends are never wish to invest in the guaranteed and may be Apache Corporation's increased, decreased or potential future not paid. success. Dividend payments can be made to shareholders and there is potential for capital growth if the share price increases. DIVIDEND SHARES Shares bought with SHAREHOLDER anyone owning one or dividends paid on Shares more shares in a company. already in the Plan. MARKET VALUE the price of publicly SPECIAL CIRCUMSTANCES injury, disability, traded shares of Apache redundancy, retirement Corporation, it is the (at or before normal price the shares can be retirement age as long bought and sold for on as this is over the age the New York Stock of 50), death, sale of a Exchange. business or company (see page 8). MATCHING SHARES Shares which are TRANSFER FORM the form you need to allocated to you at the complete to transfer rate of two Shares for your Shares into your every one Partnership name or to a broker Share you buy. account. NICs National Insurance THE TRUSTEE of the Plan is Capita contributions. IRG Trustees Limited. The Trustee is responsible for the administration of the Plan. The Trustee will also send out Plan Statements. PARTNERSHIP SHARE Shares bought with your monthly contributions from your pay, PAYE EARNINGS pre-income tax and NICs. your total earnings subject to Pay As Your Earn deductions (PAYE) less expenses and certain benefits in kind. PLAN the Apache U.K. Share Incentive Plan (SIP).
Contents Glossary of terms (INSIDE FRONT COVER) Overview 2 Summary of how the Plan works 3 How do I join the Plan? 4 Partnership Shares 5 Matching Shares 5 Example of how the Plan works 6 Dividend Shares 7 Leaving the Apache Group 8 Your tax position 9 Share ownership 11 Selling or transferring your shares 12 Further information (INSIDE BACK COVER)
Overview The Apache U.K. Share Incentive Plan (the Plan) allows you to build up your stake in our parent company, Apache Corporation, and to share in its future success by giving you the chance to purchase Shares and receive free Matching Shares given to you by the Company. PARTNERSHIP SHARES: Contribute up to L125 per month out of pre-tax and pre-National Insurance (NICs) salary to buy Apache CorporaTion Shares. MATCHING SHARES: Receive two Apache Corporation shares for each Partnership Share you buy. DIVIDEND SHARES: Reinvest dividends on your Shares in the Plan to buy more Apache Corporation Shares. All the Shares in the Plan are yours from the day they are allocated to you, so you will be entitled to receive dividends and vote on those Shares, but they are held in the Plan on your behalf. In order to qualify for full tax advantages, you normally have to leave them in the Plan for five years (three years for Dividend Shares). This booklet provides you with an outline of the key aspects of the Plan. If you have any questions after reading this booklet, please contact the Trustee on 020 8639 3347 or by sending an email to apacheuk@capita.co.uk. Please note that the law prohibits the Trustee and your Human Resources Department from giving financial planning or investment advice. You must always remember that the price of shares can go down as well as up. The price of shares can also be affected by factors other than the performance of the Apache Group and you should take care not to commit more than you can afford to the Plan. 2 Summary of how the Plan works Employee contributions Company provides All dividends arising up to L125 each month two Shares for every on Shares in the Plan Share bought are reinvested in more Shares in the Plan - ------------------------------------------------------------------------------------------------------------------- PARTNERSHIP SHARES MATCHING SHARES DIVIDEND SHARES - ------------------------------------------------------------------------------------------------------------------- SHARE INCENTIVE PLAN - ------------------------------------------------------------------------------------------------------------------- PARTNERSHIP SHARES MATCHING SHARES DIVIDEND SHARES May be sold or transferred at any Must normally be kept in the Plan Must normally be kept in time, but income tax under PAYE and for three years from date of the Plan for three years NICs will be payable unless the Shares allocation. May then be sold or from date of allocation. May then be have been held in the Plan for at transferred. Income tax under PAYE sold or and transferred. Income tax least five years.* and NICs will be payable unless the (no NICs) will be payable under Shares have been held in the Plan self-assessment for higher rate for at least five years.* taxpayers unless the Shares are held in the Plan for at least three years.* - -------------------------------------------------------------------------------------------------------------------
* Your shares cease to be subject to the Plan when you leave employment in the Apache Group of companies. If you leave under Special Circumstances, there is no income tax or NICs to pay (see page 8). 3 How do I join the Plan? WHO IS ELIGIBLE? You are eligible to join the Plan provided you are a UK employee of Apache North Sea Limited and have been employed in the Apache Group for at least three months. - - You will receive an Application Form with an invitation to join the Plan when you become eligible. - - Fill in your Application Form and return it to your Human Resources Department. If the Application Form is received by your Human Resources Department by the 8th of the month, the first deduction will take place in that month. If the Application Form is received after the 8th of the month, the first deduction will take place the following month. HOW MUCH CAN I CONTRIBUTE? If you decide to join the Plan and buy Partnership Shares, you can contribute from L10 up to L125 each month out of your gross PAYE earnings (up to a maximum of 10% of PAYE earnings). Contributions will be deducted directly from your salary before income tax and NICs. You can stop contributing to the Plan, or alter your monthly contribution rate at any time by returning a completed Plan Change Form, which is available from your Human Resources Department. If you cease contributions and at some future date you then decide you want to rejoin the Plan, you will have to complete another Application Form. During any periods of temporary absence (e.g. maternity leave or long-term sickness leave) you will still be able to contribute to the Plan in the normal way, subject to the limit of 10% of your gross PAYE earnings each month. However, you will not be able to contribute during any months when you are not receiving any taxable pay or to make up any missed contributions. 4 Partnership Shares ACQUIRING PARTNERSHIP SHARES The Trustee will invest your contributions in Apache Corporation shares. Each month the Trustee will use the whole amount to buy Shares including fractions, normally on the first day of the following month. The price you pay for the Shares will normally be the market value on the day the Shares are bought on your behalf. The Partnership Shares you buy with your own money are yours from day one. These Shares are bought from your pay before income tax and NICs are deducted. You can take your Partnership Shares out of the Plan at any time, but you will normally have to pay income tax under PAYE and NICs if you take them out within five years of allocation to you.* If you leave the Apache Group, your Partnership Shares will cease to be subject to the Plan. Partnership Shares allocated to you within the previous five years will be subject to income tax under PAYE and NICs.* Matching Shares In addition to the Partnership Shares you buy each month, you will also receive free Matching Shares. For every Partnership Share you will be allocated two Matching Shares (including fractions), with no income tax or NICs to pay. Matching Shares cannot normally be sold or transferred from the Plan for a period of three years from the date of allocation. After three years, you can sell or transfer your Matching Shares, but you will normally have to pay income tax under PAYE and NICs if you sell or transfer them within five years of allocation to you.* If you leave the Apache Group, your Matching Shares will cease to be subject to the Plan. Matching Shares allocated to you within the previous five years will be subject to income tax under PAYE and NICs.* *THERE IS NO INCOME TAX OR NICs TO PAY IF YOUR SHARES COME OUT OF THE PLAN BECAUSE YOU LEAVE THE APACHE GROUP IN SPECIAL CIRCUMSTANCES (SEE PAGE 8). 5 Example of how the Plan works You choose to put L100 per month towards buying Partnership Shares. The Company provides two Matching Shares for every Partnership Share you buy. For this illustration, the Share price and exchange rate remain constant so that each Share costs L40.
PARTNERSHIP MATCHING YOUR SHARES SHARES CONTRIBUTION PURCHASED ALLOCATED TOTAL SHARES - -------------------------------------------------------------------------------------- Month 1 L100 2.5 5.0 7.5 - -------------------------------------------------------------------------------------- Month 2 L100 2.5 5.0 7.5 - -------------------------------------------------------------------------------------- Month 3 L100 2.5 5.0 7.5 - -------------------------------------------------------------------------------------- TOTAL NUMBER OF SHARES 7.5 15.0 22.5 - --------------------------------------------------------------------------------------
This means that after three months, the Trustee holds 7.5 Partnership Shares and 15 Matching Shares for you, making a total of 22.5 Shares. There will never be any cash balance left at the end of the month because fractions of Shares can be allocated under the Plan. With no Share price movement, the 22.5 Shares you own are worth L900. If you pay income tax at the basic rate, the net cost of these shares is L205.80 after relief from income tax (22%) and NICs (9.4%) through payroll. If you pay income tax at the higher rate, the net cost of these shares is L177 after relief from income tax (40%) and NICs (1%). 6 Dividend Shares A dividend is a share in the profits of a company paid to the shareholders, expressed as an amount per share. Shareholders usually receive dividends on those shares they own. The directors of the company determine the amount of any Dividend. Apache Corporation normally declares a dividend payable to shareholders four times a year. Dividends are paid net of US withholding tax (currently 15% if the participant has returned a completed form W-8BEN). Dividends are not guaranteed. Up to a maximum of L1,500 per tax year of dividends received in respect of your Shares in the Plan will be used to buy Dividend Shares in the Plan. There is no additional income tax to pay on the dividends at that time. Dividends in excess of this amount will be paid directly to you. Dividend Shares cannot normally be sold or transferred from the Plan for three years, after which time they may be sold or transferred free of income tax. If you leave the Apache Group, your Dividend Shares will cease to be subject to the Plan. If you pay income tax at the higher rate, you will have to pay income tax on the Dividends used to buy Dividend Shares within the previous three years, but in the year in which the Dividend Shares come out of the Plan. *You will need to include the details on your self-assessment tax return. The US withholding tax that has been deducted at source can be offset against any liability to UK income tax on these dividends. (If you do not pay tax at the higher rate, the US withholding tax satisfies any liability to UK income tax, and you will not need to include the details on your self-assessment tax return.) NICs are never payable on Dividends or Dividend Shares. * THERE IS NO INCOME TAX OR NICS TO PAY IF YOUR SHARES COME OUT OF THE PLAN BECAUSE YOU LEAVE THE APACHE GROUP IN SPECIAL CIRCUMSTANCES (SEE PAGE 8). 7 Leaving the Apache Group If you leave the Apache Group, all your Shares cease to be subject to the Plan and must be sold or transferred to you. SPECIAL CIRCUMSTANCES LEAVING BECAUSE OF INJURY, DISABILITY, REDUNDANCY OR RETIREMENT If you leave because of injury, disability, redundancy or retirement (at or before normal retirement age as long as this is over the age of 50), your Shares cease to be subject to the Plan. They must then be sold or transferred to you. There will be no income tax or NICs to pay. WHAT HAPPENS IF I DIE? In the event of your death, your Shares will be sold or transferred in accordance with instructions from your legal personal representatives. There will be no income tax or capital gains tax to pay. For inheritance tax purposes the value of your Shares will be the market value of the Shares at the date of your death. LEAVING FOR ANY OTHER REASONS If you leave the Apache Group (other than in one of the Special Circumstances set out above) your Shares will cease to be subject to the Plan and must be sold or transferred to you. This could mean you have income tax under PAYE and NICs to pay (see page 8 for details). CHANGES TO THE APACHE GROUP WHAT HAPPENS IF THE BUSINESS IN WHICH I AM EMPLOYED IS SOLD? If the business or part of the business in which you are employed is sold out of the Apache Group, your Shares cease to be subject to the Plan and must be sold or transferred to you. There will be no income tax or NICs to pay. WHAT HAPPENS IF THE COMPANY IS TAKEN OVER OR REORGANISED? Takeovers and mergers can take many forms and the Trustee will send you the relevant documentation when necessary. 8 Your tax position The table below gives a summary of the likely taxation implications of taking part in the Plan. This is for guidance only and if you are in any doubt as to your tax position, you should consult an independent financial adviser before taking any action.
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 AFTER YEAR 5 - ---------------------------------------------------------------------------------------------------------------- Can be sold or transferred at any time ----------------------------------------------------------------------------------------- Income tax under PAYE and NICs Partnership Shares Income tax under PAYE and NICs are are payable on the lower of payable on the value of the Shares the initial cost of the Shares No income tax or when they cease to be subject to the and the value of the Shares NICs to pay Plan. * when they cease to be subject to the Plan* - ---------------------------------------------------------------------------------------------------------------- No sale or transfer normally possible Can be sold or transferred for employees. ----------------------------------------------------------------------------------------- Income tax under PAYE and NICs For leavers, income tax and NICs are are payable on the lower of Matching Shares payable on the value of the Shares the initial cost of the Shares No income tax or when they cease to be subject to the and the value of the Shares NICs to pay. Plan.* when they cease to be subject to the Plan.* - ---------------------------------------------------------------------------------------------------------------- No sale or transfer normally possible for employees. ------------------------------------- For leavers, if Shares cease to be subject to the Plan and you are a higher rate taxpayer, you will have to pay UK income tax on the original Dividend Shares value of the dividend, but in the No income tax to pay. year the Shares cease to be subject to the Plan. US withholding tax can be offset against this liability. NICs are not payable on dividends or Dividend Shares. * - ----------------------------------------------------------------------------------------------------------------
*If you leave because of injury, disability, redundancy, retirement (at or before normal retirement age as long as this is over the age of 50), death or if the business in which you are employed is sold out of the Apache Group, there is no income tax or NICs to pay when your Shares cease to be subject to the Plan. 9 CAPITAL GAINS TAX There is no capital gains tax to pay on the growth in value of your Shares whilst they remain in the Plan. As you can leave your Shares in the Plan for all the time you are employed by the Apache Group, there is no capital gains tax to pay on any growth in the value of your Shares in the Plan, over your period of employment. If you subsequently transfer the Shares into your own name they will become subject to capital gains tax in the same way as any other investment. The base cost for calculating capital gains tax going forward will be the market value of the Shares when they leave the Plan. Taper relief will run from the date the Shares leave the Plan and will apply to any subsequent increase in value. NOTE: Shares cease to be subject to the Plan on the date you leave the Apache Group. TAX LAW CHANGES FROM TIME TO TIME AND YOU SHOULD CONFIRM THE POSITION BEFORE SHARES ARE SOLD OR TRANSFERRED. 10 Share ownership SHARES AWARDED TO YOU UNDER THE PLAN Shares in the Apache Corporation are listed on the New York Stock Exchange. The price of shares varies according to demand on the stock market. Accordingly, the price of any share may go up or down - sometimes very quickly. The price depends upon what purchasers are prepared to pay. This will be largely influenced by a company's profitability and prospects but may also be affected by general economic circumstances, exchange rates, political events and other factors outside the control of the company. DIVIDENDS A dividend is a share in the profits of a company distributed to shareholders, expressed as an amount per share. The directors of the company determine the amount of any dividend. Apache Corporation normally declares a dividend payable to shareholders four times a year. Dividends are paid net of US withholding tax (currently 15% if the participant has returned a completed form W-8BEN). Dividends are not guaranteed. WHO OWNS THE SHARES? You are the beneficial owner of all the Shares awarded to you and held in Trust under the Plan as soon as they are allocated to you. VOTING Shares in Apache Corporation carry the right to vote. This is your right, but as the Shares will be held in the name of the Trustee, you have to instruct the Trustee how to vote on your behalf, if you want them to do so. You will receive relevant documentation as and when necessary. WHO LOOKS AFTER YOUR SHARES? The Company has appointed Capita IRG Trustees Limited to administer the Plan and undertake the Trustee's duties. Capita IRG Trustees Limited has considerable experience in handling such plans and is independent of the Company. CAPITA IRG TRUSTEES LIMITED The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Tel: 020 8639 3347 Fax: 020 8639 2467 email: apacheuk@capital.co.uk KEEPING YOU UP TO DATE - STATEMENTS The Trustee will send you two Plan Statements a year, approximately six months apart in May and November. Each Plan Statement will show details of Shares acquired during the previous six months and give details of your total shareholding under the Plan. 11 Selling or transferring your Shares In order to sell your Shares or have them transferred into your name or a broker account, you must send a completed Sale Form or Transfer Form to the Trustee. The forms are available from the Trustee. Details of the administration fees and broker's commission payable are included on the Sale or Transfer Form. If you sell your Shares, the administration fee and broker's commission will be deducted from the sale proceeds. If you transfer your Shares, you will need to send a cheque to the Trustee for the administration charge with your completed Transfer Form and any applicable tax and NICs payment. PAYING INCOME TAX (IF APPLICABLE) ON SALE If the Trustee sells Partnership Shares or Matching Shares on your behalf within five years of allocation to you, the proceeds will be paid to you through payroll net of income tax and NICs. If income tax is deducted at the basic rate and you are a higher rate taxpayer, you will need to include the details on your self-assessment tax return. If you are not liable to income tax you may be able to claim a rebate at the end of the tax year. If the Trustee sells Dividend Shares on your behalf within three years of allocation, you will need to include the details on your self-assessment tax return if you pay tax at the higher rate. The US withholding tax that has been deducted at source can be offset against any liability to UK income tax on these dividends. If you do not pay tax at the higher rate, the US withholding tax satisfies any liability to UK income tax, and you will not need to include the details on your self-assessment tax return. Any administration fee and broker's commission will be deducted from the sale proceeds. ON TRANSFER If you leave the Apache Group and ask the Trustee to transfer your Shares to you, they will notify you of the amount of any income tax and NICs to be paid. On receipt of a payment from you for the income tax, NICs, and any administration fee due, the Trustee will arrange for you to be entered on the register of shareholders of the Company. If you ask the Trustee to transfer Dividend Shares before the end of three years, you will need to include the details on your self-assessment tax return if you pay tax at the higher rate. The US withholding tax that has been deducted at source can be offset against any liability to UK income tax on these dividends. If you do not pay tax at the higher rate, the US withholding tax satisfies any liability to UK income tax, and you will not need to include the details on your self-assessment tax return. 12 Further Information TRUST DEED AND RULES The Plan is administered in accordance with the Trust Deed and Rules, a legally binding document governing the Plan. This booklet is an explanatory guide only. If there is any discrepancy between the two documents the Trust Deed and Rules will take precedence. Copies of the Trust Deed and Rules are available for inspection, and you may arrange to see this document through your Human Resources Department. The Company may vary or terminate the Plan. However, any such change will not affect your position with regard to Shares already in the Plan. 13 EX-4.7 5 h06844exv4w7.txt APACHE UK SHARE INCENTIVE PLAN INTRODUCTORY SHARE Exhibit 4.7 TO: ALL EMPLOYEES Apache to award L1,000 worth of Apache Corporation Shares through the Apache U.K. Share Incentive Plan (SIP) to all employees who commenced employment with Apache North Sea Limited on 1 April 2003. To launch the Apache U.K. SIP, and in recognition of the fact that employees transferring from BP on 1 April 2003 are not able to contribute to a SIP for three months, Apache North Sea Limited (the Company) has decided to award all employees who started with the Company on 1 April 2003 L1,000 worth of Introductory Shares in Apache Corporation through the SIP. - - Your Introductory Shares will be awarded to you in July 2003 with no income tax or National Insurance Contributions (NICs) to pay. - - Whilst you are employed in the Apache group, your Introductory Shares must stay in the SIP for three years. - - After three years you can sell or transfer your Introductory Shares, but you will normally have to pay income tax under PAYE and NICs if you sell or transfer them within five years of allocation to you.* - - If you leave the Apache group, your Introductory Shares will cease to be subject to the SIP and must be sold or transferred out of the SIP. - - If you leave within five years you will normally have to pay income tax under PAYE and NICs.* - - Dividends on your Introductory Shares in the SIP will be reinvested to buy Dividend Shares in the SIP just like dividends on any other shares you have in the SIP. WHAT DO I HAVE TO DO TO RECEIVE MY INTRODUCTORY SHARES? You must complete the enclosed Introductory Share Agreement and return it to the Trustee to be received by 30 June 2003. If your completed Introductory Share Agreement is not received by then, you cannot receive any Introductory Shares in the SIP. HOW CAN I FIND OUT MORE? Your Introductory Shares are awarded through the SIP, and are subject to the Rules of the SIP. This leaflet is additional to, and should be read in conjunction with, the Apache U.K. Share Incentive Plan (SIP) Employee Booklet received with this leaflet. If you have any further questions, you can contact the Trustee of the SIP on 020 8639 3347 or by email at apacheuk@capita.co.uk. Please note that the law prohibits the Trustee and your Human Resources Department from giving financial planning or investment advice. WHAT IS THE TAX POSITION? Your tax position for Introductory Shares is detailed overleaf. HUMAN RESOURCES *IF YOU LEAVE THE APACHE GROUP BECAUSE OF INJURY, DISABILITY, REDUNDANCY, RETIREMENT (AT OR BEFORE NORMAL RETIREMENT AGE AS LONG AS THIS IS OVER THE AGE OF 50), DEATH OR IF YOU ARE EMPLOYED BY A PART OF THE COMPANY WHICH IS SOLD OUT OF THE APACHE GROUP, THERE IS NO INCOME TAX OR NICS TO PAY WHEN YOUR SHARES CEASE TO BE SUBJECT TO THE SIP. YOUR TAX POSITION FOR INTRODUCTORY SHARES INCOME TAX AND NICs
AFTER YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 5 - ----------------------------------------------------------------------------------------------------------- No sale or transfer normally possible for Can be sold or transferred at any time employees - ----------------------------------------------------------------------------------------------------------- INTRODUCTORY SHARES For leavers, income tax under PAYE and Income tax under PAYE and No income NICs is payable on the value of the shares NICs is payable on the tax or NICs when they cease to be subject to the SIP.* lower of the initial cost to pay of the Shares and the value of the Shares when they cease to be subject to the SIP.* - -----------------------------------------------------------------------------------------------------------
CAPITAL GAINS TAX There is no capital gains tax to pay on the growth in value of your Introductory Shares whilst they remain in the SIP. As you can leave your Introductory Shares in the SIP for all the time you are employed by the Apache Group, there is no capital gains tax to pay on any growth in value of your Shares in the SIP over your period of employment. If you subsequently transfer the Shares into your own name they will become subject to capital gains tax in the same way as any other investment. The base cost for calculating capital gains tax going forward will be the market value of the Shares when they leave the SIP. Taper relief will run from the date the Shares leave the SIP and will apply to any subsequent increase in value. NOTE: Shares cease to be subject to the SIP on the date you leave the Apache Group. Tax law changes from time to time and you should confirm the position before Shares are sold or transferred. GENERAL YOU MUST ALWAYS REMEMBER THAT THE PRICE OF SHARES CAN GO DOWN AS WELL AS UP. THE PRICE OF SHARES CAN ALSO BE AFFECTED BY FACTORS OTHER THAN THE PERFORMANCE OF THE APACHE GROUP. THE SIP IS ADMINISTERED IN ACCORDANCE WITH THE TRUST DEED AND RULES, A LEGALLY BINDING DOCUMENT GOVERNING THE SIP. THIS IS AN EXPLANATORY LEAFLET ONLY. IT IS ADDITIONAL TO, AND SHOULD BE READ IN CONJUNCTION WITH, THE APACHE U.K. SHARE INCENTIVE PLAN (SIP) EMPLOYEE BOOKLET RECEIVED WITH THIS LEAFLET. IF THERE IS ANY DISCREPANCY, THE TRUST DEED AND RULES WILL TAKE PRECEDENCE. COPIES OF THE TRUST DEED AND RULES ARE AVAILABLE FOR INSPECTION, AND YOU CAN ARRANGE TO SEE THIS DOCUMENT THROUGH YOUR HUMAN RESOURCES DEPARTMENT. THE COMPANY MAY VARY OR TERMINATE THE SIP. HOWEVER, ANY SUCH CHANGE WILL NOT AFFECT YOUR POSITION WITH REGARD TO SHARES ALREADY IN THE SIP. *IF YOU LEAVE THE APACHE GROUP BECAUSE OF INJURY, DISABILITY, REDUNDANCY, RETIREMENT (AT OR BEFORE NORMAL RETIREMENT AGE AS LONG AS THIS IS OVER THE AGE OF 50), DEATH OR IF YOU ARE EMPLOYED BY A PART OF THE COMPANY WHICH IS SOLD OUT OF THE APACHE GROUP, THERE IS NO INCOME TAX OR NICS TO PAY WHEN YOUR SHARES CEASE TO BE SUBJECT TO THE SIP. EX-5.1 6 h06844exv5w1.txt OPINION OF LEGAL COUNSEL RE LEGALITY OF SECURITIES ANDREWS & KURTH L.L.P. ATTORNEYS 600 TRAVIS, SUITE 4200 HOUSTON, TEXAS 77002 EXHIBIT 5.1 June 17, 2003 Apache Corporation 2000 Post Oak Blvd., Suite 100 Houston, TX 77056-4400 Ladies and Gentlemen: We are rendering this opinion in our capacity as special counsel for Apache Corporation, a Delaware corporation ("Apache"), in connection with the Registration Statement on Form S-8 (the "Registration Statement") filed on or about this date by Apache under the Securities Act of 1933, as amended, and relating to 100,000 shares of Apache's common stock, $1.25 par value ("Apache Common Stock"), to be offered under the plan described in the Registration Statement (the "Plan"). In connection therewith, we have examined the Registration Statement, the corporation proceedings with respect to the offering of shares and such other documents and instruments as we have deemed necessary or appropriate for the expression of the opinion contained herein. On the basis of our foregoing, and having regard for such legal considerations that we have deemed relevant, it is our opinion that the 100,000 shares of Apache Common Stock to be registered have been duly authorized for issuance and sale, and when issued in accordance with the terms and conditions of the Plan, will be legally issued, fully paid and non-assessable. The opinions set forth above are limited in all respects to matters of Texas law and to the Delaware General Corporation Law (including the applicable provisions of the Delaware Constitution and the reported judicial decisions interpreting these laws). We consent to the inclusion of this letter as an exhibit to the Registration Statement. Very truly yours, /s/ ANDREWS & KURTH L.L.P. Andrews & Kurth L.L.P. EX-23.1 7 h06844exv23w1.txt CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Registration Statement pertaining to the Apache UK Share Incentive Plan of our report dated March 14, 2003 with respect to the financial statements of Apache Corporation and subsidiaries included in the Annual Report on Form 10-K for the year ended December 31, 2002, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP ERNST & YOUNG LLP Houston, Texas June 17, 2003 EX-23.2 8 h06844exv23w2.txt CONSENT OF RYDER SCOTT COMPANY PETROLEUM ENGINEERS [Ryder Scott Letterhead] EXHIBIT 23.2 Consent of Ryder Scott Company Petroleum Engineers As independent petroleum engineers, we hereby consent to the incorporation by reference in this registration statement of our Firm's review of the proved oil and gas reserve quantities of Apache Corporation as of January 1, 2003, and to all references to our Firm included in this registration statement. /s/ Ryder Scott Company, L. P Ryder Scott Company, L. P. Houston, Texas May 31, 2003 -----END PRIVACY-ENHANCED MESSAGE-----