EXHIBIT 10.3
OCCIDENTAL PETROLEUM CORPORATION
DEFERRED STOCK PROGRAM
OCCIDENTAL PETROLEUM CORPORATION
DEFERRED STOCK PROGRAM
TABLE OF CONTENTS
PAGE
ARTICLE I PURPOSES AND AUTHORIZED SHARES.............................................................. 2
1.1 Purposes.................................................................................... 2
1.2 Shares Available............................................................................ 2
1.3 Relationship to Plans....................................................................... 2
ARTICLE II DEFINITIONS................................................................................. 3
ARTICLE III option gain deferrals....................................................................... 9
3.1 Participation............................................................................... 9
3.2 Alternative Exercise of Options............................................................. 9
ARTICLE IV DEFERRAL OF OTHER STOCK AWARDS.............................................................. 11
4.1 Deferrals of Restricted Stock and Performance Stock......................................... 11
4.2 Deferrals of Restricted Share Units......................................................... 11
ARTICLE V DEFERRED SHARE ACCOUNTS..................................................................... 12
5.1 Crediting of Deferred Shares................................................................ 12
5.2 Dividend Equivalents........................................................................ 12
5.3 Vesting..................................................................................... 13
5.4 Distribution of Benefits.................................................................... 13
5.5 Adjustments in Case of Changes in Common Stock.............................................. 16
5.6 Company's Right to Withhold................................................................. 16
5.7 Termination of Employment................................................................... 16
ARTICLE VI ADMINISTRATION.............................................................................. 18
6.1 The Administrator........................................................................... 18
6.2 Committee Action............................................................................ 18
6.3 Rights And Duties........................................................................... 18
6.4 Indemnity and Liability..................................................................... 19
ARTICLE VII claims procedure............................................................................ 20
ARTICLE VIII AMENDMENT AND TERMINATION OF PROGRAM........................................................ 22
8.1 Amendment................................................................................... 22
8.2 Term........................................................................................ 22
-i-
OCCIDENTAL PETROLEUM CORPORATION
DEFERRED STOCK PROGRAM
TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE IX miscellaneous............................................................................... 23
9.1 Limitation on Participant's Rights.......................................................... 23
9.2 Beneficiary Designation..................................................................... 23
9.3 Payments to Minors or Persons Under Incapacity.............................................. 23
9.4 Receipt and Release......................................................................... 24
9.5 Deferred Shares and Other Benefits Not Assignable; Obligations Binding Upon Successors...... 24
9.6 Employment Taxes............................................................................ 24
9.7 Governing Law; Severability................................................................. 24
9.8 Compliance with Laws........................................................................ 25
9.9 Program Construction........................................................................ 25
9.10 Headings Not Part of Program................................................................ 25
EXHIBIT A QUALIFYING STOCK OPTION ALTERNATIVE
EXERCISE ELECTION........................................................................... A-1
EXHIBIT B LIST OF SECTION 16 OFFICERS AS OF THE EFFECTIVE DATE........................................ B-1
-ii-
OCCIDENTAL PETROLEUM CORPORATION
DEFERRED STOCK PROGRAM
This document sets forth the terms of the Occidental Petroleum
Corporation Deferred Stock Program (the "Program"), effective as of September
12, 2002. This document amends and supersedes the Deferred Settlement Rules and
Procedures previously established with respect to Restricted Stock Awards and
Performance Stock Awards and applies to amounts previously deferred under those
Deferred Settlement Rules and Procedures.
This Program is intended to be an unfunded program maintained
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees as described in Section 201(2),
301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974,
as amended.
ARTICLE I
PURPOSES AND AUTHORIZED SHARES
1.1 Purposes. The purposes of the Program are to promote the ownership
and retention of shares of common stock of Occidental Petroleum Corporation by
its executives and to allow executives to accumulate additional retirement
income through deferrals of receipt of common stock of Occidental Petroleum
Corporation under its Stock Plans.
1.2 Shares Available. The number of Shares that may be issued under
each of the 1987 Plan, the 1995 Plan and the 2001 Plan as part of this Program
is limited to the sum of the following: (a) the aggregate number of Shares that
were the subject of the Qualifying Options granted under such Stock Plan that
are exercised pursuant to Article III in exchange for the crediting of Deferred
Shares under this Program, (b) the aggregate number of Shares that were subject
to Qualifying Restricted Stock Awards granted under such Stock Plan that
Participants elect pursuant to Section 4.1 to defer in the form of Deferred
Shares under this Program, (c) the aggregate number of Shares that were subject
to Qualifying Performance Stock Awards granted under such Stock Plan that
Participants elect pursuant to Section 4.1 to defer in the form of Deferred
Shares under this Program, and (d) the aggregate number of Share units subject
to Qualifying Restricted Share Unit Awards granted under such Stock Plan that
vest and are credited in the form of Deferred Shares under this Program as
described in Section 5.1(b). Deferred Shares credited to Participants' Deferred
Share Accounts under this Program may accrue Dividend Equivalents that may be
credited in the form of additional Deferred Shares and paid to Participants
under this Program in the form of Shares. If the number of Shares payable under
this Program would exceed one or more of the limits described in the preceding
sentence because of the accumulation of Deferred Shares in respect of Dividend
Equivalents, such excess Shares shall be issued and charged against the Share
limits under the 2001 Plan. If insufficient Shares remain under the 2001 Plan
for the accumulation of Dividend Equivalents, Dividend Equivalents may be paid
(in the sole discretion of the Committee) in cash.
1.3 Relationship to Plans. This Program constitutes a deferred
compensation plan providing alternative settlements under and as contemplated by
the Stock Plans in respect of Qualifying Stock Options, Qualifying Restricted
Stock Awards, Qualifying Restricted Share Unit Awards and Qualifying Performance
Stock Awards granted thereunder. This Program also contemplates the grant of
Deferred Shares under and as contemplated by the Stock Plans. This Program and
all rights under it are provided and shall be subject to and construed
consistently with the other terms of the 1987 Plan, the 1995 Plan or the 2001
Plan, as the case may be.
2
ARTICLE II
DEFINITIONS
Whenever the following words and phrases are used in this Program
with the first letter capitalized, they shall have the meanings specified below:
Affiliate. "Affiliate" means: (a) any corporation that is a member
of a controlled group of corporations (within the meaning of Code Section
1563(a), determined without regard to Code Sections 1563(a)(4) and (e)(3)(C),
and with the phrase "more than 50%" substituted for the phrase "at least 80%"
each place it appears in Code Section 1563(a)) of which Occidental Petroleum
Corporation is a component member, or (b) any entity (whether or not
incorporated) that is under common control with Occidental Petroleum Corporation
(as defined in Code Section 414(c) and the Treasury Regulations thereunder, and
with the phrase "more than 50%" substituted for the phrase "at least 80%" each
place it appears in the Treasury Regulations under Code Section 414(c)).
Already-Owned Shares. "Already-Owned Shares" means Shares owned by
an Eligible Person; provided, however, that Shares acquired by an Eligible
Person from the Company under an option or other employee benefit plan
maintained by the Company or otherwise must be held by the Eligible Person for
at least six (6) months in order to qualify as Already-Owned Shares and, if
Shares are used to pay the exercise price of an option or other award, such
Shares may not be reused as payment of the exercise price of another option or
award within six (6) months of such prior use.
Alternative Exercise. "Alternative Exercise" means the exercise of
all or a portion of a Qualifying Stock Option using Already-Owned Shares in
exchange for a combination of Exercise Shares and Deferred Shares under this
Program.
Alternative Exercise Election. "Alternative Exercise Election"
means an election executed by an Eligible Person in accordance with Sections 3.1
and 3.2 of this Program pursuant to which the Eligible Person elects to defer
that portion of the proceeds of the exercise of the Qualifying Option equal to
the spread in the form of Deferred Shares.
Beneficiary. "Beneficiary" means the person or persons designated
as such in accordance with Section 9.2.
Board. "Board" means the Board of Directors of the Corporation.
Change in Control. "Change in Control" means any of the following:
(a) Approval by the stockholders of the Company (or, if
no stockholder approval is required, by the Board) of the dissolution or
liquidation of the Company, other than in the context of a transaction
that does not constitute a Change in Control under clause (b) below;
3
(b) Consummation of a merger, consolidation, or other
reorganization, with or into, or the sale of all or substantially all of
the Company's business and/or assets as an entirety to, one or more
entities that are not subsidiaries or other affiliates of the Company (a
"Business Combination"), unless (i) as a result of the Business
Combination, more than 50% of the outstanding voting power of the
surviving or resulting entity or a parent thereof (the "Successor
Entity") immediately after the Business Combination is, or will be,
owned, directly or indirectly, by holders of the Company's voting
securities immediately before the Business Combination; (ii) no "person"
(as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended from time (the "Exchange Act")),
excluding the Successor Entity or any employee benefit plan of the
Company and any trustee or other fiduciary holding securities under a
Company employee benefit plan or any person described in and satisfying
the conditions of Rule 13d-1(b)(i) of the Exchange Act (an "Excluded
Person"), beneficially owns, directly or indirectly, more than 20% of the
outstanding shares or the combined voting power of the outstanding voting
securities of the Successor Entity, after giving effect to the Business
Combination, except to the extent that such ownership existed prior to
the Business Combination; and (iii) at least 50% of the members of the
board of directors of the entity resulting from the Business Combination
were members of the Board at the time of the execution of the initial
agreement or of the action of the Board approving the Business
Combination;
(c) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act, but excluding any Excluded Person) is or
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company's then
outstanding voting securities, other than as a result of (i) an
acquisition directly from the Company; (ii) an acquisition by the
Company; or (iii) an acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or a Successor Entity; or
(d) During any period not longer than two consecutive
years, individuals who at the beginning of such period constituted the
Board cease to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company's stockholders,
of each new Board member was approved by a vote of at least two-thirds
(2/3) of the Board members then still in office who were Board members at
the beginning of such period (including for these purposes, new members
whose election or nomination was so approved), but excluding, for this
purpose, any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other
than the Board.
(e) Notwithstanding the foregoing, a Change in Control
shall not occur if, prior to the Change in Control, the Executive
Compensation and Human Resources Committee of the Board deems such an
event to not be a Change in Control for the purposes of this Program.
Code. "Code" means the Internal Revenue Code of 1986, as amended.
4
Committee. "Committee" means the administrative committee
appointed to administer the Program pursuant to Article VI.
Common Stock. "Common Stock" means the Corporation's common stock,
par value $.20 per share, subject to adjustment pursuant to Section 5.5 of this
Program.
Company. "Company" means the Corporation and any Affiliates.
Conversion Date. "Conversion Date" means the date that the
Eligible Person exercises all or a portion of a Qualifying Option in accordance
with the Alternative Exercise procedures under this Program.
Corporation. "Corporation" means Occidental Petroleum Corporation,
a Delaware corporation, and any successor corporation.
Current Dividend Equivalent. "Current Dividend Equivalent" means a
Dividend Equivalent paid to the Participant in the form of cash at the same time
as dividends are paid on Shares to the Corporation's shareholders.
Deferred Dividend Equivalent. "Deferred Dividend Equivalent" means
a Dividend Equivalent credited to a Participant's Deferred Share Account in the
form of additional Deferred Shares (rounded to four decimal places) and paid to
the Participant in the form of Shares at the same time that the other Deferred
Shares credited to the Participant's Deferred Share Account are distributed in
the form of Shares to the Participant.
Deferred Settlement Rules and Procedures. "Deferred Settlement
Rules and Procedures" means the rules and procedures established under the 1995
Plan by the Committee prior to the adoption of this Program to allow the holders
of any Restricted Stock Award and the holders of any Performance Stock Award to
elect to defer the delivery of Shares that become vested under such Restricted
Stock Award or Performance Stock Award until termination of the holder's
employment with the Company.
Deferred Share. "Deferred Share" means a non-voting unit of
measurement which is deemed solely for bookkeeping purposes to be equivalent to
one outstanding Share (subject to Section 5.5) solely for purposes of this
Program.
Deferred Share Account. "Deferred Share Account" means the
bookkeeping account maintained by the Company on behalf of each Participant that
is credited with Deferred Shares in accordance with Sections 5.1(a) and/or
5.1(b) and Dividend Equivalents thereon in accordance with Section 5.2.
Disability. "Disability" means a condition that qualifies as a
disability under the Company's Retirement Plan and is approved by the Committee.
Distribution Election Form. "Distribution Election Form" means an
election form provided by the Committee on which a Participant may elect an
alternative form of distribution, which election will be effective only if the
Participant's termination of employment with the Company occurs on or after
becoming eligible for Retirement, as provided in Section 5.4(c).
5
Dividend Equivalent. "Dividend Equivalent" means the amount of
cash dividends or other cash distributions paid by the Corporation on that
number of Shares equal to the number of Deferred Shares credited to a
Participant's Deferred Share Account as of the applicable record date for the
dividend or other distribution, which amount shall be either credited as a
Deferred Dividend Equivalent to the Deferred Share Account of the Participant or
paid to the Participant as a Current Dividend Equivalent in accordance with the
terms of Section 5.2.
Effective Date. "Effective Date" means September 12, 2002.
Eligible Person. "Eligible Person" means any employee of the
Company who holds a Qualifying Option, Qualifying Performance Stock Award,
Qualifying Restricted Share Unit Award or Qualifying Restricted Stock Award
granted under one of the Stock Plans.
Exchange Act. "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
Exercise Shares. "Exercise Shares" means the Shares delivered by
the Corporation upon the Alternative Exercise of a Qualifying Option in
accordance with Section 3.2(a).
Fair Market Value. "Fair Market Value" has the meaning given to
such term in the 2001 Plan.
Gain Shares. "Gain Shares" means the number of shares deferred
under this Program upon the Alternate Exercise of a Qualifying Option as
determined under Section 3.2(a).
1987 Plan. "1987 Plan" means the Occidental Petroleum Corporation
1987 Stock Option Plan, as amended from time to time.
1995 Plan. "1995 Plan" means the Occidental Petroleum Corporation
1995 Incentive Stock Plan, as amended from time to time.
Other Qualifying Stock Award. "Other Qualifying Stock Award" means
a Qualifying Restricted Stock Award, a Qualifying Performance Stock Award or a
Qualifying Restricted Share Unit Award.
Participant. "Participant" means any person who has Deferred
Shares credited to a Deferred Share Account under this Program.
Performance Stock Award. "Performance Stock Award" means an award
of "Performance Stock" under and as defined in the 1995 Plan or a
"Performance-Based Award" under and as defined in the 2001 Plan.
Program. "Program" means this Occidental Petroleum Corporation
Deferred Stock Program, as it may be amended from time to time.
6
Qualifying Option or Qualifying Stock Option. "Qualifying Option
or Qualifying Stock Option" means any nonqualified stock option granted before
or after the Effective Date under one of the Stock Plans to one of the current
Section 16 Officers listed in Appendix B hereto or to any employee who is
subsequently designated a Section 16 Officer by the Executive Compensation and
Human Resources Committee or the Board; provided, however, that an option shall
not be a Qualifying Stock Option if either (a) it will expire, by its terms,
before the end of the six-month period commencing with the date that the
Alternative Exercise Election is received by the Corporation or (b) the option
holder ceases to be a designated Section 16 Officer before the Alternative
Exercise Election is received by the Corporation. In addition, any nonqualified
stock option granted before or after the Effective Date under one of the Stock
Plans to an employee of the Company shall automatically become a Qualifying
Stock Option if and at such time as such employee is designated a Section 16
Officer by the Executive Compensation and Human Resources Committee or the Board
after the date of grant; provided, however, that such an option shall not be a
Qualifying Stock Option if either (a) it will expire by its terms, before the
end of the six-month period commencing with the date that the Alternative
Exercise Election is received by the Corporation or (b) the option holder ceases
to be a designated Section 16 Officer before the Alternative Exercise Election
is received by the Corporation.
Qualifying Performance Stock Award. "Qualifying Performance Stock
Award" means (a) any Performance Stock Award granted under one of the Stock
Plans prior to the Effective Date and (b) any Performance Stock Award granted
under the 2001 Plan after the Effective Date unless otherwise provided by the
Executive Compensation and Human Resources Committee in the award agreement
evidencing such Performance Stock Award.
Qualifying Restricted Share Unit Award. "Qualifying Restricted
Share Unit Award" means a Restricted Share Unit Award that, by its terms, delays
the delivery of Shares subject to the Restricted Share Unit Award that become
vested to termination of the holder's employment with the Company.
Qualifying Restricted Stock Award. "Qualifying Restricted Stock
Award" means (a) any Restricted Stock Award granted under one of the Stock Plans
prior to the Effective Date and (b) any Restricted Stock Award granted under the
2001 Plan after the Effective Date unless otherwise provided by the Executive
Compensation and Human Resources Committee in the award agreement evidencing
such Restricted Stock Award.
Restricted Share Unit Award. "Restricted Share Unit Award" means a
grant of restricted units, with each such unit representing the right to receive
one Share under the 2001 Plan.
Restricted Stock Award. "Restricted Stock Award" means a grant of
restricted stock under the 1995 Plan or the 2001 Plan.
Retires. "Retires" means terminates employment on or after
qualifying for Retirement.
Retirement. "Retirement" means (a) the termination of a
Participant's employment with the Company for reasons other than Disability or
death after the Participant
7
attains age 65, (b) the termination of a Participant's employment with the
Company for reasons other than Disability or death after the Participant attains
age 55 and completes five (5) Years of Service or (c) the Participant's
attainment of age 55 following the Participant's termination of employment with
the Company for reasons other than Disability or death prior to age 55 if the
Participant qualifies for retiree medical coverage under the Occidental
Petroleum Corporation Medical Plan on the date of the Participant's termination
of employment.
Retirement Plan. "Retirement Plan" means the Occidental Petroleum
Corporation Retirement Plan, as amended from time to time.
Rule 16b-3. "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act.
Section 16 Officer. "Section 16 Officer" means an officer of the
Corporation as defined in Rule 16a-1(f) promulgated under the Exchange Act.
Share. "Share" means a share of Common Stock.
Stock Plans. "Stock Plans" means the 1987 Plan, the 1995 Plan and
the 2001 Plan.
2001 Plan. "2001 Plan" means the Occidental Petroleum Corporation
2001 Incentive Compensation Plan.
Years of Service. "Years of Service" means the number of full
years credited to the Participant under the Retirement Plan for vesting
purposes.
8
ARTICLE III
OPTION GAIN DEFERRALS
3.1 Participation.
(a) General Participation Requirements. An Eligible Person may
elect to exercise a Qualifying Option under and subject to the Alternative
Exercise provisions set forth herein and to receive a credit of Deferred Shares
under this Program. Any such election must apply to all Shares subject to the
Qualifying Option.
(b) Manner and Timing of Election. An election to Alternatively
Exercise a Qualifying Option may only be made by an Eligible Person by
completing and executing a form of Alternative Exercise Election that meets the
requirements of Section 3.2 and submitting such form to the Corporation after
the Effective Date. Any election received by the Corporation within six (6)
months of the expiration of an option will be void and have no effect.
(c) Committee's Right to Refuse to Accept Alternative Exercise
Election. The Committee, in its sole discretion, may refuse to accept any
Alternative Exercise Election within the 30-day period following the date such
Alternative Exercise Election is received by the Corporation. Notice of any
refusal to accept an Alternative Exercise Election shall be delivered in writing
to the Eligible Person as soon as administratively practicable following the end
of the Committee's 30-day review period.
3.2 Alternative Exercise of Options.
(a) Form of Election. Each Alternative Exercise Election with
respect to a Qualifying Stock Option shall be in the form attached hereto as
Exhibit A or any other form approved by the Committee. Each such Alternative
Exercise Election shall specify the Qualifying Stock Option that the Eligible
Person elects to exercise under this Program and shall provide that (i) the
Eligible Person will exercise such Qualifying Stock Option by paying the
exercise price with Already-Owned Shares having an aggregate Fair Market Value
(on the date preceding the date of the Alternative Exercise) equal to the
exercise price for the number of Shares with respect to which the Qualifying
Stock Option is exercised and (ii), upon exercise, the Company will (A) deliver
to the Eligible Person the same number of Shares used by the Eligible Employee
to pay the exercise price of the Qualifying Stock Option and (B), in lieu of the
remainder of the Shares which would otherwise be delivered to the Eligible
Person (the "Gain Shares"), credit to a Deferred Share Account established for
the Eligible Person Deferred Shares equal in number to the number of Gain
Shares. An Alternative Exercise Election is irrevocable by the Eligible Person
once it is received by the Corporation.
(b) Limited Ability to Exercise Option. Any Qualifying Option
that is subject to an Alternative Exercise Election may not be exercised at all
during the six-month period following the date the Corporation receives the
Eligible Person's Alternative Exercise Election.
(c) Termination of Alternative Exercise Elections. An Eligible
Person's Alternative Exercise Election shall terminate and the related
Qualifying Option may be exercised for actual Shares in accordance with the
terms of the Qualifying Option without regard to the Alternative Exercise
Election or the restriction set forth in Section 3.2(b) in the following
9
circumstances: (i) an Eligible Person's Alternative Exercise Election is timely
refused by the Committee, (ii) an Eligible Person's employment with the Company
(including any Affiliate) is terminated, or (iii), unless the Committee
otherwise provides, a Change in Control occurs. In addition, an Eligible
Person's Alternative Exercise Election shall terminate and the related
Qualifying Option may be exercised for actual Shares in accordance with the
terms of the Qualifying Option without regard to the Alternative Exercise
Election on the date on which the Eligible Person ceases to be a designated
Section 16 Officer. If the Corporation unilaterally refuses to honor an
Alternative Exercise of a Qualifying Option pursuant to Section 9.8, the
Alternative Exercise Election with respect to such Qualifying Option shall
terminate and such Qualifying Option shall be exercisable for actual Shares in
accordance with its terms without regard to the Alternative Exercise Election or
the terms of the Qualifying Option regarding Alternative Exercise.
(d) Other Terms of Alternative Exercise Elections. No
Alternative Exercise Election shall have the effect of extending the term or
otherwise changing the terms of any Qualifying Option (except as expressly
contemplated hereby in respect of the consequences of an Alternative Exercise).
No Alternative Exercise Election may be amended or terminated except as
specifically provided herein.
10
ARTICLE IV
DEFERRAL OF OTHER STOCK AWARDS
4.1 Deferrals of Restricted Stock and Performance Stock.
(a) Participation. An Eligible Person may make an advance
election to forego the delivery of Shares upon the vesting of a Qualifying
Restricted Stock Award or a Qualifying Performance Stock Award and to receive a
credit of Deferred Shares under this Program. Any such election must apply to
all Shares subject to the Qualifying Restricted Stock Award or Qualifying
Performance Stock Award.
(b) Manner and Timing of Election. An election to forego the
delivery of Shares upon the vesting of a Qualifying Restricted Stock Award or a
Qualifying Performance Stock Award may only be made by an Eligible Person by
completing an election on a form provided by the Committee and delivering that
election to the Corporation at least twelve (12) months before any Shares that
are subject to the Qualifying Restricted Stock Award or Qualifying Performance
Stock Award, as the case may be, become vested. Any election received by the
Corporation within twelve (12) months of the vesting of any Shares under a
Qualifying Restricted Stock Award or Qualifying Performance Stock Award will be
considered void and shall have no force or effect.
(c) Election Irrevocable. An election made in accordance with
this Section 4.1 to forego the delivery of Shares in exchange for a credit of
Deferred Shares under this Program shall be irrevocable once it is received by
the Corporation.
4.2 Deferrals of Restricted Share Units. Share units that become
vested under a Qualifying Restricted Share Unit Award shall automatically be
subject to the terms of this Program and be credited as Deferred Shares as
provided in Section 5.1(b).
11
ARTICLE V
DEFERRED SHARE ACCOUNTS
5.1 Crediting of Deferred Shares.
(a) Alternative Exercise of Options. As of the applicable
Conversion Date of a Qualifying Stock Option, an Eligible Person's Deferred
Share Account shall be credited with the number of Deferred Shares attributable
to the Gain Shares, as described in Section 3.2(a).
(b) Vesting of Other Qualifying Stock Awards. As of the date
that all or any portion of a Qualifying Restricted Stock Award or Qualifying
Performance Stock Award that is subject to an deferral election under Section
4.1 becomes vested, no Shares shall be issued to the Eligible Person. Instead,
such Eligible Person's Deferred Share Account shall be credited with the number
of Deferred Shares that is equal to the number of Shares subject to the
Qualifying Restricted Stock Award or Qualifying Performance Stock Award that
first became vested as of that date. As of the date that all or any portion of a
Qualifying Restricted Share Unit Award becomes vested, the Eligible Person's
Deferred Share Account shall be credited with the number of Deferred Shares that
is equal to the number of stock units that first became vested as of that date.
(c) Limitations on Rights Associated with Deferred Shares. A
Participant's Deferred Share Account shall be a memorandum account on the books
of the Corporation. The Deferred Shares credited to a Participant's Deferred
Share Account shall be used solely as a device for the determination of the
number of Shares to be eventually issued to such Participant in accordance with
this Program. The Deferred Shares shall not be treated as property or as a trust
fund of any kind. No Participant shall be entitled to any voting or other
shareholder rights with respect to Deferred Shares granted or credited under
this Program. The number of Deferred Shares credited (and the Shares to which
the Participant is entitled under this Program) shall be subject to adjustment
in accordance with Section 5.5 of this Program.
5.2 Dividend Equivalents.
(a) Election of Current or Deferred Dividend Equivalents. If,
prior to the date of an Eligible Person's first election to Alternatively
Exercise a Qualifying Option or to defer delivery of Shares under an Other
Qualifying Stock Award under this Program, the Eligible Person has elected under
any deferral plan or program of the Company to defer receipt of any Shares, then
such Eligible Person's election as to whether to receive dividend equivalents
with respect to such deferred Shares in the form of Current Dividend Equivalents
or Deferred Dividend Equivalents shall apply with respect to all Dividend
Equivalents attributable to all Deferred Shares under this Program. If an
Eligible Person has not previously made any such deferral election, then such
Eligible Person shall make a one-time irrevocable election at the time of the
Eligible Person's first election under this Program, whether Dividend
Equivalents under this Program will be paid in the form of Current Dividend
Equivalents or Deferred Dividend Equivalents. Any such election shall be on a
form provided by and delivered to the Committee. If an Eligible Person fails to
make such an election, he or she shall be deemed to have elected the Current
Dividend Equivalents. Any such election shall apply with respect to all Dividend
12
Equivalents attributable to all Deferred Shares credited to such Participant
under this Program. A Participant may not change his or her Dividend Equivalent
election.
(b) Deferred Dividend Equivalents Credits to Deferred Share
Accounts. As of any applicable dividend or distribution payment date, the
Deferred Share Account of each Participant who has elected Deferred Dividend
Equivalents shall be credited with additional Deferred Shares in an amount equal
to the amount of the Dividend Equivalents divided by the Fair Market Value of a
Share as of the applicable dividend or distribution payment date. If the limit
on the number of Shares available under this Program in respect of Dividend
Equivalents is reached, the Company may in its discretion pay such Dividend
Equivalents to Participants as Current Dividend Equivalents.
(c) Payment of Current Dividend Equivalents. At the time that
the Corporation distributes dividend payments to its shareholders, the Company
shall pay to each Participant who has elected Current Dividend Equivalents a
cash payment in an amount equal to the amount of the Dividend Equivalents
attributable to the Deferred Shares credited to his or her Deferred Share
Account.
5.3 Vesting. All Deferred Shares (including Deferred Shares credited
as Dividend Equivalents) credited to a Participant's Deferred Share Account
shall be at all times fully vested and nonforfeitable.
5.4 Distribution of Benefits.
(a) Form of Distribution. Deferred Shares credited to a
Participant's Deferred Share Account shall be distributed in an equivalent whole
number of Shares. Fractional share interests shall be settled in cash. The
Committee, in its sole discretion, may pay Deferred Shares credited as Dividend
Equivalents in cash in lieu of Shares.
(b) Timing of Distribution of Benefits. Benefits in respect of
the Deferred Shares credited to a Participant's Deferred Share Account shall be
distributed to the Participant (or his or her Beneficiary in the case of death)
within the first ninety (90) days of the year following the Participant's
termination of employment with the Company for any reason (including, without
limitation, Retirement, death, Disability, resignation or termination by the
Company). If a Participant's benefits are paid in annual installments under
Section 5.4(c), each annual installment shall be paid within the first ninety
(90) days of each calendar year.
(c) Manner of Distribution.
(i) General Rules. Distribution will generally be in the
form of lump sum payment. However, if a Participant
terminates employment on or after becoming eligible
for Retirement, his or her Deferred Shares may
instead be paid in annual installments over two (2)
to twenty (20) years or in a combination of an
initial lump sum payment followed by annual
installments over the subsequent one (1) to twenty
(20) years. The number of Shares to be distributed
in each annual distribution shall be equal to the
number of Shares then credited to the Participant's
Deferred Share Account divided
13
by the number of remaining annual installments. Such
number shall be adjusted downward to the nearest
whole number of Shares so that no fractional Shares
interests are distributed until the last annual
installment distribution.
(ii) Retirement Distribution Election. If, prior to the
date of an Eligible Person's first election under
this Program to Alternatively Exercise a Qualifying
Option or to defer delivery of Shares under an Other
Qualifying Stock Award, the Eligible Person has
elected under any other deferral plan or program of
the Company to defer receipt of any Shares, then
such Eligible Person's election as to whether
distribution of Shares upon Retirement shall be in a
lump sum, installments or a combination of lump sum
and installments shall apply to all Deferred Shares
credited under this Program. If an Eligible Person
has not previously made any such distribution
election, then such Eligible Person may make an
election at the time of his or her first election
under this Program on a form provided by and
delivered to the Committee, and such election shall
apply to all Deferred Shares credited under this
Program. A Participant who fails to make an election
regarding the form of distribution upon or following
Retirement will be deemed to have elected a lump
sum.
(iii) Changes to Retirement Distribution Election. A
Participant may change his or her election as to the
form of Retirement distribution, provided that his
or her change election is made on a Distribution
Election Form and such election is received by the
Committee no later than the December 31 preceding
the date of the Participant's Retirement unless
otherwise permitted by the Committee. Subject to the
foregoing limitations, a Participant may make such
election (or revoke a prior election and make a new
election) at any time. Any election (or modification
or revocation of a prior election) that is made
later than the December 31 preceding the
Participant's Retirement will be considered void and
shall have no force or effect, except as otherwise
determined by the Committee.
(iv) Override of Retirement Distribution Election.
Notwithstanding the foregoing, the Committee may, in
its sole discretion:
(A) distribute the benefits in a single lump sum
if the sum of Shares to be distributed to the
Participant is less than or equal to 1,000,
or
(B) reduce the number of installments elected by
the Participant to produce an annual
distribution of at least 100 Shares.
14
(d) Survivor Benefits. If the Participant dies at any time
before or after termination of employment with the Company while there are
Deferred Shares credited to his or her Deferred Share Account, the Committee
shall distribute the benefits in respect of such remaining Deferred Shares to
the Participant's Beneficiary in a lump sum during the first ninety (90) days of
the calendar year following the year in which the Participant's death occurred.
(e) Effect of Change of Control. In the event of a Change in
Control, the following rules shall apply:
(i) All Participants shall continue to have a fully
vested, nonforfeitable interest in their Deferred
Share Account balances.
(ii) Unless the Committee otherwise provides, Alternative
Exercise Elections shall terminate in accordance
with Section 3.2(c).
(iii) All payments in respect of Deferred Share Accounts
following a Change in Control shall be made as
follows:
(A) Payments that have already commenced shall
continue to be made no less rapidly than
under the schedule in effect just prior to
the Change in Control.
(B) Payments that have not yet commenced shall be
made (in the form of Shares unless the
Committee provides otherwise) in a lump sum
at the earliest possible payment date under
the normal rules for benefit commencement
pursuant to Section 5.4(b) as in effect on
the day before the day of the Change in
Control.
(iv) A Participant's termination of employment for
purposes of this Program shall be deemed to include
(but shall not be limited to) any event (such as a
constructive discharge) giving the Participant the
right to receive salary continuation or other
severance benefits following a Change in Control, as
determined under any plan, program, or agreement
covering the Participant that is in effect at the
time of the Change in Control.
(v) Upon a Participant's petition within sixty (60) days
following a Change in Control, or such other period
as the Committee may permit, the Committee may, in
its sole discretion, authorize an immediate
distribution of the Participant's entire Deferred
Share Account to the Participant regardless of
whether the Participant continues to be employed by
the Company.
(f) Section 162(m) Limitation. Notwithstanding the foregoing,
if the Committee determines in good faith that there is a reasonable likelihood
that any benefits payable to a Participant for a taxable year of the Company
would not be deductible by the Company solely by reason of the limitation under
Code Section 162(m), then to the extent
15
reasonably deemed necessary by the Committee to ensure that the entire amount of
any distribution to the Participant pursuant to this Program is deductible, the
Committee may defer all or any portion of a distribution under this Program. The
amounts so deferred shall be distributed to the Participant or his or her
Beneficiary (in the event of the Participant's death) at the earliest possible
date, as determined by the Committee in good faith, on which the deductibility
of compensation paid or payable to the Participant for the taxable year of the
Company during which the distribution is made will not be limited by Code
Section 162(m).
5.5 Adjustments in Case of Changes in Common Stock.
(a) If the outstanding Shares are increased, decreased, or
exchanged for a different number or kind of securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such Shares or other securities, through merger, consolidation, sale of all or
substantially all of the assets of the Company, reorganization,
recapitalization, stock dividend, stock split, reverse stock split or similar
change in capitalization or any other distribution with respect to such Shares
or other securities, proportionate and equitable adjustments consistent with the
effect of such event on stockholders generally (but without duplication of
benefits if Dividend Equivalents are credited) shall be made in the number and
type of Shares or other securities, property and/or rights contemplated
hereunder and of rights in respect of Deferred Shares and Deferred Share
Accounts credited under this Program so as to preserve the benefits intended.
The provisions of Section 8 of the 1987 Plan, Section 9 of the 1995 Plan and
Section 6.2 of the 2001 Plan shall also apply to the related Deferred Shares
granted under the Stock Plans in accordance with this Program.
(b) If the event results in any rights of shareholders to
receive cash (other than cash dividends and cash distributions), a corresponding
amount of cash shall be paid to each Participant as soon as practicable
following the date the cash is paid in respect of outstanding Shares.
5.6 Company's Right to Withhold. The Company (including its
Affiliates) may satisfy any state or federal tax withholding obligation arising
upon a distribution of Shares and any cash with respect to a Participant's
Deferred Share Account by reducing the number of Shares or cash otherwise
deliverable to the Participant. The appropriate number of Shares required to
satisfy such tax withholding obligation in the case of Deferred Shares will be
based on the Fair Market Value of a Share on the date of distribution. If the
Company (including its Affiliates), for any reason, elects not to (or cannot)
satisfy the withholding obligation in accordance with the preceding sentence,
the Participant shall pay or provide for payment in cash of the amount of any
taxes which the Company (including its Affiliates) may be required to withhold
with respect to the benefits hereunder, before any such benefits are paid.
5.7 Termination of Employment. For the purpose of this Article V, a
Participant will be deemed to have terminated employment if the Participant
ceases to be an employee of any of the following:
(a) the Company;
(b) an Affiliate; or
16
(c) any other entity, whether or not incorporated, in which the
Company has an ownership interest, and the Committee has designated that
the Participant's commencement of employment with such entity upon
Participant's ceasing to be an employee of an entity described in (a) or
(b) above will not be deemed to be a termination of employment for
purposes of this Program, provided that such designation shall be made in
writing by the Committee and shall be communicated to the Participant
prior to his commencement of employment with the entity so designated.
For the purposes of the preceding provisions, a Participant who ceases to be an
employee of an entity described in (a), (b) or (c) above shall not be deemed to
have terminated employment if such cessation of employment is followed
immediately by his commencement of employment with another entity described in
(a), (b) or (c) above.
17
ARTICLE VI
ADMINISTRATION
6.1 The Administrator. The Committee hereunder shall consist of (i)
the members of the Executive Compensation and Human Resources Committee of the
Board who are Non-Employee Directors within the meaning of Rule 16b-3 and
"outside directors" for purposes of Section 162(m) of the Code, or (ii) such
other committee of the Board, each participating member of which is a
Non-Employee Director (as defined in Rule 16b-3) and each member of which is an
"outside director" for purposes of Section 162(m) of the Code, as may hereafter
be appointed by the Board to serve as administrator of this Program. Any member
of the Committee may resign by delivering a written resignation to the Board.
Members of the Committee shall not receive any additional compensation for
administration of this Program.
6.2 Committee Action. Action of the Committee with respect to the
administration of this Program shall be taken pursuant to a majority vote or by
unanimous written consent of its members.
6.3 Rights And Duties.
(a) Subject to the limitations of this Program, the Committee
shall be charged with the general administration of this Program and the
responsibility for carrying out its provisions, and shall have powers necessary
to accomplish those purposes, including, but not by way of limitation, the
following:
(i) To construe and interpret this Program;
(ii) To resolve any questions concerning the amount of
benefits payable to a Participant;
(iii) To make all other determinations required by this
Program, including adjustments under Section 5.5;
(iv) To maintain all the necessary records for the
administration of this Program and provide
statements of Deferred Share Accounts to
Participants on an annual or more frequent basis;
(v) To make and publish forms, rules and procedures for
the administration of this Program; and
(vi) To administer the claims procedures set forth in
Article VII for presentation of claims by
Participants and Beneficiaries for benefits under
this Program, including consideration of such
claims, review of claim denials and issuance of a
decision on review.
18
(b) The Committee shall have full discretion to construe and
interpret the terms and provisions of this Program (but not to increase amounts
payable hereunder) and to resolve any disputed question or controversy, which
interpretation or construction or resolution, including decisions with respect
to adjustments under Section 5.5, shall be final and binding on all parties,
including but not limited to the Company and any Eligible Person, Participant or
Beneficiary, except as otherwise required by law. The Committee shall administer
such terms and provisions in a nondiscriminatory manner and in full accordance
with any and all laws applicable to this Program. In performing its duties, the
Committee shall be entitled to rely on information, opinions, reports or
statements prepared or presented by: (i) officers or employees of the Company
whom the Committee believes to be reliable and competent as to such matters; and
(ii) counsel (who may be employees of the Company), independent accountants and
other persons as to matters which the Committee believes to be within such
persons' professional or expert competence. The Committee shall be fully
protected with respect to any action taken or omitted by it in good faith
pursuant to the advice of such persons. The Committee may appoint a program
administrator or any other agent, and delegate to them such powers and duties in
connection with the administration of this Program as the Committee may from
time to time prescribe.
6.4 Indemnity and Liability. All expenses of the Committee shall be
paid by the Company and the Company shall furnish the Committee with such
clerical and other assistance as is necessary in the performance of its duties.
No member of the Committee shall be liable for any act or omission of any other
member of the Committee nor for any act or omission on his or her own part. To
the extent permitted by law, the Company shall indemnify and save harmless each
member of the Committee against any and all expenses and liabilities arising out
of his or her membership on the Committee.
19
ARTICLE VII
CLAIMS PROCEDURE
All applications for benefits under the Program shall be submitted
to: Occidental Petroleum Corporation, Attention: Corporate Secretary, 10889
Wilshire Blvd., Los Angeles, CA 90024. Applications for benefits must be in
writing on the forms prescribed by the Committee and must be signed by the
Participant, or in the case of a death benefit, by the Beneficiary or legal
representative of the deceased Participant. Each application shall be acted upon
and approved or disapproved within sixty (60) days following its receipt by the
Committee. If any application for a benefit is denied, in whole or in part, the
Committee shall notify the applicant in writing of such denial and of his or her
right to a review by the Committee and shall set forth in a manner calculated to
be understood by the applicant, specified reasons for such denial, specific
references to pertinent Program provisions on which the denial is based, a
description of any additional material or information necessary for the
applicant to perfect his or her application, an explanation of why such material
or information is necessary, and an explanation of the Program's review
procedure.
Any person, or his or her duly authorized representative, whose
application for benefits is denied in whole or in part, may appeal such denial
to the Committee for a review of the decision by submitting to the Committee
within sixty (60) days after receiving notice of the denial, a written
statement:
(a) requesting a review of his or her application for benefits
by the Committee;
(b) setting forth all of the grounds upon which his or her
request for review is based and any facts in support thereof; and
(c) setting forth any issues or comments which the applicant
deems relevant to his or her application.
The Committee shall act upon each such application within sixty
(60) days after the later of receipt of the applicant's request for review by
the Committee or receipt of any additional materials reasonably requested by the
Committee from such applicant.
The Committee shall make a full and fair review of each such
application and any written materials submitted by the applicant or the Company
in connection therewith, and may require the Company or the applicant to submit
within thirty (30) days of written notice by the Committee, such additional
facts, documents, or other evidence as the Committee, in its sole discretion,
deems necessary or advisable in making such a review. On the basis of its
review, the Committee shall make an independent determination of the applicant's
eligibility for benefits under the Program. The decision of the Committee on any
application for benefits shall be final and conclusive upon all persons.
If the Committee denies an application in whole or in part, the
Committee shall give written notice of its decision to the applicant setting
forth in a manner calculated to be
20
understood by the applicant, the specific reasons for such denial and specific
references to the pertinent Program provisions on which the Committee's decision
was based.
No legal action may be commenced prior to the completion of the
benefit claims procedure described herein. In addition, no legal action may be
commenced after the later of (a) 180 days after receiving the written response
of the Committee to an appeal, or (b) 365 days after an applicant's original
application for benefits.
21
ARTICLE VIII
AMENDMENT AND TERMINATION OF PROGRAM
8.1 Amendment. The Board may amend this Program in whole or in part at
any time or may at any time suspend or terminate this Program. Notwithstanding
the foregoing, no amendment shall reduce the number of Deferred Shares and
Dividend Equivalents credited to any Participant's Deferred Share Account or
cancel any Participant's right to receive Dividend Equivalents (and any cash
that may become payable pursuant to Section 5.5(b)) without the consent of the
affected Participant. Any amendments authorized hereby shall be stated in an
instrument in writing and all Eligible Persons shall be bound thereby upon
receipt of written notice thereof. Adjustments pursuant to Section 5.5 hereof
shall not be deemed amendments to this Program, the Deferred Share Accounts or
the rights of Participants.
8.2 Term. It is the current expectation of the Company that this
Program shall be continued indefinitely, but continuance of this Program is not
assumed as a contractual obligation of the Company. In the event that the Board
decides to discontinue or terminate this Program, it shall notify the Committee
and Participants in this Program of its action in writing, and this Program
shall be terminated at the time therein set forth. All Participants shall be
bound thereby. In connection with the termination of this Program, the Committee
may, in its sole discretion, elect to accelerate the distribution date for all
Deferred Share Accounts (including Deferred Share Accounts being paid in or
otherwise to be paid in the form of installments) and make a lump sum
distribution in respect thereof.
22
ARTICLE IX
MISCELLANEOUS
9.1 Limitation on Participant's Rights. Participation in this Program
shall not give any person the right to continued employment or service or any
rights or interests other than as herein provided. No Participant shall have any
right to any payment or benefit hereunder except to the extent provided in this
Program. This Program creates no fiduciary duty to Participants and shall create
only a contractual obligation on the part of the Company as to such amounts;
this Program shall not be construed as creating a trust. This Program, in and of
itself, has no assets. Participants shall have rights no greater than the right
to receive the Common Stock (and any cash as expressly provided herein) or the
value thereof as a general unsecured creditor in respect of their Deferred Share
Accounts.
9.2 Beneficiary Designation. Upon forms provided by and subject to
conditions imposed by the Company, each Participant may designate in writing the
Beneficiary or Beneficiaries whom such Participant desires to receive any Shares
or amounts payable under this Program after his or her death. A Participant may
from time to time change his or her designated Beneficiary or Beneficiaries
without the consent of such Beneficiary or Beneficiaries by filing a new
designation with the Committee. However, if a married Participant wishes to
designate a person other than his or her spouse as Beneficiary, such designation
shall be consented to in writing by the spouse, which consent shall acknowledge
the effect of the designation. The Participant may change any election
designating a Beneficiary or Beneficiaries without any requirement of further
spousal consent if the spouse's consent so provides. Notwithstanding the
foregoing, spousal consent shall be unnecessary if it is established (to the
satisfaction of the Committee or a Committee representative) that there is no
spouse or that the required consent cannot be obtained because the spouse cannot
be located. The Company and the Committee may rely on the Participant's
designation of a Beneficiary or Beneficiaries last filed in accordance with the
terms of this Program. Notwithstanding the foregoing, if a Participant has
completed a beneficiary designation form for deferred Shares under any other
plan or program of the Company, such prior designation shall be the Beneficiary
designation under this Program and apply to all benefits of the Participant
hereunder unless changed in accordance with this Section 9.2.
If a Participant fails to designate a Beneficiary as provided
above, or if all designated Beneficiaries predecease the Participant, any
benefits remaining unpaid shall be paid in accordance with the Participant's
Beneficiary designation under the Company's Retirement Program, and if there is
no such valid Beneficiary designation, to the Participant's then surviving
spouse, or if none, to the Participant's estate, unless directed otherwise by
the court that has jurisdiction over the assets belonging to the Participant's
probate estate.
9.3 Payments to Minors or Persons Under Incapacity. Every person
receiving or claiming benefits under this Program shall be conclusively presumed
to be mentally competent and of age until the date on which the Committee
receives a written notice, in a form and manner acceptable to the Committee,
that such person is incompetent or a minor, for whom a guardian or other person
legally vested with the care of his or her person or estate has been appointed;
23
provided, however, that if the Committee finds that any person to whom a benefit
is payable under this Program is unable to care for his or her affairs because
of incompetency, or because he or she is a minor, any payment due (unless a
prior claim therefor shall have been made by a duly appointed legal
representative) may be paid to the spouse, a child, a parent, a brother or
sister, or to any person or institution considered by the Committee to have
incurred expense for such person otherwise entitled to payment. To the extent
permitted by law, any such payment so made shall be a complete discharge of
liability therefor under this Program.
If a guardian of the estate of any person receiving or claiming benefits
under this Program is appointed by a court of competent jurisdiction, benefit
payments may be made to such guardian provided that proper proof of appointment
and continuing qualification is furnished in a form and manner acceptable to the
Committee. In the event a person claiming or receiving benefits under this
Program is a minor, payment may be made to the custodian of an account for such
person under the Uniform Gifts to Minors Act. To the extent permitted by law,
any such payment so made shall be a complete discharge of any liability therefor
under this Program.
9.4 Receipt and Release. Any payment to a Participant or the
Participant's Beneficiary in accordance with the provisions of this Program
shall, to the extent thereof, be in full satisfaction of all claims against the
Board, the Committee, and the Company. The Committee may require such
Participant or Beneficiary, as a condition precedent to such payment, to execute
a receipt and release to such effect.
9.5 Deferred Shares and Other Benefits Not Assignable; Obligations
Binding Upon Successors. Deferred Shares and other benefits of a Participant
under this Program shall not be assignable or transferable and any purported
transfer, assignment, pledge or other encumbrance or attachment of any payments
or benefits under this Program, or any interest therein, other than by operation
of law or pursuant to Section 9.2, shall not be permitted or recognized.
Obligations of the Company under this Program shall be binding upon successors
of the Company.
9.6 Employment Taxes. The Company (including its Affiliates) may
satisfy any state or federal employment tax withholding obligation arising from
an Alternative Exercise of a Qualifying Option or a deferral of an Other
Qualifying Stock Award under this Program by deducting such amount from any
amount of compensation payable to the Participant. Alternatively, the Company
(including its Affiliates) may require the Participant to deliver to it the
amount of any such withholding obligation as a condition to the Alternative
Exercise of the Qualifying Option or the deferral of the Other Qualifying Stock
Award. The Company (including its Affiliates) may instead satisfy any such
withholding obligation by reducing the number of Deferred Shares that would
otherwise be credited to the Participant's Deferred Share Account as a result of
the Alternative Exercise or deferral, provided that the Company (or the
applicable Affiliate) and the Participant make appropriate arrangements to
satisfy all additional income and employment tax withholding obligations that
arise as a result of using this Deferred Share credit reduction method to
satisfy the original employment tax withholding obligation.
9.7 Governing Law; Severability. The validity of this Program or any
of its provisions shall be construed, administered and governed in all respects
under and by the laws of the State of Delaware to the extent such laws are not
preempted by the Employee Retirement
24
Income Security Act of 1974, as amended. If any provisions of this instrument
shall be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue to be fully
effective.
9.8 Compliance with Laws. This Program, the Company's acceptance of
the exercise price of a Qualifying Option in the form of Shares, the Company's
issuance of Deferred Shares, and the offer, issuance and delivery of Shares
and/or the payment in Shares through the deferral of compensation under this
Program are subject to compliance with all applicable federal and state laws,
rules and regulations (including but not limited to state and federal securities
law) and to such approvals by any listing, agency or any regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
this Program shall be subject to such restrictions, and the person acquiring
such securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. If the Company in its
sole discretion determines that an Alternative Exercise of a Qualifying Option
would violate any law, rule or regulation, the Company may refuse to honor such
Alternative Exercise.
9.9 Program Construction. It is the intent of the Company that
transactions pursuant to this Program, with respect to Eligible Persons or
Participants who are subject to Section 16 of the Exchange Act, satisfy and be
interpreted in a manner that satisfies the applicable requirements of Rule 16b-3
so that to the extent elections are timely made, the crediting of Deferred
Shares and the distribution of Shares with respect to Deferred Shares under this
Program will be entitled to the benefits of Rule 16b-3 or other exemptive rules
under Section 16 of the Exchange Act and will not be subjected to avoidable
liability thereunder.
9.10 Headings Not Part of Program. Headings and subheadings in this
Program are inserted for reference only and are not to be considered in the
construction of the provisions hereof.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this document this 12th day of September, 2002.
OCCIDENTAL PETROLEUM CORPORATION
By /s/ RICHARD W. HALLOCK
-------------------------------------------
Richard W. Hallock
Executive Vice-President, Human Resources
25