1
CERTIFICATE OF DESIGNATIONS
OF THE
CUMULATIVE MIDCON-INDEXED CONVERTIBLE PREFERRED STOCK
(PAR VALUE $1.00 PER SHARE)
OF
OCCIDENTAL PETROLEUM CORPORATION
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by written consent, dated November 20, 1996, of the sole member of
the Pricing Committee of the Board of Directors of Occidental Petroleum
Corporation, a Delaware corporation:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Pricing Committee of the Board of Directors by the Restated
Certificate of Incorporation of Occidental Petroleum Corporation, a Delaware
corporation (the "Corporation"), as amended (the "Certificate of
Incorporation"), and the Bylaws of the Corporation, the Pricing Committee of
the Board of Directors hereby authorizes the creation of a series of Preferred
Stock, par value $1.00 per share, of the Corporation upon the terms and subject
to the conditions set forth herein and hereby fixes the designation and number
of shares thereof and fixes the powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations and restrictions thereof (in addition to those set forth in the
Certificate of Incorporation that may be applicable to such series of Preferred
Stock) as follows:
1. Designation and Amount. There shall be a series of Preferred
Stock, par value $1.00 per share, of the Corporation designated as "Cumulative
MidCon-Indexed Convertible Preferred Stock" and the number of shares
constituting such series shall be 1,400,000. Such series is referred to herein
as the "CMIC Preferred Stock." The CMIC Preferred Stock is issuable in whole
shares or in fractions of 1/1000th of a share that shall entitle the holder
thereof to exercise the voting rights, to participate in the distributions and
to have the benefit of all other rights of holders of CMIC Preferred Stock, as
set forth herein and in the Certificate of Incorporation.
2. Definitions. As used herein, the following terms shall have
the respective meanings indicated below:
"Adjusted MidCon Value" shall mean, as of any date, (i) the Appraised
MidCon Value as of such date, minus (ii) the absolute value of the Sharing
Amount as of such date if greater than zero, plus (iii) the absolute value of
the Sharing Amount as of such date if less than zero, minus (iv) the Value of
Sharing Amount Advances as of such date.
"Appraisal Date" shall mean any date as of which the MidCon Value is
determined for purposes of determining the Appraised MidCon Value.
"Appraised MidCon Value" shall mean, as of any date, (i) if such date
is prior to the date on which the Appraised MidCon Value is first determined
pursuant to Section 10, the MidCon Value as of the Date of Original Issue, as
determined by an investment banking or appraisal firm of recognized national
standing selected by the ESOP Trust and submitted to the Corporation on the
Date of Original Issue, and (ii) for any
1
2
other date, the most recent determination of Appraised MidCon Value pursuant
to Section 10.
"Board of Directors" shall mean the Board of Directors of the
Corporation or (other than for purposes of Section 7(b) hereof), to the extent
permitted by applicable law, a duly authorized committee thereof.
"Business Day" shall mean any day other than a Legal Holiday.
"Cessation of Default Notice" shall have the meaning set forth in
Section 12(b).
"Closing Price" shall mean, with respect to any security on any day,
the closing sale price, regular way, on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices,
regular way, in each case on the principal national securities exchange or
quotation system on which such security is quoted or listed or admitted to
trading, as the case may be, or, if not quoted or listed or admitted to trading
on any national securities exchange or quotation system, the average of the
closing bid and asked prices of such security on the over-the-counter market on
the day in question as reported by the National Quotation Bureau Incorporated,
or a similar generally accepted reporting service or, if not so reported, the
market value per unit of such security on the day in question, as determined,
using valuation techniques generally accepted in the securities industry, by
any NYSE member firm selected by the Board of Directors for that purpose or, if
such determination by an NYSE member firm cannot be obtained on a timely basis,
a price determined in good faith by the Board of Directors and set forth in a
resolution adopted by the Board of Directors.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Conversion Amount" shall mean, as of any date, the quotient obtained
by dividing (i) the Adjusted MidCon Value as of such date, by (ii) the Original
Issue Amount; provided, however, that if such date occurs during the period
from but excluding the date on which the Corporation gives a Default Notice to
but excluding the date on which the Corporation gives a Cessation of Default
Notice, the "Conversion Amount" shall mean the quotient obtained by dividing
(A) the greater of (x) the Adjusted MidCon Value as of such date or (y) the
Minimum Adjusted MidCon Value as of such date by (B) the Original Issue Amount.
"Conversion Date" shall have the meaning set forth in Section
9(b)(iii).
"Conversion Ratio" shall mean, as of any Conversion Date, the quotient
obtained by dividing (i) the Conversion Amount as of such Conversion Date, by
(ii) the Occidental Market Price as of such Conversion Date.
"CMIC Preferred Stock" shall have the meaning set forth in Section 1.
"Date of Original Issue" shall mean the date on which shares of CMIC
Preferred Stock are first issued.
"Debt" shall mean, with respect to any Person, all preferred stock
issued by such Person and all liabilities of such Person (i) for borrowed
money, (ii) evidenced by bonds, notes, debentures or similar instruments, (iii)
for the balance deferred and unpaid of the purchase price of any property
acquired by such Person or services received by such Person, or (iv) for the
payment of money relating to a capitalized lease obligation (other than the
Pipeline Lease).
2
3
"Default Notice" shall have the meaning set forth in Section 12(b).
"Delivery Date" shall mean the date of delivery of any First
Appraiser's Report.
"Determination Date" shall mean (i) when used with respect to any
dividend or other distribution, the date fixed for the determination of the
holders of the securities entitled to receive such dividend or distribution,
or, if a dividend or distribution is paid or made without fixing such a date,
the date of such dividend or distribution and (ii) when used with respect to
any subdivision, combination or reclassification of securities, the date upon
which such subdivision, combination or reclassification becomes effective.
"Dividend Note" shall mean the Promissory Note, dated November 14,
1996, by MidCon to the order of the Corporation in the principal amount of
$1,600,000,000.
"Dividend Payment Date" shall have the meaning set forth in Section
4(a).
"Dividend Period" shall mean the Initial Dividend Period or any
Subsequent Dividend Period, as the context requires.
"Dollars" and "$" shall mean United States dollars.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ESOP Note" shall mean the Promissory Note, dated November 20, 1996,
made by the ESOP Trust in favor of the Corporation pursuant to the Loan
Agreement.
"ESOP Trust" shall mean the MidCon Corp. ESOP Trust established
pursuant to the Trust Agreement, dated as of November 20, 1996, by and between
the ESOP Trustee and the Corporation, as amended from time to time, and adopted
as part of the MidCon ESOP.
"ESOP Trustee" shall mean U.S. Trust Company of California, N.A., not
in its individual capacity, but solely in its capacity as trustee of the MidCon
ESOP, and its successors and assigns.
"Event of Default" shall mean any Event of Default under the Loan
Agreement other than an Event of Default specified in clause (i) or (ii) of
Section 8(a) of the Loan Agreement.
"Exchange" shall have the meaning set forth in Section 8(c).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Securities and
Exchange Commission thereunder.
"Exchange Date" shall mean the date set forth in an Exchange Notice as
the proposed Exchange Date; provided, however, that if the ESOP Trust gives the
Corporation written notice that it is unable to consummate an Exchange on the
proposed Exchange Date set forth in such Exchange Notice solely as a result of
the fact that any applicable waiting period under the HSR Act has not expired
or been terminated, including, without limitation, as a result of the need to
respond to requests for additional information from regulatory authorities,
then "Exchange Date" shall mean the 20th Business Day after the proposed
Exchange Date set forth in the Exchange Notice.
3
4
"Exchange Notice" shall have the meaning set forth in Section 8(c).
"Exchange Obligations" shall mean the ESOP Trust's obligation, on the
Exchange Date, to: (w) effect the repayment of the ESOP Note and all Debt of
the MidCon Group owed to the Occidental Group; (x) either (A) effect the
release of Occidental from its obligations under any and all liabilities and
obligations, including guarantees, indemnities and other contingent
obligations, of Occidental (collectively, "Occidental Guarantees") incurred for
the benefit of, or in respect of any Debt or obligation of, MidCon or any other
member of the MidCon Group, other than liabilities arising under
non-contractual contingent obligations outstanding as of the Exchange Date, (B)
provide for indemnification of Occidental, by an institution with an investment
grade credit rating, for all liabilities and obligations under Occidental
Guarantees outstanding as of the Exchange Date, (C) provide other security or
arrangements reasonably satisfactory to Occidental in respect of all
liabilities and obligations under Occidental Guarantees outstanding as of the
Exchange Date, or (D) any combination of the foregoing; (y) provide Occidental
with an indemnity from MidCon, in form, scope and substance reasonably
satisfactory to Occidental, with respect to all non- contractual contingent
obligations referred to in clause (A) above; and (z) if the ESOP Trust intends
to pay Occidental any portion of the Sharing Amount in cash, effect the payment
to Occidental of cash equal to the Sharing Amount as of the Exchange Date.
"Exchange Price" shall mean, for any Exchange, the quotient obtained by
dividing (i) the amount by which (A) the Appraised MidCon Value as of the
Exchange Date exceeds (B) the Value of Sharing Amount Advances as of the
Exchange Date, by (ii) the Original Issue Amount.
"Exchange Waiver Date" shall mean (i) the date on which the Corporation
receives a written notice from the ESOP Trust that it does not intend to effect
an Exchange during the next 120 days, (ii) the 49th day after a Notice Date if
the ESOP Trust has not given an Exchange Notice within 48 days after such
Notice Date, (iii) any date on which the Corporation receives written notice
from the ESOP Trust that it is thereby revoking an Exchange Notice, (iv) any
Exchange Date if the ESOP Trust does not consummate the Exchange on such date,
or (v) any date on which the Corporation receives a written notice from the
ESOP Trust that it will be unable or unwilling to consummate the Exchange
Obligations on the Exchange Date.
"Exchange Waiver Period" shall mean each 120-day period beginning on an
Exchange Waiver Date; provided, however, that such period may be extended for
up to 20 Business Days by the Corporation's giving notice to such effect to the
ESOP Trust if additional time is required because any applicable waiting period
under the HSR Act for a proposed MidCon Disposition has not expired or been
terminated; provided, further, that such Exchange Waiver Period shall end on
the date immediately preceding the date on which the Corporation gives a MidCon
Disposition Notice, a Notice of Proposed Redemption, a Default Notice or a
Recapitalization Notice.
"Ex-Date" shall mean (i) when used with respect to any dividend or
distribution, the first date on which the securities on which the dividend or
distribution is payable trade regular way on the relevant exchange or in the
relevant market without the right to receive such dividend or distribution, and
(ii) when used with respect to any subdivision, combination or reclassification
of securities, the first date on which the securities trade regular way on such
exchange or in such market to reflect such subdivision, combination or
reclassification becoming effective.
"Ex-Dividend Period" shall have the meaning set forth in Section 4(a).
"Extraordinary Cash Dividend" shall mean, with respect to any
security, a cash dividend or cash
4
5
distribution on such security (other than a dividend or distribution in
connection with a Liquidation of the issuer of such security) (the "Specified
Dividend"), in an amount determined pursuant to the following sentence. If,
upon the date prior to the date of the declaration (the "Declaration Date")
with respect to the Specified Dividend, the aggregate per share amount of the
Specified Dividend, together with the aggregate per share amounts of all cash
dividends and cash distributions on such security with Ex-Dates occurring in
the 360 consecutive day period ending on the date prior to the Ex-Date with
respect to the Specified Dividend, exceeds 25% of the Market Price of such
security on the Trading Day prior to the Declaration Date with respect to the
Specified Dividend, such excess shall be deemed to be an Extraordinary Cash
Dividend.
"First Appraiser" shall mean an investment banking or appraisal firm of
recognized national standing that is selected to make an initial determination
of MidCon Value pursuant to Section 10(a).
"First Appraiser's Report" shall have the meaning set forth in Section
10(a).
"Floor Price" shall mean $12, subject to adjustment as provided in
Section 18.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Initial Dividend Period" shall mean the period from and including the
Date of Original Issue to and excluding December 31, 1996.
"Intercompany Transaction" shall mean any transaction or series of
related transactions between any member of the Occidental Group and any member
of the MidCon Group, including, without limitation, (i) the sale, lease,
transfer or other disposition of properties, assets or securities by the
Occidental Group to the MidCon Group, (ii) the purchase or lease of any
property, assets or securities by the Occidental Group from the MidCon Group,
(iii) an Investment by the Occidental Group in any member of the MidCon Group,
or (iv) entering into or amending any contract or agreement to which both a
member of the Occidental Group and a member of the MidCon Group are parties;
provided, however, that such term shall not include any transaction between the
MidCon ESOP or the ESOP Trust and any member of the Occidental Group or the
MidCon Group, including any termination of the MidCon ESOP or the ESOP Trust.
"Investment" in any Person shall mean (i) the acquisition for cash or
property, other than securities, of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of such Person,
(ii) the making of any deposit with, or advance, loan, contribution or other
extension of credit to, such Person, or (iii) the guarantee of any Debt of such
Person.
"Insolvent" shall mean, with respect to any Person, that (i) the
present fair salable value of such Person's assets is less than the amount that
will be required to pay such Person's probable liability on such Person's debts
as they become absolute and matured, (ii) such Person has an unreasonably small
capital with which to operate its business, or (iii) such Person is unable to
pay its debts as they mature.
"Junior Preferred Stock" shall have the meaning set forth in Section
4(c).
"Legal Holiday" shall mean any day on which banking institutions are
authorized or obligated by law or executive order to close in New York, New
York or in Los Angeles, California.
"Liquidation" shall mean, with respect to any Person, any liquidation,
dissolution or winding up of such Person, whether voluntary or involuntary;
provided, however, that neither the voluntary sale, conveyance,
5
6
lease, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of such
Person, nor the consolidation or merger of such Person with or into one or more
other Persons, nor the consolidation or merger of one or more Persons with or
into such Person shall be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up.
"Loan Agreement" shall mean the Term Loan Agreement, dated as of
November 20, 1996, by and among the Corporation, the ESOP Trust and MidCon, a
copy of which is on file at the executive offices of the Corporation.
"Mandatory Redemption" shall have the meaning set forth in Section
8(b).
"Mandatory Redemption Price" shall mean, for any Mandatory Redemption,
the quotient obtained by dividing (i) the greater of (A) the Adjusted MidCon
Value as of the date of such Mandatory Redemption, or (B) the Minimum Adjusted
MidCon Value as of such date, by (ii) the Original Issue Amount.
"Market Price" shall mean, with respect to any security on any date
(the "Specified Date"), the average of the daily Closing Prices with respect to
such security for the ten consecutive Trading Days for such security ending on
the third Trading Day that immediately precedes the Specified Date,
appropriately adjusted to take into account any dividends or distributions
payable on such security, or any reclassification, subdivisions or combinations
of, or similar transactions involving, such security with respect to which (i)
the Ex-Date occurs after the first of such ten consecutive Trading Days and
(ii) the Determination Date occurs prior to the Specified Date.
"MidCon" shall mean MidCon Corp., a Delaware corporation.
"MidCon Common Stock" shall mean the common stock, par value $.01 per
share, of MidCon and, in the case of any reclassification, recapitalization or
other change in the MidCon Common Stock, or in the case of a consolidation or
merger of MidCon with or into another Person affecting the MidCon Common Stock,
such capital stock, securities or other property to which a holder of MidCon
Common Stock shall be entitled upon the occurrence of such event.
"MidCon Disposition" shall mean (i) the consummation of (A) a public
offering of shares of MidCon Common Stock by the Corporation or MidCon,
pursuant to an effective registration statement filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended, or (B)
a dividend or distribution of shares of MidCon Common Stock to holders of
Occidental Common Stock, that, together with all other prior or concurrent such
offerings, dividends or distributions, results in the sale, dividend or
distribution of more than 20% of the shares of MidCon Common Stock outstanding
as of the consummation of such offering, dividend or distribution, (ii) any
sale, transfer or other conveyance, whether direct or indirect, of assets or
properties of the MidCon Group that represent 50% or more of the then current
market value of all of the assets and properties of the MidCon Group, on a
consolidated basis, to any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than to or among wholly owned subsidiaries of MidCon,
whether in a single transaction or a series of related transactions, (iii) the
Liquidation of MidCon, or (iv) any transaction, event or circumstance or series
of transactions, events or circumstances, including a merger or consolidation
involving MidCon, pursuant to which the Corporation ceases to be the
"beneficial owner" (as that term is used in Rules 13d-3 and 13d-5 under the
Exchange Act, whether or not applicable, except that a Person shall be deemed
to be the beneficial owner of all shares that such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total voting
6
7
power of the then outstanding shares of MidCon Common Stock.
"MidCon Disposition Notice" shall have the meaning set forth in Section
12(a).
"MidCon ESOP" shall mean the MidCon Corp. Employee Stock Ownership
Plan, as amended from time to time.
"MidCon Group" shall mean MidCon and all corporations, joint stock
companies, joint ventures, partnerships, limited liability companies, business
trusts and other entities that MidCon controls, whether through the ownership
of voting securities, by contract or otherwise.
"MidCon Guarantee" shall mean the guarantee by MidCon of all
obligations of the MidCon ESOP under the ESOP Note and the Loan Agreement.
"MidCon Restructuring" shall mean (i) the contribution by the
Corporation to the capital of MidCon and its subsidiaries of four promissory
notes issued by subsidiaries of MidCon and in favor of the Corporation, in the
aggregate principal amount of approximately $741 million, (ii) the contribution
by the Corporation to the capital of MidCon of the net outstanding balance of
the intercorporate advances to MidCon and its subsidiaries as of November 30,
1996 in an amount not to exceed $154 million, which advances are interest
bearing payables, net, are payable to affiliates other than MidCon and its
subsidiaries and are part of MidCon's current liabilities, (iii) the dividend
by MidCon to the Corporation of the Dividend Note and all payments in respect
thereof, (iv) the dividend of (A) 100% of the interest of the MidCon Group in
oil and gas producing properties in the Panhandle, Caesar, Mocane, Chauvin,
Lawtell and Devil fields, and 98% of the MidCon Group's 50% interest in oil and
gas producing properties in the Garden Banks fields, and (B) any other oil or
gas leasehold or other interest held for exploration or development of oil or
gas, in either case, by a distribution of any such interest or of all the
issued and outstanding capital stock of MidCon's subsidiary owning any such
interest, (v) the dividend of all the issued and outstanding capital stock of
Occidental Energy Ventures Corp., (vi) dividends by MidCon to the Corporation
of interests in the Pipeline Partnership or one of the partners in the Pipeline
Partnership, representing 51% of the total ownership interests therein, (vii)
the Pipeline Lease and the MidCon guaranty thereof, (viii) the gas purchase and
sale agreement between a subsidiary of MidCon and another subsidiary to be
owned by the Corporation, (ix) the agreement to use facilities owned by a
MidCon subsidiary for the operation of the facilities under the Pipeline Lease,
(x) the formation of the Pipeline Partnership, and (xi) all assignment
agreements and conveyances to effectuate each of the foregoing dividends.
"MidCon Share Price" shall mean, as of any date, the quotient obtained
by dividing (i) the Appraised MidCon Value as of such date, by (ii) the number
of shares of MidCon Common Stock outstanding as of the close of business on
such date.
"MidCon Value" shall mean, as of any date, the private market value of
all shares of MidCon Common Stock outstanding as of the close of business on
such date, based on the amount a willing purchaser would pay a willing seller
in an arm's length transaction if it were acquiring all such shares; provided,
however, that (i) the indebtedness represented by the MidCon Guarantee shall be
deemed to have a value equal to the outstanding principal balance of, and all
accrued and unpaid interest on, the ESOP Note as of such date, which value
shall be subtracted from the value otherwise calculated hereunder, (ii) the
Dividend Note shall be deemed to have a value equal to the outstanding
principal balance of, and all accrued and unpaid interest on, such note, which
value shall be deducted from the value otherwise calculated hereunder, (iii)
the MidCon Restructuring shall be deemed to have been completed as of the Date
of Original Issue, (iv) the dollar value
7
8
of any capital contributions by the Occidental Group to the MidCon Group after
the Date of Original Issue, plus an amount equal to a 9% annual return
(compounded annually) on each such capital contribution from the date of such
capital contribution to such date, shall be deducted therefrom, (v) the
aggregate amount of any Restricted Payments made pursuant to clause (ii) of
Section 11(c) during the period from but excluding the Date of Original Issue
to and including such date, plus an amount equal to a 9% annual return
(compounded annually) on each such Restricted Payment from the date of such
Restricted Payment to such date, shall be added thereto, (vi) the Value of
Sharing Amount Advances as of such date shall be added thereto, and (vii) such
value shall be determined without giving effect to any Optional Redemption,
Mandatory Redemption or Exchange effected on such date or any transactions
effected in connection therewith.
"Minimum Adjusted MidCon Value" shall mean $100 million from the Date
of Original Issue through and including December 31, 1996, declining by $1
million on the first day of each month thereafter to $0 on April 1, 2005 and
thereafter.
"NNM" shall mean the Nasdaq National Market.
"Notice Date" shall have the meaning set forth in Section 8(c).
"Notice of Proposed Redemption" shall have the meaning set forth in
Section 8(e).
"NYSE" shall mean the New York Stock Exchange.
"Occidental Common Stock" shall mean the Common Stock, par value $.20
per share, of the Corporation, and, in the case of any reclassification,
recapitalization or other change in the Occidental Common Stock, such capital
stock, securities or other property to which a holder of Occidental Common
Stock shall be entitled upon the occurrence of such event.
"Occidental Group" shall mean the Corporation and all corporations,
joint stock companies, joint ventures, partnerships, limited liability
companies, business trusts and other entities that the Corporation controls,
whether through the ownership of voting securities, by contact or otherwise,
excluding the MidCon Group.
"Occidental Market Price" shall mean, as of any date, the greater of
(i) the Market Price of Occidental Common Stock as of such date, or (ii) the
Floor Price as of such date.
"Optional Redemption" shall have the meaning set forth in Section 8(a).
"Optional Redemption Price" shall have the meaning set forth in Section
8(a).
"Original Issue Amount" shall mean 1,400,000.
"Permitted Intercompany Transactions" shall mean (i) the MidCon
Restructuring, and Intercompany Transactions pursuant to contracts, agreements
or arrangements executed or in effect on or prior to the Date of Original
Issue, and any amendment, renewal or extension thereof (excluding (x) any
amendment, renewal or extension of any Debt of MidCon and (y) any extension or
renewal of the Pipeline Lease or the Services Agreement, or any amendment of
the Pipeline Lease or the Services Agreement that results in a renewal or an
extension of the term thereof) on terms that, considered as a whole, are not
materially less favorable to the MidCon Group, (ii) any capital contribution by
Occidental to MidCon, (iii) the dividend by MidCon to the
8
9
Corporation of any interests in the Pipeline Partnership or the Garden Banks
field not distributed to the Corporation pursuant to the MidCon Restructuring,
(iv) the repayment of any Debt owed by the MidCon Group to the Occidental Group
in accordance with its terms, so long as any optional prepayment of such Debt
does not render MidCon Insolvent, (v) the sale by MidCon of any shares of
Permitted Preferred Stock to any member of the Occidental Group for cash in an
amount that does not exceed the liquidation preference of such shares, or in
exchange for Debt of MidCon with an aggregate unpaid principal balance and
accrued but unpaid interest that does not exceed the liquidation preference of
such shares, and (vi) any dividend on shares of Permitted Preferred Stock, or
any redemption of shares of Permitted Preferred Stock, if such dividend or
redemption does not render MidCon Insolvent.
"Permitted Preferred Stock" shall mean any capital stock of MidCon,
other than MidCon Common Stock, that (i) is not directly or indirectly
convertible into or exchangeable for shares of MidCon Common Stock, (ii) has no
voting rights other than as required by applicable law and, in any case, is not
entitled to vote generally in the election of directors, (iii) is redeemable at
a price that does not exceed (x) the cash purchase price of shares of such
capital stock or, if shares of such capital stock are issued in exchange for
Debt of MidCon, the aggregate unpaid principal balance of, and accrued and
unpaid interest on, such Debt (with respect to such shares of capital stock,
the "Purchase Price"), plus (y) any accumulated and unpaid dividends on such
stock, (iv) is not redeemable or required to be purchased by MidCon at the
option of the holder thereof, (v) has a dividend rate that does not exceed 8%
of the liquidation preference or Purchase Price of such capital stock, (vi)
does not have a liquidation preference in excess of the Purchase Price of
shares of such capital stock plus any accumulated and unpaid dividends thereon,
and (vii) does not entitle the holder thereof to receive assets of MidCon other
than (x) dividends at the stated dividend rate for such capital stock, (y) the
redemption price for such capital stock upon redemption, and (z) the
liquidation preference of such capital stock upon the Liquidation of MidCon.
"Person" shall mean any corporation, individual, joint stock company,
joint venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality or
other entity.
"Pipeline Lease" shall mean the lease by the Pipeline Partnership to
MidCon Pipeline Operator, Inc. of all of the pipeline and related facilities
owned by the Pipeline Partnership, a copy of which is on file at the executive
offices of the Corporation.
"Pipeline Partnership" shall mean MidCon Texas Pipeline, L.P., a
Delaware limited partnership, and its successors and assigns.
"Qualifying Employer Securities" shall mean securities that constitute
"qualifying employer securities" with respect to the MidCon ESOP, within the
meaning of Section 409(1) of the Code and Section 407(d)(5) of ERISA or any
successor provisions of law.
"Recapitalization" shall mean a recapitalization of the Corporation (i)
effected by means of a consolidation, merger, share exchange or similar
transaction pursuant to which the outstanding shares of Occidental Common Stock
are to be exchanged for or changed, reclassified or converted into other stock
or securities or cash or any other property, or any combination thereof, other
than any such consideration which is constituted solely of Qualifying Employer
Securities and cash payments, if applicable, in lieu of fractional shares and
(ii) in which the Persons who are the "beneficial owners" (as that term is used
in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not applicable,
except that a Person shall be deemed to be the beneficial owner of all shares
that such Person has the right to acquire, whether such right is exercisable
9
10
immediately or only after the passage of time) of all outstanding shares of
Occidental Common Stock immediately prior to such transaction become the
beneficial owners of more than 80% of the voting stock of the Person surviving
such consolidation, merger, share exchange or other transaction.
"Recapitalization Notice" shall have the meaning set forth in Section
12(c).
"Record Date" shall have the meaning set forth in Section 4(a).
"Redemption Date" shall mean the earliest to occur of (i) the
effective date of an Optional Redemption, (ii) the effective date of a
Mandatory Redemption, or (iii) the effective date of an Exchange.
"Redemption Notice" shall have the meaning set forth in Section 8(e).
"Redemption Period" shall mean the period of time from and including
the date on which the Corporation gives a Redemption Notice in respect of an
Optional Redemption to and including the date fixed for Optional Redemption in
such Redemption Notice.
"Redemption Price" shall mean (i) in the case of an Optional
Redemption, the Optional Redemption Price, (ii) in the case of a Mandatory
Redemption, the Mandatory Redemption Price, and (iii) in the case of an
Exchange, the Exchange Price.
"Regular Cash Dividend" shall mean, with respect to any security, any
cash dividend or cash distribution with respect to such security other than an
Extraordinary Cash Dividend.
"Restricted Payment" shall mean (i) any dividend or other distribution
paid by a member of the MidCon Group on shares of its capital stock to any
member of the Occidental Group, and (ii) any payment by a member of the MidCon
Group to any member of the Occidental Group on account of the purchase,
redemption or other acquisition or retirement for value of any shares of its
capital stock; provided, however, that the term "Restricted Payment" shall not
include (A) any dividend, distribution or other payment on shares of common
stock of an issuer solely in shares of common stock of such issuer, or (B) any
payments pursuant to Permitted Intercompany Transactions.
"Second Appraiser" shall have the meaning set forth in Section 10(c).
"Second Appraiser's Report" shall have the meaning set forth in
Section 10(c).
"Services Agreement" shall mean the Services Agreement, dated November
20, 1996, by and between Occidental and MidCon, a copy of which is on file at
the executive offices of the Corporation.
"Sharing Amount" shall mean, as of any date, (i) the product of (A)
the Sharing Percentage as of such date, and (B) the amount, if any, by which
(x) the sum of the Appraised MidCon Value as of such date and the outstanding
principal amount of the ESOP Note as of such date, exceeds (y) $1.4 billion,
minus (ii) the Value of Sharing Amount Advances as of such Date.
"Sharing Percentage" shall mean 50% from the Date of Original Issue
through and including December 31, 1997, declining by 5/6 of 1.0% on the first
day of each month thereafter to 30% on December 1, 1999 and thereafter.
10
11
"Subsequent Dividend Period" shall mean the applicable period from and
including December 31 of any year to and excluding the next December 31, or, in
each such case as to particular shares of CMIC Preferred Stock, such shorter
period during which such shares of CMIC Preferred Stock are outstanding
(including the first day but excluding the last day of such shorter period),
but shall not include the Initial Dividend Period.
"Third Appraiser" shall have the meaning set forth in Section 10(f).
"Third Appraiser's Report" shall have the meaning set forth in Section
10(f).
"Trading Day" shall mean, with respect to any security, (i) if the
principal trading market for the applicable security is the NYSE or another
national securities exchange, a day on which the NYSE or such other national
securities exchange is open for business, (ii) if the principal trading market
for the applicable security is the NNM, a day on which a trade may be made on
the NNM, or (iii) if the applicable security is not listed, admitted for
trading or quoted as provided in clause (i) or (ii), any day other than a
Saturday or Sunday or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
"Value of Sharing Amount Advances" shall mean, as of any date, the sum
of (i) the value of all Restricted Payments made in compliance with clause (i)
of Section 11(c) during the period from but excluding the Date of Original
Issue to and including such date, and (ii) an amount equal to a 9% annual
return (compounded annually) on each such Restricted Payment from the date of
such Restricted Payment to such date.
3. Issuance and Automatic Conversion. Shares of CMIC Preferred Stock
shall be issued or sold by the Corporation only to the ESOP Trust. In the
event of any sale, transfer or other disposition (including, without
limitation, upon a foreclosure or other realization upon shares of CMIC
Preferred Stock pledged as security for any loan or loans made to the MidCon
ESOP or the ESOP Trust) (hereinafter a "transfer") of shares of CMIC Preferred
Stock without the prior written consent of the Corporation, which may be
withheld in its sole and absolute discretion, to any person (including, without
limitation, any participant in the MidCon ESOP), the shares of CMIC Preferred
Stock so transferred, upon such transfer and without any further action by the
Corporation or the transferee, shall be automatically converted into shares of
Occidental Common Stock at the applicable Conversion Ratio in accordance with
this Section and Section 9 and thereafter such transferee shall not have any of
the powers, preferences or relative, participating, optional or special rights
ascribed to shares of CMIC Preferred Stock hereunder, but, rather, shall have
only the powers and rights pertaining to the shares of Occidental Common Stock
into which such shares of CMIC Preferred Stock shall have been so converted. In
the event of any such automatic conversion pursuant to this Section 3, such
transferee shall be treated for all purposes as the record holder of the shares
of Occidental Common Stock into which its shares of CMIC Preferred Stock shall
have been converted as of the date of such conversion. Certificates
representing shares of CMIC Preferred Stock may be legended to reflect such
consequences of a transfer. Notwithstanding the foregoing provisions of this
Section 3, shares of CMIC Preferred Stock may be converted into shares of
Occidental Common Stock as provided in Section 9 and the shares of Occidental
Common Stock issued upon any conversion in accordance with Section 9 or this
Section 3 may be transferred by the holder thereof as permitted by law.
4. Dividends. (a) Holders of shares of CMIC Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors, out
of the assets of the Corporation at the time legally available therefor, cash
dividends at an annual rate of $21 per share, and no more, which shall be fully
cumulative,
11
12
shall accumulate without interest from the Date of Original Issue, and shall be
payable, in cash, annually in arrears on December 31 of each year (each, a
"Dividend Payment Date"), commencing December 31, 1996 (except that, if any
such date is a Saturday, Sunday or Legal Holiday, then such dividend shall be
payable on the first preceding day that is not a Saturday, Sunday or Legal
Holiday), to holders of record as they appear upon the stock transfer books of
the Corporation at the close of business on such record dates, not more than
sixty days nor less than ten days preceding the related Dividend Payment Dates,
as are fixed by the Board of Directors (each, a "Record Date").
Notwithstanding the foregoing, the Corporation shall have the right, but shall
have no obligation, to make any payment of dividends on the CMIC Preferred
Stock, whether or not declared, (i) after a Mandatory Redemption Date or the
date on which an Exchange occurs, or (ii) during the Redemption Period;
provided, however, that, in the event of an Optional Redemption, the
Corporation shall be obligated to pay accumulated and unpaid dividends on the
Redemption Date as part of the Optional Redemption Price, as required by
Section 8(a). Subject to Section 4(c), dividends on account of arrearages for
any past Dividend Period may be declared and paid at any time, without
reference to any regular Dividend Payment Date. Holders at the close of
business on a Record Date of shares of CMIC Preferred Stock that are called for
Optional Redemption on a Redemption Date during the period (the "Ex-Dividend
Period") between such Record Date and the corresponding Dividend Payment Date
shall not (unless the Corporation elects otherwise, in its sole discretion), in
their capacity as such, be entitled to receive the dividend payment on such
Dividend Payment Date, but shall be entitled to receive accumulated and unpaid
dividends on the Redemption Date as part of the Optional Redemption Price, as
required by Section 8(a).
(b) The dividend payable as set forth in Section 4(a) on each share
of the CMIC Preferred Stock for each full annual Dividend Period during which
such share was outstanding shall be $21. For the Initial Dividend Period and
any Subsequent Dividend Period during which such share was not outstanding for
a full annual Dividend Period, the dividend payable on each such share of the
CMIC Preferred Stock shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. The aggregate dividend paid to a holder of
shares of CMIC Preferred Stock shall be based on the aggregate number of shares
of CMIC Preferred Stock held by such holder at the close of business on the
applicable Record Date and rounded to the nearest whole cent (with one-half
cent rounded upward). Unless otherwise provided herein, dividends on each
share of CMIC Preferred Stock will be cumulative from and including the Date of
Original Issue to and excluding the earliest to occur of (i) the date of
redemption of such share, (ii) the date of conversion of such share, and (iii)
the date of final distribution of assets upon any Liquidation of the
Corporation. Holders of shares of the CMIC Preferred Stock shall not be
entitled to any dividend, whether payable in cash, property or stock, in excess
of full cumulative dividends, or to any interest, or sum of money in lieu of
interest, in respect of any dividend payment or payments on shares of the CMIC
Preferred Stock that may be in arrears. Any dividend payment made on shares of
the CMIC Preferred Stock shall first be credited against the earliest
accumulated but unpaid dividend with respect to shares of the CMIC Preferred
Stock.
(c) No dividends or other distributions (other than a dividend or
distribution in Occidental Common Stock or in any other capital stock of the
Corporation ranking junior to the CMIC Preferred Stock as to dividends and upon
Liquidation of the Corporation ("Junior Preferred Stock")) shall be declared,
made or paid or set apart for payment or distribution upon the Occidental
Common Stock or upon any other capital stock of the Corporation ranking junior
to or on a parity with the CMIC Preferred Stock as to dividends, nor may any
Occidental Common Stock or any other capital stock of the Corporation ranking
junior to or on a parity with the CMIC Preferred Stock as to dividends or upon
Liquidation of the Corporation be redeemed, purchased or otherwise acquired
for any consideration (or any moneys be paid to or made available for a sinking
fund for the redemption of any shares of such capital stock) by the Corporation
(except by conversion into or in exchange for Occidental Common Stock or Junior
Preferred Stock), unless full cumulative dividends on all outstanding shares of
the CMIC Preferred Stock have been, or contemporaneously are, declared and
12
13
paid, or declared and a sum sufficient for the payment thereof is set apart for
the payment thereof, for all Dividend Periods ending on or prior to the date of
such declaration, payment, distribution, setting apart, making monies
available, redemption, purchase or acquisition. Notwithstanding the foregoing,
(i) nothing in this Certificate shall prevent the Corporation from making
contributions to, or purchasing capital stock in connection with, its employee
benefit or dividend reinvestment plans, and (ii) if at any time full cumulative
dividends have not been declared and paid on the CMIC Preferred Stock and on
any of the Corporation's preferred stock ranking on a parity as to dividends
with the CMIC Preferred Stock, partial dividends may be declared and paid on
the CMIC Preferred Stock and such other preferred stock so long as such
dividends are declared and paid pro rata so that the amounts of dividends
declared and paid per share on the CMIC Preferred Stock and such other
preferred stock will in all cases bear to each other the same ratio that
accumulated and unpaid dividends per share on the shares of the CMIC Preferred
Stock and such other preferred stock bear to each other.
(d) Any reference to "distribution" contained in this Section 4 shall
not include any distribution made in connection with any Liquidation of the
Corporation.
5. Liquidation Preference. In the event of any Liquidation of the
Corporation, each holder of a share of CMIC Preferred Stock shall be entitled
to receive, and be paid out of the assets of the Corporation available for
distribution to its stockholders, a liquidation preference in the amount of
$1,000 per share, plus all accumulated and unpaid dividends on such share to
the date of final distribution to the holders of shares of CMIC Preferred
Stock, whether or not declared, without interest, and no more, before any
payment shall be made or any assets distributed to the holders of Occidental
Common Stock or any other class or series of the Corporation's stock ranking
junior to the CMIC Preferred Stock upon such Liquidation of the Corporation.
If, upon any Liquidation of the Corporation, the amounts payable with respect
to the liquidation preference of the CMIC Preferred Stock and any other shares
of the Corporation's capital stock ranking on a parity with the CMIC Preferred
Stock upon such Liquidation of the Corporation are not paid in full, the
holders of CMIC Preferred Stock and of such other shares will share pro rata in
the amounts payable and other property distributable with respect to such
Liquidation of the Corporation so that the per share amounts to which holders
of CMIC Preferred Stock and such other shares are entitled will in all cases
bear to each other the same ratio that the liquidation preferences of the CMIC
Preferred Stock and such other capital stock bear to each other. After payment
in full of the preferences in respect of the shares of the CMIC Preferred Stock
upon Liquidation of the Corporation, the holders of such shares in their
capacity as such shall not be entitled to any further right or claim to any
remaining assets of the Corporation.
6. Ranking. (a) Any class or series of capital stock of the
Corporation shall be deemed to rank:
(i) prior to the CMIC Preferred Stock, as to dividends or upon
Liquidation of the Corporation, if the holders of such class or series shall be
entitled to the receipt of dividends or of amounts distributable upon
Liquidation of the Corporation, as the case may be, in preference or priority
to the holders of CMIC Preferred Stock;
(ii) on a parity with the CMIC Preferred Stock, as to dividends
or upon Liquidation of the Corporation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share thereof
are different from those of the CMIC Preferred Stock, if the holders of such
class or series of capital stock and the CMIC Preferred Stock shall be entitled
to the receipt of dividends or of amounts distributable upon Liquidation of the
Corporation, as the case may be, in proportion to their respective amounts of
accumulated and unpaid dividends per share or liquidation prices, as the case
may be, without preferences or priority one over the other; or
13
14
(iii) junior to the CMIC Preferred Stock, as to dividends or
upon Liquidation of the Corporation, if such capital stock shall be common
stock or any other class or series of capital stock of the Corporation if the
holders of CMIC Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon Liquidation of the Corporation, as the case may be,
in preference or priority to the holders of shares of such capital stock.
(b) For purposes of this Certificate, without limiting the generality
or effect of the foregoing, the shares of CMIC Preferred Stock shall rank on a
parity, as to dividends and upon Liquidation of the Corporation, with shares of
the Corporation's $3.875 Cumulative Convertible Preferred Stock, shares of the
Corporation's $3.875 Cumulative Convertible Voting Preferred Stock and shares
of the Corporation's $3.00 Cumulative CXY-Indexed Convertible Preferred Stock.
7. Voting Rights.
(a) General. The holders of CMIC Preferred Stock will not have any
voting rights except as set forth below or as otherwise from time to time
required by applicable law. In connection with any right to vote, each holder
of shares of CMIC Preferred Stock will have one vote for each such share held.
Any shares of CMIC Preferred Stock held by any member of the Occidental Group
shall not have voting rights hereunder and shall not be counted in determining
the presence of a quorum or in calculating any percentage of shares under this
Section 7.
(b) Default Voting Rights. Except during the Redemption Period,
whenever dividends on the CMIC Preferred Stock shall be in arrears in an
aggregate amount equal to at least two full annual dividends (whether or not
consecutive), (i) the number of members of the Board of Directors shall be
increased by two, effective as of the time of election of such directors and
(ii) the holders of the CMIC Preferred Stock (voting separately as a class with
all other affected classes or series of preferred stock upon which like voting
rights have been conferred and are exercisable) will have the exclusive right
to vote for and elect such two additional directors of the Corporation. The
right of the holders of the CMIC Preferred Stock to vote for such two
additional directors shall terminate when all accumulated and unpaid dividends
on the CMIC Preferred Stock have been paid or declared and set apart for
payment. The term of office of all directors so elected shall terminate
immediately upon the termination of the rights of the holders of the CMIC
Preferred Stock and such other preferred stock to vote for such two additional
directors. Each such director so elected shall serve until the next annual
meeting and until his successor is elected, unless his term of office is
terminated earlier as provided in the preceding sentence. The foregoing right
of the holders of the CMIC Preferred Stock with respect to the election of two
directors shall be exercisable at the next annual meeting of stockholders
following the default or at any special meeting of stockholders held for such
purpose. If the right to elect directors shall have accrued to the holders of
the CMIC Preferred Stock more than ninety days preceding the date established
(or, if not yet established, reasonably expected by the Corporation to be
established) for the next annual meeting of stockholders, the Chairman of the
Board of the Corporation or other authorized officer of the Corporation, if
any, shall, within twenty days after the delivery to the Corporation at its
principal executive offices of a written request for a special meeting signed
by the holders of at least 10% of all outstanding shares of the CMIC Preferred
Stock, call a special meeting of the holders of the CMIC Preferred Stock and
any other holders of preferred stock entitled to vote thereon to be held within
sixty days after the delivery of such request for the purpose of electing such
additional directors. The holders of the CMIC Preferred Stock and such other
preferred stock referred to above voting as a class shall have the exclusive
right to remove without cause at any time and replace any directors such
holders shall have elected pursuant to this Section 7.
14
15
(c) Class Voting Rights. So long as the CMIC Preferred Stock is
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least 51% (or such higher percentage, if any, as may then
be required by applicable law) of all outstanding shares of the CMIC Preferred
Stock, voting separately as a class, (i) amend, alter or repeal any provision
of the Certificate of Incorporation, as the same may be amended from time to
time, so as to affect adversely the relative rights, preferences,
qualifications, limitations or restrictions of the CMIC Preferred Stock, (ii)
create, authorize or issue, or reclassify any authorized stock of the
Corporation into, or increase the authorized amount of, any class or series of
stock of the Corporation ranking senior to the CMIC Preferred Stock as to
dividends or upon Liquidation of the Corporation, or (iii) increase the number
of authorized, or issue additional, shares of CMIC Preferred Stock. A class
vote on the part of the CMIC Preferred Stock shall not be required (except as
otherwise required by law) in connection with any other matter, including,
without limitation, the authorization, issuance or increase in the authorized
amount of any shares of any class or series of stock of the Corporation that
either (A) ranks junior to, or on a parity with, the CMIC Preferred Stock as to
dividends and upon Liquidation of the Corporation or (B) is, at the time of
such increase, undesignated as to ranking with respect to dividends and upon
Liquidation of the Corporation.
8. Redemption.
(a) Redemption at the Option of the Corporation. The Corporation
may, at its option and in its sole discretion, redeem (an "Optional
Redemption") all but not less than all of the outstanding shares of CMIC
Preferred Stock, on any date set by the Board of Directors, at a redemption
price per share (the "Optional Redemption Price") equal to $1,000 plus all
accumulated and unpaid dividends thereon, if any, whether or not declared, to
but excluding the date fixed for redemption; provided, however, that no
Optional Redemption shall be permitted hereunder unless: (i) such Optional
Redemption occurs on or after January 1, 1998; or (ii) the Internal Revenue
Service has informed the Corporation in writing that it will not provide the
Corporation with a favorable determination letter indicating that the MidCon
ESOP is qualified within the meaning of Section 401(a) of the Code and is an
"employee stock ownership plan" within the meaning of Section 4975(e)(7) of the
Code after the Corporation has made all reasonable efforts to obtain such a
determination letter.
(b) Mandatory Redemption. In the event of a MidCon Disposition, on
the effective date of such MidCon Disposition, the Corporation shall redeem (a
"Mandatory Redemption") all of the outstanding shares of CMIC Preferred Stock
at a redemption price per share equal to the Mandatory Redemption Price.
(c) Redemption (Exchange) at the Option of the ESOP Trust. Except
during any Exchange Waiver Period, at any time after January 1, 2000, or within
48 days after the date (the "Notice Date") on which the Corporation gives a
MidCon Disposition Notice, a Notice of Proposed Redemption, a Default Notice or
a Recapitalization Notice, the ESOP Trust may require the Corporation to redeem
(an "Exchange") all but not less than all of the outstanding shares of CMIC
Preferred Stock, at a redemption price per share equal to the Exchange Price,
by (i) giving written notice (the "Exchange Notice") to the Corporation (A)
requesting redemption of the CMIC Preferred Stock in exchange for shares of
MidCon Common Stock and (B) specifying a proposed Exchange Date, which shall
not be more than 123 days after the earlier of (x) the date such Exchange
Notice is given or (y) the Notice Date, and (ii) concurrently with such
Exchange, satisfying the Exchange Obligations. If the Sharing Amount is
greater than zero and the ESOP Trust elects to pay the Corporation any portion
of the Sharing Amount as of the Exchange Date in shares of MidCon Common Stock,
the number of shares of MidCon Common Stock to be delivered to the Corporation
in respect thereof shall be equal to (x) the amount of the Sharing Amount to be
paid in such shares, divided by (y) the fair market value (on a marketable
minority interest basis) of one share of MidCon Common Stock as of the Exchange
15
16
Date, giving effect to the Exchange and all transactions in connection
therewith, as determined by an investment banking or appraisal firm of
recognized national standing selected by the Corporation and reasonably
acceptable to the ESOP Trust. If the Sharing Amount is less than zero, then,
concurrently with the Exchange, the Corporation shall make a cash payment to
the ESOP Trust equal to the absolute value of the Sharing Amount.
(d) Payment of Redemption Price. (i) In the event of an Optional
Redemption, a Mandatory Redemption or an Exchange, the aggregate Redemption
Price paid to a holder of CMIC Preferred Stock shall be the product of the
aggregate number of shares of CMIC Preferred Stock redeemed from such holder
and the applicable per share Redemption Price, with such product being rounded
to the nearer cent, with one-half cent rounded upward.
(ii) In the event of an Optional Redemption or a Mandatory
Redemption, the Corporation, at its option, may make payment of the Redemption
Price in (A) cash, (B) shares of Occidental Common Stock, (C) if shares of
MidCon Common Stock constitute, or upon such redemption would constitute,
Qualifying Employer Securities, shares of MidCon Common Stock, or (D) any
combination of the foregoing. In the event of an Exchange, the Corporation
shall make payment of the aggregate Exchange Price first in shares of MidCon
Common Stock, and only if and to the extent that, immediately prior to the
Exchange, the Occidental Group does not own a number of shares of MidCon Common
Stock sufficient to satisfy the aggregate Exchange Price payable in respect of
all of the outstanding shares of CMIC Preferred Stock, the Corporation shall
pay the remaining portion of the aggregate Exchange Price in cash or, if the
ESOP Trust consents, shares of Occidental Common Stock or a combination of cash
and shares of Occidental Common Stock. For purposes of determining the number
of shares of Occidental Common Stock to be delivered by the Corporation in
satisfaction, in whole or in part, of any Redemption Price, shares of
Occidental Common Stock shall be valued at the Occidental Market Price as of
the date of redemption. For purposes of determining the number of shares of
MidCon Common Stock to be delivered by the Corporation in satisfaction, in
whole or in part, of any Redemption Price, shares of MidCon Common Stock shall
be valued at the MidCon Share Price as of the date of redemption; provided,
however, that, in the case of a Mandatory Redemption occurring as a result of a
public offering, or a dividend or distribution to holders of shares of
Occidental Common Stock, of shares of MidCon Common Stock, shares of MidCon
Common Stock shall be valued at the lesser of the MidCon Share Price or 112.5%
of (x) in the case of a public offering, the public offering price per share of
MidCon Common Stock, or (y) in the case of a dividend or distribution, the
Closing Price of a share of MidCon Common Stock as of the Redemption Date.
(e) Notice of Redemption. In the event of an Optional Redemption or
a Mandatory Redemption, the Corporation shall give notice (the "Redemption
Notice") to the holders of record of shares of CMIC Preferred Stock. In the
event of an Optional Redemption, the Redemption Notice shall be given at least
5 but not more than 60 days prior to the Redemption Date. In the event of a
Mandatory Redemption, the Redemption Notice shall be given on the Redemption
Date. Each Redemption Notice shall specify (i) the date fixed for redemption,
(ii) the place or places of payment of the Redemption Price, (iii) that payment
will be made upon presentation and surrender of certificates representing
shares of CMIC Preferred Stock, (iv) that on and after the Redemption Date,
dividends will cease to accumulate on such shares (unless the Corporation
defaults in the payment of the Redemption Price), and (v) that the right of
holders to convert shares of CMIC Preferred Stock shall terminate at the close
of business on the Redemption Date (unless the Corporation defaults in the
payment of the Redemption Price). Any Redemption Notice that is mailed as
herein provided shall be conclusively presumed to have been duly given, whether
or not the holder of shares of CMIC Preferred Stock receives such Redemption
Notice; and failure to give such Redemption Notice, or any defect in such
Redemption Notice to the holder of any shares of CMIC Preferred Stock, shall
not affect the validity of the
16
17
proceedings for the redemption of any other shares of CMIC Preferred Stock. At
least 48 days prior to giving a Redemption Notice in respect of an Optional
Redemption, the Corporation shall give notice (the "Notice of Proposed
Redemption") of its intention to do so to the holders of record of shares of
CMIC Preferred Stock. If the Corporation receives an Exchange Notice from the
ESOP Trust within 48 days after giving a Notice of Proposed Redemption, the
Corporation shall not give a Redemption Notice until after (i) the ESOP Trust
has given the Corporation a notice revoking such Exchange Notice, or (ii) the
Exchange Date has transpired and the ESOP Trust does not consummate an Exchange
on such date. After giving a Notice of Proposed Redemption, the Corporation
shall give a Redemption Notice in respect of an Optional Redemption within 20
days after the earlier of (i) the date on which the Corporation receives written
notice from the ESOP Trust that it does not intend to effect an Exchange or that
it is thereby revoking an Exchange Notice given after such Notice of Proposed
Redemption was given, or (ii) the Exchange Date set forth in an Exchange Notice
given after such Notice of Proposed Redemption was given, if the ESOP Trust does
not consummate an Exchange on such date.
(f) Redemption Procedures. On the Redemption Date, each holder of
shares of CMIC Preferred Stock shall surrender the certificates evidencing such
shares to the Corporation at a place designated in the applicable Redemption
Notice and shall thereupon be entitled to receive payment of the applicable
Redemption Price for each such share. A Redemption Notice having been given as
aforesaid, if, on the Redemption Date, assets necessary for the redemption
shall be legally available therefor and shall have been irrevocably deposited
or set aside, then, notwithstanding that the certificates evidencing any shares
of CMIC Preferred Stock shall not have been surrendered, (i) dividends with
respect to the shares of CMIC Preferred Stock called for redemption shall cease
to accumulate, (ii) such shares shall no longer be deemed outstanding, (iii)
the holders thereof shall cease to be stockholders of the Corporation to the
extent of their interest in such shares, and (iv) all rights whatsoever with
respect to the shares of CMIC Preferred Stock shall terminate, except the right
of the holders of such shares to receive the Redemption Price for each share,
without interest or any sum of money in lieu of interest thereon, upon
surrender of their certificates therefor at a place designated in the
applicable Redemption Notice.
(g) No Sinking Fund. The shares of CMIC Preferred Stock shall not be
subject to the operation of any retirement or sinking fund.
9. Conversion Privileges.
(a) Rights of Conversion. Each holder of shares of CMIC Preferred
Stock shall have the right, at such holder's option, to convert all or a
portion of the shares held, at any time or from time to time prior to the close
of business on the date fixed for redemption of such shares as herein provided,
into that number of fully paid and nonassessable shares of Occidental Common
Stock (calculated as to each conversion to the nearer 1/100th of a share, with
.5/100 rounded upwards to 1/100) determined by multiplying (i) the Conversion
Ratio as of the relevant Conversion Date, by (ii) the aggregate number of
shares of CMIC Preferred Stock being converted on such Conversion Date by such
holder.
(b) Conversion Procedures.
(i) Any holder of shares of CMIC Preferred Stock desiring to
convert such shares pursuant hereto shall surrender the certificate or
certificates evidencing such shares at the principal executive offices of the
Corporation or another place designated by the Corporation in a written notice
sent to the holders of record of shares of CMIC Preferred Stock, which
certificate or certificates, if the Corporation shall so require, shall be duly
endorsed to the Corporation or in blank, or accompanied by proper instruments
of transfer to the
17
18
Corporation or in blank, accompanied by (A) an irrevocable written notice to
the Corporation that the holder elects to convert such shares and specifying
the name or names (with address or addresses) in which a certificate or
certificates evidencing shares of Occidental Common Stock are to be issued, and
(B) if required pursuant to Section 9(g), an amount sufficient to pay any
transfer or similar tax payable by such holder (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
(ii) Except as provided in Section 4(a), the holder of a share
of CMIC Preferred Stock at the close of business on a Record Date shall be
entitled to receive the dividend payable thereon on the corresponding Dividend
Payment Date notwithstanding the conversion thereof during the Ex-Dividend
Period or the Corporation's default in the payment of the dividend due on such
Dividend Payment Date; provided, however, that, with respect to each share of
CMIC Preferred Stock surrendered for conversion during the Ex-Dividend Period,
the Corporation shall retain a number of shares of Occidental Common Stock (or
other securities or assets) otherwise required to be delivered upon such
conversion equal to (A) the dividend payable on such share of CMIC Preferred
Stock, divided by (B) the Occidental Market Price as of the Conversion Date.
Except as provided for above, no payments or adjustments in respect of
dividends on shares of CMIC Preferred Stock surrendered for conversion (whether
or not in arrears) or on account of any dividend on the shares of Occidental
Common Stock issued upon conversion shall be made upon the conversion of any
shares of CMIC Preferred Stock.
(iii) The Corporation shall, as soon as practicable after such
surrender for conversion of certificates evidencing shares of CMIC Preferred
Stock and compliance with the other conditions herein contained, but subject to
Sections 9(d), 9(e), 9(f), 9(g) and 9(h), deliver to the person for whom such
shares of CMIC Preferred Stock are so surrendered, or to the nominee or
nominees of such person, certificates evidencing the number of full shares of
Occidental Common Stock to which such person shall be entitled, together with a
cash payment in respect of any fraction of a share of Occidental Common Stock
otherwise issuable, in accordance with Section 9(d), or any cash payment
required pursuant to Section 9(e). Subject to the following provisions of this
paragraph, each conversion shall be deemed to have been effected immediately
prior to the close of business on the date (the "Conversion Date") on which
certificates for the shares of CMIC Preferred Stock to be converted shall have
been surrendered together with the irrevocable written notice and the payment
of taxes (if applicable), all as provided in the first two paragraphs of this
Section 9(b). The Person or Persons entitled to receive the shares of
Occidental Common Stock deliverable upon conversion of such shares of CMIC
Preferred Stock shall be treated for all purposes as the record holder or
holders of such shares of Occidental Common Stock on the relevant Conversion
Date, unless the stock transfer books of the Corporation shall be closed on
such Conversion Date, in which event such person or persons shall be deemed to
have become such holder or holders of record at the close of business on the
next succeeding day on which such stock transfer books are open, but such
conversion shall be based upon the Conversion Ratio in effect on such
Conversion Date.
(c) Adjustment of Terms of Conversion. Upon the occurrence of any
event that affects the Occidental Common Stock and that the Board of Directors
determines would result in a violation of the general principle that each share
of CMIC Preferred Stock shall be convertible into a number of shares of
Occidental Common Stock (or other assets) having a market value equal to the
Conversion Amount, or upon the determination by the Board of Directors that
such event may occur, the Board of Directors shall be entitled, but will not be
required, to increase the Conversion Ratio, or make other provision, as it
determines in its sole discretion to be necessary or desirable in order to
implement such general principle. To the extent permitted by law, the
Corporation from time to time may increase the Conversion Ratio by any amount,
permanently or for any period of time of at least twenty days (excluding Legal
Holidays), if the increase is irrevocable during the period. Whenever the
Conversion Ratio is increased, or other provision is made, pursuant to this
Section 9(c),
18
19
the Corporation shall mail to the holders of record of shares of CMIC Preferred
Stock a notice of the increase or other provision at least 15 days prior to the
date the increased Conversion Ratio or other provision takes effect, and such
notice shall describe the increased Conversion Ratio or other provision and, if
applicable, the period it will be in effect.
(d) No Fractional Shares. No fractional shares or scrip representing
fractional shares of Occidental Common Stock shall be issued upon conversion of
any shares of CMIC Preferred Stock. If a certificate or certificates
representing more than one share of CMIC Preferred Stock shall be surrendered
for conversion at one time by the same record holder, the number of full shares
of Occidental Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares of CMIC Preferred Stock so
surrendered by such record holder as provided in Section 9(a). In lieu of any
fractional share of Occidental Common Stock that would otherwise be issuable
upon conversion of any shares of CMIC Preferred Stock, the Corporation shall
pay a cash adjustment in respect of such fractional share in an amount equal to
the same fraction of the Closing Price of the Occidental Common Stock on the
Trading Day immediately preceding the Conversion Date, calculated to the nearer
cent, with one-half cent rounded upward.
(e) Reservation of Shares; Authorized Shares. The Corporation shall
initially reserve and keep available, out of its authorized and unissued or
treasury stock, solely for the purpose of effecting the conversion of the CMIC
Preferred Stock, such number of shares of Occidental Common Stock free of
preemptive rights as shall be sufficient, as of the Date of Original Issue, to
effect the conversion of all shares of CMIC Preferred Stock initially issued.
The Corporation may, from time to time thereafter, reduce the number of such
shares reserved and kept available, out of its authorized and unissued stock,
to a number sufficient to effect the conversion, at such time, of all shares of
CMIC Preferred Stock then issued and outstanding. At any time that the
Corporation lacks sufficient authorized and unissued shares and treasury shares
to effect the conversion of all shares of CMIC Preferred Stock then issued and
outstanding, the Corporation will seek to increase the number of authorized
shares of Occidental Common Stock or acquire shares of Occidental Common Stock
in amounts sufficient to enable the Corporation to effect such conversion.
(f) Compliance with Laws. If the delivery of shares of Occidental
Common Stock upon conversion of shares of CMIC Preferred Stock requires
registration with or approval of any governmental authority under the laws of
any United States jurisdiction, the Corporation will, as expeditiously as
possible, use commercially reasonable efforts to make such registration or
obtain such approval, and shall not be required to deliver shares of Occidental
Common Stock upon conversion until such registration is made or such approval
is obtained.
(g) Transfer Taxes. The Corporation shall pay any and all issue or
other taxes (other than taxes based on income) that may be payable in respect
of any issue or delivery of shares of Occidental Common Stock (or other
securities or assets) upon conversion of shares of CMIC Preferred Stock. The
Corporation shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue or delivery of shares of
Occidental Common Stock (or other securities or assets) in a name other than
that in which the shares of CMIC Preferred Stock so converted were registered,
and no such issue or delivery of such shares shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of such tax
or has established, to the satisfaction of the Corporation, that such tax has
been paid. Nothing in this Section 9(g) shall limit the restrictions on
transfer set forth in Section 3. To the extent required by law, the
Corporation may, upon any conversion of shares of CMIC Preferred Stock, retain
any shares of Occidental Common Stock (or other securities or assets) otherwise
required to be delivered upon such conversion to the extent necessary to
provide for the payment of taxes required to be withheld or deducted by the
Corporation, and paid to any taxing authority having jurisdiction, from amounts
otherwise due to the holder; provided, however, that the Corporation shall
apply such shares or other securities or assets (or cash received upon
19
20
disposition thereof), or make other provision, to discharge such taxes.
(h) Par Value of Occidental Common Stock. If, as of the close of
business on any day, the quotient obtained by dividing (i) $1,000 by (ii) the
Conversion Ratio is less than the par value per share of the Occidental Common
Stock, the Conversion Ratio in effect as of the opening of business on the next
day shall be adjusted to equal the quotient obtained by dividing (A) $1,000 by
(B) the par value per share of the Occidental Common Stock. The Corporation
shall not take any action to increase the par value per share of the Occidental
Common Stock. The Corporation shall not be obligated to issue any shares of
Occidental Common Stock upon conversion of shares of CMIC Preferred Stock if,
and only to the extent that, the aggregate par value of the shares of
Occidental Common Stock deliverable upon such conversion would exceed the
aggregate par value of the shares of CMIC Preferred Stock being converted by an
amount greater than the Corporation's surplus.
10. Determination of Appraised MidCon Value.
(a) Determination by First Appraiser.
(i) Prior to March 31 of each year, commencing March 31,
1997, the Corporation shall retain a First Appraiser to determine the MidCon
Value as of the immediately preceding December 31. If the ESOP Trust has given
the Corporation written notice of its choice for the First Appraiser prior to
March 1 of such year, the Corporation shall retain as the First Appraiser the
firm selected by the ESOP Trust. The Corporation shall cause the First
Appraiser to complete its determination, and prepare and deliver to the
Corporation and the ESOP Trust a written report (a "First Appraiser's Report"),
setting forth in reasonable detail its determination of the MidCon Value as of
the immediately preceding December 31, as soon as practicable but in no event
later than June 1 of such year.
(ii) At least 60 days prior to any MidCon Disposition, the
Corporation shall retain a First Appraiser to determine the MidCon Value as of
an Appraisal Date that is 30 days prior to the expected date of such MidCon
Disposition. If the ESOP Trust has previously given the Corporation written
notice of its choice for the First Appraiser, the Corporation shall retain the
firm selected by the ESOP Trust as the First Appraiser. The Corporation shall
cause the First Appraiser to complete its determination, and prepare and
deliver to the Corporation and the ESOP Trust a First Appraiser's Report,
setting forth in reasonable detail its determination of such MidCon Value, as
soon as practicable but in no event later than five days after such Appraisal
Date.
(iii) No later than the fifth day after delivery of an
Exchange Notice by the ESOP Trust to the Corporation, the Corporation shall
retain a First Appraiser to determine the MidCon Value as of an Appraisal Date
that is 30 days prior to the proposed Exchange Date set forth in such Exchange
Notice. If the ESOP Trust has given the Corporation written notice of its
choice for the First Appraiser in the Exchange Notice, the Corporation shall
retain the firm selected by the ESOP Trust as the First Appraiser. The
Corporation shall cause the First Appraiser to complete its determination, and
prepare and deliver to the Corporation and the ESOP Trust a First Appraiser's
Report, setting forth in reasonable detail its determination of such MidCon
Value, as soon as practicable but in no event later than five days after such
Appraisal Date.
(iv) If the holder of shares of CMIC Preferred Stock
desires to convert all of the outstanding shares of CMIC Preferred Stock into
shares of Occidental Common Stock, such holder may, by giving notice to such
effect to the Corporation, require the Corporation to retain a First Appraiser
to determine the MidCon Value as of an Appraisal Date that is 30 days prior to
the proposed Conversion Date set forth
20
21
in such holder's notice. Such holder may include in such notice, its choice
for the First Appraiser, if any. No later than the fifth day after delivery of
such notice by such holder, the Corporation shall retain a First Appraiser to
determine the MidCon Value as of such Appraisal Date. If such holder has
informed the Corporation of its choice for the First Appraiser in its notice to
the Corporation, the Corporation shall retain the firm selected by such holder
as the First Appraiser. The Corporation shall cause the First Appraiser to
complete its determination, and prepare and deliver to the Corporation and such
holder a First Appraiser's Report, setting forth in reasonable detail its
determination of such MidCon Value, as soon as practicable but in no event
later than five days after such Appraisal Date.
(v) If the Corporation determines, in good faith, that an
event or circumstance has occurred or arisen that is likely to result in a
sustainable decrease in Appraised MidCon Value of 20% or more and at least $50
million, the Corporation shall give the ESOP Trust notice to such effect. If,
within five days thereafter, the ESOP Trust gives the Corporation notice of its
choice for the First Appraiser, the Corporation shall retain the firm selected
by the ESOP Trust as the First Appraiser. Otherwise, the Corporation may
select a First Appraiser. The Corporation shall cause the First Appraiser to
determine the MidCon Value as of a recent date and prepare and deliver to the
Corporation and the ESOP Trust a First Appraiser's Report, setting forth in
reasonable detail its determination of such MidCon Value, as soon as
practicable but in no event later than five days after such Appraisal Date.
(vi) If the ESOP Trust determines, in good faith, that an
event or circumstance has occurred or arisen that is likely to result in a
sustainable increase in Appraised MidCon Value of 20% or more and at least $50
million, the ESOP Trust may, by giving notice to such effect to the
Corporation, require the Corporation to retain a First Appraiser to determine
the MidCon Value as of an Appraisal Date specified by the ESOP Trust in such
notice. The ESOP Trust may include in such notice its choice for the First
Appraiser, if any. No later than the fifth day after delivery of such notice
by the ESOP Trust, the Corporation shall retain a First Appraiser to determine
such MidCon Value. If the ESOP Trust has informed the Corporation of its
choice for the First Appraiser in its notice to the Corporation, the
Corporation shall retain the firm selected by the ESOP Trust as the First
Appraiser. The Corporation shall cause the First Appraiser to complete its
determination and prepare and deliver to the Corporation and the ESOP Trust a
First Appraiser's Report, setting forth in reasonable detail its determination
of such MidCon Value, as soon as practicable but in no event later than five
days after such Appraisal Date.
(b) Assessment of First Appraiser's Report. From and after the third
Business Day after a Delivery Date (or such earlier date on which the ESOP
Trust gives written notice to the Corporation approving the First Appraiser's
Report if the Corporation does not object to the First Appraiser's Report), the
MidCon Value set forth in the First Appraiser's Report delivered on such
Delivery Date shall be the new Appraised MidCon Value until the next
determination thereof pursuant to this Section 10, unless (i) the Corporation
has, prior to such date, received a written notice from the ESOP Trust,
objecting to the First Appraiser's Report, or (ii) the Corporation objects to
the First Appraiser's Report.
(c) Determination by Second Appraiser. If the MidCon Value as of the
relevant Appraisal Date, as set forth in a First Appraiser's Report, has not
been determined to be the new Appraised MidCon Value pursuant to Section 10(b),
then, from and after the tenth Business Day after the Delivery Date of such
First Appraiser's Report, such value shall be the Appraised MidCon Value until
the next determination thereof pursuant to this Section 10, unless the
Corporation has, prior to such date, received, from an investment banking or
appraisal firm of recognized national standing (a "Second Appraiser"), which
shall be selected by (i) the ESOP Trust in the case of Section 10(b)(i), or
(ii) the Corporation in the case of Section 10(b)(ii), a written report (each,
a "Second Appraiser's Report"), setting forth in reasonable detail such Second
21
22
Appraiser's determination of the MidCon Value as of the Appraisal Date set
forth in the First Appraiser's Report.
(d) Assessment of Second Appraiser's Report. If (i) the MidCon Value
as of the relevant Appraisal Date, as set forth in a First Appraiser's Report,
has not been determined to be the new Appraised MidCon Value pursuant to
Section 10(b) or 10(c), and (ii) the average of the MidCon Values as of the
relevant Appraisal Date, as set forth in the First Appraiser's Report and the
Second Appraiser's Report, does not exceed 110% of the lesser of such two
MidCon Values, then, from and after the first Business Day after the delivery
of such Second Appraiser's Report to the Corporation, such average shall be the
new Appraised MidCon Value until the next determination thereof pursuant to
this Section 10.
(e) Opportunity to Request Third Appraiser. If (i) the MidCon Value
as of the relevant Appraisal Date, as set forth in a First Appraiser's Report,
has not been determined to be the new Appraised MidCon Value pursuant to
Section 10(b) or 10(c), (ii) the average of the MidCon Values as of the
relevant Appraisal Date, as set forth in the First Appraiser's Report and the
Second Appraiser's Report, has not been determined to be the new Appraised
MidCon Value pursuant to Section 10(d), (iii) within three Business Days after
delivery of such Second Appraiser's Report to the ESOP Trust, the Corporation
has not received a written notice from the ESOP Trust requesting a Third
Appraiser's Report, and (iv) the Corporation does not intend to obtain a Third
Appraiser's Report, then, from and after the sixth Business Day after the
delivery of such Second Appraiser's Report to the Corporation and the ESOP
Trust, the average of the MidCon Values as of the relevant Appraisal Date, as
set forth in the First Appraiser's Report and the Second Appraiser's Report,
shall be the new Appraised MidCon Value until the next determination thereof
pursuant to this Section 10.
(f) Determination by Third Appraiser. If (i) the MidCon Value as of
the relevant Appraisal Date, as set forth in a First Appraiser's Report, has
not been determined to be the new Appraised MidCon Value pursuant to Section
10(b) or 10(c), and (ii) the average of the MidCon Values as of the relevant
Appraisal Date, as set forth in the First Appraiser's Report and the Second
Appraiser's Report, has not been determined to be the new Appraised MidCon
Value pursuant to Section 10(d) or 10(e), then (A) the Corporation shall retain
an investment banking or appraisal firm of recognized national standing jointly
selected by the First Appraiser and the Second Appraiser (a "Third Appraiser")
to determine the MidCon Value as of the relevant Appraisal Date, (B) the
Corporation shall cause such Third Appraiser to complete such determination,
and prepare and deliver to the Corporation and the ESOP Trust a written report
(each, a "Third Appraiser's Report"), setting forth in reasonable detail its
determination of the MidCon Value, as of the relevant Appraisal Date, as soon
as practicable but in no event later than 18 Business Days after the Delivery
Date of such First Appraiser's Report, and (C) from and after the first
Business Day after the delivery of such Third Appraiser's Report to the
Corporation, the average of the two of the three MidCon Values as of the
relevant Appraisal Date, as set forth in the First Appraisal Report, the Second
Appraisal Report and the Third Appraisal Report, that are closest together
shall be the new Appraised MidCon Value until the next determination thereof
pursuant to this Section 10 (or, if no two such MidCon Values are closest
together, the average of all three such MidCon Values shall be the new
Appraised MidCon Value until the next determination thereof pursuant to this
Section 10).
(g) Notice of New Appraised MidCon Value. Whenever an Appraised
MidCon Value is determined pursuant to this Section 10, the Corporation shall
mail to holders of record of the CMIC Preferred Stock a notice of such new
Appraised MidCon Value within fifteen days after the date such Appraised MidCon
Value becomes effective.
(h) Appraisal Fees and Expenses. The Corporation shall pay all of the
reasonable fees and expenses
22
23
of each First Appraiser, each Second Appraiser and each Third Appraiser.
(i) Updated Appraisals. If the Appraised MidCon Value as of any date
has been determined as of an Appraisal Date that is more than 30 days prior to
the date on which a MidCon Disposition or an Exchange is to occur, then, no
later than five Business Days prior to the applicable Redemption Date, the
Corporation shall request that the First Appraiser, the Second Appraiser, if
any, and the Third Appraiser, if any, who were involved in the determination of
the Appraised MidCon Value as of such date redetermine the MidCon Value as of a
date that is not more than two Business Days prior to such Redemption Date, and
shall cause such Persons to provide written reports to the Corporation and the
ESOP Trust, setting forth in reasonable detail their redetermination of the
MidCon Value as of the relevant Appraisal Date, no later than such Appraisal
Date. If any such redetermined Midcon Value is different from the MidCon Value
previously determined, by such Persons, then, from and after the delivery of
all such reports to the Corporation, the value that would have been the
Appraised MidCon Value if such redetermined MidCon Values had been set forth in
the First Appraiser's Report, the Second Appraiser's Report and the Third
Appraiser's Report used to determine the current Appraised MidCon Value shall
be the new Appraised MidCon Value
11. Transactions with MidCon. (j) The Corporation shall not, and
shall not permit any member of the Occidental Group to, directly or indirectly,
enter into, or permit to exist, any Intercompany Transaction except for (i)
transactions made in good faith, the terms of which are fair and reasonable to
the MidCon Group and are at least as favorable as the terms that could be
obtained by the MidCon Group in a comparable transaction made on an arm's
length basis and, if outside the ordinary course of business, do not have an
aggregate value in excess of $50,000,000; provided, however, that the
provisions of this Section 11(a)(i) shall not apply to any transactions
involving any sale, transfer or other disposition of any shares of capital
stock or other equity interests of any member of the MidCon Group, any
securities convertible into or exchangeable for any such shares or interests or
any options, warrants or other rights that are exercisable for any such shares,
interests or securities or any amendment, renewal, extension, refinancing,
repurchase, exchange or other acquisition of any interest in the Dividend Note,
(ii) Permitted Intercompany Transactions, (iii) transactions approved by the
ESOP Trust, or (iv) Restricted Payments permitted pursuant to Section 11(c).
(b) An Intercompany Transaction shall be deemed to satisfy clause (i)
of Section 11(a) if (i) the Corporation has obtained a favorable written
opinion as to the fairness of such transaction to the MidCon Group, from a
financial point of view, from a nationally recognized investment banking or
public accounting firm or other expert, in each case, reasonably acceptable to
the ESOP Trust, or (ii) with respect to any Intercompany Transaction with an
aggregate value of not more than $5,000,000, (A) an Executive Vice President of
the Corporation has determined that such Intercompany Transaction is fair and
reasonable to the MidCon Group, and on terms that are at least as favorable as
the terms that could be obtained by the MidCon Group on an arm's length basis
and (B) the Corporation has delivered a certificate to such effect to MidCon
and the ESOP Trust.
(c) The Corporation shall not permit any member of the MidCon Group
to, directly or indirectly, make any Restricted Payment, unless either (i) at
the time and after giving effect to such Restricted Payment, the Sharing Amount
is at least equal to $200,000,000 (assuming, solely for purposes of this
Section 11(c), that the Sharing Percentage is equal to 30%), or (ii) the
aggregate amount of all Restricted Payments, including such proposed Restricted
Payment, during the period from but excluding the Date of Original Issue to and
including the date of such Restricted Payment, does not exceed the dollar value
of any capital contributions made by the Occidental Group to the MidCon Group
after the Date of Original Issue and on or prior to the date of such Restricted
Payment, calculated, to the extent that any such Restricted Payment or capital
contribution was made in property other than cash, based on the fair market
value of such property as of the
23
24
date of its distribution or proposed distribution to a member of the Occidental
Group or its contribution to a member of the MidCon Group, which fair market
value shall be determined by the ESOP Trust or a nationally recognized
investment banking or public accounting firm or other expert chosen by the ESOP
Trust and, in each case, reasonably acceptable to the Corporation. If, at the
time a Restricted Payment is made, such Restricted Payment (or any portion
thereof) would be permitted under clause (i) and clause (ii) of the immediately
preceding sentence, such Restricted Payment (or portion thereof) shall be
deemed to have been made pursuant to clause (ii).
12. Notice of Certain Events. (a) In the event of any proposed
MidCon Disposition, the Corporation shall cause to be sent to the holders of
record of the CMIC Preferred Stock, at least 120 days prior to the effective
date of the proposed MidCon Disposition, a notice (the "MidCon Disposition
Notice") setting forth (i) a reasonably detailed description of the proposed
transaction, (ii) the Corporation's best estimate of the price at which the
MidCon Disposition is expected to be effected, and (iii) the Corporation's best
estimate of the effective date for the proposed MidCon Disposition.
(b) Upon the occurrence of an Event of Default, the Corporation shall
cause to be sent to the holders of record of the CMIC Preferred Stock a notice
(the "Default Notice") setting forth a reasonably detailed description of the
Event of Default. When any such Event of Default is no longer continuing, the
Corporation shall cause to be sent to the holders of record of the CMIC
Preferred Stock a notice (the "Cessation of Default Notice") to such effect.
(c) In the event of any proposed Recapitalization, the Corporation
shall cause to be sent to the holders of record of the CMIC Preferred Stock, at
least 120 days prior to the effective date of the proposed Recapitalization, a
notice (the "Recapitalization Notice") setting forth a reasonably detailed
description of the proposed Recapitalization.
13. Consolidation, Merger, Etc. (a) In the event that the
Corporation shall enter into any consolidation, merger, share exchange or
similar transaction, however named, pursuant to which the outstanding shares of
Occidental Common Stock are to be exchanged solely for or changed, reclassified
or converted solely into shares of capital stock of any successor or resulting
or other company (including the Corporation) that constitute Qualifying
Employer Securities with respect to holders of CMIC Preferred Stock and, if
applicable, for a cash payment in lieu of fractional shares, if any, proper
provision shall be made so that, upon consummation of such transaction, the
shares of CMIC Preferred Stock shall be converted into or exchanged for shares
of convertible preferred stock of such successor or resulting or other company
having in respect of such company the same powers, preferences and relative,
participating, optional or other special rights (including the rights provided
by this Section 13) and the qualifications, limitations or restrictions thereof
that the shares of CMIC Preferred Stock had in respect of the Corporation
immediately prior to such transaction, except that after such transaction each
share of convertible preferred stock of the surviving or resulting or other
company so received in such transaction upon conversion or exchange of shares
of CMIC Preferred Stock shall be convertible into or redeemable for, otherwise
on the terms and conditions provided by Sections 3, 8(d), 8(g) and 9, the kind
of Qualifying Employer Securities receivable in such transaction by a holder of
shares of Occidental Common Stock (except that references herein to the
"Occidental Market Price" shall be deemed to be references to the Market Price
of such Qualifying Employer Securities). If by virtue of the structure of such
transaction, a holder of Occidental Common Stock is required to make an
election with respect to the nature and kind of consideration to be received in
such transaction, which election cannot practicably be made by the holders of
shares of CMIC Preferred Stock, then the shares of preferred stock of the
surviving or resulting or other company received in such transaction upon
conversion or exchange of shares of CMIC Preferred Stock shall, by virtue of
such transaction and on the same terms as apply to the
24
25
holders of shares of Occidental Common Stock, be convertible into or redeemable
solely for Qualifying Employer Securities (together, if applicable, with a cash
payment in lieu of fractional shares) with the effect provided above on the
basis of the kind of Qualifying Employer Securities receivable in such
transaction by a holder of shares of Occidental Common Stock; provided,
however, that if the kind of Qualifying Employer Securities receivable in such
transaction is not the same for each such share of Occidental Common Stock,
then the kind so receivable in such transaction for each share of Occidental
Common Stock for this purpose shall be deemed to be the kind so receivable by
the plurality of such shares of Occidental Common Stock.
(b) In the event that the Corporation shall enter into any
consolidation, merger, share exchange or similar transaction, however named,
pursuant to which the outstanding shares of Occidental Common Stock are to be
exchanged for or changed, reclassified or converted into other stock or
securities or cash or any other property, or any combination thereof, other
than any such consideration which is constituted solely of Qualifying Employer
Securities and cash payments, if applicable, in lieu of fractional shares,
proper provision shall be made so that, upon consummation of such transaction,
the outstanding shares of CMIC Preferred Stock shall, by virtue of such
transaction and on the same terms as are applicable to the holders of shares of
Occidental Common Stock, be converted into or exchanged for the aggregate
amount of stock, securities, cash or other property (payable in like kind)
receivable by holders of the number of shares of Occidental Common Stock into
which such shares of CMIC Preferred Stock could have been converted immediately
prior to such transaction. If by virtue of the structure of such transaction,
a holder of shares of Occidental Common Stock is required to make an election
with respect to the nature and kind of consideration to be received in such
transaction, which election cannot practicably be made by holders of shares of
CMIC Preferred Stock, then the shares of CMIC Preferred Stock shall, by virtue
of such transaction and on the same terms as apply to the holders of shares of
Occidental Common Stock, be converted into or exchanged for the aggregate
amount of stock, securities, cash or other property (payable in kind)
receivable by a holder of the number of shares of Occidental Common Stock into
which such shares of CMIC Preferred Stock could have been converted immediately
prior to such transaction if such holder of Occidental Common Stock failed to
exercise any rights of election to receive any kind or amount of stock,
securities, cash or other property receivable in such transaction; provided,
however, that if the kind or amount of stock, securities, cash or other
property receivable in such transaction are not the same for each non-electing
share of Occidental Common Stock, then the kind and amount of stock,
securities, cash or other property so receivable in such transaction for each
non-electing share of Occidental Common Stock shall be the kind and amount so
receivable per share by the plurality of the non-electing shares.
(c) If the Corporation shall enter into any agreement providing for
any consolidation, merger, share exchange or similar transaction described in
this Section 13, then the Corporation shall, as soon as practicable thereafter
(and in any event at least 60 days before consummation of such transaction),
give notice of such agreement and the material terms thereof to each holder of
shares of CMIC Preferred Stock. The Corporation shall not consummate any
consolidation, merger, share exchange or similar transaction unless all of the
terms of this Section 13 have been complied with.
14. Outstanding Shares; Status of Acquired Shares. For purposes of
this Certificate, all shares of CMIC Preferred Stock issued by the Corporation
shall be deemed outstanding except (i) as provided in Section 8(f), (ii) from
and after the Conversion Date with respect to such shares, all shares of CMIC
Preferred Stock converted into Occidental Common Stock or other securities or
assets as provided herein, and (iii) from the date of registration of transfer,
all shares of CMIC Preferred Stock held of record by the Corporation or any
other member of the Occidental Group. Shares of CMIC Preferred Stock redeemed
by the Corporation pursuant to Section 8, received by the Corporation upon
conversion pursuant to Section 9, or otherwise acquired by the Corporation will
be restored to the status of authorized but unissued shares of Preferred Stock,
25
26
without designation as to class, and may thereafter be issued, but not as
shares of CMIC Preferred Stock.
15. Notices. All notices and reports to be given or delivered to the
Corporation pursuant to this Certificate shall be given in writing and shall be
deemed to have been given only upon receipt thereof by the Corporation at its
principal executive offices at 10889 Wilshire Boulevard, Los Angeles,
California 90024 (or such other address as the Corporation shall specify in
writing by notice sent by certified mail, return receipt requested, to the
holders of record of shares of the CMIC Preferred Stock), addressed to the
General Counsel. All notices and reports to be given or delivered by the
Corporation to the holders of shares of CMIC Preferred Stock shall be sent by
hand delivery or by first class mail, postage prepaid, to such holders at their
last addresses as they appear on the stock transfer books of the Corporation,
or to any such holder by facsimile transmission to a number given by such
holder to the Corporation. All notices and reports to be given or delivered to
the ESOP Trust pursuant to this Certificate shall be given in writing and shall
be sent by hand delivery or by certified mail, return receipt requested, to the
ESOP Trust at the principal executive offices of the ESOP Trustee at 515 South
Flower Street, Suite 2800, Los Angeles, California 90071 (or such other address
as the ESOP Trust shall specify in writing by notice sent to the Corporation),
addressed to the Executive Vice President and Senior Trust Officer of the ESOP
Trustee or to the ESOP Trust, or by facsimile transmission to (213) 488-1366.
16. Preemptive Rights. The CMIC Preferred Stock is not entitled to
any preemptive or subscription rights in respect of any securities of the
Corporation.
17. Severability of Provisions. Whenever possible, each provision
hereof shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating or otherwise
adversely affecting the remaining provisions hereof.
18. Adjustment of Occidental Market Price. The Floor Price shall be
subject to adjustment from time to time as follows:
(a) If the Corporation shall fix a Determination Date with respect to
the payment or making of a dividend or other distribution on shares of
Occidental Common Stock exclusively in shares of Occidental Common Stock, the
Floor Price in effect as of the opening of business on the day following the
Determination Date shall be decreased by multiplying such Floor Price by a
fraction (i) the numerator of which shall be one and (ii) the denominator of
which shall be the sum of one and the number of shares, or fraction thereof,
constituting such dividend or other distribution to be paid or made in respect
of each share of Occidental Common Stock.
(b) If the Corporation shall fix a Determination Date with respect to
the making of a dividend or other distribution on shares of Occidental Common
Stock consisting exclusively of rights or warrants entitling the holders
thereof to subscribe for or purchase, during a period not exceeding 45 days
from the date of such dividend or other distribution, shares of Occidental
Common Stock at a price per share less than the Market Price of one share of
Occidental Common Stock on the Ex-Date for such dividend or distribution, the
Floor Price in effect as of the opening of business on the day following the
Determination Date shall be decreased by multiplying such Floor Price by a
fraction (i) the numerator of which shall be the sum of one plus a fraction,
the numerator of which is equal to the product of (x) the number of shares of
Occidental Common Stock that may be subscribed for or purchased pursuant to the
rights or warrants paid as a dividend on, or distributed in respect of, each
share of Occidental Common Stock and (y) the per share subscription or purchase
price of such rights or warrants, and the denominator of which is equal to the
Market Price of one share of Occidental
26
27
Common Stock on the Ex-Date, and (ii) the denominator of which shall be the sum
of one plus the number of shares of Occidental Common Stock that may be
subscribed for or purchased pursuant to the rights or warrants paid as a
dividend on, or distributed in respect of, each share of Occidental Common
Stock.
(c) If outstanding shares of Occidental Common Stock shall be
subdivided into a greater number of shares of Occidental Common Stock or
combined into a smaller number of shares of Occidental Common Stock, the Floor
Price in effect at the opening of business on the day upon which such
subdivision or combination becomes effective shall be proportionately decreased
or increased, respectively.
(d) If the Corporation shall fix a Determination Date with respect to
the making of a dividend or other distribution on shares of Occidental Common
Stock (other than a dividend or distribution referred to in Section 18(a) or
18(b), or in connection with a Liquidation of the Corporation) consisting of
evidences of its indebtedness, shares of any class of capital stock or other
assets (including securities and Extraordinary Cash Dividends, but excluding
Regular Cash Dividends) (any of the foregoing, other than any such excluded
dividend or distribution, being hereinafter referred to as "Assets"), then, in
each such case, the Floor Price in effect as of the opening of business on the
day following the Determination Date shall be decreased by multiplying such
Floor Price by a fraction (i) the numerator of which shall be the Market Price
of one share of Occidental Common Stock on the Determination Date less the fair
market value on the Determination Date of the portion of the Assets so
distributed applicable to one share of Occidental Common Stock and (ii) the
denominator of which is the Market Price of one share of Occidental Common
Stock on the Determination Date.
(e) If the Floor Price is adjusted pursuant to Section 18(a), 18(b)
or 18(d), as a result of the Corporation fixing a Determination Date, and the
dividend or distribution with respect to which such Determination Date was
fixed is not paid or made, or is only paid or made in part, the Floor Price in
effect as of the opening of business on the day following the date on which
such dividend or distribution was to have been paid or made shall be adjusted
to equal either (i) if such dividend or distribution is not paid or made, the
Floor Price that would then be in effect if such Determination Date had not
been fixed, or (ii) if such dividend or distribution is only paid or made in
part, the Floor Price that would then be in effect if the adjustment made as of
the opening of business on the day following the Determination Date had been
made on the basis of a dividend or distribution in the amount actually paid or
made. If the Floor Price is adjusted pursuant to Section 18(b) as a result of
the Corporation fixing a Determination Date for a dividend or distribution
consisting of rights or warrants, and any of such rights or warrants expire
unexercised, the Floor Price in effect as of the opening of business on the day
following the date of expiration of such rights or warrants shall be adjusted
to equal the Floor Price that would then be in effect if the adjustment made as
of the opening of business on the day following the Determination Date with
respect to such dividend or distribution had been made assuming that the number
of shares of Occidental Common Stock that could be subscribed for or purchased
pursuant to the rights or warrants paid as a dividend on, or distributed in
respect of, each share of Occidental Common Stock had been multiplied by a
fraction, the numerator of which is equal to the total number of such rights or
warrants that were actually exercised and the denominator of which is equal to
the total number of such rights or warrants that were paid as a dividend or
distributed.
(f) No adjustment in the Floor Price pursuant to this Section 18
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Floor Price; provided, however, that any adjustments
which by reason of this subparagraph (f) are not required to be made shall be
carried forward and taken into account in determining whether any subsequent
adjustment shall be required.
(g) When the Floor Price is adjusted as provided in this Certificate
of Designations:
27
28
(i) the Corporation shall compute the adjustment and shall
prepare a certificate signed by the Treasurer or an Assistant Treasurer of the
Corporation setting forth the adjusted Floor Price and showing in reasonable
detail the facts upon which such adjustment is based; and
(ii) a notice stating that the Floor Price has been adjusted
and setting forth the adjusted Floor Price shall as soon as practicable after
the Corporation has calculated such adjustment be mailed by the Corporation to
all record holders of shares of CMIC Preferred Stock.
(h) In any case in which this Section 18 provides that an adjustment
shall become effective as of the opening of business on the day following the
Determination Date with respect to a dividend or distribution or on the day on
which a subdivision or combination becomes effective, the Corporation may defer
until such dividend, distribution, subdivision or combination is effected (i)
issuing to the holder of any share of CMIC Preferred Stock converted after such
day and before such dividend, distribution, subdivision or combination is
effected the additional shares of Occidental Common Stock issuable upon such
conversion by reason of the adjustment required by such event over and above
the shares of Occidental Common Stock issuable upon such conversion before
giving effect to such adjustment and (ii) paying to such holder any amount in
cash in lieu of any fractional share of Occidental Common Stock pursuant to
Section 9(d).
19. Restriction on MidCon Dispositions. The Corporation shall not
effect a MidCon Disposition at a price that is more than $150 million below the
price specified in the MidCon Disposition Notice delivered by the Corporation
that described such MidCon Disposition.
28
29
IN WITNESS WHEREOF, Occidental Petroleum Corporation has caused this
Certificate to be made under the seal of the Corporation and signed by
Stephen I. Chazen, its Executive Vice President - Corporate Development, and
attested by Donald P. de Brier, its Executive Vice President, General Counsel
and Secretary on the 20th day of November, 1996.
OCCIDENTAL PETROLEUM CORPORATION
By: /s/ STEPHEN I. CHAZEN
----------------------------
Name: Stephen I. Chazen
[SEAL] Title: Executive Vice President -
Corporate Development
Attest:
By: /s/ DONALD P. DE BRIER
----------------------------
Name: Donald P. de Brier
Title: Executive Vice President,
General Counsel and Secretary