<PAGE>
Prospectus Supplement to Prospectus dated September 25, 1998.
$350,000,000
[LOGO]
UNION OIL COMPANY OF CALIFORNIA
7.35% Notes due June 15, 2009
Payment of Principal, Interest and Premium, if any, Guaranteed by
UNOCAL CORPORATION
-------------
Union Oil Company of California will pay interest on the notes on June 15
and December 15 of each year. The first payment will be made on December 15,
1999. The notes will be issued only in denominations of $1,000 and integral
multiples of $1,000.
Union Oil Company of California may, at any time, redeem any or all of the
notes, in whole or in part, at the redemption price described herein.
The notes will rank equally with the other unsecured senior indebtedness of
Union Oil Company of California. The notes will be guaranteed by Unocal
Corporation.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
<TABLE>
<S> <C> <C>
Per Note Total
--------- -------------
Initial public offering price..................... 99.932% $ 349,762,000
Underwriting discount............................. 0.650% $2,275,000
Proceeds, before expenses, to Union Oil Company of
California....................................... 99.282% $ 347,487,000
</TABLE>
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the notes will accrue from June 21, 1999 and must
be paid by the purchaser if the notes are delivered after June 21, 1999.
------------------------
The underwriters expect to deliver the notes in book-entry form only through
the facilities of The Depository Trust Company against payment in New York, New
York on June 21, 1999.
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
BANC OF AMERICA SECURITIES LLC
J.P. MORGAN & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
<PAGE>
SALOMON SMITH BARNEY
------------------------
Prospectus Supplement dated June 16, 1999.
<PAGE>
DESCRIPTION OF THE NOTES
IN THIS PROSPECTUS SUPPLEMENT, THE WORDS "COMPANY," "WE," "OUR," "OURS," AND
"US" REFER TO UNION OIL COMPANY OF CALIFORNIA, A CALIFORNIA CORPORATION, AND A
WHOLLY OWNED SUBSIDIARY OF UNOCAL CORPORATION, A DELAWARE CORPORATION
("UNOCAL"), UNLESS OTHERWISE STATED, OR THE CONTEXT OTHERWISE REQUIRES.
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES (REFERRED TO
IN THE ACCOMPANYING PROSPECTUS AS THE "OFFERED DEBT SECURITIES") SUPPLEMENTS
AND, TO THE EXTENT INCONSISTENT THEREWITH, REPLACES, THE DESCRIPTION OF THE
GENERAL TERMS AND PROVISIONS OF THE OFFERED DEBT SECURITIES IN THE ACCOMPANYING
PROSPECTUS. THE FOLLOWING SUMMARY OF THE NOTES IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE SENIOR INDENTURE REFERRED TO IN THE ACCOMPANYING PROSPECTUS.
CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED IN THE FOLLOWING DISCUSSION OR
IN THE ACCOMPANYING PROSPECTUS HAVE THE MEANINGS GIVEN TO THEM IN THE SENIOR
INDENTURE. PLEASE REFER TO THE ACCOMPANYING PROSPECTUS FOR A DETAILED SUMMARY OF
ADDITIONAL PROVISIONS OF THE NOTES AND THE SENIOR INDENTURE UNDER WHICH THE
NOTES WILL BE ISSUED.
GENERAL
The notes offered by this prospectus supplement constitute a series of
senior debt securities under the Senior Indenture described in the accompanying
prospectus limited in aggregate principal amount to $350,000,000.
The notes will mature on June 15, 2009 (the "Maturity Date"). The notes will
bear interest at the rate shown in their title on the cover page of this
prospectus supplement from June 21, 1999 or from the most recent interest
payment date to which interest has been paid or provided for, payable
semi-annually on June 15 and December 15 of each year (each, an "Interest
Payment Date"), commencing December 15, 1999, to the persons in whose names the
notes are registered at the close of business on the June 1 or December 1, as
the case may be, next preceding such Interest Payment Date. The notes are not
entitled to the benefit of any sinking fund. The notes will be sold in
denominations of $1,000 and integral multiples of $1,000.
Unocal will unconditionally guarantee the notes as to the payment of
principal, interest and premium, if any. References to payments of principal in
this prospectus supplement shall include payments of premium, if any.
The covenant provisions of the Senior Indenture described under the caption
"Description of the Debt Securities--Certain Covenants of Unocal" in the
accompanying prospectus will apply to the notes. The defeasance and covenant
defeasance provisions of the Senior Indenture described under the caption
"Description of the Debt Securities-- Defeasance" in the accompanying prospectus
will apply to the notes.
REDEMPTION AT THE OPTION OF THE COMPANY
The notes will be redeemable, in whole or in part, at any time ("Redemption
Date"), and at our option, at a redemption price equal to the greater of:
- 100% of the principal amount of the notes to be redeemed; or
- the sum of the present values of the remaining scheduled payments of
principal and interest thereon (not including interest accrued to such
Redemption Date) discounted to such Redemption Date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 15 basis points;
plus, accrued and unpaid interest on the principal amount being redeemed to such
Redemption Date (the "Redemption Price"). Installments of interest on notes that
are due and payable on an Interest Payment Date falling on or prior to the
relevant Redemption Date shall be payable to the holders of such notes who are
registered as holders at the close of business on the relevant Regular Record
Date according to the terms of the notes and the provisions of the Senior
Indenture.
S-2
<PAGE>
"Treasury Rate" means with respect to the Redemption Date for the notes:
- the yield, under the heading that represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
that is published weekly by the Board of Governors of the Federal Reserve
System and that establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months before or
after the Maturity Date, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month); or
- if such release (or any successor release) is not published during the
week preceding the calculation date or does not contain such yields, the
rate per annum equal to the semi-annual equivalent yield to maturity of
the Comparable Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for such Redemption Date.
The Treasury Rate shall be calculated on the third Business Day preceding
the Redemption Date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes.
"Independent Investment Banker" means Goldman, Sachs & Co. or, if such firm
is unwilling or unable to select the Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by the Senior
Trustee after consultation with us.
"Comparable Treasury Price" means, with respect to any Redemption Date.
- the average of six Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or
- if the Senior Trustee obtains fewer than six such Reference Treasury
Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations.
"Reference Treasury Dealer" means:
- each of Goldman, Sachs & Co., Credit Suisse First Boston Corporation,
Morgan Stanley & Co. Incorporated, Banc of America Securities LLC, J.P.
Morgan Securities Inc., Lehman Brothers Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc., and their
respective successors; provided that if any of the foregoing ceases to be
a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), we will substitute another Primary Treasury Dealer; and
- any other Primary Treasury Dealer selected by us.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by the
Senior Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Senior Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
S-3
<PAGE>
We will mail notice of any redemption at least 30 days but not more than 60
days before any Redemption Date to each holder of notes to be redeemed. If we
elect to partially redeem the notes, the Senior Trustee will select, in a fair
and appropriate manner, the notes to be redeemed.
Unless we default in payment of the Redemption Price, on and after any
Redemption Date, interest will cease to accrue on the notes or portions thereof
called for redemption.
BOOK-ENTRY SYSTEM
Upon issuance, the notes will be represented by one or more global
securities registered in the name of Cede & Co., the nominee of The Depository
Trust Company, New York, New York (the "Depositary" or "DTC").
The Depositary has advised us that the Depositary is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act of 1934, as amended. The Depositary holds
securities that its participants deposit with the Depositary. The Depositary
also facilitates the settlement of securities transactions, such as transfers
and pledges, among its participants through electronic book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities certificates. The Depositary's participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations, some of whom (and/or their representatives) own the
Depositary. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through,
or maintain a custodial relationship with, a participant, either directly or
indirectly. The rules applicable to the Depositary and its participants are on
file with the Securities and Exchange Commission.
Purchases of the notes under the Depositary's system must be made by or
through direct participants, which will receive a credit for the notes on the
Depositary's records. The beneficial ownership interest of each note is in turn
to be recorded on the direct and indirect participants' respective records.
Beneficial owners will not receive written confirmation from the Depositary of
their purchases, but beneficial owners are expected to receive written
confirmations providing details of their transactions, as well as periodic
statements of their holdings, from the direct or indirect participants through
which the beneficial owners entered into the transactions. Transfers of
ownership interests in the notes are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners. Beneficial owners
will not receive certificates representing their ownership interests in notes
except in the event that use of the book-entry system for the notes is
discontinued.
To facilitate subsequent transfers, all notes deposited with the Depositary
by participants in the Depositary will be registered in the name of Cede & Co.
The deposit of the notes with the Depositary and their registration in the name
of Cede & Co. effect no change in beneficial ownership. The Depositary has no
knowledge of the actual beneficial owners of the notes; the Depositary's records
reflect only the identity of the direct participants to whose accounts such
notes are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Payments of principal and interest on the notes will be made to Cede & Co.
The Depositary's practice is to credit direct participants' accounts on the
relevant payment date in accordance with their respective holdings shown on the
Depositary's records unless the Depositary has reason to believe that it will
not receive payment on that payment date. Payments by participants to beneficial
owners will be governed by standing instructions and customary practices, as is
the case with securities for the accounts of customers in bearer form or
registered in "street-name," and will be the
S-4
<PAGE>
responsibility of each participant and not of the Depositary, the underwriters,
Unocal or us, subject to any statutory or regulatory requirements as may be in
effect from time to time. We are responsible for payment of principal and
interest to Cede & Co. Disbursements of such payments to direct participants is
the responsibility of the Depositary, and disbursement of such payments to the
beneficial owners of the notes is the responsibility of direct and indirect
participants in the Depositary.
Conveyance of notices and other communications by the Depositary to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
So long as Cede & Co. is the registered owner of the global securities, Cede
& Co. will be considered the sole owner or holder of the notes represented by
the global securities for the purposes of receiving payment on the notes,
receiving notices and for all other purposes under the Senior Indenture and the
notes. Except as provided herein, owners of beneficial interests in the global
securities will not be entitled to and will not be considered the holders of the
global securities for any purposes under the Senior Indenture. Therefore, each
person owning a beneficial interest in the global securities must rely on the
procedures of the Depositary, and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder of the notes under the Senior Indenture. Neither
the Depositary nor Cede & Co. will consent or vote with respect to the notes.
Under its usual procedures, the Depositary mails an omnibus proxy to us as soon
as possible after the applicable record date. The omnibus proxy assigns Cede &
Co.'s consenting or voting rights to those participants to whose accounts the
notes are credited on the applicable record date (identified in a listing
attached to the omnibus proxy).
The Depositary may discontinue providing its services as securities
depository with respect to the notes at any time by giving reasonable notice to
us. Under such circumstances and in the event that a successor securities
depository is not obtained, certificates for the notes are required to be
printed and delivered. In addition, we may decide to discontinue use of the
system of book-entry transfers through the Depositary (or a successor securities
depository). In that event, certificates will be printed and delivered.
Neither we nor Unocal will have any responsibility or obligation to
participants in the Depositary or the persons for whom they act as nominees with
respect to the accuracy of the records of the Depositary, its nominee or any
direct or indirect participant with respect to any ownership interest in the
notes, or with respect to payments to or providing of notice for the direct
participants, the indirect participants or the beneficial owners of the notes.
The information contained in this prospectus supplement under the caption
"Description of the Notes--Book-Entry System" concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that we believe to
be reliable. Neither we, Unocal nor the Senior Trustee, the underwriters,
dealers or agents take responsibility for the accuracy or completeness thereof.
SENIOR TRUSTEE
The Senior Trustee under the Senior Indenture is Chase Manhattan Bank and
Trust Company, National Association. The Chase Manhattan Bank, an indirect
affiliate of the Senior Trustee, is the administrator of the Unocal Dividend
Reinvestment and Common Stock Purchase Plan, with certain services performed by
ChaseMellon Shareholder Services, L.L.C., also an indirect affiliate of the
Senior Trustee. See "Description of the Debt Securities--The Trustees" in the
accompanying prospectus for other relationships we and Unocal have with those
companies.
S-5
<PAGE>
UNDERWRITING
The Company, Unocal and the underwriters for the offering (the "Underwriters")
named below have entered into an underwriting agreement and a pricing agreement
with respect to the notes. Subject to certain conditions, each Underwriter has
severally agreed to purchase the principal amount of notes indicated in the
following table.
<TABLE>
<CAPTION>
Principal Amount
Underwriters of Notes
- ---------------------------------------------------------- ----------------
<S> <C>
Goldman, Sachs & Co....................................... $ 175,000,000
Credit Suisse First Boston Corporation.................... 52,500,000
Morgan Stanley & Co. Incorporated......................... 52,500,000
Banc of America Securities LLC............................ 14,000,000
J.P. Morgan Securities Inc................................ 14,000,000
Lehman Brothers Inc....................................... 14,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated........ 14,000,000
Salomon Smith Barney Inc.................................. 14,000,000
----------------
Total................................................... $ 350,000,000
----------------
----------------
</TABLE>
Notes sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this Prospectus. Any
notes sold by the Underwriters to securities dealers may be sold at a discount
from the initial public offering price of up to 0.40% of the principal amount of
notes. Any such securities dealers may resell any notes purchased from the
Underwriters to certain other brokers or dealers at a discount from the initial
public offering price of up to 0.25% of the principal amount of notes. If all
the notes are not sold at the initial offering price, the Underwriters may
change the offering price and the other selling terms.
The notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the notes.
In connection with the Offering, the Underwriters may purchase and sell
notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater number of
notes than they are required to purchase in the Offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the notes while the
Offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased notes sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the notes. As a result, the price of the notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
The Company estimates that its share of the total expenses of the Offering,
excluding underwriting discounts and commissions, will be approximately
$300,000.
S-6
<PAGE>
The Company and Unocal have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933.
From time to time, the Underwriters or their affiliates engage in
transactions with and perform services for us and Unocal and our affiliates in
the ordinary course of business. Affiliates of Credit Suisse First Boston
Corporation, Banc of America Securities LLC, J.P. Morgan Securities Inc. and
Salomon Smith Barney Inc. are lenders under the $1,000,000,000 Credit and
Guarantee Agreement, dated as of October 10, 1997, and referred to under
"Description of the Debt Securities--Mandatory Prepayment" in the accompanying
prospectus, and may receive a portion of the net proceeds of the offering.
S-7
<PAGE>
[LOGO]
$1,438,800,000
Union Oil Company of California
Debt Securities and Warrants to Purchase Debt Securities
With Payment of Principal, Interest and Premium, if any, Guaranteed by
Unocal Corporation
------------------------
Unocal Corporation
Common Stock, Preferred Stock and Warrants to Purchase
Common Stock and Preferred Stock
------------------------
Union Oil Company of California (the "Company") intends to offer from time
to time in one or more series debt securities consisting of unsecured
debentures, notes or other evidences of indebtedness (the "Debt Securities"). At
the option of the Company, the Debt Securities may be offered as Senior Debt
Securities ("Senior Debt Securities") and as Subordinated Debt Securities
("Subordinated Debt Securities"). Unocal Corporation ("Unocal"), the parent
company of the Company, will guarantee the payment of principal, interest and
premium, if any, on the Debt Securities. The Company and Unocal may also offer
from time to time warrants to purchase guaranteed Debt Securities ("Debt
Warrants"), which may be issued independently or together with guaranteed Debt
Securities. Unocal may offer from time to time Common Stock ("Unocal Common
Stock"), Preferred Stock ("Unocal Preferred Stock") and warrants to purchase
Unocal Common or Preferred Stock ("Equity Warrants"), which may be issued
independently or together with Unocal Common Stock or Unocal Preferred Stock.
Such Unocal Common Stock and Unocal Preferred Stock may also be issued upon
conversion or exchange of Debt Securities and such Unocal Common Stock may be
issued upon conversion of Unocal Preferred Stock. The Debt Securities, Debt
Warrants, Unocal Common Stock, Unocal Preferred Stock and Equity Warrants are
referred to collectively as the "Securities." No more than an aggregate of
$1,438,800,000 public offering price of Securities, including the exercise price
of Debt Warrants and Equity Warrants, may be sold pursuant to this Prospectus,
subject to possible reduction as a result of the sale of other securities
registered under the Registration Statement of which this Prospectus forms a
part. The Securities may be sold for United States dollars, foreign currency or
currency units.
Certain specific terms of the particular Securities in respect of which this
Prospectus is being delivered will be set forth in the accompanying Prospectus
Supplement, including, where applicable, (i) in the case of Debt Securities, the
title, aggregate principal amount, authorized denominations, maturity, interest
rate (which may be fixed or variable) and time of payment of interest, terms for
redemption, terms for sinking fund payments, terms for conversion or exchange
into other Securities, currency or currencies of denomination and payment (if
other than U.S. dollars), listing on a securities exchange and any other terms
in connection with the offering and sale of the Debt Securities in respect of
which this Prospectus is delivered, as well as the initial public offering
price; (ii) in the case of Unocal Preferred Stock, the specific title, number of
shares, dividend (including the method of calculation), seniority, liquidation,
redemption, voting and other rights, terms for any conversion or exchange into
other Securities, listing on a securities exchange, initial public offering
price and any other terms; (iii) in the case of Unocal Common Stock, the number
of shares and the terms of the offering thereof; and (iv) in the case of Debt
Warrants and Equity Warrants, the designation and number, exercise price, any
listing of the Debt Warrants, Equity Warrants or the underlying Securities on a
securities exchange and any other terms in connection with the offering, sale
and exercise of the Debt Warrants and Equity Warrants. Debt Securities of a
series may be issued in registered form, in a form registered as to principal
only, or in bearer form (with or without coupons attached), or any combination
of such forms. In addition, all or a portion of the Debt Securities may be
issued in temporary or definitive global form. Debt Securities in bearer form
are offered only outside the United States to non-United States persons and to
offices located outside the United States of certain United States financial
institutions and other exempt persons. See "Limitations on the Issuance of
Bearer Securities."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
The Securities will be sold directly, through agents designated from time to
time or through underwriters or dealers, which may be a group of underwriters.
The Securities may also be exchanged for outstanding securities of the Company
or Unocal or both and resold by the holder pursuant to this Prospectus in the
over-the-counter market, through negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at prices otherwise negotiated. The
terms of any such exchange and the method of resale by the holder will be set
forth in a Prospectus Supplement. If any agents of the Company or Unocal or any
dealers or underwriters are involved in the sale of the Securities, the names of
such agents, underwriters or dealers and any applicable commissions or discounts
will be set forth in a Prospectus Supplement.
This Prospectus may not be used to consummate sales of Securities
unless accompanied by a Prospectus Supplement.
The date of this Prospectus is September 25, 1998.
<PAGE>
AVAILABLE INFORMATION
Unocal is currently subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports (which contain summarized financial
information regarding the Company), proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the following Regional
Offices of the Commission: 7 World Trade Center, 13th Floor, New York, New York
10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material may also be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, such reports, proxy statements and other
information concerning Unocal may be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, 17th Floor, New York, New York 10005, the
Chicago Stock Exchange, 440 South LaSalle Street, Suite 518, Chicago, Illinois
60605-1070, and the Pacific Stock Exchange, 115 Sansome Street, 3rd Floor, San
Francisco, California 94104.
The Commission maintains a Web site at http://www.sec.gov that contains
reports, proxy statements, and other information concerning Unocal, which files
electronically with the Commission.
Unocal and the Company have filed registration statements on Form S-3 with
the Commission (together with all amendments and exhibits, the "Registration
Statements") under the Securities Act of 1933, as amended (the "Securities
Act"). This Prospectus does not contain all of the information included in the
Registration Statements, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements contained herein
concerning the provisions of any document do not purport to be complete and, in
each instance, are qualified in all respects by reference to the copy of such
document filed as an exhibit to the Registration Statements or otherwise filed
with the Commission. Each such statement is subject to and qualified in its
entirety by such reference. Reference is made to such Registration Statements
and to the exhibits relating thereto for further information with respect to
Unocal, the Company and the securities offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by Unocal with the Commission and
are incorporated herein by reference (Commission File No. 1-8483):
1. Unocal's Annual Report on Form 10-K for the year ended December 31, 1997;
2. Unocal's Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 1998; and
3. Unocal's Current Reports on Form 8-K dated January 28, 1998, February 13,
1998, February 25, 1998, April 15, 1998, April 28, 1998, June 3, 1998, June
17, 1998 (as amended by Amendment No. 1 thereto on Form 8-K/A), July 14,
1998, July 28, 1998, August 17, 1998, August 24, 1998, and September 2,
1998.
All documents filed by Unocal with the Commission pursuant to Section 13(a),
13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the securities
offered hereby shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified and
superseded, to constitute a part of this Prospectus.
2
<PAGE>
Unocal will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to: Stockholder Services Department, Unocal Corporation, 2141 Rosecrans
Avenue, Suite 4000, El Segundo, California 90245; telephone number (310)
726-7600.
USE OF PROCEEDS
The proceeds received by the Company from the sale of the Debt Securities
and Debt Warrants offered hereby, will be used by the Company and its affiliates
for general corporate purposes. The proceeds received by Unocal from the sale of
the Unocal Preferred Stock, Unocal Common Stock and Equity Warrants offered
hereby will be used for general corporate purposes, which are expected to
include contributions or loans to the Company and its affiliates.
THE COMPANY AND UNOCAL
Unocal is a leading global resource and project development company, with
major oil and gas exploration and production activities in Asia, the United
States Gulf of Mexico and Latin America. Unocal is also the world's leading
producer of geothermal energy; and a manufacturer and marketer of nitrogen-based
fertilizers, petroleum coke, graphites and specialty minerals. Unocal conducts
virtually all of its operations through the Company and the Company's
subsidiaries. As of June 30, 1998, the Company had approximately $7.8 billion of
assets.
The Company was incorporated in California in 1890 and in 1983 became a
wholly owned operating subsidiary of Unocal. As of June 30, 1998, the net assets
of the Company represented approximately 100% of the net assets of Unocal, based
on book value. The Company is a California corporation and Unocal is a Delaware
corporation, each with its principal executive office at 2141 Rosecrans Avenue,
Suite 4000, El Segundo, California 90245, and its telephone number at that
address is (310) 726-7600.
3
<PAGE>
HISTORICAL CONDENSED CONSOLIDATED
SELECTED FINANCIAL INFORMATION
The following historical condensed consolidated financial information of
Unocal and its subsidiaries, including the Company, for the six months ended
June 30, 1998 and 1997 and the five years ended December 31, 1997, has been
derived from and is qualified in its entirety by the detailed financial
statements included in the documents incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."
SELECTED FINANCIAL INFORMATION OF UNOCAL
(MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues (1)............................. $ 2,604 $ 3,110 $ 6,064 $ 5,328 $ 4,389 $ 4,272 $ 4,730
Earnings from continuing operations
(2).................................... 123 344 669 456 249 110 272
Basic per common share............... 0.51 1.38 2.69 1.54 0.87 0.30 0.98
Diluted per common share............. 0.50 1.35 2.65 1.53 0.86 0.30 0.98
Net earnings (3)......................... 123 262 581 36 260 (153) 213
Basic per common share............... 0.51 1.05 2.34 (0.15) 0.91 (0.78) 0.73
Diluted per common share............. 0.50 1.04 2.31 (0.07) 0.90 (0.78) 0.73
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
-------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets (4)......................... $ 7,750 $ 7,821 $ 7,530 $ 9,123 $ 9,891 $ 9,337 $ 9,706
Long-term debt (4)....................... 2,480 2,320 2,169 2,940 3,692 3,452 3,455
Trust Convertible Preferred Securities... 522 522 522 522 -- -- --
Stockholders' equity (5)................. 2,300 2,354 2,314 2,275 2,930 2,815 3,129
</TABLE>
- ------------------------
(1) Excludes revenues from discontinued operations.
(2) Earnings from continuing operations are before: losses from discontinued
operations of $44 million ($0.18 basic and $0.17 diluted per common share)
in the six months ended June 30, 1997, $50 million ($0.20 basic and $0.19
diluted per common share) in 1997 and $420 million ($1.69 basic and $1.60
diluted per common share) in 1996; gains from discontinued operations of $11
million ($0.04 basic and diluted per common share) in 1995, $14 million
($0.06 basic and diluted per common share) in 1994, and $71 million ($0.29
basic and diluted per common share) in 1993; a loss from the early
extinguishment of debt of $38 million ($0.15 basic and diluted per common
share) in 1997; and the cumulative effect of changes in accounting
principles which consisted of charges of $277 million ($1.14 basic and
diluted per common share) in 1994 and $130 million ($0.54 basic and diluted
per common share) in 1993.
(3) Per share amounts are after reductions to net earnings for dividends on
preferred stock of $18 million in 1996 and $36 million in 1995, 1994, and
1993; and a non-cash charge related to the exchange of preferred stock of
$54 million in 1996.
(4) The reduction in assets in 1997 was due principally to the sale of the West
Coast refining, marketing and transportation assets (the "West Coast
assets") with the proceeds used largely to reduce debt and purchase treasury
stock. The reduction in assets in 1996 was due primarily to an accrual for
the loss on the planned sale of the West Coast assets and the sale of
California oil and gas properties with the proceeds used to reduce debt.
(5) Includes preferred stock of $513 million in 1995, 1994 and 1993.
4
<PAGE>
RATIOS OF UNOCAL AND THE COMPANY
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------------ -------------------------------------
1998 1997 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (1)
Unocal...................................................... 2.9 4.7 3.7 3.2 2.2
Company..................................................... 3.3 5.2 4.2 3.3 2.2
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends(1)(2)
Unocal...................................................... 2.9 4.7 3.7 2.9 1.9
<CAPTION>
1994 1993
----- -----
<S> <C> <C>
Ratio of Earnings to Fixed Charges (1)
Unocal...................................................... 1.7 2.2
Company..................................................... 1.7 2.2
Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends(1)(2)
Unocal...................................................... 1.4 1.9
</TABLE>
- ------------------------
(1) For purposes of this ratio, earnings consist of earnings from continuing
operations (before discontinued operations, an extraordinary item (the early
extinguishment of debt) and the cumulative effect of changes in accounting
principles) before taxes on income and fixed charges. Fixed charges consist
of interest on indebtedness and capital lease obligations, amortization of
debt discount, debt premium and issuance expense and that portion of
operating lease rental expense which is representative of the interest
factor (assumed to be one-third).
(2) For purposes of this ratio, preferred stock dividends are adjusted to a
pre-tax basis.
DESCRIPTION OF THE DEBT SECURITIES
Described below are certain general terms and provisions of the Debt
Securities to which a Prospectus Supplement may relate or for which Debt
Warrants may be exercisable. The particular terms of the Debt Securities and the
extent, if any, to which such general provisions may apply to a particular
series of Debt Securities ("Offered Debt Securities") will be described in the
Prospectus Supplement relating to such Offered Debt Securities.
The Senior Debt Securities will be issued under an Indenture dated as of
February 3, 1995 (the "Senior Indenture") among the Company, Unocal and Chemical
Trust Company of California (which was succeeded by merger effective as of
November 15, 1997, by Chase Manhattan Bank and Trust Company, National
Association), as trustee (the "Senior Trustee"). The Subordinated Debt
Securities will be issued under a proposed indenture (the "Subordinated
Indenture") among the Company, Unocal and a trustee to be named in any
Prospectus Supplement relating to Subordinated Debt Securities (the
"Subordinated Trustee"). The Senior Indenture and the Subordinated Indenture are
referred to collectively as the "Indentures" and individually as an "Indenture."
The Senior Indenture incorporates, and the Subordinated Indenture will
incorporate, the Standard Multiple-Series Indenture Provisions, January 1991,
dated as of January 2, 1991 (the "Standard Provisions"), of the Company and
Unocal, which is filed as an exhibit to the Registration Statement. Neither of
the Indentures will limit the amount of Debt Securities which may be issued
thereunder (Section 2.01). Each of the Indentures will provide that Debt
Securities of any series may be issued thereunder up to the aggregate principal
amount which may be authorized from time to time by the Company.
The following summaries of certain provisions of the Debt Securities and the
Indentures do not purport to be complete and are subject to, and qualified in
their entirety by reference to, all provisions of the Indentures, including the
definitions of certain terms used therein. Wherever particular sections of the
Indentures or terms that are defined in the Indentures are referred to herein or
in an accompanying Prospectus Supplement, it is intended that such sections or
terms will be incorporated by reference as a part of the statements made herein
or therein, and the statements are qualified in their entirety by such
reference. Unless otherwise indicated, references in this Prospectus or in an
accompanying Prospectus Supplement to particular sections of the Indentures are
to the Standard Provisions. Unless otherwise indicated, when used in this
Prospectus the term "principal" will mean principal of, and any premium on, the
Debt Securities.
5
<PAGE>
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company and
will be fully and unconditionally guaranteed as to payment by Unocal. The Senior
Debt Securities and the related Guarantees will rank on a parity with all other
unsecured and unsubordinated indebtedness of the Company and Unocal,
respectively, and will have a right of payment prior to any Subordinated Debt
Securities, in the case of Senior Debt Securities, and prior to the Guarantees
of Subordinated Debt Securities, in the case of the Guarantees of the Senior
Debt Securities. The indebtedness represented by the Subordinated Debt
Securities and the Guarantees of the Subordinated Debt Securities will be
subordinated in right of payment to the prior payment in full of the Senior Debt
of the Company and Unocal, respectively, as described below under
"Subordination." The Debt Securities may be issued in one or more series with
the same or various maturities at or above par or with an original issue
discount. Offered Debt Securities bearing no interest or interest at a rate
which at the time of issuance is below market rates ("Original Issue Discount
Securities") will be sold at a discount (which may be substantial) below their
stated principal amount. In the event of redemption or acceleration of the
maturity of an Original Issue Discount Security, the amount payable to the
holder of such Security upon such redemption or acceleration will be determined
in accordance with the terms of the Security, but will be an amount less than
the amount payable at the Stated Maturity of such Security.
Reference is made to the Prospectus Supplement relating to the Offered Debt
Securities for the following terms thereof:
(1) the title of the Offered Debt Securities;
(2) any limit upon the aggregate principal amount of the Offered Debt
Securities;
(3) the percentage of their principal amount for which the Offered Debt
Securities will be issued;
(4) the date or dates on which the principal of the Offered Debt
Securities will be payable;
(5) the rate or rates (which may be fixed or variable) at which the
Offered Debt Securities will bear interest, if any, or the method by which
such rate or rates will be determined;
(6) the date or dates from which any such interest will accrue or the
method by which such date or dates will be determined;
(7) the dates on which payment of any such interest will be payable and
the record dates for such interest payment dates;
(8) the place or places where the principal of and any interest on the
Offered Debt Securities (and Coupons, if any) will be payable and the
offices or agencies of the Company maintained for such purposes and each
office or agency where the Offered Debt Securities may be presented for
registration of transfer or exchange;
(9) the period or periods within which, the price or prices at which,
and the terms and conditions upon which, the Offered Debt Securities may be
redeemed in whole or in part, at the option of the Company;
(10) the obligation of the Company, if any, to redeem, repay or
purchase, the Offered Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a holder of an Offered Debt Security
and the period or periods within which, the price or prices at which, and
the terms and conditions upon which, the Offered Debt Securities will be
redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(11) any additional restrictive covenants included for the benefit of
holders of the Offered Debt Securities;
6
<PAGE>
(12) any additional Events of Default with respect to the Offered Debt
Securities;
(13) the principal amount of the Offered Debt Securities that are
Original Issue Discount Securities payable upon declaration of acceleration
of the maturity of the Offered Debt Securities;
(14) the currency or currency unit for which the Offered Debt Securities
may be purchased, the currency or currency unit in which the payment of
principal and interest on such Offered Debt Securities will be payable, the
right of the Company or the holder to elect a currency different from that
in which the Offered Debt Securities are denominated for payments of
principal and interest, and the Exchange Rate Agent, if any;
(15) any index used to determine the amount of payments of principal of
and interest on the Offered Debt Securities;
(16) whether the Offered Debt Securities will be issued in registered
form, in a form registered only as to principal, or in bearer form, or any
combination thereof;
(17) whether and on what terms the Offered Debt Securities will be
convertible or exchangeable into shares of Unocal Preferred Stock or Unocal
Common Stock;
(18) whether any of the Offered Debt Securities will be issuable
initially as a temporary Global Security (as defined in "Form, Exchange,
Registration and Transfer") and whether any of the Offered Debt Securities
are to be issuable as a permanent Global Security, or any combination
thereof and, if so, the Depositary (as defined in "Global Securities") or
Depositaries therefor;
(19) if a temporary Global Security is to be issued with respect to such
series, the requirements for certification of ownership by non-United States
persons that will apply prior to (a) the issuance of a definitive Bearer
Security (as defined in "Form, Exchange, Registration and Transfer") or (b)
the payment of interest on an Interest Payment Date that occurs before the
issuance of a definitive Bearer Security;
(20) the circumstances under which Offered Debt Securities may be
exchanged for Debt Securities issued in a different form;
(21) any paying agents, transfer agents, registrars or other agents with
respect to the Offered Debt Securities;
(22) whether and under what circumstances the Company will pay
additional amounts to any holder of Offered Debt Securities who is not a
United States person (as defined under "Limitations on the Issuance of
Bearer Securities") in respect of any tax, assessment or governmental charge
required to be withheld or deducted and, if so, whether the Company will
have the option to redeem rather than pay any additional amounts;
(23) whether any of the provisions described in "Certain Covenants of
Unocal," "Events of Default," "Subordination," "Conversion and Exchange,"
"Form, Exchange, Registration and Transfer," and "Defeasance" will not apply
to the Offered Debt Securities;
(24) any other terms of the Offered Debt Securities not inconsistent
with the applicable Indenture; and
(25) a discussion of certain Federal income tax considerations, if
required.
INTEREST AND FOREIGN CURRENCY
Principal and interest will be payable, and the Offered Debt Securities will
be transferable, in the manner described in the Prospectus Supplement relating
to such Offered Debt Securities.
7
<PAGE>
If any of the Offered Debt Securities are sold for any foreign currency or
currency unit or if principal of or any interest on any of the Offered Debt
Securities is payable in any foreign currency or currency unit, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such Offered Debt Securities and such foreign currency or
currency unit will be specified in a Prospectus Supplement.
GUARANTEES
Under the terms of the Indentures and subject to the provisions thereof,
Unocal will fully and unconditionally guarantee to the holders from time to time
of the Debt Securities: (i) the full and prompt payment of the principal of any
Debt Securities and Coupons, if any, when and as the same become payable,
whether at the Stated Maturity thereof, by acceleration, call for redemption or
otherwise, and (ii) the full and prompt payment of any interest on any Debt
Securities and Coupons, if any, when and as the same becomes payable. The
Guarantees will remain in effect until the entire principal of and interest on
the Debt Securities has been paid in full or otherwise discharged in accordance
with the provisions of the Indentures (Section 5.01). In the event of a default
in the payment of principal of any Debt Security when and as the same becomes
payable, whether at the Stated Maturity thereof, by acceleration, call for
redemption or otherwise, or in the event of a default in any sinking fund
payment, or in the event of a default in the payment of any interest on any Debt
Security when and as the same becomes payable, the Trustee has the right to
proceed directly against Unocal without first proceeding against the Company or
exhausting any other remedies which the Trustee may have (Section 5.02). Any
right of payment of the holders of Senior Debt Securities under the related
Guarantees will be prior to the right of payment of the holders of Subordinated
Debt Securities under the related Guarantees.
CERTAIN COVENANTS OF UNOCAL
LIMITATIONS ON LIENS. The Senior Indenture provides that neither Unocal nor
any Restricted Subsidiary will issue, assume or guarantee any indebtedness for
money borrowed ("Debt") that is secured by a Mortgage upon (i) any domestic oil
or gas property of Unocal or a Restricted Subsidiary, (ii) any principal
domestic refining or manufacturing plant of Unocal or a Restricted Subsidiary,
or (iii) shares of stock or indebtedness of any Restricted Subsidiary, unless
the Senior Debt Securities will be secured equally and ratably with or prior to
such Debt. This covenant will not apply to (a) Mortgages on property or
securities of a corporation when it becomes a Restricted Subsidiary, (b)
purchase money Mortgages, (c) Mortgages existing at the time of acquisition of
property pursuant to a merger, consolidation or purchase of substantially all
the assets of the Seller, (d) any Mortgage securing Debt owing by a Restricted
Subsidiary to Unocal or to another Restricted Subsidiary, (e) Mortgages on
particular property incurred in connection with the exploration, drilling,
development, repair, alteration or improvement of such property, (f) Mortgages
on current assets or other personal property to secure Debt maturing in not more
than one year, or extensions, renewals or replacements of Mortgages referred to
in (a) through (e). Notwithstanding the foregoing, Unocal or one or more
Restricted Subsidiaries may issue, assume or guarantee Debt secured by a
Mortgage which would otherwise be subject to the foregoing restrictions if the
aggregate amount of such Debt, together with the aggregate principal amount of
all other such Debt of Unocal and its Restricted Subsidiaries then outstanding,
does not at such time exceed 20% of the Consolidated Net Assets of Unocal
(Senior Indenture Section 5.04).
The following types of transactions, among others, will not be deemed to
create Debt secured by a Mortgage: (a) the sale or transfer of oil, oil shale,
gas or other minerals in place for a period of time until, or in an amount such
that, the transferee will realize therefrom a specified amount of money (however
determined) or a specified amount of such minerals or the sale or transfer of
any other interest in property of the character commonly referred to as a
"production payment" and (b) the placing of any Mortgage in favor of domestic or
foreign governmental bodies or agencies to secure payment, or the performance of
any other obligations, pursuant to any contract or statute or to secure any
indebtedness incurred for the
8
<PAGE>
purpose of financing or refinancing all or a part of the purchase price or the
cost of construction of the property subject to such Mortgage (Senior Indenture
Section 5.04).
The term "Mortgage" is defined as any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance (Senior Indenture Section 1.01).
The term "oil or gas property" is defined as any interest owned by Unocal or
a Restricted Subsidiary in land which in the opinion of Unocal's Board of
Directors is capable of producing crude oil, natural gas or other hydrocarbons
in paying quantities and any interest in such substances produced or to be
produced (or the proceeds thereof) from said lands, but not including
exploration or production facilities or other improvements on said lands (Senior
Indenture Section 5.04).
The term "Consolidated Net Assets" is defined as the total amount of assets
(less applicable reserves and other properly deductible items) of Unocal and its
consolidated Subsidiaries after deducting therefrom all liabilities and
liability items except Long-Term Debt, stockholders' equity and deferred income
taxes, which under generally accepted accounting principles would be included on
such consolidated balance sheet (Senior Indenture Section 1.01).
The term "Restricted Subsidiary" is defined as the Company and any other
"Subsidiary" (i) substantially all of the assets and operations of which are
located within any one or more of the States of the United States and (ii) which
has assets in excess of 2% of the total consolidated assets of Unocal and its
consolidated Subsidiaries.
The term "Subsidiary" is defined as any corporation, association, or other
business entity of which Unocal, either directly or indirectly, has either (i)
the voting power to elect a majority of the directors of such corporation or
(ii) other ownership interest representing more than 50% ownership of such
entity (Senior Indenture Section 1.01).
LIMITATIONS ON SALE AND LEASEBACK. Unocal will not, nor will it permit any
Restricted Subsidiary to, enter into any sale and leaseback arrangement (where
the lease runs for a term of more than five years) involving any domestic real
property, unless (i) Unocal or such Restricted Subsidiary is not restricted by
the above provisions from incurring Debt secured by a Mortgage on such property
or (ii) Unocal will apply within 90 days an amount equal to the greater of (a)
the fair value (as determined by the Board of Directors of Unocal) of such
property or (b) the proceeds of the sale of such property, to the retirement
(other than any mandatory retirement) of Long-Term Debt of Unocal or a
Restricted Subsidiary (other than Debt owned by Unocal or a Restricted
Subsidiary and Debt subordinated to the Senior Debt Securities) (Senior
Indenture Section 5.05). The foregoing limitations will not apply to any sale
and leaseback between Unocal and any of its Restricted Subsidiaries or between
any of its Restricted Subsidiaries.
RESTRICTIONS ON MERGER AND SALE OF ASSETS. Neither the Company nor Unocal
may consolidate with or merge into any other corporation, or transfer its
properties as an entirety or substantially as an entirety to any person, unless
(i) the person (if other than the Company or Unocal) formed by or resulting from
any such consolidation or merger or which has received the transfer of such
property and assets will be a corporation organized under the laws of the United
States or any state or territory thereof or the District of Columbia and will
assume payment of the principal of, and interest on, the Debt Securities and the
performance and observance of the Indentures and (ii) immediately after the
consolidation, merger, sale or conveyance, the surviving corporation or the
corporation to which the sale or conveyance was made will not be in default
under either Indenture (Section 12.01).
EVENTS OF DEFAULT
The Senior Indenture defines, and the Subordinated Indenture will define, an
Event of Default with respect to any series of Debt Securities as being any one
of the following events: (i) default in the payment of any interest on any Debt
Security of that series when due, continued for 30 days after written notice has
9
<PAGE>
been given by the Trustee to the Company or Unocal or by a holder to the Company
and the Trustee, (ii) default in the payment of the principal of a Debt Security
of that series when due, (iii) default in the deposit of any sinking fund
payment when and as due by the terms of a Debt Security of such series,
continued for 30 days after written notice has been given by the Trustee to the
Company or Unocal or by a holder to the Company and the Trustee, (iv) default in
any material respect in the performance in any other of the Company's or
Unocal's material covenants in the applicable Indenture (other than a covenant
included in such Indenture solely for the benefit of another series of Debt
Securities), continued for 90 days after written notice has been given by the
Trustee to the Company or Unocal or by holders of at least 25% in principal
amount of the Outstanding Debt Securities of such series to the Company and the
Trustee, (v) a default resulting in acceleration of any other indebtedness for
borrowed money, in an aggregate principal amount exceeding $50,000,000, of the
Company or Unocal under the terms of the instrument or instruments under which
such indebtedness is issued or secured, unless such acceleration is annulled, or
such indebtedness is discharged, or there is deposited in trust a sum of money
sufficient to discharge such indebtedness, within 20 days after written notice
has been given by the Trustee to the Company and Unocal or by holders of at
least 25% in principal amount of the Outstanding Debt Securities of such series
to the Company, Unocal and the Trustee, and (vi) certain events of bankruptcy,
insolvency or reorganization (Section 7.01).
No holder of any Debt Security of a series will have any right to institute
any proceeding with respect to the applicable Indenture or for any remedy
thereunder, unless such holder previously has given to the Trustee written
notice of an Event of Default with respect to such series and unless the holders
of at least 25% in aggregate principal amount of the Debt Securities of that
series at the time outstanding have made written request upon the Trustee, and
have offered reasonable security or indemnity, to institute such proceeding as
trustee under such Indenture, and the Trustee for 60 days shall have failed to
institute such proceeding. However, the right of any holder of any Debt Security
to institute suit for enforcement of any payment of principal of and interest on
such Debt Security on or after the due date expressed in such Debt Security may
not be impaired or affected without such holder's consent (Section 7.04).
The holders of a majority in principal amount of Debt Securities of any
series at the time outstanding may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to Debt Securities of
that series, provided that such holders have offered reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
the Trustee in compliance with any such direction and subject to certain other
restrictions (Sections 7.06 and 8.02(d)).
Unocal and the Company will be required to furnish to the Trustee within 120
days after the end of each fiscal year a statement as to their respective
compliance with all conditions and covenants under the Indentures (Sections 4.06
and 5.07).
MANDATORY PREPAYMENT
The provisions of each of (i) the $1,000,000,000 Credit and Guarantee
Agreement, dated as of October 10, 1997, among the Company and Unocal Canada
Limited, as borrowers, Unocal, as guarantor, and a syndicate of banks, and (ii)
the $250,000,000 Credit and Guarantee Agreement, dated as of December 15, 1993,
as amended, among Unocal Thailand, Ltd.--Thailand Branch, as borrower, the
Company and Unocal, as guarantors, and a syndicate of banks, provide for the
termination of the loan commitments thereunder and require the prepayment of all
outstanding loans and all other amounts owing thereunder in the event (a) any
person or group becomes the beneficial owner of more than 30% of the then
outstanding voting stock of Unocal, otherwise than in a transaction having the
approval of the Board of Directors of Unocal, at least a majority of which are
continuing directors, or (b) continuing directors shall cease to constitute at
least a majority of the Board of Directors of Unocal. The Company or Unocal may
include similar or different mandatory prepayment provisions in other borrowing
instruments including, without limitation, Debt Securities issued in the future.
There can be no assurance that the Company
10
<PAGE>
will have the funds available to prepay such amounts if required to do so under
any of these mandatory prepayment provisions.
SUBORDINATION
The indebtedness represented by the Subordinated Debt Securities and the
Guarantees of Subordinated Debt Securities will be subordinate and junior in
right of payment to the prior payment in full of all Senior Debt of the Company
or Unocal, as the case may be, whether outstanding on the date of the
Subordinated Indenture or thereafter incurred. "Senior Debt" is defined as (i)
all indebtedness of the Company or Unocal, as the case may be, for borrowed
money, (ii) all indebtedness for borrowed money of others guaranteed by the
Company or Unocal and (iii) any obligation of the Company or Unocal under any
interest rate or currency swap agreement, in each case whether outstanding on
the date of the Indenture or incurred thereafter that is not by its terms
subordinate and junior in right of payment to any other indebtedness of the
Company or Unocal, as the case may be, and, in the case of the Company, includes
all indebtedness at any time evidenced by Senior Debt Securities (Subordinated
Indenture Section 16.09).
In the event (i) of any liquidation, dissolution or other winding up of the
Company or Unocal, or of any receivership, insolvency, bankruptcy, readjustment,
reorganization or other similar proceedings relative to the Company or Unocal or
their respective property, all principal of and any interest due on all Senior
Debt will be paid in full, or provided for, before any principal, sinking fund,
if any, or interest payment is made on the Subordinated Debt Securities, in the
case of the Company, or the Guarantees of Subordinated Debt Securities, in the
case of Unocal, or (ii) that the Subordinated Debt Securities are declared due
and payable because of the occurrence of an Event of Default (under
circumstances such that the preceding clause (i) will not be applicable), the
holders of the Subordinated Debt Securities will be entitled to payment only
after all principal of and any interest due on the Senior Debt has been paid or
has been provided for (Subordinated Indenture Section 16.01).
By reason of such subordination, creditors of the Company who are holders of
Senior Debt Securities may recover more, ratably, than holders of Subordinated
Debt Securities.
CONVERSION AND EXCHANGE
The terms, if any, on which Offered Debt Securities are convertible into or
exchangeable for Unocal Preferred Stock or Unocal Common Stock will be set forth
in the Prospectus Supplement relating thereto. Such terms may include provisions
for conversion or exchange, either mandatory, at the option of the holder or at
the option of the Company.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities may be issued in fully registered form without coupons,
in a form registered as to principal only with or without bearer coupons
("Registered Securities") or in bearer form with or without coupons ("Bearer
Securities") or any combination thereof. Debt Securities may also be issued in
whole or in part, in the form of one or more temporary or permanent global
securities (each a "Global Security"). Unless otherwise specified in the
applicable Prospectus Supplement relating to the Offered Debt Securities, the
Debt Securities will be only Registered Securities. The Debt Securities
denominated in United States Dollars will be issued, unless otherwise set forth
in the applicable Prospectus Supplement relating to the Offered Debt Securities,
in denominations of $1,000 for Registered Securities and in denominations of
$5,000 for Bearer Securities, and in any integral multiple of such denominations
(Section 2.02). See, however, "Limitations on the Issuance of Bearer Securities"
below. One or more Global Securities will be issued in a denomination or
aggregate denominations equal to the aggregate principal amount of Outstanding
Debt Securities of the series to be represented by such Global Security or
Securities. The
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Prospectus Supplement relating to a series of Debt Securities denominated in a
foreign or composite currency will specify the denomination thereof.
Registered Securities of any series (other than a Global Security, except as
set forth below) will be exchangeable for other Registered Securities of the
same series and of a like aggregate principal amount and tenor of different
authorized denominations. In addition, if Debt Securities of any series are
issuable as both Registered Securities and Bearer Securities, at the written
request of the holder, and subject to the terms of the applicable Indenture,
Bearer Securities (with all unmatured coupons, except as provided below, and all
mature coupons in default) of such series will be exchangeable into Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor. No Bearer Securities will be delivered in
the United States. Bearer Securities with coupons appertaining thereto
surrendered in exchange for Registered Securities between a Regular Record Date,
or, in certain circumstances a Special Record Date, and the relevant date for
payment of interest must be surrendered without the coupon relating to such date
for payment of interest and such interest will not be payable in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the holder of such coupon when due in accordance with the terms
of the applicable Indenture. Unless otherwise stated in a Prospectus Supplement,
Registered Securities will not be exchangeable into Bearer Securities. If a
holder elects to receive a definitive Bearer Security, rather than hold an
interest in a permanent global Bearer Security, then, at the option of the
Company, such holder must pay to the Company a service charge and a
proportionate share of the cost of printing such definitive Bearer Security
(Section 2.05).
Debt Securities may be presented for exchange as provided above, and
Registered Securities (other than a Global Security) may be presented for
registration of transfer (with the form of transfer endorsed thereon duly
executed), at the office of the Security Registrar or at the office of any
transfer agent designated by the Company for such purpose with respect to any
series of Debt Securities and specified in the applicable Prospectus Supplement,
upon payment of any required service charges and taxes and other governmental
charges. The holders of the Debt Securities will be required to pay all service
charges for the exchange or transfer of any Debt Security, except the Company
shall pay for such service charges (i) for the transfer from a temporary global
Debt Security to any other form of Debt Security, (ii) if the Debt Securities
are listed on a stock exchange that requires the issuer to pay such charges as a
condition to listing or (iii) if the applicable Prospectus Supplement otherwise
specifies. Such transfer or exchange will be effected once the Security
Registrar or such transfer agent, as the case may be, is satisfied with the
document of title and identity of the person making the request. Bearer
Securities will be transferable by delivery.
The Company has appointed the Senior Trustee under the Senior Indenture, and
will appoint the Subordinated Trustee under the Subordinated Indenture, as
Security Registrar (Section 2.05). At the date of this Prospectus, the Corporate
Trust Office of the Senior Trustee is located at 101 California Street, Suite
2725, San Francisco, California 94111. If the identity or address of the Senior
Trustee changes, the corrected information will appear in the applicable
Prospectus Supplement, as appropriate. The identity and address of the
Subordinated Trustee will appear in the applicable Prospectus Supplement. If the
applicable Prospectus Supplement specifies any transfer agents in addition to
the Security Registrar with respect to any series of Debt Securities, the
Company may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts,
except that, if Debt Securities of a series are issuable only as Registered
Securities, the Company will be required to maintain a transfer agent in each
Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Securities, the Company will be required to maintain (in
addition to the Security Registrar) a transfer agent in a Place of Payment for
such series located outside the United States. The Company may at any time
designate additional transfer agents with respect to any series of Debt
Securities (Section 4.02).
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In the event of any redemption in part, the Company shall not be required
to: (i) issue, register the transfer or exchange of Debt Securities of any
series during a period beginning at the opening of 15 Business Days before any
selection of Debt Securities of that series to be redeemed and ending at the
close of business on (a) the day of mailing of the relevant notice of
redemption, if Debt Securities of the series are issuable only as Registered
Securities, (b) the day of the first publication of the relevant notice of
redemption, if Debt Securities of the series are issuable only as Bearer
Securities, or (c) the day of mailing of the relevant notice of redemption, if
Debt Securities of the series are issuable as Registered Securities and Bearer
Securities and there is no publication; (ii) register the transfer or exchange
of any Registered Security, or portion thereof, called for redemption, except
the unredeemed portion of any Registered Security being redeemed in part; or
(iii) exchange any Bearer Security called for redemption, except to exchange
such Bearer Security for a Registered Security of that series and like tenor
which is simultaneously surrendered for redemption (Section 2.05).
PAYMENT AND PAYING AGENTS
Payment of principal of, and any interest on, Registered Securities, unless
otherwise specified in the applicable Prospectus Supplement, will be made at the
office of the Paying Agent or Paying Agents as the Company may designate from
time to time, except that at the option of the Company payment of any interest
may be made by check mailed to the address of the person entitled thereto as
such address shall appear in the Security Register (Section 2.11). Payment of
any installment of interest on Registered Securities will be made to the person
in whose name such Registered Security is registered at the close of business on
the Regular Record Date for such interest (Section 2.09), except as otherwise
specified in the applicable Prospectus Supplement.
Payment of principal of, and any interest on, Bearer Securities will be
payable in United States dollars, unless a different currency is designated in
the applicable Prospectus Supplement, subject to any applicable laws and
regulations, at the offices of such Paying Agents outside the United States as
the Company may designate from time to time. Payment of interest on Bearer
Securities with coupons appertaining thereto on any Interest Payment Date will
be made only against surrender of the coupon relating to such Interest Payment
Date, unless otherwise indicated in the applicable Prospectus Supplement
(Sections 2.11 and 4.02). No payment with respect to any Bearer Security will be
made at the Corporate Trust Office of the Trustee or any office or agency of the
Company in the United States or by check mailed to any address in the United
States or by transfer to an account maintained in the United States.
Notwithstanding the foregoing, payments of principal of, and any interest on,
Bearer Securities denominated and payable in United States Dollars will be made
at the office of the Company's Paying Agent in New York City, if (but only if)
payment of the full amount thereof in United States Dollars at all offices or
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions (Section 4.02).
The Company has designated the New York City Corporate Trust Office of the
Senior Trustee, and will designate the New York City Corporate Trust Office of
the Subordinated Trustee, as the sole Paying Agent for payments with respect to
Offered Debt Securities that are issuable as Registered Securities, and as the
Paying Agent in New York City for payments with respect to Offered Debt
Securities (subject to the limitations described above in the case of Bearer
Securities) that are issuable solely as Bearer Securities or as both Registered
Securities and Bearer Securities. Any Paying Agents outside the United States
and any other Paying Agents in the United States initially designated by the
Company for the Offered Debt Securities will be named in the applicable
Prospectus Supplement. The Company may at any time designate additional Paying
Agents or rescind the designation of any Paying Agent or approve a change in the
office through which any Paying Agent acts. However, the Company will be
required to maintain a Paying Agent in each Place of Payment for Debt Securities
of each series that is issuable solely as Registered Securities, and the Company
will be required to maintain for each series of Bearer Securities a Paying Agent
(i) in New York City for payments with respect to any Registered Securities of
the series (and for payments with respect to Bearer Securities of the series in
the circumstances described above, but not
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otherwise), (ii) in a place of payment located outside the United States where
Debt Securities of such series and any coupons appertaining thereto may be
presented and surrendered for payment; and (iii) each place outside the United
States required by any stock exchange on which Debt Securities of such series
are listed (Section 4.02).
All monies paid by the Company to a Paying Agent for the payment of
principal of, and any interest on, any Debt Securities that remain unclaimed at
the end of two years after such principal or interest has become due and payable
will be repaid to the Company and the holder of such Debt Security or any coupon
appertaining thereto will thereafter look only to the Company or Unocal for
payment thereof (Section 13.05).
GLOBAL SECURITIES
The Offered Debt Securities may be issued in whole or in part in the form of
one or more Global Securities that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the applicable Prospectus
Supplement. Global Securities may be issued in either registered or bearer form
and in either temporary or definitive form. Unless and until it is exchanged in
whole or in part for Debt Securities in definitive form, a Global Security may
not be transferred except as a whole by the Depositary for such Global Security
to a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor
(Sections 2.03 and 2.05).
The specific terms of the depositary arrangement with respect to any Offered
Debt Securities will be described in the applicable Prospectus Supplement. The
Company anticipates that the following provisions will apply to all depositary
arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of institutions that have accounts with such Depositary
("Participants"). The accounts to be credited shall be designated by the
underwriters of such Debt Securities, by certain agents of the Company or by the
Company, if such Debt Securities are offered and sold directly by the Company.
Ownership of beneficial interests in a Global Security will be limited to
Participants or persons that may hold interests through Participants. Ownership
of beneficial interests in such Global Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depositary for such Global Security or by Participants or by persons that
hold through Participants. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such ownership limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
owner of such Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole owner or holder of the Debt Securities
represented by such Global Security for all purposes under the Indenture
governing such Debt Securities. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have Debt Securities of
the series represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Debt Securities of
such series in definitive form and will not be considered the owners or holders
thereof under the Indenture governing such Debt Securities.
Subject to the restrictions discussed under "Limitations on the Issuance of
Bearer Securities" below,
principal and interest payments on Debt Securities registered in the name of or
held by a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner or the holder of the Global
Security representing such Debt Securities. None of the Company, Unocal, the
Trustee for such Debt Securities, any paying agent or the Security Registrar for
such Debt Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of
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beneficial ownership interests in a Global Security for such Debt Securities or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that the Depositary for Debt Securities of a series,
upon receipt of any payment of principal or interest in respect of a definitive
Global Security, will immediately credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depositary. The
Company also expects that payments by Participants to owners of beneficial
interests in such Global Security held through such Participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
If a Depositary for Debt Securities of a series is at any time unwilling or
unable to continue as Depositary and a successor Depositary is not appointed by
the Company within 90 days, the Company and Unocal will issue Debt Securities of
such series in definitive form in exchange for the Global Security or Securities
representing the Debt Securities of such series. In addition, the Company may at
any time and in its sole discretion determine not to have any Debt Securities of
a series represented by one or more Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for the
Global Security or Securities representing such Debt Securities. Further, an
owner of a beneficial interest in a Global Security representing Debt Securities
of such series may, under certain circumstances and on terms acceptable to the
Company and the Depositary for such Global Security, receive Debt Securities of
such series in definitive form. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery in
definitive form of Debt Securities of the series represented by such Global
Security equal in principal amount to such beneficial interest and to have such
Debt Securities registered in its name (if the Debt Securities of such series
are issuable as Registered Securities). Unless otherwise specified by the
Company, Debt Securities of such series so issued in definitive form will be
issued (a) as Registered Securities in denominations of $1,000 and integral
multiples thereof, if the Debt Securities of such series are issuable as
Registered Securities, (b) as Bearer Securities in the denominations of $5,000,
if the Debt Securities of such series are issuable as Bearer Securities, or (c)
as either Registered or Bearer Securities in such denominations, if the Debt
Securities of such series are issuable in either form (Section 2.05). See,
however, "Limitations on the Issuance of Bearer Securities" below for a
description of certain restrictions on the issuance of a Bearer Security in
definitive form in exchange for an interest in a Global Security.
MEETINGS, MODIFICATION AND WAIVER
MODIFICATION OF INDENTURES. The Senior Indenture provides, and the
Subordinated Indenture will provide, that the Company, Unocal and the Trustee
thereunder may, without the consent of any holders of Debt Securities, enter
into supplemental indentures for the purposes, among other things, of adding to
the Company's or Unocal's covenants, adding additional Events of Default,
establishing the form or terms of Debt Securities or curing ambiguities or
inconsistencies in such Indenture or making other provisions; provided such
action shall not adversely affect the interests of the holders of any series of
Debt Securities in any material respect (Section 11.01). In addition,
modifications and amendments of each Indenture may be made by the Company and
Unocal and the Trustee with the consent of the holders of not less than a
majority in aggregate principal amount of the Debt Securities then outstanding
of each series affected by such modification or amendment; provided, however,
that no such modification or amendment may, without the consent of the holder of
each Debt Security then outstanding that is affected thereby, (a) change the
Stated Maturity of the principal of, or any installment of principal of or
interest on any Debt Security, (b) reduce the principal amount of or interest on
any Debt Security, (c) change any obligation to pay additional amounts, (d)
reduce the amount of principal of an Original Issue Discount Security payable
upon acceleration of the Maturity thereof, (e) change the Place of Payment or
the currency or currency unit in which any Debt Security or interest thereon is
payable, (f) impair the right to institute suit for the
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enforcement of any payment on or with respect to any Debt Security, (g) reduce
the percentage in principal amount of Debt Securities then outstanding of any
series, the consent of whose holders is required for modification or amendment
of the applicable Indenture or for any waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults, (h) change any
obligation of the Company to maintain an office or agency in the places and for
the purposes required by an Indenture, (i) if the Debt Securities are
convertible into any other security of the Company or Unocal, make any change
that would materially adversely affect the right to convert such Debt
Securities, or (j) modify any of the above provisions. If the Debt Securities of
any series are issuable upon the exercise of Debt Warrants, then each holder of
a Debt Warrant with respect to such series shall be treated as a holder of such
Debt Securities in the amount issuable upon exercise of such Debt Warrant for
purposes of voting under Section 11.02 of the Indenture (Sections 9.04 and
11.02).
WAIVER OF DEFAULT. The holders of a majority in aggregate principal amount
of the Debt Securities then outstanding of each series may, on behalf of the
holders of all the Debt Securities of that series, waive, insofar as that series
is concerned, compliance by Unocal with certain restrictive provisions of the
applicable Indenture (Section 5.11). The holders of a majority in aggregate
principal amount of the Debt Securities then outstanding of each series may, on
behalf of all holders of Debt Securities of that series and any coupons
appertaining thereto, waive any past default under the Indenture with respect to
Debt Securities of that series, except a default (a) in the payment of principal
of or any interest on any Debt Security of such series and (b) in respect of a
covenant or provision of the Indenture which cannot be modified or amended
without the consent of the holder of each Debt Security then outstanding of such
series affected (Section 7.06).
CALCULATING OUTSTANDING PRINCIPAL. The Senior Indenture provides, and the
Subordinated Indenture will provide, that in determining whether the holders of
the requisite principal amount of the Debt Securities that are outstanding have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or are present at a meeting of holders of Debt Securities for quorum
purposes, (i) the principal amount of an Original Issue Discount Security that
will be deemed to be outstanding will be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof, and (ii) the principal amount of a Debt
Security denominated in a foreign currency or currency unit will be deemed to be
that amount of United States dollars that could be obtained for such principal
amount on the basis of the spot rate of exchange for such foreign currency or
currency unit as determined by the Company or an Exchange Rate Agent up to ten
days before the date of the action by the holders (Section 9.04).
MEETINGS AND VOTING. The Senior Indenture contains, and the Subordinated
Indenture will contain, a provision for convening meetings of the holders of
Debt Securities of a series, including Debt Securities issuable as Bearer
Securities (Section 10.01). A meeting may be called at any time by the Trustee,
and upon request, by the Company, Unocal or the holders of at least 25% in
principal amount of the Debt Securities then outstanding of such series, in any
such case upon notice given in accordance with "Notices" below (Sections 10.02
and 10.03). Except as described above under "Modifications of Indentures" and
"Waiver of Default," a resolution presented at a meeting or reconvened meeting
at which a quorum of the holders of Debt Securities then outstanding of the
applicable series is present may be adopted by the affirmative vote of the
lesser of (i) the holders of a majority in principal amount of the Debt
Securities then outstanding of such series, or (ii) the holders of 66-2/3% in
principal amount of the Debt Securities then outstanding of such series
represented and voting at the meeting; provided, however, that if any consent,
waiver, or other action which the applicable Indenture expressly provides may be
made, given or taken by the holders of a specified percentage, which is less
than a majority of the principal amount of the Debt Securities then outstanding
of a series, such action may be adopted at a meeting or reconvened meeting at
which a quorum is present by the affirmative vote of the lesser of (a) the
holders of such specified percentage in principal amount of the Debt Securities
then outstanding of that series or (b) a majority in principal amount of Debt
Securities then outstanding of such series represented and voting at the
meeting. Any
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resolution passed or decision taken at any meeting of holders of Debt Securities
of any series duly held in accordance with the Indenture will be binding on all
holders of Debt Securities of that series and the related coupons whether or not
present or represented at the meeting.
The quorum at a meeting of the holders of a series of Debt Securities will
be persons holding or representing a majority in principal amount of the Debt
Securities then outstanding of a series, unless otherwise specified in a
Prospectus Supplement (Section 10.08).
The record date for purposes of determining the identity of holders entitled
to vote regarding, or consent to, actions by the Trustee and certain waivers
will be the later of (i) thirty (30) days prior to the first solicitation of
such consent or (ii) the date of the most recent list of holders of securities
furnished to the Trustee prior to such solicitation.
NOTICES
Except as otherwise provided in the applicable Indenture, notices to holders
of Bearer Securities will be given by publication at least once in a newspaper
published on a Business Day in New York City and London and in such other city
or cities as may be required with respect to such Bearer Securities and will be
mailed to such persons whose names and addresses were previously filed with the
Trustee under the applicable Indenture, within the time prescribed for the
giving of such notice. Notices to holders of Registered Securities will be given
by mail to the address of such holders as they appear in the Security Register
(Section 1.04).
TITLE
Title to any Bearer Securities (including Bearer Securities in permanent
global bearer form) and any coupons appertaining thereto will pass by delivery.
The Company, Unocal, the appropriate Trustee and any agent of the Company or
such Trustee may treat the bearer of any Bearer Securities, the bearer of any
coupon and the registered owner of any Registered Security as the absolute owner
thereof (whether or not such Debt Security or coupon is overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all the other purposes (Section 2.07).
DEFEASANCE
Unless otherwise indicated in the applicable Prospectus Supplement, the
obligations of the Company and Unocal with respect to the payment of the
principal of and interest on the Offered Debt Securities and their respective
obligations under Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.08, 5.09, 5.11, 12.01
and 12.02 of the Indenture will be terminated if: (i) the Company irrevocably
deposits or causes to be deposited with the appropriate Trustee, under the terms
of an escrow trust agreement in form and substance satisfactory to the
appropriate Trustee, as trust funds pledged as security for, and dedicated
solely to, the benefit of the holders of the Offered Debt Securities, (a) money
or (b) in the case of Offered Debt Securities and coupons denominated in United
States Dollars, U.S. Government Obligations (as defined in Section 13.04), and
in the case of Debt Securities and coupons denominated in a foreign currency,
Foreign Government Securities (as defined in Section 13.04), which through the
payment of interest thereon and principal thereof in accordance with their terms
will provide money or (c) a combination of (a) and (b), in each case in an
amount sufficient to pay in the currency or currency unit in which the Offered
Debt Securities are payable all the principal of and interest on the Offered
Debt Securities on the dates such payments are due in accordance with the terms
of the Offered Debt Securities; and (ii) the Company furnishes to the
appropriate Trustee a ruling by the Internal Revenue Service, in form and
substance satisfactory to such Trustee, or an Opinion of Counsel, in form and
substance satisfactory to the appropriate Trustee, to the effect, in either
case, that the holders of such Offered Debt Securities (a) will not recognize
income, gain or loss for Federal income tax purposes as a result of the
Company's exercise of the defeasance provisions of the Indenture and (b) will be
subject to Federal income tax in the same
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amount, in the same manner and at the same time as would have been the case if
the Company had not exercised its defeasance rights under the Indenture (Section
13.03).
THE TRUSTEES
A Trustee may resign or be removed with respect to one or more series of
Debt Securities and a successor Trustee may be appointed by the Company to act
with respect to such series (Section 8.10). In the event that two or more
Persons are acting as Trustee with respect to different series of Debt
Securities under one of the Indentures, each such Trustee will be deemed to be a
Trustee of a trust under the applicable Indenture, separate and apart from the
trust administered by any other such Trustee, and any action described herein to
be taken by the "Trustee" may then be taken by each such Trustee with respect
to, and only with respect to, the one or more series of Debt Securities for
which it is Trustee (Section 8.11).
The Senior Trustee is Chase Manhattan Bank and Trust Company, National
Association. The identity of the Subordinated Trustee has yet to be determined.
The Chase Manhattan Bank, an affiliate of the Senior Trustee, is a lending bank
under the $1,000,000,000 Credit and Guarantee Agreement, referred to above under
"Mandatory Prepayment." ChaseMellon Shareholder Services, L.L.C., an affiliate
of the Senior Trustee, is the transfer agent and registrar for the Unocal Common
Stock and The Chase Manhattan Bank is the successor Rights Agent under the
Rights Agreement, dated as of January 29, 1990, referred to below under
"Description of the Common Stock--Rights to Purchase Series A Preferred Stock."
ChaseMellon Shareholder Services, L.L.C. is also the administrator of the Unocal
Dividend Reinvestment and Common Stock Purchase Plan. Unocal and the Company may
in the future maintain other banking relationships with the Senior Trustee and
The Chase Manhattan Bank in the ordinary course of business and may do the same
with the Subordinated Trustee.
GOVERNING LAW
The Indentures, the Debt Securities, the Guarantees, and the coupons will be
governed by, and construed in accordance with, the laws of the State of New York
(Section 15.05).
DESCRIPTION OF THE PREFERRED STOCK
The following description of Unocal Preferred Stock sets forth certain
general terms and provisions of the series of Unocal Preferred Stock to which
any Prospectus Supplement may relate. The specific terms of an offered series of
Unocal Preferred Stock will be described in the Prospectus Supplement relating
to such series. If so indicated in the Prospectus Supplement relating thereto,
the terms of any such series of Unocal Preferred Stock may differ from the terms
set forth below. The description of Unocal Preferred Stock set forth below and
the description of the terms of an offered series of Unocal Preferred Stock set
forth in the Prospectus Supplement relating thereto do not purport to be
complete and are qualified in their entirety by reference to Unocal's
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
and the Certificate of Designations relating to such offered series of Unocal
Preferred Stock, which will be filed with the Commission and incorporated by
reference as an exhibit to the Registration Statement of which this Prospectus
is a part at or prior to the time of the sale of such offered series.
Under Unocal's Certificate of Incorporation, Unocal's Board of Directors is
authorized, without further stockholder action, to provide for the issuance of
up to 100,000,000 shares of preferred stock, $0.10 par value per share, in one
or more series, with or without voting powers, and with such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions, as the Board of Directors shall
determine. As of the date of this Prospectus, Unocal has no outstanding shares
of Preferred Stock. Unocal has reserved for issuance and designated 3,000,000
shares of preferred stock as Series A Junior Participating Cumulative Preferred
Stock in connection with the Rights Plan described below under "Description of
the Common Stock--Rights to Purchase Series A Preferred Stock."
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GENERAL
The applicable Prospectus Supplement will set forth the following specific
terms regarding the series of Unocal Preferred Stock offered thereby: (i) the
designation, number of shares and liquidation preference per share; (ii) the
initial public offering price; (iii) the dividend rate or rates, if any, or the
method of determining the dividend rate or rates; (iv) the index, if any, upon
which the amount of dividends is to be determined; (v) the dates on which
dividends will accrue and be payable and the designated record dates for
determining the holders entitled to such dividends; (vi) any redemption or
sinking fund provisions; (vii) any conversion or exchange provisions; (viii) any
provisions for the issuance of global securities; (ix) the currency (which may
be composite currency) in which liquidation preferences, redemption prices and
dividends shall be payable, if other than United States dollars; (x) voting
rights, if different from those described under "--Voting Rights"; and (xi) any
additional terms, preferences or rights.
The shares of Unocal Preferred Stock will, when issued, be fully paid and
nonassessable and will have no preemptive rights.
The transfer agent, registrar, dividend disbursing agent, redemption agent
and, if applicable, conversion agent for the offered series of Unocal Preferred
Stock will be specified in the applicable Prospectus Supplement relating
thereto.
DIVIDENDS
The holders of the Unocal Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of Unocal, out of
funds legally available therefor, cumulative or non-cumulative cash or other
dividends at such rate or rates and on such dates as will be set forth in the
applicable Prospectus Supplement. Such rates may be fixed or variable or both.
If variable, the formula used for determining the dividend rate for each
dividend period will be set forth in the Prospectus Supplement. Dividends will
be payable to the holders of record as they appear on the stock register of
Unocal on such record dates, not more than sixty (60) days nor less than ten
(10) days preceding the payment dates thereof, as will be fixed by the Board of
Directors of Unocal. If the Board of Directors of Unocal fails to declare a
dividend payable on a dividend payment date on any series of Unocal Preferred
Stock for which dividends are noncumulative ("Noncumulative Preferred Stock"),
then the holders of such series of Noncumulative Preferred Stock will have no
right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and Unocal will have no obligation to pay a dividend for
such period, whether or not dividends on such series are declared payable on any
future dividend payment dates. Dividends payable on any series of Unocal
Preferred Stock for any period less than a full dividend period will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
REDEMPTION
The offered series of Unocal Preferred Stock may be redeemable at the option
of Unocal and may be subject to mandatory redemption pursuant to a sinking fund
or otherwise, in each case upon the terms, on the date or dates and at the
redemption price or prices set forth in the applicable Prospectus Supplement. If
fewer than all shares of the offered series of Unocal Preferred Stock are to be
redeemed, the shares to be redeemed will be selected by Unocal pro rata or by
lot, by any other method determined by the Board of Directors to be equitable,
or by any method set forth in the applicable Prospectus Supplement.
If any dividends on shares of the offered series of Unocal Preferred Stock
are in arrears, no shares of Unocal Common Stock or shares of capital stock
ranking junior to or on parity with the offered series of Unocal Preferred Stock
may be redeemed and no shares of such offered series of Unocal Preferred Stock
may be redeemed unless all outstanding shares of such series are simultaneously
redeemed, and Unocal may not purchase or otherwise acquire any shares of such
series; provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of such series pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of such series.
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Notice of redemption will be given by mailing the same to each record holder
of the shares to be redeemed to the respective addresses of such holders as the
same shall appear on Unocal's stock register. Each such notice will state: (i)
the redemption date; (ii) the number of shares and series of Unocal Preferred
Stock to be redeemed; (iii) the redemption price and the manner in which such
redemption price is to be paid and delivered; (iv) the place or places where
certificates for such shares of Unocal Preferred Stock are to be surrendered for
payment of the redemption price; and (v) that dividends on the shares to be
redeemed will cease to accrue on such redemption date. If fewer than all shares
of any series of Unocal Preferred Stock held by any holder are to be redeemed,
the notice mailed to such holder will also specify the number of shares to be
redeemed from such holder.
If notice of redemption has been given, from and after the redemption date
for the shares of the series of Unocal Preferred Stock called for redemption
(unless default shall be made by Unocal in providing money for the payment of
the redemption price of the shares so called for redemption), dividends on the
shares of Unocal Preferred Stock so called for redemption will cease to accrue,
any right to convert the shares of Unocal Preferred Stock will terminate, such
shares will no longer be deemed to be outstanding, and all rights of the holders
thereof as stockholders of Unocal (except the right to receive the redemption
price, without interest) will cease. Upon surrender in accordance with such
notice of the certificates representing any shares so redeemed (properly
endorsed or assigned for transfer, if the notice shall so state), the redemption
price set forth above will be paid out of funds provided by Unocal. If fewer
than all of the shares represented by any such certificate are redeemed, a new
certificate will be issued representing the unredeemed shares without cost to
the holder thereof.
LIQUIDATION PREFERENCE
The applicable Prospectus Supplement will set forth the specific liquidation
preference of the offered series of Unocal Preferred Stock.
Unocal conducts substantially all of its operations through the Company. The
right of Unocal, and hence the right of creditors and stockholders of Unocal, to
participate in any distribution of assets of any subsidiary (including the
Company) upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the extent
that claims of Unocal itself as a creditor of the subsidiary may be recognized.
CONVERSION AND EXCHANGE
The terms, if any, on which shares of any offered series of Unocal Preferred
Stock are convertible into or exchangeable for Unocal Common Stock will be set
forth in the Prospectus Supplement relating thereto. Such terms may include
provisions for conversion or exchange, either mandatory, at the option of the
holder, or at the option of Unocal.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular offered series of Unocal Preferred Stock, or except as expressly
required by applicable law, the holders of Unocal Preferred Stock will not be
entitled to vote.
On matters on which holders of such offered series and holders of any other
series of Unocal Preferred Stock are entitled to vote as a single class, each
full share of any series of Unocal Preferred Stock shall be entitled to one
vote. Therefore, the voting power of such series will depend on the number of
shares in such series, not the liquidation preference or initial offering price
of the shares of such series of the Unocal Preferred Stock.
If the equivalent of six quarterly dividends (whether or not consecutive)
payable on any offered series of Unocal Preferred Stock or any other series of
Unocal Preferred Stock are in default, the number of
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<PAGE>
directors of Unocal will be increased by two and the holders of all outstanding
shares of Unocal Preferred Stock and all other outstanding shares of preferred
stock having similar voting rights, voting as a single class without regard to
series and with no cumulative voting, to the exclusion of the holders of Unocal
Common Stock, will be entitled to elect those two additional directors, who
shall serve until all dividends in default have been paid or declared and set
apart for payment.
DESCRIPTION OF THE COMMON STOCK
Unocal's Board of Directors is authorized to issue a maximum of 750,000,000
shares of Unocal Common Stock, $1.00 par value per share, under Unocal's
Certificate of Incorporation. As of June 30, 1998, 241,353,546 shares of Unocal
Common Stock were outstanding, 10,622,778 shares were held by Unocal as treasury
shares and 37,640,428 shares were reserved for issuance upon the conversion of
the 6 1/4% Trust Convertible Preferred Securities of Unocal Capital Trust and in
connection with Unocal's employee benefit plans, its Directors' Restricted Stock
Plan and its Dividend Reinvestment and Common Stock Purchase Plan.
The following summary of the rights of the Unocal Common Stock does not
purport to be complete and is subject in all respects to the applicable
provisions of the Delaware General Corporation Law and the Certificate of
Incorporation.
DIVIDEND RIGHTS: Subject to the prior rights, if any, of the holders of
Unocal Preferred Stock, holders of Unocal Common Stock are entitled to receive
such dividends as are declared by Unocal's Board of Directors out of funds
legally available therefor.
VOTING RIGHTS: Subject to the rights, if any, of the holders of Unocal
Preferred Stock, all voting rights are vested in the holders of shares of Unocal
Common Stock, each share being entitled to one vote on all matters presented for
a vote (except for those matters for which a separate class vote is required
under Delaware law). The holders of one-third of the shares entitled to vote
constitute a quorum at any meeting of stockholders.
LIQUIDATION RIGHTS: Subject to the rights, if any, of the holders of Unocal
Preferred Stock, in the event of liquidation of Unocal, holders of Unocal Common
Stock will share pro rata in all assets distributable to stockholders in respect
of shares held by them.
PREEMPTIVE RIGHTS: Holders of Unocal Common Stock are not entitled to any
preemptive rights to subscribe for any additional securities that may be issued.
NON-CUMULATIVE VOTING: Holders of shares of Unocal Common Stock have
non-cumulative voting rights, which means that holders of more than 50% of the
shares voting for the election of directors can elect 100% of the directors
standing for election if they choose to do so, and, in such event, the holders
of the remaining less than 50% of the shares voting for the election of
directors will not be able to elect any person or persons to the Board of
Directors of Unocal. Unocal's Board of Directors is divided into three classes,
and directors are normally elected for three-year terms. One of the classes is
presented for election at each annual meeting, so that the entire Board of
Directors is never presented for election in any one year.
ChaseMellon Shareholder Services, L.L.C., Los Angeles, California, is the
transfer agent and registrar for the Unocal Common Stock. The Unocal Common
Stock may also be presented for transfer at the office of ChaseMellon
Shareholder Services, L.L.C., New York, New York.
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<PAGE>
RIGHTS TO PURCHASE SERIES A PREFERRED STOCK
In January 1990, the Board of Directors of Unocal adopted a stockholder
rights plan (the "Rights Plan") and declared a dividend of one right (a "Right";
collectively, the "Rights") for, and to be attached to, each outstanding share
of Common Stock. The resolutions creating the Rights Plan provide that as long
as the Rights are attached to shares of Common Stock, as provided in the "Rights
Agreement" referred to below, one additional Right will be issued and delivered
with each share of Common Stock that becomes outstanding after February 12,
1990. Each Right entitles the holder thereof to purchase one one-hundredth of a
share of preferred stock designated as the Series A Junior Participating
Cumulative Preferred Stock ("Series A Preferred Stock"). The Rights will expire
on January 29, 2000, unless redeemed earlier, and will not be exercisable or
transferable separately from the shares of Common Stock until the close of
business on the Distribution Date, which will occur on the earlier of (i) the
tenth day following a public announcement that a person or group of affiliated
or associated persons (a "15% Stockholder") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding Common Stock
or (ii) the date of the commencement or the announcement of an intention to make
a tender or exchange offer that would cause any person or group to become a 15%
Stockholder.
Pursuant to the Rights Plan, 3,000,000 shares of Series A Preferred Stock
have been designated and reserved for issuance upon exercise of the Rights. An
additional number of shares of Series A Preferred Stock equal to one one-
hundredth of the number of shares of Unocal Common Stock will be reserved for
issuance in connection with an issuance of Preferred Stock or Unocal Common
Stock, whether issued directly, upon exercise of Equity Warrants or upon
conversion of Preferred Stock or Debt Securities.
A description of the Rights and the Series A Preferred Stock is set forth in
the Rights Agreement, dated January 29, 1990, between Unocal and The Chase
Manhattan Bank (successor to Chemical Trust Company of California), as Rights
Agent, which is included as exhibit to the Registration Statement of which this
Prospectus is a part.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS OF UNOCAL
The Certificate of Incorporation and Bylaws of Unocal contain certain
provisions which may have the effect of rendering a change of control of Unocal
more difficult. The Certificate of Incorporation provides that the Board of
Directors is divided into three classes, with the directors serving three-year
staggered terms. Special meetings of Unocal's stockholders generally may be
called only by the Board of Directors, and any action required or permitted to
be taken by the stockholders must be taken at an annual or special meeting and
may not be effected by written consent. The vote of 75% of the outstanding stock
of Unocal entitled to vote is required for the stockholders to adopt, amend or
repeal bylaws. Such a 75% vote is also required for approval of a merger or
consolidation of Unocal with, and certain other transactions with, another
corporation which, with its affiliates, owns beneficially more than 10% of the
total voting power of all outstanding shares of Unocal voting stock (a "Related
Corporation"), unless such a transaction was approved by 75% of the directors of
Unocal prior to the Related Corporation becoming such. The Certificate of
Incorporation also require such a 75% vote to repeal or amend any of the
foregoing provisions.
The Bylaws of Unocal generally require 90 days' advance notice of, and
specified information with respect to, nominations by stockholders of persons
for election as directors and other business to be brought before a meeting by a
stockholder.
As set forth above under "Description of the Preferred Stock," the Board of
Directors has the authority, without further stockholder action, to provide for
the issuance of Unocal Preferred Stock and to fix the terms thereof. Provisions
which could render a change of control of Unocal more difficult, such as
extraordinary voting, dividend, redemption or conversion rights, could be
included in such Unocal Preferred Stock.
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<PAGE>
DESCRIPTION OF THE WARRANTS
The following description sets forth certain general terms and provisions of
the Debt Warrants and Equity Warrants to which a Prospectus Supplement may
relate. The particular terms of any Debt Warrants and Equity Warrants offered
will be described in the Prospectus Supplement relating to such Debt Warrants or
Equity Warrants. The following summaries of certain provisions of the Debt
Warrants and Equity Warrants and of one or more separate Warrant Agreements
(each a "Warrant Agreement") between the Company and Unocal and one or more
banking institutions or trust companies, as Warrant Agent (each a "Warrant
Agent"), do not purport to be complete and are subject to and qualified in their
entirety by reference to all provisions of the applicable Warrant Agreement.
Forms of Warrant Agreements are filed as exhibits to the Registration Statement.
Each Warrant Agreement will be governed by, and construed in accordance with,
the laws of the State of New York.
GENERAL
Debt Warrants and Equity Warrants, evidenced by Warrant Certificates (the
"Warrant Certificates"), may be issued under a Warrant Agreement independently
or together with any Debt Securities, Unocal Preferred Stock or Unocal Common
Stock and may be transferable with or separate from such Securities. If Debt
Warrants to purchase Debt Securities are offered, the applicable Prospectus
Supplement will describe the terms of the Debt Warrants, including the
following: (i) the offering price, if any, including the currency, or currency
unit in which such price will be payable; (ii) the designation, aggregate
principal amount and terms of the Offered Debt Securities with which the Debt
Warrants are issued and the number of Debt Warrants issued with each such
Offered Debt Security; (iii) if applicable, the date on or after which the Debt
Warrants and the related Offered Debt Securities will be separately
transferable; (iv) the designation, aggregate principal amount and terms of Debt
Securities purchasable upon exercise of one Debt Warrant and the price or prices
at which, and the currency, or currency unit in which such principal amount of
Debt Securities may be purchased upon exercise; (v) the date on which the right
to exercise the Debt Warrants commences and the date on which such right
expires; (vi) any United States Federal income tax consequences; (vii) whether
the Debt Warrants represented by the Warrant Certificates will be issued in
registered or bearer form or both; and (viii) any other material terms of the
Debt Warrants. If Equity Warrants are offered, the applicable Prospectus
Supplement will describe the terms of the Equity Warrants, including the
following: (i) the offering price, if any, including the currency or currency
unit in which such price will be payable; (ii) the designation of any series of
Unocal Preferred Stock purchasable upon exercise of the Equity Warrants; (iii)
the number of shares of Unocal Preferred Stock or Unocal Common Stock
purchasable upon exercise of one Equity Warrant, and the price or prices at
which, and the currency, or currency unit in which such shares may be purchased
upon exercise; (iv) the date on which the right to exercise the Equity Warrants
commences and the date on which such right expires; (v) any United States
Federal income tax consequences; (vi) whether the Equity Warrants represented by
the Warrant Certificate will be issued in registered or bearer form or both;
(vii) whether the Equity Warrants or the underlying Unocal Preferred Stock or
Unocal Common Stock will be listed on any national securities exchange; and
(viii) any other material terms of the Equity Warrants. In addition, if any Debt
Warrants or Equity Warrants are sold for any foreign currency or currency units,
the restrictions, elections, tax consequences, specific terms and other
information with respect to such issue will be specified in the applicable
Prospectus Supplement.
Warrant Certificates, if any, may be exchanged for new Warrant Certificates
of different denominations and may (if in registered form) be presented for
registration of transfer at the corporate trust office of the Warrant Agent,
which will be listed in the applicable Prospectus Supplement, or at such other
office as may be set forth therein. Warrantholders do not have any of the rights
of holders of Debt Securities (except to the extent that the consent of
Warrantholders may be required for certain modifications of the terms of the
Indenture under which the series of Offered Debt Securities issuable upon
exercise of the Warrants are to be issued) or Unocal Preferred or Common
stockholders and are not entitled to payments
23
<PAGE>
of principal and interest, if any, on Debt Securities or to dividends or other
distributions made with respect to Unocal Preferred Stock or Unocal Common
Stock.
EXERCISE OF WARRANTS
Warrants may be exercised by surrendering the Warrant Certificate, if any,
at the corporate trust office or other designated office of the Warrant Agent,
with (i) the form of election to purchase on the reverse side of the Warrant
Certificate, if any, properly completed and executed, and (ii) payment in full
of the exercise price, as set forth in the applicable Prospectus Supplement.
Upon exercise of Warrants, the Warrant Agent will, as soon as practicable,
deliver the Debt Securities, Unocal Preferred Stock or Unocal Common Stock
issuable upon the exercise of the Warrants in authorized denominations in
accordance with the instructions of the exercising Warrantholder and at the sole
cost and risk of such holder. If less than all of the Warrants evidenced by the
Warrant Certificate are exercised, a new Warrant Certificate will be issued for
the remaining amount of unexercised Warrants, if sufficient time exists prior to
the expiration date.
LIMITATIONS ON THE ISSUANCE OF BEARER SECURITIES
In compliance with United States Federal tax laws and regulations, Bearer
Securities may not, in general, be offered or sold during the Restricted Period
(as defined below) to a person within the United States or to, or for the
account or benefit of, a United States person. However, offers or sales can be
made to (i) the United States office of international organizations (as defined
in Section 7701(a)(18) of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder), (ii) the United States office of
foreign central banks (as defined in Section 895 of the Code and the regulations
thereunder) and (iii) foreign branches of United States financial institutions
which are purchasing for their own account or for resale, and which have agreed
to comply with the reporting requirements of Section 165(j)(3)(A), (B) or (C) of
the Code and the regulations thereunder. In addition, sales can be made to a
United States person acquiring a Bearer Security through a financial institution
described in clause (iii) of the preceding sentence if certain certification
requirements and other conditions are satisfied. Definitive Bearer Securities
will not be delivered within the United States, or in any event unless the
beneficial owner of the Securities has complied with the certification
requirements to be described in the relevant Prospectus Supplement.
Each underwriter, dealer and agent (or other "distributor" within the
meaning of the regulations under Section 163 of the Code) participating in the
distribution of any Bearer Securities will agree that (i) it will not offer,
sell or deliver Bearer Debt Securities within the United States or to, or for
the account or benefit of, United States persons (other than qualifying
financial institutions) (a) until 40 days after the closing date or (b) at any
time if the obligation is held as part of an unsold allotment or subscription
(the "Restricted Period"), and (ii) it has in effect procedures reasonably
designed to ensure that its employees and agents who are directly engaged in
selling the Bearer Securities are aware of the restrictions described in clause
(i) of this sentence. Bearer Securities will bear a legend on their face and on
any interest coupons that may be detached therefrom or, if the obligation is
evidenced by a book entry, a legend will appear in the book of record in which
the book entry is made substantially to the following effect: "Any United States
person who holds this obligation will be subject to limitations under the United
States income tax laws, including the limitations provided in Sections 165(j)
and 1287(a) of the Internal Revenue Code." The Code Sections referred to in such
legend provide that a United States person who holds a Bearer Security will not
be allowed to deduct any loss realized on the sale, exchange or redemption of
such Bearer Security and any gain (which might otherwise be characterized as
capital gain) recognized on such sale, exchange or redemption will be treated as
ordinary income. If the Company or Unocal issue Warrants in bearer form, they
will specify in the applicable Prospectus Supplement what, if any, restrictions
or certification requirements will be applicable to the issuance and delivery of
such bearer Warrants.
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As used herein, "United States person" means an individual who is a citizen
or resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, an estate the income of which is subject to United States
Federal income taxation regardless of its source, a trust if a court within the
United States is able to exercise primary supervision of the administration of
the trust and one or more United States persons have the authority to control
all decisions of the trust or certain electing trusts that were existing on
August 19, 1996 and treated as domestic trusts on such date and "United States"
means the United States of America (including the States and the District of
Columbia) and its possessions, which include, as of the date hereof, Puerto
Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island, and Northern
Mariana Islands.
PLAN OF DISTRIBUTION
The Company and Unocal may offer and sell the Securities in any of three
ways: (i) directly to investors; (ii) to investors through agents; or (iii)
through underwriters or dealers. The Company may also exchange Securities for
outstanding indebtedness of the Company or Unocal, or both. The applicable
Prospectus Supplement with respect to the Securities will set forth the terms of
the offering of the Securities, including the name or names of any underwriters,
the purchase price of the Securities and the proceeds to the Company or Unocal,
as the case may be, from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which such Securities may be listed.
If underwriters are used in the sale, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The Securities may be
either offered to the public through underwriting syndicates represented by
managing underwriters, or directly by one or more underwriters. Unless otherwise
set forth in the applicable Prospectus Supplement, the obligations of the
underwriters to purchase the Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all the Securities
if any are purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
Except for Unocal Common Stock, each issue of Securities sold will be a new
issue of securities with no established trading market. Any underwriters or
agents with respect to an issue of Securities may make a market in such
Securities, but such underwriters or agents will not be obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of any Securities in the secondary market.
If the Securities are issued in exchange for outstanding securities of the
Company or Unocal, the applicable Prospectus Supplement will set forth the terms
of the exchange, the identity of and the terms of sale of the Securities by the
selling security holders.
Securities may be sold directly by the Company or Unocal or through agents
designated by the Company or Unocal from time to time. Any agent involved in the
offer or sale of the Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company or Unocal to such
agent will be set forth, in the applicable Prospectus Supplement. Unless
otherwise indicated in the applicable Prospectus Supplement, any such agent will
be acting on a best efforts basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Company or
Unocal will authorize agents, underwriters or dealers to solicit offers by
certain specified institutions to purchase the Securities from the Company at
the public offering price set forth in the applicable Prospectus Supplement
pursuant to delayed delivery contracts providing for payment and delivery on a
specified date in the future. Such
25
<PAGE>
contracts will be subject only to those conditions set forth in the applicable
Prospectus Supplement and the applicable Prospectus Supplement will set forth
the commission payable for solicitation of such contracts.
Agents, selling security holders and underwriters may be entitled under
agreements entered into with the Company and Unocal to indemnification by the
Company and Unocal against certain civil liabilities, including certain
liabilities under the Securities Act of 1933, or to contribution with respect to
payments which the agents, selling security holders or underwriters may be
required to make in respect thereof. Agents, selling security holders and
underwriters may be customers of, engage in transactions with, or perform
services for the Company or Unocal in the ordinary course of business.
EXPERTS
The consolidated financial statements and financial statement schedule of
Unocal and its subsidiaries as of December 31, 1997 and 1996, and for each of
the three years in the period ended December 31, 1997, included in Unocal's
Annual Report on Form 10-K for the year ended December 31, 1997, and
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
which report is incorporated by reference herein, and on the authority of that
firm as experts in accounting and auditing. Such report includes an explanatory
paragraph with respect to a change in the method of accounting for the
impairment of long-lived assets and long-lived assets disposed of in 1995.
LEGAL MATTERS
Legal matters in connection with the issuance and sale of the Securities
offered hereby will be passed upon for the Company and Unocal by Dennis P. R.
Codon, Esq., Vice President, Chief Legal Officer and General Counsel of the
Company and Unocal, and for any underwriters, selling security holders or agents
by Gibson, Dunn & Crutcher LLP, San Francisco, California. As of August 31,
1998, Mr. Codon owned beneficially 23,245 shares of Unocal Common Stock, which
included 10,470 restricted shares that vest in 1999 through 2003. He also held
options to purchase 57,088 shares of Unocal Common Stock at prices ranging from
$26.375 to $38.8125, with expiration dates ranging from 2003 to 2008. In
addition, Mr. Codon held 15,800 performance share units awarded to him in 1995
through 1998.
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the notes offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
------------------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Description of the Notes...................... S-2
Underwriting.................................. S-6
Prospectus
Available Information......................... 2
Incorporation of Certain Documents by
Reference................................... 2
Use of Proceeds............................... 3
The Company and Unocal........................ 3
Historical Condensed Consolidated Selected
Financial Information....................... 4
Description of the Debt Securities............ 5
Description of the Preferred Stock............ 18
Description of the Common Stock............... 21
Description of the Warrants................... 23
Limitations on the Issuance of Bearer
Securities.................................. 24
Plan of Distribution.......................... 25
Experts....................................... 26
Legal Matters................................. 26
</TABLE>
$350,000,000
[LOGO]
Union Oil Company
of California
7.35% Notes due June 15, 2009
---------------------
PROSPECTUS SUPPLEMENT
---------------------
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
BANC OF AMERICA SECURITIES LLC
J.P. MORGAN & CO.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
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