SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) March 16, 2000
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
<PAGE>
Item 5. Other Events.
Loans to and Purchases of Common Stock by Certain Officers of the Company.
On March 16, 2000, the company entered into agreements (the "Loan Agreements")
with ten of its officers, including Roger C. Beach, its Chairman of the Board
and Chief Executive Officer; Timothy H. Ling, its Executive Vice President,
North American Energy Operations, and Chief Financial Officer, and a director;
Charles R. Williamson, its Executive Vice President, International Energy
Operations, and a director; and Dennis P.R. Codon, its Vice President, Chief
Legal Officer and General Counsel, pursuant to the company's 2000 Executive
Stock Purchase Program (the "Stock Purchase Program"). The Stock Purchase
Program, including the Loan Agreements, was approved by the Board of Directors
of the Company (the "Board"), with Messrs. Beach, Ling and Williamson
abstaining. The Stock Purchase Program will be submitted for the approval of the
company's stockholders at the 2000 Annual Meeting of Stockholders (the "Annual
Meeting") scheduled to be held on May 22, 2000. A copy of the Stock Purchase
Program is attached as Exhibit 10.1 to this report and is included as Exhibit A
to the company's Proxy Statement dated April 12, 2000, for the Annual Meeting
(the "Proxy Statement").
The Board adopted the Stock Purchase Program in order to attract and retain
senior executives and other key employees of the company and its subsidiaries.
The Stock Purchase Program is administered by the Management Development and
Compensation Committee of the Board (the "Committee"), which is comprised
entirely of non-employee directors. The Stock Purchase Program provides that the
company may loan to senior management selected by the Committee funds to
purchase shares of the company's common stock. In the discretion of the
Committee, such purchases may be either open market purchases or purchases
directly from the company. Each loan (a "Loan" or Loans") will be for 100% of
the purchase price, including commissions, if any, will be full-recourse and
will be interest-bearing. Participants in the Stock Purchase Program also will
be eligible to receive Performance Bonus Awards under the Long-Term Incentive
Plan of 1998 (which is part of the 1998 Management Incentive Program, as
amended) which will be paid out in cash upon satisfaction of certain performance
and other criteria. The amendment to the 1998 Management Incentive Program
providing for the Performance Bonus Awards also will be submitted for the
approval of the company's stockholders at the Annual Meeting and is described in
the Proxy Statement.
Pursuant to the Loan Agreements, the following Loans were made on March 16,
2000, to the ten participants in the Stock Purchase Program and utilized to
purchase in the open market, during the period March 16 to 23, 2000, the numbers
of shares of the company's common stock indicated at an average cost, including
commissions, of $27.82:
<TABLE>
<CAPTION>
Number of Shares
Name and Principal Positions Loan Amount Purchased
<S> .............................................................<C> <C>
Roger C. Beach ..................................................$ 5,000,000 179,736
Chairman of the Board and Chief Executive Officer
Timothy H. Ling .................................................$ 5,000,000 179,736
Chief Financial Officer and Executive Vice President,
North American Energy Operations
Charles R. Williamson ...........................................$ 5,000,000 179,736
Executive Vice President, International Energy Operations
Dennis P.R. Codon ...............................................$ 2,500,000 89,868
Vice President, Chief Legal Officer and General Counsel
Executive officers as a group ...................................$17,500,000 629,076
(Total of those listed above)
All other officers (six persons) ................................$14,500,000 521,234
</TABLE>
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All of Loans listed above bear interest at the rate of 6.8% per annum, mature on
March 16, 2008, and have the other terms described in the Loan Agreements and
the related promissory notes evidencing the Loans executed by each participant.
The Company and the participants have agreed that, if the Stock Purchase Program
is not approved by the stockholders at the Annual Meeting, the shares listed
above will be sold to the company for the lesser of the purchase price or their
fair market value at the time of the resale, and the Loans will become
immediately due and payable.
Copies of the Loan Agreements, together with the related promissory notes
evidencing the Loans, between the company and Messrs. Beach, Ling, Williamson
and Codon are attached as Exhibits 10.2 through 10.5 to this report.
Employment Agreement between the Company and Charles R. Williamson.
The company has entered into a new employment agreement with Mr. Williamson,
effective as of March 27, 2000 (the "2000 Employment Agreement"). The 2000
Employment Agreement replaces a prior employment agreement between the company
and Mr. Williamson, effective as of July 28, 1998. A copy of the 2000 Employment
Agreement is attached as Exhibit 10.6 to this report.
Item 7. Financial Statements and Exhibits.
(c) Exhibits: The Exhibit Index on page 4 of this
report lists the exhibits that are filed as part
of this report.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNOCAL CORPORATION
(Registrant)
Date: April 12, 2000 By: /s/ JOE D. CECIL
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Joe D. Cecil
Vice President and Comptroller
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EXHIBIT INDEX
10.1 2000 Executive Stock Purchase Program
10.2 Award Agreement (Loan Agreement), together with related promissory note,
both dated March 16, 2000, between Unocal Corporation and Roger C. Beach.
10.3 Award Agreement (Loan Agreement), together with related promissory note,
both dated March 16, 2000, between Unocal
Corporation and Timothy H. Ling.
10.4 Award Agreement (Loan Agreement), together with related promissory note,
both dated March 16, 2000, between Unocal Corporation and Charles R.
Williamson.
10.5 Award Agreement (Loan Agreement), together with related promissory note,
both dated March 16, 2000, between Unocal Corporation and Dennis P.R.
Codon.
10.6 Employment Agreement, effective as of March 27, 2000, by and between Unocal
Corporation and Charles R. Williamson.
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EXHIBIT 10.1
UNOCAL CORPORATION
2000 EXECUTIVE STOCK PURCHASE PROGRAM
The purpose of the 2000 Executive Stock Purchase Program (the "Program") is
to promote the long-term growth and financial success of Unocal Corporation (the
"Company") by (1) providing a means whereby executives of the Company and its
subsidiaries can acquire and maintain stock ownership, thereby strengthening
their commitment to maximizing the value of the Company for its stockholders,
while (2) placing them at risk in the event of poor Company performance through
the use of full recourse promissory notes as payment for Company stock.
1. General Description
The Program provides an opportunity for the Company's executives to
purchase up to 1.75 million shares of Stock of the Company and to receive loans
from the Company to finance such purchases.
2. Definitions
The following definitions shall be applicable throughout the Program but
shall not be deemed to apply in other contexts unless specifically provided
otherwise:
a. "Award" means (i) an award permitting a Participant to purchase Stock
from the Company under this Program at the Purchase Price, together with the
related Purchase Loan, or (ii) an award offering to make a Purchase Loan to a
Participant for the purchase of Stock on a specified date or dates in the open
market, directly from the Company, or by private purchase.
b. "Award Agreement" means a written agreement between the Company and a
Participant which sets forth the terms of an Award. Award Agreements need not be
identical and shall be in the form approved by the Committee.
c. "Board" means the Board of Directors of the Company, except those
members who are Employees.
d. "Cause" means (i) conduct or action by a Participant which, in the
opinion of the Committee, is materially harmful to the Company; (ii) willful
failure by a Participant to follow an order of the Board, except in such case
where the Participant believes in good faith that following such order would be
materially detrimental to the interests of the Company; (iii) a Participant's
conviction of a felony; or (iv) performance by a Participant which, in the
opinion of the Committee, falls below the reasonable expectations of the
Company.
e. "Code" means the Internal Revenue Code of 1986, as amended.
f. "Committee" means the Management Development and Compensation Committee
of the Board, which shall consist solely of two or more directors who qualify as
"outside directors," as defined in the regulations under Section 162 (m) of the
Code and as "Non-Employees Director" as defined in Rule 16b-3.
g. "Company" means Unocal Corporation.
h. "Date of Grant" means the date on which the granting of an Award is
authorized by the Committee or such later date as may be specified by the
Committee in such authorization.
i. "Disability" means the inability of a Participant to perform his or her
normal duties of employment as a result of physical or mental incapacity as
determined by the Committee.
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j. "Employee" means any person regularly employed by the Company or a
Subsidiary on a full-time salaried basis.
k. "Fair Market Value" means the average of the reported high and low
prices of the Stock as reported in the New York Stock Exchange Composite
Transactions quotations on a specified date or the actual purchase price of
shares acquired by the Participant under the Program.
l. "Interest Rate" means the interest rate determined by the Committee,
which shall be the lowest rate which avoids the imputation of interest under the
Code at the time of the Loan.
m. "Participant" means an Employee of the Company or a Subsidiary who has
been granted an Award under the Program.
n. "Purchase Date" means the date or dates on which a Participant purchases
shares of Stock pursuant to an Award.
o. "Purchase Loan" means an extension of credit to a Participant by the
Company evidenced by the Purchase Note.
p. "Purchase Note" means a full recourse promissory note including the
terms set forth in Section 8.
q. "Purchase Price" means (i), in the case of a purchase of Stock from the
Company, the Fair Market Value of the Stock on the Purchase Date or (ii), in the
case of a purchase of Stock in the open market or from a party other than the
Company, the price at which the Participant purchases Stock pursuant to an
Award.
r. "Retirement" means termination of employment on or after "normal
retirement age" as defined in the Company's retirement plan then in effect.
s. "Rule 16b-3" means Rule 16b-3 as promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
t. "Stock" means shares of common stock of the Company as described in the
Company's Certificate of Incorporation.
u. "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
v. "Voluntary Termination" means any termination of employment by a
Participant prior to Retirement other than a termination without Cause or a
termination due to death or Disability.
3. Effective Date and Duration
The Program shall be effective on March 16, 2000, subject to the approval
of this Program by the Company's stockholders. If this Program is not approved
by the Company's stockholders, Participants must sell to the Company the Stock
purchased under this Program at the lesser of the Purchase Price or the Fair
Market Value on the date of such sale, and each Purchase Loan shall become
immediately due and payable in full (including accrued and unpaid interest). If
this Program is approved by the Company's stockholders, it shall terminate on
December 31, 2003; provided that Purchase Loans outstanding as of such date
shall not be affected or impaired by termination of the Program.
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4. Administration
The Committee shall administer the Program. The acts of a majority of its
members present at any meeting at which a quorum is present and acts unanimously
approved in writing by the Committee shall be deemed the acts of the Committee.
The Committee may conduct meetings in person or by telephone.
No member of the Committee, while serving as such, shall be eligible to
receive an Award under the Program. The Committee shall have the authority,
subject to the provisions of the Program, to establish, adopt, or revise such
rules and regulations and to make all such determinations relating to the
Program as it may deem necessary or advisable in the administration of the
Program. Among other things, the Committee shall have the authority, subject to
the terms of the Program, to determine (a) the individuals to whom the Awards
are granted, (b) the time or times the Awards are granted, (c) the Purchase
Dates for such Awards, (d) the basis for any termination of employment,
including whether or not it was for Cause, Disability, Retirement or otherwise
(which determination shall be reasonable), and (e) the forms, terms and
provisions of the Award Agreement and any other documents under the Program. The
Committee's interpretation of the Program or any Awards granted pursuant thereto
and all decisions and determinations by the Committee with respect to the
Program shall be final, binding, and conclusive on all parties.
5. Shares Subject to the Program
The Committee may, from time to time, grant and amend Awards to eligible
Employees in accordance with the provisions of the Plan; provided, however,
that:
a. Subject to Section 10, the aggregate number of shares of Stock made
subject to Awards under this Plan may not exceed 1,750,000 shares, and no
Participant shall receive an Award with respect to more than 200,000 shares.
b. If a Participant fails to purchase all of the shares of Stock subject to
an Award, such unpurchased shares of Stock shall again be available to be
granted as an Award under this Program.
c. Stock purchased under this Program may be from the Company's authorized
and unissued Stock or Treasury Shares; Stock purchased on the open market; or
Stock acquired by private purchase.
6. Eligibility
Senior management and other key Employees of the Company and its
Subsidiaries (including officers or Employees who are members of the Board)
shall be eligible to be granted Awards under this Program.
7. Stock Purchase
a. Grant of Award. The Committee shall determine the Purchase Date and, in
the case of an Award permitting the Participant to purchase Stock from the
Company, the number of shares of Stock that the Participant may purchase under
the Award or, in the case of an Award offering to make a Purchase Loan for a
purchase in the open market or from a third party, the amount of the Purchase
Loan. The Committee shall give each Participant written notice prior to the
Purchase Date stating (i) the maximum and minimum numbers (which numbers may be
identical) of shares of Stock that the Participant may purchase under the Award
or the maximum and minimum amounts (which amounts may be identical) of the
Purchase Loan, (ii) the Purchase Date and (iii) the Interest Rate and other
terms pertaining to the Purchase Loan.
b. Exercise of Award. A Participant shall exercise an Award by delivering
to the Company on the Purchase Date (i) a notice stating the number of shares
(not less than the minimum number and not more than the maximum number specified
in the Award) such Participant elects to purchase or the amount (not less than
the minimum and not more than the maximum amount specified in the Award) that
the
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Participant elects to borrow, and (ii) an executed Award Agreement, Purchase
Note and any other documents required pursuant to the Program. Any Participant
who does not elect to purchase at least the minimum number of shares specified
in the Award Agreement or to borrow at least the minimum amount specified in the
Award Agreement on the Purchase Date shall forfeit any rights under the Program
with respect to such Award, including, without limitation, any right to receive
a Purchase Loan.
8. Purchase Loans
a. General. The Company shall extend a Purchase Loan to a Participant upon
exercise of an Award subject to the terms and conditions set forth in this
Section 8. The original principal amount of the Purchase Loan shall be equal to
the total purchase price of the Stock. Such Purchase Loan shall be evidenced by
a Purchase Note with full recourse against the maker. The obligations of each
Participant under the Purchase Loan shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by any change in the existence, structure or
ownership of the Company, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Company or its assets or the market value of
the Stock or any resulting release or discharge of any obligation of the Company
or the existence of any claim, set-off or other rights which any Participant may
have at any time against the Company or any other person, whether in connection
with the Program or with any unrelated transactions, provided that nothing
herein shall prevent the assertion of any such claim by separate suit or
counterclaim.
Notwithstanding anything to the contrary in this Section 8, the Company
shall not be required to make any Purchase Loan to a Participant if the making
of such Purchase Loan will (i) cause the Company to violate any covenant or
similar provision in any indenture, loan agreement or other agreement, or (ii)
violate any applicable federal, state or local law, provided, that the failure
to make such Purchase Loan shall be deemed to revoke the acceptance and exercise
of a related Award unless otherwise specified by the Participant.
Notwithstanding anything to the contrary in this Section 8, the terms and
repayment provisions of the Purchase Note shall conform with the applicable
rules and regulations of the Federal Reserve Board then in effect.
b. Unsecured Loan. Payment of the Purchase Loan shall not be secured,
directly or indirectly, by a pledge of the shares of Stock acquired by the
Participant upon the exercise of the Award to which the Purchase Loan relates.
c. Interest. Interest on the principal balance of the Purchase Loan will
accrue annually, in arrears, at the Interest Rate. Except as provided in the
Purchase Loan and related Purchase Note, interest shall be added to the balance
of the Purchase Loan. To the extent that a Participant receives cash dividends
or other distributions paid in cash on Stock purchased under this Program, the
Participant shall prepay the related Purchase Loan with the full pre-tax amount
of such dividend or distribution received within ten (10) days of receipt. Such
prepayments shall first be applied to pay accrued interest on the Purchase Loan
and then to reduce the principal balance due on the Purchase Loan.
d. Term. The term of the Purchase Loan for any Participant shall begin on
such Participant's Purchase Date and, subject to prepayment as provided in this
Section 8, shall have a final maturity date on the eighth (8th) anniversary of
the Purchase Date.
e. Payment Schedule. Except as provided in Section 3, and subject to
prepayment as provided in this Section 8, no payments of either principal or
interest shall be due under the Purchase Loan during the first five (5) years
following the Purchase Date. The principal balance of the Purchase Loan
(including accrued but unpaid interest) outstanding after any prepayments
following the end of such five-year period, if any (the "Remaining Balance"),
shall be payable in three (3) equal annual installments on the sixth (6th),
seventh (7th) and eighth (8th) anniversaries of the Purchase Date, with interest
on the unpaid Remaining Balance payable annually in arrears, on each such
anniversary.
f. Optional Prepayments. A Participant may prepay all or any portion of the
Purchase Loan at any time. Any prepayments made to the Company pursuant to this
Section 8(f) shall first be applied to pay
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accrued interest on the Purchase Loan and then to reduce the principal balance
due on the Purchase Loan. Any prepayment of the balance of the Purchase Loan
shall be applied to the principal payments due thereon in chronological order of
maturity.
g. Prepayment Obligations Upon Voluntary Termination or Termination for
Cause. Upon a termination of employment that is determined by the Committee to
be a termination for Cause or a Voluntary Termination, any outstanding balance
on the Purchase Loan (including any accrued and unpaid interest) shall become
due and payable on the 60th day following such termination of employment.
Prepayment of a Purchase Loan shall not be required in the event of any other
termination of employment (including termination due to death, Disability,
Retirement, and termination without Cause).
h. Purchase Loan Forgiveness. For Awards granted during the year 2000, the
Committee shall provide for the partial forgiveness of the Purchase Loan in the
case of a Participant who has died or becomes Disabled to the extent that, at
the maturity date of the Purchase Loan, the outstanding balance of the Purchase
Loan (including any accrued and unpaid interest), increased by the amount of any
repayments of principal previously made by the Participant, is greater than the
sum of (i) the Fair Market Value of the number of shares of Stock purchased by
the Participant pursuant to the exercise of the Award plus (ii) the amount of
the Performance Bonus paid to the Participant under the Long-Term Incentive Plan
of 1998 for the four-year award period ending on December 31, 2003 plus (iii)
interest on such Performance Bonus at the Interest Rate from December 31, 2003
to the repayment date.
9. General
a. Government and Other Regulations. The obligation of the Company with
respect to the grant and exercise of Awards shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies as
may be required. The Company shall be under no obligation to register under the
Securities Act of 1933, as amended ("Act") any of the shares of Stock issued
under the Program. If the Stock issued under the Program may in certain
circumstances be exempt from registration under the Act, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
b. Tax Withholding. The Company or a Subsidiary, as appropriate, shall have
the right to deduct from any benefits due under the Program or other amounts
payable to a Participant an amount sufficient to satisfy any federal, state or
local withholding requirements applicable to such benefits. In addition, as a
condition to payment or delivery of any benefit hereunder, including without
limitation, any forgiveness of any portion of a Purchase Loan pursuant to
Section 3 or Section 8(h), the Company or a Subsidiary, as appropriate, may
require a Participant to pay to the Company or Subsidiary the amount of any
applicable federal, state or local withholding taxes.
c. Claim to Awards and Employment Rights. No Employee or other person shall
have any claim or right to be granted an Award under the Program. Neither this
Program nor any action taken hereunder shall be construed as giving any Employee
any right to be retained in the employ of the Company or a Subsidiary.
d. Applicable Law. This Program, any Award Agreements and all other related
documents shall be governed by and construed in accordance with the laws of the
State of California without regard to the application of the conflicts of laws
provisions thereof except for such matters as are subject to the General
Corporation Law of Delaware.
e. Inurement of Rights and Obligations. The rights and obligations under
the Program and any related Award Agreements shall inure to the benefit of, and
binding upon, the Company, its successors and assigns, and the Participants and
their beneficiaries.
f. Non-exclusivity of Program. Nothing in this Program shall limit or be
deemed to limit the authority of the Board or the Committee to grant awards or
authorize any other compensation, with or without reference to Stock, under any
other plan or authority.
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g. Severability; Validity. This Program is intended to qualify under Rule
16b-3. If any of the terms or provisions of this Program conflict with the
requirements of Rule 16b-3, then such terms and provisions shall be deemed
inoperative to the extent they so conflict with such requirements. In the event
that any provision of the Program or any related Award Agreement or other
related document is held to be invalid, void or unenforceable, the same shall
not affect, in any respect whatsoever, the validity of any other provision of
the Program or any related Award Agreement or other document.
h. Indemnification. Each person who is or shall have been a member of the
Committee or the Board, including the Employee directors, shall be indemnified
and held harmless by the Company against and from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit, or proceeding to which he may be
a party or in which he may be involved by reason of any action or failure to act
under the Program and against and from any and all amounts paid by him in
satisfaction of judgment in any such action, suit or proceeding against him. He
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
i. Reliance on Reports. Each member of the Committee and the Board,
including the Employee directors, shall be fully justified in relying or acting
in good faith upon any report made by the independent public accountants of the
Company and its Subsidiaries and upon any other information furnished in
connection with the Program by any person or persons other than himself. In no
event shall any person who is or shall have been a member of the Committee or of
the Board be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information or for any
action taken, including the furnishing of information, or failure to act, if in
good faith.
j. Relationship to Other Benefits. No payment under the Program shall be
taken into account in determining any benefits under a pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary.
k. Expenses. The expenses of administering the Program shall be borne by
the Company and its Subsidiaries.
l. Pronouns. Masculine pronouns and other words of masculine gender shall
refer to both men and women.
m. Titles and Headings. The titles and headings of the sections in the
Program are for convenience of reference only, and in the event of any conflict,
the text of the Program, rather than such titles or headings, shall control.
10. Changes in Capital Structure
Any agreements evidencing Awards shall be subject to adjustment by the
Committee as to the number and price of shares of Stock or other considerations
subject to such Awards in the event of changes in the outstanding Stock by
reason of stock dividends, stock splits, recapitalizations, reorganizations,
mergers, consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Purchase of any such Awards. In the
event of any such change in the outstanding Stock, the aggregate number of
shares available under the Program and the number of shares issued under any
Award shall be appropriately adjusted by the Committee, whose determination
shall be conclusive.
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11. Amendments and Termination
The Board may at any time amend, suspend or terminate the Program subject
to the provisions of this Section 11. No amendment, suspension or termination of
the Program shall, without the consent of the Participant, adversely affect such
Participant's rights under the Program in any material respect. In addition,
without further stockholder approval, the Board shall not:
a. Increase the maximum number of shares which may be issued under the
Program, except as provided in Section 10;
b. Change the Program to permit a purchase of Stock at a price less than
Fair Market Value; or
c. Extend the termination date of the Program.
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EXHIBIT 10.2
UNOCAL CORPORATION
2000 EXECUTIVE STOCK PURCHASE PROGRAM
THIS AWARD AGREEMENT (this "Agreement") dated March 16, 2000 is between
Unocal Corporation, a Delaware corporation (the "Company"), and the Participant
named below and constitutes the agreement of the parties as follows: the Company
agrees to loan to the Participant the amount set forth below (the "Loan") to
purchase and pay for shares of Common Stock of the Company (the "Common Stock")
in the open market, such purchase to commence on the date set forth below,
subject to the terms and conditions hereof (this "Award"). This Award is granted
pursuant to and subject to the terms of the Unocal Corporation 2000 Executive
Stock Purchase Program (the "Program"), attached hereto as Exhibit A, and any
rules or guides to administration adopted from time to time by the Management
Development and Compensation Committee or any successor committee appointed by
the Company's Board of Directors to administer the Program (the "Committee").
The Participant's obligation to repay the Loan shall be evidenced by a full
recourse note, in the form attached hereto as Exhibit B, executed by the
Participant and delivered to the Company on the Purchase Date. A signed
facsimile shall be deemed acceptable delivery.
Participant: Roger Beach
Loan Amount: $5,000,000
Purchase Date(s)
Commencement: March 16, 2000
The Participant represents, warrants and agrees as follows:
1. The proceeds of the Loan will be used solely for the business purpose of
purchasing shares of the Common Stock;
2. The Loan is not being taken for personal, family or household purposes;
3. The taking and repayment of the Loan will not violate any other
agreement to which the Participant is a party or by which the Participant is
bound;
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4. The Participant is not in possession of any undisclosed information
concerning the Company which, if disclosed, would be material to investors in
the Common Stock; and
The Participant understands that purchases, sales and ownership of the
Common Stock are subject to the requirements of the Securities Act of 1933 and
the Securities Exchange Act of 1934 and agrees to comply with such laws and the
rules and regulations thereunder, including without limitation, restrictions on
the ability of affiliates of the Company to sell the Common Stock and the
reporting requirements of Section 16 of the Securities Exchange Act of 1934.
UNOCAL CORPORATION AGREED AND ACKNOWLEDGED:
(a Delaware corporation)
By: /s/FRANK C. HERRINGER /s/ROGER C. BEACH
------------------------- -------------------------
Its: Chairman of the Management Development and Participant's Signature
Compensation Committee of the Unocal
Board of Directors
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EXHIBIT B
FULL RECOURSE
PROMISSORY NOTE
DUE MARCH 16, 2008
$5,000,000 March 16, 2000
- ----------
FOR VALUE RECEIVED, Roger Beach, an individual ("Maker"), unconditionally
promises to pay to Unocal Corporation, a Delaware corporation (together with any
successor or assignee by operation of law or otherwise, "Payee"), on the earlier
of March 16, 2008 or such other date as provided herein, in the manner and at
the place hereinafter provided, the unpaid principal amount of all advances made
by Payee to Maker for the purposes of Maker's purchase of common stock of Payee
pursuant to the terms of the Unocal Corporation 2000 Executive Stock Purchase
Program (the "Program"). All advances made under this Note shall be noted
hereon; provided, however, that the failure to make a notation shall not limit
or otherwise affect the obligations of Maker hereunder with respect to payments
of principal or interest on this Note.
The initial principal amount of this Note is five million dollars
($5,000,000). Such principal amount shall be increased by an amount equal to any
accrued but unpaid interest as set forth in the next paragraph of this note and
decreased by any of the funds not used to purchase shares under the Program and
by any repayments of principal. The principal amount outstanding on March 16,
2005, shall be payable in three equal annual installments on the March 16, 2006,
March 16, 2007 and at maturity.
Maker also promises to pay interest on the unpaid principal amount of this
Note from the date such principal is advanced until such principal is paid in
full at a rate per annum equal to the lesser of: (i) the maximum amount
allowable pursuant to applicable law; or (ii) 6.8%. Interest on this Note shall
be computed on the basis of a 365-day year, based on the actual number of days
elapsed. Interest shall be payable in arrears [annually] on the sixteenth (16th)
day of each March (an "Interest Payment Date"), commencing on March 16, 2001,
upon any prepayment of this Note (to the extent accrued on the amount being
prepaid) and at maturity; provided that, prior to March 17, 2005, interest shall
be payable only in an amount equal to dividends paid on the shares of Common
Stock of Payee purchased for Maker under the Program, subject to proportionate
adjustment in the event of a stock split, stock dividend or other change in
capitalization. All interest accrued and unpaid as of any Interest Payment Date
shall be added to principal and accrue interest from such Interest Payment Date.
1. Payments; Voluntary Prepayment. All payments of principal and interest
in respect of this Note shall be made in lawful money of the United States of
America. Each payment made hereunder shall be credited first to interest then
due and the remainder of such payment shall be credited to principal, and
interest shall thereupon cease to accrue upon the principal so credited. Maker
shall have the right at any time and from time to time to prepay the principal
of this Note in whole or in part, without premium or penalty, such prepayment
hereunder being accompanied by interest on the principal amount of the Note
being prepaid to the date of prepayment. All voluntary prepayments shall be
applied to the remaining principal payments in chronological order of maturity.
2. Mandatory Prepayment.
(a) If there shall occur a termination for Cause or Voluntary Termination
(as such terms are defined in the Program) of Maker, the unpaid principal amount
of this Note together with accrued interest thereon shall become due and payable
on the 60th business day after such termination.
(b) If the Program is not approved by Payee's stockholders on or before
June 22, 2000, the unpaid principal of and all accrued and unpaid interest on
this Note shall become immediately due and payable.
3. Full Recourse Note. This Note is a full recourse Note and Maker shall be
liable forthe full payment of the principal of and interest on this Note.
2
<PAGE> 2
4. Events of Default. Each of the following shall constitute an Event of
Default:
(a) The failure by Maker to pay any principal under this Note when due,
whether at stated maturity, by acceleration, or otherwise, or the failure to pay
any interest or other amount due under this Note within five (5) days after the
date due;
(b) any challenge, or institution of any proceedings to challenge by Maker
of the validity, binding effect or enforceability of this Note or any
endorsement of this Note;
(c) any default by Maker of any other obligation under this Note; or
(d) The initiation of any proceeding relating to Maker under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt or receivership law or statute, whether filed by or against Maker, or the
assignment for the benefit of creditors by Maker.
Upon an Event of Default set forth in clauses (a) and (d) above, the
principal amount of this Note together with accrued interest thereon shall
become immediately due and payable, without presentment, demand, notice, protest
or other requirements of any kind (all of which are hereby expressly waived by
Maker). Upon any other Event of Default, Payee may, by written notice to Maker,
declare the principal amount of this Note together with accrued interest thereon
to be due and payable, and the principal amount of this Note together with such
interest shall thereupon immediately become due and payable without presentment,
further notice, protest or other requirements of any kind (all of which are
hereby expressly waived by Maker).
5. Set-Off. Payee shall be entitled to set-off against this Note any and
all amounts owed by Payee to Maker as and when such amounts become due and
payable, whether presently existing or hereafter incurred, to the maximum extent
allowable under applicable laws. To the extent that Maker's consent to the
set-off is required, this Note constitutes Maker's consent.
6. Miscellaneous.
(a) All notices and other communications provided for hereunder shall be in
writing (including facsimile or e-mail communication) and hand-delivered,
mailed, or telecopied as follows: if to Maker, at Maker's address specified
opposite Maker's signature below; and if to Payee, at 2141 Rosecrans Avenue,
Suite 4000, CA 90245; or in each case at such other address as shall be
designated by Payee or Maker. All such notices and communications shall, when
hand-delivered, mailed, or telecopied (with answer-back confirmation) be
effective when deposited in the mails, delivered or sent by telecopier.
(b) No failure or delay on the part of Payee or any other holder of this
Note to exercise any right, power or privilege under this Note and no course of
dealing between Maker and Payee shall impair such right, power or privilege or
operate as a waiver of any default or an acquiescence therein, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies expressly provided in this Note are
cumulative to, and not exclusive of, any rights or remedies that Payee would
otherwise have. No notice to or demand on Maker in any case shall entitle Maker
to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of Payee to any other or further action in any
circumstances without notice or demand.
(c) Maker and any endorser of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder. To the fullest extent permitted by law,
the obligations of Maker hereunder shall not be subject to any counterclaim,
set-off, deduction, diminution, abatement, recoupment, deferment, suspension,
reduction or defense (other than the full and strict compliance by
2
<PAGE> 3
Maker with those obligations) based on any claim that Maker may have against
Payee or any other person.
(d) No provision of this Note may be waived, modified or discharged orally,
but only by an agreement signed by the party against whom enforcement is sought.
(e) If any provision in or obligation under this Note shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
(f) This note and the rights and obligations of maker and payee hereunder
shall be governed by, and shall be construed and enforced in accordance with the
laws of the State of California except for such matters as are subject to the
General Corporation Law of the State of Delaware.
3
<PAGE> 4
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
day and year and at the place first above written.
MAKER
ROGER C. BEACH
------------------------
Print Name
/s/ROGER C. BEACH
------------------------
Signature
4
<PAGE> 5
TRANSACTIONS ON PROMISSORY NOTE
Amount of Outstanding
Amount of Principal Repaid on this Principal Balance on
Loan Made Date this Date
Date on this Date
- ---- ------------ ------------------------ --------------------
5
EXHIBIT 10.3
UNOCAL CORPORATION
2000 EXECUTIVE STOCK PURCHASE PROGRAM
THIS AWARD AGREEMENT (this "Agreement") dated March 16, 2000 is between
Unocal Corporation, a Delaware corporation (the "Company"), and the Participant
named below and constitutes the agreement of the parties as follows: the Company
agrees to loan to the Participant the amount set forth below (the "Loan") to
purchase and pay for shares of Common Stock of the Company (the "Common Stock")
in the open market, such purchase to commence on the date set forth below,
subject to the terms and conditions hereof (this "Award"). This Award is granted
pursuant to and subject to the terms of the Unocal Corporation 2000 Executive
Stock Purchase Program (the "Program"), attached hereto as Exhibit A, and any
rules or guides to administration adopted from time to time by the Management
Development and Compensation Committee or any successor committee appointed by
the Company's Board of Directors to administer the Program (the "Committee").
The Participant's obligation to repay the Loan shall be evidenced by a full
recourse note, in the form attached hereto as Exhibit B, executed by the
Participant and delivered to the Company on the Purchase Date. A signed
facsimile shall be deemed acceptable delivery.
Participant: Timothy H. Ling
Loan Amount: $5,000,000
Purchase Date(s)
Commencement: March 16, 2000
The Participant represents, warrants and agrees as follows:
1. The proceeds of the Loan will be used solely for the business purpose of
purchasing shares of the Common Stock;
2. The Loan is not being taken for personal, family or household purposes;
3. The taking and repayment of the Loan will not violate any other
agreement to which the Participant is a party or by which the Participant is
bound;
<PAGE> 2
4. The Participant is not in possession of any undisclosed information
concerning the Company which, if disclosed, would be material to investors in
the Common Stock; and
The Participant understands that purchases, sales and ownership of the
Common Stock are subject to the requirements of the Securities Act of 1933 and
the Securities Exchange Act of 1934 and agrees to comply with such laws and the
rules and regulations thereunder, including without limitation, restrictions on
the ability of affiliates of the Company to sell the Common Stock and the
reporting requirements of Section 16 of the Securities Exchange Act of 1934.
UNOCAL CORPORATION AGREED AND ACKNOWLEDGED:
(a Delaware corporation)
By: /s/FRANK C. HERRINGER /s/TIMOTHY H. LING
------------------------- -------------------------
Its: Chairman of the Management Development and Participant's Signature
Compensation Committee of the Unocal
Board of Directors
2
<PAGE>
EXHIBIT B
FULL RECOURSE
PROMISSORY NOTE
DUE MARCH 16, 2008
$5,000,000 March 16, 2000
- ----------
FOR VALUE RECEIVED, Timothy H. Ling, an individual ("Maker"),
unconditionally promises to pay to Unocal Corporation, a Delaware corporation
(together with any successor or assignee by operation of law or otherwise,
"Payee"), on the earlier of March 16, 2008 or such other date as provided
herein, in the manner and at the place hereinafter provided, the unpaid
principal amount of all advances made by Payee to Maker for the purposes of
Maker's purchase of common stock of Payee pursuant to the terms of the Unocal
Corporation 2000 Executive Stock Purchase Program (the "Program"). All advances
made under this Note shall be noted hereon; provided, however, that the failure
to make a notation shall not limit or otherwise affect the obligations of Maker
hereunder with respect to payments of principal or interest on this Note.
The initial principal amount of this Note is five million dollars
($5,000,000). Such principal amount shall be increased by an amount equal to any
accrued but unpaid interest as set forth in the next paragraph of this note and
decreased by any of the funds not used to purchase shares under the Program and
by any repayments of principal. The principal amount outstanding on March 16,
2005, shall be payable in three equal annual installments on the March 16, 2006,
March 16, 2007 and at maturity.
Maker also promises to pay interest on the unpaid principal amount of this
Note from the date such principal is advanced until such principal is paid in
full at a rate per annum equal to the lesser of: (i) the maximum amount
allowable pursuant to applicable law; or (ii) 6.8%. Interest on this Note shall
be computed on the basis of a 365-day year, based on the actual number of days
elapsed. Interest shall be payable in arrears [annually] on the sixteenth (16th)
day of each March (an "Interest Payment Date"), commencing on March 16, 2001,
upon any prepayment of this Note (to the extent accrued on the amount being
prepaid) and at maturity; provided that, prior to March 17, 2005, interest shall
be payable only in an amount equal to dividends paid on the shares of Common
Stock of Payee purchased for Maker under the Program, subject to proportionate
adjustment in the event of a stock split, stock dividend or other change in
capitalization. All interest accrued and unpaid as of any Interest Payment Date
shall be added to principal and accrue interest from such Interest Payment Date.
1. Payments; Voluntary Prepayment. All payments of principal and interest
in respect of this Note shall be made in lawful money of the United States of
America. Each payment made hereunder shall be credited first to interest then
due and the remainder of such payment shall be credited to principal, and
interest shall thereupon cease to accrue upon the principal so credited. Maker
shall have the right at any time and from time to time to prepay the principal
of this Note in whole or in part, without premium or penalty, such prepayment
hereunder being accompanied by interest on the principal amount of the Note
being prepaid to the date of prepayment. All voluntary prepayments shall be
applied to the remaining principal payments in chronological order of maturity.
2. Mandatory Prepayment.
(a) If there shall occur a termination for Cause or Voluntary Termination
(as such terms are defined in the Program) of Maker, the unpaid principal amount
of this Note together with accrued interest thereon shall become due and payable
on the 60th business day after such termination.
(b) If the Program is not approved by Payee's stockholders on or before
June 22, 2000, the unpaid principal of and all accrued and unpaid interest on
this Note shall become immediately due and payable.
<PAGE> 2
3. Full Recourse Note. This Note is a full recourse Note and Maker shall be
liable for the full payment of the principal of and interest on this Note.
4. Events of Default. Each of the following shall constitute an Event of
Default:
(a) The failure by Maker to pay any principal under this Note when due,
whether at stated maturity, by acceleration, or otherwise, or the failure to pay
any interest or other amount due under this Note within five (5) days after the
date due;
(b) any challenge, or institution of any proceedings to challenge by Maker
of the validity, binding effect or enforceability of this Note or any
endorsement of this Note;
(c) any default by Maker of any other obligation under this Note; or
(d) The initiation of any proceeding relating to Maker under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt or receivership law or statute, whether filed by or against Maker, or the
assignment for the benefit of creditors by Maker.
Upon an Event of Default set forth in clauses (a) and (d) above, the
principal amount of this Note together with accrued interest thereon shall
become immediately due and payable, without presentment, demand, notice, protest
or other requirements of any kind (all of which are hereby expressly waived by
Maker). Upon any other Event of Default, Payee may, by written notice to Maker,
declare the principal amount of this Note together with accrued interest thereon
to be due and payable, and the principal amount of this Note together with such
interest shall thereupon immediately become due and payable without presentment,
further notice, protest or other requirements of any kind (all of which are
hereby expressly waived by Maker).
5. Set-Off. Payee shall be entitled to set-off against this Note any and
all amounts owed by Payee to Maker as and when such amounts become due and
payable, whether presently existing or hereafter incurred, to the maximum extent
allowable under applicable laws. To the extent that Maker's consent to the
set-off is required, this Note constitutes Maker's consent.
6. Miscellaneous.
(a) All notices and other communications provided for hereunder shall be in
writing (including facsimile or e-mail communication) and hand-delivered,
mailed, or telecopied as follows: if to Maker, at Maker's address specified
opposite Maker's signature below; and if to Payee, at 2141 Rosecrans Avenue,
Suite 4000, CA 90245; or in each case at such other address as shall be
designated by Payee or Maker. All such notices and communications shall, when
hand-delivered, mailed, or telecopied (with answer-back confirmation) be
effective when deposited in the mails, delivered or sent by telecopier.
(b) No failure or delay on the part of Payee or any other holder of this
Note to exercise any right, power or privilege under this Note and no course of
dealing between Maker and Payee shall impair such right, power or privilege or
operate as a waiver of any default or an acquiescence therein, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies expressly provided in this Note are
cumulative to, and not exclusive of, any rights or remedies that Payee would
otherwise have. No notice to or demand on Maker in any case shall entitle Maker
to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of Payee to any other or further action in any
circumstances without notice or demand.
(c) Maker and any endorser of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of
2
<PAGE> 3
limitations as a defense to any demand hereunder. To the fullest extent
permitted by law, the obligations of Maker hereunder shall not be subject to any
counterclaim, set-off, deduction, diminution, abatement, recoupment, deferment,
suspension, reduction or defense (other than the full and strict compliance by
Maker with those obligations) based on any claim that Maker may have against
Payee or any other person.
(d) No provision of this Note may be waived, modified or discharged orally,
but only by an agreement signed by the party against whom enforcement is sought.
(e) If any provision in or obligation under this Note shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
(f) This note and the rights and obligations of maker and payee hereunder
shall be governed by, and shall be construed and enforced in accordance with the
laws of the State of California except for such matters as are subject to the
General Corporation Law of the State of Delaware.
3
<PAGE> 4
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
day and year and at the place first above written.
MAKER
TIMOTHY H. LING
------------------------
Print Name
/s/TIMOTHY H. LING
------------------------
Signature
4
<PAGE> 5
TRANSACTIONS ON PROMISSORY NOTE
Amount of Outstanding
Amount of Principal Repaid on this Principal Balance on
Loan Made Date this Date
Date on this Date
- ---- ------------ ------------------------ --------------------
5
EXHIBIT 10.4
UNOCAL CORPORATION
2000 EXECUTIVE STOCK PURCHASE PROGRAM
THIS AWARD AGREEMENT (this "Agreement") dated March 16, 2000
is between Unocal Corporation, a Delaware corporation (the "Company"), and the
Participant named below and constitutes the agreement of the parties as follows:
the Company agrees to loan to the Participant the amount set forth below (the
"Loan") to purchase and pay for shares of Common Stock of the Company (the
"Common Stock") in the open market, such purchase to commence on the date set
forth below, subject to the terms and conditions hereof (this "Award"). This
Award is granted pursuant to and subject to the terms of the Unocal Corporation
2000 Executive Stock Purchase Program (the "Program"), attached hereto as
Exhibit A, and any rules or guides to administration adopted from time to time
by the Management Development and Compensation Committee or any successor
committee appointed by the Company's Board of Directors to administer the
Program (the "Committee"). The Participant's obligation to repay the Loan shall
be evidenced by a full recourse note, in the form attached hereto as Exhibit B,
executed by the Participant and delivered to the Company on the Purchase Date. A
signed facsimile shall be deemed acceptable delivery.
Participant: Charles R. Williamson
Loan Amount: $5,000,000
Purchase Date(s)
Commencement: March 16, 2000
The Participant represents, warrants and agrees as follows:
1. The proceeds of the Loan will be used solely for the business purpose of
purchasing shares of the Common Stock;
2. The Loan is not being taken for personal, family or household purposes;
3. The taking and repayment of the Loan will not violate any other
agreement to which the Participant is a party or by which the Participant is
bound;
<PAGE> 2
4. The Participant is not in possession of any undisclosed information
concerning the Company which, if disclosed, would be material to investors in
the Common Stock; and
The Participant understands that purchases, sales and ownership of the
Common Stock are subject to the requirements of the Securities Act of 1933 and
the Securities Exchange Act of 1934 and agrees to comply with such laws and the
rules and regulations thereunder, including without limitation, restrictions on
the ability of affiliates of the Company to sell the Common Stock and the
reporting requirements of Section 16 of the Securities Exchange Act of 1934.
UNOCAL CORPORATION AGREED AND ACKNOWLEDGED:
(a Delaware corporation)
By: /s/DENNIS P.R. CODON /s/CHARLES R. WILLIAMSON
------------------------- -------------------------
Its: Vice President, Chief Legal Officer Participant's Signature
and General Counsel
2
<PAGE>
EXHIBIT B
FULL RECOURSE
PROMISSORY NOTE
DUE MARCH 16, 2008
$5,000,000 March 16, 2000
- ----------
FOR VALUE RECEIVED, Charles R. Williamson, an individual ("Maker"),
unconditionally promises to pay to Unocal Corporation, a Delaware corporation
(together with any successor or assignee by operation of law or otherwise,
"Payee"), on the earlier of March 16, 2008 or such other date as provided
herein, in the manner and at the place hereinafter provided, the unpaid
principal amount of all advances made by Payee to Maker for the purposes of
Maker's purchase of common stock of Payee pursuant to the terms of the Unocal
Corporation 2000 Executive Stock Purchase Program (the "Program"). All advances
made under this Note shall be noted hereon; provided, however, that the failure
to make a notation shall not limit or otherwise affect the obligations of Maker
hereunder with respect to payments of principal or interest on this Note.
The initial principal amount of this Note is five million dollars
($5,000,000). Such principal amount shall be increased by an amount equal to any
accrued but unpaid interest as set forth in the next paragraph of this note and
decreased by any of the funds not used to purchase shares under the Program and
by any repayments of principal. The principal amount outstanding on March 16,
2005, shall be payable in three equal annual installments on the March 16, 2006,
March 16, 2007 and at maturity.
Maker also promises to pay interest on the unpaid principal amount of this
Note from the date such principal is advanced until such principal is paid in
full at a rate per annum equal to the lesser of: (i) the maximum amount
allowable pursuant to applicable law; or (ii) 6.8%. Interest on this Note shall
be computed on the basis of a 365-day year, based on the actual number of days
elapsed. Interest shall be payable in arrears [annually] on the sixteenth (16th)
day of each March (an "Interest Payment Date"), commencing on March 16, 2001,
upon any prepayment of this Note (to the extent accrued on the amount being
prepaid) and at maturity; provided that, prior to March 17, 2005, interest shall
be payable only in an amount equal to dividends paid on the shares of Common
Stock of Payee purchased for Maker under the Program, subject to proportionate
adjustment in the event of a stock split, stock dividend or other change in
capitalization. All interest accrued and unpaid as of any Interest Payment Date
shall be added to principal and accrue interest from such Interest Payment Date.
1. Payments; Voluntary Prepayment. All payments of principal and interest
in respect of this Note shall be made in lawful money of the United States of
America. Each payment made hereunder shall be credited first to interest then
due and the remainder of such payment shall be credited to principal, and
interest shall thereupon cease to accrue upon the principal so credited. Maker
shall have the right at any time and from time to time to prepay the principal
of this Note in whole or in part, without premium or penalty, such prepayment
hereunder being accompanied by interest on the principal amount of the Note
being prepaid to the date of prepayment. All voluntary prepayments shall be
applied to the remaining principal payments in chronological order of maturity.
2. Mandatory Prepayment.
(a) If there shall occur a termination for Cause or Voluntary Termination
(as such terms are defined in the Program) of Maker, the unpaid principal amount
of this Note together with accrued interest thereon shall become due and payable
on the 60th business day after such termination.
(b) If the Program is not approved by Payee's stockholders on or before
June 22, 2000, the unpaid principal of and all accrued and unpaid interest on
this Note shall become immediately due and payable.
<PAGE> 2
3. Full Recourse Note. This Note is a full recourse Note and Maker shall be
liable for the full payment of the principal of and interest on this Note.
4. Events of Default. Each of the following shall constitute an Event of
Default:
(a) The failure by Maker to pay any principal under this Note when due,
whether at stated maturity, by acceleration, or otherwise, or the failure to pay
any interest or other amount due under this Note within five (5) days after the
date due;
(b) any challenge, or institution of any proceedings to challenge by Maker
of the validity, binding effect or enforceability of this Note or any
endorsement of this Note;
(c) any default by Maker of any other obligation under this Note; or
(d) The initiation of any proceeding relating to Maker under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt or receivership law or statute, whether filed by or against Maker, or the
assignment for the benefit of creditors by Maker.
Upon an Event of Default set forth in clauses (a) and (d) above, the
principal amount of this Note together with accrued interest thereon shall
become immediately due and payable, without presentment, demand, notice, protest
or other requirements of any kind (all of which are hereby expressly waived by
Maker). Upon any other Event of Default, Payee may, by written notice to Maker,
declare the principal amount of this Note together with accrued interest thereon
to be due and payable, and the principal amount of this Note together with such
interest shall thereupon immediately become due and payable without presentment,
further notice, protest or other requirements of any kind (all of which are
hereby expressly waived by Maker).
5. Set-Off. Payee shall be entitled to set-off against this Note any and
all amounts owed by Payee to Maker as and when such amounts become due and
payable, whether presently existing or hereafter incurred, to the maximum extent
allowable under applicable laws. To the extent that Maker's consent to the
set-off is required, this Note constitutes Maker's consent.
6. Miscellaneous.
(a) All notices and other communications provided for hereunder shall be in
writing (including facsimile or e-mail communication) and hand-delivered,
mailed, or telecopied as follows: if to Maker, at Maker's address specified
opposite Maker's signature below; and if to Payee, at 2141 Rosecrans Avenue,
Suite 4000, CA 90245; or in each case at such other address as shall be
designated by Payee or Maker. All such notices and communications shall, when
hand-delivered, mailed, or telecopied (with answer-back confirmation) be
effective when deposited in the mails, delivered or sent by telecopier.
(b) No failure or delay on the part of Payee or any other holder of this
Note to exercise any right, power or privilege under this Note and no course of
dealing between Maker and Payee shall impair such right, power or privilege or
operate as a waiver of any default or an acquiescence therein, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies expressly provided in this Note are
cumulative to, and not exclusive of, any rights or remedies that Payee would
otherwise have. No notice to or demand on Maker in any case shall entitle Maker
to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of Payee to any other or further action in any
circumstances without notice or demand.
(c) Maker and any endorser of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of
2
<PAGE> 3
limitations as a defense to any demand hereunder. To the fullest extent
permitted by law, the obligations of Maker hereunder shall not be subject to any
counterclaim, set-off, deduction, diminution, abatement, recoupment, deferment,
suspension, reduction or defense (other than the full and strict compliance by
Maker with those obligations) based on any claim that Maker may have against
Payee or any other person.
(d) No provision of this Note may be waived, modified or discharged orally,
but only by an agreement signed by the party against whom enforcement is sought.
(e) If any provision in or obligation under this Note shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
(f) This note and the rights and obligations of maker and payee hereunder
shall be governed by, and shall be construed and enforced in accordance with the
laws of the State of California except for such matters as are subject to the
General Corporation Law of the State of Delaware.
3
<PAGE> 4
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
day and year and at the place first above written.
MAKER
CHARLES R. WILLIAMSON
------------------------
Print Name
/s/CHARLES R. WILLIASON
------------------------
Signature
4
<PAGE> 5
TRANSACTIONS ON PROMISSORY NOTE
Amount of Outstanding
Amount of Principal Repaid on this Principal Balance on
Loan Made Date this Date
Date on this Date
- ---- ------------ ------------------------ --------------------
5
EXHIBIT 10.5
UNOCAL CORPORATION
2000 EXECUTIVE STOCK PURCHASE PROGRAM
THIS AWARD AGREEMENT (this "Agreement") dated March 16, 2000 is between
Unocal Corporation, a Delaware corporation (the "Company"), and the Participant
named below and constitutes the agreement of the parties as follows: the Company
agrees to loan to the Participant the amount set forth below (the "Loan") to
purchase and pay for shares of Common Stock of the Company (the "Common Stock")
in the open market, such purchase to commence on the date set forth below,
subject to the terms and conditions hereof (this "Award"). This Award is granted
pursuant to and subject to the terms of the Unocal Corporation 2000 Executive
Stock Purchase Program (the "Program"), attached hereto as Exhibit A, and any
rules or guides to administration adopted from time to time by the Management
Development and Compensation Committee or any successor committee appointed by
the Company's Board of Directors to administer the Program (the "Committee").
The Participant's obligation to repay the Loan shall be evidenced by a full
recourse note, in the form attached hereto as Exhibit B, executed by the
Participant and delivered to the Company on the Purchase Date. A signed
facsimile shall be deemed acceptable delivery.
Participant: Dennis P. R. Codon
Loan Amount: $2,500,000
Purchase Date(s)
Commencement: March 16, 2000
The Participant represents, warrants and agrees as follows:
1. The proceeds of the Loan will be used solely for the business purpose of
purchasing shares of the Common Stock;
2. The Loan is not being taken for personal, family or household purposes;
3. The taking and repayment of the Loan will not violate any other
agreement to which the Participant is a party or by which the Participant is
bound;
<PAGE> 2
4. The Participant is not in possession of any undisclosed information
concerning the Company which, if disclosed, would be material to investors in
the Common Stock; and
The Participant understands that purchases, sales and ownership of the
Common Stock are subject to the requirements of the Securities Act of 1933 and
the Securities Exchange Act of 1934 and agrees to comply with such laws and the
rules and regulations thereunder, including without limitation, restrictions on
the ability of affiliates of the Company to sell the Common Stock and the
reporting requirements of Section 16 of the Securities Exchange Act of 1934.
UNOCAL CORPORATION AGREED AND ACKNOWLEDGED:
(a Delaware corporation)
By: /s/TIMOTHY H. LING /s/DENNIS P.R. CODON
------------------------- -------------------------
Its: Chief Financial Officer and Participant's Signature
Executive Vice President,
North American Energy Operations
2
<PAGE>
EXHIBIT B
FULL RECOURSE
PROMISSORY NOTE
DUE MARCH 16, 2008
$2,500,000 March 16, 2000
- ----------
FOR VALUE RECEIVED, Dennis P.R. Codon, an individual ("Maker"),
unconditionally promises to pay to Unocal Corporation, a Delaware corporation
(together with any successor or assignee by operation of law or otherwise,
"Payee"), on the earlier of March 16, 2008 or such other date as provided
herein, in the manner and at the place hereinafter provided, the unpaid
principal amount of all advances made by Payee to Maker for the purposes of
Maker's purchase of common stock of Payee pursuant to the terms of the Unocal
Corporation 2000 Executive Stock Purchase Program (the "Program"). All advances
made under this Note shall be noted hereon; provided, however, that the failure
to make a notation shall not limit or otherwise affect the obligations of Maker
hereunder with respect to payments of principal or interest on this Note.
The initial principal amount of this Note is two million, five hundred
thousand dollars ($2,500,000). Such principal amount shall be increased by an
amount equal to any accrued but unpaid interest as set forth in the next
paragraph of this note and decreased by any of the funds not used to purchase
shares under the Program and by any repayments of principal. The principal
amount outstanding on March 16, 2005, shall be payable in three equal annual
installments on the March 16, 2006, March 16, 2007 and at maturity.
Maker also promises to pay interest on the unpaid principal amount of this
Note from the date such principal is advanced until such principal is paid in
full at a rate per annum equal to the lesser of: (i) the maximum amount
allowable pursuant to applicable law; or (ii) 6.8%. Interest on this Note shall
be computed on the basis of a 365-day year, based on the actual number of days
elapsed. Interest shall be payable in arrears [annually] on the sixteenth (16th)
day of each March (an "Interest Payment Date"), commencing on March 16, 2001,
upon any prepayment of this Note (to the extent accrued on the amount being
prepaid) and at maturity; provided that, prior to March 17, 2005, interest shall
be payable only in an amount equal to dividends paid on the shares of Common
Stock of Payee purchased for Maker under the Program, subject to proportionate
adjustment in the event of a stock split, stock dividend or other change in
capitalization. All interest accrued and unpaid as of any Interest Payment Date
shall be added to principal and accrue interest from such Interest Payment Date.
1. Payments; Voluntary Prepayment. All payments of principal and interest
in respect of this Note shall be made in lawful money of the United States of
America. Each payment made hereunder shall be credited first to interest then
due and the remainder of such payment shall be credited to principal, and
interest shall thereupon cease to accrue upon the principal so credited. Maker
shall have the right at any time and from time to time to prepay the principal
of this Note in whole or in part, without premium or penalty, such prepayment
hereunder being accompanied by interest on the principal amount of the Note
being prepaid to the date of prepayment. All voluntary prepayments shall be
applied to the remaining principal payments in chronological order of maturity.
2. Mandatory Prepayment.
(a) If there shall occur a termination for Cause or Voluntary Termination
(as such terms are defined in the Program) of Maker, the unpaid principal amount
of this Note together with accrued interest thereon shall become due and payable
on the 60th business day after such termination.
(b) If the Program is not approved by Payee's stockholders on or before
June 22, 2000, the unpaid principal of and all accrued and unpaid interest on
this Note shall become immediately due and payable.
<PAGE> 2
3. Full Recourse Note. This Note is a full recourse Note and Maker shall be
liable for the full payment of the principal of and interest
on this Note.
4. Events of Default. Each of the following shall constitute an Event of
Default:
(a) The failure by Maker to pay any principal under this Note when due,
whether at stated maturity, by acceleration, or otherwise, or the failure to pay
any interest or other amount due under this Note within five (5) days after the
date due;
(b) any challenge, or institution of any proceedings to challenge by Maker
of the validity, binding effect or enforceability of this Note or any
endorsement of this Note;
(c) any default by Maker of any other obligation under this Note; or
(d) The initiation of any proceeding relating to Maker under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt or receivership law or statute, whether filed by or against Maker, or the
assignment for the benefit of creditors by Maker.
Upon an Event of Default set forth in clauses (a) and (d) above, the
principal amount of this Note together with accrued interest thereon shall
become immediately due and payable, without presentment, demand, notice, protest
or other requirements of any kind (all of which are hereby expressly waived by
Maker). Upon any other Event of Default, Payee may, by written notice to Maker,
declare the principal amount of this Note together with accrued interest thereon
to be due and payable, and the principal amount of this Note together with such
interest shall thereupon immediately become due and payable without presentment,
further notice, protest or other requirements of any kind (all of which are
hereby expressly waived by Maker).
5. Set-Off. Payee shall be entitled to set-off against this Note any and
all amounts owed by Payee to Maker as and when such amounts become due and
payable, whether presently existing or hereafter incurred, to the maximum extent
allowable under applicable laws. To the extent that Maker's consent to the
set-off is required, this Note constitutes Maker's consent.
6. Miscellaneous.
(a) All notices and other communications provided for hereunder shall be in
writing (including facsimile or e-mail communication) and hand-delivered,
mailed, or telecopied as follows: if to Maker, at Maker's address specified
opposite Maker's signature below; and if to Payee, at 2141 Rosecrans Avenue,
Suite 4000, CA 90245; or in each case at such other address as shall be
designated by Payee or Maker. All such notices and communications shall, when
hand-delivered, mailed, or telecopied (with answer-back confirmation) be
effective when deposited in the mails, delivered or sent by telecopier.
(b) No failure or delay on the part of Payee or any other holder of this
Note to exercise any right, power or privilege under this Note and no course of
dealing between Maker and Payee shall impair such right, power or privilege or
operate as a waiver of any default or an acquiescence therein, nor shall any
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies expressly provided in this Note are
cumulative to, and not exclusive of, any rights or remedies that Payee would
otherwise have. No notice to or demand on Maker in any case shall entitle Maker
to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the right of Payee to any other or further action in any
circumstances without notice or demand.
(c) Maker and any endorser of this Note hereby consent to renewals and
extensions of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of
2
<PAGE> 3
limitations as a defense to any demand hereunder. To the fullest extent
permitted by law, the obligations of Maker hereunder shall not be subject to any
counterclaim, set-off, deduction, diminution, abatement, recoupment, deferment,
suspension, reduction or defense (other than the full and strict compliance by
Maker with those obligations) based on any claim that Maker may have against
Payee or any other person.
(d) No provision of this Note may be waived, modified or discharged orally,
but only by an agreement signed by the party against whom enforcement is sought.
(e) If any provision in or obligation under this Note shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
(f) This note and the rights and obligations of maker and payee hereunder
shall be governed by, and shall be construed and enforced in accordance with the
laws of the State of California except for such matters as are subject to the
General Corporation Law of the State of Delaware.
3
<PAGE> 4
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
day and year and at the place first above written.
MAKER
DENNIS P. R. CODON
------------------------
Print Name
/s/DENNIS P. R. CODON
------------------------
Signature
4
<PAGE> 5
TRANSACTIONS ON PROMISSORY NOTE
Amount of Outstanding
Amount of Principal Repaid on this Principal Balance on
Loan Made Date this Date
Date on this Date
- ---- ------------ ------------------------ --------------------
5
EXHIBIT 10.6
UNOCAL EMPLOYMENT AGREEMENT
This employment agreement (the "Agreement") is made effective as of March
27, 2000 by and between Unocal Corporation, a Delaware corporation (the
"Company") and Charles R. Williamson, Group Vice President, Asia Operations
("Employee").
In consideration of the mutual promises and agreements set forth herein,
the Company and Employee agree as follows:
1. Term.
1.1 The term of this Agreement (the "Term") shall commence on March 27,
2000 and shall be for three years, subject to earlier termination in accordance
with the provisions of Section 4 hereinbelow. If the Agreement has not been
subject to early termination in accordance with the provisions of Section 4
hereinbelow, beginning on March 27,2000 and on each day thereafter, the Term
shall automatically be extended for an additional day unless the Company
notifies Employee in writing that it does not wish to further extend the Term.
Notwithstanding the foregoing, this Agreement shall end automatically and
without additional notice on the date of the Company's Annual Meeting of
Shareholders that next follows the date of Employee's sixty-fifth (65th)
birthday.
2. Position and Title.
2.1 The Company on behalf of itself and its affiliates and subsidiaries
hereby employs Employee as Executive Vice President, International Energy
Operations, and Employee hereby accepts such employment.
2.2 Employee shall devote substantially all of his efforts on a full time
basis to the business and affairs of the Company and shall not engage in any
business or perform any services in any capacity whatsoever adverse to the
interests of the Company.
2.3 Employee shall at all times faithfully, industriously, and to the
best of his ability, experience, and talents, perform all of the duties of his
position.
3. Compensation.
3.1 As of the date of this Agreement, Employee's annual base salary is
$400,008. Employee's base salary and performance shall be reviewed periodically
at intervals approved by the Management Development and Compensation Committee
of the Board of Directors of the Company (the "Committee"), and Employee's base
salary may be increased from time to time based on merit or such other
consideration as the Committee may deem appropriate.
3.2 During the Term, Employee shall participate in all of the Company's
incentive plans, benefit plans and perquisites, and in any new or successor
incentive plans, benefit plans and perquisites, that are generally provided to
executives of the Company with a level of responsibility and stature comparable
to Employee. Performance goals, award opportunity, benefit levels, and
administrative guidelines for such plans shall be subject to review and approval
by the Committee.
4. Termination of Employment.
4.1 During the Term, the Company may terminate Employee's employment herein
at any time for Cause or as a result of a material breach by Employee of his
obligations under this Agreement, provided however that, except in the case of
conviction of a felony, the Company shall provide Employee with not less than
sixty (60) days prior written notice describing the behavior or conduct which is
alleged by the Company to constitute Cause,
<PAGE> 2
and Employee shall be provided with reasonable opportunity to correct such
behavior or conduct within the notice period. For purposes of this Agreement,
Cause shall be defined as any or all of the following:
(1) Conduct or action by Employee which, in the opinion of a majority of
the Board of Directors, is materially harmful to the Company;
(2) Willful failure by Employee to follow an order of the Board, except in
such case where the Employee believes in good faith that following
such order would be materially detrimental to the interests of the
Company;
(3) Employee's conviction of a felony.
4.2 In the event that Employee's employment is terminated by the Company
for any reason other than those set forth in Paragraph 4.1 hereinabove, or, (a)
Employee's annual base salary is reduced below the amount stated in Paragraph
3.1 hereinabove (unless such reduction is part of an across the board reduction
affecting all Company executives with a comparable level of responsibility,
title or stature), or (b) Employee is removed from or denied participation in
incentive plans, benefit plans, or perquisites generally provided by the Company
to other executives with a comparable level of responsibility, title or stature,
or (c) Employee's target incentive opportunity, benefits or perquisites are
reduced relative to other executives with comparable responsibility, title or
stature, or (d) Employee is assigned duties or obligations inconsistent with his
position with the Company or (e) There is a significant change in the nature and
scope of Employee's authority or his overall working environment, such event
shall be considered a Termination Without Cause.
4.3 In the event of Employee's Termination Without Cause at any time during
the Term of this Agreement, then:
(1) The Company shall pay Employee a lump-sum severance amount within
thirty (30) days following Termination Without Cause equal to three
(3) times the sum of (a) the higher of the Employee's annual base
salary at the time of Termination Without Cause or the annual base
salary stated in Paragraph 3.1 hereinabove, and (b) the annual target
Bonus applicable to Employee as of the beginning of the calendar year
in which such Termination Without Cause occurs, reduced by the amount
of any Unocal Employee Redeployment Program and/or Unocal Termination
Allowance benefits payable to Employee.
(2) The Company shall provide for Employee to receive medical, dental,
life, and disability insurance coverage for three (3) years following
Termination Without Cause at levels and a net cost to Employee
comparable to that provided to Employee immediately prior to
Employee's Termination Without Cause.
(3) The Company shall pay Employee an additional lump-sum severance amount
within thirty (30) days following Employee's Termination Without Cause
equal to three (3) times the base salary used to determine the lump-
sum severance benefit in paragraph 4.3(1) hereinabove, multiplied by
6% (.06).
4.4 In the event that during the Term of this Agreement Employee should
voluntarily resign from the Company, should terminate employment with the
Company due to death, permanent disability or incapacitation, or is terminated
by the Company for Cause or for a material breach by Employee of his obligations
under this Agreement, then Employee shall not be entitled to any of the
termination benefits provided for in Paragraph 4.3 hereinabove, and the Term of
the Agreement shall immediately end.
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<PAGE> 3
4.5 Employee shall not be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to Employee under any
provisions of this Agreement.
5. Change of Control.
5.1 In the event of a Change of Control of the Company at any time during
the Term of this Agreement, then:
(1) In the event of Employee's Termination Without Cause within a period
of twenty-four (24) months following the date of a Change of Control,
Employee shall be entitled to the termination benefits described in
Paragraph 4.3 hereinabove; provided that the lump-sum severance amount
paid to Employee under this Paragraph 5.1(1), which is calculated
based on Paragraphs 4.3(1) and 4.3(3) hereinabove, shall be (a)
reduced to equal the present value, determined in accordance with
Section 280G(d)(4) of the Internal Revenue Code (the "IRC"), of the
lump-sum severance amount which would otherwise be payable under
Paragraphs 4.3(1) and 4.3(3), and (b) reduced to offset compensation
and other earned income by Employee in the manner provided for in
Paragraphs 5.1(2) and 5.1(3) below.
(2) The lump-sum severance amounts payable to Employee under Paragraphs
4.3(1) and 4.3(3) shall be reduced by one hundred percent (100%) of
any compensation and other earned income (within the meaning of
Section 911(d)(2)(A) of the IRC) which is earned by Employee for
services rendered to persons or entities other than the Company or its
affiliates during the three years immediately following Employee's
Termination Without Cause.
(3) Not less frequently than annually beginning on the first anniversary
following Employee's Termination Without Cause, Employee shall account
to the Company with respect to all compensation and other earned
income earned by Employee which is required hereunder to be offset
against the lump-sum severance amount received by Employee from the
Company under Paragraphs 5.1(1) and 5.1(2). If the Company has paid a
lump-sum severance amount in excess of the amount to which Employee is
entitled (after giving effect to the offsets provided for above),
Employee shall reimburse the Company for such excess within thirty
(30) days of the determination of such excess. The requirements
imposed under this Paragraph 5.1(3) shall terminate thirty (30) days
immediately following the third anniversary of Employee's Termination
Without Cause.
5.2 For the purpose of this Agreement, a "Change of Control" shall mean:
(a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")(a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 5.2; or
3
<PAGE> 4
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company or
the acquisition of assets of another corporation (a "Business Combination"), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
5.3 Certain Additional Payments by the Company may be due as follows:
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any payment or
distribution by the Company or its affiliates to or for the benefit of the
Employee (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise but determined without regard to any
additional payments required under this Section 5.3), (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by the Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Employee shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Employee of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 5.3, if it shall be
determined that the Employee is entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that
could be paid to the Employee such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Employee
and the Payments, in the aggregate, shall be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 5.3(c), all determinations
required to be made under this Section 5.3, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
Ernst and Young or
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<PAGE> 5
such other certified public accounting firm as may be designated by the Employee
(the "Accounting Firm") which shall provide detailed supporting calculations
both to the Company and the Employee within 15 business days of the receipt of
notice from the Employee that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Employee shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 5.3, shall be paid by the Company to the
Employee within five days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding upon the Company and
the Employee. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 5.3(c) and the Employee thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Employee.
(c) The Employee shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Employee is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Employee in writing prior to the expiration of such
period that it desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by the Company
relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 5.3(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Employee to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Employee agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Employee to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Employee, on an interest-free basis and shall indemnify and hold
the Employee harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
the such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Employee with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-
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<PAGE> 6
Up Payment would be payable hereunder and the Employee shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Section 5.3(c), the Employee becomes entitled to receive any
refund with respect to such claim, the Employee shall (subject to the Company's
employing with the requirements of Section 5.3 promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 5.3(c), a determination is made that
the Employee shall not be entitled to any refund with respect to such claim and
the Company does not notify the Employee in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
6. Covenants.
6.1 Employee agrees that any and all confidential knowledge or information,
including but not limited to customer lists, books, records, data, formulae,
specifications, inventions, processes and methods, and developments and
improvements, which have been or may be obtained or learned by Employee in the
course of his employment with the Company, will be held confidential by
Employee, and that Employee shall not disclose the same to any person outside of
the Company either during his employment with the Company or after his
employment by the Company has terminated.
6.2 Employee agrees that upon termination of his employment with the
Company he will immediately surrender and turn over to the Company all books,
records, forms, specifications, formulae, data, and all papers and writings
relating to the business of the Company and all other property belonging to the
Company, it being understood and agreed that the same are the sole property of
the Company and that Employee shall not make or retain any copies thereof.
6.3 Employee agrees that all inventions, developments or improvements which
he has made or may make, conceive, invent, discover or otherwise acquire during
his employment with the Company in the scope of his responsibilities or
otherwise shall become the sole property of the Company.
6.4 Employee agrees to provide a release of any claims with respect to
termination of his or her employment on such form as requested by the Company
upon payment of the sums provided in Section 4.3 above.
7. Miscellaneous Provisions.
7.1 All terms and conditions of this Agreement are set forth herein, and
there are no warranties, agreements or understandings, express or implied,
except those expressly set forth herein.
7.2 Any modification to this Agreement shall be binding only if evidenced
in writing signed by all parties hereto.
7.3 Any notice or other communication required or permitted to be given
hereunder shall be deemed properly given if personally delivered or deposited in
the United States mail, registered or certified and postage prepaid, addressed
to the Company at 2141 Rosecrans Ave., Suite 4000, El Segundo, CA (Attention:
General Counsel), or to Employee at his or her most recent home address on file
with Company, or at other such addresses as may from time to time be designated
in writing by the respective parties.
7.4 The laws of the State of California shall govern the validity of this
Agreement, the construction of its terms, and the interpretation of the rights
and duties of the parties involved.
7.5 In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable,
the same shall not affect any other provision of this Agreement, but
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this Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been contained herein.
7.6 This Agreement shall be binding upon, and inure to the benefit of, the
successors and assigns of the Company and the personal representatives, heirs
and legatees of Employee.
7.7 "Bonus" refers to the Unocal Incentive Compensation Plan and any
replacement or successor plan thereof.
7.8 Company shall pay 90% (ninety percent) of Employee's out-of-pocket
litigation expenses, including reasonable attorney's fees, in connection with
any judicial proceeding to enforce this Agreement or construe or determine the
validity of this Agreement, whether or not the Employee is successful in such
proceeding.
7.9 The term "Company" shall include with respect to employment hereunder,
any subsidiary or affiliate of the Company as well as any successor employer
following a Change in Control.
7.10 This Agreement succeeds and replaces that Unocal Employment Agreement
which was effective July 28, 1998 between Company and Employee.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.
BY: /s/ FRANK C. HERRINGER
----------------------
Chairman of the Management Development and
Compensation Committee of the Unocal
Board of Directors
BY: /s/ CHARLES R. WILLIAMSON
-------------------------
EMPLOYEE
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