-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nh44nTrYDTIahUae7HmIB8N3Q5FsXGP6ntzGNDs8SFrmzlhoIUN95FF2NCpgGR3T Q1WoxOTasNLEMvUdykWhYw== 0000716039-00-000014.txt : 20000413 0000716039-00-000014.hdr.sgml : 20000413 ACCESSION NUMBER: 0000716039-00-000014 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000316 ITEM INFORMATION: FILED AS OF DATE: 20000412 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNOCAL CORP CENTRAL INDEX KEY: 0000716039 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 953825062 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08483 FILM NUMBER: 599187 BUSINESS ADDRESS: STREET 1: 2141 ROSECRANS AVE STREET 2: STE 4000 CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3107267600 8-K 1 LOANS TO AND PURCHASES OF COMMON STOCK BY OFFICERS 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 ------------------------ UNOCAL CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 1-8483 95-3825062 - -------------------------------------------------------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (310) 726-7600 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) 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 $27.82:
Number of Shares Name and Principal Positions Loan Amount Purchased ............................................................. Roger C. Beach ..................................................$ 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
1 2 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. 2 3 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 - ------------------------- ------------------------------- Joe D. Cecil Vice President and Comptroller 3 4 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. 4 EX-10.1 2 2000 EXECUTIVE STOCK PURCHASE PROGRAM 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. 2 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. 2 3 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 3 4 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 4 5 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. 5 6 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. 6 7 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. 7 EX-10.2 3 2000 STOCK PURCHASE PROGRAM - R.C. BEACH 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; 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/ROGER C. BEACH ------------------------- ------------------------- Its: Chairman of the Management Development and Participant's Signature Compensation Committee of the Unocal Board of Directors 2 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 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 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 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 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 EX-10.3 4 2000 STOCK PURCHASE PROGRAM - T. H. LING 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; 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 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. 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 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 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 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 EX-10.4 5 2000 STOCK PURCHASE PROGRAM - C.R. WILLIAMSON 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; 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 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. 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 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 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 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 EX-10.5 6 2000 STOCK PURCHASE PROGRAM - D. P.R. CODON 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; 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 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. 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 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 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 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 EX-10.6 7 UNOCAL EMPLOYMENT AGREEMENT - C. R. WILLIAMSON 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, 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. 2 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 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 4 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- 5 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 6 7 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 7 -----END PRIVACY-ENHANCED MESSAGE-----