-----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, Qa+siwCh4aGukL0ts+IEIyP30j46D0rKeRKgejsUmB9AtebA2vlRvNy6DSR9dGDN RTzQrbPW1ST1fxvnfnS0gQ== 0001047469-98-026326.txt : 19980703 0001047469-98-026326.hdr.sgml : 19980703 ACCESSION NUMBER: 0001047469-98-026326 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 21 FILED AS OF DATE: 19980702 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNION OIL CO OF CALIFORNIA CENTRAL INDEX KEY: 0000100880 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 951315450 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-58415 FILM NUMBER: 98660021 BUSINESS ADDRESS: STREET 1: 1201 W FIFTH ST CITY: LOS ANGELES STATE: CA ZIP: 90017 BUSINESS PHONE: 2139777600 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: S-3 SEC ACT: SEC FILE NUMBER: 333-58415-01 FILM NUMBER: 98660022 BUSINESS ADDRESS: STREET 1: 2141 ROSECRANS AVE STREET 2: STE 4000 CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3107267600 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNOCAL CAPITAL TRUST II CENTRAL INDEX KEY: 0001065172 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-58415-02 FILM NUMBER: 98660023 BUSINESS ADDRESS: STREET 1: 2141 ROSECRANS AVE., SUITE 4000 CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3107267600 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1998 REGISTRATION NOS. 333- ; 333- -01; 333- -02 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------------------- UNION OIL COMPANY OF CALIFORNIA (Exact name of Registrant as specified in its charter) CALIFORNIA 2141 Rosecrans Avenue, Suite 95-1315450 4000 (State or other jurisdiction El Segundo, California 90245 (I.R.S. Employer of incorporation or (310) 726-7600 Identification organization) Number) principal executive offices)
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) UNOCAL CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 2141 Rosecrans Avenue, Suite 95-3825062 4000 (State or other jurisdiction El Segundo, California 90245 (I.R.S. Employer of incorporation or (310) 726-7600 Identification organization) Number)
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) UNOCAL CAPITAL TRUST II (Exact name of Registrant as specified in its charter) DELAWARE 2141 Rosecrans Avenue, Suite TO BE APPLIED 4000 FOR (State or other jurisdiction El Segundo, California 90245 (I.R.S. Employer of incorporation or (310) 726-7600 Identification organization) Number)
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ---------------------------------- DENNIS P.R. CODON, ESQ. VICE PRESIDENT, CHIEF LEGAL OFFICER AND GENERAL COUNSEL UNOCAL CORPORATION 2141 ROSECRANS AVENUE, SUITE 4000 EL SEGUNDO, CALIFORNIA 90245 (310) 726-7600 (Name, address, including zip code, and telephone number, including the area code, of agent for service) WITH COPIES TO: DOUGLAS D. SMITH, ESQ. GIBSON, DUNN & CRUTCHER LLP ONE MONTGOMERY STREET SAN FRANCISCO, CALIFORNIA 94104 (415) 393-8200 ---------------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT. ---------------------------------- If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE.
PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE SECURITIES TO BE REGISTERED BE REGISTERED(1) PER UNIT(2) Union Oil Debt Securities(3)................................ Unocal Preferred Stock(3)................................... Unocal Common Stock(3)(4)................................... Union Oil and Unocal Warrants(7)............................ Unocal Guarantees of Union Oil Debt Securities(8)........... $1,200,000,000(5)(6) 100% Trust Preferred Securities of Unocal Capital Trust II representing indirectly undivided beneficial interests in Junior Subordinated Debentures of Unocal held by Unocal Capital Trust II.......................................... Unocal Guarantee of Trust Preferred Securities of Unocal Capital Trust II(9)....................................... PROPOSED TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED OFFERING PRICE(2) REGISTRATION FEE Union Oil Debt Securities(3)................................ Unocal Preferred Stock(3)................................... Unocal Common Stock(3)(4)................................... Union Oil and Unocal Warrants(7)............................ Unocal Guarantees of Union Oil Debt Securities(8)........... $1,200,000,000(5)(6) $354,000 Trust Preferred Securities of Unocal Capital Trust II representing indirectly undivided beneficial interests in Junior Subordinated Debentures of Unocal held by Unocal Capital Trust II.......................................... Unocal Guarantee of Trust Preferred Securities of Unocal Capital Trust II(9).......................................
(1) In United States dollars or the equivalent thereof in foreign currency or currency units. (2) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o). (3) Also includes such indeterminate amount of Union Oil Debt Securities and indeterminate numbers of shares of Unocal Preferred and Common Stock (including associated Preferred Stock Purchase Rights) as may be issued upon conversion or exchange of any other Union Oil Debt Securities, shares of Unocal Preferred Stock or Trust Preferred Securities of Unocal Capital Trust II and/or the Unocal Junior Subordinated Debentures that provide for conversion or exchange into such securities or upon exercise of Warrants for such securities. (4) Includes associated Preferred Stock Purchase Rights. Prior to the occurrence of certain events, the Rights will not be exercisable or evidenced separately from the Unocal Common Stock. (5) Such amount represents the aggregate of the principal amount of any Union Oil Debt Securities issued, the issue price of any Union Oil Debt Securities issued at an original issue discount, the liquidation preferences of any Unocal Preferred Stock and Trust Preferred Securities of Unocal Capital Trust II, the amount computed pursuant to Rule 457(c) for any Unocal Common Stock, the issue price of any Warrants and the exercise price of any Warrants. (6) No separate cash consideration will be received for the Union Oil Debt Securities, Unocal Preferred Stock or Unocal Common Stock issuable upon conversion or exchange of other Union Oil Debt Securities, Unocal Preferred Stock or Trust Preferred Securities of Unocal Capital Trust II and/or Unocal Junior Subordinated Debentures. (7) Warrants to purchase Union Oil Debt Securities, Unocal Preferred Stock or Unocal Common Stock may be sold separately or with Union Oil Debt Securities, Unocal Preferred Stock or Unocal Common Stock. (8) The Union Oil Debt Securities will be fully and unconditionally guaranteed as to the payment of principal, interest and premium, if any, by Unocal. No cash consideration will be received by Unocal for the Guarantees. (9) The Unocal Capital Trust II Preferred Securities will be guaranteed as to the payment of principal, interest and premium, if any, by Unocal. No cash consideration will be received by Unocal for the Guarantees. ---------------------------------- The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a) may determine. Pursuant to Rule 429 under the Securities Act of 1933, this Registration Statement contains a combined prospectus that also relates to up to $238,800,000 principal amount of Union Oil Debt Securities, Unocal Preferred Stock, Unocal Common Stock and Warrants to purchase Union Oil Debt Securities, Unocal Preferred Stock and Unocal Common Stock, registered on Form S-3 Registration Statement Nos. 33-54861 and 33-54861-01, which was declared effective on February 3, 1995. In the event any of such previously registered Preferred Stock, Common Stock, Debt Securities or Warrants to purchase Preferred Stock, Common Stock or Debt Securities are offered and sold prior to the effective date of this Registration Statement, the amount of such Preferred Stock, Common Stock, Debt Securities or Warrants to purchase Preferred Stock, Common Stock or Debt Securities will not be included in any Prospectus hereunder. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXPLANATORY NOTE This Registration Statement contains two forms of Prospectuses to be used in connection with offerings of the following securities: (1) debt securities (both senior and subordinated) of Union Oil, with guarantees thereof by Unocal, preferred stock and common stock of Unocal, and warrants to purchase debt securities of Union Oil, common stock of Unocal and preferred stock of Unocal; and (2) trust preferred securities of Unocal Capital Trust II, junior subordinated debentures of Unocal and guarantees by Unocal of trust preferred securities issued by Unocal Capital Trust II. Each offering of securities made under this Registration Statement will be made pursuant to one of these two Prospectuses, with the specification of the securities offered thereby set forth in an accompanying Prospectus Supplement. SUBJECT TO COMPLETION, DATED JULY 2, 1998 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. [LOGO] $ * UNION OIL COMPANY OF CALIFORNIA DEBT SECURITIES AND WARRANTS TO PURCHASE DEBT SECURITIES WITH PAYMENT OF PRINCIPAL, INTEREST AND PREMIUM, IF ANY, GUARANTEED BY UNOCAL CORPORATION ------------------------ UNOCAL CORPORATION COMMON STOCK, PREFERRED STOCK AND WARRANTS TO PURCHASE COMMON STOCK AND PREFERRED STOCK ------------------------ Union Oil Company of California (the "Company") intends to offer from time to time in one or more series debt securities consisting of unsecured debentures, notes or other evidences of indebtedness (the "Debt Securities"). At the option of the Company, the Debt Securities may be offered as Senior Debt Securities ("Senior Debt Securities") and as Subordinated Debt Securities ("Subordinated Debt Securities"). Unocal Corporation ("Unocal"), the parent company of the Company, will guarantee the payment of principal, interest and premium, if any, on the Debt Securities. The Company and Unocal may also offer from time to time warrants to purchase guaranteed Debt Securities ("Debt Warrants"), which may be issued independently or together with guaranteed Debt Securities. Unocal may offer from time to time Common Stock ("Unocal Common Stock"), Preferred Stock ("Unocal Preferred Stock") and warrants to purchase Unocal Common or Preferred Stock ("Equity Warrants"), which may be issued independently or together with Unocal Common Stock or Unocal Preferred Stock. Such Unocal Common Stock and Unocal Preferred Stock may also be issued upon conversion or exchange of Debt Securities and such Unocal Common Stock may be issued upon conversion of Unocal Preferred Stock. The Debt Securities, Debt Warrants, Unocal Common Stock, Unocal Preferred Stock and Equity Warrants are referred to collectively as the "Securities." No more than an aggregate of $ * public offering price of Securities, including the exercise price of Debt Warrants and Equity Warrants, may be sold pursuant to this Prospectus, subject to possible reduction as a result of the sale of other securities registered under the Registration Statement of which this Prospectus forms a part. The Securities may be sold for United States dollars, foreign currency or currency units. Certain specific terms of the particular Securities in respect of which this Prospectus is being delivered will be set forth in the accompanying Prospectus Supplement, including, where applicable, (i) in the case of Debt Securities, the title, aggregate principal amount, authorized denominations, maturity, interest rate (which may be fixed or variable) and time of payment of interest, terms for redemption, terms for sinking fund payments, terms for conversion or exchange into other Securities, currency or currencies of denomination and payment (if other than U.S. dollars), listing on a securities exchange and any other terms in connection with the offering and sale of the Debt Securities in respect of which this Prospectus is delivered, as well as the initial public offering price; (ii) in the case of Unocal Preferred Stock, the specific title, number of shares, dividend (including the method of calculation), seniority, liquidation, redemption, voting and other rights, terms for any conversion or exchange into other Securities, listing on a securities exchange, initial public offering price and any other terms; (iii) in the case of Unocal Common Stock, the number of shares and the terms of the offering thereof; and (iv) in the case of Debt Warrants and Equity Warrants, the designation and number, exercise price, any listing of the Debt Warrants, Equity Warrants or the underlying Securities on a securities exchange and any other terms in connection with the offering, sale and exercise of the Debt Warrants and Equity Warrants. Debt Securities of a series may be issued in registered form, in a form registered as to principal only, or in bearer form (with or without coupons attached), or any combination of such forms. In addition, all or a portion of the Debt Securities may be issued in temporary or definitive global form. Debt Securities in bearer form are offered only outside the United States to non-United States persons and to offices located outside the United States of certain United States financial institutions and other exempt persons. See "Limitations on the Issuance of Bearer Securities." THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------------------- The Securities will be sold directly, through agents designated from time to time or through underwriters or dealers, which may be a group of underwriters. The Securities may also be exchanged for outstanding securities of the Company or Unocal or both and resold by the holder pursuant to this Prospectus in the over-the-counter market, through negotiated transactions or otherwise, at market prices prevailing at the time of sale or at prices otherwise negotiated. The terms of any such exchange and the method of resale by the holder will be set forth in a Prospectus Supplement. If any agents of the Company or Unocal or any dealers or underwriters are involved in the sale of the Securities, the names of such agents, underwriters or dealers and any applicable commissions or discounts will be set forth in a Prospectus Supplement. THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. THE DATE OF THIS PROSPECTUS IS , 1998. - -------------------------- *$1,200,000,000 PLUS AMOUNT REMAINING UNSOLD UNDER REGISTRATION STATEMENT NOS. 33-54861 AND 33-54861-01. AVAILABLE INFORMATION Unocal is currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports (which contain summarized financial information regarding the Company), proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the following Regional Offices of the Commission: 7 World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may also be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, such reports, proxy statements and other information concerning Unocal may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, 17th Floor, New York, New York 10005, the Chicago Stock Exchange, 440 South LaSalle Street, Suite 518, Chicago, Illinois 60605-1070, and the Pacific Stock Exchange, 115 Sansome Street, 3rd Floor, San Francisco, California 94104. The Commission maintains a Web site at http://www.sec.gov that contains reports, proxy statements, and other information concerning Unocal, which files electronically with the Commission. Unocal and the Company have filed registration statements on Form S-3 with the Commission (together with all amendments and exhibits, the "Registration Statements") under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does not contain all of the information included in the Registration Statements, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Statements contained herein concerning the provisions of any document do not purport to be complete and, in each instance, are qualified in all respects by reference to the copy of such document filed as an exhibit to the Registration Statements or otherwise filed with the Commission. Each such statement is subject to and qualified in its entirety by such reference. Reference is made to such Registration Statements and to the exhibits relating thereto for further information with respect to Unocal, the Company and the securities offered hereby. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed by Unocal with the Commission and are incorporated herein by reference (Commission File No. 1-8483): 1. Unocal's Annual Report on Form 10-K for the year ended December 31, 1997; 2. Unocal's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998; and 3. Unocal's Current Reports on Form 8-K dated January 28, 1998, February 13, 1998, February 25, 1998, April 15, 1998, April 28, 1998, June 3, 1998, and June 17, 1998 (as amended by Amendment No. 1 thereto on Form 8-K/A). All documents filed by Unocal with the Commission pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the securities offered hereby shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified and superseded, to constitute a part of this Prospectus. 2 Unocal will provide without charge to each person to whom a copy of this Prospectus is delivered, upon the written or oral request of any such person, a copy of any or all of the documents incorporated herein by reference (not including the exhibits to such documents, unless such exhibits are specifically incorporated by reference in such documents). Requests for such copies should be directed to: Stockholder Services Department, Unocal Corporation, 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245; telephone number (310) 726-7600. USE OF PROCEEDS The proceeds received by the Company from the sale of the Debt Securities and Debt Warrants offered hereby, will be used by the Company and its affiliates for general corporate purposes. The proceeds received by Unocal from the sale of the Unocal Preferred Stock, Unocal Common Stock and Equity Warrants offered hereby will be used for general corporate purposes, which are expected to include contributions or loans to the Company and its affiliates. THE COMPANY AND UNOCAL Unocal is a leading global resource and project development company, with major oil and gas exploration and production activities in Asia, the United States Gulf of Mexico and Latin America. Unocal is also the world's leading producer of geothermal energy; a provider of electrical power; and a manufacturer and marketer of nitrogen-based fertilizers, petroleum coke, graphites and specialty minerals. Unocal conducts virtually all of its operations through the Company and the Company's subsidiaries. As of March 31, 1998, the Company had approximately $7.6 billion of assets. The Company was incorporated in California in 1890 and in 1983 became a wholly owned operating subsidiary of Unocal. As of March 31, 1998, the net assets of the Company represented approximately 100% of the net assets of Unocal, based on book value. The Company is a California corporation and Unocal is a Delaware corporation, each with its principal executive office at 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245, and its telephone number at that address is (310) 726-7600. 3 HISTORICAL CONDENSED CONSOLIDATED SELECTED FINANCIAL INFORMATION The following historical condensed consolidated financial information of Unocal and its subsidiaries, including the Company, for the three months ended March 31, 1998 and 1997 and the five years ended December 31, 1997, has been derived from and is qualified in its entirety by the detailed financial statements included in the documents incorporated by reference herein. See "Incorporation of Certain Documents by Reference." SELECTED FINANCIAL INFORMATION OF UNOCAL (MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31 YEAR ENDED DECEMBER 31, -------------------- ----------------------------------------------------- 1998 1997 1997 1996 1995 1994 1993 --------- --------- --------- --------- --------- --------- --------- (UNAUDITED) INCOME STATEMENT DATA Revenues (1)............................. $ 1,207 $ 1,456 $ 6,064 $ 5,328 $ 4,389 $ 4,272 $ 4,730 Earnings from continuing operations (2).................................... 18 188 669 456 249 110 272 Basic per common share............... 0.07 0.75 2.69 1.54 0.87 0.30 0.98 Diluted per common share............. 0.07 0.73 2.65 1.53 0.86 0.30 0.98 Net earnings (3)......................... 18 144 581 36 260 (153) 213 Basic per common share............... 0.07 0.57 2.34 (0.15) 0.91 (0.78) 0.73 Diluted per common share............. 0.07 0.56 2.31 (0.07) 0.90 (0.78) 0.73
AT MARCH 31, AT DECEMBER 31, -------------------- ----------------------------------------------------- 1998 1997 1997 1996 1995 1994 1993 --------- --------- --------- --------- --------- --------- --------- (UNAUDITED) BALANCE SHEET DATA Total assets (4)......................... $ 7,578 $ 9,430 $ 7,530 $ 9,123 $ 9,891 $ 9,337 $ 9,706 Long-term debt (4)....................... 2,427 2,814 2,169 2,940 3,692 3,452 3,455 Trust Convertible Preferred Securities... 522 522 522 522 -- -- -- Stockholders' equity (5)................. 2,246 2,330 2,314 2,275 2,930 2,815 3,129
- ------------------------ (1) Excludes revenues from discontinued operations. (2) Earnings from continuing operations are before: losses from discontinued operations of $44 million ($0.18 basic and $0.17 diluted per common share) in the three months ended March 31, 1997, $50 million ($0.20 basic and $0.19 diluted per common share) in 1997 and $420 million ($1.69 basic and $1.60 diluted per common share) in 1996; gains from discontinued operations of $11 million ($0.04 basic and diluted per common share) in 1995, $14 million ($0.06 basic and diluted per common share) in 1994, and $71 million ($0.29 basic and diluted per common share) in 1993; a loss from the early extinguishment of debt of $38 million ($0.15 basic and diluted per common share) in 1997; and the cumulative effect of changes in accounting principles which consisted of charges of $277 million ($1.14 basic and diluted per common share) in 1994 and $130 million ($0.54 basic and diluted per common share) in 1993. (3) Per share amounts are after reductions to net earnings for dividends on preferred stock of $18 million in 1996 and $36 million in 1995, 1994, and 1993; and a non-cash charge related to the exchange of preferred stock of $54 million in 1996. (4) The reduction in assets in 1997 was due principally to the sale of the West Coast refining, marketing and transportation assets (the "West Coast assets") with the proceeds used largely to reduce debt and purchase treasury stock. The reduction in assets in 1996 was due primarily to an accrual for the loss on the planned sale of the West Coast assets and the sale of California oil and gas properties with the proceeds used to reduce debt. (5) Includes preferred stock of $513 million in 1995, 1994 and 1993. 4 RATIOS OF UNOCAL AND THE COMPANY (UNAUDITED)
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31, ------------------------ ------------------------------------- 1998 1997 1997 1996 1995 ----- ----- ----- ----- ----- Ratio of Earnings to Fixed Charges (1) Unocal...................................................... 2.4 5.1 3.7 3.2 2.2 Company..................................................... 2.8 5.7 4.2 3.3 2.2 Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends(1)(2) Unocal...................................................... 2.4 5.1 3.7 2.9 1.9 1994 1993 ----- ----- Ratio of Earnings to Fixed Charges (1) Unocal...................................................... 1.7 2.2 Company..................................................... 1.7 2.2 Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends(1)(2) Unocal...................................................... 1.4 1.9
- ------------------------ (1) For purposes of this ratio, earnings consist of earnings from continuing operations (before discontinued operations, an extraordinary item (the early extinguishment of debt) and the cumulative effect of changes in accounting principles) before taxes on income and fixed charges. Fixed charges consist of interest on indebtedness and capital lease obligations, amortization of debt discount, debt premium and issuance expense and that portion of operating lease rental expense which is representative of the interest factor (assumed to be one-third). (2) For purposes of this ratio, preferred stock dividends are adjusted to a pre-tax basis. DESCRIPTION OF THE DEBT SECURITIES Described below are certain general terms and provisions of the Debt Securities to which a Prospectus Supplement may relate or for which Debt Warrants may be exercisable. The particular terms of the Debt Securities and the extent, if any, to which such general provisions may apply to a particular series of Debt Securities ("Offered Debt Securities") will be described in the Prospectus Supplement relating to such Offered Debt Securities. The Senior Debt Securities will be issued under an Indenture dated as of February 3, 1995 (the "Senior Indenture") among the Company, Unocal and Chemical Trust Company of California (which was succeeded by merger effective as of November 15, 1997, by Chase Manhattan Bank and Trust Company, National Association), as trustee (the "Senior Trustee"). The Subordinated Debt Securities will be issued under a proposed indenture (the "Subordinated Indenture") among the Company, Unocal and a trustee to be named in any Prospectus Supplement relating to Subordinated Debt Securities (the "Subordinated Trustee"). The Senior Indenture and the Subordinated Indenture are referred to collectively as the "Indentures" and individually as an "Indenture." The Senior Indenture incorporates, and the Subordinated Indenture will incorporate, the Standard Multiple-Series Indenture Provisions, January 1991, dated as of January 2, 1991 (the "Standard Provisions"), of the Company and Unocal, which is filed as an exhibit to the Registration Statement. Neither of the Indentures will limit the amount of Debt Securities which may be issued thereunder (Section 2.01). Each of the Indentures will provide that Debt Securities of any series may be issued thereunder up to the aggregate principal amount which may be authorized from time to time by the Company. The following summaries of certain provisions of the Debt Securities and the Indentures do not purport to be complete and are subject to, and qualified in their entirety by reference to, all provisions of the Indentures, including the definitions of certain terms used therein. Wherever particular sections of the Indentures or terms that are defined in the Indentures are referred to herein or in an accompanying Prospectus Supplement, it is intended that such sections or terms will be incorporated by reference as a part of the statements made herein or therein, and the statements are qualified in their entirety by such reference. Unless otherwise indicated, references in this Prospectus or in an accompanying Prospectus Supplement to particular sections of the Indentures are to the Standard Provisions. Unless otherwise indicated, when used in this Prospectus the term "principal" will mean principal of, and any premium on, the Debt Securities. 5 GENERAL The Debt Securities will be direct, unsecured obligations of the Company and will be fully and unconditionally guaranteed as to payment by Unocal. The Senior Debt Securities and the related Guarantees will rank on a parity with all other unsecured and unsubordinated indebtedness of the Company and Unocal, respectively, and will have a right of payment prior to any Subordinated Debt Securities, in the case of Senior Debt Securities, and prior to the Guarantees of Subordinated Debt Securities, in the case of the Guarantees of the Senior Debt Securities. The indebtedness represented by the Subordinated Debt Securities and the Guarantees of the Subordinated Debt Securities will be subordinated in right of payment to the prior payment in full of the Senior Debt of the Company and Unocal, respectively, as described below under "Subordination." The Debt Securities may be issued in one or more series with the same or various maturities at or above par or with an original issue discount. Offered Debt Securities bearing no interest or interest at a rate which at the time of issuance is below market rates ("Original Issue Discount Securities") will be sold at a discount (which may be substantial) below their stated principal amount. In the event of redemption or acceleration of the maturity of an Original Issue Discount Security, the amount payable to the holder of such Security upon such redemption or acceleration will be determined in accordance with the terms of the Security, but will be an amount less than the amount payable at the Stated Maturity of such Security. Reference is made to the Prospectus Supplement relating to the Offered Debt Securities for the following terms thereof: (1) the title of the Offered Debt Securities; (2) any limit upon the aggregate principal amount of the Offered Debt Securities; (3) the percentage of their principal amount for which the Offered Debt Securities will be issued; (4) the date or dates on which the principal of the Offered Debt Securities will be payable; (5) the rate or rates (which may be fixed or variable) at which the Offered Debt Securities will bear interest, if any, or the method by which such rate or rates will be determined; (6) the date or dates from which any such interest will accrue or the method by which such date or dates will be determined; (7) the dates on which payment of any such interest will be payable and the record dates for such interest payment dates; (8) the place or places where the principal of and any interest on the Offered Debt Securities (and Coupons, if any) will be payable and the offices or agencies of the Company maintained for such purposes and each office or agency where the Offered Debt Securities may be presented for registration of transfer or exchange; (9) the period or periods within which, the price or prices at which, and the terms and conditions upon which, the Offered Debt Securities may be redeemed in whole or in part, at the option of the Company; (10) the obligation of the Company, if any, to redeem, repay or purchase, the Offered Debt Securities pursuant to any sinking fund or analogous provision or at the option of a holder of an Offered Debt Security and the period or periods within which, the price or prices at which, and the terms and conditions upon which, the Offered Debt Securities will be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (11) any additional restrictive covenants included for the benefit of holders of the Offered Debt Securities; 6 (12) any additional Events of Default with respect to the Offered Debt Securities; (13) the principal amount of the Offered Debt Securities that are Original Issue Discount Securities payable upon declaration of acceleration of the maturity of the Offered Debt Securities; (14) the currency or currency unit for which the Offered Debt Securities may be purchased, the currency or currency unit in which the payment of principal and interest on such Offered Debt Securities will be payable, the right of the Company or the holder to elect a currency different from that in which the Offered Debt Securities are denominated for payments of principal and interest, and the Exchange Rate Agent, if any; (15) any index used to determine the amount of payments of principal of and interest on the Offered Debt Securities; (16) whether the Offered Debt Securities will be issued in registered form, in a form registered only as to principal, or in bearer form, or any combination thereof; (17) whether and on what terms the Offered Debt Securities will be convertible or exchangeable into shares of Unocal Preferred Stock or Unocal Common Stock; (18) whether any of the Offered Debt Securities will be issuable initially as a temporary Global Security (as defined in "Form, Exchange, Registration and Transfer") and whether any of the Offered Debt Securities are to be issuable as a permanent Global Security, or any combination thereof and, if so, the Depositary (as defined in "Global Securities") or Depositaries therefor; (19) if a temporary Global Security is to be issued with respect to such series, the requirements for certification of ownership by non-United States persons that will apply prior to (a) the issuance of a definitive Bearer Security (as defined in "Form, Exchange, Registration and Transfer") or (b) the payment of interest on an Interest Payment Date that occurs before the issuance of a definitive Bearer Security; (20) the circumstances under which Offered Debt Securities may be exchanged for Debt Securities issued in a different form; (21) any paying agents, transfer agents, registrars or other agents with respect to the Offered Debt Securities; (22) whether and under what circumstances the Company will pay additional amounts to any holder of Offered Debt Securities who is not a United States person (as defined under "Limitations on the Issuance of Bearer Securities") in respect of any tax, assessment or governmental charge required to be withheld or deducted and, if so, whether the Company will have the option to redeem rather than pay any additional amounts; (23) whether any of the provisions described in "Certain Covenants of Unocal," "Events of Default," "Subordination," "Conversion and Exchange," "Form, Exchange, Registration and Transfer," and "Defeasance" will not apply to the Offered Debt Securities; (24) any other terms of the Offered Debt Securities not inconsistent with the applicable Indenture; and (25) a discussion of certain Federal income tax considerations, if required. INTEREST AND FOREIGN CURRENCY Principal and interest will be payable, and the Offered Debt Securities will be transferable, in the manner described in the Prospectus Supplement relating to such Offered Debt Securities. 7 If any of the Offered Debt Securities are sold for any foreign currency or currency unit or if principal of or any interest on any of the Offered Debt Securities is payable in any foreign currency or currency unit, the restrictions, elections, tax consequences, specific terms and other information with respect to such Offered Debt Securities and such foreign currency or currency unit will be specified in a Prospectus Supplement. GUARANTEES Under the terms of the Indentures and subject to the provisions thereof, Unocal will fully and unconditionally guarantee to the holders from time to time of the Debt Securities: (i) the full and prompt payment of the principal of any Debt Securities and Coupons, if any, when and as the same become payable, whether at the Stated Maturity thereof, by acceleration, call for redemption or otherwise, and (ii) the full and prompt payment of any interest on any Debt Securities and Coupons, if any, when and as the same becomes payable. The Guarantees will remain in effect until the entire principal of and interest on the Debt Securities has been paid in full or otherwise discharged in accordance with the provisions of the Indentures (Section 5.01). In the event of a default in the payment of principal of any Debt Security when and as the same becomes payable, whether at the Stated Maturity thereof, by acceleration, call for redemption or otherwise, or in the event of a default in any sinking fund payment, or in the event of a default in the payment of any interest on any Debt Security when and as the same becomes payable, the Trustee has the right to proceed directly against Unocal without first proceeding against the Company or exhausting any other remedies which the Trustee may have (Section 5.02). Any right of payment of the holders of Senior Debt Securities under the related Guarantees will be prior to the right of payment of the holders of Subordinated Debt Securities under the related Guarantees. CERTAIN COVENANTS OF UNOCAL LIMITATIONS ON LIENS. The Senior Indenture provides that neither Unocal nor any Restricted Subsidiary will issue, assume or guarantee any indebtedness for money borrowed ("Debt") that is secured by a Mortgage upon (i) any domestic oil or gas property of Unocal or a Restricted Subsidiary, (ii) any principal domestic refining or manufacturing plant of Unocal or a Restricted Subsidiary, or (iii) shares of stock or indebtedness of any Restricted Subsidiary, unless the Senior Debt Securities will be secured equally and ratably with or prior to such Debt. This covenant will not apply to (a) Mortgages on property or securities of a corporation when it becomes a Restricted Subsidiary, (b) purchase money Mortgages, (c) Mortgages existing at the time of acquisition of property pursuant to a merger, consolidation or purchase of substantially all the assets of the Seller, (d) any Mortgage securing Debt owing by a Restricted Subsidiary to Unocal or to another Restricted Subsidiary, (e) Mortgages on particular property incurred in connection with the exploration, drilling, development, repair, alteration or improvement of such property, (f) Mortgages on current assets or other personal property to secure Debt maturing in not more than one year, or extensions, renewals or replacements of Mortgages referred to in (a) through (e). Notwithstanding the foregoing, Unocal or one or more Restricted Subsidiaries may issue, assume or guarantee Debt secured by a Mortgage which would otherwise be subject to the foregoing restrictions if the aggregate amount of such Debt, together with the aggregate principal amount of all other such Debt of Unocal and its Restricted Subsidiaries then outstanding, does not at such time exceed 20% of the Consolidated Net Assets of Unocal (Senior Indenture Section 5.04). The following types of transactions, among others, will not be deemed to create Debt secured by a Mortgage: (a) the sale or transfer of oil, oil shale, gas or other minerals in place for a period of time until, or in an amount such that, the transferee will realize therefrom a specified amount of money (however determined) or a specified amount of such minerals or the sale or transfer of any other interest in property of the character commonly referred to as a "production payment" and (b) the placing of any Mortgage in favor of domestic or foreign governmental bodies or agencies to secure payment, or the performance of any other obligations, pursuant to any contract or statute or to secure any indebtedness incurred for the 8 purpose of financing or refinancing all or a part of the purchase price or the cost of construction of the property subject to such Mortgage (Senior Indenture Section 5.04). The term "Mortgage" is defined as any mortgage, pledge, lien, security interest, conditional sale or other title retention agreement or other similar encumbrance (Senior Indenture Section 1.01). The term "oil or gas property" is defined as any interest owned by Unocal or a Restricted Subsidiary in land which in the opinion of Unocal's Board of Directors is capable of producing crude oil, natural gas or other hydrocarbons in paying quantities and any interest in such substances produced or to be produced (or the proceeds thereof) from said lands, but not including exploration or production facilities or other improvements on said lands (Senior Indenture Section 5.04). The term "Consolidated Net Assets" is defined as the total amount of assets (less applicable reserves and other properly deductible items) of Unocal and its consolidated Subsidiaries after deducting therefrom all liabilities and liability items except Long-Term Debt, stockholders' equity and deferred income taxes, which under generally accepted accounting principles would be included on such consolidated balance sheet (Senior Indenture Section 1.01). The term "Restricted Subsidiary" is defined as the Company and any other "Subsidiary" (i) substantially all of the assets and operations of which are located within any one or more of the States of the United States and (ii) which has assets in excess of 2% of the total consolidated assets of Unocal and its consolidated Subsidiaries. The term "Subsidiary" is defined as any corporation, association, or other business entity of which Unocal, either directly or indirectly, has either (i) the voting power to elect a majority of the directors of such corporation or (ii) other ownership interest representing more than 50% ownership of such entity (Senior Indenture Section 1.01). LIMITATIONS ON SALE AND LEASEBACK. Unocal will not, nor will it permit any Restricted Subsidiary to, enter into any sale and leaseback arrangement (where the lease runs for a term of more than five years) involving any domestic real property, unless (i) Unocal or such Restricted Subsidiary is not restricted by the above provisions from incurring Debt secured by a Mortgage on such property or (ii) Unocal will apply within 90 days an amount equal to the greater of (a) the fair value (as determined by the Board of Directors of Unocal) of such property or (b) the proceeds of the sale of such property, to the retirement (other than any mandatory retirement) of Long-Term Debt of Unocal or a Restricted Subsidiary (other than Debt owned by Unocal or a Restricted Subsidiary and Debt subordinated to the Senior Debt Securities) (Senior Indenture Section 5.05). The foregoing limitations will not apply to any sale and leaseback between Unocal and any of its Restricted Subsidiaries or between any of its Restricted Subsidiaries. RESTRICTIONS ON MERGER AND SALE OF ASSETS. Neither the Company nor Unocal may consolidate with or merge into any other corporation, or transfer its properties as an entirety or substantially as an entirety to any person, unless (i) the person (if other than the Company or Unocal) formed by or resulting from any such consolidation or merger or which has received the transfer of such property and assets will be a corporation organized under the laws of the United States or any state or territory thereof or the District of Columbia and will assume payment of the principal of, and interest on, the Debt Securities and the performance and observance of the Indentures and (ii) immediately after the consolidation, merger, sale or conveyance, the surviving corporation or the corporation to which the sale or conveyance was made will not be in default under either Indenture (Section 12.01). EVENTS OF DEFAULT The Senior Indenture defines, and the Subordinated Indenture will define, an Event of Default with respect to any series of Debt Securities as being any one of the following events: (i) default in the payment of any interest on any Debt Security of that series when due, continued for 30 days after written notice has 9 been given by the Trustee to the Company or Unocal or by a holder to the Company and the Trustee, (ii) default in the payment of the principal of a Debt Security of that series when due, (iii) default in the deposit of any sinking fund payment when and as due by the terms of a Debt Security of such series, continued for 30 days after written notice has been given by the Trustee to the Company or Unocal or by a holder to the Company and the Trustee, (iv) default in any material respect in the performance in any other of the Company's or Unocal's material covenants in the applicable Indenture (other than a covenant included in such Indenture solely for the benefit of another series of Debt Securities), continued for 90 days after written notice has been given by the Trustee to the Company or Unocal or by holders of at least 25% in principal amount of the Outstanding Debt Securities of such series to the Company and the Trustee, (v) a default resulting in acceleration of any other indebtedness for borrowed money, in an aggregate principal amount exceeding $50,000,000, of the Company or Unocal under the terms of the instrument or instruments under which such indebtedness is issued or secured, unless such acceleration is annulled, or such indebtedness is discharged, or there is deposited in trust a sum of money sufficient to discharge such indebtedness, within 20 days after written notice has been given by the Trustee to the Company and Unocal or by holders of at least 25% in principal amount of the Outstanding Debt Securities of such series to the Company, Unocal and the Trustee, and (vi) certain events of bankruptcy, insolvency or reorganization (Section 7.01). No holder of any Debt Security of a series will have any right to institute any proceeding with respect to the applicable Indenture or for any remedy thereunder, unless such holder previously has given to the Trustee written notice of an Event of Default with respect to such series and unless the holders of at least 25% in aggregate principal amount of the Debt Securities of that series at the time outstanding have made written request upon the Trustee, and have offered reasonable security or indemnity, to institute such proceeding as trustee under such Indenture, and the Trustee for 60 days shall have failed to institute such proceeding. However, the right of any holder of any Debt Security to institute suit for enforcement of any payment of principal of and interest on such Debt Security on or after the due date expressed in such Debt Security may not be impaired or affected without such holder's consent (Section 7.04). The holders of a majority in principal amount of Debt Securities of any series at the time outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to Debt Securities of that series, provided that such holders have offered reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by the Trustee in compliance with any such direction and subject to certain other restrictions (Sections 7.06 and 8.02(d)). Unocal and the Company will be required to furnish to the Trustee within 120 days after the end of each fiscal year a statement as to their respective compliance with all conditions and covenants under the Indentures (Sections 4.06 and 5.07). MANDATORY PREPAYMENT The provisions of each of (i) the $1,000,000,000 Credit and Guarantee Agreement, dated as of October 10, 1997, among the Company and Unocal Canada Limited, as borrowers, Unocal, as guarantor, and a syndicate of banks, and (ii) the $250,000,000 Credit and Guarantee Agreement, dated as of December 15, 1993, as amended, among Unocal Thailand, Ltd.-Thailand Branch, as borrower, the Company and Unocal, as guarantors, and a syndicate of banks, provide for the termination of the loan commitments thereunder and require the prepayment of all outstanding loans and all other amounts owing thereunder in the event (a) any person or group becomes the beneficial owner of more than 30% of the then outstanding voting stock of Unocal, otherwise than in a transaction having the approval of the Board of Directors of Unocal, at least a majority of which are continuing directors, or (b) continuing directors shall cease to constitute at least a majority of the Board of Directors of Unocal. The Company or Unocal may include similar or different mandatory prepayment provisions in other borrowing instruments including, without limitation, Debt Securities issued in the future. There can be no assurance that the Company 10 will have the funds available to prepay such amounts if required to do so under any of these mandatory prepayment provisions. SUBORDINATION The indebtedness represented by the Subordinated Debt Securities and the Guarantees of Subordinated Debt Securities will be subordinate and junior in right of payment to the prior payment in full of all Senior Debt of the Company or Unocal, as the case may be, whether outstanding on the date of the Subordinated Indenture or thereafter incurred. "Senior Debt" is defined as (i) all indebtedness of the Company or Unocal, as the case may be, for borrowed money, (ii) all indebtedness for borrowed money of others guaranteed by the Company or Unocal and (iii) any obligation of the Company or Unocal under any interest rate or currency swap agreement, in each case whether outstanding on the date of the Indenture or incurred thereafter that is not by its terms subordinate and junior in right of payment to any other indebtedness of the Company or Unocal, as the case may be, and, in the case of the Company, includes all indebtedness at any time evidenced by Senior Debt Securities (Subordinated Indenture Section 16.09). In the event (i) of any liquidation, dissolution or other winding up of the Company or Unocal, or of any receivership, insolvency, bankruptcy, readjustment, reorganization or other similar proceedings relative to the Company or Unocal or their respective property, all principal of and any interest due on all Senior Debt will be paid in full, or provided for, before any principal, sinking fund, if any, or interest payment is made on the Subordinated Debt Securities, in the case of the Company, or the Guarantees of Subordinated Debt Securities, in the case of Unocal, or (ii) that the Subordinated Debt Securities are declared due and payable because of the occurrence of an Event of Default (under circumstances such that the preceding clause (i) will not be applicable), the holders of the Subordinated Debt Securities will be entitled to payment only after all principal of and any interest due on the Senior Debt has been paid or has been provided for (Subordinated Indenture Section 16.01). By reason of such subordination, creditors of the Company who are holders of Senior Debt Securities may recover more, ratably, than holders of Subordinated Debt Securities. CONVERSION AND EXCHANGE The terms, if any, on which Offered Debt Securities are convertible into or exchangeable for Unocal Preferred Stock or Unocal Common Stock will be set forth in the Prospectus Supplement relating thereto. Such terms may include provisions for conversion or exchange, either mandatory, at the option of the holder or at the option of the Company. FORM, EXCHANGE, REGISTRATION AND TRANSFER The Debt Securities may be issued in fully registered form without coupons, in a form registered as to principal only with or without bearer coupons ("Registered Securities") or in bearer form with or without coupons ("Bearer Securities") or any combination thereof. Debt Securities may also be issued in whole or in part, in the form of one or more temporary or permanent global securities (each a "Global Security"). Unless otherwise specified in the applicable Prospectus Supplement relating to the Offered Debt Securities, the Debt Securities will be only Registered Securities. The Debt Securities denominated in United States Dollars will be issued, unless otherwise set forth in the applicable Prospectus Supplement relating to the Offered Debt Securities, in denominations of $1,000 for Registered Securities and in denominations of $5,000 for Bearer Securities, and in any integral multiple of such denominations (Section 2.02). See, however, "Limitations on the Issuance of Bearer Securities" below. One or more Global Securities will be issued in a denomination or aggregate denominations equal to the aggregate principal amount of Outstanding Debt Securities of the series to be represented by such Global Security or Securities. The 11 Prospectus Supplement relating to a series of Debt Securities denominated in a foreign or composite currency will specify the denomination thereof. Registered Securities of any series (other than a Global Security, except as set forth below) will be exchangeable for other Registered Securities of the same series and of a like aggregate principal amount and tenor of different authorized denominations. In addition, if Debt Securities of any series are issuable as both Registered Securities and Bearer Securities, at the written request of the holder, and subject to the terms of the applicable Indenture, Bearer Securities (with all unmatured coupons, except as provided below, and all mature coupons in default) of such series will be exchangeable into Registered Securities of the same series of any authorized denominations and of a like aggregate principal amount and tenor. No Bearer Securities will be delivered in the United States. Bearer Securities with coupons appertaining thereto surrendered in exchange for Registered Securities between a Regular Record Date, or, in certain circumstances a Special Record Date, and the relevant date for payment of interest must be surrendered without the coupon relating to such date for payment of interest and such interest will not be payable in respect of the Registered Security issued in exchange for such Bearer Security, but will be payable only to the holder of such coupon when due in accordance with the terms of the applicable Indenture. Unless otherwise stated in a Prospectus Supplement, Registered Securities will not be exchangeable into Bearer Securities. If a holder elects to receive a definitive Bearer Security, rather than hold an interest in a permanent global Bearer Security, then, at the option of the Company, such holder must pay to the Company a service charge and a proportionate share of the cost of printing such definitive Bearer Security (Section 2.05). Debt Securities may be presented for exchange as provided above, and Registered Securities (other than a Global Security) may be presented for registration of transfer (with the form of transfer endorsed thereon duly executed), at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose with respect to any series of Debt Securities and specified in the applicable Prospectus Supplement, upon payment of any required service charges and taxes and other governmental charges. The holders of the Debt Securities will be required to pay all service charges for the exchange or transfer of any Debt Security, except the Company shall pay for such service charges (i) for the transfer from a temporary global Debt Security to any other form of Debt Security, (ii) if the Debt Securities are listed on a stock exchange that requires the issuer to pay such charges as a condition to listing or (iii) if the applicable Prospectus Supplement otherwise specifies. Such transfer or exchange will be effected once the Security Registrar or such transfer agent, as the case may be, is satisfied with the document of title and identity of the person making the request. Bearer Securities will be transferable by delivery. The Company has appointed the Senior Trustee under the Senior Indenture, and will appoint the Subordinated Trustee under the Subordinated Indenture, as Security Registrar (Section 2.05). At the date of this Prospectus, the Corporate Trust Office of the Senior Trustee is located at 101 California Street, Suite 2725, San Francisco, California 94111. If the identity or address of the Senior Trustee changes, the corrected information will appear in the applicable Prospectus Supplement, as appropriate. The identity and address of the Subordinated Trustee will appear in the applicable Prospectus Supplement. If the applicable Prospectus Supplement specifies any transfer agents in addition to the Security Registrar with respect to any series of Debt Securities, the Company may at any time rescind the designation of any such transfer agent or approve a change in the location through which any such transfer agent acts, except that, if Debt Securities of a series are issuable only as Registered Securities, the Company will be required to maintain a transfer agent in each Place of Payment for such series and, if Debt Securities of a series are issuable as Bearer Securities, the Company will be required to maintain (in addition to the Security Registrar) a transfer agent in a Place of Payment for such series located outside the United States. The Company may at any time designate additional transfer agents with respect to any series of Debt Securities (Section 4.02). 12 In the event of any redemption in part, the Company shall not be required to: (i) issue, register the transfer or exchange of Debt Securities of any series during a period beginning at the opening of 15 Business Days before any selection of Debt Securities of that series to be redeemed and ending at the close of business on (a) the day of mailing of the relevant notice of redemption, if Debt Securities of the series are issuable only as Registered Securities, (b) the day of the first publication of the relevant notice of redemption, if Debt Securities of the series are issuable only as Bearer Securities, or (c) the day of mailing of the relevant notice of redemption, if Debt Securities of the series are issuable as Registered Securities and Bearer Securities and there is no publication; (ii) register the transfer or exchange of any Registered Security, or portion thereof, called for redemption, except the unredeemed portion of any Registered Security being redeemed in part; or (iii) exchange any Bearer Security called for redemption, except to exchange such Bearer Security for a Registered Security of that series and like tenor which is simultaneously surrendered for redemption (Section 2.05). PAYMENT AND PAYING AGENTS Payment of principal of, and any interest on, Registered Securities, unless otherwise specified in the applicable Prospectus Supplement, will be made at the office of the Paying Agent or Paying Agents as the Company may designate from time to time, except that at the option of the Company payment of any interest may be made by check mailed to the address of the person entitled thereto as such address shall appear in the Security Register (Section 2.11). Payment of any installment of interest on Registered Securities will be made to the person in whose name such Registered Security is registered at the close of business on the Regular Record Date for such interest (Section 2.09), except as otherwise specified in the applicable Prospectus Supplement. Payment of principal of, and any interest on, Bearer Securities will be payable in United States dollars, unless a different currency is designated in the applicable Prospectus Supplement, subject to any applicable laws and regulations, at the offices of such Paying Agents outside the United States as the Company may designate from time to time. Payment of interest on Bearer Securities with coupons appertaining thereto on any Interest Payment Date will be made only against surrender of the coupon relating to such Interest Payment Date, unless otherwise indicated in the applicable Prospectus Supplement (Sections 2.11 and 4.02). No payment with respect to any Bearer Security will be made at the Corporate Trust Office of the Trustee or any office or agency of the Company in the United States or by check mailed to any address in the United States or by transfer to an account maintained in the United States. Notwithstanding the foregoing, payments of principal of, and any interest on, Bearer Securities denominated and payable in United States Dollars will be made at the office of the Company's Paying Agent in New York City, if (but only if) payment of the full amount thereof in United States Dollars at all offices or agencies outside the United States is illegal or effectively precluded by exchange controls or other similar restrictions (Section 4.02). The Company has designated the New York City Corporate Trust Office of the Senior Trustee, and will designate the New York City Corporate Trust Office of the Subordinated Trustee, as the sole Paying Agent for payments with respect to Offered Debt Securities that are issuable as Registered Securities, and as the Paying Agent in New York City for payments with respect to Offered Debt Securities (subject to the limitations described above in the case of Bearer Securities) that are issuable solely as Bearer Securities or as both Registered Securities and Bearer Securities. Any Paying Agents outside the United States and any other Paying Agents in the United States initially designated by the Company for the Offered Debt Securities will be named in the applicable Prospectus Supplement. The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts. However, the Company will be required to maintain a Paying Agent in each Place of Payment for Debt Securities of each series that is issuable solely as Registered Securities, and the Company will be required to maintain for each series of Bearer Securities a Paying Agent (i) in New York City for payments with respect to any Registered Securities of the series (and for payments with respect to Bearer Securities of the series in the circumstances described above, but not 13 otherwise), (ii) in a place of payment located outside the United States where Debt Securities of such series and any coupons appertaining thereto may be presented and surrendered for payment; and (iii) each place outside the United States required by any stock exchange on which Debt Securities of such series are listed (Section 4.02). All monies paid by the Company to a Paying Agent for the payment of principal of, and any interest on, any Debt Securities that remain unclaimed at the end of two years after such principal or interest has become due and payable will be repaid to the Company and the holder of such Debt Security or any coupon appertaining thereto will thereafter look only to the Company or Unocal for payment thereof (Section 13.05). GLOBAL SECURITIES The Offered Debt Securities may be issued in whole or in part in the form of one or more Global Securities that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the applicable Prospectus Supplement. Global Securities may be issued in either registered or bearer form and in either temporary or definitive form. Unless and until it is exchanged in whole or in part for Debt Securities in definitive form, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor (Sections 2.03 and 2.05). The specific terms of the depositary arrangement with respect to any Offered Debt Securities will be described in the applicable Prospectus Supplement. The Company anticipates that the following provisions will apply to all depositary arrangements. Upon the issuance of a Global Security, the Depositary for such Global Security will credit, on its book-entry registration and transfer system, the respective principal amounts of the Debt Securities represented by such Global Security to the accounts of institutions that have accounts with such Depositary ("Participants"). The accounts to be credited shall be designated by the underwriters of such Debt Securities, by certain agents of the Company or by the Company, if such Debt Securities are offered and sold directly by the Company. Ownership of beneficial interests in a Global Security will be limited to Participants or persons that may hold interests through Participants. Ownership of beneficial interests in such Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary for such Global Security or by Participants or by persons that hold through Participants. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such ownership limits and such laws may impair the ability to transfer beneficial interests in a Global Security. So long as the Depositary for a Global Security, or its nominee, is the owner of such Global Security, such Depositary or such nominee, as the case may be, will be considered the sole owner or holder of the Debt Securities represented by such Global Security for all purposes under the Indenture governing such Debt Securities. Except as set forth below, owners of beneficial interests in a Global Security will not be entitled to have Debt Securities of the series represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of Debt Securities of such series in definitive form and will not be considered the owners or holders thereof under the Indenture governing such Debt Securities. Subject to the restrictions discussed under "Limitations on the Issuance of Bearer Securities" below, principal and interest payments on Debt Securities registered in the name of or held by a Depositary or its nominee will be made to the Depositary or its nominee, as the case may be, as the registered owner or the holder of the Global Security representing such Debt Securities. None of the Company, Unocal, the Trustee for such Debt Securities, any paying agent or the Security Registrar for such Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of 14 beneficial ownership interests in a Global Security for such Debt Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that the Depositary for Debt Securities of a series, upon receipt of any payment of principal or interest in respect of a definitive Global Security, will immediately credit Participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Security as shown on the records of such Depositary. The Company also expects that payments by Participants to owners of beneficial interests in such Global Security held through such Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such participants. If a Depositary for Debt Securities of a series is at any time unwilling or unable to continue as Depositary and a successor Depositary is not appointed by the Company within 90 days, the Company and Unocal will issue Debt Securities of such series in definitive form in exchange for the Global Security or Securities representing the Debt Securities of such series. In addition, the Company may at any time and in its sole discretion determine not to have any Debt Securities of a series represented by one or more Global Securities and, in such event, will issue Debt Securities of such series in definitive form in exchange for the Global Security or Securities representing such Debt Securities. Further, an owner of a beneficial interest in a Global Security representing Debt Securities of such series may, under certain circumstances and on terms acceptable to the Company and the Depositary for such Global Security, receive Debt Securities of such series in definitive form. In any such instance, an owner of a beneficial interest in a Global Security will be entitled to physical delivery in definitive form of Debt Securities of the series represented by such Global Security equal in principal amount to such beneficial interest and to have such Debt Securities registered in its name (if the Debt Securities of such series are issuable as Registered Securities). Unless otherwise specified by the Company, Debt Securities of such series so issued in definitive form will be issued (a) as Registered Securities in denominations of $1,000 and integral multiples thereof, if the Debt Securities of such series are issuable as Registered Securities, (b) as Bearer Securities in the denominations of $5,000, if the Debt Securities of such series are issuable as Bearer Securities, or (c) as either Registered or Bearer Securities in such denominations, if the Debt Securities of such series are issuable in either form (Section 2.05). See, however, "Limitations on the Issuance of Bearer Securities" below for a description of certain restrictions on the issuance of a Bearer Security in definitive form in exchange for an interest in a Global Security. MEETINGS, MODIFICATION AND WAIVER MODIFICATION OF INDENTURES. The Senior Indenture provides, and the Subordinated Indenture will provide, that the Company, Unocal and the Trustee thereunder may, without the consent of any holders of Debt Securities, enter into supplemental indentures for the purposes, among other things, of adding to the Company's or Unocal's covenants, adding additional Events of Default, establishing the form or terms of Debt Securities or curing ambiguities or inconsistencies in such Indenture or making other provisions; provided such action shall not adversely affect the interests of the holders of any series of Debt Securities in any material respect (Section 11.01). In addition, modifications and amendments of each Indenture may be made by the Company and Unocal and the Trustee with the consent of the holders of not less than a majority in aggregate principal amount of the Debt Securities then outstanding of each series affected by such modification or amendment; provided, however, that no such modification or amendment may, without the consent of the holder of each Debt Security then outstanding that is affected thereby, (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on any Debt Security, (b) reduce the principal amount of or interest on any Debt Security, (c) change any obligation to pay additional amounts, (d) reduce the amount of principal of an Original Issue Discount Security payable upon acceleration of the Maturity thereof, (e) change the Place of Payment or the currency or currency unit in which any Debt Security or interest thereon is payable, (f) impair the right to institute suit for the 15 enforcement of any payment on or with respect to any Debt Security, (g) reduce the percentage in principal amount of Debt Securities then outstanding of any series, the consent of whose holders is required for modification or amendment of the applicable Indenture or for any waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults, (h) change any obligation of the Company to maintain an office or agency in the places and for the purposes required by an Indenture, (i) if the Debt Securities are convertible into any other security of the Company or Unocal, make any change that would materially adversely affect the right to convert such Debt Securities, or (j) modify any of the above provisions. If the Debt Securities of any series are issuable upon the exercise of Debt Warrants, then each holder of a Debt Warrant with respect to such series shall be treated as a holder of such Debt Securities in the amount issuable upon exercise of such Debt Warrant for purposes of voting under Section 11.02 of the Indenture (Sections 9.04 and 11.02). WAIVER OF DEFAULT. The holders of a majority in aggregate principal amount of the Debt Securities then outstanding of each series may, on behalf of the holders of all the Debt Securities of that series, waive, insofar as that series is concerned, compliance by Unocal with certain restrictive provisions of the applicable Indenture (Section 5.11). The holders of a majority in aggregate principal amount of the Debt Securities then outstanding of each series may, on behalf of all holders of Debt Securities of that series and any coupons appertaining thereto, waive any past default under the Indenture with respect to Debt Securities of that series, except a default (a) in the payment of principal of or any interest on any Debt Security of such series and (b) in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of the holder of each Debt Security then outstanding of such series affected (Section 7.06). CALCULATING OUTSTANDING PRINCIPAL. The Senior Indenture provides, and the Subordinated Indenture will provide, that in determining whether the holders of the requisite principal amount of the Debt Securities that are outstanding have given any request, demand, authorization, direction, notice, consent or waiver thereunder or are present at a meeting of holders of Debt Securities for quorum purposes, (i) the principal amount of an Original Issue Discount Security that will be deemed to be outstanding will be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof, and (ii) the principal amount of a Debt Security denominated in a foreign currency or currency unit will be deemed to be that amount of United States dollars that could be obtained for such principal amount on the basis of the spot rate of exchange for such foreign currency or currency unit as determined by the Company or an Exchange Rate Agent up to ten days before the date of the action by the holders (Section 9.04). MEETINGS AND VOTING. The Senior Indenture contains, and the Subordinated Indenture will contain, a provision for convening meetings of the holders of Debt Securities of a series, including Debt Securities issuable as Bearer Securities (Section 10.01). A meeting may be called at any time by the Trustee, and upon request, by the Company, Unocal or the holders of at least 25% in principal amount of the Debt Securities then outstanding of such series, in any such case upon notice given in accordance with "Notices" below (Sections 10.02 and 10.03). Except as described above under "Modifications of Indentures" and "Waiver of Default," a resolution presented at a meeting or reconvened meeting at which a quorum of the holders of Debt Securities then outstanding of the applicable series is present may be adopted by the affirmative vote of the lesser of (i) the holders of a majority in principal amount of the Debt Securities then outstanding of such series, or (ii) the holders of 66-2/3% in principal amount of the Debt Securities then outstanding of such series represented and voting at the meeting; provided, however, that if any consent, waiver, or other action which the applicable Indenture expressly provides may be made, given or taken by the holders of a specified percentage, which is less than a majority of the principal amount of the Debt Securities then outstanding of a series, such action may be adopted at a meeting or reconvened meeting at which a quorum is present by the affirmative vote of the lesser of (a) the holders of such specified percentage in principal amount of the Debt Securities then outstanding of that series or (b) a majority in principal amount of Debt Securities then outstanding of such series represented and voting at the meeting. Any 16 resolution passed or decision taken at any meeting of holders of Debt Securities of any series duly held in accordance with the Indenture will be binding on all holders of Debt Securities of that series and the related coupons whether or not present or represented at the meeting. The quorum at a meeting of the holders of a series of Debt Securities will be persons holding or representing a majority in principal amount of the Debt Securities then outstanding of a series, unless otherwise specified in a Prospectus Supplement (Section 10.08). The record date for purposes of determining the identity of holders entitled to vote regarding, or consent to, actions by the Trustee and certain waivers will be the later of (i) thirty (30) days prior to the first solicitation of such consent or (ii) the date of the most recent list of holders of securities furnished to the Trustee prior to such solicitation. NOTICES Except as otherwise provided in the applicable Indenture, notices to holders of Bearer Securities will be given by publication at least once in a newspaper published on a Business Day in New York City and London and in such other city or cities as may be required with respect to such Bearer Securities and will be mailed to such persons whose names and addresses were previously filed with the Trustee under the applicable Indenture, within the time prescribed for the giving of such notice. Notices to holders of Registered Securities will be given by mail to the address of such holders as they appear in the Security Register (Section 1.04). TITLE Title to any Bearer Securities (including Bearer Securities in permanent global bearer form) and any coupons appertaining thereto will pass by delivery. The Company, Unocal, the appropriate Trustee and any agent of the Company or such Trustee may treat the bearer of any Bearer Securities, the bearer of any coupon and the registered owner of any Registered Security as the absolute owner thereof (whether or not such Debt Security or coupon is overdue and notwithstanding any notice to the contrary) for the purpose of making payment and for all the other purposes (Section 2.07). DEFEASANCE Unless otherwise indicated in the applicable Prospectus Supplement, the obligations of the Company and Unocal with respect to the payment of the principal of and interest on the Offered Debt Securities and their respective obligations under Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.08, 5.09, 5.11, 12.01 and 12.02 of the Indenture will be terminated if: (i) the Company irrevocably deposits or causes to be deposited with the appropriate Trustee, under the terms of an escrow trust agreement in form and substance satisfactory to the appropriate Trustee, as trust funds pledged as security for, and dedicated solely to, the benefit of the holders of the Offered Debt Securities, (a) money or (b) in the case of Offered Debt Securities and coupons denominated in United States Dollars, U.S. Government Obligations (as defined in Section 13.04), and in the case of Debt Securities and coupons denominated in a foreign currency, Foreign Government Securities (as defined in Section 13.04), which through the payment of interest thereon and principal thereof in accordance with their terms will provide money or (c) a combination of (a) and (b), in each case in an amount sufficient to pay in the currency or currency unit in which the Offered Debt Securities are payable all the principal of and interest on the Offered Debt Securities on the dates such payments are due in accordance with the terms of the Offered Debt Securities; and (ii) the Company furnishes to the appropriate Trustee a ruling by the Internal Revenue Service, in form and substance satisfactory to such Trustee, or an Opinion of Counsel, in form and substance satisfactory to the appropriate Trustee, to the effect, in either case, that the holders of such Offered Debt Securities (a) will not recognize income, gain or loss for Federal income tax purposes as a result of the Company's exercise of the defeasance provisions of the Indenture and (b) will be subject to Federal income tax in the same 17 amount, in the same manner and at the same time as would have been the case if the Company had not exercised its defeasance rights under the Indenture (Section 13.03). THE TRUSTEES A Trustee may resign or be removed with respect to one or more series of Debt Securities and a successor Trustee may be appointed by the Company to act with respect to such series (Section 8.10). In the event that two or more Persons are acting as Trustee with respect to different series of Debt Securities under one of the Indentures, each such Trustee will be deemed to be a Trustee of a trust under the applicable Indenture, separate and apart from the trust administered by any other such Trustee, and any action described herein to be taken by the "Trustee" may then be taken by each such Trustee with respect to, and only with respect to, the one or more series of Debt Securities for which it is Trustee (Section 8.11). The Senior Trustee is Chase Manhattan Bank and Trust Company, National Association. The identity of the Subordinated Trustee has yet to be determined. The Chase Manhattan Bank, an affiliate of the Senior Trustee, is a lending bank under the $1,000,000,000 Credit and Guarantee Agreement, referred to above under "Mandatory Prepayment." ChaseMellon Shareholder Services, L.L.C., an affiliate of the Senior Trustee, is the transfer agent and registrar for the Unocal Common Stock and The Chase Manhattan Bank is the successor Rights Agent under the Rights Agreement, dated as of January 29, 1990, referred to below under "Description of the Common Stock--Rights to Purchase Series A Preferred Stock." ChaseMellon Shareholder Services, L.L.C. is also the administrator of the Unocal Dividend Reinvestment and Common Stock Purchase Plan. Unocal and the Company may in the future maintain other banking relationships with the Senior Trustee and The Chase Manhattan Bank in the ordinary course of business and may do the same with the Subordinated Trustee. GOVERNING LAW The Indentures, the Debt Securities, the Guarantees, and the coupons will be governed by, and construed in accordance with, the laws of the State of New York (Section 15.05). DESCRIPTION OF THE PREFERRED STOCK The following description of Unocal Preferred Stock sets forth certain general terms and provisions of the series of Unocal Preferred Stock to which any Prospectus Supplement may relate. The specific terms of an offered series of Unocal Preferred Stock will be described in the Prospectus Supplement relating to such series. If so indicated in the Prospectus Supplement relating thereto, the terms of any such series of Unocal Preferred Stock may differ from the terms set forth below. The description of Unocal Preferred Stock set forth below and the description of the terms of an offered series of Unocal Preferred Stock set forth in the Prospectus Supplement relating thereto do not purport to be complete and are qualified in their entirety by reference to Unocal's Certificate of Incorporation, as amended (the "Certificate of Incorporation"), and the Certificate of Designations relating to such offered series of Unocal Preferred Stock, which will be filed with the Commission and incorporated by reference as an exhibit to the Registration Statement of which this Prospectus is a part at or prior to the time of the sale of such offered series. Under Unocal's Certificate of Incorporation, Unocal's Board of Directors is authorized, without further stockholder action, to provide for the issuance of up to 100,000,000 shares of preferred stock, $0.10 par value per share, in one or more series, with or without voting powers, and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions, as the Board of Directors shall determine. As of the date of this Prospectus, Unocal has no outstanding shares of Preferred Stock. Unocal has reserved for issuance and designated 3,000,000 shares of preferred stock as Series A Junior Participating Cumulative Preferred Stock in connection with the Rights Plan described below under "Description of the Common Stock--Rights to Purchase Series A Preferred Stock." 18 GENERAL The applicable Prospectus Supplement will set forth the following specific terms regarding the series of Unocal Preferred Stock offered thereby: (i) the designation, number of shares and liquidation preference per share; (ii) the initial public offering price; (iii) the dividend rate or rates, if any, or the method of determining the dividend rate or rates; (iv) the index, if any, upon which the amount of dividends is to be determined; (v) the dates on which dividends will accrue and be payable and the designated record dates for determining the holders entitled to such dividends; (vi) any redemption or sinking fund provisions; (vii) any conversion or exchange provisions; (viii) any provisions for the issuance of global securities; (ix) the currency (which may be composite currency) in which liquidation preferences, redemption prices and dividends shall be payable, if other than United States dollars; (x) voting rights, if different from those described under "--Voting Rights"; and (xi) any additional terms, preferences or rights. The shares of Unocal Preferred Stock will, when issued, be fully paid and nonassessable and will have no preemptive rights. The transfer agent, registrar, dividend disbursing agent, redemption agent and, if applicable, conversion agent for the offered series of Unocal Preferred Stock will be specified in the applicable Prospectus Supplement relating thereto. DIVIDENDS The holders of the Unocal Preferred Stock of each series will be entitled to receive, when, as and if declared by the Board of Directors of Unocal, out of funds legally available therefor, cumulative or non-cumulative cash or other dividends at such rate or rates and on such dates as will be set forth in the applicable Prospectus Supplement. Such rates may be fixed or variable or both. If variable, the formula used for determining the dividend rate for each dividend period will be set forth in the Prospectus Supplement. Dividends will be payable to the holders of record as they appear on the stock register of Unocal on such record dates, not more than sixty (60) days nor less than ten (10) days preceding the payment dates thereof, as will be fixed by the Board of Directors of Unocal. If the Board of Directors of Unocal fails to declare a dividend payable on a dividend payment date on any series of Unocal Preferred Stock for which dividends are noncumulative ("Noncumulative Preferred Stock"), then the holders of such series of Noncumulative Preferred Stock will have no right to receive a dividend in respect of the dividend period ending on such dividend payment date, and Unocal will have no obligation to pay a dividend for such period, whether or not dividends on such series are declared payable on any future dividend payment dates. Dividends payable on any series of Unocal Preferred Stock for any period less than a full dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. REDEMPTION The offered series of Unocal Preferred Stock may be redeemable at the option of Unocal and may be subject to mandatory redemption pursuant to a sinking fund or otherwise, in each case upon the terms, on the date or dates and at the redemption price or prices set forth in the applicable Prospectus Supplement. If fewer than all shares of the offered series of Unocal Preferred Stock are to be redeemed, the shares to be redeemed will be selected by Unocal pro rata or by lot, by any other method determined by the Board of Directors to be equitable, or by any method set forth in the applicable Prospectus Supplement. If any dividends on shares of the offered series of Unocal Preferred Stock are in arrears, no shares of Unocal Common Stock or shares of capital stock ranking junior to or on parity with the offered series of Unocal Preferred Stock may be redeemed and no shares of such offered series of Unocal Preferred Stock may be redeemed unless all outstanding shares of such series are simultaneously redeemed, and Unocal may not purchase or otherwise acquire any shares of such series; provided, however, that the foregoing shall not prevent the purchase or acquisition of shares of such series pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of such series. 19 Notice of redemption will be given by mailing the same to each record holder of the shares to be redeemed to the respective addresses of such holders as the same shall appear on Unocal's stock register. Each such notice will state: (i) the redemption date; (ii) the number of shares and series of Unocal Preferred Stock to be redeemed; (iii) the redemption price and the manner in which such redemption price is to be paid and delivered; (iv) the place or places where certificates for such shares of Unocal Preferred Stock are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If fewer than all shares of any series of Unocal Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder will also specify the number of shares to be redeemed from such holder. If notice of redemption has been given, from and after the redemption date for the shares of the series of Unocal Preferred Stock called for redemption (unless default shall be made by Unocal in providing money for the payment of the redemption price of the shares so called for redemption), dividends on the shares of Unocal Preferred Stock so called for redemption will cease to accrue, any right to convert the shares of Unocal Preferred Stock will terminate, such shares will no longer be deemed to be outstanding, and all rights of the holders thereof as stockholders of Unocal (except the right to receive the redemption price, without interest) will cease. Upon surrender in accordance with such notice of the certificates representing any shares so redeemed (properly endorsed or assigned for transfer, if the notice shall so state), the redemption price set forth above will be paid out of funds provided by Unocal. If fewer than all of the shares represented by any such certificate are redeemed, a new certificate will be issued representing the unredeemed shares without cost to the holder thereof. LIQUIDATION PREFERENCE The applicable Prospectus Supplement will set forth the specific liquidation preference of the offered series of Unocal Preferred Stock. Unocal conducts substantially all of its operations through the Company. The right of Unocal, and hence the right of creditors and stockholders of Unocal, to participate in any distribution of assets of any subsidiary (including the Company) upon its liquidation or reorganization or otherwise is necessarily subject to the prior claims of creditors of the subsidiary, except to the extent that claims of Unocal itself as a creditor of the subsidiary may be recognized. CONVERSION AND EXCHANGE The terms, if any, on which shares of any offered series of Unocal Preferred Stock are convertible into or exchangeable for Unocal Common Stock will be set forth in the Prospectus Supplement relating thereto. Such terms may include provisions for conversion or exchange, either mandatory, at the option of the holder, or at the option of Unocal. VOTING RIGHTS Except as indicated below or in the Prospectus Supplement relating to a particular offered series of Unocal Preferred Stock, or except as expressly required by applicable law, the holders of Unocal Preferred Stock will not be entitled to vote. On matters on which holders of such offered series and holders of any other series of Unocal Preferred Stock are entitled to vote as a single class, each full share of any series of Unocal Preferred Stock shall be entitled to one vote. Therefore, the voting power of such series will depend on the number of shares in such series, not the liquidation preference or initial offering price of the shares of such series of the Unocal Preferred Stock. If the equivalent of six quarterly dividends (whether or not consecutive) payable on any offered series of Unocal Preferred Stock or any other series of Unocal Preferred Stock are in default, the number of 20 directors of Unocal will be increased by two and the holders of all outstanding shares of Unocal Preferred Stock and all other outstanding shares of preferred stock having similar voting rights, voting as a single class without regard to series and with no cumulative voting, to the exclusion of the holders of Unocal Common Stock, will be entitled to elect those two additional directors, who shall serve until all dividends in default have been paid or declared and set apart for payment. DESCRIPTION OF THE COMMON STOCK Unocal's Board of Directors is authorized to issue a maximum of 750,000,000 shares of Unocal Common Stock, $1.00 par value per share, under Unocal's Certificate of Incorporation. As of March 31, 1998, 241,323,183 shares of Unocal Common Stock were outstanding, 10,594,630 shares were held by Unocal as treasury shares and 38,144,770 shares were reserved for issuance upon the conversion of the 6 1/4% Trust Convertible Preferred Securities of Unocal Capital Trust and in connection with Unocal's employee benefit plans, its Directors' Restricted Stock Plan and its Dividend Reinvestment and Common Stock Purchase Plan. The following summary of the rights of the Unocal Common Stock does not purport to be complete and is subject in all respects to the applicable provisions of the Delaware General Corporation Law and the Certificate of Incorporation. DIVIDEND RIGHTS: Subject to the prior rights, if any, of the holders of Unocal Preferred Stock, holders of Unocal Common Stock are entitled to receive such dividends as are declared by Unocal's Board of Directors out of funds legally available therefor. VOTING RIGHTS: Subject to the rights, if any, of the holders of Unocal Preferred Stock, all voting rights are vested in the holders of shares of Unocal Common Stock, each share being entitled to one vote on all matters presented for a vote (except for those matters for which a separate class vote is required under Delaware law). The holders of one-third of the shares entitled to vote constitute a quorum at any meeting of stockholders. LIQUIDATION RIGHTS: Subject to the rights, if any, of the holders of Unocal Preferred Stock, in the event of liquidation of Unocal, holders of Unocal Common Stock will share pro rata in all assets distributable to stockholders in respect of shares held by them. PREEMPTIVE RIGHTS: Holders of Unocal Common Stock are not entitled to any preemptive rights to subscribe for any additional securities that may be issued. NON-CUMULATIVE VOTING: Holders of shares of Unocal Common Stock have non-cumulative voting rights, which means that holders of more than 50% of the shares voting for the election of directors can elect 100% of the directors standing for election if they choose to do so, and, in such event, the holders of the remaining less than 50% of the shares voting for the election of directors will not be able to elect any person or persons to the Board of Directors of Unocal. Unocal's Board of Directors is divided into three classes, and directors are normally elected for three-year terms. One of the classes is presented for election at each annual meeting, so that the entire Board of Directors is never presented for election in any one year. ChaseMellon Shareholder Services, L.L.C., Los Angeles, California, is the transfer agent and registrar for the Unocal Common Stock. The Unocal Common Stock may also be presented for transfer at the office of ChaseMellon Shareholder Services, L.L.C., New York, New York. 21 RIGHTS TO PURCHASE SERIES A PREFERRED STOCK In January 1990, the Board of Directors of Unocal adopted a stockholder rights plan (the "Rights Plan") and declared a dividend of one right (a "Right"; collectively, the "Rights") for, and to be attached to, each outstanding share of Common Stock. The resolutions creating the Rights Plan provide that as long as the Rights are attached to shares of Common Stock, as provided in the "Rights Agreement" referred to below, one additional Right will be issued and delivered with each share of Common Stock that becomes outstanding after February 12, 1990. Each Right entitles the holder thereof to purchase one one-hundredth of a share of preferred stock designated as the Series A Junior Participating Cumulative Preferred Stock ("Series A Preferred Stock"). The Rights will expire on January 29, 2000, unless redeemed earlier, and will not be exercisable or transferable separately from the shares of Common Stock until the close of business on the Distribution Date, which will occur on the earlier of (i) the tenth day following a public announcement that a person or group of affiliated or associated persons (a "15% Stockholder") has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding Common Stock or (ii) the date of the commencement or the announcement of an intention to make a tender or exchange offer that would cause any person or group to become a 15% Stockholder. Pursuant to the Rights Plan, 3,000,000 shares of Series A Preferred Stock have been designated and reserved for issuance upon exercise of the Rights. An additional number of shares of Series A Preferred Stock equal to one one- hundredth of the number of shares of Unocal Common Stock will be reserved for issuance in connection with an issuance of Preferred Stock or Unocal Common Stock, whether issued directly, upon exercise of Equity Warrants or upon conversion of Preferred Stock or Debt Securities. A description of the Rights and the Series A Preferred Stock is set forth in the Rights Agreement, dated January 29, 1990, between Unocal and The Chase Manhattan Bank (successor to Chemical Trust Company of California), as Rights Agent, which is included as exhibit to the Registration Statement of which this Prospectus is a part. CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS OF UNOCAL The Certificate of Incorporation and Bylaws of Unocal contain certain provisions which may have the effect of rendering a change of control of Unocal more difficult. The Certificate of Incorporation provides that the Board of Directors is divided into three classes, with the directors serving three-year staggered terms. Special meetings of Unocal's stockholders generally may be called only by the Board of Directors, and any action required or permitted to be taken by the stockholders must be taken at an annual or special meeting and may not be effected by written consent. The vote of 75% of the outstanding stock of Unocal entitled to vote is required for the stockholders to adopt, amend or repeal bylaws. Such a 75% vote is also required for approval of a merger or consolidation of Unocal with, and certain other transactions with, another corporation which, with its affiliates, owns beneficially more than 10% of the total voting power of all outstanding shares of Unocal voting stock (a "Related Corporation"), unless such a transaction was approved by 75% of the directors of Unocal prior to the Related Corporation becoming such. The Certificate of Incorporation also require such a 75% vote to repeal or amend any of the foregoing provisions. The Bylaws of Unocal require 60 days' advance notice of, and specified information with respect to, nominations by stockholders of persons for election as directors and other business to be brought before an annual meeting by a stockholder. As set forth above under "Description of the Preferred Stock," the Board of Directors has the authority, without further stockholder action, to provide for the issuance of Unocal Preferred Stock and to fix the terms thereof. Provisions which could render a change of control of Unocal more difficult, such as extraordinary voting, dividend, redemption or conversion rights, could be included in such Unocal Preferred Stock. 22 DESCRIPTION OF THE WARRANTS The following description sets forth certain general terms and provisions of the Debt Warrants and Equity Warrants to which a Prospectus Supplement may relate. The particular terms of any Debt Warrants and Equity Warrants offered will be described in the Prospectus Supplement relating to such Debt Warrants or Equity Warrants. The following summaries of certain provisions of the Debt Warrants and Equity Warrants and of one or more separate Warrant Agreements (each a "Warrant Agreement") between the Company and Unocal and one or more banking institutions or trust companies, as Warrant Agent (each a "Warrant Agent"), do not purport to be complete and are subject to and qualified in their entirety by reference to all provisions of the applicable Warrant Agreement. Forms of Warrant Agreements are filed as exhibits to the Registration Statement. Each Warrant Agreement will be governed by, and construed in accordance with, the laws of the State of New York. GENERAL Debt Warrants and Equity Warrants, evidenced by Warrant Certificates (the "Warrant Certificates"), may be issued under a Warrant Agreement independently or together with any Debt Securities, Unocal Preferred Stock or Unocal Common Stock and may be transferable with or separate from such Securities. If Debt Warrants to purchase Debt Securities are offered, the applicable Prospectus Supplement will describe the terms of the Debt Warrants, including the following: (i) the offering price, if any, including the currency, or currency unit in which such price will be payable; (ii) the designation, aggregate principal amount and terms of the Offered Debt Securities with which the Debt Warrants are issued and the number of Debt Warrants issued with each such Offered Debt Security; (iii) if applicable, the date on or after which the Debt Warrants and the related Offered Debt Securities will be separately transferable; (iv) the designation, aggregate principal amount and terms of Debt Securities purchasable upon exercise of one Debt Warrant and the price or prices at which, and the currency, or currency unit in which such principal amount of Debt Securities may be purchased upon exercise; (v) the date on which the right to exercise the Debt Warrants commences and the date on which such right expires; (vi) any United States Federal income tax consequences; (vii) whether the Debt Warrants represented by the Warrant Certificates will be issued in registered or bearer form or both; and (viii) any other material terms of the Debt Warrants. If Equity Warrants are offered, the applicable Prospectus Supplement will describe the terms of the Equity Warrants, including the following: (i) the offering price, if any, including the currency or currency unit in which such price will be payable; (ii) the designation of any series of Unocal Preferred Stock purchasable upon exercise of the Equity Warrants; (iii) the number of shares of Unocal Preferred Stock or Unocal Common Stock purchasable upon exercise of one Equity Warrant, and the price or prices at which, and the currency, or currency unit in which such shares may be purchased upon exercise; (iv) the date on which the right to exercise the Equity Warrants commences and the date on which such right expires; (v) any United States Federal income tax consequences; (vi) whether the Equity Warrants represented by the Warrant Certificate will be issued in registered or bearer form or both; (vii) whether the Equity Warrants or the underlying Unocal Preferred Stock or Unocal Common Stock will be listed on any national securities exchange; and (viii) any other material terms of the Equity Warrants. In addition, if any Debt Warrants or Equity Warrants are sold for any foreign currency or currency units, the restrictions, elections, tax consequences, specific terms and other information with respect to such issue will be specified in the applicable Prospectus Supplement. Warrant Certificates, if any, may be exchanged for new Warrant Certificates of different denominations and may (if in registered form) be presented for registration of transfer at the corporate trust office of the Warrant Agent, which will be listed in the applicable Prospectus Supplement, or at such other office as may be set forth therein. Warrantholders do not have any of the rights of holders of Debt Securities (except to the extent that the consent of Warrantholders may be required for certain modifications of the terms of the Indenture under which the series of Offered Debt Securities issuable upon exercise of the Warrants are to be issued) or Unocal Preferred or Common stockholders and are not entitled to payments 23 of principal and interest, if any, on Debt Securities or to dividends or other distributions made with respect to Unocal Preferred Stock or Unocal Common Stock. EXERCISE OF WARRANTS Warrants may be exercised by surrendering the Warrant Certificate, if any, at the corporate trust office or other designated office of the Warrant Agent, with (i) the form of election to purchase on the reverse side of the Warrant Certificate, if any, properly completed and executed, and (ii) payment in full of the exercise price, as set forth in the applicable Prospectus Supplement. Upon exercise of Warrants, the Warrant Agent will, as soon as practicable, deliver the Debt Securities, Unocal Preferred Stock or Unocal Common Stock issuable upon the exercise of the Warrants in authorized denominations in accordance with the instructions of the exercising Warrantholder and at the sole cost and risk of such holder. If less than all of the Warrants evidenced by the Warrant Certificate are exercised, a new Warrant Certificate will be issued for the remaining amount of unexercised Warrants, if sufficient time exists prior to the expiration date. LIMITATIONS ON THE ISSUANCE OF BEARER SECURITIES In compliance with United States Federal tax laws and regulations, Bearer Securities may not, in general, be offered or sold during the Restricted Period (as defined below) to a person within the United States or to, or for the account or benefit of, a United States person. However, offers or sales can be made to (i) the United States office of international organizations (as defined in Section 7701(a)(18) of the Internal Revenue Code of 1986, as amended (the "Code") and the regulations thereunder), (ii) the United States office of foreign central banks (as defined in Section 895 of the Code and the regulations thereunder) and (iii) foreign branches of United States financial institutions which are purchasing for their own account or for resale, and which have agreed to comply with the reporting requirements of Section 165(j)(3)(A), (B) or (C) of the Code and the regulations thereunder. In addition, sales can be made to a United States person acquiring a Bearer Security through a financial institution described in clause (iii) of the preceding sentence if certain certification requirements and other conditions are satisfied. Definitive Bearer Securities will not be delivered within the United States, or in any event unless the beneficial owner of the Securities has complied with the certification requirements to be described in the relevant Prospectus Supplement. Each underwriter, dealer and agent (or other "distributor" within the meaning of the regulations under Section 163 of the Code) participating in the distribution of any Bearer Securities will agree that (i) it will not offer, sell or deliver Bearer Debt Securities within the United States or to, or for the account or benefit of, United States persons (other than qualifying financial institutions) (a) until 40 days after the closing date or (b) at any time if the obligation is held as part of an unsold allotment or subscription (the "Restricted Period"), and (ii) it has in effect procedures reasonably designed to ensure that its employees and agents who are directly engaged in selling the Bearer Securities are aware of the restrictions described in clause (i) of this sentence. Bearer Securities will bear a legend on their face and on any interest coupons that may be detached therefrom or, if the obligation is evidenced by a book entry, a legend will appear in the book of record in which the book entry is made substantially to the following effect: "Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code." The Code Sections referred to in such legend provide that a United States person who holds a Bearer Security will not be allowed to deduct any loss realized on the sale, exchange or redemption of such Bearer Security and any gain (which might otherwise be characterized as capital gain) recognized on such sale, exchange or redemption will be treated as ordinary income. If the Company or Unocal issue Warrants in bearer form, they will specify in the applicable Prospectus Supplement what, if any, restrictions or certification requirements will be applicable to the issuance and delivery of such bearer Warrants. 24 As used herein, "United States person" means an individual who is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, an estate the income of which is subject to United States Federal income taxation regardless of its source, a trust if a court within the United States is able to exercise primary supervision of the administration of the trust and one or more United States persons have the authority to control all decisions of the trust or certain electing trusts that were existing on August 19, 1996 and treated as domestic trusts on such date and "United States" means the United States of America (including the States and the District of Columbia) and its possessions, which include, as of the date hereof, Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island, and Northern Mariana Islands. PLAN OF DISTRIBUTION The Company and Unocal may offer and sell the Securities in any of three ways: (i) directly to investors; (ii) to investors through agents; or (iii) through underwriters or dealers. The Company may also exchange Securities for outstanding indebtedness of the Company or Unocal, or both. The applicable Prospectus Supplement with respect to the Securities will set forth the terms of the offering of the Securities, including the name or names of any underwriters, the purchase price of the Securities and the proceeds to the Company or Unocal, as the case may be, from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which such Securities may be listed. If underwriters are used in the sale, the Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The Securities may be either offered to the public through underwriting syndicates represented by managing underwriters, or directly by one or more underwriters. Unless otherwise set forth in the applicable Prospectus Supplement, the obligations of the underwriters to purchase the Securities will be subject to certain conditions precedent and the underwriters will be obligated to purchase all the Securities if any are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. Except for Unocal Common Stock, each issue of Securities sold will be a new issue of securities with no established trading market. Any underwriters or agents with respect to an issue of Securities may make a market in such Securities, but such underwriters or agents will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of any Securities in the secondary market. If the Securities are issued in exchange for outstanding securities of the Company or Unocal, the applicable Prospectus Supplement will set forth the terms of the exchange, the identity of and the terms of sale of the Securities by the selling security holders. Securities may be sold directly by the Company or Unocal or through agents designated by the Company or Unocal from time to time. Any agent involved in the offer or sale of the Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by the Company or Unocal to such agent will be set forth, in the applicable Prospectus Supplement. Unless otherwise indicated in the applicable Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. If so indicated in the applicable Prospectus Supplement, the Company or Unocal will authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase the Securities from the Company at the public offering price set forth in the applicable Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such 25 contracts will be subject only to those conditions set forth in the applicable Prospectus Supplement and the applicable Prospectus Supplement will set forth the commission payable for solicitation of such contracts. Agents, selling security holders and underwriters may be entitled under agreements entered into with the Company and Unocal to indemnification by the Company and Unocal against certain civil liabilities, including certain liabilities under the Securities Act of 1933, or to contribution with respect to payments which the agents, selling security holders or underwriters may be required to make in respect thereof. Agents, selling security holders and underwriters may be customers of, engage in transactions with, or perform services for the Company or Unocal in the ordinary course of business. EXPERTS The consolidated financial statements and financial statement schedule of Unocal and its subsidiaries as of December 31, 1997 and 1996, and for each of the three years in the period ended December 31, 1997, included in Unocal's Annual Report on Form 10-K for the year ended December 31, 1997, and incorporated by reference in this Prospectus, have been incorporated herein in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, which report is incorporated by reference herein, and on the authority of that firm as experts in accounting and auditing. Such report includes an explanatory paragraph with respect to a change in the method of accounting for the impairment of long-lived assets and long-lived assets disposed of in 1995. LEGAL MATTERS Legal matters in connection with the issuance and sale of the Securities offered hereby will be passed upon for the Company and Unocal by Dennis P. R. Codon, Esq., Vice President, Chief Legal Officer and General Counsel of the Company and Unocal, and for any underwriters, selling security holders or agents by Gibson, Dunn & Crutcher LLP, San Francisco, California. As of April 30, 1998, Mr. Codon owned beneficially 23,114 shares of Unocal Common Stock, which included 10,470 restricted shares that vest in 1999 through 2003. He also held options to purchase 57,088 shares of Unocal Common Stock at prices ranging from $26.375 to $38.8125, with expiration dates ranging from 2003 to 2008. In addition, Mr. Codon held 15,800 performance share units awarded to him in 1995 through 1998. 26 SUBJECT TO COMPLETION, DATED JULY 2, 1998 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. [LOGO] $1,200,000,000 UNOCAL CAPITAL TRUST II TRUST PREFERRED SECURITIES GUARANTEED BY UNOCAL CORPORATION TO THE EXTENT SET FORTH HEREIN ------------------------ UNOCAL CORPORATION JUNIOR SUBORDINATED DEBENTURES ------------------------ Unocal Capital Trust II, a Delaware statutory business trust, (the "Trust") may offer, from time to time, trust preferred securities (the "Trust Preferred Securities") representing preferred beneficial ownership interests in the Trust. Unocal Corporation, a Delaware corporation ("Unocal") will directly or indirectly own all of the common securities of the Trust (the "Trust Common Securities" and, together with the Trust Preferred Securities, the "Trust Securities"). The Trust Securities will represent undivided beneficial interests in the assets of the Trust. Concurrently with the issuance by the Trust of its Trust Preferred Securities, the Trust will invest the proceeds thereof and any contributions made in respect of the Trust Common Securities in Unocal's Junior Subordinated Debentures (the "Junior Subordinated Debentures") with terms corresponding to the terms of the Trust Preferred Securities. The Trust exists for the sole purposes and functions of (a) issuing and selling its Trust Securities having an aggregate principal amount equal to the aggregate liquidation amount of the Junior Subordinated Debentures, (b) using the proceeds from the sale of such Trust Securities to acquire the Junior Subordinated Debentures issued by Unocal, and (c) engaging in only those other activities as are necessary or incidental thereto. The Trust Preferred Securities and the Trust Common Securities will rank pari passu with each other and payment thereon shall be pro rata; provided that (i) if a Declaration Event of Default (as defined herein) occurs and is continuing, the rights of holders of Trust Common Securities to receive payment of periodic distributions and payments upon liquidation, redemption or otherwise will be subordinated to the rights of holders of the Trust Preferred Securities and (ii) holders of Trust Common Securities will have the exclusive right (subject to the terms of the Declaration (as defined herein)) to appoint, replace, or remove Trustees and to increase or decrease the number of Trustees. See "Unocal Capital Trust II," "Description of the Trust Preferred Securities," and "Description of the Junior Subordinated Debentures". Holders of the Trust Preferred Securities will be entitled to receive preferential cumulative cash distributions ("Distributions") accumulating from the date of original issuance and payable periodically as specified in an accompanying Prospectus Supplement. If provided in an accompanying Prospectus Supplement, Unocal will have the right to defer payments of interest on the Junior Subordinated Debentures by extending the interest payment period thereon at any time or from time to time for one or more deferral periods (each, an "Extension Period") (which shall not extend beyond the Stated Maturity of the Junior Subordinated Debentures). If interest payments are so deferred, Distributions on the Trust Preferred Securities will also be deferred and Unocal will not be permitted, subject to certain exceptions set forth herein, to declare or pay any cash distributions with respect to Unocal's capital stock or debt securities that rank pari passu with or junior to the Junior Subordinated Debentures. During an Extension Period, Distributions will continue to accumulate (and the Trust Preferred Securities will accumulate additional Distributions thereon at the rate per annum set forth in the Prospectus Supplement). See "Description of Trust Preferred Securities--Distributions". (CONTINUED ON NEXT PAGE) THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. THE DATE OF THIS PROSPECTUS IS , 1998. (CONTINUED FROM PREVIOUS PAGE) The obligations of Unocal under the Junior Subordinated Debentures will be unsecured obligations of Unocal and will be subordinate and junior in right of payment, to the extent set forth herein, to all Senior Indebtedness (as defined herein) of Unocal, which includes all obligations and liabilities other than accounts payable or any other obligations of Unocal to trade creditors, obligations expressly made PARI PASSU or subordinate by their terms, and certain indebtedness between or among Unocal and its affiliates, but senior to all capital stock of Unocal now outstanding or hereafter issued by Unocal and to any guarantee now or hereafter entered into by Unocal in respect of capital stock of its affiliates, including the Guarantee. As of March 31, 1998, Unocal (on an unconsolidated basis) had $538 million of its 6 1/4% Convertible Junior Subordinated Debentures due 2026 (the "6 1/4% Junior Subordinated Debentures") which will rank PARI PASSU with the Junior Subordinated Debentures outstanding and had no Senior Indebtedness other than guarantees of debt and capital lease obligations of Unocal's subsidiaries. At the same date, Unocal's consolidated balance sheet reflected approximately $4.8 billion of total liabilities of the subsidiaries of Unocal, including $2.4 billion of total debt of Unocal's subsidiaries guaranteed by Unocal. The Trust's funds available for distribution to the holders of the Trust Preferred Securities will be limited to payments received from Unocal on the Junior Subordinated Debentures. The Junior Subordinated Debentures will be structurally subordinated to all obligations of Unocal's subsidiaries. See "Description of the Trust Preferred Securities--Distributions". The payment of distributions, payments on the liquidation of the Trust, and payments on the redemption of the Trust Preferred Securities, out of moneys held by the Trust as set forth below, will be guaranteed by Unocal on a subordinated basis as and to the extent described herein (the "Guarantee"). The Guarantee will be a full and unconditional guarantee from the time of issuance of the Trust Preferred Securities, but the Guarantee will cover distributions and other payments on the Trust Preferred Securities only if and to the extent that Unocal has made a payment of interest or principal on the Junior Subordinated Debentures deposited in the Trust as trust assets. Unocal's obligations under the Guarantee will be unsecured and will rank (i) subordinate and junior in right of payment to all Senior Indebtedness of Unocal, (ii) PARI PASSU with the most senior preferred or preference stock now or hereafter issued by Unocal and with any guarantee now or hereafter entered into by Unocal in respect of any preferred or preference stock of any affiliate of Unocal, including Unocal's guarantee of the Unocal Capital Trust's 6 1/4% Convertible Trust Preferred Securities (the "6 1/4 Trust Preferred Securities"), and (iii) senior to the Common Stock. The Guarantee will be structurally subordinated to all obligations of Unocal's subsidiaries. See "Description of the Guarantee". For a description of the redemption rights with respect to the Trust Preferred Securities, the possible dissolution of the Trust, and distribution of Junior Subordinated Debentures held by the Trust to holders of the Trust Securities and the liquidation amount on the Trust Preferred Securities, see "Description of the Trust Preferred Securities--Mandatory Redemption," "--Special Event Distribution or Redemption," "--Redemption Procedures for Redemption by the Trust," "--Liquidation Distribution Upon Dissolution," and "Description of the Junior Subordinated Debentures". If provided in the accompanying Prospectus Supplement, Unocal may redeem the Junior Subordinated Debentures (and cause the redemption of the Trust Securities) or may dissolve the Trust and cause the Junior Subordinated Debentures to be distributed to the holders of Trust Preferred Securities in liquidation of their interests in the Trust. See "Description of Preferred Securities-- Liquidation Distribution Upon Termination". The Trust Preferred Securities may be offered in amounts, at prices and on terms to be determined at the time of offering; provided, however, the aggregate initial public offering price of all Trust Preferred Securities (including the Junior Subordinated Debentures) issued pursuant to the Registration Statement of which this Prospectus forms a part shall not exceed $1,200,000,000, subject to possible reduction as a result of the sale of other securities registered under such Registration Statement. Certain specific terms of the Junior Subordinated Debentures and the Trust Preferred Securities in respect of which this Prospectus is being delivered will be described in the accompanying Prospectus Supplement, including without limitation and where applicable and to the extent not set forth herein, (a) in the case of Junior Subordinated Debentures, the specific designation, aggregate principal amount, denominations, the stated maturity (including any provisions for the shortening or extension thereof) (the "Stated Maturity"), interest payment dates, interest rate (which may be fixed or variable) or method of calculating interest, if any, the Extension Period or interest deferral terms, if any, place or places where principal, premium, if any, and interest, if any, will be payable, any terms of redemption, any sinking fund provisions, terms for any conversion or exchange into Unocal Common Stock or other securities, initial offering or purchase price, methods of distribution and any other special terms, and (b) in the case of Trust Preferred Securities, the specific title, aggregate amount, stated liquidation preference, number of securities, Distribution 2 rate or method of calculating such rate, Extension Period or Distribution deferral terms, if any, place or places where Distributions will be payable, any terms of redemption, exchange, initial offering or purchase price, methods of distribution and any other special terms. The Prospectus Supplement also will contain information, as applicable, about certain United States Federal income tax consequences relating to the Trust Preferred Securities. The Trust Preferred Securities may be sold to or through underwriters, through dealers, remarketing firms or agents or directly to purchasers. See "Plan of Distribution". The names of any underwriters, dealers, remarketing firms or agents involved in the sale of Junior Subordinated Debentures or Trust Preferred Securities in respect of which this Prospectus is being delivered and any applicable fee, commission or discount arrangements with them will be set forth in the Prospectus Supplement. The Prospectus Supplement will state whether the Trust Preferred Securities will be listed on any national securities exchange or automated quotation system. If the Trust Preferred Securities are not listed on any national securities exchange or automated quotation system, there can be no assurance that there will be a secondary market for the Trust Preferred Securities. 3 AVAILABLE INFORMATION Unocal is currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the following Regional Offices of the Commission: 7 World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may also be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, such reports, proxy statements and other information concerning Unocal may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, 17th Floor, New York, New York 10005, the Chicago Stock Exchange, 440 South LaSalle Street, Suite 518, Chicago, Illinois 60605-1070, and the Pacific Stock Exchange, 115 Sansome Street, 3rd Floor, San Francisco, California 94104. The Commission maintains a Web site at http://www.sec.gov that contains reports, proxy statements, and other information concerning Unocal, which files electronically with the Commission. Unocal and the Trust have filed a registration statement on Form S-3 with the Commission (together with all amendments and exhibits, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does not contain all of the information included in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Statements contained herein concerning the provisions of any document do not purport to be complete and, in each instance, are qualified in all respects by reference to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is subject to and qualified in its entirety by such reference. Reference is made to such Registration Statement and to the exhibits relating thereto for further information with respect to Unocal, the Trust and the securities offered hereby. No separate financial statements of the Trust have been included herein. Unocal does not consider that such financial statements would be material to holders of the Trust Preferred Securities because (i) all of the voting securities of the Trust will be owned, directly or indirectly, by Unocal, a reporting company under the Exchange Act, (ii) the Trust has no independent operations but exists for the sole purpose of issuing securities representing undivided beneficial interests in the assets of the Trust and (iii) Unocal's obligations described herein, the guarantee by Unocal of the Trust's obligations under the Trust Preferred Securities, and the Junior Subordinated Debentures to be held by the Trust and the related indenture, taken together, will constitute a full and unconditional guarantee of payments due on the Trust Preferred Securities. See "Description of the Junior Subordinated Debentures" and "Description of the Guarantee". The Trust is not currently subject to the information reporting requirements of the Exchange Act. The Trust will become subject to such requirements upon the effectiveness of the Registration Statement and the issuance of the Trust Preferred Securities thereunder although it intends to seek and expects to receive exemption therefrom. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed by Unocal with the Commission and are incorporated herein by reference (Commission File No. 1-8483): 1. Unocal's Annual Report on Form 10-K for the year ended December 31, 1997; 2. Unocal's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998; and 3. Unocal's Current Reports on Form 8-K dated January 28, 1998, February 13, 1998, February 25, 1998, April 15, 1998, April 28, 1998, June 3, 1998, and June 17, 1998 (as amended by Amendment No. 1 thereto on Form 8-K/A). 4 All documents filed by Unocal with the Commission pursuant to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the securities offered hereby shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified and superseded, to constitute a part of this Prospectus. Unocal will provide without charge to each person to whom a copy of this Prospectus is delivered, upon the written or oral request of any such person, a copy of any or all of the documents incorporated herein by reference (not including the exhibits to such documents, unless such exhibits are specifically incorporated by reference in such documents). Requests for such copies should be directed to: Stockholder Services Department, Unocal Corporation, 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245; its telephone number is (310) 726-7600. USE OF PROCEEDS All of the proceeds from the sale of the Trust Preferred Securities offered hereby will be invested by the Trust in Junior Subordinated Debentures. The proceeds received by Unocal from the sale of the Junior Subordinated Debentures to the Trust will be used for general corporate purposes, which are expected to include contributions or loans to its subsidiaries. UNOCAL Unocal is a leading global resource and project development company, with major oil and gas exploration and production activities in Asia, the United States Gulf of Mexico and Latin America. Unocal is also the world's leading producer of geothermal energy; a provider of electrical power; and a manufacturer and marketer of nitrogen-based fertilizers, petroleum coke, graphites and specialty minerals. Unocal conducts virtually all of its operations through Union Oil Company of California ("Union Oil") and Union Oil's subsidiaries. As of March 31, 1998, Unocal had approximately $7.6 billion of assets. Unocal was incorporated in Delaware on March 18, 1983, to operate as the parent of Union Oil, which was incorporated in California on October 17, 1890. As of March 31, 1998, the net assets of Union Oil represented approximately 100% of the net assets of Unocal, based on book value. The principal offices of Unocal are located at 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245, and its telephone number at that address is (310) 726-7600. UNOCAL CAPITAL TRUST II The Trust is a statutory business trust formed under Delaware law pursuant to (i) a declaration of trust, dated as of June 30, 1998, executed by Unocal, as sponsor, and the trustees of the Trust (the "Trustees") and (ii) the filing of a certificate of trust with the Secretary of State of Delaware on June 30, 1998. Such declaration will be amended and restated in its entirety (as so amended and restated, the "Declaration") and will be incorporated by reference into the Registration Statement of which this Prospectus is a part. The Declaration will be qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Trust exists for the sole purposes and functions of (a) issuing and selling its Trust Securities having an aggregate principal amount equal to the aggregate liquidation amount of the Junior Subordinated Debentures, (b) using the proceeds from the sale of such Trust Securities to acquire the Junior Subordinated Debentures issued by Unocal, and (c) engaging in only those other activities as are necessary or incidental thereto. Unocal will pay all fees and expenses related to the Trust and the offering of the Trust Securities. 5 The Trust will have a term of approximately 35 years, but may terminate earlier as provided in the Declaration. The Trust's business and affairs are conducted by its trustees, each appointed by Unocal as holder of the Trust Common Securities. Pursuant to the Declaration, the number of Trustees will initially be five. Three of the Trustees (the "Regular Trustees") must be persons who are employees or officers of Unocal. The fourth Trustee must be an entity permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, unaffiliated with Unocal and with a combined capital and surplus of at least $50 million, which will serve as indenture trustee under the Declaration for the purpose of compliance with the Trust Indenture Act (the "Institutional Trustee"). Initially, The Bank of New York, a banking corporation, will be the Institutional Trustee until it resigns or is removed by Unocal. The fifth Trustee must be a resident of Delaware or an entity that maintains its principal place of business in the state of Delaware (the "Delaware Trustee"). Initially, The Bank of New York (Delaware), an affiliate of the Institutional Trustee, will be the Delaware Trustee until it resigns or is removed by Unocal. Unocal, as the holder of the Trust Common Securities, will have the right to appoint or remove any Trustee and to increase or decrease the number of Trustees (but not below two Trustees.) The Institutional Trustee will hold title to the Junior Subordinated Debentures for the benefit of the holders of the Trust Securities and will have the power to exercise all rights, powers, and privileges as the holder of the Junior Subordinated Debentures under the Indenture. In addition, the Institutional Trustee will maintain exclusive control of a segregated non-interest bearing trust account (the "Institutional Trustee Account") into which it will deposit all payments of funds received in respect of the Junior Subordinated Debentures for the benefit of the holders of the Trust Securities. The Institutional Trustee will make payments of distributions and payments on liquidation, redemption, and otherwise to the holders of the Trust Securities out of funds from the Institutional Trustee Account. Trust and Trustee expenses are not paid from funds in the Institutional Trustee Account, but are paid by Unocal pursuant to the Indenture. See "Description of the Junior Subordinated Debentures--Miscellaneous". For the purpose of compliance with the Trust Indenture Act, The Bank of New York will also act as the Guarantee Trustee and as Debenture Trustee (as defined herein) under the Indenture (as defined herein). The Bank of New York is currently serving as various trustees with respect to the 6 1/4% Trust Preferred Securities and the 6 1/4% Junior Subordinated Debentures. In addition, The Bank of New York is currently the trustee under two indentures under which debt securities in an aggregate principal amount of approximately $1.1 billion, maturing from June 1998 to April 2015, have been issued by Union Oil and guaranteed by Unocal. The Bank of New York is a participating lender under Unocal's bank credit agreement, pursuant to which it has committed to lend to Union Oil and other subsidiaries of Unocal, subject to guarantees by Unocal, an aggregate of approximately $30 million, none of which is outstanding as of the date of this Prospectus. The guarantees by Unocal under the indentures and bank credit agreement described above are Senior Indebtedness (as defined herein). Unocal and its subsidiaries may in the future enter into other relationships with The Bank of New York. The foregoing summary of the material terms and provisions of the Declaration is subject to, and qualified in its entirety by reference to, the Declaration, a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus is a part, the Delaware Trust Act, and the Trust Indenture Act. The business address of the Trust is 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245, and its telephone number at that address is (310) 726-7600. 6 DESCRIPTION OF THE TRUST PREFERRED SECURITIES The Trust Preferred Securities will be issued pursuant to the terms of the Declaration. The Declaration will be qualified as an indenture under the Trust Indenture Act. The Institutional Trustee, The Bank of New York, will act as indenture trustee for the Trust Preferred Securities under the Declaration for purposes of compliance with the Trust Indenture Act. The terms of the Trust Preferred Securities and the rights of the holders thereof, will include those stated in the Declaration, those made part of the Declaration by the Trust Indenture Act, and those set forth in the Delaware Trust Act. The following summary of the material terms and provisions of the Trust Preferred Securities and the rights of the holders thereof, is subject to, and qualified in its entirety by reference to, the Declaration, a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus is a part, the Trust Indenture Act, and the Delaware Trust Act. GENERAL The Declaration authorizes the Regular Trustees to issue on behalf of the Trust the Trust Securities, which will represent undivided beneficial interests in the assets of the Trust. All of the Trust Common Securities will be owned, directly or indirectly, by Unocal. The Trust Common Securities will rank PARI PASSU, and payments will be made thereon on a PRO RATA basis, with the Trust Preferred Securities, except that upon the occurrence and during the continuance of a Declaration Event of Default (as defined herein), the rights of the holders of the Trust Common Securities to receive payment of periodic distributions and payments upon liquidation, redemption, and otherwise will be subordinated to the rights of the holders of the Trust Preferred Securities. The Declaration does not permit the issuance by the Trust of any securities other than the Trust Securities or the incurrence of any indebtedness by the Trust. Pursuant to the Declaration, the Institutional Trustee will hold the Junior Subordinated Debentures for the benefit of the holders of the Trust Securities. The payment of distributions out of money held by the Trust, and payments upon redemption of the Trust Preferred Securities or liquidation of the Trust, will be guaranteed by Unocal to the extent described under "Description of the Guarantee". The Guarantee will be held by The Bank of New York, the Guarantee Trustee, for the benefit of the holders of the Trust Preferred Securities. The Guarantee will not cover payment of distributions when the Trust does not have sufficient available funds to pay such distributions. In such event, the remedy of a holder of Trust Preferred Securities would be to vote to direct the Institutional Trustee to enforce the Institutional Trustee's rights under the Junior Subordinated Debentures except in the limited circumstances in which the holder may take Direct Action (as defined herein). See "--Declaration Events of Default" and "--Voting Rights". Certain United States Federal income tax consequences and special considerations applicable to any such Junior Subordinated Debentures and the Trust Preferred Securities will be described in the Prospectus Supplement. DISTRIBUTIONS The Trust's Preferred Securities will represent preferred beneficial ownership interests in the Trust, and the Distributions on each Preferred Security will be payable at a rate specified in the Prospectus Supplement. Distributions not paid on the regularly scheduled payment date therefor will accumulate interest thereon at the distribution rate, compounded quarterly, to the extent permitted by law. The term "distribution" as used herein includes any such interest payable unless otherwise stated. The amount of distributions payable for any full quarterly distribution period will be computed on the basis of a 360-day year of twelve 30-day months. The amount of distributions payable for any period shorter than a full quarterly distribution period for which distributions are computed, will be computed on the basis of a 30-day month and, for periods of less than a month, the actual number of days elapsed per 30-day month. Distributions on the Trust Preferred Securities will be cumulative, will accumulate from and including the date of original issuance, and will be payable quarterly in arrears on March 1, June 1, September 1 and 7 December 1 of each year or on such dates as specified in the accompanying Prospectus Supplement, when, as and if funds are available for payment. Distributions will be made by the Institutional Trustee, except as otherwise described below. If provided in the applicable Prospectus Supplement, Unocal shall have the right at any time and from time to time during the term of the Junior Subordinated Debentures to defer payment of interest for such number of consecutive interest payment periods as may be specified in the Prospectus Supplement (each, an "Extension Period") on the terms described in the Prospectus Supplement, provided that such Extension Period may not extend beyond the Stated Maturity of such Junior Subordinated Debentures. Distributions on the Trust Preferred Securities must be paid on the dates on which they are payable only to the extent that the Trust has funds available for the payment of such distributions. The Trust's funds available for distribution to the holders of the Trust Preferred Securities will be limited to payments received from Unocal on the Junior Subordinated Debentures. See "Description of the Junior Subordinated Debentures". If Unocal does not make interest payments on such Junior Subordinated Debentures, the Institutional Trustee will not have funds available to pay Distributions on the Trust Preferred Securities. The payment of distributions out of moneys held by the Trust will be guaranteed by Unocal to the extent set forth under "Description of the Guarantee". Distributions on the Trust Preferred Securities will be payable to the holders thereof as they appear on the books and records of the Trust on the relevant record dates, which, as long as the Trust Preferred Securities remain in book-entry only form, will be one Business Day (as defined below) prior to the relevant payment dates. Such distributions will be paid through the Institutional Trustee who will hold amounts received in respect of the Junior Subordinated Debentures for the benefit of the holders of the Trust Securities. Subject to any applicable laws and regulations and the provisions of the Declaration and the Indenture, distributions may, at Unocal's option, be paid either (i) by check mailed to the address of the person entitled thereto as it appears in the register or (ii) by transfer to an account maintained by such person located in the United States; PROVIDED, HOWEVER, that payments to the Depositary (as defined herein) will be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. See "Book-Entry System--The Depository Trust Company". If the Trust Preferred Securities do not continue to remain in book-entry only form, the Regular Trustees shall have the right to select record dates, which shall conform to the rules of any securities exchange or other organization on which the Trust Preferred Securities are listed or quoted and shall be at least one Business Day prior to the relevant payment dates. If any date on which distributions are payable on the Trust Preferred Securities is not a Business Day, then payment of the distributions payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such payment date. A "Business Day" means any day other than a Saturday, Sunday, or any other day on which banking institutions in New York City or Los Angeles, California are permitted or required by any applicable law to close. CONVERSION RIGHTS The terms, if any, on which the Trust Preferred Securities are convertible or exchangeable into Common Stock or other securities will be set forth in the Prospectus Supplement. Such terms may include provisions for conversion or exchange, either mandatory, at the option of the holder, or at the option of Unocal, in which case the number of shares of Common Stock or other securities to be received by the holders of the Trust Preferred Securities would be calculated as of a time and in the manner stated in the Prospectus Supplement. 8 MANDATORY REDEMPTION Upon the repayment of the Junior Subordinated Debentures, whether at maturity or upon redemption, the proceeds from such repayment must immediately be applied to redeem Trust Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Junior Subordinated Debentures so repaid. The Junior Subordinated Debentures may be redeemed, in whole or in part, at the option of Unocal as provided in the Prospectus Supplement, or at any time in certain circumstances upon the occurrence of a Special Event (as defined below). Holders of Trust Securities must be given not less than 30 nor more than 60 days notice of any such redemption. Unocal will issue a press release announcing any such redemption. See "--Special Event Distribution or Redemption" and "Description of the Junior Subordinated Debentures--Redemption at the Option of Unocal". In the event Unocal redeems less than all of the Junior Subordinated Debentures and, therefore, less than all of the outstanding Trust Preferred Securities are to be redeemed, the Trust Preferred Securities will be redeemed pro rata, which means that so long as the Trust Preferred Securities are in book-entry form the redemption proceeds will be distributed in accordance with the procedures of the Depository (as defined herein). See "Book-Entry System--The Depository Trust Company". Unocal may not redeem any Junior Subordinated Debentures (and therefore cause a mandatory redemption of Trust Preferred Securities) unless all accumulated and unpaid distributions have been paid on all outstanding Trust Preferred Securities for all quarterly distribution payment periods terminating on or prior to the last distribution payment date before the date of redemption. Any redemption of Trust Preferred Securities, other than upon the occurrence of a Special Event, will be made at the Prices set forth in the Prospectus Supplement ("Redemption Price") together with accrued and unpaid interest to, but excluding the redemption date. SPECIAL EVENT DISTRIBUTION OR REDEMPTION "Tax Event" means that the Regular Trustees shall have received an opinion of an independent tax counsel experienced in such matters (a "Dissolution Tax Opinion") to the effect that on or after the date of issuance of the Trust Preferred Securities, as a result of (a) any amendment to, clarification of, or change (including any announced prospective change) in the laws, or any regulations thereunder, of the United States or any political subdivision or taxing authority thereof or therein, (b) any judicial decision, official administrative pronouncement, ruling, regulatory procedure, notice, or announcement, including any notice or announcement of intent to adopt such procedures or regulations (an "Administrative Action"), or (c) any amendment to, clarification of, or change in the official position or the interpretation of such Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental authority, or regulatory body, irrespective of the manner in which such amendment, clarification or change is made known, which amendment, clarification, or change is effective or such pronouncement or decision is announced, in each case, on or after, the date of issuance of the Trust Preferred Securities, there is the creation by such change in tax law of more than an insubstantial risk that (i) the Trust is or will be subject to United States federal income tax with respect to interest accrued or received on the Junior Subordinated Debentures, (ii) the Trust is, or will be subject to more than a DE MINIMIS amount of taxes, duties or other governmental charges, or (iii) interest payable in cash by Unocal to the Trust on the Junior Subordinated Debentures (other than interest attributable to the Trust Common Securities) is not, or will not be, deductible, in whole or in part, by Unocal for United States federal income tax purposes; PROVIDED, HOWEVER, that such an opinion shall not be deemed to be a "Dissolution Tax Opinion" if the change in tax law requires Unocal for United States federal income tax purposes to defer taking a deduction for any OID that accrues with respect to the Junior Subordinated Debentures until the interest payment related to such OID is paid by Unocal in cash, PROVIDED, such change in tax law does not create more than an insubstantial risk that Unocal will be prevented from taking a deduction for OID accruing with respect to the Junior Subordinated Debentures at a date that is no later than the date the interest payment related to such OID is actually paid by Unocal in cash. 9 "Investment Company Event" means that the Regular Trustees shall have received an opinion of an independent counsel experienced in such matters (a "Change in 1940 Act Opinion") to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency, or regulatory authority on or after the date of issuance of the Trust Preferred Securities, there is more than an insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the Investment Company Act of 1940, as amended (the "1940 Act"). If, at any time, a Tax Event or an Investment Company Event (each, a "Special Event") shall occur and be continuing, the Trust may with the consent of Unocal, except in the limited circumstances described below, be dissolved with the result that, after satisfaction of liablities of liablities to creditors of the Trust as provided by applicable law, Junior Subordinated Debentures with an aggregate principal amount equal to the aggregate liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accumulated and unpaid distributions on, the Trust Securities, would be distributed to the holders of the Trust Securities in liquidation of such holders' interests in the Trust on a PRO RATA basis within 90 days following the occurrence of the Special Event; PROVIDED that such dissolution and distribution shall be conditioned on (i) the Regular Trustees' receipt of an opinion of an independent tax counsel experienced in such matters (a "No Recognition Opinion"), which opinion may rely on published revenue rulings of the Internal Revenue Service ("IRS"), to the effect that the holders of the Trust Securities will not recognize any gain or loss for United States federal income tax purposes as a result of such dissolution and distribution of Junior Subordinated Debentures, (ii) Unocal or the Trust being unable to avoid such Special Event within such 90-day period by taking some ministerial action (such as filing a form or making an election or pursuing some other similar reasonable measure) that will have no adverse effect on the Trust, Unocal or the holders of the Trust Securities or does not subject any of them to more than DE MINIMIS regulatory requirements and (iii) Unocal's prior written consent to such dissolution and distribution. If Unocal declines to consent to the dissolution and distribution, Unocal may incur an obligation to pay Additional Interest. See "Description of the Junior Subordinated Debentures--Additional Interest". Furthermore, if (i) after receipt of a Dissolution Tax Opinion by the Regular Trustees Unocal has received an opinion (a "Redemption Tax Opinion") of an independent tax counsel experienced in such matters that, as a result of a Tax Event, there is more that an insubstantial risk that Unocal would be precluded from deducting the interest on the Junior Subordinated Debentures for United States federal income tax purposes, even after the Junior Subordinated Debentures were distributed to the holders of Trust Securities in liquidation of such holders' interests in the Trust as described above, or (ii) after receipt of a Dissolution Tax Opinion or a Change in 1940 Act Opinion by the Regular Trustees, such Regular Trustees shall have been informed by independent tax counsel experienced in such matters that it cannot, for substantive reasons, deliver a No Recognition Opinion to the Trust, Unocal shall have the right, upon not less than 30 nor more than 60 days notice, to redeem the Junior Subordinated Debentures, in whole or in part, at 100% of the principal amount thereof, plus accrued and unpaid interest thereon, for cash within 90 days following the occurrence of such Special Event. Following such redemption, Trust Securities with an aggregate liquidation amount equal to the aggregate principal amount of the Junior Subordinated Debentures so redeemed shall be redeemed by the Trust at the liquidation amount thereof plus accumulated and unpaid distributions thereon to, but excluding the redemption date on a PRO RATA basis; PROVIDED, HOWEVER, that if at the time there is available to Unocal the opportunity to eliminate, which elimination shall be complete within such 90-day period, such Special Event by taking some ministerial action that has no adverse effect on the Trust, Unocal or the holders of the Trust Securities, or does not subject any of them to more than DE MINIMIS regulatory requirements, Unocal or the Trust will pursue such measure in lieu of redemption. After the date for any distribution of Junior Subordinated Debentures upon dissolution of the Trust, (i) the Trust Preferred Securities will no longer be deemed to be outstanding, (ii) the Depository or its nominee, as the record holder of the Trust Preferred Securities, will receive a registered global certificate or certificates representing the Junior Subordinated Debentures to be delivered upon such distribution, 10 and (iii) any certificate representing Trust Preferred Securities not held by the Depository or its nominee will be deemed to represent beneficial interests in Junior Subordinated Debentures having an aggregate principal amount equal to the aggregate liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest (including Compound Interest) equal to accumulated and unpaid distributions on such Trust Preferred Securities until such certificates are presented to Unocal or its agent for transfer or reissuance. There can be no assurance as to the market prices for the Trust Preferred Securities or the Junior Subordinated Debentures that may be distributed in exchange for Trust Preferred Securities if a dissolution and liquidation of the Trust were to occur. Accordingly, the Trust Preferred Securities that an investor may purchase, or the Junior Subordinated Debentures that the investor may receive on dissolution and liquidation of the Trust, may trade at a discount to the price that the investor paid to purchase the Trust Preferred Securities offered hereby. REDEMPTION PROCEDURES FOR REDEMPTION BY THE TRUST The Trust may not redeem any of the outstanding Trust Preferred Securities unless all accumulated and unpaid distributions have been paid on all outstanding Trust Preferred Securities for all quarterly distribution periods terminating on or prior to the last distribution payment date before the date of redemption. Trust Preferred Securities redeemed on each redemption date shall be redeemed at the Redemption Price with the applicable proceeds from the contemporaneous redemption of the Junior Subordinated Debentures. Redemptions of the Trust Preferred Securities shall be made and the Redemption Price shall be payable on each redemption date only to the extent that the Trust has funds on hand available for the payment of such Redemption Price See also "--Subordination of Common Securities." If the Trust gives a notice of redemption in respect of Trust Preferred Securities, then, by 12:00 noon, New York City time, on the redemption date, provided that Unocal has paid to the Institutional Trustee funds sufficient to pay the applicable Redemption Price, plus accumulated and unpaid distributions thereon, the Institutional Trustee will irrevocably deposit with the Depositary funds sufficient to pay the applicable Redemption Price, plus accumulated and unpaid distributions thereon, and will give the Depository irrevocable instructions and authority to pay the redemption price plus accumulated and unpaid distributions to the holders of the Trust Preferred Securities. See "Book-Entry System--The Depository Trust Company". If such Trust Preferred Securities are no longer in book-entry form, the Institutional Trustee, to the extent funds are available, will irrevocably deposit with the paying agent for such Trust Preferred Securities funds sufficient to pay the Redemption Price and will give such paying agent irrevocable instructions and authority to pay the Redemption Price to the holders thereof upon surrender of their certificates evidencing such Trust Preferred Securities. Notwithstanding the foregoing, distributions payable on or prior to the redemption date for any Trust Preferred Securities called for redemption shall be payable to the holders of such Trust preferred Securities on the relevant record dates for the related distribution dates. If notice of redemption shall have been given and funds deposited as required, then, immediately prior to the close of business on the date of such deposit, distributions will cease to accrue and all rights of holders of such Trust Preferred Securities so called for redemption will cease, except the right of the holders of such Trust Preferred Securities to receive the Redemption Price, plus accumulated and unpaid distributions thereon, but without further accrued interest on such Redemption Price. The distributions payable upon redemption (unless the date of redemption is a distribution payment date) will be payable to the person to whom the Redemption Price is payable. In the event that any date fixed for redemption of Trust Preferred Securities is not a Business Day, then payment of the Redemption Price, plus accumulated and unpaid distributions thereon, payable on such date will be made on the next succeeding day that is a Business Day (without any interest or other payments in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day. In the event that payment of the Redemption Price, plus accumulated and unpaid distributions thereon, in respect of Trust Preferred Securities is improperly 11 withheld or refused and not paid either by the Institutional Trustee, or, if paid to the Trust, by Unocal pursuant to the Guarantee, distributions on such Trust Preferred Securities will continue to accumulate at the distribution rate from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. In the event that fewer than all of the outstanding Trust Securities are to be redeemed, the Trust Securities will be redeemed pro rata. So long as the Trust Securities are in book-entry form, the distribution of proceeds will be made in accordance with the procedures applied by the Depository. See "Book-Entry System--The Depository Trust Company". If such Trust Securities are no longer in book-entry form, payment of the Redemption Price on the Trust Preferred Securities and any distribution of Junior Subordinated Debentures to holders of Trust Preferred Securities shall be made to the applicable recordholders thereof as they appear on the register for such Trust Preferred Securities on the redemption date. Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), Unocal or any of its subsidiaries may at any time, and from time to time, purchase outstanding Trust Preferred Securities by tender, in the open market or otherwise. Notice of any redemption will be mailed at least 30 days but not more than 60 days before redemption date to each Holder of Trust Securities to be redeemed at its registered address. Unless Unocal defaults in payment of the Redemption Price on the Junior Subordinated Debentures, on and after the redemption date interest will cease to accrue on such Junior Subordinated Debentures or portions thereof (and distributions) will cease to accrue on the Trust Preferred Securities or portions thereof) called for redemption. SUBORDINATION OF TRUST COMMON SECURITIES Payment of distributions on, and the Redemption Price of, Trust Preferred Securities and the Trust Common Securities, as applicable, shall be made pro rata based on the liquidation amount of such Trust Preferred Securities and Trust Common Securities; provided, however, that if on any distribution date or redemption date a Debenture Event of Default shall have occurred and be continuing, no payment of any distribution on, or Redemption Price of, any of the Trust Common Securities, and no other payment on account of the redemption, liquidation or other acquisition of such Trust Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid distributions on all of the outstanding Trust Preferred Securities for all distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all of the Issuer's outstanding Trust Preferred Securities then called for redemption, shall have been made or provided for, and all funds available to the Institutional Trustee shall first be applied to the payment in full in cash of all distributions on, or Redemption Price of, the Trust Preferred Securities then due and payable. In the case of any Event of Default resulting from Debenture Event of Default, Unocal as holder of the Trust Common Securities will be deemed to have waived any right to act with respect to any such Event of Default under the Declaration until the effect of all such Events of Default with respect to such Trust Preferred Securities have been cured, waived or otherwise eliminated. Until any such Events of Default under the Declaration with respect to the Trust preferred Securities have been so cured, waived or otherwise eliminated, the Institutional Trustee shall act solely on behalf of the holders of such Trust Preferred Securities and not on behalf of Unocal as holder of the Trust Common Securities, and only the holders of such Trust Preferred Securities will have the right to direct the Institutional Trustee to act on their behalf. 12 LIQUIDATION DISTRIBUTION UPON DISSOLUTION In the event of any voluntary or involuntary dissolution, winding-up or termination of the Trust (each a "Liquidation"), the then holders of the Trust Preferred Securities will be entitled to receive out of the assets of the Trust, after satisfaction of liabilities to creditors, distributions in an amount equal to the aggregate of the liquidation amount per Trust Preferred Security, plus accumulated and unpaid distributions thereon to the date of payment (the "Liquidation Distribution"), unless, in connection with such Liquidation, Junior Subordinated Debentures in an aggregate principal amount equal to the aggregate liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest equal to accumulated and unpaid distributions on, the Trust Preferred Securities have been distributed on a PRO RATA basis to the holders of the Trust Securities. If, upon any such Liquidation, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution for all Trust Securities, then the amounts payable directly by the Trust on the Trust Securities shall be paid on a PRO RATA basis. The holders of the Trust Common Securities will be entitled to receive distributions upon any such dissolution PRO RATA with the holders of the Trust Preferred Securities, except that if a Declaration Event of Default has occurred and is continuing, the Trust Preferred Securities shall have a preference over the Trust Common Securities with regard to such distributions. Pursuant to the Declaration, the Trust shall dissolve (i) on the thirty-fifth anniversary of the initial issuance of the Trust Securities, the expiration of the term of the Trust, (ii) upon the bankruptcy of Unocal as the holder of the Trust Common Securities, (iii) upon the filing of a certificate of dissolution or its equivalent with respect to Unocal as the holder of the Trust Common Securities, the consent of the holders of at least a majority in liquidation amount of the Trust Securities voting together as a single class to file a certificate of cancellation with respect to the trust, or the revocation of the charter of Unocal as the holder of the Trust Common Securities and the expiration of 90 days after the date of revocation without a reinstatement thereof, (iv) upon the occurrence of a Special Event in the circumstances provided under "Special Event Distribution or Redemption," (v) upon the entry of a decree of a judicial dissolution of the holder of the Trust Common Securities or the Trust, (vi) upon redemption of all the Trust Securities, or (vii) upon the occurrence of such other events described in the Prospectus Supplement. DECLARATION EVENTS OF DEFAULT An event of default under the Indenture (an "Indenture Event of Default") constitutes an event of default under the Declaration with respect to the Trust Securities (a "Declaration Event of Default"). See "Description of Junior Subordinated Debentures--Indenture Events of Default". Upon the occurrence and continuance of a Declaration Event of Default, the Institutional Trustee as the sole holder of the Junior Subordinated Debentures will have the right under the Indenture to declare the principal amount of the Junior Subordinated Debentures to be immediately due and payable. Unocal and the Trust are each required to file annually with the Institutional Trustee an officer's certificate as to its compliance with all conditions and covenants under the Declaration. If the Institutional Trustee fails to enforce its rights under the Junior Subordinated Debentures, any holder of Trust Preferred Securities may institute a legal proceeding against Unocal to enforce the Institutional Trustee's rights under the Junior Subordinated Debentures. Notwithstanding the foregoing, if a Declaration Event of Default has occurred and is continuing and such event is attributable to the failure of Unocal to pay interest or principal on the Junior Subordinated Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, the redemption date), then the registered holder of Trust Preferred Securities may institute a Direct Action for payment on or after the respective due date specified in the Junior Subordinated Debentures. In connection with such Direct Action, Unocal will be subrogated to the rights of such holder of Trust Preferred Securities under the Declaration to the extent of any payment made by Unocal to such holder of Trust Preferred Securities in such Direct Action. 13 The holders of Trust Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Junior Subordinated Debentures. Pursuant to the Declaration, the holder of the Trust Common Securities will be deemed to have waived any Declaration Event of Default with respect to the Trust Common Securities until all Declaration Events of Default with respect to the Trust Preferred Securities have been cured, waived or otherwise eliminated. Until such Declaration Events of Default with respect to the Trust Preferred Securities have been so cured, waived, or otherwise eliminated, the Institutional Trustee will be deemed to acting solely on behalf of the holders of the Trust Preferred Securities and only the holders of the Trust Preferred Securities will have the right to direct the Institutional Trustee with respect to certain matters under the Declaration, and therefore the Indenture. VOTING RIGHTS Except as described herein, under the Delaware Trust Act, the Trust Indenture Act and under "Description of the Guarantee--Modification of the Guarantee; Assignment", and as otherwise required by law and the Declaration, the holders of the Trust Preferred Securities will have no voting rights. Subject to the requirement of the Institutional Trustee obtaining a tax opinion as set forth in the last sentence of the next paragraph, the holders of a majority in aggregate liquidation amount of the Trust Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Institutional Trustee, or direct the exercise of any trust or power conferred upon the Institutional Trustee under the Declaration, including the right to direct the Institutional Trustee, as holder of the Junior Subordinated Debentures, to (i) exercise the remedies available under the Indenture with respect to the Junior Subordinated Debentures, (ii) waive any past Indenture Event of Default that is waivable under the Indenture, or (iii) exercise any right to rescind or annul a declaration that the principal of all the Junior Subordinated Debentures shall be due and payable; PROVIDED, HOWEVER, that if an Indenture Event of Default has occurred and is continuing then, the holders of 25% of the aggregate liquidation amount of the Trust Preferred Securities may direct the Institutional Trustee to declare the principal of and interest on the Junior Subordinated Debentures immediately due and payable; PROVIDED, FURTHER, that, where a consent or action under the Indenture would require the consent or act of holders of more than a majority in principal amount of the Junior Subordinated Debentures (a "Super Majority"), only the holders of at least such Super Majority in aggregate liquidation amount of the Trust Preferred Securities may direct the Institutional Trustee to give such consent or take such action. The Institutional Trustee shall notify all holders of the Trust Preferred Securities of any notice of default received from the Debenture Trustee with respect to the Debentures. Such notice shall state that such Indenture Event of Default also constitutes a Declaration Event of Default. Except with respect to the directing the time, method and place of conducting a proceeding for a remedy, the Institutional Trustee shall not take any of the actions described in clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes. In the event the consent of the Institutional Trustee, as the holder of the Junior Subordinated Debentures, is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Junior Subordinated Debentures, the Institutional Trustee shall request the direction of the holders of the Trust Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a majority in liquidation amount of the Trust Securities voting together as a single class; PROVIDED, HOWEVER, that where a consent under the Indenture would require the consent of a Super Majority, the Institutional Trustee may only give such consent at the direction of the holders of at least the same Super Majority percentage in liquidation amount of the Trust Securities as is required under the Indenture of aggregate principal amount of the Junior Subordinated Debentures outstanding. The Institutional Trustee shall not take any 14 such action in accordance with the direction of the holders of the Trust Securities unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that for the purposes of United States federal income take the Trust will not be classified as other than a grantor trust on account of such action. A waiver of an Indenture Event of Default will constitute a waiver of the corresponding Declaration Event of Default. Any approval or direction of holders of Trust Preferred Securities may be given at a separate meeting of holders of Trust Preferred Securities convened for such purpose, at a meeting of all of the holders of Trust Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which holders of Trust Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such holders is to be taken, to be mailed to each holder of record of Trust Preferred Securities. Each such notice will include a statement setting forth the following information: (i) the date of such meeting or the date by which such action is to be taken; (ii) a description of any resolution proposed for adoption at such meeting on which such holders are entitled to vote or of such matter upon which written consent is sought; and (iii) instructions for the delivery of proxies or consents. No vote or consent of the holders of Trust Preferred Securities will be required for the Trust to redeem and cancel Trust Preferred Securities, distribute Junior Subordinated Debentures, or if provided in the Prospectus Supplement, make adjustments to the conversion price or to the kind and amount of the securities, cash and other property into which the Junior Subordinated Debentures are convertible, each in accordance with the Declaration. Notwithstanding that holders of Trust Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Trust Preferred Securities that are owned at such time by Unocal or any entity directly or indirectly controlling or controlled by, or under direct or indirect common control with, Unocal, shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if such Trust Preferred Securities were not outstanding. The procedures by which holders of Trust Preferred Securities may exercise their voting rights are described below. See "--Book-Entry Only Issuances" and "Book-Entry System--The Depository Trust Company". Holders of the Trust Preferred Securities will have no rights to appoint or remove the Trustees, who may be appointed, removed or replaced solely by Unocal as the indirect or direct holder of all of the Trust Securities. MODIFICATION OF THE DECLARATION The Declaration may be modified and amended if approved by the Regular Trustees (and in certain circumstances the Institutional Trustee), provided that, if any proposed amendment provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Trust Securities, whether by way of amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or termination of the Trust, then the holders of the Trust Securities voting together as a single class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of at least a majority in liquidation amount of the Trust Securities affected thereby; PROVIDED that if any amendment or proposal referred to in clause (i) above would adversely affect only the Trust Preferred Securities or only the Trust Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a majority in liquidation amount of such class of Trust Securities. Notwithstanding the foregoing, no amendment or modification may be made to the Declaration if such amendment or modification would (i) cause the Trust to be classified for purposes of United States federal income taxation as other than a grantor trust, (ii) reduce or otherwise adversely affect the powers 15 of the Institutional Trustee in contravention of the Trust Indenture Act or (iii) cause the Trust to be deemed an "investment company" which is required to be registered under the 1940 Act. MERGERS, CONSOLIDATIONS OR AMALGAMATIONS The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, any corporation or other body, except as described below or as otherwise indicated in the Prospectus Supplement. The Trust may, with the consent of Unocal and the Regular Trustees and without the consent of the holders of the Trust Securities, the Delaware Trustee or the Institutional Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any state, PROVIDED that (i) such successor entity either (x) expressly assumes all of the obligations of the Trust under the Trust Securities or (y) substitutes for the Trust Preferred Securities other securities having substantially the same terms as the Trust Securities (the "Successor Securities"), so long as the Successor Securities rank the same as the Trust Preferred Securities rank with respect to distributions and payments upon liquidation, redemption, and otherwise, (ii) Unocal expressly acknowledges a trustee of such successor entity possessing the same powers and duties as the Institutional Trustee as the holder of the Junior Subordinated Debentures, (iii) Unocal uses its reasonable efforts to cause the Trust Preferred Securities (including any Successor Securities) to be listed or quoted on any national securities exchange or with another organization on which the Trust Preferred Securities are then listed or quoted, (iv) such merger, consolidation, amalgamation or replacement does not cause the Trust Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization, (v) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the holders of the Trust Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity), (vi) such successor entity has a purpose substantially identical to that of the Trust, (vii) prior to such merger, consolidation, amalgamation or replacement, Unocal has received an opinion of an independent counsel to the Trust experienced in such matters to the effect that, (A) such merger, consolidation, amalgamation or replacement does not adversely affect the legal rights, preferences and privileges of the holders of the Trust Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the holders' interest in the new entity), (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor such successor entity will be required to register as an investment company under the 1940 Act, and (C) following such merger, consolidation, amalgamation or replacement, the Trust or such successor entity will continue to be classified as a grantor trust for United States federal income tax purposes, and (viii) Unocal owns all Trust Common Securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee and the Trust Common Securities Guarantee (as defined below). Notwithstanding the foregoing, the Trust shall not, except with the consent of holders of 100% in liquidation amount of the Trust Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it, if such consolidation, amalgamation, merger or replacement would cause the Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. BOOK-ENTRY ONLY ISSUANCES Unless otherwise provided in the Prospectus Supplement, the Depositary Trust Company ("DTC") will act as securities depositary for the Trust Preferred Securities. The Trust Preferred Securities will be issued only as fully registered securities registered in the name of Cede & Co., DTC's nominee ("Cede"). One or more fully registered global Trust Preferred Securities certificates, representing the total aggregate number of Trust Preferred Securities, will be issued and will be deposited with DTC. Although voting with respect to the Trust Preferred Securities is limited, in those cases where a vote is required, neither DTC nor Cede will itself consent or vote with respect to Trust Preferred Securities. Under its usual procedures, 16 DTC would solicit votes on behalf of the Trust through an Omnibus Proxy. Except as provided herein, a Beneficial Owner in a global Trust Preferred Security certificate will not be entitled to receive physical delivery of Trust Preferred Securities. Accordingly, each Beneficial Owner must rely on the procedures of DTC to exercise any rights under the Trust Preferred Securities. A more detailed description of the DTC book-entry system is set forth in "Book-Entry System--The Depository Trust Company" below. INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE The Institutional Trustee, prior to the occurrence of a default with respect to the Trust Securities and after the curing of any defaults that may have occurred, undertakes to perform only such duties as are specifically set forth in the Declaration and, after default, shall exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to such provisions, the Institutional Trustee is under no obligation to exercise any of the powers vested in it by the Declaration at the request of any holder of Trust Preferred Securities, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities which might be incurred hereby. The holders of Trust Preferred Securities will not be required to offer such indemnity in the event such holders, by exercising their voting rights, direct the Institutional Trustee to take any action it is empowered to take under the Declaration following a Declaration Event of Default. The Institutional Trustee also serves as trustee under the Guarantee and the Indenture. See "Unocal Capital Trust II" regarding The Bank of New York's serving as the trustee under two indentures under which debt securities have been issued by Union Oil and guaranteed by Unocal and The Bank of New York's service as various trustees in connection with the 6 1/4% Junior Subordinated Debentures and the 6 1/4% Trust Preferred Securities. PAYING AGENT, REGISTRAR AND TRANSFER AGENT Payments in respect of the Trust Preferred Securities shall be made to DTC, which shall credit the relevant accounts at DTC on the applicable distribution dates or, if any such Trust Preferred Securities are not held by DTC, such payments shall be made by check mailed to the address of the holder entitled thereto as such address shall appear on the Register. Unless otherwise provided in the Prospectus Supplement, the Institutional Trustee will act as paying agent and may designate an additional or substitute paying agent at any time. The paying agent shall be permitted to resign as paying agent upon 30 days' written notice to the Institutional Trustee and Unocal. In the event that the Institutional Trustee shall no longer be the paying agent, the Regular Trustees shall appoint a successor (which shall be a bank or trust company acceptable to the Regular Trustees and Unocal) to act as paying agent. Unless otherwise specified in the Prospectus Supplement, the Institutional Trustee will act as registrar and transfer agent for the Trust Preferred Securities. Registration of transfers of Trust Preferred Securities will be effected without charge by or on behalf of the Trust, but upon payment (with the giving of such indemnity as the Trust or Unocal may require) in respect of any tax or other government charges that may be imposed in relation to it. The Trust will not be required to register or cause to be registered the transfer of Trust Preferred Securities after such Trust Preferred Securities have been called for redemption. GOVERNING LAW The Declaration and the Trust Securities will be governed by, and construed in accordance with, the internal laws of the State of Delaware. MISCELLANEOUS The Regular Trustees are authorized and directed to conduct affairs of, to operate the Trust in such a way that, and to take any action so that the Trust will not be required to register as an "investment company" under the 1940 Act or characterized as other than a grantor trust for United States federal 17 income tax purposes, and to cooperate with Unocal so that the Junior Subordinated Debentures will be treated as indebtedness of Unocal for United States federal income tax purposes. In this connection, the Regular Trustees are authorized to take any action, not inconsistent with the Declaration and applicable law, that the Regular Trustees determine in their discretion to be necessary or desirable to achieve such end, as long as such action does not adversely affect the interests of the holders of the Trust Preferred Securities. Holders of the Trust Preferred Securities have no preemptive or similar rights. The Trust may not borrow money or issue debt or mortgage or pledge any of its assets. DESCRIPTION OF THE GUARANTEE Set forth below is a summary of information concerning the Guarantee which will be executed and delivered by Unocal concurrently with the issuance of the Trust Preferred Securities for the benefit of the holders from time to time of the Trust Preferred Securities. The Guarantee will be qualified as an indenture under the Trust Indenture Act. The Bank of New York will act as the independent trustee under the Guarantee (the "Guarantee Trustee") for purposes of the Trust Indenture Act. The terms of the Guarantee will be those set forth in such Guarantee and those made part of such Guarantee by the Trust Indenture Act. The summary is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the form of Guarantee, which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and the Trust Indenture Act. The Guarantee will be held by the Guarantee Trustee for the benefit of the holders of the Trust Preferred Securities. GENERAL Pursuant to the Guarantee, Unocal will agree, to the extent set forth therein, to pay in full to the holders of the Trust Preferred Securities the Guarantee Payments (as defined herein) (except to the extent paid by the Trust), as and when due, regardless of any defense, right of set-off, or counterclaim which the Trust may have or assert other than the defense of payment. The following payments with respect to Trust Preferred Securities issued by the Trust to the extent not paid by the Trust (the "Guarantee Payments"), will be subject to the Guarantee thereon (without duplication): (i) any accumulated and unpaid distributions which are required to be paid on such Trust Preferred Securities to the extent the Trust shall have funds available therefor; (ii) the redemption price and all accumulated and unpaid distributions to the date of redemption to the extent the Trust has funds available therefor with respect to any Trust Preferred Securities called for redemption by the Trust; and (iii) upon a voluntary or involuntary dissolution, winding-up, or termination of the Trust (other than if provided in the Prospectus Supplement, in connection with the conversion of all of the Trust Securities into Common Stock or the distribution of the Junior Subordinated Debentures to the holders of Trust Preferred Securities as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accumulated and unpaid distributions on such Trust Preferred Securities to the date of payment, to the extent the Trust has funds available therefor and (b) the amount of assets of the Trust remaining available for distribution to holders of such Trust Preferred Securities in liquidation of the Trust. Unocal's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by Unocal to the holders of Trust Preferred Securities or by causing the Trust to pay such amounts to such holders. The Guarantee will rank subordinate and junior in right of payment to all liabilities of Unocal, other than any liabilities which expressly by their terms are made pari passu or subordinate to the obligations of Unocal under the Guarantee. See"--Status of the Guarantee". Since Unocal is a holding company, the right of Unocal to participate in any distribution of assets of any subsidiary upon such subsidiary's liquidation or reorganization or otherwise is subject to the prior claims of creditors of that subsidiary, except to the extent that Unocal may itself be a creditor of that subsidiary. Accordingly, Unocal's obligations under the Guarantee will be effectively subordinated to all existing and future liabilities of 18 Unocal's subsidiaries, and claimants should look only to the assets of Unocal for payments thereunder. Except as otherwise provided in the Prospectus Supplement, the Guarantee does not limit the incurrence or issuance of other secured or unsecured debt of Unocal, including Senior Indebtedness, whether under the Indenture, any other indenture that Unocal may enter into in the future or otherwise. The Guarantee will not apply to any payment of distributions on the Trust Preferred Securities except to the extent the Trust shall have funds available therefor. If Unocal does not make interest payments on the Junior Subordinated Debentures purchased by the Trust, the Trust will not pay distributions on the Trust Preferred Securities issued by the Trust and will not have funds available therefor. See "Description of the Junior Subordinated Debentures--Certain Covenants of Unocal". The Guarantee, when taken together with Unocal's obligations under the Junior Subordinated Debentures, the Indenture, and the Declaration, including its obligations to pay costs, expenses, debts, and liabilities of the Trust (other than with respect to the Trust Securities), will provide a full and unconditional guarantee on a subordinated basis by Unocal of payments due on the Trust Preferred Securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes such guarantee. It is only the combined operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee of the Trust's obligations under the Trust Preferred Securities. Unocal has also agreed separately to fully and unconditionally guarantee the obligations of the Trust with respect to the Trust Common Securities (the "Trust Common Securities Guarantee") to the same extent as the Guarantee, except that upon an Indenture Event of Default, rights of holders of Trust Common Securities to receive payment of periodic distributions and payments on liquidation, redemption, or otherwise will be subordinated to the rights of the holders of Trust Preferred Securities. CERTAIN COVENANTS OF UNOCAL In the Guarantee, Unocal will covenant that, so long as any Trust Preferred Securities remain outstanding, if there shall have occurred any event that would constitute an event of default under the Guarantee or the Declaration, then (a) Unocal shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock (other than (i) purchases or acquisitions of shares of capital stock in connection with any employee benefit plan or program, director plan or program, dividend reinvestment, stock repurchase, or other similar plans available to stockholders of Unocal, or any option, warrant, right, or exercisable, exchangeable, or convertible security outstanding as of the Expiration Date, (ii) as a result of a reclassification of Unocal's capital stock pursuant to the exchange or conversion provisions of Unocal's capital stock or the exchange or conversion of one class or series of Unocal's capital stock for another class or series of Unocal's capital stock or the capital securities of a subsidiary (including a trust such as the Trust), or (iii) the purchase of fractional interests in shares of Unocal's capital stock pursuant to the conversion or exchange provisions of such capital stock or security being converted or exchanged), and (b) Unocal shall not make any payment of interest, principal or premium, if any, on, or repay, repurchase, or redeem or make any guarantee payment (other than pursuant to the Guarantee) with respect to any debt securities issued by Unocal that rank PARI PASSU with or junior to the Junior Subordinated Debentures. MODIFICATION OF THE GUARANTEE; ASSIGNMENT Except with respect to any changes that do not adversely affect the rights of holders of Trust Preferred Securities (in which case no consent of holders of Trust Preferred Securities will be required), the Guarantee may be amended only with the prior approval of the holders of at least a majority in liquidation amount of the outstanding Trust Preferred Securities. The manner of obtaining any such approval will be as set forth under "Description of the Trust Preferred Securities--Voting Rights". All guarantees and agreements contained in a Guarantee shall bind the successors, assigns, receivers, trustees, and representatives of Unocal and shall inure to the benefit of the holders of the Trust Preferred Securities then outstanding. 19 TERMINATION The Guarantee will terminate upon (a) full payment of the Redemption Price of all Trust Preferred Securities, (b) if provided in the Prospectus Supplement, conversion of all the Trust Preferred Securities to Common Stock or distribution of the Junior Subordinated Debentures held by the Trust to the holders of the Trust Preferred Securities or (c) full payment of the amounts payable in accordance with the Declaration upon liquidation of the Trust. Notwithstanding the foregoing, the Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of Trust Preferred Securities must restore payment of any sums paid under Trust Preferred Securities or the Guarantee. The subordination provisions of the Junior Subordinated Debentures provide that in the event payment is made on the Junior Subordinated Debentures or the Guarantee in contravention of such provisions, such payments shall be paid over the holders of Senior Indebtedness. EVENTS OF DEFAULT An event of default under the Guarantee will occur upon the failure of Unocal to perform any of its payment or other obligations thereunder. The holders of a majority in liquidation amount of the Trust Preferred Securities have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of the Guarantee or exercising any trust or power conferred upon the Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce such Guarantee, any holder of Trust Preferred Securities may institute a legal proceeding directly against Unocal to enforce the Guarantee Trustee's rights under the Guarantee, without first instituting a legal proceeding against the Trust, the Guarantee Trustee, or any other person or entity. Notwithstanding the foregoing, if Unocal has failed to make a payment required under the Guarantee, a holder of the Trust Preferred Securities may directly institute a proceeding against Unocal for enforcement of the Guarantee for such payment. Unocal waives any right or remedy to require that any action be brought first against the Trust or any other person or entity before proceeding directly against Unocal. Unocal, as guarantor, is required to file annually with the Guarantee Trustee a certificate as to whether or not Unocal is in compliance with all the conditions and covenants applicable to it under the Guarantee. STATUS OF THE GUARANTEE The Guarantee will constitute an unsecured obligation of Unocal and will rank (i) subordinate and junior in right of payment to all other liabilities of Unocal (including obligations under the Junior Subordinated Debentures), (ii) PARI PASSU with the most senior preferred or preference stock now or hereafter issued by Unocal, with Unocal's guarantee of the 6 1/4% Trust Preferred Securities, and with any guarantee now or hereafter entered into by Unocal in respect of any preferred or preference stock of any affiliate of Unocal; and (iii) senior to the Common Stock. The terms of the Trust Preferred Securities provide that each holder of Trust Preferred Securities by acceptance thereof agrees to the subordination provisions and other terms of the Guarantee relating thereto. The Guarantee does not place a limitation on the amount of additional Senior Indebtedness that may be incurred by Unocal. Unocal expects from time to time to incur additional indebtedness constituting Senior Indebtedness. The Guarantee creates a guarantee of payment and not of collection (that is, the holder of Trust Preferred Securities may institute a legal proceeding directly against Unocal to enforce its rights under the Guarantee without instituting a legal proceeding against the Trust, the Guarantee Trustee, or any other person or entity). 20 INFORMATION CONCERNING THE GUARANTEE TRUSTEE The Guarantee Trustee, before the occurrence of any event of default with respect to the Guarantee and after curing all events of default with respect to the Guarantee that may have occurred, shall undertake to perform only such duties as are specifically set forth in the Guarantee. After an event of default with respect to the Guarantee has occurred, the Guarantee Trustee shall exercise the rights and powers vested in it by the Guarantee, and shall use the same degree of care and skill in its exercise thereof as a prudent individual would exercise or use under the circumstances in the conduct of his or her own affairs. Subject to such provisions, the Guarantee Trustee is under no obligation to exercise any of the powers vested in it by the Guarantee at the request of any holder of Trust Preferred Securities, unless such holder shall have provided to the Guarantee Trustee such security and indemnity, reasonably satisfactory to the Guarantee, against the costs, expenses, and liabilities that might be incurred thereby. GOVERNING LAW The Guarantee will be governed by and construed in accordance with the laws of the State of New York. 21 DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES Set forth below is a description of the specific terms of the Junior Subordinated Debentures. The following description is subject to, and is qualified in its entirety by reference to, the Multiple Series Indenture (the "Base Indenture"), dated as of September 11, 1996, between Unocal and The Bank of New York, as Trustee (the "Debenture Trustee"), the form of which is filed as an Exhibit to the Registration Statement of which this Prospectus is a part and the Supplemental Indenture (the "Supplemental Indenture" and, together with the Base Indenture, the "Indenture") to be entered into by and between Unocal and the Debenture Trustee, the form of which is filed as an Exhibit to the Registration Statement of which this Prospectus is a part, which shall also be amended and subsequently incorporated by reference into the Registration Statement of which this Prospectus is a part . Certain capitalized terms used herein are defined in the Indenture. Under certain circumstances involving the dissolution of the Trust following the occurrence of a Special Event, Junior Subordinated Debentures may be distributed to the holders of the Trust Securities in liquidation of the Trust. See "Description of the Trust Preferred Securities--Special Event Distribution or Redemption". If the Junior Subordinated Debentures are distributed to the holders of the Trust Preferred Securities, Unocal will use its reasonable efforts to have the Junior Subordinated Debentures listed or quoted on such national securities exchange or similar organization on which the Trust Preferred Securities are then listed or quoted, if any. GENERAL The Indenture does not limit the amount of debt securities which can be issued thereunder and provides that debt securities of any series may be issued thereunder up to the aggregate principal amount which may be authorized from time to time by Unocal. The Indenture does not limit the amount of other indebtedness or securities which may be issued by Unocal. The Junior Subordinated Debentures will be issued as unsecured debt under the Indenture. The Junior Subordinated Debentures will be limited in aggregate principal amount to the amount specified in the Prospectus Supplement and may be payable in currencies other than United States dollars, in composite currencies or in amounts determined by reference to an index, all as provided in the Indenture. Unless otherwise provided in the Prospectus Supplement, the Junior Subordinated Debentures are not subject to a sinking fund provision. The entire principal amount of the Junior Subordinated Debentures will mature and become due and payable, together with any accrued and unpaid interest thereon including Compound Interest (as defined herein) and Additional Interest (as defined herein), if any, on the date set forth in the Prospectus Supplement. The Prospectus Supplement will set forth the following specific terms regarding the Junior Subordinated Debentures: (i) the designation and aggregate principal amount of Junior Subordinated Debentures; (ii) the percentage of their principal amount at which such Junior Subordinated Debentures will be issued; (iii) the date or dates (if any) on which such Junior Subordinated Debentures will mature; (iv) the rate per annum or the method of determining the rate or rates per annum, if any, at which such Junior Subordinated Debentures will bear interest; (v) the dates from and on which such interest, if any, will accrue and be payable and the designated record dates for such interest payments; (vi) the place or places where the Junior Subordinated Debentures may be presented for payment, if other than as described under "--Payment and Paying Agents"; (vii) redemption terms; (viii) any conversion or exchange provisions; (ix) provisions for issuance of global securities; (x) the terms and conditions of any obligation or right of Unocal or a holder to convert or exchange the Junior Subordinated Debentures into Trust Preferred Securities; (xi) the form of Declaration and Guarantee Agreement, if applicable; and (xii) any other terms of the Junior Subordinated Debentures not inconsistent with the provisions of the Indenture. If so indicated in the Prospectus Supplement, the terms of the Junior Subordinated Debentures offered 22 thereby may differ from those set forth herein. The Junior Subordinated Debentures may be issued as discounted Junior Subordinated Debentures (bearing no interest or interest at a rate which at the time of issuance is below market rates) to be sold at a discount below their stated principal amount. Federal income tax consequences and other special considerations applicable to such discounted Junior Subordinated Debentures will be described in the Prospectus Supplement. If Junior Subordinated Debentures are distributed to holders of Trust Preferred Securities in liquidation of such holders' interests in the Trust, such Junior Subordinated Debentures will initially be issued as a Global Security (as defined herein). As described herein, under certain limited circumstances, Junior Subordinated Debentures may be issued in certificated form in exchange for a Global Security. See "Book-Entry and Settlement" below. Unless otherwise provided in the Prospectus Supplement, if the Junior Subordinated Debentures are issued in certificated form, such Junior Subordinated Debentures will be in denominations of $50 and integral multiples thereof and may be transferred or exchanged at the offices described below. Payments on Junior Subordinated Debentures issued as a Global Security will be made to DTC, a successor depositary or, in the event that no depositary is used, to a Paying Agent for the Junior Subordinated Debentures. In the event Junior Subordinated Debentures are issued in certificated form, principal and interest will be payable, the transfer of the Junior Subordinated Debentures will be registerable and Junior Subordinated Debentures will be exchangeable for Junior Subordinated Debentures of other denominations of a like aggregate principal amount at the corporate trust office of the Institutional Trustee in New York, New York; PROVIDED that payment of interest may be made at the option of Unocal by check mailed to the address of the holder entitled thereto or by wire transfer to an account appropriately designated by the holder entitled thereto. Notwithstanding the foregoing, so long as the holder of any Junior Subordinated Debentures is the Institutional Trustee, the payment of principal and interest on the Junior Subordinated Debentures held by the Institutional Trustee will be made at such place and to such account as may be designated by the Institutional Trustee. In the event of any redemption, neither Unocal nor the Debenture Trustee shall be required to (i) issue, register the transfer of or exchange Junior Subordinated Debentures during a period beginning at the opening of business 15 days before the day of selection for redemption of Junior Subordinated Debentures and ending at the close of business on the day of mailing of the relevant notice of redemption or (ii) transfer or exchange any Junior Subordinated Debentures so selected for redemption, except, in the case of any Junior Subordinated Debentures being redeemed in part, any portion thereof not to be redeemed. The Indenture provides that if a series of Junior Subordinated Debentures is denominated in a currency other than United States dollars or in a composite currency, in the absence of a contrary provision in the Junior Subordinated Debentures any action or distribution under the Indenture will be based on the relative amount of United States dollars that could be obtained on such reasonable basis of exchange on such date as is specified by Unocal to the Debenture Trustee. All of the Junior Subordinated Debentures will be unsecured general obligations of Unocal. Since Unocal is a holding company, the rights of Unocal to participate in any distribution of assets of any subsidiary upon its liquidation or reorganization or otherwise (and thus the ability of holders of the Junior Subordinated Debentures to benefit indirectly from such distribution) are subject to the prior claims of creditors of that subsidiary, except to the extent that Unocal may itself be a creditor of that subsidiary. Claims on Unocal's subsidiaries by creditors other than Unocal include long-term debt and substantial obligations in respect of federal funds purchased, securities sold under repurchase agreements and certain other short-term borrowings, as well as deposit liabilities. Accordingly, the Junior Subordinated Debentures will be effectively subordinated to all existing and future liabilities of Unocal's subsidiaries, and holders of the Junior Subordinated Debentures should look only to the assets of Unocal for payments on the Junior Subordinated Debentures. Neither the Indenture nor the Junior Subordinated Debentures contain provisions which would afford holders of the Junior Subordinated Debentures protection in the event of a takeover, recapitalization or similar restructuring involving Unocal which could adversely affect the Junior Subordinated Debentures. 23 SUBORDINATION The Junior Subordinated Debentures are subordinated and junior in right of payment to all Senior Indebtedness of Unocal to the extent set forth in the Indenture. No payment of principal (including redemption payments), premium, if any, or interest on the Junior Subordinated Debentures may be made (i) if any Senior Indebtedness of Unocal is not paid when due and any applicable grace period with respect to such default has ended and such default has not been cured or waived or ceased to exist, or (ii) if the maturity of any Senior Indebtedness of Unocal has been accelerated because of a default and such acceleration has not been rescinded. Upon any payment by Unocal or distribution of assets of Unocal to creditors upon any dissolution, winding-up, liquidation, or reorganization, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all principal, premium, if any, and interest due or to become due on all Senior Indebtedness of Unocal must be paid in full before the holders of Junior Subordinated Debentures are entitled to receive or retain any payment. Upon satisfaction of all claims of all Senior Indebtedness then outstanding, the rights of the holders of the Junior Subordinated Debentures will be subrogated to the rights of the holders of Senior Indebtedness of Unocal to receive payments of distributions applicable to Senior Indebtedness until all amounts owing on the Junior Subordinated Debentures are paid in full. For purposes of the subordination provisions, the payment, issuance and delivery of cash, property or securities (other than stock and certain subordinated securities of Unocal) upon conversion of a Junior Subordinated Debenture will be deemed to constitute payment on account of the principal of such Junior Subordinated Debenture. By reason of such subordination, in the event of liquidation or insolvency, creditors of Unocal may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than the holders of the Junior Subordinated Debentures. In the event of the acceleration of the maturity of any Junior Subordinated Debentures, the holders of Senior Indebtedness outstanding at the time of such acceleration will first be entitled to receive payment in full of all amounts due thereon before the holders of the Junior Subordinated Debentures will be entitled to receive any payment upon the principal of (and premium, if any) or interest on, the Junior Subordinated Debentures. The term "Senior Indebtedness" means, with respect to Unocal, all current and future obligations and liabilities of Unocal (whether absolute, accrued, fixed, contingent, liquidated, unliquidated, or otherwise), except for (1) accounts payable or any other obligations of Unocal to trade creditors created or assumed by Unocal in the ordinary course of business, (2) any obligation that is expressly by its terms subordinated to or PARI PASSU with the Junior Subordinated Debentures, and (3) any obligation or liability of Unocal to any person of which at least a majority of the voting interest under ordinary circumstances is at such time, directly or indirectly, owned by Unocal. In addition, such Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification, or waiver of any term of such Senior Indebtedness. The Indenture does not limit the aggregate amount of Senior Indebtedness that may be issued or incurred by Unocal and does not limit obligations at Union Oil or other subsidiaries which are structurally senior to the Junior Subordinated Debentures. CERTAIN COVENANTS OF UNOCAL If Unocal shall have exercised its right to defer payment of interest on the Junior Subordinated Debentures by extending the interest payment period as provided in the Indenture and such period, or any extension thereof, shall be continuing, then (a) Unocal shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock (other than (i) purchases or acquisitions of shares of capital stock in connection with any employee benefit plan or program, director plan or program, dividend reinvestment, stock repurchase, or other similar plans available to stockholders of Unocal, or any option, warrant, right, or exercisable, 24 exchangeable, or convertible security outstanding as of the Expiration Date, (ii) as a result of a reclassification of Unocal's capital stock pursuant to the exchange or conversion provisions of Unocal's capital stock or the exchange or conversion of one class or series of Unocal's capital stock for another class or series of Unocal's capital stock or the capital securities of a subsidiary (including a trust such as the Trust), or (iii) the purchase of fractional interests in shares of Unocal's capital stock pursuant to the conversion or exchange provisions of such capital stock or security being converted or exchanged), and (b) Unocal shall not make any payment of interest, principal or premium, if any, on, or repay, repurchase, or redeem or make any guarantee payment (other than pursuant to the Guarantee) with respect to any debt securities issued by Unocal that rank PARI PASSU with or junior to the Junior Subordinated Debentures. Except as otherwise provided in the Indenture, for so long as the Junior Subordinated Debentures are issued to the Trust or the Institutional Trustee and the Trust Securities remain outstanding, Unocal will covenant: (i) to directly or indirectly maintain 100% ownership of the Trust Common Securities; PROVIDED, HOWEVER, that any permitted successor of Unocal under the Indenture may succeed to Unocal's ownership of such Trust Common Securities; (ii) to use its reasonable efforts to cause the Trust (a) to remain a statutory business trust, except in connection with the distribution of the Junior Subordinated Debentures, the redemption of all Trust Securities, or certain mergers, consolidations, amalgamations or other transactions, each as permitted by the Indenture or the Declaration, and (b) to continue to be classified as a grantor trust for United States federal income tax purposes; and (iii) to use its reasonable efforts to cause each holder of Trust Securities to be treated as owning an undivided beneficial interest in the Junior Subordinated Debentures. REDEMPTION AT THE OPTION OF UNOCAL Except as described below with respect to accrued and unpaid interest, Unocal will have the right to redeem the Junior Subordinated Debentures, in whole or in part, from time to time, as provided in the Prospectus Supplement, upon not less than 30 nor more than 60 days notice, at the Redemption Prices set forth in the Prospectus Supplement. Notwithstanding the foregoing, Unocal may not redeem any Junior Subordinated Debentures unless all accrued and unpaid interest has been paid on all outstanding Junior Subordinated Debentures for all quarterly interest payment periods terminating on or prior to the last interest payment date before the date of redemption. If Junior Subordinated Debentures are redeemed on any interest payment date accrued and unpaid interest shall be payable to holders of record on the record date for such interest payment. Unocal shall also have the right to redeem the Junior Subordinated Debentures at any time in certain circumstances upon the occurrence of a Special Event as described under "Description of the Trust Preferred Securities--Special Event Distribution or Redemption" at 100% of the principal amount thereof, plus accrued and unpaid interest thereon (including Compound Interest), to, but excluding, the redemption date or as otherwise provided in the Prospectus Supplement. So long as the Trust Preferred Securities are outstanding, the Declaration requires that the proceeds from the redemption of any of the Junior Subordinated Debentures will be used to redeem Trust Preferred Securities. INTEREST Each Junior Subordinated Debenture shall bear interest at the per annum rate provided in the Prospectus Supplement from the date of original issuance. Interest is payable quarterly in arrears on the interest payment dates provided in the Prospectus Supplement of each year (each an "Interest Payment Date"), to the person in whose name such Junior Subordinated Debenture is registered, subject to certain exceptions, at the close of business on the business day next preceding such Interest Payment Date. In the event the Trust Preferred Securities shall not continue to remain in book-entry only form and the Junior 25 Subordinated Debentures are not in the form of a global security, Unocal shall have the right to select record dates, which shall be at least one business day before an Interest Payment Date. The amount of interest will be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on the Junior Subordinated Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, then such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. If provided in the Prospectus Summary, Unocal shall have the right at any time and from time to time during the term of the Junior Subordinated Debentures to defer payment of interest for such number of consecutive interest payment periods as may be specified in the Prospectus Supplement (each, an "Extension period") on the terms described in the Prospectus Supplement, provided that such Extension Period may not extend beyond the Stated Maturity of such Junior Subordinated Debentures. Certain United States Federal income tax consequences and special considerations applicable to such Junior Subordinated Debentures will be described in the Prospectus Supplement. CONVERSION OF THE JUNIOR SUBORDINATED DEBENTURES The terms, if any, on which Junior Subordinate Debentures are convertible or exchangeable into Trust Preferred Securities or other securities will be set forth in the Prospectus Supplement relating thereto. Such terms may include provisions for conversion or exchange, either mandatory, at the option of the holder, or at the option of Unocal, in which case the number of shares of Preferred Securities or other securities to be received by the holders of Junior Subordinated Debentures would be calculated as of a time and in the manner stated in the Prospectus Supplement relating thereto. ADDITIONAL INTEREST If at any time the Trust shall be required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, Unocal will pay as additional interest ("Additional Interest") such additional amounts as shall be required so that the net amounts received and retained by the Trust after paying any such taxes, duties, assessments or other governmental charges will be not less than the amounts the Trust would have received had no such taxes, duties, assessments or other governmental charges been imposed. CONSOLIDATION, MERGER AND SALE OF ASSETS Except as otherwise provided in the Indenture, Unocal may not merge or consolidate or sell or convey all or substantially all of its assets unless the successor corporation (if other than Unocal) is a domestic corporation and assumes Unocal's obligations on the Junior Subordinated Debentures and under the Indenture. The Indenture does not contain provisions that afford the Junior Subordinated Debentures protection in the event of a highly leveraged transaction involving Unocal. INDENTURE EVENTS OF DEFAULT Unless otherwise provided in the Prospectus Supplement, any one of the following events will constitute an Indenture Event of Default with respect to the Junior Subordinated Debentures: (a) default in the payment of any interest on the Junior Subordinated Debentures when due and payable, if continued for 30 days after written notice has been given as provided in the Indenture, whether or not such payment is prohibited by the subordination provisions of the Indenture and the Junior Subordinated Debentures, 26 PROVIDED, HOWEVER, that a valid extension of the interest payment period does not constitute a default in the payment of interest; (b) default in the payment of principal of (or premium, if any, on) the Junior Subordinated Debentures when due and payable whether or not such payment is prohibited by the subordination provisions of the Indenture and the Junior Subordinated Debentures, PROVIDED, HOWEVER, that a valid extension of the maturity of such Junior Subordinated Debentures does not constitute a default in the payment of principal or premium; if any, (c) failure to perform any other covenant of Unocal in the Indenture or the Junior Subordinated Debentures (other than a covenant included in the Indenture solely for the benefit of any series of debt securities other than the Junior Subordinated Debentures), if continued for 90 days after written notice has been given as provided in the Indenture; (d) certain events in bankruptcy, insolvency or reorganization involving Unocal; (e) the voluntary or involuntary dissolution, winding-up, or termination of the Trust, except in connection with (i) the distribution of Junior Subordinated Debentures to the holders of Trust Securities in liquidation of the Trust or in their interest in the Trust, (ii) the redemption of the Trust Preferred Securities, and (iii) certain mergers, consolidations or amalgamations, each as permitted by the Declaration; or (f) any other Events of Default described in the Prospectus Supplement. If any Indenture Event of Default shall occur and be continuing, the Institutional Trustee, as the holder of the Junior Subordinated Debentures, will have the right to declare the principal of the Junior Subordinated Debentures (including any Compound Interest and Additional Interest, if any) and any other amounts payable under the Indenture to be forthwith due and payable and to enforce its other rights as a creditor with respect to the Junior Subordinated Debentures. An Indenture Event of Default also constitutes a Declaration Event of Default. The holders of Trust Preferred Securities in certain circumstances have the right to direct the Institutional Trustee to exercise its rights as the holder of the Junior Subordinated Debentures. See "Description of the Trust Preferred Securities--Declaration Events of Default" and "--Voting Rights". Notwithstanding the foregoing, if an Indenture Event of Default has occurred and is continuing and such event is attributable to the failure of Unocal to pay interest or principal on the Junior Subordinated Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, the redemption date), Unocal acknowledges that then a holder of Trust Preferred Securities may institute a Direct Action for payment on or after the respective due date specified in the Junior Subordinated Debentures. Notwithstanding any payments made to such holder of Trust Preferred Securities by Unocal in connection with a Direct Action, Unocal shall remain obligated to pay the principal of or interest on the Junior Subordinated Debentures held by the Trust or the Institutional Trustee of the Trust, and Unocal shall be subrogated to the rights of the holder of such Trust Preferred Securities with respect to payments on the Trust Preferred Securities to the extent of any payments made by Unocal to such holder in any Direct Action. The holders of Trust Preferred Securities will not be able to exercise directly any other remedy available to the holders of the Junior Subordinated Debentures. DEFEASANCE The obligations of Unocal with respect to the payment of the principal of, and interest on, the Junior Subordinated Debentures will terminate if Unocal irrevocably deposits or causes to be deposited with the Debenture Trustee, under the terms of an escrow trust agreement in form and substance satisfactory to the Debenture Trustee, as a trust fund specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Junior Subordinated Debentures, (i) money, (ii) U.S. government obligations, which through the payment of interest and principal in respect thereof in accordance with their terms will provide money at such time or times as payments are due and payable on the Junior Subordinated Debentures, or (iii) a combination of (i) and (ii), sufficient to pay and discharge the Junior Subordinated Debentures (and all other sums payable with respect to the Junior Subordinated Debentures). The discharge of the Junior Subordinated Debentures is subject to certain other conditions, including (without limitation) (a) no Indenture Event of Default or event (including such deposit) which with notice or lapse of time would become an Indenture Event of Default shall have occurred and be continuing on the date of such deposit, 27 and (b) such deposit and the related intended consequence will not result in any default or event of default under any material indenture, agreement, or other instrument binding upon Unocal or its subsidiaries or any of their properties. If provided in the Prospectus Supplement, the conversion rights under the Indenture will survive until the Junior Subordinated Debentures are no longer outstanding. MODIFICATION, WAIVER, MEETINGS, AND VOTING MODIFICATION OF INDENTURES. The Indenture will provide that Unocal and the Debenture Trustee may, without the consent of any holders of Junior Subordinated Debentures or any other series of securities issued thereunder, enter into supplemental indentures for the purposes, among other things, of adding to Unocal's covenants, adding additional Indenture Events of Default, establishing the form or terms of Junior Subordinated Debentures or any other series of securities issued thereunder or curing ambiguities or inconsistencies in such Indenture, or making other changes to the Indenture or form or terms of the Junior Subordinated Debentures or any other series of securities issued thereunder, provided such action does not have a material adverse effect on the interests of the holders of the Junior Subordinated Debentures or any other series of securities issued thereunder. In addition, modifications and amendments of the Indenture may be made by Unocal and the Debenture Trustee with the consent of the holders of not less than a majority in aggregate principal amount of the Junior Subordinated Debentures then outstanding affect by such modification or amendment; PROVIDED, HOWEVER, that no such modification or amendment may, without the consent of each holder of Junior Subordinated Debentures and each holder of any other securities issued under the Indenture, in each case which is outstanding and is affected thereby, (a) change the stated maturity of the principal of, or any installment of principal of or rate of interest on the Junior Subordinated Debentures, (b) reduce the principal amount of or interest on any Junior Subordinated Debentures, (c) change any obligation to pay Additional Amounts with respect to the Junior Subordinated Debentures, (d) change the place of payment or the currency or currency unit in which the Junior Subordinated Debentures or interest thereon is payable, (e) impair the right to institute suit for the enforcement of any payment on or with respect to the Junior Subordinated Debentures, (f) reduce the percentage in principal amount of the Junior Subordinated Debentures then outstanding required for modification or amendment of the Indenture or for any waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults, (g) change any obligation of Unocal to maintain an office or agency in the places and for the purposes required by the Indenture, (h) if provided in the Prospectus Supplement, make any change that would materially adversely affect the right to convert the Junior Subordinated Debentures, or (i) modify any of the above positions. WAIVER OF DEFAULT. The holders of a majority in aggregate principal amount of the Junior Subordinated Debentures then outstanding may, on behalf of the holders of all Junior Subordinated Debentures, waive compliance by Unocal with certain restrictive provisions of the Indenture. The holders of a majority in aggregate principal amount of the Junior Subordinated Debentures then outstanding may, on behalf of the holders of all Junior Subordinated Debentures, waive any past default under the Indenture with respect to the Junior Subordinated Debentures except a default (a) in the payment of principal of or any interest on the Junior Subordinated Debentures and (b) in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of each holder of the Junior Subordinated Debentures then outstanding. MEETINGS AND VOTING. A meeting of the holders of the Junior Subordinated Debentures may be called at any time by the Debenture Trustee, and upon request, by Unocal (pursuant to a resolution of the Board) or the holders of at least 25% in principal amount of the Junior Subordinated Debentures then outstanding. Except as described above under "Modifications of Indentures" and "Waiver of Default," a resolution presented at a meeting or reconvened meeting at which a quorum of the holders of Junior Subordinated Debentures then outstanding is present may be adopted by the affirmative vote of the lesser of (i) the holders of a majority in principal amount of the Junior Subordinated Debentures then outstanding, or (ii) the holders of 66 2/3% in principal amount of the Junior Subordinated Debentures then 28 outstanding represented and voting at the meeting; PROVIDED, HOWEVER, that if any consent, waiver, or other action which the Indenture expressly provides may be made, given, or taken by the holders of a specified percentage, which is less than a majority of the principal amount of the Junior Subordinated Debentures then outstanding, such action may be adopted at a meeting or reconvened meeting at which a quorum is present by the affirmative vote of the lesser of (a) the holders of such specified percentage in principal amount of the Junior Subordinated Debentures then outstanding or (b) a majority in principal amount of Junior Subordinated Debentures then outstanding represented and voting at the meeting. Any resolution passed or decision taken at any meeting of holders of Junior Subordinated Debentures duly held in accordance with the Indenture will be binding on all holders of Junior Subordinated Debentures whether or not present or represented at the meeting. Except with respect to certain reconvened meetings, the quorum at a meeting of the holders of a Junior Subordinated Debenture will be persons holding or representing a majority in principal amount of the Junior Subordinated Debentures then outstanding. PAYMENT AND PAYING AGENTS Unless otherwise indicated in the Prospectus Supplement, payment of principal of (and premium, if any) and any interest on Junior Subordinated Debentures will be made at the offices of The Bank of New York, as paying agent in the City of New York, or at the offices of such other paying agent or paying agents as Unocal may designate from time to time in the Prospectus Supplement, except that at the option of Unocal payment of any interest may be made (i), except in the case of Global Junior Subordinated Debentures, by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by transfer to an account maintained by the Person entitled thereto as specified in the Securities Register, provided that proper transfer instructions have been received by the record date. Unless otherwise indicated in the Prospectus Supplement, payment of any interest on Junior Subordinated Debentures will be made to the Person in whose name such Junior Subordinated Debenture is registered at the close of business on the record date for such interest, except in the case of Defaulted interest. Unocal may at any time designate additional paying agents or rescind the designation of any paying agent; however Unocal will at all times be required to maintain a paying agent in New York for the Junior Subordinated Debentures. Any monies deposited with the Debenture Trustee or any paying agent, or then held by Unocal in trust, for the payment of the principal of (and premium, if any) or interest on any Junior Subordinated Debenture and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall, at the request of Unocal, be repaid to Unocal and the holder of such Junior Subordinated Debenture shall thereafter look, as a general unsecured creditor, only to Unocal for payment thereof. BOOK-ENTRY AND SETTLEMENT If distributed to holders of Trust Preferred Securities in connection with the involuntary or voluntary dissolution, winding-up, or liquidation of the Trust as a result of the occurrence of a Special Event, the Junior Subordinated Debentures will be issued in the form of one or more global certificates registered in the name of the depository or its nominee. For further detail, see "Book-Entry System--The Depository Trust Company" below. 29 THE DEPOSITORY If the Junior Subordinated Debentures are distributed to holders of Trust Preferred Securities in liquidation of such holders' interests in the Trust, unless otherwise provided in the Prospectus Supplement, DTC will act as securities depository for the Junior Subordinated Debentures. For a description of DTC and the specific terms of the depository arrangements, see "Description of the Trust Preferred Securities-- Book-Entry Only Issuances". None of Unocal, the Trust, the Institutional Trustee, any paying agent and any other agent of Unocal or the Debenture Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Security for such Junior Subordinated Debentures or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. DISCONTINUANCE OF THE DEPOSITORY'S SERVICES A Global Security shall be exchangeable for Junior Subordinated Debentures registered in the names of persons other than the Depository or its nominee only if (i) the Depository notifies Unocal that it is unwilling or unable to continue as a depository for such Global Security and no successor depository shall have been appointed, (ii) the Depository, at any time, ceases to be a clearing agency registered under the Exchange Act at which time the Depository is required to be so registered to act as such depository and no successor depository shall have been appointed, (iii) Unocal, in its sole discretion, determines that such Global Security shall be so exchangeable or (iv) there shall have occurred an Indenture Event of Default with respect to such Junior Subordinated Debentures. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Junior Subordinated Debentures registered in such names as the Depository shall direct. It is expected that such instructions will be based upon directions received by the Depository from its Participants with respect to ownership of beneficial interests in such Global Security. GOVERNING LAW The Indenture and the Junior Subordinated Debentures will be governed by, and construed in accordance with, the internal laws of the State of New York. MISCELLANEOUS The Indenture will provide that Unocal will pay all fees and expenses related to (i) the issuance of the Trust Securities and the Junior Subordinated Debentures, (ii) the organization, maintenance and dissolution of the Trust, (iii) the retention of the Trustees and (iv) the enforcement by the Institutional Trustee of the rights of the holders of the Trust Preferred Securities. The payment of such fees and expenses will be fully and unconditionally guaranteed by Unocal. Unocal will have the right at all times to assign any of its respective rights or obligations under the Indenture to a direct or indirect wholly owned subsidiary of Unocal; provided that, in the event of any such assignment, Unocal will remain liable for all of their respective obligations. Subject to the foregoing, the Indenture will be binding upon and inure to the benefit of the parties thereto and their respective successors and assigns. The Indenture provides that it may not otherwise be assigned by the parties thereto. 30 EFFECT OF OBLIGATIONS UNDER THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE As set forth in the Declaration, the sole purposes of the Trust are (a) issuing its Trust Securities in exchange for Junior Subordinated Debentures having an aggregate principal amount equal to the aggregate liquidation amount of such Trust Securities and (b) engaging in such other activities as are necessary or incidental thereto. As long as payments of interest and other payments are made when due on the Junior Subordinated Debentures, such payments will be sufficient to cover distributions and payments due on the Trust Securities because of the following factors: (i) the aggregate principal amount of Junior Subordinated Debentures will be equal to the sum of the aggregate liquidation amount of the Trust Securities; (ii) the interest rate and the interest and other payment dates on the Junior Subordinated Debentures will match the distribution rate and distribution and other payment dates for the Trust Securities; (iii) Unocal shall pay all, and the Trust shall not be obligated to pay, directly or indirectly, costs, expenses, debt, and obligations of the Trust (other than with respect to the Trust Securities); and (iv) the Declaration further provides that the Trustees shall not take or cause or permit the Trust to, among other things, engage in any activity that is not consistent with the purposes of the Trust. Payments of distributions (to the extent funds therefor are available) and other payments due on the Trust Preferred Securities (to the extent funds therefor are available) are guaranteed by Unocal as and to the extent set forth under "Description of the Guarantee". If Unocal does not make interest payments on the Junior Subordinated Debentures held by the Trust, the Trust will not have sufficient funds to pay distributions on the Trust Preferred Securities. The Guarantee is a full guarantee on a subordinated basis with respect to the Trust Preferred Securities issued by the Trust from the time of its issuance but does not apply to any payment of distributions unless and until the Trust has sufficient funds for the payment of such distributions. The Guarantee covers the payment of distributions and other payments on the Trust Preferred Securities only if and to the extent that Unocal has made a payment of interest or principal on the Junior Subordinated Debentures held by the Trust as its sole asset. The Guarantee, when taken together with Unocal's obligations under the Junior Subordinated Debentures, the Indenture and the Declaration, including its obligations to pay costs, expenses, debts and liabilities of the Trust (other than with respect to the Trust Securities), provides a full and unconditional guarantee of amounts on the Trust Preferred Securities. If Unocal fails to make interest or other payments on the Junior Subordinated Debentures when due (taking account of any Extension Period), the Declaration provides a mechanism whereby a holder of the Trust Preferred Securities, using the procedures described in "Description of the Trust Preferred Securities--Book-Entry Only Issuances," and "--Voting Rights," and "Book Entry System--The Depository Trust Company" may direct the Institutional Trustee to enforce its rights under the Junior Subordinated Debentures. Notwithstanding the foregoing, in such circumstances a holder of Trust Preferred Securities may institute a Direct Action for payment on or after the respective due date specified in the Junior Subordinated Debentures. In connection with such Direct Action, Unocal will be subrogated to the rights of such holder of Trust Preferred Securities in such Direct Action. Unocal, under the Guarantee, acknowledges that the Guarantee Trustee shall enforce the Guarantee on behalf of the holders of the Trust Preferred Securities. If Unocal fails to make payments under the Guarantee, the Guarantee provides a mechanism whereby the holders of the Trust Preferred Securities may direct the Guarantee Trustee to enforce its rights thereunder. Any holder of Trust Preferred Securities may institute a legal proceeding directly against Unocal to enforce such holder's right to receive payment under the Guarantee without first instituting a legal proceeding against the Trust, the Guarantee Trustee, or any other person or entity. 31 BOOK-ENTRY SYSTEM--THE DEPOSITORY TRUST COMPANY Unless otherwise provided in the Prospectus Supplement, DTC (the "Depository") will act as the Depository for the Trust Preferred Securities and, if such are distributed to the holders of Trust Preferred Securities as described herein, is expected to act as the Depository for the Junior Subordinated Debentures. For purposes of the description of the book-entry system below, the Trust Preferred Securities and the Junior Subordinated Debentures are referred to as the "Offered Securities". One or more fully- registered global certificates (each, a "Global Security") will be issued for the Trust Preferred Securities and for the Junior Subordinated Debentures, representing in the aggregate the total number of such Trust Preferred Securities or aggregate principal balance of Junior Subordinated Debentures, respectively, and will be deposited with, or on behalf of, DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants (the "Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations (the "Direct Participants"). DTC is owned by a number of its Direct Participants and by the NYSE, the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others, such as securities brokers and dealers, banks, and trust companies that clear transactions through or maintain a direct or indirect custodial relationship with a Direct Participant either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission. The ownership interest of each actual owner of an Offered Security ("Beneficial Owner") within the DTC system is recorded on the Direct and Indirect Participants' records and is credited to the Direct Participant on DTC's records. Beneficial Owners will not receive written confirmation from DTC of their transactions, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the Direct or Indirect Participants through which the Beneficial Owners exchanged or hold Offered Securities. Transfers of ownership interests in the Offered Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in an Offered Security, except in the event that use of the book-entry system for such Offered Security is discontinued. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interests in the Offered Securities represented by a global certificate. To facilitate subsequent transfers, all the Offered Securities deposited by Participants with DTC are registered in the name of Cede. The deposit of Offered Securities with DTC and their registration in the name of Cede effect no change in beneficial ownership. DTC has no knowledge of the identity of the Beneficial Owners of the Offered Securities, as its records reflect only the identity of the Direct Participants to whose accounts such Offered Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners will 32 be governed by arrangements among them, subject to any statutory or regulatory requirements that may be in effect from time to time. Redemptions are coordinated through DTC. Redemption notices shall be sent to Cede. If less than all of the Offered Securities held by DTC are being redeemed, DTC will reduce the amount of the interest of each Direct Participant in such Offered Securities in accordance with its procedures. Conversions are coordinated through DTC. Conversions notices shall be sent to Cede by a Direct Participant for the benefit of Beneficial Owners. DTC will reduce the amount of interest of a Direct Participant in the Offered Securities as result of any such conversion in accordance with its procedures. Additionally, although voting with respect to the Offered Securities is limited, in those cases where a vote is required, neither DTC nor Cede will itself consent or vote with respect to such securities. Under its usual procedures, DTC would mail an Omnibus Proxy to the issuer of the Offered Security for which a vote is being solicited as soon as possible after the record date. The Omnibus Proxy assigns Cede consenting or voting rights to those Direct Participants to whose accounts the voting Offered Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Unocal and the Trust believe that the arrangements among DTC, Direct and Indirect Participants, and Beneficial Owners will enable the Beneficial Owners to exercise rights equivalent in substance to the rights that can be directly exercised by a holder of an Offered Security. Distribution payments on the Offered Securities are made to DTC. DTC's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown of DTC's record unless DTC has reason to believe that it will not receive payments on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the account of customers in bearer form or registered in "street name," and such payments will be the responsibility of such Participant and not of DTC, the Trust, or Unocal, subject to any statutory or regulatory requirements to the contrary that may be in effect from time to time. Payment of distributions to DTC is the responsibility of the issuer of the Offered Security, disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. DTC has advised Unocal that it will take any action permitted to be taken by a holder of the Offered Securities (including, without limitation, the presentation of a stock certificate for conversion) only at the direction of one or more Participants to whose account with DTC interests in shares presented by a global certificate are credited and only in respect of such number of the shares of the Offered Securities represented by a global certificate as to which such Participants have given such direction. Except as provided herein, a Beneficial Owner in a global Trust Security certificate will not be entitled to receive physical delivery of such securities. Accordingly, each Beneficial Owner must rely on the procedures of DTC to exercise any rights under such securities. Because DTC can only act on behalf of Participants, who in turn act on behalf of Indirect Participants, the ability of a person having a beneficial interest in shares represented by a global certificate to pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate of such interest. DTC may discontinue providing its services as Depository with respect to the Offered Securities at any time by giving reasonable notice to the issuer. Under such circumstances, in the event that a successor securities depositary is not obtained, certificates for the Offered Securities for which DTC has discontinued its services are required to be printed and delivered. Additionally, the issuer of the Offered Security may decide to discontinue use of the system of book-entry transfers through DTC (or any successor depositary) with respect to its Offered Securities. In that event, certificates for such Offered Securities will be printed and delivered. 33 The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that Unocal and the Trust believe to be reliable, but neither Unocal nor the Trust takes responsibility for the accuracy thereof. PLAN OF DISTRIBUTION Unocal may offer and sell the Trust Preferred Securities in any of three ways: (i) directly to investors; (ii) to investors through agents; or (iii) through underwriters or dealers. The Trust Preferred Securities may also be exchanged for outstanding securities of Unocal or Union Oil or both and resold by the holder pursuant to this Prospectus in the over-the-counter market, on the New York Stock Exchange, through negotiated transactions or otherwise, at market prices prevailing at the time of sale or at prices otherwise negotiated. The terms of any such exchange and the method of resale by the holder will be set forth in a Prospectus Supplement. The Prospectus Supplement with respect to the Trust Preferred Securities will set forth the terms of the offering of the Trust Preferred Securities, including the name or names of any underwriters, the purchase price of the Securities and the proceeds to Unocal from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which such Trust Preferred Securities may be listed. If underwriters are used in the sale, the Trust Preferred Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The Trust Preferred Securities may be either offered to the public through underwriting syndicates represented by managing underwriters, or directly by one or more underwriters. Unless otherwise set forth in the applicable Prospectus Supplement, the obligations of the underwriters to purchase the Securities will be subject to certain conditions precedent and the underwriters will be obligated to purchase all the Securities if any are purchased. Any initial offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. The Trust Preferred Securities will be a new issue of securities with no established trading market. Any underwriters or agents with respect to the Trust Preferred Securities may make a market in such Trust Preferred Securities, but such underwriters or agents will not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the liquidity of any Trust Preferred Securities in the secondary market. If the Trust Preferred Securities are issued in exchange for outstanding securities of Unocal, the applicable Prospectus Supplement will set forth the terms of the exchange, the identity of and the terms of sale of the Trust Preferred Securities by the selling security holders. The Trust Preferred Securities may be sold directly by Unocal or through agents designated by Unocal from time to time. Any agent involved in the offer or sale of the Securities in respect of which this Prospectus is delivered will be named, and any commissions payable by Unocal to such agent will be set forth, in the Prospectus Supplement. Unless otherwise indicated in the Prospectus Supplement, any such agent will be acting on a best efforts basis for the period of its appointment. If so indicated in the Prospectus Supplement, Unocal will authorize agents, underwriters or dealers to solicit offers by certain specified institutions to purchase the Trust Preferred Securities from Unocal at the public offering price set forth in the Prospectus Supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject only to those conditions set forth in the Prospectus Supplement and the Prospectus Supplement will set forth the commission payable for solicitation of such contracts. Agents, selling security holders and underwriters may be entitled under agreements entered into with Unocal to indemnification by Unocal against certain civil liabilities, including certain liabilities under the 34 Securities Act of 1933, or to contribution with respect to payments which the agents, selling security holders or underwriters may be required to make in respect thereof. Agents, selling security holders and underwriters may be customers of, engage in transactions with, or perform services for Unocal in the ordinary course of business. EXPERTS The consolidated financial statements and financial statement schedule of Unocal and its subsidiaries as of December 31, 1997 and 1996, and for each of the three years in the period ended December 31, 1997, included in Unocal's Annual Report on Form 10-K for the year ended December 31, 1997, and incorporated by reference in this Prospectus, have been incorporated herein in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, which report is incorporated by reference herein, and on the authority of that firm as experts in accounting and auditing. Such report includes an explanatory paragraph with respect to a change in the method of accounting for the impairment of long-lived assets and long-lived assets disposed of in 1995. LEGAL MATTERS Unless otherwise indicated in the Prospectus Supplement, certain matters of Delaware law relating to the validity of the Trust Preferred Securities offered hereby will be passed upon for Unocal by Morris Nichols Arhst & Tunnell, Wilmington, Delaware, and certain matters relating to the validity of the Junior Subordinated Debentures and the Guarantee will be passed upon for Unocal by Dennis P. R. Codon, Esq., Vice President, Chief Legal Officer and General Counsel of Unocal, and for any underwriters, selling security holders or agents by Gibson, Dunn & Crutcher LLP, San Francisco, California. Gibson, Dunn & Crutcher LLP will rely on the opinion of Morris Nichols Arhst & Tunnell as to certain matters of Delaware law. As of April 30, 1998, Mr. Codon owned beneficially 23,114 shares of Unocal Common Stock, which included 10,470 restricted shares that vest in 1999 through 2003. He also held options to purchase 57,088 shares of Unocal Common Stock at prices ranging from $26.375 to $38.8125, with expiration dates ranging from 2003 to 2008. In addition, Mr. Codon held 15,800 performance share units awarded to him in 1995 through 1998. 35 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Other expenses of all issuances and distributions pursuant to this Registration Statement to be borne by the Company are estimated* as follows: Registration fee--Securities and Exchange Commission............ $ 354,000 Blue Sky registration fees and expenses......................... 20,000 Printing costs.................................................. 100,000 Legal fees and expenses......................................... 85,000 Accounting fees and expenses.................................... 225,000 Trustees' fees and expenses..................................... 150,000 Warrant Agent's fees and expenses............................... 2,500 Transfer Agent and Registrars' fees............................. 2,500 Rating agency fees and expenses................................. 350,000 Miscellaneous expenses.......................................... 11,000 --------- Total......................................................... $1,300,000 --------- ---------
- ------------------------ * All of the amounts are estimated, except the registration fee. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS The General Corporation Law of the State of Delaware, the state of incorporation of Unocal, and the Bylaws of Unocal provide for indemnification of directors and officers in certain circumstances. The General Corporation Law of the State of California, the state of incorporation of the Company, and the Bylaws of the Company provide for indemnification of directors and officers in certain circumstances. In addition, Unocal and the Company have provided in their respective Certificate of Incorporation and Restated and Amended Articles of Incorporation that each shall eliminate the personal liability of its directors to the full extent permitted by Delaware and California law, as the case may be, and Unocal has entered into indemnification agreements with each director providing for additional indemnification. The Company and Unocal have policies of directors' and officers' liability insurance which insures directors and officers against the cost of defense, settlement or payment of a judgment under certain circumstances. Section 8 of the Standard Underwriting Provisions--Debt Securities, July 1994, Standard Underwriting Provisions--Preferred Stock, July 1994. and Standard Underwriting Provisions--Common Stock, July 1994. (Exhibits 1.1, 1.2 and 1.3 hereto) and Section 7 of the Form of Distribution Agreement (Exhibit 1.5 hereto) each provides for indemnification of directors and officers of the Company and Unocal by the underwriters and agents, respectively, in certain circumstances. The Declaration of Trust (the "Declaration") of Unocal Capital Trust II (the "Trust"), provides that Unocal will indemnify, to the full extent provided by law, (i) a trustee, (ii) any affiliate of a trustee, (iii) any officers, directors, shareholders, members, partners, employees, representatives, or agents of a trustee, and (iv) any officer, employee, or agent of the Trust or its affiliates for losses, liabilities, and expenses incurred in connection with his actions as trustee of the Trust if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Trust (except that, with respect to actions in the right of the Trust, no such indemnification shall be made in respect of a matter as to which such person shall have been adjudged to be liable to the Trust, unless the court in which such matter was brought determines that such person is fairly and reasonably entitled to indemnity), and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Unocal agreed to indemnify (a) the Institutional trustee, (b) Delaware trustee, (c) any affiliate of the Institutional trustee or the Delaware trustee, and (d) any officers, directors, shareholders, members, partners, employees, II-1 representatives, custodians, nominees, or agents of the Institutional trustee or Delaware trustee for any losses, liabilities, and expenses incurred without negligence or bad faith on its part in connection with the exercise or performance of any of its powers or duties under the Declaration Section 8 of the Standard Underwriting Provisions--Trust Preferred Securities, June 1998 (Exhibit 1.4 hereto) provides for indemnification of each of Unocal and the Trust, their directors, trustees, and officers who sign this registration statement, and each person, if any, who controls Unocal or the Trust within the meaning of either Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended by the underwriters and agents, respectively, in certain circumstances. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT NUMBER EXHIBIT - ----------------- ------------------------------------------------------------------------------------------------- 1.1 Standard Underwriting Provisions--Debt Securities, July 1994 (including form of Underwriting Agreement) (incorporated by reference to Exhibit 1.1 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 1.2 Standard Underwriting Provisions--Preferred Stock, July 1994 (including form of Underwriting Agreement) (incorporated by reference to Exhibit 1.2 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 1.3 Standard Underwriting Provisions--Common Stock, July 1994 (including form of Underwriting Agreement) (incorporated by reference to Exhibit 1.3 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 1.4 Standard Underwriting Provisions--Trust Preferred Securities, June 1998 (including form of Underwriting Agreement). 1.5 Form of Distribution Agreement. 3.1 Restated and Amended Articles of Incorporation of the Company (incorporated by reference to Exhibit 99.1 to Unocal's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, File No. 1-8483). 3.2 Bylaws of the Company, as amended through June 1, 1998, and currently in effect. 3.3 Certificate of Incorporation of Unocal, as amended (incorporated by reference to Exhibit 3.1 to Amendment No. 2 on Form 10-K/A to Unocal's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File No. 1-8483). 3.4 Bylaws of Unocal, as amended through June 1, 1998, and currently in effect. 3.5 Certificate of Trust of the Trust 4.1 Rights Agreement dated as of January 29, 1990, between Unocal and The Chase Manhattan Bank, as successor rights agent (incorporated by reference to Exhibit 4.9 to Unocal's Registration Statement on Form S-4 (Registration Nos. 333-09137 and 333-09137-01)). 4.2 Standard Multiple-Series Indenture Provisions, January 1991, dated as of January 2, 1991 (incorporated by reference to Exhibit 4.1 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-38505 and 33-38505-01)). 4.3 Form of Senior Indenture (incorporated by reference to Exhibit 4.6 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)).
II-2 4.4 Form of Subordinated Indenture (incorporated by reference to Exhibit 4.7 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.5 Form of Warrant Agreement for Debt Securities (including form of Warrant Certificate) (incorporated by reference to Exhibit 4.8 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.6 Form of Warrant Agreement for Unocal Preferred Stock (including form of Warrant Certificate) (incorporated by reference to Exhibit 4.9 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.7 Form of Warrant Agreement for Unocal Common Stock (including form of Warrant Certificate) (incorporated by reference to Exhibit 4.10 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.8 Multiple-Series Indenture (Junior Subordinated Indenture) of Unocal (incorporated by reference to Exhibit 4.3 to Unocal's Registration Statement on Form S-4 (Registration Nos. 333-09137 and 333-09137-01)). 4.9 Form of Second Supplemental Indenture, between Unocal and The Bank of New York, as trustee, including form of Junior Subordinated Debenture. 4.10 Declaration of Trust of the Trust. 4.11 Form of Amended and Restated Declaration of Trust of the Trust, including form of Trust Preferred Security. 4.12 Form of Preferred Securities Guarantee Agreement (the Guarantee). 4.13 Form of Senior and Subordinated Security (incorporated by reference to Exhibit 4.11 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.14 Form of Temporary Global Bearer Fixed Rate Security (incorporated by reference to Exhibit 4.12 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.15 Form of Permanent Global Bearer Fixed Rate Security (incorporated by reference to Exhibit 4.13 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.16 Form of Fixed Rate Registered Medium-Term Note. 4.17 Form of Floating Rate Registered Medium-Term Note. 5.1 Opinion of Dennis P. R. Codon, Esq. to the Company, Unocal and the Trust. 5.2 Opinion of Morris Nichols Arhst & Tunnell. 12.1 Statement regarding computation of ratio of earnings to fixed charges for the Company (incorporated by reference to Exhibit 12.2 to Unocal's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, and Exhibit 12.3 to Unocal's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, File No. 1-8483). 12.2 Statement regarding computation of ratio of earnings to fixed charges for Unocal (incorporated by reference to Exhibit 12.1 to Unocal's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, and Exhibit 12.1 to Unocal's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, File No. 1-8483). 12.3 Statement regarding computation of ratio of earnings to combined fixed charges and preferred stock dividends for Unocal. 23.1 Consent of Coopers & Lybrand L.L.P.
II-3 23.2 Consent of Dennis P. R. Codon, Esq. (contained in his opinion filed as Exhibit 5.1 to this Registration Statement). 23.3 Consent of Morris Nichols Arhst & Tunnell (contained in its opinion filed as Exhibit 5.2 to this Registration Statement). 24.1 Power of Attorney (the Company and Unocal). 24.2 Power of Attorney (the Trust) (included on the signature page of this Registration Statement). 25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of the Senior Trustee. 25.2 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as trustee under the Junior Subordinated Indenture. 25.3 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as trustee under the Declaration of Trust of the Trust. 25.4 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as trustee under the Guarantee by Unocal for the benefit of the holders of the Trust Preferred Securities.
ITEM 17. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Act"), may be permitted to directors, officers, trustees and controlling persons of the Company, Unocal or the Trust pursuant to the provisions described in the first, third and fourth paragraphs under Item 15 above, or otherwise, the Company, Unocal and the Trust have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company, Unocal and the Trust of expenses incurred or paid by a director, officer, trustee or controlling person of the Company, Unocal and the Trust in the successful defense of any action, suit or proceeding) is asserted by such director, officer, trustee or controlling person in connection with the securities being registered, the Company, Unocal and the Trust will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The Company, Unocal and the Trust hereby undertake that, for purposes of determining any liability under the Act, each filing of Unocal's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned Registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) To include any prospectus required by Section 10(a)(3) of the Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; II-4 (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; PROVIDED, HOWEVER, that the undertakings set forth in paragraphs (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by Unocal pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrants certify that they have reasonable grounds to believe that they meet all of the requirements for filing on Form S-3 and have duly caused this registration statement to be signed on their behalf by the undersigned, thereunto duly authorized, in the City of El Segundo, State of California, on June 30, 1998. UNION OIL COMPANY OF CALIFORNIA UNOCAL CORPORATION By /s/ TIMOTHY H. LING ----------------------------------------- Timothy H. Ling CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated, which capacities are held for both the Company and Unocal.
SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- /s/ ROGER C. BEACH* Chairman of the Board of - ------------------------------ Directors and Chief June 30, 1998 Roger C. Beach Executive Officer /s/ TIMOTHY H. LING - ------------------------------ Chief Financial Officer June 30, 1998 Timothy H. Ling /s/ JOE D. CECIL* - ------------------------------ Vice President and June 30, 1998 Joe D. Cecil Comptroller /s/ JOHN W. AMERMAN* - ------------------------------ Director June 30, 1998 John W. Amerman /s/ JOHN W. CREIGHTON, JR.* - ------------------------------ Director June 30, 1998 John W. Creighton, Jr. /s/ MALCOLM R. CURRIE* - ------------------------------ Director June 30, 1998 Malcolm R. Currie /s/ FRANK C. HERRINGER* - ------------------------------ Director June 30, 1998 Frank C. Herringer
II-6
SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- /s/ JOHN F. IMLE, JR.* - ------------------------------ Director June 30, 1998 John F. Imle, Jr. /s/ KEVIN W. SHARER* - ------------------------------ Director June 30, 1998 Kevin W. Sharer /s/ CHARLES R. WEAVER* - ------------------------------ Director June 30, 1998 Charles R. Weaver /s/ MARINA V.N. WHITMAN* - ------------------------------ Director June 30, 1998 Marina v.N. Whitman*
*By: /s/ TIMOTHY H. LING ------------------------- Timothy H. Ling ATTORNEY-IN-FACT
II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of El Segundo, State of California, on June 30, 1998. UNOCAL CAPITAL TRUST II By: /s/ D. D. CHESSUM ----------------------------------------- Darrell D. Chessum TRUSTEE
Each person whose signature appears below hereby constitutes and appoints each of Darrell D. Chessum, Daniel A. Franchi, and Richard L. Walton his true and lawful attorney-in-fact and agent, with full powers of substitution and resubstitution, for the undersigned and in the name of the undersigned, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement on Form S-3, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- /s/ D. D. CHESSUM - ------------------------------ Trustee June 30, 1998 Darrell D. Chessum /s/ D. A. FRANCHI - ------------------------------ Trustee June 30, 1998 Daniel A. Franchi /s/ R. L. WALTON - ------------------------------ Trustee June 30, 1998 Richard L. Walton
II-8
SIGNATURE TITLE DATE - ------------------------------ -------------------------- ------------------- The Bank of New York Trustee June , 1998 By: - ------------------------------ Title: - ------------------------------ The Bank of New York (Delaware) Trustee June , 1998 By: - ------------------------------ Title: - ------------------------------
II-9 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT - ----------------- ------------------------------------------------------------------------------------------------- 1.1 Standard Underwriting Provisions--Debt Securities, July 1994 (including form of Underwriting Agreement) (incorporated by reference to Exhibit 1.1 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 1.2 Standard Underwriting Provisions--Preferred Stock, July 1994 (including form of Underwriting Agreement) (incorporated by reference to Exhibit 1.2 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 1.3 Standard Underwriting Provisions--Common Stock, July 1994 (including form of Underwriting Agreement) (incorporated by reference to Exhibit 1.3 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 1.4 Standard Underwriting Provisions--Trust Preferred Securities, June 1998 (including form of Underwriting Agreement). 1.5 Form of Distribution Agreement. 3.1 Restated and Amended Articles of Incorporation of the Company (incorporated by reference to Exhibit 99.1 to Unocal's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, File No. 1-8483). 3.2 Bylaws of the Company, as amended through June 1, 1998, and currently in effect. 3.3 Certificate of Incorporation of Unocal, as amended (incorporated by reference to Exhibit 3.1 to Amendment No. 2 on Form 10-K/A to Unocal's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File No. 1-8483). 3.4 Bylaws of Unocal, as amended through June 1, 1998, and currently in effect. 3.5 Certificate of Trust of the Trust 4.1 Rights Agreement dated as of January 29, 1990, between Unocal and The Chase Manhattan Bank, as successor rights agent (incorporated by reference to Exhibit 4.9 to Unocal's Registration Statement on Form S-4 (Registration Nos. 333-09137 and 333-09137-01)). 4.2 Standard Multiple-Series Indenture Provisions, January 1991, dated as of January 2, 1991 (incorporated by reference to Exhibit 4.1 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-38505 and 33-38505-01)). 4.3 Form of Senior Indenture (incorporated by reference to Exhibit 4.6 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.4 Form of Subordinated Indenture (incorporated by reference to Exhibit 4.7 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.5 Form of Warrant Agreement for Debt Securities (including form of Warrant Certificate) (incorporated by reference to Exhibit 4.8 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.6 Form of Warrant Agreement for Unocal Preferred Stock (including form of Warrant Certificate) (incorporated by reference to Exhibit 4.9 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)).
EXHIBIT NUMBER EXHIBIT - ----------------- ------------------------------------------------------------------------------------------------- 4.7 Form of Warrant Agreement for Unocal Common Stock (including form of Warrant Certificate) (incorporated by reference to Exhibit 4.10 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.8 Multiple-Series Indenture (Junior Subordinated Indenture) of Unocal (incorporated by reference to Exhibit 4.3 to Unocal's Registration Statement on Form S-4 (Registration Nos. 333-09137 and 333-09137-01)). 4.9 Form of Second Supplemental Indenture, between Unocal and The Bank of New York, as trustee, including form of Junior Subordinated Debenture. 4.10 Declaration of Trust of the Trust. 4.11 Form of Amended and Restated Declaration of Trust of the Trust, including form of Trust Preferred Security. 4.12 Form of Preferred Securities Guarantee Agreement (the Guarantee). 4.13 Form of Senior and Subordinated Security (incorporated by reference to Exhibit 4.11 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.14 Form of Temporary Global Bearer Fixed Rate Security (incorporated by reference to Exhibit 4.12 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.15 Form of Permanent Global Bearer Fixed Rate Security (incorporated by reference to Exhibit 4.13 to the Company's and Unocal's Registration Statement on Form S-3 (Registration Nos. 33-54861 and 33-54861-01)). 4.16 Form of Fixed Rate Registered Medium-Term Note. 4.17 Form of Floating Rate Registered Medium-Term Note. 5.1 Opinion of Dennis P. R. Codon, Esq. to the Company, Unocal and the Trust. 5.2 Opinion of Morris Nichols Arhst & Tunnell. 12.1 Statement regarding computation of ratio of earnings to fixed charges for the Company (incorporated by reference to Exhibit 12.2 to Unocal's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, and Exhibit 12.3 to Unocal's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, File No. 1-8483). 12.2 Statement regarding computation of ratio of earnings to fixed charges for Unocal (incorporated by reference to Exhibit 12.1 to Unocal's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, and Exhibit 12.1 to Unocal's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, File No. 1-8483). 12.3 Statement regarding computation of ratio of earnings to combined fixed charges and preferred stock dividends for Unocal. 23.1 Consent of Coopers & Lybrand L.L.P. 23.2 Consent of Dennis P. R. Codon, Esq. (contained in his opinion filed as Exhibit 5.1 to this Registration Statement). 23.3 Consent of Morris Nichols Arhst & Tunnell (contained in its opinion filed as Exhibit 5.2 to this Registration Statement). 24.1 Power of Attorney (the Company and Unocal). 24.2 Power of Attorney (the Trust) (included on the signature page of this Registration Statement). 25.1 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of the Senior Trustee.
EXHIBIT NUMBER EXHIBIT - ----------------- ------------------------------------------------------------------------------------------------- 25.2 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as trustee under the Junior Subordinated Indenture. 25.3 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as trustee under the Declaration of Trust of the Trust. 25.4 Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as trustee under the Guarantee by Unocal for the benefit of the holders of the Trust Preferred Securities.
EX-1.4 2 EXHIBIT 1.4 EXHIBIT 1.4 UNOCAL CORPORATION TRUST PREFERRED SECURITIES STANDARD UNDERWRITING PROVISIONS JUNE 1998 INTRODUCTION A. Unocal Corporation, a Delaware corporation ("Unocal"), and Unocal Capital Trust II, a statutory business trust (the "Trust") organized under the Business Trust Act (the "Delaware Act") of the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. Code Sec. 3801 et seq.) propose (i) to enter into an Underwriting Agreement ("Underwriting Agreement") in the form of Annex I (including Schedule I and Schedule II to Annex I) to these Standard Underwriting Provisions, which Underwriting Agreement will incorporate therein by reference some or all of the provisions set out below under "Standard Provisions," with such additions and deletions as the parties thereto may determine, and, subject to the terms and conditions stated herein and therein, (ii) to issue and sell to the firms named in Schedule I to the Underwriting Agreement (such firms constituting the "Underwriters" with respect to the Underwriting Agreement and the securities specified therein) certain trust preferred securities specified in Schedule II to such Underwriting Agreement (the "Trust Preferred Securities"), less the number of Trust Preferred Securities covered by Delayed Delivery Contracts, if any, as provided in Section 3 below under "Standard Provisions" and as may be specified in Schedule II to such Underwriting Agreement (with respect to such Underwriting Agreement, any Trust Preferred Securities to be covered by Delayed Delivery Contracts being herein sometimes referred to as "Contract Trust Preferred Securities" and the Trust Preferred Securities to be purchased by the Underwriters (after giving effect to the deduction, if any, for Contract Trust Preferred Securities) being herein sometimes referred to as "Underwriters' Trust Preferred Securities"). The Trust Preferred Securities will be guaranteed by Unocal to the extent described in the Prospectus (as hereinafter defined). In connection with the issuance and sale of Trust Preferred Securities, Unocal will issue and sell to the Trust as trust assets its junior subordinated debenures (the "Debentures") and the Trust will issue and sell to Unocal its trust common securities (the "Trust Common Securities") as described in the Prospectus. B. The terms of the Trust Preferred Securities shall be as specified in the Underwriting Agreement and the Amended and Restated Declaration of Trust (the "Declaration") to be entered into by and among Unocal, as Sponsor, The Bank of New York, a New York banking corporation, as the Institutional Trustee (the "Institutional Trustee"), The Bank of New York (Delaware), a Delaware banking corporation, as the Delaware Trustee (the "Delaware Trustee"), and Darrell D. Chessum, Daniel A. Franchi and Richard L. Walton, as the Regular Trustees (the "Regular Trustees," and collectively with the Institutional Trustee and the Delaware Trustee, the "Trustees"). C. Sales of Trust Preferred Securities may be made to the Underwriters of such Trust Preferred Securities, for whom the firms designated as representatives of the Underwriters of such Trust Preferred Securities in Schedule I to the Underwriting Agreement will act as representatives (the "Representatives"). The term "Representatives" also refers to a single firm acting as sole representative of the Underwriters and to Underwriters who act without any firm being designated as their representative. D. These Standard Underwriting Provisions shall not be construed as an obligation of Unocal to sell any Trust Preferred Securities. The obligation of Unocal to issue and sell any Trust Preferred Securities shall be evidenced by the Underwriting Agreement with respect to the Trust Preferred Securities specified therein. The expression "this Underwriting Agreement" is used below under "Standard Provisions" so that when the Underwriting Agreement incorporates therein a provision using such expression, such expression will, without modification, be referring to that specific Underwriting Agreement. The Underwriting Agreement shall specify the initial public offering price of the Trust Preferred Securities, the purchase price to the Underwriters of the Trust Preferred Securities, the names of the Underwriters of the Trust Preferred Securities, the names of the Representatives of such Underwriters, the terms of the Trust Preferred Securities, the aggregate number of Trust Preferred Securities to be purchased by all of the Underwriters, the number of Trust Preferred Securities to be purchased by each Underwriter, whether any of the Trust Preferred Securities shall be covered by Delayed Delivery Contracts (as defined in Section 3 hereof) and the compensation payable to the Underwriters with respect thereto and shall set forth the date, time and manner of delivery of the Trust Preferred Securities and payment therefor (to the extent not set forth in the registration statement and prospectus with respect thereto). STANDARD PROVISIONS 1. Terms used but not defined below have the meaning given such terms above under "Introduction." 2. Unocal and the Trust, jointly and severally, represent and warrant to, and agree with, each of the Underwriters that: a. A registration statement (Nos. 333-_______, and 333-_____-02) in respect of the Trust Preferred Securities, the Guarantee (the "Guarantee") between Unocal and The Bank of New York, a New York banking corporation, as Guarantee Trustee (the "Guarantee Trustee"), and the Debentures has been filed with the Securities and Exchange Commission (the "Commission") in the form heretofore delivered or to be delivered to the Representatives and, excluding exhibits to such registration statement, but including all documents incorporated by reference in the prospectus contained therein, to the Representatives for each of the other Underwriters and such registration statement in such form has been declared effective by the Commission and to the knowledge of Unocal or the Trust no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (the various parts of such registration statement, including all exhibits thereto, but excluding the Statements of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the Trustees under the Indenture (as defined below), the Declaration and the Guarantee, each as amended at the time such part became effective, being hereinafter collectively called the "Registration Statement;" the term "Basic Prospectus" means the prospectus included in the Registration Statement; the term "Prospectus" means the Basic Prospectus together with the prospectus supplement (other than a preliminary prospectus supplement) specifically relating to the Trust Preferred Securities as filed with, or transmitted for filing with, the Commission pursuant to Rule 424; the term "preliminary prospectus" means a preliminary prospectus supplement specifically relating to the Trust Preferred Securities together with the Basic Prospectus; the terms "Registration Statement," "Basic Prospectus," "Prospectus" and "preliminary prospectus" shall include, in each case, the material, if any, incorporated by reference therein); b. The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act of 1933, as amended (the "Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to 2 state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to Unocal or the Trust by an Underwriter through the Representatives expressly for use in the Prospectus; c. The Registration Statement and the Prospectus conform in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to each Registration Statement and any amendment thereto, and as of the date of the Prospectus as to the Prospectus, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to Unocal or the Trust by an Underwriter through the Representatives expressly for use in the Prospectus; d. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any material change in the capital stock or consolidated long-term debt of Unocal or any material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of Unocal and its subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Prospectus; e. Unocal has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus. f. The Trust has been duly created and is validly existing in good standing as a statutory business trust under the Delaware Act, is and will be treated as a "grantor trust" for Federal income tax purposes under existing law, has the business trust power and authority to conduct its business as presently conducted and as described in the Prospectus, and is not required to be authorized to do business in any other jurisdiction. g. Unocal has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of Unocal have been duly and validly authorized and issued and are fully paid and non-assessable (except for a DE MINIMIS number of shares), and Unocal is the registered and beneficial owner of all of the Trust Common Securities; h. Unocal has the corporate power and authority to execute, deliver and perform its obligations under this Underwriting Agreement, the Declaration, the Indenture and the Guarantee; i. The Trust has the business trust power and authority to execute, deliver and perform its obligations under this Underwriting Agreement; j. This Underwriting Agreement has been duly and validly authorized, executed and delivered by Unocal and is a valid and binding obligation of Unocal; k. This Underwriting Agreement has been duly and validly authorized, executed and delivered by the Trust and is a valid and binding obligation of the Trust; 3 l. In the event any of the Trust Preferred Securities are to be purchased pursuant to Delayed Delivery Contracts, each of such Delayed Delivery Contracts has been duly and validly authorized by Unocal and the Trust and, when executed and delivered by Unocal, the Trust and the purchaser named therein, will constitute a valid and legally binding obligation of Unocal and the Trust, enforceable against Unocal and the Trust in accordance with its terms, except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws relating to or affecting enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); and any such Delayed Delivery Contract will conform in all material respects to the description thereof in the Prospectus; m. The Trust Preferred Securities to be issued and sold pursuant to this Underwriting Agreement, and, in the case of any Contract Trust Preferred Securities, pursuant to such Delayed Delivery Contract, will be duly authorized by the Declaration upon execution and delivery of the Declaration in the form filed with the Registration Statement, and, when issued, sold and delivered in accordance with the terms of this Underwriting Agreement or such Delay Delivery Contract, as the case may be, will be validly issued and (subject to the terms of the Declaration) fully paid and nonassessable undivided beneficial interests in the assets of the Trust, not subject to any preemptive or similar rights, and will conform in all material respects to all statements relating thereto contained in the Prospectus. Holders of Trust Preferred Securities will be entitled, subject to the terms of the Declaration, to the same limitation of personal liability extended to stockholders of private corporations for profit. n. The Declaration and the Guarantee have been duly authorized by Unocal and, as of the closing date, will have been duly executed and delivered by Unocal. Assuming due authorization, execution and delivery of the Declaration by the Trustees, and the Guarantee by the Guarantee Trustee, the Declaration will, as of the closing date, be a valid and binding obligation of Unocal, enforceable in accordance with its terms, except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws relating to or affecting enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity), and the Guarantee will, as of the closing date, be a valid and binding obligation of Unocal, enforceable in accordance with its terms, except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). o. The Indenture (the "Indenture") between Unocal and The Bank of New York, a New York banking corporation, as Debenture Trustee (the "Debenture Trustee"), has been duly authorized by Unocal, duly qualified under the Trust Indenture Act and, as of the closing date, will have been duly executed and delivered by Unocal. Assuming due authorization, execution and delivery of the Indenture by the Debenture Trustee, the Indenture, when executed and delivered by Unocal, will constitute a valid and binding agreement of Unocal, enforceable in accordance with its terms, except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). p. The Debentures to be deposited in the Trust as trust assets have been duly authorized, and, assuming due authorization, execution and delivery of the Indenture by the Debenture Trustee, when executed and delivered by Unocal to the Debenture Trustee, and when executed and authenticated in accordance with the provisions of the Indenture and delivered to the Trust, will be entitled to the benefits of the Indenture and will be valid and binding obligations of Unocal enforceable in 4 accordance with their terms, except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws affecting enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). q. The execution and delivery by Unocal and the Trust of, and the performance by Unocal and the Trust of their obligations under, this Underwriting Agreement, and, in the case of any Contract Trust Preferred Securities, such Delayed Delivery Contract, the execution and delivery by Unocal and the performance by Unocal of its obligations under, the Declaration, the Indenture and the Guarantee, the issuance and delivery by the Trust of the Trust Preferred Securities and the consummation of the transactions and the fulfillment of the terms herein contemplated or contemplated by such Delayed Delivery Contract will not contravene, violate, conflict with, result in the breach of, or constitute a default under (i) any provision of applicable law or regulation; (ii) the certificate of incorporation or by-laws of Unocal; (iii) the Declaration or any agreement or other instrument binding upon the Trust or Unocal or any of its subsidiaries; or (iv) any judgment, determination, order or decree of any governmental body, agency or court having jurisdiction over the Trust or Unocal or any of its subsidiaries other than, in the case of clauses (i), (iii) and (iv), any such contravention, violation, conflict, breach, or default that individually or in the aggregate would not have a material adverse effect on Unocal and its subsidiaries, taken as a whole, and no consent, approval, authorization or order of, or the qualification with, any governmental body or agency is required for the performance by Unocal and the Trust of their obligations under this Underwriting Agreement or such Delayed Delivery Contract, the issuance and delivery of the Trust Preferred Securities and the consummation of the transactions contemplated hereby or by such Delayed Delivery Contract, except such as may be required by the Act, the Exchange Act or the Trust Indenture Act and as may be required by the securities or Blue Sky laws of the various states or the securities laws of non-U.S. jurisdictions in connection with the transactions contemplated hereby or by such Delayed Delivery Contract. r. There are no holders of securities of Unocal who, by reason of the filing of either the Registration Statement under the Act or the execution by Unocal of this Underwriting Agreement, have the right to request or demand that Unocal register under the Act any securities held by them; s. Other than as set forth or contemplated in the Prospectus, there is no legal or governmental proceeding pending to which Unocal or any of its subsidiaries is a party or of which any property of Unocal or any of its subsidiaries is subject, which is likely (to the extent not covered by insurance) to have a material adverse effect on the consolidated financial position of Unocal and its subsidiaries, and, to the best of Unocal's knowledge and other than as set forth and contemplated in the Prospectus, no such proceeding is threatened or contemplated by governmental authorities or threatened by others. 3. Upon the execution of this Underwriting Agreement and authorization by the Representatives of the release of the Underwriters' Trust Preferred Securities, the several Underwriters propose to offer the Underwriters' Trust Preferred Securities for sale upon the terms and conditions set forth in the Prospectus, as amended or supplemented. Unocal and the Trust may specify in Schedule II hereto that the Underwriters are authorized to solicit offers to purchase Trust Preferred Securities from the Trust pursuant to delayed delivery contracts (herein "Delayed Delivery Contracts"), substantially in the form of Annex III attached hereto but with such changes therein as the Representatives and Unocal and the Trust may authorize or approve. If so specified, the Underwriters will endeavor to make such arrangements, and as compensation therefor Unocal will pay to the Representatives, for the accounts of the Underwriters, at the Time of Delivery (as defined below), such compensation, if any, as may be set forth in such Underwriting Agreement. Delayed 5 Delivery Contracts, if any, are to be with investors of the types described in the Prospectus and subject to other conditions therein set forth. The Underwriters will not have any responsibility in respect of the validity or performance of any Delayed Delivery Contracts. The number of Contract Trust Preferred Securities to be deducted from the number of Trust Preferred Securities to be purchased by each Underwriter as set forth in Schedule I hereto shall be, in each case, the number of Contract Trust Preferred Securities which Unocal and the Trust have been advised by the Representatives has been attributed to such Underwriter, provided that, if Unocal and the Trust have not been so advised, the amount of Contract Trust Preferred Securities to be so deducted shall be, in each case, that proportion of Contract Trust Preferred Securities which the number of Trust Preferred Securities to be purchased by such Underwriter under this Underwriting Agreement bears to the total number of the Trust Preferred Securities. The number of Underwriters' Trust Preferred Securities to be purchased by all the Underwriters pursuant to this Underwriting Agreement shall be the total of Trust Preferred Securities set forth in Schedule I to such Underwriting Agreement less the number of Contract Trust Preferred Securities. Unocal and the Trust will deliver to the Representatives not later than 3:30 p.m., New York time, on the third business day preceding the Time of Delivery specified in this Underwriting Agreement (or such other time and date as the Representatives and Unocal may agree upon in writing) a written notice setting forth the number of Contract Trust Preferred Securities. 4. If in definitive form, Underwriters' Trust Preferred Securities to be purchased by each Underwriter pursuant to this Underwriting Agreement, in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours' prior notice to Unocal and the Trust, shall be delivered by or on behalf of the Trust to the Representatives for the account of such Underwriter; and if in global form, Underwriters' Trust Preferred Securities to be purchased by each Underwriter pursuant to this Underwriting Agreement shall be delivered to The Depository Trust Company for credit to the specified account of such Underwriters. Such delivery in each case shall be made against payment by such Underwriter or on its behalf of the purchase price therefor by electronic funds transfer, certified or official bank check or checks (or such other method of payment that may be specified in the Underwriting Agreement), payable to the order of the Trust in the funds specified in this Underwriting Agreement, all at the place and time and date specified in this Underwriting Agreement or at such other place and time and date as the Representatives and Unocal and the Trust may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Trust Preferred Securities. Concurrently with the delivery of and payment for the Underwriters' Trust Preferred Securities, Unocal will deliver to the Representatives for the accounts of the Underwriters a check payable to the order of, or an electronic funds transfer to the account of, the party designated in this Underwriting Agreement in the amount of any compensation payable by Unocal to the Underwriters in respect of any Delayed Delivery Contracts as provided in Section 3 hereof and in this Underwriting Agreement. 5. Unocal and the Trust agree with each of the Underwriters: a. To make no further amendment or supplement to the Registration Statement or the Prospectus after the date of this Underwriting Agreement and prior to the Time of Delivery which shall be disapproved by the Representatives promptly after reasonable notice thereof, except that Unocal and the Trust shall be permitted to make further amendments or supplements to the Registration Statement or the Prospectus by incorporation by reference of any proxy statements, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K without the approval of the Representatives, provided that Unocal and the Trust shall (i) deliver a copy of each such report or proxy statement (together with all exhibits thereto) to each Representative promptly with such report or proxy statement being filed with the Commission, which delivery shall be deemed to have been satisfied by the 6 posting of such report or proxy statements on Unocal's Internet Website at http://www.Unocal.com; and (ii) if the date of the filing of such a report or proxy statement with the Commission will be the same day as the Time of Delivery, then Unocal and the Trust shall to the extent practicable notify each Representative at least one business day (i.e. any day which is not a Saturday or Sunday and which in New York City is not a day on which banking institutions are generally authorized or obligated by law to close) prior to filing such a report or proxy statement with the Commission; to advise the Representatives promptly of any amendment or supplement to any Registration Statement or the Prospectus after such Time of Delivery and furnish the Representatives with copies thereof and to file promptly all reports and any definitive proxy or information statements required to be filed by Unocal with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as delivery of a prospectus is required in connection with the offering or sale of the Trust Preferred Securities, and during such same period to advise he Representatives, promptly after either of them receives notice thereof, of the time when any amendment to the Registration Statement has been filed or become effective or any supplement to the Prospectus or any amended Prospectus has been filed or transmitted for filing, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Trust Preferred Securities, of the suspension of the qualification of the Trust Preferred Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order relating to the Trust Preferred Securities or suspension of any such qualification, to use promptly its best efforts to obtain its withdrawal; b. Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Trust Preferred Securities for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Trust Preferred Securities, provided that in connection therewith neither Unocal nor the Trust shall be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; c. To furnish the Underwriters with copies of the Prospectus in such quantities as the Representatives may from time to time reasonably request, and, if the delivery of a prospectus is required at any time in connection with the offering or sale of the Trust Preferred Securities and if at such time any event shall have occurred as a result of which the Prospectus would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act or the Exchange Act, to notify the Representatives and upon their request to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; d. To make generally available to holders of Trust Preferred Securities as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement and of the post-effective amendment thereto hereinafter referred to, any required consolidated earnings statement of Unocal and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including at the option of Unocal and the Trust, Rule 158); and 7 e. During the period beginning from the date of this Underwriting Agreement and continuing to and including the earlier of (i) the termination of trading restrictions for the Trust Preferred Securities, as notified to Unocal and the Trust by the Representatives, and (ii) the Time of Delivery, not to offer, sell, contract to sell or otherwise dispose, or announce the proposed issuance or sale, of any Trust Preferred Securities or Debentures, or securities convertible into or substantially similar to the Trust Preferred Securities or Debentures, without the prior oral consent of the Representatives, which consent shall be promptly confirmed in writing. 6. Unocal and the Trust, jointly and severally, covenant and agree with the several Underwriters that they will pay or cause to be paid the following: (i) the fees, disbursements and expenses of Unocal's and the Trust's counsel, accountants and trustees in connection with the registration of the Trust Preferred Securities under the Act and all other expenses in connection with the preparation, printing and filing of any Registration Statement, any preliminary prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, the Standard Underwriting Provisions, June 1998, 1998, this Underwriting Agreement, any Delayed Delivery Contracts, any Blue Sky and Legal Investment Memoranda and any other documents in connection with the offering, purchase, sale and delivery of the Trust Preferred Securities; (iii) all expenses in connection with the qualification of the Trust Preferred Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (iv) any fees charged by securities rating services for rating the Trust Preferred Securities; (v) any filing fees incident to any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Trust Preferred Securities; (vi) the cost of preparing the Trust Preferred Securities; (vii) the costs and fees incurred in connection with the listing of any Trust Preferred Securities on any securities exchange; and (viii) all other costs and expenses incident to the performance of its obligations hereunder and under any Delayed Delivery Contracts which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Sectio, Section 8 and Section 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Trust Preferred Securities by them, and any advertising expenses connected with any offers they may make. 7. The obligations of the Underwriters shall be subject, in the discretion of the Representatives, to the condition that all representations and warranties and other statements of Unocal and the Trust herein are, at and as of the Time of Delivery, true and correct, the condition that Unocal and the Trust have performed all of their respective obligations hereunder theretofore to be performed, and the following additional conditions: a. No stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the Representatives' reasonable satisfaction; b. Gibson, Dunn & Crutcher LLP, counsel for the Underwriters, shall have furnished to the Representatives such opinion or opinions, dated the Time of Delivery, with respect to the incorporation of Unocal, the creation of the Trust, the Trust Preferred Securities, this Underwriting Agreement, any Delayed Delivery Contracts, the Registration Statement, the Prospectus and other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; 8 c. The General Counsel of Unocal, or his or her designee, subject to the approval by the Representatives of such designee, shall have furnished to the Representatives his or her written opinion, dated the Time of Delivery, in form and substance satisfactory to the Representatives, to the effect that: (i) Unocal has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; (ii) Unocal has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of Unocal have been duly and validly authorized and issued and are fully paid and nonassessable (except such counsel may take exception for a DE MINIMIS number of shares), and Unocal is the registered and beneficial owner of all of the outstanding Trust Common Shares; (iii) to the best of such counsel's knowledge and other than as set forth or contemplated in the Prospectus, there is no legal or governmental proceeding pending to which Unocal or any of its subsidiaries is a party or of which any property of Unocal or any of its subsidiaries is the subject, which is likely (to the extent not covered by insurance) to have a material adverse effect on the consolidated financial position of Unocal and its subsidiaries; and, to the best of such counsel's knowledge and other than as set forth and contemplated in the Prospectus, no such proceeding is threatened or contemplated by governmental authorities or threatened by others; (iv) the Underwriting Agreement has been duly and validly authorized, executed and delivered by Unocal; (v) in the event any of the Trust Preferred Securities are to be purchased pursuant to Delayed Delivery Contracts, each of such Delayed Delivery Contracts has been duly and validly authorized by Unocal and, when executed and delivered by Unocal, the Trust and the purchaser named therein, will constitute a valid and legally binding obligation of Unocal, enforceable against Unocal in accordance with its terms, except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws relating to or affecting enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); and any such Delayed Delivery Contract will conform in all material respects to the description thereof in the Prospectus; (vi) to the best of such counsel's knowledge after reasonable inquiry, there are no holders of securities of Unocal who, by reason of the filing of either of the Registration Statements under the Act or the execution by Unocal of the Underwriting Agreement, have the right to request or demand that Unocal register under the Act any securities held by them; (vii) the Indenture has been duly qualified under the Trust Indenture Act, has been duly authorized, executed and delivered by Unocal and, assuming due authorization, execution and delivery of the Indenture by the Debenture Trustee, constitutes a valid and binding agreement of Unocal enforceable in accordance with its terms except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, 9 moratorium fraudulent transfer or other similar laws relating to or affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); (viii) the Debentures, when executed and authenticated in accordance with the provisions of the Indenture, assuming due authorization, execution and delivery of the Indenture by the Debenture Trustee, and delivered to the Trust, will be entitled to the benefits of the Indenture and will be valid and binding obligations of Unocal enforceable in accordance with their terms except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws relating to or affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); (ix) the Guarantee has been duly authorized, executed and delivered and, assuming due authorization, execution and delivery of the Guarantee by the Guarantee Trustee, will be a valid and binding agreement of Unocal enforceable in accordance with its terms except as the enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws relating to or affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity); (x) the execution and delivery by Unocal and the Trust of, and the performance by Unocal and the Trust of their obligations under, the Underwriting Agreement, and, in the case of any Contract Trust Preferred Securities, such Delayed Delivery Contract, the execution and delivery by Unocal and the performance by Unocal of its obligations under, the Declaration, the Indenture and the Guarantee, the issuance and delivery by the Trust of the Trust Preferred Securities and the consummation of the transactions and the fulfillment of the terms herein contemplated or contemplated by such Delayed Delivery Contract will not contravene, violate, conflict with, result in the breach of, or constitute a default under (i) any provision of applicable law or regulation; (ii) the certificate of incorporation or by-laws of Unocal; (iii) the Declaration or any agreement or other instrument binding upon the Trust or Unocal or any of its subsidiaries; or (iv) any judgment, determination, order or decree of any governmental body, agency or court having jurisdiction over the Trust or Unocal or any of its subsidiaries other than, in the case of clauses (i), (iii) and (iv), any such contravention, violation, conflict, breach, or default that individually or in the aggregate would not have a material adverse effect on Unocal and its subsidiaries, taken as a whole, and no consent, approval, authorization or order of, or the qualification with, any governmental body or agency is required for the performance by Unocal and the Trust of their obligations under the Underwriting Agreement or such Delayed Delivery Contract, the issuance and delivery of the Trust Preferred Securities and the consummation of the transactions contemplated by the Underwriting Agreement or by such Delayed Delivery Contract, except such as may be required by the Act, the Exchange Act or the Trust Indenture Act and as may be required by the securities or Blue Sky laws of the various states or the securities laws of non-U.S. jurisdictions in connection with the transactions contemplated by the Underwriting Agreement or by such Delayed Delivery Contract. (xi) the statements made in the Prospectus under the captions, "Description of the Trust Preferred Securities," "Description of the Junior Subordinated Debentures" and "Description of the Guarantee," insofar as such statements constitute a summary of the legal matters, documents or proceedings referred to therein, fairly present the information 10 called for with respect to such legal matters, documents and proceedings and are accurate in all material respects; (xii) The Trust is and will be treated as a "grantor trust" for Federal income tax purposes under existing law; (xiii) the documents incorporated by reference in the Prospectus (other than the financial statements, the related schedules and financial exhibits, and other financial and statistical information included therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; and such counsel has no reason to believe that any of such documents, when they became effective or were so filed, as the case may be, in the case of a registration statement which became effective under the Act, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, in the case of other documents which were filed under the Act or the Exchange Act with the Commission, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading; and (xiv) the Registration Statement and the Prospectus (other than the financial statements, the related schedules and financial exhibits, and other financial and statistical information included therein, as to which such counsel need express no opinion), complies as to form in all material respects with the requirements of the Act and the rules and regulations thereunder; such counsel has no reason to believe that, as of the effective date of the Registration Statement, either the Registration Statement or the Basic Prospectus contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of the Time of Delivery, either the Registration Statement or the Prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, such counsel need express no opinion with respect to any statement contained in or omitted from the Registration Statement or the Prospectus in reliance upon or in conformity with written information furnished to Unocal by any Underwriter expressly for use in the Registration Statement or the Prospectus; and such counsel does not know of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in the Registration Statement or the Prospectus, which are not filed or incorporated by reference or described as required. In rendering such opinion, such counsel may rely as to matters of fact on certificates of officers of Unocal and Trustees of the Trust and of public officials, may rely upon the opinion delivered pursuant to paragraph (d) of this Section 7 as to the Delaware Act and may state that such counsel expresses no opinion as to the laws of any jurisdiction other than the State of California, the federal law of the United States and the Delaware General Corporation Law. d. Special Delaware Counsel to Unocal and the Trust shall have furnished to the Representatives its written opinion, dated the Time of Delivery, in form and substance satisfactory to the Representatives, to the effect that: 11 (i) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Act and, assuming due authorization, execution and delivery of the Declaration by Unocal and the Trustees, has the business trust power and authority to conduct its business as presently conducted and as described in the Prospectus; (ii) assuming due authorization, execution and delivery of the Declaration by Unocal and the Trustees, the Declaration is a valid and binding obligation of Unocal and the Trustees enforceable in accordance with its terms, except as the enforcement thereof may be limited by (1) bankruptcy, insolvency, reorganization, moratorium, receivership, liquidation, fraudulent transfer or other similar laws relating to or affecting enforcement of creditors' rights generally, (2) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity), and (3) considerations of public policy or the effect of applicable law relating to fiduciary duties; (iii) assuming due authorization, execution and delivery of the Declaration by Unocal and the Trustees, the execution and delivery of the Underwriting Agreement by the Trust, and the performance by the Trust of its obligations thereunder, has been duly authorized by all requisite business trust action on the part of the Trust; (iv) assuming due authorization, execution and delivery of the Declaration by Unocal and the Trustees, in the event any of the Trust Preferred Securities are Contract Trust Preferred Securities to be issued or sold pursuant to Delayed Delivery Contracts, upon the execution and delivery of any such Delayed Delivery Contracts by Unocal, as Sponsor of the Trust, each of such Delayed Delivery Contracts will have been duly and validly authorized by the Trust; (v) assuming due authorization, execution and delivery of the Declaration by Unocal and the Trustees, the Trust Preferred Securities to be issued and sold pursuant to this Underwriting Agreement, and, in the case of any Contract Trust Preferred Securities, pursuant to the related Delayed Delivery Contract, and the Trust Common Securities have been duly authorized by the Declaration and, when issued, delivered and paid for in accordance with the Declaration, the Underwriting Agreement and, in the case of Contract Preferred Securities, the Delayed Delivery Contract, and as described in the Registration Statement and the Prospectus Supplement, will be validly issued and (subject to the terms of the Declaration) fully paid and nonassessable undivided beneficial interests in the assets of the Trust. Holders of Trust Preferred Securities and the Trust Common Securities will be entitled, subject to the terms of the Declaration, to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; and (vi) Under the Declaration and the Delaware Act, the issuance of the Trust Preferred Securities and the Trust Common Securities is not subject to preemptive rights. (vii) The execution and delivery by the Trust of, and the performance by the Trust of its obligations under, the Underwriting Agreement, and, in the case of any Contract Trust Preferred Securities, the related Delayed Delivery Contract, the issuance and delivery by the Trust of the Trust Preferred Securities and the consummation of the transactions and the fulfillment of the terms herein contemplated or contemplated by such Delayed Delivery Contract will not violate (i) any provision of applicable Delaware law or Delaware regulation; or (ii) the Declaration or any agreement or other instrument binding 12 upon the Trust; and, assuming that the Trust derives no income from or in connection with services provided within the State of Delaware and has no assets, activities (other than having a Delaware Trustee as required by the Delaware Act and the filing of documents with the Delaware Secretary of State) or employees in the State of Delaware, no consent, approval, authorization or order of, or the qualification with, any Delaware governmental body or agency is required for the performance by the Trust of its obligations under the Underwriting Agreement or such Delayed Delivery Contract, the issuance and delivery of the Trust Preferred Securities and the consummation of the transactions contemplated by the Underwriting Agreement or by such Delayed Delivery Contract, except such as may be required under the securities or blue sky laws of the State of Delaware, as to which such counsel need express no opinion. e. At the Time of Delivery, the independent accountants of Unocal who have audited the consolidated financial statements of Unocal and its subsidiaries included or incorporated by reference in the Registration Statement shall have furnished to the Representatives a letter dated as of the Time of Delivery with respect to Unocal to the effect set forth in Annex II to these Standard Underwriting Provisions and as to such other matters as the Representatives may reasonably request and in form and substance satisfactory to the Representatives; f. (i) Neither Unocal nor any of its subsidiaries shall have sustained since the date of the latest audited consolidated financial statements included or incorporated by reference in the Prospectus, any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and (ii) Since the respective dates as of which information is given in the Prospectus, there shall not have been any change in the capital stock or consolidated long-term debt of Unocal or any change, or development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of Unocal and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the effect of which, in any such case described in Clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Trust Preferred Securities on the terms and in the manner contemplated in the Prospectus; g. Subsequent to the date of this Underwriting Agreement there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities; or (iii) any outbreak or escalation of hostilities or other calamity or crisis on or after the date of such Underwriting Agreement, if the effect of any such event specified in this Clause (iii) in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Underwriters' Trust Preferred Securities on the terms and in the manner contemplated in the Prospectus; h. Unocal and the Trust shall have furnished or caused to be furnished to the Representatives at the Time of Delivery certificates of officers of Unocal and the Trust satisfactory to the Representatives as to the accuracy of the representations and warranties of Unocal and the Trust herein at and as of such Time of Delivery, as to the performance by Unocal and the Trust of all of their obligations 13 hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a) and (f) of this Section, and as to such other matters as the Representatives may reasonably request; and i. There shall have been no notice pursuant to Section 5(a) above of an intention to amend or supplement, nor shall there have been any such amendment or supplement to, the Registration Statement or the Prospectus by incorporation by reference pursuant to Section 5(a) above between the date of this Underwriting Agreement and the Time of Delivery, inclusive. If Unocal or the Trust notifies any Representative of the impending filing of any amendment or supplement to the Registration Statement or the Prospectus by incorporation by reference pursuant to Section 5(a) above, then each Representative so notified shall use such information, until such information has been filed with the Commission, solely for the purpose of determining whether or not to consummate the purchase of the Trust Preferred Securities pursuant to this Underwriting Agreement. 8. a. Unocal and the Trust, jointly and severally, will indemnify and hold harmless each Underwriter against any losses, claims, damages, or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, the Registration Statement, the Prospectus, or any other prospectus relating to the Trust Preferred Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim; provided, however, that Unocal and the Trust shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any preliminary prospectus, the Registration Statement, the Prospectus, or any other prospectus relating to the Trust Preferred Securities, or any such amendment or supplement in reliance upon and in conformity with written information furnished to Unocal and the Trust by any Underwriter through the Representatives expressly for use in the Prospectus. b. Each Underwriter will indemnify and hold harmless Unocal and the Trust against any losses, claims, damages or liabilities to which Unocal may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, the Registration Statement, the Prospectus or any other prospectus relating to the Trust Preferred Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in any preliminary prospectus, the Registration Statement, the Prospectus, or any other prospectus relating to the Trust Preferred Securities, or any such amendment or supplement thereto in reliance upon and in conformity with written information furnished to Unocal and the Trust by such Underwriter through the Representatives expressly for use therein; and will reimburse Unocal or the Trust for any legal or other expenses reasonably incurred by Unocal or the Trust in connection with investigating or defending any such action or claim. c. Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case 14 any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. d. If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by Unocal and the Trust, on the one hand, and the Underwriters, on the other, from the offering of the Trust Preferred Securities to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of Unocal and the Trust, on the one hand, and the Underwriters, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by Unocal and the Trust, on the one hand, and such Underwriters, on the other, shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by Unocal and the Trust bear to the total underwriting compensation received by such Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by Unocal and the Trust, onthe one hand, or such Underwriters, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Unocal, the Trust and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Trust Preferred Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Underwriters in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to the Trust Preferred Securities and not joint. 15 e. The obligations of Unocal and the Trust under this Section 8 shall be in addition to any liability which Unocal or the Trust may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and trustee of Unocal or the Trust and to each person, if any, who controls Unocal or the Trust within the meaning of the Act. 9. a. If any Underwriter shall default in its obligation to purchase the Underwriters' Trust Preferred Securities which it has agreed to purchase under this Underwriting Agreement relating to such Trust Preferred Securities, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Underwriters' Trust Preferred Securities on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such Underwriters' Trust Preferred Securities, then Unocal and the Trust shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Underwriters' Trust Preferred Securities on such terms. In the event that, within the respective prescribed period, the Representatives notify Unocal and the Trust that they have so arranged for the purchase of such Underwriters' Trust Preferred Securities, or Unocal and the Trust notify the Representatives that they have so arranged for the purchase of such Underwriters' Trust Preferred Securities, the Representatives or Unocal and the Trust shall have the right to postpone the Time of Delivery for such Underwriters' Trust Preferred Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and Unocal and the Trust agree to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Underwriting Agreement. b. If, after giving effect to any arrangements for the purchase of the Underwriters' Trust Preferred Securities of a defaulting Underwriter or Underwriters by the Representatives or Unocal and the Trust as provided in subsection (a) above, the aggregate number of such Underwriters' Trust Preferred Securities which remains unpurchased does not exceed one-eleventh of the aggregate number of the Trust Preferred Securities, then Unocal and the Trust shall have the right to require each non-defaulting Underwriter to purchase the number of Underwriters' Trust Preferred Securities which such Underwriter agreed to purchase under this Underwriting Agreement and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Trust Preferred Securities which such Underwriter agreed to purchase under this Underwriting Agreement) of the Underwriters' Trust Preferred Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. c. If, after giving effect to any arrangements for the purchase of the Underwriters' Trust Preferred Securities of a defaulting Underwriter or Underwriters by the Representatives or Unocal and the Trust as provided in subsection (a) above, the aggregate number of Underwriters' Trust Preferred Securities which remains unpurchased exceeds one-eleventh of the aggregate number of the Trust Preferred Securities, as referred to in subsection (b) above, or if Unocal and the Trust shall not exercise their right described in subsection (b) above to require non-defaulting Underwriters to purchase Underwriters' Trust Preferred Securities of a defaulting Underwriter or Underwriters, then this Underwriting Agreement shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, Unocal or the Trust, except for the expenses to be borne by Unocal and the Trust and the 16 Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default. 10. The respective indemnities, agreements, representations, warranties and other statements of Unocal or the Trust and the several Underwriters, as set forth in this Underwriting Agreement or made by or on behalf of them, respectively, pursuant to this Underwriting Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or Unocal or the Trust, or any officer, director, trustee or controlling person of Unocal or the Trust and shall survive delivery of and payment for the Trust Preferred Securities. 11. If this Underwriting Agreement shall be terminated pursuant to Section 9 hereof, neither Unocal nor the Trust shall then be under any liability to any Underwriter with respect to the Trust Preferred Securities except as provided in Section 6 and Section 8 hereof; but, if for any other reason, Underwriters' Trust Preferred Securities are not delivered by or on behalf of Unocal and the Trust as provided herein, Unocal and the Trust will reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Trust Preferred Securities, but Unocal and the Trust shall then be under no further liability to any Underwriter with respect to such Trust Preferred Securities except as provided in Section 6 and Section 8 hereof. 12. In all dealings hereunder, the Representatives of the Underwriters shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose in Schedule II hereto. All statements, requests, notices and agreements hereunder shall be in writing or by facsimile, telex, telegram or other similar electronic communication if promptly confirmed in writing, and if the Underwriters shall be sufficient in all respects if delivered or sent by registered mail to the address of the Representatives as set forth in Schedule II hereto; and if to Unocal or the Trust shall be sufficient in all respects if delivered or sent by registered mail to the address of Unocal set forth in the Registration Statement, Attention: Corporate Secretary; provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by registered mail to such Underwriter at its address set forth either in its Underwriters' Questionnaire, or facsimile constituting such Questionnaire, which address will be supplied to Unocal and the Trust by the Representatives upon request. 13. This Underwriting Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters and Unocal and the Trust and, to the extent provided in Section 8 and Section 10 hereof, the officers, directors and trustees of Unocal and the Trust and each person who controls Unocal or the Trust, or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Underwriting Agreement. No purchaser of any of the Trust Preferred Securities from an Underwriter shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence in this Underwriting Agreement. 15. This Underwriting Agreement shall be governed by and construed in accordance with the laws of the State of New York. 17 16. This Agreement may be (i) executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument and (ii) evidenced by an exchange of facsimile communications or any other rapid transmission device designed to produce a written record of communications transmitted. The obligations of the Underwriters under this Underwriting Agreement shall be several and not joint. 18 ANNEX I TO STANDARD UNDERWRITING PROVISIONS UNDERWRITING AGREEMENT - --------------------- - --------------------- - --------------------- - --------------------- - --------------------- - --------------------- As Representatives of the several [Date] Underwriters named in Schedule I hereto Ladies and Gentlemen: Unocal Corporation, a Delaware corporation ("Unocal"), and Unocal Capital Trust II, a Delaware statutory business trust (the "Trust"), propose, subject to the terms and conditions stated herein and in Sections 1 through 16 and Annexes II and III of the Standard Underwriting Provisions, June 1998 (the "Standard Provisions"), to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Trust Preferred Securities (the "Trust Preferred Securities") specified in Schedule II hereto. Each of the provisions of the Standard Provisions is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Underwriting Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Underwriting Agreement, except that each representation and warranty with respect to the Prospectus in Section 2 of the Standard Provisions shall be deemed to be a representation and warranty as of _______, 1998 in relation to the Basic Prospectus (as therein defined), and also a representation and warranty as of the date of this Underwriting Agreement in relation to the Prospectus (as therein defined). Each reference to the Representatives herein and in the provisions of the Standard Provisions so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Standard Provisions are used herein as therein defined. The Representatives designated to act on behalf of each of the Underwriters pursuant to Section 12 of the Standard Provisions and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto. An amendment to the Registration Statement, or a supplement to the Basic Prospectus, as the case may be, relating to the Trust Preferred Securities, in the form heretofore delivered to you, has been or is now proposed to be transmitted for filing with the Commission. Subject to the terms and conditions set forth herein and in the Standard Provisions incorporated herein by reference, Unocal and the Trust agree to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from Unocal and the Trust at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the number of Trust Preferred Securities set forth opposite the name of such Underwriter in Schedule I hereto, less the I-1 number of Trust Preferred Securities covered by Delayed Delivery Contracts, if any, as may be specified respectively in such Schedule II. If the foregoing is in accordance with your understanding, please sign and return to us two counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Standard Provisions incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and Unocal and the Trust. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to Unocal and the Trust for examination, upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof. Very truly yours, UNOCAL CORPORATION By: ---------------------------------- Name: Title: UNOCAL CAPITAL TRUST II By: UNOCAL CORPORATION, as Sponsor By: ---------------------------------- Name: Title: Accepted as to the date hereof: [Name of Representative] By: ---------------------------------- Authorized Signature Name: Title: [Name of Representative] By: ---------------------------------- Authorized Signature Name: Title: On behalf of each of the Underwriters I-2 SCHEDULE I TO UNDERWRITING AGREEMENT Number of Trust Preferred Securities to be Underwriters Purchased - -------------------------------------------------------------------------------- [Names of Underwriters].......................... ------------------ ------------------ Total............................................ ------------------ ------------------ I-3 SCHEDULE II TO UNDERWRITING AGREEMENT TRUST PREFERRED SECURITIES TITLE OF TRUST PREFERRED SECURITIES: ___% TRUST PREFERRED SECURITIES NUMBER OF FIRM TRUST PREFERRED SECURITIES: MAXIMUM NUMBER OF OPTIONAL TRUST PREFERRED SECURITIES: DISTRIBUTION RATE: ___% DISTRIBUTION PAYMENT DATES: VOTING RIGHTS: REDEMPTION PROVISIONS: LIQUIDATION RIGHTS: LIQUIDATION AMOUNT $___ PER TRUST PREFERRED SECURITY [OTHER TERMS] PRICE TO PUBLIC: PURCHASE PRICE BY UNDERWRITERS: UNDERWRITERS' COMPENSATION: $___ PER TRUST PREFERRED SECURITY TIME OF DELIVERY: [DATE AND TIME] CLOSING LOCATION: DELAYED DELIVERY: [NONE] [UNDERWRITERS' COMPENSATION SHALL BE $_____ PER TRUST PREFERRED SECURITIES FOR WHICH DELAYED DELIVERY CONTRACTS HAVE BEEN ENTERED INTO. SUCH COMPENSATION SHALL BE PAYABLE TO THE ORDER OF .] -------------------------- NAMES AND ADDRESSES OF REPRESENTATIVES: DESIGNATED REPRESENTATIVES: ADDRESS FOR NOTICES, ETC.: [OTHER TERMS] I-4 ANNEX II TO STANDARD UNDERWRITING PROVISIONS FORM OF COMFORT LETTER Pursuant to Section 7(e) of the Underwriting Agreement, the independent accountants shall furnish letters to the Representatives with respect to Unocal to the effect that: (i) They are independent certified public accountants with respect to Unocal within the meaning of the Act and the applicable published rules and regulations thereunder; (ii) In their opinion, the consolidated financial statements and any supplementary financial information and schedules audited by them and included or incorporated by reference in the Registration Statement or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations thereunder; (iii) In their opinion, the unaudited selected financial information with respect to the consolidated results of operations and financial position of Unocal for the five most recent fiscal years included or incorporated by reference in the Prospectus or in Item 6 of Unocal's Annual Report on Form 10-K for the most recent fiscal year agrees with the corresponding amounts (after restatement where applicable) in the audited consolidated financial statements for the five such fiscal years which were included or incorporated by reference in Unocal's Annual Reports on Form 10-K for such fiscal years; (iv) On the basis of limited procedures, not constituting an examination in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim consolidated financial statements of Unocal as consolidated with its subsidiaries, inspection of the minute books of Unocal and its significant subsidiaries since the date of the latest audited financial statements included or incorporated by reference in the Prospectus, inquiries of officials of Unocal and its significant subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that: (A) the unaudited condensed consolidated earnings statement, consolidated balance sheet and consolidated cash flows statement included or incorporated by reference in Unocal's Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Exchange Act as it applies to Form 10-Q and the related published rules and regulations thereunder or that any material modification should be made to them in order for them to be in conformity with generally accepted accounting principles; (B) any unaudited pro forma condensed consolidated financial statements included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the published rules and regulations thereunder or the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements, except as disclosed and with which they concur; II-1 (C) as of a specified date not more than five days prior to the Time of Delivery, there have been any changes in the outstanding capital stock (other than issuances of capital stock upon exercise of options and stock appreciation rights, upon earn-outs of performance shares, and upon conversions of convertible securities, in each case which were outstanding on the date of the latest balance sheet included or incorporated by reference in the Prospectus, and upon grants or cancellation of restricted stock and issuances of capital stock pursuant to the Savings Plan and the Dividend Reinvestment and Common Stock Purchase Plan and upon surrender for exchange of certificates evidencing former shares of common stock of Unocal Exploration Corporation and other than purchases of common stock or any increase in the consolidated long-term debt of Unocal and its subsidiaries (other than normal fluctuations in the outstanding amount of commercial paper classified as long-term in accordance with generally accepted accounting principles), or any increase in short-term notes payable in excess of 100%, or any decreases in consolidated net current assets or net assets or other items specified by the Representatives, or any increases in any items specified by the Representatives, in each case as compared with amounts shown in the latest balance sheet included or incorporated by reference in the Prospectus, except in each case for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (D) for the period from the date of the latest financial statements included or incorporated by reference in the Prospectus to the specified date referred to in Clause (C) there were any decreases in consolidated total revenues, net earnings or basic earnings per share or, if for a fiscal quarter, the ratio of earnings to fixed charges or other items specified by the Representatives, or any increases in any items specified by the Representatives, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Representatives, except in each case for increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (v) In addition to the audit referred to in their report(s) included or incorporated by reference in the Prospectus and the limited procedures, inspection of minute books, inquiries and other procedures referred to in paragraph (iv) above, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Representatives which are derived from the general accounting records of Unocal and its subsidiaries, which appear in the Prospectus (including specified documents incorporated by reference), or in Part II of, or in exhibits and schedules to, the Registration Statement specified by the Representatives, and have compared certain of such amounts, percentages and financial information with the accounting records of, or, if approved by the Underwriters, schedules prepared by, Unocal and its subsidiaries and have found them to be in agreement. II-2 ANNEX III TO STANDARD UNDERWRITING PROVISIONS DELAYED DELIVERY CONTRACT UNOCAL CORPORATION - --------------------------------- - --------------------------------- - --------------------------------- - --------------------------------- UNOCAL CAPITAL TRUST II - --------------------------------- - --------------------------------- - --------------------------------- - --------------------------------- -----------,---- Ladies and Gentlemen: The undersigned hereby agrees to purchase from Unocal Corporation, a Delaware corporation ("Unocal"), and Unocal Capital Trust II, a Delaware statutory business trust (the "Trust") and Unocal and the Trust agree to sell to the undersigned, [number of Trust Preferred Securities] of the Trust's [Title of Trust Preferred Securities] (the "Trust Preferred Securities"), offered by the Prospectus dated _________, 1998, as amended or supplemented as of ______________, _____, receipt of a copy of which is hereby acknowledged, at a purchase price of $____ per security, [plus accrued distributions, if any,] and on the further terms and conditions set forth in this contract. [The undersigned will purchase the Trust Preferred Securities from the Trust on ________, ____ (the "Delivery Date").] [The undersigned will purchase the Trust Preferred Securities from the Trust on the delivery date or dates and in the amounts set forth below: DELIVERY DATE NUMBER OF SHARES ---------------------------- ---------------------------- ---------------------------- ---------------------------- Each such date on which Trust Preferred Securities are to be purchased hereunder is hereinafter referred to as a "Delivery Date".] Payment for the Trust Preferred Securities which the undersigned has agreed to purchase on [the][each] Delivery Date shall be made to the Trust or its order by wire transfer of III-1 immediately available funds, at the option of the undersigned, to a bank account specified by the Trust, on [the][such] Delivery Date upon delivery to the undersigned of the Trust Preferred Securities then to be purchased by the undersigned in definitive fully registered form and in such denominations and registered in such names as the undersigned may designate by written or telegraphic communication addressed to Unocal and the Trust not less than five full business days prior to [the][such] Delivery Date. The obligation of the undersigned to take delivery of and make payment for Trust Preferred Securities on [the][each] Delivery Date shall be subject to the condition that the purchase of Trust Preferred Securities to be made by the undersigned shall not on [the][such] Delivery Date be prohibited under the laws of the jurisdiction to which the undersigned is subject. The obligation of the undersigned to take delivery of and make payment for Trust Preferred Securities shall not be affected by the failure of any purchaser to take delivery of and payment for Trust Preferred Securities pursuant to other contracts similar to this contract. [The undersigned understands that Underwriters (the "Underwriters") are also purchasing Trust Preferred Securities from the Trust, but that the obligations of the undersigned hereunder are not contingent on such purchases.] Promptly after completion of the sale to the Underwriters Unocal and the Trust will mail or deliver to the undersigned at its address set forth below notice to such effect, accompanied by a copy of the Opinions of Counsel for Unocal and the Trust delivered to the Underwriters in connection therewith. The undersigned represents and warrants that, as of the date of this contract, the undersigned is not prohibited from purchasing the Trust Preferred Securities hereby agreed to be purchased by it under the laws of the jurisdiction to which the undersigned is subject. This contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. This contract may be executed by either of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. This contract shall be governed by and construed in accordance with the laws of the State of New York. III-2 It is understood that the acceptance by Unocal and the Trust of any Delayed Delivery Contract (including this contract) is in Unocal's and the Trust's sole discretion and that, without limiting the foregoing, acceptances of such contracts need not be on a first-come, first-served basis. If this contract is acceptable to Unocal and the Trust, it is requested that Unocal and the Trust sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding contract between Unocal and the Trust and the undersigned when such counterpart is so mailed or delivered by Unocal and the Trust. Yours very truly, ----------------------------------- By: -------------------------------- (Signature) ----------------------------------- (Name and Title) ----------------------------------- (Address) Accepted: -------------------, ------- Unocal Corporation By: -------------------------------- Name: Title: Unocal Capital Trust II By: Unocal Corporation, as Sponsor By: --------------------------- Name: Title: III-3 EX-1.5 3 EXHIBIT 1.5 EXHIBIT 1.5 UNION OIL COMPANY OF CALIFORNIA MEDIUM-TERM NOTES, SERIES C PAYMENT OF PRINCIPAL, INTEREST AND PREMIUM, IF ANY, GUARANTEED BY UNOCAL CORPORATION FORM OF DISTRIBUTION AGREEMENT , 1998 Morgan Stanley & Co. Incorporated 1585 Broadway New York, NY 10036 Credit Suisse First Boston Corporation Eleven Madison Avenue, 4th Floor New York, NY 10010-3629 J.P. Morgan Securities Inc. 60 Wall Street New York, NY 10260-0060 NationsBanc Montgomery Securities LLC NationsBank Corporate Center 100 North Tryon Street Charlotte, NC 28255 Salomon Brothers Inc Seven World Trade Center New York, NY 10048 Ladies and Gentlemen: 1. INTRODUCTION. Union Oil Company of California, a California corporation (the "Issuer"), and Unocal Corporation, a Delaware corporation (the "Guarantor"), each confirms its agreement with each of you (individually, an "Agent" and collectively, the "Agents") with respect to the issue and sale from time to time by the Issuer of its Medium-Term Notes, Series C, registered under the registration statements referred to in Section 2(a) hereof (any such medium- term notes, other than any to be sold pursuant to any agreement that may be entered into between the Issuer, the Guarantor and any of the Agents for them to act as a placement agent (a "placement agency agreement"), are hereinafter referred to as the "Debt Securities"), guaranteed (any such guarantees being hereinafter referred to as the "Guarantees") as to payment of principal, interest and premium, if any, by the Guarantor (the Debt Securities and the Guarantees related thereto being hereinafter collectively referred to as the "Securities"). The Securities may be sold pursuant to Section 3 of this Agreement in an aggregate amount not to exceed the amount of Registered Securities (as defined in Section 2(a) hereof), reduced by the aggregate amount of any other Registered Securities sold otherwise than pursuant to Section 3 of this Agreement. The Securities will be issued under an indenture, dated as of February 3, 1995 (the "Indenture"), among the Issuer, the Guarantor and Chemical Trust Company of California (which was succeeded by merger effective as of November 15, 1997, by Chase Manhattan Bank and Trust Company, National Association), as trustee (the "Trustee"), which incorporates the Standard Multiple-Series Indenture Provisions, January 1991, of the Issuer and the Guarantor dated as of January 2, 1991. The Securities shall have the prices, maturity ranges, interest rates, redemption provisions and other terms set forth in the Prospectus referred to in Section 2(a) hereof, as it may be supplemented from time to time. The Securities will be issued, and the terms thereof established, from time to time by the Issuer and the Guarantor in accordance with the Indenture and the Procedures (as defined in Section 3(d) hereof). 2. REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE GUARANTOR. The Issuer and the Guarantor, jointly and severally, represent and warrant to, and agree with, each Agent as follows: (a) The Issuer and the Guarantor have filed with the Securities and Exchange Commission (the "Commission") two registration statements on Form S-3 (Registration Nos. 33-54861; 33-54861-01 and 333-_____; 333-_____-01), including a prospectus relating to debt securities of the Issuer and guarantees thereof by Guarantor, together with equity securities of the Guarantor (such securities, together with trust preferred securities of Unocal Capital Trust II and related junior subordinated debentures and guarantees of the Guarantor also registered under Registration Statement Nos. 333-_____ and 333-_____-01, being referenced to collectively as the "Registered Securities"), which registration statements have become effective. Each such registration statement, including the exhibits thereto (other than the Form T-1), as amended as of the Closing Date (as defined in Section 3(e) hereof), is hereinafter referred to as a "Registration Statement." References herein to the "applicable Registration Statement" shall be deemed to refer to both Registration Statements so long as Registered Securities remain issuable under Registration Statement Nos. 33-54861; 33-54861-01 and only to Registration Statement Nos. 333-_____; 333-_____-01 thereafter. The prospectus relating to debt securities of the Issuer and guarantees thereof by the Guarantor, together with equity securities of the Guarantor, included in each Registration Statement, as amended or supplemented as of the Closing Date (other than by a supplement relating solely to the offering of Registered Securities other than the Securities), including all material incorporated by reference therein, is hereinafter referred to as the "Prospectus." Any reference in this Agreement to amending or supplementing the Prospectus shall be deemed to include the filing of materials incorporated by reference in the Prospectus after the Closing Date and any reference in this Agreement to any amendment or supplement to the Prospectus shall be deemed to include any such materials incorporated by reference in the Prospectus after the Closing Date. (b) On the effective date of Registration Statement Nos. 33-54861; 33-54861-01 relating to the Registered Securities and on the effective date of Registration Statement Nos. 333-_____; 2 333-_____-01 relating to the Registered Securities, each such Registration Statement conformed in all material respects to the requirements of the Securities Act of 1933, as amended (the "Act"), the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission pursuant to the Act (the "Rules and Regulations") and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and on the Closing Date, each Registration Statement and the Prospectus, and at each of the times of acceptance and of delivery referred to in Section 6(a) hereof and at each of the times of amendment or supplementing referred to in Section 6(b) hereof (the Closing Date and each such time being herein sometimes referred to as a "Representation Date"), each Registration Statement and the Prospectus, as then amended or supplemented, will conform in all material respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations, and none of such documents will include any untrue statement of a material fact or will omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, except that the foregoing does not apply to statements in or omissions from any of such documents based upon written information furnished to the Issuer or the Guarantor by any Agent specifically for use therein. 3. APPOINTMENT AS AGENT; AGREEMENT OF AGENT; SOLICITATIONS AS AGENT. (a) Subject to the terms and conditions stated herein, the Issuer and the Guarantor each hereby appoints each of the Agents as an agent of the Issuer and the Guarantor for the purpose of soliciting or receiving offers to purchase the Securities from the Issuer and the Guarantor by others. So long as this Agreement shall remain in effect with respect to any Agent, neither the Issuer nor the Guarantor shall, without the consent of each such Agent, solicit or accept offers to purchase Securities otherwise than through one of the Agents (except as contemplated by Section 11 hereof); PROVIDED, HOWEVER, that, subject to all of the terms and conditions of this Agreement and any agreement contemplated by Section 11 hereof, the foregoing shall not be construed to prevent the Issuer or the Guarantor from selling at any time any Registered Securities pursuant to any placement agency agreement or in a firm commitment underwriting pursuant to an underwriting agreement that does not provide for a continuous offering of such Registered Securities; PROVIDED, FURTHER, that the Issuer and the Guarantor may from time to time accept unsolicited offers to purchase Securities from the Issuer and the Guarantor or to sell Securities as an agent of the Issuer and the Guarantor if (i) the Securities are purchased or sold in accordance with the terms of separate purchase or agency agreements to be entered into between each such unsolicited offeror and the Issuer and the Guarantor, each of which agreements will be for a single transaction and contain business terms substantially similar to those contained in this Agreement (including the same discount or commission payment to an agent as is contained in Exhibit A attached hereto, unless in connection with a purchase as principal pursuant to Section 11 a lower discount or commission is agreed to by such agent, the Issuer and the Guarantor), and (ii) there is delivered in connection therewith a pricing supplement to the Prospectus (a "Pricing Supplement") stating that the Agents are not participating in, and are in no way responsible for, any aspect of such unsolicited transaction, and (iii) the Issuer gives notice to the Agents of its acceptance of such an unsolicited offer to purchase Securities or sell Securities as an agent pursuant to this paragraph. (b) On the basis of the representations and warranties contained herein, but subject to the terms and conditions herein set forth, each Agent agrees, as agent of the Issuer and the Guarantor, to 3 use reasonable efforts when requested by the Issuer to solicit offers to purchase the Securities upon the terms and conditions set forth in the Prospectus, as from time to time amended or supplemented. Upon receipt of notice from the Issuer as contemplated by Section 4(b) hereof, each Agent shall suspend its solicitation of offers to purchase Securities until such time as the Issuer shall have furnished it with an amendment or supplement to each Registration Statement or the Prospectus, as the case may be, contemplated by Section 4(b) and shall have advised each such Agent that such solicitation may be resumed. The Issuer reserves the right, in its sole discretion, to suspend solicitation of offers to purchase the Securities commencing at any time for any period of time or permanently. If the Issuer has notified each Agent to suspend solicitation of offers to purchase Securities for any reason, then such Agent will use its best efforts to suspend such solicitation as soon as practicable after receiving notice from the Issuer thereof, but in any event, within one business day after receiving such notice. Any suspension in solicitation described above shall continue until such time as the Issuer has advised the Agents that such solicitation may be resumed. For the purpose of the second preceding sentence, "business day" shall mean any day which is not a Saturday or Sunday and which in New York City is not a day on which banking institutions are generally authorized or obligated by law to close. The Agents are authorized to solicit offers to purchase Securities in book-entry fully registered form and only in minimum aggregate denominations of $1,000 and integral multiples of $1,000 in excess thereof. Unless otherwise agreed to by the Issuer and an Agent and specified in a supplement to the Prospectus, Securities (i) shall be purchased at a purchase price equal to 100% of the principal amount thereof, and (ii) if purchased by an Agent as principal, pursuant to a Purchase Agreement or otherwise, as contemplated by Section 11 hereof, may be resold at varying prices from time to time or, if set forth in the applicable Purchase Agreement, at a fixed public offering price. In connection with any resale of Securities purchased as principal, an Agent may use a selling or dealer group and may reallow to any broker or dealer any portion of the discount or commission payable with respect thereto. Each Agent shall communicate to the Issuer, orally or in writing, each reasonable offer to purchase Securities received by it as agent. The Issuer shall have the sole right to accept offers for itself and the Guarantor to purchase the Securities and may reject any such offer, in whole or in part. Each Agent shall have the right, in its discretion reasonably exercised, without notice to the Issuer or the Guarantor, to reject any offer to purchase Securities received by it, in whole or in part, and any such rejection shall not be deemed a breach of its agreement contained herein. No Security which the Issuer has agreed to sell pursuant to this Agreement shall be deemed to have been purchased and paid for, or sold by the Issuer, until such Security shall have been delivered to The Depository Trust Company for the account of the purchaser thereof against payment by such purchaser. (c) At the time of delivery of, and payment for, any Securities sold by the Issuer as a result of a solicitation made by, or offer to purchase received by, an Agent, the Issuer and the Guarantor agree to pay such Agent a commission in accordance with the schedule set forth in Exhibit A hereto. (d) Administrative procedures respecting the sale of Securities (the "Procedures") shall be agreed upon from time to time by the Agents, the Issuer and the Guarantor. The initial 4 Procedures, which are set forth in Exhibit B hereto, shall remain in effect until changed by agreement among the Issuer, the Guarantor and the Agents. Each Agent, the Issuer and the Guarantor agree to perform the respective duties and obligations specifically provided to be performed by each of them herein and in the Procedures. The Issuer will furnish to the Trustee and any authenticating agent a copy of the Procedures which are from time to time in effect. (e) The documents required to be delivered by Section 5 hereof shall be delivered at the office of Gibson Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles, California 90071 not later than 10:00 A.M., Los Angeles time, on the date of this Agreement or at such other place and time as may be mutually agreed to by the Issuer, the Guarantor and the Agents, which in no event shall be later than the time at which the Agents commence solicitation of offers to purchase Securities hereunder, such time and date being herein called the "Closing Date." 4. CERTAIN AGREEMENTS OF THE ISSUER AND THE GUARANTOR. The Issuer agrees with the Agents that it has furnished or it will furnish to Gibson Dunn & Crutcher LLP, counsel for the Agents, one signed copy of each Registration Statement, including all exhibits, in the form in which it became effective and of all amendments thereto and that, in connection with each offering of Securities: (a) The Issuer will advise each Agent promptly of any proposal to amend or supplement any Registration Statement or the Prospectus (other than by a Pricing Supplement relating to the Securities or an amendment or supplement relating solely to the offering of Registered Securities other than the Securities) and will afford the Agents a reasonable opportunity to comment on any such proposed amendment or supplement, except that with respect to amendments or supplements to any Registration Statement or the Prospectus by incorporation by reference of any Proxy Statements, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K, the Issuer or the Guarantor shall to the extent practicable, notify each Agent either (i) to suspend solicitation of offers to purchase Securities pursuant to Section 3(b) above, or (ii) of the filing of such a report or proxy statement with the Commission at least one business day (as defined in Section 3(b) above) prior to filing such a report or proxy statement with the Commission and deliver a copy of each such report or proxy statement (together with exhibits thereto) to each Agent on the same business day that such report or proxy statement is filed with the Commission; and the Issuer will also advise each Agent of the filing of any amendment or supplement (other than a Pricing Supplement relating to the Securities or an amendment or supplement relating solely to the offering of Registered Securities other than the Securities) and of the institution by the Commission of any stop order proceedings in respect of any Registration Statement or of any part thereof and will use its best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. If the Issuer notifies any Agent of the impending filing of any amendment or supplement to the Registration Statement or the Prospectus by incorporation by reference pursuant to this Section 4(a), then such Agent so notified shall use such information, until such inforation has been filed with the Commission, solely for the purpose of determining whether or not to suspend solicitations of offers to purchase Securities pursuant to this Agreement. If the Issuer is not accepting offers to purchase the Securities and does not anticipate accepting offers to purchase the Securities prior to the filing of the Issuer's or the Guarantor's next succeeding Quarterly Report on Form 10-Q or next Annual Report on Form 10-K, as the case may be, then no such advice or notification shall be required until the Issuer determines to solicit offers to purchase the Securities. 5 (b) If, at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus, as then amended or supplemented, would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Act, the Issuer will promptly notify each Agent to suspend solicitation of offers to purchase Securities; and if the Issuer shall decide to amend or supplement the applicable Registration Statement or the Prospectus, it will promptly advise each Agent by telephone (with confirmation in writing) and will promptly prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. Notwithstanding the foregoing, if, at the time of any notification to suspend solicitations, any Agent shall own any of the Securities with the intention of reselling them, or the Issuer has accepted an offer to purchase Securities but the related settlement has not occurred, the Issuer and the Guarantor, subject to the provisions of subsection (a) of this Section, will promptly prepare and file with the Commission an amendment or supplement that will correct such statement or omission or an amendment that will effect such compliance. (c) The Issuer and the Guarantor, during the period when a prospectus relating to the Securities is required to be delivered under the Act, will file promptly all documents required to be filed by it with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"). In addition, during the period described in the immediately preceding sentence, on the date on which the Guarantor makes any announcement to the general public concerning earnings or concerning any other event which is required to be described, or which the Issuer or the Guarantor proposes to describe, in a document filed pursuant to the Exchange Act, the Issuer or the Guarantor will furnish a copy of such announcement to each Agent and, subject to the provisions of subsections (a) and (b) of this Section, will cause the Prospectus to be amended or supplemented to reflect the information contained in such announcement. The Issuer or the Guarantor also will furnish each Agent with copies of all other press releases or announcements to the general public as soon as practicable after such press releases or announcements are made to the public. The information required to be furnished to the Agents pursuant to the prior sentence shall be deemed to have been furnished by the posting thereof on the Guarantor's Internet website at http://www.unocal.com. The Issuer or the Guarantor will promptly notify each Agent of any downgrading in the rating of the Securities or any other debt securities of the Issuer or the Guarantor, or any proposal to downgrade the rating of the Securities or any other debt securities of the Issuer or the Guarantor, by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), as soon as the Issuer and the Guarantor learn of such downgrading or proposal to downgrade. (d) As soon as practicable after the date of each acceptance by the Issuer of an offer to purchase Securities hereunder, but in any event not later than (A) the 45th day after the end of the fourth fiscal quarter following the fiscal quarter that includes the date of such acceptance or (B) if such fourth fiscal quarter is the last quarter of the Issuer's or the Guarantor's fiscal year, the 90th day after the end of such fourth fiscal quarter, the Guarantor will make generally available to its security holders a consolidated earnings statement of the Guarantor and its subsidiaries covering a period of at least the 12 prior months which will satisfy the provisions of Section 11(a) of the Act and the Rules and Regulations thereunder (including, at the option of the Guarantor, Rule 158). 6 (e) The Issuer will furnish to each Agent copies of each Registration Statement, including all exhibits, the Prospectus and all amendments and supplements to such documents (other than Pricing Supplements relating to Securities not sold or purchased by any such Agent and amendments or supplements relating solely to the offering of Registered Securities other than the Securities), in each case as soon as available and in such quantities as are reasonably requested. (f) The Issuer will arrange for the qualification of the Securities for sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Agents designate and will continue such qualifications in effect so long as required for the distribution. (g) So long as any Securities are outstanding, the Guarantor will furnish to the Agents, (i) as soon as practicable after the end of each fiscal year, a copy of the Guarantor's annual report to stockholders for such year, (ii) as soon as available, a copy of each report or definitive proxy statement of the Guarantor filed with the Commission under the Exchange Act or mailed to stockholders, and (iii) from time to time, such other information concerning the Issuer and the Guarantor as the Agents may reasonably request. (h) The Issuer and the Guarantor, jointly and severally, covenant and agree with the Agents to pay all expenses incident to the performance of their respective obligations under this Agreement and to reimburse each Agent for any expenses (including fees and disbursements of counsel) incurred by it in connection with qualification of the Securities for sale and determination of their eligibility for investment under the laws of such jurisdictions as such Agent may designate and the printing of memoranda relating thereto, for any fees charged by investment rating agencies for the rating of the Securities, for expenses incurred in distributing the Prospectus and all supplements thereto, any preliminary prospectuses and any preliminary prospectus supplements to each Agent and for the reasonable fees and disbursements of counsel to the Agents. 5. CONDITIONS OF OBLIGATIONS. The obligation of each Agent, as agent of the Issuer and the Guarantor, under this Agreement at any time to use its reasonable efforts to solicit offers to purchase the Securities is subject to the accuracy, on the date hereof, on each Representation Date and on the date of each such solicitation, of the representations and warranties of the Issuer and the Guarantor herein, to the accuracy, on each such date, of the statements of the Issuer's and the Guarantor's officers made pursuant to the provisions hereof, to the performance, on or prior to each such date, by the Issuer and the Guarantor of their obligations hereunder, and to each of the following additional conditions precedent: (a) No stop order suspending the effectiveness of any Registration Statement or of any part thereof shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Issuer, the Guarantor or any Agent, shall be contemplated by the Commission. (b) None of the Registration Statements nor the Prospectus, as amended or supplemented, as of any Representation Date or date of such solicitation, as the case may be, shall contain any untrue statement of fact which, in the reasonable opinion of any Agent, is material or omits to state a fact which, in the reasonable opinion of any Agent, is material and is required to be stated therein or is necessary to make the statements therein not misleading. 7 (c) There shall not have occurred (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Issuer, the Guarantor or any of their respective subsidiaries, other than as set forth or contemplated in the Prospectus, as amended or supplemented, which, in the reasonable judgment of such Agent, materially impairs the investment quality of the Securities; (ii) any downgrading in the rating of the Issuer's or the Guarantor's debt securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act) and no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Issuer's or the Guarantor's debt securities; (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Issuer or the Guarantor on any exchange or in the over-the-counter market; (iv) any banking moratorium declared by Federal or New York authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of such Agent, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with solicitations of offers to purchase, or sales of, Securities. (d) At the Closing Date, the Agents shall have received an opinion, dated the Closing Date, of the General Counsel of the Issuer and the Guarantor or his designee, subject to the approval by the Agents of such designee, to the effect that: (i) Each of the Issuer and Guarantor has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; and each of the Issuer and the Guarantor is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which it respectively owns or leases substantial properties or in which the conduct of its respective business requires such qualification, except in those jurisdictions in which the failure to so qualify would not have a material adverse effect on the business or operations of the Issuer or the Guarantor; (ii) All of the issued shares of capital stock of the Issuer and the Guarantor have been duly and validly authorized and issued and are fully paid and nonassessable (except such counsel may take exception for a DE MINIMIS number of shares), and the Guarantor is the registered and beneficial owner of all of the outstanding shares of capital stock of the Issuer; (iii) To the best of such counsel's knowledge and other than as set forth or contemplated in the Prospectus, there is no legal or governmental proceeding pending to which the Issuer, the Guarantor or any of their respective subsidiaries is a party or of which any property of the Issuer, the Guarantor or any of their respective subsidiaries is the subject, which is likely (to the extent not covered by insurance) to have a material adverse effect on the consolidated financial position of the Issuer and its subsidiaries or of the Guarantor and its subsidiaries; and, to the best of such counsel's knowledge and other than as set forth or contemplated in the Prospectus, no such proceeding is threatened or contemplated by governmental authorities or threatened by others; 8 (iv) This Agreement has been duly authorized, executed and delivered by the Issuer and the Guarantor; (v) The Securities have been duly authorized, and when the terms of any Securities of any such series have been established in accordance with the Indenture and such Securities have been executed, authenticated, issued and delivered against payment therefor in accordance with the Indenture and this Agreement, such Securities will constitute valid and legally binding obligations of the Issuer and the Guarantor, enforceable against the Issuer and the Guarantor in accordance with their terms, subject, as to enforcement, to (a) bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights, (b) general equity principles, (c) requirements that a claim with respect to any Securities denominated in other than United States dollars (or a judgment denominated in other than United States dollars in respect of such a claim) be converted into United States dollars at a rate of exchange prevailing on a date determined pursuant to applicable law, and (d) governmental authority to limit, delay or prohibit the making of payments outside the United States or in a foreign currency, composite currency or currency unit; except that such counsel may decline to express an opinion on the validity and legally binding nature of the obligations of the Issuer and Guarantor with respect to any Securities that may be indexed or linked to any foreign currency, composite currency, currency unit, commodity price, financial or non-financial index or other factors; the Securities and the Indenture conform in all material respects to the descriptions thereof in the Prospectus; the forms and the terms of such Securities endorsed thereon have been established by or pursuant to Board Resolutions in each case of the Issuer or the Guarantor, as appropriate, in conformity with the provisions of the Indenture; (vi) The Indenture has been duly authorized, executed and delivered by the Issuer and the Guarantor and (assuming the due authorization, execution and delivery thereof by the Trustee) constitutes a valid and legally binding instrument of the Issuer and the Guarantor, enforceable against the Issuer and the Guarantor in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture has been duly qualified under the Trust Indenture Act; (vii) The execution, delivery and performance of the Indenture and this Agreement, the issuance and sale of the Securities, compliance with the terms and provisions of the foregoing and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach of any of the terms or provision of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Issuer or the Guarantor is a party or by which the Issuer or the Guarantor is bound or to which any of the property or assets of the Issuer or the Guarantor is subject, nor will such action result in any violation of the provisions of the Guarantor's Certificate of Incorporation, as amended, or the Issuer's Restated Articles of Incorporation, as amended, or the bylaws of the Issuer or the Guarantor or any statute or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Issuer or the Guarantor or any of their respective properties, except that such counsel may state that the opinion set forth in the preceding clause is limited to those statutes, orders, rules or regulations currently in effect which, in such counsel's experience, are normally applicable to transactions of the type contemplated by this Agreement and that such counsel expresses 9 no opinion as to the securities or Blue Sky laws of the various jurisdictions in which the Securities are to be offered; the Issuer and the Guarantor each has full power and authority to authorize, issue and sell the Securities as contemplated by this Agreement; (viii) No consent, approval, authorization, order, registration or qualification of or filing with any United States court or governmental agency or body having jurisdiction over the Issuer, the Guarantor, any of their respective subsidiaries or any of their respective properties is required for the issue and sale of the Securities by the Issuer and the Guarantor or the consummation by the Issuer or the Guarantor of the other transactions contemplated by this Agreement or the Indenture, except such as have been obtained and made under the Act and the Trust Indenture Act and such consents, approvals, authorizations registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the issuance and distribution of the Securities under this Agreement; (ix) The documents incorporated by reference in the Prospectus (other than the financial statements, the related schedules and financial exhibits and other financial and statistical information included therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act, the Rules and Regulations, the Exchange Act and the rules and regulations thereunder, as applicable; and such counsel has no reason to believe that any of such documents, when they became effective or were so filed, as the case may be, in the case of a registration statement which became effective under the Act, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, in the case of other documents which were filed under the Act or the Exchange Act with the Commission, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading; and (x) Each Registration Statement has become effective under the Act, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of any Registration Statement or of any part thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act; each Registration Statement, as of its effective date, each Registration Statement and the Prospectus, as of the Closing Date, and any amendment or supplement thereto, as of its date (other than the financial statements, related schedules and financial exhibits and other financial and statistical information included therein, as to which such counsel need express no opinion), complied as to form in all material respects with the requirements of the Act, the Trust Indenture Act and the Rules and Regulations; such counsel has no reason to believe that any such registration statement, as of its effective date, any Registration Statement or the Prospectus, as of the Closing Date, or any such amendment or supplement, as of its date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the descriptions in each Registration Statement and the Prospectus of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present the information required to be shown; provided, such counsel need express no opinion with respect to any statement contained in or omitted from any Registration Statement or the Prospectus in reliance upon or in conformity with written information furnished to the Issuer or the Guarantor by any Agent, expressly for use in any Registration Statement or Prospectus; and 10 (xi) Such counsel does not know of any contracts or other documents of a character required to be filed as an exhibit to any Registration Statement or required to be incorporated by reference into the Prospectus or required to be described in any Registration Statement or the Prospectus which are not filed or incorporated by reference or described as required; and (xii) Confirming the accuracy of the statements set forth in the Prospectus, as amended or supplemented, under the caption "United States Tax Considerations" as of such Closing Date. (e) At the Closing Date, the Agents shall have received a certificate, dated the Closing Date, of the Chief Financial Officer, the Treasurer or any Assistant Treasurer and the Secretary or any Assistant Secretary of the Issuer and the Guarantor, respectively, in which such officers, to the best of their knowledge after reasonable investigation, shall state that (i) the representations and warranties of the Issuer and the Guarantor in this Agreement are true and correct, (ii) the Issuer and the Guarantor each has complied with all agreements and satisfied all conditions on its respective part to be performed or satisfied hereunder at or prior to the Closing Date, (iii) no stop order suspending the effectiveness of any Registration Statement or of any part thereof has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission, (iv) subsequent to the date of the most recent financial statements incorporated by reference in the Prospectus there has been no material adverse change in the financial position or results of operations of the Issuer, the Guarantor and their respective subsidiaries, except as set forth in or contemplated by the Prospectus or as described in such certificate; and (v) the documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act, the Rules and Regulations, the Exchange Act and the rules and regulations thereunder, as applicable; and such officers have no reason to believe that any of such documents, when they became effective or were so filed, as the case may be, in the case of a registration statement which became effective under the Act, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and, in the case of other documents which were filed under the Act or the Exchange Act with the Commission, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading. (f) At the Closing Date, the Agents shall have received letters, dated the Closing Date, of Coopers & Lybrand L.L.P. or any successor, stating in effect that: (i) They are independent certified public accountants with respect to the Issuer and the Guarantor within the meaning of the Act and the applicable published Rules and Regulations thereunder; (ii) In their opinion, the consolidated financial statements and any supplementary financial information and schedules audited by them and included or incorporated by reference in the Registration Statement or the Prospectus comply as to form in all material respects with the applicable accounting requirements of the Act, the related Rules and Regulations thereunder, the Exchange Act and the related rules and regulations thereunder, as applicable; 11 (iii) In their opinion, the unaudited selected financial information with respect to the consolidated results of operations and financial position of the Guarantor for the five most recent fiscal years included or incorporated by reference in the Prospectus or in Item 6 of the Guarantor's Annual Report on Form 10-K for the most recent fiscal year agrees with the corresponding amounts (after restatement where applicable) in the audited consolidated financial statements for the five such fiscal years which were included or incorporated by reference in the Guarantor's Annual Reports on Form 10-K for such fiscal years; (iv) If applicable, in their opinion, the unaudited selected financial information with respect to the consolidated results of operations and financial position of the Issuer for the five most recent fiscal years included or incorporated by reference in the Prospectus or in Item 6 of the Issuer's Annual Report on Form 10-K for the most recent fiscal year agrees with the corresponding amounts (after restatement where applicable) in the audited consolidated financial statements for the five such fiscal years which were included or incorporated by reference in the Issuer's Annual Reports on Form 10- K for such fiscal years; (v) On the basis of limited procedures, not constituting an examination in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim consolidated financial statements of the Issuer and the Guarantor as consolidated with their respective subsidiaries, inspection of the minute books of the Issuer, the Guarantor and their respective significant subsidiaries since the date of the latest audited financial statements included or incorporated by reference in the Prospectus, inquiries of officials of the Issuer, the Guarantor and their respective significant subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that: (A) the unaudited condensed consolidated earnings statement, consolidated balance sheet and consolidated cash flows statement included or incorporated by reference in the Guarantor's Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Exchange Act as it applies to Form 10-Q and the related published rules and regulations thereunder or that any material modification should be made to them in order for them to be in conformity with generally accepted accounting principles; (B) if applicable, the unaudited condensed consolidated earnings statement, consolidated balance sheet and consolidated cash flows statement included or incorporated by reference in the Issuer's Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Exchange Act as it applies to Form 10-Q and the related published rules and regulations thereunder or that any material modification should be made to them in order for them to be in conformity with generally accepted accounting principles; (C) any unaudited pro forma condensed consolidated financial statements included or incorporated by reference in the Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the Act and the published Rules and 12 Regulations thereunder or the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements, except as disclosed and with which they concur; (D) as of a specified date not more than five days prior to the Closing Date, there have been any changes in the outstanding capital stock (other than, in the case of the Guarantor, issuances of capital stock upon exercise of options and stock appreciation rights, upon earn-outs of performance shares, and upon conversions of convertible securities, in each case which were outstanding on the date of the latest balance sheet included or incorporated by reference in the Prospectus, and upon grants or cancellations of restricted stock and issuances of capital stock pursuant to the Profit Sharing Plan, Dividend Reinvestment and Stock Purchase Plan) or any increase in the consolidated long-term debt of the Issuer and the Guarantor and their respective subsidiaries (other than normal fluctuations in the outstanding amount of commercial paper classified as long-term in accordance with generally accepted accounting principles), or any increase in short-term notes payable in excess of 100%, or any decreases in consolidated net current assets or net assets or other items specified by the Agents, or any increases in any items specified by the Agents, in each case as compared with amounts shown in the latest balance sheet included or incorporated by reference in the Prospectus, except in each case for changes, increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (E) for the period from the date of the latest financial statements included or incorporated by reference in the Prospectus to the specified date referred to in Clause (D) there were any decreases in consolidated total revenues, net earnings or, in the case of the Guarantor, net earnings or net earnings per share or, if for a fiscal quarter, the ratio of earnings to fixed charges or other items specified by the Agents, or any increases in any items specified by the Agents, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Agents, except in each case for increases or decreases which the Prospectus discloses have occurred or may occur or which are described in such letter; and (vi) In addition to the examination referred to in their report(s) included or incorporated by reference in the Prospectus and the limited procedures, inspection of minute books, inquiries and other procedures referred to in paragraph (v) above, they have carried out certain specified procedures, not constituting an examination in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Agents which are derived from the general accounting records of the Issuer, the Guarantor and their respective subsidiaries, which appear in the Prospectus (including specified documents incorporated by reference), or in Part II of, or in exhibits and schedules to, the Registration Statement specified by the Agents, and have compared certain of such amounts, percentages and financial information with the accounting records of, or if approved by the Agents, schedules prepared by, the Issuer, the Guarantor and their respective subsidiaries and have found them to be in agreement. All financial statements, schedules, financial exhibits and other financial information included in material incorporated by reference into the Prospectus shall be deemed included in the Prospectus for purposes of this subsection. 13 (g) The Agents shall have received from Gibson Dunn & Crutcher LLP, counsel for the Agents, such opinion or opinions, dated the Closing Date, with respect to the incorporation of the Issuer and Guarantor, the validity of the Securities, the applicable Registration Statement, the Prospectus and other related matters as they may require, and the Issuer and the Guarantor shall have furnished to such counsel such documents as they reasonably request for the purpose of enabling them to pass upon such matters. The Issuer and the Guarantor will furnish the Agents with such conformed copies of such opinions, certificates, letters and documents as they reasonably request. 6. ADDITIONAL COVENANTS OF THE ISSUER AND THE GUARANTOR. The Issuer and the Guarantor agree, jointly and severally, that: (a) Each acceptance by the Issuer of an offer for the purchase of Securities shall be deemed to be an affirmation that its and the Guarantor's respective representations and warranties contained in this Agreement are true and correct at the time of such acceptance and a covenant that such representations and warranties will be true and correct at the settlement date for the sale of the Securities relating to such acceptance, as though made at and as of each such time, it being understood that such representations and warranties shall relate to the applicable Registration Statement and the Prospectus, as amended or supplemented, at each such time. Each such acceptance by the Issuer of an offer for the purchase of Securities shall be deemed to constitute an additional representation, warranty and agreement by the Issuer and the Guarantor that, as of the settlement date for the sale of such Securities, after giving effect to the issuance of such Securities, any other Securities to be issued on or prior to such settlement date and any other Registered Securities to be issued and sold by the Issuer and/or the Guarantor on or prior to such settlement date, the aggregate amount of Registered Securities (including any Securities) which have been issued and sold by the Issuer and the Guarantor will not exceed the amount of Registered Securities registered pursuant to the applicable Registration Statement. (b) Each time that each Registration Statement or the Prospectus shall be amended or supplemented, the Issuer and the Guarantor shall, concurrently with such amendment or supplement, furnish the Agents with a certificate, dated the date of delivery thereof, of the Chief Financial Officer, the Treasurer or any Assistant Treasurer and the Secretary or any Assistant Secretary of the Issuer and the Guarantor, respectively, in form satisfactory to the Agents, to the effect that the statements contained in the certificate covering the matters set forth in Section 5(e) hereof which was last furnished to the Agents are true and correct at the time of such amendment or supplement, as though made at and as of such time (except that such statements shall be deemed to relate to the applicable Registration Statement and the Prospectus, as amended or supplemented at such time, and except that the statements contained in the certificate covering the matters set forth in clause (ii) of Section 5(e) shall be deemed to relate to the time of delivery of such certificate) or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in Section 5(e), modified as necessary to relate to the applicable Registration Statement and the Prospectus, as amended or supplemented at the time of delivery of such certificate, and, in the case of the matters set forth in clause (ii) of Section 5(e), to the time of delivery of such certificate; PROVIDED, HOWEVER, that such requirement shall only apply to amendments or supplements by Quarterly Reports on Form 10-Q or Annual Reports on Form 10-K, unless specifically requested in writing by any of the Agents. If the Issuer is not accepting offers to purchase the Securities at the time 14 of a Representation Date and does not anticipate accepting offers to purchase the Securities prior to the filing of either the Issuer's or the Guarantor's next succeeding Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be, then no such certificate covering such periods shall be required until the Issuer determines to solicit offers to purchase the Securities. Once the Issuer has made such determination, such a certificate must be delivered prior to the settlement of the first purchase of any Securities after such withdrawal from the market. (c) The Issuer shall, as soon as practicable after each Representation Date referred to in Section 6(b), furnish the Agents with a written opinion or opinions, dated as of the date of such Representation Date, of counsel for the Issuer and the Guarantor, in form satisfactory to the Agents, to the effect set forth in Section 5(d) hereof, but modified, as necessary, to relate to the applicable Registration Statement and the Prospectus, as amended or supplemented at such Representation Date; PROVIDED, HOWEVER, that in lieu of such opinion or opinions, counsel may furnish the Agents with a letter or letters to the effect that the Agents may rely on a prior opinion delivered under Section 5(d) or this Section 6(c) to the same extent as if it were dated as of the date of such letter (except that statements in such prior opinion shall be deemed to relate to the applicable Registration Statement and the Prospectus, as amended or supplemented at such Representation Date); PROVIDED further, that such opinion or opinions shall only be required for amendments or supplements by Quarterly Reports on Form 10-Q or Annual Reports on Form 10-K, unless specifically requested in writing by any of the Agents. If the Issuer is not accepting offers to purchase the Securities at the time of a Representation Date and does not anticipate accepting offers to purchase the Securities prior to the filing of either the Issuer's or the Guarantor's next succeeding Quarterly Report on Form 10-Q or the Annual Report on Form 10-K, as the case may be, then no opinions or letters covering such periods shall be required until the Issuer determines to solicit offers to purchase the Securities. Once the Issuer has made such determination, an opinion or letter must be delivered prior to the settlement of the first purchase of any Securities after such withdrawal from the market. (d) The Issuer shall cause Coopers & Lybrand L.L.P. or its successor, as soon as practicable, after each Representation Date referred to in Section 6(b) on which each Registration Statement or the Prospectus shall be amended or supplemented to include additional financial information, to furnish the Agents with a letter or letters, addressed to the Issuer and the Agents and to the Guarantor and the Agents and, in each case, dated as of such Representation Date, in form and substance satisfactory to the Agents, to the effect set forth in Section 5(f) hereof but modified to relate to the applicable Registration Statement and the Prospectus, as amended or supplemented, at such Representation Date, with such changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Issuer and the Guarantor; PROVIDED, HOWEVER, that, except as otherwise requested by the Agents, such letters shall be required only for amendments or supplements by Quarterly Reports on Form 10-Q or Annual Reports on Form 10-K, unless specifically requested in writing by any of the Agents; PROVIDED, FURTHER, that if the applicable Registration Statement or the Prospectus is amended or supplemented solely to include financial information as of and for a fiscal quarter, Coopers & Lybrand L.L.P. or its successor may limit the scope of such letter to the unaudited financial statements included in such amendment or supplement unless there is contained therein any other accounting, financial or statistical information that, in the reasonable judgment of the Agents, should be covered by such letter, in which event such letter shall also cover such other information and procedures as shall be agreed upon by the Agents. If the Issuer is not 15 accepting offers to purchase the Securities at the time of a Representation Date and does not anticipate accepting offers to purchase the Securities prior to the filing of either the Issuer's or the Guarantor's next succeeding Quarterly Report on Form 10-Q or the next Annual Report on Form 10-K, as the case may be, then no comfort letters covering such periods shall be required until the Issuer determines to solicit offers to purchase the Securities. Once the Issuer has made such determination, a comfort letter or letters shall be required prior to the settlement of the first purchase of any Securities after such withdrawal from the market and shall cover the periods from the later of the date of the balance sheet covered by the last available comfort letter or the most recently reported audited financial information in the Annual Report on Form 10-K up to the date not more than five days prior to the date of such letter. (e) On each settlement date for the sale of Securities, the Issuer and the Guarantor shall, if in the reasonable judgment of the counsel for the Agents a written opinion of counsel for the Issuer and the Guarantor is necessary or advisable in connection with such settlement, furnish the Agent selling or purchasing such Securities with a written opinion of counsel, dated as of the date of delivery thereof, in form satisfactory to such Agent, to the effect set forth in clauses (i), (v) and (vi) of Section 5(d) hereof, but modified, as necessary, to relate to the Prospectus, as amended or supplemented at such settlement date, and except that such opinion shall state that the Securities being sold by the Issuer and the Guarantor on such settlement date, when delivered against payment therefor as provided in the Indenture and this Agreement (and assuming the due authentication, issuance and delivery of the Indenture by the Trustee), will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Issuer and the Guarantor, enforceable against the Issuer and the Guarantor in accordance with their terms, subject only to the exceptions as to enforcement set forth in clause (v) of Section 5(d) hereof, and will conform to the description thereof contained in the Prospectus, as amended or supplemented at such settlement date. (f) The Issuer and Guarantor, jointly and severally, agree that any obligation of a person who has agreed to purchase Securities to make payment for and take delivery of such Securities shall be subject to (i) the accuracy, on the related settlement date fixed pursuant to the Procedures, of the Issuer's and the Guarantor's representation and warranty deemed to be made to the Agents pursuant to the last sentence of subsection (a) of this Section 6, and (ii) the satisfaction, on such settlement date, of each of the following conditions: (i) No stop order suspending the effectiveness of any Registration Statement or of any part thereof shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Issuer, the Guarantor or any Agent, shall be contemplated by the Commission; (ii) None of the Registration Statements nor the Prospectus, as amended or supplemented as of any Representation Date or such settlement date, as the case may be, shall contain an untrue statement of material fact or shall omit to state a material fact which is required to be stated therein or is necessary to make the statements therein not misleading; and (iii) There shall not have occurred (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Issuer, the Guarantor or any of their respective subsidiaries which materially impairs the investment quality of the 16 Securities; (ii) any downgrading in the rating of the Issuer's or the Guarantor's debt securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act) and no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Issuer's or the Guarantor's debt securities; (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Issuer or the Guarantor on any exchange or in the over-the-counter market; (iv) any banking moratorium declared by Federal or New York authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with the sale and delivery of the Securities on the terms and in the manner contemplated in the Prospectus, as amended and supplemented. 7. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuer and the Guarantor, jointly and severally, will indemnify and hold harmless each Agent against any losses, claims, damages or liabilities, joint or several, to which such Agent may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus or preliminary prospectus supplement, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Agent for any legal or other expenses reasonably incurred by such Agent in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER, that the Issuer and the Guarantor will not be liable to such Agent in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to the Issuer and the Guarantor by such Agent specifically for use therein. (b) Each Agent will indemnify and hold harmless the Issuer and the Guarantor against any losses, claims, damages or liabilities to which the Issuer or the Guarantor may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in either Registration Statement, the Prospectus or any amendment or supplement thereto, or any related preliminary prospectus or preliminary prospectus supplement, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Issuer or the Guarantor by such Agent specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Issuer or the Guarantor in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred PROVIDED, HOWEVER, that such Agent will 17 not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of the offer or sale of Securities occurring after such Agent has notified the Issuer orally (confirmed in writing) that such information should no longer be used therein and such Agent does not thereafter deliver a Prospectus containing such information. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party and who shall not be counsel to any other indemnified party who may have interests conflicting with those of such indemnified party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. (d) If the indemnification provided for in this Section 7 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Issuer and the Guarantor on the one hand and any Agent on the other from the offering pursuant to this Agreement of the Securities which are the subject of the action or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuer and the Guarantor on the one hand and any Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Issuer and the Guarantor on the one hand and any Agent on the other shall be deemed to be in the same proportions as the total net proceeds from the offering pursuant to this Agreement of the Securities which are the subject of the action (before deducting expenses) received by the Issuer and the Guarantor bear to the total commissions received by such Agent from the offering of such Securities pursuant to this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer, the Guarantor or such Agent and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Agent shall be required to contribute any 18 amount in excess of the amount by which the total price at which the Securities which are the subject of the action and which were distributed to the public through it pursuant to this Agreement or upon resale of Securities purchased by it from the Issuer or the Guarantor exceeds the amount of any damages which such Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of each Agent in this subsection (d) to contribute are several, in the same proportion which the amount of the Securities which are the subject of the action and which were distributed to the public through such Agent pursuant to this Agreement bears to the total amount of such Securities distributed to the public through all of the Agents pursuant to this Agreement, and not joint. (e) The obligations of the Issuer and the Guarantor under this Section 7 shall be in addition to any liability which the Issuer or the Guarantor may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls each Agent within the meaning of the Act; and the obligations of each Agent under this Section 7 shall be in addition to any liability which each Agent may otherwise have and shall extend, upon the same terms and conditions, to each director of the Issuer and the Guarantor, to each officer of the Issuer and the Guarantor who has signed any Registration Statement and to each person, if any, who controls the Issuer or the Guarantor within the meaning of the Act. 8. STATUS OF EACH AGENT. In soliciting offers to purchase the Securities from the Issuer pursuant to this Agreement and in assuming its other obligations hereunder (other than offers to purchase pursuant to Section 11), each Agent is acting individually and not jointly and is acting solely as agent for the Issuer and the Guarantor and not as principal. Each Agent will make reasonable efforts to assist the Issuer and the Guarantor in obtaining performance by each purchaser whose offer to purchase Securities from the Issuer has been solicited by such Agent and accepted by the Issuer, but such Agent shall have no liability to the Issuer or the Guarantor in the event any such purchase is not consummated. If the Issuer or the Guarantor shall default on any of their respective obligations to deliver Securities to a purchaser whose offer it has accepted, the Issuer and the Guarantor (i) shall hold the Agents harmless against any loss, claim or damage arising from or as a result of such default by the Issuer or the Guarantor, and (ii) in particular, shall pay to the Agents any commission to which they would be entitled in connection with such sale. 9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective indemnities, agreements, representations, warranties and other statements of the Issuer and the Guarantor or their respective officers and of the Agents set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Agent, the Issuer, the Guarantor or any of their respective representatives, officers or directors or any controlling person and will survive delivery of any payment for the Securities. If this Agreement is terminated pursuant to Section 10 or for any other reason, the Issuer and the Guarantor shall remain jointly and severally responsible for the expenses to be paid or reimbursed by them pursuant to Section 4(h) and the obligations of the Issuer and the Guarantor under Sections 4(d) and 4(g) and the respective obligations of the Issuer, the Guarantor and the Agents pursuant to Section 7 shall remain in effect. In addition, if any such termination shall occur either (i) at a time when any Agent 19 shall own any of the Securities with the intention of reselling them or (ii) after the Issuer and the Guarantor have accepted an offer to purchase Securities and prior to the related settlement, the obligations of the Issuer and the Guarantor under the last sentence of Section 4(b), under Sections 4(a), 4(c), 4(e), 4(f), 6(a), 6(e) and 6(f) and, in addition, in the case of a termination occurring as described in (ii) above, under Section 3(c) and under the last sentence of Section 8, shall also remain in effect. 10. TERMINATION. This Agreement may be terminated for any reason at any time by the Issuer and the Guarantor as to any Agent or by any Agent, insofar as this Agreement relates to such Agent, upon the giving of one day's written notice of such termination to the other parties hereto. Any settlement with respect to Securities placed by an Agent occurring after termination of this Agreement shall be made in accordance with the Procedures and each Agent agrees, if requested by the Issuer and the Guarantor, to take the steps therein provided to be taken by such Agent in connection with such settlement. 11. PURCHASES AS PRINCIPAL. From time to time any Agent may agree with the Issuer and the Guarantor to purchase Securities from the Issuer as principal, in which case such purchase shall be made in accordance with the terms of a separate agreement to be entered into among such Agent, the Issuer and the Guarantor in the form attached hereto as Exhibit C, or pursuant to such other agreement including oral agreements as the Agent, the Issuer and the Guarantor shall agree (a "Purchase Agreement"). A Purchase Agreement, to the extent set forth therein, may incorporate by reference specified provisions of this Agreement. 12. SALES OF SECURITIES DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. If at any time the Issuer and any of the Agents shall determine to issue and sell Securities denominated in a currency other than U.S. dollars, which other currency may include a composite currency, the Issuer, the Guarantor and any such Agent shall execute and deliver to one another a Foreign Currency Amendment in the form attached hereto as EXHIBIT "D". The Foreign Currency Amendment shall establish, as appropriate, additions to and modifications of the terms of this Agreement, which additions and modifications shall apply to the sales, whether offered on an agency or principal basis, of Securities denominated in the currency covered thereby. 13. NOTICES. Except as otherwise provided herein, all notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication including facsimile and, if a specific email or similar address has been provided by the recipient, electronic delivery over the Internet. Notices to Morgan Stanley & Co. Incorporated shall be directed to them at 1585 Broadway, New York, NY 10036, Attention: Manager--Continuously Offered Products Group, facsimile: 212-761-0780; notices to Credit Suisse First Boston Corporation shall be directed to them at Eleven Madison Avenue, 5th Floor, New York NY 10010-3629, Attention: Short and Medium Finance, facsimile: 212-325-8183; notices to J. P. Morgan Securities Inc. shall be directed to them at 60 Wall Street, 13th Floor, New York, NY 10260-0060, Attention: Transaction Execution Group, facsimile: 212- 648-5151; notices to NationsBanc Montgomery Securities LLC shall be directed to them at NationsBank Corporate Center, 100 North Tryon Street, Charlotte, NC 28255, Attention: Continuously Offered Products Group facsimile: 704-388-9939; notices to Salomon Brothers Inc shall be directed to them at Seven World Trade Center, New York, NY 10048, Attention: MTN Department facsimile: 212-783-2274; and notices to the Issuer and the 20 Guarantor shall be directed to them at 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245, Attention: Treasurer facsimile: 310-726-7834; or in the case of any party hereto, to such other address or person as such party shall specify to each other party by a notice given in accordance with the provisions of this Section 13. Any such notice shall take effect at the time of receipt. 14. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties hereto, their respective successors, the officers and directors and controlling persons referred to in Section 7 and, to the extent provided in Section 6(f), any person who has agreed to purchase Securities from the Issuer, and no other person will have any right or obligation hereunder. 15. GOVERNING LAW; COUNTERPARTS. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. This Agreement may be executed in counterparts and the executed counterparts shall together constitute a single instrument. 21 If the foregoing correctly sets forth our agreement, please indicate your acceptance hereof in the space provided for that purpose below. Very truly yours, UNION OIL COMPANY OF CALIFORNIA By: ----------------------------------- Name: Title: UNOCAL CORPORATION By: ----------------------------------- Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: MORGAN STANLEY & CO. INCORPORATED By: ----------------------------------- Name: Title: CREDIT SUISSE FIRST BOSTON CORPORATION By: ----------------------------------- Name: Title: J.P. MORGAN SECURITIES INC. By: ----------------------------------- Name: Title: NATIONSBANC MONTGOMERY SECURITIES LLC By: ----------------------------------- Name: Title: SALOMON BROTHERS INC By: ----------------------------------- Name: Title: 22 EXHIBIT A The Issuer and the Guarantor agree to pay jointly an Agent a commission equal to the following percentage of the principal amount of Securities sold to purchasers solicited by such Agent:
Commission Rate (as a percentage of Term(a) principal amount)(b) ---- ---------------- 9 months to less than 12 months 0.125% 12 months to less than 18 months 0.150 18 months to less than 24 months 0.200 24 months to less than 30 months 0.250 30 months to less than 3 years 0.300 3 years to less than 4 years 0.350 4 years to less than 5 years 0.450 5 years to less than 7 years 0.500 7 years to less than 10 years 0.550 10 years to less than 20 years 0.600 20 years to less than 30 years 0.750 30 years to less than 40 years 0.875 40 years or more To be negotiated at the time of sale
- -------------------- (a) With respect to any Security that is subject to redemption, repayment or purchase by the Issuer at the option of the holder thereof, the Term of such Security shall be deemed to end on the earliest redemption, repayment or purchase date specified in such Security. (b) With respect to any Security that is a "Original Issue Discount Note", as defined in the Prospectus Supplement, the commission payable with respect to the sale of such Security shall be based on the purchase price of such Security. A-1 EXHIBIT B ADMINISTRATIVE PROCEDURES The Medium-Term Notes, Series C, due nine months or more from their date of issue (the "Notes") are to be offered on a continuing basis by Union Oil Company of California (the "Issuer") and guaranteed as to payment of principal, interest, and premium, if any, by Unocal Corporation, a Delaware corporation (the "Guarantor"). Morgan Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, J. P. Morgan & Co., NationsBanc Montgomery Securities LLC and Salomon Brothers Inc, as agents (individually, an "Agent" and collectively, the "Agents"), have each agreed to use reasonable efforts to solicit offers to purchase the Notes. None of the Agents will be obligated to purchase Notes for its own account. The Notes are being sold pursuant to a Distribution Agreement, dated _______ __, 1998 (the "Distribution Agreement"), among the Issuer, the Guarantor and the Agents, and will be issued pursuant to an Indenture, dated as of February 3, 1995 (the "Indenture"), among the Issuer, the Guarantor and Chemical Trust Company of California (which was succeeded by merger effective as of November 15, 1997, by Chase Manhattan Bank and Trust Company, National Association), as trustee (the "Trustee"), which incorporates the Standard Multiple-Series Indenture Provisions, January 1991, of the Issuer and the Guarantor dated as of January 2, 1991. The Notes will rank equally with all other unsecured and unsubordinated indebtedness of the Issuer and the Guarantor and will have been registered with the Securities and Exchange Commission (the "Commission"). The Notes will be represented by book-entry notes delivered to The Depository Trust Company ("DTC") or its nominee and recorded in the book- entry system maintained by DTC ("Book-Entry Notes"). Beneficial owners of Book-Entry Notes will not be entitled to receive a certificate representing such Notes. Administrative and record-keeping responsibilities will be handled for the Issuer and the Guarantor by its Treasury Department. The Issuer and the Guarantor will advise the Agents in writing of those persons handling administrative responsibilities with whom the Agents are to communicate regarding offers to purchase Notes and the details of their delivery. Administrative procedures and certain terms of the offering are explained below. To the extent that the procedures set forth below conflict with the provisions of the Notes or the Indenture, the terms of the Notes or the Indenture shall control. Unless otherwise defined herein, terms defined in the Indenture (or any applicable Board Resolution referred to therein related to the Notes) shall be used herein as therein defined. In connection with the qualification of the Book-Entry Notes for eligibility in the book-entry system maintained by DTC, the Trustee will perform the custodial, document control and administrative functions described below, in accordance with its obligations under a Letter of Representations (the "Letter") from the Issuer and the Trustee to DTC dated as of the date hereof, and a Medium-Term Note Certificate Agreement between Chase Manhattan Bank and Trust Company, National Association, as agent for the Trustee, and DTC dated as of December 2, 1988, and its obligations as a participant in DTC, including DTC's Same-Day Funds Settlement System ("SFDS"). B-1 ISSUANCE All Book-Entry Notes having the same Issue Date, interest rate and Stated Maturity will be represented initially by a single depository note (the "Global Note") in fully registered form without coupons. Each Global Note will be dated and issued as of the date of its authentication by the Trustee. Each Global Note will bear an "Original Issue Date," which will be (i) with respect to an original Global Note (or any portion thereof), its Issue Date, and (ii) following a consolidation of Global Notes, the most recent Interest Payment Date to which interest has been paid or duly provided for on the predecessor Global Notes, regardless of the date of authentication of such subsequently issued Global Note. No Global Note will represent any Certificated Note. IDENTIFICATION NUMBERS The Issuer has arranged with the CUSIP Service Bureau of Standard & Poor's Corporation (the "CUSIP Service Bureau") for the reservation of a series of CUSIP numbers (including tranche numbers), such series consisting of approximately 835 remaining CUSIP numbers and relating to Global Notes representing Book- Entry Notes. The Issuer has obtained from the CUSIP Service Bureau a written list of such reserved CUSIP numbers and has delivered it to the Trustee and DTC. The Trustee will assign CUSIP numbers serially to Global Notes as described below under Settlement Procedure "C" in "Details for Settlement" and "Settlement Procedures Timetable." DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Trustee has assigned to Global Notes. The Trustee will notify the Issuer at any time when fewer than 100 of the reserved CUSIP numbers remain unassigned to Global Notes; and the Issuer will reserve an additional 900 CUSIP numbers for assignment to Global Notes representing Book- Entry Notes. Upon obtaining such additional CUSIP numbers, the Issuer shall deliver a list of such additional CUSIP numbers to the Trustee and DTC. REGISTRATION Each Global Note will be registered in the name of Cede & Co., as nominee for DTC, on the Security Register maintained under the Indenture. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more participants in DTC (with respect to such Note, the "Participants") to act as agent or agents for such owner in connection with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such Note in the account of such Participants. The ownership interest of such beneficial owner in such Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. TRANSFERS Transfers of a Book-Entry Note will be accomplished by book entries made by DTC and, in turn, by Participants (and, in certain cases, one or more indirect participants in DTC) acting on behalf of beneficial transferors and transferees of such Note. B-2 EXCHANGES The Trustee may deliver to DTC and the CUSIP Service Bureau at any time a written notice of consolidation (a copy of which shall be attached to the Global Note resulting from such consolidation) specifying (i) the CUSIP numbers of two or more outstanding Global Notes that represent Book-Entry Notes having the same interest rate and Stated Maturity, and for which interest has been paid to the same date, (ii) a date, occurring at least thirty days after such written notice is delivered and at least thirty days before the next Interest Payment Date for such Notes, on which such Global Notes shall be exchanged for a single replacement Global Note and (iii) a new CUSIP number to be assigned to such replacement Global Note. Upon receipt of such a notice, DTC will send to its Participants (including the Trustee) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Trustee will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Global Notes to be exchanged will no longer be valid. On the specified exchange date, the Trustee will exchange such Global Notes for a single Global Note bearing the new CUSIP number and a new Original Issue Date and the CUSIP numbers of the exchanged Global Notes will, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. DENOMINATION The denominations of the Book-Entry Notes will be $1,000 or any larger denomination which is an integral multiple of $1,000; PROVIDED, HOWEVER that if the Book Entry Notes are denominated in a currency other than U.S. Dollars, such Notes shall only be issued in denominations of the equivalent of $1,000 as provided in the Note. Global Notes will be denominated in principal amounts not in excess of $200,000,000. INTEREST Each Book-Entry Note will bear interest from the most recent date to which interest has been paid or made available for payment on the Global Note representing such Book-Entry Note or, if no interest has been paid or made available for payment, from the Issue Date of the Global Note representing such Note, until the principal thereof is paid or made available for payment; PROVIDED, HOWEVER, that a Floating Rate Book-Entry Note which has a rate of interest that is reset daily or weekly will bear interest from and including its Issue Date or the day following the most recent Regular Record Date to which interest on such Note has been paid or provided for. Interest payable at the maturity of a Book-Entry Note will be payable to the Person to whom the principal of such Note is payable. Standard & Poor's Corporation will use the information received in the pending deposit message described below under Settlement Procedure "C" in "Details for Settlement" and "Settlement Procedures Timetable" to include the amount of any interest payable and certain other information regarding the related Global Note in the appropriate daily bond report published by Standard & Poor's Corporation. PAYMENTS OF PRINCIPAL AND INTEREST (a) PAYMENTS OF INTEREST ONLY. Promptly after each Regular Record Date, the Trustee will deliver to the Issuer and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Global Note on the following Interest Payment Date (other than an Interest Payment Date B-3 coinciding with Maturity) and the total of such amounts. The Issuer will confirm with the Trustee the amount payable on each Global Note on such Interest Payment Date. DTC will confirm the amount payable on each Global Note on such Interest Payment Date by reference to the daily bond reports published by Standard & Poor's Corporation. The Issuer will pay to the Trustee the total amount of interest due on such Interest Payment Date (other than at Maturity), the Trustee will pay such amount to DTC at the times and in the manner set forth at (c) below under "Manner of Payment". If any Interest Payment Date for a Book-Entry Note is not a Business Day, the payment due on such day shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such Interest Payment Date. (b) PAYMENTS AT MATURITY. Promptly after each Record Date for an issue of Notes, the Trustee will deliver to the Issuer and DTC a written list of principal and interest to be paid on each Global Note maturing in the following month. The Issuer, the Trustee and DTC will confirm the amounts of such principal and interest payments with respect to each such Global Note on or about the fifth Business Day preceding the Maturity of such Global Note. The Issuer will pay to the Trustee, as the paying agent, the principal amount of such Global Note, together with interest due at such Maturity. Upon surrender of a Global Note, the Trustee will pay such amounts to DTC as the times and in the manner set forth at (c) below under "Manner of Payment". If any Maturity of a Global Note representing Book-Entry Notes is not a Business Day, the payment due on such day shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such Maturity. Promptly after payment to DTC of the principal and interest due at the Maturity of such Global Note, the Trustee will cancel such Global Note in accordance with the terms of the Indenture. (c) MANNER OF PAYMENT. The total amount of any principal and interest due on Global Notes on any Interest Payment Date or at Maturity shall be paid by the Issuer to the Trustee in funds available as practicable thereafter on such date. The Issuer will make such payment on such Global Notes by wire transfer to the Trustee. The Issuer will confirm instructions regarding payment to the Trustee. Prior to 10:00 a.m., New York time, on each maturity date or as soon as possible thereafter, following receipt of such funds from the Issuer, the Trustee will pay by separate wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC, in funds available for immediate use by DTC, each payment of principal (together with interest thereon) due on Global Notes on any maturity date. On each Interest Payment Date, an interest payment shall be made to DTC in same day funds in accordance with existing arrangements between the Trustee and DTC. Thereafter, on each such date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the representative Participants in whose names the Book-Entry Notes represented by such Global Notes are recorded in the book-entry system maintained by DTC. NEITHER THE ISSUER NOR THE TRUSTEE SHALL HAVE ANY DIRECT RESPONSIBILITY OR LIABILITY FOR THE PAYMENT BY DTC TO SUCH PARTICIPANTS OF THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF ANY, ON THE BOOK-ENTRY NOTES. (d) WITHHOLDING TAXES. The amount of any taxes required under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other person responsible for forwarding payments and materials directly to the beneficial owner of such Note. B-4 SETTLEMENT The receipt by the Issuer of immediately available funds in payment for a Book-Entry Note and the authentication and issuance of the Global Note or Global Notes representing such Note shall constitute "settlement" with respect to such Note. All orders accepted by the Issuer will be settled from one to five Business Days from the date of the sale pursuant to the timetable for settlement set forth below unless the Issuer and the purchaser agree to settlement on a later date. DETAILS FOR SETTLEMENT Settlement Procedures with regard to each Book-Entry Note sold by the Issuer through an Agent shall be as follows: A. For each offer accepted by the Issuer, the Presenting Agent shall communicate to the Issuer's Treasury Department by telephone, facsimile transmission or other acceptable means the following Purchase Information: 1. Principal amount (in U.S. dollars, foreign currency or currency units), of each Book-Entry Note in authorized denominations to be delivered to DTC. 2. The issue price (in U.S. dollars, foreign currency or currency units), interest rate, with respect to the Fixed Rate Book-Entry Notes and with respect to Floating Rate Book-Entry Notes, the Initial Interest Rate, the interest rate basis, the Spread or Spread Multiplier, the maximum or minimum interest rates, if any, the Index Maturity, the Interest Reset Date, Calculation Date, Interest Determination Date, and the Interest Payment date (as such terms are defined in the Prospectus Supplement) of each Book-Entry Note. 3. Stated Maturity of each Book-Entry Note. 4. If an Original Issue Discount Note, the yield to Maturity and the initial accrual period of original issue discount. 5. Issue Date of each Book-Entry Note. 6. Earliest Redemption Date of each Book-Entry Note, if any. 7. Settlement Date for each Book-Entry Note. 8. Presenting Agent's commission (to be paid in the form of a discount from the proceeds remitted to the Issuer upon settlement). 9. If an Original Issue Discount Note the yield to Maturity and the initial accrual period of original issue discount. B. The Issuer will advise the Trustee by facsimile transmission of the settlement information set forth in Settlement Procedure "A" above and the name of the Presenting Agent. B-5 C. The Trustee will assign a CUSIP number to the Global Note representing such Book-Entry Note and will telephone the Issuer and advise the Issuer of such CUSIP number. The Trustee will enter a pending deposit message through DTC's Participant Terminal System, providing the following settlement information to DTC (which shall route such information to Standard & Poor's Corporation) and the Presenting Agent. 1. The applicable information set forth in Settlement Procedure "A". 2. Initial Interest Payment Date, if any, for such Note, number of days by which such date succeeds the Regular Record Date and the amount of interest payable on such Interest Payment Date per $1,000 principal amount of Book-Entry Notes. 3. CUSIP number of the Global Note representing such Note. 4. Whether such Global Note will represent any other Book-Entry Note (to the extent known at such time). 5. Interest payment periods. 6. Numbers of the participant accounts maintained by DTC on behalf of the Trustee and the Agent. D. The Issuer will deliver (or will have delivered) to the Trustee a Global Note representing such Note. E. The Trustee will complete and authenticate the Global Note representing such Note. F. DTC will credit such Note to the Trustee's participant account at DTC. G. The Trustee will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC to (i) debit such Note to the Trustee's participant account and credit such Note to the Presenting Agent's participant account and (ii) debit the Presenting Agent's settlement account and credit the Trustee's settlement account for an amount equal to the price of such Note less the Presenting Agent's commission. The entry of such a deliver order shall constitute a representation and warranty by the Trustee to DTC that (i) the Global Note representing such Note has been executed, delivered and authenticated and (ii) the Trustee is holding such Global Note pursuant to the Medium-Term Certificate Agreement between the Trustee and DTC. H. The Presenting Agent will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC (i) to debit such Note to the Presenting Agent's participant account and credit such Note to the participant accounts of the Participants with respect to such Note and (ii) to debit the settlement accounts of such Participants and credit the settlement account of the Presenting Agent for an amount equal to the price of such Note. I. Transfers of funds in accordance with SDFS deliver orders described in Settlement Procedures "G" and "H" will be settled in accordance with SDFS operating procedures in effect on the settlement date. B-6 J. The Trustee, upon confirming receipt of such funds, will wire transfer the amount transferred to the Trustee in accordance with Settlement Procedure "G" above, in funds available for immediate use, for the account of "Union Oil Company of California, Depository Account No. 24771, Credit Medium-Term Note Program, Series C," at Northern Trust Company, ABA# 071000152, 50 South La Salle Street, Chicago, Illinois 60675. K. The Presenting Agent will confirm the purchase of such Note to the purchaser either by transmitting to the Participants with respect to such Note a confirmation order or orders through DTC's institutional delivery system or by mailing a written confirmation to such purchaser. SETTLEMENT PROCEDURES TIMETABLE For orders of Book-Entry Notes solicited by the Presenting Agent, and accepted by the Issuer for settlement on the first Business Day after the sale date, Settlement Procedures "A" through "K" set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below:
Settlement Procedure Time --------- ---- A 11:00 a.m. on the sale date B 12:00 Noon on the sale date C 2:00 p.m. on the sale date D 3:00 p.m. on the day before settlement date E 9:00 a.m. on settlement date F 10:00 a.m. on settlement date G-H 2:00 p.m. on settlement date I 4:45 p.m. on settlement date J-K 5:00 p.m. on settlement date
If a sale is to be settled two Business Days after the sale date, Settlement Procedures "A", "B" and "C" shall be completed as soon as practicable but not later than 11:00 a.m., 12:00 Noon and 2:00 p.m., as the case may be, on the first Business Day after the sale date. If a sale is to be settled more than two Business Days after the sale date, Settlement Procedures "A", "B" and "C" shall be completed as soon as practicable but no later than 11:00 a.m., 12 Noon and 2:00 p.m., as the case may be, on the second Business Day after the sale date. Settlement Procedure "I" is subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in the SDFS operating procedures in effect on the settlement date. B-7 If settlement of a Book-Entry Note is rescheduled or canceled, the Issuer shall notify the Trustee, and upon receipt of such notice, the Trustee will deliver to DTC, through DTC's Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m., New York City time, on the Business Day immediately preceding the scheduled settlement date. FAILURE TO SETTLE If the Trustee has not entered an SDFS deliver order with respect to a Book-Entry Note pursuant to Settlement Procedure "G", then upon written request (which may be evidenced by facsimile transmission) of the Issuer, the Trustee shall deliver to DTC, through DTC's Participant Terminal System, as soon as practicable, but no later than 2:00 p.m. on any Business Day, a withdrawal message instructing DTC to debit such Note to the Trustee's participant account. DTC will process the withdrawal message, provided that the Trustee's participant account contains a principal amount of the Global Note representing such Note that is at least equal to the principal amount to be debited. If withdrawal messages are processed with respect to all the Book-Entry Notes represented by a Global Note, the Trustee will mark such Global Note "canceled", make appropriate entries in the Trustee' records and send such canceled Global Note to the Issuer in accordance with the Indenture. The CUSIP member assigned to such Global Note shall, in accordance with CUSIP Service Bureau procedures, be canceled and not immediately reassigned. If withdrawal messages are processed with respect to one or more, but not all, of the Book-Entry Notes represented by a Global Note, the Trustee will exchange such Global Note for two Global Notes, one of which shall represent such Note or Notes and shall be canceled immediately after issuance and the other of which shall represent the remaining Book-Entry Notes previously represented by the surrendered Global Note and shall bear the CUSIP number of the surrendered Global Note. If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such Note by the beneficial purchaser thereof (or a person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participants and, in turn, the Presenting Agent may enter an SDFS deliver order through DTC's Participant Terminal System debiting such Note to the Presenting Agent's participant account and crediting such Note free to the participant account of the Trustee and shall notify the Trustee and the Issuer thereof. Thereafter, the Trustee, (i) will immediately transfer by Fedwire (immediately available funds) to the Presenting Agent an amount equal to the price of such Note which was previously sent by wire transfer to the account of the Issuer maintained at Chemical Bank in accordance with Settlement Procedure "J", and (ii) the Trustee will deliver the withdrawal message and take the related actions described in the preceding paragraph. Such debits and credits will be made on the settlement date, if possible, and in any event not later than 5:00 p.m. on the following Business Day. If such failure shall have occurred for any reason other than the failure of the Presenting Agent to provide the Purchase Information to the Issuer or to provide a confirmation to the Purchaser, the Issuer will reimburse the Presenting Agent on an equitable basis for its loss of the use of funds during the period when the funds were credited to the account of the Issuer. Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect. In the event of a failure to settle with respect to one or more, but not all, of the Book-Entry Notes to have been represented by a Global Note, the Trustee will provide, in accordance with Settlement Procedures "D" B-8 and "E," for the authentication and issuance of a Global Note representing the other Book-Entry Notes to have been represented by such Global Note and will make appropriate entries in its records. TRUSTEE NOT TO RISK FUNDS Nothing herein shall be deemed to require the Trustee to risk or expend its own funds in connection with any payment made to the Issuer, or the Presenting Agent, or DTC, or any Noteholder, or any Participant, it being understood by all parties that payments made by the Trustee to the Issuer, or the Presenting Agent, or DTC, or any Noteholder, or any Participant shall be made only to the extent that funds are provided to the Trustee for such purpose. ORIGINAL ISSUE DISCOUNT NOTES AND ZERO-COUPON NOTES Notes may be issued as Original Issue Discount Notes (which may be Certificated Notes or Book-Entry Notes, as indicated), which term includes all Notes, including Zero-Coupon Notes, which provide that upon redemption or acceleration of the maturity thereof an amount less than the principal amount thereof shall become due and payable. In the event of redemption or acceleration of maturity of an Original Issue Discount Note, the amount payable on such Note, in lieu of the principal amount due at the Stated Maturity thereof, shall, unless the Note provides otherwise, be the Amortized Face Amount (as defined below) of such Note. The "Amortized Face Amount" of an Original Issue Discount Note shall be the amount equal to (a) the Issue Price of the Note (as defined below) plus (b)that portion of the difference between the Issue Price and the principal amount of such Note that has been amortized at the Stated Yield (as defined below) of such Note (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated, but in no event shall the Amortized Face Amount exceed the principal amount of such Note due at the Stated Maturity thereof. As used in the preceding sentence, the term "Issue Price" means the principal amount of such Original Issue Discount Note due at the Stated Maturity thereof less the Original Issue Discount of such Note stated in the legend on the face thereof, and the "Stated Yield" of such Note means the yield-to-maturity stated in the legend on the face of such Note (or, if not so stated, the yield-to-maturity compounded semiannually and computed in accordance with generally accepted United States bond yield computation principles) for the period from the Issue Date of such Note as stated in the legend on the face of such Note, to the Stated Maturity thereof on the basis of its Issue Price and principal amount. There will be no periodic payments of interest on Zero-Coupon Notes. References in these Administrative Procedures to interest payments and interest- related information do not apply to Zero-Coupon Notes. MATURITIES Each Note will mature on a date, selected by the purchaser and agreed to by the Issuer and Guarantor, which will be nine months or more from the Issue Date. Each Floating Rate Note (as defined below) will mature on an Interest Payment Date (as defined below) for such Note. B-9 ADVERTISING COSTS The Issuer will determine in consultation with the Agents the amount of advertising that may be appropriate in offering the Notes. The Issuer shall pay for only the advertising expenses approved in advance by the Issuer. BUSINESS DAY "Business Day" means any day which is not a Saturday or Sunday and which in New York City (and, with respect to LIBOR Notes (as defined in the Prospectus Supplement) in London) is not a day on which banking institutions are generally authorized or obligated by law, regulation or executive order to close. PROCEDURES FOR ESTABLISHING THE TERMS OF THE NOTES The Issuer and the Agents will discuss from time to time the rates to be borne by the Notes that may be sold as a result of the solicitation of offers by the Agents. Once any Agent has recorded any indication of interest in Notes upon certain terms, and communicated with the Issuer, if the Issuer plans to accept an offer to purchase Notes upon such terms, it will prepare a Pricing Supplement, reflecting the terms of such Notes and, after approval from such Agent, will arrange to have such Pricing Supplement, filed with, or transmitted by means reasonably calculated to result in filing with, the Commission and will supply at least two copies of such Pricing Supplement and if requested by the Presenting Agent, additional copies of the Prospectus, as then amended or supplemented, to the Presenting Agent. No settlements with respect to Notes upon such terms may occur prior to such transmitting for filing and the Agents will not, prior to such transmitting for filing, mail confirmations to customers who have offered to purchase Notes upon such terms. After such transmitting for filing, sales, mailing of confirmations and settlements may occur with respect to Notes upon such terms, subject to the provisions of "Delivery of Prospectus" below. If the Issuer decides to post rates and a decision has been reached to change interest rates, the Issuer will promptly notify each Agent. Each Agent will forthwith suspend solicitation of purchases. At that time, the Agents will recommend and the Issuer will establish rates to be so "posted". Following establishment of posted rates and prior to the filing or transmitting described in the preceding paragraph, the Agents may only record indications of interest in purchasing Notes at the posted rates. After such transmitting for filing, sales, mailing of confirmations and settlements may resume, subject to the provisions of "Delivery of Prospectus" below. Outdated Pricing Supplements, and copies of the Prospectus to which they are attached (other than those retained for files), will be destroyed. SUSPENSION OF SOLICITATION: AMENDMENT OR SUPPLEMENT As provided in the Distribution Agreement. The Issuer may suspend solicitation of purchases at any time for any reason and each Agent will use its best efforts to suspend solicitations as soon as practicable after notice (and in any event within one Business Day). Any suspension of solicitation shall B-10 continue until such time as the Issuer has advised the Agents that solicitation of purchases may be resumed. If the Agents receive the notice from the Issuer contemplated by Section 4(b) of the Distribution Agreement, they will promptly suspend solicitation and will only resume solicitation as provided in the Distribution Agreement. If the Issuer decides to amend or supplement any Registration Statement (as defined in the Distribution Agreement) or the Prospectus relating to the Notes, it will promptly advise each Agent and will furnish each Agent with the proposed amendment or supplement in accordance with the terms of the Distribution Agreement. The Issuer will promptly file or transmit by means reasonably calculated to result in filing with the Commission such amendment or supplement, provide the Agents with copies of any such amendment or supplement, confirm to the Agents that such amendment or supplement has been filed with the Commission and advise the Agents that solicitation may be resumed. Any such suspension shall not affect the Issuer's or the Guarantor's obligations under the Distribution Agreement; and in the event that at the time the Issuer suspends solicitation of purchases there shall be any offers already accepted by the Issuer outstanding for settlement, the Issuer will have the sole responsibility for fulfilling such obligations. The Issuer will in addition promptly advise the Agents and the Trustee if such offers are not to be settled and if copies of the Prospectus as in effect at the time of the suspension may not be delivered in connection with the settlement of such offers. ACCEPTANCE OF OFFERS Each Agent will promptly advise the Issuer, orally or in writing, of each reasonable offer to purchase Notes received by it, other than those rejected by such Agent. Each Agent may, in its discretion reasonably exercised, without notice to the Issuer or the Guarantor, reject any offer received by it, in whole or in part. The Issuer will have the sole right to accept offers to purchase Notes on its behalf and on behalf of the Guarantor and may reject any such offer, in whole or in part. If the Issuer rejects an offer, the Issuer will promptly notify the Agent involved. DELIVERY OF PROSPECTUS A copy of the Prospectus, as most recently amended or supplemented with respect to the Notes (including the appropriate Pricing Supplement) on the date of delivery thereof (except as provided below), must be delivered to a purchaser prior to or together with the earlier of the delivery of (i) the written confirmation provided for above and (ii) any Note purchased by such purchaser. Subject to the foregoing, it is anticipated that delivery to the purchaser of the Prospectus, as so amended or supplemented, confirmation and Notes will be made simultaneously at settlement. The Issuer shall ensure that the Presenting Agent receives copies of the Prospectus and each amendment or supplement thereto with respect to the Notes (including appropriate Pricing Supplements) in such quantities and within such time limits as will enable the Presenting Agent to deliver such confirmation or Note to a purchaser as contemplated by these procedures and in compliance with the first sentence of this paragraph. If, since the date of acceptance of a purchaser's offer, the Prospectus shall have been supplemented solely to reflect any sale of Registered Securities or Notes on terms different from those agreed to between the Issuer and such purchaser or a change in posted rates not applicable to such purchaser, such purchaser shall not receive the Prospectus, as supplemented by such new supplement, but shall receive the Prospectus as supplemented to reflect the terms of the Notes being purchased by B-11 such purchaser and otherwise as most recently amended or supplemented on the date of delivery of the Prospectus. AUTHENTICITY OF SIGNATURES The Issuer and the Guarantor will cause the Trustee to furnish the Agents from time to time, upon written request, with the specimen signatures of each of the Trustee's officers, employees or agents who have been authorized by the Trustee to authenticate Notes, but the Agents will have no obligation or liability to the Issuer or the Guarantor or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Issuer, the Guarantor, or the Trustee on any Note or Global Note. CALCULATION OF AND PAYMENT DATES FOR INTEREST Each Note will bear interest (i) in the case of Notes bearing interest at a Fixed Rate (the "Fixed Rate Notes", which may be either Fixed Rate Certificated Notes or Fixed Rate Book-Entry Notes, as indicated), at the annual rate stated on the face thereof, payable semiannually in arrears on January 31 and July 31 (each an "Interest Payment Date") with respect to such Fixed Rate Note and at any Redemption Date, Repayment Date or the Stated Maturity and (ii) in the case of Notes bearing interest at a rate or rates determined by reference to an interest rate formula (the "Floating Rate Notes," which may be either Floating Rate Certificated Notes or Floating Rate Book-Entry Notes, as indicated), at a rate determined pursuant to the formula stated on the face thereof, payable in arrears on such dates as are specified therein and in the related Pricing Supplement (each an "Interest Payment Date" with respect to such Floating Rate Note) and at any Redemption Date or the Stated Maturity. Interest (including payments for partial periods) will be calculated and paid on the basis of a 360-day year of twelve 30-day months for any Fixed Rate Notes. The "Regular Record Date" with respect to Floating Rate Notes shall be the date 15 calendar days prior to each Interest Payment Date, whether or not such date shall be a Business Day, and the Regular Record Dates with respect to the Fixed Rate Notes shall be the January 15 and July 15 next preceding the January 31 and July 31 Interest Payment Dates. The first payment of interest on any Note originally issued between a Regular Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next succeeding record date. With respect to Fixed Rate Notes, each payment of interest shall include interest accrued to but excluding the date of such payment. For special provisions relating to Floating Rate Notes, see the section entitled "Description of the Notes" in the Prospectus Supplement. B-12 EXHIBIT C PURCHASE AGREEMENT __________________, _______ Union Oil Company of California 2141 Rosecrans Avenue, Suite 4000 El Segundo, CA 90245 Unocal Corporation 2141 Rosecrans Avenue, Suite 4000 El Segundo, CA 90245 Attention: Treasurer 1. The undersigned agrees to purchase the following principal amount of the Securities described in the Distribution Agreement dated _______ ___, 1998 (the "Distribution Agreement"): Principal Amount _______________ Interest Rate or Formula ______% Stated Maturity _______________, ___________ Discount or Premium _______% of Principal Amount Redemption Terms, if any ___________________________ Price to be paid to Issuer $______________ Settlement Date _________, _____ (Additional Terms) 2. Except as otherwise expressly provided herein, all terms used herein which are defined in the Distribution Agreement shall have the same meanings as in the Distribution Agreement. The terms Agent or Agents, as used in the Distribution Agreement, shall be deemed to refer only to the undersigned for purposes of this Agreement. 3. This Agreement incorporates by reference Sections 4, 6, 7 (including any Amendments entered into pursuant thereto by the Issuer and the Guarantor and the undersigned Agent), 12 and 13 of the Distribution Agreement, the first and last sentences of Section 9 thereof and, to the extent applicable, the Procedures, except that the phrase "jointly with any other indemnifying party similarly notified" in Section 7(a), the phrase "and who shall not be counsel to any other indemnified party who may have interest conflicting with those of such indemnified party" in Section 7(a) and the last sentence of Section 7(d) shall not be applicable. You and we agree to perform, to the extent applicable, our respective duties and obligations specifically provided to be performed by each of us in the Procedures. C-1 4. Our obligation to purchase Securities hereunder is subject to the accuracy on the above Settlement Date of your representations and warranties contained in Section 2 of the Distribution Agreement (it being understood that such representations and warranties shall relate to the applicable Registration Statement and the Prospectus, as amended at such Settlement Date) and to your performance and observance of all covenants and agreements contained in Sections 4 and 6 thereof. Our obligations hereunder is also subject to the following conditions: (a) the satisfaction, at such Settlement Date, of each of the conditions set forth in subsections (a) and (b) and (d) through (g) of Section 5 of the Distribution Agreement (it being understood that each document so required to be delivered shall be dated such Settlement Date and that each such condition and the statements contained in each such document that relate to the applicable Registration Statement or the Prospectus shall be deemed to relate to the applicable Registration Statement or the Prospectus, as the case may be, as amended or supplemented at the time of settlement on such Settlement Date, and except that the opinion described in Section 5(d) shall be modified so as to state that the Securities being sold on such Settlement Date, when delivered against payment therefor as provided in the Indenture and this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Issuer and the Guarantor enforceable in accordance with their terms, subject only to the exceptions as to enforcement set forth in clause (v) of Section 5(d) of the Distribution Agreement, and will conform to the description thereof contained in the Prospectus, as amended or supplemented at such Settlement Date); (b) there shall not have occurred since the date hereof (i) any change, or any development involving a prospective charge, in or affecting particularly the business or properties of the Issuer or the Guarantor or their respective subsidiaries other than as set forth or contemplated in the Prospectus, as amended or supplemented, which, in our judgment, materially impairs the investment quality of the Securities; (ii) any downgrading in the rating of the Issuer's or the Guarantor's debt securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act) and no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Issuer's or the Guarantor's debt securities; (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Issuer or the Guarantor on any exchange or in the over-the-counter market if the effect of any such suspension, limitation or setting of minimum prices makes it impractical or inadvisable to proceed with the sale and delivery of the Securities on the terms and in the manner contemplated in this Prospectus as amended and supplemented; (iv) any banking moratorium declared by Federal or New York authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in our judgment, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the sale of an payment for the Securities; and (c) there has been no notice pursuant to Section 4(a) of the Distribution Agreement of an intention to amend or supplement, nor has there been any such amendment or supplement to, the applicable Registration Statement or the Prospectus by incorporation by reference pursuant to Section C-2 4(a) of the Distribution Agreement between the date of this Agreement and the Settlement Date (as defined above). 5. In further consideration of our agreement hereunder, you agree that between the date hereof and the above Settlement Date, you will not offer or sell, enter into any agreement to sell, or announce the proposed issuance or sale of, any debt securities of the Issuer or the Guarantor in the United States, other than sales of Securities, borrowings under your revolving credit agreements and lines of credit, the private placement of securities and issuances of your commercial paper. 6. If for any reason, other than because of our default, our purchase of the above Securities is not consummated, you shall remain responsible for the expenses to be paid (but not our expenses to be reimbursed) by you pursuant to Section 4 of the Distribution Agreement and the respective obligations of you and the undersigned pursuant to Section 7 shall remain in effect, in each case as incorporated herein. If for any reason our purchase of the above Securities is not consummated other than because of our default or a failure to satisfy a condition set forth in clause (iii), (iv) or (v) of paragraph (b) above, you shall reimburse us, severally, for all out-of-pocket expenses reasonably incurred by us in connection with the offering of the above Securities and not otherwise required to be reimbursed pursuant to Section 4 of the Distribution Agreement. 7. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. This Agreement may be executed in counterparts and the executed counterparts shall together constitute a single instrument. [Insert Name of Purchaser] By: -------------------------------- Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: UNION OIL COMPANY OF CALIFORNIA By: -------------------------------- Name: Title: AND UNOCAL CORPORATION By: -------------------------------- Name: Title: C-3 EXHIBIT D FOREIGN CURRENCY AMENDMENT [Insert Title of Foreign Currency to be Covered by this Amendment] The undersigned hereby agree that for the purposes of the issue and sale of Securities denominated in [title of currency] (the "Applicable Foreign Currency") pursuant to the Distribution Agreement by and among Union Oil Company of California, Unocal Corporation, Morgan Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, J. P. Morgan Securities Inc., NationsBanc Montgomery Securities LLC and Salomon Brothers Inc, dated _______ __, 1998 (the "Distribution Agreement"), the following additions and modifications shall be made to the Distribution Agreement. The additions and modifications adopted hereby shall be of the same effect for the sale under the Distribution Agreement of all Securities denominated in the Applicable Foreign Currency, whether offered on an agency or principal basis, but shall be of no effect with respect to Securities denominated in any currency other than the Applicable Foreign Currency. Except as otherwise expressly provided herein, all terms used herein which are defined in the Distribution Agreement shall have the same meanings as in the Distribution Agreement. The term Agents, as used in the Distribution Agreement, shall be deemed to refer to the undersigned Agents for purposes of this Amendment. [Insert appropriate additions and modifications to the Distribution Agreement, for example, to opinions of counsel, conditions to obligations and settlement procedures, according to the customary practice of the Agents when acting as underwriters in offerings denominated in the Applicable Foreign currency.] - ----------------------, ----- UNION OIL COMPANY OF CALIFORNIA By: -------------------------------- Name: Title: UNOCAL CORPORATION By: -------------------------------- Name: Title: [Names of Agents participating in the offering of Securities in the Applicable Foreign Currency] By: -------------------------------- Name: Title: EX-3.2 4 EXHIBIT 3.2 EXHIBIT 3.2 BYLAWS OF UNION OIL COMPANY OF CALIFORNIA (AS AMENDED JUNE 1, 1998) ARTICLE I FISCAL YEAR Section 1. The fiscal year of Union Oil Company of California (hereinafter called the "Company") shall end on the thirty-first day of December of each year. ARTICLE II OFFICES Section 1. PRINCIPAL OFFICE. The principal office for the transaction of business of the Company is hereby fixed and located at 2141 Rosecrans Avenue, Suite 4000, in the City of El Segundo, County of Los Angeles, State of California. The Board of Directors (hereinafter sometimes called the "Board") is hereby granted full power and authority to change said principal office from one location to another in said county. ARTICLE III SHAREHOLDERS Section 1. ANNUAL MEETINGS. The annual meetings of the shareholders shall be held at 10:00 o'clock A.M. on the fourth Monday in May of each year if not a legal holiday, for the purpose of electing directors, consideration of reports of the affairs of the Company, and for the transaction of any other business which is within the powers of the shareholders and properly brought before the meeting. If the fourth Monday in May is a legal holiday, the annual meeting of the shareholders shall be held at 10:00 o'clock A.M. on the preceding or subsequent Monday as fixed by resolution of the Board. Section 2. SPECIAL MEETINGS. Special meetings of the shareholders for any purpose whatsoever may be called at any time by the Chairman of the Board, the Chief Executive Officer, the Board, or by one or more shareholders holding not less than ten percent of the voting power of the Company upon request in writing to the Chairman of the Board, the Chief Executive Officer, the President, a Vice President or the Secretary. The business transacted at special meetings shall be confined to the purpose or purposes stated in the notice of such meetings. Section 3. NOTICE OF MEETINGS. Written notice of each annual or special meeting of shareholders shall be given to each shareholder entitled to vote thereat not less than ten nor more than sixty days before the meeting. Section 4. PLACE OF MEETINGS. All meetings of shareholders, whether annual or special, shall be held at the principal office of the Company or at such other place, within or without the State of California, as the Board may from time to time designate pursuant to authority hereinafter granted it. In the absence of any such designation, shareholders' meetings shall be held at the principal office of the Company. Section 5. VOTING RIGHTS. Shareholders entitled to vote at shareholder meetings shall be entitled to one vote for each full share. A fraction of a share or a fractional interest in a share shall not be entitled to any voting rights whatsoever. Section 6. CONDUCT OF MEETINGS. The decisions of the Chairman of the Board or officer presiding at all shareholders' meetings shall govern in all matters relating to the conduct of the meeting. Section 7. VOTING. Directors shall be elected in accordance with the provisions of the California Corporations Code by holders of shares entitled to vote in the election; provided, however, a nomination shall be accepted, and votes cast for a nominee shall be counted by the inspectors of election, only if the Secretary of the Company has received at least twenty-four hours prior to the meeting a statement over the signature of the nominee that such person consents to being a nominee and, if elected, intends to serve as a director. Section 8. ACTION WITHOUT A MEETING. Any action which may be taken at any annual or special meeting may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of the outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors. ARTICLE IV BOARD OF DIRECTORS Section 1. POWERS. Subject to the limitations of the Restated Articles of Incorporation of the Company and of the California General Corporation Law as to action required or authorized to be approved by the shareholders, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed by, the Board of Directors. Section 2. NUMBER. The exact number of directors of the Company, within the limits specified in Article Fourth of the Company's Restated Articles of Incorporation, shall be nine (9) until changed in the manner provided by law. 2 Section 3. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The Board shall appoint a Chairman, who shall preside at all meetings of the Board of Directors and shall have such other powers and duties as may from time to time be assigned by the Board of Directors or prescribed by the Bylaws. The Board may also appoint a Vice Chairman, who shall preside at all meetings of the Board of Directors in the absence of the Chairman and shall have such other powers and duties as may from time to time be assigned by the Board of Directors or prescribed by the Bylaws. Section 4. ANNUAL MEETINGS. Immediately following each annual meeting of shareholders, the Board shall hold its annual meeting for the purpose of organization, election of officers and the transaction of any other business. Section 5. REGULAR MEETINGS. Regular meetings of the Board shall be held at the times and on the dates fixed by resolution of the Board. Section 6. SPECIAL MEETINGS. Special meetings of the Board for any purpose or purposes whatsoever may be called by the Chairman of the Board or the Chief Executive Officer or, in the absence or inability of either of them, by the President, the Chief Financial Officer, or by at least two of the directors at the time in office. Section 7. NOTICE OF MEETINGS. Notice of annual meetings and of regular meetings of the Board is hereby dispensed with. Notice of special meetings must be given at least two days in advance if given by mail, or at least twenty-four hours in advance if delivered personally or given by telephone or telegram. Section 8. PLACE OF MEETINGS. All meetings of the Board, whether annual, regular or special meetings, shall be held at any place within or without the State of California which has been designated from time to time by resolution of the Board or in the notice of the meeting. In the absence of such designation all directors' meetings shall be held at the principal office of the Company. Section 9. QUORUM. A majority of the exact number of directors specified in Section 2 of ARTICLE IV of the Bylaws shall constitute a quorum of the Board of Directors for the transaction of business; provided, however, that vacancies on the Board may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, each such director to hold office until a successor is elected at an annual or special meeting of the shareholders. Section 10. COMPENSATION OF DIRECTORS. Directors and members of committees appointed by the Board shall receive such compensation, if any, for their services, and such reimbursement for their expenses as may be fixed or determined by resolution of the Board. The Board may, however, in any such resolution provide that directors who are also employees of the Company or any of its subsidiaries shall not receive additional compensation for services as a director or member of a committee appointed by the Board. Section 11. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS. 3 (a) The Company shall, to the maximum extent permitted by the General Corporation Law of California, indemnify each of its directors and officers against all expense, liability, and loss, including without limitation, attorneys' fees, judgments, fines, ERISA excise taxes, penalties, amounts paid or to be paid in settlement, and any other amounts actually incurred in connection with any proceeding arising by reason of the fact any such person is or was a director or officer of the Company and shall advance to such director or officer expenses incurred in defending any such proceeding to the maximum extent permitted by such law. For purposes of this section, a "director" or "officer" of the Company includes any person who is or was a director or officer of the Company, or is or was serving at the request of the Company as a director, officer, trustee, or fiduciary, or in a similar capacity, of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or any other enterprise or entity whatsoever, including without limitation service with respect to employee benefit plans. (b) The Board of Directors may in its discretion provide by resolution, either on a general basis or as to specific employees or agents, for similar indemnification of, or advance of expenses to, other employees or agents of the Company, and likewise may refuse to provide for such indemnification or advance of expenses except to the extent such indemnification is mandatory under the California General Corporation Law. (c) The Company shall maintain in full force and effect, at its own expense, director and officer liability insurance ("INSURANCE") coverage for each director and officer in amounts and scope at least as favorable as that maintained by the Corporation on September 30, 1996, or, to the extent more favorable, any Insurance policy entered into or renewed by the Company following such date. Notwithstanding the foregoing, if the Company, after using its best efforts, cannot obtain and purchase such coverage for an amount no more than what it paid for the most recent expiring Insurance policy plus a reasonable additional amount, the Company shall only be required to purchase such Insurance coverage for any act or omission occurring at or prior to the time of such date. (d) The rights provided to any person by this bylaw shall be enforceable against the Company by such person, who shall be presumed to have relied upon it in serving or continuing to serve as a director or officer, as provided above. No amendment of this bylaw shall impair the rights of any person arising at any time with respect to events occurring prior to such amendment, including, without limitation, any right of a director or officer to Insurance for any act or omission occurring at or prior to the time of such amendment. Section 12. AUTHORITY TO DESIGNATE PLACE OF SHAREHOLDERS' MEETINGS. The Board is hereby granted full power and authority to designate from time to time any place within or without the State of California for the holding of any shareholders' meeting, whether annual or special. Section 13. COMMITTEES. The Board may, by resolution, appoint one or more committees, in addition to an Executive Committee and a Board Management Committee, to consist of two or more of the directors of the Company, and prescribe their duties and powers. A majority of the members of any such committee may determine its action and fix the time and place of its meetings unless the Board shall otherwise provide. The Board shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. 4 Section 14. ACTION BY WRITTEN CONSENT. Any action required or permitted to be taken by the Board or any committee thereof may be taken without a meeting, if all members of the Board or such committee, as the case may be, shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Section 15. CONFERENCE CALLS. Members of the Board or any committee thereof may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. ARTICLE V EXECUTIVE COMMITTEE Section 1. NUMBER AND COMPOSITION. The Board of Directors shall appoint from its membership, annually, an Executive Committee of three or more directors. Included on the Executive Committee shall be the Chief Executive Officer of the Company. Each member of the Executive Committee shall hold membership at the pleasure of the Board, which shall have the exclusive power to fill vacancies thereon as they may occur. The Chairman of the Executive Committee shall be the Chief Executive Officer of the Company. Section 2. POWERS. The Executive Committee, during the intervals between meetings of the Board, shall have and there is hereby granted to it all the powers and authority of the Board of Directors in the management of the business and affairs of the Company, except that the Executive Committee shall not be permitted to fill vacancies on the Board or on any committee, approve any action for which approval of the shareholders is also required by the California General Corporation Law, amend or repeal any resolution of the Board which by its express terms is not so amendable or repealable, or appoint other committees of the Board or the members thereof or take any other action which may not be delegated to a committee of the Board under the California General Corporation Law. Section 3. PROCEDURE. Two members of the Executive Committee shall constitute a quorum of the Executive Committee for the transaction of business. The Executive Committee, by vote of a majority of its members, shall fix its own times and places of meetings and shall prescribe its own rules of procedure; no change in which shall be made save by a majority vote of its members. Section 4. RECORDS AND REPORTS. The Executive Committee shall keep regular minutes of all business transacted at its meetings, and all action of the Executive Committee shall be reported to the Board at its next ensuing meeting. Section 5. COMPENSATION. Members of the Executive Committee may receive such compensation, if any, for their services, and such reimbursement for their expenses, as may be fixed or determined by the Board. 5 ARTICLE VI BOARD MANAGEMENT COMMITTEE Section 1. NUMBER AND COMPOSITION. The Board of Directors shall appoint from its membership, annually, a Board Management Committee composed of the directors who are employee officers of the Company. The Chairman of the Board Management Committee shall be the Chief Executive Officer of the Company. Section 2. POWERS. The Board Management Committee, during the intervals between meetings of the Board, shall have and there is hereby granted to it all the powers and authority of the Board of Directors in the management of the business and affairs of the Company, subject to approval limits established by resolution of the Board of Directors as deemed appropriate from time to time, but the Board Management Committee shall not be permitted to fill vacancies on the Board or on any committee, appoint the Chief Executive Officer, the President or the Chief Financial Officer, approve any action for which shareholders' approval or approval of the outstanding shares is also required by the California General Corporation Law, to amend or repeal any resolution of the Board or of the Executive Committee which by its express terms is not so amendable or repealable, or to appoint other committees of the Board or the members thereof or take any other action which may not be delegated to a committee of the Board under Section 311 of the California General Corporation Law. Section 3. PROCEDURE. Two members of the Board Management Committee shall constitute a quorum of the Board Management Committee for the transaction of business. The Board Management Committee, by vote of a majority of its members, shall fix its own times and places of meetings and shall prescribe its own rules of procedure; no change in which shall be made save by a majority vote of its members. Section 4. RECORDS. The Board Management Committee shall keep regular minutes of all business transacted at its meetings. ARTICLE VII OFFICERS Section 1. OFFICERS. The officers of the Company shall be a Chief Executive Officer, a President, a Chief Financial Officer, a Vice President, a Secretary, a Comptroller, a Treasurer, and a Chief Legal Officer. The Company may also have, at the discretion of the Board, one or more additional Vice Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and one or more Assistant Comptrollers, and the Board may appoint such other officers as it may deem necessary or advisable, who shall have such authority and perform such duties as from time to time may be prescribed by the Board, the Chairman of the Board, or the Chief Executive Officer. Any two or more offices may be held by the same person. Section 2. ELECTION AND REMOVAL. The officers of the Company shall be chosen annually by the Board at its annual meeting and each shall hold office until the corresponding annual meeting of the Board in the next year and until a successor shall be elected and qualified unless 6 such officer shall theretofore resign or shall be removed or otherwise disqualified to serve. The Board may remove any officer either with or without cause or under such other terms or conditions as it may prescribe. Vacancies may be filled by the Board as they may occur. Section 3. POWERS AND DUTIES. (a) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the officer, reporting directly to the Board, responsible for overall management of the Company and shall have general supervision, direction and control over the business and affairs of the Company and its officers. The Chief Executive Officer shall be a member of the Executive Committee and of the Board Management Committee and in general shall perform all duties incident to the office of Chief Executive Officer and shall have such powers and duties as may from time to time be assigned by the Board of Directors or prescribed by the Bylaws. (b) PRESIDENT. The President in general shall perform all duties incident to the office of President, and shall have such powers and duties as may from time to time be assigned by the Board of Directors, the Chief Executive Officer or prescribed by the Bylaws. (c) CHIEF FINANCIAL OFFICER AND VICE PRESIDENTS. The Chief Financial Officer and each Vice President shall have such authority and shall perform such duties as shall from time to time be assigned by the Board, the Chief Executive Officer or prescribed by the Bylaws. (d) SECRETARY. The Secretary shall keep, or cause to be kept, a book of minutes, at the principal office and/or such other place or places as the Board may order, of all meetings of directors and shareholders, with the time and place of holding, whether regular or special, and if special how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at shareholders' meetings, and the proceedings thereof. The Secretary shall keep or cause to be kept at the principal office, or at the office of the Company's transfer agent, a share register, which may be an electronic database, showing the names of the shareholders of record and their addresses, the number and classes of shares held by each, the numbers and dates of the certificates issued for those shares, and the numbers and dates of cancellation of every certificate surrendered for cancellation. The Secretary shall give or cause to be given notice of all meetings of the shareholders and the Board required to be given by the Bylaws or by law. The Secretary shall have charge of and be custodian of the seal of the Company and the minute books and documents relating to the existence and governance of the Company. The Secretary shall have such other powers and perform such other duties as may from time to time be prescribed by the Board, the Chairman of the Board, the Chief Executive Officer or the Bylaws, and shall in general, subject to control of the Board, the Chairman of the Board and the Chief Executive Officer, perform all the duties usually incident to the office of secretary of a corporation. (e) ASSISTANT SECRETARIES. Each Assistant Secretary shall assist the Secretary and, in the absence or disability of the Secretary, may perform the duties of the Secretary unless and until the 7 contrary is expressed by the Board, and shall perform such other duties as may be prescribed by the Board or the Secretary. (f) TREASURER. The Treasurer shall have custody of and be responsible for all the monies and funds of the Company. The Treasurer shall deposit or cause to be deposited all Company monies, funds and other valuables in the name and to the credit of the Company in such bank or banks as shall be proper or as shall be directed by the Board, the Chief Executive Officer, or the Chief Financial Officer, and shall disburse the funds of the Company which have been duly approved for disbursement. The Treasurer shall enter or cause to be entered regularly in the books of the Company full and accurate accounts of all monies received and paid out on account of the Company. The Treasurer shall have such other powers and perform such other duties as may from time to time be prescribed by the Board, the Chief Executive Officer, the Chief Financial Officer or the Bylaws, and shall in general, subject to control of the Board, the Chief Executive Officer, and the Chief Financial Officer, perform all the duties usually incident to the office of treasurer of a corporation. (g) ASSISTANT TREASURERS. Each Assistant Treasurer shall assist the Treasurer and, in the absence or disability of the Treasurer, may perform the duties of Treasurer unless and until the contrary is expressed by the Board, and shall perform such other duties as may be prescribed by the Board or the Treasurer. (h) COMPTROLLER. The Comptroller shall be the principal officer in charge of the general accounting books, accounting records and forms of the Company and shall see that all monies and obligations due the Company and all properties and assets are properly accounted for. The Comptroller shall prepare the Company's balance sheets, income accounts and other financial statements and reports, and render to the Board, the Chief Executive Officer, and the Chief Financial Officer, such periodic reports covering the results of operations of the Company as may be required by them or any of them. The Comptroller shall have such other powers and perform such other duties as may from time to time be prescribed by the Board, the Chief Executive Officer, the Chief Financial Officer or the Bylaws, and shall in general, subject to control of the Board, the Chief Executive Officer, and the Chief Financial Officer, perform all the duties usually incident to the office of comptroller of a corporation. (i) ASSISTANT COMPTROLLERS. Each Assistant Comptroller shall assist the Comptroller and, in the absence or disability of the Comptroller, may perform the duties of the Comptroller unless and until the contrary is expressed by the Board, and shall perform such other duties as may be prescribed by the Board or the Comptroller. (j) CHIEF LEGAL OFFICER. The Chief Legal Officer shall be in charge of the Company's legal affairs. The Chief Legal Officer shall advise the Board, the Chairman of the Board and/or the officers of the Company on such legal matters and prepare such reports as may be required by them or any of them. 8 ARTICLE VIII MISCELLANEOUS Section 1. EXECUTION OF DOCUMENTS. Unless otherwise authorized or prescribed by the Board of Directors, all contracts, leases, deeds, deeds of trust, mortgages, bonds, indentures, endorsements, assignments, powers of attorney to transfer stock or for other purposes, and other documents and instruments of whatsoever kind shall be executed for and on behalf of the Company by the Chief Executive Officer, the President, the Chief Financial Officer, a Vice President, the Treasurer, the Comptroller, or by any such officer and shall be attested by the Secretary or an Assistant Secretary, who shall have authority to affix the corporate seal to the same. The Board also may authorize, and delegate to any one or more of the Chief Executive Officer, the President and the Chief Financial Officer the power to so authorize, any other officer or officers, employee or employees, or agent or agents, to execute any contract, document or instrument of whatever kind for and on behalf of the Company and such authority may be general or be confined to specific instances. Section 2. UNDERTAKINGS AND COMMITMENTS. No undertaking, commitment, contract, instrument or document shall be binding upon the Company unless previously authorized or subsequently ratified by the Board or executed by an officer or officers, an employee or employees or an agent or agents of the Company acting under powers conferred by the Board or by these Bylaws. Section 3. CHECKS, DRAFTS, ETC. All checks, notes and other obligations for collection, deposit or transfer, and all checks and drafts for disbursement from Company funds, and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be endorsed or signed by such officer or officers, employee or employees or agent or agents as shall be thereunto authorized from time to time by the Board of Directors, which may delegate the power to so authorize to any one or more of the Chief Executive Officer, the President and the Chief Financial Officer. Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. Shares standing in the name of the Company may be voted or represented and all rights incident thereto may be exercised on behalf of the Company by the Chief Executive Officer, President, the Chief Financial Officer, a Vice President, the Secretary, the Treasurer or the Comptroller, or by such other officers upon to whom the Board of Directors may from time to time confer like powers. ARTICLE IX REPEAL OF BYLAWS Section 1. All existing Bylaws of the Company and all amendments thereto are hereby repealed. 9 ARTICLE X AMENDMENTS Section 1. POWER OF SHAREHOLDERS. New Bylaws may be adopted or these Bylaws may be amended or repealed by the vote or written assent of shareholders entitled to exercise a majority of the voting power of the Company. Section 2. POWER OF DIRECTORS. Subject to the right of shareholders as provided in Section 1 of this ARTICLE X to adopt, amend or repeal Bylaws, Bylaws may be adopted, amended or repealed by the Board of Directors as provided or permitted by law. ARTICLE XI EMERGENCY Section 1. "Emergency" as used in this Article means disorder, disturbance or damage caused by war, enemy attack, other warlike acts or by catastrophe, disaster or other similar emergency condition, which prevents the conduct and management of the affairs and business of the Company by the Board of Directors and officers in the manner provided for in other Articles of these Bylaws. The powers and duties conferred and imposed by this Article, and any resolutions adopted pursuant hereto, shall be effective only during an emergency. This Article may be implemented from time to time by resolutions adopted by the Board of Directors before or during an emergency, or during an emergency by the emergency Board of Directors constituted and then acting pursuant hereto. An emergency, once commenced, shall be deemed to continue until terminated by resolutions adopted for that purpose by the Board of Directors. Section 2. If, during an emergency, a majority of the Board of Directors cannot be found or is unable to act, one-third of the exact number of the Board of Directors shall constitute a quorum thereof. Section 3. During any emergency, the officers and employees of the Company shall continue, so far as possible, to conduct the Company's affairs and business under the guidance of the Board of Directors acting pursuant to this Article and in accordance with known orders of governmental authorities. Section 4. If, during any emergency, a quorum of the Board of Directors, as provided in Section 3 of this Article, cannot be found or is unable to act, any three available members of the Executive Committee, including the Chief Executive Officer, shall be and constitute the Board of Directors, with two thereof constituting a quorum, and as such shall have and exercise the fullest power of the Board of Directors for the conduct and management of the affairs and business of the Company, permitted by law, without the limitations set forth in Section 2 of ARTICLE V of these Bylaws, provided that such emergency Board of Directors as so constituted shall comply to the extent practicable under the circumstances with the provisions of ARTICLE III of these Bylaws relating to annual and special meetings of shareholders. If three members of the Executive Committee, including the Chief Executive Officer, are not able to serve, any three available directors shall be and constitute such emergency Board of Directors, with two thereof constituting a 10 quorum, for the exercise of the powers conferred and performance of the duties imposed by this Section 4. Section 5. If, during any emergency, neither a quorum of the Board of Directors, as provided in Section 3 of this Article, nor a quorum of the emergency Board of Directors, as provided for in Section 4 of this Article is available to serve, then the powers conferred and duties imposed by Section 4 shall vest in and devolve upon any three of (in the following order of priority) available directors, including any one or more of the Chief Executive Officer, the President and the Chief Financial Officer, and as many Vice Presidents (or, in case of their inability, any other officers), in order of seniority, as may be necessary from time to time to constitute a total of three emergency directors. The Chief Executive Officer and any other one emergency director shall constitute a quorum of such emergency Board of Directors for exercise of the powers conferred and performance of the duties imposed hereunder, but if the Chief Executive Officer is not available, any two of such emergency directors shall constitute a quorum. 11 EX-3.4 5 EXHIBIT 3.4 EXHIBIT 3.4 BYLAWS OF UNOCAL CORPORATION A DELAWARE CORPORATION (AS AMENDED JUNE 1, 1998) ARTICLE I FISCAL YEAR Section 1. The fiscal year of Unocal Corporation (hereinafter called the "Corporation") shall end on the thirty-first (31st) day of December of each year. ARTICLE II OFFICES Section 1. PRINCIPAL OFFICE. The principal office for the transaction of business of the Corporation is hereby fixed and located at 2141 Rosecrans Avenue, Suite 4000, in the City of El Segundo, County of Los Angeles, State of California. The Board of Directors (hereinafter sometimes called the "Board") is hereby granted full power and authority to change said principal office from one location to another. ARTICLE III STOCKHOLDERS Section 1. ANNUAL MEETINGS. The annual meetings of the stockholders shall be held at 10:00 o'clock A.M. on the fourth (4th) Monday in May of each year if not a legal holiday, for the purpose of electing directors, consideration of reports of the affairs of the Corporation, and for the transaction of any other business which is within the powers of the stockholders and properly brought before the meeting. If the fourth (4th) Monday in May is a legal holiday, the annual meeting of the stockholders shall be held at 10:00 o'clock A.M. on the preceding or subsequent Monday as fixed by resolution of the Board. Section 2. NOTICE OF MEETINGS. Written notice of each annual or special meeting of stockholders shall be given to each stockholder entitled to vote thereat not less than ten (10) nor more than sixty (60) days before the meeting. Section 3. PLACE OF MEETINGS. All meetings of stockholders, whether annual or special, shall be held at the principal office of the Corporation or at such other place, within or without the State of Delaware, as the Board may from time to time designate pursuant to authority hereinafter granted it. In the absence of any such designation stockholders' meetings shall be held at the principal office of the Corporation. Section 4. VOTING RIGHTS. Stockholders entitled to vote at stockholder meetings shall be entitled to one (1) vote for each full share. A fraction of a share or a fractional interest in a share shall not be entitled to any voting rights whatsoever. Section 5. CONDUCT OF MEETINGS. The decisions of the Chairman of the Board or officer presiding at all stockholders' meetings shall govern in all matters relating to the conduct of the meeting. Section 6. VOTING. Directors shall be divided into three (3) classes with each director serving a three (3)-year term. At each annual meeting, all directors of one (1) class shall be elected in accordance with the provisions of ARTICLE SEVENTH of the Corporation's Certificate of Incorporation by the holders of shares entitled to vote in the election. A nomination shall be accepted, and votes cast for a proposed nominee shall be counted by the inspectors of election, only if the Secretary of the Corporation has received at least sixty (60) days prior to the meeting a statement over the signature of the proposed nominee that such person consents to being a nominee and, if elected, intends to serve as a director. Such statement shall also contain the Unocal stock ownership of the proposed nominee, occupations and business history for the previous five (5) years, other directorships, names of business entities in which the proposed nominee owns a ten (10) percent or more equity interest, listing of any criminal convictions, including federal or state securities violations, and all other information as would be required to be disclosed in solicitations of proxies for the election of such nominee as director pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. Section 7. NOTICE OF STOCKHOLDER BUSINESS. At any meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder or a beneficial owner of the Corporation's stock ("Proponent"). For business to be properly brought before the meeting by a Proponent, such business must be a proper matter for stockholder action under the general corporation law of the state of Delaware, and the Secretary must have received at least sixty (60) days prior to the meeting written notice by the Proponent containing (a) a brief description of each matter desired to be brought before the meeting, (b) the Proponent's name and address, as they appear on the Corporation's books, (c) the class and the number of shares of the Corporation which are beneficially owned by the Proponent and, if the Proponent is a beneficial owner, proof of beneficial ownership, (d) any material interest of the Proponent in such business, (e) an indication as to whether the Proponent intends to solicit or participate in the solicitation of proxies in favor of such business, and (f) as to each person whom the Proponent proposes to nominate for election or reelection as a director, all information relating to such person as would be required to be disclosed 2 in solicitations of proxies for the election of such person as a director pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at a meeting except in accordance with the procedures set forth herein. Section 8. QUORUM. The holders of one-third (1/3) of all of the outstanding shares of the stock of the Corporation entitled to vote at a meeting of stockholders, present in person or by proxy, shall constitute a quorum for the transaction of any business at such meeting. ARTICLE IV BOARD OF DIRECTORS Section 1. POWERS. Subject to the limitations of the Certificate of Incorporation of the Corporation and of the Delaware General Corporation Law as to action which shall be authorized or approved by the stockholders, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed by, the Board of Directors. Section 2. NUMBER. The exact number of directors of the Corporation shall be nine (9) until changed in the manner provided by law. Section 3. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The Board shall appoint a Chairman, who shall preside at all meetings of the Board of Directors and shall have such other powers and duties as may from time to time be assigned by the Board of Directors or prescribed by the Bylaws. The Board may also appoint a Vice Chairman, who shall preside at all meetings of the Board of Directors in the absence of the Chairman and shall have such other powers and duties as may from time to time be assigned by the Board of Directors or prescribed by the Bylaws. Section 4. ANNUAL MEETINGS. Immediately following each annual meeting of stockholders, the Board shall hold its annual meeting for the purpose of organization, election of officers and the transaction of any other business. Section 5. REGULAR MEETINGS. Regular meetings of the Board shall be held at the times and on the dates fixed by resolution of the Board. Section 6. SPECIAL MEETINGS. Special meetings of the Board for any purpose or purposes whatsoever may be called by the Chairman of the Board or the Chief Executive Officer or, in the absence or inability of either of them, by the President, the Chief Financial Officer, or by at least two (2) of the directors at the time in office. Section 7. NOTICE OF MEETINGS. Notice of annual meetings and of regular meetings of the Board is hereby dispensed with. Notice of special meetings must be given at least two (2) days in advance if given by mail, or at least twenty-four (24) hours in advance if delivered personally or given by telephone or telegram. Section 8. PLACE OF MEETINGS. All meetings of the Board, whether annual, regular or special meetings, shall be held at any place within or without the State of Delaware which has been 3 designated from time to time by resolution of the Board or in the notice of the meeting. In the absence of such designation all directors' meetings shall be held at the principal office of the Corporation. Section 9. QUORUM. A majority of the exact number of directors specified in Section 2 of ARTICLE IV of the Bylaws shall constitute a quorum of the Board of Directors for the transaction of business; provided, however, that vacancies on the Board may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, each such director to hold office until a successor is elected at an annual or special meeting of the stockholders. Section 10. COMPENSATION OF DIRECTORS. Directors and members of committees appointed by the Board shall receive such compensation, if any, for their services, and such reimbursement for their expenses, as may be fixed or determined by resolution of the Board. The Board may, however, in any such resolution provide that directors who are also employees of the Corporation or any of its subsidiaries shall not receive additional compensation for services as a director or member of a committee appointed by the Board. Section 11. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS. (a) RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is threatened to be made a party to or involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative ("Proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, trustee, or fiduciary, or in a similar capacity (collectively, "Agent") of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or any other enterprise or entity whatsoever, including without limitation employee benefit plans (collectively, "Affiliate"), whether the basis of such Proceeding is alleged action in an official capacity, or in any other capacity while serving as a director or officer of the Corporation or as an Agent of an Affiliate, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability, and loss, including without limitation, attorneys' fees, judgments, fines, ERISA excise taxes, penalties, amounts paid or to be paid in settlement, and any other amounts actually incurred or suffered by such person in connection with any Proceeding; and such indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation or Agent of an Affiliate and shall inure to the benefit of his or her heirs, executors, and administrators; PROVIDED, HOWEVER, that, except as provided in paragraph (b) hereof with respect to Proceedings seeking to enforce rights to indemnification, the Corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the board of directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such Proceeding in advance of its final disposition; PROVIDED, HOWEVER, that, if the Delaware General Corporation Law requires, the payment of 4 such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including without limitation, service to an employee benefit plan) in advance of the final disposition of a Proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, to the extent authorized from time to time by its board of directors, either on a general basis or as to specific employees or agents, provide indemnification to employees and agents of the Corporation with similar scope and effect as the foregoing indemnification of directors and officers. (b) RIGHT TO BRING SUIT. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for expenses incurred in a Proceeding in advance of its final disposition in which case the applicable period shall be twenty (20) days, the person seeking indemnification (the "Party to be Indemnified") may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Party to be Indemnified shall be entitled to be paid also the expense of prosecuting or defending such claim. The Corporation's sole defense to an action seeking indemnification (other than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) shall be that the Party to be Indemnified has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the Party to be Indemnified for the amount claimed, and the burden of providing such defense shall be on the Corporation. Neither the failure of the Corporation (including its board of directors, its independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the Party to be Indemnified is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its board of directors, its independent legal counsel, or its stockholders) that the Party to be Indemnified has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Party to be Indemnified has not met the applicable standard of conduct. (c) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the payment of expenses incurred in defending a Proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. (d) INSURANCE. The Corporation shall maintain in full force and effect, at its own expense, director and officer liability insurance ("Insurance") coverage for each director and officer in amounts and scope at least as favorable as that maintained by the Corporation on September 30, 1996, or, to the extent more favorable, any Insurance policy entered into or renewed by the Corporation following such date. Notwithstanding the foregoing, if the Corporation, after 5 using its best efforts, cannot obtain and purchase such coverage for an amount no more than what it paid for the most recent expiring Insurance policy plus a reasonable additional amount, the Corporation shall only be required to purchase such Insurance coverage for any act or omission occurring at or prior to the time of such date. (e) ENFORCEABILITY; AMENDMENT. The rights provided to any person by this bylaw shall be enforceable against the Corporation by such person, who shall be presumed to have relied upon it in serving or continuing to serve as an Agent, as provided above. No amendment of this bylaw shall impair the rights of any person arising at any time with respect to events occurring prior to such amendment, including, without limitation, any right of a director or officer to Insurance for any act or omission occurring at or prior to the time of such amendment. Section 12. AUTHORITY TO DESIGNATE PLACE OF STOCKHOLDERS' MEETINGS. The Board is hereby granted full power and authority to designate from time to time any place within or without the State of Delaware for the holding of any stockholders' meeting. Section 13. COMMITTEES. The Board may, by resolution, appoint one (1) or more committees, in addition to an Executive Committee and a Board Management Committee, to consist of two (2) or more of the directors of the Corporation, and prescribe their duties and powers. A majority of the members of any such committee may determine its action and fix the time and place of its meetings unless the Board shall otherwise provide. The Board shall have the power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee. Section 14. ACTION BY WRITTEN CONSENT. Any action required or permitted to be taken by the Board or any committee thereof may be taken without a meeting, if all members of the Board or such committee, as the case may be, shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Section 15. CONFERENCE CALLS. Members of the Board or any committee thereof may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. ARTICLE V EXECUTIVE COMMITTEE Section 1. NUMBER AND COMPOSITION. The Board of Directors shall appoint from its membership, annually, an Executive Committee of three (3) or more directors. Included on the Executive Committee shall be the Chief Executive Officer of the Corporation. Each member of the Executive Committee shall hold membership at the pleasure of the Board, which shall have the exclusive power to fill vacancies thereon as they may occur. The Chairman of the Executive Committee shall be the Chief Executive Officer of the Corporation. Section 2. POWERS. The Executive Committee, during the intervals between meetings of the Board, shall have and there is hereby granted to it all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, except that the 6 Executive Committee shall not be permitted to fill vacancies on the Board or on any committee, approve any action for which stockholder approval is also required by the Delaware General Corporation Law, amend or repeal any resolution of the Board which by its express terms is not so amendable or repealable, or appoint other committees of the Board or the members thereof and shall not have any powers restricted by Section 141(c) of the Delaware General Corporation Law unless the Board shall have specifically delegated authority to the Executive Committee to take action with respect to a matter listed in such Section as permitted to be so delegated. Section 3. PROCEDURE. Two (2) members of the Executive Committee shall constitute a quorum of the Executive Committee for the transaction of business. The Executive Committee, by vote of a majority of its members, shall fix its own times and places of meetings and shall prescribe its own rules of procedure; no change in which shall be made save by a majority vote of its members. Section 4. RECORDS AND REPORTS. The Executive Committee shall keep regular minutes of all business transacted at its meetings, and all action of the Executive Committee shall be reported to the Board at its next ensuing meeting. Section 5. COMPENSATION. Members of the Executive Committee may receive such compensation, if any, for their services, and such reimbursement for their expenses, as may be fixed or determined by the Board. ARTICLE VI BOARD MANAGEMENT COMMITTEE Section 1. NUMBER AND COMPOSITION. The Board of Directors shall appoint from its membership, annually, a Board Management Committee composed of the directors who are salaried officers of the Corporation. The Chairman of the Board Management Committee shall be the Chief Executive Officer of the Corporation. Section 2. POWERS. The Board Management Committee, during the intervals between meetings of the Board, shall have and there is hereby granted to it all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, subject to approval limits established by resolution of the Board of Directors as deemed appropriate from time to time, but the Board Management Committee shall not be permitted to fill vacancies on the Board or on any committee, appoint the Chief Executive Officer, the President or the Chief Financial Officer, approve any action for which stockholder approval is also required by the Delaware General Corporation Law, amend or repeal any resolution of the Board or of the Executive Committee, which by its express terms is not so amendable or repealable, or appoint other committees of the Board or the members thereof and shall not have any powers restricted by Section 141(c) of the Delaware General Corporation Law unless the Board shall have specifically delegated authority to the Board Management Committee to take action with respect to a matter listed in such Section as permitted to be so delegated. 7 Section 3. PROCEDURE. Two (2) members of the Board Management Committee shall constitute a quorum of the Board Management Committee for the transaction of business. The Board Management Committee, by vote of a majority of its members, shall fix its own times and places of meetings, and shall prescribe its own rules of procedure; no change in which shall be made save by a majority vote of its members. Section 4. RECORDS. The Board Management Committee shall keep regular minutes of all business transacted at its meetings. ARTICLE VII OFFICERS Section 1. OFFICERS. The officers of the Corporation shall be a Chief Executive Officer, a President, a Chief Financial Officer, a Vice President, a Secretary, a Comptroller, a Treasurer, and a Chief Legal Officer. The Corporation may also have, at the discretion of the Board, one (1) or more additional Vice Presidents, one (1) or more Assistant Secretaries, one (1) or more Assistant Treasurers, and one (1) or more Assistant Comptrollers, and the Board may appoint such other officers as it may deem necessary or advisable, who shall have such authority and perform such duties as from time to time may be prescribed by the Board, the Chairman of the Board, or the Chief Executive Officer. Any two (2) or more offices may be held by the same person. Section 2. ELECTION AND REMOVAL. The officers of the Corporation shall be chosen annually by the Board at its annual meeting and each shall hold office until the corresponding annual meeting of the Board in the next year and until a successor shall be elected and qualified unless such officer shall theretofore resign or shall be removed or otherwise disqualified to serve. The Board may remove any officer either with or without cause or under such other terms or conditions as it may prescribe. Vacancies may be filled by the Board as they may occur. Section 3. POWERS AND DUTIES. (a) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the officer, reporting directly to the Board, responsible for overall management of the Corporation and shall have general supervision, direction and control over the business and affairs of the Corporation and its officers. The Chief Executive Officer shall be a member of the Executive Committee and of the Board Management Committee and in general shall perform all duties incident to the office of Chief Executive Officer and shall have such powers and duties as may from time to time be assigned by the Board of Directors or prescribed by the Bylaws. (b) PRESIDENT. The President in general shall perform all duties incident to the office of President, and shall have such powers and duties as may from time to time be assigned by the Board of Directors, the Chief Executive Officer or prescribed by the Bylaws. (c) CHIEF FINANCIAL OFFICER AND VICE PRESIDENTS. The Chief Financial Officer and each Vice President shall have such authority and shall perform such duties as shall from time to time be assigned by the Board, the Chief Executive Officer or prescribed by the Bylaws. 8 (d) SECRETARY. The Secretary shall keep, or cause to be kept, a book of minutes, at the principal office and/or such other place or places as the Board may order, of all meetings of directors and stockholders, with the time and place of holding, whether regular or special, and if special how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The Secretary shall keep or cause to be kept at the principal office, or at the office of the Corporation's transfer agent, a stock register, which may be an electronic database, showing the names of the stockholders of record and their addresses, the number and classes of shares held by each, the numbers and dates of the certificates issued for those shares, and the numbers and dates of cancellation of every certificate surrendered for cancellation. The Secretary shall give or cause to be given notice of all meetings of the stockholders and the Board required to be given by the Bylaws or by law. The Secretary shall have charge of and be custodian of the seal of the Corporation and the minute books and documents relating to the existence and governance of the Corporation. The Secretary shall have such other powers and perform such other duties as may from time to time be prescribed by the Board, the Chairman of the Board, the Chief Executive Officer or the Bylaws, and shall in general, subject to control of the Board, the Chairman of the Board and the Chief Executive Officer, perform all the duties usually incident to the office of secretary of a corporation. (e) ASSISTANT SECRETARIES. Each Assistant Secretary shall assist the Secretary and, in the absence or disability of the Secretary, may perform the duties of the Secretary unless and until the contrary is expressed by the Board, and may perform such other duties as may be prescribed by the Board or the Secretary. (f) TREASURER. The Treasurer shall have custody of and be responsible for all the monies and funds of the Corporation. The Treasurer shall deposit or cause to be deposited all Corporation monies, funds and other valuables in the name and to the credit of the Corporation in such bank or banks as shall be judged proper or as shall be directed by the Board, the Chief Executive Officer, or the Chief Financial Officer, and shall disburse the funds of the Corporation which have been duly approved for disbursement. The Treasurer shall enter or cause to be entered regularly in the books of the Corporation full and accurate accounts of all monies received and paid out on account of the Corporation. The Treasurer shall have such other powers and perform such other duties as may from time to time be prescribed by the Board, the Chief Executive Officer, the Chief Financial Officer or the Bylaws, and shall in general, subject to control of the Board, the Chief Executive Officer, and the Chief Financial Officer, perform all the duties usually incident to the office of treasurer of a corporation. (g) ASSISTANT TREASURERS. Each Assistant Treasurer shall assist the Treasurer and, in the absence or disability of the Treasurer, may perform the duties of the Treasurer unless and until 9 the contrary is expressed by the Board, and shall perform such other duties as may be prescribed by the Board or the Treasurer. (h) COMPTROLLER. The Comptroller shall be the principal officer in charge of the general accounting books, accounting records and forms of the Corporation and shall see that all monies and obligations due the Corporation and all properties and assets are properly accounted for. The Comptroller shall prepare the Corporation's balance sheets, income accounts and other financial statements and reports, and render to the Board, the Chief Executive Officer, and the Chief Financial Officer, such periodic reports covering the results of operations of the Corporation as may be required by them or any of them. The Comptroller shall have such other powers and perform such other duties as may from time to time be prescribed by the Board, the Chief Executive Officer, the Chief Financial Officer or the Bylaws and shall in general, subject to control of the Board, the Chief Executive Officer, and the Chief Financial Officer, perform all the duties usually incident to the office of comptroller of a corporation. (i) ASSISTANT COMPTROLLERS. Each Assistant Comptroller shall assist the Comptroller and, in the absence or disability of the Comptroller, may perform the duties of the Comptroller unless and until the contrary is expressed by the Board, and shall perform such other duties as may be prescribed by the Board or the Comptroller. (j) CHIEF LEGAL OFFICER. The Chief Legal Officer shall be in charge of the Corporation's legal affairs. The Chief Legal Officer shall advise the Board, the Chairman of the Board and/or the officers of the Corporation on such legal matters and prepare such reports as may be required by them or any of them. ARTICLE VIII MISCELLANEOUS Section 1. EXECUTION OF DOCUMENTS. Unless otherwise authorized or prescribed by the Board of Directors, all contracts, leases, deeds, deeds of trust, mortgages, bonds, indentures, endorsements, assignments, powers of attorney, and other documents and instruments of whatsoever kind shall be executed for and on behalf of the Corporation by the Chief Executive Officer, the President, the Chief Financial Officer, a Vice President, the Treasurer, the Comptroller, or by any such officer and shall be attested by the Secretary or an Assistant Secretary, who shall have authority to affix the corporate seal to the same. The Board also may authorize, and delegate to any one (1) or more of the Chief Executive Officer, the President and the Chief Financial Officer the power to so authorize, any other officer or officers, employee or employees, or agent or agents, to execute any contract, document or instrument of whatever kind for and on behalf of the Corporation and such authority may be general or be confined to specific instances. Section 2. UNDERTAKINGS AND COMMITMENTS. No undertaking, commitment, contract, instrument or document shall be binding upon the Corporation unless previously authorized or 10 subsequently ratified by the Board or executed by an officer or officers, an employee or employees or an agent or agents of the Corporation acting under powers conferred by the Board or by these Bylaws. Section 3. CHECKS, DRAFTS, ETC. All checks, notes and other obligations for collection, deposit or transfer, and all checks and drafts for disbursement from Corporation funds, and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be endorsed or signed by such officer or officers, employee or employees or agent or agents as shall be thereunto authorized from time to time by the Board of Directors, which may delegate the power to so authorize to any one (1) or more of the Chief Executive Officer, the President and the Chief Financial Officer. Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. Shares standing in the name of the Corporation may be voted or represented and all rights incident thereto may be exercised on behalf of the Corporation by the Chief Executive Officer, the President, the Chief Financial Officer, a Vice President, the Secretary, the Treasurer or the Comptroller, or by such other officers upon whom the Board of Directors may from time to time confer like powers. ARTICLE IX AMENDMENTS TO BYLAWS Section 1. POWER OF STOCKHOLDERS. New Bylaws may be adopted or these Bylaws may be amended or repealed by the vote of seventy-five (75) percent of the outstanding stock of the Corporation entitled to vote thereon. Section 2. POWER OF DIRECTORS. Subject to the right of stockholders as provided in Section 1 of this ARTICLE IX to adopt, amend or repeal Bylaws, Bylaws may be adopted, amended or repealed by the Board of Directors as provided or permitted by law; however, any Bylaw amendment adopted by the Board of Directors increasing or reducing the authorized number of directors or amending this Section shall require a resolution adopted by the affirmative vote of not less than seventy-five (75) percent of the directors. ARTICLE X EMERGENCY Section 1. "Emergency" as used in this Article means disorder, disturbance or damage caused by war, enemy attack, other warlike acts or by catastrophe, disaster or other similar emergency condition, which prevents the conduct and management of the affairs and business of the Corporation by the Board of Directors and officers in the manner provided for in other Articles of these Bylaws. The powers and duties conferred and imposed by this Article, and any resolutions adopted pursuant hereto, shall be effective only during an emergency. This Article may be implemented from time to time by resolutions adopted by the Board of Directors before or during an emergency, or during an emergency by the emergency Board of Directors constituted and then acting pursuant hereto. An emergency, once commenced, shall be deemed to continue until terminated by resolutions adopted for that purpose by the Board of Directors. 11 Section 2. If, during an emergency, a majority of the Board of Directors cannot be found or is unable to act, one-third (1/3) of the exact number of the Board of Directors shall constitute a quorum thereof. Section 3. During any emergency, the officers and employees of the Corporation shall continue, so far as possible, to conduct the Corporation's affairs and business under the guidance of the Board of Directors acting pursuant to this Article and in accordance with known orders of governmental authorities. Section 4. If, during any emergency, a quorum of the Board of Directors, as provided in Section 3 of this Article, cannot be found or is unable to act, any three (3) available members of the Executive Committee, including the Chief Executive Officer, shall be and constitute the Board of Directors, with two (2) thereof constituting a quorum, and as such shall have and exercise the fullest power of the Board of Directors for the conduct and management of the affairs and business of the Corporation, permitted by law, without the limitations set forth in Section 2 of ARTICLE V of these Bylaws, provided that such emergency Board of Directors as so constituted shall comply to the extent practicable under the circumstances with the provisions of ARTICLE III of these Bylaws relating to annual and special meetings of stockholders. If three (3) members of the Executive Committee, including the Chief Executive Officer, are not able to serve, any three (3) available directors shall be and constitute such emergency Board of Directors, with two (2) thereof constituting a quorum, for the exercise of the powers conferred and performance of the duties imposed by this Section 4. Section 5. If, during any emergency, neither a quorum of the Board of Directors, as provided in Section 3 of this Article, nor a quorum of the emergency Board of Directors, as provided for in Section 4 of this Article is available to serve, then the powers conferred and duties imposed by Section 4 shall vest in and devolve upon any three (3) of (in the following order of priority) available directors, including any one (1) or more of the Chief Executive Officer, the President and the Chief Financial Officer, and as many Vice Presidents (or, in case of their inability, any other officers), in order of seniority, as may be necessary from time to time to constitute a total of three (3) emergency directors. The Chief Executive Officer and any other one (1) emergency director shall constitute a quorum of such emergency Board of Directors for exercise of the powers conferred and performance of the duties imposed hereunder, but if the Chief Executive Officer is not available, any two (2) of such emergency directors shall constitute a quorum. 12 EX-3.5 6 EXHIBIT 3.5 Exhibit 3.5 CERTIFICATE OF TRUST OF UNOCAL CAPITAL TRUST II This Certificate of Trust of Unocal Capital Trust II (the "Trust"), dated June 30, 1998, is being duly executed and filed by the undersigned, as trustees, to form a business trust under the Delaware Business Trust Act (12 DEL. C. Sections 3801 ET SEQ.) 1. NAME. The name of the business trust being formed hereby is Unocal Capital Trust II. 2. DELAWARE TRUSTEE. The name and business address of the trustee of the Trust with a principal place of business in the State of Delaware is The Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711. 3. EFFECTIVE DATE. This Certificate of Trust shall be effective as of its filing. IN WITNESS WHEREOF, the undersigned, being all of the trustees of the Trust, have executed this Certificate of Trust as of the date first above written. /s/ D. D. Chessum ----------------------------------------- Darrell D. Chessum, as Trustee /s/ D. A. Franchi ----------------------------------------- Daniel A. Franchi, as Trustee /s/ R. L. Walton ----------------------------------------- Richard L. Walton, as Trustee THE BANK OF NEW YORK, as Trustee By:/s/ Thomas B. Zakrzewski -------------------------------------- Name: Thomas B. Zakrzewski Title: Assistant Vice President THE BANK OF NEW YORK (DELAWARE) as Trustee By:/s/ Walter N. Gitlin -------------------------------------- Name: Walter N. Gitlin Title: Authorized Signatory 2 EX-4.9 7 EXHIBIT 4.9 EXHIBIT 4.9 - -------------------------------------------------------------------------------- UNOCAL CORPORATION As Issuer and THE BANK OF NEW YORK As Trustee ___% Junior [CONVERTIBLE] Subordinated Debentures Second Supplemental Indenture Dated as of ____________, _____ - --------------------------------------------------------------------------------
TABLE OF CONTENTS PAGE ---- ARTICLE I DEFINITIONS SECTION 1.1. Definition of Terms. . . . . . . . . . . . . . . . . . . . 1 ARTICLE II GENERAL TERMS AND CONDITIONS OF THE DEBENTURES SECTION 2.1. Designation and Principal Amount.. . . . . . . . . . . . . 9 SECTION 2.2. Maturity.. . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 2.3. Form and Payment.. . . . . . . . . . . . . . . . . . . . . 9 SECTION 2.4. Global Debenture.. . . . . . . . . . . . . . . . . . . . . 9 SECTION 2.5. Interest.. . . . . . . . . . . . . . . . . . . . . . . . .10 ARTICLE III REDEMPTION OF THE DEBENTURES SECTION 3.1. Special Event Redemption.. . . . . . . . . . . . . . . . .11 SECTION 3.2. Optional Redemption by Company.. . . . . . . . . . . . . .12 SECTION 3.3. Redemption of Less Than All Debentures.. . . . . . . . . .13 SECTION 3.4. No Sinking Fund. . . . . . . . . . . . . . . . . . . . . .13 ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD SECTION 4.1. Extension of Interest Payment Period.. . . . . . . . . . .13 SECTION 4.2. Notice of Extension. . . . . . . . . . . . . . . . . . . .14 SECTION 4.3. Limitation of Transactions.. . . . . . . . . . . . . . . .14 ARTICLE V EXPENSES SECTION 5.1. Payment of Expenses. . . . . . . . . . . . . . . . . . . .15 SECTION 5.2. Payment Upon Resignation or Removal. . . . . . . . . . . .15 ARTICLE VI COVENANTS SECTION 6.1. Covenants as to the Trust. . . . . . . . . . . . . . . . .15 SECTION 6.2. Listing or Quotation of Debentures.. . . . . . . . . . . .16 ARTICLE VII CONVERSION OF DEBENTURES SECTION 7.1. Conversion Rights. . . . . . . . . . . . . . . . . . . . .16 SECTION 7.2. Conversion Procedure.. . . . . . . . . . . . . . . . . . .16 SECTION 7.3. Certain Conversion Price Adjustments.. . . . . . . . . . .18 SECTION 7.4. Merger, Consolidation, or Sale of Assets.. . . . . . . . .22
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TABLE OF CONTENTS PAGE ---- SECTION 7.5. Spinoff. . . . . . . . . . . . . . . . . . . . . . . . . .24 SECTION 7.6. Notice of Adjustments of Conversion Price. . . . . . . . .28 SECTION 7.7. Prior Notice of Certain Events.. . . . . . . . . . . . . .28 SECTION 7.8. Certain Plans, Rights or Securities. . . . . . . . . . . .29 SECTION 7.9. Preferred Stock Purchase Rights. . . . . . . . . . . . . .29 SECTION 7.10. Special Provisions Regarding Adjustment of Conversion Price or Other Provisions. . . . . . . . . . . . . . . . .31 SECTION 7.11. Certain Additional Rights. . . . . . . . . . . . . . . . .31 SECTION 7.12. Trustee Not Responsible for Determining Conversion Price or Adjustments.. . . . . . . . . . . . . . . . . . .32 ARTICLE VIII EVENTS OF DEFAULT SECTION 8.1. Events of Default. . . . . . . . . . . . . . . . . . . . .32 ARTICLE IX FORM OF DEBENTURE SECTION 9.1. Form of Debenture. . . . . . . . . . . . . . . . . . . . .32 ARTICLE X ORIGINAL ISSUE OF DEBENTURES SECTION 10.1. Original Issue of Debentures.. . . . . . . . . . . . . . .33 ARTICLE XI MISCELLANEOUS SECTION 11.1. Ratification of Base Indenture: Supplemental Indenture Controls.. . . . . . . . . . . . . . . . . . . .33 SECTION 11.2. Trustee Not Responsible for Recitals.. . . . . . . . . . .33 SECTION 11.3. Governing Law. . . . . . . . . . . . . . . . . . . . . . .33 SECTION 11.4. Separability.. . . . . . . . . . . . . . . . . . . . . . .33 SECTION 11.5. Counterparts.. . . . . . . . . . . . . . . . . . . . . . .34 SECTION 11.6 List of Holders of Securities. . . . . . . . . . . . . . .33
ii THIS SECOND SUPPLEMENTAL INDENTURE, dated as of ___________,_____ (the "Supplemental Indenture"), is between Unocal Corporation, a Delaware corporation (the "Company"), and The Bank of New York, as trustee (the "Trustee"). RECITALS WHEREAS, the Company has executed and delivered the Base Indenture (as defined herein) to the Trustee to provide for the issuance of the Company's Securities from time to time in one or more series as might be determined by the Company under the Base Indenture, in an unlimited aggregate principal amount as may be authenticated and delivered as provided in the Base Indenture; WHEREAS, pursuant to the terms of the Base Indenture, the Company desires to provide for the establishment of a new series of its Securities to be known as its "___% Junior [Convertible] Subordinated Debentures" (the "Debentures"), the form and substance of such Debentures and the terms, provisions and conditions thereof to be set forth as provided in the Base Indenture and this Supplemental Indenture; WHEREAS, Unocal Capital Trust II, a Delaware statutory business trust (the "Trust"), intends to issue up to $__________ aggregate liquidation amount of its ___% Trust [Convertible] Preferred Securities (the "Trust Preferred Securities") and up to $____________ aggregate liquidation amount of its ___ % Trust Common Securities (the "Trust Common Securities" and, together with the Trust Preferred Securities, the "Trust Securities"), representing undivided beneficial interests in the assets of the Trust; and WHEREAS, the Trust proposes to issue Trust Securities to the Company in exchange for Debentures in an aggregate principal amount equal to the aggregate liquidation amount of the Trust Securities issued: NOW, THEREFORE, in consideration of the issuance to the Company of Trust Securities by the Trust and the acceptance of the Debentures in exchange therefor by the Trust, and for the purpose of setting forth, as provided in the Base Indenture, the form and substance of the Debentures and the terms, provisions and conditions thereof, the Company covenants and agrees with the Trustee as follows: ARTICLE I DEFINITIONS SECTION 1.1. DEFINITION OF TERMS For all purposes of this Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) unless otherwise defined herein, the capitalized terms used herein that are defined in the Base Indenture have the same meanings when used in this Supplemental Indenture; (b) the terms defined in this Article I have the meanings assigned to them in this Article I and include the plural as well as the singular; (c) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (d) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States of America, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States of America at the date of such computation; (e) a reference to a Section or Article (or subdivision thereof) or the Recitals is to a Section or Article (or subdivision thereof) or the Recitals of this Supplemental Indenture; (f) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision; (g) headings are for convenience of reference only and do not affect interpretation; (h) the following terms have the meanings given to them in the Rights Agreement: (i) Distribution Date; (ii) 15% Ownership Date; and (iii) Section 13(a) Event; (i) the terms defined as follows shall have the meanings assigned to them as follows: "ADDITIONAL INTEREST" has the meaning specified in Section 2.5(c). "ADMINISTRATIVE ACTION" means a judicial decision, official administrative pronouncement, ruling, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations. "APPLICABLE PRICE" means (i) in the event of a Non-Stock Fundamental Change in which the holders of Common Stock receive only cash, the amount of cash received by the holder of one share of Common Stock and (ii) in the event of any other Fundamental Change, the average of the Closing Prices of the Common Stock for the 10 Trading Days immediately prior to the record date for the determination of the holders of Common Stock entitled to receive cash, securities, property or other assets in connection with such Fundamental Change or, if there is no such record date, the date upon which the holders of the Common Stock shall have the right to receive such cash, securities, property or other assets. "AVERAGE STOCK PRICE" shall mean the average of the Closing Prices of the Common Stock for the 10 Trading Days immediately prior to the "ex" dividend or distribution date of the Common Stock, or absent such a date, the 10 Trading Days immediately prior to the Spinoff Distribution Date; PROVIDED, HOWEVER, that if the Spinoff Fair Value is computed with respect to Closing Prices of Spinoff Company Stock following the Spinoff Distribution Date, the Average 2 Stock Price shall be calculated as the average of the sums of the Closing Prices of the Common Stock and the Spinoff Company Stock for the 10 Trading Days immediately following the Spinoff Distribution Date. "BASE INDENTURE" means that Indenture dated as of September 11, 1996 between the Company and the Trustee, as it may be amended, restated, supplemented and/or modified from time to time. "BUSINESS DAY" means any day other than a Saturday, Sunday, or any other day on which banking institutions in New York, New York or Los Angeles, California are permitted or required by any applicable law to close. "CLEARING AGENCY" means an organization registered as a "Clearing Agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation, that is acting as depositary for the Debentures and in whose name or in the name of a nominee of that organization shall be registered a Global Debenture and which shall undertake to effect book entry transfers and pledges of the Debentures. The initial Clearing Agency shall be the Depository Trust Company. "CLOSING PRICE" of any common stock on any day shall mean the last reported sale price regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way of such common stock, in each case on the New York Stock Exchange composite tape or, if the common stock is not listed or admitted to trading on such exchange, on the principal national securities exchange or quotation system on which such common stock is listed or quoted or admitted to trading, or, if not listed or quoted or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of such common stock as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose or, if not so available in such manner, as otherwise determined in good faith by the Board of Directors. "COMMON SECURITY CERTIFICATE" means a definitive certificate in fully registered form representing a Trust Common Security substantially in the form of Exhibit A-2 to the Declaration. "COMMON STOCK" means shares of the common stock, $1.00 par value, of the Company. "COMMON STOCK FUNDAMENTAL CHANGE" means any Fundamental Change in which more than 50% of the value (as determined in good faith by the Board of Directors) of the consideration received by the holders of Common Stock consists of common stock that, for the 10 Trading Days immediately prior to such Fundamental Change, has been admitted for listing or admitted for listing subject to notice of issuance on a national securities exchange or quoted or approved for quotation subject to notice of issuance on the Nasdaq National Market System; PROVIDED, HOWEVER, that a Fundamental Change shall not be a Common Stock Fundamental Change unless either (i) the Company continues to exist after the occurrence of such Fundamental Change and the outstanding Debentures continue to exist as outstanding Debentures, or (ii) not later than the occurrence of such Fundamental Change, the outstanding Debentures are converted 3 into or exchanged for [convertible] debentures of a corporation succeeding to the business of the Company, which [convertible] debentures have terms substantially similar to those of the Debentures as determined in good faith by the Board of Directors. "COMPANY" has the meaning specified in the first paragraph hereof. "COMPOUNDED INTEREST" has the meaning specified in Section 4.1. ["CONVERSION AGENT" means the Institutional Trustee acting as Conversion Agent for a Holder.] ["CONVERSION DATE" has the meaning specified in Section 7.2(b).] ["CONVERSION NOTICE" has the meaning specified in Section 7.2(a).] ["CONVERSION PRICE" means $______ as of the date of this Supplemental Indenture, as may be adjusted from time to time as set forth in Article VII.] "COUPON RATE" has the meaning specified in Section 2.5. "CURRENT MARKET PRICE" means, on any date in question, the average of the Closing Prices of such common stock for the 10 Trading Day period ending on the earlier of the day in question and, if applicable, the day before the "ex" date with respect to the issuance or distribution requiring such computation; PROVIDED, HOWEVER, that if more than one event occurs that would require an adjustment pursuant to Section 7.3, the Board of Directors may make such adjustments to the Closing Prices during such 10 Trading Day period as it deems appropriate to effectuate the intent of the adjustments in Section 7.3, in which case any such determination by the Board of Directors shall be set forth in a Board Resolution and shall be conclusive. "DEBENTURES" has the meaning specified in the Recitals. "DECLARATION" means the Amended and Restated Declaration of Trust of the Trust, dated as of ________________, ________, as it may be amended, restated, supplemented and/or modified from time to time. "DEFERRED INTEREST" has the meaning specified in Section 4.1. "DELAWARE TRUSTEE" means the Delaware Trustee, if any, of the Trust. "DISSOLUTION EVENT" means that, as a result of the occurrence and continuation of a Special Event, the Trust is to be dissolved in accordance with the Declaration, and the Debentures held by the Institutional Trustee are to be distributed to the holders of the Trust Securities issued by the Trust PRO RATA in accordance with the Declaration. "DISSOLUTION TAX OPINION" means an opinion of independent tax counsel experienced in such matters to the effect that on or after ________________, ___, as a result of (a) any amendment to, clarification of, or change (including any announced prospective change) in the 4 laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, (b) any Administrative Action or (c) any amendment to, clarification of, or change in the official position or the interpretation of such Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental authority or regulatory body, irrespective of the manner in which such amendment, clarification or change is made known, which amendment, clarification, or change is effective or such pronouncement or decision is announced, in each case, on or after, ________, ____, there is more than an insubstantial risk that (i) the Trust is or will be within 90 days of the date thereof, subject to United States federal income tax with respect to interest accrued or received on the Debentures, (ii) the Trust is, or will be within 90 days of the date thereof, subject to more than a DE MINIMIS amount of taxes, duties or other governmental charges, or (iii) interest payable in cash by the Company to the Trust on the Debentures (other than interest attributable to the Trust Common Securities) is not, or within 90 days of the date thereof will not be, deductible, in whole or in part, by the Company for United States federal income tax purposes; PROVIDED, HOWEVER, that such an opinion shall not be deemed to be a "Dissolution Tax Opinion" if the change in tax law requires the Company for United States federal income tax purposes to defer taking a deduction for any OID that accrues with respect to the Debentures until the interest payment related to such OID is paid by the Company in cash, PROVIDED such change in tax law does not create more than an insubstantial risk that the Company will be prevented from taking a deduction for OID accruing with respect to the Debentures as of a date that is no later than the date the interest payment related to such OID is actually paid by the Company in cash. "DISTRIBUTION" means a distribution to the holders of Trust Securities of the amount of any interest (including Compounded Interest and Additional Interest), premium and/or principal paid on the Debentures. "ex date" (1) when used with respect to any issuance or distribution, means the first date on which such common stock trades regular way on the New York Stock Exchange or, if not listed on the New York Stock Exchange, on any securities exchange where such common stock may be listed or in the relevant market from which the Closing Prices were obtained, without the right to receive such issuance or distribution, and (2) when used with respect to any tender or exchange offer means the first date on which such common stock trades regular way on such securities exchange or in such market after the Expiration Time of such offer. "EXPIRATION TIME" has the meaning specified in Section 7.3(e). "EXTENDED INTEREST PAYMENT PERIOD" has the meaning specified in Section 4.1. "FUNDAMENTAL CHANGE" means the occurrence of any transaction or event or series of transactions or events pursuant to which all or substantially all of the Common Stock is exchanged for, converted into, acquired for or constitutes solely the right to receive cash, securities, property or other assets (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise); PROVIDED, HOWEVER, in the case of any such series of transactions or events, for purposes of adjustment of the Conversion Price, a Fundamental Change shall be deemed to have occurred 5 when substantially all of the Common Stock shall have been exchanged for, converted into or acquired for, or constitute solely the right to receive, such cash, securities, property or other assets, but the adjustment shall be based upon the consideration that the holders of Common Stock received in the transaction or event as a result of which more than 50% of the Common Stock outstanding shall have been exchanged for, converted into or acquired for, or shall constitute solely the right to receive, such cash, securities, property or other assets. "GLOBAL DEBENTURE" has the meaning specified in Section 2.4. "GUARANTEE" means that Preferred Securities Guarantee Agreement dated as of even date hereof between the Company and the Preferred Guarantee Trustee (as defined therein) for the benefit of the holders of Trust Preferred Securities. "INTEREST PAYMENT DATE" has the meaning specified in Section 2.5. "INVESTMENT COMPANY EVENT" means that the Regular Trustees shall have received an opinion of independent counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulations by any legislative body, court, governmental agency or regulatory authority on or after _________________________, _____, there is more than an insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the Investment Company Act of 1940, as amended. "INSTITUTIONAL TRUSTEE" means the Institutional Trustee of the Trust. "JUNIOR SECURITIES" shall mean (i) shares of any stock of any class of the Company and (ii) securities of the Company which are subordinated in right of payment to all Senior Indebtedness that may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Debentures are so subordinated as provided in Article XI. "LIST OF HOLDERS" has the meaning specified in Section 11.6. "MATURITY DATE" means the date on which the Debentures mature and on which the principal shall be due and payable together with all accrued and unpaid interest thereon including Compounded Interest and Additional Interest, if any. "MINISTERIAL ACTION" has the meaning specified in Section 3.1. "NEW DEBENTURES" has the meaning specified in Section 7.5(a). "90-DAY PERIOD" has the meaning specified in Section 3.1. "NON BOOK-ENTRY PREFERRED SECURITIES" has the meaning specified in Section 2.4. "NON-STOCK FUNDAMENTAL CHANGE" means any Fundamental Change other than a Common Stock Fundamental Change. 6 "NO RECOGNITION OPINION" means an opinion of independent tax counsel experienced in such matters (which opinion may rely on published revenue rulings of the Internal Revenue Service) to the effect that the holders of the Trust Securities will not recognize any gain or loss for United States federal income tax purposes as a result of the dissolution of the Trust and the distribution of Debentures. "OID" means original issue discount. "OPTIONAL REDEMPTION PRICE" has the meaning specified in Section 3.2. "PREFERRED SECURITY CERTIFICATE" means a certificate representing a Trust Preferred Security substantially in the form of Exhibit A-1 to the Declaration. "PRINCIPAL AMOUNT OF ONE DEBENTURE" means $___ as of the date of this Supplemental Indenture, as may be adjusted from time to time as set forth in Section 7.5. "PURCHASED SHARES" has the meaning specified in Section 7.3(e). "PURCHASER STOCK PRICE" means, with respect to any Common Stock Fundamental Change, the average of the Closing Prices for one share of the common stock received by holders of Common Stock in such Common Stock Fundamental Change for the 10 Trading Days immediately prior to the record date for the determination of the holders of Common Stock entitled to receive such common stock or, if there is no such record date, the date upon which the holders of Common Stock shall have the right to receive such common stock. "REDEMPTION TAX OPINION" means an opinion of independent tax counsel experienced in such matters that, as a result of a Tax Event, there is more than an insubstantial risk that the Company would be precluded from deducting the interest on the Debentures for United States federal income tax purposes even after the Debentures were distributed to the holders of Trust Securities in liquidation of such holders' interests in the Trust as described in the Declaration. "REFERENCE DATE" has the meaning specified in Section 7.3(c). "REFERENCE MARKET PRICE" initially means $______, and, in the event of any adjustment to the Conversion Price other than as a result of a Fundamental Change or a Spinoff, the amount as adjusted so that the ratio of the Reference Market Price to the Conversion Price after giving effect to any such adjustment of the Conversion Price shall always be the same as the ratio of $_____ to the initial Conversion Price of $_____. "REGULAR RECORD DATE" has the meaning specified in Section 2.5(a). "REGULAR TRUSTEE" means the Regular Trustee of the Trust. "RIGHTS" has the meaning specified in Section 7.9. "RIGHTS AGREEMENT" shall mean that certain Rights Agreement dated as or January 29, 1990 by and between the Company and the Rights Agent (as defined therein). 7 "RIGHTS EXPIRATION DATE" shall mean the "Expiration Date" as defined in the Rights Agreement. "RIGHTS RECORD DATE" has the meaning specified in Section 7.3. "RIGHTS REDEMPTION DATE" shall mean the "Redemption Date" as defined in the Rights Agreement. "SERIES A STOCK" has the meaning specified in Section 7.9(b). "SPECIAL EVENT" means a Tax Event or an Investment Company Event. "SPECIAL EVENT REDEMPTION PRICE" has the meaning specified in Section 3.1. "SPINOFF" has the meaning specified in Section 7.5(a). "SPINOFF COMPANY" has the meaning specified in Section 7.5(a). "SPINOFF COMPANY DEBENTURE" has the meaning specified in Section 7.5(a). "SPINOFF COMPANY STOCK" has the meaning specified in Section 7.5(a). "SPINOFF COMPANY TRUST" has the meaning specified in Section 7.5(c). "SPINOFF DISTRIBUTION DATE" has the meaning specified in Section 7.5(a). "SPINOFF EXCHANGE DATE" has the meaning specified in Section 7.5(c). "SPINOFF FAIR VALUE" shall mean the product of (a) the average of the Closing Prices for one share of Spinoff Company Stock as reported on a "when issued" basis for the 10 Trading Days immediately prior to the Spinoff Distribution Date or in the absence of "when issued" trading, for the 10 Trading Days immediately following the Spinoff Distribution Date, multiplied by (b) the number of shares of Spinoff Company Stock distributed to a holder of one share of Common Stock in the Spinoff; PROVIDED, HOWEVER, in the absence of an active trading market for the Spinoff Company Stock, the fair value of the shares of Spinoff Company Stock distributed to a holder of one share of Common Stock in the Spinoff shall be determined by the Board of Directors in good faith. "SPINOFF RATIO" shall mean a fraction, the numerator of which is the Spinoff Fair Value, and the denominator of which is the Average Stock Price. "SUPPLEMENTAL INDENTURE" has the meaning specified in the first paragraph hereof. "TAX EVENT" means that the Regular Trustees have received a Dissolution Tax Opinion. "TRADING DAY" shall mean a day on which any securities are traded on the national securities exchange or quotation system used to determine the Closing Price. 8 "TRUST" has the meaning specified in the first paragraph hereof. "TRUST COMMON SECURITIES" has the meaning specified in the Recitals. "TRUST PREFERRED SECURITIES" has the meaning specified in the Recitals. "TRUSTEE" has the meaning specified in the Recitals. "TRUST SECURITIES" has the meaning specified in the Recitals. ARTICLE II GENERAL TERMS AND CONDITIONS OF THE DEBENTURES SECTION 2.1. DESIGNATION AND PRINCIPAL AMOUNT. There is hereby authorized a series of Debentures designated the "___% Junior Subordinated Debentures," limited in aggregate principal amount to $__________, which amount shall be as set forth in a Company Order for the authentication and delivery of Debentures pursuant to Section 2.03 of the Base Indenture. SECTION 2.2. MATURITY. The Maturity Date is _____________1, 20__. SECTION 2.3. FORM AND PAYMENT. Except as provided in Section 2.4, the Debentures shall be issued in fully registered certificated form without Coupons, in denominations of the Principal Amount of One Debenture and integral multiples thereof. Principal and interest on the Debentures issued in certificated form will be payable, the transfer of such Debentures will be registrable, and such Debentures will be exchangeable for Debentures bearing identical terms and provisions, at the office or agency of the Trustee; PROVIDED, HOWEVER, that payment of interest may be made at the option of the Company by check mailed to the Holder at such address as shall appear in the Security Register. Notwithstanding the foregoing, so long as the Holder of any Debentures is the Institutional Trustee, the payment of the principal of and interest (including Compounded Interest and Additional Interest, if any) on such Debentures held by the Institutional Trustee will be made at such place and to such account as may be designated by the Institutional Trustee. SECTION 2.4. GLOBAL DEBENTURE. (a) In connection with a Dissolution Event, (i) the Debentures in certificated form may be presented to the Trustee by the Institutional Trustee in exchange for a global Debenture in an aggregate principal amount equal to the aggregate principal amount of all outstanding Debentures (a "Global Debenture"), to be registered in the name of the Clearing Agency, or its nominee, and delivered by the Trustee to the Clearing Agency for crediting to the accounts of its 9 participants pursuant to the instructions of the Regular Trustees. The Company upon any such presentation shall execute a Global Debenture in such aggregate principal amount and deliver the same to the Trustee for authentication and delivery in accordance with the Base Indenture. Payments on the Debentures issued as a Global Debenture will be made to the Clearing Agency; and (ii) any Preferred Security Certificate which represents Trust Preferred Securities other than Trust Preferred Securities held by the Clearing Agency or its nominee ("Non Book-Entry Preferred Securities") will be deemed to represent beneficial interests in Debentures having an aggregate principal amount equal to the aggregate liquidation amount of, with an interest rate identical to the distribution rate of, and accrued and unpaid interest (including Compounded Interest) equal to accumulated and unpaid distribution on the Non Book-Entry Preferred Securities until such Preferred Security Certificates are presented to the Security Registrar for transfer or reissuance at which time such Preferred Security Certificates will be canceled and a Debenture, registered in the name of the Holder of the Preferred Security Certificate or the transferee of the Holder of such Preferred Security Certificate, as the case may be, with an aggregate principal amount equal to the aggregate liquidation amount of the Preferred Security Certificate canceled, will be executed by the Company and delivered to the Trustee for authentication and delivery in accordance with the Base Indenture. On issue of such Debentures, Debentures with an equivalent aggregate principal amount that were presented by the Institutional Trustee to the Trustee will be deemed to have been canceled. (b) A Global Debenture may be transferred, in whole but not in part, only to another nominee of the Clearing Agency, or to a successor Clearing Agency selected or approved by the Company or to a nominee of such successor Clearing Agency. SECTION 2.5. INTEREST. (a) Each Debenture will bear interest at the rate of ____% per annum (the "Coupon Rate") from _____________, _____, or the most recent date on which interest has been paid in full, until the principal thereof becomes due and payable, and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the Coupon Rate, compounded quarterly, payable (subject to the provisions of Article IV) quarterly in arrears on March 1, June 1, September 1 and December 1 of each year (each, an "Interest Payment Date"), commencing on ____________, _____, to the Holder of such Debenture or any Predecessor Debenture, at the close of business on the record date for such Interest Payment Date, which record date (the "Regular Record Date"), (i) in respect of (A) Debentures of which the Institutional Trustee is the only Holder and the related Trust Preferred Securities are in book-entry only form or (B) a Global Debenture, shall be the close of business on the Business Day next preceding that Interest Payment Date; and (ii) in respect of Debentures other than as set forth in (i), the Company may select a Regular Record Date for such interest installment which shall be any date at least one Business Day before an Interest Payment Date. 10 (b) The amount of interest payable for any full quarterly period shall be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed, shall be computed on the basis of 30-day months and, for periods of less than a month, the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the Debentures is not a Business Day, then payment of interest payable on such date shall be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (c) If, at any time while the Institutional Trustee is the Holder of any Debentures, the Trust or the Institutional Trustee shall be required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any such case, the Company shall pay as additional interest ("Additional Interest") on the Debentures held by the Institutional Trustee such additional amounts as shall be required so that the net amounts received and retained by the Trust and the Institutional Trustee after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust and the Institutional Trustee would have received had no such taxes, duties, assessments or other government charges been imposed. ARTICLE III REDEMPTION OF THE DEBENTURES SECTION 3.1. SPECIAL EVENT REDEMPTION. If a Special Event has occurred and is continuing and: (a) the Company has received a Redemption Tax Opinion; or (b) the Regular Trustees shall have been informed by independent tax counsel experienced in such matters that, for substantive reasons, it cannot deliver a No Recognition Opinion to the Trust, then, notwithstanding Section 3.2 but subject to Section 3.3, the Company shall have the right upon not less than 30 days nor more than 60 days notice to the Holders of the Debentures to redeem the Debentures, in whole or in part, for cash within 90 days following the occurrence of such Special Event (the "90-Day Period") at a redemption price equal to 100% of the principal amount to be redeemed (the "Special Event Redemption Price") plus any accrued and unpaid interest (including Compounded and Additional Interest) thereon to but excluding the date of such redemption, PROVIDED that, if at the time there is available to the Company the opportunity to eliminate, which elimination shall be complete within the 90-Day Period, such Special Event by taking some ministerial action (such as filing a form or making an election, or pursuing some other similar reasonable measure) that has no adverse effect on the Company, the Trust or the Holders of the Trust Securities, or does not subject any of them to more than DE MINIMIS regulatory requirements ("Ministerial Action"), the Company shall pursue such Ministerial Action in lieu of 11 redemption, and, PROVIDED, FURTHER, that the Company shall have no right to redeem the Debentures while the Trust is pursuing any Ministerial Action pursuant to its obligations under the Declaration; PROVIDED such Ministerial Action can eliminate such Special Event during the 90-Day Period. The Special Event Redemption Price, plus such accrued and unpaid interest, shall be paid prior to 12:00 noon, New York time, on the date fixed by the Company for such redemption or at such earlier time as the Company determines, PROVIDED that the Company shall deposit with the Trustee an amount sufficient to pay the Special Event Redemption Price plus such accrued and unpaid interest thereon by 10:00 a.m., New York time, on the date such Special Event Redemption Price is to be paid. SECTION 3.2. OPTIONAL REDEMPTION BY COMPANY. Subject to the provisions of Section 3.3 and to the provisions of Article 3 of the Base Indenture, the Company shall have the right to redeem the Debentures, in whole or in part at any time on or after ____________, ______. Any redemption pursuant to this Section 3.2 will be made upon not less than 30 days nor more than 60 days notice to the Holders of the Debentures, at the following prices (expressed as percentages of the principal amount of the Debentures) (the "Optional Redemption Price") together with accrued and unpaid interest, including Compounded and Additional Interest to, but excluding, the redemption date, if redeemed during the 12-month period beginning on ____________1 (other than the first period, which will begin on ___________, _______) of the following years:
Year Redemption Price ---- ---------------- _____ ______% _____ ______% _____ ______% _____ ______% _____ ______% _____ ______%
and 100% if redeemed on or after __________ 1, ______. The Company may not redeem any Debentures unless all accrued and unpaid interest has been paid on all outstanding Debentures for all quarterly interest payment periods terminating on or prior to the last Interest Payment Date before the date of redemption. If Debentures are redeemed on any March 1, June 1, September 1, or December 1, accrued and unpaid interest shall be payable to Holders on the relevant record date. The Company shall issue a press release announcing any redemption pursuant to this Section 3.2. The Optional Redemption Price plus such accrued and unpaid interest thereon shall be paid prior to 12:00 noon, New York time, on the date fixed by the Company for such redemption or at such earlier time as the Company determines, PROVIDED that the Company shall deposit with the Trustee an amount sufficient to pay the Optional Redemption Price, plus accrued and unpaid interest thereon, by 10:00 a.m., New York time, on the date such Optional Redemption Price is to be paid. 12 In addition to the foregoing, the Company shall have the right to redeem the Debentures, in whole or in part, at any time in exchange for Spinoff Company Debentures or New Debentures in accordance with Section 7.5. SECTION 3.3. REDEMPTION OF LESS THAN ALL DEBENTURES. If the Debentures are only partially redeemed, the Debentures will be redeemed PRO RATA or by lot or by any other method utilized by the Trustee. The Company may not redeem any Debentures unless all accrued and unpaid interest has been paid on all of the outstanding Debentures for all quarterly interest periods terminating on or prior to the last Interest Payment Date before the date of redemption. SECTION 3.4. NO SINKING FUND. The Debentures are not entitled to the benefit of any sinking fund. ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD SECTION 4.1. EXTENSION OF INTEREST PAYMENT PERIOD. As long as an Event of Default under Section 6.01(a) of the Base Indenture shall not have occurred and be continuing, the Company shall have the right, at any time and from time to time during the term of the Debentures, to defer payments of interest by extending the interest payment period of such Debentures for a period not exceeding 20 consecutive quarters (an "Extended Interest Payment Period"), during which Extended Interest Payment Period no interest shall be due and payable on the Debentures; PROVIDED that no Extended Interest Payment Period may extend beyond the Maturity Date. To the extent permitted by applicable law, interest, the payment of which has been deferred during an Extended Interest Payment Period, shall bear interest thereon at the Coupon Rate compounded quarterly for each quarter of the Extended Interest Payment Period ("Compounded Interest"). Before the termination of any such Extended Interest Payment Period, the Company may further extend such Extended Interest Payment Period, PROVIDED that such Extended Interest Payment Period together with all such previous and further extensions thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity Date. At the end of the Extended Interest Payment Period, the Company shall pay all interest accrued and unpaid on the Debentures, including any Additional Interest and Compounded Interest (together, "Deferred Interest") that shall be payable to the Holders of Debentures in whose names the Debentures are registered in the Security Register on the first record date after the termination of the Extended Interest Payment Period. Upon the termination of any Extended Interest Payment Period and upon the payment of all Deferred Interest then due, the Company may commence a new Extended Interest Payment Period, subject to the foregoing requirements. No interest shall be due and payable during an Extended Interest Payment Period, except at the end thereof, but the Company may pay at any time all or any portion of the interest accrued during an Extended Interest Payment Period. 13 SECTION 4.2. NOTICE OF EXTENSION. (a) If the Institutional Trustee shall be the only Holder of the Debentures at the time the Company elects an Extended Interest Payment Period, the Company shall give written notice to the Regular Trustees, the Institutional Trustee and the Trustee of its election of such Extended Interest Payment Period one Business Day before the earlier of (i) the date on which Distributions on the Trust Securities are payable for the first quarter of such Extended Interest Payment Period, or (ii) the date the Regular Trustees are required to give notice of the record date or the date such Distributions are payable for the first quarter of such Extended Interest Payment Period to any national stock exchange or other organization on which the Trust Preferred Securities are listed or quoted or to holders of Trust Preferred Securities, but in any event at least one Business Day before such record date or such payment date. (b) If the Institutional Trustee shall not be the only Holder of the Debentures at the time the Company elects an Extended Interest Payment Period, the Company shall give the Holders of Debentures written notice of its election of such Extended Interest Payment Period at least 10 Business Days before the earlier of (i) the Interest Payment Date for the first quarter of such Extended Interest Payment Period, or (ii) the date the Company is required to give notice of the record date or the date of such interest payment for the first quarter of such Extended Interest Payment Period to any national stock exchange or other organization on which the Debentures are listed or quoted or to Holders of Debentures. (c) The quarter in which any notice is given pursuant to subsections (a) or (b) of this Section 4.2 shall be, and shall be counted as, one of the 20 quarters permitted in the maximum Extended Interest Payment Period permitted under Section 4.1. SECTION 4.3. LIMITATION OF TRANSACTIONS. If the Company shall exercise its right to defer payment of interest as provided in Section 4.1, then during such Extended Interest Payment Period (a) the Company shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock (other than (i) purchases or acquisitions of shares of capital stock in connection with any employee benefit plan or program, director plan or program, dividend reinvestment, stock repurchase, or other similar plans available to stockholders of the Company, or any option, warrant, right, or exercisable, exchangeable, or convertible security outstanding as of __________ __, _____, (ii) as a result of a reclassification of the Company's capital stock pursuant to the exchange or conversion provisions of the Company's capital stock or the exchange or conversion of one class or series of the Company's capital stock for another class or series of its capital stock or the capital securities of a subsidiary (including a trust such as the Trust), or (iii) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or security being converted or exchanged), and (b) the Company shall not make any payment of interest, principal or premium, if any, on, or repay, repurchase or redeem or make any guarantee payment (other than pursuant to the Guarantee) with respect to, any debt securities issued by the Company that rank PARI PASSU with or junior to the Debentures. 14 ARTICLE V EXPENSES SECTION 5.1. PAYMENT OF EXPENSES. In connection with the issuance of the Debentures to the Institutional Trustee in exchange for the Trust Securities and in connection with the issuance of the Trust Securities by the Trust to the Company, the Company, in its capacity as borrower with respect to the Debentures, shall: (a) pay all costs and expenses relating to the offering, sale and issuance of the Debentures and the Trust Securities, including fees payable pursuant to the Underwriting Agreements by and among the Company, the Trust and the Underwriters named in Schedule I thereto, and compensation of the Trustee under the Base Indenture in accordance with the provisions of Section 7.06 of the Base Indenture; (b) pay all costs and expenses of the Trust (including, but not limited to, costs and expenses relating to the organization, maintenance and dissolution of the Trust, the fees and expenses of the Institutional Trustee and the Delaware Trustee, the costs and expenses relating to the operation of the Trust, including, without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, paying agent(s), registrar(s), transfer agent(s), duplicating, travel and telephone and other telecommunications expenses and costs and expenses incurred in connection with the acquisition, financing, and disposition of Trust assets); (c) pay all costs and expenses related to the enforcement by the Institutional Trustee of its rights as a Holder of Debentures; (d) be primarily liable for any indemnification obligations arising with respect to the Declaration; and (e) pay any and all taxes (other than United States withholding taxes attributable to the Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the Trust. SECTION 5.2. PAYMENT UPON RESIGNATION OR REMOVAL. Upon termination of this Supplemental Indenture or the Base Indenture or the removal or resignation of the Trustee pursuant to Section 7.10 of the Base Indenture, the Company shall pay to the Trustee all amounts accrued to the date of such termination, removal or resignation. ARTICLE VI COVENANTS SECTION 6.1. COVENANTS AS TO THE TRUST. If the Institutional Trustee is the Holder of the Debentures, the Company shall (a) maintain 100% direct or indirect ownership of the Trust Common Securities; PROVIDED, HOWEVER, that any 15 permitted successor of the Company under the Base Indenture may succeed to the Company's ownership of the Common Securities, (b) use its reasonable efforts to cause the Trust (i) to remain a statutory business trust, except in connection with a distribution of Debentures to the holders of Trust Securities, the redemption of all of the Trust Securities, or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, and (ii) to continue to be classified as a grantor trust for United States federal income tax purposes, and (c) use its reasonable efforts to cause each holder of Trust Securities to be treated as owning an undivided beneficial interest in the Debentures. SECTION 6.2. LISTING OR QUOTATION OF DEBENTURES. If the Debentures are to be distributed to the holders of Trust Securities upon a Dissolution Event, the Company shall use its reasonable efforts to arrange to list, or seek approval for quotation of, such Debentures on any stock exchange or other organization on which the Trust Preferred Securities are then listed or quoted, if any. [ARTICLE VII CONVERSION OF DEBENTURES SECTION 7.1. CONVERSION RIGHTS. Subject to and upon compliance with the provisions of this Article VII, the Debentures are convertible, at the option of the Holder thereof, at any time beginning _________ ___, _____ and prior to the close of business (New York time) on __________ 1, 20__, (or, in the case of Debentures called for redemption, prior to the close of business (New York time) on the Business Day prior to the corresponding redemption date) into that number of fully paid and nonassessable shares of Common Stock obtained by dividing the principal amount of the Debentures to be converted by the Conversion Price. For example, the initial Conversion Price is $________ and thus each Debenture is initially convertible into ______________ shares of Common Stock (calculated by dividing the Principal Amount of One Debenture as of the date of this Supplemental Indenture by the initial Conversion Price). The Conversion Price is subject to adjustment as described in this Article VII. All calculations under this Article VII shall be made to the nearest cent or to the nearest 1/l00th of a share, as the case may be. SECTION 7.2. CONVERSION PROCEDURES. (a) In order to convert all or a portion of the Debentures, the Holder thereof shall (i) sign and deliver to the Conversion Agent an irrevocable notice of election to convert ("Conversion Notice") setting forth the principal amount of Debentures to be converted (which shall equal the Principal Amount of One Debenture or integral multiples thereof), together with the name or names, if other than the Holder, in which the shares of Common Stock should be issued upon conversion, (ii) if such Debentures are definitive Debentures, surrender to the Conversion Agent the Debentures to be converted, with such endorsements or transfer documents as requested by the Conversion Agent, and (iii) pay any transfer or similar tax, if required. In addition, a holder of Trust Securities may exercise its right under the Declaration to convert such Trust Securities into Common Stock by delivering to the Conversion Agent an irrevocable 16 conversion request setting forth the information called for by the preceding sentence and directing the Conversion Agent (i) to exchange such Trust Securities for a portion of the Debentures held by the Trust (at an exchange rate of $1 of principal amount of Debentures for each $1 liquidation amount of Trust Securities) and (ii) to immediately convert such Debentures, on behalf of such holder, into Common Stock pursuant to this Article VII and, if such Trust Securities are in definitive form, surrendering such Preferred Security Certificates or Common Security Certificates, as the case may be, duly endorsed or assigned to the Trust or in blank. So long as any Trust Preferred Securities are outstanding, the Trust shall not convert any Debentures except pursuant to a conversion request delivered to the Conversion Agent by a holder of Trust Securities. Accrued but unpaid interest will not be paid in cash on Debentures that are converted, nor will such accrued interest be converted into additional shares of Common Stock upon conversion of the Debentures, but such accrued interest shall be deemed to be paid in full and then returned by the Holder to the Company as partial consideration for Common Stock received on conversion, and the Company shall not make nor be required to make any other payment, adjustment or allowance with respect to accrued but unpaid interest on the Debentures being converted, which shall be deemed to be paid in full. If any Debentures are converted into shares of Common Stock during the period from (but excluding) a record date to (and including) the next succeeding interest payment date, then either (i) if such Debentures have been called for redemption on a redemption date that occurs during such period, or are to be redeemed in connection with a Special Event which occurs during such period, the Company shall not be required to pay interest on such Interest Payment Date in respect of such Debentures or (ii) if otherwise converted during such period, such Debentures shall be accompanied by funds equal to the interest payable on such succeeding Interest Payment Date on the principal amount so converted. (b) Each conversion shall be deemed to have been effected immediately prior to the close of business on the day on which the Conversion Notice was received (the "Conversion Date") by the Conversion Agent from the Holder or from a holder of the Trust Securities effecting a conversion thereof pursuant to its conversion rights under the Declaration, as the case may be. The Person or Persons entitled to receive Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock as of the Conversion Date. As promptly as practicable on or after the Conversion Date, the Company shall issue and deliver at the office of the Conversion Agent, unless otherwise directed by the Holder in the Conversion Notice, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion, together with the cash payment, if any, in lieu of any fraction of any share to the Person or Persons entitled to receive the same. The Conversion Agent shall deliver such certificate or certificates to such Person or Persons. (c) The Company's delivery upon conversion of the fixed number of shares of Common Stock into which the Debentures are convertible (together with the cash payment, if any, in lieu of fractional shares) shall be deemed to satisfy the Company's obligation to pay the principal amount at the Maturity Date of the portion of Debentures so converted and any unpaid 17 interest (including Compounded Interest) accrued on such Debentures at the time of such conversion. (d) No fractional shares of Common Stock will be issued as a result of conversion, but in lieu thereof, the Company shall pay in cash an amount equal to the same fraction of the Closing Price of such fractional interest on the Conversion Date, or, if such day is not a Trading Day, on the next Trading Day. The Company shall pay such cash amount, if any, to the Conversion Agent and the Conversion Agent in turn will pay such cash amount, if any, to the Holder of the Debentures or the holder of the Trust Securities so converted, as appropriate. (e) In the event of the conversion of any Debenture in part only, a new Debenture or Debentures for the unconverted portion thereof will be issued in the name of the Holder thereof upon the cancellation thereof in accordance with Section 2.08 of the Base Indenture. (f) In effecting the conversion transactions described in this Section 7.2, the Conversion Agent is acting as agent of the holders of Trust Securities (in the exchange of Trust Securities for Debentures) and as agent of the Holders of Debentures (in the conversion of Debentures into Common Stock), as the case may be. The Conversion Agent is hereby authorized (i) to exchange Debentures held by the Trust from time to time for Trust Securities in connection with the conversion of such Trust Securities in accordance with this Article VII and (ii) to convert all or a portion of the Debentures into Common Stock and thereupon to deliver such shares of Common Stock in accordance with the provisions of this Article VII and to deliver to the Trust a new Debenture or Debentures for any resulting unconverted principal amount. SECTION 7.3. CERTAIN CONVERSION PRICE ADJUSTMENTS. The Conversion Price shall be adjusted from time to time as follows: (a) In case the Company shall, while any of the Debentures are outstanding, (i) pay a dividend or make a distribution with respect to Common Stock in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, (iii) combine outstanding shares of Common Stock into a smaller number of shares or (iv) issue by reclassification of shares of Common Stock any shares of capital stock of the Company, the conversion privilege and the Conversion Price for the Debentures shall be adjusted so that the Holder of any Debenture thereafter surrendered for conversion shall be entitled to receive the number of shares of capital stock of the Company which such Holder would have owned immediately following such action had such Debenture been converted immediately prior thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or other distribution and shall become effective immediately after the effective date in case of a subdivision, combination or reclassification (or immediately after the record date if a record date shall have been established for such event). If, as a result of an adjustment made pursuant to this subsection (a), the Holder of any Debenture thereafter surrendered for conversion shall become entitled to receive shares of two or more classes or series of capital stock of the Company, the Board of Directors (whose determination shall be conclusive and shall be described in a Board Resolution filed with the Trustee) shall determine in good faith the allocation of the adjusted Conversion Price for the Debentures between or among shares of such classes or series of capital stock. 18 (b) In case the Company shall, while any of the Debentures are outstanding, issue rights or warrants to all holders of Common Stock entitling them (for a period expiring within 45 days after the record date for the determination of stockholders entitled to receive such rights or warrants (the "Rights Record Date")) to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of Common Stock on the Rights Record Date, the Conversion Price for the Debentures shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such current market price, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase. Such adjustment shall become effective immediately after the Rights Record Date. To the extent that shares of Common Stock are not so delivered after the expiration of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. For the purposes of this subsection, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. The Company shall not issue any rights or warrants in respect of shares of Common Stock held in the treasury of the Company. In case any rights or warrants referred to in this subsection in respect of which an adjustment shall have been made shall expire unexercised within 45 days after the same shall have been distributed or issued by the Company, the Conversion Price shall be readjusted at the time of such expiration to the Conversion Price that would have been in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants. (c) Subject to the last sentence of this subsection (c), in case the Company shall, by dividend or otherwise, distribute to all holders of Common Stock evidences of its indebtedness, shares of any class or series of capital stock (other than Common Stock), cash or assets or rights or warrants to subscribe for or purchase any of its securities (excluding any rights or warrants referred to in subsection (b), any dividend or distribution paid exclusively in cash and any dividend or distribution referred to in subsection (a) of this Section 7.3), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subsection (c) by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the date fixed for the payment of such distribution (the "Reference Date") less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors), on the Reference Date, of the portion of the evidences of indebtedness, shares of capital stock, cash and assets so distributed or of such subscription rights or warrants applicable to one share of Common Stock and the denominator shall be such Current Market Price per share of the Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the Reference Date; PROVIDED, HOWEVER, that in the event the numerator shall be less than one, in lieu of the foregoing adjustment, adequate provision shall be made so that each 19 Holder of Debentures shall have the right to receive upon conversion the amount of such distribution such Holder would have received had such Holder converted each Debenture immediately prior to the Reference Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not occurred. If the Board of Directors determines the fair market value of any distribution for purposes of this subsection (c) by reference to the actual or when issued trading market for any securities comprising such distribution, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price per share of Common Stock. For purposes of this subsection (c), any dividend or distribution that includes shares of Common Stock or rights or warrants to subscribe for or purchase shares of Common Stock shall be deemed instead to be (i) a dividend or distribution of the evidences of indebtedness, shares of capital stock, cash or assets other than such shares of Common Stock or such rights or warrants (making any Conversion Price reduction required by this subsection (c) immediately followed by (ii) a dividend or distribution of such shares of Common Stock or such rights or warrants (making any further Conversion Price reduction required by subsection (a) or (b)), except (A) the Reference Date of such dividend or distribution as defined in this subsection (c) shall be substituted as (1) "the record date in the case of a dividend or other distribution," and (2) "the record date for the determination of stockholders entitled to receive such rights or warrants" and (3) "the date fixed for such determination" within the meaning of subsections (a) and (b) and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed outstanding for purposes of computing any adjustment of the Conversion Price in subsection (a). (d) In case the Company shall pay or make a dividend or other distribution on the Common Stock exclusively in cash (excluding any quarterly cash dividend on Common Stock to the extent that the aggregate cash dividend per share of Common Stock in any quarter does not exceed the greater of (i) the amount per share of Common Stock of the next preceding quarterly dividend on Common Stock to the extent such preceding quarterly dividend did not require an adjustment of the Conversion Price pursuant to this subsection (d) (as adjusted to reflect subdivisions or combinations of Common Stock), and (ii) ____ % of the Current Market Price per share, and excluding any dividend or distribution in connection with the liquidation, dissolution or winding-up of the Company), the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subsection (d) by a fraction of which the numerator shall be the Current Market Price per share of Common Stock on the date fixed for the payment of such distribution less the amount of cash so distributed (and not excluded as provided above) applicable to one share of Common Stock and the denominator shall be such Current Market Price per share of the Common Stock, such reduction to become effective immediately prior to the opening of business on the day following the date fixed for the payment of such distribution; PROVIDED, HOWEVER, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price per share of Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of Debentures shall have the right to receive upon conversion the amount of cash such Holder would have received had such Holder converted each Debenture immediately prior to the record date for the distribution of the cash. If an 20 adjustment is required to be made pursuant to this subsection (d) as a result of a distribution that is a quarterly dividend, such adjustment shall be based upon the amount by which such distribution exceeds the amount of the quarterly cash dividend permitted to be excluded as provided above. If an adjustment is required to be made pursuant to this subsection (d) as a result of a distribution that is not a quarterly dividend, such adjustment shall be based upon the full amount of the distribution. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such record date had not been fixed. (e) In case a tender or exchange offer (other than an odd-lot offer) made by the Company or any Subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer shall involve the payment by the Company or such Subsidiary of consideration per share of Common Stock having a fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds the Closing Price of the Common Stock on the Trading Day next succeeding the Expiration Time, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subsection (e) by a fraction (which shall not be greater than one) of which the numerator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time multiplied by the Closing Price of Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (i) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (ii) the product of the number of shares of the Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the Closing Price of Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become retroactively effective immediately prior to the opening of business on the day following the Expiration Time. (f) In case a tender or exchange offer made by a Person other than the Company or any Subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer shall involve the payment by a Person other than the Company or any Subsidiary of the Company of consideration per share of Common Stock having a fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a Board Resolution) at the applicable Expiration Time that exceeds the Closing Price of the Common Stock on the Trading Day next succeeding the applicable Expiration Time in which as of the closing date of the offer the Board of Directors of the Company is not recommending rejection of the offer, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the effectiveness of the Conversion Price reduction contemplated by this subsection (f) by a fraction (which shall not be greater than one) of which the numerator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) 21 at the Expiration Time multiplied by the Closing Price of the Common Stock on the Trading Day next succeeding the Expiration Time and the denominator shall be the sum of (i) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the Purchased Shares and (ii) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the Closing Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such reduction to become retroactively effective immediately prior to the opening of business on the day following the Expiration Time; PROVIDED, HOWEVER, that the reduction of the Conversion Price contemplated by this subsection (f) will only be made if the tender offer or exchange offer is made for an amount that increases that Person's ownership of Common Stock to more than 25% of the total shares of Common Stock outstanding and PROVIDED, FURTHER, that the reduction of the Conversion Price contemplated by this subsection (f) will not be made if as of the close of the offer, the offering documents with respect to such offer disclose a plan or an intention to cause the Company to engage in a consolidation or merger of the Company or a sale of all or substantially all of the assets of the Company. (g) The Company may make such reductions in the Conversion Price, in addition to those required by subsections (a) through (f), as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes. The Company, at its option, may from time to time reduce the Conversion Price by any amount for any period of time if the period is at least 20 days, the reduction is irrevocable during the period, and the Board of Directors shall have made a determination in good faith that such reduction would be in the best interest of the Company, which determination shall be conclusive. Whenever the Conversion Price is reduced pursuant to the preceding sentence, the Company shall mail to Holders of record of the Debentures a notice of the reduction at least 15 days prior to the date the reduced Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the period it will be in effect. (h) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1 % in the Conversion Price; PROVIDED, HOWEVER, that any adjustments which by reason of this subsection (h) are not required to be made shall be carried forward and taken into account in determining whether any subsequent adjustment shall be required. (i) If any action would require adjustment of the Conversion Price pursuant to more than one of the provisions described above, only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value to the Holder of Debentures. SECTION 7.4. MERGER, CONSOLIDATION, OR SALE OF ASSETS. (a) In the event that the Company shall be a party to (i) any recapitalization or reclassification of the Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination of the 22 Common Stock), (ii) any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger that does not result in a reclassification, conversion, exchange or cancellation of outstanding shares of Common Stock), (iii) any sale or transfer of all or substantially all of the assets of the Company, (iv) any compulsory share exchange, or (v) any other transaction, in any such case pursuant to which shares of Common Stock shall be converted into the right to receive other securities, cash or other property, then lawful provision shall be made as part of the terms of such transaction whereby the Holder of each Debenture then outstanding shall have the right thereafter to convert such Debenture only into: (A) in the case of any such transaction that does not constitute a Common Stock Fundamental Change and subject to funds being legally available for such purpose under applicable law at the time of such conversion, the kind and amount of the securities, cash and/or other property that would have been receivable upon such recapitalization, reclassification, consolidation, merger, sale, transfer, or share exchange by a holder of the number of shares of Common Stock issuable upon conversion of such Debenture immediately prior to such recapitalization, reclassification, consolidation, merger, sale, transfer or share exchange, after giving effect, in the case of any such transaction that is a Non-Stock Fundamental Change, to any adjustment in the Conversion Price in accordance with clause (i) of subsection (c) of this Section 7.4; and (B) in the case of any such transaction that constitutes a Common Stock Fundamental Change, common stock of the kind received by holders of Common Stock as a result of such Common Stock Fundamental Change in an amount of shares of common stock of such kind equal to the Principal Amount of One Debenture divided by the Conversion Price as adjusted in accordance with clause (ii) of subsection (c) of this Section 7.4. (b) The company or the Person (i) formed by such consolidation, (ii) resulting from such merger, (iii) that acquired such assets or the shares of the Common Stock or (iv) that is the issuer of the securities into which the Common Stock was converted into the right to receive, as the case may be, shall make provision in its certificate or articles of incorporation or other constituent document to establish the rights set forth in this Section 7.4. Such certificate or articles of incorporation or other constituent document shall provide for adjustments that, for events subsequent to the effective date of such certificate or articles of incorporation or other constituent document (or the amendment thereto), shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article VII. The above provisions shall similarly apply to successive transactions of the foregoing type. (c) Notwithstanding any other provision of this Section 7.4 to the contrary, if any Fundamental Change occurs, then the Conversion Price in effect will be adjusted immediately after such Fundamental Change as follows: (i) in the case of a Non-Stock Fundamental Change, the Conversion Price immediately following such Non-Stock Fundamental Change shall be the lower of (A) the Conversion Price in effect immediately prior to such Non-Stock Fundamental Change, but after giving effect to any other prior adjustments effected pursuant to Section 7.3, and 23 (B) the product of (1) the greater of the Applicable Price or the then applicable Reference Market Price and (2) a fraction, the numerator of which shall be the Principal Amount of One Debenture and the denominator of which shall be (x) the amount of the Optional Redemption Price set forth in Section 3.2 for the Debentures if the redemption date were the date of such Non-Stock Fundamental Change (or, for the period from the date of this Supplemental Indenture through _________, ____, the twelve-month periods commencing on ___________ 1, _____ and __________ 1, _____ and the period from __________ 1, ____ to __________ 1, ______, the product of ______, _______, _____ and _______, respectively, multiplied by the Principal Amount of One Debenture) plus (y) any then-accrued and unpaid interest on the Principal Amount of One Debenture to but excluding the date of such Non-Stock Fundamental Change; and (ii) in the case of a Common Stock Fundamental Change, the Conversion Price immediately following such Common Stock Fundamental Change shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change, but after giving effect to any other prior adjustments effected pursuant to Section 7.3, multiplied by a fraction, the numerator of which is the Purchaser Stock Price and the denominator of which is the Applicable Price; PROVIDED, HOWEVER, that in the event of a Common Stock Fundamental Change in which (A) 100% of the value of the consideration received by a holder of Common Stock is common stock of the successor, acquiror or other third party (and cash, if any, paid with respect to any fractional interests in such common stock resulting from such Common Stock Fundamental Change) and (B) all of the Common Stock shall have been exchanged for, converted into or acquired for, common stock of the successor, acquiror or other third party (and cash, if any, paid with respect to any fractional interests in such common stock resulting from such Common Stock Fundamental Change), the Conversion Price immediately following such Common Stock Fundamental Change shall be the Conversion Price in effect immediately prior to such Common Stock Fundamental Change divided by the number of shares of common stock of the successor, acquiror or other third party received by a holder of one share of Common Stock as a result of such Common Stock Fundamental Change. SECTION 7.5. SPINOFF. (a) In the event that the Company shall distribute, by dividend or otherwise (the date of which is hereinafter referred to as the "Spinoff Distribution Date") to all holders of the Common Stock shares of capital stock ("Spinoff Company Stock") of any subsidiary of the Company or any other corporation controlled by the Company and formed for the purpose of facilitating the transaction described in this paragraph (the "Spinoff Company") (such transaction, a "Spinoff"), then at the option of the Company, subject to Section 7.5(b), the Company shall: (i) exchange all, but not less than all, of the Debentures for new Debentures of the Spinoff Company ("Spinoff Company Debentures") having the same Principal Amount of One Debenture, interest rate, accrued and unpaid interest, redemption provisions, and conversion provisions of the Debentures and other terms substantially similar to those of the Debentures except that (A) upon conversion the Spinoff Company Debentures shall convert into Spinoff Company Stock, (B) the conversion price applicable to the Spinoff 24 Company Debentures immediately following such exchange shall be equal to the product of the Conversion Price in effect immediately prior to such Spinoff and the Spinoff Ratio, and (C) the reference market price with respect to such Spinoff Company Debentures shall be equal to the Reference Market Price in effect immediately prior to such Spinoff multiplied by the Spinoff Ratio; or (ii) exchange all, but not less than all, of the Debentures for: (A) Spinoff Company Debentures having the same interest rate, redemption provisions, and conversion provisions of the Debentures and other terms substantially similar to those of the Debentures except that (1) upon conversion the Spinoff Company Debentures shall convert into Spinoff Company Stock, (2) the principal amount of each Spinoff Company Debenture shall be equal to the product of the Principal Amount of One Debenture immediately prior to such Spinoff multiplied by the Spinoff Ratio, (3) the conversion price applicable to the Spinoff Company Debentures immediately following such exchange shall be equal to the product of the Conversion Price in effect immediately prior to such Spinoff and the Spinoff Ratio, (4) the reference market price with respect to such Spinoff Company Debentures shall be equal to the product of the Reference Market Price in effect immediately prior to such Spinoff and the Spinoff Ratio, and (5) the accrued and unpaid interest on such Spinoff Company Debentures immediately following such exchange shall be equal to the amount of the accrued and unpaid interest, if any, on the Debentures through such date of exchange multiplied by the Spinoff Ratio; and (B) new convertible debentures of the Company (the "New Debentures") having the same interest rate; redemption provisions, and conversion provisions of the Debentures and other terms substantially similar to those of the Debentures except that (1) the principal amount of each New Debenture shall be equal to the product of (x) the Principal Amount of One Debenture immediately prior to such Spinoff and (y) one minus the Spinoff Ratio, (2) the conversion price applicable to the New Debentures immediately following such exchange shall be equal to the product of (x) the Conversion Price in effect immediately prior to such Spinoff and (y) one minus the Spinoff Ratio, (3) the reference market price with respect to such New Debentures shall be equal to the product of (x) the Reference Market Price in effect immediately prior to such Spinoff and (y) one minus the Spinoff Ratio, and (4) the accrued and unpaid interest on such New Debentures immediately following such exchange shall be equal to the product of (x) the amount the accrued and unpaid interest, if any, on the Debentures through such date of exchange and (y) one minus the Spinoff Ratio; or (iii) with respect to all, but not less than all, of the Debentures: (A) distribute to the Holders thereof Spinoff Company Debentures having the same interest rate, redemption provisions, and conversion provisions of the Debentures and other terms substantially similar to those of the Debentures except that (1) such Spinoff Company Debentures shall be convertible into Spinoff Company Stock instead of Common Stock, (2) the principal amount of each Spinoff Company Debenture shall be equal to the product of the Principal Amount of One Debenture immediately prior to such Spinoff and the Spinoff Ratio, (3) the conversion price applicable to the Spinoff Company Debentures immediately following such distribution shall be equal to the product of the Conversion Price in effect immediately prior 25 to such Spinoff and the Spinoff Ratio, and (4) the reference market price with respect to such Spinoff Company Debentures shall be equal to the product of the Reference Market Price in effect immediately prior to such Spinoff and the Spinoff Ratio, and (5) the accrued and unpaid interest on such Spinoff Company Debentures immediately following such distribution shall be equal to the amount the accrued and unpaid interest, if any, on the Debentures through such date of exchange multiplied by the Spinoff Ratio; and (B) adjust the terms of the Debentures such that (1) the Principal Amount of One Debenture shall be equal to the product of (x) the Principal Amount of One Debenture immediately prior to such Spinoff and (y) one minus the Spinoff Ratio, (2) the Conversion Price shall be equal to the product of (x) the Conversion Price in effect immediately prior to such Spinoff and (y) one minus the Spinoff Ratio, (3) the Reference Market Price shall be equal to (x) the Reference Market Price in effect immediately prior to such Spinoff multiplied by (y) one minus the Spinoff Ratio, and (4) the accrued and unpaid interest thereon shall be equal to (x) the amount the accrued and unpaid interest, if any, through such date of adjustment multiplied by (y) one minus the Spinoff Ratio; or (iv) adjust the Conversion Price by multiplying the Conversion Price prior to the Spinoff by a fraction, the numerator of which is the Average Stock Price less the Spinoff Fair Value, and the denominator of which is such Average Stock Price; (b) The options of the Company in the event of a Spinoff as set forth in subsection (a) of this Section 7.5, shall be subject to the following provisions: (i) The Company shall have the option described in subsection (a)(i) of this Section 7.5 only if the Spinoff Company will, as determined in good faith by the Board of Directors prior to the Spinoff Distribution Date, have consolidated net assets in an amount greater than 40% of the consolidated net assets of the Company as of the day immediately prior to the Spinoff Distribution Date; (ii) the Company shall have the options described in subsections (a)(ii) and (a)(iii) of this Section 7.5 only if the Spinoff Company will, as determined in good faith by the Board of Directors prior to the Spinoff Distribution Date, have consolidated net assets in an amount greater than 20% of the consolidated net assets of the Company as of the day immediately prior to the Spinoff Distribution Date; and (iii) the Company shall have the options described in subsections (a)(i), (a)(ii) and (a)(iii) of this Section 7.5 only if (A) the Spinoff Distribution Date is on or prior to September 1, 20___ and (B) the Company and the Regular Trustees shall have received an opinion of independent tax counsel experienced in such matters to the effect that the holders of the Trust Preferred Securities will not be subject, at the time of such transaction or subsequently thereafter, to more than a DE MINIMIS amount of taxes, duties or other governmental charges in connection with the exchange or distribution and adjustment described therein. 26 (c) In the event the Company shall choose (subject to subsection (b) of this Section 7.5) to effect an exchange described in subsections (a)(i), (a)(ii) or (a)(iii) of this Section 7.5: (i) no less than 20 Business Days prior to the date on which an exchange of the Debentures or a distribution and adjustment as contemplated by subsection (a)(iii) above has been completed (the "Spinoff Exchange Date"), the Company must provide notice to the Holders of the Debentures of the Spinoff Exchange Date, reasonable detail concerning relevant adjustments to interest rate, redemption provisions and conversion provisions, and the kind and amount of the securities into which such Debentures will be exchanged as a result of the Spinoff; (ii) the Company shall make provisions, as part of the Spinoff, to establish the right of the holders of the Debentures to the securities to be issued in such exchange or a distribution and adjustment as contemplated by subsection (a)(iii), including, but not limited to, causing the Spinoff Company to create a trust (the "Spinoff Company Trust") similar to the Trust for the purpose of issuing the Spinoff Company Trust Preferred Securities; (iii) following the Spinoff Exchange Date, except in the case of the distribution and adjustment described in subsection (a)(iii) of this Section 7.5, all rights of Holders of Debentures (including, but not limited to, the right to accrue interest) shall cease, and the Debentures will no longer be deemed to be outstanding and will only represent the right to receive the securities to be issued to the Holders of Debentures in exchange therefor pursuant to the Spinoff; (iv) following the Spinoff Exchange Date, the Holders of the Debentures shall be considered the holders of record of any Spinoff Company Debentures and New Debentures (or in the case of subsection (a)(iii) of this Section 7.5, the Debentures) for the purposes of the governing instruments with respect to such securities, including, but not limited to, any indenture, declaration or certificate of designations and the Base Indenture, this Supplemental Indenture, including for the purposes of giving of notice or voting thereunder; and (v) each Holder of Debentures, by such Holder's acceptance thereof, agrees to such exchange (or distribution and adjustment) and the effects thereof as set forth in this Section 7.5(c). (d) For the purposes of this Section 7.5, the determination of whether after the Spinoff, the Spinoff Company Debentures or the New Debentures have terms substantially similar to those of the Debentures prior to the Spinoff shall be determined in good faith by the Board of Directors (or its successor). (e) In the event of a Spinoff, the provisions set forth in this Section 7.5 shall exclusively govern such transaction, and no other adjustment or change shall be made with respect to the Conversion Price or the securities to be received by a Holder of Debentures upon 27 conversion due solely to such Spinoff; PROVIDED, HOWEVER, that notice of a conversion price adjustment pursuant to subsection (a)(iv) of this Section 7.5 shall be given in accordance with Section 7.6, and notice of a Spinoff shall be given in accordance with Section 7.7. The implementation of any of the provisions set forth in this Section 7.5 shall not require the approval of Holders of Debentures. SECTION 7.6. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the Conversion Price or other conversion provisions of the Debentures are adjusted as provided in this Article VII (other than pursuant to subsections (a)(i), (a)(ii) or a(iii) of Section 7.5): (a) the Company shall compute the adjusted Conversion Price and shall prepare a certificate signed by the Chief Financial Officer or the Treasurer of the Company setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based, and such certificate shall forthwith be filed with the Trustee and the transfer agent for the Trust Preferred Securities and the Debentures; and (b) a notice stating the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall as soon as practicable be mailed by the Company to all record holders of Trust Preferred Securities and Holders of the Debentures at their last addresses as they appear upon the securities transfer books of the Company and the Trust. SECTION 7.7. PRIOR NOTICE OF CERTAIN EVENTS. In case: (a) the Company shall (i) declare any dividend (or any other distribution) on its Common Stock, other than (A) a dividend payable in shares of Common Stock or (B) a dividend payable in cash that would not require an adjustment pursuant to Section 7.3(c) or (d) or (ii) authorize a tender or exchange offer that would require an adjustment pursuant to Section 7.3(e); (b) the Company shall authorize the granting to all holders of Common Stock of rights or warrants to subscribe for or purchase any shares of stock of any class or series or of any other rights or warrants; (c) of any reclassification of Common Stock (other than a subdivision or combination of the outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company shall be required, or of the sale or transfer of all or substantially all of the assets of the Company or of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or other property; (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or 28 (e) any Spinoff; then the Company shall (i) if any Trust Preferred Securities are outstanding, cause to be filed with the transfer agent for the Trust Preferred Securities, and shall cause to be mailed to the holders of record of the Trust Preferred Securities, at their last addresses as they shall appear upon the securities transfer books of the Trust or (ii) shall cause to be mailed to all Holders at their last addresses as they shall appear in the Security Register, at least 15 days prior to the applicable record or effective date hereinafter specified, a notice stating (A) the date on which a record (if any) is to be taken for the purpose of such dividend, distribution, rights or warrants or distribution of Spinoff Company Stock, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, rights or warrants or distribution of Spinoff Company Stock are to be determined or (B) the date on which such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding up (but no failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice). SECTION 7.8. CERTAIN PLANS, RIGHTS OR SECURITIES. Notwithstanding the foregoing provisions, no adjustment of the Conversion Price shall be made upon (a) the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock under any such plan, (b) the issuance of any shares of Common Stock, or options or rights to purchase shares of Common Stock pursuant to any present or future employee benefit plan or program, or present or future director plan or program of the Company or (c) the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of __________, _____. There shall also be no adjustment of the Conversion Price in case of the issuance of any stock (or securities convertible into or exchangeable for stock) of the Company except as specifically described in this Article VII. SECTION 7.9. PREFERRED STOCK PURCHASE RIGHTS. (a) So long as Rights of a kind similar to those declared and distributed by the Board of Directors in January 1990 pursuant to the Rights Agreement, as the same may hereafter be amended or reissued ("Rights"), are attached to the outstanding shares of Common Stock, each share of Common Stock issued upon conversion of the Debentures prior to the earliest of any Distribution Date, the date of redemption of the Rights or the date of expiration of the Rights shall be issued with Rights in a number equal to the number of Rights then attached to each such outstanding share of Common Stock. (b) For the purposes of Section 7.3(b), upon the earlier to occur of (i) the eleventh Business Day (as such term is defined in the Rights Agreement) following a 15% Ownership Date 29 and (ii) a Section 13(a) Event, then an issuance of rights to purchase shares of Common Stock during a period not exceeding 45 days from the date of such dividend or other distribution shall be deemed to have occurred, unless a Rights Redemption Date or a Rights Expiration Date has occurred prior to such eleventh Business Day (as defined in the Rights Agreement) or such Section 13(a) Event, as the case may be, or unless the Company has taken action pursuant to Section 7(e) of the Rights Agreement to substitute other consideration for all or any portion of the Series A Junior Participating Cumulative Preferred Stock ("Series A Stock") otherwise issuable upon exercise of a Right. For purposes of the reduction of the conversion price provided for in Section 7.3(b) upon such deemed issuance of rights, each share of Series A Stock shall be deemed to constitute 100 shares of Common Stock (subject to adjustment as provided in the Rights Plan), and the date fixed for determination of stockholders entitled to receive such rights shall be the close of business on the tenth such Business Day following such 15% Ownership Date or the date of such Section 13(a) Event, as the case may be; PROVIDED, HOWEVER, that the current market price per share of the Common Stock shall be determined based on the 10 consecutive Trading Days prior to and including the Distribution Date. (c) For the purposes of Section 7.3(c), if the Company has taken action pursuant to Section 7(e) of the Rights Agreement to substitute other consideration for all or any portion of the Series A Stock otherwise issuable upon exercise of a Right, upon the earlier to occur of (x) the eleventh Business Day (as defined in the Rights Agreement) following a 15% Ownership Date and (y) a Section 13(a) Event, then an issuance of Securities shall be deemed to have occurred, unless a Rights Redemption Date or a Rights Expiration Date has occurred prior to such eleventh Business Day or such Section 13(a) Event, as the case may be. For purposes of the reduction of the conversion price provided for in Section 7.3(c) upon such deemed issuance of Securities, the date fixed for determination of stockholders entitled to receive such rights shall be the close of business on the tenth such Business Day following such 15% Ownership Date or the date of such Section 13(a) Event, as the case may be; PROVIDED, HOWEVER, that the current market price per share of the Common Stock shall be determined based on the 10 consecutive Trading Days prior to and including the Distribution Date. (d) For purposes of Section 7.3(b) and Section 7.3(c), the redemption by the Company of Rights shall be deemed to be an expiration of such rights. (e) In lieu of any adjustment to the Conversion Price as required by subsections (b), (c) and (f) of this Section 7.9, the Company may amend the Rights Agreement to provide that upon conversion of Convertible Debentures the Holder will receive, in addition to the common stock issuable upon conversion, the Rights that were attached to such shares of Common Stock prior to the Distribution Date. (f) If any Debenture has been converted on or after the Distribution Date and on or before the tenth Business Day (as defined in the Rights Agreement) following such 15% Ownership Date or the date of such Section 13(a) Event, as the case may be, then as soon as practicable following the date on which the adjustment required by subsections (b) and (c) of this Section 7.9 is made, the Company shall issue to the holder of the Debenture so converted a number of additional shares of Common Stock (and cash in lieu of any fractional share) that 30 would have been issuable upon such conversion had such adjustment been made immediately prior to such conversion. SECTION 7.10. SPECIAL PROVISIONS REGARDING ADJUSTMENT OF CONVERSION PRICE OR OTHER PROVISIONS. In the event that the provisions of this Article VII specifying the methods by which the Conversion Price or other provisions are adjusted would require an adjustment that is determined in good faith by the Board of Directors to be inconsistent with the purposes of the provisions hereof providing for Conversion Price or other adjustments (generally, to place the holders of the Debenture and the Trust Securities in a position equivalent to the position they were in prior to the event requiring an adjustment to the Conversion Price or other provisions), the Board of Directors may make an adjustment (in lieu of that required pursuant to such provisions) that it determines in good faith to place the Holders of the Debentures in a position at least equivalent to the position they were in prior to such event, which determination shall be described in a Board Resolution. SECTION 7.11. CERTAIN ADDITIONAL RIGHTS. In case the Company shall, by dividend or otherwise, declare or make a distribution on the Common Stock referred to in Section 7.3(c) or 7.3(d) (including, without limitation, dividends or distributions referred to in the last sentence of Section 7.3(d)) the Holder of Debentures, upon the conversion thereof subsequent to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution and prior to the effectiveness of the Conversion Price adjustment in respect of such distribution, shall also be entitled to receive for each share of Common Stock into which Debentures are converted, the portion of the shares of Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash and assets so distributed applicable to one share of Common Stock; PROVIDED, HOWEVER, that, at the election of the Company (whose election shall be evidenced by a resolution of the Board of Directors) with respect to all Holders so converting, the Company may, in lieu of distributing to such Holder any portion of such distribution not consisting of cash or securities of the Company, pay such Holder an amount in cash equal to the fair market value thereof (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors). If any conversion of Debentures described in the immediately preceding sentence occurs prior to the payment date for a distribution to holders of Common Stock which the Holder of Debentures so converted is entitled to receive in accordance with the immediately preceding sentence, the Company may elect (such election to be evidenced by a resolution of the Board of Directors) to distribute to such Holder a due bill for the shares of Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets to which such Holder is so entitled, PROVIDED, that such due bill (a) meets any applicable requirements of the principal securities exchange or other market on which the Common Stock is then traded and (b) requires payment or delivery of such shares of Common Stock, rights, warrants, evidences of indebtedness, shares of capital stock, cash or assets no later than the date of payment or delivery thereof to holders of shares of Common Stock receiving such distribution. 31 SECTION 7.12. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR ADJUSTMENTS. Neither the Trustee nor any Conversion Agent shall at any time be under any duty or responsibility to any Holder of any Debenture to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, or whether this supplemental indenture need be entered into. Neither the Trustee nor any Conversion Agent shall be accountable with respect to the validity or value (or the kind of account) of any shares of Common Stock or of any securities or property, which may at any time be issued or delivered upon the conversion of any Debenture; and neither the Trustee nor any Conversion Agent makes any representation with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property upon the surrender of any Debenture for the purpose of conversion.] ARTICLE VIII EVENTS OF DEFAULT SECTION 8.1. EVENTS OF DEFAULT. (a) In addition to those events set forth in Section 6.01 of the Base Indenture, "Event of Default" with respect to the Debentures, shall include the following events: (i) in the event the Institutional Trustee is the Holder of the Debentures, the Trust shall have voluntarily or involuntarily dissolved, wound-up its business or otherwise terminated its existence except in connection with (i) the distribution of Debentures to holders of Trust Securities in liquidation of their interest in the Trust, (ii) the redemption of all of the outstanding Trust Securities, or (iii) certain mergers, consolidations or amalgamations, each as permitted by the Declaration; and (ii) the failure by the Company to deliver the Common Stock upon a valid conversion election by a Holder of Debentures to convert such Debentures into shares of Common Stock (whether or not such conversion is prohibited by the subordination provisions set forth in the Base Indenture). (b) Notwithstanding any other provision to the contrary, a valid extension of the interest payment period of the Debentures pursuant to Section 4.1 shall not constitute a default in the payment of an installment of interest under Section 6.01(a) of the Base Indenture. ARTICLE IX FORM OF DEBENTURE SECTION 9.1. FORM OF DEBENTURE. The Debentures and the Trustee's Certificate of Authentication to be endorsed thereon shall be substantially in the form set forth as Annex I to this Supplemental Indenture. 32 ARTICLE X ORIGINAL ISSUE OF DEBENTURES SECTION 10.1. ORIGINAL ISSUE OF DEBENTURES. Debentures in the aggregate principal amount of up to $__________ may, upon or following execution of this Supplemental Indenture, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and make available for delivery said Debentures to or upon the written order of the Company, signed by its Chairman, its Vice Chairman, its Chief Executive Officer, its Chief Financial Officer, its President or any Vice President and its Treasurer or an Assistant Treasurer, without any further action by the Company. ARTICLE XI MISCELLANEOUS SECTION 11.1. RATIFICATION OF BASE INDENTURE: SUPPLEMENTAL INDENTURE CONTROLS. The Base Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided. The provisions of this Supplemental Indenture shall supersede the provisions of the Base Indenture to the extent the Base Indenture is inconsistent herewith. SECTION 11.2. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals herein contained are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture. SECTION 11.3. GOVERNING LAW. This Supplemental Indenture and each Debenture shall be deemed to be a contract made under the internal laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State. SECTION 11.4. SEPARABILITY. In case any one or more of the provisions contained in this Supplemental Indenture or in the Debentures shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Supplemental Indenture or of the Debentures, but this Supplemental Indenture and the Debentures shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. 33 SECTION 11.5. COUNTERPARTS. This Supplemental Indenture may be executed in any number of counterparts each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. SECTION 11.6. LIST OF HOLDERS OF SECURITIES. (a) The Company shall provide the Trustee (i), except while the Trust Preferred Securities remain in book entry form, at least one Business Day prior to an Interest Payment Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Debentures ("List of Holders") as of such record date, provided that the Company shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Institutional Trustee by the Company and (ii) at any other time, within 30 days of receipt by the Company of a written request for a list of Holders as of a date no more than 14 days before such List of Holders is given to the Trustee. The Trustee shall preserve, in as current a form as is reasonably practicable, all information contained in Lists of Holders given to it or which it receives in the capacity as Paying Agent (if acting in such capacity) provided that the Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Trustee shall comply with its obligations under Sections 311(b), 311(b) and 312(b) of the Trust Indenture Act. 34 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the day and year first above written. UNOCAL CORPORATION By -------------------------------- Name: Title: THE BANK OF NEW YORK, as Trustee By -------------------------------- Name: Title: 35 ANNEX I FORM OF DEBENTURE [FORM OF FACE OF DEBENTURE] [IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT THE FOLLOWING: This Debenture is a Global Debenture within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or a nominee of a Depositary. This Debenture is exchangeable for Debentures registered in the name of a Person other than the Depositary or its nominee only in the limited circumstances described in the Indenture, and] no transfer of this Debenture (other than a transfer of this Debenture as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in such limited circumstances.] [IF THE CLEARING AGENCY IS THE DEPOSITORY TRUST COMPANY, INSERT THE FOLLOWING OR SUCH OTHER STATEMENT AS THE DEPOSITORY TRUST COMPANY SHALL SPECIFY: Unless this Debenture is presented by an authorized representative of The Depository Trust Company, a New York corporation (55 Water Street, New York, New York), to the issuer or its agent for registration of transfer, exchange or payment, and any Debenture issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of The Depository Trust Company), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] No. _____________ CUSIP No. _________ UNOCAL CORPORATION ____% JUNIOR [CONVERTIBLE] SUBORDINATED DEBENTURE Unocal Corporation, a Delaware corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to _________________________________, or registered assigns, the principal sum of ______________ Dollars ($_________) on __________ 1, 20__, and to pay interest on said principal sum from ___________ __, _____, or from the most recent date on which interest has been paid in full, quarterly (subject to deferral as set forth herein) in arrears on March 1, June 1, September 1, and December 1 of each year (each, an "Interest Payment Date") commencing __________ 1, ____, at the rate of ____% per annum until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and overdue installment of interest at the same rate per annum compounded quarterly (without duplication and to the extent that payment of such interest is enforceable under applicable law). The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of 1 twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed will be computed on the basis of 30-day months and, for periods of less than a month, the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on this Debenture is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture (referred to on the reverse hereof), be paid to the person in whose name this Debenture (or one or more Predecessor Debentures) is registered on the Regular Record Date for such interest installment. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holders on such Regular Record Date and may be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the registered Holders of the Debentures not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of (and premium, if any) and the interest on this Debenture shall be payable at the office or agency of the Trustee maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; PROVIDED, HOWEVER, that payment of interest may be made at the option of the Company by check mailed to the registered Holder at such address as shall appear in the Security Debenture. Notwithstanding the foregoing, so long as the Holder of this Debenture is the Institutional Trustee, the payment of the principal of (and premium, if any) and interest on this Debenture will be made at such place and to such account as may be designated by the Institutional Trustee. The indebtedness evidenced by this Debenture is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness, and this Debenture is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such Holder upon said provisions. This Debenture shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. 2 The provisions of this Debenture are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. UNOCAL CORPORATION By: ------------------------ Name: Title: Attest: By: ------------------------ Name: Title: [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This is one of the Debentures of the series of Debentures described in the within-mentioned Indenture. Dated: --------------------- THE BANK OF NEW YORK, as Trustee or as Authentication Agent By By -------------------------- ------------------------- Authorized Signatory Authorized Signatory 3 [FORM OF REVERSE OF DEBENTURE] This Debenture is one of a duly authorized series of Securities of the Company specified in the Indenture, all issued or to be issued in one or more series under and pursuant to an Indenture (the "Base Indenture") dated as of September 11, 1996, duly executed and delivered between the Company and The Bank of New York, as Trustee (the "Trustee"), as supplemented by the Second Supplemental Indenture dated as of ______________, ____, between the Company and the Trustee (such Second Supplemental Indenture, as it supplements the Base Indenture, the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of Debentures. By the terms of the Indenture, the Securities are issuable thereunder in series that may vary as to amount, date of maturity, rate of interest and in other respects as provided in the Indenture. This series of Securities is limited in aggregate principal amount as specified in said Supplemental Indenture and is herein sometimes referred to as the "Debentures." Because of the occurrence and continuation of a Special Event, in certain circumstances, this Debenture may become due and payable, in whole or in part, at 100% of the principal amount (the "Special Event Redemption Price") together with any interest accrued thereon, including Compounded Interest and Additional Interest to, but excluding the redemption date. The Special Event Redemption Price plus such accrued and unpaid interest, shall be paid prior to 12:00 noon, New York time, on the date of such redemption or at such earlier time as the Company determines. In addition, the Company shall have the right to redeem this Debenture at the option of the Company, upon not less than 30 nor more than 60 days notice, without premium or penalty, in whole or in part at any time on or after ___________ 1, ______ at the following prices (expressed as percentages of the principal amount of the Debentures) (the "Optional Redemption Price") together with accrued and unpaid interest, including Additional Interest and Compounded Interest to, but excluding, the redemption date, if redeemed during the 12-month period beginning on _________ 1 (other than the first period, which will begin on __________ 1, _____) of the following years:
Year Redemption Price ---- ---------------- ____ ................. ______% ____ ................. ______% ____ ................. ______% ____ ................. ______% ____ ................. ______% ____ ................. ______%
and 100% if redeemed on or after __________1, ____. In the event of a Spinoff, the Company also has the right to redeem the Debentures, in whole or in part, in exchange for Spinoff Company Debentures and/or New Debentures, and each Holder, by its acceptance of the Debenture, agrees to such exchange and the effects of such exchange as set forth in the Indenture. 4 The Company may not redeem any Debentures unless all accrued and unpaid interest has been paid on all outstanding Debentures for all quarterly interest payment periods terminating on or prior to the last Interest Payment Date before the date of redemption. If Debentures are redeemed on any March 1, June 1, September 1, or December 1, accrued and unpaid interest shall be payable to Holders on the relevant record date. The Company shall issue a press release announcing any Optional Redemption. If the Debentures are only partially redeemed by the Company pursuant to an Optional Redemption, the Debentures will be redeemed PRO RATA. In the event of redemption of this Debenture in part only, a new Debenture or Debentures of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of all of the Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of each series affected at the time outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of such series; PROVIDED, HOWEVER, that no such supplemental indenture shall (a) extend the fixed maturity of any Securities of any series, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, or make any change that adversely affects the right to convert any Securities of any series or make any change in the subordination provisions that adversely affects the rights of any Holders of any Securities of any series, without the consent of the Holder of each Debenture so affected, or (b) reduce the aforesaid percentage of Securities of such series, the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holders of each Security of any series then outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of any series at the time outstanding affected thereby, on behalf of all of the Holders of the Securities of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or premium, if any, or interest on any Securities of such series or a failure to convert any Securities of such series in accordance with its terms upon an election by the Holders thereof. Any such consent or waiver by the registered Holder of this Debenture (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Debenture and of any Debenture issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Debenture. 5 No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Debenture at the time and place and at the rate and in the money herein prescribed. As long as an Event of Default under Section 6.01(a) of the Base Indenture shall not have occurred and be continuing, the Company shall have the right, at any time and from time to time during the term of the Debentures, to defer payments of interest by extending the interest payment period of the Debentures for a period not exceeding 20 consecutive quarters (an "Extended Interest Payment Period") during which Extended Interest Payment Period no interest shall be due and payable on the Debentures; PROVIDED, that no Extended Interest Payment Period may extend beyond the Maturity Date. To the extent permitted by applicable law, interest, the payment of which has been deferred during an Extended Interest Payment Period, shall bear interest thereon at the rate specified for these Debentures, compounded quarterly for each quarter of the Extended Interest Payment Period ("Compounded Interest"). Before the termination of any such Extended Interest Payment Period, the Company may further extend such Extended Interest Payment Period, PROVIDED, that such Extended Interest Payment Period together with all such previous and further extensions thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity Date. At the end of the Extended Interest Payment Period, the Company shall pay all interest then accrued and unpaid on the Debentures, including any Additional Interest and Compounded Interest, that shall be payable to the Holders of Debentures on the first record date after the termination of the Extended Interest Payment Period. Upon the termination of any such Extended Interest Payment Period and upon the payment of all accrued and unpaid interest (including Compounded Interest to the extend permitted by applicable law), the Company may commence a new Extended Interest Payment Period. The Company may pay at any time all or any portion of the interest accrued during an Extended Interest Payment Period, subject to the requirements set forth in the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable by the registered Holder hereof on the Security Register of the Company, upon surrender of this Debenture for registration of transfer at the office or agency of the Trustee in the City and State of New York accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered Holder hereof or his or her attorney duly authorized in writing, and thereupon one or more new Debentures of authorized denominations and for the same aggregate principal amount and series will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Debenture, the Company, the Trustee, any paying agent and the Security Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company 6 nor the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. Subject to and upon compliance with Article VII of the Supplemental Indenture, the Holder of this Debenture has the right, exercisable at any time beginning _______ __, _____ and prior to the close of business (New York time) on ____________ 1, 20__ (or, in the event this Debenture is called for redemption, prior to the close of business (New York time) on the Business Day prior to the corresponding redemption date), to convert the principal amount hereof (or any portion thereof that is an integral multiple of the Principal Amount of One Debenture) into that number of fully paid and nonassessable shares of Common Stock obtained by dividing the principal amount of the Debentures to be converted by the Conversion Price in effect on the Conversion Date. For example, the initial Conversion Price is $__.__ and thus each Debenture is initially convertible into 1. __ shares of Common Stock (calculated by dividing the Principal Amount of One Debenture as of the date of the Supplemental Indenture by the initial Common Price). The Conversion Price is subject to adjustment as described in the Indenture. All conversion price and conversion provision calculations shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. To convert all or a portion of this Debenture, a Holder must (a) complete and sign an irrevocable notice of election to convert substantially in the form attached hereto and deliver such Conversion Notice to the Conversion Agent, (b) surrender the Debenture to the Conversion Agent, (c) furnish appropriate endorsements or transfer documents if required by the Conversion Agent and (d) pay any transfer or similar tax, if required. Accrued but unpaid interest will not be paid in cash on Debentures that are converted, nor will such accrued interest be converted into additional shares of Common Stock upon conversion of the Debentures, but such accrued interest shall be deemed to be paid in full and then returned by the Holder to the Company as partial consideration for Common Stock received on conversion, and the Company shall not make nor be required to make any other payment, adjustment or allowance with respect to accrued but unpaid interest on the Debentures being converted, which shall be deemed to be paid in full. If any Debentures are converted during the period from (but excluding) a record date to (and including) the next succeeding interest payment date, then either (i) if such Debentures have been called for redemption on a redemption date that occurs during such period, or are to be redeemed in connection with a Special Event which occurs during such period, the Company shall not be required to pay interest on such Interest Payment Date in respect of such Debentures or (ii) if otherwise converted during such period, such Debentures shall be accompanied by funds equal to the interest payable on such succeeding Interest Payment Date on the principal amount so converted. 7 No fractional shares will be issued upon conversion but a cash payment shall be made by the Company in lieu of such fractional interest. The outstanding principal amount of any Debenture shall be reduced by the principal amount thereof converted into shares of Common Stock. The Company's delivery upon conversion of the fixed number of shares of Common Stock into which the Debentures are convertible (together with cash in lieu of fractional shares) shall be deemed to satisfy the Company's obligation to pay the principal amount at the Maturity Date of the portion of Debentures so converted and any unpaid interest (including Compounded Interest) accrued on such Debentures at the time of such conversion. The Debentures of this series are issuable only in registered form without Coupons in denominations of the Principal Amount of One Debenture and any integral multiple thereof. [IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, SUBSTITUTE THE FOLLOWING FOR THE PREVIOUS SENTENCE: This Global Debenture is exchangeable for Debentures in definitive form only under certain limited circumstances set forth in the Indenture. Debentures of this series so issued are issuable only in registered form without Coupons in denominations of the Principal Amount of One Debenture and any integral multiple thereof.) As provided in the Indenture and subject to certain limitations therein set forth, Debentures of this series are exchangeable for a like aggregate principal amount of Debentures of this series of a different authorized denomination, as requested by the Holder surrendering the same. All terms used in this Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THE DEBENTURES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF. 8 [FORM OF ELECTION TO CONVERT] ELECTION TO CONVERT To: Unocal Corporation The undersigned Holder of this Debenture hereby irrevocably exercises the option to convert this Debenture, or the portion below designated, into Common Stock of UNOCAL CORPORATION in accordance with the terms of the Indenture referred to in this Debenture, and directs that the shares issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Date: ----------------- ---- in whole ____ in part __ Portion of principal amount of the Debenture to be converted (the Principal Amount of One Debenture or integral multiples thereof): $ ------------------- ---------------------------------------- Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number ---------------------------------------- ---------------------------------------- ---------------------------------------- Signature Guarantee:(1) ----------------- - ------------------------- (1) Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Conversion Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Conversion Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities and Exchange Act of 1934, as amended. 9 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Debenture to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee) and irrevocably appoints ------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- agent to transfer this Debenture on the books of the Trust. The agent may substitute another to act for him or her. Date: ------------------------------- Signature: -------------------------- (Sign exactly as your name appears on the other side of this Debenture) Signature Guarantee:(*) ------------------------------ - --------------------- * Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Debenture Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities and Exchange Act of 1934, as amended. 10 EX-4.10 8 EXHIBIT 4.10 EXHIBIT 4.10 DECLARATION OF TRUST DECLARATION OF TRUST, dated as of June 30, 1998, between Unocal Corporation, a Delaware corporation, as Sponsor, The Bank of New York, a New York banking corporation, as trustee, The Bank of New York (Delaware), a Delaware banking corporation, as trustee, Darrell D. Chessum, Daniel A. Franchi and Richard L. Walton as Regular Trustees (collectively with the other trustees, the "Trustees"). The Sponsor and the Trustees hereby agree as follows: 1. The trust created hereby (the "Trust") shall be known as "Unocal Capital Trust II", in which name the Trustees, or the Sponsor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Sponsor hereby assigns, transfers, conveys and sets over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount in trust from the Sponsor, which amount shall constitute the initial trust estate. The Trustees hereby declare that they will hold the trust estate in trust for the Sponsor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 DEL. C. Section 3801 ET SEQ. (the "Business Trust Act"), and that this document constitute the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in the form attached hereto. The Trust is hereby established by the Sponsor and the Trustees for the purposes of (i) issuing preferred securities ("Trust Preferred Securities") representing undivided beneficial interests in the assets of the Trust in exchange for cash and investing the proceeds thereof in junior subordinated debentures of the Sponsor, (ii) issuing and selling common securities ("Trust Common Securities" and, together with the Trust Preferred Securities, "Trust Securities") representing undivided beneficial interests in the assets of the Trust to the Sponsor in exchange for cash and investing the proceeds thereof in additional junior subordinated debentures of the Sponsor and (iii) engaging in such other activities as are necessary, convenient or incidental thereto. 3. The Sponsor and the Trustees will enter into an amended and restated Declaration of Trust, satisfactory to each such party and substantially in the form to be included as Exhibit 4.11 to the Registration Statement referred to below, to provide for the contemplated operation of the Trust created hereby and the issuance of the Trust Preferred Securities and Trust Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Declaration of Trust, the Trustees shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain prior to such execution and delivery any licenses, consents or approvals required by applicable law or otherwise. 4. The Sponsor and the Trustees hereby authorize and direct the Sponsor, in each case on behalf of the Trust as the sponsor of the Trust: (i) to prepare and file with the Securities and Exchange Commission (the "Commission"), in each case on behalf of the Trust, (a) a Registration Statement on Form S-3 and any pre-effective or post-effective amendments to such Registration Statement (the "Registration Statement"), relating to the registration under the Securities Act of 1933, as amended, of the Trust Preferred Securities of the Trust, and (b) a Registration Statement on Form 8-A or other form issued or permitted by the Commission, including all pre-effective and post-effective amendments thereto (the "1934 Act Registration Statement"), relating to the registration of the Trust Preferred Securities under the Securities Exchange Act of 1934, as amended, (ii) to prepare and file, in each case on behalf of the Trust, with the New York Stock Exchange, the American Stock Exchange or such other national securities exchange or the Nasdaq National Market as the Sponsor shall determine, a listing or other similar application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Trust Preferred Securities to be listed or approved for quotation on the New York Stock Exchange, the American Stock Exchange or such other national securities exchange or the Nasdaq National Market; (iii) to prepare and file, in each case on behalf of the Trust, such applications, reports, surety bonds, irrevocable consents, appointments of attorneys for service of process and other papers, documents and agreements as shall be necessary or desirable to register the Trust Preferred Securities under the securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or desirable; and (iv) to negotiate, on behalf of the Trust, the form of Underwriting Agreement among the Trust, the Sponsor, and the underwriters to be named in Schedule I thereto, substantially in the form to be included as Exhibit 1.4 to the Registration Statement. It is hereby acknowledged and agreed that in connection with any documents referred to in clauses (i)-(iv) above, (A) any Regular Trustee (or his attorneys-in-fact and agents as permitted herein or the Sponsor is authorized on behalf of the Trust to execute such documents on behalf of the Trust, provided that the Registration Statement shall be signed by all of the Regular Trustees, and (B) The Bank of New York and The Bank of New York (Delaware), in their capacities as Trustees of the Trust shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, the New York Stock Exchange (or other national securities exchange or the Nasdaq National Market) or state securities or "Blue Sky" laws, and in such case only to the extent so required. In connection with all of the foregoing, each Regular Trustee, solely in his capacity as Trustee of the Trust, hereby constitutes and appoints Timothy H. Ling, Joe D. Cecil and Darrell D. Chessum, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such Regular Trustee or in such Regular Trustee's name, place and stead, in any and all capacities, to sign the Registration Statement and the 1934 Act Registration Statement and any and all amendments (including post-effective amendments) thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, granting unto said attorneys-in-fact and agents, or any of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such Regular Trustee might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, shall do or cause to be done by virtue hereof. 5. This Declaration of Trust may be executed in counterparts. 2 6. The number of Trustees initially shall be five (5) and thereafter the number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by the Sponsor which may increase or decrease the number of Trustees; provided that to the extent required by the Business Trust Act, one Trustee shall either be a natural person who is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware. Subject to the foregoing, the Sponsor is entitled to appoint or remove without cause any Trustee at any time. The Trustees may resign upon thirty days prior notice to the Sponsor. 7. The Trust may terminate without issuing any Trust Preferred Securities and Trust Common Securities at the election of the Sponsor. 3 IN WITNESS WHEREOF, the parties hereto have caused this Declaration of Trust to be duly executed as of the day and year first above written. UNOCAL CORPORATION, as Sponsor By: /s/ D. D. Chessum ----------------------------------- Name: Darrell D. Chessum Title: Treasurer /s/ D. D. Chessum ----------------------------------------- Darrell D. Chessum, as Regular Trustee /s/ D. A. Franchi ----------------------------------------- Daniel A. Franchi, as Regular Trustee /s/ R. L. Walton ----------------------------------------- Richard L. Walton, as Regular Trustee THE BANK OF NEW YORK, as Trustee By: /s/ Thomas B. Zakrzewski -------------------------------- Name: Thomas B. Zakrzewski Title: Assistant Vice President THE BANK OF NEW YORK (DELAWARE) as Trustee By: /s/ Walter N. Gitlin ----------------------------------------- Name: Walter N. Gitlin Title: Authorized Signatory 4 EX-4.11 9 EXHIBIT 4.11 EXHIBIT 4.11 ------------------------------ FORM OF AMENDED AND RESTATED DECLARATION OF TRUST OF UNOCAL CAPITAL TRUST II Dated as of _________ ------------------------------ TABLE OF CONTENTS
PAGE ---- ARTICLE I. INTERPRETATION AND DEFINITIONS. . . . . . . . . . . . . . . .1 SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . .1 ARTICLE II. TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . .8 SECTION 2.1. Trust Indenture Act: Application. . . . . . . . . . . . . . .8 SECTION 2.2. Lists of Holders of Securities. . . . . . . . . . . . . . . .8 SECTION 2.3. Reports by the Institutional Trustee. . . . . . . . . . . . .9 SECTION 2.4. Periodic Reports to Institutional Trustee . . . . . . . . . .9 SECTION 2.5. Evidence of Compliance with Conditions Precedent. . . . . . .9 SECTION 2.6. Events of Default: Waiver . . . . . . . . . . . . . . . . . 10 SECTION 2.7. Event of Default; Notice. . . . . . . . . . . . . . . . . . 11 ARTICLE III. ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 3.1. Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 3.2. Office. . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 3.3. Purposes and Functions. . . . . . . . . . . . . . . . . . . 12 SECTION 3.4. Authority . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 3.5. Title to Property of the Trust. . . . . . . . . . . . . . . 12 SECTION 3.6. Powers. Duties and Authority of the Regular Trustees . . . 13 SECTION 3.7. Prohibition of Actions by the Trust and the Trustees. . . . 15 SECTION 3.8. Powers and Duties of the Institutional Trustee. . . . . . . 16 SECTION 3.9. Certain Duties and Responsibilities of the Institutional Trustee . . . . . . . . . . . . . . . . . . . 18 SECTION 3.10. Certain Rights of Institutional Trustee . . . . . . . . . . 20 SECTION 3.11. Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . 22 SECTION 3.12. Execution of Documents. . . . . . . . . . . . . . . . . . . 22 SECTION 3.13. Not Responsible for Recitals or Issuance of Securities. . . 23 SECTION 3.14. Duration of Trust . . . . . . . . . . . . . . . . . . . . . 23 SECTION 3.15. Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE IV. SPONSOR . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 4.1. Issuance of Securities to Sponsor . . . . . . . . . . . . . 24 SECTION 4.2. Responsibilities of the Sponsor . . . . . . . . . . . . . . 25 ARTICLE V. TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 5.1. Number of Trustees. . . . . . . . . . . . . . . . . . . . . 25 SECTION 5.2. Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . 26 SECTION 5.3. Institutional Trustee Eligibility . . . . . . . . . . . . . 26 SECTION 5.4. Certain Qualifications of Regular Trustees and Delaware Trustee Generally. . . . . . . . . . . . . . . . . 27 SECTION 5.5. Regular Trustees. . . . . . . . . . . . . . . . . . . . . . 27 SECTION 5.6. Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . 27 SECTION 5.7. Appointment, Removal and Resignation of Trustees. . . . . . 27 i SECTION 5.8. Vacancies Among Trustees. . . . . . . . . . . . . . . . . . 29 SECTION 5.9. Effect of Vacancies . . . . . . . . . . . . . . . . . . . . 29 SECTION 5.10. Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 5.11. Delegation of Power by Regular Trustees . . . . . . . . . . 30 SECTION 5.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . . . . . . 30 ARTICLE VI. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 6.1. Distributions . . . . . . . . . . . . . . . . . . . . . . . 30 ARTICLE VII. ISSUANCE OF SECURITIES. . . . . . . . . . . . . . . . . . . 30 SECTION 7.1. General Provisions Regarding Securities . . . . . . . . . . 30 SECTION 7.2. Execution and Authentication. . . . . . . . . . . . . . . . 31 SECTION 7.3. Form and Dating . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 7.4. Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . 32 ARTICLE VIII. TERMINATION OF TRUST. . . . . . . . . . . . . . . . . . . . 32 SECTION 8.1. Termination of Trust. . . . . . . . . . . . . . . . . . . . 32 ARTICLE IX. TRANSFER OF INTERESTS . . . . . . . . . . . . . . . . . . . 33 SECTION 9.1. Transfer of Securities. . . . . . . . . . . . . . . . . . . 33 SECTION 9.2. Transfer of Certificates. . . . . . . . . . . . . . . . . . 34 SECTION 9.3. Deemed Security Holders . . . . . . . . . . . . . . . . . . 34 SECTION 9.4. Book Entry Interests. . . . . . . . . . . . . . . . . . . . 34 SECTION 9.5. Notices to Clearing Agency. . . . . . . . . . . . . . . . . 35 SECTION 9.6. Appointment of Successor Clearing Agency. . . . . . . . . . 35 SECTION 9.7. Definitive Preferred Security Certificates. . . . . . . . . 35 SECTION 9.8. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . 36 ARTICLE X. LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 10.1. Liability . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 10.2. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 10.3. Fiduciary Duty. . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 10.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 10.5. Outside Business. . . . . . . . . . . . . . . . . . . . . . 41 ARTICLE XI. ACCOUNTING. . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 11.1. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 11.2. Certain Accounting Matters. . . . . . . . . . . . . . . . . 41 SECTION 11.3. Banking . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 11.4. Withholding . . . . . . . . . . . . . . . . . . . . . . . . 42 ii ARTICLE XII. AMENDMENTS AND MEETINGS . . . . . . . . . . . . . . . . . . 43 SECTION 12.1. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 12.2. Meetings of the Holders of Securities: Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . 44 ARTICLE XIII. REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 13.1. Representations and Warranties of Institutional Trustee . . 46 SECTION 13.2. Representations and Warranties of Delaware Trustee. . . . . 46 ARTICLE XIV. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 14.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 14.2. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 14.3. Intention of the Parties. . . . . . . . . . . . . . . . . . 49 SECTION 14.4. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 14.5. Successors and Assigns. . . . . . . . . . . . . . . . . . . 49 SECTION 14.6. Partial Enforceability. . . . . . . . . . . . . . . . . . . 49 SECTION 14.7. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 49 ANNEX I Terms of __% Trust [Convertible] Preferred Securities __% Trust Common Securities . . . . . . . . . . . . . . . .I-1 EXHIBIT A-1 Form of Preferred Security Certificate. . . . . . . . . . A1-1 EXHIBIT A-2 Form of Trust Common Certificate. . . . . . . . . . . . . A2-1 EXHIBIT B Specimen of Junior Subordinated Debenture . . . . . . . . . .B
iii AMENDED AND RESTATED DECLARATION OF TRUST OF UNOCAL CAPITAL TRUST II --------- THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") by and among the Trustees (as defined herein), the Sponsor (as defined herein) and the holders, from time to time, of undivided beneficial interests in the Trust to be issued pursuant to this Declaration is dated and effective as of _____________. RECITALS WHEREAS, the Trustees and the Sponsor established Unocal Capital Trust II (the "Trust"), a trust under the Delaware Business Trust Act pursuant to a Declaration of Trust dated as of June 30, 1998, (the "Original Declaration") and a Certificate of Trust filed with the Secretary of State of the State of Delaware on June 30, 1998, for the sole purposes of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust, investing the proceeds from such sales in the Debentures issued by the Debenture Issuer (as those terms are hereinafter defined) and engaging in only those activities necessary or incidental thereto; WHEREAS, as of the date hereof, no interests in the Trust have been issued; WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and every term and provision of the Original Declaration; and NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a business trust under the Delaware Business Trust Act and that this Declaration constitute the governing instrument of such business trust, the Trustees declare that all assets contributed to the Trust will be held in trust for the benefit of the holders, from time to time, of the securities representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. ARTICLE I INTERPRETATION AND DEFINITIONS SECTION 1.1. DEFINITIONS. Unless the context otherwise requires: (a) Capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) a term defined anywhere in this Declaration has the same meaning throughout; (c) all references to "the Declaration" or "this Declaration" are to this Declaration, including the Annexes and Exhibits hereto, as modified, supplemented or amended from time to time; (d) all references in this Declaration to Articles, Sections, Recitals, Annexes, and Exhibits are to Articles, Sections and the Recitals of, and Annexes and Exhibits to, this Declaration unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Declaration unless otherwise defined in this Declaration or unless the context otherwise requires; and (f) a reference to the singular includes the plural and vice versa. "ADMINISTRATIVE ACTION" has the meaning specified in Annex I. "AFFILIATE" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder. ["AGENT" means any Paying Agent or Conversion Agent.] "AUTHORIZED OFFICER" of a Person means any Person that is authorized to bind such Person. "BASE INDENTURE" means that Indenture dated as of September 11, 1996 between Unocal as issuer and The Bank of New York, as trustee. "BOOK ENTRY INTEREST" means a beneficial interest in a Global Certificate, ownership and transfers of which shall be maintained and made through book entries by a Clearing Agency as described in Section 9.4. "BUSINESS DAY" means any day other than a Saturday, Sunday, or any other day on which banking institutions in New York, New York or Los Angeles, California are permitted or required by any applicable law to close. "BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware Code, 12 DEL. CODE Section 3801 et seq., as it may be amended from time to time, or any successor legislation. "CERTIFICATE" means a Common Security Certificate or a Preferred Security Certificate. "CHANGE IN 1940 ACT OPINION" has the meaning specified in Annex I. "CLEARING AGENCY" means an organization registered as a "Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary for the Preferred Securities and in whose name or in the name of a nominee of that organization shall be registered a Global Certificate and which shall undertake to effect book entry transfers and pledges of the Preferred Securities. The initial Clearing Agency shall be the Depository Trust Company. 2 "CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency. "CODE" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation. "COMMISSION" means the Securities and Exchange Commission. "COMMON SECURITIES" has the meaning specified in Section 7.1. "COMMON SECURITY CERTIFICATE" means a definitive certificate in fully registered form representing a Common Security substantially in the form of Exhibit A-2. "COMMON STOCK" means shares of the common stock, $1.00 par value, of Unocal. "CONTRACT PREFERRED SECURITIES" means Preferred Securities sold pursuant to a Delayed Delivery Contract. ["CONVERSION AGENT" has the meaning set forth in Section 7.4. "CONVERSION DATE" has the meaning set forth in Annex I. "CONVERSION REQUEST" has the meaning set forth in Annex I.] "CORPORATE TRUST OFFICE" means the office of the Institutional Trustee at which the corporate trust business of the Institutional Trustee shall be, at any particular time, principally administered, which office at the date of execution of this Agreement is located at 101 Barclay Street, Floor 21 West, New York, New York 10286. "COUPON RATE" has the meaning set forth in Annex I. "COVERED PERSON" means: (a) any officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities. "DEBENTURE ISSUER" means Unocal Corporation (or its successor) in its capacity as issuer of the Debentures under the Indenture. "DEBENTURE TRUSTEE" means The Bank of New York, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee. "DEBENTURES" means the series of ___% Junior [Convertible] Subordinated Debentures issued or to be issued by the Debenture Issuer under the Indenture and held by the Institutional Trustee, a specimen certificate for such series of Debentures being Exhibit B. "DEFINITIVE PREFERRED SECURITY CERTIFICATES" has the meaning set forth in Section 9.7. 3 "DELAWARE TRUSTEE" has the meaning set forth in Section 5.2. "DELAYED DELIVERY CONTRACT" means a contract, substantially in the form attached as Annex III to the Standard Underwriting Provisions incorporated by reference in the Underwriting Agreement, for the purchase of Preferred Securities on the delivery date or dates and the amounts set forth therein, such Preferred Securities being referred to herein as Contract Preferred Securities. "DIRECT ACTION" has the meaning set forth in Section 3.8(e). "DISSOLUTION TAX OPINION" has the meaning set forth in Annex I. "DISTRIBUTION" has the meaning set forth in Section 6.1. "EVENT OF DEFAULT" in respect of the Securities means an Indenture Event of Default has occurred and is continuing. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation. "EXTENSION PERIOD" has the meaning set forth in Annex I. "FIDUCIARY INDEMNIFIED PERSON" has the meaning set forth in Section 10.4(b). "FISCAL YEAR" has the meaning set forth in Section 11.1. "GLOBAL CERTIFICATE" has the meaning set forth in Section 9.4(a). "HOLDER" means a Person in whose name a Certificate representing a Security is registered, such Person being a beneficial owner within the meaning of the Business Trust Act. "INDEMNIFIED PERSON" means a Sponsor Indemnified Person or a Fiduciary Indemnified Person. "INDENTURE" means the Base Indenture and the Supplemental Indenture pursuant to which the Debentures are or are to be issued. "INDENTURE EVENT OF DEFAULT" means an "Event of Default" as defined in the Indenture. "INSTITUTIONAL TRUSTEE" has the meaning set forth in Section 5.3. "INSTITUTIONAL TRUSTEE ACCOUNT" has the meaning set forth in Section 3.8(c). "INVESTMENT COMPANY" means an investment company as defined in the Investment Company Act. "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation. 4 "INVESTMENT COMPANY EVENT" has the meaning set forth in Annex I. "LEGAL ACTION" has the meaning set forth in Section 3.6(g). "LIQUIDATION DISTRIBUTION" has the meaning set forth in Annex I. "LIST OF HOLDERS" has the meaning set forth in Section 2.2. "MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as provided in the terms of the Preferred Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities voting together as a single class who are the record owners of more than 50% of the aggregate liquidation amount of all outstanding Securities or, if the context so requires, Holders of outstanding Preferred Securities or Holders of outstanding Common Securities voting separately as a class who are the record owners of more than 50% of the aggregate liquidation amount of all outstanding securities of the relevant class. "MINISTERIAL ACTION" has the meaning set forth in Annex I. "NEW TRUST COMMON SECURITY" has the meaning set forth in Annex I. "NEW TRUST PREFERRED SECURITY" has the meaning set forth in Annex I. "NEW TRUST SECURITIES" has the meaning set forth in Annex I. "90-DAY PERIOD" has the meaning set forth in Annex I. "NO RECOGNITION OPINION" has the meaning set forth in Annex I. "OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate signed by two Authorized Officers of such Person or, if such Person is an individual, signed by such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Declaration shall include: (a) a statement that each officer signing the Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "OID" has the meaning set forth in Annex I. 5 "ORIGINAL DECLARATION" has the meaning set forth in the Recitals. "PAYMENT AMOUNT" has the meaning set forth in Section 6.1. "PAYING AGENT" has the meaning set forth in Section 3.8(h). "PERSON" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, business trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "PREFERRED SECURITIES" has the meaning specified in Section 7.1. "PREFERRED SECURITY BENEFICIAL OWNER" means, with respect to a Book Entry Interest, a Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly as a Clearing Agency Participant or as an indirect participant, in each case in accordance with the rules of such Clearing Agency). "PREFERRED SECURITY CERTIFICATE" means a certificate representing a Preferred Security substantially in the form of Exhibit A-1. "PREFERRED SECURITIES GUARANTEE" means the guarantee agreement, to be dated as of _________________, of the Sponsor in respect of the Preferred Securities. "PRO RATA" has the meaning set forth in Annex I. "QUORUM" means a majority of the Regular Trustees or, if there are only two Regular Trustees, both of them. "REDEMPTION/DISTRIBUTION NOTICE" has the meaning set forth in Annex I. "REDEMPTION TAX OPINION" has the meaning set forth in Annex I. "REGULAR TRUSTEE" has the meaning set forth in Section 5.1. "RELATED PARTY" means, with respect to the Sponsor, any direct or indirect wholly owned subsidiary of the Sponsor or any other Person that owns, directly or indirectly, 100% of the outstanding voting securities of the Sponsor. "RESPONSIBLE OFFICER" means, with respect to the Institutional Trustee, any officer within the Corporate Trust Office of the Institutional Trustee, including any vice president, any assistant vice president, any assistant secretary, the treasurer, any assistant treasurer or other officer of the Corporate Trust Office of the Institutional Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. 6 "RULE 3a-5" means Rule 3a-5 under the Investment Company Act. "SECURITIES" means the Common Securities and the Preferred Securities. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time, or any successor legislation. "SPECIAL EVENT" has the meaning set forth in Annex I. "SPIN-OFF COMPANY TRUST COMMON SECURITY" has the meaning set forth in Annex I. "SPIN-OFF COMPANY TRUST PREFERRED SECURITY" has the meaning set forth in Annex I. "SPIN-OFF COMPANY TRUST SECURITIES" has the meaning set forth in Annex I. "SPONSOR" means Unocal Corporation (or its successor), in its capacity as sponsor of the Trust, and any transferee of the Common Securities permitted by Article IX. "SPONSOR INDEMNIFIED PERSON" means (a) any Regular Trustee; (b) any Affiliate of any Regular Trustee; (c) any officers, directors, shareholders, members, partners, employees, representatives or agents of any Regular Trustee; or (d) any officer, employee or agent of the Trust or its Affiliates. "SUCCESSOR DELAWARE TRUSTEE" has the meaning set forth in Section 5.7(b)(ii). "SUCCESSOR ENTITY" has the meaning set forth in Section 3.15(b)(i). "SUCCESSOR SECURITIES" has the meaning set forth in Section 3.15(b)(i)(B). "SUCCESSOR INSTITUTIONAL TRUSTEE" has the meaning set forth in Section 5.7(b)(i). "SUPER MAJORITY" has the meaning set forth in Section 2.6(a)(ii). "SUPPLEMENTAL INDENTURE" means that Second Supplemental Indenture dated as of ________________ between Debenture Issuer and The Bank of New York, as Trustee. "TAX EVENT" has the meaning set forth in Annex I. "10% IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as provided in the terms of the Preferred Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Preferred Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of 10% or more of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. 7 "TREASURY REGULATIONS" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "TRUST" has the meaning set forth in the Recitals. "TRUSTEE" or "TRUSTEES" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and each other Person who may from time to time be duly appointed, qualified and serving as a Trustee in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder. "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended from time to time, or any successor legislation. "UNDERWRITING AGREEMENT" means the Underwriting Agreement by and among Unocal, the Trust and the underwriters named in Schedule I thereto. "UNOCAL" means Unocal Corporation, a Delaware corporation, or any successor entity in a merger, consolidation or amalgamation. ARTICLE II TRUST INDENTURE ACT SECTION 2.1. TRUST INDENTURE ACT: APPLICATION. (a) This Declaration is subject to the provisions of the Trust Indenture Act that are required to be part of this Declaration and shall, to the extent applicable, be governed by such provisions. (b) The Institutional Trustee shall be the only Trustee which is a Trustee for the purposes of the Trust Indenture Act. (c) If and to the extent that any provision of this Declaration limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. (d) The application of the Trust Indenture Act to this Declaration shall not affect the nature of the Securities as equity securities representing undivided beneficial interests in the assets of the Trust. SECTION 2.2. LISTS OF HOLDERS OF SECURITIES. (a) Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the Institutional Trustee (i), except while the Preferred Securities remain in book-entry only form, at least one Business Day prior to the date for payment of Distributions, a list, in such form as the 8 Institutional Trustee may reasonably require, of the names and addresses of the Holders of the Securities ("List of Holders") as of such record date, PROVIDED that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Institutional Trustee. The Institutional Trustee shall preserve, in as current a form as is reasonably practicable, all information contained in Lists of Holders given to it or which it receives in the capacity as Paying Agent (if acting in such capacity) PROVIDED that the Institutional Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Institutional Trustee shall comply with its obligations under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act. SECTION 2.3. REPORTS BY THE INSTITUTIONAL TRUSTEE. Within 60 days after May 15 of each year, the Institutional Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Institutional Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. SECTION 2.4. PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE. Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Institutional Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Delivery of such reports, information and documents to the Institutional Trustee is for informational purposes only and the Institutional Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Sponsor's compliance with any of its covenants hereunder (as to which the Institutional Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Institutional Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Declaration that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. 9 SECTION 2.6. EVENTS OF DEFAULT: WAIVER. (a) The Holders of a Majority in liquidation amount of Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default in respect of the Preferred Securities and its consequences, PROVIDED that, if the underlying Indenture Event of Default: (i) is not waivable under the Indenture, such Event of Default under the Declaration shall also not be waivable; or (ii) requires the consent or vote of the Holders of greater than a majority (a "Super Majority") in principal amount of the Debentures to be waived under the Indenture, such Event of Default under the Declaration may only be waived by the vote of the Holders of at least the same Super Majority percentage in liquidation amount of the Preferred Securities as is required under the Indenture of aggregate principal amount of the Debentures outstanding. The foregoing provisions of this Section 2.6(a) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such Indenture Event of Default shall cease to exist, and any Event of Default with respect to the Preferred Securities arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other Indenture Event of Default or Event of Default with respect to the Preferred Securities or impair any right consequent thereon. Any waiver by the Holders of the Preferred Securities of an Event of Default with respect to the Preferred Securities shall also be deemed to constitute a waiver by the Holders of the Common Securities of any such Event of Default with respect to the Common Securities for all purposes of this Declaration without any further act, vote, or consent of the Holders of the Common Securities. (b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on behalf of the Holders of all of the Common Securities, waive any past Event of Default with respect to the Common Securities and its consequences, PROVIDED that, if the underlying Indenture Event of Default: (i) is not waivable under the Indenture, such Event of Default under the Declaration shall also not be waivable unless the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.6(b); (ii) requires the consent or vote of a Super Majority in principal amount of the holders of the Debentures to be waived under the Indenture, except where such Event of Default under the Declaration may only be waived by the vote of the Holders of at least the same Super Majority percentage in liquidation amount of the Common Securities as is required under the Indenture of aggregate principal amount of the Debentures 10 outstanding, unless the Holders of the Common Securities are deemed to have waived such Event of Default under the Declaration as provided below in this Section 2.6(b); PROVIDED FURTHER, each Holder of Common Securities will be deemed to have waived any such Indenture Event of Default and all Events of Default with respect to the Common Securities and its consequences until all Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated, and until such Events of Default with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Institutional Trustee will be deemed to be acting solely on behalf of the Holders of the Preferred Securities and only the Holders of the Preferred Securities will have the right to direct the Institutional Trustee in accordance with the terms of the Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(l)(A) and 316(a)(l)(B) of the Trust Indenture Act are hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon such cure, waiver or other elimination, any such Indenture Event of Default shall cease to exist and any Event of Default with respect to the Common Securities arising therefrom shall be deemed to have been cured, waived or otherwise eliminated for every purpose of this Declaration, but no such cure, waiver or other elimination shall extend to any subsequent or other Indenture Event of Default or Event of Default with respect to the Common Securities or impair any right consequent thereon. (c) A waiver of an Indenture Event of Default by the Institutional Trustee at the direction of the Holders of the Preferred Securities, constitutes a waiver of the corresponding Event of Default under this Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(l)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. SECTION 2.7. EVENT OF DEFAULT; NOTICE. (a) The Institutional Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Securities, notices of all defaults with respect to the Securities actually known to a Responsible Officer of the Institutional Trustee, unless such defaults have been cured before the giving of such notice (the term "defaults" for the purposes of this Section 2.7(a) being hereby defined to be an Indenture Event of Default, not including any periods of grace provided for therein and irrespective of the giving of any notice provided therein); PROVIDED that, except for a default in the payment of principal of (or premium, if any) or interest on any of the Debentures, the Institutional Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Institutional Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Securities. (b) The Institutional Trustee shall not be deemed to have knowledge of any default except: (i) a default under Sections 6.01(a) or (b) of the Base Indenture; or 11 (ii) any default as to which the Institutional Trustee shall have received written notice or of which a Responsible Officer of the Institutional Trustee charged with the administration of the Declaration shall have actual knowledge. ARTICLE III ORGANIZATION SECTION 3.1. NAME. The Trust is named "Unocal Capital Trust II." Such name may be modified from time to time by the Regular Trustees following written notice to the Holders of Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Regular Trustees. SECTION 3.2. OFFICE. The address of the principal office of the Trust is c/o Unocal Corporation, 2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245. On 10 Business Days written notice to the Holders of Securities, the Regular Trustees may designate another principal office. SECTION 3.3. PURPOSES AND FUNCTIONS. The sole purposes and functions of the Trust are (a) to issue and sell Securities and use the gross proceeds from such sale to acquire Debentures, and (b) except as otherwise limited herein, to engage in only those other activities necessary or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States federal income tax purposes as a grantor trust. SECTION 3.4. AUTHORITY. Subject to the limitations provided in this Declaration and to the specific duties of the Institutional Trustee, the Regular Trustees shall have exclusive and complete authority to carry out the purposes and functions of the Trust. An action taken by the Regular Trustees in accordance with their powers shall constitute the act of and serve to bind the Trust and an action taken by the Institutional Trustee on behalf of the Trust in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees as set forth in this Declaration. SECTION 3.5. TITLE TO PROPERTY OF THE TRUST. Except as provided in Section 3.8 with respect to the Debentures and the Institutional Trustee Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial interest in the assets of the Trust. 12 SECTION 3.6. POWERS. DUTIES AND AUTHORITY OF THE REGULAR TRUSTEES. The Regular Trustees shall have the exclusive power, duty and authority to cause the Trust to engage in the following activities: (a) to issue and sell the Preferred Securities and the Common Securities in accordance with this Declaration; PROVIDED, HOWEVER, that the Trust may issue no more than one series of Preferred Securities (which series of Preferred Securities shall include any Contract Preferred Securities to be issued hereunder) and no more than one series of Common Securities, and, PROVIDED FURTHER, that there shall be no interests in the Trust other than the Securities; (b) in connection with the issuance of the Securities, at the direction of the Sponsor, to: (i) execute and file with the Commission the registration statement on Form S-3 prepared by the Sponsor, including any amendments thereto, pertaining to the issuance of Preferred Securities and the Preferred Securities Guarantee; (ii) execute and file any documents prepared by the Sponsor, or take any acts as determined by the Sponsor to be necessary in order to qualify or register all or part of the Preferred Securities in any State in which the Sponsor has determined to qualify or register such Preferred Securities for sale; (iii) if desired by the Sponsor, execute and file an application, prepared by the Sponsor, to the New York Stock Exchange, the American Stock Exchange or any other national stock exchange or the Nasdaq National Market for listing or quotation upon notice of issuance of any Preferred Securities; (iv) execute and file with the Commission a request for exemption from the reporting requirements of the Securities Exchange Act of 1934, as amended; (c) to acquire the Debentures using the proceeds from the issuance of the Securities; PROVIDED, HOWEVER, that the Regular Trustees shall cause legal title to the Debentures to be held of record in the name of the Institutional Trustee for the benefit of the Holders of the Preferred Securities and the Holders of Common Securities; (d) to give the Sponsor and the Institutional Trustee prompt written notice of the occurrence of a Special Event; PROVIDED that the Regular Trustees shall consult with the Sponsor and the Institutional Trustee before taking or refraining from taking any Ministerial Action in relation to a Special Event; (e) to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including and with respect to, for the purposes of Section 316(c) of the Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant notices to the Holders of Preferred Securities, Holders of Common Securities and, to the extent applicable, to any stock exchange or other 13 organization on which the Preferred Securities are listed or quoted or to the Clearing Agency, as to such actions and applicable record dates; (f) to take all actions and perform such duties as may be required of the Regular Trustees pursuant to the terms of the Securities; (g) to bring or defend, pay, collect, compromise, settle, terminate, arbitrate, resort to legal action, or otherwise adjust claims or demands of or against the Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Institutional Trustee has the exclusive power to bring such Legal Action; (h) to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for such services; (i) to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act; (j) to give the certificate required by Section 314(a)(4) of the Trust Indenture Act to the Institutional Trustee, which certificate may be executed by any Regular Trustee; (k) to incur expenses that are necessary or incidental to carry out any of the purposes or functions of the Trust; (1) to act as, or appoint another Person to act as, registrar and transfer agent for the Securities; (m) to give prompt written notice to the Holders of the Securities of any notice received from the Debenture Issuer of its election to defer payments of interest on the Debentures as permitted under the Indenture; (n) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Securities or to enable the Trust to effect the purposes for which the Trust was created; (o) to take any action, not inconsistent with this Declaration or with applicable law, that the Regular Trustees determine in their discretion to be necessary or desirable in carrying out the activities of the Trust as set out in this Section 3.6, including, but not limited to: (i) causing the Trust not to be deemed to be an Investment Company required to be registered under the Investment Company Act; 14 (ii) causing the Trust not to be classified as other than a grantor trust for United States federal income tax purposes; and (iii) cooperating with the Debenture Issuer so that the Debentures will be treated as indebtedness of the Debenture Issuer for United States federal income tax purposes, PROVIDED THAT such action does not adversely affect the interests of Holders; (p) to take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of the Trust; (q) to execute all documents, agreements or instruments and to take all action necessary to cause the Clearing Agency to act as clearing agency for the securities and to perform all duties required by such documents, agreements and instruments; and (r) to execute all documents, agreements or instruments, perform all duties and powers, and do all things for and on behalf of the Trust in all matters necessary or incidental to the foregoing. The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular Trustees shall not take any action that is inconsistent with the purposes and functions of the Trust set forth in Section 3.3. Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the authority of the Institutional Trustee set forth in Section 3.8. Any expenses incurred by the Regular Trustees pursuant to this Section 3.6 shall be reimbursed by the Sponsor. SECTION 3.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES. (a) The Trust shall not, and the Trustees (including the Institutional Trustee) shall not, engage in any activity other than as required or authorized by this Declaration. In particular, the Trust shall not and the Trustees (including the Institutional Trustee) shall cause the Trust not to: (i) invest any proceeds received by the Trust from holding the Debentures, but shall distribute all such proceeds to Holders of Securities pursuant to the terms of this Declaration and of the Securities; (ii) acquire any assets other than as expressly provided herein; (iii) possess Trust property for other than a Trust purpose; 15 (iv) make any loans or incur any indebtedness other than loans represented by the Debentures; (v) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Securities in any way whatsoever except as specifically provided herein; (vi) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities; or (vii) other than as provided in this Declaration or Annex I, (A) direct the time, method and place of exercising any trust or power conferred upon the Debenture Trustee with respect to the Debentures, (B) waive any past default that is waivable under the Indenture, (C) exercise any right to rescind or annul any declaration that the principal of all the Debentures shall be due and payable, or (D) consent to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required unless the Trust shall have received an opinion of counsel to the effect that such modification will not cause more than an insubstantial risk that for United States federal income tax purposes the Trust will not be classified as a grantor trust. SECTION 3.8. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE. (a) Unless distributed to the Holders of the Securities in accordance with the terms thereof, the legal title to the Debentures shall be owned by and held of record in the name of the Institutional Trustee in trust for the benefit of the Holders of the Securities. The right, title and interest of the Institutional Trustee to the Debentures shall vest automatically in each Person who may hereafter be appointed as Institutional Trustee in accordance with Section 5.7. Such vesting and succession of title shall be effective whether or not conveyancing documents with regard to the Debentures have been executed and delivered. (b) The Institutional Trustee shall not transfer its right, title and interest in the Debentures to the Regular Trustees or to the Delaware Trustee (if the Institutional Trustee does not also act as Delaware Trustee). 16 (c) The Institutional Trustee shall: (i) establish and maintain a segregated non-interest bearing trust account (the "Institutional Trustee Account") in the name of and under the exclusive control of the Institutional Trustee on behalf of the Holders of the Securities and, upon the receipt of payments of funds made in respect of the Debentures held by the Institutional Trustee, deposit such funds into the Institutional Trustee Account and make payments to the Holders of the Preferred Securities and Holders of the Common Securities from the Institutional Trustee Account in accordance with Section 6.1. Funds in the Institutional Trustee Account shall be held uninvested until disbursed in accordance with this Declaration. The Institutional Trustee Account shall be an account that is maintained with a banking institution the rating on whose long-term unsecured indebtedness is at least equal to the rating assigned to the Preferred Securities by a "nationally recognized statistical rating organization", as that term is defined for purposes of Rule 436(g)(2) under the Securities Act; (ii) engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Preferred Securities and the Common Securities to the extent the Debentures are redeemed or mature; and (iii) upon written notice of distribution issued by the Regular Trustees in accordance with the terms of the Securities, engage in such ministerial activities as shall be necessary or appropriate to effect the distribution of the Debentures to Holders of Securities upon the occurrence of certain special events (as may be defined in the terms of the Securities) arising from a change in law or a change in legal interpretation or other specified circumstances pursuant to the terms of the Securities. (d) The Institutional Trustee shall take all actions and perform such duties as may be specifically required of the Institutional Trustee pursuant to the terms of the Securities. (e) The Institutional Trustee shall take any Legal Action which arises out of or in connection with an Event of Default of which a Responsible Officer of the Institutional Trustee has actual knowledge or the Institutional Trustee's duties and obligations under this Declaration or the Trust Indenture Act; PROVIDED HOWEVER, that if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), then a Holder of Preferred Securities may directly institute a proceeding for enforcement of payment to such Holder of the principal of or interest on Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities of such Holder (a "Direct Action") on or after the respective due date specified in the Debentures. In connection with such Direct Action, the rights of the Holders of the Common Securities will be subrogated to the rights of such Holder of Preferred Securities to the extent of any 17 payment made by the Debenture Issuer to such Holder of Preferred Securities in such Direct Action. Except as provided in the preceding sentences, the Holders of Preferred Securities will not be able to exercise directly any other remedy available to the holder of the Debentures. (f) The Institutional Trustee shall not resign as a Trustee unless either: (i) the Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders of Securities pursuant to the terms of the Securities; or (ii) a Successor Institutional Trustee has been appointed and has accepted that appointment in accordance with Section 5.7. (g) The Institutional Trustee shall have the legal power to exercise all of the rights, powers and privileges of a holder of Debentures under the Indenture and, if an Event of Default actually known to a Responsible Officer of the Institutional Trustee occurs and is continuing, the Institutional Trustee shall, for the benefit of Holders of the Securities, enforce its rights as holder of the Debentures subject to the rights of the Holders pursuant to the terms of such Securities. (h) The Institutional Trustee may authorize one or more Persons (each, a "Paying Agent") to pay Distributions on behalf of the Trust with respect to all securities and any such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any Paying Agent may be removed by the Institutional Trustee at any time and a successor Paying Agent or additional Paying Agents may be appointed at any time by the Institutional Trustee. (i) Subject to this Section 3.8, the Institutional Trustee shall have none of the duties, liabilities, powers, or the authority of the Regular Trustees set forth in Section 3.6. The Institutional Trustee must exercise the powers set forth in this Section 3.8 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Institutional Trustee shall not take any action that is inconsistent with the purposes and functions of the Trust set out in Section 3.3. SECTION 3.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL TRUSTEE. (a) The Institutional Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Declaration and no implied covenants shall be read into this Declaration against the Institutional Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Institutional Trustee has actual knowledge, the Institutional Trustee shall exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 18 (b) No provision of this Declaration shall be construed to relieve the Institutional Trustee from liability for its own negligent action, its own negligent failure to act, or its own will misconduct, except that: (i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Institutional Trustee shall be determined solely by the express provisions of this Declaration and the Institutional Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Declaration, and no implied covenants or obligations shall be read into this Declaration against the Institutional Trustee; and (B) in the absence of bad faith on the part of the Institutional Trustee, the Institutional Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Institutional Trustee and conforming to the requirements of this Declaration; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Institutional Trustee, the Institutional Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Declaration; (ii) the Institutional Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Institutional Trustee, unless it shall be proved that the Institutional Trustee was negligent in ascertaining the pertinent facts; (iii) the Institutional Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Institutional Trustee, or exercising any trust or power conferred upon the Institutional Trustee under this Declaration; (iv) no provision of this Declaration shall require the Institutional Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Declaration or indemnity reasonably satisfactory to the Institutional Trustee against such risk or liability is not reasonably assured to it; (v) the Institutional Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Debentures and the Institutional 19 Trustee Account shall be to deal with such property in a similar manner as the Institutional Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Institutional Trustee under this Declaration and the Trust Indenture Act; (vi) the Institutional Trustee shall have no duty or liability for or with respect to the value, genuineness, existence or sufficiency of the Debentures or the payment of any taxes or assessments levied thereon or in connection therewith; (vii) the Institutional Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree in writing with the Sponsor. Money held by the Institutional Trustee need not be segregated from other funds held by it except in relation to the Institutional Trustee Account maintained by the Institutional Trustee pursuant to Section 3.8(c)(i) and except to the extent otherwise required by law; and (viii) the Institutional Trustee shall not be responsible for monitoring the compliance by the Regular Trustees or the Sponsor with their respective duties under this Declaration, nor shall the Institutional Trustee be liable for any default or misconduct of the Regular Trustees or the Sponsor. SECTION 3.10. CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE. (a) Subject to the provisions of Section 3.9: (i) the Institutional Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; (ii) any direction or act of the Sponsor or the Regular Trustees contemplated by this Declaration shall be sufficiently evidenced by an Officers' Certificate; (iii) whenever in the administration of this Declaration, the Institutional Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Institutional Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Sponsor or the Regular Trustees; (iv) the Institutional Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation 20 statement or any filing under tax or securities laws) or any rerecording, refiling or registration thereof; (v) the Institutional Trustee may consult with counsel of its selection or other experts and the advice or opinion of such counsel and experts with respect to legal matters or advice within the scope of such experts' area of expertise shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion, such counsel may be counsel to the Sponsor or any of its Affiliates, and may include any of its employees. The Institutional Trustee shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction; (vi) the Institutional Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any Holder, unless such Holder shall have provided to the Institutional Trustee security and indemnity, reasonably satisfactory to the Institutional Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Institutional Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Institutional Trustee PROVIDED, that, nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the Institutional Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Declaration; (vii) the Institutional Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Institutional Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; (viii) the Institutional Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees or attorneys and the Institutional Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (ix) any action taken by the Institutional Trustee or its agents hereunder shall bind the Trust and the Holders of the Securities, and the signature of the Institutional Trustee or its agents alone shall be sufficient and effective to perform any such action and no third party shall be required to inquire as to the authority of the Institutional Trustee to so act or as to its compliance with any of the terms and provisions of this Declaration, both of which shall be conclusively evidenced by the Institutional Trustee's or its agent's taking such action; 21 (x) whenever in the administration of this Declaration the Institutional Trustee shall deem it desirable to receive written instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Institutional Trustee (i) may request written instructions from the Holders of the Securities which instructions may only be given by the Holders of the same proportion in liquidation amount of the Securities as would be entitled to direct the Institutional Trustee under the terms of the Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in or accordance with such instructions; (xi) except as otherwise expressly provided by this Declaration, the Institutional Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration; and (xii) the Institutional Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Declaration. (b) No provision of this Declaration shall be deemed to impose any duty or obligation on the Institutional Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Institutional Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Institutional Trustee shall be construed to be a duty. SECTION 3.11. DELAWARE TRUSTEE. Notwithstanding any other provision of this Declaration other than Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities of the Regular Trustees or the Institutional Trustee described in this Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Business Trust Act. SECTION 3.12. EXECUTION OF DOCUMENTS. Except as otherwise required by the Business Trust Act, any Regular Trustee is authorized to execute on behalf of the Trust any documents that the Regular Trustees have the power and authority to execute pursuant to Section 3.6; PROVIDED that, the registration statement referred to in Section 3.6(b)(i), including any amendments thereto, shall be signed by all of the Regular Trustees. 22 SECTION 3.13. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained in this Declaration and the Securities shall be taken as the statements of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration or the Securities. SECTION 3.14. DURATION OF TRUST. The Trust, unless terminated pursuant to the provisions of Article VIII hereof, shall have existence for thirty-five (35) years from the date of the Original Declaration. SECTION 3.15. MERGERS. (a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, any corporation or other body, except as described in Sections 3.15(b) and (c) or Section 9 of Annex I. (b) The Trust may, with the consent of the Regular Trustees or, if there are more than two, a majority of the Regular Trustees and without the consent of the Holders of the Securities, the Delaware Trustee or the Institutional Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any state; PROVIDED that: (i) such successor entity (the "Successor Entity") either: (A) expressly assumes all of the obligations of the Trust under the Securities; or (B) substitutes for the Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Preferred Securities rank with respect to Distributions and payments upon liquidation, redemption and otherwise; (ii) the Debenture Issuer expressly acknowledges a trustee of the Successor Entity that possesses the same powers and duties as the Institutional Trustee as the Holder of the Debentures; (iii) the Debenture Issuer uses its reasonable efforts to cause the Preferred Securities or any Successor Securities to be listed or quoted, or to cause any Successor Securities to be listed or quoted upon notification of issuance, on any national securities exchange or with another organization on which the Preferred Securities are then listed or quoted; 23 (iv) such merger, consolidation, amalgamation or replacement does not cause the Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization; (v) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of such Holders' interests in the new entity); (vi) such Successor Entity has a purpose identical to that of the Trust; (vii) prior to such merger, consolidation, amalgamation or replacement, the Sponsor has received an opinion of independent counsel to the Trust experienced in such matters to the effect that: (A) such merger, consolidation, amalgamation or replacement does not adversely affect the legal rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other thin with respect to any dilution of the Holders' interest in the new entity); and (B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor the Successor Entity will be required to register as an Investment Company under the Investment Company Act; (C) following such merger, consolidation, amalgamation or replacement, the Trust (or the Successor Entity) will continue to be, or will be, classified as a grantor trust for United States federal income tax purposes; and (viii) the Sponsor guarantees the obligations of such Successor Entity under the Successor Securities at least to the extent provided by the Preferred Securities Guarantee. (c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders of 100% in liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or Successor Entity to be classified as other than a grantor trust for United States federal income tax purposes. ARTICLE IV SPONSOR SECTION 4.1. ISSUANCE OF SECURITIES TO SPONSOR. The aggregate stated liquidation amount of Common Securities outstanding at any time shall be no less than 1% of the capital of the Trust. 24 SECTION 4.2. RESPONSIBILITIES OF THE SPONSOR. In connection with the issuance and sale of the Preferred Securities, the Sponsor shall have the exclusive right and responsibility to engage in the following activities: (a) to prepare for filing by the Trust with the Commission a registration statement on Form S-3, including any amendments thereto, pertaining to the issuance of the Preferred Securities and the Preferred Securities Guarantee; (b) to determine the States in which to take appropriate action to qualify or register all or part of the Preferred Securities and the Preferred Securities Guarantee and to do any and all such acts, other than actions which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States; (c) if the Sponsor so desires, to prepare for filing by the Trust an application to the New York Stock Exchange or any other national stock exchange or the Nasdaq National Market for listing upon notice of issuance of any Preferred Securities; and (d) to negotiate the terms of, execute and enter into, on behalf of the Trust, the Underwriting Agreement and cause the Trust to perform its obligations thereunder; and (e) to negotiate the form of, execute and enter into, on behalf of the Trust, Delayed Delivery Contracts and cause the Trust to perform its obligations thereunder. ARTICLE V TRUSTEES SECTION 5.1. NUMBER OF TRUSTEES. The number of Trustees initially shall be five (5), and: (a) at any time before the issuance of any Securities, the Sponsor may, by written instrument, increase or decrease the number of Trustees; and (b) after the issuance of any Securities, the number of Trustees may be increased or decreased by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities or by written consent; PROVIDED, HOWEVER, that the number of Trustees shall in no event be less than two (2); PROVIDED FURTHER that (i) if required by Section 5.2, one Trustee shall be the Delaware Trustee; (ii) there shall be at least one Trustee who is an employee or officer of, or is affiliated with the Sponsor (a "Regular Trustee"); and (iii) if required by Section 5.3, one Trustee shall be the Institutional Trustee, and such Institutional Trustee may also serve as Delaware Trustee if it meets the applicable requirements. 25 SECTION 5.2. DELAWARE TRUSTEE. (a) If required by the Business Trust Act, one Trustee (the "Delaware Trustee") shall be: (i) a natural person who is a resident of the State of Delaware; or (ii) if not a natural person, an entity which has its principal place of business in the State of Delaware, and otherwise meets the requirements of applicable law. (b) If the Institutional Trustee meets the requirements of Section 5.2(a), then the Institutional Trustee shall also be the Delaware Trustee and Section 3.11 shall have no application. SECTION 5.3. INSTITUTIONAL TRUSTEE ELIGIBILITY. (a) For so long as this Declaration is required to qualify as an indenture under the Trust Indenture Act, there shall at all times be one Trustee (the "Institutional Trustee") which shall: (i) not be an Affiliate of the Sponsor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then for the purposes of this Section 5.3(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Institutional Trustee shall cease to be eligible to so act under Section 5.3(a), the Institutional Trustee shall immediately resign in the manner and with the effect set forth in Section 5.7(c). (c) If the Institutional Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Institutional Trustee and the Holder of the Common Securities (as if it were the obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. (d) The Preferred Securities Guarantee shall be deemed to be specifically described in this Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the Trust Indenture Act. 26 (e) The initial Institutional Trustee shall be: The Bank of New York SECTION 5.4. CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE TRUSTEE GENERALLY. Each Regular Trustee and the Delaware Trustee (unless the Institutional Trustee also acts as Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more Authorized Officers. SECTION 5.5. REGULAR TRUSTEES. (a) The initial Regular Trustees shall be: Darrell D. Chessum Daniel A. Franchi Richard L. Walton (b) Except as expressly set forth in this Declaration and except if a meeting of the Regular Trustees is called with respect to any matter over which the Regular Trustees have power to act, any power of the Regular Trustees may be exercised by, or with the consent of, any one such Regular Trustee. (c) Unless otherwise determined by the Regular Trustees, and except as otherwise required by the Business Trust Act or applicable law, any Regular Trustee is authorized to execute on behalf of the Trust any documents which the Regular Trustees have the power and authority to cause the Trust to execute pursuant to Section 3.6, PROVIDED, that, the registration statement referred to in Section 3.6, including any amendments thereto, shall be signed by all of the Regular Trustees personally or by power of attorney. SECTION 5.6. DELAWARE TRUSTEE. The initial Delaware Trustee shall be: The Bank of New York (Delaware). SECTION 5.7. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES. (a) Subject to Section 5.7(b), Trustees may be appointed or removed without cause at any time: (i) until the issuance of any Securities, by written instrument executed by the Sponsor; and (ii) after the issuance of any Securities, by vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities. 27 (b) (i) the Trustee that acts as Institutional Trustee shall not be removed in accordance with Section 5.7(a) until a successor Institutional Trustee (a "Successor Institutional Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Institutional Trustee and delivered to the Regular Trustees and the Sponsor; and (ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with this Section 5.7(a) until a successor Trustee possessing the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Delaware Trustee and delivered to the Regular Trustees and the Sponsor. (c) A Trustee appointed to office shall hold office until his successor shall have been appointed or until his death, removal or resignation. Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or upon such later date as is specified therein; PROVIDED, HOWEVER, that: (i) No such resignation of the Trustee that acts as the Institutional Trustee shall be effective: (A) until a Successor Institutional Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Institutional Trustee and delivered to the Trust, the Sponsor and the resigning Institutional Trustee; or (B) until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the Holders of the Securities; and (ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee. (d) The Holders of the Common Securities shall use their best efforts to promptly appoint a Successor Delaware Trustee or Successor Institutional Trustee as the case may be if the Institutional Trustee or the Delaware Trustee delivers an instrument of resignation in accordance with this Section 5.7. (e) If no Successor Institutional Trustee or Successor Delaware Trustee shall have been appointed and accepted appointment as provided in this Section 5.7 within 60 days after delivery of an instrument of resignation or removal, the Institutional Trustee or Delaware Trustee resigning or being removed, as applicable, may petition any court of competent jurisdiction for appointment of a Successor Institutional Trustee or Successor Delaware Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor Institutional Trustee or Successor Delaware Trustee, as the case may be. 28 (f) No Institutional Trustee or Delaware Trustee shall be liable for the acts or omissions to act of any Successor Institutional Trustee or Successor Delaware Trustee, as the case may be. SECTION 5.8. VACANCIES AMONG TRUSTEES. If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees or, if there are more than two, a majority of the Regular Trustees shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 5.7. SECTION 5.9. EFFECT OF VACANCIES. The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by the appointment of a Regular Trustee in accordance with Section 5.7, the Regular Trustees in office, regardless of their number, shall have all the powers granted to the Regular Trustees and shall discharge all the duties imposed upon the Regular Trustees by this Declaration. SECTION 5.10. MEETINGS. If there is more than one Regular Trustee, meetings of the Regular Trustees shall be held from time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be held at a time and place fixed by resolution of the Regular Trustees. Notice of any in-person meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meetings of the Regular Trustee or any committee thereof shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting to the transaction of any activity on the ground that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by telephone) and eligible to vote with respect to such matter, PROVIDED that a Quorum is present, or without a meeting by, the unanimous written consent of the Regular Trustees. In the event there is only one Regular Trustee, any and all action of such Regular Trustee shall be evidenced by a written consent of such Regular Trustee. 29 SECTION 5.11. DELEGATION OF POWER BY REGULAR TRUSTEES. (a) Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents, including, but not limited to those contemplated by Sections 3.6, 3.12 and 5.5(b), or by executing or making any other governmental filing. (b) The Regular Trustees shall have power to delegate from time to time to such of their number or to officers of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. SECTION 5.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Institutional Trustee or the Delaware Trustee, as the case may be, may be merged or converted or with which either may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Institutional Trustee or the Delaware Trustee, as the case may be, shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Institutional Trustee or the Delaware Trustee, as the case may be, shall be the successor of the Institutional Trustee or the Delaware Trustee, as the case may be, hereunder, PROVIDED such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. ARTICLE VI DISTRIBUTIONS SECTION 6.1. DISTRIBUTIONS. Holders shall receive Distributions (as defined herein) in accordance with the applicable terms of the relevant Holder's Securities. Distributions shall be made on the Preferred Securities and the Common Securities in accordance with the preferences set forth in their respective terms. If and to the extent that the Debenture Issuer makes a payment of interest (including Compounded Interest (as defined in the Indenture) and Additional Interest (as defined in the Indenture), premium and/or principal on the Debentures held by the Institutional Trustee (the amount of any such payment being a "Payment Amount"), the Institutional Trustee shall and is directed, to the extent funds are available for that purpose, to make a distribution (a "Distribution") of the Payment Amount to Holders. ARTICLE VII ISSUANCE OF SECURITIES SECTION 7.1. GENERAL PROVISIONS REGARDING SECURITIES. (a) The Regular Trustees shall on behalf of the Trust issue one class of preferred securities (which preferred securities may be or include Contract Preferred Securities issued and 30 sold pursuant to Delayed Delivery Contracts) having such terms as are set forth in Annex I (the "Preferred Securities") and one class of common securities having such terms as are set forth in Annex I (the "Common Securities"). The Securities represent undivided beneficial interests in the assets of the Trust. The Trust shall issue no securities or other interests in the assets of the Trust other than the Preferred Securities and the Common Securities. (b) The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust. (c) Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and non-assessable. (d) Every Person, by virtue of having become a Holder or a Preferred Security Beneficial Owner in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Declaration. SECTION 7.2. EXECUTION AND AUTHENTICATION. (a) The Certificates shall be signed on behalf of the Trust by a Regular Trustee. In case any Regular Trustee of the Trust who shall have signed any of the Securities shall cease to be such Regular Trustee before the Certificates so signed shall be delivered by the Trust, such Certificates nevertheless may be delivered as though the person who signed such Certificates had not ceased to be such Regular Trustee; and any Certificate may be signed on behalf of the Trust by such persons who, at the actual date of execution of such Security, shall be the Regular Trustees of the Trust, although at the date of the execution and delivery of the Declaration any such person was not such a Regular Trustee. (b) One Regular Trustee shall sign the Preferred Securities for the Trust by manual or facsimile signature. Unless otherwise determined by the Trust, such signature shall, in the case of Common Securities, be a manual signature. A Preferred Security shall not be valid until authenticated by the manual signature of an authorized signatory of the Institutional Trustee. The signature shall be conclusive evidence that the Preferred Security has been authenticated under this Declaration. Upon a written order of the Trust signed by one Regular Trustee, the Institutional Trustee shall authenticate the Preferred Securities for original issue. The Institutional Trustee may appoint an authenticating agent acceptable to the Trust to authenticate Preferred Securities. An authenticating agent may authenticate Preferred Securities whenever the Institutional Trustee may do so. Each reference in this Declaration to authentication by the Institutional Trustee includes authentication by such agent. An authenticating agent has the same rights as the Institutional Trustee to deal with the Company or an Affiliate. 31 SECTION 7.3. FORM AND DATING. The Preferred Securities and the Institutional Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 and the Common Securities shall be substantially in the form of Exhibit A-2, each of which is hereby incorporated in and expressly made a part of this Declaration. Certificates may be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by their execution thereof. The Securities may have letters, numbers, notations or other marks of identification or designation and such legends or endorsements required by law, stock exchange rule, agreements to which the Trust is subject, if any, or usage (PROVIDED that any such notation, legend or endorsement is in a form acceptable to the Trust). The Trust at the direction of the Sponsor shall furnish any such legend not contained in Exhibit A-1 to the Institutional Trustee in writing. Each Preferred Security Certificate shall be dated the date of its authentication. The terms and provisions of the Securities set forth in Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and to the extent applicable, the Institutional Trustee and the Sponsor, by their execution and delivery of this Declaration, expressly agree to such terms and provisions and to be bound thereby. SECTION 7.4. PAYING AGENT. In the event that the Preferred Securities are not in book-entry only form, the Trust shall maintain in the Borough of Manhattan, City of New York, State of New York, an office or agency where the Preferred Securities may be presented for payment ("Paying Agent"). [The Trust shall maintain an office or agency where Securities may be presented for conversion ("Conversion Agent").] The Trust may appoint the Paying Agent [and the Conversion Agent] and may appoint one or more additional paying agents [and one or more additional conversion agents] in such other locations as it shall determine. The term "Paying Agent" includes any additional paying agent [and the term "Conversion Agent" includes any additional conversion agent]. The Trust may change any Paying Agent [or Conversion Agent] without prior notice to any Holder. The Trust shall notify the Institutional Trustee in writing of the name and address of any [Paying] Agent not a party to this Declaration. If the Trust fails to appoint or maintain another entity as Paying Agent [or Conversion Agent], the Institutional Trustee shall act as such. The Trust or any of its Affiliates may act as Paying Agent [or Conversion Agent]. The Trust shall act as Paying Agent [and Conversion Agent] for the Common Securities. [The Trust initially appoints the Institutional Trustee as Conversion Agent for the Preferred Securities.] ARTICLE VIII TERMINATION OF TRUST SECTION 8.1. TERMINATION OF TRUST. (a) The Trust shall dissolve: (i) upon the bankruptcy of the Sponsor; 32 (ii) upon the filing of a certificate of dissolution or its equivalent with respect to the Sponsor; the consent of a majority in liquidation amount of the Securities voting together as a single class to file a certificate of cancellation with respect to the Trust; or the revocation of the Sponsor's charter and the expiration of 90 days after the date of revocation without a reinstatement thereof; (iii) upon the entry of a decree of judicial dissolution of the Sponsor or the Trust; (iv) when all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Securities; (v) upon the occurrence and continuation of a Special Event in accordance with the terms of the Securities; [(vi) upon the distribution of the Sponsor's common stock to all Securities Holders upon conversion of all outstanding Preferred Securities;] (vii) the expiration of the term of the Trust on _________, 20__; or (viii) before the issuance of any Securities, with the consent of all of the Regular Trustees and the Sponsor. (b) As soon as is practicable after the occurrence of an event referred to in Section 8.1(a), the Trustees (each of whom is hereby authorized to take such action) shall file a certificate of cancellation with the Secretary of State of the State of Delaware terminating the Trust. (c) The provisions of Sections 3.9 and 3.10 and Article X shall survive the termination of the Trust. ARTICLE IX TRANSFER OF INTERESTS SECTION 9.1. TRANSFER OF SECURITIES. (a) Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Declaration and in the terms of the Securities. Any transfer or purported transfer of any Security not made in accordance with this Declaration shall be null and void. (b) Subject to this Article IX, Preferred Securities shall be freely transferable. (c) Subject to this Article IX, the Sponsor and any Related Party may only transfer Common Securities to the Sponsor or a Related Party of the Sponsor; PROVIDED that, any such transfer is subject to the condition precedent that the transferor obtain the written opinion of 33 independent counsel experienced in such matters that such transfer would not cause more than an insubstantial risk that: (i) the Trust would be classified for United States federal income tax purposes as other than a grantor trust; and (ii) the Trust would be an Investment Company required to be registered under the Investment Company Act. SECTION 9.2. TRANSFER OF CERTIFICATES. The Regular Trustees shall provide for the registration of Certificates and of transfers of Certificates, which will be effected without charge but only upon payment (with such indemnity as the Regular Trustees may require) in respect of any tax or other government charges that may be imposed in relation to it. Upon surrender for registration of transfer of any Certificate, the Regular Trustees shall cause one or more new Certificates to be issued in the name of the designated transferee or transferees. Every Certificate surrendered for registration of transfer shall be accompanied by a written instrument of transfer in form satisfactory to the Regular Trustees duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Certificate surrendered for registration of transfer shall be canceled by the Regular Trustees. A transferee of a Certificate shall be entitled to the rights and subject to the obligations of a Holder hereunder upon the receipt by such transferee of a Certificate. By acceptance of a Certificate, each transferee shall be deemed to have agreed to be bound by this Declaration. SECTION 9.3. DEEMED SECURITY HOLDERS. The Trustees may treat the Person in whose name any Certificate shall be registered on the books and records of the Trust as the sole Holder of such Certificate and of the Securities represented by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Certificate or in the Securities represented by such Certificate on the part of any Person, whether or not the Trust shall have actual or other notice thereof. SECTION 9.4. BOOK ENTRY INTERESTS. (a) On original issuance to the Sponsor, the Preferred Securities Certificates will be issued by or on behalf of the Trust in the form of one or more, fully registered, global Preferred Security Certificates (each a "Global Certificate"), either to the Sponsor or to the initial Clearing Agency for the benefit of the Sponsor. The Preferred Securities Certificates, upon the initial transfer from the Sponsor, will be in the form of Global Certificates held by the Clearing Agency. (b) Except as provided in Sections 9.4(a) and 9.7: (i) Global Certificates delivered to the Clearing Agency shall be registered on the books and records of the Trust in the name of the Clearing Agency or its nominee, and no Preferred Security Beneficial Owner will receive a Definitive Preferred Security 34 Certificate representing such Preferred Security Beneficial Owner's interests in such Global Certificates; (ii) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Declaration (including the payment of Distributions on the Global Certificates and receiving approvals, votes or consents hereunder) as the Holder of the Preferred Securities and the sole holder of the Global Certificates and shall have no obligation to the Preferred Security Beneficial Owners; (iii) to the extent that the provisions of this Section 9.4 conflict with any other provisions of this Declaration, the provisions of this Section 9.4 shall control; and (iv) the rights of the Preferred Security Beneficial Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Preferred Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants and receive and transmit payments of Distributions on the Global Certificates to such Clearing Agency Participants. The Clearing Agency will make book entry transfers among the Clearing Agency Participants. SECTION 9.5. NOTICES TO CLEARING AGENCY. Whenever a notice or other communication to the Preferred Security Holders is required under this Declaration, unless and until Definitive Preferred Security Certificates shall have been issued to the Preferred Security Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give all such notices and communications specified herein to be given to the Preferred Security Holders to the Clearing Agency, and shall have no notice obligations to the Preferred Security Beneficial Owners. SECTION 9.6. APPOINTMENT OF SUCCESSOR CLEARING AGENCY. If any Clearing Agency elects to discontinue its services as securities depositary with respect to the Preferred Securities, the Regular Trustees may, in their sole discretion, appoint a successor Clearing Agency with respect to such Preferred Securities. SECTION 9.7. DEFINITIVE PREFERRED SECURITY CERTIFICATES. If: (a) a Clearing Agency elects to discontinue its services as securities depositary with respect to the Preferred Securities and a successor Clearing Agency is not appointed within 90 days after such discontinuance pursuant to Section 9.6; or (b) the Regular Trustees elect after consultation with the Sponsor to terminate the book entry system through the Clearing Agency with respect to the Preferred Securities, then: 35 (c) definitive, fully registered Preferred Security Certificates (the "Definitive Preferred Security Certificates") shall be prepared by the Regular Trustees on behalf of the Trust with respect to such Preferred Securities; and (d) upon surrender of the Global Certificates by the Clearing Agency, accompanied by registration instructions, the Regular Trustees shall cause Definitive Preferred Securities Certificates to be delivered to Preferred Security Beneficial Owners in accordance with the instructions of the Clearing Agency. Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions and each of them may conclusively rely on and shall be protected in relying on, said instructions of the Clearing Agency. The Definitive Preferred Security Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or other marks of identification or designation and such legends or endorsements as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which Preferred Securities may be listed, or to conform to usage. SECTION 9.8. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If: (a) any mutilated Certificates should be surrendered to the Regular Trustees, or if the Regular Trustees shall receive evidence to their satisfaction of the destruction, loss or theft of any Certificate; and (b) there shall be delivered to the Regular Trustees such security or indemnity as may be required by them to keep each of them harmless. then, in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like denomination. In connection with the issuance of any new Certificate under this Section 9.8, the Regular Trustees may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the relevant Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS SECTION 10.1. LIABILITY. (a) Except as expressly set forth in this Declaration, the Preferred Securities Guarantee and the terms of the Securities, the Sponsor shall not be: 36 (i) personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders of the Securities which shall be made solely from assets of the Trust; or (ii) be required to pay to the Trust or to any Holder of Securities any deficit upon dissolution of the Trust or otherwise. (b) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of the Common Securities shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware, PROVIDED, HOWEVER, the Holders of the Common Securities shall be liable for all of the debts and obligations of the Trust (other than with respect to the Securities) to the extent not satisfied out of the Trust's assets, and, upon dissolution of the Trust, shall pay or make reasonable provision to pay all claims and obligations, including all contingent, conditional or unmatured claims and obligations known to the Trust and all claims and obligations which are known to the Trust but for which the identity of the claimant is unknown (other than with respect to amounts payable pursuant to the terms of the Securities) to the extent not satisfied out of the Trust's assets. (c) Pursuant to Section 3803(a) of the Business Trust Act, the Holders of the Preferred Securities shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. SECTION 10.2. EXCULPATION. (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's gross negligence or willful misconduct with respect to such acts or omissions. (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Trust, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Securities might properly be paid. 37 SECTION 10.3. FIDUCIARY DUTY. (a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other Covered Person for its good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity (other than the duties imposed on the Institutional Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person. (b) Unless otherwise expressly provided herein: (i) whenever a conflict of interest exists or arises between any Covered Persons; or (ii) whenever this Declaration or any other agreement contemplated herein or therein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust or any Holder of Securities, the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Declaration or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise. (c) Whenever in this Declaration an Indemnified Person is permitted or required to make a decision: (i) in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or (ii) in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Declaration or by applicable law. SECTION 10.4. INDEMNIFICATION. (a) (i) The Sponsor shall indemnify, to the full extent permitted by law, any Sponsor Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Trust) by reason of 38 the fact that he is or was a Sponsor Indemnified Person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Sponsor Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (ii) The Sponsor shall indemnify, to the full extent permitted by law, any Sponsor Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Trust to procure a judgment in its favor by reason of the fact that he is or was a Sponsor Indemnified Person against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such Sponsor Indemnified Person shall have been adjudged to be liable to the Trust unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such Court of Chancery or such other court shall deem proper. (iii) To the extent that a Sponsor Indemnified Person shall be successful on the merits or otherwise (including dismissal of an action without prejudice or the settlement of an action without admission of liability) in defense of any action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any claim, issue or matter therein, he shall be indemnified, to the full extent permitted by law, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (iv) Any indemnification under paragraphs (i) and (ii) of this Section 10.4(a) (unless ordered by a court) shall be made by the Sponsor only as authorized in the specific case upon a determination that indemnification of the Sponsor Indemnified Person is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (i) and (ii). Such determination shall be made (1) by the Regular Trustees by a majority vote of a quorum consisting of such Regular Trustees who were not parties to such action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion, or (3) by the Common Security Holder of the Trust. (v) Expenses (including attorneys' fees) incurred by a Sponsor Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the Sponsor in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking 39 by or on behalf of such Sponsor Indemnified Person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Sponsor as authorized in this Section 10.4(a). Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is reasonably and promptly made (i) by the Regular Trustees by a majority vote of a quorum of disinterested Regular Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion or (iii) the Common Security Holder of the Trust, that, based upon the facts known to the Regular Trustees, counsel or the Common Security Holder at the time such determination is made, such Sponsor Indemnified Person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Trust, or, with respect to any criminal proceeding, that such Sponsor Indemnified Person believed or had reasonable cause to believe his conduct was unlawful. In no event shall any advance be made in instances where the Regular Trustees, independent legal counsel or Common Security Holder reasonably determine that such person deliberately breached his duty to the Trust or its Common or Preferred Security Holders. (vi) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 10.4(a) shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may be entitled under any agreement, vote of stockholders or disinterested directors of the Sponsor or Preferred Security Holders of the Trust or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. All rights to indemnification under this Section 10.4(a) shall be deemed to be provided by a contract between the Sponsor and each Sponsor Indemnified Person who serves in such capacity at any time while this Section 10.4(a) is in effect. Any repeal or modification of this Section 10.4(a) shall not affect any rights or obligations then existing. (vii) The Sponsor or the Trust may purchase and maintain insurance on behalf of any person who is or was a Sponsor Indemnified Person against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Sponsor would have the power to indemnify him against such liability under the provisions of this Section 10.4(a). (viii) For purposes of this Section 10.4(a), references to "the Trust" shall include, in addition to the resulting or surviving entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger, so that any person who is or was a director, trustee, officer or employee of such constituent entity, or is or was serving at the request of such constituent entity as a director, trustee, officer, employee or agent of another entity, shall stand in the same position under the provisions of this Section 10.4(a) with respect to the resulting or surviving entity as he would have with respect to such constituent entity if its separate existence had continued. (ix) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 10.4(a) shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Sponsor Indemnified Person and shall inure to the benefit of the heirs, executors and administrators of such a person. 40 (b) The Sponsor agrees to indemnify the (i) Institutional Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Institutional Trustee and the Delaware Trustee, and (iv) any officers, directors, shareholders, members, partners, employees, representatives, custodians, nominees or agents of the Institutional Trustee and the Delaware Trustee (each of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified Person harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration or the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as set forth in this Section 10.4(b) shall survive the satisfaction and discharge of this Declaration. SECTION 10.5. OUTSIDE BUSINESS. Any Covered Person, the Sponsor, the Delaware Trustee and the Institutional Trustee may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Securities shall have no rights by virtue of this Declaration in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person, shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Covered Person, the Delaware Trustee and the Institutional Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Sponsor of its Affiliates. ARTICLE XI ACCOUNTING SECTION 11.1. FISCAL YEAR. The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or such other year as is required by the Code. SECTION 11.2. CERTAIN ACCOUNTING MATTERS. (a) At all times during the existence of the Trust, Trustees shall keep, or cause to be kept, full books, records and supporting documents, which shall reflect detail, each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting in compliance with generally accepted accounting principles, consistently applied. The Trust shall use the accrual method of accounting for the United States federal income tax purposes. The 41 books of account and the records of the Trust shall be examined by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent certified public accountants selected by the Regular Trustees. (b) The Regular Trustees shall cause to be prepared and delivered to each of the Holders of Securities, within 120 days after the end of each Fiscal Year of the Trust, annual financial statements of the Trust, including a balance sheet of the Trust as of the end of such Fiscal Year, and the related income or loss. (c) The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders of Securities, any annual United States federal income tax information statement, required by the Code, containing such information with regard to the Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements within 30 days after the end of each Fiscal Year of the Trust. (d) The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing authority, an annual United States federal income tax return, on a Form 1041 or such other form required by United States federal income tax law, and any other annual income tax returns required to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing authority. SECTION 11.3. BANKING. The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the Trust; PROVIDED, HOWEVER, that all payments of funds in respect of the Debentures held by the Institutional Trustee shall be made directly to the Institutional Trustee Account and no other funds of the Trust shall be deposited in the Institutional Trustee Account. The sole signatories for such accounts shall be designated by the Regular Trustees; PROVIDED, HOWEVER, that the Institutional Trustee shall designate the signatories for the Institutional Trustee Account. SECTION 11.4. WITHHOLDING. The Trust and the Regular Trustees shall comply with all withholding requirements under United States federal, state and local law. The Trust shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding with respect to each Holder, and any representations and forms as shall reasonably be requested by the Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations. The Regular Trustees shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Holder, the amount withheld shall be deemed to be a distribution in the amount of the withholding to the Holder. In the event of any claimed over withholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was 42 not withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the amount of such withholding. ARTICLE XII AMENDMENTS AND MEETINGS SECTION 12.1. AMENDMENTS. (a) Except as otherwise provided in this Declaration or by any applicable terms of the Securities, this Declaration may only be amended by a written instrument approved and executed by: (i) the Regular Trustees (or, if there are more than two Regular Trustees a majority of the Regular Trustees); (ii) if the amendment affects the rights, powers, duties, obligations or immunities of the Institutional Trustee, the Institutional Trustee; and (iii) if the amendment affects the rights, powers, duties, obligations or immunities of the Delaware Trustee, the Delaware Trustee. (b) No amendment shall be made, and any such purported amendment shall be void and ineffective: (i) unless, in the case of any proposed amendment, the Institutional Trustee shall have first received an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); (ii) unless, in the case of any proposed amendment which affects the rights, powers, duties, obligations or immunities of the Institutional Trustee, the Institutional Trustee shall have first received: (A) an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and (B) an opinion of counsel (who may be counsel to the Sponsor or the Trust) that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and (iii) to the extent the result of such amendment would be to: (A) cause the trust to be classified for purposes of United States federal income taxation as other than a grantor trust; 43 (B) reduce or otherwise adversely affect the powers of the Institutional Trustee in contravention of the Trust Indenture Act; or (C) cause the Trust to be deemed to be an Investment Company required to be registered under the Investment Company Act. (c) At such time after the Trust has issued any Securities that remain outstanding, any amendment that would adversely affect the rights, privileges or preferences of any Holder of Securities may be effected only with such additional requirements as may be set forth in the terms of such Securities. (d) Section 9.1(c) and this Section 12.1 shall not be amended without the consent of all of the Holders of the Securities. (e) Article IV shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities. (f) The rights of the Holders of the Common Securities under Article V to increase or decrease the number of, and appoint and remove Trustees shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities. (g) Notwithstanding Section 12.1(c), this Declaration may be amended without the consent of the Holders of the Securities to: (i) cure any ambiguity; (ii) correct or supplement any provision in this declaration that may be defective or inconsistent with any other provision of this Declaration; (iii) add to the covenants, restrictions or obligations of the Sponsor; and (iv) to conform to any change in Rule 3a-5 or written change in interpretation or application of Rule 3a-5 by any legislative body, court, government agency or regulatory authority which amendment does not have a material adverse effect on the right, preferences or privileges of the Holders. SECTION 12.2. MEETINGS OF THE HOLDERS OF SECURITIES: ACTION BY WRITTEN CONSENT. (a) Meetings of the Holders of any class of Securities may be called at any time by the Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter on which Holders of such class of Securities are entitled to act under the terms of this Declaration, the terms of the Securities or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 10% in liquidation amount of such class of Securities. Such direction shall be given by delivering to the Regular Trustees one or more calls in a writing stating that the signing Holders of Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of 44 Securities calling a meeting shall specify in writing the Security Certificates held by the Holders of Securities exercising the right to call a meeting and only those Securities specified shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met. (b) Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of Securities: (i) notice of any such meeting shall be given to all the Holders of Securities having a right to vote thereat at least 7 days and not more than 60 days before the date of such meeting. Whenever a vote, consent or approval of the Holders of Securities is permitted or required under this Declaration or the rules of any stock exchange on which the Preferred Securities are listed or admitted for trading, such vote, consent or approval may be given at a meeting of the Holders of Securities. Any action that may be taken at a meeting of the Holders of Securities may be taken without a meeting if a consent in writing setting forth the action so taken is signed by the Holders of Securities owning not less than the minimum amount of Securities in liquidation amount that would be necessary to authorize or take such action at a meeting at which all Holders of Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of Securities entitled to vote who have not consented in writing. The Regular Trustees may specify that any written ballot submitted to the Security Holder for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Regular Trustees; (ii) each Holder of a Security may authorize any Person to act for it by proxy on all matters in which a Holder of Securities is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities executing it. Except as otherwise provided herein, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Holders of the Securities were stockholders of a Delaware corporation; (iii) each meeting of the Holders of the Securities shall be conducted by the Regular Trustees or by such other Person that the Regular Trustees may designate; and (iv) unless this Declaration, the terms of the Securities, the Trust Indenture Act or the listing rules of any stock exchange on which the Preferred Securities are then listed or trading, otherwise provides, the Regular Trustees, in their sole discretion, shall establish all other provisions relating to meetings of 45 Holders of Securities, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders of Securities, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote. ARTICLE XIII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE SECTION 13.1. REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE. The Trustee that acts as initial Institutional Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Institutional Trustee represents and warrants, as applicable, to the Trust and the Sponsor at the time of the Successor Institutional Trustee's acceptance of its appointment as Institutional Trustee that: (a) the Institutional Trustee is eligible to act as such under Section 5.3(a); (b) the Institutional Trustee is duly organized, validly existing and in good standing, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Declaration; (c) the execution, delivery and performance by the Institutional Trustee of the Declaration has been duly authorized by all necessary corporate action on the part of the Institutional Trustee. The Declaration has been duly executed and delivered by the Institutional Trustee, and it constitutes a legal, valid and binding obligation of the Institutional Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law); (d) the execution, delivery and performance of the Declaration by the Institutional Trustee does not conflict with or constitute a breach of the charter or by-laws of the Institutional Trustee; and (e) no consent, approval or authorization of, or registration with or notice to, any state or federal banking or other regulatory authority is required for the execution, delivery or performance by the Institutional Trustee, of the Declaration. SECTION 13.2. REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE. The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee that: 46 (a) The Delaware Trustee is a Delaware banking corporation with trust powers, duly organized, validly existing and in good standing, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, the Declaration; (b) The Delaware Trustee has been authorized to perform its obligations under the Certificate of Trust and the Declaration. The Declaration under Delaware law constitutes a legal, valid and binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law); (c) No consent, approval or authorization of, or registration with or notice to, any Delaware or federal banking or other regulatory authority is required for the execution, delivery or performance by the Delaware Trustee, of the Declaration; and (d) The Delaware Trustee is a natural person who is a resident of the State of Delaware or, if not a natural person, an entity that has its principal place of business in the State of Delaware. ARTICLE XIV MISCELLANEOUS SECTION 14.1. NOTICES. All notices provided for in this Declaration shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows: (a) if given to the Trust, in care of the Regular Trustees at the Trust's mailing address set forth below (or such other address as the Trust may give notice of to the Holders of the Securities): Unocal Capital Trust II c/o Unocal Corporation 2141 Rosecrans Avenue, Suite 4000 El Segundo, California 90245 Fax No.: 310-726-7875 Attention: General Counsel (b) if given to the Delaware Trustee, at the mailing address set forth below (or such other address as Delaware Trustee may give notice of to the Holders of the Securities): The Bank of New York (Delaware) White Clay Center Route 273 47 Newark, Delaware 19711 Fax No.: _________ Attention: _________ (c) if given to the Institutional Trustee, at its Corporate Trust Office to the attention of Corporate Trust Trustee Administration (or such other address as the Institutional Trustee may give notice of to the Holders of the Securities). (d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set forth below (or such other address as the Holder of the Common Securities may give notice to the Trust): Unocal Corporation 2141 Rosecrans Avenue, Suite 4000 El Segundo, California 90245 Fax No.: 310-726-7875 Attention: General Counsel (e) if given to any other Holder, at the address set forth on the books and records of the Trust. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. SECTION 14.2. GOVERNING LAW. This Declaration and the rights of the parties hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws of the State of Delaware or any other jurisdiction that would call for the application of the law of any jurisdiction other than the State of Delaware; PROVIDED, HOWEVER, that there shall not be applicable to the Trust, the Trustees or this Declaration any provision of the laws (statutory or common) of the State of Delaware pertaining to trusts that relate to or regulate, in a manner inconsistent with the terms hereof, (i) the filing with any court or governmental body or agency of trustee accounts or schedules of trustee fees and charges, (ii) affirmative requirements to post bonds for trustees, officers, agents or employees of a trust, (iii) the necessity for obtaining court or other governmental approval concerning the acquisition, holding or disposition of real or personal property, (iv) fees or other sums payable to trustees, officers, agents or employees of a trust, (v) the allocation of receipts and expenditures to income or principal, (vi) restrictions or limitations on the permissible nature, amount or concentration of trust investments or requirements relating to the titling, storage or other manner of holding or investing trust assets, or (vii) the establishment of fiduciary or other standards of responsibility or limitations on the acts or powers of trustees that are inconsistent with the limitations or liabilities or authorities and powers of the 48 Trustees as set forth or referenced in this Declaration. Section 3540 of Title 12 of the Delaware Code shall not apply to the Trust. SECTION 14.3. INTENTION OF THE PARTIES. It is the intention of the parties hereto that the Trust be classified for United States federal income tax purposes as a grantor trust. The provisions of this Declaration shall be interpreted to further this intention of the parties. SECTION 14.4. HEADINGS. Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof. SECTION 14.5. SUCCESSORS AND ASSIGNS. Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether so expressed. SECTION 14.6. PARTIAL ENFORCEABILITY. If any provision of this Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby. SECTION 14.7. COUNTERPARTS. This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Trustees to one of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. 49 IN WITNESS WHEREOF, the undersigned has caused these presents to be executed as of the day and year first above written. --------------------------------------- Darrell D. Chessum, as Regular Trustee --------------------------------------- Daniel A. Franchi, as Regular Trustee --------------------------------------- Richard L. Walton, as Regular Trustee THE BANK OF NEW YORK (DELAWARE), as Delaware Trustee By: ------------------------------------ Name: Title: THE BANK OF NEW YORK, as Institutional Trustee By: ------------------------------------ Name: Title: UNOCAL CORPORATION, as Sponsor By: ------------------------------------ Name: Title: 50 ANNEX I TERMS OF ____% TRUST [CONVERTIBLE] PREFERRED SECURITIES ____% TRUST COMMON SECURITIES Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust of Unocal Capital Trust II (the "Trust"), dated as of _____________ (as amended from time to time, the "Declaration"), the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities and the Common Securities are set out below (each capitalized term used but not defined herein has the meaning set forth in the Declaration): 1. DESIGNATION AND NUMBER. (a) Preferred Securities. ___________________________ (____________) preferred securities of the Trust with an aggregate liquidation amount with respect to the assets of the Trust of _____________________ Dollars ($___________), and an initial liquidation amount with respect to the assets of $50 per preferred security, are hereby designated for the purposes of identification only as "___% Trust [Convertible] Preferred Securities" (the "Preferred Securities"). The Preferred Security Certificates evidencing the Preferred Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice or to conform to the rules of any stock exchange or other organization on which the Preferred Securities are listed or quoted. (b) Common Securities. ______________________ (__________) common securities of the Trust with an aggregate liquidation amount with respect to the assets of the Trust of ____________________ Dollars ($_________), and an initial liquidation amount with respect to the assets of the Trust of $50 per common security, are hereby designated for the purposes of identification only as "___ % Trust Common Securities" (the "Common Securities"). The Common Security Certificates evidencing the Common Securities shall be substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice. 2. DISTRIBUTIONS. (a) Distributions payable on each Security will be fixed at a rate per annum of ___ % (the "Coupon Rate") of the liquidation amount of any Security, such rate being the rate of interest payable on the Debentures held or to be held by the Institutional Trustee. To the extent permitted by applicable law, Distributions not paid on the regularly scheduled payment date therefor will accumulate interest thereon at the Coupon Rate compounded quarterly. The term "Distributions" as used herein includes such cash distributions and any such interest payable unless otherwise stated. Distributions are payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of Distributions payable for any period shall be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for I-1 any period shorter than a full quarterly Distribution period for which Distributions are computed, shall be computed on the basis of 30-day months and, for periods of less than a month, the actual number of days elapsed per 30-day month. (b) Distributions on the Securities shall be cumulative, shall accumulate from _________, ____, or the most recent date on which Distributions have been paid in full, and shall be payable quarterly in arrears, on March 1, June 1, September 1 and December 1 of each year, commencing on __________ 1, ____, when, as and if funds are available for payment and except as otherwise described below. So long as the Debenture Issuer shall not be in default in the payment of interest on the Debentures, the Debenture Issuer has the right under the Indenture, at any time, and from time to time, to defer payments of interest by extending the interest payment period on the Debentures for a period not exceeding 20 consecutive quarterly interest payment periods (each an "Extension Period"), during which Extension Period no interest shall be due and payable on the Debentures, PROVIDED that no Extension Period shall last beyond the date of maturity of the Debentures. As a consequence of such deferral, Distributions will also be deferred. To the extent permitted by applicable law, during such Extension Period, deferred quarterly Distributions will continue to accumulate with interest thereon at the Coupon Rate, for each quarter of the Extension Period. Before the termination of any such Extension Period, the Debenture Issuer may further extend such Extension Period; PROVIDED that such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters or extend beyond the date of maturity of the Debentures. At the end of the Extension Period, payments of accumulated Distributions shall be payable to Holders of Preferred Securities on the first record date after the termination of such Extension Period. Upon the termination of any such Extension Period and the payment of all amounts then due, the Debenture Issuer may commence a new Extension Period, subject to the above requirements. (c) Distributions on the Securities shall be payable to the Holders thereof as they appear on the books and records of the Trust as of the close of business on the relevant record dates. While the Preferred Securities are represented by a Global Certificate, the relevant record dates shall be the close of business on the Business Day next preceding such distribution payment date, unless otherwise provided in the Declaration or unless a different regular record date is established or provided for the corresponding interest payment date on the Debentures. The relevant record dates for the Common Securities shall be the same as for the Preferred Securities. If the Preferred Securities shall not continue to remain in book-entry only form, the relevant record dates for the Preferred Securities shall be selected by the Regular Trustees, which dates shall conform to the rules of any securities exchange or other organization on which the Securities are listed or quoted, if any, and, shall be at least one Business Day prior to the relevant payment dates, which payment dates correspond to the interest payment dates on the Debentures. Distributions payable on any Securities that are not punctually paid on any Distribution payment date, as a result of the Debenture Issuer having failed to make a payment under the Debentures, shall cease to be payable to the Person in whose name such Securities are registered on the relevant record date, and such defaulted Distribution will instead be payable to the Person whose name such Securities are registered on the special record date or other specified date determined in accordance with the Indenture. If any date on which Distributions are payable on the Securities is not a Business Day, then payment of the Distribution payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect I-2 of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment all be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such payment date. [(d) Accumulated but unpaid Distributions shall not be payable in cash on Securities converted by the Holder into Common Stock through the Conversion Agent into Common Stock pursuant to the terms of the Securities as set forth in this Annex I to the Declaration, nor will such accumulated but unpaid Distributions be converted into additional shares of Common Stock upon conversion, but such accumulated but unpaid Distributions shall be deemed to be paid in full and then returned by the Holder to the Sponsor as partial consideration for Common Stock received on conversion, and no payment, allowance or adjustment shall be made with respect to accumulated and unpaid Distributions on such Securities, which shall be deemed to be paid in full. If any Securities are converted into shares of Common Stock during the period from (but excluding) a record date to (and including) the next succeeding distribution payment date, then either (i) if such Securities have been called for redemption on a redemption date that occurs during such period, or are to be redeemed in connection with a Special Event which occurs during such period, the Trust shall not be required to pay Distributions on such distribution payment date in respect of such Securities or (ii) if otherwise converted during such period, such Securities shall be accompanied by funds equal to the Distributions payable on such succeeding distribution payment date on the liquidation amount so converted.] (e) In the event that there is any money or other property held by or for the Trust that is not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among the Holders of the Securities. 3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of any voluntary or involuntary dissolution, winding-up or termination of the Trust, the Holders of the Securities on the date of the dissolution, winding-up or termination, as the case may be, shall be entitled to receive out of the assets of the Trust available for distribution to Holders of Securities after satisfaction of liabilities of creditors an amount equal to the aggregate liquidation amount of the Securities plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), unless, such dissolution, winding-up or termination occurs in connection with a Special Event in which, in accordance with Section 4(c), Debentures in an aggregate principal amount equal to the aggregate liquidation amount of such Securities, with an interest rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal to the accumulated and unpaid Distributions on, such Securities, shall be distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities. If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a Pro Rata basis. I-3 4. REDEMPTION AND DISTRIBUTION. (a) Upon the repayment of the Debentures in whole or in part, whether at maturity or upon redemption (either at the option of the Debenture Issuer or pursuant to a Special Event as described below), the proceeds from such repayment or payment shall be substantially simultaneously applied to redeem Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Debentures so repaid or redeemed at a redemption price per Security equal to the redemption price of the Debentures, together with accrued and unpaid Distributions thereon through the date of the redemption, payable in cash. Holders will be given not less than 30 nor more than 60 days notice of such redemption. (b) If fewer than all the outstanding Securities are to be so redeemed, the Common Securities and the Preferred Securities will be redeemed Pro Rata and the Preferred Securities to be redeemed will be as described in Section 4(g) below. (c) If, at any time, a Tax Event or an Investment Company Event (each, as defined below, a "Special Event") shall occur and be continuing, the Regular Trustees may with the consent of the Debenture Issuer, except in certain limited circumstances described in this Section 4(c), dissolve the Trust and, after satisfaction of creditors, cause Debentures held by the Institutional Trustee, having an aggregate principal amount equal to the aggregate liquidation amount of, with an interest rate identical to the Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid Distributions on, and having the same record date for payment as the Securities, to be distributed to the Holders of the Securities in liquidation of such Holders' interests in the Trust on a Pro Rata basis, within 90 days following the occurrence of such Special Event (the "90-Day Period"); PROVIDED, HOWEVER, that such dissolution and distribution shall be conditioned on (i) the Regular Trustees' receipt of an opinion of independent tax counsel experienced in such matters (a "No Recognition Opinion"), which opinion may rely on published revenue rulings of the Internal Revenue Service, to the effect that the Holders of the Securities will not recognize any gain or loss for United States federal income tax purposes as a result of the dissolution of the Trust and the distribution of Debentures, (ii) the Debenture Issuer or the Trust being unable to eliminate, which elimination shall be complete within the 90-Day Period, such Special Event by taking some ministerial action that will have no adverse effect on the Trust, the Debenture Issuer, the Sponsor or the Holders of the Securities or does not subject any of them to more than de minimis regulatory requirements ("Ministerial Action"), such as filing a form or making an election, or pursuing some other similar reasonable measure, and (iii) the Debenture Issuer's prior written consent to such dissolution and distribution. If in the event of a Special Event (i) after receipt of a Dissolution Tax Opinion (as defined hereinafter) by the Regular Trustees, the Debenture Issuer has received an opinion (a "Redemption Tax Opinion") of independent tax counsel experienced in such matters that, as a result of a Tax Event, there is more than an insubstantial risk that the Debenture Issuer would be precluded from deducting the interest on the Debentures for United States federal income tax purposes even after the Debentures were distributed to the Holders of Securities in liquidation of such Holders' interests in the Trust as described in this Section 4(c), or (ii) after receipt of a Dissolution Tax Opinion or a Change in 1940 Act Opinion by the Regular Trustees, such Regular Trustees shall have been informed by independent tax counsel experienced in such matters that it, I-4 for substantive reasons, cannot deliver a No Recognition Opinion to the Trust, the Debenture Issuer shall have the right, upon not less than 30 nor more than 60 days notice, to redeem the Debentures, in whole or in part, at a redemption price equal to 100% of the principal amount to be redeemed plus accrued and unpaid interest thereon to but excluding the date of such redemption, for cash within the 90-Day Period. Following such redemption, Securities with an aggregate liquidation amount equal to the aggregate principal amount of the Debentures so redeemed shall be redeemed by the Trust at a redemption price equal to 100% of the liquidation amount to be redeemed on a Pro Rata basis, plus accumulated but unpaid Distributions thereon to but excluding such redemption date; PROVIDED, HOWEVER, that if at the time there is available to the Debenture Issuer or the Trust the opportunity to eliminate, which elimination shall be complete within the 90-Day Period, such Special Event by taking some Ministerial Action, the Trust or the Debenture Issuer will pursue such Ministerial Action in lieu of redemption. "Tax Event" means that the Regular Trustees shall have received an opinion of independent tax counsel experienced in such matters (a "Dissolution Tax Opinion") to the effect that on or after ___________________, as a result of (a) any amendment to, clarification of, or change (including any announced prospective change) in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, (b) any judicial decision, official administrative pronouncement, ruling, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations (an "Administrative Action") or (c) any amendment to, clarification of, or change in the official position or the interpretation of such Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental authority or regulatory body, irrespective of the manner in which such amendment, clarification or change is made known, which amendment, clarification, or change is effective or such pronouncement or decision is announced, in each case, on or after ___________________, there is more than an insubstantial risk that (i) the Trust is or will be within 90 days of the date thereof, subject to United States federal income tax with respect to interest accrued or received on the Debentures, (ii) the Trust is, or will be within 90 days of the date thereof, subject to more than a de minimis amount of taxes, duties or other governmental charges, or (iii) interest payable in cash by the Debenture Issuer to the Trust on the Debentures, other than interest attributable to the Common Securities, is not, or within 90 days of the date thereof will not be, deductible, in whole or in part, by the Debenture Issuer for United States federal income tax purposes; PROVIDED, HOWEVER, that such an opinion shall not be deemed to be a "Dissolution Tax Opinion" if the change in tax law that requires the Debenture Issuer for United States federal income tax purposes to defer taking a deduction for any original issue discount ("OID") that accrues with respect to the Debentures until the interest payment related to such OID is paid by the Debenture Issuer in cash, PROVIDED such change in tax law does not create more than an insubstantial risk that the Debenture Issuer will be prevented from taking a deduction for OID accruing with respect to the Debentures as of a date that is no later than the date the interest payment related to such OID is actually paid by the Debenture Issuer in cash. "Investment Company Event" means that the Regular Trustees shall have received an opinion of independent counsel experienced in such matters (a "Change in 1940 Act Opinion") to the effect that, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulations by any legislative body, court, governmental I-5 agency or regulatory authority on or after ___________________, there is more than an insubstantial risk that the Trust is or will be considered an "investment company" which is required to be registered under the Investment Company Act of 1940, as amended. On and from the date fixed by the Regular Trustees for any distribution of Debentures upon dissolution of the Trust: (i) the Securities will be deemed to be not outstanding, (ii) the Clearing Agency or its nominee, as the record Holder of the Preferred Securities, will receive a registered certificate or certificates representing the Debentures to be delivered upon such distribution, and (iii) any certificates representing Securities, except for certificates representing Preferred Securities held by the Clearing Agency or its nominee (or any successor Clearing Agency or its nominee), will be deemed to represent Debentures having an aggregate principal amount equal to the aggregate stated liquidation amount of, with an interest rate identical to the Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid Distributions on such Preferred Securities until such certificates are presented to the Debenture Issuer or its agent for transfer or reissue. (d) The Trust may not redeem any of the outstanding Preferred Securities unless all accumulated and unpaid Distributions have been paid on all of the outstanding Preferred Securities for all quarterly Distribution periods terminating on or prior to the last Distribution payment date before the date of redemption. (e) If the Debentures are distributed to Holders of the Securities, pursuant to the terms of the Indenture, the Debenture Issuer will use its reasonable efforts to have the Debentures listed on the New York Stock Exchange or listed or quoted on any national securities exchange, or with another organization on which the Preferred Securities were listed or quoted immediately prior to the distribution of the Debentures, if any. (f) Notice of any redemption of, or notice of distribution of Debentures in exchange for the Securities (a "Redemption/Distribution Notice") will be given by the Trust by mail to each Holder of Securities to be redeemed or exchanged not less than 30 nor more than 60 days before the date fixed for redemption or exchange thereof which, in the case of a redemption, will be the date fixed for redemption of the Debentures. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this Section 4(f), a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, or by such other means suitable to assure delivery of such written notice, to Holders of Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of Securities at the address of each such Holder appearing in the books and records of the Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof with respect to any Holder shall affect the validity of the redemption or exchange proceedings with respect to any other Holder. (g) In the event that less than all the outstanding Securities are to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Preferred Securities, it being understood that, in respect of Preferred Securities registered in the name of and held of record by the Clearing Agency or its nominee, the distribution of the proceeds of such redemption I-6 will be made to each Clearing Agency Participant (or Person on whose behalf such nominee holds such securities) in accordance with the procedures applied by such Clearing Agency or nominee. (h) If Securities are to be redeemed and the Trust gives a Redemption/Distribution Notice, which notice may only be issued if the Debentures are redeemed as set out in this Section 4 (which notice will be irrevocable), then (i) while the Preferred Securities are in book-entry form, with respect to the Preferred Securities, by 12:00 noon, New York City time, on the redemption date, PROVIDED that the Debenture Issuer has paid the Institutional Trustee, the Institutional Trustee will deposit irrevocably with the Clearing Agency or its nominee funds sufficient to pay the applicable redemption price and accumulated but unpaid Distributions thereon with respect to the Preferred Securities and will give the Clearing Agency irrevocable instructions and authority to pay such amounts to the Holders of the Preferred Securities, and (ii) with respect to Preferred Securities issued in definitive form and Common Securities, PROVIDED that the Debenture Issuer has paid the Institutional Trustee a sufficient amount of cash in connection with the related redemption or maturity of the Debentures, the Institutional Trustee will pay the relevant redemption price and accumulated but unpaid Distributions thereon to the Holders of such Securities by check mailed to the address of the relevant Holder appearing on the books and records of the Trust on the redemption date. If a Redemption/Distribution Notice shall have been given and funds deposited as required, if applicable, then immediately prior to the close of business on the required date of such deposit, distributions will cease to accrue on the Securities so called for redemption and all rights of Holders of such Securities so called for redemption will cease, except the right of the Holders of such Securities to receive the redemption price and accumulated but unpaid Distributions thereon, but without further accrual of interest thereon. Neither the Regular Trustees nor the Trust shall be required to register or cause to be registered the transfer of any Securities that have been so called for redemption. If any date fixed for redemption of Securities is not a Business Day, then payment of the redemption price and accumulated but unpaid Distributions thereon payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. In the event that payment of the redemption price and accumulated but unpaid Distributions thereon in respect of any Securities is improperly withheld or refused and not paid either by the Institutional Trustee or, if paid to the Institutional Trustee, by the Sponsor as guarantor pursuant to the Preferred Securities Guarantee, Distributions on such Securities wll continue to accumulate at the Coupon Rate from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the redemption price and the accumulated but unpaid Distributions thereon. (i) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of the Trust to (A) in respect of the Preferred Securities, the Clearing Agency or its nominee if the Global Certificates have been issued or, if Definitive Preferred Security Certificates have been issued, to the Holder thereof, and (B) in respect of the Common Securities, to the Holder thereof. I-7 (j) Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), the Sponsor or any of its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or otherwise. [5. CONVERSION RIGHTS. The Holder of Securities shall have the right at any time, beginning ____________, _____ and prior to the close of business (New York time) on _______________, 20__ (or, in the case of Securities called for redemption, prior to the close of business (New York time) on the Business Day prior to the redemption date), at their option, to cause the Conversion Agent to convert Securities, on behalf of the converting Holders, into shares of Common Stock in the manner described herein on and subject to the following terms and conditions: (a) The Securities will be convertible at the office of the Conversion Agent into fully paid and nonassessable shares of Common Stock pursuant to the Holder's direction to the Conversion Agent to exchange such Securities for a portion of the Debentures theretofore held by the Trust on the basis of $1 in liquidation amount of a Security per $1 in principal amount of Debentures, and immediately convert such amount of Debentures into that number of fully paid and nonassessable shares of Common Stock obtained by dividing the principal amount of such Debentures to be converted by the conversion price of the Debentures. The initial conversion price of the Debentures is $__________. The conversion price and the securities into which the Securities are convertible are subject to certain adjustments set forth in Article VII of the Supplemental Indenture. (b) In order to convert Securities into Common Stock the Holder shall deliver to the Conversion Agent at the office referred to above an irrevocable request to convert Securities on behalf of such Holder (the "Conversion Request"), together, if the Securities are in certificated form, with such certificates. The Conversion Request shall (i) set forth the number of Securities to be converted and the name or names, if other than the Holder, in which the shares of Common Stock should be issued and (ii) direct the Conversion Agent (A) to exchange such Securities for a portion of the Debentures held by the Trust (at the rate of exchange specified in the preceding paragraph) and (B) to immediately convert such Debentures on behalf of such Holder, into Common Stock (at the conversion rate specified in the preceding paragraph). The Conversion Agent shall notify the Trust of the Holder's election to exchange Securities for a portion of the Debentures held by the Trust and the Trust shall, upon receipt of such notice, deliver to the Conversion Agent the appropriate principal amount of Debentures for exchange in accordance with this Section. The Conversion Agent shall thereupon notify the Sponsor of the Holder's election to convert such Debentures into shares of Common Stock. Except as provided above, neither the Trust nor the Sponsor will make, or be required to make, any payment, allowance or adjustment upon any conversion on account of any accumulated and unpaid Distributions accrued on the Securities (including any Additional Amounts accrued thereon) surrendered for conversion, or on account of any accumulated and unpaid dividends on the shares of Common Stock issued upon such conversion. Securities shall be deemed to have been converted immediately prior to the close of business on the day on which a Conversion Request relating to such Securities is received by the Trust in accordance with the foregoing provision (the "Conversion Date"). The Person or Persons entitled to receive Common Stock issuable upon conversion of the Debentures I-8 shall be treated for all purposes as the record holder or holders of such Common Stock at such time. As promptly as practicable on or after the Conversion Date, the Sponsor shall issue and deliver at the office of the Conversion Agent a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion, together with the cash payment, if any, in lieu of any fraction of any share to the Person or Persons entitled to receive the same, unless otherwise directed by the Holder in the notice of conversion and the Conversion Agent shall distribute such certificate or certificates and cash payments, if any, to such Person or Persons. (c) Each Holder of a Security by his acceptance thereof appoints the Institutional Trustee as "Conversion Agent" for the purpose of effecting the conversion of Securities in accordance with this Section. In effecting the conversion and transactions described in this Section, the Conversion Agent shall be acting as agent of the Holders of Securities directing it to effect such conversion transactions. The Conversion Agent is hereby authorized (i) to exchange Securities from time to time for Debentures held by the Trust in connection with the conversion of such Securities in accordance with this Section and (ii) to convert all or a portion of the Debentures into Common Stock and thereupon to deliver such shares of Common Stock in accordance with the provisions of this Section and to deliver to the Trust a new Debenture or Debentures for any resulting unconverted principal amount. (d) No fractional shares of Common Stock will be issued as a result of conversion, but in lieu thereof, such fractional interest will be paid in cash by the Sponsor to the Conversion Agent, which in turn will make such payment to the Holder or Holders of Securities so converted. (e) Unocal shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of the Debentures, free from any preemptive or other similar rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the Debentures then outstanding. Notwithstanding the foregoing, Unocal shall be entitled to deliver upon conversion of Debentures, shares of Common Stock reacquired and held in the treasury of Unocal (in lieu of the issuance of authorized and unissued shares of Common Stock), so long as any such treasury shares are free and clear of all liens, charges, security interests or encumbrances. Any shares of Common Stock issued upon conversion of the Debentures shall be duly authorized, validly issued and fully paid and nonassessable. The Trust shall deliver the shares of Common Stock received upon conversion of the Debentures to the converting Holder free and clear of all liens, charges, security interests and encumbrances, except for United States withholding taxes. Each of Unocal and the Trust shall prepare and shall use its best efforts to obtain and keep in force such governmental or regulatory permits or other authorizations as may be required by law, and shall comply with all applicable requirements as to registration or qualification of Common Stock (and all requirements to list Common Stock issuable upon conversion of Debentures that are at the time applicable), in order to enable Unocal to lawfully issue Common Stock to the Trust upon conversion of the Debentures and the Trust to lawfully deliver Common Stock to each Holder upon conversion of the Securities. (f) Unocal will pay any and all taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Debentures and the delivery of the shares of Common Stock by the Trust upon conversion of the Securities. Unocal shall not, however, be I-9 required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the Securities so converted were registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Trust the amount of any such tax, or has established to the satisfaction of the Trust that such tax has been paid. (g) Nothing in the preceding Paragraph (f) shall limit the requirement of the Trust to withhold taxes pursuant to the terms of the Securities or set forth in this Annex I to the Declaration or to the Declaration itself or otherwise require the Institutional Trustee or the Trust to pay any amounts on account of such withholdings. (h) Notwithstanding the foregoing, no Holder of Common Securities may convert such number of Common Securities which, after giving effect to such conversion, would result in the Holders of Common Securities in the aggregate holding less then 1 % of the capital of the Trust.] 6. VOTING RIGHTS - PREFERRED SECURITIES. (a) Except as provided under Sections 6(b) and 8 and as otherwise required by law and the Declaration, the Holders of the Preferred Securities will have no voting rights. (b) Subject to the requirements set forth in this paragraph, the Holders of a Majority in liquidation amount of the Preferred Securities, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Institutional Trustee, or direct the exercise of any trust or power conferred upon the Institutional Trustee under the Declaration, including the right to direct the Institutional Trustee, as holder of the Debentures, to (i) exercise the remedies available under the Indenture with respect to the Debentures, (ii) waive any past default and its consequences that is waivable under Section 5.13 of the Indenture, or (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable, PROVIDED, HOWEVER, that, where a consent or action under the Indenture would require the consent or act of holders of more than a majority (a "Super Majority") in aggregate principal amount of Debentures, the Institutional Trustee may only give such consent or take such action at the written direction of the Holders of at least the same Super Majority percentage in liquidation amount of the Preferred Securities as is required under the Indenture of aggregate principal amount of the Debentures outstanding. The Institutional Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities. Other than with respect to directing the time, method and place of conducting any remedy available to the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee shall not take any action in accordance with the directions of the Holders of the Preferred Securities under this paragraph unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes. If an Event of Default has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), then a Holder of Preferred Securities may directly institute a proceeding for enforcement of payment to I-10 such Holder of the principal of or interest on Debentures having a principal amount equal to the aggregate liquidation amount of the Preferred Securities of such Holder (a "Direct Action") on or after the respective due date specified in the Debentures. In connection with such Direct Action, the rights of the Holders of the Common Securities will be subrogated to the rights of such Holder of Preferred Securities to the extent of any payment made by the Debentue Issuer to such Holder of Preferred Securities in such Direct Action. Except as provided in the preceding sentence, the Holders of Preferred Securities will not be able to exercise directly any other remedy available to the holder of the Debentures. Any approval or direction of Holders of Preferred Securities may be given at a separate meeting of Holders of Preferred Securities convened for such purpose, at a meeting of all of the Holders of Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of Preferred Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of the Preferred Securities will be required for the Trust to redeem, exchange and/or cancel Preferred Securities or to distribute Debentures, each in accordance with the Declaration and the terms of the Securities. Notwithstanding that Holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if they were not outstanding. 7. VOTING RIGHTS - COMMON SECURITIES. (a) Except as provided under Sections 7(b), (c) and 8 and as otherwise required by law and the Declaration, the Holders of the Common Securities will have no voting rights. (b) The Holders of the Common Securities are entitled, in accordance with Article V of the Declaration, to vote to appoint, remove or replace any Trustee or to increase or decrease the number of Trustees. (c) Subject to Section 2.6 of the Declaration and only after any Event of Default with respect to the Preferred Securities has been cured, waived, or otherwise eliminated and subject to the requirements of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount of the Common Securities, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Institutional Trustee, or exercising any trust or power conferred upon the Institutional Trustee under the Declaration, including (i) directing the time method, place of conducting any proceeding for any remedy available to the Debenture Trustee, or exercising any trust or power conferred on the I-11 Debenture Trustee with respect to the Debentures, (ii) waive any past default and its consequences that is waivable under Section 5.13 of the Indenture, or (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable, PROVIDED that, where a consent or action under the Indenture would require the consent or act of the holders of a Super Majority in aggregate principal amount of the Debentures, the Institutional Trustee may only give such consent or take such action at the written direction of the Holders of at least the same Super Majority percentage in liquidation amount of the Common Securities as is required under the Indenture of aggregate principal amount of the Debentures outstanding. Pursuant to this Section 7(c), the Institutional Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities. Other than with respect to directing the time, method and place of conducting any remedy available to the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee shall not take any action in accordance with the directions of the Holders of the Common Securities under this paragraph unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that for the purposes of United States federal income tax the Trust will not be classified as other than a grantor trust on account of such action. If the Institutional Trustee fails to enforce its rights under the Declaration, any Holder of Common Securities may institute a legal proceeding directly against any Person to enforce the Institutional Trustee's rights under the Declaration, without first instituting a legal proceeding against the Institutional Trustee or any other Person. Any approval or direction of Holders of Common Securities may be given at a separate meeting of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of Common Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of the Common Securities will be required for the Trust to redeem and cancel Common Securities or to distribute Debentures in accordance with the Declaration and the terms of the Securities. 8. AMENDMENTS TO DECLARATION AND INDENTURE. (a) In addition to any requirements under Section 12.1 of the Declaration, if any proposed amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Securities, whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than as described in Section 8.1 of the Declaration, then the Holders of outstanding Securities voting together as a single class, will be entitled to vote on such amendment or proposal (but not on any other amendment or proposal) and such amendment or proposal shall not be effective except with the approval of the Holders of at least a Majority in liquidation amount of the Securities affected thereby; PROVIDED, HOWEVER, if any I-12 amendment or proposal referred to in clause (i) above would adversely affect only the Preferred Securities or only the Common Securities, then only the affected class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of a Majority in liquidation amount of such class of Securities. (b) In the event the consent of the Institutional Trustee, as the holder of the Debentures, is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Debentures, the Institutional Trustee shall request the written direction of the Holders of the Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Securities voting together as a single class; PROVIDED, HOWEVER, that where a consent under the Indenture would require the consent of the Holders of a Super Majority in aggregate principal amount of the Debentures, the Institutional Trustee may only give such consent at the direction of the Holders of at least the same Super Majority percentage in liquidation amount of the Securities as is required under the Indenture of aggregate principal amount of the Debentures outstanding; PROVIDED, FURTHER, that the Institutional Trustee shall not take any action in accordance with the directions of the Holders of the Securities under this Section 8(b) unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that for the purposes of United States federal income tax the Trust will not be classified as other than a grantor trust on account of such action. 9. SPIN-OFF. (a) If, in connection with a Spin-off (as defined in Section 7.5 of the Supplemental Indenture), the Debentures are exchanged pursuant to such Section 7.5 for Spin-off Company Debentures (as defined in such Section 7.5) or New Debentures (as defined in such Section 7.5), then, simultaneously with such exchange, the Preferred Securities and the Common Securities shall be deemed to be exchanged into: (i) in the event of an exchange pursuant to Section 7.5(a)(i) of the Supplemental Indenture, a new trust preferred security ("Spin-off Company Trust Preferred Security") and new trust common security ("Spin-off Company Trust Common Security" and, together with the Spin-off Company Trust Preferred Securities, the "Spin-off Company Trust Securities"), as the case may be, of the Spin-off Company Trust (as defined in Section 7.5(c)(ii) of the Supplemental Indenture) having the same distribution rate, accumulated and unpaid distributions, if any, redemption provisions[, and conversion] provisions of these Securities and other terms substantially similar to those of these Securities[, except that (A) upon conversion the Spin-off Company Trust Securities will convert into Spin-off Company Stock (as defined in Section 7.5(a) of the Supplemental Indenture), and (B) the conversion price and Reference Market Price of the Spin-off Company Trust Securities shall be adjusted as provided in Section 7.5(a)(i) of the Supplemental Indenture]; or (ii) in the event of an exchange pursuant to Section 7.5(a)(ii) of the Supplemental Indenture: I-13 (A) Spin-off Company Trust Securities having the same distribution rate, redemption provisions[, and conversion provisions] of these Securities and other terms substantially similar to those of these Securities[, except that (A) upon conversion the Spin-off Company Trust Securities will convert into Spin-off Company Stock, and (B) the liquidation amount, conversion price and Reference Market Price of, and accrued but unpaid distributions, if any, on, the Spin-off Company Trust Securities shall be adjusted as provided in Section 7.5(a)(ii)(A) of the Supplemental Indenture]; and (B) new trust preferred securities ("New Trust Preferred Securities") and new trust common securities ("New Trust Common Securities" and, together with the New Trust Preferred Securities, the "New Trust Securities"), as the case may be, having the same distribution rate, accumulated and unpaid distributions, redemption provisions[, and conversion provisions] of these Securities and other terms substantially similar to those of these Securities[, except that (A) the liquidation amount, conversion price and Reference Market Price of, and accrued but unpaid distributions, if any, on, the New Trust Securities shall be adjusted as provided in Section 7.5(a)(ii)('3) of the Supplemental Indenture]. (b) In the event of an exchange pursuant to Section 9(a): (i) no less than 20 Business Days prior to the Spin-off Exchange Date (as defined in Section 7.5(c)(i) of the Supplemental Indenture), the Trustees will provide notice to the Holders of the Spin-off Exchange Date and the kind and amount of securities into which these Securities will be exchanged as a result of the Spin-off; (ii) following the Spin-off Exchange Date, the holders of Spin-off Company Trust Securities shall have the benefit of guarantees with terms substantially similar to that of the Preferred Securities Guarantee from Spin-off Company (as defined in Section 7.5(a) of the Supplemental Indenture) as guarantor, and the holders of New Trust Securities shall have the benefit of guarantees with terms substantially similar to that of the Preferred Securities Guarantee, from the Debenture Issuer as guarantor; (iii) following the Spin-off Exchange Date, all rights of Holders of these Securities (including, but not limited to, the right to accrue distributions) shall cease, and these Securities will no longer be deemed to be outstanding and will only represent the right to receive the securities to be issued to the Holders of these Securities in exchange there for pursuant to this Section 9; (iv) following the Spin-off Exchange Date, the Holders of record of these Securities will be considered the holders of record of any Spin-off Trust Securities and New Trust Securities for the purposes of the governing instruments with respect to such securities, including, but not limited to, any indenture, declaration or certificate of designations and the Indenture, including for the purposes of giving of notice or voting thereunder; and I-14 (v) each Holder of these Securities, by acceptance of these Securities, agrees to such exchange and to the effects of such exchange as set forth herein. (c) For the purposes of this Section 9, the determination of whether after the Spin-off the Spin-off Trust Securities or the New Trust Securities have terms substantially similar to those of these Securities prior to the Spin-off shall be determined in good faith by the Regular Trustees. 10. PRO RATA. A reference in these terms of the Securities to any distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder of Securities according to the aggregate liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities outstanding unless, in relation to a payment, an Event of Default has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each Holder of the Preferred Securities pro rata according to the aggregate liquidation amount of Preferred Securities held by such Holder relative to the aggregate liquidation amount of all Preferred Securities outstanding, and only after satisfaction of all amounts owed to the Holders of the Preferred Securities, to each Holder of Common Securities pro rata according to the aggregate liquidation amount of Common Securities held by such Holder relative to the aggregate liquidation amount of all Common Securities outstanding. 11. RANKING. The Preferred Securities rank pari passu, and payment thereon shall be made Pro Rata with, the Common Securities, except that where an Event of Default occurs and is continuing, the rights of Holders of the Common Securities to payment in respect of Distributions and payments upon liquidation, redemption, and otherwise are subordinated to the rights to payment of the Holders of the Preferred Securities. 12. ACCEPTANCE OF PREFERRED SECURITIES GUARANTEE AND INDENTURE. Each Holder of Preferred Securities by the acceptance thereof, agrees to the provisions of the Preferred Securities Guarantee, including the subordination provisions therein and to the provisions of the Indenture. 13. NO PREEMPTIVE RIGHTS. The Holders of the Securities shall have no preemptive rights to subscribe for any additional securities. 14. MISCELLANEOUS. These terms constitute a part of the Declaration. The Sponsor will provide a copy of the Declaration, the Preferred Securities Guarantee (if appropriate), and the Indenture to a Holder without charge on written request to the Sponsor at its principal place of business. I-15 EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE [FORM OF FACE OF SECURITY CERTIFICATE] [IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT THE FOLLOWING: This Preferred Security is a Global Certificate within the meaning of the Declaration hereinafter referred to and is registered in the name of the Clearing Agency or a nominee of the Clearing Agency. This Preferred Security is exchangeable for Preferred Securities registered in the name of a person other than the Clearing Agency or its nominee only in the circumstances described in the Declaration and no transfer of this Preferred Security (other than a transfer of this Preferred Security as a whole by the Clearing Agency to a nominee of the Clearing Agency or by a nominee of the Clearing Agency to the Clearing Agency or another nominee of the Clearing Agency) may be registered except in such circumstances. ] [IF THE CLEARING AGENCY IS THE DEPOSITORY TRUST COMPANY, INSERT THE FOLLOWING OR SUCH OTHER STATEMENT AS THE DEPOSITORY TRUST COMPANY SHALL SPECIFY: Unless this Preferred Security is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Trust or its agent for registration of transfer, exchange or payment, and any Preferred Security issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of The Depository Trust Company), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.] Certificate Number _________ Number of Preferred Securities __________ CUSIP NO. [_____________] Certificate Evidencing ___% Trust [Convertible] Preferred Securities of UNOCAL CAPITAL TRUST II ___ % Trust [Convertible] Preferred Securities (liquidation amount $__ per Trust Preferred Security) Unocal Capital Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that __________________________________________ (the "Holder") is the registered owner of preferred securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the __ % Trust [Convertible] Preferred A1-1 Securities (liquidation amount $__ per Trust [Convertible] Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities represented hereby are issued and shall in all respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of ___________________, ____, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of the Preferred Securities as set forth in Annex I to the Declaration. Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Preferred Securities Guarantee to the extent provided therein. The Sponsor will provide a copy of the Declaration, the Preferred Securities Guarantee and the Indenture to a Holder without charge upon written request to the Trust at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Preferred Securities as evidence of indirect beneficial ownership in the Debentures. These Preferred Securities shall not be entitled to any benefit under the Declaration, be valid or become obligatory for any purpose, until the Certificate of Authentication hereon shall have been signed by or on behalf of the Institutional Trustee. The provisions of these Preferred Securities are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Trust has caused this certificate to be executed. UNOCAL CAPITAL TRUST II By:______________________________ Name: Regular Trustee A1-2 [FORM OF CERTIFICATE OF AUTHENTICATION] INSTITUTIONAL TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Preferred Securities referred to in the within-mentioned Declaration. Dated: ------------------------------- [THE BANK OF NEW YORK] as Institutional Trustee or as Authentication Agent By: By: -------------------------------- ---------------------------------- Authorized Signatory Authorized Signatory A1-3 [FORM OF REVERSE OF SECURITY] Distributions payable on each Preferred Security will be fixed at a rate per annum of __ % (the "Coupon Rate") of the liquidation amount per Preferred Security, such rate being the rate of interest payable on the Debentures held by the Institutional Trustee. Distributions not paid on the regularly scheduled payment date therefor will bear interest thereon compounded quarterly at the Coupon Rate (to the extent permitted by applicable law). The term "Distributions" as used herein includes such cash distributions and any such interest payable unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of 30-day months and, for periods of less than a month, the actual number of days elapsed per 30-day month. Except as otherwise described below, distributions on the Preferred Securities shall be cumulative, shall accumulate from _______________, ____, or the most recent date on which Distributions have been paid in full, and shall be payable quarterly (subject to deferral as set forth in the Declaration and the Indenture) in arrears, on March 1, June 1, September 1 and December 1 of each year, commencing _____________1, ____, which payment dates shall correspond to the interest payment dates on the Debentures, when, as and if funds are available for payment, to Holders at the close of business on the regular record date for such distribution, which regular record date shall be, while these Preferred Securities are represented by a Global Certificate, the close of business on the Business Day next preceding such distribution payment date, unless otherwise provided in the Declaration or unless a different regular record date is established or provided for the corresponding interest payment date on the Debentures. The Debenture Issuer has the right under the Indenture to defer payments of interest by extending the interest payment period from time to time on the Debentures for a period (each an "Extension Period") not exceeding 20 consecutive quarterly interest payment periods during which Extension Period no interest is due and payable on the Debentures; PROVIDED that no Extension Period shall last beyond the date of the maturity of the Debentures. As a consequence of such deferral, Distributions will also be deferred. To the extent permitted by applicable law, during such Extension Period deferred quarterly Distributions will continue to accumulate with interest thereon at the Coupon Rate compounded quarterly for each quarter of the Extension Period. Before the termination of any such Extension Period, the Debenture Issuer may further extend such Extension Period; PROVIDED that such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters or extend beyond the maturity date of the Debentures. At the end of the Extension Period, Payments of accumulated Distributions shall be payable to Holders of Preferred Securities on the first record date after the termination of such Extension Period. Upon the termination of any such Extension Period and the payment of all amounts then due, the Debenture Issuer may commence a new Extension Period, subject to the requirements set forth in the Indenture. A1-4 Upon repayment of the Debentures in whole or in part, whether at maturity or upon redemption, the proceeds from such repayment or payment shall be substantially simultaneously applied to redeem the Securities as provided in the Declaration. The Preferred Securities shall be exchangeable at the option of the Debenture Issuer in certain events as set forth in the Declaration and in the Supplemental Indenture. [The Preferred Securities shall be convertible into shares of Common Stock at the holder's direction to the Conversion Agent as set forth in the Declaration.] A1-5 [CONVERSION REQUEST To: [ ] as Conversion Agent of Unocal Capital Trust II The undersigned Holder of these Preferred Securities hereby irrevocably exercises the option to convert these Preferred Securities, or the portion below designated, into Common Stock of Unocal Corporation (the "Common Stock") in accordance with the terms of the Amended and Restated Declaration of Trust of Unocal Capital Trust II, dated as of _______________, _____ (as amended from time to time, the "Declaration"). Pursuant to the aforementioned exercise of the option to convert these Preferred Securities, the undersigned hereby directs the Conversion Agent (as that term is defined in the Declaration) on behalf of the undersigned to (i) exchange such Preferred Securities for a portion of the Debentures (as that term is defined in the Declaration) held by the Trust (at the rate of exchange specified in the terms of the Preferred Securities set forth as Annex I to the Declaration) and (ii) immediately convert such Debentures, into Common Stock pursuant to the terms of the Indenture (as defined in the Declaration). The undersigned does also hereby direct the Conversion Agent that the shares of Common Stock issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Date: ________________, _____ in whole __ in part ___ Number of Preferred Securities to be converted: ____________________ If a name or names other than the undersigned, please indicate in the spaces below the name or names in which the shares of Common Stock are to be issued, along with the address or addresses of such person or persons -------------------------------------- -------------------------------------- -------------------------------------- -------------------------------------- A1-6 -------------------------------------- Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number -------------------------------------- -------------------------------------- -------------------------------------- Signature Guarantee: * __________] - --------------------------- * (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Conversion Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Conversion Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A1-7 ------------------------ ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security Certificate to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee and irrevocably appoints _______________________________________________________ agent to transfer this Preferred Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: -------------------------------- Signature: --------------------------- (Sign exactly as your name appears on the other side of this Preferred Security Certificate) SIGNATURE GUARANTEE* ------------------------------------------------- - ------------------------------- * Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities and Exchange Act of 1934, as amended. A1-8 EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE [FORM OF FACE OF SECURITY CERTIFICATE] Certificate Number ________________ Number of Common Securities ________ Certificate Evidencing ___% Trust Common Securities of UNOCAL CAPITAL TRUST II ____% Trust Common Securities (liquidation amount $___ per Common Security) Unocal Capital Trust II, a statutory business trust formed under the laws of the State of Delaware (the "Trust"), hereby certifies that __________________________________________ (the "Holder") is the registered owner of common securities of the Trust representing undivided beneficial interests in the assets of the Trust designated the __% Trust Common Securities (liquidation amount $___ per Common Security) (the "Common Securities"). The Common Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities represented hereby are issued and shall in all respects be subject to the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of ________________, _____, as the same may be amended from time to time (the "Declaration"), including the designation of the terms of the Common Securities as set forth in Annex I to the Declaration. Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Sponsor will provide a copy of the Declaration and the Indenture to a Holder without charge upon written request to the Trust at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Common Securities as evidence of indirect beneficial ownership in the Debentures. The provisions of these Common Securities are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Trust has caused this certificate to be executed. A2-1 UNOCAL CAPITAL TRUST II By: ----------------------------------- Name: Regular Trustee A2-2 [FORM OF REVERSE OF SECURITY] Distributions payable on each Common Security will be fixed at a rate per annum of __ % (the "Coupon Rate") of the liquidation amount per Common Security, such rate being the rate of interest payable on the Debentures held by the Institutional Trustee. Distributions not paid on the regularly scheduled payment date therefor will bear interest thereon compounded quarterly at the Coupon Rate (to the extent permitted by applicable law). The term "Distributions" as used herein includes such cash distributions and any such interest payable unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full quarterly Distribution period on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly Distribution period for which Distributions are computed, Distributions will be computed on the basis of 30-day months and, for periods of less than a month, the actual number of days elapsed per 30-day month. Except as otherwise described below, distributions on the Preferred Securities shall be cumulative, shall accumulate from ___________, ____, or the most recent date on which Distributions have been paid in full, and shall be payable quarterly (subject to deferral as set forth in the Declaration and the Indenture) in arrears, on March 1, June 1, September 1 and December 1 of each year, commencing __________ 1, ____, which payment dates shall correspond to the interest payment dates on the Debentures, when, as and if funds are available for payment, to Holders at the close of business on the regular record date for such distribution, which regular record date shall be, while these Common Securities are represented by a Global Certificate, the close of business on the Business Day next preceding such distribution payment date, unless otherwise provided in the Declaration or unless a different regular record date is established or provided for the corresponding interest payment date on the Debentures. The Debenture Issuer has the right under the Indenture to defer payments of interest by extending the interest payment period from time to time on the Debentures for a period (each an "Extension Period") not exceeding 20 consecutive quarterly interest payment periods during which Extension Period no interest is due and payable on the Debentures, PROVIDED that no Extension Period shall last beyond the date of the maturity of the Debentures. As a consequence of such deferral, Distributions will also be deferred. To the extent permitted by applicable law, during such Extension Period deferred quarterly Distributions will continue to accumulate with interest thereon at the Coupon Rate compounded quarterly for each quarter of the Extension Period. Before the termination of any such Extension Period, the Debenture Issuer may further extend such Extension Period; PROVIDED that such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters or extend beyond the maturity date of the Debentures. At the end of the Extension Period, Payments of accumulated Distributions shall be payable to Holders of Common Securities on the first record date after the termination of such Extension Period. Upon the termination of any such Extension Period and the payment of all amounts then due, the Debenture Issuer may commence a new Extension Period, subject to the requirements set forth in the Indenture. A2-3 Upon repayment of the Debentures, in whole or in part, whether at maturity or upon redemption, the proceeds from such repayment or payment shall be substantially simultaneously applied to redeem the Securities as provided in the Declaration. The Common Securities shall be exchangeable at the option of the Debenture Issuer in certain events as set forth in the Declaration and in the Supplemental Indenture. [The Common Securities shall be convertible into shares of Common Stock at the holder's direction to the Conversion Agent as set forth in the Declaration.] A2-4 [CONVERSION REQUEST To: [ ] as Conversion Agent of Unocal Capital Trust II The undersigned Holder of these Common Securities hereby irrevocably exercises the option to convert these Common Securities, or the portion below designated, into Common Stock of Unocal Corporation (the "Common Stock") in accordance with the terms of the Amended and Restated Declaration of Trust of Unocal Capital Trust II, dated as of ______________, _____ (as amended from time to time, the "Declaration"). Pursuant to the aforementioned exercise of the option to convert these Common Securities, the undersigned hereby directs the Conversion Agent (as that term is defined in the Declaration) on behalf of the undersigned to (i) exchange such Common Securities for a portion of the Debentures (as that term is defined in the Declaration) held by the Trust (at the rate of exchange specified in the terms of the Common Securities set forth as Annex I to the Declaration) and (ii) immediately convert such Debentures, into Common Stock pursuant to the terms of the Indenture (as defined in the Declaration). The undersigned does also hereby direct the Conversion Agent that the shares of Common Stock issuable and deliverable upon conversion, together with any check in payment for fractional shares, be issued in the name of and delivered to the undersigned, unless a different name has been indicated in the assignment below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Date: ______________, _____ in whole __ in part ___ Number of Common Securities to be converted: ____________________ If a name or names other than the undersigned, please indicate in the spaces below the name or names in which the shares of Common Stock are to be issued, along with the address or addresses of such person or persons ----------------------------------------- ----------------------------------------- ----------------------------------------- ----------------------------------------- A2-5 ----------------------------------------- Signature (for conversion only) Please Print or Typewrite Name and Address, Including Zip Code, and Social Security or Other Identifying Number ----------------------------------------- ----------------------------------------- ----------------------------------------- Signature Guarantee: *__________________] - -------------------------------- * (Signature must be guaranteed by an "eligible guarantor institution" that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Conversion Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Conversion Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) A2-6 ---------------------- ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert assignee's social security or tax identification number) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Insert address and zip code of assignee and irrevocably appoints ______________________________________________________ agent to transfer this Common Security Certificate on the books of the Trust. The agent may substitute another to act for him or her. Date: ---------------------------------- Signature: ----------------------------- (Sign exactly as your name appears on the other side of this Common Security Certificate) SIGNATURE GUARANTEE *: -------------------------------------------- - -------------------------- * Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities and Exchange Act of 1934, as amended. A2-7 EXHIBIT B SPECIMEN OF JUNIOR [CONVERTIBLE] SUBORDINATED DEBENTURE B-1 EX-4.12 10 EXHIBIT 4.12 Exhibit 4.12 FORM OF PREFERRED SECURITIES GUARANTEE AGREEMENT Unocal Capital Trust II Dated as of ___________, ____
TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1. Definitions and Interpretation. . . . . . . . . . . . . . .1 ARTICLE II TRUST INDENTURE ACT SECTION 2.1. Trust Indenture Act; Application. . . . . . . . . . . . . .3 SECTION 2.2. Lists of Holders. . . . . . . . . . . . . . . . . . . . . .3 SECTION 2.3. Reports by Preferred Guarantee Trustee. . . . . . . . . . .4 SECTION 2.4. Periodic Reports to Preferred Guarantee Trustee . . . . . .4 SECTION 2.5. Evidence of Compliance with Conditions Precedent. . . . . .4 SECTION 2.6. Events of Default; Waiver . . . . . . . . . . . . . . . . .4 SECTION 2.7. Event of Default; Notice . . . . . . . . . . . . . . . . .4 SECTION 2.8. Conflicting Interests . . . . . . . . . . . . . . . . . . .5 ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee. . . .5 SECTION 3.2. Certain Rights of Preferred Guarantee Trustee . . . . . . .7 SECTION 3.3. Not Responsible for Recitals or Issuance of Preferred Securities Guarantee. . . . . . . . . . . . . . . . . . .9 ARTICLE IV PREFERRED GUARANTEE TRUSTEE SECTION 4.1. Preferred Guarantee Trustee Eligibility . . . . . . . . . .9 SECTION 4.2. Appointment Removal and Resignation of Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . 10 ARTICLE V PREFERRED SECURITIES GUARANTEE SECTION 5.1. Preferred Securities Guarantee. . . . . . . . . . . . . . 10 SECTION 5.2. Waiver of Notice and Demand . . . . . . . . . . . . . . . 11 SECTION 5.3. Obligations Not Affected. . . . . . . . . . . . . . . . . 11 SECTION 5.4. Rights of Holders . . . . . . . . . . . . . . . . . . . . 12 SECTION 5.5. Guarantee of Payment. . . . . . . . . . . . . . . . . . . 12 SECTION 5.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 5.7. Independent Obligations . . . . . . . . . . . . . . . . . 12 ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION SECTION 6.1. Limitation of Transactions. . . . . . . . . . . . . . . . 13 SECTION 6.2. Subordination . . . . . . . . . . . . . . . . . . . . . . 13 i ARTICLE VII TERMINATION SECTION 7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE VIII INDEMNIFICATION SECTION 8.1. Exculpation . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 8.2. Indemnification . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE IX MISCELLANEOUS SECTION 9.1. Successors and Assigns. . . . . . . . . . . . . . . . . . 15 SECTION 9.2. Amendments. . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 9.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 9.4. Benefit . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 9.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . 16
ii PREFERRED SECURITIES GUARANTEE AGREEMENT This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee") dated as of __________, ____, is executed and delivered by Unocal Corporation, a Delaware corporation (the "Guarantor"), and The Bank of New York, as trustee (the "Preferred Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of Unocal Capital Trust II, a Delaware statutory business trust (the "Issuer"). WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration") dated as of __________, ____, among the trustees of the Issuer named therein, the Guarantor, as sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing to the Guarantor on the date hereof up to _________ preferred securities, having an aggregate liquidation amount of up to $_______ designated the "___% Trust [Convertible] Preferred Securities" (the "Preferred Securities"). WHEREAS, as an incentive to purchase such Preferred Securities, the Guarantor desires fully and unconditionally to agree, to the extent set forth in this Preferred Securities Guarantee, to pay to the Holders of the Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing, the Guarantor executes and delivers this Preferred Securities Guarantee for the benefit of the Holders of Preferred Securities. ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.1. DEFINITIONS AND INTERPRETATION In this Preferred Securities Guarantee, unless the context otherwise requires: (a) Capitalized terms used in this Preferred Securities Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; (b) terms defined in the Declaration as of the date of execution of this Preferred Securities Guarantee have the same meaning when used in this Preferred Securities Guarantee unless otherwise defined in this Preferred Securities Guarantee; (c) a term defined anywhere in this Preferred Securities Guarantee has the same meaning throughout; (d) all references to "the Preferred Securities Guarantee" or "this Preferred Securities Guarantee" are to this Preferred Securities Guarantee as modified, supplemented or amended from time to time; (e) all references in this Preferred Securities Guarantee to Articles and Sections are to Articles and Sections of this Preferred Securities Guarantee, unless otherwise specified; (f) a term defined in the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") has the same meaning when used in this Preferred Securities Guarantee, unless otherwise defined in this Preferred Securities Guarantee or unless the context otherwise requires; and (g) a reference to the singular includes the plural and vice versa. "AUTHORIZED OFFICER" of a Person means any Person that is authorized to bind such Person, PROVIDED, HOWEVER, that the Authorized Officer signing a certificate furnished pursuant to Section 314(a)(4) of the Trust Indenture Act shall be the principal executive, financial or accounting officer of such Person. "CORPORATE TRUST OFFICE" means the office of the Preferred Guarantee Trustee at which the corporate trust business of the Preferred Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at 101 Barclay Street (21 West), New York, New York 10286. 1 "COVERED PERSON" means any Holder or beneficial owner of Preferred Securities. "EVENT OF DEFAULT" means a default by the Guarantor on any of its payment or other obligations under this Preferred Securities Guarantee. "GUARANTEE PAYMENTS" means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by the Issuer: (i) any accumulated and unpaid Distributions that are required to be paid on such Preferred Securities to the extent the Issuer shall have funds available therefor, (ii) the redemption price (the "Redemption Price"), and all accumulated and unpaid Distributions to the date of redemption, to the extent the Issuer has funds available therefor, with respect to any Preferred Securities called for redemption by the Issuer, and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Issuer (other than in connection with the conversion of all of the Trust Securities into the Guarantor's common stock or the distribution of Debentures to the Holders in exchange for Preferred Securities as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Issuer shall have funds available therefor and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer (in either case, the "Liquidation Distribution"). If an Event of Default (as defined in the Indenture) has occurred and is continuing, the rights of holders of the Common Securities to receive payments under the Common Securities Guarantee are subordinated to the rights of Holders of Preferred Securities to receive Guarantee Payments. "HOLDER" shall mean any holder, as registered on the books and records of the Issuer, of any Preferred Securities; PROVIDED, HOWEVER, that, in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor. "INDEMNIFIED PERSON" means the Preferred Guarantee Trustee, any Affiliate of the Preferred Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Preferred Guarantee Trustee. "INDENTURE" means the Multiple-Series Indenture dated as of September 11, 1996, of the Guarantor, as supplemented by the Second Supplemental Indenture dated as of _________ ____, between the Guarantor (the "Debenture Issuer") and The Bank of New York, as trustee, relating to the Debentures. "MAJORITY IN LIQUIDATION AMOUNT OF THE PREFERRED SECURITIES" means, except as provided in the terms of the Preferred Securities, or except as provided by the Trust Indenture Act, a vote by Holder(s), voting separately as a class, of more than 50% of the liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accumulated and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Preferred Securities. "PREFERRED GUARANTEE TRUSTEE" means The Bank of New York, until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment pursuant to 2 the terms of this Preferred Securities Guarantee and thereafter means each such Successor Preferred Guarantee Trustee. "RESPONSIBLE OFFICER" means, with respect to the Preferred Guarantee Trustee, any officer within the Corporate Trust Office of the Preferred Guarantee Trustee, including any vice president, any assistant vice president, any assistant secretary, the treasurer, any assistant treasurer or other officer within the Corporate Trust Office of the Preferred Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "SUCCESSOR PREFERRED GUARANTEE TRUSTEE" means a successor Preferred Guarantee Trustee possessing the qualifications to act as Preferred Guarantee Trustee under Section 4.1. "TRUST SECURITIES" means, collectively, the Common Securities and the Preferred Securities. ARTICLE II TRUST INDENTURE ACT SECTION 2.1. TRUST INDENTURE ACT; APPLICATION (a) This Preferred Securities Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Preferred Securities Guarantee and shall, to the extent applicable, be governed by such provisions; and (b) if and to the extent that any provision of this Preferred Securities Guarantee limits, qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. SECTION 2.2. LISTS OF HOLDERS (a) The Guarantor shall provide the Preferred Guarantee Trustee with a list, in such form as the Preferred Guarantee Trustee may reasonably require, of the names and addresses of the Holders ("List of Holders") (i) within 1 Business Day after each record date for payment of Distributions as long as the Preferred Securities remain in book-entry only form, otherwise within 14 days after each record date for payment of Distributions, and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a List of Holders as of a date no more than 14 days before such List of Holders is given to the Preferred Guarantee Trustee, PROVIDED, that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Preferred Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act. 3 SECTION 2.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE Within 60 days after May 15 of each year, the Preferred Guarantee Trustee shall provide to the Holders such reports as are required by Section 313 of the Trust Indenture Act if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. SECTION 2.4. PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE The Guarantor shall provide to the Preferred Guarantee Trustee such documents, reports and information as are required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Delivery of such reports, information and documents to the Preferred Guarantee Trustee is for informational purposes only and the Preferred Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein, including the Guarantor's compliance with any of its covenants hereunder (as to which the Preferred Guarantee Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 2.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT The Guarantor shall provide to the Preferred Guarantee Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Preferred Securities Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. SECTION 2.6. EVENTS OF DEFAULT: WAIVER The Holders of Majority in liquidation amount of the Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of the Preferred Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 2.7. EVENT OF DEFAULT; NOTICE (a) The Preferred Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee, unless such defaults have been cured before the giving of such notice, PROVIDED, that, the Preferred Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Preferred Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. 4 (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Preferred Guarantee Trustee shall have received written notice thereof, or a Responsible Officer of the Preferred Guarantee Trustee charged with the administration of the Declaration shall have obtained actual knowledge thereof. SECTION 2.8. CONFLICTING INTERESTS The Declaration shall be deemed to be specifically described in this Preferred Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE SECTION 3.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE (a) This Preferred Securities Guarantee shall be held by the Preferred Guarantee Trustee for the benefit of the Holders, and the Preferred Guarantee Trustee shall not transfer this Preferred Securities Guarantee to any Person except a Holder exercising his or her rights pursuant to Section 5.4(b) or to a Successor Preferred Guarantee Trustee upon acceptance by such Successor Preferred Guarantee Trustee of its appointment to act as Successor Preferred Guarantee Trustee. The right, title and interest of the Preferred Guarantee Trustee shall automatically vest in any Successor Preferred Guarantee Trustee, and such vesting and succession of title shall be effective whether or not conveyance documents have been executed and delivered pursuant to the appointment of such Successor Preferred Guarantee Trustee. (b) If an Event of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee for the benefit of the Holders. (c) The Preferred Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is actually known to a Responsible Officer of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such of the rights and powers vested in it by this Preferred Securities Guarantee, and shall use the same degree of care and skill in its exercise thereof as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Preferred Securities Guarantee shall be construed to relieve the Preferred Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: 5 (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Preferred Guarantee Trustee shall be determined solely by the express provisions of this Preferred Securities Guarantee, and the Preferred Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants or obligations shall be read in this Preferred Securities Guarantee against the Preferred Guarantee Trustee; and (B) in the absence of bad faith on the part of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Preferred Guaranteed Trustee and conforming to the requirements of this Preferred Securities Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Preferred Securities Guarantee; (ii) the Preferred Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Preferred Guarantee Trustee, unless it shall be proved that the Preferred Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Preferred Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Preferred Guarantee Trustee, or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee; and (iv) no provision of this Preferred Securities Guarantee shall require the Preferred Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its duties or in the exercise of any of its rights or powers, if the Preferred Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Preferred Securities Guarantee or indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against such risk or liability is not reasonably assured to it. SECTION 3.2. CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE (a) Subject to the provisions of Section 3.1: 6 (i) The Preferred Guarantee Trustee may conclusively rely, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. (ii) Any direction or act of the Guarantor contemplated by this Preferred Securities Guarantee shall be sufficiently evidenced by an Officers' Certificate. (iii) Whenever, in the administration of this Preferred Securities Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Preferred Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor. (iv) The Preferred Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any rerecording, refiling or reregistration thereof). (v) The Preferred Guarantee Trustee may consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Preferred Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Preferred Securities Guarantee from any court of competent jurisdiction. (vi) The Preferred Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Preferred Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Preferred Guarantee Trustee such security and indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against the costs, expenses (including attorneys fees and expenses and the expenses of the Preferred Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Preferred Guarantee Trustee; PROVIDED that, nothing contained in this Section 3.2(a)(vi) shall be taken to relieve the Preferred Guarantee Trustee, upon the occurrence of an Event of Default, of its obligations to exercise the rights and powers vested in it by this Preferred Securities Guarantee. (vii) The Preferred Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Preferred 7 Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (viii) The Preferred Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Preferred Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. (ix) Any action taken by the Preferred Guarantee Trustee or its agents hereunder shall bind the Holders and the signature of the Preferred Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Preferred Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Preferred Securities Guarantee, both of which shall be conclusively evidenced by the Preferred Guarantee Trustee's or its agent's taking such action. (x) Whenever in the administration of this Preferred Securities Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Preferred Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Preferred Securities, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions. (xi) The Preferred Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Preferred Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. (xii) The Preferred Guarantee Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Preferred Securities Guarantee. (b) No provision of this Preferred Securities Guarantee shall be deemed to impose any duty or obligation on the Preferred Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Preferred Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Preferred Guarantee Trustee shall be construed to be a duty. SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF PREFERRED SECURITIES GUARANTEE 8 The recitals contained in this Preferred Securities Guarantee shall be taken as the statements of the Guarantor, and the Preferred Guarantee Trustee does not assume any responsibility for their correctness. The Preferred Guarantee Trustee makes no representation as to the validity or sufficiency of this Preferred Securities Guarantee. ARTICLE IV PREFERRED GUARANTEE TRUSTEE SECTION 4.1. PREFERRED GUARANTEE TRUSTEE ELIGIBILITY (a) There shall at all times be a Preferred Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.1(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Preferred Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). (c) If the Preferred Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.2. APPOINTMENT REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE TRUSTEE (a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Preferred Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor. (c) The Preferred Guarantee Trustee appointed to office shall hold office until a Successor Preferred Guarantee Trustee shall have been appointed or until its removal or 9 resignation. The Preferred Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Preferred Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor and the resigning Preferred Guarantee Trustee. (d) If no Successor Preferred Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery of an instrument of resignation or removal, the Preferred Guarantee Trustee resigning or being removed may petition any court of competent jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee. (e) No Preferred Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Preferred Guarantee Trustee. (f) Upon termination of this Preferred Securities Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all amounts owed to the Preferred Guarantee Trustee by the Guarantor to the date of such termination, removal or resignation. ARTICLE V PREFERRED SECURITIES GUARANTEE SECTION 5.1. PREFERRED SECURITIES GUARANTEE The Guarantor fully and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), as and when due, regardless of any defense, right of set-off or counterclaim that the Issuer may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. SECTION 5.2. WAIVER OF NOTICE AND DEMAND The Guarantor hereby waives notice of acceptance of this Preferred Securities Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.3. OBLIGATIONS NOT AFFECTED The obligations, covenants, agreements and duties of the Guarantor under this Preferred Securities Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following: 10 (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Issuer; (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debentures); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Issuer granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; (e) any invalidity of, or defect or deficiency in, the Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be full and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. SECTION 5.4. RIGHTS OF HOLDERS (a) The Holders of a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting of any proceeding for any remedy available to the Preferred Guarantor Trustee in respect of this Preferred Securities Guarantee or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee. (b) If the Preferred Guarantee Trustee fails to enforce such Preferred Securities Guarantee, any Holder of Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce the Preferred Guarantee Trustee's rights under this Preferred Securities Guarantee, without first instituting a legal proceeding against the Issuer, the Preferred 11 Guarantee Trustee or any other person or entity. The Guarantor waives any right or remedy to require that any action be brought first against the Issuer or any other person or entity before proceeding directly against the Guarantor. SECTION 5.5 GUARANTEE OF PAYMENT This Preferred Securities Guarantee creates a guarantee of payment and not of collection. SECTION 5.6 SUBROGATION The Guarantor shall be subrogated to all (if any) rights of the Holders of Preferred Securities against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Preferred Securities Guarantee; PROVIDED, HOWEVER, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Preferred Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Preferred Securities Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. SECTION 5.7 INDEPENDENT OBLIGATIONS The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Preferred Securities, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION SECTION 6.1 LIMITATION OF TRANSACTIONS So long as any Preferred Securities remain outstanding, if there shall have occurred an Event of Default or an event of default under the Declaration, then (a) the Guarantor shall not declare or pay any dividend on, make any distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock (other than (i) purchases or acquisitions of shares of capital stock in connection with any employee benefit plan or program, director benefit plan or program, dividend reinvestment, stock repurchase, or other similar plans available to stockholders of the Guarantor, or any option, warrant, right, or exercisable, exchangeable, or convertible security outstanding as of ____________, (ii) as a result of a reclassification of the Guarantor's capital stock or the exchange or conversion of one class or series of the Guarantor's capital stock for another class or series of the Guarantor's capital stock or the capital securities of a subsidiary (including a trust such as the Issuer), or (iii) the purchase of fractional interests in shares of the Guarantor's capital stock pursuant to the 12 conversion or exchange provisions of such capital stock of the Guarantor or the security being converted or exchanged) or make any guarantee payments with respect to the foregoing, the Guarantor shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities (including guarantees) issued by the Guarantor which rank PARI PASSU with or junior to the Debentures and (c) the Guarantor shall not make any guarantee payments with respect to the foregoing (other than pursuant to this Preferred Securities Guarantee). SECTION 6.2 SUBORDINATION This Preferred Securities Guarantee will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, (ii) PARI PASSU with the most senior preferred or preference stock now or hereafter issued by the Guarantor and with any guarantee now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's common stock. ARTICLE VII TERMINATION SECTION 7.1 TERMINATION This Preferred Securities Guarantee shall terminate upon (i) full payment of the Redemption Price of all Preferred Securities, (ii) the distribution of the Guarantor's common stock to all of the Holders in respect of the conversion of all the Preferred Securities into the Guarantor's common stock or upon the distribution of the Debentures held by the Issuer to the Holders of all of the Preferred Securities or (iii) full payment of the amounts payable in accordance with the Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this Preferred Securities Guarantee will continue to be effective or will be restated, as the case may be, if at any time any Holder must restore payment of any sums paid under the Preferred Securities or under this Preferred Securities Guarantee. ARTICLE VIII INDEMNIFICATION SECTION 8.1 EXCULPATION (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Covered Person for any loss, damage, liability, expense or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Preferred Securities Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Preferred Securities Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's negligence or willful misconduct with respect to such acts or omissions. 13 (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Guarantor, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distribution to Holders might properly be paid. SECTION 8.2. INDEMNIFICATION The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as set forth in this Section 8.2 shall survive the termination of this Preferred Securities Guarantee. When the Preferred Guarantee Trust incurs expenses or renders services in connection with an Event of Default with respect to the Preferred Securities specified in Section 6.01(e) or 6.01(f) of the Indenture of the Guarantor, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law. ARTICLE IX MISCELLANEOUS SECTION 9.1. SUCCESSORS AND ASSIGNS All guarantees and agreements contained in this Preferred Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. SECTION 9.2. AMENDMENTS Except with respect to any changes that do not adversely affect the rights of Holders (in which case no consent of Holders will be required), this Preferred Securities Guarantee may be amended only with the prior approval of the Holders of at least a Majority in liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accumulated and unpaid Distributions to the date upon which the voting percentages are determined) of the Preferred Securities. The provisions of Section 12.2 of the Declaration with respect to meetings of Holders apply to the giving of such approval. SECTION 9.3. NOTICES 14 All notices provided for in this Preferred Securities Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered by hand, telecopied or mailed by first class mail, as follows: (a) If given to the Preferred Guarantee Trustee, at the Preferred Guarantee Trustee's mailing address set forth below (or such other address as the Preferred Guarantee Trustee may give notice of to the Holders of the Preferred Securities): The Bank of New York 101 Barclay Street (21 West) New York, New York 10286 Attn: Corporate Trust Trustee Administration Fax No.: ----------------------------- (b) If given to the Guarantor, at the Guarantors's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Preferred Securities): Unocal Corporation 2141 Rosecrans Avenue Suite 4000 El Segundo, California 90245 Attn: Corporate Secretary Fax No.: (310) 726-7875 (c) If given to any Holder of Preferred Securities, at the address set forth on the books and records of the Issuer. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. SECTION 9.4 BENEFIT This Preferred Securities Guarantee is solely for the benefit of the Holders of the Preferred Securities and, subject to Section 3.1(a), is not separately transferable from the Preferred Securities. SECTION 9.5 GOVERNING LAW THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF. 15 THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year first above written. UNOCAL CORPORATION, as Guarantor By: ----------------------------- Name: Title: THE BANK OF NEW YORK, as Preferred Guarantee Trustee By: ----------------------------- Name: Title: 16 EX-4.16 11 EXHIBIT 4.16 Fixed Rate Registered Medium-Term Note UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. IF THIS NOTE IS DESIGNATED BELOW AS A "DISCOUNT NOTE," FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE, THE ISSUANCE PRICE (THE "ISSUANCE PRICE") OF THIS NOTE IS ___% OF ITS PRINCIPAL AMOUNT, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS SECURITY IS ___% OF ITS PRINCIPAL AMOUNT, THE ORIGINAL ISSUANCE DATE IS ___________, 19__, AND THE YIELD TO MATURITY IS ___%. THE METHOD USED TO DETERMINE THE YIELD IS ____________, AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT APPLICABLE TO THE SHORT ACCRUAL PERIOD OF ______________, 19__, TO _______________, 19__, IS ___% OF THE PRINCIPAL AMOUNT OF THIS NOTE. THE ECONOMIC YIELD COULD BE DIFFERENT FROM THE HYPOTHETICAL YIELD TO MATURITY FOR TAX PURPOSES. REGISTERED REGISTERED UNION OIL COMPANY OF CALIFORNIA Payment of Principal, Interest and Premium, if any, Guaranteed by UNOCAL CORPORATION MEDIUM-TERM NOTE, SERIES C NO. ____________ Principal Amount: CUSIP NO._______________ Registered Holder: Cede & Co. U.S. $__________ - -------------------------------------------------------------------------------- Trade Date: Original Issuance Date: Initial Interest Rate: _____% Issue Price: Stated Maturity: Selling Agent's Discount or Commission: Net Proceeds to Issuer: - -------------------------------------------------------------------------------- Redemption: / / This Note cannot be redeemed prior to maturity / / This Note may be redeemed prior to maturity Earliest Redemption Date: Redemption Price: _____% Annual Redemption Price Reduction: ______% Sinking Fund Redemption Dates: Sinking Fund Amount: Repayment: / / This Note cannot be repaid prior to maturity / / This Note may be repaid prior to maturity at the option of the holder of the Note Repayment Date(s): Repayment Price: _____% Discount Notes: / / Yes / / No / / Indexed (see attached) / / Amortizing (see attached) Total Amount of OID: Yield to Maturity: Initial Accrual Period: Other Provisions: UNION OIL COMPANY OF CALIFORNIA, a corporation duly organized and existing under the laws of the State of California (the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co. or registered assigns, the principal amount specified above (the "Principal Amount") on the Stated Maturity specified above (unless earlier redeemed or repaid) and to pay to the registered holder hereof as hereinafter provided interest on said Principal Amount at the per annum Interest Rate specified above on each succeeding Interest Payment Date (as defined below), until payment of said principal sum has been made or made available for payment; PROVIDED, HOWEVER, if the Original Issuance Date is after the Regular Record Date (as defined below) and before the next succeeding Interest Payment Date, then interest hereon shall be paid on the Interest Payment Date following the next succeeding Regular Record Date. Interest hereon shall accrue from the Original Issuance Date or, if later, the Interest Payment Date next preceding the date hereof to which interest has been paid or duly provided for, unless the date hereof is an Interest Payment Date to which interest has been paid or duly provided for on this Note (or a predecessor Note in exchange, registration of transfer or substitution for which this Note was issued) in which case from the date hereof, or unless the date hereof is not the Original Issuance Date and is after a Regular Record Date and before the immediately succeeding Interest Payment Date, then from such next succeeding Interest Payment Date. The term "Interest Payment Date" for any regular payment of interest shall mean January 31 or July 31 and the date fixed for redemption pursuant to the Indenture (as defined below) (the "Redemption Date") and the Stated Maturity. The term "Regular Record Date" for any regular payment of interest, other than any Redemption Date or the Stated Maturity, shall mean the January 15 or July 15 next preceding such January 31 and July 31 (whether or not a Business Day), as the case may be. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or a Predecessor Note in exchange for or transfer of which this Note was issued between the Regular Record Date for payment of such interest and the Interest Payment Date) is registered at the close of business on the Regular Record Date for such interest; PROVIDED, HOWEVER that interest payable at the Stated Maturity, the date fixed for repayment at the option of the holder pursuant to the fourth paragraph on the reverse of this Note or the Redemption Date shall be paid to the person to whom the Principal Amount is paid. Interest shall be calculated on the basis of a 360-day year of twelve 30-day months. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirement of any securities exchange on which the Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Payment of the principal (and premium, if any) of this Note shall be made in immediately available funds at the corporate trust office or agency of Chase Manhattan Bank & Trust Company, National Association (as successor by merger effective as of November 15, 1997 to Chemical Trust Company of California) in the Borough of Manhattan, the City of New York, and interest hereon shall be paid upon delivery of instructions in advance to facilitate such payment in 2 accordance with normal procedures of the Trustee. Alternatively, such payments shall be made at such other office or agency of the Company as may be designated by it for that purpose in the Borough of Manhattan, the City of New York, in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts; PROVIDED, HOWEVER, that at the option of the Company payment of interest may be made by United States dollar check mailed on the applicable interest payment date to the address of the Person entitled thereto as such address shall appear in the Security Register. The Company may also appoint additional paying agents. For interest payments on a Note of U.S. $10,000,000 or more in principal amount, the Holder may elect at any time to have payment made in immediately available funds; where the principal of the Note is less than U.S. $10,000,000, payment will be made in immediately available funds only if agreed to on a case-by-case basis by the Company. Interest payments shall not be made in immediately available funds unless written instructions have been presented to Chase Manhattan Bank & Trust Company, National Association (or other paying agent) at least 15 days prior to the relevant Regular Record Date. This Note is one of a duly authorized issuance of Medium-Term Notes, Series C, of the Company (the "Notes"), which have been issued under and are governed by the terms of an indenture dated as of February 3, 1995 (the "Indenture") among the Company, Unocal Corporation, a corporation duly organized and existing under the laws of the State of Delaware, as Guarantor (the "Guarantor," which term includes any successor guarantor under the Indenture), and Chase Manhattan Bank & Trust Company, National Association (as successor to Chemical Trust Company of California) as Trustee (the "Trustee," which term includes any successor trustee under the Indenture), which incorporates the Standard Multiple-Series Indenture Provisions, January 1991 of the Issuer and Guarantor dated as of January 2, 1991, to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the respective rights thereunder of the Company, the Guarantor, the Trustee and the Holders of the Notes, and the terms upon which the Notes are, and are to be, authenticated and delivered. The provisions of this Note are continued on the reverse hereof and the provisions there set forth shall for all purposes have the same effect as though fully set forth at this place. References herein to "this Note," "hereof," "herein" and comparable terms shall include an Addendum hereto if an Addendum is specified under "Other Provisions" above. Unless the certificate of authentication hereon has been executed by or on behalf of Chase Manhattan Bank & Trust Company, National Association, the Trustee under the Indenture, or its successor thereunder, by the manual signature of one of its, or its Authenticating Agent's, authorized signatories, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. Any provision contained herein with respect to the calculation of the rate of interest applicable to this Note, its payment dates or any other matter relating hereto may be modified as specified in an Addendum relating hereto if so specified above. 3 IN WITNESS WHEREOF, UNION OIL COMPANY OF CALIFORNIA has caused this instrument to be executed in its corporate name by the manual or facsimile signature of its Chairman of the Board of Directors, its Chief Executive Officer, its President, its Chief Operating Officer, its Chief Financial Officer, one of its Vice Presidents, its Treasurer or one of its Assistant Treasurers, and impressed or imprinted with its corporate seal or facsimile thereof, attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. UNION OIL COMPANY OF CALIFORNIA By: -------------------------------- Name: Title: [CORPORATE SEAL] Attest: - -------------------------------- Name: Title: [Assistant] Secretary 4 [FORM OF CERTIFICATE OF AUTHENTICATION] This is one of the Securities of the series designated herein issued under the within-mentioned Indenture. Dated: CHASE MANHATTAN BANK & TRUST COMPANY, NATIONAL ASSOCIATION As Trustee By: -------------------------------- Name: Title: Authorized Signatory 5 [FORM OF REVERSE OF NOTE] UNION OIL COMPANY OF CALIFORNIA Payment of Principal, Interest and Premium, if any, Guaranteed by UNOCAL CORPORATION MEDIUM-TERM NOTE, SERIES C (For Offerings Within the United States) This Note is one of a duly authorized series of securities of the Company designated as its Medium-Term Notes, Series C (the "Notes"), limited to an aggregate principal amount of $_______________, subject to reduction or increase upon the determination of the Company all issued or to be issued in one or more series under the Indenture among the Company, the Guarantor and the Trustee. The Notes will be issued only in fully registered form in denominations of $1,000 and integral multiples of $1,000 in excess thereof, PROVIDED, HOWEVER, that if the Notes are denominated in a Specified Currency other than U.S. dollars such Notes will only be issued in denominations of the equivalent of $1,000 (rounded to an integral multiple of such Specified Currency), or any amount in excess thereof which is an integral multiple equivalent to $1,000 of such Specified Currency, as determined by reference to the noon dollar buying rate in New York City for cable transfers of such Specified Currency published by the Federal Reserve Bank of New York (the "Market Exchange Rate") on the Business Day immediately preceding the date of issuance; PROVIDED, HOWEVER, in the case of European Currency Units ("ECUs"), the Market Exchange Rate shall be the rate of exchange determined by the Commission of the European Communities (or any successor thereto) as published in the Official Journal of the European Communities, or any successor publication, on the Business Day immediately preceding the date of issuance. If payments of interest and principal on this Note are payable in a Specified Currency, and if permitted on the face of this Note, such payment may be made, at the option of the holder of such Note, in U.S. dollars, conversion of the Specified Currency into U.S. dollars shall be based on the highest bid quotation in the City of New York received by the Exchange Rate Agent at approximately 11:00 A.M., New York City time, on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent) for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to the holders of Notes and at which the applicable dealer commits to execute a contract. If such bid quotations are not available, payments will be made in the Specified Currency. All currency exchange costs will be borne by the holders of Notes by deductions from such payments. Except as otherwise provided herein, if the principal of, premium, if any, or interest on, any Note is payable in a Specified Currency other than U.S. dollars and such Specified Currency is not available to the Company for making payments thereof due to the imposition of exchange controls or other circumstances beyond the control of the Company or is no longer used by the 6 government of the country issuing such currency or for the settlement of transactions by public institutions within the international banking community, then the Company will be entitled to satisfy its obligations to holders of the Notes by making such payments in U.S. dollars on the basis of the Market Exchange Rate on the due date of such payment or, if the Market Exchange Rate is not available on such date, as of the most recent practicable date; PROVIDED HOWEVER, that if such Specified Currency is replaced by the Euro (as described below), the payment of principal of, premium, if any, or interest on any Note denominated in such currency shall be effected in Euro in conformity with legally applicable measures taken pursuant to, or by virtue of, the treaty establishing the European Community (the "EC"), as amended by the treaty on European Union (as so amended, the "Treaty"). Any payment made under such circumstances in U.S. dollars (or, if applicable, Euro) where the required payment is in a Specified Currency other than U.S. dollars shall not constitute an Event of Default. Subject to the provisions contained herein, if the Specified Currency on the facing page of this Note shall by the ECU, the value of the ECU shall be equal to the value of the ECU that is from time to time used as the unit of account of the EC . With respect to each due date for the payment of principal of, or interest on, the Notes on or after the first business day in Brussels on which the ECU ceases to be used as the unit of account of the EC and has not become a currency in its own right replacing all or some of the currencies of the member states of the EC, the Company shall choose a substitute currency (the "Chosen Currency"), which may be any currency which has, on the last day on which the ECU was used as the unit of account of the EC, a component currency of the ECU or U.S. dollars, in which all payments due on or after that date with respect to the Notes and coupons, if any, shall be made. The amount of each payment in such Chosen Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of the fourth business day in Brussels prior to the date on which such payment is due. On the first business day in Brussels on which the ECU ceases to be used as the unit of account of the EC and has not become a currency in its own right replacing all or some of the currencies of the member states of the EC, the Company shall select a Chosen Currency in which all payments with respect to Notes and coupons, if any, having a due date prior thereto but not yet presented for payment are to be made. The amount of each payment in such Chosen Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of such first business day. The equivalent of the ECU in the relevant Chosen Currency as of any date (the "Day of Valuation") shall be determined by, or on behalf of, the Exchange Rate Agent on the following basis. The amounts and components composing the ECU for this purpose (the "Components") shall be the amounts and components that composed the ECU as of the last date on which the ECU was used as the unit of account of the EC. The equivalent of the ECU in the Chosen Currency shall be calculated by, first, aggregating the U.S. dollar equivalents of the Components; and then, in the case of a Chosen Currency other than U.S. dollars, using the rate used for determining the U.S. dollar equivalent of the Components in the Chosen Currency as set forth below, calculating the equivalent in the Chosen Currency of such aggregate amount in U.S. dollars. 7 The U.S. dollar equivalent of each of the Components shall be determined by, or on behalf of, the Exchange Rate Agent on the basis of the middle spot delivery quotations prevailing at 2:30 P.M., Brussels time, on the Day of Valuation, as obtained by, or on behalf of, the Exchange Rate Agent from one or more major banks, as selected by the Company, in the country of issue of the component currency in question. If for any reason no direct quotations are available for a Component as of a Day of Valuation from any of the banks selected for this purpose, in computing the U.S. dollar equivalent of such Component, the Exchange Rate Agent shall (except as provided below) use the most recent direct quotations for such Component obtained by it or on its behalf, provided that such quotations were prevailing in the country of issue not more than two Business Days before such Day of Valuation. If such most recent quotations were so prevailing in the country of issue not more than two Business Days before such Day of Valuation, the Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component on the basis of cross rates derived from the middle spot delivery quotations for such component currency and for the U.S. dollar prevailing at 2:30 P.M., Brussels time, on such Day of Valuation, as obtained by, or on behalf of, the Exchange Rate Agent from one or more major banks, as selected by the Company, in a country other than the country of issue of such component currency. Notwithstanding the foregoing, the Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component on the basis of such cross rates if the Company or such agent judges that the equivalent so calculated is more representative than the U.S. dollar equivalent calculated as provided in the first sentence of this paragraph. Unless otherwise specified by the Company, if there is more than one market for dealing in any component currency by reason of foreign exchange regulations or for any other reason, the market to be referred to in respect of such currency shall be that upon which a nonresident issuer of securities denominated in such currency would purchase such currency in order to make payments in respect of such securities. Payments in the Chosen Currency shall be made at the specified office of a paying agent in the country of the Chosen Currency or, if none, or at the option of the holder, at the specified office of any Paying Agent either by a check drawn on, or by transfer to an account maintained by the holder with, a bank in the principal financial center of the country of the Chosen Currency. All determinations referred to above made by, or on behalf of, the Company or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on holders of Notes and coupons, if any. If, pursuant to the Treaty, all or some of the currencies of the member countries of the EC are replaced by the Euro, the payment of principal of, premium, if any, or interest on, the Notes denominated in such currencies shall be effected in Euro in conformity with legally applicable measures taken pursuant to, or by virtue of, the Treaty. Notice of the Chosen Currency so selected shall, where practicable, be published in [_____________]. 8 This Note may redeemed at the option of the Company as provided below, upon notice given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the date fixed for redemption as provided in the Indenture, at the redemption price of 100% of the principal amount or such other amount as is set forth above, together with accrued interest to the Redemption Date. The Company shall redeem the principal amount of this Note set forth on the face hereof ("Sinking Fund Amount") on the sinking fund redemption dates set forth on the face hereof ("Sinking Fund Redemption Dates") together with accrued interest to the applicable Sinking Fund Redemption Date. If no Sinking Fund Amount is set forth, the Company shall not have any obligation to redeem this Note before its Stated Maturity. The Company may reduce the Sinking Fund Amount to be redeemed on any Sinking Fund Redemption Date by subtracting 100% of the principal amount (excluding premium) of any Note surrendered to the Trustee for cancellation of which the Company becomes the beneficial owner and has so notified the Trustee on or before the applicable Sinking Fund Redemption Date or that the Company has redeemed or repaid other than pursuant to the second preceding sentence. The Company may so credit the same principal amount of the Note only once. Notice of any redemption pursuant to this paragraph will be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the date fixed for redemption as provided in the Indenture. In the event of redemption of this Note in part only, a new Note or Notes of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. In case of redemption of less than all of the Notes of this series at the time outstanding, the Notes of this series to be redeemed shall be selected by the Trustee in such manner as the Trustee shall deem appropriate and fair, as provided in the Indenture. This Note is subject to repayment in whole or in part in any whole multiple of $1,000 (provided that any remaining principal amount of this Note shall be at least $1,000) or the equivalent thereof in any Specified Currency on the Repayment Dates set forth on the face hereof at the option of the holder hereof, at a price (the "Repayment Price") set forth on the face hereof or if no Repayment Price is so set forth, at 100% of the principal amount, in each case together with interest payable to the date of repayment. To be repaid at the option of the holder either (i) this Note with the form entitled "Option to Elect Repayment" at the foot of this Note duly completed or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange, or the National Association of Securities Dealers, Inc. (the "NASD") or a commercial bank or trust company in the United States setting forth the name of the holder of this Note, the principal amount of this Note, the principal amount of this Note to be repaid, the certificate number or a description of the tenor and terms of this Note, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Note to be repaid, together with the duly completed form entitled "Option to Elect Repayment" at the foot of this Note, will be received by the Paying Agent not later than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter; PROVIDED, HOWEVER, that such telegram, telex, facsimile transmission or letter shall only be effective if this Note and form duly completed are received by the Paying Agent by such fifth Business Day, must be delivered to Company at any office or agency of the Company maintained for the payment of principal and interest, transfer and exchange in the Borough of Manhattan, the City of New York, State of New York (or at such additional addresses of which the Company shall notify the holders of the Notes of this series) not less than 30 nor more than 60 days prior to the date of repayment. Unless otherwise set forth 9 above, effective exercise of the repayment option by the holder of this Note shall be irrevocable. In any case where the Repayment Dates set forth on the face hereof are not a Business Day, then (notwithstanding any other provision of the Indenture or the Notes of this series) payment of the Repayment Price and interest need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such date, and, if such payment is so made, no interest shall accrue for the period from and after such Repayment Date. If no Repayment Dates are indicated, the Note is not subject to repayment at the option of the holder. The term "Business Day" shall mean any day which is not a Saturday or Sunday and which in the City of New York is neither a legal holiday nor a day on which banking institutions are authorized by law or regulation to close. The Indenture contains provisions permitting the Company and the Guarantor to terminate each of their obligations with respect to certain provisions of the Indenture and as to the payment of the principal of (and premium, if any) and interest on Notes of this series if the Company or the Guarantor shall have deposited or caused to be deposited irrevocably with the Trustee as a trust fund specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Notes of this series (i) money in an amount (in such currency, currencies or currency unit or units in which any such Notes are payable) or (ii) in the case of such Notes, if any, denominated in U.S. Dollars, direct non-callable and non-redeemable obligations of, or non-callable and non-redeemable obligations guaranteed by, the United States of America for the payment of which guarantee or obligation the full faith and credit of the United States is pledged, or, in the case of such Notes, if any, denominated in a Foreign Currency, foreign government securities which are direct, non-callable and non-redeemable obligations of, or non-callable and non- redeemable obligations guaranteed by the government that issued the currency, for payment of which guarantee or obligation the full faith and credit of such government is pledged, which through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than the due date of any payment of principal (including any premium) and interest, if any, under such Notes, money in an amount or (iii) a combination of (i) and (ii) sufficient (in the opinion with respect to (ii) and (iii) of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee) to pay and discharge each installment of principal of (including any premium), and interest, if any, on, such Notes, on the dates such installments of interest or principal are due in the currency, currencies or currency unit or units, in which such Notes are payable; PROVIDED, HOWEVER, that for the purposes of this paragraph, Notes shall include Notes of this series which may be issued upon exercise of warrants; PROVIDED FURTHER, HOWEVER, that the Company or the Guarantor shall not make or cause to be made the deposit provided by this paragraph unless the Company or the Guarantor shall have delivered to the Trustee an Opinion of Counsel to the effect that there will not occur any violation of the Investment Company Act of 1940, as amended, on the part of the Company or the Guarantor, the trust funds representing such deposit or the Trustee as a result of such deposit and the related exercise of the Company's or the Guarantor's option under the Indenture. If an Event of Default with respect to Notes of this series shall occur and be continuing, the principal of the Notes of the series may be declared due and payable in the manner and with the effect provided in the Indenture. 10 The Indenture contains provisions permitting the Company, the Guarantor and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes of all affected series at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Notes of such series; PROVIDED, HOWEVER, that no such supplemental indenture may without the consent of the Holder of each Note so affected thereby (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Notes of such series, (b) reduce the principal amount thereof, (c) reduce the rate of interest thereon, or premium payable upon redemption thereof, (d) reduce the principal amount of any Original Issue Discount Note payable upon acceleration of the Maturity thereof, (e) change the place of payment on or with respect to the Note or the currency or currency unit in which any Note or any premium or interest thereon is payable or the obligation to pay additional amounts, if applicable, (f) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity or Redemption Date thereof, (g) reduce the percentage of aggregate principal amount of Outstanding Notes of such series, the consent of the Holders of which is required for any such supplemental indenture or for waiver of compliance with certain Indenture provisions or waivers of defaults and their consequences under the Indenture, (h) change the obligation of the Company to maintain an office or agency in the places and for the purposes required by the Indenture, or (i) make any change that would materially adversely affect the right to convert any convertible Notes. It is also provided in the Indenture that the Holders of a majority in aggregate principal amount of the Notes of such series at any time outstanding may on behalf of the Holders of all of the Notes of such series outstanding waive any past default under the Indenture and its consequences, except a default in the payment of the principal of (and premium, if any) or interest on any of the Notes of such series or in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of each affected Holder. Any such consent or waiver by the Holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued in exchange or substitution hereof or upon registration of transfer hereof, whether or not any notation of such consent or waiver is made upon this Note. Holders of Notes may not enforce their rights pursuant to the Indenture or the Notes except as provided in the Indenture. Except for recourse against the Guarantor pursuant to the Guarantee, no recourse shall be had for the payment of the principal of (and premium, if any) or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer, director or employee, as such, past, present or future, of the Company or the Guarantor, or of any respective successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The transfer of this Note is registrable by the registered owner hereof in person or by his attorney duly authorized in writing at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose. Subject to the terms of the Indenture, upon payment of a service charge for registration of transfer and payment of a sum sufficient to reimburse the Company for any tax or other governmental charge incident to transfer 11 (except the Company will pay for such service charges if the Notes are listed on a stock exchange that requires the Company to pay such charges as a condition to listing), and upon surrender of this Note upon any such registration of transfer, a new Note or Notes of authorized denomination or denominations, for the same aggregate principal amount and having endorsed thereon a Guarantee duly created by the Guarantor, will be issued to the transferee in exchange hereof. Prior to due presentation of this Note for registration of transfer, the Company, the Guarantor, the Trustee, the Authenticating Agent, if any, and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this Note shall be registered upon the Security Register as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon) for the purpose of receiving payment of or on account of the principal hereof (and premium, if any) and, subject to the provisions on the face hereof, interest due hereon and for all other purposes, and neither the Company, the Guarantor, the Trustee, the Authenticating Agent, if any, nor any agent of the Company, the Guarantor or the Trustee shall be affected by any notice or knowledge to the contrary. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Note of this series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to this series, the Holders of not less than 25% in aggregate principal amount of the Outstanding Notes of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, the Trustee shall not have received from the Holders of a majority in aggregate principal amount of the Outstanding Notes of this series a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days; PROVIDED, HOWEVER, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of (and premium, if any) or interest on this Note on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or provide for the payment of the principal of (and premium, if any) and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed. This Note and the Guarantee hereof will rank on a parity with all other unsecured and unsubordinated indebtedness of the Company and the Guarantor, respectively. The Indenture, the Guarantee and the Notes shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 12 [FORM OF GUARANTEE] FOR VALUE RECEIVED, UNOCAL CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Guarantor," which term includes any successor corporation under the Indenture (hereinafter called the "Indenture") referred to in the Note upon which this Guarantee is endorsed), hereby unconditionally guarantees to the Holders from time to time of the Notes (a) the full and prompt payment of the principal of and any premium on any Note when and as the same shall become due and payable, whether at the Stated Maturity thereof, by acceleration, redemption or otherwise and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. In addition, the Guarantor hereby unconditionally agrees that upon default by the Company in the payment when due of the principal of (and premium, if any) and interest on the Notes (whether at Stated Maturity thereof, acceleration, redemption or otherwise) the Guarantor will forthwith pay the same, without further notice or demand. The obligations of the Guarantor hereunder shall be absolute and unconditional and shall remain in full force and effect until the entire principal of and interest and any premium on the Notes shall have been paid or provided for in accordance with the provisions of the Indenture, and such obligations shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation any of the following, whether or not with notice to, or the consent of, the Guarantor: (a) The waiver, surrender, compromise, settlement, release or termination of any or all of the obligations, covenants or agreements of the Company under the Indenture or the Notes unless the waiver, surrender, compromise, settlement, release or termination is made specifically applicable to the Guarantor; (b) The failure to give notice to the Guarantor of the occurrence of an Event of Default; (c) The waiver, compromise or release of the payment, performance or observance by the Company of any or all of its obligations, covenants or agreements contained in the Indenture, unless such waiver, compromise or release is made specifically applicable to the Guarantor; (d) The extension of the time for payment of any principal of (and premium, if any) or interest on any Note or for any other payment under the Indenture or of the time for performance of any other obligations, covenants or agreements under or arising out of the Indenture; (e) The modification or amendment (whether material or otherwise) of any obligation, covenant or agreement set forth in the Indenture or the Notes; (f) The taking or the omission of any of the actions referred to in the Indenture and any of the actions under the Notes; 13 (g) Any failure, omission, delay or lack on the part of the Trustee to enforce, assert or exercise any right, power or remedy conferred on the Trustee in the Indenture, or any other act or acts on the part of the Trustee or any of the Holders from time to time of the Notes; (h) The voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings affecting the Guarantor, or the Company or any of the assets of any of them, or any allegation or contest of the validity of the Guarantee in any such proceeding; (i) To the extent permitted by law, the release or discharge by operation of law of the Company from the performance or observance of any obligation, covenant or agreement contained in the Indenture, unless the Guarantor is also so released or discharged by operation of law; (j) The default or failure of the Guarantor or the Trustee fully to perform any of its obligations set forth in the Indenture or the Notes; or (k) The invalidity of the Indenture or the Notes or any part of any thereof. No set-off, counterclaim, reduction, or diminution of any obligation, or any defense of any kind or nature which the Guarantor has or may have against the Trustee shall be available hereunder to the Guarantor against the Trustee to reduce the payments of the Guarantor under this Guarantee. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Unless the certificate of authentication on the Note to which this Guarantee is endorsed has been executed by or on behalf of the Trustee, by the manual signature of one of its, or its Authenticating Agent's, authorized signatories, this Guarantee shall not be valid or obligatory for any purpose. 14 IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. Dated: UNOCAL CORPORATION By: ----------------------------------- Name: Title: [CORPORATE SEAL] Attest: - --------------------------------------- Name: Title: [Assistant] Secretary 15 OPTION TO ELECT REPAYMENT The undersigned hereby requests and irrevocably instructs the Company to repay the within Note on the first Repayment Date set forth on the face hereof occurring not less than 30 nor more than 60 days after the date of receipt of the within Note by the Company at an office or agency of the Company maintained for the payment of principal and interest, transfer and exchange in the City of New York, State of New York (or at such other addresses of which the Company shall notify the registered holders of the Notes of this series). ( ) In whole ( ) In part equal to $______________________ (must be a whole multiple of $1,000 or the equivalent thereof in any Specified Currency; remaining principal amount must be at least $1,000) at a price equal to the Repayment Price set forth on the face hereof, or if no Repayment Price is so set forth, at 100% of the principal amount, in each case, together with interest accrued to the date of repayment. Signature Please print or type name and address: ________________________________ _____________________________________ Notice: The signature on this Option to Elect _____________________________________ Repayment must correspond with the _____________________________________ name as written upon the face of the within _____________________________________ instrument in every particular without alteration or enlargement or any change whatever. 16 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto Please insert Social Security or other identifying number of assignee: ______________________________ _____________________________________________________________________________ (Name and Address of Assignee, including Zip Code, must be printed or typewritten) the within Note, and all rights thereunder, hereby irrevocably constituting and appointing ___________________________________ Attorney to transfer said Note on the Security Register of the Company, with full power of substitution in the premises. Dated: ______________________________________ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration or enlargement or any change whatever. 17 EX-4.17 12 EXHIBIT 4.17 Floating Rate Registered Medium-Term Note UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & COMPANY, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. IF THIS NOTE IS DESIGNATED BELOW AS "DISCOUNT NOTE," FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE, THE ISSUANCE PRICE (THE "ISSUANCE PRICE") OF THIS NOTE IS ___% OF ITS PRINCIPAL AMOUNT, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THIS SECURITY IS ___% OF ITS PRINCIPAL AMOUNT, THE ORIGINAL ISSUANCE DATE IS ________________, 19___, AND THE YIELD TO MATURITY IS ___%. THE METHOD USED TO DETERMINE THE YIELD IS __________________, AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT APPLICABLE TO THE SHORT ACCRUAL PERIOD OF __________________, 19___, TO __________________, 19___, IS ___% OF THE PRINCIPAL AMOUNT OF THIS NOTE. THE ECONOMIC YIELD COULD BE DIFFERENT FROM THE HYPOTHETICAL YIELD TO MATURITY FOR TAX PURPOSES. REGISTERED REGISTERED UNION OIL COMPANY OF CALIFORNIA Payment of Principal, Interest and Premium, if any, Guaranteed By UNOCAL CORPORATION MEDIUM-TERM NOTE, SERIES C
NO. ___________ Principal Amount: CUSIP NO. ____________________ Registered Holder: Cede & Co. U.S. $___________________________ ______________________________________________________________________________________________________________________ Trade Date: Original Issuance Date: Initial Interest Rate: __________% Issue Price: Stated Maturity: Regular Record Dates: Selling Agent's Discount or Commission: Interest Payment Dates: Net Proceeds to Issuer: ______________________________________________________________________________________________________________________ Interest Rate Basis: Index Maturity: Spread: / / Commercial Paper Rate / / 1 Month +/- / / Prime Rate / / 3 Months Spread Multiplier: / / LIBOR (check Designated / / 6 Months ____% LIBOR Page / / 1 Year / / LIBOR Reuters / / Other / / LIBOR Telerate / / Treasury Rate / / CD Rate / / Indexed (see attached) / / CMT Rate Designated CMT Telerate Page: / / Amortizing (see attached) / / 7055 / / 7052 If Page 7052: / / Week / / / Month Designated CMT Maturity Index: _______ years(s) / / Federal Funds Effective Rate / / Other (see attached) Interest Determination Dates: Interest Calculation Dates: Calculation Agent: Interest Payment period / / Monthly / / Quarterly / / Semi-annually / / Annually First Interest Reset Date: Interest Reset Date: / / Daily / / Weekly / / Monthly / / Quarterly / / Semi-annually during the / / Annually during the months of ____ and ____ month of ________ Maximum Interest Rate: Minimum Interest Rate: Redemption: Repayment: / / This Note cannot be redeemed prior to maturity / / This Note cannot be repaid prior to maturity / / This Note may be redeemed prior to maturity / / This Note may be repaid prior to maturity Earliest Redemption Date: at the option of the holder of the Note Redemption Price: _____% Annual Redemption Price Reduction: ______% Repayment Date(s): Sinking Fund Redemption Dates: Repayment Price: _____% Sinking Fund Amount: Discount Notes: / / Yes / / No Total Amount of OID: Yield to Maturity: Initial Accrual Period: Other Provisions:
UNION OIL COMPANY OF CALIFORNIA, a corporation duly organized and existing under the laws of the State of California (the "Company" which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal amount specified above (the "Principal Amount") on the Stated Maturity specified above (unless earlier redeemed or repaid) and to pay to the registered holder hereof as hereinafter provided interest on said Principal Amount at the per annum Initial Interest Rate specified above until the first Interest Reset Date specified above following the Original Issuance Date specified above and thereafter at a rate determined in accordance with the provisions on the reverse hereof under the heading "Determination of Commercial Paper Rate," "Determination of Prime Rate," "Determination of LIBOR," "Determination of Treasury Rate," "Determination of CD Rate," "Determination of CMT Rate" or "Determination of Federal Funds Effective Rate" depending upon whether the Interest Rate Basis specified above is the Commercial Paper Rate, Prime Rate, LIBOR, Treasury Rate, Certificate of Deposit Rate ("CD Rate"), CMT Rate or Federal Funds Effective Rate, which rate may be adjusted by adding or subtracting the Spread or by multiplying the Spread Multiplier (as such terms are defined below) depending on whether a Spread or Spread Multiplier is designated above, until the principal hereof is paid or duly made available for payment. The "Spread," if any, is the number of basis points designated above, and the "Spread Multiplier," if any, is the percentage designated above. The Company will pay interest monthly, quarterly, semiannually or annually as specified above under "Interest Payment Period," commencing with the first Interest Payment Date specified above next succeeding the Original Issuance Date, thereafter on the Interest Payment Dates specified above and on the Stated Maturity Date; PROVIDED, HOWEVER, that if the Original Issuance Date falls between a Regular Record Date and an Interest Payment Date, the first payment of interest will be made on the Interest Payment Date following the next succeeding Regular Record Date. The "Regular Record Date" shall be 15 calendar days prior to each Interest Payment Date, whether or not such days shall be Business Days. The rate of interest payable on this Note shall be reset daily, weekly, monthly, quarterly, semiannually or annually, as specified on the face hereof (the "Interest Reset Date"). The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes, in exchange for or transfer of which this Note was issued between the Regular Record Date for payment of such interest and the Interest Payment Date), is registered at the close of business on the Regular Record Date for payment of such interest; PROVIDED, HOWEVER, that interest payable at the Stated Maturity, the date fixed for repayment at the option of the holder pursuant to the third paragraph on the reverse of this Note or the date fixed for redemption pursuant to the Indenture (the "Redemption Date") shall be paid to the person to whom the Principal Amount is paid. Interest shall be calculated on the basis of actual days elapsed and a year of 360 days, except that interest for Treasury Rate Notes and CMT Rate Notes will be calculated on the basis of actual number of days in the year. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not 1 inconsistent with the requirements of any securities exchange on which the Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Payment of the principal of (and premium, if any) on this Note will be made in immediately available funds at the corporate trust office or agency of Chase Manhattan Bank & Trust Company, National Association (as successor by merger effective as of November 15, 1997 to Chemical Trust Company of California) in the Borough of Manhattan, the City of New York, upon presentation of this Note, and interest hereon shall be paid upon delivery of instructions in advance to facilitate such payment in accordance with normal procedures of the Trustee. Alternatively, such payments shall be made at such other office or agency of the Company as may be designated by it for such purpose in the Borough of Manhattan, the City of New York, in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts; PROVIDED, HOWEVER, that at the option of the Company payment of interest may be made by United States dollar check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. The Company may also appoint additional paying agents. For interest payments on a Note of U.S. $10,000,000 or more in principal amount, the Holder may elect at any time to have payment made in immediately available funds; where the principal of the Note is less than U.S. $10,000,000, payment will be made in immediately available funds only if agreed to on a case-by-case basis by the Company. Interest payments shall not be made in immediately available funds unless written instructions have been presented Chase Manhattan Bank & Trust Company, National Association (or other paying agent) at least 15 days prior to the relevant Regular Record Date. This Note is one of a duly authorized issuance of Medium-Term Notes, Series C, of the Company (the "Notes"), which have been issued under and are governed by the terms of an indenture dated as of February 3, 1995 (the "Indenture") among the Company, Unocal Corporation, a corporation duly organized and existing under the laws of the State of Delaware, as Guarantor (the "Guarantor," which term includes any successor guarantor under the Indenture), and Chase Manhattan Bank & Trust Company, National Association, as Trustee (the "Trustee," which term includes any successor trustee under the Indenture), which incorporates the Standard Multiple Series Indenture Provisions, January 1991 of the Issuer and Guarantor dated as of January 2, 1991, to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the respective rights thereunder of the Company, the Guarantor, the Trustee and the Holders of the Notes, and the terms upon which the Notes are, and are to be, authenticated and delivered. The provisions of this Note are continued on the reverse hereof and the provisions thereof set forth shall for all purposes have the same effect as though fully set forth at this place. References herein to "this Note," "hereof," "herein" and comparable terms shall include an Addendum hereto if an Addendum is specified under "Other Provisions" above. Unless the certificate of authentication hereon has been executed by or on behalf of Chase Manhattan Bank & Trust Company, National Association, as Trustee under the Indenture, or its successor thereunder, by the manual signature of one of its, or its Authenticating Agent's, 2 authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. Any provision contained herein with respect to the calculation of the rate of interest applicable to this Note, its payment dates or any other matter relating hereto may be modified as specified in an Addendum relating hereto if so specified above. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed in its corporate name by the manual or facsimile signature of its Chairman of the Board of Directors, its Chief Executive Officer, its President, its Chief Operating Officer, its Chief Financial Officer, one of its Vice Presidents, its Treasurer, or one of its Assistant Treasurers and impressed or imprinted with its corporate seal or facsimile thereof, attested by the manual or facsimile signature of its Secretary or one of its Assistant Secretaries. UNION OIL COMPANY OF CALIFORNIA By __________________________ Title: Treasurer [CORPORATE SEAL] Attest: _____________________________ Title: Secretary 3 CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated herein issued under the within-mentioned Indenture. Dated: CHASE MANHATTAN BANK & TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee By_______________________________ Authorized Signatory 4 Reverse of Note UNION OIL COMPANY OF CALIFORNIA Payment of Principal, Interest and Premium, if any, Guaranteed by UNOCAL CORPORATION MEDIUM-TERM NOTE, SERIES C Floating Rate Registered (For Offerings Within the United States) This Note is one of a duly authorized issuance of securities of the Company designated as its Medium-Term Notes, Series C (the "Notes"), limited (except as otherwise provided in the Indenture) to an aggregate principal amount of $_____________ subject to a reduction or increase upon the determination of the Company, all issued or to be issued in one or more series under the Indenture among the Company, the Guarantor and the Trustee. The Notes will be issued only in fully registered form in denominations of $1,000 and integral multiples of $1,000 in excess thereof, PROVIDED, HOWEVER, that if the Notes are denominated in a Specified Currency other than U.S. dollars such Notes will only be issued in denominations of the equivalent of $1,000 (rounded to an integral multiple of such Specified Currency), or any amount in excess thereof which is an integral multiple equivalent to $1,000 of such Specified Currency, as determined by reference to the noon dollar buying rate in New York City for cable transfers of such Specified Currency published by the Federal Reserve Bank of New York (the "Market Exchange Rate") on the Business Day immediately preceding the date of issuance; PROVIDED, HOWEVER, in the case of European Currency Units ("ECUs"), the Market Exchange Rate shall be the rate of exchange determined by the Commission of the European Communities (or any successor thereto) as published in the Official Journal of the European Communities, or any successor publication, on the Business Day immediately preceding the date of issuance. If payments of interest and principal on this Note are payable in a Specified Currency, and if permitted on the face of this Note, such payment may be made, at the option of the holder of such Note, in U.S. dollars, conversion of the Specified Currency into U.S. dollars shall be based on the highest bid quotation in the City of New York received by the Exchange Rate Agent at approximately 11:00 A.M., New York City time, on the second Business Day preceding the applicable payment date from three recognized foreign exchange dealers (one of which may be the Exchange Rate Agent) for the purchase by the quoting dealer of the Specified Currency for U.S. dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to the holders of Notes and at which the applicable dealer commits to execute a contract. If such bid quotations are not available, payments will be made in the Specified Currency. All currency exchange costs will be borne by the holders of Notes by deductions from such payments. Except as otherwise provided herein, if the principal of, premium, if any, or interest on, any Note is payable in a Specified Currency other than U.S. dollars and such Specified Currency is not available to the Company for making payments thereof due to the imposition of exchange 5 controls or other circumstances beyond the control of the Company or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions within the international banking community, then the Company will be entitled to satisfy its obligations to holders of the Notes by making such payments in U.S. dollars on the basis of the Market Exchange Rate on the due date of such payment or, if the Market Exchange Rate is not available on such date, as of the most recent practicable date; PROVIDED HOWEVER, that if such Specified Currency is replaced by the Euro (as described below), the payment of principal of, premium, if any, or interest on any Note denominated in such currency shall be effected in Euro in conformity with legally applicable measures taken pursuant to, or by virtue of, the treaty establishing the European Community (the "EC"), as amended by the treaty on European Union (as so amended, the "Treaty"). Any payment made under such circumstances in U.S. dollars (or, if applicable, Euro) where the required payment is in a Specified Currency other than U.S. dollars shall not constitute an Event of Default. Subject to the provisions contained herein, if the Specified Currency on the facing page of this Note shall by the ECU, the value of the ECU shall be equal to the value of the ECU that is from time to time used as the unit of account of the EC . With respect to each due date for the payment of principal of, or interest on, the Notes on or after the first business day in Brussels on which the ECU ceases to be used as the unit of account of the EC and has not become a currency in its own right replacing all or some of the currencies of the member states of the EC, the Company shall choose a substitute currency (the "Chosen Currency"), which may be any currency which has, on the last day on which the ECU was used as the unit of account of the EC, a component currency of the ECU or U.S. dollars, in which all payments due on or after that date with respect to the Notes and coupons, if any, shall be made. The amount of each payment in such Chosen Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of the fourth business day in Brussels prior to the date on which such payment is due. On the first business day in Brussels on which the ECU ceases to be used as the unit of account of the EC and has not become a currency in its own right replacing all or some of the currencies of the member states of the EC, the Company shall select a Chosen Currency in which all payments with respect to Notes and coupons, if any, having a due date prior thereto but not yet presented for payment are to be made. The amount of each payment in such Chosen Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of such first business day. The equivalent of the ECU in the relevant Chosen Currency as of any date (the "Day of Valuation") shall be determined by, or on behalf of, the Exchange Rate Agent on the following basis. The amounts and components composing the ECU for this purpose (the "Components") shall be the amounts and components that composed the ECU as of the last date on which the ECU was used as the unit of account of the EC. The equivalent of the ECU in the Chosen Currency shall be calculated by, first, aggregating the U.S. dollar equivalents of the Components; and then, in the case of a Chosen Currency other than U.S. dollars, using the rate used for determining the U.S. dollar equivalent of the Components in the Chosen Currency as set forth 6 below, calculating the equivalent in the Chosen Currency of such aggregate amount in U.S. dollars. The U.S. dollar equivalent of each of the Components shall be determined by, or on behalf of, the Exchange Rate Agent on the basis of the middle spot delivery quotations prevailing at 2:30 P.M., Brussels time, on the Day of Valuation, as obtained by, or on behalf of, the Exchange Rate Agent from one or more major banks, as selected by the Company, in the country of issue of the component currency in question. If for any reason no direct quotations are available for a Component as of a Day of Valuation from any of the banks selected for this purpose, in computing the U.S. dollar equivalent of such Component, the Exchange Rate Agent shall (except as provided below) use the most recent direct quotations for such Component obtained by it or on its behalf, provided that such quotations were prevailing in the country of issue not more than two Business Days before such Day of Valuation. If such most recent quotations were so prevailing in the country of issue not more than two Business Days before such Day of Valuation, the Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component on the basis of cross rates derived from the middle spot delivery quotations for such component currency and for the U.S. dollar prevailing at 2:30 P.M., Brussels time, on such Day of Valuation, as obtained by, or on behalf of, the Exchange Rate Agent from one or more major banks, as selected by the Company, in a country other than the country of issue of such component currency. Notwithstanding the foregoing, the Exchange Rate Agent shall determine the U.S. dollar equivalent of such Component on the basis of such cross rates if the Company or such agent judges that the equivalent so calculated is more representative than the U.S. dollar equivalent calculated as provided in the first sentence of this paragraph. Unless otherwise specified by the Company, if there is more than one market for dealing in any component currency by reason of foreign exchange regulations or for any other reason, the market to be referred to in respect of such currency shall be that upon which a nonresident issuer of securities denominated in such currency would purchase such currency in order to make payments in respect of such securities. Payments in the Chosen Currency shall be made at the specified office of a paying agent in the country of the Chosen Currency or, if none, or at the option of the holder, at the specified office of any Paying Agent either by a check drawn on, or by transfer to an account maintained by the holder with, a bank in the principal financial center of the country of the Chosen Currency. All determinations referred to above made by, or on behalf of, the Company or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on holders of Notes and coupons, if any. If, pursuant to the Treaty, all or some of the currencies of the member countries of the EC are replaced by the Euro, the payment of principal of, premium, if any, or interest on, the Notes denominated in such currencies shall be effected in Euro in conformity with legally applicable measures taken pursuant to, or by virtue of, the Treaty. 7 Notice of the Chosen Currency so selected shall, where practicable, be published in [_____________]. This Note may redeemed at the option of the Company as provided below, upon notice given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the date fixed for redemption as provided in the Indenture, at the redemption price of 100% of the principal amount or such other amount as is set forth above, together with accrued interest to the Redemption Date. The Company shall redeem the principal amount of this Note set forth on the face hereof ("Sinking Fund Amount") on the sinking fund redemption dates set forth on the face hereof ("Sinking Fund Redemption Dates") together with accrued interest to the applicable Sinking Fund Redemption Date. If no Sinking Fund Amount is set forth, the Company shall not have any obligation to redeem this Note before its Stated Maturity. The Company may reduce the Sinking Fund Amount to be redeemed on any Sinking Fund Redemption Date by subtracting 100% of the principal amount (excluding premium) of any Note surrendered to the Trustee for cancellation of which the Company becomes the beneficial owner and has so notified the Trustee on or before the applicable Sinking Fund Redemption Date or that the Company has redeemed or repaid other than pursuant to the second preceding sentence. The Company may so credit the same principal amount of the Note only once. Notice of any redemption pursuant to this paragraph will be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the date fixed for redemption as provided in the Indenture. In the event of redemption of this Note in part only, a new Note or Notes of this series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. In case of redemption of less than all of the Notes of this series at the time outstanding, the Notes of this series to be redeemed shall be selected by the Trustee in such manner as the Trustee shall deem appropriate and fair, as provided in the Indenture. This Note is subject to repayment in whole or in part in any whole multiple of $1,000 (provided that any remaining principal amount of this Note shall be at least $1,000) or the equivalent thereof in any Specified Currency on the Repayment Dates set forth on the face hereof at the option of the holder hereof, at a price (the "Repayment Price") set forth on the face hereof or if no Repayment Price is so set forth, at 100% of the principal amount, in each case together with interest payable to the date of repayment. To be repaid at the option of the holder either (i) this Note with the form entitled "Option to Elect Repayment" at the foot of this Note duly completed or (ii) a telegram, telex, facsimile transmission or a letter from a member of a national securities exchange, or the National Association of Securities Dealers, Inc. (the "NASD") or a commercial bank or trust company in the United States setting forth the name of the holder of this Note, the principal amount of this Note, the principal amount of this Note to be repaid, the certificate number or a description of the tenor and terms of this Note, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Note to be repaid, together with the duly completed form entitled "Option to Elect Repayment" at the foot of this Note, will be received by the Paying Agent not later than the fifth Business Day after the date of such telegram, telex, facsimile transmission or letter; PROVIDED, HOWEVER, that such telegram, telex, facsimile transmission or letter shall only be effective if this Note and form duly completed are received by the Paying Agent by such fifth Business Day, must be delivered to Company at any office or agency of the Company maintained for the payment of principal and interest, transfer and 8 exchange in the Borough of Manhattan, the City of New York, State of New York (or at such additional addresses of which the Company shall notify the holders of the Notes of this series) not less than 30 nor more than 60 days prior to the date of repayment. Unless otherwise set forth above, effective exercise of the repayment option by the holder of this Note shall be irrevocable. In any case where the Repayment Dates set forth on the face hereof are not a Business Day, then (notwithstanding any other provision of the Indenture or the Notes of this series) payment of the Repayment Price and interest need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such date, and, if such payment is so made, no interest shall accrue for the period from and after such Repayment Date. If no Repayment Dates are indicated, the Note is not subject to repayment at the option of the holder. The term "Business Day" shall mean (a) with respect to any Note, any day which is not a Saturday or Sunday and which, in the City of New York, is neither a legal holiday nor a day on which banking institutions are authorized by law or regulation to close, and (b) with respect to LIBOR Notes only, any such day on which dealings in deposits in U.S. dollars are transacted in the London interbank market (a "London Banking Day"). Commencing with the first Interest Reset Date specified on the face hereof following the Original Issuance Date, the Date at which interest on this Note is payable shall be adjusted daily, weekly, monthly, quarterly, semi- annually or annually as shown on the face hereof under "Interest Reset Date"; PROVIDED, HOWEVER, that the interest rate in effect hereon for the 10 days immediately prior to the Maturity hereof shall be that in effect on the 10th day preceding the Maturity hereof. Each such adjusted rate shall be applicable on and after the Interest Reset Date to which it relates to but not including the next succeeding Interest Reset Date or until such Redemption Date, Repayment Date or the Stated Maturity, as the case may be. Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date, the rate of interest on this Note shall be the rate determined in accordance with the provisions of the applicable heading below. The Interest Reset Dates will be, in the case of Notes which reset daily, each Business Day; in the case of Notes (other than Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes which reset weekly, the Tuesday of each week (except as set forth in the last sentence of the next succeeding paragraph below); in the case of Notes which reset monthly, the third Wednesday of each month; in the case of Notes which reset quarterly, the third Wednesday of March, June, September and December; in the case of Notes which reset semi-annually, the third Wednesday of two months of each year, as specified on the face hereof; and in the case of Notes which reset annually, the third Wednesday of one month of each year, as specified on the face hereof; PROVIDED, HOWEVER, that the interest rate in effect from the Original Issuance Date to the first Interest Reset Date with respect to a Note will be the Initial Interest Rate. If any Interest Reset Date for any Note would otherwise be a day that is not a Business Day for such Note, the Interest Reset Date for such Note shall be postponed to the next day that is a Business Day for such Note, except that in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. The Interest Determination Date pertaining to an Interest Reset Date for (a) a Commercial Paper Rate Note (the "Commercial Paper Rate Interest Determination Date"), (b) a Prime Rate Note (the "Prime Rate Interest Determination Date"), (c) a CD Rate Note (the "CD Rate Interest 9 Determination Date"), (d) a CMT Rate Note (the "CMT Rate Interest Determination Date"), and (e) a Federal Funds Rate Note (the "Federal Funds Rate Interest Determination Date") will be the second Business Day preceding the Interest Reset Date with respect to such Note. The Interest Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the "LIBOR Interest Determination Date") will be the second London Banking Day (as defined below) preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note (the "Treasury Rate Interest Determination Date") will be the day of the week in which such Interest Reset Date falls on which Treasury Bills would normally be auctioned. Treasury Bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as a result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Treasury Rate Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week. If an auction date shall fall on any Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date shall instead be the first Business Day immediately following such auction date. Unless otherwise indicated herein interest will be payable, in the case of Notes which reset daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year; in the case of Notes which reset quarterly, on the third Wednesday of March, June, September and December of each year; in the case of Notes which reset semi-annually, on the third Wednesday of the two months of each year specified on the face hereof; and in the case of Notes which reset annually, on the third Wednesday of the month specified on the face hereof (each an "Interest Payment Date"), and in each case, at any Redemption Date or Repayment Date and any Stated Maturity. If an Interest Payment Date with respect to any Note would otherwise fall on a day that is not a Business Day (and also a London Banking Day with respect to a LIBOR Note) with respect to such Note, such Interest Payment Date will be the following day that is a Business Day (and also a London Banking Day with respect to a LIBOR Note) with respect to such Note, except that in the case of a LIBOR Note, if such day falls in the next calendar month, such Interest Payment Date will be the preceding day that is a Business Day (and also a London Banking Day) with respect to such LIBOR Note. Interest payments shall be for the amount of interest accrued to, but excluding, the Interest Payment Date. With respect to this Note, accrued interest from the date of issue or from the last date to which interest has been paid is calculated by multiplying the face amount of such Note by an accrued interest factor. Such accrued interest factor is computed by adding the interest factor calculated for each day from the date of issue, or from the last date to which interest has been paid, to the date for which accrued interest is being calculated. The interest factor (expressed as a decimal rounded upwards if five one hundred-thousandths or more of a percentage point and rounded downwards if less than five one hundred-thousandths of a percentage point, if necessary, to the next higher or lower, as the case may be, one hundred-thousandth of a percentage point (E.G., 9.876546% or .09876546 being rounded to 9.87655% or .0987655, respectively)) for each such day is computed by dividing the interest rate (expressed as a decimal rounded off in the same manner as the interest factor) applicable to such date by 360, in the case of Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, CD Rate Notes, CMT Rate Notes or Federal Funds Rate Notes, or by the actual number of days in the year, in the case of Treasury Rate 10 Notes. All dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent being rounded upwards). Notwithstanding the foregoing, if this Note is designated above as having an Addendum attached, this Note shall bear interest in accordance with the terms described in such Addendum. Upon the request of the Holder of any Note, the Calculation Agent will provide the interest rate then in effect, and, if different, the interest rate which will become effective as a result of a determination made on the most recent Interest Determination Date with respect to such Note. Unless otherwise specified on the face hereof, the "Interest Calculation Date," where applicable, pertaining to any Interest Determination Date will be the earlier of (a) the 10th calendar day after such Interest Determination Date, or, if any such day is not a Business Day, the next succeeding Business Day, or (b) the Business Day preceding the applicable Interest Payment Date, Redemption Date, Repayment Date or Stated Maturity, as the case may be. DETERMINATION OF COMMERCIAL PAPER RATE. The interest rate payable with respect to this Note shall be calculated with reference to the Commercial Paper Rate and the Spread or Spread Multiplier, if any, specified on the face hereof. "Commercial Paper Rate" means, with respect to each Commercial Paper Rate Interest Determination Date specified on the face hereof, the Money Market Yield (calculated as described below) of the rate on such date for commercial paper having the Index Maturity specified on the face hereof as published by Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication of the Board of Governors of the Federal Reserve System ("H.15(519)") under the heading "Commercial Paper--Nonfinancial." In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Interest Calculation Date pertaining to such Commercial Paper Rate Interest Determination Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate on such Commercial Paper Rate Interest Determination Date for commercial paper having the Index Maturity specified on the face hereof as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government Securities" ("Composite Quotations") under the heading "Commercial Paper." If by 3:00 P.M., New York City time, on such Interest Calculation Date such rate is not yet published in either H. 15(519) or Composite Quotations, the rate for that Commercial Paper Rate Interest Determination Date shall be calculated by the Calculation Agent and shall be the Money Market Yield of the arithmetic mean (rounded to the next higher one hundred-thousandth of a percentage point) of the offered rates, as of 11:00 A.M., New York City time, on that Commercial Paper Rate Interest Determination Date, of three leading dealers of commercial paper (which may include one or more of the Agents) in the City of New York selected by the Calculation Agent (after consulting with the Company) for commercial paper of the Index Maturity specified on the face hereof placed for an industrial issuer whose bond rating is "AA," or the equivalent, from a nationally recognized rating agency; PROVIDED, HOWEVER, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate will remain the Commercial Paper Rate in effect on such Commercial Paper Rate Interest Determination Date. 11 "Money Market Yield" means a yield (expressed as a percentage rounded to the next higher one hundred-thousandth of a percentage point) calculated in accordance with the following formula: Money Market Yield = D x 360 x 100 --------------- 360 - (D x M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal; and "M" refers to the actual number of days in the interest period for which interest is being calculated. DETERMINATION OF PRIME RATE. The interest rate payable with respect to this Note shall be calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. "Prime Rate" means, with respect to each Prime Rate Interest Determination Date specified on the face hereof, the rate set forth in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate is not yet published by 9:00 A.M., New York City time, on the Interest Calculation Date pertaining to such Prime Rate Interest Determination Date, the Prime Rate for such Prime Rate Interest Determination Date will be the arithmetic mean of the rates of interest publicly announced by each bank named on the Reuters Screen USPRIME1 Page (as defined below) as such bank's prime rate or base lending rate as in effect for such Prime Rate Interest Determination Date as quoted on the Reuters Screen USPRIME1 Page on such Prime Rate Interest Determination Date, or, if fewer than four such rates appear on the Reuters Screen USPRIME1 Page for such Prime Rate Interest Determination Date, the rate shall be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Prime Rate Interest Determination Date by at least tow of the three major money center banks in the City of New York selected by the Calculation Agent from which quotations are requested. If fewer than two quotations are provided, the Prime Rate shall be calculated by the Calculation Agent and shall be determined as the arithmetic mean on the basis of the prime rates in the City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, in each case having total equity capital of at least U.S. $500 million and being subject to supervision or examination by federal or state authority, selected by the Calculation Agent to quote such rate or rates; PROVIDED, HOWEVER, that if the banks or trust companies selected as aforesaid by the Calculation Agent are not quoting rates as set forth above, the "Prime Rate" in effect for such Interest Reset Period will be the same as the Prime Rate for immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Prime Rate Notes for which such Prime Rate is being determined shall be the Initial Interest Rate). "Reuters Screen USPRIME1 Page" means the display designated as Page "USPRIME1" on the Reuters Monitor Money Rates Service (or such other page as may replace the USPRIME1 Page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). DETERMINATION OF LIBOR. The interest rate payable with respect to this Note shall be calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, subject to the minimum numerical interest rate limitations and the maximum interest rate limitation, if any, 12 indicated on the face hereof. "LIBOR" will be determined with respect to each LIBOR Interest Determination Date specified on the face hereof by the Calculation Agent as following: (i) As of the LIBOR Interest Determination Date, the Calculation Agent will determine (a) if "LIBOR Reuters" is specified on the face hereof, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page (as defined below) by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency for the period of the Index Maturity, each as designated on the face hereof, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date, which appear on the Designated LIBOR Page at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified on the face hereof, the rate for deposits in the Index Currency for the period of the Index Maturity, each as designated on the face hereof, commencing on the second London Banking Day following such LIBOR Interest Determination Date (or, if pounds sterling is the Index Currency, commencing on such LIBOR Interest Determination Date), that appears on the Designated LIBOR Page at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date. If fewer than two offered rates appear (if "LIBOR Reuters" is specified on the face hereof and calculation of LIBOR is based on the arithmetic mean of the offered rates), or if no rate appears (if either (x) "LIBOR Reuters" and the Designated LIBOR Page by its terms provides only for a single rate or (y) "LIBOR Telerate" are specified on the face hereof), LIBOR in respect of that LIBOR Interest Determination Date will be determined as if the parties had specified the rate described in (ii) below. (ii) With respect to a LIBOR Interest Determination Date on which fewer than two offered rates appear (if "LIBOR Reuters" is specified on the face hereof and calculation of LIBOR is based on the arithmetic mean of the offered rates) or no rate appears (if either (x) "LIBOR Reuters" and the Designated LIBOR Page by its terms provides only for a single rate or (y) "LIBOR Telerate" is specified on the face hereof), the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent (after consultation with the Company), to provide the Calculation Agent with its offered quotations for deposits in the Index Currency for the period of the specified Index Maturity, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date (or, if pounds sterling is the Index Currency, commencing on such LIBOR Interest Determination Date), to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date and in a principal amount equal to an amount of not less than $1 million (or the equivalent in the Index Currency, if the Index Currency is not the U.S. dollar) that is representative of a single transaction in such Index Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on 13 such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of rates quoted at approximately 11:00 A.M. (or such other time specified on the face hereof), in the applicable principal financial center for the country of the Index Currency on such LIBOR Interest Determination Date, by three major banks in such principal financial center selected by the Calculation Agent (after consultation with the Company) on such LIBOR Interest Determination Date for loans in the Index Currency to leading European banks, for the period of the specified Index Maturity commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date (or, if pounds sterling is the Index Currency, commencing an such LIBOR Interest Determination Date) and in a principal amount of not less than $1 million (or the equivalent in the Index Currency if the Index Currency is not the U.S. dollar) that is representative of a single transaction in such Index Currency in such market at such time; provided, however, that if the banks selected as aforesaid by the Calculation Agent are not quoting rates as mentioned in this sentence, "LIBOR" for such Interest Reset Period will be the same as LIBOR for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the LIBOR Notes for which LIBOR is being determined shall be the Initial Interest Rate). "Index Currency" means the currency (including composite currencies) on the face hereof as the currency for which LIBOR shall be calculated. If no such currency on the face hereof, the Index Currency shall be U.S. dollars. "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is designated on the face hereof, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is designated on the face hereof, the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency. If neither LIBOR Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR for the applicable Index Currency will be determined as if LIBOR Telerate (and, if the U.S. dollar is the Index Currency, Page 3750) had been specified. DETERMINATION OF TREASURY RATE. The interest rate payable with respect to this Note shall be calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any, subject to the minimum numerical interest rate limitations and the maximum interest rate limitation, if any, specified on the face hereof. "Treasury Rate" means, with respect to each Treasury Rate Interest Determination Date specified on the face hereof, the rate for the auction held on such date of direct obligations of the United States ("Treasury Bills") having the Index Maturity designated on the face hereof as published in H.15(519) under the heading "Treasury Bills-auction average(investment)" or, if not so published by 9:00 A.M., New York City time, on the Interest Calculation Date pertaining to such Treasury Rate Interest Determination Date, the auction average rate on such Treasury Rate Interest Determination Date (expressed as a bond equivalent, on the basis of a year of 365 days or 366 days, as applicable, and applied on a daily 14 basis) as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury Bills having the Index Maturity designated on the face hereof are not published or reported as provided above by 3:00 P.M., New York City time, on such Treasury Rate Interest Calculation Date or if no such auction is held on such Treasury Rate Interest Determination Date, then the Treasury Rate shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) calculated using the arithmetic mean of the secondary market bid rates as of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity; PROVIDED, HOWEVER, that if the dealers selected as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in this sentence, the "Treasury Rate" for such interest Reset Date will be the same as the Treasury Rate for the immediately preceding Interest Reset Period (or, if there was no such Interest Reset Period, the rate of interest payable on the Treasury Rate Notes for which the Treasury Rate is being determine shall be the Initial Interest Rate). DETERMINATION OF CERTIFICATE OF DEPOSIT RATE. The interest rate payable with respect to this Note shall be calculated with reference to the CD Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. "CD Rate" means, with respect to each CD Rate Interest Determination Date specified on the face hereof, the rate on such date for negotiable certificates of deposit having the Index Maturity specified on the face hereof as published in H.15(519) under the heading "CDs (Secondary Market)." In the event that such rate is not so published by 3:00 P.M., New York City time, on the Interest Calculation Date pertaining to such CD Rate Interest Determination Date, as specified above, the CD Rate will be the rate on such CD Rate Interest Determination Date for negotiable certificates of deposit having the Index Maturity specified on the face hereof as published in Composite Quotations under the heading "Certificates of Deposit." If such rate is neither published in H.15(519) nor in Composite Quotations by 3:00 P.M., New York City time, on such CD Rate Interest Calculation Date, the CD Rate for such CD Rate Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 A.M., New York City time, on such CD Rate Interest Determination Date, of three leading nonbank dealers of negotiable U.S. dollar certificates of deposit (which may include one or more of the Agents) in the City of New York selected by the Calculation Agent (after consultation with the Company) for negotiable certificates of deposit of major United States money center banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity specified indicated hereon in a denomination of U.S. $5,000,000; PROVIDED, HOWEVER, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the CD Rate will remain the CD Rate in effect on such CD Rate Interest Determination Date. DETERMINATION OF CMT RATE. The interest rate payable with respect to this Note shall be calculated with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. "CMT Rate" means, with respect to each CMT Rate Interest Determination Date specified on the face hereof, the rate displayed on the Designated CMT Telerate Page under the caption " . . . Treasury Constant Maturities . . . Federal Reserve 15 Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index for (i) if the Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the rate for the week, or the month, as applicable, ended immediately preceding the week in which the related CMT Rate Interest Determination Date occurs. If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New York City time, on the related Interest Calculation Date, then the CMT Rate for such CMT Rate Interest Determination Date will be such Treasury Constant Maturity rate for the Designated CMT Maturity Index as published in the relevant H.15(519). If such rate is no longer published, or if not published by 3:00 P.M., New York City time, on the related Interest Calculation Date, then the CMT Rate for such CMT Rate Interest Determination Date will be such Treasury Constant Maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the CMT Rate Interest Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 P.M., New York City time, on the related Interest Calculation Date, then the CMT Rate for the CMT Rate Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on the CMT Rate Interest Determination Date reported, according to their written records, by three leading primary United States government securities dealers (which may include one or more of the Agents) (each, a "Reference Dealer") in the City of New York selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent (after consultation with the Company) and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Note") with an original maturity of approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the CMT Rate for such CMT Rate Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage point) of the secondary market offer side prices as of approximately 3:30 P.M., New York City time, on the CMT Rate Interest Determination Date of three Reference Dealers in the City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury Notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least $100,000,000. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean (rounded to the nearest one hundred - thousandth of a percentage point) of the offer prices obtained and neither the highest nor lowest of such quotes will be eliminated; PROVIDED, HOWEVER, that if fewer than three Reference Dealers selected by the Calculation Agent 16 are quoting as described herein, the CMT Rate will remain the CMT Rate in effect on such CMT Rate Interest Determination Date. If two Treasury Notes with an original maturity as described in the third preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the quotes for the CMT Rate Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page specified on the face hereof (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified on the face hereof, the Designated CMT Telerate Page shall be 7052, for the most recent week. "Designated CMT Maturity Index" means the original period to maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified on the face hereof with respect to which the CMT Rate will be calculated. If no such maturity is specified on the face hereof, the Designated CMT Maturity Index shall be 2 years. DETERMINATION OF FEDERAL FUNDS EFFECTIVE RATE. The interest rate payable with respect to this Note shall be calculated with reference to the Federal Funds Effective Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. "Federal Funds Effective Rate" means, with respect to each Federal Funds Rate Interest Determination Date, the rate on that date for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)." In the event that such rate is not so published by 3:00 P.M., New York City time, on the Interest Calculation Date pertaining to such Federal Funds Rate Interest Determination Date, as specified above, the Federal Funds Effective Rate will be the rate on such Federal Funds Rate Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate." If such rate is neither published in H.15(519) nor in Composite Quotations by 3:00 P.M., New York City time, on such Interest Calculation Date, the Federal Funds Effective Rate for such Federal Funds Rate Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the rates as of 9:00 A.M., New York City time, on such Federal Funds Rate Interest Determination Date of the last transaction in overnight Federal Funds arranged by three leading brokers of Federal Funds transactions (which may include one or more of the Agents) in the City of New York selected by the Calculation Agent (after consultation with the Company); PROVIDED, HOWEVER, that if the brokers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Federal Funds Effective Rate will remain the Federal Funds Effective Rate in effect on such Federal Funds Rate Interest Determination Date. Notwithstanding the foregoing, the interest rate hereon shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any, shown on the face hereof. The Calculation Agent shall calculate the interest rate on this Note in accordance with the foregoing on or before each Interest Calculation Date. 17 The Calculation Agent shall, upon the request of the Holder of this Note, provide to such Holder the interest rate hereon then in effect and, if different, the interest rate which shall become effective as of the next Interest Reset Date. Interest payments for this Note shall include interest accrued to but excluding the Interest Payment Date; PROVIDED, HOWEVER, that if the Interest Reset Dates with respect to such Note are weekly, interest payable on any Interest Payment Date, other than interest payable on any date on which principal hereof is payable, shall include interest accrued to and including the immediately preceding Regular Record Date. Accrued interest hereon from the Original Issuance Date or from the last date to which interest hereon has been paid, as the case may be, shall be an amount calculated by multiplying the face amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factor calculated for each day from the Original Issuance Date or from the last date to which interest shall have been paid, as the case may be, to the date for which accrued interest is being calculated. The interest factor (expressed as a decimal rounded upwards, if necessary, to the next higher one hundred-thousandth of a percentage point) for each such day shall be computed by dividing the interest rate (expressed as a decimal, rounded upwards, if necessary, to the next higher one hundred- thousandth of a percentage point) applicable to such day by 360, in the case of Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, CD Rate Notes, CMT Rate Notes or Federal Funds Rate Notes, or by the actual number of days in the year in the case of the Treasury Rate Notes. The interest rate on this Note will in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general applicability. Under present New York law, the maximum rate of interest is 25% per annum on a simple interest basis. This limit may not apply if $2,500,000 or more has been invested in this Note. The Indenture contains provisions permitting the Company and the Guarantor to terminate each of their obligations with respect to certain provisions of the Indenture and as to the payment of the principal of (and premium, if any) and interest on Notes of this series if the Company or the Guarantor shall have deposited or caused to be deposited irrevocably with the Trustee as a trust fund specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Notes of this series (i) money in an amount (in such currency, currencies or currency unit or units in which any such Notes are payable) or (ii) in the case of such Notes, if any, denominated in U.S. Dollars, direct non-callable and non- redeemable obligations of, or non-callable and non-redeemable obligations guaranteed by, the United States of America for the payment of which guarantee or obligation the full faith and credit of the United States is pledged, or, in the case of such Notes, if any, denominated in a Foreign Currency, foreign government securities which are direct, non-callable and non-redeemable obligations of, or non-callable and non-redeemable obligations guaranteed by the government that issued the currency, for payment of which guarantee or obligation the full faith and credit of such government is pledged, which through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than the due date of any payment of principal (including any premium) and interest, if any, under such Notes, money in an amount or (iii) a combination of (i) and (ii) sufficient (in the opinion with respect to (ii) and (iii) of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee) to pay and discharge each installment of principal of (including any premium), and 18 interest, if any, on, such Notes, on the dates such installments of interest or principal are due in the currency, currencies or currency unit or units, in which such Notes are payable; PROVIDED, HOWEVER, that for the purposes of this paragraph, Notes shall include Notes of this series which may be issued upon exercise of warrants; PROVIDED, FURTHER, HOWEVER, that the Company or the Guarantor shall not make or cause to be made the deposit provided by this paragraph unless the Company or the Guarantor shall have delivered to the Trustee an Opinion of Counsel to the effect that there will not occur any violation of the Investment Company Act of 1940, as amended, on the part of the Company or the Guarantor, the trust funds representing such deposit or the Trustee as a result of such deposit and the related exercise of the Company's or the Guarantor's option under the Indenture. If an Event of Default with respect to Notes of this series shall occur and be continuing, the principal of the Notes of this series may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions permitting the Company, the Guarantor and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes of all affected series at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or modifying in any manner the rights of the Holders of the Notes of such series; PROVIDED, HOWEVER, that no such supplemental indenture may without the consent of the Holder of each Note so affected thereby (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Notes of such series, (b) reduce the principal amount thereof, (c) reduce the rate of interest thereon, or premium payable upon redemption thereof, (d) reduce the principal amount of any Original Issue Discount Note payable upon acceleration of the Maturity thereof, (e) change the place of payment on or with respect to the Note or the currency or currency unit in which any Note or any premium or interest thereon is payable or the obligation to pay additional amounts, if applicable, (f) impair the right to institute suit for the enforcement of any payment on or with respect to any Note on or after the Stated Maturity or Redemption Date thereof, (g) reduce the percentage in principal amount of Outstanding Notes of such series, the consent of which is required for any supplemental indenture or waiver (of compliance with certain Indenture provisions or certain defaults under the Indenture and their consequences), (h) change the obligation of the Company to maintain an office or agency in the places and for the purposes required by the Indenture, (i) make any change that would adversely affect the right to convert any convertible Notes. It is also provided in the Indenture that the Holders of a majority in aggregate principal amount of the Notes of such series at the time outstanding may on behalf of the Holders of all of the Notes of such series waive any past default under the Indenture and its consequences, except a default in the payment of the principal of (and premium, if any) or interest on any of the Notes of such series or in respect of a covenant or provision of the Indenture which cannot be modified or amended without the consent of all affected Holders. Any such consent or waiver by the Holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued in exchange or substitution hereof and upon registration of transfer hereof, whether or not any notation of such consent or waiver is made upon this Note. Holders of Notes may not enforce their rights pursuant to the Indenture or the Notes except as provided in the Indenture. 19 Except for recourse against the Guarantor pursuant to the Guarantee, no recourse shall be had for the payment of the principal of (and premium, if any) or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer, director or employee, as such, past, present or future, of the Company or the Guarantor, or of any respective successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The transfer of this Note is registrable by the registered owner hereof in person or by his attorney duly authorized in writing at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose. Subject to the terms of the Indenture upon payment of a service charge for registration of transfer and payment of a sum sufficient to reimburse the Company for any tax or other governmental charge incident to transfer (except the Company will pay for such service charges if the Notes are listed on a stock exchange that requires the Company to pay such charges as a condition to listing), and upon surrender and of this Note upon any such registration of transfer, a new Note or Notes of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange hereof. Prior to due presentation of this Note for registration of transfer, the Company, the Guarantor, the Trustee, the Authenticating Agent, if any, and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this Note is registered upon the Security Register as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon) for the purpose of receiving payment of or on account of the principal hereof (and premium, if any) and, subject to the provisions on the face hereof, interest due hereon and for all other purposes, and neither the Company, the Guarantor, the Trustee, the Authenticating Agent, if any, nor any agent of the Company, the Guarantor or the Trustee shall be affected by any notice or knowledge to the contrary. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Note of this series will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing Event of Default with respect to this series, the Holders of not less than 25% in aggregate principal amount of the Outstanding Notes of this series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee, the Trustee shall not have received from the Holders of a majority in aggregate principal amount of the Outstanding Notes of this series a direction inconsistent with such request and the Trustee shall have failed to institute such proceeding within 60 days; PROVIDED, HOWEVER, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of (premium, if any) or interest on this Note on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or 20 provide for the payment of the principal of (and premium, if any) and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed. This Note and the Guarantee hereof will rank on a parity with all other unsecured and unsubordinated indebtedness of the Company and the Guarantor, respectively. The Indenture, the Guarantee and the Notes shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 21 GUARANTEE FOR VALUE RECEIVED, UNOCAL CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Guarantor," which term includes any successor corporation under the Indenture (hereinafter called the "Indenture") referred to in the Note upon which this Guarantee is endorsed), hereby unconditionally guarantees to the Holders from time to time of the Notes (a) the full and prompt payment of the principal of and any premium on any Note when and as the same shall become due and payable, whether at the Stated Maturity thereof, by acceleration, redemption or otherwise and (b) the full and prompt payment of any interest on any Note when and as the same shall become due, according to the terms of such Note and the Indenture. In addition, the Guarantor hereby unconditionally agrees that upon default by the Company in the payment when due of the principal of (and premium, if any) and interest on the Notes (whether at Stated Maturity thereof, acceleration, redemption or otherwise) the Guarantor will forthwith pay the same, without further notice or demand. The obligations of the Guarantor hereunder shall be absolute and unconditional and shall remain in full force and effect until the entire principal of and interest and any premium on the Notes shall have been paid or provided for in accordance with the provisions of the Indenture, and such obligations shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation any of the following, whether or not with notice to, or the consent of, the Guarantor: (a) the waiver, surrender, compromise, settlement, release or termination of any or all of the obligations, covenants or agreements of the Company under the Indenture or the Notes unless the waiver, surrender, compromise, settlement, release or termination is made specifically applicable to the Guarantor; (b) the failure to give notice to the Guarantor of the occurrence of an Event of Default; (c) the waiver, compromise or release of the payment, performance or observance by the Company of any or all of its obligations, covenants or agreements contained in the Indenture, unless such waiver, compromise or release is made specifically applicable to the Guarantor; (d) the extension of the time for payment of any principal of or interest or any premium on any Note or for any other payment under the Indenture or of the time for performance of any other obligations, covenants or agreements under or arising out of the Indenture; (e) the modification or amendment (whether material or otherwise) of any obligation, covenant or agreement set forth in the Indenture or the Notes; (f) the taking or the omission of any of the actions referred to in the Indenture and any of the actions under the Notes; 22 (g) any failure, omission, delay or lack on the part of the Trustee to enforce, assert or exercise any right, power or remedy conferred on the Trustee in the Indenture, or any other act or acts on the part of the Trustee or any of the Holders from time to time of the Notes; (h) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings affecting the Guarantor, or the Company or any of the assets of any of them, or any allegation or contest of the validity of the Guarantee in any such proceeding; (i) to the extent permitted by law, the release or discharge by operation of law of the Company from the performance or observance of any obligation, covenant or agreement contained in the Indenture, unless the Guarantor is also so released or discharged by operation of law; (j) the default or failure of the Guarantor or the Trustee fully to perform any of its obligations set forth in the Indenture or the Notes; or (k) the invalidity of the Indenture or the Notes or any part of any thereof. No set-off, counterclaim, reduction, or diminution of any obligation, or any defense of any kind or nature which the Guarantor has or may have against the Trustee shall be available hereunder to the Guarantor against the Trustee to reduce the payments of the Guarantor under this Guarantee. This Guarantee shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Unless the certificate of authentication on the Note to which this Guarantee is endorsed has been executed by or on behalf of the Trustee, by the manual signature of one of its, or its Authenticating Agent's, authorized signatories, this Guarantee shall not be valid or obligatory for any purpose. 23 IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed. Dated: UNOCAL CORPORATION By _______________________________ Title: Treasurer [CORPORATE SEAL] Attest: ________________________ Title: Secretary 24 OPTION TO ELECT REPAYMENT The undersigned hereby requests and irrevocably instructs the Company to repay the within Note on the first Repayment Date set forth on the face hereof occurring not less than 30 nor more than 60 days after the date of receipt of the within Note by the Company at an office or agency of the Company maintained for the payment of principal and interest, transfer and exchange in the City of New York, State of New York (or at such other addresses of which the Company shall notify the registered holders of the Notes of this series). ( ) In whole ( ) In part equal to $______________________ (must be a whole multiple of $1,000 or the equivalent thereof in any Specified Currency ; remaining principal amount must be at least $1,000) at a price equal to the Repayment Price set forth on the face hereof, or if no Repayment Price is so set forth, at 100% of the principal amount, in each case, together with interest accrued to the date of repayment. Signature Please print or type name and address: __________________________ _______________________________________ Notice: The signature on this _______________________________________ Option to Elect Repayment must correspond with the _______________________________________ name as written upon the face of the within _______________________________________ instrument in every particular without alteration or enlargement or any change whatever. 25 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto Please insert Social Security or other identifying number of assignee: ____________________________________________ _______________________________________________________________________ (Name and Address of Assignee, including Zip Code, must be printed or typewritten) the within Note, and all rights thereunder, hereby irrevocably constituting and appointing ____________________________________________ Attorney to transfer said Note on the Security Register of the Company, with full power of substitution in the premises. Dated: _______________________________________________ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Note in every particular, without alteration or enlargement or any change whatever. 26 EX-5.1 13 EXHIBIT 5.1 UNOCAL CORPORATION EXHIBIT 5.1 2141 Rosecrans Avenue Suite 4000 El Segundo California 90245 Telephone (310) 726-7651 Facsimile (310) 726-7815 [UNOCAL 76 LOGO] DENNIS P.R. CODON Vice President, Chief Legal Officer and General Counsel June 30, 1998 Union Oil Company of California Unocal Corporation Unocal Capital Trust II 2141 Rosecrans Avenue, Suite 4000 El Segundo, California 90245 RE: Registration Statement on Form S-3 ---------------------------------- Ladies and Gentlemen: As Vice President, Chief Legal Officer and General Counsel of Union Oil Company of California, a California corporation (the "Company"), and Unocal Corporation, a Delaware corporation ("Unocal"), and as counsel for Unocal Capital Trust II, a Delaware statutory business trust (the "Trust"), I have examined, or caused to be examined by attorneys working under my direction, the Registration Statement on Form S-3 (the "Registration Statement"), including the exhibits thereto, which the Company, Unocal and the Trust propose to file with the Securities and Exchange Commission (the "Commission"). The Registration Statement relates to the registration under the Securities Act of 1933, as amended (the "Securities Act"), for offering and sale from time to time on a continuous or delayed basis pursuant to Rule 415 under the Securities Act, of up to $1,200,000,000 aggregate public offering price, without allocation as to class of securities, of (i) debt securities of the Company, consisting of unsecured notes, debentures or other evidences of indebtedness, which may be either senior (the "Company Senior Debt Securities") or subordinated (the "Company Subordinated Debt Securities") and issuable in one or more series, together with guarantees as to the payment of principal, interest and premium, if any, thereof (the "Company Debt Guarantees") of Unocal (the Company Senior Debt Securities and Company Subordinated Debt Securities, in each case together with the related Company Debt Guarantees, being hereinafter collectively referred to as the "Company Debt Securities"); (ii) warrants of the Company and Unocal to purchase Company Debt Securities (the "Debt Warrants"), which may be issued independently or together with any series of Company Debt Securities; (iii) shares of Preferred Stock, par value $0.10 per share, of Unocal (the "Unocal Preferred Stock"), issuable in one or more series; (iv) shares of Common Stock, par value $1.00 per share, of Unocal (the "Unocal Common Stock"), together with associated Preferred Union Oil Company of California Unocal Corporation Unocal Capital Trust II June 30, 1998 Page 2 Stock Purchase Rights of Unocal (the "Rights"); (v) warrants of Unocal to purchase Unocal Preferred Stock and Unocal Common Stock (the "Equity Warrants"), which may be issued independently or together with shares of Unocal Preferred Stock or Unocal Common Stock; (vi) Trust Preferred Securities (the "Trust Preferred Securities") of the Trust, together with the guarantee thereof to the extent set forth in such guarantee (the "Preferred Securities Guarantee") of Unocal; and (vii) Junior Subordinated Debentures of Unocal (the "Unocal Subordinated Debentures"), as to which the Trust Preferred Securities wouldrepresent indirect undivided beneficial interests. The shares of Unocal Preferred Stock and Unocal Common Stock may be issued either directly, upon the conversion or exchange of Debt Securities, upon the exercise of Equity Warrants or, in the case of shares of Unocal Common Stock, upon the conversion of shares of Unocal Preferred Stock or the Trust Preferred Securities and underlying Unocal Subordinated Debentures. The Rights will be issued only with, and initially represented by the certificates for and transferable only with, shares of Unocal Common Stock. All of the foregoing securities are hereinafter referred to collectively as the "Securities". Certain capitalized terms used herein and not otherwise defined herein have the meanings ascribed to them in the Registration Statement and in the documents with which they are associated. The Securities will be offered and sold in the manner described in the Registration Statement, in the applicable prospectuses contained therein (each a "Prospectus" and, together, the "Prospectuses") and applicable supplements to the Prospectus describing in detail the particular issue or series of Securities subject thereto (each a "Prospectus Supplement"). The Company Senior Debt Securities and related Company Debt Guarantees will be issued under the Indenture, dated as of February 3, 1995 (the "Company Senior Debt Indenture"), among the Company, Unocal and Chemical Trust Company of California (which was succeeded by merger effective as of November 15, 1997, by Chase Manhattan Bank and Trust Company, National Association), as Trustee, and the Company Subordinated Debt Securities and related Company Debt Guarantees will be issued under an indenture (the "Company Subordinated Debt Indenture" and, together with the Company Senior Debt Indenture, the "Company Debt Indentures") to be entered into among the Company, Unocal and a Trustee to be determined in the future. The Company Debt Indentures will incorporate by reference the Standard Multiple-Series Indenture Provisions, January 1991, of the Company and Unocal, dated as of January 2, 1991 (the "Standard Company Debt Indenture Provisions"). The Debt Warrants and Equity Warrants will be issued pursuant to warrant agreements (each a "Warrant Agreement") to be entered into among the Company and/or Unocal and one or more Warrant Agents to be determined in the future. The Trust Preferred Securities will be issued pursuant to an Amended and Restated Declaration of Trust of the Trust, to be entered into among Unocal, as Sponsor of the Trust, Darrell D. Chessum, Daniel A. Franchi and Richard L. Walton, as the Regular Trustees, The Bank of New York, as the Institutional Trustee and The Bank of New York (Delaware), as the Delaware Trustee. The Preferred Securities Guarantee will be issued pursuant to a Preferred Securities Guarantee Agreement to be entered into between Union Oil Company of California Unocal Corporation Unocal Capital Trust II June 30, 1998 Page 3 Unocal and The Bank of New York, as the Guarantee Trustee. The Unocal Subordinated Debentures will be issued pursuant to the Multiple Series Indenture, dated as of September 11, 1996 (the "Base Indenture"), as supplemented by a Second Supplemental Indenture (the "Supplemental Indenture" and, together with the Base Indenture, the "Unocal Subordinated Debt Indenture") between, or to be entered into between, as the case may be, Unocal and The Bank of New York, as Debenture Trustee. The Rights will be issued pursuant to the Rights Agreement dated as of January 29, 1990 (the "Rights Agreement"), between Unocal and The Chase Manhattan Bank, as Successor Rights Agent. Forms of the Company Debt Indentures, the Standard Company Debt Indenture Provisions, the Company Debt Securities, the Warrant Agreements (including annexed forms of warrant certificates) the Amended and Restated Declaration of Trust (including an annexed form of the Trust Preferred Securities), the Preferred Securities Guarantee Agreement, the Base Indenture, the Supplemental Indenture (including an annexed form of the Unocal Subordinated Debentures) and the Rights Agreement are inclded as exhibits to the Registration Statement. This opinion is rendered in accordance with the requirements of Item 601(b)(5)(i) of Regulation S-K of the Commission. I am familiar with the actions heretofore taken by the Boards of Directors and officers of the Company and Unocal and the Regular Trustees of the Trust in connection with the preparation and filing of the Registration Statement, the authorization of the Company Debt Indentures, the Base Indenture, the Rights Plan and certain related matters. I have examined, or caused to be examined by such attorneys working under my direction, and have considered such questions of law and fact and such instruments, documents and records as I or they have deemed relevant and necessary for the basis of the opinions expressed below. I have relied, as to certain matters of fact, on information obtained from public officials, officers of the Company and Unocal, the Regular Trustees of the Trust and other sources believed by me to be responsible; and I have assumed that the signatures (other than signatures executing documents on behalf of Union and Unocal and other than signatures of the Regular Trustees of the Trust) on all documents examined or caused to be examined by me are genuine, that all documents submitted to me as originals are authentic, and that all documents submitted to me as copies conform with the originals, which assumptions I have not independently verified. Also, I have relied, as to certain legal matters, on advice of such attorneys working under my direction who are more familiar with such matters, as described in the preceding paragraph. I am licensed to practice law in the State of California and, although I am not licensed to practice law in the State of Delaware, I am generally familiar with the Delaware General Corporation Law. Therefore, the opinions expressed below are limited to the laws of the State of California, the Delaware General Corporation Law and the Federal laws of the United States, all as Union Oil Company of California Unocal Corporation Unocal Capital Trust II June 30, 1998 Page 4 currently in effect, to the exclusion of all other jurisdictions and all other laws of the State of Delaware. The opinions expressed below are subject to the conditions that the Registration Statement shall have become effective under the Securities Act, that the applicable Indenture shall have been qualified under the Trust Indenture Act of 1939, as amended, and that all applicable provisions of the "Blue Sky" and securities laws of the various states and other jurisdictions in which the Securities may be offered and sold shall have been complied with. The opinions expressed in Paragraphs 1, 2, 3, 6, 10 and 11 below, relating to whether the Securities described therein will be validly issued and binding obligations of the Company and/or Unocal, are subject to the exception that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors' rights generally, (ii) general principles of equity, regardless of whether enforcement is sought in a proceeding in equity or at law, and, in the case of the Company Debt Securities, (iii) requirements that a claim with respect to any Company Debt Securities denominated other than in United States dollars (or a judgment denominated other than in United States dollars in respect of such a claim) be converted into United States dollars at a rate of exchange prevailing on a date determined pursuant to applicable law, and (iv) governmental authority to limit, delay or prohibit the making of payments outside the United States or in a foreign currency, composite currency or currency unit. In addition, I express no opinion with respect to the validity and binding nature of the obligations of the Company and Unocal with respect to any Company Debt Securities that may be indexed or linked to any foreign currency, composite currency, currency unit, commodity price, financial or non-financial index or other factors. Based upon and subject to the foregoing, I am of the opinion that: 1. When the applicable Company Debt Indenture under which any Company Debt Securities of any series are to be issued has been duly executed and delivered by the parties thereto, all requisite corporate action has been taken by the Company and Unocal to establish the terms of and to authorize the issuance of such Company Debt Securities under the applicable Company Debt Indenture and the consideration to be received therefor, and such Company Debt Securities have been duly completed and duly executed, authenticated, issued and delivered, against payment therefor of the consideration specified by such corporate action, in accordance with the applicable Company Debt Indenture and in the manner described in such corporate action and in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, such Company Debt Securities will be validly issued and binding obligations of the Company and Unocal. Union Oil Company of California Unocal Corporation Unocal Capital Trust II June 30, 1998 Page 5 2. When all requisite corporate action has been taken by the Company and Unocal to establish the terms of and to authorize the issuance of any series of Debt Warrants and to authorize a Warrant Agreement relating thereto, the applicable Company Debt Indenture under which Company Debt Securities of any series are to be issued upon the exercise of such Debt Warrants has been duly executed and delivered by the parties thereto, all requisite corporate action has been taken to establish the terms of and to authorize the issuance of such Company Debt Securities under the applicable Company Debt Indenture upon the exercise of such Debt Warrants and the consideration to be received therefor upon such exercise, the applicable Warrant Agreement has been duly executed and delivered by the parties thereto and certificates evidencing such Debt Warrants have been duly completed and duly executed, countersigned, issued and delivered, against payment therefor of the consideration specified by such corporate action, in accordance with the applicable Warrant Agreement and in the manner described in such corporate action and in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, such Debt Warrants will be validly issued and binding obligations of the Company and Unocal. 3. When the applicable Company Debt Indenture under which Company Debt Securities of any series are to be issued upon the exercise of any series of Debt Warrants has been duly executed and delivered by the parties thereto, all requisite corporate action has been taken by the Company and Unocal to establish the terms of and to authorize the issuance of such applicable Debt Securities under the applicable Company Debt Indenture upon the exercise of such Debt Warrants and the consideration to be received therefor upon such exercise, such Debt Warrants have been duly and validly issued in the manner contemplated by Paragraph 2 above and exercised in accordance with their terms and the terms of the applicable Warrant Agreement and in the manner described in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, and such Company Debt Securities have been duly completed and duly executed, authenticated, issued and delivered, against payment therefor of the consideration specified by such corporate action, upon such exercise in accordance with the applicable Company Debt Indenture and the applicable Warrant Agreement and in the manner described in such corporate action and in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, such Company Debt Securities will be validly issued and binding obligations of the Company and Unocal. 4. When all requisite corporate action, including the adoption of appropriate resolutions by the Board of Directors and/or a duly authorized committee thereof (the "Board Resolutions"), has been taken by Unocal to establish the terms of and to authorize the issuance of any shares of any series of Unocal Preferred Stock, the consideration to be received therefor and a form of certificate evidencing such shares of such series, a Union Oil Company of California Unocal Corporation Unocal Capital Trust II June 30, 1998 Page 6 certificate setting forth the voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions (the "Certificate of Designations") of such series has been duly executed and filed with the Secretary of State of the State of Delaware, and certificates evidencing such shares have been duly executed, countersigned, issued and delivered, against payment therefor of the consideration specified in such Board Resolutions, in the manner described in such Board Resolutions and in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, such shares of such series of Unocal Preferred Stock will be validly issued, fully paid and nonassessable. 5. When all requisite corporate action, including the adoption of appropriate Board Resolutions, has been taken by Unocal to authorize the issuance of any shares of Unocal Common Stock and the consideration to be received therefor, and certificates evidencing such shares have been duly executed, countersigned, issued and delivered, against payment therefor of the consideration specified in such Board Resolutions, in the manner described in such Board Resolutions and in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, such shares of Unocal Common Stock will be validly issued, fully paid and nonassessable. 6. When all requisite corporate action, including the adoption of appropriate Board Resolutions, has been taken by Unocal to establish the terms of and to authorize the issuance of any series of Equity Warrants and to authorize a Warrant Agreement relating thereto, to establish the terms of and to authorize the issuance of shares of any series of Unocal Preferred Stock or to authorize the issuance of any shares of Unocal Common Stock, as the case may be, upon the exercise of such Equity Warrants and the consideration to be received therefor upon such exercise, and to authorize a form of certificate evidencing such shares of any such series of Unocal Preferred Stock, the Certificate of Designations of any such series of Unocal Preferred Stock has been duly executed and filed with the Secretary of State of the State of Delaware, the applicable Warrant Agreement has been duly executed and delivered by the parties thereto and certificates evidencing such Equity Warrants have been duly completed and duly executed, countersigned, issued and delivered, against payment therefor of the consideration specified in such Board Resolutions, in accordance with the applicable Warrant Agreement and in the manner described in such Board Resolutions and in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, such Equity Warrants will be validly issued and binding obligations of Unocal. 7. When all requisite corporate action, including the adoption of appropriate Board Resolutions, has been taken by Unocal to establish the terms of and to authorize the Union Oil Company of California Unocal Corporation Unocal Capital Trust II June 30, 1998 Page 7 issuance of any shares of any series of Unocal Preferred Stock or to authorize the issuance of any shares of Unocal Common Stock, as the case may be, upon the conversion or exchange of Company Debt Securities of any series providing for such conversion or exchange and the consideration to be received therefor upon such conversion or exchange, and to authorize a form of certificate evidencing any such shares of any such series of Unocal Preferred Stock, the Certificate of Designations of any such series of Unocal Preferred Stock has been duly executed and filed with the Secretary of State of the State of Delaware, such Company Debt Securities have been duly and validly issued in the manner contemplated by Paragraph 1 or 3 above and surrendered to Unocal or its duly authorized agent for conversion or exchange, as the case may be, in accordance with their terms and the terms of the applicable Company Debt Indenture, and certificates evidencing such shares of such series of Unocal Preferred Stock or such shares of Unocal Common Stock, as the case may be, have been duly executed, countersigned, issued and delivered, against receipt by Unocal of the consideration specified in such Board Resolutions, upon such conversion or exchange in accordance with the terms of such Company Debt Securities and the terms of the applicable Company Debt Indenture, such shares of such series of Unocal Preferred Stock or such shares of Unocal Common Stock, as the case may be, will be validly issued, fully paid and nonassessable. 8. When all requisite corporate action, including the adoption of appropriate Board Resolutions, has been taken by Unocal to establish the terms of and to authorize the issuance of any shares of any series of Unocal Preferred Stock or to authorize the issuance of any shares of Unocal Common Stock, as the case may be, upon the exercise of any series of Equity Warrants and the consideration to be received therefor upon such exercise, and to authorize a form of certificate evidencing any such shares of any such series of Unocal Preferred Stock, the Certificate of Designations of any such series of Unocal Preferred Stock has been duly executed and filed with the Secretary of State of the State of Delaware, such Equity Warrants have been duly and validly issued in the manner contemplated by Paragraph 6 above and exercised in accordance with their terms and the terms of the applicable Warrant Agreement and in the manner described in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, and certificates evidencing such shares of such series of Unocal Preferred Stock or such shares of Unocal Common Stock, as the case may be, have been duly executed, countersigned, issued and delivered, against payment therefor of the consideration specified in such Board Resolutions, upon such exercise in accordance with the applicable Warrant Agreement and in the manner described in such Board Resolutions and in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, such shares of such series of Unocal Preferred Stock or such shares of Unocal Common Stock, as the case may be, will be validly issued, fully paid and nonassessable. Union Oil Company of California Unocal Corporation Unocal Capital Trust II June 30, 1998 Page 8 9. When all requisite corporate action, including the adoption of appropriate Board Resolutions, has been taken by Unocal to authorize the issuance of any shares of Unocal Common Stock upon the conversion of any shares of any series of Unocal Preferred Stock providing for such conversion and the consideration to be received therefor upon such conversion, such shares of such series of Unocal Preferred Stock have been duly and validly issued in the manner contemplated by Paragraph 4, 7 or 8 above and surrendered to Unocal or its duly authorized agent for conversion in accordance with their terms and the terms of the Certificate of Designations of such series, and certificates evidencing such shares of Unocal Common Stock have been duly executed, countersigned, issued and delivered, against receipt by Unocal of the consideration specified in such Board Resolutions, upon such conversion in accordance with the Certificate of Designations of such series of Unocal Preferred Stock, such shares of Unocal Common Stock will be validly issued, fully paid and nonassessable. 10. When all requisite corporate action, including the adoption of appropriate Board Resolutions, has been taken by Unocal to authorize the Supplemental Indenture, under which Unocal Subordinated Debentures are to be issued, and such Supplemental Indenture has been duly executed and delivered by the parties thereto, all requisite corporate action, including the adoption of appropriate Board Resolutions, has been taken by Unocal to establish the terms of and to authorize the issuance to the Trust of such Unocal Subordinated Debentures under such Unocal Subordinated Debt Indenture and the consideration to be received therefor, and such Unocal Subordinated Debentures have been duly completed and duly executed, authenticated, issued and delivered to the Trust against payment therefor of the consideration specified by such corporate action, in accordance with the Unocal Subordinated Debt Indenture and in the manner described in such corporate action and in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, such Unocal Subordinated Debentures will be validly issued and binding obligations of Unocal. 11. When all requisite corporate action, including the adoption of appropriate Board Resolutions, has been taken by Unocal to authorize the Preferred Securities Guarantee Agreement, under which the Preferred Securities Guarantee is to be issued, and such Preferred Securities Guarantee Agreement has been duly executed and delivered by the parties thereto concurrently with the issuance and sale of the Trust Preferred Securities by the Trust, against payment therefor of the consideration specified by such corporate action, in accordance with the Amended and Restated Declaration of Trust and in the manner described in such corporate action and in the Registration Statement, the applicable Prospectus and the applicable Prospectus Supplement, such Preferred Securities Guarantee Union Oil Company of California Unocal Corporation Unocal Capital Trust II June 30, 1998 Page 9 will be a valid and binding obligation of Unocal. 12. When all requisite corporate action, including the adoption of appropriate Board Resolutions, has been taken by Unocal to authorize the issuance of shares of Unocal Common Stock upon the conversion or exchange of Unocal Subordinated Debentures and related Trust Preferred Securities providing for such conversion or exchange and the consideration to be received therefor upon such conversion or exchange, such Unocal Subordinated Debentures have been duly and validly issued in the manner contemplated by Paragraph 10 above and surrendered to Unocal or its duly authorized agent for conversion or exchange, as the case may be, in accordance with their terms and the terms of the Unocal Subordinated Debt Indenture, and certificates evidencing such shares of Unocal Common Stock have been duly executed, countersigned, issued and delivered, against receipt by Unocal of the consideration specified in such Board Resolutions, upon such conversion or exchange in accordance with the terms of such Unocal Subordinated Debentures and the terms of the Unocal Subordinated Debt Indenture, such shares of Unocal Common Stock will be validly issued, fully paid and nonassessable. 13. The Rights have been duly authorized and, when such Rights are issued in accordance with the Rights Agreement, together with shares of Unocal Common Stock duly and validly issued in the manner contemplated by Paragraphs 5, 7, 8, 9 and/or 12 above, such Rights will be validly issued. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to me under the caption "Legal Matters" in each of the Prospectuses forming a part of the Registration Statement. In giving this consent, I do not thereby admit that I am included in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder. Very truly yours, /s/ Dennis P.R. Codon EX-5.2 14 EXHIBIT 5.2 Exhibit 5.2 [Letterhead of Morris, Nichols, Arsht & Tunnell] June 30, 1998 Unocal Capital Trust II c/o Unocal Corporation 2141 Rosecrans Avenue, Suite 4000 El Segundo, California 90245 Re: Unocal Capital Trust II Ladies and Gentlemen: We have acted as special Delaware counsel to Unocal Capital Trust II, a Delaware statutory business trust (the "Trust"), in connection with certain matters relating to the organization of the Trust and the proposed issuance of Preferred Securities to beneficial owners pursuant to and as described in the Registration Statement (and the Prospectus forming a part thereof) on Form S-3 to be filed with the Securities and Exchange Commission on or about July 2, 1998 (the "Registration Statement"). Capitalized terms used herein and not otherwise herein defined are used as defined in the form of Amended and Restated Declaration of Trust of the Trust to be attached as an exhibit to the Registration Statement (the "Governing Instrument"). In rendering this opinion, we have examined copies of the following documents in the forms provided to us: the Certificate of Trust of the Trust as filed in the Office of the Secretary of State of the State of Delaware (the "State Office") on June 30, 1998 (the "Certificate"); a Declaration of Trust of the Trust dated as of June 30, 1998 (the "Original Governing Instrument"); the Governing Instrument; the Multiple Series Indenture of Unocal Corporation dated as of September 11, 1996 (the "Base Indenture"); the form of Preferred Securities Guarantee Agreement to be entered into between Unocal Unocal Capital Trust II June 30, 1998 Page 2 Corporation and The Bank of New York, as trustee (the "Preferred Guarantee"); the form of Second Supplemental Indenture, supplementing the Base Indenture, to be entered into between Unocal Corporation and The Bank of New York, as trustee; the form of Underwriting Agreement relating to the Preferred Securities (the "Underwriting Agreement"); the Registration Statement; and a certification of good standing of the Trust obtained as of a recent date from the State Office. In such examinations, we have assumed the genuineness of all signatures, the conformity to original documents of all documents submitted to us as drafts or copies or forms of documents to be executed and the legal capacity of natural persons to complete the execution of documents. We have further assumed for purposes of this opinion: (i) the due formation or organization, valid existence and good standing of each entity (other than the Trust) that is a party to any of the documents reviewed by us under the laws of the jurisdiction of its respective formation or organization; (ii) the due authorization, execution and delivery by, or on behalf of, each of the parties thereto of the above-referenced documents; (iii) that no event has occurred subsequent to the filing of the Certificate, or will occur prior to the issuance by the Trust of Preferred Securities, that would cause a dissolution or liquidation of the Trust under the Original Governing Instrument or the Governing Instrument, as applicable; (iv) that the activities of the Trust have been and will be conducted in accordance with the Original Governing Instrument or the Governing Instrument, as applicable, and the Delaware Business Trust Act, 12 DEL. C. Section 3801 ET SEQ. (the "Delaware Act"); (v) that Unocal Corporation, as Sponsor, the Regular Trustees, the Institutional Trustee, the Delaware Trustee and each other party thereto will duly authorize, execute and deliver the Governing Instrument, the Underwriting Agreement and all other documents contemplated thereby or by the Registration Statement to be executed in connection with the issuance by the Trust of Preferred Securities, prior to the first issuance of Preferred Securities; (vi) that the Preferred Securities will be offered and sold pursuant to the Registration Statement and a prospectus supplement that will be consistent with, and accurately describe, the terms of the Governing Instrument and the Preferred Guarantee and all other relevant documents; (vii) that prior to the first issuance of Preferred Securities, payment of the required consideration therefor will have been made in accordance with the terms and conditions of the Governing Instrument, the Registration Statement, the prospectus supplement and the Underwriting Agreement and that the Preferred Securities are otherwise issued and sold to the Preferred Securities Holders in accordance with the terms, conditions, requirements and procedures set forth in the Governing Instrument, the Registration Statement, the prospectus supplement and the Underwriting Agreement; and (viii) that the documents examined by us are in full force and effect, express the entire understanding of the parties thereto with respect to the subject matter thereof and have not been amended, supplemented or otherwise modified, except as herein referenced. No opinion is expressed with respect to the requirements of, or compliance with, federal or state securities or blue sky laws. We express no opinion as to, and assume no responsibility for, the Registration Statement or any other offering materials relating to the Preferred Securities. As to any fact material to our opinion, other than those assumed, we have relied without independent investigation on the above-referenced documents and on the accuracy, as of the date hereof, of the matters therein contained. Unocal Capital Trust II June 30, 1998 Page 3 Based on and subject to the foregoing, and limited in all respects to matters of Delaware law, it is our opinion that: 1. The Trust is a duly formed and validly existing business trust in good standing under the laws of the State of Delaware. 2. The Preferred Securities, upon issuance, will constitute validly issued and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable beneficial interests in the assets of the Trust. 3. Under the Delaware Act and the terms of the Governing Instrument, each Preferred Security Holder of the Trust, in such capacity, will be entitled to the same limitation of personal liability as that extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware; provided, however, we express no opinion with respect to the liability of any Preferred Security Holder who is, was or may become a named Trustee of the Trust. Notwithstanding the foregoing, we note that pursuant to Section 11.4 of the Governing Instrument, the Trust may withhold amounts otherwise distributable to a Holder and pay over such amounts to the applicable jurisdictions in accordance with federal, state and local law and any amount withheld will be deemed to have been distributed to such Holder and that, pursuant to the Governing Instrument, Preferred Security Holders may be obligated to make payments or provide indemnity or security under the circumstances set forth therein. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name and reference to our opinion under the heading "LEGAL MATTERS" in the Prospectus forming a part thereof. In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. This opinion speaks only as of the date hereof and is based on our understandings and assumptions as to present facts, and on our review of the above referenced documents and the application of Delaware law as the same exist as of the date hereof, and we undertake no obligation to update or supplement this opinion after the date hereof for the benefit of any person or entity with respect to any facts or circumstances that may hereafter come to our attention or any changes in facts or law that may hereafter occur or take effect. This opinion is intended solely for the benefit of the addressee hereof in connection with the matters contemplated hereby and may not be relied on by any other person or entity or for any other purpose without our prior written consent. Very truly yours, MORRIS, NICHOLS, ARSHT & TUNNELL /s/Morris, Nichols, Arsht & Tunnell EX-12.3 15 EXHIBIT 12.3 EXHIBIT 12.3 UNOCAL CORPORATION AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Three months ended March 31 Year ended December 31 ----------------- ---------------------------------------------- Millions of dollars 1998 1997 1997 1996 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------------------------- Earnings from continuing operations $ 18 $ 188 $ 669 $ 456 $ 249 $ 110 $ 272 Provision for income taxes 79 149 102 302 226 161 213 - ---------------------------------------------------------------------------------------------------------------------------------- Earnings subtotal (a) 97 337 771 758 475 271 485 Fixed charges included in earnings: Interest expense 41 61 183 279 291 275 304 Distribution on convertible preferred securities 8 8 33 10 - - - Interest portion of rentals (b) 6 7 23 40 41 50 55 - ---------------------------------------------------------------------------------------------------------------------------------- Fixed charges subtotal 55 76 239 329 332 325 359 Earnings from continuing operations available before fixed charges $ 152 $ 413 $1,010 $1,087 $ 807 $ 596 $ 844 - ---------------------------------------------------------------------------------------------------------------------------------- Fixed charges: Fixed charges included in earnings 55 76 239 329 332 325 359 Capitalized interest 8 5 35 15 35 30 30 Preferred stock dividends, pre-tax basis - - - 29 58 58 58 - ---------------------------------------------------------------------------------------------------------------------------------- Total fixed charges $ 63 $ 81 $ 274 $ 373 $ 425 $ 413 $ 447 - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of earnings from continuing operations to fixed charges 2.4 5.1 3.7 2.9 1.9 1.4 1.9 - ---------------------------------------------------------------------------------------------------------------------------------- (a) Includes pre-tax impairment of : - - 69 75 105 71 19 The ratio of earnings, excluding impairment, to fixed charges would be: 2.4 5.1 3.9 3.1 2.1 1.6 1.9 (b) Calculated as one-third of operating rental expense.
EX-23.1 16 EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this registration statement on Form S-3 of Union Oil Company of California, Unocal Corporation and Unocal Capital Trust II of our report dated February 16, 1998, on our audits of the consolidated financial statements and financial statement schedule of Unocal Corporation and its subsidiaries as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997, which report is included in Unocal Corporation's Annual Report on Form 10-K for the year ended December 31, 1997. Our report includes an explanatory paragraph with respect to the change in method of accounting for impairment of long-lived assets and long-lived assets to be disposed of in 1995. We also consent to the reference to our firm under the caption "Experts". COOPERS & LYBRAND L.L.P. Los Angeles, California June 30, 1998 EX-24.1 17 EXHIBIT 24.1 EXHIBIT 24.1 POWER OF ATTORNEY By signing below, each of the undersigned officers and/or directors of both Union Oil Company of California and Unocal Corporation hereby constitutes and appoints Timothy H. Ling, Joe D. Cecil and Darrrell D. Chessum, and each of them severally, with full power of substitution and resubstitution, as his or her true and lawful attorneys-in-fact and agents to sign for the undersigned and in the name of the undersigned, in any and all capacities, the Registration Statement on Form S-3 to which this Power of Attorney shall be filed as an exhibit and any or all amendments (including any post-effective amendments) to such Registration Statement and to file the same with all exhibits thereto, including this Power of Attorney, and any and all applications and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform any and all acts and things whatsoever required and necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned could do if personally present. Each of the undersigned hereby ratifies and confirms all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. This Power of Attorney may be signed in several counterparts. IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of March 30, 1998. Signature Title --------- ----- /s/ R. C. BEACH Chairman of the Board of Directors and - ----------------------------------- Chief Executive Officer Roger C. Beach /s/ TIMOTHY H. LING Chief Financial Officer - ----------------------------------- Timothy H. Ling /s/ JOE D. CECIL Vice President and Comptroller - ------------------------------------ (Principal Accounting Officer) Joe D. Cecil /s/ JOHN W. AMERMAN Director - ------------------------------------ John W. Amerman /s/ JOHN W. CREIGHTON, JR. Director - ------------------------------------ John W. Creighton, Jr. /s/ MALCOLM R. CURRIE Director - ------------------------------------ Malcolm R. Currie Signature Title --------- ----- /s/ FRANK C. HERRINGER Director - ------------------------------------ Frank C. Herringer /s/ J. F. IMLE Director - ------------------------------------ John F. Imle, Jr. /s/ DONALD P. JACOBS Director - ------------------------------------ Donald P. Jacobs /s/ KEVIN W. SHARER Director - ------------------------------------ Kevin W. Sharer /s/ CHARLES R. WEAVER Director - ------------------------------------ Charles R. Weaver /s/ MARINA v.N. WHITMAN Director - ------------------------------------ Marina v.N. Whitman EX-25.1 18 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------- FORM T-1 Statement of Eligibility and Qualification Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee ----------------------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2)____ ------------------------- CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 95-4655078 (I.R.S. Employer Identification No.) 101 California Street, Suite #2725, San Francisco, California (Address of principal executive offices) 94111 (Zip Code) ------------------ Union Oil Company of California (Exact name of Obligor as specified in its charter) California (State or other jurisdiction of incorporation or organization) 95-1315450 (I.R.S. Employer Identification No.) 2141 Rosecrans Avenue, Suite #4000 El Segundo, California (Address of principal executive offices) 90245 (Zip Code) -------------------------------- Debt Securities (Title of Indenture securities) SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, Chase Manhattan Bank and Trust Company, National Association, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of San Francisco, and State of California, on the 30th day of June, 1998. CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION By /s/ HANS H. HELLEY -------------------------------- Hans H. Helley Assistant Vice President EXHIBIT 7. Report of Condition of the Trustee. - -------------------------------------------------------------------------------- CONSOLIDATED REPORT OF CONDITION OF Chase Manhattan Bank and Trust Company, N.A. -------------------------------------------- (Legal Title) LOCATED AT 1800 Century Park East, Ste. 400 Los Angeles, CA 94111 ---------------------------------------------------------------------- (Street) (City) (State) (Zip) AS OF CLOSE OF BUSINESS ON March 31, 1998 ---------------------- - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
ASSETS DOLLAR AMOUNTs IN THOUSANDS 1. Cash and balances due from a. Noninterest-bearing balances and currency and coin (1,2) 2,654 b. Interest bearing balances (3) 0 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A) 0 b. Available-for-sale securities (from Schedule RC-B, column D) 1,061 3. Federal Funds sold (4) and securities purchased agreements to resell 73,370 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) 132 b. LESS: Allowance for loan and lease losses 0 c. LESS: Allocated transfer risk reserve 0 d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) 132 5. Trading assets 0 6. Premises and fixed assets (including capitalized leases) 171 7. Other real estate owned (from Schedule RC-M) 0 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 0 9. Customers liability to this bank on acceptances outstanding 0 10. Intangible assets (from Schedule RC-M) 1,648 11. Other assets (from Schedule RC-F) 2,139 12a. TOTAL ASSETS 81,175 b. Losses deferred pursuant to 12 U.S.C. 1823 (j) 0 c. Total assets and losses deferred pursuant to 12 U.S.C. 1823 (j) (sum of items 12.a and 12.b) 81,175
(1) INCLUDES CASH ITEMS IN PROCESS OF COLLECTION AND UNPOSTED DEBITS. (2) THE AMOUNT REPORTED IN THIS ITEM MUST BE GREATER THAN OR EQUAL TO THE SUM OF SCHEDULE RC-M, ITEMS 3.a AND 3.b (3) INCLUDES TIME CERTIFICATES OF DEPOSIT NOT HELD FOR TRADING. (4) REPORT "TERM FEDERAL FUNDS SOLD" IN SCHEDULE RC, ITEM 4.a "LOANS AND LEASES, NET OF UNEARNED INCOME" AND IN SCHEDULE RC-C, PART 1. 4
LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E) 51,348 (1) Noninterest-bearing 13,251 (2) Interest-bearing 38,097 b. In foreign offices, Edge and Agreement subsidiaries, and IBF' (1) Noninterest-bearing (2) Interest-bearing 14. Federal funds purchased (2) and securities sold under agreements to repurchase 0 15. a. Demand notes issued to the U.S. Treasury 0 b. Trading liabilities 0 16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): a. With a remaining maturity of one year or less 0 b. With a remaining maturity of more than one year through three years 0 c. With a remaining maturity of more than three years 0 17. Not applicable 18. Bank's liability on acceptances executed and outstanding 0 19. Subordinated notes and Debentures (3) 0 20. Other liabilities (from Schedule RC-G) 5,118 21. Total liabilities (sum of items 13 through 20) 56,466 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus 0 24. Common stock-- 600 25. Surplus (exclude all surplus related to preferred stock) 12,590 26. a. Undivided profits and capital reserves 11,519 b. Net unrealized holding gains (losses) on available-for-sale securities 0 27. Cumulative foreign currency translation adjustments 28. a. Total equity capital (sum of items 23 through 27) 24,709 b. Losses deferred pursuant to 12 U.S.C. 1823 (j) 0 c. Total equity capital and losses deferred pursuant to 12 U.S.C. 1823 (j) (sum of items 28.a and 28.b) 24,709 29. Total liabilities, equity capital, and losses deferred pursuant to 12 U.S.C. 1823 (j) (sum of items 21 and 28.c) 81,175
5 ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency, Washington, D.C. Board of Governors of the Federal Reserve System, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the trustee, describe each such affiliation. None. ITEM 16. LIST OF EXHIBITS. List below all exhibits filed as part of this statement of eligibility. Exhibit 1. Articles of Association of the Trustee as Now in Effect (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-41329 which is incorporated by reference). Exhibit 2. Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 333-41329, which is incorporated by reference). Exhibit 3. Authorization of the Trustee to Exercise Corporate Trust Powers (contained in Exhibit 2). Exhibit 4. Existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-41329, which is incorporated by reference). Exhibit 5. Not Applicable Exhibit 6. The consent of the Trustee required by Section 321 (b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 333-41329, which is incorporated by reference). Exhibit 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. Exhibit 8. Not Applicable Exhibit 9. Not Applicable EX-25.2 19 EXHIBIT 25.2 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ------------------------ THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ------------------------ UNOCAL CORPORATION (Exact name of obligor as specified in its charter) Delaware 95-3825062 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 2141 Rosecrans Avenue, Suite 4000 El Segundo, California 90245 (Address of principal executive offices) (Zip code) ------------------------ Junior Subordinated Debentures (Title of the indenture securities) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) - 2 - 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. - 3 - SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 22nd day of June, 1998. THE BANK OF NEW YORK By: /s/LUCILLE FIRRINCIELI --------------------------- Name: LUCILLE FIRRINCIELI Title: VICE PRESIDENT - 4 - Exhibit 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1997, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin ................. $ 5,742,986 Interest-bearing balances .......... 1,342,769 Securities: Held-to-maturity securities ........ 1,099,736 Available-for-sale securities ...... 3,882,686 Federal funds sold and Securities pur- chased under agreements to resell..... 2,568,530 Loans and lease financing receivables: Loans and leases, net of unearned income .................35,019,608 LESS: Allowance for loan and lease losses ..............627,350 LESS: Allocated transfer risk reserve..........................0 Loans and leases, net of unearned income, allowance, and reserve 34,392,258 Assets held in trading accounts ...... 2,521,451 Premises and fixed assets (including capitalized leases) ................ 659,209 Other real estate owned .............. 11,992 Investments in unconsolidated subsidiaries and associated companies .......................... 226,263 Customers' liability to this bank on acceptances outstanding ............ 1,187,449 Intangible assets .................... 781,684 Other assets ......................... 1,736,574 ----------- Total assets ......................... $56,153,587 ----------- ----------- LIABILITIES Deposits: In domestic offices ................ $27,031,362 Noninterest-bearing ......11,899,507 Interest-bearing .........15,131,855 In foreign offices, Edge and Agreement subsidiaries, and IBFs ... 13,794,449 Noninterest-bearing .........590,999 Interest-bearing .........13,203,450 Federal funds purchased and Securities sold under agreements to repurchase. 2,338,881 Demand notes issued to the U.S. Treasury ........................... 173,851 Trading liabilities .................. 1,695,216 Other borrowed money: With remaining maturity of one year or less .......................... 1,905,330 With remaining maturity of more than one year through three years...... 0 With remaining maturity of more than three years ...................... 25,664 Bank's liability on acceptances exe- cuted and outstanding .............. 1,195,923 Subordinated notes and debentures .... 1,012,940 Other liabilities .................... 2,018,960 ----------- Total liabilities .................... 51,192,576 ----------- EQUITY CAPITAL Common stock ......................... 1,135,284 Surplus .............................. 731,319 Undivided profits and capital reserves ........................... 3,093,726 Net unrealized holding gains (losses) on available-for-sale securities ......................... 36,866 Cumulative foreign currency transla- tion adjustments ................... ( 36,184) ----------- Total equity capital ................. 4,961,011 ----------- Total liabilities and equity capital ............................ $56,153,587 ----------- -----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. -- Thomas A. Renyi | Alan R. Griffith | Directors J. Carter Bacot | -- - -------------------------------------------------------------------------------- EX-25.3 20 EXHIBIT 25.3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ------------------------ THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ------------------------ UNOCAL CAPITAL TRUST II (Exact name of obligor as specified in its charter) Delaware To be applied for (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 2141 Rosecrans Avenue, Suite 4000 El Segundo, California 90245 (Address of principal executive offices) (Zip code) ------------------------ Trust Preferred Securities (Title of the indenture securities) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) - 2 - 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. - 3 - SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 22nd day of June, 1998. THE BANK OF NEW YORK By: /s/LUCILLE FIRRINCIELI --------------------------- Name: LUCILLE FIRRINCIELI Title: VICE PRESIDENT - 4 - Exhibit 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1997, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin ................. $ 5,742,986 Interest-bearing balances .......... 1,342,769 Securities: Held-to-maturity securities ........ 1,099,736 Available-for-sale securities ...... 3,882,686 Federal funds sold and Securities pur- chased under agreements to resell..... 2,568,530 Loans and lease financing receivables: Loans and leases, net of unearned income .................35,019,608 LESS: Allowance for loan and lease losses ..............627,350 LESS: Allocated transfer risk reserve..........................0 Loans and leases, net of unearned income, allowance, and reserve 34,392,258 Assets held in trading accounts ...... 2,521,451 Premises and fixed assets (including capitalized leases) ................ 659,209 Other real estate owned .............. 11,992 Investments in unconsolidated subsidiaries and associated companies .......................... 226,263 Customers' liability to this bank on acceptances outstanding ............ 1,187,449 Intangible assets .................... 781,684 Other assets ......................... 1,736,574 ----------- Total assets ......................... $56,153,587 ----------- ----------- LIABILITIES Deposits: In domestic offices ................ $27,031,362 Noninterest-bearing ......11,899,507 Interest-bearing .........15,131,855 In foreign offices, Edge and Agreement subsidiaries, and IBFs ... 13,794,449 Noninterest-bearing .........590,999 Interest-bearing .........13,203,450 Federal funds purchased and Securities sold under agreements to repurchase. 2,338,881 Demand notes issued to the U.S. Treasury ........................... 173,851 Trading liabilities .................. 1,695,216 Other borrowed money: With remaining maturity of one year or less .......................... 1,905,330 With remaining maturity of more than one year through three years...... 0 With remaining maturity of more than three years ...................... 25,664 Bank's liability on acceptances exe- cuted and outstanding .............. 1,195,923 Subordinated notes and debentures .... 1,012,940 Other liabilities .................... 2,018,960 ----------- Total liabilities .................... 51,192,576 ----------- EQUITY CAPITAL Common stock ......................... 1,135,284 Surplus .............................. 731,319 Undivided profits and capital reserves ........................... 3,093,726 Net unrealized holding gains (losses) on available-for-sale securities ......................... 36,866 Cumulative foreign currency transla- tion adjustments ................... ( 36,184) ----------- Total equity capital ................. 4,961,011 ----------- Total liabilities and equity capital ............................ $56,153,587 ----------- -----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. -- Thomas A. Renyi | Alan R. Griffith | Directors J. Carter Bacot | -- - -------------------------------------------------------------------------------- EX-25.4 21 EXHIBIT 25.4 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| ------------------------ THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) 48 Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ------------------------ UNOCAL CORPORATION (Exact name of obligor as specified in its charter) Delaware 95-3825062 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 2141 Rosecrans Avenue, Suite 4000 El Segundo, California 90245 (Address of principal executive offices) (Zip code) ------------------------ Guarantee of Trust Preferred Securites of Unocal Capital Trust II (Title of the indenture securities) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Superintendent of Banks of the State of 2 Rector Street, New York, New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) - 2 - 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. - 3 - SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 22nd day of June, 1998. THE BANK OF NEW YORK By: /s/LUCILLE FIRRINCIELI --------------------------- Name: LUCILLE FIRRINCIELI Title: VICE PRESIDENT - 4 - Exhibit 7 - -------------------------------------------------------------------------------- Consolidated Report of Condition of THE BANK OF NEW YORK of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1997, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts ASSETS in Thousands Cash and balances due from depos- itory institutions: Noninterest-bearing balances and currency and coin ................. $ 5,742,986 Interest-bearing balances .......... 1,342,769 Securities: Held-to-maturity securities ........ 1,099,736 Available-for-sale securities ...... 3,882,686 Federal funds sold and Securities pur- chased under agreements to resell..... 2,568,530 Loans and lease financing receivables: Loans and leases, net of unearned income .................35,019,608 LESS: Allowance for loan and lease losses ..............627,350 LESS: Allocated transfer risk reserve..........................0 Loans and leases, net of unearned income, allowance, and reserve 34,392,258 Assets held in trading accounts ...... 2,521,451 Premises and fixed assets (including capitalized leases) ................ 659,209 Other real estate owned .............. 11,992 Investments in unconsolidated subsidiaries and associated companies .......................... 226,263 Customers' liability to this bank on acceptances outstanding ............ 1,187,449 Intangible assets .................... 781,684 Other assets ......................... 1,736,574 ----------- Total assets ......................... $56,153,587 ----------- ----------- LIABILITIES Deposits: In domestic offices ................ $27,031,362 Noninterest-bearing ......11,899,507 Interest-bearing .........15,131,855 In foreign offices, Edge and Agreement subsidiaries, and IBFs ... 13,794,449 Noninterest-bearing .........590,999 Interest-bearing .........13,203,450 Federal funds purchased and Securities sold under agreements to repurchase. 2,338,881 Demand notes issued to the U.S. Treasury ........................... 173,851 Trading liabilities .................. 1,695,216 Other borrowed money: With remaining maturity of one year or less .......................... 1,905,330 With remaining maturity of more than one year through three years...... 0 With remaining maturity of more than three years ...................... 25,664 Bank's liability on acceptances exe- cuted and outstanding .............. 1,195,923 Subordinated notes and debentures .... 1,012,940 Other liabilities .................... 2,018,960 ----------- Total liabilities .................... 51,192,576 ----------- EQUITY CAPITAL Common stock ......................... 1,135,284 Surplus .............................. 731,319 Undivided profits and capital reserves ........................... 3,093,726 Net unrealized holding gains (losses) on available-for-sale securities ......................... 36,866 Cumulative foreign currency transla- tion adjustments ................... ( 36,184) ----------- Total equity capital ................. 4,961,011 ----------- Total liabilities and equity capital ............................ $56,153,587 ----------- -----------
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Robert E. Keilman We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. -- Thomas A. Renyi | Alan R. Griffith | Directors J. Carter Bacot | -- - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----