Exhibit 10.3
UNOCAL EMPLOYMENT AGREEMENT
This employment agreement (the "Agreement") is made effective as of
July 20, 2004 (the "Effective Date"), by and between Unocal Corporation, a
Delaware corporation (the "Company") and Xxxxxx X. Xxxxxx ("Employee").
In consideration of the mutual promises and agreements set forth
herein, the Company and Employee agree as follows:
1. Term.
1.1 Employee's initial date of active employment shall be September 1,
2004, or such other date as the Company and Employee shall mutually agree (the
"Employment Date"). The term of this Agreement (the "Term") shall commence on
the Employment Date and shall be for three (3) years, subject to earlier
termination in accordance with the provisions of Paragraph 4 hereinbelow. If the
Agreement has not been subject to early termination in accordance with the
provisions of Paragraph 4 hereinbelow, beginning on the Employment Date and on
each day thereafter, the Term shall automatically be extended for an additional
day unless the Company notifies Employee in writing that it does not wish to
further extend the Term. Notwithstanding the foregoing, this Agreement shall end
automatically and without additional notice on the date of the Company's Annual
Meeting of Shareholders that next follows the date of Employee's sixty-fifth
(65th) birthday. The parties agree that this Agreement shall be subject to
satisfactory completion by Employee of the Company's standard pre-employment
procedures prior to the Employment Date.
2. Position and Title.
2.1 The Company on behalf of itself and its affiliates and subsidiaries
hereby employs Employee as President and Chief Operating Officer and Employee
hereby accepts such employment. Employee shall report solely to the Chief
Executive Officer of the Company.
2.2 Employee shall devote substantially all of his efforts on a full time
basis to the business and affairs of the Company and shall not engage in any
business or perform any services in any capacity whatsoever adverse to the
interests of the Company.
2.3 Employee shall at all times faithfully, industriously, and to the best
of his ability, experience, and talents, perform all of the duties of his
position.
3. Compensation.
3.1 As of the Employment Date, Employee's annual base salary is $725,004.
Employee's base salary and performance shall be reviewed periodically at
intervals approved by the Management Development and Compensation Committee of
the Board of Directors of the Company (the "Committee"), and Employee's base
salary may be increased from time to time based on merit or such other
consideration as the Committee may deem appropriate.
3.2 During the Term, Employee shall participate in all of the Company's
incentive plans, benefit plans and perquisites, and in any new or successor
incentive plans, benefit plans and perquisites, that are generally provided to
executives of the Company with a level of responsibility and stature comparable
to Employee. Performance goals, award opportunity, benefit levels, and
administrative guidelines for such plans shall be subject to review and approval
by the Committee.
3.3 Employee will be entitled to the compensation described in Annex A,
which is incorporated herein.
4. Termination of Employment.
4.1 During the Term, the Company may terminate Employee's employment herein
at any time for Cause, provided however that, except in the case of conviction
of a felony, the Board of Directors shall provide Employee with not less than
sixty (60) days prior written notice describing the behavior or conduct which is
alleged by the Board of Directors to constitute Cause, and Employee shall be
provided with reasonable opportunity to correct such behavior or conduct within
the notice period. For purposes of this Agreement, Cause shall be defined as any
or all of the following:
(1) Conduct or action by Employee which, in the opinion of a majority
of the Board of Directors, is materially harmful to the Company,
but excluding any conduct which the Employee believes, in good
faith, to be in, or not opposed to, the Company's best interest;
(2) Willful failure by Employee to follow an order of the Board of
Directors, except in such case where the Employee believes in
good faith that following such order would be materially
detrimental to the interests of the Company;
(3) Employee's conviction of a felony.
4.2 A termination of Employee's employment shall be considered a
Termination Without Cause in the event that Employee's employment is terminated
by the Company for any reason other than those set forth in Paragraph 4.1
hereinabove, or in the event Employee terminates employment voluntarily
following one or more of the following (a) Employee's annual base salary is
reduced below the amount then in effect under Paragraph 3.1 hereinabove (unless
such reduction is part of an across the board reduction affecting all Company
executives with a comparable level of responsibility, title or stature), or (b)
Employee is removed from or denied participation in incentive plans, benefit
plans, or perquisites generally provided by the Company to other executives with
a comparable level of responsibility, title or stature, or (c) Employee's target
incentive opportunity, benefits or perquisites are reduced relative to other
executives with comparable responsibility, title or stature, or (d) Employee is
assigned duties or obligations inconsistent with his position with the Company
or (e) There is a significant change in the nature and scope of Employee's
authority or his overall working environment, including, without limitation, any
change in the reporting responsibilities described in Paragraph 2.1, or (f)
Employee's work location is changed to a location other than Houston or
Xxxxxxxxx, Texas,
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or such other location as Employee and the Company shall mutually agree, or
(g) the Company shall be in material breach of any other provision of this
Agreement.
4.3 In the event of Employee's Termination Without Cause at any time during
the Term of this Agreement, then, in addition to the Employee's rights under any
applicable stock or benefit plans:
(1) The Company shall pay Employee a lump-sum severance amount within
thirty (30) days following Termination Without Cause equal to
three (3) times the sum of (a) the higher of the Employee's
annual base salary at the time of Termination Without Cause or
the annual base salary stated in Paragraph 3.1 hereinabove, and
(b) the annual target Bonus applicable to Employee as of the
beginning of the calendar year in which such Termination Without
Cause occurs. Such sum shall be reduced by the amount of any
Unocal Employee Redeployment Program and Unocal Termination
Allowance benefits payable to Employee.
(2) The Company shall provide medical, dental, life, and disability
insurance coverage for Employee (and, with respect to medical and
dental coverage, for his dependents) for two (2) years following
Termination Without Cause at levels and a net cost to Employee
comparable to that provided to Employee immediately prior to
Employee's Termination Without Cause. In lieu of the foregoing
continued benefits (but not in lieu of health and dental
insurance continuation coverage under COBRA), the Company in its
sole discretion may elect to pay the Employee the sum of $25,000
(twenty-five thousand U.S. Dollars).
(3) The Company shall pay Employee an additional lump-sum severance
amount within thirty (30) days following Employee's Termination
Without Cause equal to three (3) times the base salary used to
determine the lump-sum severance benefit in paragraph 4.3(1)
hereinabove, multiplied by 6% (.06).
4.4 In the event that during the Term of this Agreement Employee (i) should
voluntarily resign from the Company for any reason other than those described in
Paragraph 4.2, (ii) should terminate employment with the Company due to death,
permanent disability or incapacitation, or (iii) is terminated by the Company
for Cause, then Employee shall not be entitled to any of the termination
benefits provided for in Paragraph 4.3 (1) through (3) hereinabove, and the Term
of the Agreement shall immediately end.
4.5 Employee shall not be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to Employee under any
provisions of this Agreement.
5. Change of Control.
5.1 In the event of a Change of Control of the Company at any time during
the Term of this Agreement, then:
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(1) In the event of Employee's Termination Without Cause within a
period of twenty-four (24) months following the date of a Change
of Control, Employee shall be entitled to the termination
benefits described in Paragraph 4.3 hereinabove (provided that
for purposes of Paragraph 4.3(1)(a), annual base salary shall be
the amount in effect immediately prior to the Change of Control,
if greater) plus the benefit described in Paragraph 5.1(2) below.
(2) Employee shall be entitled to an amount equal to the increase in
the lump sum value of Employee's Unocal Retirement Plan and
non-qualified retirement plans of the Company if three years were
added to Employee's benefit service and age thereunder and if
Employee were fully vested, with covered compensation based on
actual full months of employment, if less than 36 months
5.2 For the purpose of this Agreement, a "Change of Control" shall mean:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")(a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (i) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors (the
"outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by an
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Paragraph 5.2; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened
election contest with respect to the election or removal of
directors
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or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;
or
(c) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets of
another corporation (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all
or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust)
of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
5.3 Certain Additional Payments by the Company may be due as follows:
(a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company
or its affiliates to or for the benefit of the Employee
(whether paid or payable or
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distributed or distributable pursuant to the terms of this
Agreement or otherwise but determined without regard to any
additional payments required under this Paragraph 5.3), (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are
incurred by the Employee with respect to such excise tax
(such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Employee shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding
the foregoing provisions of this Paragraph 5.3, if it shall
be determined that the Employee is entitled to a Gross-Up
Payment, but that the Payments do not exceed 110% of the
greatest amount (the "Reduced Amount") that could be paid to
the Employee such that the receipt of Payments would not
give rise to any Excise Tax, then no Gross-Up Payment shall
be made to the Employee and the Payments, in the aggregate,
shall be reduced to the Reduced Amount.
(b) Subject to the provisions of Paragraph 5.3(c), all
determinations required to be made under this Paragraph 5.3,
including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be
made by Ernst and Young or such other certified public
accounting firm as may be designated by the Employee (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Employee within 15
business days of the receipt of notice from the Employee
that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, the
Employee shall appoint another nationally recognized
accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to
as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this
Paragraph 5.3, shall be paid by the Company to the Employee
within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm
shall be binding upon the Company and the Employee. As a
result of the uncertainty in the application of Section 4999
of the Code at the
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time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company exhausts
its remedies pursuant to Paragraph 5.3(c) and the Employee
thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Employee.
(c) The Employee shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Employee is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Employee in writing prior
to the expiration of such period that it desires to contest
such claim, the Employee shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the
Company,
(iii)cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the
Company shall bear and pay directly all costs and
expenses (including additional interest and penalties)
incurred in connection with such contest and shall
indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment
of costs and expenses. Without
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limitation on the foregoing provisions of this
Paragraph 5.3(c), the Company shall control all
proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct
the Employee to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine;
provided, however, that if the Company directs the
Employee to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the
Employee, on an interest-free basis and shall indemnify
and hold the Employee harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest
or penalties with respect thereto) imposed with respect
to the such advance or with respect to any imputed
income with respect to such advance; and further
provided that any extension of the statute of
limitations relating to payment of taxes for the
taxable year of the Employee with respect to which such
contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle
or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Paragraph 5.3(c),
the Employee becomes entitled to receive any refund
with respect to such claim, the Employee shall (subject
to the Company's employing with the requirements of
Paragraph 5.3 promptly pay to the Company the amount of
such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If,
after the receipt by the Employee of an amount advanced
by the Company pursuant to Paragraph 5.3(c), a
determination is made that the Employee shall not be
entitled to any refund with respect to such claim and
the Company does not notify the Employee in writing of
its intent to contest such denial of refund prior to
the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
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6. Covenants.
6.1 Employee agrees that any and all confidential knowledge or information,
including but not limited to customer lists, books, records, data, formulae,
specifications, inventions, processes and methods, and developments and
improvements, which have been or may be obtained or learned by Employee in the
course of his employment with the Company, will be held confidential by
Employee, and that Employee shall not disclose the same to any person outside of
the Company either during his employment with the Company or after his
employment by the Company has terminated, provided, however, that Employee shall
be entitled to make such disclosures as necessary to satisfy applicable federal
or state law or to cooperate with governmental or regulatory investigation or
legal, judicial or administrative proceedings.
6.2 Employee agrees that upon termination of his employment with the
Company he will immediately surrender and turn over to the Company all books,
records, forms, specifications, formulae, data, and all papers and writings
relating to the business of the Company and all other property belonging to the
Company, it being understood and agreed that the same are the sole property of
the Company and that Employee shall not make or retain any copies thereof.
6.3 Employee agrees that all inventions, developments or improvements which
he has made or may make, conceive, invent, discover or otherwise acquire during
his employment with the Company in the scope of his responsibilities or
otherwise shall become the sole property of the Company.
6.4 Employee agrees to provide a release of any claims with respect to
termination of his or her employment on such form as requested by the Company
upon payment of the sums provided in Paragraph 4.3 above.
7. Miscellaneous Provisions.
7.1 All terms and conditions of this Agreement are set forth herein, and in
the Exhibits attached hereto and there are no warranties, agreements or
understandings, express or implied, except those expressly set forth herein.
7.2 Any modification to this Agreement shall be binding only if evidenced
in writing signed by all parties hereto.
7.3 Any notice or other communication required or permitted to be given
hereunder shall be deemed properly given if personally delivered or deposited in
the United States mail, registered or certified and postage prepaid, addressed
to the Company at 0000 Xxxxxxxxx Xxx., Xxxxx 0000, Xx Xxxxxxx, XX (Attention:
General Counsel), or to Employee at his or her most recent home address on file
with Company, or at other such addresses as may from time to time be designated
in writing by the respective parties.
7.4 The laws of the State of California shall govern the validity of this
Agreement, the construction of its terms, and the interpretation of the rights
and duties of the parties involved.
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7.5 In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable,
the same shall not affect any other provision of this Agreement, but this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been contained herein.
7.6 This Agreement shall be binding upon, and inure to the benefit of, the
successors and assigns of the Company and the personal representatives, heirs
and legatees of Employee.
7.7 "Bonus" refers to the Unocal Incentive Compensation Plan and any
replacement or successor plan thereof
7.8 Company shall pay 90% (ninety percent) of Employee's out-of-pocket
litigation expenses, including reasonable attorney's fees, in connection with
any judicial proceeding to enforce this Agreement or construe or determine the
validity of this Agreement, whether or not the Employee is successful in such
proceeding.
7.9 The term "Company" shall include with respect to employment hereunder,
any subsidiary or affiliate of the Company, as well as any successor employer
following a Change in Control.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.
BY: _____________________________________________
Xxxxx X. Dallas
Executive Vice President and Chief Financial Officer
Unocal Corporation
BY: _____________________________________________
EMPLOYEE
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ANNEX A
1. Annual Bonus. Employee will be eligible to participate in the Company's
annual incentive plan at a target bonus award level of no less than 100% of
Employee's annual base salary; provided, however, that for the 2004 calendar
year the award will be prorated based on the number of days in the year from and
after the Employment Date.
2. Stock Awards. Effective as of the Employment Date, Employee shall
receive an award of an option (the "Option") to acquire 50,000 shares of common
stock of the Company ("Common Stock"), pursuant to the terms of the Company's
Long-Term Incentive Plan (the "LTIP"). The Option shall become exercisable in
three equal installments on each anniversary of the Employment Date. The
exercise price will be the fair market value (as defined in the LTIP) on the
Employment Date. The Option will have ten-year term, subject to earlier
expiration in the event of termination of employment in accordance with the
Company's customary option award terms. In addition, as of the Employment Date,
Employee shall be awarded 7,500 shares of restricted Common Stock ("Restricted
Stock") under the terms of the LTIP. These shares will become vested on the
fourth anniversary of the Employment Date, subject to continued service with the
Company. Both the Option and the shares of Restricted Stock awarded pursuant to
this Paragraph 2 shall become fully vested in the event of a Change of Control,
and in the event of a Termination Without Cause a pro-rata portion of the
Restricted Stock will become vested in accordance with the rights afforded an
employee who terminates for the convenience of the Company. The terms of both
the Option and the award of Restricted Stock are more fully reflected in the
award agreements attached hereto as Exhibits A and B, respectively. The Company
hereby acknowledges that the Option and shares of Restricted Stock awarded
pursuant to this Paragraph 2 are intended to induce Employee to enter into
employment with the Company and are not intended to reduce the long-term
incentive awards which may otherwise be granted by the Company to Employee by
reason of Employee's employment hereunder.
3. Deferred Compensation. Employee shall be entitled to participate in the
Company's Deferred Compensation Plan. As of the Employment Date, the Company
shall credit a company contribution account under the Deferred Compensation Plan
for Employee with the amount of $890,000 (the "Initial Account"). The amount
credited to the Initial Account, with any corresponding earnings or losses,
shall be forfeited in the event Employee's employment hereunder terminates prior
to the third anniversary of the Employment Date for any reason other than a
Termination Without Cause, death or disability; provided, however, that the
Initial Account shall be fully vested in the event of a Change of Control.
EXHIBIT A
UNOCAL CORPORATION
NONQUALIFIED STOCK OPTION
UNDER THE LONG-TERM INCENTIVE PLAN OF 2004
Award Document
UNOCAL CORPORATION (hereinafter called the "Company"), desiring to provide an
incentive to the success of the Company and its subsidiaries, hereby grants to
Xxxxxx X. Xxxxxx (hereinafter called the "Option Holder"), and the Option Holder
hereby accepts, the option to purchase shares of the Common Stock, $1.00 par
value, of the Company (hereinafter "shares") during the Option Period (the
"Option") subject to the Long Term Incentive Plan of 2004, as amended (the
"Plan") and upon the following terms and conditions:
A. Amount And Term Of Option
1. The exercise price is $________ per share, subject to adjustment as
contemplated by Section 12 of the Plan and paragraphs B.8 and C.3 below.
2. The Option Period shall be TEN (10) years, commencing with the date this
Option is granted. This Option is a Nonqualified Stock Option. The date of
grant is _____________.
3. The total number of shares which may be purchased pursuant to this Option
shall be 50,000, subject to adjustment as contemplated by Section 12 of the
Plan and paragraphs B.8 and C.3 below. This Option shall become exercisable
in accordance with the following schedule:
1/3 of the shares may be purchased on or after one year from the date of
grant. 2/3 of the shares may be purchased on or after two years from the
date of grant. 100% of the shares may be purchased on or after three years
from the date of grant.
The Option Holder must be employed by the Company or a subsidiary as of
each of the above dates for the incremental portion of this Option to
become exercisable.
B. Non-Transferability And Lapse Of Option/Termination of Employment
1. Except as otherwise expressly authorized by the Management Development and
Compensation Committee of the Board (the "Committee"), this Option shall
not be transferable by the Option Holder except by beneficiary designation,
will or the laws of descent and distribution and shall be exercisable
during the Option Holder's lifetime only by the Option Holder, or Option
Holder's guardian or legal representative, except as the Committee may
hereafter expressly permit pursuant to Section 11(e) of the Plan. The
foregoing restrictions shall not apply to transfers pursuant to Section
11(e) of the Plan. The foregoing restrictions shall not apply to transfers
pursuant to a court order, including, but not limited to any domestic
relations order.
2. For purposes of this Option, the employment of the Option Holder shall be
deemed to continue uninterrupted in the event that during the Option Period
the Option Holder is on authorized sick leave or such other leave as is
approved by the Committee.
3. This Option shall continue to be exercisable in accordance with Section A.3
and may be exercised during the Option Period for the number of shares
Option Holder was entitled to purchase on the date of his or her
termination of employment if the Option Holder terminates employment under
the following circumstances:
a. Because of retirement at or after attaining age 65;
b. Because of "early retirement" at the convenience of the Company.
"Early retirement" shall mean that on the date of termination the
Option Holder is at least 55 years of age and has at least 5 years of
vesting service under the Unocal Retirement Plan or would have 5 years
of vesting service if he or she had been employed by Union Oil Company
of California on the day prior to termination of employment. The
determination that an early retirement is "at the convenience of the
Company" shall be made at the sole discretion of the Company;
c. Because of total disability (as defined in the Unocal Medical Plan) or
death
4. If the employment of the Option Holder by the Company or any of its
subsidiaries terminates within the Option Period at the convenience of the
Company, such determination to be made by the Committee in its sole
discretion, and not because of voluntary resignation or inadequate
performance, then Option Holder shall have the right to exercise this
Option for not more than the number of shares (subject to adjustment as
provided in paragraphs C.1 and C.2 of this Option and the Plan) which
Option Holder was entitled to purchase under this Option on the date of
such termination of employment. Such exercise right shall lapse and this
Option shall terminate on the earlier of the third anniversary of that date
or the end of the Option Period.
5. If the Option Holder has a "Termination of Employment Event," as defined in
the Unocal Retirement Plan following a Change of Control, as defined below,
or dies during the Option Period while still employed by the Company or any
of its subsidiaries without having fully exercised this Option, this Option
shall become immediately exercisable and may be exercised within the Option
Period.
6. If the Option Holder's employment with the Company and/or a subsidiary
terminates other than in the circumstances described in paragraph B.3, B.4
or B.5 above, this Option shall lapse and terminate as of the date of such
termination of employment.
7. The Committee may at its sole discretion elect to reinstitute any lapsed
Options upon the rehire of a terminated Option Holder.
8. If any Option or other right to acquire Stock hereunder is not exercised
prior to or in connection with (i) a dissolution of the Company, or (ii) a
merger, reorganization, consolidation or similar event that the Company
does not survive, or (iii) a merger, reorganization, consolidation or
similar event approved by the Board (as constituted and acting prior to the
event), the Committee may provide that the Option or right will terminate,
subject to any provision that has been expressly made by the Board (as so
constituted) or by the Committee pursuant to paragraph C.4 through a plan
of reorganization or otherwise for the survival, assumption, exchange or
other settlement of the Option or right.
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C. Adjustments To Option Shares
In addition to adjustments authorized by Section 12 of the Plan:
1. If the shares then subject to this Option are split, including a split in
the form of a dividend payable in such shares, then the number of shares
then subject to this Option (and the number of shares reserved for issuance
pursuant thereto) shall be increased, and the exercise price decreased,
proportionately, without any change in the aggregate purchase price
thereof.
2. If the shares then subject to this Option are the subject of a reverse
stock split, then the number of shares then subject to this Option (and the
number of shares reserved for issuance thereafter pursuant thereto) shall
be decreased, and the exercise price increased, proportionately, without
any change in the aggregate purchase price thereof.
3. Subject to paragraph B.8 if the outstanding shares of the Company of the
class then subject to this Option shall be changed into or exchanged for a
different number or class of shares of stock of the Company or of another
entity, whether through reorganization, recapitalization, split-up, spin
off, combination of shares, merger or consolidation, then there shall be,
in such manner and to such extent (if any) as the Committee deems
appropriate in the circumstances, substituted for each such share then
subject to this Option (and for each share reserved for issuance pursuant
thereto), the number and class of shares of stock or other securities, cash
or property (or combination thereof) into which each such outstanding share
of the Company shall be so changed or exchanged, all without any change in
the aggregate purchase price for the shares then subject to this Option.
D. Manner of Exercise
1. This Option may be exercised from time to time, in accordance with its
terms, by written notice thereof signed by the Option Holder and delivered
to the Secretary of the Company at its head office in the City of El
Segundo, State of California. Such notice shall state the number of shares
being purchased, be accompanied by payment of the full option price for
such number of shares and payment for any applicable withholding tax
(unless otherwise provided for). Payment may be in the form of cash or
shares of the common stock of the Company (provided the shares have been
owned at least six (6) months, if originally acquired from the Company).
Additionally, this Option may be exercised in accordance with such other
arrangements, including "cashless" exercise procedures, as are approved
from time to time by the Board or the Committee. To the extent exercisable,
an Option shall be exercisable for all or a part of whole shares, but not
as to any fractional interest. Exercise of an Option held by a deceased
Option Holder shall be by the person, persons, trust or trusts duly
designated by the Option Holder in a form approved by the Company or, in
the absence of a designation, entitled by will or the laws of descent and
distribution to receive the benefits specified in this Agreement and under
the Plan in the event of the Option Holder's death, and shall mean the
Option Holder's executor or administrator if no other such person or entity
is designated or authorized to act under the circumstances.
2. The issuance of shares upon the exercise of this Option and subsequent
transfer thereof shall be subject to all applicable laws, rules and
regulations with respect to the issuance and sale of such shares, and to
such approvals by governmental agencies as may be required.
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3. The Option Holder shall be entitled to the privileges of stock ownership
only as to such shares as are issued or delivered hereunder and subject to
any limitation under paragraph D.2 above.
4. Upon or (to the extent necessary in the circumstances to enable the Option
Holder, subject to payment or permitted offset of the exercise price and
any applicable withholding taxes, to exercise the Option or otherwise
realize the benefits of the Option with respect to the underlying shares in
the same manner as available to the common stockholders generally as a
result of the event) immediately prior to but subject to a "Change in
Control Event" (as such term is defined below), each Option will become
immediately exercisable. As used herein, "Change in Control Event" means
any of the following:
(a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of this
paragraph (a), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by an employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any entity
pursuant to a transaction that satisfies the conditions of clauses (i),
(ii) and (iii) of paragraph (c) of this Section D.4.
(b) Individuals who, as of May 21, 2001, constituted the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to May 21, 2001 whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, except that
any such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board shall not be
considered a member of the Incumbent Board.
(c) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company
or the acquisition of assets of another entity (a "Business Combination"),
in each case, unless, following such Business Combination:
(i) all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to the
Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
entity resulting from such Business Combination (or, without limitation, an
entity which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or
more subsidiaries (a "resulting parent")) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of
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the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be,
(ii) no Person (excluding any resulting entity or resulting parent in
such Business Combination or any employee benefit plan (or related trust)
of the Company or such resulting entity or resulting parent) beneficially
owns, directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the entity resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such entity, except to the extent that such ownership
existed prior to the Business Combination; and
(iii) at least a majority of the members of the board of directors of
the resulting entity from such Business Combination or resulting parent
were members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such
Business Combination.
For purposes of this paragraph (c), "entity" means any corporation, limited
liability company, partnership or any other statutorily recognized business
organization or entity that is similar to a statutory corporation and that
can be merged into or combined with a statutory corporation.
(d) Approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
E. Miscellaneous
1. This Option is granted pursuant to the Plan and is subject to all of the
terms and provisions of the Plan.
2. The Option Holder agrees during employment to devote Option Holder's entire
time, energy and skills to the service and interests of the Company or such
subsidiary, to promote its interest, and to act in accord with the regular
policies of the Company and its subsidiaries.
3. This Option shall not confer upon the Option Holder any right with respect
to continuance of employment by the Company or any subsidiary, nor shall it
interfere in any way with Option Holder's status as an "at will" employee
or with the right of the Company or any subsidiary to terminate employment
at any time for any reason, with or without cause.
4. Notwithstanding any other provision hereof, in the event of a public tender
for all or any portion of the stock of the Company or in the event that a
proposal to merge, consolidate, or otherwise combine with another company
is submitted for shareholder approval, the Committee may in its sole
discretion declare previously granted options to be immediately
exercisable.
5. The headings of this Agreement are solely for convenience and shall not be
given any effect in interpreting this Agreement.
6. This Agreement has been executed in two counterparts each of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, The Company has granted this Option, at El Segundo,
California effective on ________________, which date is the date of grant of
this Option.
UNOCAL CORPORATION
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EXHIBIT B
UNOCAL CORPORATION LONG-TERM INCENTIVE PLAN OF 2004
RESTRICTED STOCK AWARD AGREEMENT
Unocal Corporation (hereinafter called the "Company") desiring to provide
to Xxxxxx X. Xxxxxx (hereinafter called the "Recipient") an incentive and
proprietary interest in the success of the Company and its subsidiaries, and to
obligate Recipient to perform services with the Company or a subsidiary thereof,
hereby grants, as of __________________, to the Recipient, and the Recipient
hereby accepts, subject to all the terms and conditions of this Agreement 7,500
restricted shares of the Common Stock, $1 par value, of the Company. This
Restricted Stock Award is subject to the Long-Term Incentive Plan of 2004 and
the following terms and conditions:
A. Retention and Delivery of Share Certificates
1. The shares granted pursuant to this award shall be retained by the
Company, or a party selected by the Company, while any restrictions apply.
2. The Recipient shall not be entitled to the delivery of any certificates
representing the shares granted pursuant to this award unless and until all
terms and conditions of the grant have been satisfied and all restrictions
have lapsed.
3. Any delivery of share certificates pursuant to this award is also
conditioned upon the payment to the Company of all state, local, federal or
other taxes which the Company shall deem necessary or appropriate to
withhold upon the delivery of such certificates. The Company may, in lieu
of requiring cash payment of any such taxes, elect to withhold a number of
whole shares of Stock whose value is at least equal to the amount of such
taxes.
B. Dividends
All cash dividends on restricted shares which are held by the Company
pursuant to this Agreement as of the date used for determining eligibility
to receive dividend payments, shall be paid to the Recipient. No such
dividend payments shall be made to the Recipient on any shares which have
been forfeited as of said date.
C. Voting and Consents
During the period when restricted shares pursuant to this award are
held by the Company under Section A above, Recipient shall have all voting
rights with respect
thereto. In the event the Recipient shall not exercise said voting rights
with respect to this award or with respect to a prior award, then the
Management Development and Compensation Committee of the Board of Directors
(hereinafter the "Committee") shall be entitled to vote such shares.
D. Vesting and Forfeiture of Shares
1. The Recipient shall be entitled to the delivery of all the shares which
are subject to this award and all restrictions thereon shall lapse if the
Recipient is continuously employed by the Company and/or its subsidiaries
until ________________.
2. If the employment of the Recipient is terminated prior to the end of the
restriction period by a Normal or Deferred Retirement, as defined in and
pursuant to the Company's Retirement Plan (or the retirement plan of a
subsidiary, if applicable); by death or total disability (as defined in the
Company Medical Plan); by an involuntary termination of employment which
the Company indicates to the Committee is for the convenience of the
Company; or an Early Retirement which the Company indicates to the
Committee is for the convenience of the Company; then the Recipient shall
be entitled to the delivery of a pro rata portion (not in excess of 1) of
the shares subject to the award determined by the number of calendar days
of employment with the Company or a subsidiary since the date of this
award, divided by the number of calendar days from the date of this award
until ________________.
3. The shares which are the subject of this award shall be completely
forfeited and revert to the Company in the event the Recipient voluntarily
terminates employment, or in the event the termination does not satisfy the
conditions indicated in Paragraph 2 above.
4. Upon the occurrence of a Change in Control Event (as such term is
defined below), the Recipient shall be entitled to the delivery of all the
shares which are subject to this award and all restrictions shall lapse.
The shares subject to this award shall be subject to the same provisions as
then apply generally to the outstanding shares of the Common Stock of the
Company. As used herein, Change in Control means any of the following:
(a) The acquisition by any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")(a "Person") beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or
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(iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of
this Section D.4; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
(c) The approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company or the
acquisition of assets of another corporation (a "Business
Combination"), or, if consummation of such Business Combination is
subject, at the time of such approval by shareholders, to the consent
of any government or governmental agency, the obtaining of such
consent either explicitly or implicitly by consummation of the
Business Combination in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination will
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
will beneficially own, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination will have been members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action
of the Board, providing for such Business Combination; or
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(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
5. Unless the Committee or the Board otherwise provides prior to the Change
in Control Event, the Recipient shall be entitled to refuse by advance
written notice to the Company all or any portion of any payment or benefit
(including shares) accelerated by reason of these amendments if the
Recipient determines that receipt of such payment or benefit may result in
adverse tax consequences to the Recipient under Section 4999 of the
Internal Revenue Code. Unless the Committee or the Board otherwise provides
prior to the Change in Control Event, the Company shall be totally
permanently relieved of any obligation to pay any amount or provide any
benefit to the Recipient which the Recipient explicitly so refuses.
E. Stock Dividends and Recapitalization
1. In the event a dividend is declared upon the shares of the Company of
the class then subject to this award, payable in such shares, the number of
shares then subject to this award shall be increased proportionately.
2. In the event the outstanding shares of the Company of the class then
subject to this award shall be changed into or exchanged for a different
number or class of shares of stock of the Company or of another
corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, merger or consolidation, then there shall
be substituted for each such share then subject to this award the number
and class of shares of stock into which each such outstanding share of the
Company shall be so exchanged.
F. Miscellaneous
1. Nothing in this Agreement shall confer on the Recipient any right to
continue in the employ of the Company or a subsidiary or shall interfere
with or restrict in any way the ability of the Company or a subsidiary,
which are hereby reserved, to discharge the Recipient at any time for any
reason whatsoever, with or without cause. Recipient as part of this
Agreement hereby acknowledges that the Recipient is an at-will employee.
2. No Recipient may assign, transfer, pledge, hypothecate by either
voluntary action or involuntary action any or all of the shares which are
the subject of this award and held pursuant to Section A hereof.
3. The Recipient shall file with the Company a beneficiary designation with
respect to any distributions to be made in the event of Recipient's death.
In the event no such designation is on file, or if said beneficiary or
beneficiaries do not survive the Recipient or if the Committee is in doubt
as to the appropriate beneficiary, the Committee may deliver the shares to
the legal representative of the Recipient's
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estate and thereby be relieved of all liability with respect to
distributions payable on account of the Recipient's death.
4. This Agreement shall be governed in accordance with the laws of the
State of California.
5. The headings of this Agreement are for convenience only and are to be
ignored if inconsistent with the text.
6. This Agreement shall be binding on any successor of the Company.
7. The Company and Committee shall retain all rights and authority under
the Long-Term Incentive Plan of 2004 with respect to this Award to the
extent not expressly inconsistent with this Agreement. All definitions and
terms used in this Agreement are qualified in their entirety by reference
to said Plan.
IN WITNESS WHEREOF, The Company has granted this Restricted Stock Award on
_____________, at El Segundo, California, which date is the date of this Award.
UNOCAL CORPORATION
