EXHIBIT 10.1
UNOCAL CORPORATION
2000 EXECUTIVE STOCK PURCHASE PROGRAM
The purpose of the 2000 Executive Stock Purchase Program (the "Program") is
to promote the long-term growth and financial success of Unocal Corporation (the
"Company") by (1) providing a means whereby executives of the Company and its
subsidiaries can acquire and maintain stock ownership, thereby strengthening
their commitment to maximizing the value of the Company for its stockholders,
while (2) placing them at risk in the event of poor Company performance through
the use of full recourse promissory notes as payment for Company stock.
1. General Description
The Program provides an opportunity for the Company's executives to
purchase up to 1.75 million shares of Stock of the Company and to receive loans
from the Company to finance such purchases.
2. Definitions
The following definitions shall be applicable throughout the Program but
shall not be deemed to apply in other contexts unless specifically provided
otherwise:
a. "Award" means (i) an award permitting a Participant to purchase Stock
from the Company under this Program at the Purchase Price, together with the
related Purchase Loan, or (ii) an award offering to make a Purchase Loan to a
Participant for the purchase of Stock on a specified date or dates in the open
market, directly from the Company, or by private purchase.
b. "Award Agreement" means a written agreement between the Company and a
Participant which sets forth the terms of an Award. Award Agreements need not be
identical and shall be in the form approved by the Committee.
c. "Board" means the Board of Directors of the Company, except those
members who are Employees.
d. "Cause" means (i) conduct or action by a Participant which, in the
opinion of the Committee, is materially harmful to the Company; (ii) willful
failure by a Participant to follow an order of the Board, except in such case
where the Participant believes in good faith that following such order would be
materially detrimental to the interests of the Company; (iii) a Participant's
conviction of a felony; or (iv) performance by a Participant which, in the
opinion of the Committee, falls below the reasonable expectations of the
Company.
e. "Code" means the Internal Revenue Code of 1986, as amended.
f. "Committee" means the Management Development and Compensation Committee
of the Board, which shall consist solely of two or more directors who qualify as
"outside directors," as defined in the regulations under Section 162 (m) of the
Code and as "Non-Employees Director" as defined in Rule 16b-3.
g. "Company" means Unocal Corporation.
h. "Date of Grant" means the date on which the granting of an Award is
authorized by the Committee or such later date as may be specified by the
Committee in such authorization.
i. "Disability" means the inability of a Participant to perform his or her
normal duties of employment as a result of physical or mental incapacity as
determined by the Committee.
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j. "Employee" means any person regularly employed by the Company or a
Subsidiary on a full-time salaried basis.
k. "Fair Market Value" means the average of the reported high and low
prices of the Stock as reported in the New York Stock Exchange Composite
Transactions quotations on a specified date or the actual purchase price of
shares acquired by the Participant under the Program.
l. "Interest Rate" means the interest rate determined by the Committee,
which shall be the lowest rate which avoids the imputation of interest under the
Code at the time of the Loan.
m. "Participant" means an Employee of the Company or a Subsidiary who has
been granted an Award under the Program.
n. "Purchase Date" means the date or dates on which a Participant purchases
shares of Stock pursuant to an Award.
o. "Purchase Loan" means an extension of credit to a Participant by the
Company evidenced by the Purchase Note.
p. "Purchase Note" means a full recourse promissory note including the
terms set forth in Section 8.
q. "Purchase Price" means (i), in the case of a purchase of Stock from the
Company, the Fair Market Value of the Stock on the Purchase Date or (ii), in the
case of a purchase of Stock in the open market or from a party other than the
Company, the price at which the Participant purchases Stock pursuant to an
Award.
r. "Retirement" means termination of employment on or after "normal
retirement age" as defined in the Company's retirement plan then in effect.
s. "Rule 16b-3" means Rule 16b-3 as promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended.
t. "Stock" means shares of common stock of the Company as described in the
Company's Certificate of Incorporation.
u. "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
v. "Voluntary Termination" means any termination of employment by a
Participant prior to Retirement other than a termination without Cause or a
termination due to death or Disability.
3. Effective Date and Duration
The Program shall be effective on March 16, 2000, subject to the approval
of this Program by the Company's stockholders. If this Program is not approved
by the Company's stockholders, Participants must sell to the Company the Stock
purchased under this Program at the lesser of the Purchase Price or the Fair
Market Value on the date of such sale, and each Purchase Loan shall become
immediately due and payable in full (including accrued and unpaid interest). If
this Program is approved by the Company's stockholders, it shall terminate on
December 31, 2003; provided that Purchase Loans outstanding as of such date
shall not be affected or impaired by termination of the Program.
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4. Administration
The Committee shall administer the Program. The acts of a majority of its
members present at any meeting at which a quorum is present and acts unanimously
approved in writing by the Committee shall be deemed the acts of the Committee.
The Committee may conduct meetings in person or by telephone.
No member of the Committee, while serving as such, shall be eligible to
receive an Award under the Program. The Committee shall have the authority,
subject to the provisions of the Program, to establish, adopt, or revise such
rules and regulations and to make all such determinations relating to the
Program as it may deem necessary or advisable in the administration of the
Program. Among other things, the Committee shall have the authority, subject to
the terms of the Program, to determine (a) the individuals to whom the Awards
are granted, (b) the time or times the Awards are granted, (c) the Purchase
Dates for such Awards, (d) the basis for any termination of employment,
including whether or not it was for Cause, Disability, Retirement or otherwise
(which determination shall be reasonable), and (e) the forms, terms and
provisions of the Award Agreement and any other documents under the Program. The
Committee's interpretation of the Program or any Awards granted pursuant thereto
and all decisions and determinations by the Committee with respect to the
Program shall be final, binding, and conclusive on all parties.
5. Shares Subject to the Program
The Committee may, from time to time, grant and amend Awards to eligible
Employees in accordance with the provisions of the Plan; provided, however,
that:
a. Subject to Section 10, the aggregate number of shares of Stock made
subject to Awards under this Plan may not exceed 1,750,000 shares, and no
Participant shall receive an Award with respect to more than 200,000 shares.
b. If a Participant fails to purchase all of the shares of Stock subject to
an Award, such unpurchased shares of Stock shall again be available to be
granted as an Award under this Program.
c. Stock purchased under this Program may be from the Company's authorized
and unissued Stock or Treasury Shares; Stock purchased on the open market; or
Stock acquired by private purchase.
6. Eligibility
Senior management and other key Employees of the Company and its
Subsidiaries (including officers or Employees who are members of the Board)
shall be eligible to be granted Awards under this Program.
7. Stock Purchase
a. Grant of Award. The Committee shall determine the Purchase Date and, in
the case of an Award permitting the Participant to purchase Stock from the
Company, the number of shares of Stock that the Participant may purchase under
the Award or, in the case of an Award offering to make a Purchase Loan for a
purchase in the open market or from a third party, the amount of the Purchase
Loan. The Committee shall give each Participant written notice prior to the
Purchase Date stating (i) the maximum and minimum numbers (which numbers may be
identical) of shares of Stock that the Participant may purchase under the Award
or the maximum and minimum amounts (which amounts may be identical) of the
Purchase Loan, (ii) the Purchase Date and (iii) the Interest Rate and other
terms pertaining to the Purchase Loan.
b. Exercise of Award. A Participant shall exercise an Award by delivering
to the Company on the Purchase Date (i) a notice stating the number of shares
(not less than the minimum number and not more than the maximum number specified
in the Award) such Participant elects to purchase or the amount (not less than
the minimum and not more than the maximum amount specified in the Award) that
the
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Participant elects to borrow, and (ii) an executed Award Agreement, Purchase
Note and any other documents required pursuant to the Program. Any Participant
who does not elect to purchase at least the minimum number of shares specified
in the Award Agreement or to borrow at least the minimum amount specified in the
Award Agreement on the Purchase Date shall forfeit any rights under the Program
with respect to such Award, including, without limitation, any right to receive
a Purchase Loan.
8. Purchase Loans
a. General. The Company shall extend a Purchase Loan to a Participant upon
exercise of an Award subject to the terms and conditions set forth in this
Section 8. The original principal amount of the Purchase Loan shall be equal to
the total purchase price of the Stock. Such Purchase Loan shall be evidenced by
a Purchase Note with full recourse against the maker. The obligations of each
Participant under the Purchase Loan shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by any change in the existence, structure or
ownership of the Company, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Company or its assets or the market value of
the Stock or any resulting release or discharge of any obligation of the Company
or the existence of any claim, set-off or other rights which any Participant may
have at any time against the Company or any other person, whether in connection
with the Program or with any unrelated transactions, provided that nothing
herein shall prevent the assertion of any such claim by separate suit or
counterclaim.
Notwithstanding anything to the contrary in this Section 8, the Company
shall not be required to make any Purchase Loan to a Participant if the making
of such Purchase Loan will (i) cause the Company to violate any covenant or
similar provision in any indenture, loan agreement or other agreement, or (ii)
violate any applicable federal, state or local law, provided, that the failure
to make such Purchase Loan shall be deemed to revoke the acceptance and exercise
of a related Award unless otherwise specified by the Participant.
Notwithstanding anything to the contrary in this Section 8, the terms and
repayment provisions of the Purchase Note shall conform with the applicable
rules and regulations of the Federal Reserve Board then in effect.
b. Unsecured Loan. Payment of the Purchase Loan shall not be secured,
directly or indirectly, by a pledge of the shares of Stock acquired by the
Participant upon the exercise of the Award to which the Purchase Loan relates.
c. Interest. Interest on the principal balance of the Purchase Loan will
accrue annually, in arrears, at the Interest Rate. Except as provided in the
Purchase Loan and related Purchase Note, interest shall be added to the balance
of the Purchase Loan. To the extent that a Participant receives cash dividends
or other distributions paid in cash on Stock purchased under this Program, the
Participant shall prepay the related Purchase Loan with the full pre-tax amount
of such dividend or distribution received within ten (10) days of receipt. Such
prepayments shall first be applied to pay accrued interest on the Purchase Loan
and then to reduce the principal balance due on the Purchase Loan.
d. Term. The term of the Purchase Loan for any Participant shall begin on
such Participant's Purchase Date and, subject to prepayment as provided in this
Section 8, shall have a final maturity date on the eighth (8th) anniversary of
the Purchase Date.
e. Payment Schedule. Except as provided in Section 3, and subject to
prepayment as provided in this Section 8, no payments of either principal or
interest shall be due under the Purchase Loan during the first five (5) years
following the Purchase Date. The principal balance of the Purchase Loan
(including accrued but unpaid interest) outstanding after any prepayments
following the end of such five-year period, if any (the "Remaining Balance"),
shall be payable in three (3) equal annual installments on the sixth (6th),
seventh (7th) and eighth (8th) anniversaries of the Purchase Date, with interest
on the unpaid Remaining Balance payable annually in arrears, on each such
anniversary.
f. Optional Prepayments. A Participant may prepay all or any portion of the
Purchase Loan at any time. Any prepayments made to the Company pursuant to this
Section 8(f) shall first be applied to pay
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accrued interest on the Purchase Loan and then to reduce the principal balance
due on the Purchase Loan. Any prepayment of the balance of the Purchase Loan
shall be applied to the principal payments due thereon in chronological order of
maturity.
g. Prepayment Obligations Upon Voluntary Termination or Termination for
Cause. Upon a termination of employment that is determined by the Committee to
be a termination for Cause or a Voluntary Termination, any outstanding balance
on the Purchase Loan (including any accrued and unpaid interest) shall become
due and payable on the 60th day following such termination of employment.
Prepayment of a Purchase Loan shall not be required in the event of any other
termination of employment (including termination due to death, Disability,
Retirement, and termination without Cause).
h. Purchase Loan Forgiveness. For Awards granted during the year 2000, the
Committee shall provide for the partial forgiveness of the Purchase Loan in the
case of a Participant who has died or becomes Disabled to the extent that, at
the maturity date of the Purchase Loan, the outstanding balance of the Purchase
Loan (including any accrued and unpaid interest), increased by the amount of any
repayments of principal previously made by the Participant, is greater than the
sum of (i) the Fair Market Value of the number of shares of Stock purchased by
the Participant pursuant to the exercise of the Award plus (ii) the amount of
the Performance Bonus paid to the Participant under the Long-Term Incentive Plan
of 1998 for the four-year award period ending on December 31, 2003 plus (iii)
interest on such Performance Bonus at the Interest Rate from December 31, 2003
to the repayment date.
9. General
a. Government and Other Regulations. The obligation of the Company with
respect to the grant and exercise of Awards shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies as
may be required. The Company shall be under no obligation to register under the
Securities Act of 1933, as amended ("Act") any of the shares of Stock issued
under the Program. If the Stock issued under the Program may in certain
circumstances be exempt from registration under the Act, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
b. Tax Withholding. The Company or a Subsidiary, as appropriate, shall have
the right to deduct from any benefits due under the Program or other amounts
payable to a Participant an amount sufficient to satisfy any federal, state or
local withholding requirements applicable to such benefits. In addition, as a
condition to payment or delivery of any benefit hereunder, including without
limitation, any forgiveness of any portion of a Purchase Loan pursuant to
Section 3 or Section 8(h), the Company or a Subsidiary, as appropriate, may
require a Participant to pay to the Company or Subsidiary the amount of any
applicable federal, state or local withholding taxes.
c. Claim to Awards and Employment Rights. No Employee or other person shall
have any claim or right to be granted an Award under the Program. Neither this
Program nor any action taken hereunder shall be construed as giving any Employee
any right to be retained in the employ of the Company or a Subsidiary.
d. Applicable Law. This Program, any Award Agreements and all other related
documents shall be governed by and construed in accordance with the laws of the
State of California without regard to the application of the conflicts of laws
provisions thereof except for such matters as are subject to the General
Corporation Law of Delaware.
e. Inurement of Rights and Obligations. The rights and obligations under
the Program and any related Award Agreements shall inure to the benefit of, and
binding upon, the Company, its successors and assigns, and the Participants and
their beneficiaries.
f. Non-exclusivity of Program. Nothing in this Program shall limit or be
deemed to limit the authority of the Board or the Committee to grant awards or
authorize any other compensation, with or without reference to Stock, under any
other plan or authority.
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g. Severability; Validity. This Program is intended to qualify under Rule
16b-3. If any of the terms or provisions of this Program conflict with the
requirements of Rule 16b-3, then such terms and provisions shall be deemed
inoperative to the extent they so conflict with such requirements. In the event
that any provision of the Program or any related Award Agreement or other
related document is held to be invalid, void or unenforceable, the same shall
not affect, in any respect whatsoever, the validity of any other provision of
the Program or any related Award Agreement or other document.
h. Indemnification. Each person who is or shall have been a member of the
Committee or the Board, including the Employee directors, shall be indemnified
and held harmless by the Company against and from any loss, cost, liability, or
expense that may be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit, or proceeding to which he may be
a party or in which he may be involved by reason of any action or failure to act
under the Program and against and from any and all amounts paid by him in
satisfaction of judgment in any such action, suit or proceeding against him. He
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
i. Reliance on Reports. Each member of the Committee and the Board,
including the Employee directors, shall be fully justified in relying or acting
in good faith upon any report made by the independent public accountants of the
Company and its Subsidiaries and upon any other information furnished in
connection with the Program by any person or persons other than himself. In no
event shall any person who is or shall have been a member of the Committee or of
the Board be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information or for any
action taken, including the furnishing of information, or failure to act, if in
good faith.
j. Relationship to Other Benefits. No payment under the Program shall be
taken into account in determining any benefits under a pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary.
k. Expenses. The expenses of administering the Program shall be borne by
the Company and its Subsidiaries.
l. Pronouns. Masculine pronouns and other words of masculine gender shall
refer to both men and women.
m. Titles and Headings. The titles and headings of the sections in the
Program are for convenience of reference only, and in the event of any conflict,
the text of the Program, rather than such titles or headings, shall control.
10. Changes in Capital Structure
Any agreements evidencing Awards shall be subject to adjustment by the
Committee as to the number and price of shares of Stock or other considerations
subject to such Awards in the event of changes in the outstanding Stock by
reason of stock dividends, stock splits, recapitalizations, reorganizations,
mergers, consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Purchase of any such Awards. In the
event of any such change in the outstanding Stock, the aggregate number of
shares available under the Program and the number of shares issued under any
Award shall be appropriately adjusted by the Committee, whose determination
shall be conclusive.
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11. Amendments and Termination
The Board may at any time amend, suspend or terminate the Program subject
to the provisions of this Section 11. No amendment, suspension or termination of
the Program shall, without the consent of the Participant, adversely affect such
Participant's rights under the Program in any material respect. In addition,
without further stockholder approval, the Board shall not:
a. Increase the maximum number of shares which may be issued under the
Program, except as provided in Section 10;
b. Change the Program to permit a purchase of Stock at a price less than
Fair Market Value; or
c. Extend the termination date of the Program.
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