EXHIBIT 10.2
UNOCAL CORPORATION
NONQUALIFIED STOCK OPTION
UNDER THE LONG-TERM INCENTIVE PLAN OF 1998
UNOCAL CORPORATION (hereinafter called the "Company"), desiring to provide an
incentive to the success of the Company and its subsidiaries, hereby grants to
Terry G. Dallas (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 1998, as amended (the
"Plan") and upon the following terms and conditions:
A. Amount And Term Of Option
1. This grant is conditioned upon the shareholders of the Company
approving on or before July 26, 2002 an amendment (whether singly or in
combination with other changes) to the Plan which amends Section 7
thereof in a manner consistent with Attachment A. If the shareholders
of the Company do not approve such an amendment on or prior to July 26,
2002 this grant shall be null and void and this Option shall terminate.
2. The exercise price is $36.22 per share, subject to adjustment as
contemplated by Section 12 of the Plan and paragraphs B.7
and C.3 below.
3. 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 August 20, 2001.
4. The total number of shares which may be purchased pursuant to this
Option shall be 240,000 subject to adjustment as contemplated by
Section 12 of the Plan and paragraphs B.7 and C.3 below. This Option
shall become exercisable in accordance with the following schedule:
50% of the shares may be purchased on or after August 20, 2002 75% of
the shares may be purchased on or after August 20, 2003 100% of the
shares may be purchased on or after August 20, 2004
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.
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. If (a) the employment of the Option Holder by the Company or any of its
subsidiaries terminates within the Option Period (1) because of
retirement at or after attaining age 65, (2) because of permanent and
total disability, or (3) at the convenience of the Company, in its sole
discretion, and not because of voluntary resignation or performance
inadequacy, and (b) the Option Holder shall not have then fully
exercised this Option, 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.
4. If the Option Holder dies during the Option Period without having fully
exercised this Option, this Option may be exercised within the Option
Period but not later than fifteen (15) months after the date of the
death of the Option Holder. If the Option Holder terminates employment
because of retirement at or after age 65 pursuant to the Company
retirement plan then in effect or permanent and total disability
without having fully exercised this Option, the Option may be exercised
within the Option Period but not after the later of three (3) years
following such termination, fifteen (15) months after the death of the
Option Holder or fifteen (15) months after the death of the Option
Holder's spouse. 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. The Option may not be exercised for more shares than
the number of shares (subject to adjustment) that Option Holder was
entitled to purchase on the date of death of the Option Holder.
5. If the Option Holder's employment with the Company and/or a subsidiary
terminates other than in the circumstances described in paragraph B.3
or B.4 above, this Option shall lapse and terminate as of the date of
such termination of
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employment.
6. The Committee may at its sole discretion elect to reinstitute any
lapsed Options upon the rehire of a terminated Option Holder.
7. 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.3, through a plan of
reorganization or otherwise for the survival, assumption, exchange or
other settlement of the Option or right.
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.7, 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.
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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.
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.
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 the occurrence of 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 subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section D.4;
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent
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Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
(c) Consummation of a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination 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 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 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.
E. Miscellaneous
1. This Option is granted pursuant to the Plan and is subject to all of
the terms and
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provisions of the Plan.
2. As further consideration for the granting of this Option, the Option
Holder agrees to continue in the employment of the Company or one or
more of its subsidiaries at the pleasure of the Company or such
subsidiary for a continuous period of at least one (1) year from date
hereof at the salary rate in effect on the date hereof or at such
changed rate as may be fixed from time to time by the Company or such
subsidiary. Except as permitted by Section 7(d)(iv) of the Plan, the
Option Holder agrees during such 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.
IN WITNESS WHEREOF, The Company has granted this Option, at El Segundo,
California effective on August 20, 2001, which date is the date of grant of this
Option.
UNOCAL CORPORATION
By: /s/CHARLES R. WILLIAMSON
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Charles R. Williamson
Chief Executive Officer
ACCEPTED: /s/TERRY G. DALLAS
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PRINT NAME: Terry G. Dallas
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DATE: 29 August 01
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Attachment A
Amendment to Long Term Incentive Plan of 1998, as amended
(subject to shareholder approval)
Effective upon shareholder approval on or before July 25, 2002 of an amendment
or amendments to the Plan including the following change, the second sentence of
Section 7 of the Plan shall be revised to read as follows:
"No person may be granted during any 12-month period Options
to acquire more than 600,000 shares of Stock under this Plan.
NOTATIONS AS TO PARTIAL EXERCISE OF OPTION
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Number of Balance of
Date of Shares Shares on
Exercise Exercised Option
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