EXHIBIT 10
MATERIAL CONTRACTS
TERMINATION AND EMPLOYMENT AGREEMENT AND RELEASE
This Termination and Employment Agreement and Release ("Agreement"), is
made and entered into as of the Effective Date, as defined herein, by and
between Xxxx X. Xxxxxxx ("Employee"), Union Oil Company of California
("Company") and Unocal Corporation ("Unocal"). The Company and Unocal are
sometimes referred to herein jointly as "Companies".
WHEREAS, Employee has been employed by the Companies or their
affiliates or predecessors for 29.5 years and (i) presently serves as a director
of each of Companies, (ii) was, until recently, employed as Chief Financial
Officer of Unocal, and (iii) is an employee of Company.
WHEREAS, Companies advised Employee of their wish to change his current
assignments and have him resign from his position as a director of Companies and
any positions as director or employee of any of their subsidiaries while
remaining available to act as an employee of each of the Companies in a
consulting capacity, and subsequently, effective October 15, 1998, to have him
resign from his remaining positions as an employee of Companies.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement and other valuable consideration, the sufficiency of which is
hereby acknowledged, Companies and Employee agree as follows:
1. Resignation. Upon execution of this Agreement, Employee will render
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his written resignation from all of his positions as a director of
Companies, effective as of October 15, 1997.
2. Services to be Rendered by Employee on and After Effective Date.
(a) Term of Employment.
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Employee shall be employed by the Companies continuously as a
consulting employee, commencing on the Effective Date and continuing through
October 14, 1998. Such employment may be terminated earlier,
provided that such termination shall be exclusively in accordance with Section
7(b) of this Agreement.
(b) Duties to be Performed. Upon reasonable written notice by an officer of
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the Companies, employee shall make himself available during regular business
hours at Employee's reasonable convenience to perform telephonic consultation on
matters not involving Confidential Information of the Companies, provided that
such telephonic consultation shall not be required of Employee at times which
interfere with Employee's ability to conduct other employment or business
activities. Employee may waive such written notice and telephonic requirements,
provided that any such waiver in one instance shall not constitute a permanent
waiver under this Agreement. In addition, Employee shall make himself available
during regular business hours to provide testimony in litigation to which any of
the Companies is a party, but only to the extent of five hours per month (unless
Employee is otherwise compelled by judicial process) and only to the extent
Employee determines that he could be compelled by judicial process to so
testify. The foregoing requirements to perform limited hours of service per
month shall be non-cumulative and accordingly shall expire at the end of each
month during the term of Employee's employment. The Companies agree to negotiate
in good faith with Employee regarding definition of Employee's duties provided
Companies' rights hereunder are not prejudiced where Employee is presented with
technical obstacles to future employment due to his duties under this Agreement.
(c) Non-Exclusive Employment. Employee may, without restrictions as to
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time, place or nature of undertaking, perform services for others during the
term of employment described in Section 2(a) as long as such services do not
compromise Employee's obligations under Sections 5 or 6 of this Agreement.
Following execution of this Agreement, and the Effective Date of same, and
during the term of employment described in Section 2(a),Employee agrees to
inform Companies in writing within 10 days of commencing other employment,
consulting assignments or any other position for which he receives compensation
for his services.
3.Compensation.
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(a) Vacation Accrual, Reimbursement of Fees, and Value of Future Benefits.
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Simultaneously upon full execution and as a condition to delivery of this
Agreement by the parties hereto,
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and Employee's delivery of his written resignations in accordance with Section 1
hereof, Company or Unocal shall deliver to Employee (i) its check made payable
to Employee in the amount of $46,154 (which amount shall be translated to its
hourly equivalency under the Unocal vacation bank and policy and debited from
Employee's vacation bank accrual) less Applicable Withholding, (ii) its check
for $15,000 representing reimbursement of a portion of Employee's legal fees
with Pillsbury Madison & Sutro LLP, less Applicable Withholding, (iii) its check
made payable to Employee in the amount of $75,000 (representing the parties'
agreed upon substitute value of certain welfare plan and fringe benefit coverage
for applicable periods between October 14, 1998 and October 14, 2001), less
Applicable Withholding and (v) its check made payable to Employee in the amount
of $273,171 (representing a payment in lieu of the benefit accruals that would
have occurred in the aggregate under the Unocal Retirement Plan and the
Non-Qualified Retirement Plans had the Employee continued employment through
October 14, 2001 at his present compensation). None of such amounts shall be
deemed compensation for purposes of any Benefit Plan.
(b) Salary. During the term of employment described in Section 2(a),
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Employee shall receive a salary, payable in semi-monthly installments, of
$400,008 per annum, less Applicable Withholding.
(c) Revised Incentive Compensation Plan. Employee shall receive
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distribution of the cash portion of deferred RICP awards made with respect to
years prior to 1998 in accordance with his existing deferral elections on a 100%
vested and non-forfeitable basis. Employee shall receive an RICP award for
calendar year 1997 equal to that which he would have received had his
resignation under Section 1 not occurred. If the RICP is interpreted, modified,
amended or terminated, or the Committee thereunder acts, in a manner which would
result in the foregoing award (after having been rendered in a manner that is
non-discriminatory relative to Employee) being reduced, Employee shall receive a
bonus, less Applicable Withholding, in the amount of such reduction, payable at
the time the RICP award is payable, or would have been payable.
(d) Long Term Incentive Plan of 1991.
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(1) Performance Shares. The parties acknowledge and agree that Employee has
been awarded, under the LTIP, with respect
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to the Performance Cycles set forth in Column A below, the number of Performance
Shares appearing to the right of each Performance Cycle in Column B below, and
that under the terms of the LTIP, such Performance Share awards will be
pro-rated as set forth in Column C below, assuming Employee's employment
continues through October 14, 1998:
A. B. C.
Performance Performance Proration
Cycle Share Awards
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1994-97 ............................... 6,600 6,000
1995-98 ............................... 7,000 6,635
1996-99 ............................... 7,000 4,885
1997-2000 .............................. 6,000 2,688
The Companies agree that payout of the above referenced awards shall be "at the
convenience of the Company" for purposes of Section 8(d)(i) of the LTIP and the
equivalent section of the Employee's LTIP agreements. Accordingly, the Companies
shall cause the LTIP Committee to make Performance Share payments to Employee
based on the Awards described in Column B above following the close of each
Performance Cycle (in the form and at the time such awards are generally paid)
subject only to the following LTIP variables:
(a) Pro-ration for service under Section 8(d)(i) of the LTIP shall be as
described in Column C above for termination of employment on October 14, 1998;
in the event of an earlier termination of the term of employment described in
Section 2(a), the date of such termination shall not be earlier than the
Effective Date and the pro-ration shall be based on the principles used to
derive Column C above.
(b) The original Performance Share award shall be subject to variation in
accordance with Section 8(b) of the LTIP and the "Peer Group Companies" relative
performance fraction contemplated by the LTIP agreement.
(c) The price of Stock under the LTIP at the end of the Performance Cycle.
(2) Stock Options. The parties acknowledge and agree that Employee has been
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awarded, under the LTIP, with respect to the Option Grants dated as set forth in
Column A below, the number of
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non-qualified stock options appearing to the right of each Option Grant in
Column B below, exercisable at the applicable strike price set forth in Column C
below and that under the terms of the Option Grants, such Option Grants become
exercisable in 25% increments over the 3 1/2 years following the Option Grant
date and will therefore be exercisable in the numbers set forth in Column D
below, assuming Employee's employment continues through October 14, 1998:
A B C D
Options
Number Exercisable
Option of Strike on
Grants Options Prices 10/14/98
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3/26/90 ................... 15,344 $ 30.0625 15,344
1/28/91 ................... 12,666 24.3125 12,666
3/30/92 ................... 18,269 20.9375 18,269
3/29/93 ................... 17,917 29.6875 17,917
3/28/94 ................... 22,095 26.3750 22,095
3/27/95 ................... 21,000 28.5000 21,000
3/25/96 ................... 21,000 32.8125 15,750
3/24/97 ................... 19,500 38.8125 9,750
Companies agree that the options described in Column D are vested and
non-forfeitable and shall be exercisable by Employee without restriction until
the earlier of (i) the tenth anniversary of the grant or (ii) the third
anniversary of the termination of the term of Employee's employment under
Section 2(a), provided that (i) prior to September 27, 1998, with respect to the
March 27, 1995 option grant, the number of options exercisable as described in
Column D shall be 15,750, (ii) prior to September 25, 1998, with respect to the
March 25, 1996 option grant, the number of options exercisable as described in
Column D shall be 10,500 and (iii) prior to September 24, 1998, with respect to
the March 24, 1997 option grant, the number of options exercisable as described
in Column D shall be 4,875. In the event of an exercise of an option by Employee
prior to the termination of the term of Employee's employment under Section 2(a)
and payment of all or a portion of the gain on the option in Restricted Stock,
said Restricted Stock shall be immediately 100% vested and non-forfeitable, and
shall be distributed to Employee without restriction, on October 14, 1998.
(3) Restricted Shares. The parties acknowledge and agree that Employee
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has 16,412 shares of Restricted Stock resulting
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from his deferral of a portion of RICP awards, as of October 14, 1997.
Notwithstanding any other provisions of this Agreement, such Restricted Stock
shall be 100% vested and non-forfeitable, and distributed to Employee without
restriction, on the earlier of the termination of the term of employment
described in Section 2(a) or October 14, 1998.
(4) LTIP Rights Vested. The termination of the term of Employee's
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employment under Section 2(a) by reason of Section 7(b) shall not modify
Employee's rights under Sections 3(d)(1) through (3).
(e) Expense Reimbursement. Company will reimburse Employee for all
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reasonable and documented travel and out-of-pocket expenses incurred by Employee
while traveling on behalf of Company when such travel has been authorized in
writing by Company. Companies shall provide Employee with office space,
secretarial assistance acceptable to Employee, office equipment and supplies,
hardwired and cellular telephone service through the earlier of October 14, 1998
or the date Employee is provided an office by a subsequent employer.
(f) Severance Payment. In consideration of 30 1/2 years of employment with
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the Companies and the promises exchanged in this Agreement, and notwithstanding
any other provision of this Agreement, including without limitation, the date of
termination of the term of Employee's employment under Section 2(a), on October
14, 1998 the Companies shall deliver to Employee a check made payable to
Employee (or in the event of Employee's intervening disability or death, the
trustee of the Xxxxxxx Family Trust) in the amount of $1,966,670, less
Applicable Withholding, and its check representing the dollar equivalent of
Employee's accrued vacation hours in the Unocal vacation bank, at his date of
termination of employment.
(g) Waiver. Employee shall not be entitled to any other separation benefits
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except as specifically provided in this Section 3. Employee shall not be
eligible for any additional grants under the Long Term Incentive Plan of 1991
after the Effective Date.
4. Benefits.
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(a) Participation After Effective Date. On and after the Effective Date,
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and during the term of Employee's employment under
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Section 2(a) above, Employee shall be entitled to participate in all Benefit
Plans and fringe benefit and payroll practices of Unocal on the same terms and
conditions as would be applicable were Employee serving, during the term of
employment described in Section 2(a), as Chief Financial Officer of Unocal in
good standing and receiving as compensation the amounts described in Sections
3(b) and 3(c) of this Agreement. For purposes of the preceding sentence, "terms
and conditions" includes Employee making required elections, and Employee's
paying generally applicable employee-side contributions required by a Benefit
Plan to obtain one or more benefits under the Benefit Plan.
(b) Guaranty of Benefits by Companies. If, for any reason, Employee does
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not receive, pursuant to a Benefit Plan, at the time required by such Benefit
Plan, all or any portion of the benefit under such Benefit Plan as contemplated
by Section 4(a), the Companies shall be jointly and severally obligated to
provide the Employee the After Tax Equivalent of the benefit not then received
by the Employee pursuant to the Benefit Plan. The parties agree that the rights
and obligations created under the preceding sentence are contractual rights and
obligations between Employee and the Companies under the law of California, and
not rights and obligations under a Benefit Plan.
(C) Defined Benefit Plans.
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(1) Qualified Plan. The parties acknowledge and agree that Employee's
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accrued benefit under the Unocal Retirement Plan accrued through October 31,
1997 is $9,722.23 per month (calculated as though Employee terminated employment
on October 31, 1997), and such accrued benefit accrued through October 14, 1998
(assuming Employee's employment through October 14, 1998 and making no allowance
for anticipated increase in the IRC ss. 415 limit) shall also be $9,722.23 per
month (both expressed as a single life annuity for the life of the Employee
commencing on the first day of the first month following Employee's attainment
of age 65), and that such accrued benefits are and shall be 100% vested and
non-forfeitable, and that Employee has the right to elect to receive such
benefit or any alternative form of benefit deemed to be equivalent, and
generally available, under the Unocal Retirement Plan (with applicable spousal
consents) upon the first day of the first month immediately following Employee's
attainment of age 55 (or in the event of Employee's death prior to
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retirement, Employee's surviving spouse shall have survivor benefits, in
accordance with the terms of the Unocal Retirement Plan, derived from such
applicable accrued benefits).
(2) Non-Qualified Plans. The parties acknowledge and agree that, assuming
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the accuracy of the benefits described in Section (c)(1), Employee's aggregate
accrued benefit under the Non-Qualified Retirement Plans accrued through October
31, 1997 is $11,675.91 per month, and such accrued benefit accrued through
October 14, 1998 (assuming Employee's employment through October 14, 1998) shall
be $13,234.03 per month (both expressed as a single life annuity for the life of
the Employee commencing on the first day of the first month following Employee's
attainment of age 65), and that such accrued benefits are and shall be 100%
vested and non-forfeitable, and that Employee has the right to elect to receive
such applicable benefit or any alternative form of benefit deemed to be
equivalent, and generally available, under the Non-Qualified Retirement Plans
(with any applicable spousal consents) upon the first day of the first month
immediately following Employee's attainment of age 55 (or in the event of
Employee's death prior to retirement, Employee's surviving spouse shall have
survivor benefits in accordance with the terms of the Unocal Non-Qualified
Retirement Plans derived from such applicable accrued benefits).
(3) Assumptions in Calculating Retirement Benefits. For purposes of
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calculating Final Average Pay under the Unocal Retirement Plan and the Non
Qualified Retirement Plans, Employee shall be deemed to have received an RICP
award of $200,004 with respect to 1997, notwithstanding the actual amount of
award under Section 3(c).
(d) Special Rules. The parties agree that Employee shall have a "qualifying
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event" under COBRA (consisting of potential loss of group coverage under the
Unocal Medical and Dental Plans by reason of employment termination) at the
conclusion of the term of employment described in Section 2(a). The foregoing
sentence shall not be construed as a waiver of any rights under COBRA by
Employee, Employee's spouse or Employee's dependent children.
(e) Retiree Medical and Re-employment Options. The parties acknowledge and
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agree that Employee has the right to enroll in the Retiree Medicare Supplement
Coverage under the Unocal Medical Plan at or after attainment of age 65.
Employee shall have the option of
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returning as a consulting employee on the regular payroll of the Companies for a
period of three months and at a salary of $30,000 at any time between Employee's
55th birthday and the date Employee attains age 65. If Employee so elects to
return to employment, he shall agree to make himself available for consulting on
a substantially full-time basis. The Companies acknowledge and agree that if
Employee is employed as set forth in this subsection (e), Employee and his
eligible dependents will be eligible upon Employee's subsequent termination of
employment to participate for life in the combination of, first, the Companies'
age 55 to age 65 Retiree Medical Coverage, and thereafter in the Companies'
Retiree Medicare Supplement Coverage under the Unocal Medical Plan, as such
coverages may be amended by amendments of general application, provided that for
purposes of this Section 4(e), any such amendments adopted or effective after
October 14, 1997 shall be disregarded to the extent specifically directed at
Employee or restricting eligibility in a manner which has the effect of
defeating the purpose of this Section 4(e).
In the event Employee is unable to exercise the option described in
this Section 4(e) by reason of disability, Companies shall provide the
equivalent of such retiree medical coverage (including coordinated application
of specific and aggregate benefit limitations) in exchange for Employee's
payment of the then current employee side premiums.
(f) Qualified Defined Contribution Plans. The parties acknowledge and agree
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that Employee's account balances under the Unocal ESOP and Profit Sharing/Saving
Plan are 100% vested and non-forfeitable.
5. Confidential Information. Employee acknowledges that in the course of
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carrying out his responsibilities to Companies, he has had fiduciary
responsibilities to Companies and has had access to and has been entrusted with
the confidential and proprietary information and trade secrets of Companies
including, without limitation, information not previously disclosed to the
public regarding current and projected revenues, expenses, costs, profit margins
and any other financial and budgeting information; marketing and distribution
plans and practices; manufacturing processes, formulae, methods and facilities;
research and development; business plans, opportunities, projects and any other
business and corporate strategies; product information including reserves,
exploration and research; terms of
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contracts and other arrangements with customers suppliers, agents and employees
of Companies; confidential and sensitive information of record regarding other
employees (other than Employee's personal opinions), including information with
respect to their job descriptions, documented performance strengths and
weaknesses, and compensation; and other information not generally known
regarding the business, affairs and plans of Companies (collectively, the
"Confidential Information"). Employee acknowledges that the unauthorized use or
disclosure of Confidential Information would be detrimental to Companies and
would reasonably be anticipated to materially impair Companies' value. Employee
acknowledges and agrees that such Confidential Information is the exclusive
property of Companies and that he shall not at any time, without the prior
written consent of an authorized officer of Unocal either during his employment
by Companies or after the termination of that employment, directly or indirectly
use for himself or others, or disclose to others, any Confidential Information.
The foregoing shall not apply to information which either (i) is known to
Employee other than as a result of work performed for Companies and from some
authorized source other than Companies, (ii) is or becomes part of the public
domain, other than by Employee's direct or indirect disclosure, or (iii)
consists of explanations of his work experience that are reasonably necessary to
interview for employment. Employee's obligations under this paragraph shall
survive termination of his employment as described in Section 2(a) for a period
of two years from such termination. Employee represents he has made available to
Companies all of his files and materials taken from his Unocal office, and
Companies have had an opportunity to inspect same, and Companies acknowledge
that such files and materials contain no Confidential Information.
6. Change of Control. Employee agrees that during the period commencing on
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the Effective Date and ended two years after the termination of Employee's
employment as described in Section 2(a), Employee will not directly or
indirectly participate in or assist any person or entity in activities designed
to effectuate, or reasonably likely to result in, a change in control of Unocal
or other extraordinary transaction involving Unocal. The foregoing sentence
shall not be interpreted as preventing Employee from holding a position with an
employer where Employee is "walled off" from any activity prohibited to Employee
under this Section. Without limiting the generality of the preceding sentence,
activities prohibited by this
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paragraph 5 include activities designed to effectuate, or reasonably likely to
result in (i) a merger or consolidation involving Unocal, (ii) a sale or other
disposition of all, or a substantial portion of, Unocal's assets, (iii) any
transaction that would require a vote of Unocal's stockholders under Unocal's
Certificate of Incorporation or bylaws or under applicable law, (iv) any person
or entity (individually or as a group within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) becoming the
beneficial owner of 15% or more of the combined voting power of Unocal's
then-outstanding equity securities or (v) a change in the composition of
Unocal's Board of Directors such that, during any period of two consecutive
calendar years, Continuing Directors (as defined below) cease, for any reason,
to constitute at least a majority of the Board of Directors. For purposes of
this Agreement, "Continuing Directors" shall be the individuals who constitute
the Board of Directors at the beginning of the applicable two-year period
together with new directors whose election by the stockholders was approved by a
vote of at least two-thirds of the directors then in office who either were
directors at the beginning of the applicable two-year period or whose election
was previously so-approved. Employee acknowledges and agrees that in light of
Employee's position and history with Companies and their affiliates and the
circumstances as they exist as of the Effective Date of this Agreement, it would
be impossible for Employee to engage in any of the activities prohibited by this
paragraph 5 without making use of Confidential Information, and the prohibitions
contained in this paragraph 5 are reasonable.
7. Funding, Termination and Remedies.
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(a) Funding. At the option of the Employee, the Companies shall establish
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at City National Bank, Beverly Hills, California (the "Trustee") a "rabbi trust"
in a form materially similar to that employed by the Companies for the RICP,
adapted to the purposes of this Agreement. On such formation, the Companies will
fund such Rabbi Trust with cash in the amount equal to the then present value of
the payment described in Section 3(f) discounted at the rate of 9.5% (and with
no other discounts) as determined in good faith by Xxxxx Xxxxxx, F.S.A. of
Towers, Xxxxxx. Distribution shall be accomplished by the Trustee distributing
to Employee amounts necessary to pay the amount due under Section 3(f) above. To
the extent funds remain after satisfying the amount due Employee under 3(f), the
balance of such trust shall be paid to Company. If the amount of the trust is
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insufficient to pay said amount, Company shall pay Employee such insufficiency,
less Applicable Withholding. Employee shall bear the cost of the Trustee's fees
and any other expenses of the Rabbi Trust. The assets of the Trust shall be
invested in vehicle jointly approved by the Companies and Employee. Payments to
Employee shall be reduced by any Applicable Withholding.
(b) Termination of Employee. Employee's employment with the companies
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described in Section 2(a) shall terminate only as a result of one of the
following conditions:
(1) The termination of such employment effective October 14, 1998
pursuant to the first sentence of Section 2(a).
(2) The Employee's material breach of Employee's obligations under
Section 5 or Section 6.
(c) Death or Disability. In the event of the Employee's death or total
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disability, the entire balance of the Rabbi Trust shall be distributed to the
trustee of the Xxxxxxx Family Trust.
(d) Remedies
(1) Damages. The parties agree that the damages according to proof shall be the
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remedy at law for breaches hereunder. However, the Companies shall not be
entitled to withhold any payment or portion thereof provided under Section 3 as
an alleged offset against any such claim of damages by the Companies unless (i)
Companies have submitted the issue to arbitration under Section 12 by written
notice given in accordance with the procedures thereunder on or before September
14, 1998 and (ii) after a full evidentiary hearing, the arbitrator determines
that the Companies have such a right of offset as a matter of law and that there
has been a material breach by Employee of Section 6 hereof.
(2) Companies' Equitable Remedies. Employee acknowledges and agrees that
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full compliance with his obligations under Sections 5 and 6 are essential to the
Companies, and in the event of any breach or threatened breach by Employee of
Sections 5 or 6 Companies will sustain losses which are impossible to determine
and not fully compensable by monetary damages. Therefore, Company and/or
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Unocal shall be entitled to institute and prosecute proceedings in any court of
competent jurisdiction to enjoin any such breach or threatened breach and to
enforce the specific performance of such provisions.
(3) Employee's Equitable Remedies. Companies acknowledge and agree that
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full compliance with their obligations under this Agreement are essential to the
Employee, and in the event of any breach or threatened breach by Companies of
this Agreement, Employee will sustain losses which are impossible to determine
and not fully compensable by monetary damages. Therefore, Employee shall be
entitled to institute and prosecute proceedings in any court of competent
jurisdiction to enjoin any such breach or threatened breach and to enforce the
specific performance of such provisions.
(4) Defense of Validity. The Companies agree to defend the validity of this
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Agreement in any proceeding which threatens to make this Agreement unenforceable
in any material respect.
8. General Release by Employee. In consideration for this Agreement,
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Employee hereby releases and forever discharges Companies and their respective
predecessors, successors, partners, assigns, employees, shareholders, owners,
officers, directors, agents, attorneys, subsidiaries, divisions, and affiliates
(jointly referred to as "Employee's Released Parties") from any and all claims,
demands, causes of action, obligations, damages, attorneys' fees, costs and
liabilities of any nature whatsoever ("Claims"), whether or not now known,
suspected or asserted, which Employee may have or claim to have against the
Released Parties relating in any manner to Employee's employment with Companies
and/or the termination of such employment, other than those claims arising by
reason of Employee's rights under this Agreement and Benefit Plans of the
Companies under this Agreement, and hereby covenants not to assert any such
released Claims through a lawsuit, an administrative proceeding or otherwise.
This General Release includes, but is not limited to, claims arising under
federal, state or local laws prohibiting employment discrimination or claims
arising out of any legal restrictions on Company's rights to terminate its
employees, including without limitation the Age Discrimination in Employment Act
of 1967, Title VII of the Civil Rights Act of 1964, and the Civil Rights Act of
1991.
Except as specifically provided herein in Section 4 or elsewhere, nothing
in this Section 8 or Section 9 shall affect in any way, apply
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to, increase, or diminish, any rights which Employee has with respect to
benefits under Benefit Plans that have accrued and vested as of the Effective
Date. Nothing in this Agreement shall affect in any way, apply to, increase or
diminish, any rights which Employee may have with respect to coverage by
Companies' liability insurance policies, including directors and officers
liability coverages, or Company's or Unocal's defense or indemnification of
Employee during and after his employment with the Companies, or service as an
officer or director thereof for acts or omissions occurring during the term of
his employment with Company or the term of his service as an officer or
director.
9. General Release by Companies. In consideration for this Agreement,
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Companies hereby release and forever discharge Employee and his successors,
heirs, spouse, executors, insurers, creditors, administrators, devisees, the
trustee of the Xxxxxxx Family Trust, partners, assigns, employees, shareholders,
owners, officers, directors, agents, financial consultants (and specifically
AYCO) attorneys (and specifically, Pillsbury Madison & Sutro LLP), and
affiliates (jointly referred to as "Companies' Released Parties") from any and
all claims, demands, causes of action, obligations, damages, attorneys' fees,
costs and liabilities of any nature whatsoever ("Company Claims"), whether or
not now known, suspected or asserted, which Companies may have or claim to have
against the Companies' Released Parties relating in any manner to Employee's
employment with Companies and/or the termination of such employment (other than
Company Claims arising under this Agreement), and hereby covenants not to assert
any such released Company Claims through a lawsuit, an administrative proceeding
or otherwise.
10. Section 1542 Waiver. Companies and Employee waive all rights under
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Section 1542 of the Civil Code of California. That section reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
Notwithstanding the provisions of Section 1542 or any similar law of
any other state, and to provide a full and complete release of Employee's and
Companies' Released Parties as provided in Sections 8
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and 9 hereof, Companies and Employee expressly acknowledge that Sections 8 and 9
of this Agreement are intended to release, without limitation, Claims and
Company Claims which Companies or Employee do not know or suspect to exist in
their or his favor at the time of execution of this document, and that the
settlement agreed upon completely extinguishes all such Claims and Company
Claims.
11. Non-Disclosure of Agreement. Employee shall not disclose terms of this
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Agreement to anyone; provided, however, that Employee may disclose the terms and
text of this Agreement in confidence to his spouse, lender,attorneys, tax
advisor, financial advisor, potential employer, or consulting client, or when
required by legal or administrative proceedings. At the time of execution of
this Agreement, Company agrees that it has no knowledge of any improper
disclosure by Employee as such disclosure is referred to in this paragraph.
12. Arbitration. Except for claims for equitable or injunctive relief, the
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parties hereby agree to submit any claim or dispute arising out of the terms of
this Agreement (including exhibits) to private and confidential arbitration by a
single neutral arbitrator. Subject to the terms of this paragraph, the
arbitration proceedings shall be governed by the Commercial Arbitration Rules of
the American Arbitration Association, and shall take place in Los Angeles
County. The arbitrator shall be appointed by agreement of the parties hereto or,
if no agreement can be reached, by the American Arbitration Association pursuant
to its Rules. The decision of the arbitrator shall be final and binding on all
parties to this Agreement, and judgment thereon may be entered in any court
having jurisdiction. All costs of the arbitration proceeding or litigation to
enforce this Agreement, including reasonable attorneys' fees shall be paid to
the prevailing party by the party against whom the arbitrator or court rules.
The parties shall instruct the arbitrator to specify which party is the
prevailing party. Except for claims for equitable or injunctive relief, this
arbitration procedure is intended to be the exclusive method of resolving any
claim relating to the obligations set forth in this Agreement or otherwise
relating in any way to Employee's employment relationship with Companies.
13. Entire Agreement. This Agreement is a full and complete expression of
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the intent of the parties with respect to the subject matter of this Agreement.
No other agreement or representation,
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express or implied, has been made by either party with respect to the subject
matter of this Agreement.
14. Amendment. This Agreement may not be modified except by a written
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agreement signed by both Employee and by a Vice President of Unocal.
15. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of California without reference to the
conflicts of law provisions thereof.
16. Severability. In the event any provision of this Agreement shall
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finally be determined to be unlawful, such provision shall be deemed to be
severed from this Agreement and every other provision of this Agreement shall
remain in full force and effect. If any one or more of the provisions of this
Agreement shall for any reason be held to be excessively broad, it shall be
construed, by limiting and reducing it, so as to be enforceable to the full
extent possible under applicable law.
17. Assignment. Employee warrants and represents that he has not assigned
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or in any way transferred any right or claim related to the subject matter of
this Agreement and that he will not allow or assist in such transfer or
assignment in the future. Any purported assignment or transfer shall be deemed
void ab initio.
18. No Admission. This Agreement shall not constitute an admission by any
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Released Party of any wrongful action or inaction whatsoever.
19. Voluntariness. Employee agrees that this Agreement is understood by
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Employee and is voluntarily entered into by the Employee.
20. Beneficiary Designation. Employee may file a written beneficiary
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designation for any payments in the event of his death prior to receipt of the
amounts due under this Agreement in the form of Exhibit A. The last such
designation received by Company prior to his death shall control any such
payments.
21. Employee's Right to Review Agreement. Employee has twenty-two (22) days
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from the date of Employee's receipt of this Agreement to consider whether or not
to sign this Agreement.
22. Effective Date. This Agreement shall not be effective until eight (8)
---------------
days from the date of execution of this Agreement by Employee (the "Effective
Date"). During the seven days following his execution of this Agreement,
Employee may notify Company in writing of his revocation of this Agreement.
23. Employee's Right to Consult Counsel. Employee is advised to consult
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with Employee's attorney before deciding whether or not to sign this Agreement.
24. Parties in Interest. Except as expressly provided to the contrary
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herein, this Agreement shall be binding upon each successor to, and assign of,
the parties, and inure to the benefit of each permitted successor to, and assign
of, the parties.
25. Definitions. Capitalized terms herein shall have the meanings set forth
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below.
(a) "After Tax Equivalent" means, with respect to the value of a benefit
under a Benefit Plan that is tax free or tax deferred, the amount necessary to
replace the value of such benefit after the tax effect on Employee, assuming a
50% effective tax rate. For example, if Employee were not able to receive a tax
deferred allocation of $1,000 in a Benefit Plan that was a defined contribution
plan, the After Tax Equivalent would be $2,000 payable in taxable form to
Employee (on the assumption at least $1,000 net of taxes would be generated
which Employee could choose to deposit in a deferred annuity). Similarly, the
After Tax Equivalent of a tax deferred defined benefit future accrual would be
twice the lump sum present value of the accrual at the time the accrual would
otherwise have occurred using plan actuarial assumptions.
(b) "Applicable Withholding" means the sum of (i) required Federal, state
and local payroll and income tax withholding and (ii) withholdings for
employee-side contributions pursuant to the terms of Benefit Plans.
(c) "Benefit Plan" means all of the Unocal employee benefit plans (as
defined in Section 3(3) of ERISA), programs or fringe benefit arrangements or
payroll practices in effect at the Companies on October 14, 1997, any amendment,
modification, restatement or successor to same, and any other "employee benefit
plans" as defined in Section
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3(3) of ERISA or fringe benefit programs established by the Companies during the
term of Employee's employment described in Section 2(a) in which the Chief
Financial Officer of Unocal is eligible to participate.
(d)"COBRA" means the health care continuation provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1986.
(e) "Confidential Information" has the meaning assigned by Section 5.
(f) "Effective Date" has the meaning assigned by Section 21.
(g) "LTIP" means the Long Term Incentive Compensation Plan forming a part
of the Unocal Corporation Management Incentive Program.
(h) "Non-Qualified Retirement Plans" means the Unocal Retirement
Supplementary Compensation Plan and the Unocal Supplemental Retirement Plan for
Key Management Personnel.
(i) "RICP" means the Revised Incentive Compensation Plan forming a part of
the Unocal Corporation Management Incentive Program.
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IN WITNESS WHEREOF, this Agreement has been executed in duplicate
originals.
UNION OIL COMPANY OF CALIFORNIA EMPLOYEE
By: /s/ DENNIS P.R. CODON By: /s/ XXXX X. XXXXXXX
--------------------- -------------------
Dennis P.R. Codon Xxxx X. Xxxxxxx
----------------- ---------------
Print Name Print Name
November 14, 1997 November 14, 1997
-------------------------- --------------------------
Date Date
UNOCAL CORPORATION
By: /s/ DENNIS P.R. CODON
---------------------
Dennis P.R. Codon
-----------------
Print Name
November 14, 1997
--------------------------
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