AGREEMENT TO TENDER
THIS AGREEMENT TO TENDER, dated as of October 9, 2002 (the
"Agreement"), among Unocal Corporation, a Delaware corporation ("Unocal"), Union
Oil Company of California, a California corporation and a wholly owned
subsidiary of Unocal ("Union Oil"), Xxxx X. Xxxxxxxxx ("Xxxxxxxxx"), and each of
the other officers of Pure Resources, Inc., a Delaware corporation (the
"Company"), who are signatories to this Agreement (collectively with Xxxxxxxxx,
the "Officers").
W I T N E S S E T H:
WHEREAS, on September 5, 2002, Union Oil commenced an offer to
exchange 0.6527 of a share of common stock, par value $1.00 per share (including
the associated preferred stock purchase rights), of Unocal ("Unocal Common
Stock"), for each issued and outstanding share of common stock, par value $.01
(the "Company Common Stock") of the Company not owned by Unocal or its
subsidiaries, on the terms and conditions contained in Unocal's prospectus,
dated September 4, 2002, as amended (the "Prospectus") and in the related letter
of transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Initial Offer") and on October 2, 2002 Union Oil
amended the Initial Offer to increase the exchange ratio to 0.70 (the "Revised
Offer");
WHEREAS, as of the date hereof, each undersigned Officer owns
(beneficially and of record) the number of shares of Company Common Stock (the
"Existing Shares") and the number of options to acquire shares of Company Common
Stock as is set forth immediately beneath such Officer's name on the signature
page of this Agreement, which information the Officer acknowledges is true,
correct and complete to the best of his or her knowledge (all such Existing
Shares, together with all other shares of Company Common Stock with respect to
which the Officer has beneficial ownership as of the date of this Agreement
(other than those shares of Company Common Stock held in the Company 401K
account of such Officer to the extent that the Officer does not have authority
with respect to the disposition of those shares), and any shares of capital
stock or other voting securities of the Company, beneficial ownership of which
is directly or indirectly acquired after the date hereof, including, without
limitation, shares of Company Common Stock acquired by purchase or upon the
exercise, conversion or exchange of any option, warrant or convertible security
or otherwise, and shares or any voting securities of the Company received
pursuant to any change in the capital stock of the Company, are referred to
herein as the "Owned Shares") (for purposes of this Agreement, "beneficial
ownership" shall have the meaning set forth in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Act"), except with respect to Xxxxxxxxx,
it shall not include shares of Company Common Stock which are now owned by Union
Oil). The term "Owned Shares" shall not include (i) any shares deemed to be
beneficially owned by an Officer pursuant to Rule 13d-3(d)(1)(i)(A) of the Act
but not actually owned by such Officer, (ii) any shares of stock with respect to
which the Officer has disclaimed beneficial ownership prior to the date hereof
in the Company's proxy statement for its 2002 annual meeting of stockholders, or
(iii) any shares of Unocal Common Stock or any options to acquire shares of
Unocal Common Stock granted by Unocal or subsequently beneficially owned by an
Officer.
WHEREAS, Xxxxxxxxx is party to that certain Employment Agreement with
the Company dated December 13, 1999, as amended (the "Xxxxxxxxx Employment
Agreement") pursuant to which Xxxxxxxxx has been granted a Put Option (as
defined in the Xxxxxxxxx Employment Agreement) and each of the other Officers is
a party to a severance and put right agreement ("Severance and Put Right
Agreement") with the Company pursuant to which each has been granted a Put
Option (as defined in the respective Severance and Put Right Agreement of each);
WHEREAS, as a condition to their willingness to amend the Revised
Offer to further increase the exchange ratio, Unocal and Union Oil and each of
the Officers have agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Unocal, Union Oil and the Officers hereby agree as follows:
ARTICLE I.
TENDER OF SHARES; PUT OPTION;
AND OTHER COVENANTS OF THE OFFICERS
Section 1.1. Tender of Shares; Amendment of Revised Offer. In
consideration of the Amendment, each of the Officers shall take all actions
which he or she has the power to take in order to cause the tender, on or before
the fifth business day prior to the expiration of the Revised Offer (as amended
by the Amendment or any subsequent amendment), pursuant to the Revised Offer (as
amended by the Amendment or any subsequent amendment), all of the Existing
Shares and all other Owned Shares, whether owned or acquired prior to the
successful completion of the Revised Offer (as amended by the Amendment or any
subsequent amendment), and shall not withdraw any such tendered shares unless
this Agreement is terminated in accordance with its terms; provided that, (i)
the terms and conditions of the Amendment shall be identical to those in the
Revised Offer except for amendments which do not materially adversely affect the
Officers and (ii) Union Oil shall not acquire in the Revised Offer (as amended
by the Amendment or any subsequent amendment) any shares of Company Common Stock
which are tendered unless as a result thereof, Union Oil shall beneficially own
at least 90% of the total number of issued and outstanding shares of Company
Common Stock. Unocal and Union Oil shall take all necessary steps required to
amend the Revised Offer to further increase the exchange ratio to 0.74 (the
"Amendment") by the third business day following the date hereof. Unocal and
Union Oil hereby acknowledge that certain Officers have previously pledged
certain of their shares of Company Common Stock to persons other than the
Company or its subsidiaries (a list of such pledged shares, a list of the
agreements pursuant to which they were pledged, and the agreements pursuant to
which the pledgee agrees to tender such shares have been provided to Unocal and
Union Oil prior to the execution of this Agreement) and pursuant thereto may be
prevented from tendering such shares. Such Officers shall, however, use their
reasonable best efforts to cause such shares to be tendered.
Section 1.2. Put Option; Stock Options. In consideration of the
Amendment and notwithstanding anything to the contrary in the Xxxxxxxxx
Employment Agreement or the Severance and Put Right Agreements, each Officer
agrees that:
(a) as of the date hereof, no circumstance, event or development has
occurred or exists that would permit the Officer to exercise his or
her Put Option;
(b) from and after the date hereof until the termination of this
Agreement pursuant to Section 2.1 hereof applicable to such Officer
(the "Term"), each Officer will not exercise the Put Option with
respect to any of his or her Owned Shares, including any shares
acquired after the date hereof whether through the exercise of options
or otherwise;
(c) effective upon the completion of the Revised Offer (as amended by
the Amendment or any subsequent amendment), each Officer irrevocably
waives any right to exercise his or her Put Option and irrevocably
releases any claims or rights of action related to or arising out of
or in connection with his or her Put Option or this Agreement (other
than the enforcement thereof), whether arising or accruing before, on
or after the date hereof, against the Company, Unocal or Union Oil or
any of their respective officers, directors, affiliates,
representatives or agents;
(d) from and after the completion of the Revised Offer (as amended by
the Amendment or any subsequent amendment), the undersigned Officer's
Put Option shall have no further force or effect; and
(e) from and after the date which is two business days prior to the
date the Revised Offer (as amended by the Amendment or any subsequent
amendment) is scheduled to expire, and thereafter, for the duration of
the Term applicable to such Officer, the undersigned Officer will not
exercise any options to acquire Company Common Stock;
provided, however, that for purposes of paragraphs (c) and (d), the completion
of the Revised Offer (as amended by the Amendment or any subsequent amendment)
shall not be deemed to have occurred unless as a result thereof Unocal
beneficially owns at least 90% of the total number of issued and outstanding
shares of Company Common Stock and provided further, however, that if this
Agreement is terminated (i) pursuant to Section 2.1(iv) or (ii) following
completion of the Revised Offer (as amended by the Amendment or any subsequent
amendment) pursuant to 2.1(v) or Section 2.1(vi), then paragraphs (b), (c) and
(d) shall not apply to any options to purchase Company Common Stock which are
held by the Officer following completion of the Revised Offer (as amended by the
Amendment or any subsequent amendment) or to any shares of Company Common Stock
obtained upon an exercise of such options, which occurs following the completion
of the Revised Offer (as amended by the Amendment or any subsequent amendment),
it being agreed that in the event of a termination pursuant to Section 2.1(v) or
Section 2.1(vi), this proviso shall only apply to the Officer who shall have
been so terminated or who shall have died, respectively.
Nothing in this Agreement shall (i) prevent an Officer from exercising
options, in accordance with their terms, to acquire shares of Unocal Common
Stock received as a result of the conversion of options to acquire shares of
Company Common Stock to options to acquire shares of Unocal Common Stock
pursuant to the terms of such options and as a result of the merger described in
Section 1.3 hereof or (ii) prevent an Officer from exercising all rights of
ownership with respect to any shares of Unocal Common Stock now owned, received
in exchange for the tender of Company Common Stock or subsequently acquired
pursuant to the exercise of options to acquire shares of Unocal Common Stock.
Section 1.3. No Inconsistent Actions or Arrangements. Except as
contemplated by this Agreement and other than pursuant to those obligations and
contracts existing on the date hereof (a list of which has been provided to
Unocal and Union Oil), each of the undersigned Officers shall not, during the
Term applicable to such Officer (i) transfer (which term shall include, without
limitation, any sale, assignment, gift, pledge, hypothecation or other
disposition), or consent to any transfer of, any or all of the Owned Shares
beneficially owned by him or her or any interest therein, or create or permit to
exist any pledge, lien, security interest, mortgage, trust, charge, claim,
equity, right of first refusal, limitation on disposition, adverse claim of
ownership or use or encumbrance of any kind on the Owned Shares beneficially
owned by him or her, provided however, that each Officer may transfer such
Officer's Existing Shares pursuant to an agreement to which Unocal and the
transferee are parties, which is directly enforceable by Unocal against the
transferee to the same extent and with the same degree of enforceability from a
legal and practical standpoint as this Agreement, and provided further, that no
shares may be transferred by any Officer to the Company or its subsidiaries,
(ii) enter into any contract, option or other agreement or understanding with
respect to any transfer of any or all of the Owned Shares beneficially owned by
him or her or any interest therein, (iii) grant any proxy, power-of-attorney or
other authorization in or with respect to the Owned Shares beneficially owned by
him or her, (iv) deposit the Owned Shares beneficially owned by him or her into
a voting trust or enter into a voting agreement or arrangement with respect to
the Owned Shares beneficially owned by him or her, or (v) take any other action
that would in any way restrict, limit or interfere with the performance of his
or her obligations hereunder or the transactions contemplated hereby or by the
Revised Offer (as amended by the Amendment) or the subsequent merger to be
consummated thereafter in which all shares of Company Common Stock which are not
purchased in the Revised Offer (as amended by the Amendment or any subsequent
amendment) are converted into the right to receive 0.74 of a share of Unocal
Common Stock (the "Merger"). Nothing in this Agreement shall (i) prevent an
Officer from exercising options, in accordance with their terms, to acquire
shares of Unocal Common Stock received as a result of the conversion of options
to acquire shares of Company Common Stock to options to acquire shares of Unocal
Common Stock pursuant to the terms of such options and as a result of the Merger
or (ii) prevent an Officer from exercising all rights of ownership with respect
to any shares of Unocal Common Stock now owned, received in exchange for the
tender of Company Common Stock or subsequently acquired pursuant to the exercise
of options to acquire shares of Unocal Common Stock. As to the proviso in clause
(i) in the first sentence of this section, Unocal shall act promptly and
reasonably on any agreement presented by an Officer.
Section 1.4. Stop Transfer. The undersigned Officer shall not request
that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated inter-
est representing any of the Owned Shares, unless such transfer is made to
perform his or her obligations under Section 1.1 hereof.
ARTICLE II.
MISCELLANEOUS
Section 2.1. Termination. This Agreement shall terminate and be of no
further force and effect (i) upon the written mutual consent of the parties
hereto; (ii) upon the expiration or termination of the Revised Offer (as amended
by the Amendment or any subsequent amendment) without any shares of Company
Common Stock being accepted for exchange; (iii) if the Revised Offer (as amended
by the Amendment or any subsequent Amendment) has not been completed prior to
January 10, 2003 (the "Offer Expiration Date"); provided however, that the Offer
Expiration Date shall be extended one day for each day the offer cannot be
completed because of the action of any court; (iv) if the Merger has not been
completed prior to the earlier of (A) 80 days after shares of Company Common
Stock have been acquired by Union Oil pursuant to the Revised Offer (as amended
by the Amendment or any subsequent amendment) or (B) February 15, 2003 (the
"Merger Expiration Date"); (v) with respect to an individual Officer, upon the
termination, prior to the Merger, of such Officer's employment by the Company
without Cause, as defined in the Xxxxxxxxx Employment Agreement or Severance and
Put Agreement, as applicable, provided that termination of this Agreement
pursuant to this clause (v) shall not occur if such termination is ordered by
any of the Officers without the express prior written consent of Unocal; or (vi)
with respect to an individual Officer, 80 days after the death of such Officer,
provided that the Merger has not been completed on or before such 80th day. No
such termination of this Agreement shall relieve any party hereto from any
liability for any breach of this Agreement prior to termination.
Section 2.2. Notice of Tender Status. Promptly following the tender of
all of the Officers' Owned Shares, Unocal or Union Oil shall use all reasonable
efforts to cause Mellon Investor Services to provide by facsimile at
000-000-0000 (attention: Xxxxx Xxxxxxx) current information regarding the number
of shares tendered in the Revised Offer (as amended by the Amendment or any
subsequent amendment) in the format and at the frequency received by Unocal or
Union Oil. Each Officer hereby agrees to keep such information confidential.
Section 2.3. Specific Performance. Each party acknowledges that if
such party fails to perform any of its obligations under this Agreement
immediate and irreparable harm or injury would be caused to the others for which
money damages would not be an adequate remedy. In such event, the Officers,
Unocal and Union Oil agree that the other parties hereto shall have the right,
in addition to any other rights each such party may have, to specific
performance of this Agreement. Accordingly, if any party should institute an
action or proceeding seeking specific enforcement of the provisions hereof, the
breaching party hereby waives the claim or defense such party has an adequate
remedy at law and hereby agrees not to assert in any such action or proceeding
the claim or defense that such a remedy at law exists. Each party further agrees
to waive any requirements for the securing or posting of any bond in connection
with obtaining any such equitable relief.
Section 2.4. Entire Agreement; No Third-Party Beneficiaries. This
Agreement constitutes the entire agreement and supersedes any and all other
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof, and this Agreement is
intended to confer rights or remedies hereunder only to the parties hereto;
provided, however, the rights and remedies under this Agreement shall inure to
the benefit of and be enforceable by and against the Officers' personal or legal
representatives, executors, administrators, successors, and heirs. Other than as
to rights associated with the Put Option or otherwise expressly addressed in
this Agreement, nothing herein shall operate to limit, waive, create, modify,
enhance or expand any rights an Officer has or obligations the Company has under
any agreement between the Company and such Officer, including, without
limitation, the Xxxxxxxxx Employment Agreement, each Officer's Severance and Put
Right Agreement and all option and indemnification agreements. The Officers
represent and warrant that the foregoing agreements referred to in the preceding
sentence as presently in effect are identical in substance to the agreements
filed by the Company with the United States Securities and Exchange Commission
or have been provided to Unocal and Union Oil, and other than as specifically
provided herein all such agreements shall remain in full force and effect. In
the event this Agreement is terminated in accordance with its terms no amendment
shall have been deemed to have been made to any such agreements. Each Officer
represents and warrants that since August 20, 2002, neither Pure nor any of its
subsidiaries has transferred into trust, escrow or similar arrangement any
amounts required to fund any existing benefits (other than actions taken in the
ordinary course, consistent with past practice, to fund benefit plans existing
prior to August 20, 2002), or any employment or severance agreements with such
Officer or has entered into or otherwise effected with such Officer any
additional benefit, employment, severance or similar agreements, arrangements or
plans or entered into or amended any agreements, arrangements or plans so as to
provide for increased or accelerated benefits to such Officer as a result of or
in connection with the transactions contemplated by the Offer or the Merger or
otherwise modified any existing option, employment or other benefit agreement.
The parties agree that nothing contained herein shall be construed as
contributing in any way to the establishment of the value or the method of
calculation of any Officer's Put Option.
Section 2.5. Governing Law; Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed entirely within that
State. The parties hereto irrevocably and unconditionally consent to submit to
the exclusive jurisdiction of the courts of the State of Delaware for any
actions, suits or proceedings arising out of or relating to this Agreement and
the transactions contemplated hereby (and the parties agree not to commence any
action, suit or proceeding relating thereto except in such courts). The parties
hereto irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of Delaware, and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 2.6. Stock Option Exercise. Unocal shall process exercises of
stock options to acquire Unocal Common Stock by the Officers on the same basis
and as expeditiously as it processes those of its regular employees.
Section 2.7. Acquisition Obligation. Unocal and Union Oil agree that
notwithstanding anything to the contrary herein, Union Oil shall not acquire in
the Revised Offer (as amended by the Amendment and any subsequent amendment) any
shares of Company Common Stock which are tendered unless as a result thereof, it
shall beneficially own at least 90% of the total issued and outstanding shares
of Company Common Stock.
Section 2.8. Merger. The parties hereto shall use reasonable best
efforts to consummate the Merger, subject to injunction or other court order, as
soon as reasonably practicable following the successful completion of the
Revised Offer (as amended by the Amendment and any subsequent amendment).
Section 2.9. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, Unocal, Union Oil and the Officers have caused
this Agreement to be executed as of the date first written above.
UNOCAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
--------------------------------------------
Title: Vice President, Corporate Development
--------------------------------------------
UNION OIL COMPANY OF CALIFORNIA
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
--------------------------------------------
Title: Vice President, Corporate Development
--------------------------------------------
XXXX X. XXXXXXXXX
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------------------------
Existing Shares: 1,917,293
Options to Purchase
Shares of Company
Common Stock: 2,063,076
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
--------------------------
Existing Shares: 461,177
Options to Purchase
Shares of Company
Common Stock: 332,672
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
--------------------------
Existing Shares: 1,391
Options to Purchase
Shares of Company
Common Stock: 314,397
Xxxx Xxxxxxxx
/s/ Xxxx Xxxxxxxx
--------------------------
Existing Shares: 101
Options to Purchase
Shares of Company
Common Stock: 245,711
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx
----------------------------
Existing Shares: 114,974
Options to Purchase
Shares of Company
Common Stock: 217,867
Xxx X. Xxxxxxx
/s/ Xxx X. Xxxxxxx
----------------------------
Existing Shares: 113,226
Options to Purchase
Shares of Company
Common Stock: 217,798
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
----------------------------
Existing Shares: 123,378
Options to Purchase
Shares of Company
Common Stock: 217,898
Xxxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxxxxx
----------------------------
Existing Shares: 42,609
Options to Purchase
Shares of Company
Common Stock: 166,176
Xxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxx
----------------------------
Existing Shares: 22,666
Options to Purchase
Shares of Company
Common Stock: 165,241
Xxxxx Xxxxxxxxxx
/s/ Xxxxx Xxxxxxxxxx
----------------------------
Existing Shares: 144
Options to Purchase
Shares of Company
Common Stock: 159,748
