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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
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PENNZOIL COMPANY
(Name of Subject Company)
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UNION PACIFIC RESOURCES GROUP INC.
RESOURCES NEWCO, INC.
(Bidders)
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COMMON STOCK, PAR VALUE $0.83 1/3 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
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709903 10 8
(CUSIP Number of Class of Securities)
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JOSEPH A. LASALA, JR., ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
UNION PACIFIC RESOURCES GROUP INC.
801 CHERRY STREET
FORT WORTH, TEXAS 76102
TELEPHONE: (817) 877-6000
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications on Behalf of Bidders)
Copies To:
HOWARD L. SHECTER, ESQ. PAUL T. SCHNELL, ESQ.
MORGAN, LEWIS & BOCKIUS LLP SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
101 PARK AVENUE 919 THIRD AVENUE
NEW YORK, NY 10178-0060 NEW YORK, NY 10022-3897
TELEPHONE: (212) 309-6384 TELEPHONE: (212) 735-3000
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CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$2,107,912,800 $421,600
* For purposes of calculating the filing fee only. This calculation assumes the
purchase of 25,094,200 shares of Common Stock, par value $0.83 1/3 per share,
of Pennzoil Company for $84.00 net per share in cash.
** 1/50 of 1% of Transaction Valuation.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: Not applicable. FILING PARTY: Not applicable
FORM OR REGISTRATION NO.: Not applicable. DATE FILED: Not applicable
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CUSIP NO. 709903 10 8 14D-1
1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Persons
UNION PACIFIC RESOURCES GROUP INC. (13-2647483)
2) Check the Appropriate Box if a Member of a Group*
(a) / /
(b) / /
3) SEC Use Only
4) Sources of Funds*
BK, WC
5) Check Box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(e) or 2(f) / /
6) Citizenship or Place of Organization
UTAH
7) Aggregate Amount Beneficially Owned by Each Reporting Person
87,600 SHARES
8) Check Box if the Aggregate Amount in Row 7 Excludes Certain Shares* / /
9) Percent of Class Represented by Amount in Row 7
.19%
10) Type of Reporting Person*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
2
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CUSIP NO. 709903 10 8 14D-1
1) Name of Reporting Persons
S.S. or I.R.S. Identification No. of Above Persons
RESOURCES NEWCO, INC. (I.R.S. IDENTIFICATION NUMBER PENDING)
2) Check the Appropriate Box if a Member of a Group*
(a) / /
(b) / /
3) SEC Use Only
4) Sources of Funds*
BK, AF
5) Check Box if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(e) or 2(f) / /
6) Citizenship or Place of Organization
DELAWARE
7) Aggregate Amount Beneficially Owned by Each Reporting Person
100 SHARES
8) Check Box if the Aggregate Amount in Row 7 Excludes Certain Shares* / /
9) Percent of Class Represented by Amount in Row 7
LESS THAN .1%
10) Type of Reporting Person*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
3
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This Tender Offer Statement on Schedule 14D-1 (the 'Schedule 14D-1')
relates to the offer by Union Pacific Resources Group Inc., a Utah corporation
('UPR'), and Resources Newco, Inc., a Delaware corporation and a wholly owned
subsidiary of UPR (the 'Purchaser', and together with UPR, the 'Bidders'), to
purchase up to 25,094,200 shares of Common Stock, par value $0.83 1/3 per share
(the 'Shares'), of Pennzoil Company, a Delaware corporation ('Pennzoil'), or
such greater number of Shares as equals 50.1% of the Shares outstanding on a
fully-diluted basis, in each case together with the associated preferred stock
purchase rights (the 'Rights') issued pursuant to the Rights Agreement, dated as
of October 28, 1994 (the 'Rights Agreement'), between Pennzoil and Chemical
Bank, as Rights Agent, at a price of $84.00 per Share (and associated Right),
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated June 23, 1997 (the
'Offer to Purchase'), and the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
'Offer'), which are annexed to and filed with this Schedule 14D-1 as Exhibits
(a)(1) and (a)(2), respectively. According to Pennzoil's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997 (the 'Pennzoil 10-Q'), at April
30, 1997, 46,951,151 Shares were outstanding.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Pennzoil Company, a Delaware
corporation. According to the Pennzoil 10-Q, the address of Pennzoil's principal
executive office is Pennzoil Place, P.O. Box 2967, Houston, Texas 77252-2967.
(b) The information set forth in the Introduction of the Offer to Purchase
annexed hereto as Exhibit (a)(1) is incorporated herein by reference. The class
of securities to which this Statement relates is the common stock, par value
$0.83 1/3 per share, of Pennzoil, including the Rights. The information set
forth in the Introduction and Section 1 of the Offer to Purchase is incorporated
herein by reference.
(c) The information set forth in Section 6 ('Price Range of the Shares;
Dividends on the Shares') of the Offer to Purchase is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) This statement is being filed by Union Pacific Resources Group
Inc., a Utah corporation, and Resources Newco, Inc., a Delaware corporation and
a wholly owned subsidiary of UPR. Information regarding each of the Bidders'
principal businesses and addresses of principal business offices is set forth in
Section 8 ('Certain Information Concerning Purchaser and UPR') of the Offer to
Purchase and is incorporated herein by reference. The name, business address,
present principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and the citizenship of each
director and executive officer of each of the Bidders, and the name, principal
business and address of any corporation or other organization in which such
occupations, positions, offices and employments are or were carried on are set
forth in Schedule I of the Offer to Purchase and are incorporated herein by
reference.
(e)-(f) Neither of the Bidders nor, to the best knowledge of the Bidders,
any of the directors or executive officers of either of the Bidders, has during
the last five years (i) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction, Section 8 ('Certain
Information Concerning Purchaser and UPR'), Section 10 ('Background of the
Offer; Contacts with Pennzoil') and Section 11 ('Purpose of the Offer; Plans for
Pennzoil') of the Offer to Purchase is incorporated herein by reference.
4
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ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ('Source and Amount of
Funds') of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction and Sections 10
('Background of the Offer; Contacts with Pennzoil') and 11 ('Purpose of the
Offer; Plans for Pennzoil') of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in Section 13 ('Effect of the Offer on
the Market for the Shares; Exchange Listing; Exchange Act Registration; Margin
Regulations') of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Section 8 ('Certain
Information Concerning Purchaser and UPR') of the Offer to Purchase is
incorporated herein by reference. Such information with respect to the Bidders
is current through the date hereof.
(b) The information set forth in Schedule II of the Offer to Purchase is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Sections 8 ('Certain
Information Concerning Purchaser and UPR'), 10 ('Background of the Offer;
Contacts with Pennzoil') and 11 ('Purpose of the Offer; Plans for Pennzoil') of
the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ('Fees and
Expenses') of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ('Certain Information Concerning
Purchaser and UPR') of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b)-(c) The information set forth in the Introduction and Sections 11
('Purpose of the Offer; Plans for Pennzoil') and 15 ('Certain Legal Matters') of
the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Sections 13 ('Effect of the Offer on the
Market for Shares; Exchange Listing; Exchange Act Registration; Margin
Regulations') and 15 ('Certain Legal Matters') of the Offer to Purchase is
incorporated herein by reference.
(e) The information set forth in Section 15 ('Certain Legal Matters') of
the Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, to the extent not otherwise incorporated herein by reference,
copies of which are attached hereto as Exhibits (a)(1) and (a)(2), is
incorporated herein by reference.
5
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase, dated June 23, 1997.
(2) Letter of Transmittal with respect to the Shares and Rights, together
with the Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(3) Notice of Guaranteed Delivery.
(4) Letter, dated June 23, 1997, from Smith Barney Inc. to brokers, dealers,
banks, trust companies and other nominees.
(5) Form of letters to be sent by brokers, dealers, banks, trust companies
and other nominees.
(6) Press Release, dated June 23, 1997 relating to the commencement of the
Offer.
(7) Form of summary advertisement, dated June 23, 1997.
(b) None.
(c) None.
(d) Opinion of Morgan, Lewis & Bockius LLP.
(e) Not applicable.
(f) None.
6
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SIGNATURES
After due inquiry and to the best of our knowledge and belief, we certify
that the information set forth in this statement is true, complete and correct.
UNION PACIFIC RESOURCES GROUP INC.
By: /s/ JACK L. MESSMAN
Name: Jack L. Messman
Title: Chairman and Chief Executive
Officer
RESOURCES NEWCO, INC.
By: /s/ JACK L. MESSMAN
Name: Jack L. Messman
Title: President
Dated: June 23, 1997
7
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
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(a)(1) Offer to Purchase, dated June 23, 1997.
(2) Letter of Transmittal with respect to the Shares and Rights,
together with the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(3) Notice of Guaranteed Delivery.
(4) Letter, dated June 23, 1997, from Smith Barney Inc. to brokers,
dealers, banks, trust companies and nominees.
(5) Form of letter to be sent by brokers, dealers, banks, trust
companies and nominees to their clients.
(6) Press Release, dated June 23, 1997 relating to the commencement
of the Offer.
(7) Form of Summary Advertisement, dated June 23, 1997.
(b) None.
(c) None.
(d) Opinion of Morgan, Lewis & Bockius LLP.
(e) Not applicable.
(f) None.
8
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OFFER TO PURCHASE FOR CASH
UP TO
25,094,200 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
PENNZOIL COMPANY
at
$84.00 NET PER SHARE
by
RESOURCES NEWCO, INC.,
a wholly owned subsidiary of
UNION PACIFIC RESOURCES GROUP INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, JULY 21, 1997, UNLESS THE OFFER IS EXTENDED TO A
LATER DATE AND TIME (THE 'EXPIRATION DATE'). SHARES WHICH ARE TENDERED PURSUANT
TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR,
WHERE APPLICABLE, WAIVER OF THE FOLLOWING CONDITIONS: (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES
WHICH, TOGETHER WITH SHARES OWNED BY RESOURCES NEWCO, INC. ('PURCHASER') AND ITS
AFFILIATES, WILL CONSTITUTE AT LEAST A MAJORITY OF THE TOTAL NUMBER OF
OUTSTANDING SHARES ON A FULLY DILUTED BASIS AS OF THE DATE THE SHARES ARE
ACCEPTED FOR PAYMENT BY PURCHASER PURSUANT TO THE OFFER, AND (II) PURCHASER
BEING SATISFIED IN ITS SOLE DISCRETION THAT THE BOARD OF DIRECTORS OF PENNZOIL
HAS IRREVOCABLY TAKEN ALL SUCH ACTION SO THAT (A) THE ACQUISITION OF SHARES
PURSUANT TO THE OFFER AND THE PROPOSED MERGER DESCRIBED HEREIN HAVE BEEN
APPROVED PURSUANT TO SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW OR THE
PROVISIONS OF SECTION 203 ARE OTHERWISE INAPPLICABLE TO THE ACQUISITION OF
SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER, (B) THE ACQUISITION OF
SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER HAVE BEEN APPROVED PURSUANT
TO ARTICLE SIXTH OF PENNZOIL'S RESTATED CERTIFICATE OF INCORPORATION, (C) THE
PREFERRED STOCK PURCHASE RIGHTS ISSUED BY PENNZOIL HAVE BEEN REDEEMED OR
PURCHASER IS SATISFIED IN ITS SOLE DISCRETION THAT THE RIGHTS HAVE BEEN
INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER,
AND (D) EITHER (1) PURCHASER'S DESIGNEES HAVE BEEN ELECTED TO THE BOARD OF
DIRECTORS OF PENNZOIL SO THAT AFTER SUCH ELECTION SUCH DESIGNEES CONSTITUTE A
MAJORITY OF THE BOARD OF DIRECTORS OF PENNZOIL, OR (2) PENNZOIL HAS ENTERED INTO
A MUTUALLY SATISFACTORY DEFINITIVE MERGER AGREEMENT WITH UNION PACIFIC RESOURCES
GROUP INC. ('UPR') AND PURCHASER TO PROVIDE FOR THE ACQUISITION OF PENNZOIL
PURSUANT TO THE OFFER AND THE PROPOSED MERGER. THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 14.
THE OFFER IS NOT CONDITIONED ON PURCHASER OBTAINING FINANCING.
IMPORTANT
UPR AND PURCHASER ARE CURRENTLY REVIEWING THEIR OPTIONS WITH RESPECT TO THE
OFFER AND MAY CONSIDER, AMONG OTHER THINGS, CHANGES TO THE MATERIAL TERMS OF THE
OFFER. IN ADDITION, UPR AND PURCHASER INTEND TO CONTINUE TO SEEK TO NEGOTIATE
WITH PENNZOIL WITH RESPECT TO THE ACQUISITION OF PENNZOIL BY UPR OR PURCHASER.
PURCHASER RESERVES THE RIGHT TO AMEND THE OFFER (INCLUDING AMENDING THE NUMBER
OF SHARES TO BE PURCHASED, THE PURCHASE PRICE AND THE PROPOSED SECOND-STEP
MERGER CONSIDERATION) UPON ENTERING INTO A SECOND-STEP MERGER AGREEMENT WITH
PENNZOIL OR TO NEGOTIATE A MERGER AGREEMENT WITH PENNZOIL NOT INVOLVING A TENDER
OFFER PURSUANT TO WHICH PURCHASER WOULD TERMINATE THE OFFER AND THE SHARES
WOULD, UPON CONSUMMATION OF SUCH MERGER, BE CONVERTED INTO CASH, UPR COMMON
STOCK AND/OR OTHER SECURITIES IN SUCH AMOUNTS AS ARE NEGOTIATED BY UPR AND
PENNZOIL.
Any Pennzoil stockholder desiring to tender all or any portion of such
stockholder's Shares (and the associated Rights) should either (i) complete and
sign the Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal, have such stockholder's signature
thereon guaranteed if required by Instruction 1 to the Letter of Transmittal,
mail or deliver the Letter of Transmittal (or such facsimile), or, in the case
of a book-entry transfer effected pursuant to the procedure set forth in Section
2, an Agent's Message (as defined herein), and any other required documents to
the Depositary and either deliver the certificates for such Shares and, if
separate, the certificate(s) representing the associated Rights to the
Depositary along with the Letter of Transmittal (or facsimile) or deliver such
Shares (and Rights, if applicable) pursuant to the procedure for book-entry
transfer set forth in Section 2 or (ii) request such stockholder's broker,
dealer, bank, trust company or other nominee to effect the transaction for such
stockholder. A Pennzoil stockholder having Shares (and, if applicable, Rights)
registered in the name of a broker, dealer, bank, trust company or other nominee
must contact such broker, dealer, bank, trust company or other nominee if such
stockholder desires to tender such Shares (and, if applicable, Rights). Unless
the Board Action Condition (as defined herein) with respect to the Rights is
satisfied, stockholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of Shares.
If a Pennzoil stockholder desires to tender Shares and Rights and such
stockholder's certificates for Shares (or Rights, if applicable) are not
immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis, or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such stockholder's tender may
be effected by following the procedure for guaranteed delivery set forth in
Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. A Pennzoil stockholder may also contact brokers, dealers,
commercial banks, trust companies or other nominees for assistance concerning
the Offer.
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The Dealer Manager for the Offer is:
SMITH BARNEY INC.
June 23, 1997
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TABLE OF CONTENTS
PAGE
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INTRODUCTION.............................................................. 1
THE TENDER OFFER.......................................................... 5
1. Terms of the Offer.................................................... 5
2. Procedure for Tendering Shares and Rights............................. 6
3. Withdrawal Rights..................................................... 10
4. Acceptance for Payment and Payment for Shares......................... 11
5. Certain Federal Income Tax Consequences............................... 12
6. Price Range of the Shares; Dividends on the Shares.................... 15
7. Certain Information Concerning Pennzoil............................... 15
8. Certain Information Concerning Purchaser and UPR...................... 18
9. Source and Amount of Funds............................................ 21
10. Background of the Offer; Contacts with Pennzoil....................... 21
11. Purpose of the Offer; Plans for Pennzoil.............................. 32
12. Dividends and Distributions........................................... 36
13. Effect of the Offer on the Market for the Shares; Exchange Listing;
Exchange Act Registration; Margin Regulations......................... 37
14. Certain Conditions of the Offer....................................... 38
15. Certain Legal Matters................................................. 41
16. Fees and Expenses..................................................... 44
17. Miscellaneous......................................................... 45
Schedule I -- Directors and Executive Officers of UPR and Purchaser....... I-1
Schedule II -- Transactions in Shares During the Past 60 Days by UPR
and Purchaser.............................................. II-1
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To the Holders of Common Stock
(including the associated Preferred Stock Purchase Rights) of
Pennzoil Company:
INTRODUCTION
Resources Newco, Inc., a Delaware corporation ('Purchaser') which is a
wholly owned subsidiary of Union Pacific Resources Group Inc., a Utah
corporation ('UPR'), hereby offers to purchase up to 25,094,200 shares of Common
Stock, par value $0.83 1/3 per share (the 'Shares'), of Pennzoil Company, a
Delaware corporation ('Pennzoil'), or such greater number of Shares as equals
50.1% of the Shares outstanding on a fully diluted basis as of the Expiration
Date (hereinafter defined) (such number of Shares being the 'Maximum Number'),
in each case together with (unless and until Purchaser declares that the Board
Action Condition (as defined below) is satisfied) the associated preferred stock
purchase rights (the 'Rights') issued pursuant to the Rights Agreement, dated as
of October 28, 1994, as it may from time to time be supplemented or amended (the
'Rights Agreement'), between Pennzoil and Chemical Bank, as Rights Agent (the
'Rights Agent'), at a price of $84.00 per Share (and associated Right), net to
the seller in cash, without interest thereon (the 'Offer Price'), upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the 'Offer'). All
references herein to Rights shall include all benefits that may inure to holders
of the Rights pursuant to the Rights Agreement and, unless the context otherwise
requires, all references herein to Shares shall include the Rights.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes in connection with the tender of Shares pursuant to
the Offer. Purchaser will pay all fees and expenses of Smith Barney Inc. ('Smith
Barney'), which is acting as Dealer Manager (the 'Dealer Manager'), The Bank of
New York, which is acting as the Depositary (the 'Depositary'), and Morrow &
Co., Inc., which is acting as Information Agent (the 'Information Agent'),
incurred in connection with the Offer. See Section 16.
The purpose of the Offer is to acquire a majority of the Shares as the
first step in a negotiated acquisition of the entire equity interest in
Pennzoil. UPR is seeking to negotiate with Pennzoil a definitive acquisition
agreement (the 'Proposed Merger Agreement') pursuant to which Pennzoil would, as
soon as practicable following consummation of the Offer, consummate a merger
(the 'Proposed Merger') with Purchaser or another direct or indirect wholly
owned subsidiary of UPR. At the effective time of the Proposed Merger, each
Share that is issued and outstanding immediately prior to the effective time
(other than Shares held in the treasury of Pennzoil or owned by UPR, Purchaser
or any direct or indirect wholly owned subsidiary of UPR) would be converted
into a number of shares of common stock, no par value, of UPR ('UPR Common
Stock'), determined, within a pricing collar of $25.00 to $30.00, by dividing
$84.00 by the average of the closing prices of a share of UPR Common Stock for
the twenty consecutive trading days ending five days prior to the meeting of
Pennzoil stockholders called for the purpose of voting on the Proposed Merger.
In the event that such average of the closing prices during such twenty day
period is less than $25.00 or greater than $30.00, the exchange ratio will be
fixed at 3.36 shares of UPR Common Stock or 2.80 shares of UPR Common Stock,
respectively. See Section 11. To date, Pennzoil has refused to enter into
negotiations with UPR regarding the Proposed Merger. There can be no assurance
that such negotiations will occur, or if such negotiations occur, as to the
outcome thereof. UPR and Purchaser are exploring ways to encourage the Board of
Directors of Pennzoil (the 'Pennzoil Board') to permit Pennzoil's stockholders
to participate in the Offer and the Proposed Merger. These may include a
solicitation of proxies at Pennzoil's 1998 and 1999 annual meetings of
stockholders. See Section 10 and Section 11.
The Offer is conditioned on, among other things, either Purchaser's
designees constituting a majority of the Pennzoil Board or Pennzoil having
entered into a mutually acceptable definitive merger agreement with UPR and
Purchaser to provide for the acquisition of Pennzoil pursuant to the Offer and
the Proposed Merger. See Section 14. BY TENDERING SHARES IN THE OFFER,
PENNZOIL'S STOCKHOLDERS EFFECTIVELY WILL EXPRESS TO THE PENNZOIL BOARD THAT THEY
WISH TO BE ABLE TO
<PAGE>
ACCEPT THE OFFER AND TO APPROVE THE PROPOSED MERGER OR A SIMILAR TRANSACTION
WITH UPR AND ITS AFFILIATES.
Certain Federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THIS OFFER IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF OFFERS TO BUY
ANY SECURITIES WHICH MAY BE ISSUED IN ANY MERGER OR SIMILAR BUSINESS COMBINATION
INVOLVING PURCHASER, UPR OR PENNZOIL. THE ISSUANCE OF SUCH SECURITIES WOULD HAVE
TO BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE 'SECURITIES
ACT'), AND SUCH SECURITIES WOULD BE OFFERED ONLY BY MEANS OF A PROSPECTUS
COMPLYING WITH THE REQUIREMENTS OF THE SECURITIES ACT.
The Offer is subject to the fulfillment of a number of conditions,
including, without limitation, the following:
Minimum Tender Condition. THE OFFER IS CONDITIONED UPON THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1) AT LEAST THAT NUMBER OF SHARES (THE 'MINIMUM NUMBER OF SHARES')
WHICH, TOGETHER WITH SHARES OWNED BY PURCHASER AND ITS AFFILIATES, WILL
CONSTITUTE AT LEAST A MAJORITY OF THE TOTAL NUMBER OF ALL OUTSTANDING SHARES ON
A FULLY DILUTED BASIS (AS THOUGH ALL OPTIONS OR OTHER SECURITIES CONVERTIBLE
INTO OR EXERCISABLE OR EXCHANGEABLE FOR SHARES HAD BEEN SO CONVERTED, EXERCISED
OR EXCHANGED) ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT, WITHOUT GIVING EFFECT
TO ANY DILUTION THAT MIGHT ARISE FROM EXERCISE OF THE RIGHTS (THE 'MINIMUM
TENDER CONDITION'). Purchaser reserves the right (subject to the applicable
rules and regulations of the Securities and Exchange Commission (the
'Commission')), which it presently has no intention of exercising, to waive or
reduce the Minimum Tender Condition and to elect to purchase, pursuant to the
Offer, fewer than the Minimum Number of Shares. See Sections 1 and 14.
According to Pennzoil's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997 (the 'Pennzoil 10-Q'), as of April 30, 1997 there
were 46,951,151 Shares issued and outstanding. In addition, according to
Pennzoil's Annual Report on Form 10-K for the fiscal year ended December 31,
1996 (the 'Pennzoil 10-K'), as of December 31, 1996 there were 3,311,921 Shares
subject to options outstanding under Pennzoil's stock option plans. UPR and
Purchaser currently own an aggregate of 87,600 Shares which were recently
acquired in open market purchases. See Schedule II. Based on the foregoing and
assuming that no options were granted or expired after December 31, 1996 and no
options were exercised after December 31, 1996 through April 30, 1997, there
would be 50,263,072 Shares outstanding on a fully diluted basis and the Minimum
Number of Shares would be 25,043,937. However, the actual Minimum Number of
Shares will depend on the facts as they exist on the date of purchase.
Board Action Condition. THE OFFER IS CONDITIONED UPON PURCHASER BEING
SATISFIED IN ITS SOLE DISCRETION THAT THE PENNZOIL BOARD HAS IRREVOCABLY TAKEN
ALL SUCH ACTION SO THAT (A) THE ACQUISITION OF SHARES PURSUANT TO THE OFFER AND
THE PROPOSED MERGER HAVE BEEN APPROVED PURSUANT TO SECTION 203 ('SECTION 203')
OF THE DELAWARE GENERAL CORPORATION LAW (THE 'DELAWARE LAW') OR THE PROVISIONS
OF SECTION 203 ARE OTHERWISE INAPPLICABLE TO THE ACQUISITION OF SHARES PURSUANT
TO THE OFFER AND THE PROPOSED MERGER, (B) THE ACQUISITION OF SHARES PURSUANT TO
THE OFFER AND THE PROPOSED MERGER HAVE BEEN APPROVED PURSUANT TO ARTICLE SIXTH
OF PENNZOIL'S RESTATED CERTIFICATE OF INCORPORATION, (C) THE RIGHTS HAVE BEEN
REDEEMED OR PURCHASER IS SATISFIED IN ITS SOLE DISCRETION THAT THE RIGHTS HAVE
BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE PROPOSED
MERGER, AND (D) EITHER (1) PURCHASER'S DESIGNEES HAVE BEEN ELECTED TO THE
PENNZOIL BOARD SO THAT AFTER SUCH ELECTION, SUCH DESIGNEES CONSTITUTE A MAJORITY
OF THE PENNZOIL BOARD, OR (2) PENNZOIL HAS ENTERED INTO A MUTUALLY SATISFACTORY
DEFINITIVE MERGER AGREEMENT WITH UPR AND PURCHASER TO PROVIDE FOR THE
ACQUISITION OF PENNZOIL PURSUANT TO THE OFFER AND THE PROPOSED MERGER DESCRIBED
HEREIN (COLLECTIVELY, THE 'BOARD ACTION CONDITION').
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Section 203, in general, prohibits a Delaware corporation such as Pennzoil
from engaging in a 'Business Combination' (defined as a variety of transactions,
including mergers, as set forth below) with an 'Interested Stockholder' (defined
generally as a person that is the beneficial owner of 15% or more of a
corporation's outstanding voting stock) for a period of three years following
the date that such person became an Interested Stockholder unless (a) prior to
the date such person became an Interested Stockholder, the board of directors of
the corporation approved either the Business Combination or the transaction that
resulted in the stockholder becoming an Interested Stockholder, (b) upon
consummation of the transaction that resulted in the stockholder becoming an
Interested Stockholder, the Interested Stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding stock held by directors who are also officers of the
corporation and employee stock ownership plans that do not provide employees
with the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer or (c) on or subsequent to
the date such person became an Interested Stockholder, the Business Combination
is approved by the board of directors of the corporation and authorized at a
meeting of stockholders, and not by written consent, by the affirmative vote of
the holders of at least 66 2/3% of the outstanding voting stock of the
corporation not owned by the Interested Stockholder. See Section 15.
Under Article Sixth of Pennzoil's Restated Certificate of Incorporation,
the vote of holders of 80% of the voting stock of Pennzoil is required for
approval of, with certain exceptions, a merger or consolidation of Pennzoil with
or into another corporation, a sale or lease of all or substantially all the
assets of Pennzoil to another corporation, person or entity and, under certain
conditions, a sale or lease to Pennzoil or any subsidiary of Pennzoil of assets
in exchange for voting securities of Pennzoil, in each case where the other
party to the transaction is a beneficial owner, directly or indirectly, of 5% or
more of the outstanding shares of any class or series of voting stock of
Pennzoil. In addition, for any transaction to be effected for which the
foregoing 80% vote is required, it is also required that such transaction be
approved by a majority of the outstanding voting stock of Pennzoil, exclusive of
the voting stock beneficially owned by the party whose interest in the
transaction and stock ownership in Pennzoil give rise to the requirement of the
80% vote. Any amendments to Pennzoil's Restated Certificate of Incorporation
which would amend the foregoing requirements require the same affirmative votes.
The Rights Agreement was filed with and the Rights are described in
Pennzoil's Current Report on Form 8-K dated October 28, 1994 (the 'Pennzoil
Rights 8-K'), and a summary of that description is provided below and in Section
11.
The Rights Agreement provides that, until the close of business on the
Distribution Date (as defined in Section 11), the Rights will be evidenced by
the certificates for Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), the surrender for transfer of any certificates for
Shares will also constitute the surrender for transfer of the Rights associated
with the Shares represented by such certificates. The Rights Agreement further
provides that, as soon as practicable following the Distribution Date, separate
certificates representing the Rights are to be mailed by Pennzoil or the Rights
Agent to holders of record of Shares as of the close of business on the
Distribution Date.
The Rights Agreement provides that, at any time until ten days after the
first date of a public announcement of the occurrence of a Flip-In Event (as
defined in Section 11), the Pennzoil Board may redeem the Rights in whole, but
not in part, at a price of $.01 per Right, payable, at the option of Pennzoil,
in cash, Shares or such other consideration as the Pennzoil Board may determine.
Based on publicly available information, Purchaser believes that, as of
June 23, 1997, the Rights were not exercisable, certificates for Rights had not
been issued and the Rights were evidenced by the certificates for Shares.
Purchaser believes that, as a result of the commencement of the Offer on June
23, 1997, the Distribution Date may occur as early as July 7, 1997, unless prior
to such date the Pennzoil Board redeems the Rights, amends the Rights Agreement
to make the Rights inapplicable to the Offer or delays the Distribution Date.
UNLESS THE BOARD ACTION CONDITION WITH RESPECT TO THE RIGHTS IS SATISFIED,
STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN
ORDER TO EFFECT A VALID TENDER OF SHARES IN ACCORDANCE WITH THE PROCEDURES SET
FORTH IN SECTION 2. UNLESS THE DISTRIBUTION DATE OCCURS, A TENDER OF SHARES WILL
ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS.
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Article Fifth of the Restated Certificate of Incorporation of Pennzoil
provides that the number of directors of Pennzoil shall be not less than three
nor more than 13 as specified from time to time in the By-laws of Pennzoil. The
Restated Certificate of Incorporation provides that the Board shall be divided
into three classes of directors, with the classes to be as nearly equal in
number of directors as possible. One class of directors is elected each year for
a three-year term and the stockholders are entitled to cumulative voting in the
election of directors. The Restated Certificate of Incorporation and Pennzoil's
By-laws provide that no director shall be removed from office by vote or other
action of the Pennzoil stockholders except for cause. In addition, the Restated
Certificate of Incorporation purports to provide that newly created
directorships resulting from any increase in the authorized number of directors
or other vacancies in the Board of Directors may be filled by a majority vote of
the remaining directors. Pennzoil's Restated Certificate of Incorporation also
provides that no action required or permitted to be taken at any annual or
special meeting of stockholders of Pennzoil may be taken without a meeting, and
the power of stockholders to act by written consent is specifically denied.
Pennzoil's By-laws provide that special meetings of stockholders may be called
only by the Pennzoil Board, the Chairman of the Board, the Executive Committee
of the Pennzoil Board, the Chairman of the Executive Committee of the Pennzoil
Board or the President of Pennzoil. As a result of the classified Board and
related provisions, Purchaser may be unable to elect a majority of directors to
the Pennzoil Board until the second annual meeting of stockholders of Pennzoil
following consummation of the Offer even if Purchaser acquires a majority of the
outstanding Shares in the Offer. Since the Delaware Law requires board approval
for a merger, the Proposed Merger may be delayed unless the Pennzoil Board
agrees to approve the Proposed Merger Agreement and, upon consummation of the
Offer, agrees to elect to the Pennzoil Board designees of Purchaser so that such
designees constitute a majority of the Pennzoil Board. See Sections 1, 10 and
11.
UPR and Purchaser are hereby requesting that the Pennzoil Board take such
action as is necessary to satisfy the Board Action Condition in order to give
Pennzoil stockholders the opportunity to decide for themselves whether they wish
to take advantage of the Offer and the Proposed Merger by tendering their Shares
in the Offer.
Purchaser presently intends to extend the Offer from time to time until the
Board Action Condition is satisfied or Purchaser determines, in its sole
discretion, that such condition is not reasonably likely to be satisfied under
then current circumstances. Although UPR has sought to enter into negotiations
with Pennzoil with respect to the Proposed Merger and intends to continue to
pursue such negotiations, there can be no assurances that such negotiations will
occur or, if such negotiations occur, as to the outcome thereof.
UPR and Purchaser have commenced litigation against Pennzoil and the
Pennzoil Board in the Chancery Court of Delaware seeking, among other things, an
order compelling the Pennzoil Board to redeem the Rights or render the Rights
Agreement inapplicable to the Offer and the Proposed Merger, and to compel the
Pennzoil Board to approve the Offer and the Proposed Merger for purposes of
Section 203 and for purposes of Article Sixth of the Pennzoil Restated
Certificate of Incorporation, all on the grounds that the failure to do so would
constitute a breach of the Pennzoil Board's fiduciary obligations to Pennzoil
stockholders under Delaware law. UPR and Purchaser have also commenced
litigation against Pennzoil in the United States District Court for the Northern
District of Texas seeking a declaratory judgment that the disclosure documents
which have been filed with the Commission by UPR and Purchaser in connection
with the Offer comply fully with all applicable provisions of law. Purchaser and
UPR have also commenced an action in United States District Court for the Middle
District of Louisiana seeking a declaratory judgment that a Louisiana state
takeover statute as applied to any Shares purchased pursuant to the Offer is
unconstitutional and an injunction against enforcement of such statute in
connection with the Offer.
Certain other conditions to the Offer are described in Section 14.
Purchaser reserves the right (but shall not be obligated) to waive any or all
such conditions. See Sections 1, 10, 11, 14 and 15.
THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for the Maximum Number of
Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn in accordance with Section 3. The term 'Expiration Date' means 12:00
Midnight, New York City time, on Monday, July 21, 1997, unless and until
Purchaser, in its sole discretion, shall have extended the period of time during
which the Offer is open, in which event the term 'Expiration Date' shall mean
the latest time and date at which the Offer, as so extended by Purchaser, will
expire.
Consummation of the Offer is conditioned upon, among other things,
satisfaction of the Minimum Tender Condition and the Board Action Condition. If
any or all of such conditions are not satisfied or any or all of the other
events set forth in Section 14 shall have occurred or shall be determined by
Purchaser to have occurred prior to the Expiration Date, Purchaser reserves the
right (but shall not be obligated) to (i) decline to purchase any or all of the
Shares tendered and terminate the Offer, and return all tendered Shares to
tendering stockholders, (ii) waive or reduce the Minimum Tender Condition or
waive or reduce any or all other conditions and, subject to complying with
applicable rules and regulations of the Commission, purchase all Shares validly
tendered, or (iii) extend the Offer and, subject to the right of stockholders to
withdraw Shares until the Expiration Date, retain the Shares which have been
tendered during the period or periods for which the Offer is extended.
Upon the terms and subject to the conditions of the Offer, if more than the
Maximum Number of Shares shall be validly tendered and not withdrawn prior to
the Expiration Date, Purchaser will, upon the terms and subject to the
conditions of the Offer, purchase the Maximum Number of Shares on a pro rata
basis (with adjustments to avoid purchases of fractional Shares) based upon the
number of Shares validly tendered and not withdrawn prior to the Expiration
Date. Because of the difficulty of determining the precise number of Shares
properly tendered and not withdrawn, if proration is required Purchaser does not
expect to be able to announce the final proration factor until approximately
seven New York Stock Exchange ('NYSE') trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as promptly
as practicable after the Expiration Date. Stockholders of Pennzoil may obtain
such preliminary information from the Information Agent and may be able to
obtain such information from their brokers. Purchaser will not pay for any
Shares accepted for payment pursuant to the Offer until the final proration
factor is known.
Purchaser expressly reserves the right, in its sole discretion, at any time
and from time to time, to extend for any reason the period of time during which
the Offer is open, including the occurrence of any of the events specified in
Section 14, by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the rights of a tendering
stockholder to withdraw its Shares. See Section 3. Under no circumstances will
interest be paid on the purchase price for tendered Shares, whether or not
Purchaser exercises its right to extend the Offer.
Subject to the applicable regulations of the Commission, Purchaser also
expressly reserves the right, in its sole discretion at any time and from time
to time, (i) to delay acceptance for payment of, or, regardless of whether such
Shares were theretofore accepted for payment, payment for, any Shares pending
receipt of any regulatory approval specified in Section 15 or in order to comply
in whole or in part with any other applicable law, (ii) to terminate the Offer
and not accept for payment any Shares if any of the conditions referred to in
Section 14 has not been satisfied or upon the occurrence of any of the events
specified in Section 14 and (iii) to waive any condition or otherwise amend the
Offer in any respect by giving oral or written notice of such delay,
termination, waiver or amendment to the Depositary and by making a public
announcement thereof.
Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities Exchange
Act of 1934, as amended (the 'Exchange Act'), requires Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer, and (ii) Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of the preceding paragraph), any Shares upon
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<PAGE>
the occurrence of any of the events specified in Section 14 without extending
the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d)
and 14e-1 under the Exchange Act, which require that material changes in the
information published, sent or given in connection with the Offer be promptly
disseminated to stockholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which Purchaser may choose to
make any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. Purchaser reserves the right (but
shall not be obligated) to accept payment for more than the Maximum Number of
Shares pursuant to the Offer. Purchaser has no present intention of exercising
such right. If a number of additional Shares in excess of two percent of the
outstanding Shares is to be accepted for payment, and, at the time notice of
Purchaser's decision to accept for payment such additional Shares is first
published, sent or given to holders of Shares, the Offer is scheduled to expire
at any time earlier than the tenth business day from the date that such notice
is so published, sent or given, the Offer will be extended until the expiration
of such period of ten business days.
If, prior to the Expiration Date, Purchaser should decide to increase or
decrease the number of Shares being sought or to increase or decrease the
consideration being offered in the Offer, such increase or decrease in the
number of Shares being sought or such increase or decrease in the consideration
being offered will be applicable to all of Pennzoil's stockholders whose Shares
are accepted for payment pursuant to the Offer and, if at the time notice of any
such increase or decrease in the number of Shares being sought or such increase
or decrease in the consideration being offered is first published, sent or given
to holders of such Shares, the Offer is scheduled to expire at any time earlier
than the period ending on the tenth business day from and including the date
that such notice is first so published, sent or given, the Offer will be
extended at least until the expiration of such ten business day period. For
purposes of the Offer, a 'business day' means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from 12:01 a.m.
through 12:00 Midnight, New York City time.
Requests are being made to Pennzoil pursuant to Rule 14d-5 of the Exchange
Act and Section 220 of the Delaware Law for the use of Pennzoil's stockholder
lists and security position listings for the purpose of disseminating the Offer
to holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares, and
will be furnished to brokers, dealers, banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists, or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares by Purchaser following receipt of such lists or listings from Pennzoil,
or by Pennzoil if it so elects.
2. PROCEDURE FOR TENDERING SHARES AND RIGHTS.
Valid Tender. For a stockholder to validly tender Shares and Rights
pursuant to the Offer, either (a) a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message (as
defined below), and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date and either (i) certificates for tendered
Shares and Rights must be received by the Depositary at one of such addresses or
(ii) such Shares and Rights must be delivered pursuant to the procedures for
book-entry transfer set forth below (and a Book-Entry Confirmation (as defined
below) must be received by the Depositary), in each case prior to the Expiration
Date, or (b) the tendering stockholder must comply with the guaranteed delivery
procedures set forth below.
UNLESS THE BOARD ACTION CONDITION WITH RESPECT TO THE RIGHTS IS SATISFIED,
STOCKHOLDERS WILL BE REQUIRED TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN
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ORDER TO EFFECT A VALID TENDER OF SHARES. ACCORDINGLY, STOCKHOLDERS WHO SELL
THEIR RIGHTS SEPARATELY FROM THEIR SHARES AND DO NOT OTHERWISE ACQUIRE RIGHTS
MAY NOT BE ABLE TO SATISFY THE REQUIREMENTS OF THE OFFER FOR A VALID TENDER OF
SHARES. As further described in Section 11, the Rights Agreement provides that
until the close of business on the Distribution Date, the Rights will be
evidenced by the certificates for the Shares and may be transferred with and
only with the Shares. The Rights Agreement further provides that, as soon as
practicable following the Distribution Date, separate certificates representing
the Rights are to be mailed by Pennzoil or the Rights Agent to holders of record
of Shares as of the close of business on the Distribution Date. Purchaser
believes that, as a result of the commencement of the Offer, the Distribution
Date may occur as early as July 7, 1997, unless prior to such date the Pennzoil
Board redeems the Rights, amends the Rights Agreement to make the Rights
inapplicable to the Offer or delays the Distribution Date. UNLESS THE
DISTRIBUTION DATE OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF
THE ASSOCIATED RIGHTS.
If the Distribution Date occurs and separate certificates representing the
Rights are distributed by Pennzoil or the Rights Agent to holders of Shares
prior to the time a holder's Shares are tendered pursuant to the Offer,
certificates representing a number of Rights equal to the number of Shares
tendered must be delivered to the Depositary, or, if available, a Book-Entry
Confirmation received by the Depositary with respect thereto, in order for such
Shares to be validly tendered. If the Distribution Date occurs and separate
certificates representing the Rights are not distributed prior to the time
Shares are tendered pursuant to the Offer, the Rights may be tendered prior to a
stockholder receiving the certificates for the Rights by use of the guaranteed
delivery procedure described below. A tender of Shares constitutes an agreement
by the tendering stockholder to deliver certificates representing a number of
Rights equal to the number of Shares tendered pursuant to the Offer to the
Depositary prior to expiration of the period permitted by such guaranteed
delivery procedures for delivery of certificates for, or a Book-Entry
Confirmation with respect to, the Rights (the 'Rights Delivery Period').
However, after expiration of the Rights Delivery Period, Purchaser may elect to
reject as invalid a tender of Shares with respect to which certificates for, or
a Book-Entry Confirmation with respect to, an equal number of Rights have not
been received by the Depositary. Nevertheless, Purchaser will be entitled to
accept for payment Shares tendered by a stockholder prior to receipt of the
certificates for the Rights required to be tendered with such Shares, or a Book-
Entry Confirmation with respect to such Rights, and either (a) subject to
complying with applicable rules and regulations of the Commission, withhold
payment for such Shares pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights or (b) make payment for Shares
accepted for payment pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights in reliance upon the agreement of a
tendering stockholder to deliver the Rights and such guaranteed delivery
procedures. Any determination by Purchaser to make payment for Shares in
reliance upon such agreement and such guaranteed delivery procedures or, after
expiration of the Rights Delivery Period, to reject a tender as invalid will be
made in the sole and absolute discretion of Purchaser.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at The Depository Trust Company and Philadelphia Depository Trust
Company (each, a 'Book-Entry Transfer Facility' and collectively, the
'Book-Entry Transfer Facilities') for purposes of the Offer within two business
days after the date of this Offer to Purchase. Any financial institution that is
a participant in any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by causing a Book-Entry Transfer Facility to
transfer such Shares into the Depositary's account in accordance with such
Book-Entry Transfer Facility's procedures for such transfer. However, although
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message, and any other required
documents, must, in any case, be transmitted to, and received by, the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedures described below. If the Distribution Date occurs,
the Depositary will also make a request to establish an account with respect to
the Rights at each of the Book-Entry Transfer Facilities, but no assurance can
be given that book-entry delivery of the Rights will be available. If book-entry
delivery of the Rights is available, the foregoing book-entry transfer
procedures will also apply to the Rights. If book-entry delivery of the Rights
is not available and the Distribution Date occurs, a tendering stockholder will
be required to tender the Rights by means of physical delivery to the Depositary
of certificates for the Rights (in which event references in this Offer to
Purchase to Book-Entry Confirmations with respect to
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the Rights will be inapplicable). The confirmation of a book-entry transfer of
the Shares or the Rights into the Depositary's account at a Book-Entry Transfer
Facility as described above is referred to herein as a 'Book-Entry
Confirmation.' DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term 'Agent's Message' means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF THE SHARES, THE RIGHTS, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section 2, includes any participant
in any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of the Shares and the
Rights tendered therewith and such registered holder has not completed either
the box entitled 'Special Delivery Instructions' or the box entitled 'Special
Payment Instructions' on the Letter of Transmittal or (b) if such Shares and
Rights are tendered for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an 'Eligible Institution'). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instructions 1 and 5 to the Letter of Transmittal. If the
certificates for the Shares or the Rights are registered in the name of a person
other than the signer of the Letter of Transmittal, or if payment is to be made
or certificates for the Shares or the Rights not tendered or not accepted for
payment are to be returned to a person other than the registered holder of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender the Shares and the
Rights pursuant to the Offer and such stockholder's certificates for the Shares
or the Rights are not immediately available (including because certificates for
Rights have not yet been distributed by Pennzoil or the Rights Agent) or the
procedure for book-entry transfer cannot be completed on a timely basis or time
will not permit all required documents to reach the Depositary prior to the
Expiration Date, such stockholder's tender may be effected if all of the
following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares and/or Rights, in
proper form for transfer (or a Book-Entry Confirmation with respect to all
such Shares and/or Rights), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents are received by the Depositary
within (a) in the case of the Shares, three trading days after the date of
execution of such Notice of Guaranteed Delivery or, (b) in the case of the
Rights, a period ending on the later of (1) three trading days
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after the date of execution of such Notice of Guaranteed Delivery or (2)
three business days (as defined above) after the date certificates for the
Rights are distributed to stockholders by Pennzoil or the Rights Agent. A
'trading day' is any day on which the NYSE is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares and, if the Distribution Date occurs,
certificates for (or a timely Book-Entry Confirmation, if available, with
respect to) the associated Rights (unless Purchaser elects to make payment for
such Shares pending receipt of the certificates for, or a Book-Entry
Confirmation with respect to, such Rights as described above), (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for the Shares (or the Rights) or Book-Entry
Confirmations with respect to the Shares (or the Rights, if available) are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID BY PURCHASER ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If the Board Action Condition with respect to the Rights is satisfied, the
guaranteed delivery procedures with respect to certificates for the Rights and
the requirement for the tender of the Rights will no longer apply.
The valid tender of the Shares and, if applicable, the Rights pursuant to
one of the procedures described above will constitute a binding agreement
between the tendering stockholder and Purchaser upon the terms and subject to
the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of Purchaser as such
stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares and the Rights tendered
by such stockholder and accepted for payment by Purchaser and with respect to
any and all other Shares, Rights or other securities or rights issued or
issuable in respect of such Shares and Rights on or after June 23, 1997. All
such proxies will be considered coupled with an interest in the tendered Shares
and Rights. Such appointment will be effective when, and only to the extent
that, Purchaser accepts for payment the Shares tendered by such stockholder as
provided herein. Upon such appointment, all prior powers of attorney, proxies
and consents given by such stockholder with respect to such Shares, Rights or
other securities or rights will, without further action, be revoked and no
subsequent powers of attorney, proxies, consents or revocations may be given
(and, if given, will not be deemed effective). The designees of Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
such Shares, Rights and other securities or rights in respect of any annual or
special meeting of Pennzoil's stockholders, or any adjournment or postponement
thereof, actions by written consent in lieu of any such meeting or otherwise, as
they in their sole discretion deem proper. Purchaser reserves the right to
require that, in order for the Shares and the Rights to be deemed validly
tendered, immediately upon Purchaser's acceptance for payment of such Shares and
Rights, Purchaser must be able to exercise full voting, consent and other rights
with respect to such Shares, Rights and other securities or rights, including
voting at any meeting of Pennzoil's stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
or Rights will be determined by Purchaser, in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any or all tenders determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to
waive any defect or irregularity in the tender of any Shares or Rights of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares or Rights will be
deemed to have been validly made until all defects or irregularities relating
thereto have been cured or waived. None of Purchaser, UPR, the Depositary, the
Information Agent, the Dealer Manager or any other person will be under
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any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
Backup Withholding. In order to avoid 'backup withholding' of Federal
income tax on payments of cash pursuant to the Offer, a stockholder tendering
Shares and Rights in the Offer must, unless an exemption applies, provide the
Depositary with such stockholder's correct taxpayer identification number
('TIN') on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide such stockholder's correct TIN or
fails to provide the certifications described above, the Internal Revenue
Service (the 'IRS') may impose a penalty on such stockholder and payment of cash
to such stockholder pursuant to the Offer may be subject to backup withholding
of 31%. All stockholders surrendering Shares pursuant to the Offer should
complete and sign the main signature form and the Substitute Form W-9 included
as part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to Purchaser and the
Depositary). Certain stockholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
In order to avoid backup withholding, noncorporate foreign stockholders should
complete and sign the main signature form and a Form W-8, Certificate of Foreign
Status, a copy of which may be obtained from the Depositary. See Instruction 9
to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 3, tenders of the Shares and
the Rights are irrevocable. The Shares and the Rights tendered pursuant to the
Offer may be withdrawn pursuant to the procedures set forth below at any time
prior to the Expiration Date and, unless theretofore accepted for payment and
paid for by Purchaser pursuant to the Offer, may also be withdrawn at any time
after August 21, 1997, or such later time as may apply if the Offer is extended.
The Shares or the Rights may not be withdrawn unless the associated Rights or
Shares, as the case may be, are also withdrawn. A withdrawal of the Shares or
the Rights will also constitute a withdrawal of the associated Rights or Shares,
as the case may be.
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Shares or is unable to accept Shares for payment pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 3.
Any such delay will be by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares and the Rights to
be withdrawn, the number of the Shares and the Rights to be withdrawn and the
name of the registered holder of the Shares and the Rights to be withdrawn, if
different from the name of the person who tendered the Shares and the Rights. If
certificates for the Shares or the Rights have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares or Rights have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If the Shares or the Rights have been
delivered pursuant to the procedure for book-entry transfer as set forth in
Section 2, any notice of withdrawal must also specify the name and number of the
account at the appropriate Book-Entry Transfer Facility to be credited with the
withdrawn Shares or Rights and otherwise comply with such Book-Entry Transfer
Facility's procedures. Withdrawals of tenders of the Shares and the Rights may
not be rescinded, and any Shares and Rights properly withdrawn will thereafter
be deemed not validly tendered for purposes of the Offer. However, withdrawn
Shares and Rights may be retendered by again following one of the procedures
described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser in its sole discretion,
which determination will be final and binding. None of Purchaser, UPR, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be under any duty to
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give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for the Maximum
Number of Shares validly tendered prior to the Expiration Date and not properly
withdrawn in accordance with Section 3 promptly after the later to occur of the
Expiration Date and the satisfaction or waiver of the conditions set forth in
Section 14. All questions as to the satisfaction of such terms and conditions
will be determined by Purchaser in its sole discretion, which determination will
be final and binding. See Sections 1 and 14.
Purchaser expressly reserves the right, in its sole discretion and subject
to the rules of the Commission, to delay acceptance for payment of or payment
for Shares in order to comply in whole or in part with any applicable law,
including, without limitation, the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the 'HSR Act'). Any such delays will be effected in
compliance with Rule 14e-1(c) under the Exchange Act (relating to a bidder's
obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer). UPR expects to file a
Notification and Report Form with respect to the Offer under the HSR Act on June
24, 1997. In such event, the waiting period under the HSR Act with respect to
the Offer will expire at 11:59 p.m., New York City time, on July 24, 1997,
unless early termination of the waiting period is granted. However, the
Antitrust Division of the Department of Justice (the 'Antitrust Division') or
the Federal Trade Commission (the 'FTC') may extend the waiting period by
requesting additional information or documentary material from UPR. If such a
request is made, such waiting period will expire at 11:59 p.m., New York City
time, on the 10th day after substantial compliance by UPR with such request. See
Section 15 hereof for additional information concerning the HSR Act and the
applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation with respect to) such Shares and, if the
Distribution Date occurs, certificates for (or a timely Book-Entry Confirmation,
if available, with respect to) the associated Rights (unless Purchaser elects to
make payment for such Shares pending receipt of the certificates for, or a
Book-Entry Confirmation with respect to, such Rights as described in Section 2),
(b) a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and (c) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other stockholder pursuant to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. Payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering stockholders. Under no circumstances will
interest be paid on the purchase price of the Shares to be paid by Purchaser,
regardless of any extension of the Offer or any delay in making such payment.
Upon the deposit of funds with the Depositary for the purpose of making payments
to tendering stockholders, Purchaser's obligation to make such payment shall be
satisfied and tendering stockholders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance for
payment of Shares pursuant to the Offer. Purchaser will pay any stock transfer
taxes incident to the transfer to it of validly tendered Shares, except as
otherwise provided in Instruction 6 of the Letter of Transmittal, as well as any
charges and expenses of the Depositary and the Information Agent.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer (including proration due to tenders of
Shares pursuant to the Offer in excess of the Maximum Number of Shares), or if
Share Certificates are submitted evidencing more Shares than are tendered, Share
Certificates evidencing unpurchased Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility
pursuant
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to the procedure set forth in Section 3, such Shares will be credited to an
account maintained at such Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
If, prior to the Expiration Date, Purchaser shall increase the
consideration offered to holders of Shares pursuant to the Offer, such
consideration will be paid to all holders whose Shares are purchased in the
Offer.
If Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act), the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn except to the extent tendering stockholders
are entitled to exercise, and duly exercise, withdrawal rights as described in
Section 3.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to UPR, or to one or more direct or indirect wholly owned
subsidiaries of UPR, the right to purchase Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following discussion is a summary of certain material federal income
tax consequences of the Offer and Proposed Merger to holders of Shares who hold
the Shares as capital assets. The discussion set forth below is for general
information only and may not apply to particular categories of holders of Shares
subject to special treatment under the Internal Revenue Code of 1986, as amended
(the 'Code'). The discussion is based on the Code as in effect on the date of
this Offer to Purchase, as well as regulations promulgated thereunder and
existing administrative interpretations and court decisions.
In the opinion of Morgan, Lewis & Bockius LLP, counsel for UPR, exchanges
of Shares for cash and shares of UPR Common Stock pursuant to the Offer and the
Proposed Merger should, if the Proposed Merger is consummated, be treated for
federal income tax purposes as an exchange pursuant to a plan of
'reorganization' within the meaning of Section 368(a) of the Code. This opinion
is based on counsel's view that the Offer and the Proposed Merger should be
treated by the IRS or the courts as a single integrated transaction (with
exchanges pursuant to the Offer treated as part of the Proposed Merger) and on
certain assumptions, including that not more than 60% of the presently
outstanding Shares (including Shares for which cash is received in lieu of
fractional shares of UPR Common Stock in the Proposed Merger) are exchanged for
cash pursuant to the Offer and the Proposed Merger, and that dissenters' rights
are not available in the Proposed Merger. There can be no assurance that the
Proposed Merger will be consummated, that the foregoing assumptions will be
fulfilled, or that exchanges pursuant to the Offer or the Proposed Merger or
both will qualify as being pursuant to a plan of reorganization.
Tax Consequences if the Offer and the Proposed Merger Qualify as a
Reorganization. If the Offer and the Proposed Merger (if consummated) together
qualify as a reorganization as defined in the Code, exchanges of Shares for cash
or shares of UPR Common Stock or both pursuant to the Offer or the Proposed
Merger, or both, will have the following federal income tax consequences
(subject to the discussion below regarding the possibility that a Pennzoil
stockholder may be treated under Section 318 of the Code as owning Shares that
are actually owned by another person).
(a) No gain or loss will be recognized (except in connection with any
cash received in lieu of fractional shares) by Pennzoil stockholders who
exchange all of their Shares solely for shares of UPR Common Stock in the
Proposed Merger (even if a related party under Section 318 receives cash in
the Offer). Any such stockholder's adjusted basis for the shares of UPR
Common Stock received pursuant to the Proposed Merger will be the same as
the adjusted basis of such Shares surrendered in exchange therefor
(possibly with an adjustment thereto if such related party receives cash),
and the holding period of such shares of UPR Common Stock will include the
period during which the Shares exchanged therefor were held by such
Pennzoil stockholder, provided that such Shares are capital assets in the
hands of the Pennzoil stockholder.
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(b) The receipt of cash by Pennzoil stockholders who, pursuant to the
Offer, exchange all of their Shares solely for cash will result in gain or
loss to such holder measured by the difference between the basis of the
Shares surrendered and the cash received, and, if the Shares are capital
assets in the hands of such Pennzoil stockholder, except as discussed
below, such gain or loss will constitute capital gain or loss subject to
the provisions and limitations of the Code.
(c) No loss will be recognized (except in connection with any cash
received in lieu of fractional shares) by Pennzoil stockholders who,
pursuant to the Offer or the Proposed Merger, or both, receive cash for a
portion of their Shares and shares of UPR Common Stock for the balance of
their Shares, and any such stockholder's gain, if any, will be recognized
to the extent of the cash received. If the Shares are capital assets in the
hands of such holder, such recognized gain will constitute either capital
gain subject to the provisions and limitations of the Code or, as discussed
below, a dividend. Such stockholder's adjusted basis for the shares of UPR
Common Stock received pursuant to the Proposed Merger will be the same as
the adjusted basis of the Shares surrendered in exchange therefor,
decreased by the amount of cash received and increased by the amount of
gain or dividend income recognized, and the holding period of such shares
of UPR Common Stock will include the period during which the Shares
exchanged therefor were held by such Pennzoil stockholder, provided that
such Shares are capital assets in the hands of the Pennzoil stockholder.
(d) Where the only cash received by a Pennzoil stockholder is received
in lieu of a fractional share of UPR Common Stock, such cash will generally
be treated as received in exchange for such fractional share of UPR Common
Stock and not as a dividend, and gain or loss recognized as a result of the
receipt of such cash will be capital gain or loss if the fractional share
would have constituted a capital asset in the hands of the Pennzoil
stockholder.
(e) No gain or loss will be recognized to UPR, Purchaser or Pennzoil
as a result of the Proposed Merger.
As noted above, Pennzoil stockholders who receive both cash (other than
cash solely in lieu of fractional shares) and shares of UPR Common Stock
pursuant to the Offer or the Proposed Merger, or both, may recognize capital
gain, or under Section 356(a)(2) of the Code, a dividend. For purposes of
Section 356, a stockholder may be deemed under Section 318 of the Code to own
the Shares that are owned or deemed to be owned by related individuals or
entities, or that are subject to being acquired by such stockholder's (or
another person's) exercise of an option or conversion right. Also, Pennzoil
stockholders who receive cash pursuant to the Offer, but who own or are deemed
to own constructively Shares that are exchanged for shares of UPR Common Stock
in the Proposed Merger (or that already own or are deemed to own UPR Common
Stock before the Proposed Merger), may be subject to Section 302 (including the
constructive ownership rules of Section 318) of the Code for purposes of
determining whether part or all of the cash received by them is to be taxed as a
dividend.
For purposes of determining whether the cash received pursuant to the Offer
and/or the Proposed Merger will be treated as a dividend for federal income tax
purposes, a stockholder of Pennzoil will be treated as if such stockholder first
exchanged all of such stockholder's Shares solely for UPR Common Stock and then
UPR immediately redeemed a portion of such UPR Common Stock in exchange for the
cash such stockholder actually received.
In general, the determination as to whether the cash received will be
treated as received pursuant to a sale or exchange (generating capital gain) or
a dividend distribution (generating ordinary income) depends upon whether and to
what extent there is a reduction in the stockholder's deemed percentage stock
ownership of UPR. A stockholder of Pennzoil who exchanges such stockholder's
Shares for a combination of UPR Common Stock and cash will recognize capital
gain rather than dividend income if the deemed redemption by UPR (described in
the preceding paragraph) is either (a) 'substantially disproportionate' with
respect to such stockholder or (b) is 'not essentially equivalent to a
dividend.'
A stockholder of Pennzoil will satisfy the 'substantially disproportionate'
test if (i) the percentage of the outstanding stock of UPR actually and
constructively owned by such stockholder immediately after the deemed redemption
by UPR as a result of the Offer, Proposed Merger, or otherwise, is less than 80%
of (ii) the percentage of the outstanding stock of UPR that such Pennzoil
stockholder is deemed actually and constructively to have owned immediately
before the deemed redemption by UPR.
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Pennzoil stockholders should be aware that they may fail to meet the '80%
test' described above because of, among other things, the possibility of
proration of Shares accepted for payment in the Offer. For example, even if a
stockholder elects, pursuant to the Offer to exchange all of the Shares actually
and constructively owned by him for cash, not all of the Shares tendered may be
accepted for payment in the Offer as a result of proration. The Shares not
accepted for payment in the Offer could be converted into shares of UPR Common
Stock in the Proposed Merger. See Section 1.
Whether the deemed exchange and subsequent redemption transaction are 'not
essentially equivalent to a dividend' with respect to a stockholder of Pennzoil
will depend upon such stockholder's particular circumstances. In order to reach
such conclusion, it must be determined that the transaction results in a
'meaningful reduction' in such Pennzoil stockholder's deemed percentage stock
ownership of UPR. In determining whether a reduction in a Pennzoil stockholder's
deemed percentage stock ownership has occurred, the percentage described in
clause (i) of the second preceding paragraph should be compared to the
percentage described in clause (ii) of the paragraph. Even if a stockholder of
Pennzoil does not satisfy the 'substantially disproportionate' test described
above, the IRS has ruled that a minority stockholder in a publicly held
corporation whose relative stock interest is minimal and who exercises no
control with respect to corporate affairs is considered to have a 'meaningful
reduction' if such stockholder has a reduction in such stockholder's percentage
stock ownership.
In most circumstances, therefore, gain recognized by a stockholder of
Pennzoil who exchanges such stockholder's Shares for a combination of UPR Common
Stock and cash will not be ordinary income but will be capital gain, which will
constitute long-term capital gain if the holding period for such Shares was
greater than one year as of the date of the exchange. Therefore, UPR intends to
treat cash payments pursuant to the Offer and the Proposed Merger as proceeds
arising from the sale or exchange of Shares, rather than as dividends, for
federal income tax reporting purposes. Stockholders of Pennzoil who receive such
cash should, however, consult their own tax advisors to determine the proper
treatment of such cash payments in their individual situations (including the
impact, if any, of Pennzoil or UPR stock owned by persons related to such
Pennzoil stockholder).
Tax Consequences if the Offer and the Proposed Merger Do Not Qualify as a
Reorganization. If the Proposed Merger is not consummated, or if the Proposed
Merger is consummated but the Offer is treated for federal income tax purposes
as a separate transaction, or if the Offer and the Proposed Merger together are
determined not to qualify as a reorganization as described above, exchanges
pursuant to the Offer will be taxable transactions for federal income tax
purposes. In that event, each exchanging Pennzoil stockholder will recognize
gain or loss for federal income tax purposes measured by the difference between
such stockholder's tax basis in such stockholder's Shares exchanged in the
Offer, and the amount of cash received by such stockholder. Such gain or loss
will be capital gain or loss if the Shares are held as a capital asset and will
be long-term gain or loss if such Shares are held for more than one year at the
time of the exchange.
Even if the Offer is a separate transaction, the Proposed Merger itself
should be considered a reorganization under Section 368 of the Code. In that
event, a Pennzoil stockholder receiving shares of UPR Common Stock or cash, or
both, in the Proposed Merger would be subject to the federal income tax rules
concerning reorganizations discussed above with respect to such shares of UPR
Common Stock or cash received in the Offer. If, however, the Proposed Merger is
also treated as a taxable transaction, each exchanging Pennzoil stockholder will
recognize gain or loss for federal income tax purposes measured by the
difference between such stockholder's tax basis in such stockholder's Shares
exchanged and the amount of cash, plus the fair market value of the shares of
UPR Common Stock received by such stockholder in the Proposed Merger. Such gain
or loss will be capital gain or loss if the Shares are held as a capital asset
and will be long-term gain or loss if such Shares are held for more than one
year at the time of the exchange.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. THE ABOVE DISCUSSION MAY NOT APPLY TO PARTICULAR CATEGORIES OF
HOLDERS OF SHARES SUBJECT TO SPECIAL TREATMENT UNDER THE CODE, SUCH AS FOREIGN
HOLDERS AND HOLDERS WHOSE SHARES WERE ACQUIRED PURSUANT TO THE EXERCISE OF AN
EMPLOYEE STOCK OPTION OR OTHERWISE AS COMPENSATION, OR WHO HOLD RESTRICTED
STOCK. STOCKHOLDERS OF PENNZOIL ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND
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THE PROPOSED MERGER, INCLUDING ANY STATE, LOCAL OR OTHER TAX CONSEQUENCES OF THE
OFFER AND THE PROPOSED MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES.
The Shares are listed and traded on the NYSE and prices are quoted on the
NYSE under the symbol 'PZL.' The following table sets forth, for each of the
periods indicated, the high and low sales prices for the Shares on the NYSE
Composite Tape and the amount of cash dividends paid per Share, all as reported
in published financial sources.
PENNZOIL COMMON STOCK
-----------------------------
FISCAL YEAR ENDING HIGH LOW DIVIDENDS
- ------------------------------------------------ ------ ------ ---------
December 31, 1995:
First Quarter.............................. $48.38 $43.00 $ .75
Second Quarter............................. 50.88 46.50 .75
Third Quarter.............................. 47.50 43.50 .75
Fourth Quarter............................. 44.88 34.63 .25
December 31, 1996:
First Quarter.............................. 43.63 36.88 .25
Second Quarter............................. 46.38 39.63 .25
Third Quarter.............................. 55.50 45.63 .25
Fourth Quarter............................. 58.75 49.25 .25
December 31, 1997:
First Quarter.............................. 63.50 49.88 .25
Second Quarter (through June 20, 1997)..... 61.13 45.00 .25
On June 20, 1997, which was the last trading day before commencement of the
Offer, the last reported closing price on the NYSE Composite Tape was $59.625
per Share. The Offer represents a 41% premium over the reported closing price of
the Shares on June 20, 1997. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
As of the date of this Offer to Purchase, the Rights are attached to the
Shares and are not traded separately. As a result, the sales prices per Share
set forth above are also the high and low sales prices per Share and associated
Right during such periods. Upon the occurrence of the Distribution Date, the
Rights are to detach, and may trade separately, from the Shares. See Section 11.
Purchaser believes that, as a result of the commencement of the Offer on June
23, 1997, the Distribution Date may occur as early as July 7, 1997, unless prior
to such date the Pennzoil Board redeems the Rights, amends the Rights Agreement
to make the Rights inapplicable to the Offer or delays the Distribution Date. IF
THE DISTRIBUTION DATE OCCURS AND THE RIGHTS BEGIN TO TRADE SEPARATELY FROM THE
SHARES, PENNZOIL'S STOCKHOLDERS SHOULD ALSO OBTAIN A CURRENT MARKET QUOTATION
FOR THE RIGHTS.
7. CERTAIN INFORMATION CONCERNING PENNZOIL.
The information concerning Pennzoil contained in this Offer to Purchase,
including financial information, has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Neither UPR, Purchaser nor the Dealer Manager assumes any
responsibility for the accuracy or completeness of the information concerning
Pennzoil contained in such documents and records or for any failure by Pennzoil
to disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to UPR, Purchaser or the
Dealer Manager. The Pennzoil 10-K, the Pennzoil 10-Q and such other documents
should be available for inspection and copies thereof should be obtainable in
the manner set forth below under 'Available Information.'
Pennzoil. According to the Pennzoil 10-K, Pennzoil is a Delaware
corporation and its principal executive offices are located at Pennzoil Place,
P. O. Box 2967, Houston, Texas 77252-2967. According to the Pennzoil 10-K,
Pennzoil is an energy company engaged primarily in oil and gas exploration and
production, in processing, refining and marketing of oil and motor oil and
refined products and in fast automotive oil change operations.
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Pennzoil's operations are conducted primarily through subsidiaries. Pennzoil
Exploration and Production Company conducts the majority of Pennzoil's oil and
gas exploration and production operations. The refining of oil and the
processing and marketing of motor oil, refined products and industrial
specialties are conducted by Pennzoil Products Company. Jiffy Lube
International, Inc. franchises, owns and operates automotive fast lubrication
and fluid maintenance service centers.
As of December 31, 1996, Pennzoil beneficially owned approximately 18
million shares of common stock of Chevron Corporation ('Chevron'). At the
current dividend rate, Pennzoil receives approximately $39 million annually in
dividends on its current investment in Chevron stock. Reference is made to
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Capital Resources and Liquidity' and Note 1 of Notes to
Consolidated Financial Statements for additional information, both of which are
contained in the Pennzoil 10-K.
Selected Financial Data of Pennzoil. Set forth below is certain selected
consolidated financial information with respect to Pennzoil and its subsidiaries
excerpted from the information contained in the Pennzoil 10-K and the Pennzoil
10-Q. More comprehensive financial information is included in the Pennzoil 10-K,
the Pennzoil 10-Q and other documents filed by Pennzoil with the Commission. The
following summary is qualified in its entirety by reference to the Pennzoil
10-K, the Pennzoil 10-Q and such other documents and all the financial
information (including any related notes) contained therein.
16
<PAGE>
PENNZOIL COMPANY
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(EXPRESSED IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
QUARTER ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.............................. $2,356.7 $2,782.4 $2,562.9 $2,490.0 $2,486.8 $ 587.3 $ 649.0
Income (loss) from
Continuing operations (1)........... $ 17.4 $ 160.3 $ (283.8) $ (305.1) $ 133.9 $ 15.8 $ 57.6
Discontinued operations (2)......... 11.7 -- -- -- -- -- --
Extraordinary items (3)............. (16.6) (18.4) -- -- -- -- --
Cumulative effect of changes in
accounting principles (4)......... 115.7 -- (4.9) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)................... $ 128.2 $ 141.9 $ (288.7) $ (305.1) $ 133.9 $ 15.8 $ 57.6
Earnings (loss) per share
Continuing operations (1)........... $ .43 $ 3.80 $ (6.16) $ (6.60) $ 2.88 $ .34 $ 1.23
Discontinued operations (2)......... .29 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) per share before
extraordinary items and cumulative
effect of changes in accounting
principles........................ $ .72 $ 3.80 $ (6.16) $ (6.60) $ 2.88 $ .34 $ 1.23
Extraordinary items (3)............... (.41) (.44) -- -- -- -- --
Cumulative effect of changes in
accounting principles (4)......... 2.85 -- (.11) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total................................. $ 3.16 $ 3.36 $ (6.27) $ (6.60) $ 2.88 $ .34 $ 1.23
Dividends per common share............ $ 3.00 $ 3.00 $ 3.00 $ 2.50 $ 1.00 $ .25 $ .25
FINANCIAL POSITION DATA:
Total assets.......................... $4,457.2 $4,886.2 $4,715.8 $4,307.8 $4,124.3 $4,250.5 $4,137.4
Debt
Notes payable (5)................. $ 339.3 $ 433.0 $ 337.2 $ 468.9 $ -- $ 389.9 $ --
Long-term debt, including current
maturities, and capital lease
obligations (6)................. 2,031.7 2,077.8 2,254.6 2,116.8 2,291.8 2,102.9 2,196.8
-------- -------- -------- -------- -------- -------- --------
Total debt and capital lease
obligations......................... $2,371.0 $2,510.8 $2,591.8 $2,585.7 $2,291.8 $2,492.8 $2,196.8
Total shareholders' equity (7)........ $1,180.2 $1,505.8 $1,204.3 $ 836.2 $ 969.1 $ 862.2 $1,031.1
</TABLE>
- ------------------
(1) Reference is made to Notes 1 and 8 of Notes to Consolidated Financial
Statements contained in the Pennzoil 10-K.
(2) Represents results of Purolator Products Company, which was sold in 1992.
(3) In 1993 and 1992, Pennzoil redeemed amounts outstanding under several debt
facilities using proceeds from various sources. The premiums and related
unamortized discount and debt issue costs relating to these redemptions
resulted in extraordinary charges of $18.4 million ($28.3 million before
tax), or $.44 per share, in 1993 and $16.6 million ($25.2 million before
tax), or $.41 per share, in 1992.
(4) Reference is made to Note 6 of Notes to Consolidated Financial Statements
contained in the Pennzoil 10-K for discussion of 1994 events. In December
1992, Pennzoil announced its decision to change its method of accounting for
income taxes by adopting the requirements of SFAS No. 109, 'Accounting for
Income Taxes,' effective as of January 1, 1992. As a result of adopting SFAS
No. 109, Pennzoil recognized a cumulative, one-time benefit from the change
in accounting principle for periods prior to 1992 of $115.7 million, or
$2.85 per share, as of the first quarter of 1992.
(5) As of May 1996, borrowings under Pennzoil's commercial paper and short-term
variable-rate credit arrangements, beginning with the execution of a
revolving credit facility with a group of banks, have been classified as
long-term debt. Such debt classification is based upon the availability of
committed long-term credit facilities to refinance such commercial paper and
short-term borrowings and Pennzoil's intent to maintain such commitments in
excess of one year. Reference is made to Note 3 of Notes to Consolidated
Financial Statements contained in the Pennzoil 10-K for additional
information.
(6) Quarterly information excludes capital lease obligations.
(7) Reference is made to Note 1 of Notes to Consolidated Financial Statements
contained in the Pennzoil 10-K.
Available Information. Pennzoil is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning Pennzoil's directors and officers,
their remuneration, stock options
17
<PAGE>
and other matters, the principal holders of Pennzoil's securities and any
material interest of such persons in transactions with Pennzoil is required to
be disclosed in proxy statements distributed to Pennzoil's stockholders and
filed with the Commission. Such reports, proxy statements and other information
should be available for inspection at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street
(Suite 1400), Chicago, Illinois 60661. Copies of such information should be
obtainable, by mail, upon payment of the Commission's customary charges, by
writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Commission maintains a web site on the
Internet that can be accessed at http://www.sec.gov and that contains
information filed electronically regarding Pennzoil. Such material should also
be available for inspection at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND UPR.
Purchaser. Purchaser, a Delaware corporation which is a wholly owned
subsidiary of UPR, was organized to acquire Pennzoil and has not conducted any
unrelated activities since its organization. The principal office of Purchaser
is located at the principal office of UPR. All outstanding shares of capital
stock of Purchaser are owned by UPR. Until immediately prior to the time that
Purchaser will purchase Shares pursuant to the Offer, it is not expected that
Purchaser will have any significant assets or liabilities or engage in
activities other than those incident to its formation and capitalization and the
transactions contemplated by the Offer and the Proposed Merger. Due to the fact
that Purchaser is newly-formed and has minimal assets and capitalization, no
meaningful financial information regarding Purchaser is available.
UPR. UPR is a Utah corporation with its principal office located at 801
Cherry Street, Fort Worth, Texas 76102.
UPR is engaged primarily in the exploration for and the development and
production of natural gas, natural gas liquids and crude oil in several major
producing basins in the United States and Canada. UPR emphasizes natural gas in
its exploration and production activities and also owns and operates significant
assets, in proximity to its principal producing properties, dedicated to 'gas
value chain' activities, which consist of the gathering, processing,
transportation and marketing of natural gas and natural gas liquids. UPR,
through its wholly owned subsidiary, Union Pacific Fuels, Inc. ('UP Fuels'),
markets UPR's natural gas (72% of UPR's production during 1996), crude oil (88%
of UPR's production during 1996) and natural gas liquids (96% of UPR's
production during 1996), together with significant volumes of natural gas,
natural gas liquids and crude oil produced by others. In addition, UPR engages
in the hard minerals business through non-operated joint venture and royalty
interests in several coal and trona (natural soda ash) mines located on lands
within and adjacent to its Land Grant Area (hereinafter defined) in Wyoming.
Over 90% of UPR's revenues, assets and reserves are generated or located in the
United States.
In October 1995, UPR sold 42.5 million shares of UPR Common Stock in an
initial public offering (the 'Offering'). UPR's stock is traded on the NYSE
under the symbol 'UPR.' Prior to completion of the Offering, UPR was wholly
owned by Union Pacific Corporation, a Utah corporation ('UPC'). Upon completion
of the Offering and until October 15, 1996, UPC owned approximately 83% of UPR's
outstanding common stock. On October 15, 1996, UPC consummated the distribution
of its remaining ownership interest in UPR to its shareholders as a dividend by
means of a tax-free distribution (the 'Distribution').
UPC acquired Champlin Petroleum Company ('Champlin') in 1970 to manage the
exploitation of its oil and gas operations on the Land Grant Area. The 'Land
Grant Area' means the lands granted by the Federal government to a predecessor
of UPC in the mid-1800's that pass through the states of Colorado and Wyoming
and into Utah and intersects several highly productive oil and gas basins. In
the Land Grant Area, UPR has fee ownership of the mineral rights under
approximately 700,000 additional acres. In 1971, UPC combined its own oil and
gas operations with those of Champlin. In 1987, the Champlin name was changed to
Union Pacific Resources Company ('UPRC'), and UPRC also became responsible for
managing substantially all of UPC's hard mineral assets. In October 1995, UPRC
and certain oil and gas operations of other affiliated companies that were
wholly owned subsidiaries of UPC, representing, collectively, UPC's natural
resources business segment, were combined to form UPR.
18
<PAGE>
In each of its core areas, the focus of UPR is on the exploration for and
development of natural gas and crude oil resources and on efforts to increase
margins through reductions in drilling and operating costs and effective and
efficient sales and distribution networks. UPR's strategy is to apply economies
of scale, its operating experience in its core geographic areas and its
expertise in advanced drilling and completion technologies, to increase
production by expanding UPR's North American drill site inventory and enhancing
well performance results. In addition to developing its existing properties, UPR
also increases drill site inventory through exploration, farm-in agreements and
acquisitions of properties and companies. UPR's growth in recent years has
occurred through exploration and development in core geographic areas as well as
producing property purchases, the most significant of which was the $725 million
acquisition of Amax Oil & Gas, Inc. in March 1994.
UPR's oil and gas activities are concentrated in six core geographic areas:
(1) the Austin Chalk trend in Texas and Louisiana, (2) the Rockies, consisting
of the western portion of the Land Grant Area in Wyoming and Utah, (3)
Plains/Canada, consisting of the eastern portion of the Land Grant Area in
Colorado and Wyoming, with additional operations primarily in Kansas and western
Canada, (4) the onshore and offshore Gulf Coast area, (5) eastern and southern
Texas and (6) western Texas. Natural gas and natural gas liquids constituted 86%
of UPR's total proved reserves of over 3.5 Tcfe as of December 31, 1996, and 82%
of UPR's sales volumes of 1.7 BCFED for the year then ended. For the same
period, approximately 64% of UPR's production from producing properties was
attributable to UPR-operated properties.
The name, business address, citizenship, present principal occupation and
employment history for the past five years of each of the directors and
executive officers of UPR and Purchaser are set forth on Schedule I of this
Offer to Purchase.
Selected Financial Data of UPR. Set forth below is certain selected
consolidated financial information with respect to UPR and its subsidiaries
excerpted from the information contained in UPR's Annual Report on Form 10-K for
the year ended December 31, 1996 (the 'UPR 10-K') and UPR's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997 (the 'UPR 10-Q'). More
comprehensive financial information is included in the UPR 1996 Annual Report to
Stockholders (the 'UPR Annual Report'), the UPR 10-K, the UPR 10-Q and other
documents filed by UPR with the Commission, and the following summary is
qualified in its entirety by reference to the UPR Annual Report, the UPR 10-K,
the UPR 10-Q and such other documents and all the financial information
(including any related notes) contained therein. The UPR Annual Report, the UPR
10-K, the UPR 10-Q and such other documents should be available for inspection
and copies thereof should be obtainable in the manner set forth below under
'Available Information.'
19
<PAGE>
UNION PACIFIC RESOURCES GROUP INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(EXPRESSED IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
QUARTER ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues............ $1,222.5 $1,277.1 $1,332.9 $1,476.7(a) $1,831.0 $ 389.7 $ 531.7
Operating income.............. 318.7 382.9 351.3 470.1(a) 526.6 97.3 186.4
Net income.................... 272.3 243.8(b) 390.0(c) 350.7(a) 320.8 59.2 117.2
Per share:
Net income (d).............. n/a n/a n/a n/a 1.28 .24 .47
Dividends................... n/a n/a n/a .05(e) .20 .05 .05
FINANCIAL POSITION DATA:
Properties -- net............. $1,660.5 $1,780.2 $2,600.1(f) $2,764.3 $2,972.4 $2,760.1 $3,072.8
Total assets.................. 2,586.4 2,714.1 3,247.0 3,308.9 3,648.9 3,228.3 3.695.3
Long-term debt................ 48.2 45.6 37.7 101.5 670.9(g) 101.5 571.3
Shareholders' equity.......... 1,475.2 1,596.1 1,834.9 1,312.4 1,514.3 1,360.8 1,624.0
CASH FLOW DATA:
Capital and exploratory
expenditures................ $ 594.4 $ 560.4 $1,389.3(f) $ 686.4 $ 880.3 $ 138.3 $ 284.0
Cash provided by operations... 776.2 567.5 821.0 829.4 990.4 216.0 422.2
</TABLE>
- ------------------
(a) In November 1995, UPR recorded a $122.5 million pre-tax ($78.5 million
after-tax) gain resulting from the Columbia Gas Transmission Company
bankruptcy settlement (see Note 4 to the Consolidated Financial Statements
in the UPR 10-K).
(b) In January 1993, UPR adopted Statement of Financial Accounting Standards
('SFAS') No. 106, 'Employers' Accounting for Postretirement Benefits Other
Than Pensions,' and SFAS No. 109, 'Accounting for Income Taxes,' with a
cumulative after-tax charge to 1993 earnings of $59 million.
(c) In March 1994, UPR sold its interest in the Wilmington Field and Harbor
Cogeneration Plant to the Port of Long Beach, California. The Wilmington
sale resulted in a $159.2 million pre-tax ($100 million after tax) gain (see
Note 4 to the Consolidated Financial Statements in the UPR 10-K).
(d) Earnings per share prior to 1996 have been omitted as UPR was a wholly owned
subsidiary of UPC until the Offering in October 1995. Therefore, net income
per share is not applicable for periods prior to the fourth quarter of 1995.
(e) Represents the dividend declared with respect to the fourth quarter of 1995.
Prior to October 1995, UPR was wholly owned by UPC. Therefore, dividends per
share is not applicable for periods prior to the fourth quarter 1995.
(f) In March 1994, UPR acquired Amax Oil & Gas, Inc., for a net purchase price
of $725 million.
(g) During 1996, UPR repaid its $650 million note payable to UPC (incurred at
the time of the Offering) using cash from operations and proceeds from the
issuance of long-term debt and commercial paper (see Note 8 to the
Consolidated Financial Statements in the UPR 10-K).
Available Information. UPR is subject to the informational requirements of
the Exchange Act and, in accordance therewith, files reports relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning UPR's directors and officers, their remuneration, stock
options and other matters, the principal holders of UPR's securities and any
material interest of such persons in transactions with UPR is required to be
disclosed in proxy statements distributed to UPR's stockholders and filed with
the Commission. Such reports, proxy statements and other information should be
available for inspection at the Commission and copies thereof should be
obtainable from the Commission in the same manner as is set forth with respect
to Pennzoil in Section 7. Such material should also be available for inspection
at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
20
<PAGE>
9. SOURCE AND AMOUNT OF FUNDS.
Purchaser estimates that the total amount of funds required pursuant to the
Offer to purchase the Maximum Number of Shares and to pay fees and expenses
related to the Offer will be approximately $2.2 billion. See Section 16.
Purchaser plans to obtain the necessary funds through capital contributions or
advances made by UPR. Purchaser and UPR plan to obtain the funds for such
capital contributions or advances from UPR's available cash and working capital,
and commercial paper issuances or pursuant to one or more loan facilities
currently existing or to be obtained from one or more commercial banks or other
financial institutions on terms and conditions to be determined hereafter. UPR
and Purchaser are currently in discussions with a small group of financial
institutions regarding the establishment of a credit facility that would be used
to pay all or a portion of the funds required pursuant to the Offer. It is
anticipated that the indebtedness incurred by UPR under such loans will be
repaid from funds generated internally by UPR and its subsidiaries (including,
after the Proposed Merger, if consummated, dividends paid by Pennzoil and its
subsidiaries), through additional borrowings, or through a combination of such
sources. No final decisions have been made concerning the method UPR will employ
to repay such indebtedness. Such decisions when made will be based on UPR's
review from time to time of the advisability of particular actions, as well as
on prevailing interest rates and financial and other economic conditions. This
Offer is not conditioned on financing.
10. BACKGROUND OF THE OFFER; CONTACTS WITH PENNZOIL.
On January 12, 1995, Mr. Jack L. Messman, the current Chairman and Chief
Executive Officer of UPR, and Mr. James L. Pate, Chairman and Chief Executive
Officer of Pennzoil, met and discussed their respective businesses. Mr. Pate
stated how much he admired UPR and the job Mr. Messman had done at that company.
This meeting was arranged by an executive recruiter known mutually to Mr.
Messman and Mr. Pate. The executive recruiter had previously suggested that Mr.
Pate was interested in having Mr. Messman join Pennzoil.
On January 24, 1995, Mr. Pate and Mr. Howard H. Baker, Jr., a member of the
Pennzoil Board, met with Mr. Drew Lewis, then the Chairman, President and Chief
Executive Officer of UPC, to discuss a possible combination or other business
arrangement involving Pennzoil and UPR, then a wholly owned subsidiary of UPC.
Following that meeting, on January 25, 1995 Mr. Pate sent a letter to Mr. Lewis
that stated in part:
I think there is a unique opportunity to structure a transaction with
Pennzoil Company that would maximize the value of Union Pacific Resources
to shareholders in a tax-efficient manner. Union Pacific's core oil and gas
properties and ours are very similar. We have a lot of common ownership and
generally provide the best possible fit. The size of our respective oil and
gas interests is similar and combining them would significantly improve
reserve and production profiles. The combined entity would become the
premier exploration and production company in the world, ranking number one
in terms of production and number two in reserves.
On July 18, 1995, certain additional financial details of the January
proposal with respect to a combination of Pennzoil and UPR, and other
information, were forwarded to UPC by Lazard Freres & Co., LLC, Pennzoil's
financial advisor. UPC informed Pennzoil that it was pursuing an alternative
transaction with respect to UPR (referring to the October 1995 Offering of UPR
Common Stock and the October 1996 Distribution of UPR Common Stock to UPC's
stockholders). Included in the materials forwarded by Lazard Freres & Co., LLC
were the following statements:
... The merger of [UPR] and [Pennzoil] will provide significant
advantages to both sets of shareholders. The two company's asset bases are
largely the same size and complement each other extremely well. . . . As a
result of the excellent fit between the two operations, material cost
savings should be realized upon a merger of the companies. Such cost
savings should be available not only at the corporate level but at the
field level as well. ... We believe investors will react favorably to the
combined mix of companies.
After UPR became an independent public company following the Distribution
in October 1996, UPR began a review of various possible strategic initiatives.
One of these initiatives was an in-depth, systematic review of companies in the
oil and gas industry to identify potential business combinations. This review
identified several attractive candidates, including Pennzoil, that met UPR's
acquisition criteria, and in January 1997 UPR
21
<PAGE>
commenced a focused review of the aspects of a possible combination of UPR and
Pennzoil. At meetings in February and April 1997, management reviewed with UPR's
Board of Directors a possible transaction with Pennzoil.
On February 5, 1997, Mr. Messman telephoned Mr. Pate and arranged a meeting
in Houston for March 4, 1997. On March 4, 1997, Mr. Messman and Mr. Pate met at
Pennzoil's offices in Houston. During the meeting, Mr. Messman generally
described UPR's interest in exploring with Mr. Pate a possible strategic
combination of UPR and Pennzoil. Mr. Pate stated that he believed that he could
'break up' the various businesses of Pennzoil and could realize a value equal to
a 40% premium to the then-current trading price of Pennzoil Common Stock, but
further stated that such a break up transaction was not feasible in the near
term. The last sale price of Pennzoil Common Stock on March 3, 1997 was $56.375.
Mr. Pate also stated that he believed that Pennzoil's Common Stock could be
trading in a range between $80 and $100 per share in the next four to five years
if Pennzoil's strategic plan was successfully implemented, and that a
transaction between Pennzoil and UPR would be premature at the present time. At
the close of the meeting, Mr. Pate suggested to Mr. Messman that before either
of them pursued alternative transactions, they should speak with each other.
On April 10, 1997, Mr. Messman telephoned Mr. Pate to follow up on their
March 4th meeting. Mr. Messman told Mr. Pate that UPR remained interested in
pursuing a negotiated business combination with Pennzoil and invited Mr. Pate to
UPR's offices in Fort Worth to describe UPR's business, financial condition and
strategies and to further discuss a potential transaction. Mr. Pate initially
declined the meeting stating that he was already familiar with UPR's business.
Mr. Messman suggested that they again discuss UPR's attractiveness as an
acquisition partner and a potential transaction between UPR and Pennzoil. After
further discussion, Mr. Pate agreed to visit Fort Worth and stated that he would
call Mr. Messman on May 5, 1997 to set a date for the meeting.
On May 5, 1997, Mr. Pate telephoned Mr. Messman and stated that he was not
prepared to schedule a meeting. Mr. Messman reiterated his request that Mr. Pate
meet with him to discuss a potential transaction. Additionally, Mr. Messman
stated that he was prepared to propose a price for the Shares. Mr. Pate
immediately stated that he did not want to receive a price and noted that
Pennzoil was engaged in a long-range planning process and was not prepared to
discuss value issues with UPR or respond to a price proposal. Mr. Messman and
Mr. Pate agreed to talk again on May 28 when Pennzoil's planning process would
be completed.
On May 6, 1997, Mr. Messman sent a letter to Mr. Pate which stated in part:
.... As I mentioned [during our telephone conversation]
yesterday, we are prepared to pursue a combination with your company
and are ready to discuss the full range of issues, including value and
structure. The combination of our strong financial position and the
companies' complementary assets would create a transaction beneficial
to both companies. We have the greatest respect for your management
team and believe social issues can be satisfactorily resolved.
I appreciate your reluctance to receive and respond to a price
proposal at this time, and understand that the planning process in
which you are now involved will be completed later this month, at
which time a discussion of these issues would be appropriate.
As we continue our dialogue that began in February, I want you to
know that our desire is to move ahead quickly after we talk again on
May 28. I hope we can meet as soon as possible thereafter. This
timetable is fortuitous since we have a board meeting on June 4 and
our board expects a report from me on this subject.
Again, we stand ready to be specific, particularly with regard to
economic terms and we believe we can address any and all concerns you
might have.
22
<PAGE>
On May 8, 1997, Mr. Pate sent the following letter to Mr. Messman:
Mr. Jack L. Messman
Chairman & CEO
Union Pacific Resources Group Inc.
801 Cherry Street
Fort Worth, TX 76102-6803
Dear Jack:
I was surprised by your letter of May 6, 1997. You apparently
have misconstrued my politeness to you as a temporary reluctance to
receive and respond to a price proposal.
To reiterate as clearly as I can express, Pennzoil is not
prepared to pursue any change of control transaction with your company
or anyone else and we are prepared to take all necessary action to
respond to any unsolicited offer. Our Board of Directors has charted
an independent strategic direction for Pennzoil which is in the best
interests of our company and its shareholders. Toward this end,
Pennzoil has restructured its financial obligations, business and
properties and has embarked upon a series of strategic initiatives and
projects which we are fully committed to bringing to fruition during
the next five years.
As I explained in our meeting on March 4, 1997, circumstances
have changed drastically since our first contact in 1995 when the
railroad company was considering the disposition of UPR. Pennzoil has,
among other things, cut its dividend, slashed its overhead expenses by
over $80 million, dramatically improved earnings and cash flow,
reduced debt significantly, reduced operating costs, upgraded its oil
and gas properties, redirected its capital expenditures program, made
great strides in developing our investments in Azerbaijan, staked out
significant new exploration and development opportunities
internationally, installed new senior oil and gas management, and
completed construction of our upgraded refining facilities at Atlas
and the new Lake Charles base oil plant (Excel Paralubes). In short,
we have addressed many of the strategic issues confronting us in 1995
by aggressive moves that are now only beginning to bring returns to
our shareholders.
It is strange to me that you would characterize your telephone
calls seeking meetings as a dialogue that began in February. When you
visited me in my office on March 4, I thought I had made it plain that
Pennzoil fully intends to remain independent and is not interested in
engaging in any process that could put Pennzoil into play. That was
the situation then, it remains the situation now and will remain the
same later this month. There is no purpose to meet or talk further
regarding these matters.
Sincerely,
/s/ Jim
Chairman of the Board
Chief Executive Officer
At a regularly scheduled meeting of the Board of Directors of UPR (the 'UPR
Board') on June 4, 1997, the UPR Board considered presentations by management
and its financial and legal advisors and unanimously approved continuing to
pursue a possible business combination with Pennzoil. Accordingly, on June 10,
1997 Mr. Messman telephoned Mr. Pate to advise Mr. Pate that he would be sending
a letter regarding a possible business combination between Pennzoil and UPR.
Later that day, Mr. Messman telecopied the following letter to Mr. Pate:
23
<PAGE>
Mr. James L. Pate
Chairman, President and Chief Executive Officer
Pennzoil Company
P.O. Box 2967
Houston, TX 77252-2967
Dear Jim:
I am sorry that our discussion on May 5, and my letter on May 6
led to a misunderstanding as reflected in your May 8 letter. I thought
that I had expressed the goals of UPR clearly in our conversations.
From an earlier conversation with you, I also had the impression that,
after completion of your long range planning, you would be willing to
consider a transaction designed to maximize value for Pennzoil
shareholders.
As you know from our previous communications, we have been
interested for some time in pursuing a possible transaction with
Pennzoil. I am writing to seek to establish a constructive dialogue
with Pennzoil in the hope that we can explore a possible strategic
business combination on a friendly, negotiated and confidential basis.
As you also know from our previous discussions, we believe that our
two companies would be an ideal business combination providing an
outstanding strategic fit.
In evaluating why such a combination is so attractive for both
companies and their respective shareholders, we have focused on
several key factors, including the following:
o We believe that the combined company will be the premier independent
E&P company in the United States, ranking first in nearly all
measures of size and activity. For all of the reasons stated below,
we believe that the market would react very favorably to this
combination.
o Our proven ability in applied drilling technology will increase --
quickly and efficiently -- the yield of Pennzoil's extensive
portfolio of properties. UPR is a world leader in horizontal
drilling and the most active driller in the U.S., as well as a
leader in 3-D seismic technology. UPR's ability to apply technology
to exploit assets will enhance the value of Pennzoil's properties.
o Our companies share a complementary core E&P business, have a
well-balanced, concentrated and sizeable portfolio of opportunities
in the Gulf of Mexico, onshore Gulf Coast, Austin Chalk, East Texas,
South Texas, Permian Basin, Rocky Mountains, and several high
potential international plays. The combined production and reserve
profiles will be geographically diverse with attractive growth
potential.
o The financial strength of the combined company will ensure the
ability to fund all of its promising current and future
opportunities on a global scale. Royalties from our fee ownership
position in our 7.5 million acre Land Grant provide significant cash
flow for our E&P opportunities. In fact, UPR expects to increase
immediately and significantly capital spending on Pennzoil's E&P
properties to increase production and reserves.
o Together, we can achieve greater operating and administrative
efficiencies. Our properties in East Texas and South Texas
complement each other. The combined management and technical team
will include some of the industry's best and most seasoned
professionals. As a result, new operating efficiencies will be
achieved by increasing production and reducing per-unit costs. At
the same time, let me stress that growth opportunities are the
reasons for this merger.
o Non-E&P operations of both companies will benefit from the merger,
due to the increased financial strength to fund strategic growth of
Pennzoil's Motor Oil, Products and Franchise operations and the
value which Pennzoil's brand name recognition could bring to UPR's
marketing and processing businesses.
You recognized this compelling business logic when, in 1995, you
suggested that our two companies merge. Your January 25, 1995 letter
was correct in pointing out that Pennzoil 'provided the best possible
fit' with UPR. We agree with your assertion that 'the combined entity
would become the premier exploration and production company in the
world.' Yet in contrast to your very strong
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positive feelings two years ago, you indicated in your recent letter
that Pennzoil faced more difficulties in 1995 than it does now and
that therefore a merger somehow no longer makes sense. We do not
understand why you believed that two years ago, when Pennzoil faced
particularly severe problems, it was in a better position than it is
now to merge with UPR and form the premier independent E&P company. In
fact, we believe that now, as you are embarking on a road that you
hope leads to improved performance, the benefits from a combination
would come even more quickly. If we combine our two companies, with
all of their complementary strengths, consider what we can accomplish
together -- the tremendous value we will build for our shareholders.
You had a great idea in 1995, and it is still a great idea today.
These two companies belong together.
A combination of our two companies would provide a base for
extraordinary value creation for our respective shareholders. I
believe that by working together we have the opportunity to accomplish
the best strategic merger in the energy business in recent history.
Looking at that exciting prospect, as well as our readiness to talk
about specific terms of a transaction, we were disappointed by your
assertion that all communications between us should cease. Given what
we together can accomplish for our shareholders, employees and other
constituencies, we believe that you should seriously consider our
proposal.
Because the transaction we foresee is so valuable to both
companies, I thought it appropriate as a next step, and before making
any formal proposal, to summarize the terms of a possible transaction
that we would be prepared to discuss. I assume that you will share
this letter with the members of your Board, as I have done with my
Board, which unanimously supports our pursuing these discussions with
you.
Price and Structure
o We would like to discuss a combination which would allow Pennzoil
shareholders to receive a value of $80.00 per share, payable in a
combination of cash and UPR common stock. This price represents a
substantial premium, 41% over yesterday's closing price of your
stock, 51% over the price 30 days ago and 50% over the average price
for the past 12 months. We believe that your Board and shareholders
would find this compelling and that the realization of this value
would be a remarkable achievement for your shareholders.
o We have flexibility in the design of the transaction and are willing
to discuss alternative structures. We believe that the transaction
should be designed so that the cash portion ranges from 40% to 50%,
with the balance consisting of UPR common stock. Our suggestion is
to structure a two-step transaction, with a first-step cash tender
in order to give your shareholders the earliest opportunity to
receive the cash portion of the consideration. The second-step would
be a conversion of the remaining Pennzoil common stock into UPR
common stock. A two-step structure would enable the two companies to
complete the transaction as quickly as possible.
o In addition to the substantial immediate premium that your
shareholders would receive, the stock portion of the transaction
would enable your shareholders to have a significant ongoing stake
in an outstanding company with excellent opportunities for growth
and value creation. We anticipate that the stock portion of the
transaction would be tax-free to Pennzoil shareholders.
o We have expended substantial time and effort in developing our
proposal on the basis of publicly available information and believe
that the price is a full and fair one. However, we are prepared to
consider any non-public information which you believe demonstrates
higher value. We are also willing to allow representatives of
Pennzoil to review non-public information about UPR.
I realize that you believe successful implementation of your
strategic plan will result in an increase in Pennzoil's stock price
over the next four to five years. As you see, the proposed transaction
would provide your shareholders a certain value today substantially
above the present value of even an aggressively projected range of
future prices.
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Continuity of Management and Operations
o We also recognize that your Board will want to understand how you
and your management team would fit into the leadership structure of
the new company. We hope and expect that you and your team would
continue to play an important leadership role moving forward. In
particular, we would be looking to you to play a major role in the
combined operations, helping to realize the value we both know would
reside in the new company. I would hope that you would agree to
serve the combined company as Vice Chairman of the Board and as
President and Chief Executive Officer of its Motor Oil, Products and
Franchise businesses. We also would expect that three Pennzoil Board
members, you and two others, would become directors of the combined
company. In addition, we fully recognize the importance of reaching
employment agreements with senior executives, as appropriate. Of
course, we would fully honor Pennzoil's existing employment
agreements, benefit plans and other commitments to its employees.
o We are certain that you and Pennzoil's workforce would find a
professionally exciting, challenging and rewarding environment in
the combined organization -- as well as a strong sense of shared
purpose and camaraderie.
Corporate Name
o We are willing to consider having the name of the new company
include, or be, Pennzoil.
Location
o We would maintain corporate offices in both Fort Worth and Houston,
with executive, administrative and operating personnel in both
locations.
Our number one strategic priority is to make the combination of
UPR and Pennzoil a reality. Therefore, we stand ready to meet at any
time to discuss any -- or all -- aspects of the terms and structure of
our proposed transaction. I suggest that, after you have reviewed this
matter with your Board, you and I meet privately to discuss how best
to proceed. We hope you will share our enthusiasm for this combination
and our confidence that it serves the best interests of both
companies' shareholders, employees and customers, as well as our
respective business partners, suppliers and the communities where we
operate.
I understand the concern you expressed about putting Pennzoil 'in
play.' We believe that our proposed course would avoid this. We have
made no public announcement of our proposal, have worked with our
advisors to structure this communication carefully so that it does not
require a public announcement and hope to be able to discuss our ideas
with you on a confidential, non-public basis. I suggest that we meet
privately as soon as possible, hopefully later this week, and I will
call you to try to arrange this.
Pennzoil and UPR can achieve much together, and I look forward to
discussing this extraordinary opportunity for our respective
shareholders.
Sincerely,
/s/ Jack
Jack L. Messman
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On June 11, 1997, Mr. Pate telecopied the following letter to Mr. Messman:
Mr. Jack L. Messman
Chairman and Chief Executive Officer
Union Pacific Resources Group Inc.
801 Cherry Street
Fort Worth, TX 76102-6803
Dear Jack:
Without addressing any of the issues and misunderstandings
referred to in your June 10 letter, this is to advise you that I will
review the matters covered in your letter with our Board of Directors
and advisors and expect to respond to you on or before June 20.
Sincerely,
/s/ Jim
On June 12, 1997, George Lindahl, President of UPR, a representative of
Smith Barney and Messrs. Drew Lewis and Samuel Skinner, directors of UPR,
contacted several directors of Pennzoil to obtain their reactions to UPR's
proposal letter dated June 10, 1997. Each director contacted indicated either
that he was not aware of, or had not seen, such proposal letter.
On June 12, 1997, a representative of Smith Barney also contacted a
representative of Pennzoil's current financial advisor to obtain his reaction to
UPR's proposal. The representative of Pennzoil's financial advisor indicated
initially that he could not comment. Subsequently, he confirmed that he had
reviewed UPR's proposal. The representative of Pennzoil's financial advisor also
indicated that Pennzoil had revised its five-year plan and that the new, revised
plan would be shared with the Pennzoil directors at a forthcoming Board meeting.
Additionally, he indicated that Pennzoil's new, revised plan included a number
of new initiatives. The representative of Pennzoil's financial advisor also
stated that Mr. Pate was adamant that this was not the time to sell Pennzoil and
that UPR's inquiries were not welcome at this time.
On June 13, 1997, Mr. Messman telecopied the following letter to Mr. Pate:
Mr. James L. Pate
Chairman, President & CEO
Pennzoil Company
P. O. Box 2967
Houston, TX 77252-2967
Dear Jim:
We are disappointed by your unwillingness to meet with us to
discuss the transaction proposal set forth in our letter of June 10th.
Without such a meeting, you and your Board will not be in a position
to make an informed decision regarding our proposal.
In one of our conversations, you indicated that you thought your
stock could reach $80 - $100 in four to five years. That is certainly
a worthy and ambitious objective. However, our proposal gives your
shareholders not only that possible future value today, but also the
opportunity to benefit from the growth of the combined company. We do
not see how any realistic long range plan for Pennzoil can compare
favorably with our proposal.
If you have analyzed our proposal, you will see that it is
accretive in discretionary cash flow per share. Since cash flow per
share is the primary determinant of value for E & P companies, we
expect the stock price of the combined company to rise appreciably.
Given the attributes of the combined company, the beneficial effect
could be enhanced by a higher price to cash flow multiple for the
stock.
The market price of Pennzoil stock has been running up in the
last two weeks, compared to industry indexes. We are concerned that
confidentiality has been breached. Let me assure you that we have made
every effort to prevent this from occurring on our side.
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As stated in my June 10th letter, our proposal reflects a review
of only publicly available information. If your revised 5-year plan
contains information which supports greater values, we are fully
prepared to increase our proposal.
Jim, our proposed transaction makes terrific sense for all of the
constituencies of both companies. It seems particularly obvious that
it is the best course of action for the shareholders of both
companies. Certainly, the values created by our proposal would
represent a tremendous achievement on your part for your shareholders.
Therefore, I assume that you will share both our June 10th and this
letter with your Board.
We repeat our request to meet with you promptly.
Sincerely,
/s/ Jack
Jack L. Messman
On June 20, 1997, Mr. Pate telecopied the following letter to Mr. Messman:
Mr. Jack L. Messman
Chairman and Chief Executive Officer
Union Pacific Resources Group Inc.
801 Cherry Street
Fort Worth, Texas 76102-6803
Dear Jack:
The Pennzoil Board of Directors has met and carefully considered
your letters of June 10 and 13, 1997 together with its advisors and
has instructed me to make this reply.
The Board strongly believes that this is not the time to be
considering a transaction such as that suggested in your letters. As
you well know, Pennzoil has undergone a major restructuring in the
last few years and is only just beginning to realize for its
shareholders the tremendous values that it will unlock. The Board
believes that the best interests of Pennzoil's shareholders will be
served by independently pursuing its Strategic Plan rather than a sale
of the Company.
In addition, the Board views the proposed structure of your
transaction as a classic front-end loaded, two-tier proposal, which
would be coercive to Pennzoil's shareholders. Even assuming that this
structure might be eliminated, the Board believes that your suggestion
of value is inadequate, especially when compared to the values that
can be achieved through execution of our Strategic Plan and related
opportunities. The Board is not impressed with your calculations of
the premium over market price associated with your proposal because we
believe that the marketplace, like our shareholders, does not fully
appreciate the benefits already achieved, and still to be achieved,
under our Plan.
In light of these conclusions, the Board sees little point in
debating or refuting the many assertions of opinion in your letters,
or in correcting the erroneous factual matters they contain. Likewise,
this brief summary of the basis for the Board's decision does not
address all of its concerns or objections to your proposal. Simply
stated, the Board is not interested in pursuing a transaction with
Union Pacific Resources Group Inc.
Sincerely,
/s/ Jim
James L. Pate
At a meeting of the UPR Board on June 21, 1997, the UPR Board considered
presentations by management and its financial and legal advisors and approved
the commencement of the Offer on June 23, 1997.
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On June 23, 1997, Mr. Messman telecopied the following letter to Mr. Pate:
Mr. James L. Pate
Chairman and Chief Executive Officer
Pennzoil Company
P.O. Box 2967
Houston, TX 77252-2967
Dear Jim:
As you know from our prior communications, the Board of Directors
and management of Union Pacific Resources Group Inc. (UPR) believe
that UPR and Pennzoil Company would be an ideal combination--providing
an outstanding strategic fit. Together, they would create the premier
independent exploration and production company in the United States
and significantly enhance value for shareholders of both companies.
We have repeatedly attempted, over the past four months, to
discuss with you a possible transaction that would lead to such a
combination and at the same time provide Pennzoil shareholders a
substantial premium over the current market price of their shares.
However, in my continuing efforts to communicate with you since
February, you have rejected every attempt to engage in constructive
discussion of such a proposal. This refusal continued even after we
sent a specific proposal to you on June 10th that would have provided
Pennzoil shareholders a substantial premium. In your letter of June
20th, you and Pennzoil's Board of Directors rejected our proposal,
still without any discussion with us.
Your continued refusal to discuss the rationale or valuation of a
transaction has left us with no choice but to present our offer
directly to Pennzoil shareholders. While we are still prepared to
discuss a friendly transaction, the UPR Board of Directors strongly
supports pursuing a business combination now.
Accordingly, UPR is publicly announcing today a cash tender offer
to acquire 50.1% of the outstanding common shares of Pennzoil at a
price valued at $84 per share. This represents a 41% premium over
Pennzoil's closing price of $59.625 per share on June 20, 1997, a 56%
premium over the closing price 30 days ago and a 56% premium over the
average closing price for the past 12 months.
We also propose that, upon consummation of the tender offer, UPR
and Pennzoil enter into a merger transaction in which each remaining
Pennzoil share will be exchanged for a number of UPR shares,
determined, within a pricing collar of $25 to $30, by dividing $84 by
the average of the closing prices of UPR common stock for the twenty
consecutive trading days ending five days prior to the meeting of
Pennzoil shareholders called for the purpose of voting on the proposed
merger. In the event that the UPR exchange ratio price is less than
$25 or greater than $30, the exchange ratio will be fixed at 3.36
shares, or 2.80 shares, respectively. The exchange of shares is
expected to be tax-free for Pennzoil shareholders.
The realization of our proposed value would be a remarkable
achievement for your shareholders. In addition to the substantial,
immediate cash premium that your shareholders would receive, the stock
portion of the transaction would offer them an ongoing ownership
position in an outstanding company.
UPR will bring to the proposed combination its expertise in
increasing production and reserves from oil and gas properties quickly
and efficiently, its world class technical skills and the financial
resources to capitalize on development opportunities in the large
inventory of core properties of both companies.
Pennzoil will bring to the transaction a substantial domestic
production base, extensive opportunities for development and
exploratory drilling and its own employees' talents. Importantly, UPR
can readily apply its proven business model to Pennzoil's properties
to increase their production and value. Further, Pennzoil's globally
recognized brand name and downstream energy operations will complement
UPR's large gas processing and marketing business. These two companies
belong together.
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On March 4th of this year, you told me you felt that the value of
Pennzoil stock could possibly reach $80-$100 per share over the course
of the next four to five years, if Pennzoil's strategic plan is
successfully implemented. As you see, the proposed transaction would
not only offer Pennzoil shareholders a certain value today, which is
substantially above the present value of your suggested range of
projected future prices, it would also offer Pennzoil shareholders the
opportunity to benefit from the growth of the combined company.
In your letter of June 20th, you made the unusual statement that,
'... the marketplace, like [Pennzoil] shareholders, does not fully
appreciate the benefits already achieved, and still to be achieved,
under [Pennzoil's] plan.' We are surprised that you would justify your
refusal to consider our offer by questioning the judgment of Pennzoil
shareholders and the marketplace.
Frankly, we do not see how any existing or newly created
long-range plan from you can compare favorably, or compete
economically, with our proposal for Pennzoil. In my view, your
repeated rejections of our efforts to initiate discussions regarding a
merger have been a delaying tactic, providing time to allow you to try
to develop yet another strategic plan. Over the past several years,
such plans by Pennzoil have failed to deliver value. Based on past
performance, Pennzoil shareholders could justifiably conclude that any
new plan, and its projections will be similarly unsuccessful and
designed primarily to entrench the status quo at Pennzoil. Our
proposal, on the other hand, will deliver substantial value today and
in the future.
The combined company will generate growth and value that surpass
what Pennzoil by itself can achieve, for several reasons:
o UPR's proven ability to apply drilling technology will increase --
quickly and efficiently -- the reserves and production from
Pennzoil's properties.
o The combined company will have a strong and balanced portfolio of
oil and gas properties, including potentially high-impact
international prospects, to which UPR's development expertise will
be applied.
o The combined company will have the financial strength to nearly
double capital spending to drill and develop Pennzoil's properties,
without reducing capital spending on UPR's properties. In addition,
it will have the resources to pursue significant new E&P
opportunities both domestically and internationally, as well as to
fund the strategic growth of the downstream businesses.
o Greater operating and administrative efficiencies will be achieved
by increasing production and reducing per-unit costs.
You recognized the compelling business logic of a merger when in
1995 you first suggested that our two companies merge. Your January
25, 1995 letter was correct in pointing out that Pennzoil 'provided
the best possible fit' with UPR. We agree with your assertion that,
'The combined entity would become the premier exploration and
production company in the world.' Yet, in contrast to your very strong
positive feelings two years ago, you indicated in a letter to me on
May 8, 1997 that Pennzoil faced more difficulties in 1995 than it does
now and that therefore a merger somehow no longer makes sense.
We do not understand why you believed that two years ago, when
Pennzoil faced particularly severe problems, it was in a better
position than it is now to merge with UPR and form the premier
independent E&P company. In fact, we believe that today the benefits
from a combination would come even more quickly. If we join our two
companies, with all of their complementary strengths, consider what we
can accomplish together -- the tremendous value we will build for our
shareholders. You had a great idea in 1995, and it is still a great
idea today.
I believe that by working together, we have the opportunity to
accomplish the best strategic merger in the energy business in recent
history. Growth is the driving force behind this transaction, and
clearly our proposal to build the combined company serves the
interests of shareholders of both UPR and Pennzoil.
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The merger also will create expanded opportunities for the
employees of UPR and Pennzoil, who will work in a stimulating and
rewarding environment. For the states and communities where UPR and
Pennzoil operate -- including Texas, where we will continue to
maintain corporate offices in both Fort Worth and Houston -- the
combined company and its strong growth prospects will be a major
asset. As I have previously stated, we are willing to consider having
the name of the new company include, or be, Pennzoil.
The number one strategic priority of our Company is to make the
combination of UPR and Pennzoil a reality. Given what we together can
accomplish for our shareholders, employees and other constituencies,
we were very surprised that you were opposed to even receiving a
proposal from us. We hope you will come to recognize the value this
transaction offers. We stand ready to meet at any time to discuss
any -- or all -- aspects of our proposed transaction, including
structure.
Together, UPR and Pennzoil will quickly forge a uniquely strong,
dynamic company. We urge you and Pennzoil's Board of Directors to
recognize the immediate and long-term value of this transaction for
Pennzoil shareholders.
Sincerely,
/s/ Jack
Jack L. Messman
Chairman & CEO
cc: Pennzoil Company Board of Directors
On June 23, 1997, UPR commenced the Offer.
On June 23, 1997, UPR and Purchaser commenced litigation against Pennzoil
and the Pennzoil Board in the Chancery Court of Delaware seeking, among other
things, an order compelling the Pennzoil Board to redeem the Rights or render
the Rights Agreement inapplicable to the Offer and the Proposed Merger, and to
compel the Pennzoil Board to approve the Offer and the Proposed Merger for
purposes of Section 203 and for purposes of Article Sixth of Pennzoil's Restated
Certificate of Incorporation, all on the grounds that the failure to do so would
constitute a breach of the Pennzoil Board's fiduciary obligations to Pennzoil
stockholders under Delaware law. UPR and Purchaser have also commenced
litigation against Pennzoil in the United States District Court for the Northern
District of Texas seeking a declaratory judgment that the disclosure documents
which have been filed with the Commission by UPR and Purchaser in connection
with the Offer comply fully with all applicable provisions of law. Purchaser and
UPR have also commenced an action in United States District Court for the Middle
District of Louisiana seeking a declaratory judgment that a Louisiana state
takeover statute as applied to any Shares purchased pursuant to the Offer is
unconstitutional and an injunction against enforcement of such statute in
connection with the Offer.
Except as described in this Offer to Purchase, and other than for ordinary
course purchases and sales and joint working interests and processing
arrangements not material to Pennzoil, UPR or its affiliates or to the
relationship between them, as of the date hereof (a) there have not been any
contacts, transactions or negotiations between Purchaser or UPR, any of their
respective subsidiaries or, to the best knowledge of Purchaser, any of the
persons listed on Schedule I hereto, on the one hand, and Pennzoil or any of its
directors, officers or affiliates, on the other hand, that are required to be
disclosed pursuant to the rules and regulations of the Commission and (b) none
of Purchaser, UPR or, to the best knowledge of Purchaser, any of the persons
listed on Schedule I hereto has any contract, arrangement, understanding or
relationship with any person with respect to any securities of Pennzoil. During
the Offer, Purchaser and UPR intend to have ongoing contacts and negotiations
with Pennzoil and its directors, officers and stockholders.
During the period from May 16, 1997 through June 11, 1997, UPR and
Purchaser purchased an aggregate of 87,600 Shares in open market transactions
effected on the NYSE at an average price of $57.147 per Share plus brokerage
commissions and related expenses. See Schedule II. Except as described in this
Offer to Purchase (including Schedule II hereto), none of Purchaser, UPR, or to
the best knowledge of Purchaser, any of the
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persons listed on Schedule I hereto, or any associate, or majority owned
subsidiary of Purchaser, UPR or any of the persons so listed, beneficially owns
any equity security of Pennzoil, and none of Purchaser, UPR or, to the best
knowledge of Purchaser, any of the persons referred to above, or any of the
respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of Pennzoil
during the past 60 days. Purchaser and UPR disclaim beneficial ownership of any
Shares owned by any pension plan of UPR or any affiliate of UPR.
11. PURPOSE OF THE OFFER; PLANS FOR PENNZOIL.
General. The purpose of the Offer is to acquire a majority of the Shares
as the first step in a negotiated acquisition of the entire equity interest in
Pennzoil. The purpose of the Proposed Merger is to acquire all Shares not
beneficially owned by UPR, Purchaser or any direct or indirect wholly owned
subsidiary of UPR following consummation of the Offer.
Purchaser is seeking to enter into the Proposed Merger with Pennzoil as
promptly as practicable following consummation of the Offer. Under the Proposed
Merger Agreement, at the effective time of the Proposed Merger, each Share that
is outstanding prior to the effective time (other than Shares held in the
treasury of Pennzoil or owned by UPR, Purchaser or any direct or indirect wholly
owned subsidiary of UPR) would be converted into shares of UPR Common Stock. The
exchange ratio in the Proposed Merger would be determined by dividing $84.00 by
the average closing price of the UPR Common Stock for the twenty consecutive
trading days ending five days prior to the meeting of Pennzoil stockholders
called for the purpose of voting upon the Proposed Merger with UPR (the 'UPR
Exchange Ratio Price'), provided that the UPR Exchange Ratio Price shall not be
less than $25.00, nor greater than $30.00. Based on the closing price $26.375
for the UPR Common Stock on June 20, 1997, the last trading day before the
commencement of the Offer, the exchange ratio would be 3.185 shares of UPR
Common Stock per Share. If the UPR Exchange Ratio Price was less than or equal
to $25.00, or greater than or equal to $30.00, on the determination date, then
the exchange ratio would be fixed at 3.36 shares, or 2.80 shares, respectively.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE UPR COMMON
STOCK.
The Proposed Merger Agreement is expected to provide that, upon acceptance
of and payment for the Shares purchased in the Offer and from time to time
thereafter, UPR would be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Pennzoil Board as will give UPR
representation on the Pennzoil Board equal to the product of the total number of
directors on the Pennzoil Board multiplied by the percentage that the aggregate
number of Shares then owned by UPR or its affiliates bears to the total number
of Shares then outstanding.
Consummation of the Proposed Merger will require approval by the Pennzoil
Board and the affirmative vote of the holders of a majority of the outstanding
Shares. The Proposed Merger Agreement is expected to provide that UPR will vote
all Shares acquired by it in favor of the Proposed Merger. If UPR purchases
Shares pursuant to the Offer and the Minimum Tender Condition and the Board
Action Condition are satisfied, UPR would have a sufficient number of Shares to
approve the Proposed Merger without the affirmative vote of any other holder of
Shares. Although UPR would seek consummation of the Proposed Merger as soon as
practicable following the purchase of Shares pursuant to the Offer, the exact
timing and details of the Proposed Merger would depend on a variety of factors
and legal requirements, including, among other things, whether the conditions to
the Offer have been satisfied or waived. In accordance with the rules of the
NYSE, the issuance of UPR Common Stock in the Proposed Merger will require the
affirmative vote of a majority of the votes cast by the holders of UPR Common
Stock at a meeting at which the holders of a majority of the outstanding shares
of UPR Common Stock are represented and vote on such matter. If Purchaser
determines in its sole discretion at any time that it is unlikely that the Board
Action Condition will be satisfied, Purchaser presently intends to terminate the
Offer.
The Offer is conditioned upon, among other things, either Purchaser's
designees having been elected to the Pennzoil Board so that such designees
constitute a majority of the Pennzoil Board, or Pennzoil, UPR and Purchaser
entering into the Proposed Merger Agreement. Although UPR has sought to enter
into negotiations with Pennzoil with respect to the Proposed Merger Agreement
and continues to pursue such negotiations, there can be no assurance that such
negotiations will occur or, if such negotiations occur, as to the outcome
thereof. In the event UPR is unable to negotiate the Proposed Merger Agreement
with Pennzoil or is unable to obtain
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majority representation on the Pennzoil Board, Purchaser presently intends to
terminate the Offer. Purchaser is currently reviewing its options with respect
to the Offer and may consider, among other things, changes to the material terms
of the Offer. Purchaser reserves the right to amend the Offer (including
amending the number of Shares to be purchased, the purchase price and the
proposed second-step merger consideration) if it enters into the Proposed Merger
Agreement or to negotiate a merger agreement with Pennzoil not involving a
tender offer pursuant to which Purchaser would terminate the Offer and the
Shares would, upon consummation of such merger, be converted into cash, UPR
Common Stock and/or other securities in such amounts as are negotiated by UPR
and Pennzoil. UPR and Purchaser are exploring ways to encourage the Pennzoil
Board to permit Pennzoil's stockholders to participate in the Offer and the
Proposed Merger. These may include a solicitation of proxies at Pennzoil's 1998
and 1999 annual meetings of stockholders.
THIS OFFER IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF OFFERS TO BUY
ANY SECURITIES WHICH MAY BE ISSUED IN ANY MERGER OR SIMILAR BUSINESS COMBINATION
INVOLVING PURCHASER, UPR OR PENNZOIL. THE ISSUANCE OF SUCH SECURITIES WOULD HAVE
TO BE REGISTERED UNDER THE SECURITIES ACT AND SUCH SECURITIES WOULD BE OFFERED
ONLY BY MEANS OF A PROSPECTUS COMPLYING WITH THE REQUIREMENTS OF THE SECURITIES
ACT.
Appraisal Rights and Other Matters. No appraisal rights are available in
connection with the Offer and the Proposed Merger. The Commission has adopted
Rule 13e-3 under the Exchange Act which is applicable to certain 'going private'
transactions and which may under certain circumstances be applicable to the
Proposed Merger. However, Rule 13e-3 would be inapplicable if (i) the Shares are
deregistered under the Exchange Act prior to the Proposed Merger or other
business combination or (ii) the Proposed Merger or other business combination
is consummated within one year after the purchase of the Shares pursuant to the
Offer and the amount paid per Share in the Proposed Merger or other business
combination is at least equal to the amount paid per Share in the Offer. If
applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the fairness of the proposed transaction and the
consideration offered to minority stockholders in such transaction be filed with
the Commission and disclosed to stockholders prior to consummation of the
transaction.
Plans for Pennzoil. In connection with the Offer, UPR and Purchaser have
reviewed, and will continue to review, on the basis of publicly available
information, various possible business strategies that they might consider in
the event that Purchaser acquires control of Pennzoil, whether pursuant to the
Proposed Merger Agreement or otherwise. In addition, if and to the extent that
Purchaser acquires control of Pennzoil or otherwise obtains access to the books
and records of Pennzoil, UPR and Purchaser intend to conduct a detailed review
of Pennzoil and its assets, corporate structure, dividend policy,
capitalization, operations, properties, policies, management and personnel and
consider and determine what, if any, changes would be desirable in light of the
circumstances which then exist. Such strategies could include, among other
things, changes in Pennzoil's business, corporate structure, Restated
Certificate of Incorporation, By-laws, capitalization, management or dividend
policy.
If the Proposed Merger is consummated, UPR plans to increase significantly
capital expenditures related to drilling and developing Pennzoil's properties,
without reducing capital expenditures related to UPR's existing properties. In
addition, UPR intends to use its ability in applied drilling technology to
increase the reserves and production from Pennzoil's portfolio of oil and gas
properties.
Except as indicated in this Offer to Purchase, neither UPR nor Purchaser
has any present plans or proposals which relate to or would result in an
extraordinary corporate transaction, such as a merger, consolidation,
reorganization or liquidation, involving Pennzoil or any of its subsidiaries, a
sale or transfer of a material amount of assets of Pennzoil or any of its
subsidiaries or any material change in Pennzoil's capitalization or dividend
policy a class of securities of Pennzoil being delisted from a national
securities exchange, a class of equity securities of Pennzoil becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Exchange
Act, or any other material changes in Pennzoil's corporate structure or
business, or the composition of the Pennzoil Board or Pennzoil's management.
Pennzoil Charter and By-Law Provisions. Pennzoil's Restated Certificate of
Incorporation provides for a number of anti-takeover defenses that were
summarized in Pennzoil's Registration Statement on Form S-3, dated November 5,
1993, substantially as set forth below.
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Article Fifth of the Restated Certificate of Incorporation of Pennzoil
provides that the number of directors of Pennzoil shall be not less than three
nor more than 13 as specified from time to time in the By-laws of Pennzoil. The
Restated Certificate of Incorporation provides that the Board shall be divided
into three classes of directors, with the classes to be as nearly equal in
number of directors as possible. One class of directors is elected each year for
a three-year term and the stockholders are entitled to cumulative voting in the
election of directors. The Restated Certificate of Incorporation provides that
no director shall be removed from office by vote or other action of the Pennzoil
stockholders except for cause. In addition, the Restated Certificate of
Incorporation provides that newly-created directorships resulting from any
increase in the authorized number of directors or other vacancies in the Board
of Directors may be filled by a majority vote of the remaining directors.
Pennzoil's Restated Certificate of Incorporation also provides that no action
required or permitted to be taken at any annual or special meeting of
stockholders of Pennzoil may be taken without a meeting, and the power of
stockholders to act by written consent is specifically denied. Pennzoil's
By-laws provide that special meetings of stockholders may be called only by the
Board of Directors, the Chairman of the Board, the Executive Committee of the
Board of Directors, the Chairman of the Executive Committee of the Board of
Directors or the President of Pennzoil. As a result of the classified Board and
related provisions, Purchaser may be unable to elect a majority of directors to
the Pennzoil Board until the second annual meeting of stockholders of Pennzoil
is held following consummation of the Offer even if Purchaser acquires a
majority of the outstanding Shares in the Offer. As approval of the Board of
Directors is required by the Delaware Law for a merger, this provision may have
the effect of delaying the Proposed Merger unless the Pennzoil Board agrees to
the Proposed Merger Agreement and, pursuant thereto, upon consummation of the
Offer, agrees to elect to the Pennzoil Board designees of Purchaser so that such
designees constitute a majority of the Pennzoil Board.
Under Pennzoil's Restated Certificate of Incorporation, the vote of holders
of 80% of the voting stock of Pennzoil is required for approval of, with certain
exceptions, a merger or consolidation of Pennzoil with or into another
corporation, a sale or lease of all or substantially all the assets of Pennzoil
to another corporation, person or entity and, under certain conditions, a sale
or lease to Pennzoil or any subsidiary of Pennzoil of assets in exchange for
voting securities of Pennzoil, in each case where the other party to the
transaction is a beneficial owner, directly or indirectly, of 5% or more of the
outstanding shares of any class or series of voting stock of Pennzoil. In
addition, for any transaction to be effected for which the foregoing 80% vote is
required, it is also required that such transaction be approved by a majority of
the outstanding voting stock of Pennzoil, exclusive of the voting stock
beneficially owned by the party whose interest in the transaction and stock
ownership in Pennzoil gives rise to the requirement of the 80% vote. Any
amendments to Pennzoil's Restated Certificate of Incorporation that would amend
the foregoing requirements require the same affirmative votes.
The Rights. Set forth below is a summary description of the Rights which
was derived from the Pennzoil Rights 8-K.
Effective October 28, 1994, the Pennzoil Board declared a dividend of one
Right for each outstanding Share to stockholders of record at the close of
business on November 11, 1994. Each Right entitles the registered holder to
purchase from Pennzoil a unit consisting of one one-hundredth of a share (a
'Unit') of Series A Junior Participating Preferred Stock, par value $1.00 per
share (the 'Preferred Stock'), at a purchase price of $140 per Unit, subject to
adjustment (the 'Purchase Price').
Initially, the Rights will be attached to all certificates representing
outstanding Shares, and no separate certificates for the Rights ('Rights
Certificates') will be distributed. The Rights will separate from the Shares and
Rights Certificates will be distributed to the holders of Shares (a
'Distribution Date') upon the earlier of (i) ten days following a public
announcement that a person or group of affiliated or associated persons (an
'Acquiring Person') has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Shares (the date of the announcement
being the 'Stock Acquisition Date'), or (ii) ten business days (or such later
date as may be determined by the Pennzoil Board before the Distribution Date
occurs) following the commencement of a tender offer or exchange offer that
would result in a person's becoming an Acquiring Person. Certain inadvertent
acquisitions will not result in a person's becoming an Acquiring Person if the
person promptly divests itself of sufficient Shares. Until the Distribution
Date, (a) the Rights will be evidenced by the Share certificates (together with
a copy of a Summary of Rights or bearing the notation referred to below) and
will be transferred with and only with such Share certificates, (b) new Share
certificates issued after November 11, 1994 will contain a notation
incorporating the Rights Agreement by reference and (c) the surrender for
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transfer of any Share certificate (with or without a copy of the Summary of
Rights) will also constitute the transfer of the Rights associated with the
Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on October 28, 1999, unless earlier redeemed or
exchanged by Pennzoil as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Shares as of the close of business on the
Distribution Date and, from and after the Distribution Date, the separate Rights
Certificates alone will represent the Rights. All Shares issued prior to the
Distribution Date will be issued with Rights. Shares issued after the
Distribution Date in connection with certain employee benefit plans or upon
conversion of certain securities will be issued with Rights. Except as otherwise
determined by the Pennzoil Board, no other Shares issued after the Distribution
Date will be issued with Rights.
In the event (a 'Flip-In Event') that a person becomes an Acquiring Person
(except pursuant to a tender or exchange offer for all outstanding Shares at a
price and on terms that a majority of the independent directors of Pennzoil
determines to be fair to and otherwise in the best interests of Pennzoil and its
stockholders (a 'Permitted Offer')), each holder of a Right will thereafter have
the right to receive, upon exercise of such Right, a number of Shares (or, in
certain circumstances, cash, property or other securities of Pennzoil) having a
Current Market Price (as defined in the Rights Agreement) equal to two times the
exercise price of the Right. Notwithstanding the foregoing, following the
occurrence of any Flip-In Event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by or
transferred to any Acquiring Person (or by certain related parties) will be null
and void in the circumstances set forth in the Rights Agreement. However, Rights
are not exercisable following the occurrence of any Flip-In Event until such
time as the Rights are no longer redeemable by Pennzoil as set forth below.
For example, at an exercise price of $140 per Right, each Right not owned
by an Acquiring Person (or by certain related parties) following an event set
forth in the preceding paragraph would entitle its holder to purchase $280 worth
of Shares (or other consideration, as noted above), based upon its then Current
Market Price, for $140. Assuming that the Shares had a Current Market Price of
$50 per Share at such time, the holder of each valid Right would be entitled to
purchase 5.6 Shares for $140.
In the event (a 'Flip-Over Event') that, at any time from and after the
time an Acquiring Person becomes such, (i) Pennzoil is acquired in a merger or
other business combination transaction (other than certain mergers that follow a
Permitted Offer), or (ii) 50% or more of Pennzoil's assets or earning power is
sold or transferred, each holder of a Right (except Rights that previously have
been voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of shares of common stock of the acquiring company having a
Current Market Price equal to two times the exercise price of the Right. Flip-In
Events and Flip-Over Events are collectively referred to as 'Triggering Events.'
The Purchase Price payable, and the number of Units of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units are required to be issued and, in lieu thereof, an
adjustment in cash may be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise. Pursuant to the Rights
Agreement, Pennzoil reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock will be issued.
At any time until ten days following the first date of public announcement
of the occurrence of a Flip-In Event, Pennzoil may redeem the Rights in whole,
but not in part, at a price of $.01 per Right, payable, at the option of
Pennzoil, in cash, Shares or such other consideration as the Pennzoil Board may
determine.
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Immediately upon the effectiveness of the action of the Pennzoil Board ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
At any time after the occurrence of a Flip-In Event and prior to a person's
becoming the beneficial owner of 50% or more of the Shares then outstanding,
Pennzoil may exchange the Rights (other than Rights owned by an Acquiring Person
or an affiliate or an associate of an Acquiring Person, which will have become
void), in whole or in part, at an exchange ratio of one Share, and/or other
equity securities deemed to have the same value as one Share, per Right, subject
to adjustment.
Until a Right is exercised, the holder thereof, as such, has no rights as a
stockholder of Pennzoil, including, without limitation, the right to vote or to
receive dividends.
Other than the redemption price, any of the provisions of the Rights
Agreement may be amended by the Pennzoil Board as long as the Rights are
redeemable. Thereafter, the provisions of the Rights Agreement may be amended by
the Pennzoil Board in order to cure any ambiguity, defect or inconsistency, to
make changes that do not materially adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person), or to shorten or
lengthen any time period under the Rights Agreement; provided, however, that no
amendment to lengthen the time period governing redemption shall be made at such
time as the Rights are not redeemable.
The foregoing summary of the Rights does not purport to be complete and is
qualified in its entirety by reference to the description included in the
Pennzoil Rights 8-K and the Rights Agreement and the other documents filed
therewith. The Pennzoil Rights 8-K should be available for inspection and copies
thereof should be obtainable in the manner set forth in Section 7 under
'Available Information.'
PURSUANT TO THE BOARD ACTION CONDITION, THE OFFER IS CONDITIONED UPON THE
RIGHTS HAVING BEEN REDEEMED BY THE PENNZOIL BOARD OR PURCHASER BEING SATISFIED,
IN ITS SOLE DISCRETION, THAT THE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE
INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER. UNLESS THE BOARD ACTION
CONDITION WITH RESPECT TO THE RIGHTS IS SATISFIED, STOCKHOLDERS WILL BE REQUIRED
TO TENDER ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF
SHARES IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 2. UNLESS THE
DISTRIBUTION DATE OCCURS, A TENDER OF SHARES WILL ALSO CONSTITUTE A TENDER OF
THE ASSOCIATED RIGHTS.
UPR and Purchaser have commenced litigation against Pennzoil and the
Pennzoil Board in the Chancery Court of Delaware seeking, among other things, an
order compelling the Pennzoil Board to redeem the Rights or render the Rights
Agreement inapplicable to the Offer and the Proposed Merger, and to compel the
Pennzoil Board to approve the Offer and the Proposed Merger for purposes of
Section 203 and for purposes of Article Sixth of the Pennzoil Restated
Certificate of Incorporation, all on the grounds that the failure to do so would
constitute a breach of the Pennzoil Board's fiduciary obligations to Pennzoil
stockholders under Delaware law.
12. DIVIDENDS AND DISTRIBUTIONS.
If, on or after June 23, 1997, Pennzoil should (a) split, combine or
otherwise change the Shares or its capitalization (other than by redemption of
the Rights in accordance with their terms as such terms have been publicly
disclosed prior to June 23, 1997), (b) acquire or otherwise cause a reduction in
the number of outstanding Shares or other securities (other than as aforesaid)
or (c) issue or sell additional Shares (other than the issuance of Shares under
option prior to June 23, 1997, in accordance with the terms of such options as
such terms have been publicly disclosed prior to June 23, 1997), shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire any of the foregoing, then, subject to the provisions of Section 14,
Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including without
limitation, the number or type of securities offered to be purchased.
If, on or after June 23, 1997, Pennzoil should declare or pay any cash
dividend on the Shares or other distribution on the Shares (other than a regular
cash quarterly dividend not in excess of $.25 per Share, having customary and
usual record and payment dates and, in the event the Rights are redeemed, the
price of redemption thereof), or issue with respect to the Shares any additional
Shares, shares of any other class of capital stock, other voting securities or
any securities convertible into, or rights, warrants or options, conditional or
otherwise, to
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acquire, any of the foregoing, payable or distributable to stockholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to Purchase, or their nominees or transferees on Pennzoil's stock transfer
records, then, subject to the provisions of Section 14, (a) the Offer Price may,
in the sole discretion of Purchaser, be reduced by the amount of any such cash
dividend or cash distribution and (b) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering stockholders will (i)
be received and held by the tendering stockholders for the account of Purchaser
and will be required to be promptly remitted and transferred by each tendering
stockholder to the Depositary for the account of Purchaser, accompanied by
appropriate documentation of transfer, or (ii) at the direction of Purchaser, be
exercised for the benefit of Purchaser, in which case the proceeds of such
exercise will promptly be remitted to Purchaser. Pending such remittance and
subject to applicable law, Purchaser will be entitled to all rights and
privileges as owner of any such noncash dividend, distribution, issuance or
proceeds and may withhold the entire Offer Price or deduct from the Offer Price
the amount or value thereof, as determined by Purchaser in its sole discretion.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE LISTING; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Exchange Listing. The Shares are listed on the NYSE. According to the
NYSE's published guidelines, the NYSE would consider delisting the Shares if,
among other things, the number of holders of at least 100 Shares should fall
below 1,200, the number of publicly held Shares (exclusive of holdings of
officers and directors of Pennzoil and their immediate families and other
concentrated holdings of 10% or more) should fall below 600,000, or the
aggregate market value of the publicly held Shares should fall below $5,000,000.
According to the Pennzoil 10-K, there were 18,504 holders of record of Shares on
December 31, 1996 and, according to the Pennzoil 10-Q, as of April 30, 1997,
there were 46,951,151 Shares outstanding.
If the NYSE were to delist the Shares, the market therefor could be
adversely affected. It is possible that the Shares would be traded on other
securities exchanges or in the over-the-counter market, and that price
quotations would be reported by such exchanges, or through the Nasdaq National
Market ('Nasdaq') or other sources. The extent of the public market for the
Shares and the availability of such quotations would, however, depend upon the
number of stockholders and/or the aggregate market value of the Shares remaining
at such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors. If, as a result of the purchase of the
Shares pursuant to the Offer or otherwise, the Shares no longer meet the
requirements of the NYSE for continued inclusion in the NYSE and the Shares are
no longer included in the NYSE, the market for, and the value of, the Shares
could be adversely affected.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of Pennzoil to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by Pennzoil
to its stockholders and to the Commission and would make certain provisions of
the Exchange Act no longer applicable to Pennzoil, such as the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act, the requirement
of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with stockholders' meetings and the related requirement of furnishing
an annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to 'going private' transactions. Furthermore, the
ability of 'affiliates' of Pennzoil and persons holding 'restricted securities'
of Pennzoil to dispose of such securities pursuant to Rule 144 or 144A
promulgated under the Securities Act may be impaired or eliminated. Purchaser
intends to seek to cause Pennzoil to apply for termination of registration of
the Shares under the Exchange Act as soon after the completion of the Offer as
the requirements for such termination are met.
Based on publicly available information, the Rights are registered under
the Exchange Act, but are attached to the Shares and are not currently
separately transferable. Purchaser believes that, as a result of the
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commencement of the Offer, the Distribution Date may occur as early as July 7,
1997, unless prior to such date the Pennzoil Board redeems the Rights, amends
the Rights Agreement to make the Rights inapplicable to the Offer or delays the
Distribution Date. See Section 11. According to the Pennzoil Rights 8-K, as soon
as possible after the occurrence of the Distribution Date, certificates for
Rights will be sent to all holders of Rights and the Rights will become
transferable apart from the Shares. If the Distribution Date occurs and the
Rights separate from the Shares, the foregoing discussion with respect to the
effect of the Offer on Exchange Act registration would apply to the Rights in a
similar manner.
If registration of the Shares is not terminated prior to the Proposed
Merger, then the Shares will be delisted from the NYSE and the registration of
the Shares and Rights under the Exchange Act will be terminated following the
consummation of the Proposed Merger.
Margin Regulations. The Shares are currently 'margin securities' under the
regulations of the Board of Governors of the Federal Reserve System (the
'Federal Reserve Board'), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
'margin securities' for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers.
14. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time in its sole discretion, Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, and may delay the acceptance for payment of
or, subject to the restriction referred to above, the payment for, any tendered
Shares, and may terminate the Offer, if, in the sole judgment of Purchaser (i)
at or prior to the Expiration Date any one or more of the Minimum Tender
Condition or the Board Action Condition, has not been satisfied, (ii) the
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall not have expired or been terminated or (iii) at any time on
or after June 23, 1997 and before the time of payment for any such Shares
(whether or not any Shares have theretofore been accepted for payment pursuant
to the Offer), any of the following events shall occur or shall be determined by
Purchaser to have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding, application or counterclaim by any government or governmental,
regulatory or administrative authority or agency, domestic, foreign or
supranational (each, a 'Governmental Entity'), or by any other person,
domestic or foreign, before any court or Governmental Entity, (i)(A)
challenging or seeking to, or which is reasonably likely to, make illegal,
delay or otherwise directly or indirectly restrain or prohibit, or seeking
to, or which is reasonably likely to, impose voting, procedural, price or
other requirements, in addition to those required by Federal securities
laws and the Delaware Law (each as in effect on the date of this Offer to
Purchase), in connection with, the making of the Offer, the acceptance for
payment of, or payment for, some of or all the Shares by Purchaser, UPR or
any other affiliate of UPR or the consummation by Purchaser, UPR or any
other affiliate of UPR of a merger or other similar business combination
with Pennzoil, (B) seeking to obtain material damages or (C) otherwise
directly or indirectly relating to the transactions contemplated by the
Offer or any such merger or business combination, (ii) seeking to prohibit
the ownership or operation by Purchaser, UPR or any other affiliate of UPR
of all or any portion of the business or assets of Pennzoil and its
subsidiaries or of Purchaser, UPR or any other affiliate of UPR or to
compel Purchaser, UPR or any other affiliate of UPR to dispose of or hold
separate all or any portion of the business or assets of Pennzoil or any of
its subsidiaries or of Purchaser, UPR or any other affiliate of UPR or
seeking to impose any limitation on the ability of Purchaser, UPR or any
other affiliate of UPR to conduct such business or own such assets, (iii)
seeking to impose or confirm limitations on the ability of Purchaser, UPR
or any other affiliate of UPR effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or owned by Purchaser, UPR or any other affiliate of
UPR on all matters properly presented to Pennzoil's stockholders, (iv)
seeking to require divestiture by Purchaser, UPR or any other affiliate of
UPR of any Shares, (v) seeking any material diminution in the benefits
expected to be derived by
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Purchaser, UPR or any other affiliate of UPR as a result of the
transactions contemplated by the Offer or any merger or other similar
business combination with Pennzoil, (vi) otherwise directly or indirectly
relating to the Offer or which otherwise, in the sole judgment of
Purchaser, might materially adversely affect Pennzoil or any of its
subsidiaries or Purchaser, UPR or any other affiliate of UPR or the value
of the Shares or (vii) in the sole judgment of Purchaser, materially
adversely affecting the business, properties, assets, liabilities,
capitalization, stockholders' equity, condition (financial or otherwise),
operations, licenses or franchises, results of operations or prospects of
Pennzoil or any of its subsidiaries;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, enforced, promulgated, amended, issued or deemed applicable to (i)
Purchaser, UPR or any other affiliate of UPR or Pennzoil or any of its
subsidiaries or (ii) the Offer or any merger or other similar business
combination by Purchaser, UPR or any other affiliate of UPR with Pennzoil,
by any government, legislative body or court, domestic, foreign or
supranational, or Governmental Entity, other than the routine application
of the waiting period provisions of the HSR Act to the Offer, that, in the
sole judgment of Purchaser, might, directly or indirectly, result in any of
the consequences referred to in clauses (i) through (vii) of paragraph (a)
above;
(c) any change shall have occurred or been threatened (or any
condition, event or development shall have occurred or been threatened
involving a prospective change) in the business, properties, assets,
liabilities, capitalization, stockholders' equity, condition (financial or
otherwise), operations, licenses or franchises, results of operations or
prospects of Pennzoil or any of its subsidiaries that, in the sole judgment
of Purchaser, is or may be materially adverse to Pennzoil or any of its
subsidiaries, or Purchaser shall have become aware of any facts that, in
the sole judgment of Purchaser, have or may have material adverse
significance with respect to either the value of Pennzoil or any of its
subsidiaries or the value of the Shares to Purchaser, UPR or any other
affiliate of UPR;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States, Canada or abroad, (ii) any extraordinary or material adverse
change in the financial markets or major stock exchange indices in the
United States, Canada or abroad or in the market price of Shares, (iii) any
change in the general political, market, economic or financial conditions
in the United States, Canada or abroad that could, in the sole judgment of
Purchaser, have a material adverse effect upon the business, properties,
assets, liabilities, capitalization, stockholders' equity, condition
(financial or otherwise), operations, licenses or franchises, results of
operations or prospects of Pennzoil or any of its subsidiaries or the
trading in, or value of, the Shares, (iv) any material change in United
States or Canada currency exchange rates or any other currency exchange
rates or a suspension of, or limitation on, the markets therefor, (v) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, Canada or abroad, (vi) any
limitation (whether or not mandatory) by any government, domestic, foreign
or supranational, or Governmental Entity on, or other event that, in the
sole judgment of Purchaser, might affect the extension of credit by banks
or other lending institutions, (vii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or Canada or (viii) in the case of
any of the foregoing existing at the time of the commencement of the Offer,
a material acceleration or worsening thereof;
(e) Pennzoil or any of its subsidiaries shall have (i) split, combined
or otherwise changed, or authorized or proposed a split, combination or
other change of, the Shares or its capitalization (other than by redemption
of the Rights in accordance with their terms as such terms have been
publicly disclosed prior to June 23, 1997), (ii) acquired or otherwise
caused a reduction in the number of, or authorized or proposed the
acquisition or other reduction in the number of, outstanding Shares or
other securities (other than as aforesaid), (iii) issued or sold, or
authorized or proposed the issuance, distribution or sale of, additional
Shares (other than the issuance of Shares under option prior to June 23,
1997, in accordance with the terms of such options as such terms have been
publicly disclosed prior to June 23, 1997), shares of any other class of
capital stock, other voting securities or any securities convertible into,
or rights, warrants or options, conditional or otherwise, to acquire, any
of the foregoing, (iv) declared or paid, or proposed to declare or pay, any
dividend or other distribution, whether payable in cash, securities or
other property, on or with respect to any shares of capital stock of
Pennzoil (other than a regular cash quarterly dividend not in excess
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of $.25 per Share, having customary and usual record and payment dates and,
in the event the Rights are redeemed, the price of redemption thereof), (v)
altered or proposed to alter any material term of any outstanding security
(including the Rights) other than to amend the Rights Agreement to make the
Rights inapplicable to the Offer and the Proposed Merger, (vi) incurred any
debt other than in the ordinary course of business or any debt containing
burdensome covenants, (vii) authorized, recommended, proposed or entered
into an agreement, agreement in principle or arrangement or understanding
with respect to any merger, consolidation, liquidation, dissolution,
business combination, acquisition of assets, disposition of assets, release
or relinquishment of any material contractual or other right of Pennzoil or
any of its subsidiaries or any comparable event not in the ordinary course
of business, (viii) authorized, recommended, proposed or entered into, or
announced its intention to authorize, recommend, propose or enter into, any
agreement, arrangement or understanding with any person or group that in
the sole judgment of Purchaser could adversely affect either the value of
Pennzoil or any of its subsidiaries, joint ventures or partnerships or the
value of the Shares to Purchaser, UPR or any other affiliate of UPR, (ix)
entered into or amended any employment, change in control, severance,
executive compensation or similar agreement, arrangement or plan with or
for the benefit of any of its employees, consultants or directors, or made
grants or awards thereunder, other than in the ordinary course of business
or entered into or amended any agreements, arrangements or plans so as to
provide for increased or accelerated benefits to any such persons, (x)
except as may be required by law, taken any action to terminate or amend
any employee benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended) of Pennzoil or any of
its subsidiaries, or Purchaser shall have become aware of any such action
that was not disclosed in publicly available filings prior to June 23,
1997, or (xi) amended or authorized or proposed any amendment to,
Pennzoil's Restated Certificate of Incorporation or Pennzoil's By-laws, or
Purchaser shall become aware that Pennzoil or any of its subsidiaries shall
have proposed or adopted any such amendment that was not disclosed in
publicly available filings prior to June 23, 1997;
(f) a tender or exchange offer for any Shares shall have been made or
publicly proposed to be made by any other person (including Pennzoil or any
of its subsidiaries or affiliates), or it shall have been publicly
disclosed or Purchaser shall have otherwise learned that (i) any person,
entity (including Pennzoil or any of its subsidiaries) or 'group' (within
the meaning of Section 13(d)(3) of the Exchange Act) shall have acquired or
proposed to acquire beneficial ownership of more than 5% of any class or
series of capital stock of Pennzoil (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall have
been granted any right, option or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 5% of any class or series of
capital stock of Pennzoil (including the Shares), other than acquisitions
for bona fide arbitrage purposes only and other than as disclosed in a
Schedule 13G on file with the Commission prior to June 23, 1997, (ii) any
such person, entity or group that prior to June 23, 1997, had filed such a
Schedule with the Commission has acquired or proposes to acquire, through
the acquisition of stock, the formation of a group or otherwise, beneficial
ownership of 1% or more of any class or series of capital stock of Pennzoil
(including the Shares), or shall have been granted any right, option or
warrant, conditional or otherwise, to acquire beneficial ownership of 1% or
more of any class or series of capital stock of Pennzoil (including the
Shares), (iii) any person or group shall have entered into a definitive
agreement or an agreement in principle or made a proposal with respect to a
tender offer or exchange offer or a merger, consolidation or other business
combination with or involving Pennzoil or (iv) any person shall have filed
a Notification and Report Form under the HSR Act (or amended a prior filing
to increase the applicable filing threshold set forth therein) or made a
public announcement reflecting an intent to acquire Pennzoil or any assets
or subsidiaries of Pennzoil;
(g) any approval, permit, authorization or consent of any Governmental
Entity (including those described or referred to in Section 15) shall not
have been obtained on terms satisfactory to Purchaser in its sole
discretion; or
(h) Purchaser shall have reached an agreement or understanding with
Pennzoil providing for termination of the Offer, or Purchaser, UPR or any
other affiliate of UPR shall have entered into a definitive agreement or
announced an agreement in principle with Pennzoil providing for a merger or
other business combination with Pennzoil or the purchase of stock or assets
of Pennzoil;
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which, in the sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or inaction by Purchaser, UPR or any other
affiliate of UPR) giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and UPR and
may be asserted by Purchaser regardless of the circumstances giving rise to any
such condition or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion. The failure by Purchaser at any time
to exercise any of the foregoing rights will not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances will not be deemed a waiver with respect to any other facts and
circumstances and each such right will be deemed an ongoing right that may be
asserted at any time and from time to time. Any determination by Purchaser
concerning the events described in this Section 14 will be final and binding
upon all parties.
15. CERTAIN LEGAL MATTERS.
Except as described in this Section 15, based on a review of publicly
available filings made by Pennzoil with the Commission and other publicly
available information concerning Pennzoil, neither Purchaser nor UPR is aware of
any license or regulatory permit that appears to be material to the business of
Pennzoil and its subsidiaries, taken as a whole, that might be adversely
affected by Purchaser's acquisition of the Shares (and the indirect acquisition
of the stock of Pennzoil's subsidiaries) as contemplated herein or of any
approval or other action by any Governmental Entity that would be required or
desirable for the acquisition or ownership of the Shares by Purchaser as
contemplated herein. Should any such approval or other action be required or
desirable, Purchaser and UPR currently contemplate that such approval or other
action will be sought, except as described below under 'State Takeover Laws.'
While, except as otherwise expressly described in this Section 15, Purchaser
does not presently intend to delay the acceptance for payment of or payment for
the Shares tendered pursuant to the Offer pending the outcome of any such
matter, there can be no assurance that any such approval or other action, if
needed, would be obtained or would be obtained without substantial conditions or
that failure to obtain any such approval or other action might not result in
consequences adverse to Pennzoil's business or that certain parts of Pennzoil's
business might not have to be disposed of if such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, Purchaser could decline to accept for payment or pay
for any Shares tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Except as described herein, Purchaser has not attempted to comply with any
state takeover statutes in connection with the Offer. Purchaser reserves the
right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right. In the event
that any state takeover statute is found applicable to the Offer, Purchaser
might be unable to accept for payment or pay for the Shares tendered pursuant to
the Offer or be delayed in continuing or consummating the Offer. In such case,
Purchaser may not be obligated to accept for payment or pay for any Shares
tendered. See Section 14.
Purchaser and UPR believe that Pennzoil may seek to invoke a Louisiana
state takeover statute and apply the provisions thereof to Shares purchased
pursuant to the Offer. If this statute were applicable to such Shares,
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Purchaser could not exercise voting rights in respect of such Shares except to
the extent such rights are authorized by a vote of a majority of the
disinterested Shares voting at a stockholders meeting. Because Pennzoil is
incorporated under the laws of Delaware, and not Louisiana, Purchaser and UPR
believe that application of this Louisiana statute in the foregoing fashion
would be unconstitutional. Accordingly, Purchaser and UPR have commenced an
action in United States District Court for the Middle District of Louisiana
seeking a declaratory judgment that such statute as applied to any Shares
purchased pursuant to the Offer is unconstitutional and an injunction against
enforcement of the statute in connection with the Offer.
Section 203. Section 203, in general, prohibits a Delaware corporation
such as Pennzoil from engaging in a 'Business Combination' (defined as a variety
of transactions, including mergers, as set forth below) with an 'Interested
Stockholder' (defined generally as a person that is the beneficial owner of 15%
or more of a corporation's outstanding voting stock) for a period of three years
following the date that such person became an Interested Stockholder unless (a)
prior to the date such person became an Interested Stockholder, the board of
directors of the corporation approved either the Business Combination or the
transaction that resulted in the stockholder becoming an Interested Stockholder,
(b) upon consummation of the transaction that resulted in the stockholder
becoming an Interested Stockholder, the Interested Stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding stock held by directors who are also officers
of the corporation and employee stock ownership plans that do not provide
employees with the right to determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange offer or (c) on or
subsequent to the date such person became an Interested Stockholder, the
Business Combination is approved by the board of directors of the corporation
and authorized at a meeting of stockholders, and not by written consent, by the
affirmative vote of the holders of at least 66 2/3% of the outstanding voting
stock of the corporation not owned by the Interested Stockholder.
Under Section 203, the restrictions described above do not apply if, among
other things (a) the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203; (b)
the corporation, by action of its stockholders, adopts an amendment to its
certificate of incorporation or by-laws expressly electing not to be governed by
Section 203, provided that, in addition to any other vote required by law, such
amendment to the certificate of incorporation or by-laws must be approved by the
affirmative vote of a majority of the shares entitled to vote, which amendment
would not be effective until 12 months after the adoption of such amendment and
would not apply to any Business Combination between the corporation and any
person who became an Interested Stockholder of the corporation on or prior to
the date of such adoption; (c) the corporation does not have a class of voting
stock that is (1) listed on a national securities exchange, (2) authorized for
quotation on an inter-dealer quotation system of a registered national
securities association or (3) held of record by more than 2,000 stockholders,
unless any of the foregoing results from action taken, directly or indirectly,
by an Interested Stockholder or from a transaction in which a person becomes an
Interested Stockholder; or (d) a stockholder becomes an Interested Stockholder
'inadvertently' and thereafter divests itself of a sufficient number of shares
so that such stockholder ceases to be an Interested Stockholder. Under Section
203, the restrictions described above also do not apply to certain Business
Combinations proposed by an Interested Stockholder following the announcement or
notification of one of certain extraordinary transactions involving the
corporation and a person who had not been an Interested Stockholder during the
previous three years or who became an Interested Stockholder with the approval
of a majority of the corporation's directors.
Section 203 provides that, during such three-year period, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including, without
limitation, (a) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of all assets of the corporation determined on a
consolidated basis or the aggregate market value of all the outstanding stock of
a corporation; (b) any transaction which results in the issuance or transfer by
the corporation or by certain subsidiaries thereof of any stock of the
corporation or such subsidiaries to the Interested Stockholder, except pursuant
to a transaction which effects a pro rata distribution to all stockholders of
the corporation; (c) any transaction involving the corporation or certain
subsidiaries thereof which has the effect of increasing the proportionate share
of the stock of any class or series, or securities convertible into the stock of
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any class or series, of the corporation or any such subsidiary which is owned
directly or indirectly by the Interested Stockholder (except as a result of
immaterial changes due to fractional share adjustments); or (d) any receipt of
the Interested Stockholder of the benefit (except proportionately as a
stockholder of such corporation) of any loans, advances, guarantees, pledges or
other financial benefits provided by or through the corporation.
PURSUANT TO THE BOARD ACTION CONDITION, THE OFFER IS CONDITIONED UPON THE
ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER HAVING BEEN
APPROVED PURSUANT TO SECTION 203 OR PURCHASER BEING SATISFIED, IN ITS SOLE
DISCRETION, THAT THE PROVISIONS OF SECTION 203 ARE OTHERWISE INAPPLICABLE TO THE
ACQUISITION OF SHARES PURSUANT TO THE OFFER AND THE PROPOSED MERGER.
UPR and Purchaser have commenced litigation against Pennzoil and the
Pennzoil Board in the Chancery Court of Delaware seeking, among other things, an
order compelling the Pennzoil Board to compel the Pennzoil Board to approve the
Offer and the Proposed Merger for purposes of Section 203 on the grounds that
the failure to do so would constitute a breach of the Pennzoil Board's fiduciary
obligations to Pennzoil stockholders under Delaware law.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15- calendar day waiting period following the filing by UPR of a
Notification and Report Form with respect to the Offer, unless UPR receives a
request for additional information or documentary material from the Antitrust
Division or the FTC or early termination of the waiting period is granted. UPR
expects to make such filing on June 24, 1997. If, within the initial 15-day
waiting period, either the Antitrust Division or the FTC requests additional
information or material from UPR concerning the Offer, the waiting period will
be extended and would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance by UPR with such request.
Only one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may be
extended only by court order or with the consent of UPR. In practice, complying
with a request for additional information or material can take a significant
amount of time. In addition, if the Antitrust Division or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
Pennzoil. At any time before or after Purchaser's acquisition of the Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of the Shares pursuant to the
Offer or the consummation of the Proposed Merger or seeking the divestiture of
the Shares acquired by Purchaser or the divestiture of substantial assets of
Pennzoil or its subsidiaries or UPR or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made or, if such a challenge is made, of the result thereof.
Appraisal Rights. Holders of the Shares do not have appraisal rights as a
result of the Offer. However, if the Proposed Merger is consummated, depending
on the type of consideration received by the holders of Shares upon the
conversion of such Shares in the Proposed Merger, holders of the Shares at the
effective time of the Proposed Merger may have certain rights pursuant to the
provisions of Section 262 of the Delaware Law ('Section 262') to dissent and
demand appraisal of their Shares. If the Shares are converted in the Proposed
Merger solely into shares of UPR Common Stock as is currently intended by UPR
(see Section 11), then holders of Shares will not have appraisal rights in
connection with the Proposed Merger. If Section 262 is applicable, dissenting
stockholders of Pennzoil who comply with the applicable statutory procedures
will be entitled to receive a judicial determination of the fair value of their
Shares (exclusive of any element of value arising from the accomplishment or
expectation of the Proposed Merger) and to receive payment of such fair value in
cash, together with a fair rate of interest thereon, if any. Any such judicial
determination of the fair value of the Shares could be based upon factors other
than, or in addition to, the price per Share to be paid in the Proposed Merger
or the market value of the Shares. The value so determined could be more or less
than the price per Share to be paid in the Proposed Merger.
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The foregoing description of certain provisions of Section 262 does not
purport to be complete and is qualified in its entirety by reference to Section
262. In addition, UPR intends to continue to negotiate with Pennzoil with
respect to the acquisition of Pennzoil by UPR. If such negotiations result in a
definitive merger agreement between Pennzoil and UPR (other than with respect to
the Proposed Merger), holders of the Shares may or may not have appraisal rights
under Section 262 in connection with the consummation of the merger contemplated
thereby, depending upon the terms and structure of any such merger.
Going Private Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain 'going private' transactions and
which may under certain circumstances be applicable to the Proposed Merger or
any other merger involving Pennzoil. However, Rule 13e-3 would be inapplicable
if (a) the Shares are deregistered under the Exchange Act prior to the merger or
(b) any such merger is consummated within one year after the purchase of the
Shares pursuant to the Offer and such merger provided for stockholders to
receive consideration for their Shares at least equal to the consideration paid
per Share in the Offer. If applicable, Rule 13e-3 requires, among other things,
that certain financial information concerning the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the Commission and disclosed to stockholders prior to
the consummation of the transaction.
16. FEES AND EXPENSES.
Smith Barney is acting as Dealer Manager (the 'Dealer Manager') for the
Offer and as UPR's exclusive financial advisor in connection with UPR's proposed
acquisition of Pennzoil. Pursuant to the terms of Smith Barney's engagement, UPR
has agreed to pay Smith Barney for its services as Dealer Manager a fee of $10.0
million (the 'Tender Offer Fee'), payable upon the purchase by UPR of the
Minimum Number of Shares (against which the Additional Advisory Fee described
below will be credited). For its services as financial advisor, UPR has agreed
to pay Smith Barney an initial advisory fee of $1.25 million (the 'Initial
Advisory Fee'), payable upon the first public announcement by UPR of its
proposed acquisition of Pennzoil, an additional fee of $3.0 million (the
'Additional Advisory Fee'), payable upon the execution of a definitive agreement
with Pennzoil (against which the Initial Advisory Fee will be credited), and a
transaction fee of $12.5 million, payable upon consummation of a transaction
with Pennzoil (against which the Tender Offer Fee will be credited). UPR also
has agreed to reimburse Smith Barney for travel and other out-of-pocket
expenses, including legal fees and expenses, and to indemnify Smith Barney and
certain related parties against certain liabilities, including liabilities under
the federal securities laws, arising out of Smith Barney's engagement. Smith
Barney has in the past provided investment banking services to UPR unrelated to
the Offer, and may provide services to UPR in the future, for which services
Smith Barney has received and would receive compensation. In the ordinary course
of business, Smith Barney and its affiliates may actively trade or hold the
securities of UPR and Pennzoil for their own account or for the account of
customers and, accordingly, may at any time hold a long or short position in
such securities.
Purchaser and UPR have retained Morrow & Co., Inc. to act as the
Information Agent and The Bank of New York to serve as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by personal interviews, mail, telephone, facsimile, telegraph and other
electronic means and may request brokers, dealers and other nominee stockholders
to forward materials relating to the Offer to beneficial owners of Shares. The
Depositary has not been retained to make solicitations or recommendations in its
role as Depositary. The Information Agent and the Depositary each will receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
and expenses under the federal securities laws.
Neither Purchaser nor UPR will pay any fees or commissions to any broker or
dealer or other person (other than the Dealer Manager and the Information Agent)
in connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by Purchaser upon
request for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
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17. MISCELLANEOUS.
Except as set forth in Section 15, Purchaser is not aware of any
jurisdiction where the making of the Offer is prohibited by any administrative
or judicial action pursuant to any valid state statute. If Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of the Shares pursuant thereto, Purchaser will make a good faith
effort to comply with such state statute. If, after such good faith effort,
Purchaser cannot comply with any such state statute, the Offer will not be made
to (nor will tenders be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by the Dealer Manager or one or more
registered brokers or dealers which are licensed under the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR UPR NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PURCHASER OR UPR. NEITHER
THE DELIVERY OF THIS OFFER TO PURCHASE NOR ANY PURCHASE PURSUANT TO THE OFFER,
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF UPR, PURCHASER OR PENNZOIL SINCE THE DATE AS OF WHICH
INFORMATION IS FURNISHED OR THE DATE OF THIS OFFER TO PURCHASE.
Purchaser and UPR have filed with the Commission a Tender Offer Statement
on Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 under the
Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto from time to time. Such Schedule 14D-1
and any amendments thereto, including exhibits, should be available for
inspection and copies should be obtainable in the manner set forth in Section 8
(except that such material will not be available at the regional offices of the
Commission).
RESOURCES NEWCO, INC.
June 23, 1997
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF UPR AND PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF UPR
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
UPR are set forth below. Unless otherwise indicated, the principal business
address of each director or executive officer is Union Pacific Resources Group
Inc., 801 Cherry Street, Fort Worth, Texas 76102. Directors are identified by an
asterisk. Each such person is a citizen of the United States.
NAME AND POSITION WITH UPR; PRINCIPAL OCCUPATION
BUSINESS ADDRESS OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ---------------------------- -------------------------------------------------
H. Jesse Arnelle* Partner, Arnelle, Hastie, McGee, Willis & Greene,
One Market Plaza law firm, San Francisco, California, since 1985.
Spear Street Tower Mr. Arnelle has been a Director of UPR since
Suite 39 November 1995.
San Francisco, CA 94105
Lynne V. Cheney* Distinguished Fellow, the American Enterprise
1150 17th Street, Suite 1100 Institute for Public Policy Research, Washington,
Washington, D.C. 20036 D.C. since January 1992. She was Chairperson of
the National Endowment for the Humanities from
1986 through 1992. Additionally, she is an
author, lecturer and television commentator on
public policy issues. Mrs. Cheney has been a
Director of UPR since November 1995.
Preston M. Geren III* Public Policy Consultant, Public Strategies,
Public Strategies, Inc. Inc., a public policy consulting firm, Austin,
2421 Westport Parkway Dallas and Ft. Worth, Texas, since January 1997.
Suite 500 He was the Congressman for the Twelfth
Fort Worth, TX 76177 Congressional District of the U.S. House of
Representatives from 1989 to January 1997. Mr.
Geren has been a Director of UPR since February
1997.
Lawrence M. Jones* Retired Chairman and Chief Executive Officer, The
5101 Shady Oak Road Coleman Company, Inc., manufacturer of home and
Minnetonka, MN 55343 recreational products, Wichita, Kansas. Mr. Jones
held those positions through December 1993. Mr.
Jones has been a director of UPR since November
1995.
Drew Lewis* Former Chairman, the Company, and Former
P.O. Box 70 Chairman, President, Chief Executive Officer and
Lederach, PA 19450 Director, Union Pacific Corporation, a
transportation company, Bethlehem, Pennsylvania.
Mr. Lewis held those positions through December
1996. Mr. Lewis has been a director of UPR since
August 1995.
Claudine B. Malone* President, Financial & Management Consulting,
7570 Potomac Fall Road Inc., management consulting firm, McLean,
McLean, VA 22102 Virginia, since 1984. Ms. Malone has been a
director of UPR since November 1995.
Jack L. Messman* Chairman and Chief Executive Officer of UPR since
October 1996. He was President and Chief
Executive Officer of UPR from August 1995 to
October 1996, and has been a Director of UPR
since September 1991. He has been President,
Chief Executive Officer and a Director of UPRC
since May 1991.
I-1
<PAGE>
NAME AND POSITION WITH UPR; PRINCIPAL OCCUPATION
BUSINESS ADDRESS OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ---------------------------- -------------------------------------------------
John W. Poduska, Sr., Ph.D.* Chairman, Advanced Visual Systems, Inc., provider
300 5th Avenue of visualization software, Boston, Massachusetts,
Waltham, MA 02154 since January 1992. Mr. Poduska has been a
director of UPR since November 1995.
Michael E. Rossi* Former Vice Chairman of BankAmerica. Mr. Rossi
P.O. Box 1376 held that position from February 1992 to April
Pebble Beach, CA 93953 1997. Mr. Rossi has been a director of UPR since
June 1997.
Samuel K. Skinner* President and Director, Unicom Corporation and
10 South Dearborn Street Commonwealth Edison Company, a wholly owned
37th Street subsidiary of Unicom Corporation and an electric
Chicago, IL 60603 utility company, Chicago, Illinois, since
February 1993. He was General Chairman of the
Republican National Committee from August 1992 to
February 1993, Chief of Staff to the President of
the United States from December 1991 to August
1992 and Secretary of the United States
Department of Transportation from February 1989
to December 1991. Mr. Skinner has been a director
of UPR since October 1996.
James R. Thompson* Partner, Chairman and Chairman of the Executive
35 West Wacker Drive Committee, Winston & Strawn, law firm, Chicago,
Chicago, IL 60601 Illinois, New York, New York, Washington, D.C.,
Paris, France and Geneva, Switzerland, since
January 1993. He served as Governor of the State
of Illinois from 1977 to 1991. Mr. Thompson has
been a director of UPR since November 1995.
George Lindahl III President and Chief Operating Officer of UPR
since October 1996. He was Executive Vice
President -- Operations of UPR from August 1995
to October 1996. From 1992 to August 1995, he was
Vice President -- Operations for UPRC. Prior
thereto, he was Vice President -- Exploration for
UPRC.
V. Richard Eales Executive Vice President of UPR since June 1996.
From August 1995 to June 1996, he was Executive
Vice President and Chief Financial Officer of
UPR. Prior thereto, he was Vice President --
Corporate Development of UPRC.
Anne M. Franklin Vice President -- People of UPR since August
1995. She joined UPRC as Vice President -- People
in June 1995. From 1993 to June 1995, she was
Director of Executive Leadership and Development
for Ameritech, Inc. Prior thereto, she held
various positions in marketing and operations at
Indiana Bell Telephone Company (currently
Ameritech).
Joseph A. LaSala, Jr. Vice President and General Counsel of UPR since
January 1996 and Secretary of UPR since June
1997. Mr. LaSala joined UPRC in January 1995 as
Assistant General Counsel. He was Vice President
-- Government and Regulatory Affairs of USPCI,
Inc., a former subsidiary of UPC, from May 1993
until December 1994 and, prior thereto, Vice
President -- External Relations of USPCI.
Donald W. Niemiec Vice President -- Marketing of UPR since August
1995. He has been Vice President -- Marketing of
UPRC since 1993 and President of UP Fuels since
1990.
I-2
<PAGE>
NAME AND POSITION WITH UPR; PRINCIPAL OCCUPATION
BUSINESS ADDRESS OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ---------------------------- -------------------------------------------------
Morris B. Smith Vice President and Chief Financial Officer of UPR
since June 1996. From September 1993 until June
1996, he was Vice President and Controller of
UPC. From January through August 1995, he served
as Vice President -- Finance of Union Pacific
Railroad Company; from June 1993 through December
1994, he served as Vice President -- Finance of
USPCI, Inc. Prior thereto, he was Assistant
Controller -- Planning and Analysis of UPC.
John B. Vering Vice President -- Exploration and Production
Services of UPR since October 1996. Prior
thereto, he was General Manager -- Austin Chalk
of UPR and UPRC.
I-3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The name, present principal occupation or employment and five-year
employment history of each of the directors and executive officers of Purchaser
are set forth below. The principal business address of each director or
executive officer is Union Pacific Resources Group Inc., 801 Cherry Street, Fort
Worth, Texas 76102. Directors are identified by an asterisk. Each such person is
a citizen of the United States.
POSITION WITH PURCHASER; PRINCIPAL OCCUPATION
NAME OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
- ------------------------- -----------------------------------------------------
Jack L. Messman*......... President of Purchaser. Mr. Messman has been Chairman
and Chief Executive Officer of UPR since October
1996. He was President and Chief Executive Officer of
UPR from August 1995 to October 1996, and has been a
Director of UPR since September 1991. He has been
President, Chief Executive Officer and a Director of
UPRC since May 1991.
V. Richard Eales*........ Vice President of Purchaser. Mr. Eales has been
Executive Vice President of UPR since June 1996. From
August 1995 to June 1996, he was Executive Vice
President and Chief Financial Officer of UPR. Prior
thereto, he was Vice President -- Corporate
Development of UPRC.
Joseph A. LaSala, Jr.*... Vice President, General Counsel and Secretary of
Purchaser. Mr. LaSala has been Vice President and
General Counsel of UPR since January 1996 and
Secretary of UPR since June 1997. Mr. LaSala joined
UPRC in January 1995 as Assistant General Counsel. He
was Vice President -- Government and Regulatory
Affairs of USPCI, Inc., a former subsidiary of UPC,
from May 1993 until December 1994 and, prior thereto,
Vice President -- External Relations of USPCI.
George Lindahl III*...... Vice President of Purchaser. Mr. Lindahl has been
President and Chief Operating Officer of UPR since
October 1996. He was Executive Vice President --
Operations of UPR from August 1995 to October 1996.
From 1992 to August 1995, he was Vice President --
Operations for UPRC. Prior thereto, he was Vice
President -- Exploration of UPRC.
Morris B. Smith*......... Treasurer of Purchaser. Mr. Smith has been Vice
President and Chief Financial Officer of UPR since
June 1996. From September 1993 until June 1996, he
was Vice President and Controller of UPC. From
January through August 1995, he served as Vice
President -- Finance of Union Pacific Railroad
Company; from June 1995 through December 1994, he
served as Vice President -- Finance of USPCI, Inc.
Prior thereto, he was Assistant Controller --
Planning and Analysis of UPC.
I-4
<PAGE>
SCHEDULE II
TRANSACTIONS IN SHARES DURING THE PAST 60 DAYS
BY UPR AND PURCHASER
TRANSACTION DATE SHARES ACQUIRED PRICE PER SHARE(3)
-------------------- --------------- ------------------
5/16/97............. 1,000(1) $ 54.75
6/6/97.............. 500(1) $ 57.25
6/6/97.............. 45,000(1) $ 57.625
6/9/97.............. 25,000(1) $ 56.75
6/9/97.............. 15,000(1) $ 56.50
6/11/97............. 1,000(1) $ 57.50
6/11/97............. 100(2) $ 58.625
---------------
Total............... 87,600
- ------------------
(1) Purchased by UPR in open market transactions executed on the NYSE.
(2) Purchased by Purchaser in an open market transaction executed on the NYSE.
(3) All prices are exclusive of commissions.
II-1
<PAGE>
Manually signed and properly completed facsimile copies of the Letter of
Transmittal will be accepted. The Letter of Transmittal, certificates for Shares
and/or Rights and any other required documents should be sent or delivered by
each stockholder of Pennzoil or such stockholder's broker, dealer, bank, trust
company or other nominee to the Depositary at the applicable address set forth
below.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: Facsimile Transmission: By Hand or Overnight
Tender & Exchange Department (212) 815-6213 Courier:
P.O. Box 11248 (For Eligible Tender & Exchange Department
Church Street Station Institutions Only) 101 Barclay Street
New York, New York Receive and Deliver Window
10286-1248 Confirm by Telephone: New York, New York 10286
(800) 507-9357
Any questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the other tender offer
materials may be directed to the Information Agent or the Dealer Manager at
their respective telephone numbers and locations listed below. You may also
contact your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage
Firms please call:
(800) 662-5200
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-7346
<PAGE>
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
PENNZOIL COMPANY
Pursuant to the Offer to Purchase dated June 23, 1997
of
RESOURCES NEWCO, INC.,
a wholly owned subsidiary of
UNION PACIFIC RESOURCES GROUP INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, JULY 21, 1997, UNLESS THE OFFER IS EXTENDED.
SHARES WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO THE EXPIRATION DATE.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: Facsimile Transmission: By Hand or Overnight
Courier:
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 (For Eligible Receive and Deliver Window
Church Street Station Institutions Only) 101 Barclay Street
New York, New York New York, New York 10286
10286-1248 Confirm by
Telephone:
(800) 507-9357
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used if certificates for Shares and/or
Rights (as such terms are defined below) are to be forwarded herewith or, unless
an Agent's Message (as defined in Instruction 2 below) is utilized, if delivery
of Shares and/or Rights is to be made by book-entry transfer (in the case of
Rights, if available) to an account maintained by the Depositary at a Book-Entry
Transfer Facility (as defined in and pursuant to the procedures set forth in
Section 2 of the Offer to Purchase). Unless the Board Action Condition (as
defined in the Offer to Purchase) with respect to the Rights (as defined in the
Offer to Purchase) is satisfied, stockholders will be required to tender one
Right for each Share tendered in order to effect a valid tender of Shares.
Stockholders who deliver Shares and/or Rights by book-entry transfer are
referred to herein as 'Book-Entry Stockholders' and other stockholders who
deliver shares are referred to herein as 'Certificate Stockholders'.
Stockholders whose certificates for Shares and/or Rights are not immediately
available or who cannot deliver either the certificates for, or a Book-Entry
Confirmation (as defined in Section 2 of the Offer to Purchase) with respect to,
their Shares and/or Rights and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase) must tender their Shares and/or Rights pursuant to the guaranteed
delivery procedures set forth in Section 2 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED SHARES AND/OR RIGHTS ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES AND/OR RIGHTS BY BOOK-ENTRY
TRANSFER):
Name of Tendering Institution ______________________________________________
Check Box of Book-Entry Transfer Facility:
/ / The Depository Trust Company / / Philadelphia Depository Trust Company
Account Number _________________ Transaction Code Number _________________
/ / CHECK HERE IF TENDERED SHARES AND/OR RIGHTS ARE BEING DELIVERED PURSUANT TO
A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s) _____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, CHECK BOX OF BOOK-ENTRY TRANSFER
FACILITY:
/ / The Depository Trust Company / / Philadelphia Depository Trust Company
Account Number _________________ Transaction Code Number _________________
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN, BLANK, EXACTLY AS SHARES TENDERED (ATTACH ADDITIONAL
NAME(S) APPEAR(S) ON CERTIFICATE(S)) SIGNED LIST IF NECESSARY)
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
____________________________________________
____________________________________________
____________________________________________
____________________________________________
TOTAL SHARES ______________________________
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF RIGHTS TENDERED(1)
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN, BLANK, EXACTLY AS RIGHTS TENDERED (ATTACH ADDITIONAL
NAME(S) APPEAR(S) ON CERTIFICATE(S)) SIGNED LIST IF NECESSARY)
TOTAL NUMBER
CERTIFICATE OF RIGHTS NUMBER OF
NUMBER(S) REPRESENTED BY RIGHTS
(2)(3) CERTIFICATE(S)(3) TENDERED(4)
____________________________________________
____________________________________________
____________________________________________
____________________________________________
TOTAL RIGHTS ______________________________
(1) Need not be completed if the Distribution Date has not occurred.
(2) If the tendered Rights are represented by separate certificates, complete
using the certificate numbers of such certificates for Rights. If the
tendered Rights are not represented by separate certificates, or if such
certificates have not been distributed, complete using the certificate
numbers of the Shares with respect to which the Rights were issued.
Stockholders tendering Rights that are not represented by separate
certificates should retain a copy of this description in order to accurately
complete the Notice of Guaranteed Delivery if the Distribution Date occurs.
(3) Need not be completed by Book-Entry Stockholders who are delivering Rights
by book-entry transfer.
(4) Unless otherwise indicated, it will be assumed that all Rights described
herein are being tendered. See Instruction 4.
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Resources Newco, Inc., a Delaware
corporation (the 'Purchaser') and a wholly owned subsidiary of Union Pacific
Resources Group Inc., a Utah corporation, the above-described shares of Common
Stock, par value $0.83 1/3 per share (the 'Shares'), of Pennzoil Company, a
Delaware corporation ('Pennzoil'), together with the associated preferred stock
purchase rights (the 'Rights') issued pursuant to the Rights Agreement, dated as
of October 28, 1994 (the 'Rights Agreement') between Pennzoil and Chemical Bank,
as Rights Agent (the 'Rights Agent'), pursuant to the Purchaser's offer to
purchase up to 25,094,200 Shares at a price of $84.00 per Share (and associated
Right), net to the seller in cash, without interest thereon (the 'Offer Price')
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated June 23, 1997, and in this Letter of Transmittal (which together, with any
amendments or supplements thereto or hereto, collectively constitute the
'Offer'), receipt of which is hereby acknowledged.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), subject
to, and effective upon, acceptance for payment of, and payment for, the Shares
and Rights tendered herewith in accordance with the terms of the Offer, the
undersigned hereby sells, assigns and transfers to or upon the order of the
Purchaser all right, title and interest in and to all the Shares and Rights that
are being tendered hereby (and any and all other Shares, Rights or other
securities or rights issued or issuable in respect thereof on or after June 23,
1997) and irrevocably constitutes and appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such Shares
and Rights (and all such other Shares, Rights or securities or rights), with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares and Rights (and all such other Shares, Rights or securities or
rights), or transfer ownership of such Shares and Rights (and all such other
Shares, Rights or securities or rights) on the account books maintained by any
of the Book-Entry Transfer Facilities, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, (b) present such Shares and Rights (and all such other Shares, Rights
or securities or rights) for transfer on the books of Pennzoil, and (c) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares and Rights (and all such other Shares, Rights or securities or rights),
all in accordance with the terms of the Offer.
<PAGE>
If, on or after June 23, 1997, Pennzoil should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to stockholders of record on a date prior to
the transfer of the Shares purchased pursuant to the Offer to the Purchaser or
its nominee or transferee on Pennzoil's stock transfer records, then, subject to
the provisions of Section 14 in the Offer to Purchase, (a) the Offer Price may,
in the sole discretion of the Purchaser, be reduced by the amount of any such
cash dividend or cash distribution and (b) the whole of any such noncash
dividend, distribution or issuance to be received by the tendering stockholders
will (i) be received and held by the tendering stockholders for the account of
the Purchaser and will be required to be promptly remitted and transferred by
each tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (ii) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
The undersigned hereby irrevocably appoints Jack L. Messman, Morris B. Smith
and Joseph A. LaSala, Jr., in their respective capacities as officers of the
Purchaser, and any individual who shall thereafter proceed to any such office of
the Purchaser, and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual or
special or adjourned meeting of Pennzoil's stockholders or any adjournment or
postponement thereof or otherwise in such manner as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and to otherwise act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, all of the Shares and Rights tendered hereby (and any and all other Shares,
Rights or other securities or rights issued or issuable in respect thereof on or
after June 23, 1997), which have been accepted for payment by the Purchaser
prior to the time of any action is taken and with respect to which the
undersigned is entitled to vote. This appointment is effective when, and only to
the extent that, the Purchaser accepts for payment such Shares as provided in
the Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares and Rights
in accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke any prior powers of attorney and proxies
appointed by the undersigned at any time with respect to such Shares and Rights
(and all such other Shares, Rights or securities or rights), and no subsequent
powers of attorney or proxies will be appointed, or be effective, with respect
thereto.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares and Rights
tendered hereby (and any and all other Shares, Rights or other securities or
rights issued or issuable in respect thereof on or after June 23, 1997), the
tender of the tendered Shares and Rights complies with Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, and that when the same are accepted
for payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares and Rights tendered
hereby (and all such other Shares, Rights or securities or rights).
The undersigned understands that, unless the Board Action Condition with
respect to the Rights is satisfied, stockholders will be required to tender one
Right for each Share tendered in order to effect a valid tender of Shares in
accordance with the procedures set forth in Section 2 of the Offer to Purchase.
If the Distribution Date occurs and separate certificates representing the
Rights are distributed to holders of Shares prior to the time Shares are
tendered herewith, certificates representing a number of Rights equal to the
number of Shares being tendered herewith must be delivered to the Depositary or,
if available, a Book-Entry Confirmation must be received by the Depositary with
respect thereto, in order for such Shares tendered herewith to be validly
tendered. If the Distribution Date occurs and separate certificates representing
the Rights are not distributed prior to the time Shares are tendered herewith,
Rights may be tendered prior to a stockholder receiving separate certificates
for Rights by use of the guaranteed delivery procedures described in Section 2
of the Offer to Purchase. A tender of Shares constitutes an agreement by the
tendering stockholder to deliver certificates representing a number of Rights
equal to the number of Shares tendered pursuant to the Offer to the Depositary
prior to expiration of the period permitted by such guaranteed delivery
procedures for delivery of certificates for, or a Book-Entry Confirmation with
respect to, Rights (the 'Rights Delivery Period'). However, after expiration of
the Rights Delivery Period, the Purchaser may elect to reject as invalid a
tender of Shares with respect to which certificates for, or a Book-Entry
Confirmation with respect to, an equal number of Rights has not been received by
the Depositary. Nevertheless, the Purchaser will be entitled to accept for
payment Shares tendered by the undersigned prior to the receipt of the
certificates for the Rights required to be tendered with such Shares, or a
Book-Entry Confirmation with respect to such Rights, and either (a) subject to
complying with the applicable rules and regulations of the Securities and
Exchange Commission, withhold payment for such Shares pending receipt of the
certificates for, or a Book-Entry Confirmation with respect to, such Rights or
(b) make payment for Shares accepted for payment pending receipt of the
certificates for, or a Book-Entry Confirmation with respect to, such Rights in
reliance upon the agreement of a tendering stockholder to deliver Rights and
such guaranteed delivery procedures. Any determination by the Purchaser to make
payment for Shares in reliance upon such agreement and such guaranteed delivery
procedures or, after the expiration of the Rights Delivery Period, to reject a
tender as invalid will be made in the sole and absolute discretion of the
Purchaser.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators,
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
<PAGE>
The undersigned understands that the valid tender of Shares and, if
applicable, Rights, pursuant to any one of the procedures described in Section 2
of the Offer to Purchase and in the Instructions hereto will constitute a
binding agreement between the undersigned and the Purchaser upon the terms and
subject to the conditions of the Offer (and if the Offer is extended or amended,
the terms or conditions of any such extension or amendment). Without limiting
the foregoing, if the price to be paid in the Offer is amended in accordance
with the Offer, the price to be paid to the undersigned will be the amended
price notwithstanding the fact that a different price is stated in this Letter
of Transmittal. The undersigned recognizes that under certain circumstances set
forth in the Offer to Purchase, the Purchaser may not be required to accept for
payment any of the Shares tendered hereby.
Unless otherwise indicated under 'Special Payment Instructions', please
issue the check for the purchase price and/or return any certificates for Shares
or Rights not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under 'Description of Shares Tendered' and 'Description of
Rights Tendered', respectively. Similarly, unless otherwise indicated under
'Special Delivery Instructions', please mail the check for the purchase price
and/or return any certificates for Shares or Rights not tendered or accepted for
payment (and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under 'Description of Shares Tendered' and
'Description of Rights Tendered', respectively. In the event that both the
'Special Payment Instructions' and the 'Special Delivery Instructions' are
completed, please issue the check for the purchase price and/or return any
certificates for Shares or Rights not tendered or accepted for payment (and any
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return any such certificates (and any accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
under 'Special Payment Instructions', please credit any Shares and Rights
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility (as defined herein)
designated above. The undersigned recognizes that the Purchaser has no
obligation, pursuant to the 'Special Payment Instructions', to transfer any
Shares or Rights from the name of the registered holder thereof if the Purchaser
does not accept for payment any of the Shares or Rights, respectively, so
tendered.
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY THE LOST OR DESTROYED CERTIFICATES:_____________
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares or Rights are not tendered
or not accepted for payment and/or the check for the purchase price of Shares or
Rights accepted for payment are to be issued in the name of someone other than
the undersigned, or if Shares or Rights delivered by book-entry transfer that
are not accepted for payment are to be returned by credit to an account
maintained at a Book-Entry Transfer Facility other than the account indicated
above.
Issue / / Check / / Certificates to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
Credit unpurchased Shares or Rights delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below:
Check appropriate Box:
/ / The Depository Trust Company
/ / Philadelphia Depository Trust Company
________________________________________________________________________________
(ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares or Rights are not tendered
or not accepted for payment and/or the check for the purchase price of Shares or
Rights accepted for payment are to be sent to someone other than the undersigned
or to the undersigned at an address other than that indicated above.
Mail / / Check / / Certificates to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
________________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
<PAGE>
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
________________________________________________________________________________
________________________________________________________________________________
(Signature(s) of Stockholder(s))
Dated: _____________________, 1997
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or Rights or on a security position listing or by
person(s) authorized to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, please provide the following
information and see Instruction 5).
Name(s): _______________________________________________________________________
(Please Print)
Name of Firm: __________________________________________________________________
Capacity (full title): _________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No.: ___________________________________________________
Taxpayer Identification or Social Security No.: ________________________________
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature: __________________________________________________________
Name: __________________________________________________________________________
(Please Print)
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No.: ___________________________________________________
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares and
Rights tendered herewith, unless such registered holder(s) has completed either
the box entitled 'Special Payment Instructions' or the box entitled 'Special
Delivery Instructions' on the Letter of Transmittal or (b) if such Shares and
Rights are tendered for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an 'Eligible Institution'). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of
Transmittal is to be completed by stockholders either if certificates are to be
forwarded herewith or, unless an Agent's Message is utilized, if delivery of
Shares and/or Rights is to be made by book-entry transfer pursuant to the
procedures set forth in Section 2 of the Offer to Purchase. For a stockholder
validly to tender Shares and Rights pursuant to the Offer, either (a) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
together with any required signature guarantees or an Agent's Message (in
connection with book-entry transfer) and any other required documents, must be
received by the Depositary at one of its addresses set forth herein prior to the
Expiration Date and either (i) certificates for tendered Shares and Rights must
be received by the Depositary at one of such addresses prior to the Expiration
Date or (ii) Shares and Rights must be delivered pursuant to the procedures for
book-entry transfer set forth herein and a Book-Entry Confirmation must be
received by the Depositary prior to the Expiration Date or (b) the tendering
stockholder must comply with the guaranteed delivery procedures set forth below
and in Section 2 of the Offer to Purchase.
Unless the Board Action Condition with respect to the Rights is satisfied,
stockholders will be required to tender one Right for each Share tendered in
order to effect a valid tender of Shares. Unless the Distribution Date occurs, a
tender of Shares will also constitute a tender of the associated Rights. The
Rights are currently represented by the certificates for the Shares with respect
to which the Rights were issued. The Rights Agreement provides that until the
close of business on the Distribution Date, the Rights will be evidenced by the
certificates for the Shares and may be transferred with and only with the
Shares. The Rights Agreement further provides that, as soon as practicable
following the Distribution Date, separate certificates representing the Rights
are to be mailed by the Company or the Rights Agent to holders of record of
Shares as of the close of business on the Distribution Date. If the Distribution
Date occurs and separate certificates representing the Rights are distributed
prior to the time Shares are tendered herewith, certificates representing a
number of Rights equal to the number of Shares being tendered herewith must be
delivered to the Depositary or, if available, a Book-Entry Confirmation must be
received by the Depositary with respect thereto, in order for such Shares
tendered herewith to be validly tendered. If the Distribution Date occurs and
separate certificates representing the Rights are not distributed prior to the
time Shares are tendered herewith, Rights may be tendered prior to a stockholder
receiving separate certificates for Rights by use of the guaranteed delivery
procedures described below.
Stockholders whose certificates for Shares or Rights are not immediately
available (including because certificates for Rights have not yet been
distributed by the Company or the Rights Agent) or who cannot deliver their
certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot comply with the book-entry transfer procedure on a
timely basis may tender their Shares and Rights by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase.
Pursuant to such procedures, (i) such tender must be made by or through an
Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Purchaser, must
be received by the Depositary prior to the Expiration Date and (iii) the
certificates for all tendered Shares and/or Rights, in proper form for transfer
(or a Book-Entry Confirmation with respect to all tendered Shares and/or
Rights), together with a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within (a) in the case of
Shares, three trading days after the date of execution of such Notice of
Guaranteed Delivery or (b) in the case of Rights, a period ending on the later
of (1) three trading days after the date of execution of such Notice of
Guaranteed Delivery or (2) three business days (as defined in the Offer to
Purchase) after the date certificates for Rights are distributed to stockholders
by the Company or the Rights Agent, all as provided in Section 2 of the Offer to
Purchase. A 'trading day' is any day on which the New York Stock Exchange (the
'NYSE') is open for business.
The term 'Agent's Message' means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
<PAGE>
The signatures on this Letter of Transmittal cover the Shares and the
Rights tendered hereby whether or not such Rights are delivered simultaneously
with such Shares.
THE METHOD OF DELIVERY OF THE SHARES, THE RIGHTS, THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. THE
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares or Rights will be purchased. All tendering stockholders, by
executing this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares or Rights for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
number of Shares and Rights tendered and the Share certificate numbers with
respect to such Shares and Rights should be listed on a separate signed schedule
attached hereto.
4. Partial Tenders. (Not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares or Rights evidenced by any
certificate submitted are to be tendered, fill in the number of Shares or Rights
that are to be tendered in the box entitled 'Number of Shares Tendered' or
'Number of Rights Tendered', as appropriate. In any such case, new
certificate(s) for the remainder of the Shares or Rights that were evidenced by
the old certificate(s) will be sent to the registered holder, unless otherwise
provided in the appropriate box on this Letter of Transmittal, as soon as
practicable after the Expiration Date or the termination of the Offer. All
Shares and Rights represented by certificates delivered to the Depositary will
be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
and Rights tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares or Rights tendered hereby are held of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares or Rights are registered in different names
on several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of the authority of such person so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares and Rights listed and transmitted hereby, no endorsements of certificates
or separate stock powers are required unless payment or certificates for Shares
or Rights not tendered or accepted for payment are to be issued in the name of a
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares and Rights evidenced by certificates listed
and transmitted hereby, the certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the certificates. Signature(s) on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as set forth in this Instruction 6, the
Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of Shares or Rights to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or if certificates for Shares or
Rights not tendered or accepted for payment are to be registered in the name of,
any person other than the registered holder(s), or if tendered certificates are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of, and/or certificates for Shares or Rights not accepted for
payment are to be returned to a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal, or to
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Any stockholder(s) delivering Shares or Rights
by book-entry transfer may request that Shares or Rights not purchased be
credited to such account maintained at a Book-Entry Transfer Facility as such
stockholder(s) may designate. If no such instructions are given, any such Shares
not purchased will be returned by crediting the account at the Book-Entry
Transfer Facilities designated above.
8. Requests for Assistance or Additional Copies. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses or telephone numbers set forth below.
9. Waiver of Conditions. The Purchaser reserves the absolute right in its
sole discretion to waive, at any time or from time to time, any of the specified
conditions of the Offer, in whole or in part, in the case of any Shares or
Rights tendered.
<PAGE>
10. Backup Withholding. In order to avoid 'backup withholding' of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ('TIN') on
Substitute Form W-9 in this Letter of Transmittal and certify under penalties of
perjury that such TIN is correct and that such stockholder is not subject to
backup withholding. If a stockholder does not provide such stockholder's correct
TIN or fails to provide the certifications described above, the Internal Revenue
Service (the 'IRS') may impose a $50 penalty on such stockholder and payment of
cash to such stockholder pursuant to the Offer may be subject to backup
withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the Federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed 'Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9' for more instructions.
11. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares or Rights has been lost, destroyed or stolen, the
stockholder should promptly notify the Depositary by checking the box
immediately preceding the special payment/special delivery instructions and
indicating the number of Shares or Rights lost. The stockholder will then be
instructed as to the steps that must be taken in order to replace the
certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES AND RIGHTS MUST BE RECEIVED BY THE DEPOSITARY OR SHARES AND RIGHTS MUST
BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE
PRIOR TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE
PROCEDURES FOR GUARANTEED DELIVERY.
<PAGE>
(DO NOT WRITE IN SPACES BELOW)
Date Received _____________ Accepted By __________________ Checked By __________
SHARES SHARES SHARES CHECK AMOUNT SHARES CERTIFICATE
SURRENDERED TENDERED ACCEPTED NO. OF CHECK RETURNED NO.
- ----------- -------- -------- ----- -------- -------- -----------
________________________________________________________________________________
Delivery Prepared By ______________ Checked By ______________ Date _____________
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct taxpayer identification number on Substitute Form W-9
below. If such stockholder is an individual, the taxpayer identification number
is his social security number. If a tendering stockholder is subject to backup
withholding, he must cross out item (2) of the Certification box on the
Substitute Form W-9. If the Depositary is not provided with the correct taxpayer
identification number, the stockholder may be subject to a $50 penalty imposed
by the Internal Revenue Service. In addition, payments that are made to such
stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding.
Certain stockholders (including, among others, all corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that stockholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt stockholders, other than
foreign individuals, should furnish their TIN, write 'Exempt' on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his or her correct taxpayer identification
number by completing the form below certifying that the taxpayer identification
number provided on Substitute Form W-9 is correct (or that such stockholder is
awaiting a taxpayer identification number).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
If the tendering stockholder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, he should write
'Applied For' in the space provided for in the TIN in Part I, and sign and date
the Substitute Form W-9. If 'Applied For' is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% on all payments of the purchase price until a TIN is provided to
the Depositary.
<PAGE>
PAYER'S NAME: THE BANK OF NEW YORK
SUBSTITUTE FORM W-9
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
Payer's Request for
Taxpayer Identification
Number ('TIN')
PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW.
OR ___________________________
Employer Identification
Number
PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal Revenue
Service (the 'IRS') that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if you
have been notified by the IRS that you are currently subject to backup
withholding because of under-reporting interest or dividends on your tax
returns. However, if after being notified by the IRS that you were subject to
backup withholding, you receive another notification from the IRS that you are
no longer subject to backup withholding, do not cross out such item (2). (Also
see instructions in the enclosed Guidelines).
PART 3 -- Awaiting TIN / /
SIGNATURE ___________________________ DATE __________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Officer or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a Taxpayer Identification Number to the Depositary by the
time of payment, 31% of all reportable payments made to me will be withheld, but
that such amounts will be refunded to me if I provide a certified Taxpayer
Identification Number to the Depositary within sixty (60) days.
Signature ___________________________ Date __________________
- --------------------------------------------------------------------------------
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
Toll Free (800) 566-9061
Banks and Brokerage
Firms please call:
(800) 662-5200
The Dealer Manager for the Offer is:
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
(212) 816-7346
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payor.
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the account or,
account) if combined funds, the first
individual on the account(1)
3. Husband and wife The actual owner of the account or,
(joint account) if joint funds, either person(1)
4. Custodian account of a minor (Uniform The minor(2)
Gift to Minors Act)
5. Adult and minor The adult or, if the minor is the
(joint account) only contributor, the minor(1)
9. A valid trust, estate, or pension The legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not designated
in the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational The organization
organization account
12. Partnership account held in the name The partnership
of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
- ------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your social security number or your employer identification
number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the 'IRS') and apply for a
number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers Act
of 1940 who regularly acts as a broker are exempt. Payments subject to reporting
under sections 6041 and 6041A are generally exempt from backup withholding only
if made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and payments
by certain fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries, Inc.,
Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
o Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payor.
o Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code).
o Payments described in Section 6049(b)(5) of the Code to non-resident aliens.
o Payments on tax-free covenant bonds under Section 1451 of the Code.
o Payments made by certain foreign organizations.
o Payments of mortgage interest to you.
o Payments made to an appropriate nominee.
Exempt payees described above should file substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE 'EXEMPT' ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYOR. IF YOU ARE A NON-RESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYOR A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A and 6050N
of the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payors must generally withhold 31% of taxable interest,
dividend, and certain other payments to a payee who does not furnish a taxpayer
identification number to a payor. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payor, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
TENDER OF SHARES OF COMMON STOCK
(Including the Associated Preferred Stock Purchase Rights)
of
PENNZOIL COMPANY
to
RESOURCES NEWCO, INC.,
a wholly owned subsidiary of
UNION PACIFIC RESOURCES GROUP INC.
(Not To Be Used For Signature Guarantees)
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates representing shares of Common
Stock, par value $0.83 1/3 per share (including the associated Rights, as
defined in the Offer to Purchase) (collectively, the 'Shares'), of Pennzoil
Company, a Delaware corporation, are not immediately available, if the procedure
for book-entry transfer cannot be completed on a timely basis, or if time will
not permit all required documents to reach the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). Such form
may be delivered by hand or transmitted by facsimile transmission or mail to the
Depositary. See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: Facsimile Transmission: By Hand or Overnight
Tender & Exchange Department (212) 815-6213 Courier:
P.O. Box 11248 (For Eligible Tender & Exchange Department
Church Street Station Institutions Only) 101 Barclay Street
New York, New York Receive and Deliver Window
10286-1248 Confirm by Telephone: New York, New York 10286
(800) 507-9357
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE
TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Resources Newco, Inc., a Delaware
corporation and a wholly owned subsidiary of Union Pacific Resources Group Inc.,
a Utah corporation, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated June 23, 1997 and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, constitute the
'Offer'), receipt of which is hereby acknowledged, ____________ shares of Common
Stock, par value $0.83 1/3 per share (the 'Shares'), of Pennzoil Company, a
Delaware corporation, pursuant to the guaranteed delivery procedure set forth in
Section 2 of the Offer to Purchase.
Signature(s) ______________________ Address(es) ______________________________
___________________________________ __________________________________________
(Zip Code)
Name of Record Holder(s):
Area Code and Tel. No(s). ________________
___________________________________
Complete and check ONE box if Shares will
___________________________________ be tendered by book-entry transfer:
Certificate No(s). (if available): Account No. _________________________ at
___________________________________ / / The Depository Trust Company
/ / Philadelphia Depository Trust Company
___________________________________
___________________________________
___________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, (a) represents that such tender of Shares
complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended
(the 'Exchange Act'), and (b) guarantees delivery to the Depositary, at one of
its addresses set forth above, of certificates representing the Shares tendered
hereby in proper form for transfer, or confirmation of book-entry transfer of
such Shares into the Depositary's accounts at The Depository Trust Company or
the Philadelphia Depository Trust Company, in each case with delivery of a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), and any other required documents, within three New York Stock
Exchange, Inc. trading days after the date hereof.
________________________________________
(Name of Firm)
________________________________________
(Authorized Signature)
________________________________________
(Name)
________________________________________
(Address)
________________________________________
(Zip Code)
________________________________________
(Area Code and Telephone No.)
Dated: ___________________, 1997
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.
CERTIFICATES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
Offer to Purchase for Cash
up to
25,094,200 Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
PENNZOIL COMPANY
at
$84.00 NET PER SHARE IN CASH
by
RESOURCES NEWCO, INC.,
a wholly owned subsidiary of
UNION PACIFIC RESOURCES GROUP INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, JULY 21, 1997, UNLESS THE OFFER IS EXTENDED. SHARES
WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO
THE EXPIRATION DATE.
June 23, 1997
TO BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
We have been appointed by Resources Newco, Inc., a Delaware corporation (the
'Purchaser') and a wholly owned subsidiary of Union Pacific Resources Group
Inc., a Utah corporation ('UPR'), to act as Dealer Manager in connection with
the Purchaser's offer to purchase up to 25,094,200 shares of Common Stock, par
value $0.83 1/3 per share (the 'Common Stock'), of Pennzoil Company, a Delaware
corporation ('Pennzoil'), or such greater number of Shares as equals 50.1% of
the Shares outstanding on a fully diluted basis as of the expiration of the
Offer (the 'Maximum Number'), in each case together with the associated
preferred stock purchase rights (the 'Rights') issued pursuant to the Rights
Agreement, dated as of October 28, 1994 (the 'Rights Agreement'), between
Pennzoil and Chemical Bank, as Rights Agent (the Common Stock, together with the
Rights hereinafter referred to as the 'Shares') at $84.00 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated June 23, 1997 and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
constitute the 'Offer') enclosed herewith.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated June 23, 1997;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information relating
to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be delivered
to the Depositary by the Expiration Date (as defined in the Offer to
Purchase) or if the procedure for book-entry transfer cannot be completed on
a timely basis;
4. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer; and
5. A return envelope addressed to The Bank of New York, the Depositary.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and pay for the
<PAGE>
Maximum Number of Shares which are validly tendered prior to the Expiration Date
and not theretofore properly withdrawn when, as and if the Purchaser gives oral
or written notice to the Depositary of the Purchaser's acceptance of such Shares
for payment pursuant to the Offer. Payment for Shares purchased pursuant to the
Offer will in all cases be made only after timely receipt by the Depositary of
certificates for such Shares, or timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company, pursuant to the procedures described in
Section 2 of the Offer to Purchase, a properly completed and duly executed
Letter of Transmittal (or a properly completed and manually signed facsimile
thereof) or an Agent's Message in connection with a book-entry transfer, and all
other documents required by the Letter of Transmittal.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager and the Information Agent as
described in the Offer to Purchase) for soliciting tenders of Shares pursuant to
the Offer. The Purchaser will, however, upon request, reimburse brokers,
dealers, commercial banks and trust companies for reasonable and necessary costs
and expenses incurred by them in forwarding materials to their customers.
The Purchaser will pay or cause to be paid all stock transfer taxes
applicable to its purchase of Shares pursuant to the Offer, subject to
Instruction 6 of the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, JULY 21, 1997, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry delivery of Shares, and any other
required documents, should be sent to the Depositary, and certificates
representing the tendered Shares should be delivered or such Shares should be
tendered by book-entry transfer, all in accordance with the Instructions set
forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedure for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery procedures
specified under Section 2, 'Procedure for Tendering Shares' in the Offer to
Purchase.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover of the Offer to Purchase.
Very truly yours,
SMITH BARNEY INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF THE PURCHASER, UPR, THE DEALER MANAGER, THE INFORMATION AGENT OR
THE DEPOSITARY, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF
THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND
THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
Offer to Purchase for Cash
up to
25,094,200 Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
PENNZOIL COMPANY
at
$84.00 NET PER SHARE IN CASH
by
RESOURCES NEWCO, INC.,
a wholly owned subsidiary of
UNION PACIFIC RESOURCES GROUP INC.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, JULY 21, 1997, UNLESS THE OFFER IS EXTENDED.
SHARES WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
TO OUR CLIENTS:
Enclosed for your consideration are the Offer to Purchase dated June 23,
1997 and the related Letter of Transmittal (which, together with any amendments
or supplements thereto, constitute the 'Offer') in connection with the offer by
Resources Newco, Inc., a Delaware corporation (the 'Purchaser'), a wholly owned
subsidiary of Union Pacific Resources Group Inc., a Utah corporation, to
purchase for cash up to 25,094,200 shares of Common Stock, par value $0.83 1/3
per share (the 'Common Stock'), of Pennzoil Company, a Delaware corporation
('Pennzoil'), or such greater number of Shares as equals 50.1% of the Shares
outstanding on a fully-diluted basis as of the Expiration Date (as defined in
the Offer to Purchase),in each case together with the associated preferred stock
purchase rights (the 'Rights') issued pursuant to the Rights Agreement, dated as
of October 28, 1994, between Pennzoil and Chemical Bank, as Rights Agent (the
Common Stock, together with the Rights, are referred to herein as the 'Shares').
We are the holder of record of Shares held for your account. A tender of such
Shares can be made only by us as the holder of record and pursuant to your
instructions. The enclosed Letter of Transmittal is furnished to you for your
information only and cannot be used by you to tender Shares held by us for your
account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $84.00 per Share, net to you in cash without
interest.
2. The Offer, proration period and withdrawal rights expire at 12:00
Midnight, New York City time, on Monday, July 21, 1997, unless the Offer is
extended.
<PAGE>
3. The Offer is conditioned upon, among other things, a minimum of
25,043,937 Shares being properly tendered prior to the Expiration Date and
not withdrawn.
4. Any stock transfer taxes applicable to the sale of Shares to the
Purchaser pursuant to the Offer will be paid by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
5. The Offer is being made for 25,094,200 Shares or such greater number
of Shares as equals 50.1% of the Shares outstanding on a fully diluted basis
as of the Expiration Date. If more than 25,094,200 Shares, or such greater
number of Shares as equals 50.1% of the Shares outstanding as of the
expiration of the Offer, are validly tendered prior to the Expiration Date
and not withdrawn, the Purchaser will, upon the terms and subject to the
conditions of the Offer, accept such Shares for payment on a pro rata basis,
with adjustments to avoid purchases of fractional Shares, based upon the
number of Shares validly tendered prior to the Expiration Date and not
withdrawn.
Except as disclosed in the Offer to Purchase, the Purchaser is not aware of
any state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form enclosed
herewith. An envelope to return your instructions to us is enclosed. If you
authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified on the following page. Your instructions should be forwarded
to us in ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
UP TO 25,094,200 SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
PENNZOIL COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated June 23, 1997, and the related Letter of Transmittal, in
connection with the Offer by Resources Newco, Inc., a Delaware corporation and a
wholly owned subsidiary of Union Pacific Resources Group Inc., a Utah
corporation, to purchase up to 25,094,200 shares of Common Stock, par value
$0.83 1/3 per share (the 'Common Stock'), of Pennzoil Company, a Delaware
corporation ('Pennzoil'), together with the associated preferred stock purchase
rights (the 'Rights') issued pursuant to the Rights Agreement, dated as of
October 28, 1994, between Pennzoil and Chemical Bank, as Rights Agent (the
Common Stock and the Rights are referred to herein as the 'Shares').
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares to be Tendered:* SIGN HERE
__________________________ Shares _________________________________________
Signature(s)
Dated: ____________________, 1997
_________________________________________
_________________________________________
Please print name(s) and address(es) here
- ------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE>
UNION PACIFIC RESOURCES INITIATES $6.4 BILLION
UNSOLICITED OFFER FOR PENNZOIL
Proposed Transaction Valued at $84 per Pennzoil Share
Structured as a Two-Step Transaction, with Cash Tender Offer for 50.1% of
Pennzoil Shares, Followed by Tax-Free Exchange of Shares for Remaining 49.9%
Merger Will Create "the Premier Independent
Exploration and Production Company in the U.S."
Combined Company will be "Driven By UPR's Proven Ability
to Drill and Develop Oil and Gas Properties,
Quickly and Efficiently"
Pennzoil CEO First Proposed Merger with UPR in 1995, Has Since
Rejected UPR's Repeated Overtures for Negotiated Transaction
Fort Worth, Texas, June 23, 1997 - Union Pacific Resources Group Inc. (NYSE:
UPR) today announced that it is offering to acquire, in a two-step cash and
stock transaction, all of the outstanding shares of Pennzoil Company (NYSE: PZL)
at a price valued at $84 per share. The proposed transaction represents a 41%
premium over Pennzoil's closing price of $59.625 per share on June 20, 1997, a
56% premium over the closing price 30 days ago and a 56% premium above the
average closing price for the past 12 months. The total value of the
transaction, including the assumption of Pennzoil's debt, is approximately $6.4
billion.
"We believe that the merger of UPR and Pennzoil will create the premier
independent exploration and production company in the U.S.," Jack L. Messman,
Chairman and Chief Executive Officer of UPR, said today. "Driven by UPR's proven
ability to drill and develop oil and gas properties quickly and efficiently, we
are confident that UPR will create growth and value well beyond what Pennzoil
can achieve on its own. The combined company will lead the industry by nearly
every measure of performance, including drilling activity, production and cash
flow."
Immediate Cash Value and an Investment in a Dynamic New Company
- "The Business Logic of this Combination is Powerful" -
"The business logic of this combination is powerful, and we believe we will
build shareholder value over both the near and long term," Mr. Messman added.
Highlighting the terms of the two-step transaction and the compelling business
logic of the merger, Mr. Messman said that:
o The first step of the transaction will deliver immediate value in cash - at a
substantial premium - to Pennzoil shareholders who elect to tender shares.
o In the second-step merger, the remaining Pennzoil shareholders will receive
UPR common stock with a current value of $84 per Pennzoil share.
<PAGE>
-2-
o There will be immediate and ongoing accretion to UPR's cash flow per share,
the primary measurement of value in the E&P industry, while there will be a
near-term dilutive effect on earnings per share.
o The combined company will generate growth and value that surpass what
Pennzoil by itself can achieve, for several reasons:
- UPR's proven ability to apply drilling technology will increase - quickly
and efficiently - the reserves and production from Pennzoil's properties.
- The combined company will have a strong and balanced portfolio of oil and
gas properties, including potentially high-impact international prospects,
to which UPR's development expertise will be applied.
- The combined company will have the financial strength to nearly double
capital spending to drill and develop Pennzoil's properties, without
reducing capital spending on UPR's properties. In addition, it will have
the resources to pursue significant new E&P opportunities both domestically
and internationally, as well as to fund the strategic growth of the
downstream businesses.
- Greater operating and administrative efficiencies will be achieved by
increasing production and reducing per-unit costs.
Terms of the Two-Step Transaction
In the first step of the transaction, UPR is offering, through a subsidiary, to
acquire 50.1% of Pennzoil's common shares in a cash tender offer that is
commencing today. In the second step, Pennzoil and the UPR subsidiary will merge
in a transaction in which each remaining Pennzoil share will be exchanged for a
number of UPR shares, determined, within a pricing collar of $25 to $30, by
dividing $84 by the average of the closing prices of UPR common stock for the
twenty consecutive trading days ending five days prior to the meeting of
Pennzoil shareholders called for the purpose of voting on the proposed merger.
In the event that the UPR exchange ratio price is less than $25 or greater than
$30, the exchange ratio will be fixed at 3.36 shares, or 2.80 shares,
respectively. The exchange of shares is expected to be tax-free for Pennzoil
shareholders.
Completion of the tender offer is subject to certain conditions, including: the
tendering of a sufficient number of Pennzoil shares to give UPR majority
ownership; the redemption or invalidation of Pennzoil's shareholder rights plan;
Pennzoil Board approval of the transaction for the purposes of Section 203 of
the Delaware code and Pennzoil's supermajority vote charter provision; receipt
of all required regulatory approvals; and either the election of UPR designees
as a majority of Pennzoil's Board or execution of a binding merger agreement.
The merger is also subject to certain conditions, including approval by UPR and
Pennzoil shareholders. The transaction is not conditioned upon financing and the
cash tender offer will be financed by UPR with bank borrowings.
"These Two Companies Belong Together"
For more than four months, James L. Pate, Chairman and Chief Executive Officer
of Pennzoil, has repeatedly rebuffed UPR's efforts to have any serious
discussion about a possible transaction. Today, Mr. Messman sent a letter to Mr.
Pate, stating:
"UPR will bring to the proposed combination its expertise in increasing
production and reserves from oil and gas properties quickly and efficiently, its
world class technical skills and the financial resources to capitalize on
development opportunities in the large inventory of core properties of both
companies.
"Pennzoil will bring to the transaction a substantial domestic production base,
extensive opportunities for development and exploratory drilling and its own
employees' talents. Importantly, UPR can readily apply its proven business model
to Pennzoil's properties to increase their production and value. Further,
Pennzoil's globally recognized brand name and downstream energy operations will
complement UPR's large gas processing and marketing business. These two
companies belong together."
Pennzoil Chairman First Proposed Merger with UPR in 1995
<PAGE>
-3-
Mr. Messman's letter emphasized that Mr. Pate in 1995 proposed a merger with
UPR, when it was a subsidiary of Union Pacific Corporation. "You recognized the
compelling business logic of a merger," Mr. Messman wrote, "when in 1995 you
first suggested that our two companies merge . . . . We agree with your
assertion that, `The combined entity would become the premier exploration and
production company in the world.'"
Mr. Messman's letter also questioned Mr. Pate's current view, stated in a May 8,
1997 letter to Mr. Messman, that a merger somehow no longer made sense. "We do
not understand," Mr. Messman wrote, "why you believed that two years ago, when
Pennzoil faced particularly severe problems, it was in a better position than it
is now to merge with UPR and form the premier independent E&P company. In fact,
we believe that today the benefits from a combination would come even more
quickly. If we join our two companies, with all of their complementary
strengths, consider what we can accomplish together - the tremendous value we
will build for our shareholders. You had a great idea in 1995, and it is still a
great idea today."
UPR Sought Friendly Transaction, Pennzoil Rejected UPR's
Repeated Efforts to Discuss Merger
Mr. Messman also emphasized that, in his recent efforts to communicate with Mr.
Pate, UPR has repeatedly sought to open discussions for a negotiated, friendly
transaction, only to be rejected by Pennzoil: "We have repeatedly attempted,
over the past four months, to discuss with you a possible transaction that would
lead to such a combination and at the same time provide Pennzoil shareholders a
substantial premium over the current market price of their shares. However, in
my continuing efforts to communicate with you since February, you have rejected
every attempt to engage in constructive discussion of such a proposal. This
refusal continued even after we sent a specific proposal to you on June 10th
that would have provided Pennzoil shareholders a substantial premium. In your
letter of June 20th, you and Pennzoil's Board of Directors rejected our
proposal, still without any discussion with us.
"Your continued refusal to discuss the rationale or valuation of a transaction
has left us with no choice but to present our offer directly to Pennzoil
shareholders. While we are still prepared to discuss a friendly transaction, the
UPR Board of Directors strongly supports pursuing a business combination now."
UPR's Acquisition Price Exceeds Pennzoil's Own Strategic Value Targets
In his letter to Mr. Pate, Mr. Messman also stated that, "On March 4th of this
year, you told me you felt that the value of Pennzoil stock could possibly reach
$80-$100 per share over the course of the next four to five years, if Pennzoil's
strategic plan is successfully implemented. As you see, the proposed transaction
would not only offer Pennzoil shareholders a certain value today, which is
substantially above the present value of your suggested range of projected
future prices, it would also offer Pennzoil shareholders the opportunity to
benefit from the growth of the combined company.
"In your letter of June 20th, you made the unusual statement that, `. . . the
marketplace, like [Pennzoil] shareholders, does not fully appreciate the
benefits already achieved, and still to be achieved, under [Pennzoil's] plan.'
We are surprised that you would justify your refusal to consider our offer by
questioning the judgment of Pennzoil shareholders and the marketplace.
"Frankly, we do not see how any existing or newly created long-range plan from
you can compare favorably, or compete economically, with our proposal for
Pennzoil. In my view, your repeated rejections of our efforts to initiate
discussions regarding a merger have been a delaying tactic, providing time to
allow you to try to develop yet another strategic plan. Over the past several
years, such plans by Pennzoil have failed to deliver value. Based on past
performance, Pennzoil shareholders could justifiably conclude that any new plan,
and its projections, will be similarly unsuccessful and designed primarily to
entrench the status quo at Pennzoil. Our proposal, on the other hand, will
deliver substantial value today and in the future."
Summary of the Rationale for the Merger
Summarizing the rationale for the merger, Mr. Messman cited six key factors:
<PAGE>
-4-
o UPR and Pennzoil will be the premier independent E&P company in the U.S.,
ranking first in nearly all measures of size and activity, including
drilling, production and cash flow.
o UPR's proven ability in applied drilling technology will increase - quickly
and efficiently - the reserves and production from Pennzoil's extensive
portfolio. UPR is a world leader in horizontal drilling and the most active
driller in the U.S., as well as a leader in 3-D seismic technology. UPR's
ability to apply technology to exploit assets will enhance the value of
Pennzoil's properties.
o UPR and Pennzoil share a complementary core E&P business, which combined will
have a well-balanced, concentrated and sizable portfolio of opportunities in
the Gulf of Mexico, onshore Gulf Coast, Austin Chalk, East Texas, South
Texas, Permian Basin, Rocky Mountains and several high potential
international plays. The combined production and reserve profiles would be
geographically diverse with attractive growth potential.
o The financial strength of the combined company will ensure the ability to
fund all of its promising current and future opportunities on a global scale.
Royalties from UPR's fee ownership position in its 7.5 million acre Land
Grant provide significant cash flow for its E&P opportunities. In fact, UPR
expects to nearly double capital spending on Pennzoil's E&P properties to
increase production and reserves.
o Together, the companies can achieve even greater operating and administrative
efficiencies. The two companies' properties in East Texas and South Texas
complement each other. The combined management and technical team will
include some of the industry's best and most seasoned professionals. As a
result, new operating efficiencies will be achieved by increasing production
and reducing per-unit costs. At the same time, UPR stresses that growth
opportunities are the reason for this merger.
o Non-E&P operations of both companies will benefit from the merger due to the
increased financial strength to fund strategic growth of Pennzoil's Products
and Franchise operations, and the value which Pennzoil's brand name
recognition could have for UPR's marketing and processing businesses.
"The Best Strategic Merger in the Energy Business"
"I believe that by working together, we have the opportunity to accomplish the
best strategic merger in the energy business in recent history," Mr. Messman
said in his letter to Mr. Pate. "Growth is the driving force behind this
transaction, and clearly our proposal to build the combined company serves the
interests of the shareholders of both UPR and Pennzoil.
"The merger also will create expanded opportunities for the employees of UPR and
Pennzoil, who will work in a stimulating and rewarding environment. For the
states and communities where UPR and Pennzoil operate - including Texas, where
we will continue to maintain corporate offices in both Fort Worth and Houston -
the combined company and its strong growth prospects will be a major asset. As I
have previously stated, we are willing to consider having the name of the new
company include, or be, Pennzoil.
"Together, UPR and Pennzoil will quickly forge a uniquely strong, dynamic
company. We urge you and Pennzoil's Board of Directors to recognize the
immediate and long-term value of this transaction for Pennzoil shareholders."
UPR is the nation's largest domestic independent oil and gas exploration and
production company. Headquartered in Fort Worth, Texas, UPR has been the #1
domestic driller for the past five years.
This press release is not an offer to purchase shares of Pennzoil, nor is it an
offer to sell any UPR common stock which may be issued in a merger involving
Pennzoil and a subsidiary of UPR. The cash tender offer by a subsidiary of UPR
to acquire 50.1% of Pennzoil's common shares will be made solely by the Offer to
Purchase and the related Letter of Transmittal. Any issuance of UPR common stock
in any merger involving Pennzoil and a subsidiary of UPR would have to be
registered under the Securities Act of 1933, as amended, and such UPR common
stock would be offered only by means of a prospectus complying with such Act.
<PAGE>
-5-
This press release consists of forward-looking statements that involve risks and
uncertainties, including statements regarding future drilling and development
activities, anticipated capital expenditures, cash flows, operating and
administrative efficiencies and other matters. Actual results may vary
materially for the reasons detailed in UPR's SEC reports, including its reports
on Form 10-K for the year ended December 31, 1996 and on Form 10-Q for the
quarter ended March 31, 1997.
Media Contacts: Investor Relations Contact:
Walter Montgomery Michael Liebschwager
June 23 - 24 Only: 212-816-0370 June 23 - June 24 Only: 212-816-0371
Ongoing: 212-484-6721 Ongoing: 817-877-6531
Pat Doyle
June 23 - June 24 Only: 212-816-0370
Ongoing: 817-877-6527
On the Internet: www.upr.com
# # # #
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares or Rights. The Offer is made solely by the Offer to Purchase
dated June 23, 1997 and the related Letter of Transmittal, and is not being made
to (nor will tenders be accepted from or on behalf of) holders of Shares or
Rights in any jurisdiction in which the making of the Offer or acceptance
thereof would not be in compliance with the laws of such jurisdiction. In any
jurisdiction the securities, blue sky or other laws of which require the Offer
to be made by a licensed broker or dealer, the Offer is being made on behalf of
Purchaser by Smith Barney Inc. or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
up to
25,094,200 Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Pennzoil Company
at
$84.00 Net Per Share in Cash
by
Resources Newco, Inc.,
a wholly owned subsidiary of
Union Pacific Resources Group Inc.
Resources Newco, Inc., a Delaware corporation ("Purchaser") which is a
wholly owned subsidiary of Union Pacific Resources Group Inc., a Utah
corporation ("UPR"), is offering to purchase up to 25,094,200 shares of common
stock, par value $0.83-1/3 per share (the "Shares"), of Pennzoil Company, a
Delaware corporation ("Pennzoil"), or such greater number of Shares as equals
50.1% of the Shares outstanding on a fully diluted basis on the Expiration Date
(as defined in the Offer to Purchase) (such number of Shares being the "Maximum
Number"), in each case together with the associated preferred stock purchase
rights (the "Rights") issued pursuant to the Rights Agreement dated as of
October 28, 1994 (the "Rights Agreement"), between Pennzoil and Chemical Bank,
as Rights Agent (the "Rights Agent"), at a price of $84.00 per Share (and
associated Right), net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated June 23, 1997 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Unless the context
otherwise requires, all references herein to Shares shall include the Rights.
Unless the Rights are redeemed or Purchaser is satisfied, in its sole
discretion, that the Rights have been invalidated or are otherwise inapplicable
to the Offer and the Proposed Merger (as defined herein), stockholders are
required to tender one Right for each Share tendered in order to effect a valid
tender of Shares in accordance with the procedures set forth in Section 2 of the
Offer to Purchase. Unless the Distribution Date (as defined in the Offer to
Purchase) occurs, a tender of Shares will also constitute a tender of the
associated Rights.
The purpose of the Offer is to acquire a majority of the Shares as the
first step in a negotiated acquisition of the entire equity interest in
Pennzoil. UPR is seeking to negotiate with Pennzoil a definitive acquisition
agreement pursuant to which Pennzoil would, as soon as practicable following
consummation of the Offer, consummate a merger (the "Proposed Merger") with
Purchaser or another direct or indirect wholly owned subsidiary of UPR. At the
effective time of the Proposed Merger, each Share that is issued and outstanding
immediately prior to the effective time (other than Shares held in the treasury
of Pennzoil or owned by UPR, Purchaser or any direct or indirect wholly owned
subsidiary of UPR) would be converted into a number of shares of common stock,
no par value, of UPR ("UPR Common Stock") determined by dividing $84.00 by the
average closing price of a share of UPR Common Stock during a measurement period
preceding the date of the Pennzoil stockholder meeting at which the Proposed
Merger is approved, provided that the number of shares of UPR Common Stock to be
received for each Share will not be more than 3.36 shares of UPR Common Stock
nor less than 2.80 shares of UPR Common Stock. See Sections 10 and 11 of the
Offer to Purchase.
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, JULY 21, 1997, UNLESS THE OFFER IS EXTENDED.
SHARES WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, the satisfaction or,
where applicable, waiver of the following conditions: (i) there being validly
tendered and not withdrawn prior to the Expiration Date a number of Shares
which, together with Shares owned by Purchaser and its affiliates, will
constitute at least a majority of the total number of outstanding Shares on a
fully diluted basis as of the date the Shares are accepted for payment by
Purchaser pursuant to the Offer, and (ii) Purchaser being satisfied in its sole
discretion that the Board of Directors of Pennzoil has irrevocably taken all
such action so that (a) the acquisition of Shares pursuant to the Offer and the
Proposed Merger have been approved pursuant to Section 203 of the Delaware
General Corporation Law or the provisions of Section 203 are otherwise
inapplicable to the acquisition of Shares pursuant to the Offer and the Proposed
Merger, (b) the acquisition of Shares pursuant to the Offer and the Proposed
Merger have been approved pursuant to Article Sixth of Pennzoil's Restated
Certificate of Incorporation, (c) the Rights have been redeemed or Purchaser is
satisfied in its sole discretion that the Rights have been invalidated or are
otherwise inapplicable to the Offer and the Proposed Merger, and (d) either (1)
Purchaser's designees have been elected to the Board of Directors of Pennzoil so
that, after such election, such designees constitute a majority of the Board of
Directors of Pennzoil, or (2) Pennzoil has entered into a mutually satisfactory
definitive merger agreement with UPR and Purchaser to provide for the
acquisition of Pennzoil pursuant to the Offer and the Proposed Merger. The Offer
is also subject to other terms and conditions contained in the Offer to
Purchase.
Upon the terms and subject to the conditions of the Offer, if more than the
Maximum Number of Shares shall be validly tendered and not withdrawn prior to
the Expiration Date, Purchaser will, upon the terms and subject to the
conditions of the Offer, purchase the Maximum Number of Shares on a pro rata
basis (with adjustments to avoid purchases of fractional Shares) based upon the
number of Shares validly tendered and not withdrawn prior to the Expiration
Date. Because of the difficulty of determining the precise number of Shares
properly tendered and not withdrawn, if proration is required Purchaser does not
expect to be able to announce the final proration factor until approximately
seven New York Stock Exchange trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as promptly
as practicable after the Expiration Date. Stockholders of Pennzoil may obtain
such preliminary information from the Information Agent and may be able to
obtain such information from their brokers. Purchaser will not pay for any
Shares accepted for payment pursuant to the Offer until the final proration
factor is known.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to Purchaser and not
withdrawn as, if and when Purchaser gives oral or written notice to The Bank of
New York (the "Depositary") of its acceptance for payment of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from
Purchaser and transmitting payment to tendering stockholders. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares and, if the Distribution
Date occurs, certificates for (or a timely Book-Entry Confirmation, if
available, with respect to) the associated Rights (unless Purchaser elects to
make payment for such Shares pending receipt of the certificates for, or a
Book-Entry Confirmation with respect to, such Rights), (b) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and (c) any other documents required by the Letter of
Transmittal. The per Share consideration paid to any stockholder pursuant to the
Offer will be the highest per Share consideration paid to any other stockholder
pursuant to the Offer. Under no circumstances will interest be paid on the
purchase price of the Shares to be paid by Purchaser, regardless of any
extension of the Offer or any delay in making such payment.
Except as otherwise provided below, tenders of the Shares and the Rights
are irrevocable. The Shares and the Rights tendered pursuant to the Offer may be
withdrawn pursuant to the procedures set forth in Section 3 of the Offer to
Purchase at any time prior to the Expiration Date, and, unless theretofore
accepted for payment and paid for by Purchaser pursuant to the Offer, may also
be withdrawn at any time after August 21, 1997, or at such later time as may
apply if the Offer is extended. The Shares or the Rights may not be withdrawn
unless the associated Rights or Shares, as the case may be, are also withdrawn.
A withdrawal of the Shares or the Rights will also constitute a withdrawal of
the associated Rights or Shares, as the case may be. For a withdrawal to be
effective, a written, telegraphic, or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of the Offer to Purchase and must specify the person who
tendered the Shares and the Rights to be withdrawn, the number of the Shares and
Rights to be withdrawn and the name of the registered holder of the Shares and
the Rights to be withdrawn, if different from the name of the person who
tendered the Shares and the Rights. If certificates for the Shares or the Rights
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares or
Rights have been tendered by an Eligible Institution (as defined in Section 2 of
the Offer to Purchase), the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If the Shares or the Rights have been
delivered pursuant to the procedure for book-entry transfer as set forth in
Section 2 of the Offer to Purchase, any notice of withdrawal must also specify
the name and number of the account at the appropriate Book-Entry Transfer
Facility to be credited with the withdrawn Shares or Rights and otherwise comply
with such Book-Entry Transfer Facility's procedures. Withdrawals of tenders of
the Shares and the Rights may not be rescinded, and any Shares and Rights
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares and Rights may be retendered by again
following one of the procedures described in Section 2 of the Offer to Purchase
at any time prior to the Expiration Date. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be determined
by Purchaser in its sole discretion, which determination will be final and
binding. None of Purchaser, UPR, the Depositary, the Information Agent, the
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
Purchaser reserves the right, in its sole discretion, at any time and from
time to time, and regardless of whether or not any of the events or facts set
forth in Section 14 of the Offer to Purchase shall have occurred, to (a) extend
the period of time during which the Offer is open, and thereby delay acceptance
for payment of and the payment for any Shares, by giving oral or written notice
of such extension to the Depositary and (b) amend the Offer in any other respect
by giving oral or written notice of such amendment to the Depositary. Under no
circumstances will interest be paid on the purchase price for tendered shares,
whether or not Purchaser exercises its right to extend the Offer.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
Requests are being made to Pennzoil for the use of Pennzoil's stockholder
lists and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares, and
will be furnished to brokers, dealers, banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists, or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares by Purchaser following receipt of such lists or listings from Pennzoil,
or by Pennzoil if it so elects.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read before any decision is made with
respect to the Offer.
Questions and requests for assistance or for copies of the Offer to
Purchase, the related Letter of Transmittal and other tender offer materials may
be directed to the Information Agent or the Dealer Manager, as set forth below,
and copies will be furnished promptly at Purchaser's expense. No fees or
commissions will be payable to brokers, dealers or other persons (other than the
Dealer Manager and the Information Agent) for soliciting tenders of Shares and
Rights pursuant to the Offer.
The Information Agent for the Offer is:
MORROW & CO., INC.
909 Third Avenue, 20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
The Dealer Manager for the Offer is:
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
(212) 816-7346
June 23,1997
<PAGE>
MORGAN, LEWIS & BOCKIUS LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
Telephone No.: (215) 963-5000
Fax No.: (215) 963-5299
June 23, 1997
Union Pacific Resources Group Inc.
801 Cherry Street
Fort Worth, TX 76102-6803
Re: Offer to Purchase Shares of Common Stock of
Pennzoil Company and Proposed Merger of
Pennzoil Company and Resources Newco, Inc.
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax aspects
of the offer (the "Offer") by Resources Newco, Inc. ("Newco"), a wholly owned
subsidiary of Union Pacific Resources Group Inc. ("UPR"), to purchase shares of
common stock of Pennzoil Company ("Pennzoil"), and the proposed merger of Newco
and Pennzoil (the "Proposed Merger"), all as described in the Tender Offer
Statement on Schedule 14D-1 of Newco and UPR, filed with the Securities and
Exchange Commission on the date hereof (the "Schedule 14D-1"), including the
Offer to Purchase filed as an exhibit thereto (the "Offer to Purchase"). This
opinion is based upon our review of the Offer to Purchase and our assumption
that the Offer and Proposed Merger will take place in accordance with the
description included in the Offer to Purchase.
Opinion
Based on the foregoing and on the Internal Revenue Code of 1986, as amended
(the "Code"), the regulations promulgated thereunder, and judicial and
administrative interpretations thereof, all as in effect on the date of this
letter, it is our opinion that the statements of law and conclusions of law
included in Section 5 of the Offer to Purchase, captioned "Certain Federal
Income Tax Consequences", are, in all material respects, true, correct and
complete. No opinion is expressed regarding any statements, assumptions or
opinions regarding factual matters contained in the Offer to Purchase.
Should any of the facts, assumptions or understandings referred to above
prove incorrect, please let us know so that we may consider the effect, if any,
on our opinion. No
<PAGE>
Securities and Exchange Commission
June 23, 1997
Page 2
assurances can be given that any of the foregoing authorities will not be
modified, revoked, supplemented, revised, reversed or overruled or that any such
modification, renovation, supplementation, revision, reversal or overruling will
not adversely affect the opinion set forth above.
We understand that this opinion is to be used in connection with the Offer
to Purchase and that this opinion will be filed as an Exhibit to the Schedule
14D-1.
Very truly yours,
/s/ MORGAN, LEWIS & BOCKIUS LLP
