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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
(AMENDMENT NO. 1)
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
------------------------
PENNZOIL COMPANY
(Name of Subject Company)
------------------------
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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This Amendment No. 1 amends the Tender Offer Statement on Schedule 14D-1
filed on June 23, 1997 (the 'Schedule 14D-1') 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'), with respect to Purchaser's offer 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, 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 were filed as Exhibits (a)(1) and (a)(2) to the
Schedule 14D-1, respectively. Unless otherwise defined herein, all capitalized
terms used herein shall have the respective meanings given such terms in the
Offer to Purchase.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended to add the following:
(a) (8) Press release dated June 23, 1997 relating to certain litigation.
(g) (1) Complaint, filed by UPR and Purchaser against Pennzoil et al.
(dated June 23, 1997, Court of Chancery of the State of Delaware in
and for New Castle County).
(2) Original Complaint, filed by UPR and Purchaser against Pennzoil
(dated June 23, 1997, United States District Court for the Northern
District of Texas, Fort Worth Division).
(3) Verified Complaint for Declaratory and Injunctive Relief, filed by
UPR and Purchaser against Pennzoil, Richard Ieyoub, Attorney
General of the State of Louisiana, and Larry L. Murray,
Commissioner of Financial Institutions (dated June 23, 1997, United
States District Court for the Middle District of Louisiana).
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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
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ------------------------------------------------------------- ----
(a)(8) Press release, dated June 23, 1997 relating to certain
litigation
(g)(1) Complaint, filed by UPR and Purchaser against Pennzoil et al.
(dated June 23, 1997, Court of Chancery of the State of
Delaware in and for New Castle County).
(g)(2) Original Complaint, filed by UPR and Purchaser against Pennzoil
(dated June 23, 1997, United States District Court for the
Northern District of Texas, Fort Worth Division).
(g)(3) Verified Complaint for Declaratory and Injunctive Relief, filed
by UPR and Purchaser against Pennzoil, Richard Ieyoub, Attorney
General of the State of Louisiana, and Larry L. Murray,
Commissioner of Financial Institutions (dated June 23, 1997,
United States District Court for the Middle District of
Louisiana).
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Union Pacific Resources Group Inc.
NEWS RELEASE [LOGO]
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UNION PACIFIC RESOURCES FILES SUITS IN CONNECTION
WITH UNSOLICITED OFFER FOR PENNZOIL COMPANY
ASSERTS THAT PENNZOIL DIRECTORS VIOLATE THEIR FIDUCIARY DUTIES TO SHAREHOLDERS
FORT WORTH, TX, JUNE 23, 1997 - Union Pacific Resources Group Inc. (NYSE: UPR)
announced that it has filed suit today in three jurisdictions in connection with
its unsolicited offer, announced this morning, to acquire Pennzoil Company
(NYSE: PZL) through a two-step transaction currently valued at $84 per Pennzoil
share:
o In Delaware Chancery Court, in Wilmington, UPR is seeking a judgment
directing Pennzoil's Board of Directors to lift Pennzoil's anti-takeover
defenses. UPR believes that these defenses - which include Pennzoil's
shareholder rights plan ("poison pill") - would unlawfully prevent Pennzoil
shareholders from participating in UPR's offer and would entrench
Pennzoil's management.
o In U.S. District Court for the Northern District of Texas, in Fort Worth,
UPR is seeking a declaratory judgment that UPR's tender offer documents
being distributed to Pennzoil shareholders comply fully with all applicable
requirements of law.
o In U.S. District Court for the Middle District of Louisiana, in Baton
Rouge, UPR is seeking to prevent any attempt to apply that State's
anti-takeover laws to UPR's offer for Pennzoil. UPR believes that applying
Louisiana's anti-takeover laws to the transaction violates the U.S.
Constitution.
UPR said that the filings were part of its strategy to ensure that Pennzoil's
Board of Directors does not prevent Pennzoil shareholders from realizing the
substantial premium value UPR is offering for Pennzoil shares.
# # # #
MEDIA INVESTOR RELATIONS
CONTACTS: Walter Montgomery CONTACT:
June 23 to 24 only: 212-816-0370 Michael Liebschwager
Ongoing: 212-484-6721 June 23 to
Pat Doyle June 24 only: 212-816-0371
June 23 to 24 only: 212-816-0370 Ongoing: (817) 877-6531
Ongoing: 817-877-6527
ON THE INTERNET: www.upr.com
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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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UNION PACIFIC RESOURCES GROUP
INC. and RESOURCES NEWCO, INC., : C. A. No. 15755NC
Plaintiffs, :
-against- :
PENNZOIL COMPANY, HOWARD H. :
BAKER, JR., W. J. BOVAIRD,
W. L. LYONS BROWN, JR., ERNEST H. :
COCKRELL, HARRY H. CULLEN,
ALFONSO FANJUL, BERDON LAWRENCE, :
JAMES L. PATE, BRENT SCOWCROFT,
GERALD B. SMITH and CYRIL WAGNER, :
JR.,
:
Defendants.
- - - - - - - - - - - - - - - - - - x
COMPLAINT
Plaintiffs Union Pacific Resources Group Inc. ("UPR") and Resources Newco,
Inc. ("Newco"), as and for their complaint herein, by and through their
undersigned attorneys, allege, upon knowledge as to themselves and their own
acts and upon information and belief as to all other matters, as follows:
<PAGE>
Summary of this Action
1. Plaintiff Newco, a wholly owned subsidiary of plaintiff UPR, has
announced today that it is commencing a cash tender offer (the "Tender Offer")
for a majority of the outstanding shares of Pennzoil Company ("Pennzoil") common
stock that it and UPR do not already own. Pennzoil shareholders whose shares are
purchased by Newco in the Tender Offer will receive $84 per share in cash. The
Tender Offer is the initial step in a two-step transaction pursuant to which UPR
proposes to acquire all of the outstanding shares of Pennzoil stock. In
connection with the Tender Offer, UPR will seek to negotiate a definitive merger
agreement with Pennzoil pursuant to which all remaining Pennzoil shares would be
converted into UPR shares designed to have a value of $84 per share.
2. The two-step acquisition transaction has an overall value of
approximately $6.4 billion (including assumed debt), and today represents a
valuation of $84 per share of Pennzoil common stock. This represents a premium
of approximately 56% above the average closing price for Pennzoil stock on the
New York Stock Exchange over the past twelve months, and substantially exceeds
the present value of the $80-$100 per share price four to five years from now
projected by Pennzoil's Chief Executive Officer, James L. Pate, earlier this
year.
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3. In October 1994, the Board of Directors of Pennzoil adopted a
shareholder rights plan (the "Rights Plan") for the purported purpose of
deterring unsolicited takeover attempts. If the Rights Plan remains in effect,
it will make plaintiffs' acquisition of Pennzoil economically unfeasible. In
addition, Pennzoil has two additional anti-takeover measures available to it,
the Delaware Business Combination Statute, 8 Del. C. section 203 ("Section 203")
and Article Sixth of Pennzoil's restated certificate of incorporation ("Article
Six"), which can be used effectively to block the Tender Offer and Merger and
thus deprive Pennzoil stockholders of their most basic rights as owners of the
company. As a result, Newco has conditioned the Tender Offer on the share
purchase rights (the "Rights") being validly redeemed by Pennzoil's Board of
Directors, or invalidated, and Section 203 and Article Six being rendered
inapplicable to UPR's acquisition of Pennzoil. Absent relief from this Court,
however, these conditions will not be satisfied, and the Tender Offer and Merger
therefore will not be consummated, because the incumbent Pennzoil directors will
unlawfully entrench themselves in office by refusing voluntarily to take these
actions, to the irreparable detriment of plaintiffs and Pennzoil stockholders.
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The Parties
4. Plaintiff UPR is a Utah corporation with its principal executive offices
in Fort Worth, Texas. 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 is the
beneficial owner of more than 75,000 shares of Pennzoil common stock.
5. Plaintiff Newco is a Delaware corporation with its executive offices
located in Fort Worth, Texas. Newco is a wholly-owned subsidiary of UPR and the
owner of 100 shares of Pennzoil common stock. Newco was organized for purposes
of the Tender Offer and Merger.
6. Defendant Pennzoil is a Delaware corporation with its principal
executives offices in Houston, Texas. Pennzoil is engaged primarily in oil and
gas exploration and production, in processing, refining and marketing of oil and
motor oil and refined products and in the fast automotive oil change operations.
7. Defendant James L. Pate has been Chief Executive Officer, President and
a director of Pennzoil for more than the past five years.
8. Defendants Howard H. Baker, Jr., W. J. Bovaird, W. L. Lyons Brown, Jr.,
Ernest H. Cockrell, Harry H. Cullen, Alfonso Fanjul, Berdon Lawrence, Brent
Scowcroft,
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Gerald B. Smith and Cyril Wagner, Jr., are directors of Pennzoil.
9. As directors of Pennzoil, defendants Howard H. Baker, Jr., W. J.
Bovaird, W. L. Lyons Brown, Jr., Ernest H. Cockrell, Harry H. Cullen, Alfonso
Fanjul, Berdon Lawrence, James L. Pate, Brent Scowcroft, Gerald B. Smith and
Cyril Wagner, Jr. (collectively, the "Director Defendants") owe the highest
fiduciary duties of loyalty and care to Pennzoil shareholders, including the
duty to maximize value for all Pennzoil shareholders.
Background
A. The Rights Plan
10. On or about October 28, 1994, the Pennzoil Board of Directors approved
the adoption of the Rights Plan. Effective October 28, 1994, the Pennzoil Board
declared a dividend distribution of one share purchase right (a "Right") for
each outstanding share of Pennzoil common stock to stockholders of record on the
close of business on November 11, 1994.
11. The Rights are not exercisable or transferable apart from Pennzoil's
common stock until after the "Distribution Date" -- that is, the earlier of (i)
10 days following a public announcement that a person or group has acquired (or
obtained the right to acquire) beneficial ownership of 15 percent or more of
Pennzoil's outstanding
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common shares (thereby becoming an "Acquiring Person"); or (ii) 10 business days
following the commencement of a tender or exchange offer that would result in a
person or group becoming the beneficial owner of 15 percent or more of
Pennzoil's outstanding shares of common stock (thereby also becoming an
"Acquiring Person").
12. Upon the Distribution Date, the Rights become exercisable. Each Right
entitles the holder to purchase one-hundredth of a share (a "Unit") of Series A
Junior Participating Preferred Stock (the "Series A Preferred"), par value $1.00
per share, at a purchase price of $140 per Unit, subject to adjustment. The
Rights may be exercised until October 28, 1999, unless earlier redeemed or
exchanged by Pennzoil.
13. Since the $140 exercise price of the Rights greatly exceeds the
economic value of the Units of preferred stock into which the Rights are
initially convertible, the Rights were never intended to be used to purchase
such preferred stock. Instead, the sole reason for the Rights is their
"flip-over" and "flip-in" provisions, described below, which were designed to
punish any offeror unacceptable to the Pennzoil directors by creating an
insurmountable economic barrier to any acquisition of control of Pennzoil.
14. Under the Rights Plan, if an Acquiring Person becomes the beneficial
owner of 15 percent or more of the
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outstanding shares of Pennzoil common stock, then each Right "flips-in,"
entitling its holder to purchase an amount of shares of common stock of Pennzoil
(or, in certain circumstances, to acquire cash, property or other Pennzoil
securities) having a current value equal to two times the exercise price of the
Right. In other words, at an exercise price of $140 per Right, each Right holder
can purchase $280 worth of Pennzoil common stock for $140. All Rights that are
owned by the Acquiring Person become null and void.
15. In the event that Pennzoil is acquired in a merger or other business
combination in which it is not the surviving corporation, or 50 percent or more
of Pennzoil's assets or earning power is sold or transferred, each Right
"flips-over," entitling its holder to purchase common stock of the acquiring
company having a current value equal to two times the exercise price of the
Right.
16. Under the Rights Plan, a tender or exchange offer for all outstanding
Pennzoil common stock at a price and on terms determined by a majority of the
"continuing directors" of the Pennzoil Board prior to the purchase to be
adequate and in the best interests of Pennzoil and its stockholders is a
"Permitted Offer," which does not trigger the ability to exercise the Rights.
17. The massive dilutive effect of the Rights Plan ensures that no entity
disfavored by the Pennzoil
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directors will dare to acquire a significant minority position in Pennzoil, much
less consummate a tender offer for, or attempt a merger or other business
combination with, Pennzoil unless the incumbent Pennzoil directors first
determine that the terms of the offer are adequate and in the best interests of
Pennzoil and its stockholders or redeem the Rights. In practical terms, this
deters unsolicited takeover attempts, regardless of the value which any such
proposal offers to the Pennzoil shareholders.
B. Delaware Business Combination Statute
18. Section 203 of the Delaware General Corporation Law, entitled "Business
Combinations with Interested Stockholders," applies to any Delaware corporation
that has not opted out of the statute's coverage. Pennzoil has not opted out of
the statute's coverage.
19. Section 203 was designed to impede coercive and inadequate tender and
exchange offers. Section 203 provides that if a person acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested stockholder"), such
interested stockholder may not engage in a "business combination" with the
corporation (defined to include a merger or consolidation) for three years after
the interested stockholder becomes such, unless: (i) prior to the 15%
acquisition, the board of directors has approved either the acquisition
resulting in the stockholder becoming
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an interested stockholder or the business combination; (ii) the interested
stockholder acquires 85% of the corporation's voting stock in the same
transaction in which it crosses the 15% threshold; or (iii) on or subsequent to
the date of the 15% acquisition, the business combination is approved by the
board of directors and authorized at an annual or special meeting of the
stockholders (and not by written consent) by the affirmative vote of at least
66-2/3% of the outstanding voting stock which is not owned by the interested
stockholder.
20. Application of Section 203 to the Tender Offer and Merger would delay
the Merger for at least three years. Accordingly, three years of the substantial
benefits of the proposed combination will be forever lost. Additionally, any
number of events could occur within those three years which would prevent the
Merger altogether.
C. Article Six of Pennzoil's Restated Certificate of Incorporation
21. Article Six of Pennzoil's Restated Certificate of Incorporation
provides that if a person, corporation or entity (the "interested stockholder")
acquires beneficial ownership of 5% or more of the outstanding shares of any
class or series of voting stock of Pennzoil, such interested stockholder may not
enter into a merger or consolidation with Pennzoil, unless: (i) prior to the 5%
acquisition, the
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Board of Directors of Pennzoil has approved a memorandum of understanding with
such interested stockholder for such merger or consolidation; or (ii) the merger
or consolidation is approved by an affirmative vote of at least 80% of the
outstanding Pennzoil shares entitled to vote in an election of directors and the
merger is approved by an affirmative vote of a majority of the outstanding
voting stock which is not owned by the interested stockholder.
22. Application of Article Six to the Tender Offer and Merger would
effectively preclude plaintiffs' acquisition of Pennzoil and thereby deprive
Pennzoil stockholders of the opportunity to receive a substantial premium for
their shares.
D. The Response to the Tender Offer and Merger
23. Under the terms of the Tender Offer, Pennzoil shareholders whose shares
are purchased by Newco will receive $84 per share of Pennzoil common stock (and
associated Right), net to the seller in cash. This represents a premium of
approximately 56% above the average New York Stock Exchange closing price for
Pennzoil common stock over the past twelve months.
24. UPR and Newco also have stated that they will seek to negotiate with
Pennzoil a definitive merger agreement pursuant to which Pennzoil would
consummate the Merger with UPR. Pursuant to the Merger, each outstanding
Pennzoil
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share would be converted into UPR stock designed to have a value of $84 per
share, subject to the terms and conditions of the definitive merger agreement.
Thus, the proposed two-step acquisition transaction would deliver a substantial
premium to the Pennzoil stockholders.
25. Despite these clear-cut and significant economic benefits for the
Pennzoil stockholders, the incumbent Pennzoil directors already have signalled,
in no uncertain terms, that they will seek to defeat the Tender Offer and Merger
by a variety of measures, including by refusing to redeem the Rights and
refusing to render Section 203 and Article Six inapplicable to the Tender Offer
and Merger. Earlier this year, UPR contacted Pennzoil on several occasions and
proposed discussions concerning a negotiated acquisition of Pennzoil by UPR.
Most recently, UPR proposed a transaction at a substantial premium to the
prevailing market price of Pennzoil common stock. UPR's proposal was (and the
Tender Offer and Merger are) in keeping with a transaction proposed by Pennzoil
itself in 1995 pursuant to which UPR and Pennzoil would combine and become, as
Pennzoil's Chief Executive Officer then put it, "the premier exploration and
production company in the world." Although the business justifications cited by
Pennzoil for such a business combination are at least as strong now as they were
when Pennzoil itself proposed such a deal, Pennzoil rebuffed
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UPR, stating that Pennzoil's Board of Directors had determined that Pennzoil
should remain an independent, publicly-held company; was not interested in
pursuing a transaction with UPR; and would take all necessary action to respond
to any unsolicited offer.
COUNT I
(For Breach of Fiduciary Duty: The Rights Plan)
26. Plaintiffs repeat each of the foregoing allegations as if fully set
forth in this paragraph.
27. The ostensible purpose of the Rights Plan is to protect Pennzoil
shareholders against the consummation of unfair acquisition proposals that may
fail to maximize shareholder value.
28. In light of the superior value offered to Pennzoil stockholders by the
Tender Offer and Merger, there is no legitimate reason for the Pennzoil Board of
Directors to retain the Rights Plan. The Director Defendants' refusal to redeem
the Rights only has the effect of withholding from Pennzoil shareholders the
right to maximize their wealth by allowing them the option of selling their
Pennzoil shares pursuant to the Tender Offer and later exchanging any remaining
Pennzoil shares for UPR shares pursuant to the Merger.
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29. The Director Defendants' refusal to redeem the Rights or render the
Rights Plan inapplicable to the Tender Offer and Merger has no economic
justification, serves no legitimate purpose, and is not a reasonable response to
the Tender Offer and Merger, which pose no threat to the interests of Pennzoil's
stockholders or to Pennzoil's corporate policy and effectiveness. As such, it is
in breach of the fiduciary duties such directors owe to the Pennzoil
shareholders under applicable Delaware law.
30. Plaintiffs have no adequate remedy at law.
COUNT II
(For Breach of Fiduciary Duty: Section 203)
31. Plaintiffs repeat each of the foregoing allegations as if fully set
forth in this paragraph.
32. The Board of Directors of Pennzoil is empowered by Section 203 to
render the statute inapplicable to the Tender Offer and Merger by approving the
Tender Offer or Merger.
33. In light of the superior value offered to Pennzoil stockholders by the
Tender Offer and Merger, there is no legitimate reason for the Pennzoil Board of
Directors' refusal to approve the Tender Offer and Merger or to take any other
steps necessary to render Section 203 inapplicable to the Tender Offer and
Merger. Such refusal only has the
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effect of withholding from Pennzoil shareholders the right to maximize their
wealth by allowing them the option of selling their Pennzoil shares pursuant to
the Tender Offer and later exchanging any remaining Pennzoil shares for UPR
shares pursuant to the Merger.
34. The Director Defendants' refusal to approve the Tender Offer or Merger
or render Section 203 otherwise inapplicable to the Tender Offer and Merger has
no economic justification, serves no legitimate purpose, and is not a reasonable
response to the Tender Offer and Merger, which pose no threat to the interests
of Pennzoil's shareholders or to Pennzoil's corporate policy and effectiveness.
As such, it is in breach of the fiduciary duties such directors owe to
Pennzoil's shareholders under applicable Delaware law.
35. Plaintiffs have no adequate remedy at law.
COUNT III
(For Breach of Fiduciary Duty: Article Six)
36. Plaintiffs repeat each of the foregoing allegations as if fully set
forth in this paragraph.
37. The ostensible purpose of Article Six of Pennzoil's Restated
Certificate of Incorporation is to protect Pennzoil shareholders against the
consummation of unfair acquisition proposals that may fail to maximize
shareholder value.
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38. Article Six empowers the Board of Directors of Pennzoil to render
Article Six inapplicable to the Tender Offer and Merger by approving the Merger.
39. In light of the superior value offered to Pennzoil stockholders by the
Tender Offer and Merger, there is no legitimate reason for the Pennzoil Board of
Directors' refusal to approve the Merger for purposes of Article Six or to take
any other steps to render Article Six inapplicable to the Tender Offer and
Merger. Such refusal only has the effect of withholding from Pennzoil
shareholders the right to maximize their wealth by allowing them the option of
selling their Pennzoil shares pursuant to the Tender Offer and later exchanging
any remaining Pennzoil shares for UPR shares pursuant to the Merger.
40. The Director Defendants' refusal to approve the Tender Offer and Merger
for purposes of Article Six or render Article Six otherwise inapplicable to the
Tender Offer and Merger has no economic justification, serves no legitimate
purpose, and is not a reasonable response to the Tender Offer and Merger, which
pose no threat to the interests of Pennzoil's stockholders or to Pennzoil's
corporate policy and effectiveness. As such, it is in breach of the fiduciary
duties such directors owe to the Pennzoil shareholders under applicable Delaware
law.
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41. Plaintiffs have no adequate remedy at law.
WHEREFORE, plaintiffs respectfully request that this Court:
(a) declare that the Director Defendants have breached their fiduciary
obligations to Pennzoil shareholders under Delaware law by refusing to
redeem the Rights in response to the Tender Offer;
(b) compel Pennzoil and its Director Defendants to redeem the Rights
or render the Rights Plan inapplicable to the Tender Offer and Merger;
(c) declare that the Director Defendants have breached their fiduciary
obligations to Pennzoil shareholders under Delaware law by refusing to
render Section 203 inapplicable to the Tender Offer and Merger;
(d) compel the Director Defendants to approve the Tender Offer and
Merger for purposes of Section 203 and enjoin them from taking any action
to enforce or apply Section 203 that would impede, thwart, frustrate or
interfere with the Tender Offer or Merger;
(e) declare that the Director Defendants have breached their fiduciary
obligations to Pennzoil shareholders under Delaware law by refusing to
render Article Six inapplicable to the Tender Offer and Merger;
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(f) compel the Director Defendants to approve the Tender Offer and
Merger for purposes of Article Six and enjoin the Board of Directors of
Pennzoil from taking any action to enforce or apply Article Six that would
impede, thwart, frustrate or interfere with the Tender Offer or Merger;
(g) temporarily, preliminarily and permanently enjoin Pennzoil, its
employees, agents and all persons acting on its behalf or in concert with
it from taking any action with respect to the Rights Plan, except to redeem
the Rights or render the Rights Plan inapplicable to the Tender Offer and
Merger, and from adopting any other Rights Plan or other measures, or
taking any other action designed to, or which has the effect of, impeding
the Tender Offer or the efforts of plaintiffs to acquire control of
Pennzoil;
(h) temporarily, preliminarily and permanently enjoin defendants,
their affiliates, subsidiaries, officers, directors and all others acting
in concert with them or on their behalf from bringing any action concerning
the Rights Plan, Section 203 or Article Six in any other court;
(i) award plaintiffs their costs and disbursements in this action,
including reasonable attorneys' fees; and
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(j) grant plaintiffs such other and further relief as this Court may
deem just and proper.
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
By /s/ Edward P. Welch
Edward P. Welch
Andrew J. Turezyn
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
Attorneys for Plaintiffs
Of Counsel:
Jonathan J. Lerner
Samuel Kadet
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
919 Third Avenue
New York, NY 10022
(212) 735-3000
Dated June 23, 1997
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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
UNION PACIFIC RESOURCES GROUP )
INC. and RESOURCES NEWCO, INC., )
)
Plaintiffs, )
) CIVIL ACTION NO. _____________
vs. )
)
PENNZOIL COMPANY, )
)
Defendant. )
PLAINTIFFS' ORIGINAL COMPLAINT
Plaintiffs Union Pacific Resources Group Inc. and Resources Newco, Inc.
(Newco) file this action seeking declaratory relief arising out of an offer to
purchase shares of Defendant Pennzoil Company's stock.
The Parties
1. Plaintiff Union Pacific Resources Group Inc. is a corporation organized
and existing under the laws of the State of Utah with its principal place of
business in Fort Worth, Texas. Union Pacific Resources Group Inc. and its
affiliates engage primarily in the exploration, development and production of
natural gas, natural gas liquids and crude oil in the United States and Canada.
2. Plaintiff Newco is a corporation organized and existing under the laws
of the State of Delaware with its principal place of business in Fort Worth,
Texas. As a wholly-owned subsidiary of Union Pacific Resources Group Inc., Newco
was recently organized
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 1
<PAGE>
for purposes of making the Tender Offer and consummating the Merger described
and alleged below.
3. Defendant Pennzoil Company (Pennzoil) is a corporation organized and
existing under the laws of the State of Delaware with its principal place of
business in Houston, Texas. It may be served with summons by serving its
registered agent, CT Corporation Systems at 811 Dallas, Houston, Texas 77002.
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.
4. Pennzoil's common stock is registered pursuant to Section 12(b) of the
Exchange Act, 15 U.S.C. section 781(b) and is listed and traded on the New York
Stock Exchange. According to Pennzoil's Annual Report for the fiscal year ended
December 31, 1996, there were 46,839,557 shares of Pennzoil common stock
outstanding with a par value of 83 1/3 cents per share.
Jurisdiction and Venue
5. This action arises under Sections 14(d), 14(e) and 28 of the Securities
Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. sections 78n(d), 78n(e) and
78bb, and the rules and regulations promulgated thereunder by the Securities and
Exchange Commission (SEC), 17 C.F.R. sections 240.14d-1 et seq. It also arises
under the Declaratory Judgment Act, 28 U.S.C. section 2201.
6. This Court has subject matter jurisdiction pursuant to:
a) Section 27 of the Exchange Act, 15 U.S.C. section 78aa, because this
action is brought to declare and to enforce rights and duties
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 2
<PAGE>
created by the Exchange Act and regulations thereunder;
b) 28 U.S.C. section 1331(a), because the matter in controversy arises
under the Constitution and the laws of the United States; and
c) 28 U.S.C. section 1337(a), because the action arises under the
Exchange Act, and Act of Congress regulating commerce.
7. Venue is proper in the Northern District of Texas pursuant to 15 U.S.C.
section 78aa because Pennzoil is and can be found in the district, because
Pennzoil is an inhabitant of and/or transacts business in this district, and
because some or all of the acts or transactions which could be alleged to
constitute a violation of the Exchange Act occurred in this district.
The Tender Offer
8. Immediately prior to the filing of this action, plaintiff Newco
announced a tender offer (the "Tender Offer") for 50.1% of the issued and
outstanding shares of Pennzoil common stock that it and Union Pacific Resources
Group Inc. do not already own. The Tender Offer is being made to all Pennzoil
stockholders throughout the United States and elsewhere. The Tender Offer is
being made at a price of $84.00 per share, a substantial premium to the current
market price of Pennzoil common stock. The Tender Offer and related merger will
constitute a major transaction in interstate commerce, representing a commitment
of approximately six billion, four hundred million dollars. The Tender Offer, if
successful, will be followed by a second-step merger (the "Merger") pursuant to
which each remaining share of Pennzoil stock will be converted into shares of
Union Pacific Resources Group Inc. stock, subject to the terms of a definitive
merger agreement to be entered into.
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 3
<PAGE>
9. The Tender Offer is, and will continue to be, in full compliance with
all applicable federal laws and regulations governing tender offers - the
provisions of the Williams Act, embodied in Sections 14(d) and 14(e) of the
Exchange Act, 15 U.S.C. sections 78n(d), (e), and in the rules and regulations
promulgated thereunder by the SEC. In connection with the Tender Offer, a
Schedule 14D-1 has been filed with the SEC pursuant to Section 14(d)(1)d of the
Exchange Act and Rule 14d-3 promulgated thereunder. A true and correct copy of
the Schedule 14D-1 is attached hereto as Union Pacific Resources Group Exhibit
One.
Nature of Relief
10. The Williams Act referred to in paragraph 9 herein was enacted by
Congress to provide a comprehensive uniform national system regulating all
aspects of interstate cash tender offers. Congress thereby recognized that
tender offers served beneficial economic functions by, among other things,
providing investors with an opportunity to sell their shares at advantageous
premiums over prevailing market prices.
11. The Williams Act reflects the intent of Congress that the success or
failure of tender offers for the shares of publicly-traded corporations should
be left to the free and informed investment judgment of the marketplace and not
be held hostage to self-serving efforts of entrenched senior management seeking
to preserve their positions and substantial corporate perquisites. The Williams
Act therefore establishes even-handed regulation that favors neither the offeror
nor the incumbent management of the company to whom a tender offer has been
made.
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 4
<PAGE>
12. It is also a purpose of the Williams Act to promote informed decisions
by shareholders concerning the desirability and adequacy of a tender offer. The
Williams Act therefore requires that stockholders promptly be given all material
information with respect to a tender offer so that they may make their
investment decisions in possession of full and complete information.
13. To implement those objectives, Section 14(d) of the Exchange Act, 15
U.S.C. section 17n(d), and the rules and regulations promulgated thereunder by
the SEC require that any person or entity making a tender offer for beneficial
ownership of more than five percent of a class of registered equity securities
file and disclose certain specified information with respect to the tender
offer. Any such bidder must disclose, among other things, its identity and
background, any past contacts, transactions or negotiations between the bidder
and the company in whom the bidder seeks to acquire stock, the source and amount
of funds needed for the tender offer, and any plans the bidder may have to
change the capitalization, corporate structure or business of the company whose
stock it seeks to acquire.
14. In addition, Section 14(e) of the Exchange Act, 15 U.S.C. section
78n(e), makes it "unlawful for any person to make any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statement made, in light of the circumstances under which they are made, not
misleading, or to engage in any fraudulent, deceptive, or manipulative acts or
practice in connection with any tender offer...". Plaintiffs have not violated
this provision.
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 5
<PAGE>
15. In connection with the Tender Offer, Newco has filed a Schedule 14D-1
with the SEC and is in the process of disseminating to Pennzoil's shareholders
an offer to purchase containing all material information required by applicable
law to be disclosed. That offer is more than fair and is plainly in the best
interests of Pennzoil's stockholders.
16. Notwithstanding, senior management of corporations to which such offers
are made, such as the management of Pennzoil, frequently, if not invariably,
resist unsolicited tender offers, even tender offers which are fairly and
attractively priced and in the best interests of shareholders. In order to
entrench themselves in office, it is typical for such management to cause the
target corporation to commence litigation against the bidder and others
challenging, among other things, the legal sufficiency of the disclosures made
by the bidder in its tender offer documents under Sections 14(d) and 14(e) of
the Exchange Act and applicable SEC regulations.
17. Pennzoil's officers and directors have already signaled, in
unmistakable terms, that they will seek to delay and resist the Tender Offer and
Merger by any and every conceivable means, all in order to preserve their
positions and substantial corporate perquisites. Their efforts in this respect
will, in all likelihood, include causing Pennzoil to commence baseless
litigation against plaintiffs under the provisions of the federal securities
laws regulating tender offers and acquisition efforts.
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 6
<PAGE>
Declaratory Relief
18. In hopes of working with Pennzoil management, Union Pacific Resources
Group Inc. management contacted Pennzoil management on several occasions in an
effort to initiate discussions concerning a negotiated "friendly" business
combination of Pennzoil by Union Pacific Resources Group Inc. Most recently,
Union Pacific Resources Group Inc. proposed such a transaction at a substantial
premium to the market price of Pennzoil common stock. Those efforts, like the
Tender Offer and Merger are fully consistent with a representation made by James
L. Pate, the Chairman of the Board, President and Chief Executive Officer of
Pennzoil, that combining Union Pacific Resources Group Inc. and Pennzoil would
result in "the premier exploration and production company in the world."
Although the business justifications cited by Pennzoil for such a combination
are at least as strong now as they were when Pennzoil itself proposed such a
deal in 1995, Pennzoil has rebuffed and rejected Union Pacific Resources Group
Inc.'s efforts to discuss such a transaction, stating that the Board of
Directors of Pennzoil had determined that Pennzoil should remain an independent,
publicly-held company and that the board was not interested in any acquisition
proposal from Union Pacific Resources Group Inc.
19. The Declaratory Judgment Act, 28 U.S.C. section 2201, provides that
"[i]n a case of actual controversy within its jurisdiction,... any court of the
United States, upon the filing of an appropriate pleading, may declare the
rights and other legal relations of any interested party seeking such
declaration...." Plaintiffs Union
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 7
<PAGE>
Pacific Resources Group Inc. and Newco are entitled to a declaratory judgment
that the Tender Offer which they are in the process of commencing, is proper and
complies with all applicable securities laws, rules or regulations.
20. Although the Tender Offer and Merger are fairly and attractively
priced, Pennzoil's Board of Directors and senior management have rejected Union
Pacific Resources Group Inc.'s acquisition proposal. Plaintiffs believe Pennzoil
will seek to delay and ultimately defeat the Tender Offer through efforts
including the filing of suit attacking the Tender Offer claiming that filings
made by plaintiffs in conjunction therewith violate applicable federal
securities laws and regulations. Plaintiffs may reasonably expect that Pennzoil
will act in accordance with its expressed intent, and will take every available
measure to thwart or delay Plaintiffs' lawful attempts to consummate the Tender
Offer. Thus, there is a substantial controversy between parties having adverse
interests, plaintiffs on the one hand, and Pennzoil on the other hand, which are
of sufficient immediacy and reality to warrant the issuance of a declaratory
judgment.
21. In the absence of declaratory relief, Plaintiffs will suffer
irreparable harm. Through the course of action that Pennzoil has pursued to
date, Pennzoil apparently intends to defend against the Tender Offer by, among
other things, filing false claims designed to delay or ultimately defeat
consummation of the Tender Offer and Merger. A declaratory judgment that the
Schedule 14D-1 and Tender Offer comply with all applicable securities laws will
serve the purpose of adjudicating the interests of the
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 8
<PAGE>
parties, resolving any complaints concerning the propriety of the Tender Offer,
and permitting an otherwise lawful transaction to proceed.
22. Plaintiffs therefore request pursuant to the Federal Declaratory
Judgment Act, 28 U.S.C. sections 2201-2202, that this Court enter a declaratory
judgment that the disclosure documents which have been filed with the SEC by
plaintiffs and which are being disseminated to Pennzoil stockholders in
connection with the Tender Offer comply fully with all applicable provisions of
law.
WHEREFORE, plaintiffs Union Pacific Resources Group Inc. and Newco
respectfully request that this Court enter a declaratory judgment:
i) declaring that plaintiffs have disclosed all information required by,
and are otherwise in all respects in compliance with, Sections 14(d)
and 14(e) of the Exchange Act and any other federal securities laws,
rules or regulations deemed or claimed to be applicable to the Schedule
14D-1 and Tender Offer; and
ii) awarding the plaintiffs their reasonable and necessary attorneys' fees
together with all costs of court.
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 9
<PAGE>
/s/ Ralph H. Duggins
RALPH H. DUGGINS
State Bar No. 06183700
ESTIL VANCE, JR.
State Bar No. 20479000
S. G. JOHNDROE, III
State Bar No. 10674000
Cantey & Hanger, L.L.P.
2100 Burnett Plaza
801 Cherry Street
Fort Worth, Texas 76102
(817) 877-2800
(817) 877-2807 - Fax
/s/ Dee J. Kelly
DEE J. KELLY
State Bar No. 11217000
E. GLEN JOHNSON
State Bar No. 10709500
DONALD E. HERRMANN
State Bar No. 09541300
TIMOTHY J. VAN MEIR
State Bar No. 00794781
Kelly, Hart & Hallman, P.C.
201 Main Street, Suite 2500
Fort Worth, Texas 76102
(817) 332-2500
(817) 878-9260 - Fax
JACK O'NEILL
State Bar No. 15288500
JESSE R. PIERCE
State Bar No. 15995400
Clements, O'Neill, Pierce & Nickens
1000 Louisiana, Suite 1100
Houston, Texas 77002-5009
(713) 654-7600
(713) 654-7690 - Fax
ATTORNEYS FOR PLAINTIFFS
DATED: June 23, 1997
________________________________________________________________________________
PLAINTIFF'S ORIGINAL COMPLAINT Page 10
<PAGE>
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF LOUISIANA
UNION PACIFIC RESOURCES * CIVIL ACTION
GROUP INC. and RESOURCES * NO.
NEWCO, INC. *
*
VERSUS * JUDGE:
*
PENNZOIL COMPANY, RICHARD *
IEYOUB, Attorney General of the State * MAGISTRATE
of Louisiana, and LARRY L. MURRAY, * JUDGE:
Commissioner of Financial Institutions *
******************************************
VERIFIED COMPLAINT FOR
DECLARATORY AND INJUNCTIVE RELIEF
Plaintiffs, Union Pacific Resources Group Inc. ("UPR") and Resources Newco,
Inc. ("Resources"), of their own knowledge as to their actions and on
information and belief as to other matters, complain of Pennzoil Company
("Pennzoil"), a Delaware corporation, Richard Ieyoub, Attorney General of the
State of Louisiana and Larry L. Murray, Commissioner of Financial Institutions,
as follows:
NATURE OF THE ACTION
1. Plaintiff Resources, a wholly owned subsidiary of plaintiff UPR, has
announced today that it is commencing a cash tender offer (the "Tender Offer")
for a majority of the outstanding shares of common stock of Pennzoil, a Delaware
corporation with its principal executive offices in Houston, Texas. Pennzoil
shareholders whose shares are purchased in the Tender Offer will receive $84.00
per share in cash. The Tender Offer is the initial step in a two-step
transaction pursuant to which UPR proposes to acquire all of the outstanding
shares of Pennzoil stock. In connection with the Tender Offer, UPR will seek to
negotiate a definitive
<PAGE>
merger agreement with Pennzoil (the "Merger") pursuant to which all remaining
Pennzoil shares will be converted into UPR shares designed to have a value of
$84.00 per share.
2. The two-step acquisition transaction has an overall value of
approximately $6.4 billion (including assumed debt). It represents a premium of
approximately 56% above the average closing price for Pennzoil stock on the New
York Stock Exchange over the past 12 months, and substantially exceeds the
present value of the $80-$100 per share price four to five years from now
projected by Pennzoil's Chief Executive Officer, James L. Pate, earlier this
year.
3. Although the Tender Offer is fair and in the best interests of
Pennzoil's shareholders, there is a strong likelihood that incumbent Pennzoil
management will seek to defeat the Tender Offer through every available means in
order to preserve their position and corporate perquisites. Their efforts in
this respect will, in all likelihood, include invoking an unconstitutional
Louisiana "anti-takeover" Control Share Statute.
4. Accordingly, in this action, brought pursuant to the Federal Declaratory
Judgments Act, 28 U.S.C. sections 2201-2202, plaintiffs ask the Court to declare
the Louisiana Foreign Corporation Control Share Statute (the "Control Share
Statute"), La. R.S. sections 12:140.11-12:140.17 null and void on its face and
as applied to the Tender Offer and Merger on the grounds that the Control Share
Statute violates the Commerce Clause of the United States Constitution and
deprives plaintiffs, under color of state law, of rights, privileges, and
immunities secured to them by the Constitution and laws of the United States.
5. In light of the pendency of the Tender Offer, plaintiffs also ask the
Court to grant preliminary and permanent injunctive relief enjoining defendants,
their officers, agents, servants, employees and attorneys, and all persons in
active concert or participation with them, and all other persons having actual
notice thereof, from taking any action whatsoever to invoke, enforce
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<PAGE>
or apply the Control Share Statute, or any orders, rules or regulations issued
pursuant thereto, against plaintiffs or anyone acting on their behalf in
connection with the Tender Offer.
JURISDICTION
6. This action arises under Sections 14(d), 14(e) and 28 of the Securities
Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. sections 78n(d), 78n(e) and
78bb, and the rules and regulations promulgated thereunder, 17 C.F.R. sections
240.14d-1 et seq; the Civil Rights Act of 1871, 42 U.S.C. section 1983; and
Article I, Section 8 of the United States Constitution.
7. Subject matter jurisdiction over this action is conferred on this Court
by:
(a) 28 U.S.C. section 1331(a), because the matter in controversy
arises under the Constitution and laws of the United States;
(b) 28 U.S.C. section 1343(a)(3), because this action is brought in
part under 42 U.S.C. section 1983 to redress and prevent the violation of
rights, privileges, and immunities secured to the plaintiffs by the Constitution
and laws of the United States; and
(c) 28 U.S.C. section 1337(a), because the action arises under the
Exchange Act, an Act of Congress regulating commerce.
THE PARTIES
8. Plaintiff UPR is a Utah corporation with its principal executive offices
in Fort Worth, Texas. UPR is engaged primarily in the exploration of 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 is the
beneficial owner of more than 75,000 shares of Pennzoil common stock.
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<PAGE>
9. Plaintiff Resources is a Delaware corporation with its executive offices
located in Fort Worth, Texas. Resources is a wholly-owned subsidiary of UPR and
the owner of 100 shares of Pennzoil common stock. Resources was organized for
purposes of the Tender Offer and Merger.
10. Defendant Pennzoil is a Delaware corporation with its principal
executive offices in Houston, Texas. Pennzoil is engaged primarily in oil and
gas exploration and production; in processing, refining and marketing of oil,
motor oil and refined products; and in the fast automotive oil change
operations.
11. Defendant Richard Ieyoub (being sued in his official capacity) is a
citizen and resident of the State of Louisiana, is the Attorney General of the
State of Louisiana, and is charged with enforcing the laws of the State of
Louisiana.
12. Defendant Larry L. Murray (being sued in his official capacity) is a
citizen and resident of the State of Louisiana, is the Commissioner of Financial
Institutions (the "Commissioner"), the administrative body charged with
enforcement of the Control Share Statute.
THE TENDER OFFER
13. On June 23, 1997, plaintiff Resources announced that it was commencing
a cash tender offer for a majority of the outstanding shares of Pennzoil stock
that it and UPR do not already own. The Tender Offer will be made to all
Pennzoil stockholders throughout the United States and elsewhere. The Tender
Offer will constitute a major transaction in interstate commerce, representing a
commitment in excess of $2 billion.
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<PAGE>
14. The Tender Offer will be advertised nationally by the use of the
financial press and by interstate mail and phone services. The Tender Offer will
be distributed to Pennzoil shareholders throughout the country and elsewhere by
the use of the mails and other instrumentalities and facilities of interstate
commerce.
15. The Tender Offer will be made in full compliance with federal laws and
regulations governing tender offers -- the provisions of the Williams Act
(embodied in Section 14(d) and 14(e) of the Exchange Act, 15 U.S.C. sections
78n(d), (e)), and the rules and regulations promulgated thereunder by the
Securities and Exchange Commissions ("SEC"). In connection with the Tender
Offer, a Schedule 14D-1 will be filed with the SEC pursuant to Section 14(d)(1)
of the Exchange Act and Rule 14d-3 promulgated thereunder.
THE WILLIAMS ACT
16. The Williams Act was enacted by Congress to provide a comprehensive
uniform national system regulating all aspects of interstate cash tender offers.
In enacting the Williams Act, Congress recognized that tender offers serve
beneficial economic functions by, among other things, providing investors with
an opportunity to sell their shares at advantageous premiums over prevailing
market prices.
17. The Williams Act reflects the intent of Congress that the success or
failure of interstate tender offers for the shares of public corporations should
be left to the free and informed investment judgment of the marketplace.
Accordingly, the purpose of the Williams Act is not to defeat or discourage
tender offers, but to establish even-handed regulation that favors neither the
offeror nor the incumbent management of the target corporation.
-5-
<PAGE>
18. It is also a purpose of the Williams Act to promote informed decisions
by shareholders concerning the desirability of a tender offer. Accordingly, the
Williams Act requires that stockholders promptly be given all material
information with respect to a tender offer so that they may make their
investment decision in possession of full and complete information.
19. Pursuant to the authority vested in it by Section 23(a)(1), 15 U.S.C.
section 78w(a)(1), and other provisions of the Exchange Act, the SEC has, from
time to time, promulgated rules and regulations in furtherance of the
comprehensive Congressional scheme embodied in the Williams Act and elsewhere in
the Exchange Act.
THE LOUISIANA FOREIGN CORPORATION
CONTROL SHARE STATUTE
20. The Control Share Statute, by its terms, applies to any "issuing public
corporation." As defined by the Control Share Statute, a corporation is an
"issuing public corporation" if it (1) is a foreign corporation required to have
a certificate of authority to transact business in Louisiana, and (2) has 100 or
more shareholders; its principal place of business, principal office, or
directly or through a subsidiary, substantial assets or real property within
Louisiana; and (3) has one or more of the following: (a) more than 10% of its
shareholders resident in Louisiana, (b) more than 10% of its shares owned by
Louisiana residents, (c) 10,000 shareholders resident in Louisiana, or (d) 2,000
employees resident in Louisiana. La. R.S. section 12:140.11(4)(a).
21. Pursuant to La. R.S. section 12:140.12, if Pennzoil qualifies as an
"issuing public corporation," its board of directors can adopt a bylaw making
Pennzoil subject to the operative sections of the Control Share Statute (i.e.,
La. R.S.. sections 12:140.13 - 12:40.16).
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<PAGE>
22. The Control Share Statute purports to protect shareholders against the
supposedly negative effects of control changes by providing that a shareholder
may be denied voting rights on any "control shares" it purchases unless the
"disinterested" shareholders vote at a shareholder meeting to grant such voting
rights. A shareholder acquires "control shares" whenever it acquires shares
that, but for the operation of the Control Share Statute, would bring its voting
power in the corporation to or above any of three thresholds: 20%, 33-1/3%, or
50%. La. R.S. section 12:140.11(1).
23. The special voting requirements of the Control Share Statute serve to
deter takeover bids such as the Tender Offer and Merger because an offeror's
ability to obtain control of the operations of the target corporation is
divorced from its investment and depends exclusively upon its ability to win the
support of a majority of the corporation's "disinterested" shareholders, who may
own a minimal percentage of the company's total number of outstanding shares.
24. It is highly likely that defendants will attempt to invoke, apply or
enforce the Control Share Statute with respect to shares purchased pursuant to
the Tender Offer.
FIRST CLAIM
(Control Share Statute Violates
the Commerce Clause)
25. Plaintiffs repeat and re-allege the preceding paragraphs of this
Complaint as though fully set forth herein.
26. Pennzoil selected the State of Delaware, not Louisiana, as its state of
incorporation. Even Delaware, Pennzoil's state of incorporation, may not
regulate Pennzoil's
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<PAGE>
internal affairs in such manner as to violate the Commerce Clause. It follows a
fortiori that Louisiana may not regulate the internal affairs of a foreign
corporation.
27. Through the Control Share Statute, Louisiana:
(a) attempts to regulate the internal affairs of a foreign
corporation;
(b) imposes barriers to the Tender Offer and Merger that extend beyond
those imposed by Delaware law; and
(c) limits the voting rights of the shares of Pennzoil common stock
which plaintiffs seek to acquire in a fashion inconsistent with the law of the
State that created those voting rights.
28. In so doing, the Control Share Statute deprives Pennzoil shareholders
throughout the country of the opportunity to sell their shares at a premium.
29. The Control Share Statute also serves to inhibit plaintiffs -- and,
indeed, other potential bidders as well -- from making a nationwide tender offer
to Pennzoil shareholders in Louisiana and in every other state of the country.
30. Louisiana has no legitimate state interest in regulating the internal
affairs of foreign corporations in a manner which imposes the significant
burdens on interstate commerce described above. As a result of these burdens,
and in the absence of any legitimate state interest, the Control Share Statute
violates the Commerce Clause of the United States Constitution.
31. Actual or threatened invocation or enforcement of the Control Share
Statute will cause immediate, serious and irreparable injury to plaintiffs and
to the shareholders of Pennzoil, none of whom has an adequate remedy at law.
-8-
<PAGE>
32. Unless the relief requested with respect to the enforcement of the
Control Share Statute in their prayer for relief is granted, plaintiffs will be
deprived of their federal right to engage in interstate commerce by making a
tender offer in compliance with federal law governing such offers without being
hindered or delayed by additional substantial burdens, such as those imposed by
the Control Share Statute. In particular, plaintiffs will be forced to forego
their right (guaranteed by federal law) to consummate an interstate tender offer
for Pennzoil shares.
33. Delay also harms an offeror, whose offer may be frustrated, not through
adverse action of the target's stockholders, as Congress contemplates, but
through barriers erected by the target's management.
34. Absent the relief sought herein, plaintiffs also face substantial,
immediate and irreparable injury in the following respects, among other:
(a) plaintiffs may be subjected to unnecessary and unreasonable delay
which could prevent them from consummating the Tender Offer and Merger;
(b) the confusion, delay, and/or litigation resulting from any attempt
to enforce the Control Share Statute will adversely affect their ability to
finance or purchase shares;
(c) Pennzoil shareholders may be discouraged form accepting the Tender
Offer because of uncertainty surrounding the Control Share Statute and any
further proceedings arising in connection therewith;
(d) stockholders of Pennzoil residing throughout the United States
will be deprived of the opportunity to sell their shares pursuant to the Tender
Offer;
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<PAGE>
(e) plaintiffs will be deterred and prevented from exercising their
legal right to acquire Pennzoil stock, which will deprive plaintiffs of a
significant business opportunity; and Pennzoil stockholders will be deprived of
the external checks on management provided by the possibility of unsolicited
acquisitions;
(f) Pennzoil stockholders will be deprived of the opportunity to
receive a premium price for their Pennzoil stock;
(g) plaintiffs will be deprived of the full, unfettered rights
attendant to beneficial ownership of a majority of the common shares of
Pennzoil, including, among others, the rights to propose and to vote such shares
in favor of a merger or consolidations or the disposition or other use of a
substantial portion of the assets of Pennzoil; and
(h) the ability of plaintiffs to acquire, hold and exercise full
rights of ownership of shares acquired in a nationwide tender offer and to vote
these shares in all matters properly presented to stockholders of the company
will be abridged.
SECOND CLAIM
(Control Share Statute Violates Section 1983)
35. Plaintiffs repeat and re-allege each of the preceding paragraphs of
this Complaint as though fully set forth herein.
36. The right of plaintiffs to proceed with the Tender Offer is a right and
privilege secured to them by the Williams Act, the Commerce Clause, and other
applicable federal law. Any attempt by defendants, or any of them, to interfere
with this right, by invocation of the Control Share Statute or any regulations
promulgated thereunder, would constitute a deprivation
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<PAGE>
of such right under color of state law, thereby violating the Civil Rights Act
of 1971, 42 U.S.C. section 1983.
37. Plaintiffs have no adequate remedy at law. In addition, unless
preliminary and permanent injunctive relief is granted, Pennzoil shareholders
who reside throughout the United States, including those residing in the State
of Louisiana, may lose their right to sell their shares at a premium over market
price pursuant to the Tender Offer.
WHEREFORE, Plaintiffs request that this Honorable Court enter judgment:
(i) declaring that the Control Share Statute is unconstitutional and
of no force and effect on its face and as applied to the Tender Offer;
(ii) preliminarily and permanently enjoining defendants, their
officers, directors, successors in office, agents, employees and all other
persons acting in concert with them, or on their behalf, from attempting,
directly or indirectly, to enforce the Control Share Statute against plaintiffs,
their representatives or those acting on their behalf in connection with the
Tender Offer and Merger, and from attempting to litigate issues relating to the
Control Share Statute in any other forum;
(iii) enjoining defendants and their agents, servants, attorneys,
assigns, successors, and all persons in active concert or participation with
them, from commencing any judicial proceeding, against plaintiffs and/or any
officer, director or employee of plaintiffs, in any forum other than in this
Court that would require litigation by way of claim, defense or counterclaim of
any other claims or issues that have been asserted in this action;
(iv) awarding plaintiffs their costs and disbursements, including
their reasonable attorney's fees, incurred in this action; and
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<PAGE>
(v) granting plaintiffs such other, further or different relief as the
Court may deem just and proper.
Respectfully submitted:
OF COUNSEL: /s/ Henry A. King
HENRY A. KING, T.A., #7393
NESSER, KING & LEBLANC, L.L.P. TIMOTHY S. MADDEN, #21733
201 St. Charles Avenue, Suite 3800
New Orleans, Louisiana 70170
Telephone: (504) 582-3800
Attorneys for Plaintiffs,
Union Pacific Resources Group Inc.
and Resources Newco, Inc.
OF COUNSEL:
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
919 Third Avenue
New York, NY 10022
Telephone: (212) 735-3000
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