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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
(AMENDMENT NO. 25)
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
PENNZOIL COMPANY
(Name of Subject Company)
PENNZOIL COMPANY
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.83 1/3 PER SHARE
(including the associated Preferred Stock Purchase Rights)
(Title of Class of Securities)
709903 10 8
(CUSIP Number of Class of Securities)
LINDA F. CONDIT
CORPORATE SECRETARY
PENNZOIL COMPANY
PENNZOIL PLACE, P.O. BOX 2967
HOUSTON, TEXAS 77252-2967
(713) 546-8910
(Name, address and telephone number of person authorized
to receive notice and communications on behalf of the person(s) filing
statement)
Copies To:
<TABLE>
<S> <C>
Moulton Goodrum, Jr. Charles F. Richards, Jr.
Baker & Botts, L.L.P. Richards, Layton & Finger
One Shell Plaza One Rodney Square
Houston, Texas 77002-4995 P.O. Box 551
(713) 229-1234 Wilmington, Delaware 19899-0551
(302) 658-6541
</TABLE>
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This Amendment No. 25 (this "Amendment") amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9, as amended, originally
filed on July 1, 1997 by Pennzoil Company, a Delaware corporation ("Pennzoil"
or the "Company"), relating to a tender offer commenced by Resources Newco,
Inc., a wholly owned subsidiary of Union Pacific Resources Group Inc., on \
June 23, 1997.
All capitalized terms used in this Amendment without definition have the
meanings attributed to them in the Schedule 14D-9.
The items of the Schedule 14D-9 set forth below are hereby amended by
adding the following:
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
On September 22, 1997, Pennzoil filed suit in the District Court of Dallas
County, Texas asking the court to enjoin Smith Barney, Inc. ("Smith Barney")
from acting as financial advisor to Union Pacific Resources Group Inc. ("UPR").
Pennzoil's Original Petition and Application for Temporary Restraining
Order and for Temporary and Permanent Injunction is filed as Exhibit 77.
In connection with litigation related to UPR's hostile tender offer,
Pennzoil and UPR entered into a contractual stipulation governing the
production of highly confidential documents. The lawsuit against Smith Barney
alleges that, in clear violation of the contractual stipulation and the
standards of ordinary practice, Smith Barney wrongly used privileged Pennzoil
documents to provide financial advice to UPR. Among other things, the
stipulation provided that confidential information would be used solely in
connection with litigation and would not be used "for the purpose of providing
financial advice to any party . . .."
The Court has set a hearing on Pennzoil's Motion for Expedited Discovery
on October 2, 1997 and Pennzoil's Request for a Temporary Injunction on October
9, 1997.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
77 Pennzoil's Original Petition and Application for Temporary
Restraining Order and for Temporary and Permanent
Injunction
78 Press Release of the Company dated September 22, 1997
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2
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
PENNZOIL COMPANY
Dated: September 23, 1997 By: /s/ James L. Pate
James L. Pate
Chairman of the Board, President
and Chief Executive Officer
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
77 Pennzoil's Original Petition and Application for Temporary
Restraining Order and for Temporary and Permanent
Injunction
78 Press Release of the Company dated September 22, 1997
</TABLE>
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NO. 97-08612
PENNZOIL COMPANY, ) IN THE DISTRICT COURT OF
A DELAWARE CORPORATION )
)
VS. ) DALLAS COUNTY, TEXAS
)
SMITH BARNEY, INC., ) E-101ST JUDICIAL DISTRICT
A DELAWARE CORPORATION
PLAINTIFF'S ORIGINAL PETITION AND APPLICATION FOR
TEMPORARY RESTRAINING ORDER AND FOR
TEMPORARY AND PERMANENT INJUNCTION
TO THE HONORABLE JUDGE OF SAID COURT:
Plaintiff Pennzoil Company ("Pennzoil") files this Original Petition
and Application For Temporary Restraining Order, and for Temporary and Permanent
Injunction.
I. PARTIES AND VENUE
1. Plaintiff Pennzoil is a Delaware corporation. Defendant Smith
Barney, Inc. ("Smith Barney") is a Delaware Corporation with its principal
office in this state located at 200 Crescent Court, Dallas, Texas 75201 in
Dallas County. Venue is thus proper in Dallas County under the Texas Civil
Practice and Remedies Code Section 15.002(a)(3). Service of process for Smith
Barney can be effected at the office of its registered agent, CT Corporation
System, at 350 North St. Paul Street, Dallas, Texas, 75201.
II. INTRODUCTION
2. On June 23, 1997 Union Pacific Resources Group Inc. ("UPR")
announced a hostile tender offer to acquire Pennzoil. In connection with that
tender offer, the parties entered into a contractual stipulation governing the
production of documents in related
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litigation entitled "Stipulation and Order Governing the Protection and
Exchange of Documents and Confidential Material" (the "Stipulation"). See
Exhibit "A," attached. The dispute has resulted in lawsuits in the United
States District Court for the Northern District of Texas, District of Delaware,
and Middle District of Louisiana, together with the Delaware Chancery Court.
Pursuant to the Stipulation, Pennzoil agreed to produce to UPR numerous highly
confidential documents dealing with the company's long-term strategic plan, as
well as other confidential and highly confidential financial and other
information.
3. The Stipulation provided, inter alia, that highly confidential
information was to be made available only to UPR's counsel and to experts
hired by trial counsel for the purpose of the litigation. Id. at paragraph 5.
The Stipulation specifically prohibited the use of highly confidential
information "for the purpose of providing financial advice to any party." Id. at
paragraph 6(A).
4. UPR hired Defendant Smith Barney to provide strategic
financial advice for UPR's attempted hostile tender offer for Pennzoil. See
Depo. of Charles Weiss, Exhibit "B," selected pages attached, at p. 7.
Nevertheless, despite the clear prohibition on the use of the highly
confidential information produced during discovery for the purposes of
providing financial advice to any party, UPR has furnished Smith Barney with
highly confidential documents it obtained under the Stipulation. Smith Barney
admitted that it has been provided by UPR with copies of the reports made to
Pennzoil's board of directors by Pennzoil's financial advisors, Lehman
Brothers, Evercore Partners and J.P. Morgan, analyzing UPR's proposed tender
offer. See id. at p. 323-24. When, at Weiss' deposition,
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Pennzoil's attorney asked him if UPR had also given him access to Pennzoil's
strategic plan, Weiss' attorney instructed him not to answer. See id. at p.
331. This conduct strongly implies that UPR has also furnished Smith Barney
with access to Pennzoil's highly confidential strategic plan. This type of
information is, under ethical principles, the standards of ordinary practice
among financial advisors and importantly by the express provision of the
Stipulation, regarded as off-limits to financial advisors like Smith Barney in
the context of corporate takeovers. Smith Barney has violated both industry
norms and its specific contract obligations in receiving and using such
confidential information while providing financial advice to UPR. Plaintiff
has repeatedly asked Smith Barney to honor its obligations under the contract,
but Smith Barney refuses to do so. Smith Barney has brazenly breached the
Stipulation's terms.
5. Smith Barney has inflicted and will continue to inflict
substantial harm on Pennzoil by using Pennzoil's sensitive internal documents
to aid UPR's hostile takeover bid. Pennzoil has no adequate remedy at law for
such harm. For this reason, Pennzoil now asks for a temporary restraining
order, a temporary injunction, and a permanent injunction barring Smith Barney
from providing strategic and financial advice to UPR or any other party
connected with an attempted takeover of Pennzoil.
III. Smith Barney's Use of Pennzoil's Highly Confidential
Documents Violates the Stipulation and
Smith Barney's Confidentiality Agreement
6. The Stipulation requires that anyone given Pennzoil's
confidential documents sign an undertaking agreement agreeing to be bound by
the terms of the Stipulation. The
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undertaking which Smith Barney was required to sign is Exhibit "A" to the
Stipulation (the "Undertaking"). Paragraph 6(A) of the Stipulation (Exhibit
"A" hereto) states that confidential or highly confidential discovery material
may only be provided to a litigation expert or consultant if
such expert or consultant signs an undertaking... agreeing in writing
to be bound by the terms and conditions of this Stipulation and Order,
consenting to the jurisdiction of the Court for purposes of the
enforcement of this Stipulation and Order, and agreeing not to
disclose or use any Confidential or Highly Confidential Discovery
Material for purposes other than those permitted hereunder, including
after the conclusion of the Litigations.
Charles Weiss, the co-head of Smith Barney's global energy and power group,
stated at his deposition that Smith Barney had signed the required Undertaking.
See Weiss Depo., Exh. "B" at 331-32. Smith Barney therefore has agreed to be
bound by the terms of the Stipulation and has expressly agreed not to use any
highly confidential information for the purpose of providing financial advice.
7. Paragraph 6(A) of the Stipulation bars anyone who received
Pennzoil's highly confidential information from using that information to
provide financial advice to any party.
The Stipulation states, in relevant part:
Confidential or Highly Confidential Discovery Material may be provided
to persons listed in Paragraphs 4(b) and 5(c) above only . . .
provided that such expert or consultant (i) is using said Confidential
or Highly Confidential Discovery Material solely in connection with
the Litigations; and (ii) will not use any Highly Confidential
Discovery Information for the purpose of providing financial advice to
any party. . .
The Undertaking similarly provides, "I hereby certify . . . that I will not use
any Highly Confidential Material for the purpose of providing financial advice
to any party."
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8. Despite its contractual agreement not to do so, Smith Barney,
the recipient of confidential and highly confidential discovery material from
UPR, is currently providing financial advice to UPR. Smith Barney is in clear
violation of the Stipulation and of its own contractual undertaking.
IV. Smith Barney's Use of the Confidential Documents
Will Cause Pennzoil Irreparable Harm -
Pennzoil Has No Adequate Remedy At Law
9. Pennzoil is currently embroiled in contentious litigation
with UPR regarding the hostile takeover. The sensitive information provided to
UPR's trial counsel under the Stipulation solely for the purpose of the
litigation -- if utilized by Smith Barney, the investment bankers advising UPR
on its takeover strategy -- could provide invaluable assistance to UPR's
takeover attempt and severely damage Pennzoil's interests in the hostile
takeover attempt. UPR has stated in letters (Exhibits "C" and "D," attached)
that it intends to continue using Smith Barney as its financial advisor for its
attempt to take over Pennzoil, and it reasonably appears that Smith Barney
intends to continue to provide UPR with such strategic financial advice.
10. If inflicted, this harm can not be remedied. UPR's takeover,
once successful would be difficult, if not impossible, to unravel. No action
at law for damages could provide Pennzoil with adequate relief from Smith
Barney's wrongful actions. Since Pennzoil has no adequate remedy at law, it
seeks equitable relief in the form of a temporary restraining order, a
temporary injunction, and a permanent injunction barring Smith Barney from
acting
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as UPR's advisors in connection with UPR's -- or any other party's -- attempted
takeover of Pennzoil.
V. Conclusion
11. For the reasons stated above, Pennzoil respectfully requests
that this Court issue a temporary restraining order -- followed by a temporary
and then a permanent injunction -- ordering Smith Barney to cease and desist
from acting as advisors to UPR or any other party in connection with an
attempted tender offer for Pennzoil or any other form of takeover attempt, and
for such other relief, legal or equitable, to which Plaintiff may show itself
justly entitled.
Respectfully submitted,
GIBBS & BRUNS, L.L.P.
By: /s/ ROBIN C. GIBBS
-----------------------------
Robin C. Gibbs
State Bar No. 07853000
Jeffrey C. Alexander
State Bar No. 00993300
1100 Louisiana, Suite 5300
Houston, Texas 77002
Telephone No.: (713) 650-8805
Facsimile No.: (713) 750-0903
ATTORNEYS FOR PLAINTIFF
PENNZOIL COMPANY
Ernest E. Figari, Jr.
T.B.A. No. 06983000
Figari & Davenport, L.L.P.
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901 Main Street, Suite 4800
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
OF COUNSEL FOR PLAINTIFF
PENNZOIL COMPANY
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VERIFICATION
STATE OF TEXAS )
)
COUNTY OF HARRIS )
BEFORE ME, the undersigned authority, on this day personally appeared
Michael B. Dorff, who being first duly sworn did depose and say that he is an
attorney for Pennzoil Company, Plaintiff in the above-entitled and numbered
cause; that he is authorized to make this Affidavit on Pennzoil's behalf; that
he has read the foregoing Plaintiff's Original Petition and Application for
Temporary Restraining Order and for Temporary and Permanent Injunction; and
that the facts set forth therein are true, accurate and complete based upon a
reasonable investigation of the information currently available to Plaintiff.
/s/ MICHAEL B. DORFF
--------------------------
MICHAEL B. DORFF
SUBSCRIBED AND SWORN TO BEFORE ME this 21st day of September, 1997, to
certify which witness my hand and official seal.
/s/ TAMMY JEAN MYERS
---------------------------
Notary Public in and for
the State of Texas
[SEAL] TAMMY JEAN MYERS
Notary Public, State
of Texas
My Commission Expires
12-21-97
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[PENNZOIL LETTERHEAD]
FOR IMMEDIATE RELEASE
Contacts:
Robert Harper Joele Frank/Jeff Kimball
Corporate Communications Abernathy MacGregor Group
713/546-8536 212/371-5999
PENNZOIL SUES SMITH BARNEY FOR IMPROPERLY USING CONFIDENTIAL
PENNZOIL INFORMATION IN ITS ADVISORY CAPACITY TO UPR
Houston, TX, September 22, 1997 -- Pennzoil Company (NYSE: PZL) today filed
suit in the District Court of Dallas County, Texas asking the Court to
disqualify Smith Barney, Inc. as a financial advisor to Union Pacific Resources
(NYSE: UPR) (UPR).
In connection with litigation related to UPR's hostile tender offer, Pennzoil
and UPR entered into a contractual stipulation governing the production of
highly confidential documents. Among other things, the stipulation provided
that the confidential information be used "solely in connection with the
Litigations," and would not be used "for the purpose of providing financial
advice to any party . . ." The lawsuit alleges that, in clear violation of the
contractual stipulation and the standards of ordinary practice, Smith Barney
wrongly used privileged Pennzoil documents to provide financial advice to UPR.
The lawsuit further alleges that "This type of information is, under ethical
principles, the standards of ordinary practice among financial advisors and
importantly by the express provision of the Stipulation, regarded as off-limits
to financial advisors like Smith Barney in the context of corporate takeovers.
Smith Barney has violated both industry norms and its specific contract
obligations in receiving and using such confidential information while
providing financial advice to UPR. Pennzoil has repeatedly asked Smith Barney
to honor its obligations under the contract, but Smith Barney refuses to do
so."
The court has set a hearing on Pennzoil's motion for expedited discovery on
October 2, 1997, and Pennzoil's request for a temporary injunction on October
9, 1997.
Pennzoil Company explores for and produces crude oil and natural gas,
manufactures and markets premium quality lubricants, including America's top
selling motor oil, and is the parent company of Jiffy Lube International, the
world's largest franchiser of fast oil change centers.
###
