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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
(AMENDMENT NO. 36)
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:
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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
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This Amendment No. 36 (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. ("UPR"),
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
Item 8 of Schedule 14D-9 is hereby amended and supplemented by adding
the following:
On October 23, 1997, the defendants in the lawsuit styled In re
Pennzoil Company Shareholders Litigation filed an Amended and Supplemental
Answer and Counterclaim in response to the Complaint filed by Union Pacific
Resources Group Inc. and Resources Newco, Inc. The counterclaim seeks, among
other things, a declaratory judgment that the Pennzoil Board's decisions
(i) not to redeem the Rights; (ii) not to take any action that would render
Section 203 or Article Sixth inapplicable to the Revised UPR Offer or Revised
Squeeze-out Merger, and (iii) not to designate UPR's nominees to the Pennzoil
Board or negotiate a definitive merger agreement with UPR were reasonable and
informed exercises of the directors' duties under Delaware law and do not
constitute a breach of any obligation or duty arising under Delaware law.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT
NO. DESCRIPTION
------- -----------
[S] [C]
103 Amended and Supplemental Answer and Counterclaim filed
on behalf of defendants Pennzoil Company and the members of
the Board of Directors of Pennzoil Company in response to
the Complaint filed by UPR and Newco (dated October 23,
1997, Court of Chancery of the State of Delaware in and for
New Castle County).
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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: October 24, 1997 By: /s/ James L. Pate
James L. Pate
Chairman of the Board, President
and Chief Executive Officer
3
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
103 Amended and Supplemental Answer and Counterclaim filed
on behalf of defendants Pennzoil Company and the members of
the Board of Directors of Pennzoil Company in response to
the Complaint filed by UPR and Newco (dated October 23,
1997, Court of Chancery of the State of Delaware in and for
New Castle County).
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IN THE COURT OF CHANCERY THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
IN RE PENNZOIL COMPANY ) CONSOLIDATED
SHAREHOLDERS LITIGATION ) C.A. Nos. 15764
___________________________________________)
)
UNION PACIFIC RESOURCES GROUP )
INC. and RESOURCES NEWCO, INC., )
)
Plaintiffs, )
)
v. ) C.A. No. 15755-NC
)
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. )
AMENDED AND SUPPLEMENTAL ANSWER AND COUNTERCLAIM
Defendants Pennzoil Company ("Pennzoil") and the members of Pennzoil's
board of directors (the "Board" or the "Directors"; collectively with Pennzoil,
"Defendants") hereby answer the Complaint filed by Union Pacific Resources
Group Inc. and Resources Newco, Inc. (collectively, "UPR"), as follows:
SUMMARY OF THIS ACTION
1. The allegations contained in the first
sentence of Paragraph 1 are admitted. Defendants are without knowledge or
information sufficient to form a belief as to the truth or falsity of the
remaining allegations of Paragraph 1, except that it is admitted UPR has filed
a Schedule
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14D-1 with the Securities and Exchange Commission which incorporates an offer
to purchase Pennzoil shares on certain terms and conditions (the "Offer to
Purchase"). Defendants respectfully refer the Court to the Offer to Purchase
for the terms thereof.
2. Denied.
3. The allegations contained in the first
sentence of Paragraph 3 are admitted, except Defendants deny the
characterization inherent in the term "purported". Defendants are without
knowledge or information sufficient to form a belief as to the truth or falsity
of the allegations contained in the second sentence of Paragraph 3. The
allegations contained in the third sentence of Paragraph 3 are denied, except
that Defendants respectfully refer the Court to the terms of 8 Del. C. Section
203 ("Section 203") and Article Six of Pennzoil's Restated Certificate of
Incorporation for the terms thereof. Defendants are without knowledge or
information sufficient to form a belief as to the truth or falsity of the
allegations contained in the fourth sentence of paragraph 3, except that
Defendants respectfully refer the Court to the Offer to Purchase for the terms
thereof. The allegations contained in the fifth sentence of Paragraph 3 are
denied.
THE PARTIES
4. The allegations contained in the first
sentence of Paragraph 4 are admitted. Defendants are without knowledge or
information sufficient to form a belief as to the truth or falsity of the
remaining allegations contained in Paragraph 4.
5. The allegations contained in the first
sentence of Paragraph 5 are admitted. Defendants are without knowledge or
information sufficient to form a belief as to the truth or falsity of the
remaining allegations contained in Paragraph 5.
6. Admitted.
7. Admitted
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8. Admitted.
9. The allegations contained in Paragraph 9 set
forth legal conclusions which Defendants need neither admit nor deny.
BACKGROUND
A. THE RIGHTS PLAN.
10. The allegations contained in the first
sentence of Paragraph 10 are denied. The allegations contained in the second
sentence of Paragraph 10 are admitted.
11. Admitted.
12. Admitted.
13. The allegations contained in Paragraph 13 are
denied, except it is admitted that at the initial exercise price of $140 per
share, the Rights (defined below) are "out of the money" and not likely to be
exercised.
14. The allegations contained in the first
sentence of Paragraph 14 are admitted. The remaining allegations contained in
Paragraph 14 are denied, except that it is admitted that Rights owned by an
"Acquiring Person" cannot be exercised in the event of "flip-in" event.
15. Admitted.
16. The allegations contained in Paragraph 16 are
denied, and the Court is respectfully referred to the Rights Agreement (defined
below) for the definition of "Permitted Offer".
17. Denied.
B. DELAWARE BUSINESS COMBINATION STATUTE.
18. The allegations contained in the first
sentence of Paragraph 18 set forth legal conclusions which Defendants need
neither admit nor deny. Defendants respectfully refer the Court
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to Section 203 for the terms thereof. The allegations contained in the second
sentence of Paragraph 18 are admitted.
19. The allegations contained in Paragraph 19 set
forth legal conclusions which Defendants need neither admit nor deny.
Defendants respectfully refer the Court to Section 203 for the terms thereof.
20. The allegations contained in the first
sentence of Paragraph 20 set forth legal conclusions which Defendants need
neither admit nor deny. Defendants are without knowledge or information
sufficient to form a belief as to truth or falsity of the remaining allegations
of Paragraph 20.
C. ARTICLE SIX OF PENNZOIL'S RESTATED CERTIFICATE OF INCORPORATION.
21. Denied as incomplete. Defendants
respectfully refer the Court to Article Sixth for the terms thereof.
22. Denied.
D. THE RESPONSE TO THE TENDER OFFER AND MERGER.
23. The allegations contained in the first
sentence of Paragraph 23 are denied. Defendants are without knowledge or
information sufficient to form a belief as to the truth or falsity of the
remaining allegations in Paragraph 23.
24. The allegations contained in Paragraph 24 are
denied, except that Defendants respectfully refer the Court to the Offer to
Purchase for the terms thereof .
25. Denied.
COUNT I
(FOR BREACH OF FIDUCIARY DUTY: THE RIGHTS PLAN)
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26. Defendants repeat and reallege each of the
foregoing responses as if fully set forth herein.
27. Admitted, except Defendants deny the
characterization inherent in the term "ostensible".
28. Denied.
29. Denied.
30. Denied.
COUNT II
(FOR BREACH OF FIDUCIARY DUTY: SECTION 203)
31. Defendants repeat and reallege each of the
foregoing responses as if fully set forth herein.
32. The allegations contained in Paragraph 32 set
forth legal conclusions which Defendants need neither admit nor deny.
33. Denied.
34. Denied.
35. Denied.
COUNT III
(FOR BREACH OF FIDUCIARY DUTY: ARTICLE SIX)
36. Defendants repeat and reallege each of the
foregoing responses as if fully set forth herein.
37. Denied.
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38. Denied, except admitted that Article Sixth
would not apply to the Tender Offer and Merger if the Board approved the Merger
prior to the time UPR or Newco became the beneficial owner of 5% or more of
Pennzoil's outstanding common stock.
39. Denied.
40. Denied.
41. Denied.
AFFIRMATIVE DEFENSES
42. UPR's claims are barred by the doctrine of
unclean hands.
COUNTERCLAIM FOR DECLARATORY JUDGMENT
Defendants, by their undersigned attorneys, for their Counterclaim
allege upon knowledge as to their own conduct and upon information and belief
as to all other matters, as follows:
NATURE OF THIS COUNTERCLAIM
43. Pursuant to the Delaware Uniform Declaratory
Judgments Act, 10 Del. C. Section 6501, et seq., Pennzoil seeks declaratory
relief (i) declaring the Board's decision not to redeem the rights (the
"Rights") triggered pursuant to the stockholder rights plan (the "Rights Plan")
in response to the unsolicited takeover attempt by UPR was a reasonable and
informed exercise of the directors' duties under Delaware law and does not
constitute a breach of any obligation or duty arising under Delaware law; (ii)
declaring that the Board's decision not to take any action that would render 8
Del. C. Section 203 of the Delaware General Corporation Law ("Section 203")
inapplicable to the Revised Tender Offer (as defined below) or Revised Proposed
Merger (as defined below) was a reasonable and informed exercise of the
directors' duties under Delaware law and does not constitute a breach of any
obligation or duty arising under Delaware law; (iii) declaring that the Board's
decision not to take any action that would render Article Sixth of Pennzoil's
Restated Certificate of Incorporation
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("Article Sixth") inapplicable to the Revised Tender Offer or Revised Proposed
Merger was a reasonable and informed exercise of the directors' duties under
Delaware law and does not constitute a breach of any obligation or duty arising
under Delaware law; and (iv) declaring that the Board's decision neither to
designate UPR's nominees to the Pennzoil Board so that they constitute a
majority of the Board nor to negotiate a definitive merger agreement with UPR
was a reasonable and informed exercise of the directors' duties under Delaware
law and does not constitute a breach of any obligation or duty arising under
Delaware law.
44. This controversy initially was caused by the
unsolicited acquisition proposal by UPR to acquire Pennzoil in a two-tier
acquisition consisting of a first step tender offer (the "Initial Tender
Offer") for 50.1% of Pennzoil's common stock at $84 per share followed by a
second step merger in which Pennzoil stockholders would receive UPR common
stock (the "Initial Proposed Merger"). On October 7, 1997, UPR revised its
Initial Tender Offer to provide that UPR is offering to purchase all of
Pennzoil's common stock for $84 per share (the "Revised Tender Offer") followed
by a merger in which shares of Pennzoil common stock not tendered would be
converted to $84 per share, without interest (the "Revised Proposed Merger").
As was the Initial Tender Offer, the pending Revised Tender Offer is expressly
conditioned, inter alia, upon (i) invalidation of the Rights Plan or redemption
of the Rights; (ii) Section 203 being rendered inapplicable; (iii) Article
Sixth being rendered inapplicable; and (iv) either UPR's designees being
elected to the Pennzoil Board so that they constitute a majority of the Board
or Pennzoil entering into a definitive merger agreement with UPR. Thus, the
Board's decisions not to designate UPR's nominees to the Board, not to
negotiate a definitive merger agreement with UPR, and not to render
inapplicable the Rights Plan, Section 203 and Article Sixth with respect to the
Revised Tender Offer and Revised Proposed Merger create a case or controversy.
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THE PARTIES.
45. Pennzoil is an energy company engaged
primarily in oil and gas exploration and production, in the processing,
refining and marketing of oil and motor oil and refined products and in
franchise operations focusing on the fast automotive oil change business.
Pennzoil's principal executive offices are located at Pennzoil Place, Houston,
Texas. Pennzoil has approximately 47.4 million shares of common stock
outstanding which are traded on the New York Stock Exchange ("NYSE").
Pennzoil's common stock is held by over 18,000 stockholders of record. As
discussed below, Pennzoil is in the early stages of implementing a long-term
business plan which has already produced positive results and which Pennzoil
believes will produce even more positive gains for its stockholders in the
coming years.
46. Pennzoil conducts its operations in three
principal business segments. Pennzoil's oil and gas segment engages in the
acquisition, exploration, exploitation and development of prospective and
proved oil and gas properties, the production and sale of crude oil, condensate
and natural gas liquids and the production, treatment and sale of natural gas.
The bulk of Pennzoil's current production is derived from established fields in
Texas, Louisiana and Utah and federal waters offshore Louisiana, Texas and
California. A principal goal of Pennzoil's oil and gas business is to expand
its international oil and gas reserve and production base. The groundwork for
an international exploration program was laid in the mid-1990's and Pennzoil
expects to drill exploration wells in Azerbaijan, Egypt, Qatar and Australia.
Pennzoil's year-end 1996 proved reserves totaled approximately 400 million
barrels of oil equivalent ("BOE").
47. Pennzoil's motor oil and refined products
business segment is a worldwide marketer of premium automotive and other
branded products, including particularly Pennzoil brand motor oil, which has
been the number one selling motor oil in the United States for 11 consecutive
years and
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currently commands a market share of about 21%. The value of the "Pennzoil"
brand name is illustrated by the ranking in 1996 of Pennzoil as the top
automotive "power brand" for the fifth consecutive year. In 1996, the motor
oil and refined products business segment alone generated revenues of
approximately $1.7 billion. Pennzoil's effectiveness as a specialty refiner
and marketer of consumer products and industrial specialties makes it one of
the most profitable companies in the industry on a per barrel basis.
48. Pennzoil's franchise operations segment,
which includes the well-known and valuable Jiffy Lube fast oil change system
and brand name, generated revenues in excess of $300 million in 1996. Already
the largest fast oil change service provider in the United States, Jiffy Lube
is continuing to expand rapidly with 182 new stores opened in 1996 alone.
Under an agreement with Sears, Jiffy Lube will build approximately 200 stores
in Sears Auto Centers by the end of 1997. Other aggressive growth is planned
as consumers continue to shift from do-it-yourself oil changes to fast oil
change services. Since it takes approximately 12-18 months for a new store to
reach maturity, the revenues and earnings from these stores should increase
substantially in the future.
49. Union Pacific Resources Group Inc. is a Utah
corporation. UPR's principal place of business is located at 801 Cherry
Street, Fort Worth, Texas. UPR was formerly a wholly-owned subsidiary of Union
Pacific Corporation ("UPC") which also owned the Union Pacific Railroad
Company. In October 1995, UPR sold 42.5 million shares of its common stock in
an initial public offering (the "Offering"). In connection with the Offering,
UPC announced its intention to distribute its remaining ownership interest in
UPR to its shareholders in the form of a tax-free distribution (the
"Distribution"). The Distribution was authorized by UPC's board of directors
on September 12, 1996, and effected on October 15, 1996. As of February 25,
1997, UPR had 253,776, 970 shares of common stock outstanding which are traded
on the NYSE.
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50. Newco is a Delaware corporation whose
executive offices are located at 801 Cherry Street, Fort Worth, Texas. Newco,
a wholly owned subsidiary of UPR, was formed by UPR to facilitate its attempted
hostile takeover of Pennzoil.
THE RIGHTS PLAN
51. On October 24, 1994, after literally months
of consideration, the Board adopted the Rights Plan. On October 28, 1994,
Pennzoil executed the Rights Agreement with Chemical Bank, a New York banking
corporation, to act as Rights' Agent. Pursuant to the Rights Plan, the Board
declared a dividend of one common stock purchase Right for each share of
Pennzoil common stock, par value $0.83 1/3 (the "Common Stock").
52. The Rights Plan provides that the Rights
attach to and trade with the Common Stock. However, the Rights Plan provides
that ten days after a person or group (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the Common Stock or has commenced a
tender offer or exchange offer which, if consummated, would establish the
offeror as an Acquiring Person, the Rights detach and become exercisable for
1/100th of a share of participating preferred stock at an initial exercise
price of $140 per share, which is subject to subsequent adjustment. Until the
occurrence of certain events, the Rights are "out of the money" and not likely
to be exercised.
53. As provided in the Rights Agreement, at such
time as an Acquiring Person consummates its acquisition of 15% or more of the
Common Stock, the Rights "flip-in" and entitle the holder to buy from Pennzoil,
at the exercise price, Common Stock having a value of twice the exercise price.
The Rights owned by an Acquiring Person cannot be exercised and the "flip-in"
right therefore dilutes the Acquiring Person's ownership position. If Pennzoil
is acquired in a merger or other business combination or 50% or more of
Pennzoil's assets or earnings power is sold, the Rights "flip-over" and enable
the holder to acquire, at the exercise price, common stock of the surviving
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or acquiring corporation having a value of twice the exercise price. The Board
retains the power to approve an offer without terminating the Rights Plan if
the Board determines that a particular offer for all the outstanding shares of
Common Stock is fair and otherwise in the best interests of Pennzoil and its
stockholders. In addition, the Board retains the right to redeem the Rights at
$0.01 per Right at any time prior to a 15% acquisition by an Acquiring Person.
THE DELAWARE BUSINESS COMBINATION STATUTE
54. Absent an express election by a corporation
not to be governed by Section 203, which Pennzoil has not made, Section 203
regulates business combinations between corporations and an interested
stockholder of a corporation. Section 203 prohibits a Delaware corporation
from engaging in a "business combination" with an "interested stockholder" for
three years following the time that such person becomes an interested
stockholder. Generally speaking, an interested stockholder is an individual,
corporation, or any other entity who or which owns 15% or more of the
corporation's outstanding voting stock. The term "business combination" is
defined broadly to include mergers with or caused by the interested
stockholder.
55. The three-year moratorium imposed on business
combinations by Section 203 does not apply if: (i) prior to the time when such
stockholder became an interested stockholder the board of directors of the
corporation approves either the business combination or the transaction which
resulted in the person becoming an interested stockholder; (ii) upon
consummation of the transaction which made him or her an interested stockholder
the interested stockholder owns at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced; or (iii) on or
after the time when such person becomes an interested stockholder, the board
approves the business combination and it is also approved at a stockholder
meeting by sixty-six and two-thirds percent (66 2/3%) of the outstanding voting
stock not owned by the interested stockholder.
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ARTICLE SIXTH
56. Article Sixth provides that any person or
entity that acquires 5% of voting stock of Pennzoil, thereby becoming an
interested stockholder, cannot enter into a merger with Pennzoil unless: (i)
prior to acquiring the 5% interest in Pennzoil, the Pennzoil board approved the
merger; or (ii) the merger is approved by at least 80% of outstanding Pennzoil
shares and by the holders of a majority of the outstanding stock other than the
interested stockholder.
PENNZOIL RESTRUCTURING INITIATIVES
57. In 1994 Pennzoil lost $289 million. Losses
continued in 1995, with a loss of $305 million, or $6.60 per share. In the
face of these results, Pennzoil took aggressive steps designed to improve its
income and cash flow and reduce its debt and at the same time continued to
expand its international operations. In October 1995, Pennzoil announced that
it was reducing its dividend from $3 per share to $1 per share. This, of
course, had an immediate adverse effect on the price of the Common Stock. In
addition, Pennzoil announced a plan to reduce its annual general and
administrative ("G&A") expenses by $75 million or approximately 30%. Within a
few months, on March 28, 1996, Pennzoil announced that it had successfully
reached its target to cut $75 million from its annual G&A expenses. By the end
of 1996, Pennzoil had exceeded its goal and had reduced its 1996 G&A expenses
by approximately $80 million.
58. Pennzoil was equally aggressive in
restructuring its North American oil and gas operations. During the period
1992-1996, Pennzoil drastically reduced the number of its North American
producing properties by dividing its properties into core and non-core
producing areas and disposing of substantially all properties categorized as
non-core assets. These non-core properties were traded for core properties or
sold, with the proceeds being used to acquire properties in core areas or to
reduce debt. As a result of this asset upgrading program, Pennzoil disposed of
about 620
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domestic, non-core properties that did not factor into Pennzoil's future
reserve development plans and which would have represented only about 10% of
Pennzoil's oil and gas reserves.
59. Pennzoil is now focused on about 100 core oil
and gas properties in the United States. As part of this program, Pennzoil
completed in July 1996 the sale of various non-core Canadian properties for
approximately $190 million, and the proceeds of the sale were used to reduce
outstanding debt. As a result of the asset upgrading program, the disposal of
non-core properties and Pennzoil's initiatives to reduce costs, total
production costs and expenses per BOE decreased from $5.32 in 1994 to $5.09 in
1995 to $4.41 in 1996, a 17% reduction in two years. Per barrel finding and
development costs have declined from nearly $6.00 in 1993 to $3.87 in 1996.
60. Beginning at the end of 1995, Pennzoil also
moved to improve materially its balance sheet. Primarily by using the proceeds
from sales of assets, Pennzoil reduced its total debt by $266 million from the
end of 1995 to the end of the first half of 1997.
61. By 1996, positive effects from Pennzoil's
restructuring activities and the implementation of Pennzoil's strategic
business plan were beginning to emerge. In the first quarter of 1996, Pennzoil
reported net income of $15.8 million, almost six times earnings in the first
quarter of 1995. Pennzoil then reported net income of $24.5 million for the
second quarter of 1996 as compared to a $4.8 million loss in the corresponding
quarter of 1995. In the third and fourth quarters of 1996, Pennzoil reported
net income of $65.1 million and $28.5 million, respectively, as compared to
losses of $275.3 million and $28 million during the corresponding quarters in
1995. This profit trend has continued into the first half of 1997 with
Pennzoil's net income increasing to $81.4 million, more than double the $40.3
million net income for the same period in 1996. Net cash flow from operations
(excluding changes in operating assets and liabilities) has also greatly
improved from $300.2 million for calendar year 1995 to $432.5 million for
calendar year 1996. Cash flow in
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the first half of 1997 improved even more to $279 million, which represents a
26% increase over the $221.5 million net cash from operations for the same
period in 1996. All in all, Pennzoil has had seven consecutive quarters of
year-on-year recurring earnings improvements through the second quarter of
1997. Moreover, recurring earnings are on track to continue this trend through
the third quarter of 1997 as well.
62. In September 1996, Pennzoil announced an
agreement to form a strategic alliance with Enterprise Oil plc to pursue
various exploration opportunities in the Gulf of Mexico on Pennzoil's existing
leases. The alliance with Enterprise Oil essentially allows Pennzoil to expand
its Gulf of Mexico exploration activity at very little incremental cost to
Pennzoil. Of the 102 leases involved in the alliance, Enterprise has agreed to
fund 100% of the drilling cost on 59 leases and 66 2/3% of the drilling costs
on the other 43 leases. In exchange, Enterprise will earn an interest equal to
half of Pennzoil's working interest. Enterprise has agreed to fund a minimum
of $100 million, which Enterprise may at its option increase to $150 million.
In January 1997, Enterprise and Pennzoil announced a successful discovery at
one of Pennzoil's properties, Garden Banks 161, No. 1. At the same time
Pennzoil aggressively has pursued exploration projects in Egypt, Qatar,
Australia and Azerbaijan, which are described below.
63. In early 1997, Pennzoil completed two major
refinery projects which are only now beginning to add revenues and earnings to
Pennzoil's operations. Pennzoil's "Excel Paralubes" lube plant joint venture
with Conoco, Inc. in Lake Charles, Louisiana became fully operational in 1997.
Also during 1997, Pennzoil brought on line a $250 million upgrade project for
fuels at its Shreveport, Louisiana refinery. These two projects combined are
expected to add about $.50 per share of earnings and approximately $1.00 per
share of after tax cash flow in 1997. When fully
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operational and after expected market adjustments, these two projects are
expected to add $70 million to Pennzoil's annual after-tax cash flow.
PENNZOIL'S AZERBAIJAN OPERATIONS
64. In September 1994, the State Oil Company of
the Azerbaijan Republic ("SOCAR") signed an oil production sharing contract
with a consortium of companies, including Pennzoil, to develop the Azeri,
Chirag and Gunashli ("ACG") fields in the Caspian Sea. The contract became
effective in December 1994. Pennzoil initially owned a 9.82% interest in the
ACG development unit. In July 1996, Pennzoil sold approximately half of its
interest to Exxon, ITOCHU Oil Exploration Co. Ltd. and Unocal in a deal which
requires the buyers to pay Pennzoil $130 million in cash and further requires
them to fund all of Pennzoil's future obligations to the ACG project and all
previous obligations retroactive to January 1, 1996. Pennzoil thus retains a
4.82% working interest in the ACG unit at virtually no future cost. The ACG
fields are estimated to contain from 4 to 5 billion or more barrels of
recoverable reserves. Assuming 4 billion barrels of recoverable reserves,
Pennzoil's interest equates to potential recoverable reserves in the amount of
192.8 million barrels, which would increase Pennzoil's proved reserves by 50%.
Assuming 5 billion barrels of recoverable reserves, Pennzoil's interest equals
241 million barrels, which would increase Pennzoil's proved reserves by in
excess of 60%. Pennzoil also has a 30% interest in an exploration, development
and production sharing contract with SOCAR covering the Karabakh prospect
located in the Caspian Sea offshore Azerbaijan.
OTHER INTERNATIONAL OPERATIONS
65. Primarily since early 1995, Pennzoil has been
active in expanding its other international operations. In October 1996,
Pennzoil was awarded drilling rights to the North July block offshore Egypt in
the Gulf of Suez, where Pennzoil will drill an exploration well in 1997 or
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early 1998. In January 1997, Pennzoil was awarded the drilling right to Block
E, the West Beni Suef exploration block in Egypt's western desert. Pennzoil
has a 100% working interest in each concession. Since the beginning of 1995,
Pennzoil also has obtained an interest in three other blocks in Egypt: (i) an
87.5% working interest in the South-West Gebel El-Zeit concession in the Gulf
of Suez, (ii) a 50% interest in the southeast Gulf of Suez Block, and (iii) a
50% interest in the West Feiran Block in the Gulf of Suez. Pennzoil's Egyptian
operations are conducted through various subsidiaries, including Pennzoil
Sinai, Inc. ("PSI").
66. In June 1997, Pennzoil and its partners were
awarded the rights to develop two fields in Venezuela offshore Lake Maracaibo.
Pennzoil has a 60% interest in one field and 50% interest in the other.
Pennzoil also has a 44% working interest in the Whicher Range concession in
southwest Australia. In addition, Pennzoil is drilling exploration wells in
Qatar and is actively bidding for concessions in Qatar.
BACKGROUND OF THE TENDER OFFER
67. In January 1995, when Pennzoil's
restructuring initiatives were in their earliest stages and UPR was a
wholly-owned subsidiary of UPC, representatives of Pennzoil contacted
representatives of UPC to discuss a possible tax-efficient acquisition by
Pennzoil of UPR or its assets. At that time, such an acquisition at a
favorable price would have facilitated Pennzoil's restructuring initiatives,
and the discussions between the parties were in the context of Pennzoil's
specific business objectives at the time. For example, Pennzoil needed
additional cash flow to maintain its then $3.00 per share dividend and hoped to
use cash flow from UPR's assets to provide the necessary funds. UPR also could
have provided Pennzoil with additional core reserves to replace the non-core
reserves which Pennzoil was then selling off. A transaction involving UPR also
would have assisted Pennzoil in achieving its goal of quickly reducing costs.
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68. Transactions proposed by Pennzoil for
consideration in January 1995 included a stock-swap "merger of equals"
following a tax-free spin-off of UPR by UPC. Under this alternative, the
merger agreement would have been signed prior to the spin-off. Another
alternative transaction would have involved a cash purchase of producing
properties of UPR subject to a large production payment. At no time during
these discussions did Pennzoil consider or discuss entering into any
transaction in which Pennzoil would be the acquired company or which otherwise
would result in a change of control of Pennzoil.
69. Even though the discussions did not result in
a transaction between Pennzoil and UPR, Pennzoil continued to pursue
aggressively its restructuring initiatives, and has made substantial progress
on a number of fronts, as discussed above.
70. After the spin-off of UPR by UPC in late
1996, in February 1997, Jack L. Messman, the Chairman and Chief Executive
Officer of UPR, requested a meeting with Mr. Pate. Mr. Messman had been
interviewed by Mr. Pate in 1995 for the position of Chief Operating Officer of
Pennzoil, although he was never offered that job or any other.
71. Messrs. Messman and Pate met at Pennzoil's
offices on March 4, 1997. During that meeting, Mr. Pate made clear that
Pennzoil was not interested in any change of control transaction with UPR or
anyone else. In addition, Mr. Pate advised Mr. Messman that, since 1995,
Pennzoil had embarked upon a five-year strategic plan approved by its Board,
which was designed to increase significantly Pennzoil's earnings, cash flow and
stock price.
72. On May 5, 1997 Pate and Messman spoke by
telephone. Mr. Messman invited Mr. Pate to visit him in Ft. Worth but Mr. Pate
declined, believing that there was no reason for another meeting. Given this
conversation, Mr. Pate was understandably surprised when he received a letter
from Mr. Messman dated May 6, 1997, indicating -- in the guise of purporting to
restate what was
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discussed the day before -- that UPR was prepared to pursue a combination with
Pennzoil and that Mr. Messman was anxious to "continue our dialogue that began
in February".
73. Mr. Pate responded to Mr. Messman in a letter
dated May 8, 1997 in which he stated in no uncertain terms that Pennzoil was
not prepared to pursue a change of control transaction with UPR or anyone else.
Mr. Pate also again advised Mr. Messman that unlike in 1995, it was now an
inappropriate time to consider the combination of Pennzoil and UPR:
As I explained in our meeting on March 4, 1997, circumstances
have changed drastically since our first contact in 1995 when
the railroad company [UPC] 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 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.
Mr. Pate also reiterated the changes at Pennzoil since 1995:
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.
THE JUNE 10 PROPOSAL
74. Notwithstanding Mr. Pate's clear statement
that Pennzoil was not interested in a transaction with UPR, on June 10, 1997,
Mr. Messman sent a "bear hug" letter to Mr. Pate suggesting "a possible
strategic business combination." Mr. Messman asserted that it was in
Pennzoil's interests to be acquired by UPR for the same reasons that Pennzoil
sought to obtain UPR or its assets in 1995. Of course, as Mr. Pate already had
told Mr. Messman several times, Pennzoil
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is a much different company today than it was in 1995, and Pennzoil's current
business plans and strategic goals are very different from its plans and goals
in 1995.
75. Mr. Messman also suggested in his letter the
possible terms of UPR's proposal: a purported "value of $80 per share, payable
in a combination of cash and UPR common stock," structured in two steps -- a
cash tender offer for 40-50% of Pennzoil's stock, with the remaining shares to
be converted into UPR common stock at some unspecified exchange ratio (the
"June 10 Proposal"). Thus, Mr. Messman's June 10 Proposal was a classic
example of a coercive, two tiered transaction.
76. The Board met on June 17 and 18 to give
careful and deliberate consideration to the June 10 Proposal. Ten of the
eleven Pennzoil directors are neither present or former employees nor officers
of Pennzoil and these outside directors are highly respected business leaders.
They are: Howard H. Baker (former Chief of Staff to the President of the
United States and former United States Senator and Senate Majority Leader); W.
J. Bovaird (Chairman of The Bovaird Supply Company); W.L. Lyons Brown, Jr.
(former Chairman of the Board of Brown-Forman Company); Ernest H. Cockrell
(independent oil and gas producer); Harry H. Cullen (independent oil and gas
producer); Alfonso Fanjul (Chairman of the Board and Chief Executive Officer of
Flo-Sun, Inc.); Berdon Lawrence (President of Hollywood Marine, Inc.); Brent
Scowcroft (former Assistant to the President of the United States for National
Security Affairs); Gerald B. Smith (Chairman and Chief Executive Officer of
Smith, Graham & Co. Asset Managers, L.P.); and Cyril Wagner, Jr. (a partner in
Wagner & Brown, an independent oil and gas producer).
77. At the Board meeting, representatives of
Lehman Brothers Inc. and Evercore Group Inc., Pennzoil's financial advisors
(the "Advisors"), gave an extensive presentation on the financial
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merits of the June 10 Proposal. The Advisors thereafter delivered their joint
opinion that the June 10 Proposal was inadequate from a financial point of
view.
78. The Board thereafter discussed the June 10
Proposal at length. Among other things, the Board concluded that the June 10
Proposal was (i) structurally coercive in that the treatment of non-tendering
stockholders -- being required to accept UPR stock instead of cash -- would
distort Pennzoil's shareholders' tender decisions, and (ii) substantively
coercive in that shareholders might be inclined to accept UPR's inadequate June
10 Proposal because they would not fully appreciate Pennzoil's intrinsic value
and long-term growth potential based on initiatives and projects recently
completed as well as initiatives planned or underway as part of Pennzoil's
strategic business plan. The Board specifically discussed that the June 10
Proposal posed a threat to stockholders in that UPR was seeking to usurp for
itself the future growth in revenues, net income, cash flow and stock price
appreciation which were only beginning to result from Pennzoil's restructuring
and cost-cutting efforts and strategic initiatives. The Board also discussed
the potential adverse effects of the June 10 Proposal on Pennzoil's domestic
and international oil and gas agreements and business relationships. The Board
concluded that the long-term financial interests of Pennzoil's stockholders
were best served by remaining independent and continuing to implement
Pennzoil's long-term business strategy.
79. Following this extensive discussion of the
inadequacy and unfairness to Pennzoil's stockholders of the June 10 Proposal,
the Board unanimously determined that it was not in the interests of Pennzoil
or its shareholders to pursue discussions with UPR concerning the June 10
Proposal. The Board's decision was communicated to Mr. Messman by Mr. Pate on
June 20, 1997.
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UPR COMMENCES THE INITIAL TENDER OFFER
80. UPR commenced the Initial Tender Offer on
June 23, 1997. The Initial Tender Offer was for 50.1% of Pennzoil common stock
outstanding on a fully diluted basis. Pursuant to the Initial Tender Offer
and Initial Proposed Merger, Pennzoil's shareholders were offered $84.00 in
cash per share for a portion of their shares, while the shareholders remaining
after the first step would participate in a back-end merger in which their
outstanding shares would be converted into shares of UPR common stock in a
range of 2.80 to 3.36 UPR shares for each share of Pennzoil stock, with no
guarantee of any minimum value per share. The Initial Tender Offer was also
highly conditional. In addition to a minimum tender condition, the Initial
Tender Offer was conditioned, inter alia, upon UPR being satisfied in its sole
discretion that Section 203 is satisfied or otherwise inapplicable to the
transaction, that the Initial Tender Offer and Initial Proposed Merger have
been approved pursuant to Article Sixth, that the shareholder Rights under
Pennzoil's Rights Plan have been redeemed or otherwise invalidated or made
inapplicable, and that either UPR's designees have been elected to the Board so
that such nominees constitute a majority of the Board or a definitive merger
agreement between Pennzoil and UPR has been executed.
81. Pennzoil issued a press release on June 23,
1997, stating that the Board would review the Tender Offer and, in accordance
with federal law, would publicly announce its response to the Tender Offer on
or before Monday, July 7, 1997.
THE BOARD CONSIDERS THE INITIAL TENDER OFFER AND INITIAL PROPOSED MERGER
82. The Board met on July 1, 1997, to consider
the Initial Tender Offer and Initial Proposed Merger within the time frame
contemplated by the Williams Act. Ten of the eleven Pennzoil directors were
present in person, all except Mr. Alfonso Fanjul who was traveling abroad at a
location where a secure telephone was unavailable. At the July 1, 1997 meeting,
Pennzoil's financial advisors, which now also included JP Morgan Securities,
Inc. in addition to Evercore and
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Lehman Brothers, distributed to the Board their extensive analysis of the
Initial Tender Offer and Initial Proposed Merger. Messrs. Sechrest and Porter,
respectively of Evercore and Lehman Brothers, led the Board through an
extensive analysis of the financial merits and demerits of the Tender Offer and
Proposed Merger. The Advisors thereafter each delivered a written opinion that
UPR's Initial Tender Offer and Initial Proposed Merger were inadequate to
Pennzoil and its stockholders from a financial point of view.
83. The Board discussed the Initial Tender Offer
and Initial Proposed Merger at considerable length. Among other things, the
Board considered that the Initial Tender Offer and Initial Proposed Merger were
substantively coercive in that the price offered was inadequate and did not
take into account Pennzoil's intrinsic value and long-term growth potential
based on its restructuring efforts and upon the initiatives reflected in
Pennzoil's business plan. The Board discussed that, as with the prior June 10
Proposal, the Initial Tender Offer and Initial Proposed Merger would allow UPR
to usurp for itself future growth in revenues, net income, cash flow and stock
price appreciation which were beginning to result from Pennzoil's restructuring
efforts and strategic initiatives. The Board also considered the possible
adverse effect on Pennzoil's stockholders if the Initial Tender Offer and
Initial Proposed Merger endangered the tax-free nature of UPR's spin-off from
UPC which would require UPR (and indirectly its stockholders) to indemnify UPC
for a potentially huge tax liability. The Board also discussed the potential
adverse effects of the Initial Tender Offer and Initial Proposed Merger on
Pennzoil's domestic and international oil and gas agreements and business
relationships. In addition, the Board recognized that the Initial Tender Offer
and the Initial Proposed Merger contemplated a two-step acquisition of Pennzoil
in which there was no guarantee that the consideration received by stockholders
in the second-step merger would be worth $84.00 per share, and might be worth
considerably less. The
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Board concluded that the long-term financial interests of Pennzoil stockholders
were best served by remaining independent and continuing to implement
Pennzoil's long-term business strategy.
84. After further extensive discussions, the
Board unanimously voted to reject the Initial Tender Offer and Initial Proposed
Merger as inadequate and both substantively and structurally coercive and
therefore not in the best interests of Pennzoil or its stockholders. The Board
accordingly also unanimously determined not to redeem the Rights, and to
maintain the Rights Plan to protect Pennzoil's stockholders from the inadequate
and coercive Initial Tender Offer and Initial Proposed Merger. In addition,
the Board unanimously voted to defer the distribution date for the Rights that
would occur by reason of the lapse of time after the commencement of the
Initial Tender Offer until such later date as may be determined by resolution
of the Board.
85. In order to protect Pennzoil stockholders
from the inadequate and coercive terms of the Initial Tender Offer and Initial
Proposed Merger, the Board also unanimously determined (i) not to take any
action that would render either Section 203 or Article Sixth inapplicable to
the Initial Tender Offer or the Initial Proposed Merger, and (ii) neither to
designate UPR's nominees to the Pennzoil Board nor to negotiate a definitive
merger agreement with UPR.
UPR REVISES ITS TENDER OFFER
86. On October 6, 1997, UPR announced a Revised
Tender Offer. Pursuant to the Revised Tender Offer and Revised Proposed
Merger, Pennzoil's shareholders are offered $84.00 in cash per share with
shares not acquired in the Revised Tender Offer to be cashed out at $84 per
share. The Revised Tender Offer is highly conditional. In addition to a
minimum tender condition, the Revised Tender Offer is conditioned, inter alia,
upon UPR being satisfied in its reasonable discretion that Section 203 is
satisfied or otherwise inapplicable to the transaction, that the Revised Tender
Offer and Revised Proposed Merger have been approved pursuant to Article Sixth,
that the
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shareholder Rights under Pennzoil's Rights Plan have been redeemed or otherwise
invalidated or made inapplicable, and that either UPR's designees have been
elected to the Board so that such designees constitute a majority of the Board
or a definitive merger agreement between Pennzoil and UPR has been executed.
THE BOARD CONSIDERS THE REVISED TENDER OFFER AND REVISED PROPOSED MERGER
87. The Board met on October 14, 1997, to
consider the Revised Tender Offer and Revised Proposed Merger. All eleven
Pennzoil directors were present in person or by telephone conference hook-up
for the Board meeting. At the October 14, 1997 meeting, the Board received and
considered updates of recent operational and financial developments concerning
Pennzoil including an October 1997 update of its strategic plan and an analysis
of forecasted results. Pennzoil's financial advisors, including Evercore,
Lehman Brothers and JP Morgan, distributed to the Board their analysis of the
Revised Tender Offer and Proposed Merger and made presentations to the Board
regarding the financial merits and demerits of the Revised Tender Offer and
Revised Proposed Merger. Pennzoil's financial advisors thereafter delivered
separate opinions that UPR's Revised Tender Offer and Proposed Merger were
inadequate to Pennzoil and its stockholders from a financial point of view.
88. After hearing the opinion of its financial
advisors that the Revised Tender Offer and Proposed Merger were inadequate from
a financial point of view, the Board discussed the Revised Tender Offer and
Proposed Merger. Among other things, the Board considered:
o the progress made in the last two years toward
restructuring and repositioning Pennzoil into a
top-performing operating company;
o presentations by Pennzoil's management with respect
to Pennzoil's prospects for future growth,
profitability and share price appreciation, as
reflected in Pennzoil's strategic plan;
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o the Board's belief that Pennzoil is just beginning to
realize for its stockholders the values that will be
unlocked as a result of Pennzoil's strategic
initiatives and that pursuit of Pennzoil's strategic
plan will produce greater long-term value for the
stockholders than the Revised Tender Offer and
Proposed Merger;
o the Board's belief that the marketplace and many of
Pennzoil's stockholders do not fully appreciate and
recognize the benefits already achieved, and still to
be achieved, under the strategic plan;
o the presentation of the Board's financial advisors
and their opinions that the Revised Tender Offer and
Proposed Merger are inadequate from a financial point
of view;
o the numerous conditions to which the Revised Tender
Offer and Proposed Merger are subject;
o the absence of any financing commitments to UPR;
o information obtained in the course of litigation
discovery from UPR which indicates that UPR believes
that the value of Pennzoil is greater than $84 per
share;
o the Board's belief that the Revised Tender Offer and
Proposed Merger pose a threat to Pennzoil's
stockholders in that UPR is seeking to usurp for
itself the future growth in revenues, net income and
cash flow and stock price appreciation that are only
beginning to result from Pennzoil's pending and
completed strategic initiatives;
o the concern that the purchase of shares pursuant to
the Revised Tender Offer might involve illegal
trading on the basis of material inside information
concerning Pennzoil that was improperly obtained by
UPR's financial advisor in the course of litigation
discovery; and
o the Board's commitment to protecting the best
interests of the stockholders of Pennzoil and
enhancing the value of Pennzoil.
In short, the Board concluded that with the exception of reasons related
specifically to the coercive two-tier, front-end loaded structure of the
Initial Tender Offer and Initial Proposed Merger, the reasons for the Board's
rejection of the Initial Tender Offer continue to apply. The Board concluded
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that the long-term financial interests of Pennzoil stockholders were best
served by remaining independent and continuing to implement Pennzoil's
long-term business strategy.
89. After discussion, the Board unanimously voted
to reject the Revised Tender Offer and the Proposed Merger as inadequate and
substantively coercive and therefore not in the best interests of Pennzoil or
its stockholders. The Board also unanimously determined not to redeem the
Rights, or to render the Rights Plan inapplicable to the Revised Tender Offer
and Proposed Merger, to protect Pennzoil's stockholders from the inadequate and
coercive Revised Tender Offer and Revised Proposed Merger.
90. In order to protect Pennzoil stockholders
from the inadequate and coercive terms of the Revised Tender Offer and Proposed
Merger, the Board also unanimously determined (i) not to take any action that
would render either Section 203 or Article Sixth inapplicable to the Revised
Tender Offer or the Revised Proposed Merger, and (ii) neither to designate
UPR's nominees to the Pennzoil Board nor to negotiate a definitive merger
agreement with UPR.
91. In view of UPR's position, including
particularly the fact that UPR's Revised Tender Offer is conditioned upon the
Rights being redeemed or UPR being satisfied that the Rights are otherwise
invalid or unenforceable, Section 203 and Article Sixth being rendered
inapplicable, and either UPR's designees having been elected to the Board so
that such nominees constitute a majority of the Board or a definitive merger
agreement with UPR having been executed, Pennzoil is asserting this
counterclaim to facilitate the Court's determination of the validity of the
Board's judgment not to redeem the Rights, not to take any action with respect
to Section 203 or Article Sixth, not to designate UPR's nominees to the
Pennzoil Board and not to negotiate a definitive merger agreement with UPR. It
is Pennzoil's position that the determinations by the Board not to redeem the
Rights, not to designate UPR's nominees to the Pennzoil Board, not to negotiate
a definitive merger
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agreement with UPR and not to render either Section 203 or Article Sixth
inapplicable in the face of the Revised Tender Offer and Revised Proposed
Merger (i) were reasonable and informed exercises of the directors' business
judgment under Delaware law, and (ii) did not constitute a breach of any
obligation or duty arising under Delaware law.
WHEREFORE, Pennzoil seeks a judgment pursuant to 10 Del. C. Sections
6501-6510:
(a) declaring that the decision of the Pennzoil Board of Directors
neither to redeem the Rights in response to UPR's Revised Tender Offer and
Revised Proposed Merger nor to render the Rights Plan inapplicable to the
Revised Tender Offer and Revised Proposed Merger (i) was a reasonable and
informed exercise of the directors' business judgment under Delaware law, and
(ii) did not constitute a breach of any obligation or duty arising under
Delaware law;
(b) declaring that the decision of the Pennzoil Board of Directors
not to render Section 203 inapplicable in response to UPR's Revised Tender
Offer and Revised Proposed Merger (i) was a reasonable and informed exercise of
the directors' business judgment under Delaware law, and (ii) did not
constitute a breach of any obligation or duty arising under Delaware law;
(c) declaring that the decision of the Pennzoil Board of Directors
not to render Article Sixth inapplicable in response to UPR's Revised Tender
Offer and Revised Proposed Merger (i) was a reasonable and informed exercise of
the directors' business judgment under Delaware law, and (ii) did not
constitute a breach of any obligation or duty arising under Delaware law;
(d) declaring that the decision of the Pennzoil Board of Directors
neither to designate UPR's nominees to the Pennzoil Board so that they
constitute a majority of the Board nor to negotiate a definitive merger
agreement with UPR in response to UPR's Revised Tender Offer and Revised
Proposed Merger (i) was a reasonable and informed exercise of the directors'
business
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judgment under Delaware law, and (ii) did not constitute a breach of any
obligation or duty arising under Delaware law;
(e) awarding Pennzoil its costs and attorneys' fees in connection
with this action; and
(f) awarding such other and further relief as is just and
equitable.
/s/
--------------------------------------------
Charles F. Richards, Jr.
Thomas A. Beck
Daniel A. Dreisbach
Robert J. Stearn, Jr.
J. Travis Laster
OF COUNSEL Michael D. Allen
Richards, Layton & Finger
Robin C. Gibbs, Esq. One Rodney Square
Gibbs & Bruns, L.L.P. P.O. Box 551
1100 Louisiana Wilmington, DE 19899
Suite 5300 (302) 658-6541
Houston, TX 77002 Attorneys for Defendants
Dated: October 23, 1997
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CERTIFICATE OF SERVICE
It is hereby certified that on October 23, 1997, two copies of
the Notice of Motion, Motion for Leave to File an Amended and Supplemental
Answer and Counterclaim, and Order were hand delivered to the following
attorneys of record in the aforesaid action:
Edward P. Welch, Esquire
Skadden, Arps, Slate,
Meagher & Flom
One Rodney Square
Wilmington, DE 19801
Norman M. Monhait, Esquire
Rosenthal, Monhait Gross & Goddess
Suite 1401, Mellon Bank Center
Wilmington, DE 19801
James C. Strum, Esquire
Chimicles Jacobsen & Tikellis
One Rodney Square
Wilmington, DE 19801
/s/
-----------------------------------
Daniel A. Dreisbach
