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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 3, 1998
(Date of earliest event reported: August 1, 1998)
EL PASO NATURAL GAS COMPANY
(Exact name of registrant as specified in the charter)
Delaware 1-2700 74-0608280
(State or other jurisdiction of (Commission File Number) ( I.R.S. Employer
incorporation) Identification No.)
El Paso Energy Building
1001 Louisiana Street
Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 420-2131
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Item 5. Other Events
Effective on August 1, 1998, El Paso Natural Gas Company, a Delaware
corporation ("EPNG"), reorganized into a holding company form of organizational
structure, whereby El Paso Energy Corporation, a Delaware corporation ("Holding
Company"), became the holding company.
The holding company organizational structure was effected by a merger
conducted pursuant to Section 251(g) of the Delaware General Corporation Law
(the "Merger"), which provides for the formation of a holding company structure
without a vote of the stockholders of EPNG. In the Merger, El Paso Energy Merger
Company, a Delaware corporation ("Merger Sub"), merged with and into EPNG, with
EPNG as the surviving corporation. Prior to the Merger, Merger Sub was a direct,
wholly owned subsidiary of Holding Company, which was a direct, wholly owned
subsidiary of EPNG, organized for the purpose of implementing the holding
company organizational structure. By virtue of the Merger, EPNG became a direct,
wholly owned subsidiary of Holding Company, and all of EPNG's outstanding
capital stock was converted, on a share for share basis, into capital stock of
Holding Company. As a result of such restructuring, each outstanding share of
common stock, $3.00 par value per share, of EPNG was converted into one share of
common stock, $3.00 par value per share, of Holding Company (the "Common
Stock"), and each one-half outstanding preferred stock purchase right of EPNG
was converted into one preferred stock purchase right (a "Right") associated
with each share of Common Stock, each Right representing the right to purchase
one two-hundredth (subject to adjustment) of a share of Series A Junior
Participating Preferred Stock of Holding Company. Holding Company will assume
all of EPNG's obligations under the El Paso Energy Capital Trust I, 4 3/4% Trust
Convertible Preferred Securities ("Trust Preferred Securities"), including the
conversion of the Trust Preferred Securities into securities of the Common Stock
and assumption of EPNG's guarantee of the Trust Preferred Securities. The Common
Stock will continue to trade on the New York Stock Exchange under the symbol
"EPG," the same trading symbol under which EPNG's common stock traded.
The conversion of shares of capital stock in the Merger occurred without an
exchange of certificates. Accordingly, certificates formerly representing shares
of outstanding capital stock of EPNG are deemed to represent the same number of
shares of capital stock of Holding Company until such certificates are submitted
to Holding Company's transfer agent for transfer. The change to the holding
company structure was tax free for federal income tax purposes for stockholders.
A copy of the press release further describing the transaction is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
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Item 7. Financial Statements and Exhibits
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2.1 Agreement and Plan of Merger, dated July 16, 1998, by and
among Holding Company, EPNG and Merger Sub.
3.1 Restated Certificate of Incorporation of EPNG, dated
August 3, 1998.
99.1 Press Release, dated August 3, 1998.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EL PASO NATURAL GAS COMPANY
By: /s/ Jeffrey I. Beason
------------------------------------------
Jeffrey I. Beason
Vice President and Controller
Date: August 3, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2.1 Agreement and Plan of Merger, dated July 16, 1998, by and among Holding
Company, EPNG and Merger Sub.
3.1 Restated Certificate of Incorporation of EPNG, dated August 3, 1998.
99.1 Press Release, dated August 3, 1998.
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AMONG
EL PASO NATURAL GAS COMPANY,
EL PASO ENERGY CORPORATION
AND
EL PASO ENERGY MERGER COMPANY
DATED AS OF JULY 16, 1998
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE I THE MERGER.................................................2
Section 1.1 The Merger......................................2
Section 1.2 Effective Date..................................3
Section 1.3 Restated Certificate of Incorporation...........3
Section 1.4 By-laws.........................................4
Section 1.5 Directors.......................................4
Section 1.6 Officers........................................4
Section 1.7 Additional Actions..............................4
Section 1.8 Conversion of Securities........................4
Section 1.9 Preferred Share Purchase Rights.................5
Section 1.10 No Surrender of Certificates....................6
ARTICLE II ACTIONS TO BE TAKEN IN CONNECTION WITH THE MERGER..........6
Section 2.1 Company Indebtedness............................6
Section 2.2 Assumption of Benefit Plans.....................6
Section 2.3 Reservation of Shares...........................7
ARTICLE III CONDITIONS OF MERGER......................................7
Section 3.1 Conditions Precedent............................7
ARTICLE IV COVENANTS..................................................8
Section 4.1 Election of Directors...........................8
Section 4.2 Listing of Holding Company Common Stock.........8
Section 4.3 Employee Benefit Plans..........................8
Section 4.4 Change in Capitalization........................9
Section 4.5 Contribution of Treasury Stock..................9
ARTICLE V TERMINATION AND AMENDMENT...................................9
Section 5.1 Termination.....................................9
Section 5.2 Amendment.......................................9
ARTICLE VI MISCELLANEOUS PROVISIONS...................................9
Section 6.1 Governing Law...................................9
Section 6.2 Counterparts....................................9
Section 6.3 Entire Merger Agreement.........................9
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement"), dated as of
July 16, 1998, is among El Paso Natural Gas Company, a Delaware corporation (the
"Company"), El Paso Energy Corporation, a Delaware corporation ("Holding") and a
direct, wholly owned subsidiary of the Company, and El Paso Energy Merger
Company, a Delaware corporation ("Merger Sub") and a direct, wholly owned
subsidiary of Holding.
R E C I T A L S:
WHEREAS, the Company's authorized capital stock consists of (i) 275,000,000
shares of common stock, par value $3.00 per share (the "Company Common Stock"),
of which, as of June 30, 1998, 121,257,707 shares were issued and outstanding
(including 1,360,000 shares held in the Company's Benefits Protection Trust (the
"Trust")) and 2,619,724 shares held in Company's treasury; and (ii) 25,000,000
shares of preferred stock, par value $0.01 per share, none of which is currently
outstanding but of which 1,375,000 shares have been designated as the El Paso
Natural Gas Company Series A Junior Participating Preferred Stock and an
additional 1,375,000 shares are to be designated prior to the Merger as
additional shares of such Series A Junior Participating Preferred Stock
(collectively, the "Company Series A Preferred Stock"); and
WHEREAS, as of the date hereof, Holding's authorized capital stock consists
of (i) 1,000 shares of common stock, par value $1.00 per share, of which 1,000
shares are issued and outstanding and owned by the Company and no shares are
held in treasury, and (ii) no shares of preferred stock are authorized; but
prior to the Merger, Holding's authorized capital stock will consist of (i)
275,000,000 shares of common stock, par value $3.00 per share (the "Holding
Common Stock"), of which 1,000 shares will be issued and outstanding and owned
by the Company and no shares will be held in treasury, and (ii) 25,000,000
shares of preferred stock, par value $0.01 per share, none of which is currently
outstanding but of which 2,750,000 shares will be designated as the El Paso
Energy Corporation Series A Junior Participating Preferred Stock (the "Holding
Series A Preferred Stock") pursuant to a Certificate of Designation filed with
the Delaware Secretary of State; and
WHEREAS, as of the date hereof, Merger Sub has an authorized capital stock
consisting of 1,000 shares of common stock, par value $1.00 per share (the
"Merger Sub Common Stock"), of which 1,000 shares are issued and outstanding on
the date hereof and owned by Holding; and
WHEREAS, the designations, rights and preferences, and the qualifications,
limitations and restrictions thereof, of the Holding Series A Preferred Stock
and the Holding Common Stock are the same as those of the Company Series A
Preferred Stock and the Company Common Stock respectively; and
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WHEREAS, the Restated Certificate of Incorporation of Holding (the "Holding
Charter") and the By-laws of Holding (the "Holding By-laws") in effect
immediately after the Effective Date (as hereinafter defined) will contain
provisions identical to the Restated Certificate of Incorporation of the Company
(the "Company Charter") and By-laws of the Company (the "Company By-laws") in
effect immediately before the Effective Date (other than with respect to matters
excepted by Section 251(g) of the General Corporation Law of the State of
Delaware (the "DGCL")); and
WHEREAS, the directors and officers of the Company immediately prior to the
Merger (as hereinafter defined) will be the directors and officers of Holding as
of the Effective Date; and
WHEREAS, Holding and Merger Sub are newly formed corporations organized for
the purpose of participating in the transactions herein contemplated; and
WHEREAS, the Company desires to create a new holding company structure by
merging Merger Sub with and into the Company, with the Company continuing as the
surviving corporation of such merger, and each outstanding share (or any
fraction thereof) of Company Common Stock being converted in such merger into a
like number of shares of Holding Common Stock, all in accordance with the terms
of this Merger Agreement (the "Merger"); and
WHEREAS, the Boards of Directors of Holding, Merger Sub and the Company and
Holding, in its capacity as the sole stockholder of Merger Sub, have approved
this Merger Agreement and the merger of Merger Sub with and into the Company
upon the terms and subject to the conditions set forth in this Merger Agreement;
and
WHEREAS, pursuant to authority granted by the Board of Directors of the
Company, the Company will, immediately prior to the Effective Date (defined
below), contribute to the capital of Holding all of the shares of Company Common
Stock then held by the Company in its treasury.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained in this Merger Agreement, and intending to be legally bound
hereby, the Company, Holding and Merger Sub hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. In accordance with Section 251(g) of the DGCL and
subject to and upon the terms and conditions of this Merger Agreement, Merger
Sub shall, at the Effective Date (defined below), be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation"). At the Effective Date, the effect of the Merger shall
be as provided in Section 259 of the DGCL.
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SECTION 1.2 EFFECTIVE DATE. The parties shall file this Merger Agreement,
executed in accordance with the relevant provisions of the DGCL, with the
Secretary of State of the State of Delaware and shall make all other filings or
recordings required under the DGCL to effectuate the Merger. The Merger shall
become effective as of 12:01 a.m. Eastern Daylight Time on August 1, 1998 (such
date and time being referred to herein as the "Effective Date").
SECTION 1.3 RESTATED CERTIFICATE OF INCORPORATION. From and after the
Effective Date, the Company's Charter, as in effect immediately prior to the
Effective Date, shall be the restated certificate of incorporation of the
Surviving Corporation (the "Surviving Corporation's Charter") until thereafter
amended as provided by law; provided, however, that, from and after the
Effective Date:
(a) Article 4 thereof shall be amended so as to read in its entirety as
follows:
"The total number of authorized shares of all classes of stock of this
corporation shall consist of 1,000 shares of common stock having a par
value of $1.00 per share and 1,000,000 shares of preferred stock having a
par value of $0.01 per share. Authority is hereby expressly granted to the
Board of Directors to fix by resolution or resolutions any of the
designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions which are permitted by the
General Corporation Law of the State of Delaware in respect of any class or
classes of stock or any series of any class of stock of the corporation. No
shares of the previously designated Series A Junior Participating Preferred
Stock having been issued, such series is hereby terminated and all matters
set forth in this Restated Certificate of Incorporation with respect to
such series are hereby eliminated from this Restated Certificate of
Incorporation.
(b) A new Article 13 shall be added thereto which shall be and read in its
entirety as follows:
"ARTICLE 13. VOTE OF STOCKHOLDERS OF EL PASO ENERGY CORPORATION REQUIRED TO
APPROVE CERTAIN ACTIONS.
Any act or transaction by or involving this corporation that requires for
its adoption under the General Corporation Law of the State of Delaware or
this Restated Certificate of Incorporation the approval of the stockholders
of this corporation shall, pursuant to Section 251(g) of the General
Corporation Law of the State of Delaware, require, in addition, the
approval of the stockholders of El Paso Energy Corporation, a Delaware
corporation, or any successor thereto by merger, by the same vote that is
required by the General Corporation Law of the State of Delaware and/or the
Restated Certificate of Incorporation of this corporation."
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SECTION 1.4 BY-LAWS. From and after the Effective Date, the Company
By-laws, as in effect immediately prior to the Effective Date, shall constitute
the By-laws of the Surviving Corporation until thereafter amended as provided
therein or by applicable law.
SECTION 1.5 DIRECTORS. The directors of Merger Sub in office immediately
prior to the Effective Date shall be the initial directors of the Surviving
Corporation and will hold office from the Effective Date until their successors
are duly elected or appointed and qualified in the manner provided in the
Surviving Corporation's Charter and By-laws, or as otherwise provided by law.
SECTION 1.6 OFFICERS. The officers of Merger Sub in office immediately
prior to the Effective Date shall be the officers of the Surviving Corporation
until the earlier of their resignation or removal or until their successors are
duly elected or appointed and qualified in the manner provided in the Surviving
Corporation's Charter and By-laws, or as otherwise provided by law.
SECTION 1.7 ADDITIONAL ACTIONS. Subject to the terms of this Merger
Agreement, the parties hereto shall take all such reasonable and lawful action
as may be necessary or appropriate in order to effectuate the Merger, which
shall include executing and delivering an assignment and assumption agreement
(the "Assumption Agreement"), effective upon consummation of the Merger, in such
form as the Company and Holding determine to be appropriate to evidence the
assignment to and assumption by Holding of such rights, interests, obligations
and liabilities as the Company and Holding determine to be appropriate. If, at
any time after the Effective Date, the Surviving Corporation shall consider or
be advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of Merger Sub
or the Company acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Merger Agreement, the officers and directors of the Surviving Corporation shall
be authorized to execute and deliver, in the name and on behalf of each of
Merger Sub and the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of Merger Sub
and the Company or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Merger Agreement.
SECTION 1.8 CONVERSION OF SECURITIES. At the Effective Date, by virtue of
the Merger and without any action on the part of Holding, Merger Sub, the
Company or the holder of any of the following securities:
(a) Conversion of Company Common Stock. Each share of Company Common Stock
(or fraction of a share of Company Common Stock), including the 1,360,000 shares
of
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Company Common Stock held in the Trust, issued and outstanding immediately prior
to the Effective Date shall be converted into and thereafter represent one duly
issued, fully paid and nonassessable share (or equal fraction of a share) of
Holding Common Stock.
(b) Conversion of Company Common Stock in Treasury. Each share of Company
Common Stock issued but held by the Company or Holding in its treasury
immediately prior to the Effective Date shall be converted into and thereafter
represent one duly issued, fully paid and nonassessable share of Holding Common
Stock held in such entity's treasury immediately after the Effective Date.
(c) Conversion of Capital Stock of Merger Sub. Each share of Merger Sub
Common Stock issued and outstanding immediately prior to the Effective Date
shall be converted into and thereafter represent one duly issued, fully paid and
nonassessable share of common stock, par value $1.00 per share, of the Surviving
Corporation.
(d) Cancellation of Capital Stock of Holding. Each share of Holding Common
Stock that is owned by the Company immediately prior to the Merger and any
preferred share purchase rights of Holding issued pursuant to the Holding Rights
Plan (as defined herein) and associated with any such share shall automatically
be cancelled and retired and shall cease to exist.
(e) Rights of Certificate Holders. From and after the Effective Date,
holders of certificates formerly evidencing Company Common Stock shall cease to
have any rights as stockholders of the Company, except as provided by law;
provided, however, that such holders shall have the rights set forth in Section
1.10 herein.
SECTION 1.9 PREFERRED SHARE PURCHASE RIGHTS.
(a) In accordance with Section 24.1 of that certain Amended and Restated
Shareholders Rights Agreement dated as of July 23, 1997, as amended and in
effect on the Effective Date, between the Company and The First National Bank of
Boston, as Rights Agent (the "Company Rights Plan"), as of the Effective Date,
each one-half outstanding preferred stock purchase right of the Company
("Company Purchase Right") shall be converted into one preferred stock purchase
right of Holding issued under the Holding Rights Plan.
(b) Holding shall, prior to the Effective Date, adopt a preferred stock
purchase rights plan (the "Holding Rights Plan") substantially similar in form
and substance to the Company Rights Plan, with such changes and adjustments
thereto as may be necessary to reflect that, at the Effective Date, each
one-half of a preferred stock purchase right of the Company will be converted
into one preferred share purchase right of Holding issued pursuant to the
Holding Rights Plan, and, in accordance therewith, Holding shall, at the
Effective Date but without duplication of Holding's obligations under the
Holding Rights Plan, issue to each holder of Holding Common Stock issued
pursuant hereto one preferred share purchase right ("Holding
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Purchase Right") for each share of Holding Common Stock issued by it pursuant to
Section 1.8(a) herein.
SECTION 1.10 NO SURRENDER OF CERTIFICATES. Until thereafter surrendered for
transfer or exchange in the ordinary course, each outstanding stock certificate
that, immediately prior to the Effective Date, evidenced Company Common Stock
shall be deemed and treated for all corporate purposes to evidence the ownership
of the number of shares of Holding Common Stock into which such shares of
Company Common Stock were converted pursuant to the provisions of Sections 1.8
(a) and (b) herein. In addition, immediately after the Effective Date, each such
stock certificate shall evidence a number of Holding Purchase Rights equal to
the number of one-half Company Purchase Rights evidenced thereby immediately
prior to the Effective Date of the Merger (that is, each one-half Company
Purchase Right will be converted into one Holding Purchase Right).
ARTICLE II
ACTIONS TO BE TAKEN IN
CONNECTION WITH THE MERGER
SECTION 2.1 COMPANY INDEBTEDNESS. As of the Effective Date, Holding, the
Company and the trustee under the Subordinated Indenture dated as of March 1,
1998, between the Company and The Chase Manhattan Bank, as Trustee, shall
execute, acknowledge and deliver a supplemental indenture pursuant to which
Holding shall assume and agree to perform all of the Company's obligations
thereunder and will become the primary obligor with respect to the $334,750,000
principal amount of 4 3/4% subordinated convertible debentures due 2028 of the
Company (the "Debentures") and the Company's guarantee of the 6,500,000 4 3/4%
trust convertible preferred Securities of El Paso Energy Capital Trust I (the
"Trust Preferred Securities"), and the Debentures and the Trust Preferred
Securities will be convertible into Holding Common Stock (rather than Company
Common Stock).
SECTION 2.2 ASSUMPTION OF BENEFIT PLANS. Holding and the Company hereby
agree that they will, as of the Effective Date, execute, acknowledge and deliver
an assumption agreement (which may include an Assignment and Assumption
Agreement) pursuant to which Holding will, from and after the Effective Date,
assume and agree to perform all obligations of the Company pursuant to (a) the
following stock-related plans (as each may have been amended): (i) 1995 Omnibus
Compensation Plan, (ii) 1995 Incentive Compensation Plan, (iii) 1995
Compensation Plan for Non-Employee Directors, (iv) Strategic Stock Plan, (v)
Omnibus Plan for Management Employees, (vi) Retirement Savings Plan, (vii)
Omnibus Compensation Plan, (viii) Restricted Stock Award Plan for Management
Employees, and (ix) Stock Option Plan for Non-Employee Directors; and (b) such
other qualified and non-qualified plans, trust agreements, employment agreements
and other documents and agreements as the Company and Holding determine to be
appropriate (collectively the "Benefit Plans").
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SECTION 2.3 RESERVATION OF SHARES. On or prior to the Effective Date,
Holding will reserve sufficient authorized but unissued shares of Holding Common
Stock to provide for the issuance of Holding Common Stock upon (a) the exercise
of options or in satisfaction of other benefits payable and outstanding under
the Benefit Plans, and (b) the conversion of the Debentures and the Trust
Preferred Securities, and will reserve the Holding Series A Preferred Stock
sufficient to provide for the issuance thereof upon exercise of Holding Purchase
Rights.
ARTICLE III
CONDITIONS OF MERGER
SECTION 3.1 CONDITIONS PRECEDENT. The obligations of the parties to this
Merger Agreement to consummate the Merger and the transactions contemplated by
this Merger Agreement shall be subject to fulfillment or waiver by the parties
hereto of each of the following conditions:
(a) Prior to the Effective Date, the Holding Common Stock to be issued
pursuant to the Merger shall have been approved for listing, upon official
notice of issuance, by the New York Stock Exchange (the "NYSE").
(b) Holding shall have adopted the Holding Rights Plan and, prior to the
Effective Date, the Holding Purchase Rights to be issued in conjunction with the
issuance of Holding Common Stock pursuant to the Merger shall have been approved
for listing, upon official notice of issuance, by the NYSE.
(c) The Company, Holding and the Trustee shall have executed and delivered
the Supplemental Indenture contemplated by Article II herein, subject only to
the occurrence of the Effective Date.
(d) Prior to the Effective Date, Andrews & Kurth, L.L.P., counsel to the
Company, shall have received on behalf of the Company an interpretive or
no-action letter from the staff of the Securities and Exchange Commission, in
form and substance satisfactory to the Company, in response to that certain
request therefor dated May 18, 1998, from such firm.
(e) Prior to the Effective Date, White & Case, L.L.P., special tax counsel
to the Company, shall have rendered an opinion to the Board of Directors of the
Company, in form and substance satisfactory to the Company, to the effect that
for federal income tax purposes (i) the Merger will constitute a tax-free
reorganization under Section 368(a) of the Code; (ii) no gain or loss will be
recognized by the stockholders of the Company upon receipt of the Holding
Common Stock and Holding Purchase Rights in exchange for their shares of Company
Common Stock and Company Purchase Rights pursuant to the Merger; (iii) the tax
basis of the shares of Holding Common Stock to be received by the Company's
stockholders pursuant to the Merger Agreement will be the same as their tax
basis in the Company Common Stock converted or
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exchanged therefor; and (iv) the holding period of Holding Common Stock to be
received by the Company's stockholders pursuant to the Merger Agreement will
include the holding period of the Company Common Stock converted or exchanged
therefor, provided that such Company Common Stock is held as a capital asset in
the hands of such stockholder at the time of the Merger.
(f) Prior to the Effective Date, no order, statute, rule, regulation,
executive order, injunction, stay, decree, judgment or restraining order shall
have been enacted, entered, promulgated or enforced by any court or governmental
or regulatory authority or instrumentality which prohibits or makes illegal the
consummation of the Merger or the transactions contemplated hereby.
(g) Prior to the Effective Date, the Company shall file with the office of
the Delaware Secretary of State a Restated Certificate of Incorporation, among
other things, to increase Holding's authorized capital stock to (i) 275,000,000
shares of common stock, par value $3.00 per share and (ii) 25,000,000 shares of
preferred stock, par value $0.01 per share
(h) Prior to the Effective Date, the Company shall file with the office of
the Delaware Secretary of State a Certificate of Increase to increase to a total
of 2,750,000 the number of shares of Company Series A Preferred Stock.
ARTICLE IV
COVENANTS
SECTION 4.1 ELECTION OF DIRECTORS. Effective immediately prior to the
Effective Date, the Company, in its capacity as the sole stockholder of Holding,
will cause the Board of Directors of Holding to effect, and Holding hereby
agrees to effect, such amendments to the Holding By-laws as are necessary to
increase the number of directors of Holding to equal the number of directors of
the Company and the Company, in its capacity as the sole stockholder of Holding,
will elect (or the Board of Directors of Holding will elect to fill vacancies on
the board) each person who is then a member of the board of directors of the
Company as a director of Holding (and to be the only directors of Holding), each
of whom shall serve until the next annual meeting of shareholders of Holding and
until his successor shall have been elected and qualified.
SECTION 4.2 LISTING OF HOLDING COMPANY COMMON STOCK. Holding will use its
best efforts to obtain, at or before the Effective Date, authorization to list,
upon official notice of issuance, on the NYSE Holding Common Stock issuable
pursuant to the Merger and Holding Purchase Rights issuable in conjunction
therewith.
SECTION 4.3 EMPLOYEE BENEFIT PLANS. The Company and Holding will take or
cause to be taken all actions necessary or desirable in order for Holding to
assume the Benefit Plans and to assume (or become a participating employer in)
each other existing employee benefit plan, trust and agreement of the Company,
with or without amendments, or to adopt comparable plans,
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all to the extent deemed appropriate by the Company and Holding and permitted
under applicable law.
SECTION 4.4 CHANGE IN CAPITALIZATION. Prior to the Effective Date, Holding
and the Company agree to take all action necessary or desirable under the DGCL
to designate 2,750,000 shares of Preferred Stock of Holding as Series A Junior
Participating Preferred Stock having terms and provisions substantially similar
to those of the Company's Series A Junior Participating Preferred Stock.
SECTION 4.5 CONTRIBUTION OF TREASURY STOCK. Immediately prior to the
Effective Date, the Company will contribute to the capital of Holding all the
Company Common Stock then held in the treasury of the Company.
ARTICLE V
TERMINATION AND AMENDMENT
SECTION 5.1 TERMINATION. This Merger Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Date by action of the Board of Directors of the Company, Holding or Merger Sub
if it is determined that for any reason the completion of the transactions
provided for herein would be inadvisable or not in the best interest of such
corporation or its stockholders. In the event of such termination and
abandonment, this Merger Agreement shall become void and neither the Company,
Holding or Merger Sub nor their respective stockholders, directors or officers
shall have any liability with respect to such termination and abandonment.
SECTION 5.2 AMENDMENT. This Merger Agreement may be supplemented, amended
or modified by the mutual consent of the Boards of Directors of the parties to
this Merger Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1 GOVERNING LAW. This Merger Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws.
SECTION 6.2 COUNTERPARTS. This Merger Agreement may be executed in one or
more counterparts, each of which when executed shall be deemed to be an original
but all of which shall constitute one and the same agreement.
SECTION 6.3 ENTIRE MERGER AGREEMENT. This Merger Agreement, including the
documents and instruments referred to herein, constitutes the entire agreement
and supersedes all
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other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
IN WITNESS WHEREOF, Holding, Merger Sub and the Company have caused this
Merger Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
EL PASO NATURAL GAS COMPANY
By: /s/ H. Brent Austin
-----------------------------------------
H. Brent Austin
Executive Vice President
and Chief Financial Officer
EL PASO ENERGY CORPORATION
By: /s/ H. Brent Austin
-----------------------------------------
H. Brent Austin
Executive Vice President
and Chief Financial Officer
EL PASO ENERGY MERGER COMPANY
By: /s/ H. Brent Austin
-----------------------------------------
H. Brent Austin
Executive Vice President
and Chief Financial Officer
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CERTIFICATE
PURSUANT TO SECTION 251(g) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 16, 1998
MERGING
EL PASO ENERGY MERGER COMPANY
WITH AND INTO EL PASO NATURAL GAS COMPANY
--------------------------
The attached Agreement and Plan of Merger shall be effective at 12:01 a.m.,
Eastern Daylight Time, on August 1, 1998.
--------------------------
El Paso Natural Gas Company
I, David L. Siddall, Corporate Secretary of El Paso Natural Gas Company, a
corporation organized and existing under the laws of the State of Delaware (the
"Corporation"), hereby certify that the Merger Agreement and Plan of Merger to
which this Certificate is attached, after having been first duly signed on
behalf of said corporation and having been duly signed on behalf of El Paso
Energy Merger Company, a Delaware corporation, and El Paso Energy Corporation, a
Delaware corporation, was duly adopted pursuant to Subsection (g) of Section 251
of the Delaware General Corporation Law and the conditions specified in the
first sentence of such Subsection have been satisfied; and that the Merger
Agreement and Plan of Merger was thereby adopted by action of the Board of
Directors of El Paso Natural Gas Company, and is the duly adopted agreement and
act of said corporation.
/s/ David L. Siddall
----------------------------------------------------
David L. Siddall
Corporate Secretary
El Paso Natural Gas Company
<PAGE> 14
El Paso Energy Merger Company
I, David L. Siddall, Corporate Secretary of El Paso Energy Merger Company,
a corporation organized and existing under the laws of the State of Delaware
(the "Corporation"), hereby certify that the Merger Agreement and Plan of Merger
to which this Certificate is attached, after having been first duly signed on
behalf of said corporation and having been duly signed on behalf of El Paso
Natural Gas Company, a Delaware corporation, and El Paso Energy Corporation, a
Delaware corporation, was duly adopted pursuant to Section 251 of the Delaware
General Corporation Law and the conditions specified in the first sentence of
such Subsection have been satisfied; and that the Merger Agreement and Plan of
Merger was thereby adopted by action of the Board of Directors of El Paso Energy
Merger Company, approved by vote of the sole stockholder of El Paso Energy
Merger Company, and is the duly adopted agreement and act of said corporation.
/s/ David L. Siddall
----------------------------------------------------
David L. Siddall
Corporate Secretary
El Paso Energy Merger Company
<PAGE> 1
RESTATED
CERTIFICATE OF INCORPORATION
OF
EL PASO NATURAL GAS COMPANY
E1 Paso Natural Gas Company, a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby
certify:
1. The original Certificate of Incorporation was filed with the
Secretary of State on November 28, 1928. The name under which it was
originally incorporated is El Paso Natural Gas Company.
2. The following Restated Certificate of Incorporation was duly
proposed by the corporation's Board of Directors pursuant to the applicable
provisions of Section 245 of the General Corporation Law of the State of
Delaware. The following Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the corporation's
certificate of incorporation as heretofore amended and supplemented, and there
is no discrepancy between those provisions and the following Restated
Certificate of Incorporation, except for such provisions as are expressly
permitted to be omitted by Section 245 of the General Corporation law of the
State of Delaware.
ARTICLE 1. NAME
The name of this corporation is EL PASO NATURAL GAS COMPANY.
ARTICLE 2. REGISTERED OFFICE AND AGENT
The address of the registered office of this corporation is
Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New
Castle, State of Delaware 19801, and the name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE 3. PURPOSES
The purpose of this corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
<PAGE> 2
ARTICLE 4. SHARES
The total number of authorized shares of all classes of stock of this
corporation shall consist of 1,000 shares of common stock having a par value of
$1.00 per share and 1,000,000 shares of preferred stock having a par value of
$0.01 per share. Authority is hereby expressly granted to the Board of
Directors to fix by resolution or resolutions any of the designations and the
powers, preferences and rights, and the qualifications, limitations or
restrictions which are permitted by the General Corporation Law of the State of
Delaware in respect of any class or classes of stock or any series of any class
of stock of the corporation.
ARTICLE 5. BY-LAWS
The Board of Directors shall have the power to adopt, amend or repeal
the By-laws of this corporation, subject to the power of the stockholders to
amend or repeal such By-laws. The stockholders having voting power shall also
have the power to adopt, amend or repeal the By-laws of this corporation.
ARTICLE 6. ELECTION OF DIRECTORS
Except as may be otherwise required by the By-laws, written ballots
are not required in the election of Directors.
ARTICLE 7. PREEMPTIVE RIGHTS
Preemptive rights shall not exist with respect to shares of stock or
securities convertible into shares of stock of this corporation.
ARTICLE 8. CUMULATIVE VOTING
The right to cumulate votes in the election of Directors shall not
exist with respect to shares of stock of this corporation.
ARTICLE 9. AMENDMENTS TO RESTATED CERTIFICATE OF INCORPORATION
This corporation reserves the right to amend or repeal any of the
provisions contained in this Restated Certificate of Incorporation in any
manner now or hereafter permitted by law, and the rights of the stockholders of
this corporation are granted subject to this reservation.
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<PAGE> 3
ARTICLE 10. LIMITATION OF DIRECTOR LIABILITY
To the full extent that the General Corporation Law of the State of
Delaware, as it exists on the date hereof or may hereafter be amended, permits
the limitation or elimination of the liability of Directors, a Director of this
corporation shall not be liable to this corporation or its stockholders for
monetary damages for breach of fiduciary duty as a Director. Any amendment to
or repeal of this Article 10 shall not adversely affect any right or protection
of a Director of this corporation for or with respect to any acts or omissions
of such Director occurring prior to such amendment or repeal.
ARTICLE 11. ACTION BY STOCKHOLDERS WITHOUT A MEETING
Any action by the stockholders of this corporation shall be taken at a
meeting of stockholders and no action may be taken by written consent of
stockholders entitled to vote on such action.
ARTICLE 12. SPECIAL VOTING REQUIREMENTS
In addition to any affirmative vote required by law, by this Restated
Certificate of Incorporation, by any agreement with any national securities
exchange, or as may be otherwise required, any "Business Combination" (as
hereinafter defined) involving this corporation shall be subject to approval in
the manner set forth in this Article 12.
12.1 Definitions.
For the purposes of this Article 12:
(a) "Affiliate" and "beneficial owner" are used herein as
defined in Rule 12b-2 and Rule 13d-3, respectively, under the
Securities Exchange Act of 1934 as in effect on January 1, 1992 (the
"1934 Act"). The term "Affiliate" as used herein shall exclude this
corporation, but shall include the definition of "Associate" as
contained in said Rule 12b-2.
(b) An "Interested Stockholder" is a person other than
(i) the corporation or (ii) Burlington Resources Inc., a Delaware
corporation ("BRI"), as long as BRI continues to own at least a
majority of the stock of this corporation entitled to vote for the
election of Directors ("Voting Stock") and there has been no Change in
Control of BRI since January 1, 1992, who is (A) the beneficial owner
of ten percent or more of the Voting Stock or (B) an Affiliate of this
corporation which (1) at any time within a two-year period prior to
the record date for the vote on a Business Combination was the
beneficial owner of ten percent or more of the Voting Stock, or (2) at
the completion of the Business Combination will be the beneficial
owner of ten percent or more of the Voting Stock.
-3-
<PAGE> 4
(c) A "Person" is a natural person or a legal entity of
any kind, together with any Affiliate of such person or entity, or any
person or entity with whom such person, entity or any Affiliate has
any agreement or understanding relating to acquiring, voting or
holding Voting Stock.
(d) A "Disinterested Director" is a member of the Board
of Directors of this corporation (other than the Interested
Stockholder) who was a Director prior to the time the Interested
Stockholder became an Interested Stockholder, or any Director who was
recommended for election by the Disinterested Directors. Any action
to be taken by the Disinterested Directors shall require the
affirmative vote of at least two-thirds of the Disinterested
Directors.
(e) A "Business Combination" is (i) a merger or
consolidation of this corporation or any of its subsidiaries with an
Interested Stockholder; (ii) the sale, lease, exchange, pledge,
transfer or other disposition (A) by this corporation or any of its
subsidiaries of all or a Substantial Part of the corporation's Assets
to an Interested Stockholder, or (B) by an Interested Stockholder of
any of its assets, except in the ordinary course of business, to this
corporation or any of its subsidiaries; (iii) the issuance of stock or
other securities of this corporation or any of its subsidiaries to an
Interested Stockholder, other than on a pro rata basis to all holders
of Voting Stock of the same class held by the Interested Stockholder
pursuant to a stock spilt, stock dividend or distribution of warrants
or rights; (iv) the adoption of any plan or proposal for the
liquidation or dissolution of this corporation proposed by or on
behalf of an Interested Stockholder; (v) any reclassification of
securities, recapitalization, merger or consolidation or other
transaction which has the effect, directly or indirectly, of
increasing the proportionate share of any Voting Stock beneficially
owned by an Interested Stockholder; or (vi) any agreement, contract or
other arrangement providing for any of the foregoing transactions.
(f) A "Substantial Part of the corporation's Assets"
shall mean assets of this corporation or any of its subsidiaries in an
amount equal to twenty percent or more of the fair market value, as
determined by the Disinterested Directors, of the total consolidated
assets of this corporation and its subsidiaries taken as a whole as of
the end of its most recent fiscal year ended prior to the time the
determination is made.
(g) A "Change in Control" shall be deemed to occur (i) if
any Person is or becomes the "beneficial owner" (as defined in Rule
13d-3 of the 1934 Act), directly or indirectly, of securities of BRI
representing twenty percent or more of the stock of BRI entitled to
vote for Directors of BRI, (ii) upon the first purchase of BRI's
common stock pursuant to a tender or exchange offer (other than a
tender or exchange offer made by BRI), (iii) upon the approval by
BRI's stockholders of a merger or consolidation, a sale or disposition
of all or substantially all of BRI's assets or a plan of liquidation
or dissolution of BRI, or (iv) if, during any period of two
consecutive years, individuals who at the beginning of such period
constitute the BRI Board of Directors cease for any reason to
constitute at least a majority thereof, unless the election or
nomination of the election by
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<PAGE> 5
BRI's stockholders of each new Director was approved by a vote of at
least two-thirds of the Directors then still in office who were
Directors at the beginning of the period.
12.2 Vote Required for Business Combinations.
The affirmative vote of not less than fifty-one percent of the Voting
Stock, excluding the Voting Stock of an Interested Stockholder who is a party
to the Business Combination, shall be required for the adoption or
authorization of a Business Combination, unless the Disinterested Directors
determine that:
(a) The Interested Stockholder is the beneficial owner of
not less than eighty percent of the Voting Stock and has declared its
intention to vote in favor of or to approve such Business Combination;
or
(b) (i) The fair market value of the consideration per
share to be received or retained by the holders of each class or
series of stock of this corporation in a Business Combination is equal
to or greater than the consideration per share (including brokerage
commissions and soliciting dealer's fees) paid by such Interested
Stockholder in acquiring the largest number of shares of such class of
stock previously acquired in any one transaction or series of related
transactions, whether before or after the Interested Stockholder
became an Interested Stockholder and (ii) the Interested Stockholder
shall not have received the benefit, directly or indirectly (except
proportionately as a stockholder), of any loans, advances, guarantees,
pledges or other financial assistance provided by this corporation,
whether in anticipation of or in connection with such Business
Combination or otherwise.
12.3 Information Requirements.
In the event any vote of holders of Voting Stock is required for the
adoption or approval of any Business Combination, a proxy or information
statement describing the Business Combination and complying with the
requirements of the 1934 Act shall be mailed at a date determined by the
Disinterested Directors to all stockholders of this corporation whether or not
such statement is required under the 1934 Act. The statement shall contain any
recommendations as to the advisabi1ity of the Business Combination which the
Disinterested Directors, or any of them, may choose to state and, if deemed
advisable by the Disinterested Directors, an opinion of an investment banking
firm as to the fairness of the terms of such Business Combination. Such firm
shall be selected by the Disinterested Directors and be paid a fee for its
services by this corporation as approved by the Disinterested Directors.
12.4 Amendment.
No amendment to this Restated Certificate of Incorporation shall
amend, alter, change or repeal any of the provisions of Article 11 or of this
Article 12 unless such amendment shall receive the affirmative vote of not less
than fifty-one percent of the Voting Stock, excluding the Voting Stock of any
Interested Stockholder as defined in Section 12.1 of this Article 12.
-5-
<PAGE> 6
ARTICLE 13. VOTE OF STOCKHOLDERS OF EL PASO ENERGY
CORPORATION REQUIRED TO APPROVE CERTAIN ACTIONS
Any act or transaction by or involving this corporation that requires
for its adoption under the General Corporation Law of the State of Delaware or
this Restated Certificate of Incorporation the approval of the stockholders of
this corporation shall, pursuant to Section 251(g) of the General Corporation
Law of the State of Delaware, require, in addition, the approval of the
stockholders of El Paso Energy Corporation, a Delaware corporation, or any
successor thereto by merger, by the same vote that is required by the General
Corporation Law of the State of Delaware and/or the Restated Certificate of
Incorporation of this corporation.
IN WITNESS WHEREOF, the undersigned has executed this document and
affirms, under penalties of perjury, that the statements herein are true and
that this instrument is the act and deed of El Paso Natural Gas Company as of
this 3rd day of August 1998.
EL PASO NATURAL GAS COMPANY
/s/ H. Brent Austin
----------------------------------------
H. Brent Austin
Executive Vice President and Chief
Financial Executive Officer
Attest:
/s/ David L. Siddall
- --------------------------------------
David L. Siddall
Corporate Secretary
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<PAGE> 1
EXHIBIT 99.1
[EL PASO ENERGY LOGO] NEWS
- --------------------------------------------------------------------------------
El Paso Energy Corporation Contact: Norma F. Dunn, CPA
P.O. Box 2511 Vice President
Houston, Texas 77252-2511 Investor & Public Relations
Office: (713) 420-3750
Fax: (713) 420-4993
FOR IMMEDIATE RELEASE
EL PASO ENERGY CORPORATION
FINALIZES HOLDING COMPANY STRUCTURE
HOUSTON, TEXAS, AUGUST 3, 1998 -- El Paso Energy Corporation (NYSE:EPG)
announced today that effective August 1, 1998, it has finalized plans to create
a new parent holding company. The new parent company, El Paso Energy
Corporation, owns 100 percent of El Paso Natural Gas Company, the previous
publicly held company. El Paso Natural Gas Company began doing business under
the name El Paso Energy Corporation in April 1996.
This action conforms the legal structure of the company to the functional
organization it has employed for some time. The business operations of the
company will not change as a result of implementing the new legal structure,
although administrative and operational flexibility will be improved.
The reorganization was structured in a manner under Delaware law that did
not require action by El Paso Natural Gas Company shareholders, whose rights,
privileges and interests will remain the same with respect to the new parent
corporation. Existing El Paso Natural Gas Company common stock certificates
serve as evidence of ownership of the same number of shares in El Paso Energy
Corporation; an exchange of certificates is not required. The change to the
holding company structure was tax free to its shareholders. The company's
name, charter, By-laws, officers, and board of directors did not change as a
result of the reorganization. The new parent company will continue to be
traded with the ticker symbol "EPG" on the New York Stock Exchange.
-more-
<PAGE> 2
EL PASO ENERGY CORPORATION FINALIZES HOLDING COMPANY STRUCTURE
PAGE TWO
With over $9 billion in assets, El Paso Energy Corporation provides
energy solutions through five business units: Tennessee Gas Pipeline Company,
El Paso Natural Gas Company, El Paso Field Services Company, El Paso Energy
Marketing Company, and El Paso Energy International Company. The company owns
the nation's only integrated coast-to-coast natural gas pipeline system and has
operations in interstate natural gas transmission, gas gathering and
processing, energy marketing, and international infrastructure development.
Visit El Paso Energy's web site at www.epenergy.com.
# # #
Contacts:
Media Relations: Russ Roberts
(713) 420-5435
Investor Relations: Scott Vonderheide
(713) 420-4527
- --------------------------------------------------------------------------------
Some information included in this document may be forward looking and may
involve risks and uncertainties, including general economic and competitive
conditions that could significantly impact expected results. Reference should
be made to the Company's (and its affiliates') Securities and Exchange
Commission filings for important factors that may affect actual results.
