SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 14)*
CRYSTAL GAS STORAGE, INC. f/k/a CRYSTAL OIL COMPANY
---------------------------------------------------
(Name of Issuer)
Common Stock, $0.01 Par Value
-----------------------------
(Title of Class of Securities)
229241104
--------------
(CUSIP Number)
Stephen M. Vine, Esq.
Patrick J. Dooley, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
(212) 872-1000
-------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 15, 1999
------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
Note. Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the Notes).
Continued on following page(s)
Page 1 of 29 Pages
Exhibit Index: Page 10
<PAGE>
Page 2 of 29 Pages
SCHEDULE 13D
CUSIP No. 229241104
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Soros Fund Management LLC
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [X]
3 SEC Use Only
4 Source of Funds*
Not applicable
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 1,637,001
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 1,637,001
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,637,001
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
60.70%
14 Type of Reporting Person*
OO; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 3 of 29 Pages
SCHEDULE 13D
CUSIP No. 229241104
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
George Soros (in the capacity described herein)
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
Not applicable
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 80,647
Shares
Beneficially 8 Shared Voting Power
Owned By 1,637,001
Each
Reporting 9 Sole Dispositive Power
Person 80,647
With
10 Shared Dispositive Power
1,637,001
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,717,648
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* [ ]
13 Percent of Class Represented By Amount in Row (11)
63.69%
14 Type of Reporting Person*
IA; IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 4 of 29 Pages
SCHEDULE 13D
CUSIP No. 229241104
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Stanley F. Druckenmiller (in the capacity described herein)
2 Check the Appropriate Box If a Member of a Group*
a. [ ]
b. [x]
3 SEC Use Only
4 Source of Funds*
Not applicable
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 1,637,001
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
1,637,001
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,637,001
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
60.70%
14 Type of Reporting Person*
IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 5 of 29 Pages
This Amendment No. 14 to Schedule 13D relates to shares of
Common Stock, $0.01 par value per share (the "Shares"), of Crystal Gas Storage,
Inc., previously known as Crystal Oil Company (the "Issuer"). This Amendment No.
14 supplementally amends the initial statement on Schedule 13D dated January 31,
1986 and all amendments thereto (collectively, the "Initial Statement") filed by
the Reporting Persons (as defined herein). This Amendment No. 14 is being filed
by the Reporting Persons to report that certain of the Reporting Persons have
entered into a Shareholders Agreement (as defined below) in connection with the
announced Merger (as defined below) of the Issuer and El Paso Energy Acquisition
Co., a Delaware corporation ("El Paso Acquisition"), which is a wholly-owned
subsidiary of El Paso Energy Corporation, a Delaware corporation ("El Paso
Energy"). Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Initial Statement. The Initial Statement is
supplementally amended as follows.
Item 2. Identity and Background.
This Statement is being filed on behalf of each of the
following persons (collectively, the "Reporting Persons"):
(i) Soros Fund Management LLC ("SFM LLC");
(ii) Mr. George Soros ("Mr. Soros"); and
(iii) Mr. Stanley F. Druckenmiller ("Mr. Druckenmiller").
This Statement relates to Shares held for the accounts of
Quantum Partners LDC ("Quantum Partners"), Quantum Fund N.V. ("Quantum Fund")
and Mr. Soros.
Updated information concerning the Managing Directors of SFM
LLC is attached hereto as Annex A.
Item 4. Purpose of Transaction.
Except as set forth in Item 6 and incorporated herein by
reference, neither Quantum Partners, Quantum Fund, the Reporting Persons nor, to
the best of their knowledge, any of the other individuals identified in response
to Item 2, has any plans or proposals that relate to or would result in any of
the transactions described in subparagraphs (a) through (j) of Item 4 of
Schedule 13D.
Mr. Gary Gladstein, a Managing Director of SFM LLC, and Mr.
Neal Moszkowski, an employee of SFM LLC, are Directors of the Issuer and in such
capacities may have an influence on the corporate activities of the Issuer,
including as may relate to transactions described in subparagraphs (a) through
(j) of Item 4 of Schedule 13D.
Notwithstanding the foregoing, the Reporting Persons reserve
the right to acquire, or cause to be acquired, additional securities of the
Issuer, to dispose of, or cause to be disposed, such securities at any time or
to formulate other purposes, plans or proposals regarding the Issuer or any of
its securities, to the extent deemed advisable in light of general investment
and trading policies of the Reporting Persons and/or SFM Clients, market
conditions or other factors.
Item 5. Interest in Securities of the Issuer.
<PAGE>
Page 6 of 29 Pages
(a) (i) Each of SFM LLC and Mr. Druckenmiller may be deemed
the beneficial owner of 1,637,001 Shares (approximately 60.70% of the total
number of Shares outstanding assuming the conversion of the convertible
securities of the Issuer held for the account of Quantum Partners). This number
includes (1) 183,346 Shares held for the account of Quantum Fund and (2) the
following securities held for the account of Quantum Partners: (A) 1,444,720
Shares and (B) 3,971,260 shares of Preferred Stock (which may be converted into
8,935 Shares).
(ii) Mr. Soros may be deemed the beneficial owner of
1,717,648 Shares (approximately 63.69% of the total number of Shares outstanding
assuming the conversion of all of the convertible securities of the Issuer held
for the account of Quantum Partners). This number includes (1) 80,647 Shares
held directly for the account of Mr. Soros; (2) 183,346 Shares held for the
account of Quantum Fund; and (3) 1,453,655 Shares held for the account of
Quantum Partners (assuming the conversion of all of the convertible securities
of the Issuer held by Quantum Partners, as described in (a)(i) above).
(b) (i) Pursuant to the terms of the contract between Quantum
Fund and SFM LLC, SFM LLC may be deemed to have sole power to direct the voting
and disposition of the 1,637,001 Shares held for the accounts of Quantum Fund
and Quantum Partners (assuming conversion of all of the convertible securities
held for the account of Quantum Partners).
(ii) Pursuant to the terms of the contract between
Quantum Fund and SFM LLC and the position held by Mr. Soros with SFM LLC, Mr.
Soros may be deemed to have shared power to direct the voting and disposition of
the 1,637,001 Shares held for the account of Quantum Fund and Quantum Partners
(assuming conversion of all of the convertible securities held for the account
of Quantum Partners).
(iii) Mr. Soros has the sole power to vote and to dispose
of the 80,647 Shares held for his personal account.
(iv) Pursuant to the terms of the contract between
Quantum Fund and SFM LLC and the position held by Mr. Druckenmiller with SFM
LLC, Mr. Druckenmiller may be deemed to have shared power to direct the voting
and disposition of the 1,637,001 Shares held for the account of Quantum Fund and
Quantum Partners (assuming conversion of all of the convertible securities owned
by Quantum Partners).
(c) Except as disclosed in Item 6 hereof, which is
incorporated by reference in this Item 5, there have been no transactions
effected with respect to the Shares since August 19, 1999 (60 days prior to the
date hereof) by Quantum Partners, Quantum Fund or by any of the Reporting
Persons.
(d) (i) The shareholders of Quantum Partners, including
Quantum Fund, have the right to participate in the receipt of dividends from, or
proceeds from the sale of, securities, including the Shares, held for the
account of Quantum Partners in accordance with their ownership interests in
Quantum Partners.
(ii) The shareholders of Quantum Fund have the right to
participate in the receipt of dividends from, or proceeds from the sale of,
securities, including the Shares, held for the account of Quantum Fund in
accordance with their ownership interests in Quantum Fund.
(iii) Mr. Soros has the sole right to participate in the
receipt of dividends from, or proceeds from the sale of securities, including
the Shares, held for his account.
(e) Not applicable.
<PAGE>
Page 7 of 29 Pages
Each of SFM LLC and Mr. Druckenmiller expressly disclaims
beneficial ownership of any Shares held directly for the account of Mr. Soros.
Item 6. Contracts, Arrangements, Understandings in Relationship with
Respect to Securities of the Issuer.
On October 15, 1999, each of SFM LLC and Mr. Soros entered
into separate Shareholders Agreements (each, a "Shareholders Agreement") with El
Paso Energy and El Paso Acquisition in connection with the merger of the Issuer
and El Paso Acquisition (the "Merger") pursuant to the Agreement and Plan of
Merger (the "Merger Agreement") entered into among the Issuer, El Paso Energy
and El Paso Acquisition. A copy of each Shareholders Agreement is attached
hereto as Exhibit D and Exhibit E and each is incorporated herein by reference
in response to this Item 6.
Pursuant to Section 1(a) of each Shareholders Agreement, each
of SFM LLC and Mr. Soros have agreed to (or to cause to, in case such person is
a beneficial owner but not the stockholder of record) (i) vote all Shares and
other Voting Securities (as defined therein) in favor of the Merger; (ii) not
vote any Shares and Voting Securities in favor of any action or agreement which
would result in a breach in any material respect of any covenant, representation
or obligation of the Issuer under the Merger Agreement and (iii) vote all Shares
and Voting Securities against any action or agreement which would interfere or
impede the Merger.
Pursuant to Section 1(b) of each Shareholders Agreement, each
of SFM LLC and Mr. Soros appointed, on their behalf, designees of El Paso
Acquisition as attorneys, agents and proxies to vote the Shares and Voting
Securities in favor of the Merger and other transactions contemplated by the
Merger Agreement as otherwise contemplated by Section 1(b) thereof.
Pursuant to Section 3(a) of each Shareholders Agreement, each
of SFM LLC and Mr. Soros agreed for the term of each Shareholders Agreement not
to sell, sell short, transfer, pledge or assign the Shares and Voting Securities
subject to the Shareholders Agreement.
Each Shareholders Agreement shall terminate and expire on the
earliest of (1) the Effective Time of the Merger (as defined in the Merger
Agreement), (2) the time of termination of the Merger Agreement pursuant to
Section 7.1 thereof, (3) March 31, 2000 or (4) upon the amendment or waiver of
any provision of the Merger Agreement that would have any adverse effect on SFM
LLC or Mr. Soros, as the case may be.
The foregoing description of the Shareholders Agreement does
not purport to be complete and is qualified in its entirety by reference to each
of the Shareholders Agreement attached as Exhibit D and Exhibit E hereto.
Except as disclosed above, the Reporting Persons, Quantum
Fund, Quantum Partners and other SFM Clients do not have any contracts,
arrangements, understandings or relationships with respect to any securities of
the Issuer.
Item 7. Material to be Filed as Exhibits.
D. Shareholder Agreement dated October 15, 1999 by and
among SFM LLC, El Paso Corporation and El Paso
Acquisition.
E. Shareholder Agreement dated October 15, 1999 by and
among Mr. Soros, El Paso Corporation and El Paso
Acquisition.
<PAGE>
Page 8 of 29 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: October 18, 1999 SOROS FUND MANAGEMENT LLC
By: /S/ MICHAEL C. NEUS
------------------------------------
Michael C. Neus
Assistant General Counsel
GEORGE SOROS
By: /S/ MICHAEL C. NEUS
-------------------------------------
Michael C. Neus
Attorney-in-Fact
STANLEY F. DRUCKENMILLER
By: /S/ MICHAEL C. NEUS
-------------------------------------
Michael C. Neus
Attorney-in-Fact
<PAGE>
Page 9 of 29 Pages
ANNEX A
The following is a list of all of the persons (other than
Stanley Druckenmiller) who serve as Managing Directors of SFM LLC, as well as
the number of Shares, if any, held for the account of each:
Number of Shares
Scott K. H. Bessent
Walter Burlock
L. Kevin Dann
Gary Gladstein............................. 1,850
Duncan Hennes
Ron Hiram
Sheldon Kasowitz
David N. Kowitz
Carson Levit
Alexander C. McAree
Steven Okin
Frank Sica
Sean C. Warren
Each of the above-listed persons is a United States citizen whose principal
occupation is serving as Managing Director of SFM LLC, and each has a business
address c/o Soros Fund Management LLC, 888 Seventh Avenue, 33rd Floor, New York,
New York 10106.
To the best of the Reporting Persons' knowledge:
(a) The consideration used for purchasing the Shares reported above was
the personal funds of each of the Managing Directors who purchased such
Shares.
(b) All of the Shares reported above were acquired for investment
purposes.
(c) Each of the Managing Directors (i) holds the Shares reported above
as being held for his or her own account, (ii) has the sole power to
vote or dispose of such Shares and has the right to receive the
dividends from, or proceeds from the sale of, the Shares, and (iii) has
not effected any transactions in the Shares since August 19, 1999 (60
days prior to the date hereof).
(d) Gary Gladstein serves as a Director of the Issuer. Except as
disclosed in the previous sentence, none of the Managing Directors has
any contracts, arrangements, understandings or relationships with
respect to the Shares.
<PAGE>
Page 10 of 29 Pages
EXHIBIT INDEX
Page No.
--------
D. Shareholders Agreement dated October 15, 1999 by and
among Soros Fund Management LLC, El Paso Energy Corporation
and El Paso Energy Acquisition Co.......................... 11
E. Shareholders Agreement dated October 15, 1999 by and
among George Soros, El Paso Energy Corporation and El Paso
Energy Acquisition Co..................................... 20
Page 11 of 29 Pages
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Agreement") dated as of October 15, 1999
among the persons and entities listed on Schedule 1 hereto (each, a "Holder"
and, collectively, the "Holders"), El Paso Energy Corporation, a Delaware
corporation ("Parent"), and El Paso Energy Acquisition Co., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"). Parent, Sub and
Crystal Gas Storage, Inc., a Louisiana corporation (the "Company"), propose to
enter into an Agreement and Plan of Merger (the "Merger Agreement" which term
for purposes of this Agreement shall not include any amendment or waiver of any
provision of the Merger Agreement that would have any adverse effect on a Holder
without the prior consent of such Holder) on the date of this Agreement
providing for the merger of the Company and Sub (as contemplated by the terms of
the Merger Agreement, the "Merger").
Each Holder has the right to vote the number of shares of common stock,
par value $.01 per share, ("Company Common Stock"), or other securities (the
"Voting Securities"), listed opposite the name of such Holder on Schedule 1.
Parent and Sub have required, as a condition to entering into the Merger
Agreement, that the Holders enter into this Agreement. The Holders believe that
it is in the best interest of the Company and its stockholders to induce Parent
and Sub to enter into the Merger Agreement and, therefore, the Holders are
willing to enter into this Agreement.
Accordingly, in consideration of the mutual covenants and agreements
set forth herein and such other valuable consideration the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Voting of Equity Securities.
---------------------------
(a) Each Holder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the
stockholders of the Company, however called, and in any action
by written consent of the stockholders of the Company, he
shall (or shall cause the stockholder of record, if the Holder
is the beneficial owner but not the stockholder of record of
Voting Securities) at the written direction of the Parent (x)
vote all Voting Securities of such Holder in favor of the
Merger; (y) not vote any Voting Securities in favor of any
action or agreement which would result in a breach in any
material respect of any covenant, representation or warranty
or any other obligation of the Company under the Merger
Agreement; and (z) vote all Voting Securities of such Holder
against any action or agreement which would impede, interfere
with or attempt to discourage the Merger, including, but not
limited to: (i) any takeover proposal (other than the Merger)
involving the Company or any of its subsidiaries; (ii) any
<PAGE>
Page 12 of 29 pages
change in the management or board of directors of the Company,
except as otherwise agreed to in writing by Sub; (iii) any
material change in the present capitalization or dividend
policy of the Company; or (iv) any other material change in
the Company's corporate structure or business.
(b) Without limiting the generality of the foregoing,
each Holder hereby irrevocably appoints designees of Sub, the
attorneys, agents and proxies, with full power of
substitution, for the undersigned and in the name, place and
stead of the undersigned to vote the Voting Securities in
favor of the Merger and other transactions contemplated by the
Merger Agreement, against any transaction in clause (z) of
Section 1(a), and otherwise as contemplated by Section 1(a),
including the execution of written consents, with respect to
all Voting Securities of the Company which the undersigned is
or may be entitled to vote at any meeting of the Company held
after the date hereof, whether annual or special and whether
or not an adjourned meeting, or in respect of which the
undersigned is or may be entitled to act by written consent.
This proxy is coupled with an interest and, except as provided
below, shall be irrevocable and binding on any successor in
interest of the undersigned. This proxy shall operate to
revoke any prior proxy as to Voting Securities heretofore
granted by the Holder. Such proxy shall terminate upon the
termination of this Agreement at the Expiration Date.
2. Term.
-----
This Agreement shall terminate and expire on the
earliest of (1) the Effective Time of the Merger (as defined
in the Merger Agreement), (2) the time of termination of the
Merger Agreement pursuant to Section 7.1 thereof, (3) March
31, 2000 or (4) upon the amendment or waiver of any provision
of the Merger Agreement that would have any adverse effect on
Holder (such earliest date and time being referred to in this
Agreement as the "Expiration Date").
3. Covenants of the Holders.
-------------------------
(a) During the period from the date of this Agreement
until the Expiration Date, except in accordance with the
provisions of this Agreement, each Holder severally and not
jointly agrees that he will not:
(i) sell, sell short, transfer, pledge,
hypothecate, assign or otherwise dispose of, or enter
into any contract, option, hedging arrangement or
other arrangement or understanding with respect to
the sale, transfer, pledge, hypothecation, assignment
or other disposition of, any Voting Securities;
2
<PAGE>
Page 13 of 29 Pages
(ii) deposit any Voting Securities into a
voting trust, or grant any proxies or enter into a
voting agreement with respect to any Voting
Securities; or
(iii) initiate, solicit or knowingly
encourage, directly or indirectly, any inquiries or
the making or implementation of any proposal that
constitutes, or may reasonably be expected to lead
to, any takeover proposal (as defined in the Merger
Agreement) or enter into discussions or negotiate
with any person or entity in furtherance of such
inquiries or to obtain a takeover proposal, or agree
to or endorse any takeover proposal.
(b) Any additional shares of Company Common Stock,
warrants, options or other securities or rights exercisable
for, exchangeable for or convertible into shares of Company
Common Stock (collectively, "Equity Securities") acquired by
any Holder will become subject to this Agreement and, to the
extent entitled and permitted to vote with respect to the
matters contemplated in Section 1(a), shall, for all purposes
of this Agreement, be considered Voting Securities.
4. Representations and Warranties of each Holder. Each Holder
------------------------------------------------
severally and not jointly represents and warrants to Parent and Sub as follows:
(a) (i) such Holder has the right to vote the Voting
Securities, listed opposite the name of such Holder on
Schedule 1, (ii) such Voting Securities are, except as noted
on Schedule 1, the only Equity Securities owned of record or
beneficially by such Holder or in which such Holder has any
interest or which such Holder has the right to vote, as the
case may be, and (iii) such Holder does not have any option or
other right to acquire any other Equity Securities;
(b) such Holder has the right, power and authority to
execute and deliver this Agreement and to perform his
obligations hereunder; other than in connection with or in
compliance with the disclosure provisions of the Securities
Exchange Act of 1934, as amended, and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and any equivalent state laws the execution, delivery
and performance of this Agreement by such Holder will not
require the consent of or filing with any other person and
will not constitute a violation of, conflict with or result in
a default under (i) any contract, understanding or arrangement
to which such Holder is a party or by which such Holder is
bound, (ii) any judgment, decree or order applicable to such
Holder, or (iii) any law, rule or regulation of any
governmental body applicable to such Holder; and, assuming
3
<PAGE>
Page 14 of 29 Pages
this Agreement is the valid and binding obligation of Parent
and Sub, this Agreement constitutes a valid and binding
agreement on the part of such Holder, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity;
(d) except as set forth on Schedule 1, none of the
Voting Securities are subject to any voting trust or other
agreement or arrangement (except as created by this Agreement)
with respect to the voting or disposition of the Voting
Securities; and there are no outstanding options, warrants or
rights to purchase or acquire, or agreements (except for this
Agreement) relating to, such Voting Securities;
(f) no person is required to withhold any amounts
pursuant to Section 1445 of the Code from any payments of
Merger Consideration (as defined in the Merger Agreement) made
to a Holder pursuant to the Merger ("1445 Withholding").
5. Effect of Representations, Warranties and Covenants of
--------------------------------------------------------------
Holders. The representations, warranties and covenants of the Holders shall be
- -------
several and not joint. The liability of each individual Holder shall extend only
to the representations, warranties and covenants of such Holder and not to any
representation, warranty or covenant of any other Holder, and each Holder,
severally, and not jointly, agrees to indemnify and hold harmless Parent and Sub
from and against any liabilities, losses, obligations, costs or expenses
(including reasonable attorneys fees), excluding consequential and punitive
damages, which are finally judicially determined to have arisen out of, resulted
from or been related to any breach by such Holder of its representations,
warranties or covenants.
6. Representations, Warranties and Covenants of Parent and Sub.
-------------------------------------------------------------
Each of Parent and Sub hereby represents and warrants to each Holder that: it is
a corporation duly formed under the laws of the state of its incorporation; it
has all requisite corporate power and authority to enter into and perform all
its obligations under this Agreement; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on its part; this Agreement
has been duly executed and delivered by it; and this Agreement constitutes a
valid and binding agreement on its part, enforceable in accordance with its
terms, subject to applicable bankruptcy insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equity. Parent and
Sub shall not make, or permit to be made, any 1445 Withholding.
7. Adjustments. In the event of any increase or decrease or other
-----------
change in the Voting Securities by reason of stock dividends, split-up,
4
<PAGE>
Page 15 of 29 Pages
recapitalizations, combinations, exchanges of shares or the like, the number of
Voting Securities subject to this Agreement shall be adjusted appropriately.
8. Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the law of the State of New York applicable to
agreements entered into and to be performed wholly within such state.
9. Further Assurances. Each party hereto shall, to the extent not
------------------
entailing other than de minimis expense, perform such further acts and execute
such further documents as may reasonably be required to carry out the provisions
of this Agreement. Without limiting the generality of the foregoing, the Holder,
to the extent it "controls" the Company, according to the HSR Act and the rules
and regulations promulgated by the Federal Trade Commission to implement the HSR
Act, shall, to the extent required by the HSR Act, file a premerger notification
and report form under the HSR Act with respect to the Merger as promptly as
reasonably possible following execution and delivery of this Agreement and shall
use reasonable efforts to promptly respond to any request for additional
information pursuant to Section (e)(1) of the HSR Act.
10. Assignment. This Agreement may not be assigned by any party
----------
hereto.
11. Remedies. The parties agree that legal remedies for breach of
--------
this Agreement will be inadequate and that this Agreement may be enforced by
Parent and Sub by injunctive or other equitable relief.
12. Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing (except as otherwise provided herein)
and shall be deemed duly given if delivered in person, by confirmed facsimile
transmission or by overnight courier service, addressed as follows:
5
<PAGE>
Page 16 of 29 Pages
To Parent or Sub:
El Paso Energy Corporation
1001 Louisiana Street
Houston, Texas 77002
Attention: President
Facsimile: (713) 420-6969
With a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Attention: Gary P. Cooperstein, Esq.
Facsimile: (212) 859-4000
To each Holder:
To Holder:
c/o Soros Fund Management LLC
888 Seventh Avenue
New York, New York 10106
Attention: Michael C. Neus, Esq.
Facsimile: (212) 664-0544
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Patrick J. Dooley, Esq.
Facsimile: (212) 872-1002
13. Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
6
<PAGE>
Page 17 of 29 Pages
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
14. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
15. Binding Effect; Benefits. This Agreement shall survive the
--------------------------
death or incapacity of any Holder and shall inure to the benefit of and shall be
binding upon the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended to or shall confer on any person other than
the parties hereto and their respective heirs, legal representatives and
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
16. No Agency. Nothing herein shall be deemed create any agency or
---------
partnership relationship between the parties hereto.
7
<PAGE>
Page 18 of 29 Pages
IN WITNESS WHEREOF, the Holders, Parent and Sub have entered into this
Agreement as of the date first written above.
EL PASO ENERGY CORPORATION
By: /S/ EL PASO ENERGY CORPORATION
______________________________________________
Name:
Title:
EL PASO ENERGY ACQUISITION CO.
By: /S/ EL PASO ENERGY ACUISITION CO.
______________________________________________
Name:
Title:
HOLDER:
SOROS FUND MANAGEMENT LLC
By: /S/ GARY GLADSTEIN
______________________________________________
Name: Gary Gladstein
Title: Managing Director
8
<PAGE>
Page 19 of 29 Pages
Schedule 1
----------
Soros Fund Management LLC is investment advisor to Quantum Fund N.V. and Quantum
Partners LDC, and as such exercises investment and voting discretion with
respect to the Voting Securities held by such entities. Quantum Fund N.V. holds
183,346 Common shares, and Quantum Partners LDC holds 1,444,720 Common shares
and 3,971,260 $.06 Convertible Voting Preferred Shares.
Page 20 of 29 Pages
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Agreement") dated as of October 15, 1999
among the persons and entities listed on Schedule 1 hereto (each, a "Holder"
and, collectively, the "Holders"), El Paso Energy Corporation, a Delaware
corporation ("Parent"), and El Paso Energy Acquisition Co., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"). Parent, Sub and
Crystal Gas Storage, Inc., a Louisiana corporation (the "Company"), propose to
enter into an Agreement and Plan of Merger (the "Merger Agreement" which term
for purposes of this Agreement shall not include any amendment or waiver of any
provision of the Merger Agreement that would have any adverse effect on a Holder
without the prior consent of such Holder) on the date of this Agreement
providing for the merger of the Company and Sub (as contemplated by the terms of
the Merger Agreement, the "Merger").
Each Holder has the right to vote the number of shares of common stock,
par value $.01 per share, ("Company Common Stock"), or other securities (the
"Voting Securities"), listed opposite the name of such Holder on Schedule 1.
Parent and Sub have required, as a condition to entering into the Merger
Agreement, that the Holders enter into this Agreement. The Holders believe that
it is in the best interest of the Company and its stockholders to induce Parent
and Sub to enter into the Merger Agreement and, therefore, the Holders are
willing to enter into this Agreement.
Accordingly, in consideration of the mutual covenants and agreements
set forth herein and such other valuable consideration the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Voting of Equity Securities.
---------------------------
(a) Each Holder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the
stockholders of the Company, however called, and in any action
by written consent of the stockholders of the Company, he
shall (or shall cause the stockholder of record, if the Holder
is the beneficial owner but not the stockholder of record of
Voting Securities) at the written direction of the Parent (x)
vote all Voting Securities of such Holder in favor of the
Merger; (y) not vote any Voting Securities in favor of any
action or agreement which would result in a breach in any
material respect of any covenant, representation or warranty
or any other obligation of the Company under the Merger
Agreement; and (z) vote all Voting Securities of such Holder
against any action or agreement which would impede, interfere
with or attempt to discourage the Merger, including, but not
limited to: (i) any takeover proposal (other than the Merger)
involving the Company or any of its subsidiaries; (ii) any
<PAGE>
Page 21 of 29 Pages
change in the management or board of directors of the Company,
except as otherwise agreed to in writing by Sub; (iii) any
material change in the present capitalization or dividend
policy of the Company; or (iv) any other material change in
the Company's corporate structure or business.
(b) Without limiting the generality of the foregoing,
each Holder hereby irrevocably appoints designees of Sub, the
attorneys, agents and proxies, with full power of
substitution, for the undersigned and in the name, place and
stead of the undersigned to vote the Voting Securities in
favor of the Merger and other transactions contemplated by the
Merger Agreement, against any transaction in clause (z) of
Section 1(a), and otherwise as contemplated by Section 1(a),
including the execution of written consents, with respect to
all Voting Securities of the Company which the undersigned is
or may be entitled to vote at any meeting of the Company held
after the date hereof, whether annual or special and whether
or not an adjourned meeting, or in respect of which the
undersigned is or may be entitled to act by written consent.
This proxy is coupled with an interest and, except as provided
below, shall be irrevocable and binding on any successor in
interest of the undersigned. This proxy shall operate to
revoke any prior proxy as to Voting Securities heretofore
granted by the Holder. Such proxy shall terminate upon the
termination of this Agreement at the Expiration Date.
2. Term.
----
This Agreement shall terminate and expire on the
earliest of (1) the Effective Time of the Merger (as defined
in the Merger Agreement), (2) the time of termination of the
Merger Agreement pursuant to Section 7.1 thereof, (3) March
31, 2000 or (4) upon the amendment or waiver of any provision
of the Merger Agreement that would have any adverse effect on
Holder (such earliest date and time being referred to in this
Agreement as the "Expiration Date").
3. Covenants of the Holders.
------------------------
(a) During the period from the date of this Agreement
until the Expiration Date, except in accordance with the
provisions of this Agreement, each Holder severally and not
jointly agrees that he will not:
-2-
<PAGE>
Page 22 of 29 Pages
(i) sell, sell short, transfer, pledge,
hypothecate, assign or otherwise dispose of, or enter
into any contract, option, hedging arrangement or
other arrangement or understanding with respect to
the sale, transfer, pledge, hypothecation, assignment
or other disposition of, any Voting Securities;
(ii) deposit any Voting Securities into a
voting trust, or grant any proxies or enter into a
voting agreement with respect to any Voting
Securities; or
(iii) initiate, solicit or knowingly
encourage, directly or indirectly, any inquiries or
the making or implementation of any proposal that
constitutes, or may reasonably be expected to lead
to, any takeover proposal (as defined in the Merger
Agreement) or enter into discussions or negotiate
with any person or entity in furtherance of such
inquiries or to obtain a takeover proposal, or agree
to or endorse any takeover proposal.
(b) Any additional shares of Company Common Stock,
warrants, options or other securities or rights exercisable
for, exchangeable for or convertible into shares of Company
Common Stock (collectively, "Equity Securities") acquired by
any Holder will become subject to this Agreement and, to the
extent entitled and permitted to vote with respect to the
matters contemplated in Section 1(a), shall, for all purposes
of this Agreement, be considered Voting Securities.
4. Representations and Warranties of each Holder. Each Holder
------------------------------------------------
severally and not jointly represents and warrants to Parent and Sub as follows:
(a) (i) such Holder has the right to vote the Voting
Securities, listed opposite the name of such Holder on
Schedule 1, (ii) such Voting Securities are, except as noted
on Schedule 1, the only Equity Securities owned of record or
beneficially by such Holder or in which such Holder has any
interest or which such Holder has the right to vote, as the
case may be, and (iii) such Holder does not have any option or
other right to acquire any other Equity Securities;
-3-
<PAGE>
Page 23 of 29 Pages
(b) such Holder has the right, power and authority to
execute and deliver this Agreement and to perform his
obligations hereunder; other than in connection with or in
compliance with the disclosure provisions of the Securities
Exchange Act of 1934, as amended, and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and any equivalent state laws the execution, delivery
and performance of this Agreement by such Holder will not
require the consent of or filing with any other person and
will not constitute a violation of, conflict with or result in
a default under (i) any contract, understanding or arrangement
to which such Holder is a party or by which such Holder is
bound, (ii) any judgment, decree or order applicable to such
Holder, or (iii) any law, rule or regulation of any
governmental body applicable to such Holder; and, assuming
this Agreement is the valid and binding obligation of Parent
and Sub, this Agreement constitutes a valid and binding
agreement on the part of such Holder, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity;
(d) except as set forth on Schedule 1, none of the
Voting Securities are subject to any voting trust or other
agreement or arrangement (except as created by this Agreement)
with respect to the voting or disposition of the Voting
Securities; and there are no outstanding options, warrants or
rights to purchase or acquire, or agreements (except for this
Agreement) relating to, such Voting Securities;
(f) no person is required to withhold any amounts
pursuant to Section 1445 of the Code from any payments of
Merger Consideration (as defined in the Merger Agreement) made
to a Holder pursuant to the Merger ("1445 Withholding").
5. Effect of Representations, Warranties and Covenants of
--------------------------------------------------------------
Holders. The representations, warranties and covenants of the Holders shall be
- -------
several and not joint. The liability of each individual Holder shall extend only
to the representations, warranties and covenants of such Holder and not to any
representation, warranty or covenant of any other Holder, and each Holder,
severally, and not jointly, agrees to indemnify and hold harmless Parent and Sub
from and against any liabilities, losses, obligations, costs or expenses
(including reasonable attorneys fees), excluding consequential and punitive
damages, which are finally judicially determined to have arisen out of, resulted
from or been related to any breach by such Holder of its representations,
warranties or covenants.
6. Representations, Warranties and Covenants of Parent and Sub.
-------------------------------------------------------------
Each of Parent and Sub hereby represents and warrants to each Holder that: it is
a corporation duly formed under the laws of the state of its incorporation; it
has all requisite corporate power and authority to enter into and perform all
its obligations under this Agreement; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on its part; this Agreement
-4-
<PAGE>
Page 24 of 29 Pages
has been duly executed and delivered by it; and this Agreement constitutes a
valid and binding agreement on its part, enforceable in accordance with its
terms, subject to applicable bankruptcy insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equity. Parent and
Sub shall not make, or permit to be made, any 1445 Withholding.
7. Adjustments. In the event of any increase or decrease or other
-----------
change in the Voting Securities by reason of stock dividends, split-up,
recapitalizations, combinations, exchanges of shares or the like, the number of
Voting Securities subject to this Agreement shall be adjusted appropriately.
8. Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the law of the State of New York applicable to
agreements entered into and to be performed wholly within such state.
9. Further Assurances. Each party hereto shall, to the extent not
------------------
entailing other than de minimis expense, perform such further acts and execute
such further documents as may reasonably be required to carry out the provisions
of this Agreement. Without limiting the generality of the foregoing, the Holder,
to the extent it "controls" the Company, according to the HSR Act and the rules
and regulations promulgated by the Federal Trade Commission to implement the HSR
Act, shall, to the extent required by the HSR Act, file a premerger notification
and report form under the HSR Act with respect to the Merger as promptly as
reasonably possible following execution and delivery of this Agreement and shall
use reasonable efforts to promptly respond to any request for additional
information pursuant to Section (e)(1) of the HSR Act.
-5-
<PAGE>
Page 25 of 29 Pages
10. Assignment. This Agreement may not be assigned by any party
----------
hereto.
11. Remedies. The parties agree that legal remedies for breach of
--------
this Agreement will be inadequate and that this Agreement may be enforced by
Parent and Sub by injunctive or other equitable relief.
12. Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing (except as otherwise provided herein)
and shall be deemed duly given if delivered in person, by confirmed facsimile
transmission or by overnight courier service, addressed as follows:
-6-
<PAGE>
Page 26 of 29 Pages
To Parent or Sub:
El Paso Energy Corporation
1001 Louisiana Street
Houston, Texas 77002
Attention: President
Facsimile: (713) 420-6969
With a copy to:
Fried, Frank, Harris, Shriver
& Jacobson
One New York Plaza
New York, New York 10004
Attention: Gary P. Cooperstein, Esq.
Facsimile: (212) 859-4000
To each Holder:
To Holder:
c/o Soros Fund Management LLC
888 Seventh Avenue
New York, New York 10106
Attention: Michael C. Neus, Esq.
Facsimile: (212) 664-0544
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Patrick J. Dooley, Esq.
Facsimile: (212) 872-1002
13. Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
-7-
<PAGE>
Page 27 of 29 Pages
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
14. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
15. Binding Effect; Benefits. This Agreement shall survive the
--------------------------
death or incapacity of any Holder and shall inure to the benefit of and shall be
binding upon the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended to or shall confer on any person other than
the parties hereto and their respective heirs, legal representatives and
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
16. No Agency. Nothing herein shall be deemed create any agency or
---------
partnership relationship between the parties hereto.
- 8 -
<PAGE>
Page 28 of 29 Pages
IN WITNESS WHEREOF, the Holders, Parent and Sub have entered into this
Agreement as of the date first written above.
EL PASO ENERGY CORPORATION
By: /S/ EL PASO ENERGY CORPORATION
______________________________________________
Name:
Title:
EL PASO ENERGY ACQUISITION CO.
By: /S/ EL PASO ENERGY ACQUISITION CO.
______________________________________________
Name:
Title:
HOLDER:
GEORGE SOROS
By: /S/ GARY GLADSTEIN
______________________________________________
Name: Gary Gladstein
Title: Attorney in Fact
- 9 -
<PAGE>
Page 29 of 29 Pages
Schedule 1
----------
George Soros -- 80,647 Common Shares
