SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
EL PASO ENERGY CORPORATION
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(Name of Issuer)
Common Stock, par value $3.00 per share
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(Title of Class of Securities)
283905107
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(CUSIP Number)
William A. Smith, Esq.
Sonat Inc.
AmSouth-Sonat Tower
Birmingham, Alabama 35203
(205) 325-3800
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With a copy to:
Seth A. Kaplan, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, N.Y. 10019
(212) 403-1000
March 13, 1999
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(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 which 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: / /
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CUSIP No.
283905107 SCHEDULE 13D Page 2 of 15 Pages
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1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Sonat Inc.
63-0647939
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2 Check the Appropriate Box if a Member of a Group (See Instructions)
(a) / /
(b) / /
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3 SEC Use Only
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4 Sources of Funds (See Instructions)
WC; OO
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5 Check Box if Disclosure of Legal Proceedings is Required Pursuant / /
to Item 2(d) or 2(e)
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6 Citizenship or Place of Organization
Delaware
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7 Sole Voting Power
Number 24,349,638
of
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Shares 8 Shared Voting Power
Beneficially -0-
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Owned By 9 Sole Dispositive Power
Each 24,349,638
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Reporting 10 Shared Dispositive Power
Person -0-
With
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
24,349,638
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12 Check Box if the Aggregate Amount in Row (11) Excludes Certain / /
Shares (See Instructions)
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13 Percent of Class Represented by Amount in Row (11)
16.6%
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14 Type of Reporting Person (See Instructions)
HC, CO
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ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D (this "Schedule 13D") relates to the
common stock, par value $3.00 per share ("El Paso Common Stock"), of El Paso
Energy Corporation, a Delaware corporation ("El Paso"). The principal executive
offices of El Paso are located at the El Paso Energy Building, 1001 Louisiana
Street, Houston, Texas 77002.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is filed by Sonat Inc., a Delaware corporation
("Sonat"). Sonat is a diversified energy company engaged in exploration and
production of oil and natural gas, interstate transmission of natural gas, and
energy services. Sonat's principal executive offices are located at the
AmSouth-Sonat Tower, Birmingham, Alabama 35203.
Each executive officer and each director of Sonat is a citizen of
the United States. The name, business address and present principal occupation
of each executive officer and director of Sonat are set forth in Annex I to this
Schedule 13D, which is incorporated herein by reference.
During the last five years, neither Sonat nor, to the best knowledge
of Sonat, any of the persons listed on Annex I hereto, (i) has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) has been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction as a result of which Sonat or such person was or is
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4 hereof, Sonat and El Paso have
entered into a Stock Option Agreement, dated as of March 13, 1999 (the "El Paso
Stock Option Agreement"), pursuant to which El Paso has, among other things,
granted to Sonat an option (the "El Paso Option") to acquire shares of El Paso
Common Stock as described below. If the conditions precedent were satisfied to
permit Sonat to exercise its option to purchase shares of El Paso Common Stock
pursuant to the El Paso Stock Option Agreement and Sonat so exercised the El
Paso Option, Sonat currently anticipates that Sonat would obtain the funds for
the purchase from general funds available to Sonat and its affiliates and/or by
borrowing from parties whose identity is not yet known. As further described in
Item 4 hereof, under certain circumstances, Sonat can perform a cashless
exercise of the El Paso Option.
No funds were used in connection with the entering into the Merger
Agreement (as defined in Item 4 below) or the El Paso Stock Option Agreement.
ITEM 4. PURPOSE OF TRANSACTION.
THE MERGER AGREEMENT
On March 13, 1999, Sonat and El Paso entered into an Agreement and
Plan of Merger (the "Merger Agreement"), providing for, among other things, the
merger of El Paso and Sonat, with El Paso continuing as the surviving
corporation (the "Parent Merger"). Under the terms of the Merger Agreement,
each share of Sonat common stock, par value $1.00 per share ("Sonat Common
Stock"), issued and outstanding at the effective time of the Parent Merger, the
Alternative Merger or the Revised Merger (each as defined below) (the "Effective
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Time") will be exchanged for one share of El Paso Common Stock (the "Exchange
Ratio"). The Parent Merger is subject to certain customary conditions,
including, among others, approval by the stockholders of both companies as well
as the receipt of applicable regulatory approvals, including the expiration or
termination of the waiting period prescribed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
In the event El Paso stockholder approval for the issuance of El
Paso Common Stock in the Parent Merger is not obtained, the Merger Agreement
provides that, in lieu of the Parent Merger, a newly formed, wholly-owned
subsidiary of El Paso ("Merger Sub") would be merged with and into Sonat, with
Sonat continuing as the surviving corporation and wholly-owned subsidiary of El
Paso (the "Alternative Merger"; as used herein "Merger" shall mean the Parent
Merger or the Alternative Merger, as applicable). Under the terms of the Merger
Agreement, each share of Sonat Common Stock issued and outstanding at the
Effective Time will be exchanged for the following: (1) a fraction of a share of
El Paso Common Stock equal to the Common Conversion Number (as defined below);
and (2) a fraction of a depositary share representing an interest in a newly
issued series of El Paso preferred stock (the "Preferred Stock") having a
liquidation preference of $100 (the "Depositary Share") equal to the Depositary
Share Conversion Number (as defined below). The Preferred Stock will bear a
dividend rate designed to cause the stock to have a trading price after the
Effective Time as nearly as equal to the liquidation preference of the Preferred
Stock. The Preferred Stock will be redeemable in 21 years and will not be
convertible.
"Common Conversion Number" means (i) the maximum number of shares of
El Paso Common Stock that may be issued by El Paso as of the date prior to the
closing date of the Merger without obtaining approval of the El Paso
stockholders pursuant to the rules and regulations of the New York Stock
Exchange (the "NYSE"), less shares then currently required to be reserved for
issuance under Sonat stock option plans, divided by (ii) the number of shares of
Sonat Common Stock outstanding immediately prior to the Effective Time.
"Depositary Share Conversion Number" means a fraction (a) the
numerator of which is (i) the implied price of a Depositary Share (determined by
reference to the average closing price of the El Paso Common Stock on the
10-trading day period immediately preceding the second trading day prior to the
Sonat shareholders meeting called to vote on the Merger, which implied price
will have a minimum value of $32 and a maximum value of $44.50 per share)
multiplied by (ii) a fraction equal to the Exchange Ratio less the Common
Conversion Number and (b) the denominator of which is the $100 liquidation
preference for a Depositary Share.
The parties have reserved the right under the Merger Agreement, at
the request of El Paso, to substitute the form of business combination
contemplated by the Parent Merger with an alternative structure (the "Revised
Merger"), pursuant to which Sonat and El Paso will form a new corporation (to be
jointly owned by both companies) ("Newco"); provided that the Revised Merger
will only be effected if such transaction (i) would reduce the transaction costs
associated with the consummation of the Parent Merger, (ii) would not adversely
affect Sonat's shareholders and (iii) will not affect El Paso's obligations to
effect the Alternative Merger if required by the terms of the Merger Agreement.
At the Effective Time, each of Sonat and El Paso will be merged with a newly
formed, wholly-owned subsidiaries of Newco, with each of Sonat and El Paso,
respectively, continuing as the surviving corporation and a wholly-owned
subsidiary of Newco.
Pursuant to the Merger Agreement, (i) upon consummation of the
Parent Merger, (a) the officers of El Paso will be the officers of the surviving
corporation and (b) at the Effective Time of the Merger, the Certificate of
Incorporation and Bylaws of El Paso, as the surviving
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corporation, will be amended as provided in the Merger Agreement; or (ii) upon
consummation of the Alternative Merger, (a) the officers of Sonat will be the
officers of the surviving corporation, (b) the directors of Merger Sub will be
the directors of the surviving corporation, (c) each share of Merger Sub common
stock will be converted into one share of common stock of the surviving
corporation, (d) at the Effective Time of the Merger, the Certificate of
Incorporation of the surviving corporation will be amended as provided in the
Merger Agreement, (e) the By-laws of Sonat will constitute the by-laws of the
surviving corporation and (f) the By-laws of El Paso will be amended as provided
in the Merger Agreement.
The Merger Agreement further provides that the Board of Directors of
El Paso immediately after the Effective Time will consist of 15 members, nine of
whom will be designated by the Board of Directors of El Paso prior to the
Effective Time and six of whom will be designated by the Board of Directors of
Sonat. In addition, the El Paso Board (or any nominating committee thereof) will
cause Selim K. Zilkha to be nominated for election as a director of the El Paso
Board for so long as Selim K. Zilkha and members of his immediate family and
trusts therefor own at least 5% of the then outstanding voting securities of El
Paso. The Merger Agreement further provides that from the Effective Time until
December 31, 2000, Ronald L. Kuehn, Jr. will be the non-executive chairman of El
Paso's Board of Directors, to be succeeded, after such date, by William A. Wise.
Upon consummation of the Merger, the Sonat Common Stock will be
delisted from the NYSE and deregistered under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In connection with the execution of the
Merger Agreement, Sonat will amend its Rights Agreement, dated as of January 8,
1996, between Sonat and Chemical Mellon Stockholder Services L.L.C., as amended
on November 22, 1997 (the "Sonat Rights Agreement"), to make it inapplicable to
the Merger Agreement and the transactions contemplated thereby.
The Merger Agreement may be terminated under certain circumstances
described in Article VIII of the Merger Agreement, including if the Merger is
not completed prior to March 31, 2000 (the "Termination Date"); provided that
the party desiring to terminate the Merger Agreement is not at fault for the
Merger failing to have occurred on or before such date. In no event may El Paso
terminate the Merger Agreement if El Paso stockholder approval of the share
issuance contemplated by the Parent Merger is not obtained. The Merger Agreement
further provides for the right of either party to receive a termination fee of
$150 million and out-of-pocket expenses not to exceed $10 million in the event
the Merger Agreement is terminated under specified circumstances as set forth
therein.
The foregoing description of the Merger Agreement is qualified in
its entirety by reference to the Merger Agreement, a copy of which is filed as
an exhibit hereto and is incorporated by reference herein.
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<PAGE>
As a condition and inducement to each party's willingness to enter
into the Merger Agreement, each party requested, and the other party agreed, to
grant the requesting party an option to purchase a certain number of shares of
the granting party's common stock. Sonat granted to El Paso such an option (the
"Sonat Option") pursuant to a Stock Option Agreement, dated as of March 13, 1999
(the "Sonat Stock Option Agreement"), between Sonat, as grantor, and El Paso, as
grantee. El Paso granted Sonat the El Paso Option pursuant to the El Paso Stock
Option Agreement.
THE EL PASO STOCK OPTION AGREEMENT
Pursuant to the El Paso Stock Option Agreement, El Paso granted
Sonat the El Paso Option to purchase up to 24,349,638 shares of El Paso Common
Stock (as adjusted as set forth therein) (the "Option Shares") at an exercise
price of $37.725 per share (as adjusted as set forth therein) (the "Purchase
Price").
In the event of any change in the El Paso Common Stock by reason of
a stock dividend, split-up, merger, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
subject to the El Paso Option, and the Purchase Price therefor, will be
appropriately adjusted, and proper provision will be made in the agreements
governing such transaction, so that Sonat will receive upon exercise of the El
Paso Option the number and class of shares or other securities or property that
Sonat would have received in respect of El Paso Common Stock if the El Paso
Option had been exercised immediately prior to such event or the record date
therefor, as applicable. In the event El Paso enters in to an agreement (i) to
consolidate with or merger into any person (other than Sonat or one of its
subsidiaries) and El Paso will not be the continuing or surviving corporation in
such transaction, (ii) to permit any person (other than Sonat or one of its
subsidiaries) to merge or consolidate with El Paso, pursuant to which El Paso
will be the surviving corporation, but in connection with such transaction, the
shares of El Paso Common Stock will be changed into or exchange for stock or
other securities of El Paso or any other person or cash or any other property,
or El Paso Common Stock will represent less than 50% of the outstanding voting
securities of the merged or consolidated company, or (iii) to sell or transfer
all or substantially all of its assets to any person (other than Sonat or any of
its subsidiaries), then, in each such case, the agreement governing such
transaction will make proper provision so that the El Paso Option will be
converted into or exchanged for an option with identical terms appropriately
adjusted to acquire the number and class of shares or other securities, cash or
property that Sonat would have received in respect of El Paso Common Stock if
the El Paso Option had been exercised immediately prior to such consolidation,
merger, sale or transfer, or the record date therefor, as applicable. The
transactions described in clauses (i) through (iii) above are referred to herein
as "El Paso Transactions".
The El Paso Option is exercisable at any time following the
occurrence of any event as a result of which Sonat is entitled to receive a
termination fee pursuant to Section 8.2 of the Merger Agreement if the Merger
Agreement is being or has been terminated (an "Exercise Event"). The events
pursuant to which Sonat is entitled to receive a termination fee under the
Merger Agreement include the following:
(i) a Takeover Proposal (as defined below) has been made for El Paso
and (x) the Merger Agreement is then terminated because the Termination
Date has passed without consummation of the Parent Merger or the
Alternative Merger, as the case may be, and (ii) El Paso consummates an
Acquisition Transaction (as defined below) within 12 months of the date of
termination of the Merger Agreement; and
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(ii) the Merger Agreement is terminated by Sonat because a Stock
Acquisition Date (as defined in the El Paso rights agreement) shall have
occurred and the acquiring person would beneficially own 25% or more of
the outstanding shares of El Paso Common Stock (assuming all of the rights
issued pursuant to the El Paso rights agreement shall have been exercised
or exchanged for shares of El Paso Common Stock).
As used herein, "Takeover Proposal" means, with respect to Sonat or
El Paso, any inquiry, proposal or offer from any person relating to (i)
any direct or indirect acquisition or purchase of a business that
constitutes 25% or more of the net revenues, net income or the assets of
Sonat or El Paso, as applicable, and its subsidiaries, taken as a whole,
or 25% or more of any class of equity securities of Sonat or El Paso, as
applicable, or any of its subsidiaries, (ii) any tender offer or exchange
offer that if consummated would result in any person beneficially owning
25% or more of any class of equity securities of Sonat or El Paso, as
applicable, or any of its subsidiaries, or (iii) any merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Sonat or El Paso, as
applicable, or any of its subsidiaries that constitutes 25% or more of the
net revenues, net income or the assets of Sonat or El Paso, as applicable,
and its subsidiaries taken as a whole, in each case other than the
transactions contemplated by the Merger Agreement, the Stock Option
Agreements and the Voting Agreements. Each of the transactions referred to
in clauses (i) - (iii) of the foregoing definition of Takeover Proposal,
other than the transactions contemplated by the Merger Agreement or by the
Stock Option Agreements and the Voting Agreements is referred to herein as
an "Acquisition Transaction."
The El Paso Option expires upon the earliest to occur of (i) the
Effective Time and (ii) nine months after the first occurrence of an Exercise
Event.
Pursuant to a "put" right in the El Paso Stock Option Agreement,
Sonat may require El Paso to purchase the El Paso Option (if it has not
theretofore been exercised) upon the occurrence of the following: (i) El Paso
enters into an agreement (x) pursuant to which all of the El Paso Common Stock
will be purchased for cash or (y) with respect to an El Paso Transaction; and
(ii) the El Paso Option is then presently exercisable. If Sonat elects to
exercise its "put" right, Sonat shall have the right to receive in exchange for
cancellation of the El Paso Option an amount in cash equal to the number of
Option Shares multiplied by the excess of (A) the then current price of El Paso
Common Stock (as determined in accordance with the El Paso Stock Option
Agreement) and (B) the Purchase Price.
Pursuant to the El Paso Stock Option Agreement, Sonat may require El
Paso to register under the Securities Act of 1933, as amended (the "Securities
Act"), shares of El Paso Common Stock acquired pursuant to an exercise of the El
Paso Option at any time during the period within two years after the date of
first exercise of the El Paso Option. Sonat may require up to two such
registrations be made effective, such registrations to be on customary terms.
The El Paso Option limits the aggregate profit that Sonat may
receive pursuant to the put right and any sale, pledge or other disposition
(including by merger or exchange) of any Option Share (a "Sale"), combined with
all amounts paid or payable by El Paso to Sonat pursuant to Section 8.2 of the
Merger Agreement, at an amount not to exceed $175 million.
El Paso agreed that, during the term of the El Paso Option, (i) to
maintain sufficient shares of El Paso Common Stock so that the El Paso Option
may be fully exercisable without additional authorization of El Paso
stockholders, (ii) not to seek to avoid the observance or performance by it of
any of its covenants, agreements and conditions under the El Paso Stock Option
Agreement, and (iii) not to take any action or omit to take any action that
would have the
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effect of preventing El Paso from delivering the Option Shares to Sonat upon
exercises of the El Paso Option or otherwise performing its obligations under
the El Paso Stock Option Agreement.
Sonat has agreed (i) not to sell, transfer or otherwise dispose of
the Option, any part thereof or any of its rights under the El Paso Stock Option
Agreement to any third party without the prior written consent of El Paso (which
consent will not be unreasonably withheld or delayed) and (ii) to offer or sell
Option Shares only pursuant to a registration statement under the Securities Act
or an exemption therefrom.
The foregoing description of the El Paso Stock Option Agreement is
qualified in its entirety by reference to the El Paso Stock Option Agreement, a
copy of which is filed as an exhibit hereto and is incorporated by reference
herein.
THE SONAT STOCK OPTION AGREEMENT
Pursuant to the Sonat Stock Option Agreement, Sonat granted El Paso
the Sonat Option to purchase up to 21,899,515 shares of Sonat Common Stock (as
adjusted as set forth therein) at an exercise price of $27.238 per share (as
adjusted as set forth therein). The other provisions of the Sonat Stock Option
Agreement substantially correspond to the related provisions of the El Paso
Stock Option Agreement, except that the definition of Exercise Event with
respect to the Sonat Option incorporates the following additional situations
under which El Paso will be entitled to receive a termination fee under the
Merger Agreement:
(i) a Takeover Proposal has been made for El Paso and (x) the Merger
Agreement is then terminated because the Sonat shareholders fail to approve the
Merger Agreement at a meeting of Sonat shareholders, and (ii) Sonat consummates
an Acquisition Transaction within 12 months of the date of termination of the
Merger Agreement;
(ii) the Merger Agreement has been terminated by El Paso because the
Sonat Board withdraws, modifies or fails to reaffirm its recommendation for the
Merger Agreement and the Merger or the Sonat Board approves or recommends
another transaction; and
(iii) the Merger Agreement is terminated by Sonat to accept a
Superior Proposal (as defined in the Merger Agreement) in accordance with the
provisions of Section 5.3(b) of the Merger Agreement.
The foregoing description of the Sonat Stock Option Agreement is
qualified in its entirety by reference to the Sonat Stock Option Agreement, a
copy of which is filed as an exhibit hereto and is incorporated by reference
herein.
VOTING AGREEMENTS
In connection with the Merger Agreement, on March 13, 1999, certain
members of the Zilkha family and an affiliated entity, who collectively own
approximately 23% of the outstanding shares of Sonat Common Stock, and Ronald L.
Kuehn, Jr., chairman of the board, president and chief executive officer of
Sonat, entered into separate voting agreements with El Paso (the "Zilkha Voting
Agreement" and the "Kuehn Voting Agreement", respectively, and together, the
"Voting Agreements"), pursuant to which, among other things, they agreed to (i)
appear at any meeting of Sonat shareholders called during the term of such
agreement or to cause such shareholder's shares of Sonat Common Stock to be
present at such meeting for purposes of establishing a quorum, and (ii) vote
their shares of Sonat Common Stock in favor of the Merger Agreement and the
transactions contemplated thereby. In addition, pursuant to the respective
Voting Agreements, the shareholders have granted to El Paso an irrevocable proxy
to vote their
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respective shares of Sonat Common Stock at any meeting of Sonat shareholders as
and to the extent provided in clauses (i) and (ii) of the foregoing sentence.
The Voting Agreements will terminate upon the earliest to occur of
(i) the Effective Time and (ii) the termination of the Merger Agreement in
accordance with its terms.
Each of the stockholders has agreed, pursuant to their respective
Voting Agreements, that while such Voting Agreement is in effect, and except as
contemplated therein, (i) not to grant any proxies, powers of attorneys or other
voting agreements in respect of their Sonat Common Stock, (ii) not to take any
action that would make any representation or warranty of such stockholder
contained therein untrue or incorrect or disabling such stockholder from
performing his or its obligations under such Voting Agreement, (iii) to promptly
notify El Paso of any new shares acquired by such stockholder, if any, after the
date of such Voting Agreement and (iv) such stockholder will immediately cease
any discussion or negotiations with any parties other than El Paso with respect
to a Takeover Proposal and such stockholder will not (x) solicit, initiate or
encourage any inquiries or the making of any Takeover Proposal or (y)
participate in any discussions or negotiations regarding any Takeover Proposal,
except to the extent such discussions or negotiations are participated in by the
stockholder in his capacity as a director of Sonat in accordance with the terms
of the Merger Agreement.
In addition, pursuant to the Zilkha Voting Agreement, El Paso has
agreed that the rights of such stockholders set forth in the Registration Rights
Agreement, dated as of January 30, 1998, by and among Sonat, Selim K. Zilkha,
Michael Zilkha and the Selim K. Zilkha Trust shall continue in effect after the
Effective Time, and after the Effective Time, Parent shall comply with the
obligations of Sonat thereunder as if it were Sonat.
The foregoing descriptions of the Zilkha Voting Agreement and the
Kuehn Voting Agreement are qualified in their entirety by reference to each such
Voting Agreement, a copy of each of which are filed as exhibits hereto and are
incorporated by reference herein.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
Neither Sonat nor, to the best knowledge of Sonat, any of the
persons listed on Annex I hereto, beneficially owns any shares of El Paso Common
Stock other than as set forth herein or as listed on Annex I hereto. Prior to
the El Paso Option becoming exercisable and being exercised, Sonat expressly
disclaims beneficial ownership of the Option Shares which are purchasable by
Sonat upon the El Paso Option becoming exercisable and being exercised. Neither
the filing of this Schedule 13D nor any of its contents shall be deemed to
constitute an admission that Sonat is the beneficial owner of the shares of El
Paso Common Stock subject to the El Paso Option for purposes of Section 13(d) or
Section 16 of the Exchange Act, or for any other purpose, and such beneficial
ownership is expressly disclaimed.
(a) Pursuant to the El Paso Option, Sonat has an option to purchase
up to 24,349,638 shares of El Paso Common Stock at the Purchase Price, or
approximately 19.9% of the currently outstanding El Paso Common Stock before
giving effect to the exercise of the El Paso Option and 16.6% of the currently
outstanding El Paso Common Stock after giving effect to the exercise of the
Option (based upon 122,359,989 shares of El Paso Common Stock outstanding as of
the close of business on March 12, 1999, as represented by El Paso in the Merger
Agreement). The El Paso Option is not presently exercisable and will become
exercisable only in accordance with the conditions set forth in the El Paso
Stock Option Agreement.
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(b) Assuming for purposes of this Item 5 that events occurred that
would enable Sonat to exercise the El Paso Option and Sonat exercised the El
Paso Option, Sonat would have sole voting power and sole dispositive power with
respect to the shares of El Paso Common Stock acquired pursuant to the El Paso
Option.
(c) Except as described in Item 4 hereof, no transactions in El Paso
Common Stock were effected by Sonat or, to the best knowledge of Sonat, any of
the persons listed on Annex I hereto, during the 60-day period preceding March
13, 1999.
(d) Until the El Paso Option is exercised (if at all), Sonat has no
right to receive dividends from, or the proceeds from the sale of, the Option
Shares. If the El Paso Option is exercised by Sonat, Sonat would have the sole
right to receive dividends on, or (except as limited by the aggregate profit
cap) proceeds from the sale of, the Option Shares acquired pursuant thereto.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Except as set forth in this Schedule 13D, to the best knowledge of
Sonat, there are no other contracts, arrangements, understandings or
relationships (legal or otherwise) among the persons named in Item 2 or listed
on Annex I hereto, and between such persons and any person with respect to any
securities of El Paso, including but not limited to, transfer or voting of any
of the securities of El Paso, joint ventures, loan or option arrangements, puts
or calls, guarantees or profits, division of profits or loss, or the giving or
withholding of proxies, or a pledge or contingency the occurrence of which would
give another person voting power over the securities of El Paso.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed as part of this Schedule 13D:
Exhibit 1 -- Agreement and Plan of Merger, dated as of March 13, 1999,
by and between Sonat Inc. and El Paso Energy Corporation
(incorporated by reference to Exhibit 2.1 to Sonat's Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on March 15, 1999).
Exhibit 2 -- El Paso Stock Option Agreement, dated as of March 13,
1999, by and between Sonat Inc. and El Paso Energy Corporation
(incorporated by reference to Exhibit 99.1 to Sonat's Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on March 15, 1999).
Exhibit 3 -- Sonat Stock Option Agreement, dated as of March 13, 1999,
by and between Sonat Inc. and El Paso Energy Corporation
(incorporated by reference to Exhibit 99.2 to Sonat's Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on March 15, 1999).
Exhibit 4 -- Voting Agreement, dated as of March 13, 1999, by and between
El Paso Energy Corporation, Selim K. Zilkha, in his
individual capacity and in his capacity as trustee of the
Selim K. Zilkha Trust, and Michael Zilkha (incorporated by
reference to Exhibit 99.3 to Sonat's Current Report on Form
8-K, filed with the Securities and Exchange Commission on
March 15, 1999).
Exhibit 5 -- Voting Agreement, dated as of March 13, 1999, by and
between El Paso Energy Corporation and Ronald L. Kuehn, Jr.
(incorporated by reference to Exhibit 99.4 to Sonat's Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on March 15, 1999).
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SIGNATURE
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.
Dated: March 23, 1999
SONAT INC.
By: /s/ William A. Smith
-----------------------------------------
Name: William A. Smith
Title: Executive Vice President and
General Counsel
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ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF SONAT INC.
Set forth below are the name and present principal occupation of
each director and executive officer of Sonat Inc. as of March 23, 1999. The
business address of each such director and executive officer is c/o Sonat Inc.,
AmSouth-Sonat Tower, Birmingham, Alabama 35203.
DIRECTOR PRINCIPAL OCCUPATION
William O. Bourke Retired Chairman of the Board and
Chief Executive Officer, Reynolds
Metals Company, Richmond, Virginia.
Ronald L. Kuehn, Jr. Chairman of the Board, President and
Chief Executive Officer of Sonat.
Robert J. Lanigan Chairman Emeritus, Owens-Illinois,
Inc., Toledo, Ohio.
Max L. Lukens Chairman, President and Chief
Executive Officer, Baker Hughes
Incorporated, Houston, Texas.
Charles Marshall Retired Vice Chairman of the Board,
American Telephone and Telegraph
Company, New York, New York.
Dr. Benjamin F. Payton President, Tuskegee University,
Tuskegee, Alabama.
John J. Phelan, Jr. Retired Chairman of the Board and
Chief Executive Officer, New York
Stock Exchange, New York, New York.
Jerome J. Richardson Owner/Founder, NFL Carolina Panthers,
Charlotte, North Carolina.
Adrian M. Tocklin President and Chief Executive Officer,
Tocklin & Associates, Inc., Chicago,
Illinois.
James B. Williams Chairman of the Executive Committee,
SunTrust Banks, Inc., Atlanta, Georgia.
Joe B. Wyatt Chancellor, Vanderbilt University,
Nashville, Tennessee.
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Michael S. Zilkha Former Executive Vice President,
Zilkha Energy Company, Houston, Texas.
Selim K. Zilkha Former Sole Director and Chief
Executive Officer, Zilkha Energy
Company, Houston, Texas.
EXECUTIVE OFFICERS (OTHER THAN PRINCIPAL OCCUPATION
EXECUTIVE OFFICERS WHO ARE ALSO --------------------
DIRECTORS):
- -------------------------------
James A. Rubright Executive Vice President.
William A. Smith Executive Vice President and General
Counsel.
Richard B. Bates Senior Vice President - Marketing.
John B. Holmes, Jr. Senior Vice President; President -
Sonat Exploration.
James E. Moylan, Jr. Senior Vice President and Chief
Financial Officer.
Thomas W. Barker, Jr. Vice President - Finance.
Beverly T. Krannich Vice President - Human Resources and
Secretary.
John M. Musgrave Vice President - Planning and Treasurer
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EXHIBIT INDEX
Exhibit 1 -- Agreement and Plan of Merger, dated as of March 13, 1999,
by and between Sonat Inc. and El Paso Energy Corporation
(incorporated by reference to Exhibit 2.1 to Sonat's Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on March 15, 1999).
Exhibit 2 -- El Paso Stock Option Agreement, dated as of March 13,
1999, by and between Sonat Inc. and El Paso Energy Corporation
(incorporated by reference to Exhibit 99.1 to Sonat's Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on March 15, 1999).
Exhibit 3 -- Sonat Stock Option Agreement, dated as of March 13, 1999,
by and between Sonat Inc. and El Paso Energy Corporation
(incorporated by reference to Exhibit 99.2 to Sonat's Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on March 15, 1999).
Exhibit 4 -- Voting Agreement, dated as of March 13, 1999, by and between
El Paso Energy Corporation, Selim K. Zilkha, in his
individual capacity and in his capacity as trustee of the
Selim K. Zilkha Trust, and Michael Zilkha (incorporated by
reference to Exhibit 99.3 to Sonat's Current Report on Form
8-K, filed with the Securities and Exchange Commission on
March 15, 1999).
Exhibit 5 -- Voting Agreement, dated as of March 13, 1999, by and
between El Paso Energy Corporation and Ronald L. Kuehn, Jr.
(incorporated by reference to Exhibit 99.4 to Sonat's Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on March 15, 1999).
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