UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
SCHEDULE
14A
(RULE
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment
No. __)
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by the
Registrant
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Filed by a Party other than the Registrant
Check
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appropriate box:
(as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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ENERGY
PARTNERS, LTD.
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(Name
of Registrant as Specified in Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than
Registrant)
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Payment
of
Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or
the form or schedule and the date of its filing.
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(1)
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Amount
previously paid:
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(2)
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Form,
schedule or registration statement no.:
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(3)
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Filing
party:
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(4)
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Date
filed:
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October
,
2006
Dear
Fellow Stockholder:
Woodside
Petroleum, Ltd., an Australian oil & gas company, is attempting to buy your
Company at a price which your Board of Directors has determined to be
inadequate
and not
in your best interests. Woodside and its U.S. subsidiary ATS, Inc. propose
to do
this by soliciting your consent to two different proposals, each described
in
the enclosed document. Your
Board is unanimously opposed to the ATS consent
solicitation.
We
urge you NOT TO SIGN any [COLOR] consent card or other form which may be sent
to
you by ATS or Woodside.
As
you
know, your Board has terminated the contemplated merger with Stone Energy
Corporation and is currently engaged in a process of exploring strategic
alternatives to maximize stockholder value, including the possible sale of
the
Company.
Woodside
is now soliciting written consents to remove all members of the Board that
you
have elected and replace them with its handpicked, paid nominees who have been
selected for the single purpose of facilitating a transaction between EPL and
Woodside. Woodside is doing this because it does not want to give your Board
adequate time to successfully undertake the important process of exploring
strategic alternatives to maximize stockholder value. Make no mistake,
Woodside’s
aim is to buy your shares and the entire Company for the lowest possible
price
and it
wants its nominees to control the process by which it can achieve that end.
You
should not support them in their efforts.
We
think
you should ask yourselves, who is likely to try to get you the highest value
for
your shares? The people handpicked by Woodside, who wants to buy your shares,
undoubtedly at the lowest price possible, or the incumbent Board you have
elected, which is composed of a majority of independent directors and is
committed to exploring strategic alternatives for your benefit?
Your
Board strongly urges you to reject Woodside’s efforts to take control of your
Company by taking the following steps. First, do not
sign ATS’ [color] consent card or any other form which may be sent to you by ATS
or Woodside.
Second,
if you have previously signed a [color] consent card sent to you by Woodside
or
ATS, you should revoke that consent by signing, dating and mailing the enclosed
WHITE
Consent
Revocation Card immediately. Finally, even if you have not signed ATS’ consent
card, you can show your support for your Board by signing, dating and mailing
the enclosed WHITE Consent Revocation Card. Regardless of the number of shares
you own, your revocation of consent is important. Please
act today.
Thank
you
for your continued support.
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Very
truly yours,
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Richard
A. Bachmann
Chairman
and Chief Executive Officer
Energy
Partners, Ltd.
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A
more
detailed explanation of this solicitation is to be found in the attached Consent
Revocation Statement, which you are encouraged to read. If you have any
questions about revoking any consent you may have previously granted or require
assistance, please call:
MacKenzie
Partners, Inc.
105
Madison Avenue
New
York,
NY 10016
Tel:
(212)
929-5500
Fax:
(212)
929-0308
Call
Toll Free:
(800)
322-2885
PRELIMINARY
COPY
SUBJECT
TO COMPLETION DATED OCTOBER 19, 2006
October
,
2006
CONSENT
REVOCATION STATEMENT
BY
THE BOARD OF DIRECTORS OF ENERGY PARTNERS, LTD.
IN
OPPOSITION TO
A
CONSENT SOLICITATION BY ATS INC., WOODSIDE FINANCE LIMITED AND
WOODSIDE PETROLEUM LTD.
WOODSIDE PETROLEUM LTD.
This
Consent Revocation Statement is furnished by the Board of Directors (the
“Board”) of Energy Partners, Ltd., a Delaware corporation (“EPL” or the
“Company”), to the holders of all issued and outstanding shares of EPL’s common
stock, par value $0.01 per share (the “Common Stock”), and the associated
preferred stock purchase rights, in connection with your Board’s opposition to
the solicitation of written stockholder consents by ATS Inc., a Delaware
corporation (“ATS”) and a wholly-owned subsidiary of Woodside Petroleum, Ltd., a
company organized under the laws of Victoria, Australia (“Woodside”), Woodside
Finance Limited, a company formed under the laws of Victoria, Australia and
a
wholly-owned subsidiary of Woodside (“Woodside Finance”), and
Woodside.
On
August
28, 2006, Woodside publicly announced its intent to acquire all of the
outstanding shares of EPL’s Common Stock at a price of $23.00 per share in cash
(purportedly subject to increase to $23.50 or $24.00 under certain
circumstances), subject to various closing conditions.
ATS
is now
escalating its campaign to advance its hostile offer for EPL by soliciting
your
written consents to take control of your Board by (i) removing all eleven
existing members of the Board that you have elected and (ii) filling the
newly-created vacancies with individuals handpicked by Woodside. Specifically,
with its proposals, Woodside is asking you to:
| 1. |
Remove
all eleven existing members of the Board (and any person(s) (other
than
those elected by this consent solicitation) elected or designated
by any
of such directors to fill any vacancy or newly created
directorship); and
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| 2. |
Elect
its own hand-picked and paid nominees as the new directors of EPL
(or if
any such Nominee is unable or unwilling to serve on the Board, any
other
person designated as a nominee by
ATS).
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In
its
public filings with the Securities and Exchange Commission (the “SEC”), ATS has
stated that, subject to their fiduciary duties, it expects its nominees to
support the $23.00 (purportedly subject to increase to $23.50 or $24.00 under
certain circumstances) per share offer and to take all steps necessary to
consummate a transaction between ATS and EPL that will force out EPL’s
stockholders. In addition, in its public filings with the SEC, ATS has stated
that the election of its nominees will signal that a majority of the Company’s
stockholders believe that the ATS offer — which your Board has unanimously (with
Mr. Hiltz abstaining) determined to be inadequate and not in the best interests
of the Company’s
stockholders
(other than Woodside and its affiliates) — is in their best interests. In
considering the ATS proposals, it is important for you to recognize that neither
ATS nor Woodside has any duty to act in your best interests — each acts purely
for Woodside’s financial gain. The Nominees have been selected for the single
purpose of facilitating a transaction between EPL and Woodside — they have no
anticipated role other than to vote for consummation of a transaction that
your
Board has deemed to be inadequate and not in your best interests.
Your
directors were nominated and elected through processes implemented by the Board
in keeping with good corporate governance practices. Please see the discussion
in this Consent Revocation Statement under the heading “Corporate Governance”
and regarding the process undertaken by the Board in the selection of directors.
In contrast, the ATS nominees have been selected by, and are on the payroll
of,
Woodside, which acts solely in its own financial self-interest.
The
Board has directed the Company to pursue strategic alternatives to maximize
stockholder value, including the possible sale of the
Company.
EPL’s
solid track record of operational success and the strong potential of EPL’s
attractive Gulf of Mexico properties and prospects place the Company in a strong
position to explore strategic alternatives to maximize value for EPL
stockholders. However, if Woodside takes control of your Board, the Board’s
efforts to maximize stockholder value will be curtailed and the ATS nominees
will complete the ATS offer at a price which the Board has already deemed
inadequate. The
Board strongly urges you to protect your right to achieve greater value than
the
ATS offer.
Your
Board unanimously
opposes the solicitation by ATS. Your Board, which is composed of a majority
of
independent directors within the meaning of the New York Stock Exchange listing
standards, is committed to acting in the best interests of all
of the Company’s stockholders and believes that it is better positioned than
Woodside’s handpicked nominees to maximize value to EPL’s
stockholders.
This
Consent Revocation Statement and the enclosed WHITE
Consent
Revocation Card are first being mailed to stockholders on or about
,
2006.
Your
Board urges you not
to sign any [color] consent card sent to you by ATS or Woodside but instead
to
sign and return the WHITE
card included with these materials.
If
you
have previously signed and returned the [color] consent card, you have every
right to change your mind and revoke your consent. Whether or not you have
signed the [color] consent card, we urge you to mark the “YES, REVOKE MY
CONSENT” boxes on the enclosed WHITE Consent Revocation Card and to sign, date
and mail the card in the postage-paid envelope provided. Although submitting
a
consent revocation will not have any legal effect if you have not previously
submitted a consent card, it will help us keep track of the progress of the
consent process. Regardless of the number of shares you own, your consent
revocation is important. Please
act today.
If
your
shares are held in “street name,” only your broker or your banker can vote your
shares. Please contact the person responsible for your account and instruct
him
or her to submit a WHITE Consent Revocation Card on your behalf
today.
In
accordance with Delaware law and the Company’s bylaws, the Board set October 17,
2006 as the record date (the “Record Date”) for the determination of the
Company’s stockholders who are entitled to execute, withhold or revoke consents
relating to the ATS consent solicitation. Only holders of record as of the
close
of business on the Record Date may execute, withhold or revoke consents with
respect to the ATS consent solicitation.
-2-
If
you
have any questions about giving your consent revocation or require assistance,
please call:
MacKenzie
Partners, Inc.
105
Madison Avenue
New
York,
NY 10016
Tel:
(212)
929-5500
Fax:
(212)
929-0308
Call
Toll Free:
(800)
322-2885
-3-
TABLE
OF CONTENTS
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Page
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FORWARD-LOOKING
STATEMENTS
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1
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DESCRIPTION
OF THE ATS CONSENT SOLICITATION
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2
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REASONS
TO REJECT THE ATS CONSENT SOLICITATION PROPOSALS
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2
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QUESTIONS
AND ANSWERS ABOUT THIS CONSENT REVOCATION SOLICITATION
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6
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BACKGROUND
OF THE ATS OFFER & CONSENT SOLICITATION
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8
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THE
CONSENT PROCEDURE
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14
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Voting
Securities and Record Date
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14
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Effectiveness
of Consents
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14
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Effect
of WHITE Consent Revocation Card
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14
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Results
of Consent Revocation Statement
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15
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SOLICITATION
OF CONSENT REVOCATIONS
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15
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Cost
and Method
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15
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Participants
in the Company’s Solicitation
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15
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PROFESSIONAL
ADVISORS
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15
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APPRAISAL
RIGHTS
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16
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CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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16
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LEGAL
PROCEEDINGS
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17
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CURRENT
DIRECTORS AND EXECUTIVE OFFICERS OF EPL
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19
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OWNERSHIP
OF COMMON STOCK BY MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
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21
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CORPORATE
GOVERNANCE
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23
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The
Board of Directors
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23
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Committees
of the Board
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24
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EXECUTIVE
COMPENSATION AND OTHER MATTERS
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26
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Incentive
and Other Employee Benefit Plans
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27
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Employment
Agreements and Change of Control Arrangements
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29
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Section
16(a) Beneficial Ownership Reporting Compliance
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30
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STOCKHOLDER
PROPOSALS FOR THE 2007 ANNUAL MEETING
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31
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Annex
I Certain
Information Regarding Participants in This Consent Revocation
FORWARD-LOOKING
STATEMENTS
All
statements other than statements of historical fact contained in this Consent
Revocation Statement and in periodic reports filed by us or under the Securities
and Exchange Act of 1934 and other written or oral statements made by us or
on
our behalf, are forward-looking statements. Forward-looking statements are
subject to risks and uncertainties. Although we believe that in making such
statements our expectations are based on reasonable assumptions, such statements
may be influenced by factors that could cause actual outcomes and results to
be
materially different from those projected.
Except
for
our obligations to disclose material information under U.S. federal securities
laws, we do not undertake any obligation to release publicly any revisions
to
any forward-looking statements, to report events or circumstances after the
date
of this document, or to report the occurrence of unanticipated events.
Statements
that are predictive in nature, that depend upon or refer to future events or
conditions, or that include words such as “will,” “would,” “should,” “plans,”
“likely,” “expects,” “anticipates,” “intends,” “believes,” “estimates,”
“thinks,” “may,” and similar expressions, are forward-looking statements. The
following important factors, in addition to those discussed under “Risk Factors”
in our periodic reports, could affect the future results of the energy industry
in general and could cause those results to differ materially from those
expressed in or implied by such forward-looking statements:
| · |
uncertainties
inherent in the development and production of and exploration for
oil and
natural gas and in estimating reserves;
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| · |
the
effects of our substantial indebtedness, which could adversely restrict
our ability to operate, could make us vulnerable to general adverse
economic and industry conditions, could place us at a competitive
disadvantage compared to our competitors that have less debt, and
could
have other adverse consequences;
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| · |
unexpected
future capital expenditures (including the amount and nature thereof);
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the
impact of oil and natural gas price
fluctuations;
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| · |
the
effects of competition;
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| · |
the
success of our risk management activities;
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| · |
the
availability (or lack thereof) of acquisition or combination
opportunities;
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the
impact of current and future laws and governmental regulations;
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| · |
environmental
liabilities that are not covered by an effective indemnity or insurance;
and
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| · |
general
economic, market or business
conditions.
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All
written and oral forward-looking statements attributable to us or persons acting
on behalf of us are expressly qualified in their entirety by such factors.
We
refer you specifically to the section “Risk Factors” in Item 1A of our Form 10-Q
for the quarter ended June 20, 2006, of our Annual Report on Form 10-K for
the
year ended December 31, 2005. Although we believe that the assumptions on which
any forward-looking statements in this Consent Revocation Statement and our
periodic reports filed by us are reasonable, no assurance can be given that
such
assumptions will prove correct. All forward-looking statements in this document
are expressly qualified in their entirety by the cautionary statements in this
paragraph.
DESCRIPTION
OF THE ATS CONSENT SOLICITATION
As
set
forth in its definitive consent solicitation materials filed with the SEC,
ATS
is asking you to vote on the following proposals:
| 1. |
Remove
all eleven existing members of the Board (and any person(s) (other
than
those elected by the ATS consent solicitation) elected or designated
by
any of such directors to fill any vacancy or newly created directorship);
and
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| 2. |
Elect
Walter R. Arnheim, Terry G. Dallas, Robert B. Holland, III, David
R.
Martin and J. Kenneth Thompson (each, a “Nominee” and collectively, the
“Nominees”) as the directors of EPL (or if any such Nominee is unable or
unwilling to serve on the Board, any other person designated as a
nominee
by ATS).
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We
believe
that the ATS proposals have a single purpose: to facilitate ATS’ proposed $23.00
(purportedly subject to increase to $23.50 or $24.00 under certain
circumstances) per share acquisition of the entire equity interest in EPL—an
offer your Board has already unanimously (with Mr. Hiltz abstaining) determined
to be inadequate and not in the best interests of the Company’s stockholders
(other than Woodside and its affiliates).
REASONS
TO REJECT THE
ATS CONSENT SOLICITATION PROPOSALS
On
October
12, 2006, the Company announced that your Board, a majority of which are
independent directors, had directed the Company, assisted by its financial
advisors, to explore strategic alternatives to maximize stockholder value,
including the possible sale of the Company.
Despite
the Board’s effort to explore all alternatives that would maximize value for
EPL’s stockholders, ATS continues in its attempt to convince you to accept its
offer — an offer that your Board has already deemed inadequate. ATS is pursuing
its agenda to take control of EPL by seeking consents to two proposals designed
to enable ATS to take control of your Board. Your Board believes that the ATS
consent solicitation is an attempt to pressure the Board to accept the ATS
hostile tender offer and to limit its options and flexibility to maximize value
for EPL’s stockholders. Your Board opposes
the
solicitation by ATS because the Board believes:
The
ATS Consent Solicitation is an opportunistic attempt to cash out EPL
stockholders at an inadequate price.
EPL
has
filed with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(as
amended through the date hereof, the “Schedule 14D-9”) which contains the
Board’s recommendation that EPL stockholders reject the ATS offer and not tender
their shares to ATS.
The
Schedule 14D-9 discloses that the Board unanimously (with Mr. Hiltz abstaining)
determined that the ATS offer is inadequate and not in the best interests of
the
Company’s stockholders (other than Woodside and its affiliates). The Board’s
reasons for its determination included:
| · |
The
Board's belief — based on its familiarity with the business of the
Company, its financial condition, results of operations and prospects,
and
the Board's familiarity with the oil and natural gas exploration
and
production industry, and the prospects for, and the Company's position
in,
that industry — that the continued execution of the Company’s current
business plan should provide greater value to stockholders than the
ATS
offer.
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-2-
| · |
The
Board's belief that the fair value and unaffected price of the Company's
stock is substantially higher than the prevailing market price at
the time
ATS launched the ATS offer. The Board noted that the $23.00 per share
offer price is a 29% discount to the Company's 52-week high (which
was
$32.27 on September 29, 2005), and a 7% discount to the Company's
average
closing stock price over the 90 trading days preceding the announcement
of
the Company's offer to acquire Stone.
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| · |
The
opinions of Petrie Parkman & Co., Inc., Evercore Group L.L.C., and
Banc of America Securities LLC, the Company's financial advisors,
to the
effect that, as of September 13, 2006, and based upon and subject
to
various assumptions and limitations set forth in each opinion, the
$23.00
per share being offered was inadequate, from a financial point of
view, to
the Company's stockholders (other than Woodside and its affiliates).
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| · |
The
Board's belief that the Company's prospect inventory, including those
prospects on the Gulf of Mexico Shelf and in the deepwater Gulf of
Mexico,
is expected to generate increasing returns over the next few years,
and
that neither the Company's current stock price nor the ATS offer
reflects
the value of these assets or their potential.
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| · |
The
Board's belief that the ATS offer represents an opportunistic attempt
by
Woodside to acquire a unique and valuable collection of oil and natural
gas exploration and production assets and employees at a favorable
time to
Woodside at a price well below the true value that these assets and
employees represent.
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| · |
The
conditionality of the ATS offer, which includes many stringent, open-ended
or subjective conditions that, unless waived by ATS, may result in
the ATS
offer not being consummated.
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The
Schedule 14D-9, which has been mailed to EPL stockholders, contains the Board's
recommendation concerning the ATS offer and other important
information.
The
ATS Consent Solicitation will short-circuit your EPL Board’s carefully designed
plan to maximize stockholder value.
The
Board,
a majority of which are independent directors, has recently directed
the Company to pursue strategic alternatives to maximize stockholder value
with
the assistance of its financial advisors, including a possible sale of the
Company. Your
Board, and not ATS’ hand-picked nominees, is in the best position to evaluate
those strategic alternatives available to EPL, decide which of those is most
likely to provide full and fair value to all EPL stockholders and implement
that
decision.
We
believe
Woodside is soliciting written consents from you to remove all members of the
Board that you have elected and replace them with its handpicked, paid nominees
because it does not want to give your Board adequate time to successfully
undertake the important process of exploring strategic alternatives to maximize
stockholder value. To be clear, Woodside’s
aim is to buy your shares and the entire Company for the lowest possible
price
and it
wants its nominees to control the process by which it can achieve that end.
You
should not support them in their efforts.
Your
Board
agreed to terminate the planned merger with Stone Energy Corporation (“Stone”)
after we were unable to negotiate a decrease in consideration payable to Stone
stockholders under the merger agreement between EPL and Stone (the “Merger
Agreement”). Rather than be liable for the $25.6 million fee that would be
payable to Stone in the event EPL’s stockholders voted against the proposed
transaction with Stone and then EPL consummated a Third Party Acquisition
Proposal (as defined in the Merger Agreement) within 12 months following the
EPL
stockholder meeting, your Board negotiated the
-3-
payment
by
EPL to Stone of only $8 million, in full satisfaction of all obligations under
the Merger Agreement. The payment represents a $17.6 million discount from
the
fee that would have been payable by EPL to Stone under certain circumstances.
As
a result of this payment, EPL achieved its objective of an immediate termination
of the Merger Agreement which enabled EPL to commence promptly the review of
its
strategic alternatives. Your Board has directed the Company to pursue strategic
alternatives to maximize stockholder value with the assistance of its financial
advisors, including a possible sale of the Company. Your Board will evaluate
the
strategic alternatives presented, decide what action is in the best interests
of
EPL’s stockholders and implement that decision. Although the Board plans to
continue to work with financial advisors and senior management to ascertain
the
status of the review of strategic alternatives, no timetable has been set for
completion of this process. The timing of consummation of any strategic
alternative which may be pursued by the Board, including one involving Woodside,
is uncertain.
In
contrast, ATS continues to demonstrate that its goal is not to enhance the
value
of EPL. ATS has maintained its offer price at $23.00 per share (purportedly
subject to increase to $23.50 or $24.00 under certain circumstances), with
no
increase having been offered for EPL’s having negotiated a $17.6 million
reduction in the termination fee that would have been payable to Stone upon
an
acquisition of the Company by a third party, including by ATS. In its filings
with the SEC, ATS has said that it would increase its offer price by $.50 per
share if the $25.6 termination fee payable under certain circumstances were
voided. Now your Board has saved $17.6 million of the termination fee, but
ATS
has not followed through on its promise to pass that savings on to the EPL
stockholders in the event it consummates its offer. In other words, if ATS
acquires EPL, it’s going to keep the $17.6 million for itself. Given that it is
in ATS’ interest to acquire EPL at the lowest possible price, your Board
believes that it is extremely unlikely that the ATS nominees would have any
incentive to pursue other alternatives for EPL and its
stockholders.
The
ATS consent solicitation will place control of EPL in the hands of nominees
who
have been handpicked by ATS to serve its own interest, not the interest of
other
EPL stockholders.
At
this
critical time for the future of EPL, we believe it is vital to continue to
have
directors in place who know EPL and are committed to continuing to act in the
best interests of EPL and all of its stockholders. The Board believes that
you,
our stockholders, should continue to be represented by directors who are not
hand-picked by ATS or Woodside.
The
ATS
nominees have clear conflicts of interest since it is in the interest of ATS
to
acquire EPL at the lowest possible price. The facts on this matter speak for
themselves. ATS itself has stated in its consent solicitation materials that
it
“expects” that is nominees will “take such action as may be required to expedite
the prompt consummation of the [ATS] Offer.”
The
ATS
nominees, if elected, would have certain obligations under the Delaware General
Corporation Law (the “DGCL”) to EPL. If ATS’ hand-picked nominees are elected as
your directors, we believe they would have conflicts of interest which can
only
be detrimental to the interests of EPL and its stockholders, since it is in
ATS’
and Woodside’s interest to acquire EPL at the lowest possible price for EPL’s
shares, a price which your Board has already determined is
inadequate.
Given
ATS’s attempt to acquire EPL, we believe it is contrary to the interests of ATS
to allow any ATS-designated directors to take any further steps to enhance
the
value of the EPL shares. It is significant that, as disclosed in ATS’ consent
solicitation materials, the ATS nominees, if elected to the Board, will be
indemnified by ATS “to the fullest extent permitted by the DGCL and other
applicable law” if they breach their fiduciary duties to EPL and its
stockholders. We believe that such indemnification appears to indicate that
conflicts of interest could cause the ATS nominees, if elected, to be unable
to
fulfill their fiduciary duties to EPL and its stockholders.
-4-
Furthermore,
unless and until ATS acquires control over EPL, ATS
has
no
obligation to protect the interests of EPL’s stockholders; its sole obligation
is to Woodside and its stockholders. Additionally, because Woodside, through
its
affiliate Gryphon Exploration Company and its ownership of other assets and
its
conduct of other operations in the Gulf of Mexico, competes directly with EPL,
we believe that the ATS nominees would be subject to conflicts of interest
in
serving as directors of EPL.
While
ATS’
consent solicitation materials describe its proposed slate of directors as
“independent,” your Board believes that all of them have been handpicked by
Woodside simply to facilitate the acquisition of EPL by Woodside on terms that
are as favorable to Woodside as possible. In fact, Woodside has stated in its
consent statement materials that it “does not currently anticipate that the
Nominees will continue to serve as directors of the Company” once Woodside
completes the acquisition of EPL.
In
other
words, Woodside’s hand-picked nominees have been chosen for the single purpose
of approving a transaction your Board has already determined to be inadequate
and opportunistic, for which each nominee will receive $40,000. There is no
expectation that the ATS nominees will do anything to create or enhance value
to
the EPL stockholders.
On
the
contrary, your existing Board already has a strong track record of increasing
value for EPL stockholders. Your Board currently has a majority of directors
who
truly independent (within the meaning of the New York Stock Exchange listing
standards) and are committed to enhancing value for EPL stockholders, not just
Woodside and its affiliates.
For
the
foregoing reasons, your Board believes that the interests of EPL stockholders
will be best served if EPL’s current directors, acting independently of ATS, are
given the opportunity to evaluate EPL’s strategic alternatives, decide what
action is in the best interests of EPL’s stockholders and implement that
decision.
The
Board of Directors strongly believes that the solicitation being undertaken
by
ATS is not in the best interests of the Company’s stockholders and we therefore
urge stockholders to reject
the solicitation and revoke any consent previously
submitted.
Do
not delay.
In order to ensure that the existing Board is able to act in your best
interests, please mark, sign, date and return the enclosed WHITE
consent revocation card as promptly as possible.
-5-
QUESTIONS
AND ANSWERS ABOUT THIS CONSENT REVOCATION SOLICITATION
Q:
Who
is making this solicitation?
A:
Your
Board of Directors.
Q:
What
are we asking you to do?
A:
You are
being asked to revoke any consent that you may have delivered to ATS or to
Woodside in favor of the two proposals described in Woodside’s consent
solicitation statement and, by doing so, preserve your current Board, which
will
continue to act in your best interests.
Q:
If
I have already delivered a consent, is it too late for me to change my
mind?
A:
No.
Until the requisite number of duly executed, unrevoked consents are delivered
to
the Company in accordance with Delaware law and the Company’s organizational
documents, the consents will not be effective. At any time prior to the consents
becoming effective, you have the right to revoke your consent by delivering
a
WHITE Consent Revocation Card, as discussed in the following
question.
Q:
What
is the effect of delivering a consent revocation card?
A:
By
marking the “YES,
REVOKE MY CONSENT”
boxes
on
the enclosed WHITE
Consent
Revocation Card and signing, dating and mailing the card in the postage-paid
envelope provided, you will revoke any earlier dated consent that you may have
delivered to ATS or Woodside. Even if you have not submitted a consent card,
you
may submit a consent revocation as described above. Although submitting a
consent revocation will not have any legal effect if you have not previously
submitted a consent card, it will help us keep track of the progress of the
consent process.
Q:
If
I deliver a consent revocation card, does that mean that the Company will not
consummate a transaction with ATS?
A:
No. If
you deliver your WHITE Consent Revocation Card, you will only be deciding to
preserve the current composition of EPL’s Board. In other words, by returning
the WHITE Consent Revocation Card, you will ensure that the Company’s strategic
alternatives are evaluated fully and fairly by your existing directors instead
of by directors who are handpicked by ATS and expected to take the necessary
steps to consummate the ATS offer.
Q:
What
should I do to revoke my consent?
A:
Mark
the “YES,
REVOKE MY CONSENT”
boxes
next to each proposal listed on the WHITE Consent Revocation Card. Then, sign,
date and return the enclosed WHITE Consent Revocation Card today to MacKenzie
Partners, Inc. in the envelope provided. It is important that you date the
WHITE
Consent Revocation Card when you sign it.
Q:
What
happens if I do nothing?
A:
If you
do not send in any consent ATS may send to you and do not return the enclosed
WHITE Consent Revocation Card, you will effectively be voting AGAINST ATS’
proposals.
Q:
What happens if ATS’ proposals pass?
-6-
A:
If
unrevoked consents representing a majority of our outstanding common stock
are
delivered to us within 60 days of the earliest-dated consent, your Board will
be
replaced with ATS’ handpicked nominees who have stated publicly that they will
act to consummate the ATS offer — an offer your Board has already unanimously
(with Mr. Hiltz abstaining) determined to be inadequate and not in the best
interests of the Company’s stockholders (other than Woodside and its
affiliates). Your Board also believes that ATS’ proposals will interfere with
the Board’s efforts to explore strategic alternatives for the Company, including
efforts to seek a sale of the Company designed to obtain full and fair value
for
all Company stockholders.
Q:
What
is your Board’s position with respect to the ATS offer?
A:
Your
Board has unanimously (with Mr. Hiltz abstaining) determined that the ATS offer
is inadequate and not in the best interests of the Company’s stockholders (other
than Woodside and its affiliates). The Board has also recommended that
stockholders reject the ATS offer.
The
Board’s reasons and recommendations are contained in EPL’s
solicitation/recommendation statement on Schedule 14D-9 filed with the SEC
on
September 14, 2006 and which has been mailed to you. You should read the
Schedule 14D-9 (including any amendments or supplements thereto) because these
documents contain important information relating to the ATS offer.
Q:
What
does your Board recommend?
A:
Your
Board strongly believes that the solicitation being undertaken by ATS and
Woodside is not in the best interests of EPL’s stockholders. Your Board
unanimously opposes the solicitation by ATS and urges stockholders to reject
the
solicitation and revoke any consent previously submitted. Your Board has
recently directed the Company to pursue strategic alternatives to maximize
stockholder value, including a possible sale of the Company, and is in the
best
position to evaluate those strategic alternatives available to EPL, decide
which
of those is in the best interests of EPL’s stockholders and implement that
decision.
Q:
Who
is entitled to consent, withhold consent or revoke a previously given consent
with respect to Woodside’s proposals?
A:
Only
the stockholders of record of the Company Common Stock on the record date are
entitled to consent, withhold consent or revoke a previously given consent
with
respect to Woodside’s proposals. In accordance with Delaware law and EPL’s
bylaws, the Board set October 17, 2006 as the record date (the “Record Date”)
for the determination of the EPL stockholders who are entitled to execute,
withhold or revoke consents relating to the ATS consent solicitation. Only
holders of record as of the close of business on the Record Date may execute,
withhold or revoke consents with respect to the ATS consent
solicitation.
Q:
Who should I call if I have questions about the
solicitation?
A:
Please
call MacKenzie Partners, Inc. toll free at (800) 322-2885.
-7-
BACKGROUND
OF THE ATS OFFER & CONSENT SOLICITATION
On
Monday,
August 28, 2006, Mr. Richard A. Bachmann, Chairman and Chief Executive Office
of
EPL, received a telephone call at approximately 6:30 a.m. CDT on his cellular
phone from Don Voelte, the managing director and chief executive officer of
Woodside. Mr. Voelte informed Mr. Bachmann that Woodside was issuing a press
release announcing that ATS would make a cash tender offer to acquire all of
EPL’s Common Stock for $23.00 per share, subject to EPL’s stockholders voting
down the Merger Agreement. Mr. Voelte also indicated that Woodside would
commence litigation to overturn the termination fee paid by EPL to Plains
Exploration & Production Company (“Plains”) upon the termination of Plains’
merger agreement with Stone and any breakup fees payable under the Merger
Agreement, and would increase its offer by up to $1.00 if it were successful.
Mr. Voelte also told Mr. Bachmann that Woodside had acquired 4.5% of EPL’s
Common Stock. Mr. Voelte stated Woodside would prefer to do a friendly deal,
but
he was advised that Woodside could not talk to the Board or to management as
a
result of restrictions in the Merger Agreement. Mr. Bachmann did not comment
on
Mr. Voelte’s interpretation of the Merger Agreement.
Later
that
morning, the Board held a telephonic meeting during which Mr. Bachmann informed
the Board of the telephone call he received from Mr. Voelte. Following the
meeting, EPL issued a press release stating that the Board would review and
discuss the Woodside proposal in due course in consultation with its financial
and legal advisors, and would advise EPL’s stockholders of its position.
On
Monday,
August 28, 2006, Woodside filed suit against EPL, the EPL directors and Stone
in
the Delaware Court of Chancery in New Castle County (such proceeding, the “ATS
Litigation”). The complaint seeks, among other relief, (i) a declaration that
the termination fee paid to Plains and the breakup fee provisions in the Merger
Agreement are unlawful and (ii) the invalidation of a provision of the Company’s
bylaws that requires 85% approval for stockholder actions taken by written
consent.
On
Tuesday, August 29, 2006, the Company sent a letter to its employees advising
them of Woodside’s offer. The Company also filed with the SEC an amendment to
its registration statement (the “Registration Statement”) that included its
prospectus/proxy statement to be used at the stockholder meeting for the
acquisition of Stone. Among other things, the amendment included disclosure
of
the Woodside offer.
On
Thursday, August 31, 2006, ATS announced that it had commenced the tender offer
for the Company’s shares. ATS’ tender offer statement also indicated that ATS
expected to launch a consent solicitation to replace the members of EPL’s Board
with its nominees who ATS expected would accept the ATS offer.
On
Thursday, August 31, 2006, the Board held a telephonic meeting. The Board
approved the retention of Petrie Parkman & Co., Inc. (“Petrie Parkman”) as a
financial advisor to render any fairness or adequacy opinions with respect
to
the ATS offer, and the continued retention of Evercore and Banc of America
Securities LLC (“Banc of America Securities”) as financial advisors. The Board
also approved the retention of Wachtell, Lipton, Rosen & Katz as legal
counsel in addition to Cahill Gordon & Reindel LLP and Abrams & Laster
LLP. The Company’s legal advisors reviewed with the Board their fiduciary
duties. The legal advisors also discussed with the Board the terms of the ATS
offer, as well as the claims made by ATS in the ATS Litigation. The Company’s
financial advisors discussed with the Board the financial terms of the ATS
offer
and the types of financial analyses that were being prepared for the Board.
Mr.
Bachmann discussed his concerns regarding employee retention and indicated
that,
because of the tight job market and uncertainty regarding the ATS offer,
management was likely to recommend an employee retention plan to attempt to
limit employee departures and stabilize the employee base.
-8-
On
Wednesday, September 6, 2006, the Board held a meeting with its financial and
legal advisors. The Company’s legal advisors, among other things, again reviewed
with the Board their fiduciary duties. Each of the Company’s financial advisors
reviewed with the Board the financial terms of the ATS offer and preliminary
financial analyses. The Board then discussed various potential responses to
the
ATS offer. The Board focused on Woodside’s statement in the Schedule TO that the
terms of the Merger Agreement restrict the Company’s ability to talk to
Woodside. The Board believes that the Company is able to hold discussions with
Woodside and explore other possible strategic alternatives under the Merger
Agreement, but the Board also believed it was prudent to obtain Stone’s
confirmation of the Company’s interpretation. Management then described employee
retention issues resulting from the public announcement of Woodside’s offer and
discussed with the Board proposals being developed to implement modest employee
retention programs designed to limit employee losses and the projected costs
associated with such proposals. The Board also discussed other matters related
to the ATS offer. The Board also discussed a possible amendment to the Company’s
bylaws that would eliminate one of the claims raised in the ATS
Litigation.
Following
the Board meeting, counsel for EPL called Stone’s outside legal counsel. EPL’s
counsel informed Stone’s counsel of Woodside’s interpretation of the Merger
Agreement and requested acknowledgement that Stone had sought in the
negotiations to impose “no shop” restrictions on EPL comparable to those
applicable to Stone, that EPL had refused to accept such restrictions, that
Stone nevertheless agreed to proceed with the Merger Agreement, and that,
accordingly, and for other reasons, the Merger Agreement could not be
interpreted to impose such restrictions. Stone’s counsel acknowledged that the
Merger Agreement did not contain a “no shop” clause and indicated he would
discuss the matter with Stone and its Delaware counsel.
On
Thursday, September 7, 2006, Mr. Bachmann met with Mr. Richard Pattarozzi,
an
independent Stone board member, and discussed the status of the Stone
transaction. Mr. Bachmann also informed Mr. Pattarozzi of Woodside’s statement
regarding the Merger Agreement and indicated that EPL was requesting Stone’s
confirmation of EPL’s interpretation of the Merger Agreement. Mr. Pattarozzi
indicated he would contact the Stone board of directors to discuss the matter
promptly. Later that day, Stone’s outside counsel informed EPL’s outside counsel
that Stone did not concur with EPL’s interpretation of the Merger Agreement and
that Stone believed the Company was prohibited from communicating with Woodside
regarding the ATS offer. EPL then filed an action in Delaware seeking a
declaratory judgment (the “Declaratory Action”), and requested expedited
treatment.
The
Declaratory Action sought to confirm that the Merger Agreement does not restrict
the Company from “developing, soliciting, considering, communicating, exchanging
information, negotiating, disclosing, entering into or consummating potential
or
definitive strategic alternatives for Energy Partners, including internally
generated or third party proposals.”
The
Board
determined that the Company should not engage in any discussions with, or
provide any nonpublic information regarding the Company to, Woodside or other
third parties until the resolution of the Declaratory Action.
On
Friday,
September 8, 2006, the Board held a meeting and consulted with its financial
and
legal advisors. Mr. Bachmann updated the Board on the filing of the Declaratory
Action. The Board also discussed the ATS offer and the potential options
available to the Company, depending on the outcome of the Declaratory
Action.
Also
on
Friday, September 8, 2006, Mr. Bachmann and EPL’s financial and legal advisors
met with David H. Welch, President and Chief Executive Officer of Stone, and
Kenneth H. Beer, Stone’s Senior Vice President and Chief Financial Officer, and
Stone’s financial and legal advisors. EPL suggested a
-9-
framework
for the potential renegotiation of the Merger Agreement. Stone indicated it
would discuss the matter with its board of directors and respond quickly. Mr.
Welch noted the departure of several employees and requested a waiver under
the
Merger Agreement to permit Stone to adopt an employee retention plan and certain
salary adjustments with a cost of approximately $2.2 million. Mr. Bachmann
indicated that EPL would consider Stone’s request.
On
September 8, 2006, ATS launched its consent solicitation of EPL stockholders
in
which it solicited EPL stockholders to vote against the Stone
transaction.
On
September 11, 2006, Stone informed EPL that it would not enter into negotiations
regarding the Merger Agreement.
On
September 12, 2006, Stone announced that, on September 7, 2006, it had adopted
an employee retention plan and certain salary adjustments that will become
effective if the merger between EPL and Stone does not occur.
On
Wednesday, September 13, 2006, the Board met to discuss the ATS offer.
Representatives of Petrie Parkman, one of the Company’s financial advisors,
updated its previous reviews with the Board of the financial terms of the ATS
offer and reviewed its financial analyses of the $23.00 per share being offered
in the ATS offer. Representatives of Petrie Parkman also rendered to the Board
its oral opinion, confirmed in writing following the Board meeting, to the
effect that, as of September 13, 2006 and based upon and subject to the various
assumptions and limitations set forth in its opinion, the consideration being
offered by Woodside to the holders of Company Common Stock pursuant to the
ATS
offer is inadequate, from a financial point of view, to such holders (other
than
Woodside and its affiliates). Subsequently, representatives of Evercore, one
of
the Company’s financial advisors, updated its previous reviews with the Board of
the financial terms of the ATS offer and its financial analyses of the $23.00
per share being offered in the ATS offer. Representatives of Evercore also
rendered to the Board its oral opinion, confirmed in writing following the
Board
meeting, to the effect that, as of September 13, 2006 and based upon and subject
to the various assumptions and limitations set forth in its opinion, the
consideration being offered by Woodside to the holders of Company Common Stock
pursuant to the ATS offer is inadequate, from a financial point of view, to
such
holders (other than Woodside and its affiliates). Finally, representatives
of
Banc of America Securities, one of the Company’s financial advisors, updated its
previous reviews with the Board of the financial terms of the ATS offer and
its
financial analyses of the $23.00 per share being offered in the ATS offer.
Representatives of Banc of America Securities also rendered to the Board its
oral opinion, confirmed in writing following the Board meeting, to the effect
that, as of September 13, 2006 and based upon and subject to the various
assumptions and limitations set forth in its opinion, the consideration being
offered by Woodside to the holders of Company Common Stock pursuant to the
ATS
offer is inadequate, from a financial point of view, to such holders (other
than
Woodside and its affiliates). Following this review and discussion by the Board,
the Board unanimously determined (with Mr. Hiltz abstaining) that the ATS offer
was inadequate and not in the best interests of the Company’s stockholders
(other than Woodside and its affiliates). Accordingly, the Board recommended
that EPL stockholders reject the ATS offer and not tender your shares of Common
Stock pursuant to the ATS offer. The Board approved certain actions to address
employee retention issues resulting from the ATS offer and certain amendments
to
the Company’s bylaws. The Board adopted a six-month stockholders rights
agreement (the “Limited Rights Plan”). The Limited Rights Plan is intended to
allow the Company sufficient time to act in the best interests of EPL
stockholders. The Board also approved indemnification agreements for directors,
officers and one other employee based on the Board’s prior approval of such
arrangements for directors on August 4, 2006.
-10-
On
Thursday, September 14, 2006, EPL notified Stone that the employee retention
plan and salary adjustments announced by Stone on September 12, 2006 constituted
a breach of the Merger Agreement, which EPL considered material, and demanded
that Stone cure the breach.
On
Thursday, September 14, 2006, the Company provided Woodside with the Company’s
press release and the Schedule 14D-9.
On
September 27, 2006, the Delaware Court issued an oral ruling in the Declaratory
Action and the consolidated portion of the ATS action and indicated that a
written opinion would be issued later. In its oral ruling, subsequently
clarified at a hearing on October 5, 2006, the Delaware Court stated, among
other things, that Section 6.2(e) of the Merger Agreement does not limit the
ability of EPL to solicit, explore and negotiate, in good faith, any Third
Party
Acquisition Proposals (as defined in the Merger Agreement), including but not
limited to the ATS offer. The Delaware Court dismissed without prejudice
the remainder of the claims raised by EPL in the Declaratory Action as not
ripe
for a judicial determination.
On
October
6, EPL received the following letter from ATS:
[LETTERHEAD
OF ATS INC.]
October
5,
2006
Energy
Partners Ltd.
201
St.
Charles Ave., Suite 3400
New
Orleans, LA 70170-3400
Attn:
Richard Bachmann
Chairman
of the Board and Chief Executive Officer
Dear
Mr.
Bachmann,
ATS
was
pleased with the Delaware Chancery Court’s recent ruling that Section 6.2(e) of
your merger agreement with Stone Energy Corporation (“Stone”) does not prohibit
Energy Partners Ltd. (“EPL”) from talking to us about our pending offer to
acquire EPL. As addressed in your initial conversation with Don Voelte, CEO
of
Woodside Petroleum Ltd. on August 28, 2006, our advisors felt your hands were
tied by the Stone Merger Agreement - now that those binds have been lifted
we
are available to have discussions.
We
firmly
believe that our offer of US$23.00 per share (subject to increase by US$1.00
in
certain specified cases) is a fair valuation (especially in light of the
substantial decreases in the commodities markets and the corresponding decline
in your E&P peer group since our offer was announced). However, we would be
willing to listen to and review any information that you think could convince
us
otherwise.
Should
EPL
wish to discuss our offer with us further, please do not hesitate to contact
me
at +61 437 200 882, or feel free to contact Don Voelte on the personal contact
numbers provided on your August 28th
call.
-11-
Sincerely,
Mark
Chatterji
President
On
October
9, 2006, EPL responded by sending the following letter to ATS:
[EPL
Letterhead]
October
9,
2006
Mr.
Mark
Chatterji, President
ATS,
Inc.
71683
Riverside Drive
Covington,
LA 70433
Dear
Mr.
Chatterji:
We
were,
to be candid, surprised that you would send us the letter after you disclosed
its contents publicly. It made it appear to be a publicity ploy rather than
something substantive. And, again to be candid, we were surprised by the
letter’s content. You obviously know that our Board of Directors has found your
offer to be inadequate, and I might add the word “opportunistic,” and the
reasons for that decision. The results of your tender offer in which less than
24,000 EPL shares (approximately 6/100ths of 1% of our outstanding shares)
were
tendered, also speaks volumes for the fact that our stockholders agree totally
with the decision of their Board of Directors.
We
will
consider any reasonable offer which would enhance stockholder value. This
company, since its inception, has always prided itself in representing all
stockholders in taking steps to deliver value to all stockholders.
Should
Woodside wish to make such an offer and pursue discussions with us in a
constructive manner, please do not hesitate to contact Richard Bachmann, our
Chairman and Chief Executive Officer.
John
H.
Peper
Executive
Vice President
On
October
11, 2006, the Board held a meeting with its legal and financial advisors. The
Company’s legal advisors reviewed, among other things, the Board’s fiduciary
duties. The Board discussed termination of the Merger Agreement, including
the
costs and benefits associated with the termination and the likelihood of
stockholder approval of the transaction with Stone. The Board then approved
termination of the Merger Agreement. The Board directed the Company, assisted
by
its financial advisors, to explore strategic alternatives to maximize
stockholder value, including the possible sale of the Company.
-12-
On
October
12, 2006, EPL announced the termination of the Merger Agreement and that the
Board had directed the Company, assisted by its financial advisors, to explore
strategic alternatives to maximize stockholder value, including the possible
sale of the Company.
-13-
THE
CONSENT PROCEDURE
Voting
Securities and Record Date
In
accordance with Delaware law and the Company’s organizational documents, the
Board has set October 17, 2006 (the “Record Date”) as the record date for the
determination of stockholders who are entitled to execute, withhold or revoke
consents relating to the ATS proposals. As of the Record Date, there were
38,952,203 shares of the Company’s Common Stock outstanding, each entitled to
one consent per share.
Only
stockholders of record as of the Record Date are eligible to execute, withhold
and revoke consents in connection with the ATS proposals. Persons beneficially
owning shares of EPL Common Stock (but not holders of record), such as persons
whose ownership of EPL Common Stock is through a broker, bank or other financial
institution, should contact such broker, bank or financial institution and
instruct such person to execute the WHITE
Consent
Revocation Card on their behalf.
Effectiveness
of Consents
Under
Delaware law, unless otherwise provided in a corporation’s certificate of
incorporation, stockholders may act without a meeting, without prior notice
and
without a vote, if consents in writing setting forth the action to be taken
are
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at
a
meeting at which all shares entitled to vote thereon were present and voted.
The
Company’s certificate of incorporation does not prohibit stockholder action by
written consent. Under Section 228 of the Delaware General Corporation Law,
Woodside’s proposals will become effective if valid, unrevoked consents signed
by the holders of a majority of the shares of EPL’s Common Stock outstanding as
of the Record Date are delivered to the Company within 60 days of the
earliest-dated consent delivered to the Company.
Because
the ATS proposals could become effective before the expiration of the 60-day
period, we urge you to act promptly to return the WHITE
Consent
Revocation Card.
Effect
of WHITE
Consent Revocation Card
A
stockholder may revoke any previously signed consent by signing, dating and
returning to the Company a WHITE
Consent
Revocation Card. A consent may also be revoked by delivery of a written
revocation of your consent to ATS. Stockholders are urged, however, to deliver
all consent revocations to MacKenzie Partners, Inc., 105 Madison Avenue, New
York, NY 10016 (Facsimile No. (212) 929-0308). The Company requests that if
a
revocation is instead delivered to ATS, a copy of the revocation also be
delivered to EPL, c/o MacKenzie Partners, Inc., at the address or facsimile
number set forth above, so that EPL will be aware of all
revocations.
Unless
you
specify otherwise, by signing and delivering the WHITE Consent Revocation Card,
you will be deemed to have revoked consent to all of the ATS
proposals.
Any
consent revocation may itself be revoked by marking, signing, dating and
delivering a written revocation of your Consent Revocation Card to EPL or to
ATS
or by delivering to ATS a subsequently dated [color] consent card that ATS
sent
to you.
EPL
has
retained MacKenzie Partners, Inc. to assist in communicating with stockholders
in connection with Woodside’s consent solicitation and to assist in our efforts
to obtain consent revocations. If you have any questions about how to complete
or submit your WHITE
Consent
Revocation Card or
-14-
any
other
questions, MacKenzie Partners, Inc. will be pleased to assist you. You may
call
MacKenzie Partners, Inc. at (212) 929-5500 or toll-free at (800)
322-2885.
You
should carefully review this Consent Revocation Statement. YOUR TIMELY RESPONSE
IS IMPORTANT. You are urged not to sign any [color] consent cards. Instead,
reject the solicitation efforts of ATS and Woodside by promptly completing,
signing, dating and mailing the enclosed WHITE Consent Revocation Card to
MacKenzie Partners, Inc., 105 Madison Avenue, New York, NY 10016. Call Toll
Free: (800) 322-2885 (Facsimile No. 212-929-0308). Please be aware that if
you
sign a [color] card but do not check any of the boxes on the card, you will
be
deemed to have consented to the ATS proposals.
Results
of Consent Revocation Statement
EPL
will
retain an independent inspector of elections in connection with ATS’
solicitation. EPL intends to notify stockholders of the results of the consent
solicitation by issuing a press release, which it will also file with the SEC
as
an exhibit to a Current Report on Form 8-K.
SOLICITATION
OF CONSENT
REVOCATIONS
Cost
and Method
The
cost
of the solicitation of revocations of consent will be borne by EPL. EPL
estimates that the total expenditures relating to EPL’s current revocation
solicitation (other than salaries and wages of officers and employees, but
including costs of litigation related to the solicitation) will be approximately
$ ,
of which approximately $
has been incurred as of the date hereof. In
addition to solicitation by mail, directors, officers and other employees of
the
Company may, without additional compensation, solicit revocations by mail,
in
person or by telephone or other forms of telecommunication.
EPL
has
retained MacKenzie Partners, Inc. as proxy solicitors, at a fee not to exceed
$250,000, plus reasonable out-of-pocket expenses, to assist in the solicitation
of revocations. EPL will reimburse brokerage houses, banks, custodians and
other
nominees and fiduciaries for out-of-pocket expenses incurred in forwarding
EPL’s
consent revocation materials to, and obtaining instructions relating to such
materials from, beneficial owners of EPL Common Stock. MacKenzie Partners,
Inc.
has advised the Company that approximately 65 of its employees will be involved
in the solicitation of revocations by MacKenzie Partners, Inc. on behalf of
EPL.
In addition, MacKenzie Partners, Inc. and certain related persons will be
indemnified against certain liabilities arising out of or in connection with
the
engagement.
Participants
in the Company’s
Solicitation
Under
applicable regulations of the SEC, each director and certain officers of the
Company are deemed a “participant” in the Company’s solicitation of revocations
of consent. Please refer to the section entitled “Security Ownership of Certain
Beneficial Owners and Management” and to Annex I, “Certain Information Regarding
Participants in this Consent Revocation Solicitation”, for information about our
directors and officers who may be deemed a participant in the
solicitation.
PROFESSIONAL
ADVISORS
Evercore
Partners (“Evercore”), Banc of America Securities LLC (“Banc of America
Securities”), Petrie Parkman & Co., Inc. (“Petrie Parkman”) and UBS
Securities LLC (“UBS”) are acting as financial advisors for the Company in
connection with, among other things, the Company’s analysis and consideration
of, and response to, the ATS offer and the Company’s efforts to explore
strategic
-15-
alternatives
to maximize stockholder value. In connection with their engagement, the Company
has agreed to pay Evercore, Banc of America Securities, Petrie Parkman and
UBS
customary fees for its services. The Company has also agreed to reimburse
Evercore, Banc of America Securities, Petrie Parkman and UBS for their
reasonable out-of-pocket expenses, including fees and disbursements of its
legal
counsel, and to indemnify Evercore, Banc of America Securities, Petrie Parkman
and UBS and certain related persons, against certain liabilities arising out
of
or in connection with their engagement.
Evercore,
Banc of America Securities, Petrie Parkman and UBS and certain of their
affiliates, in the past have provided investment banking and financial services
to the Company, for which services they have received customary compensation.
In
the ordinary course of business, Evercore, Banc of America Securities, Petrie
Parkman and UBS and their affiliates may actively trade or hold securities
of
the Company for its own account or for the accounts of customers and,
accordingly, may at any time hold a long or short position in such
securities.
The
Company has retained Joele Frank, Wilkinson Brimmer Katcher (“Joele Frank”) as
its public relations advisor in connection with the ATS offer. The Company
has
agreed to pay customary compensation for such services and to reimburse Joele
Frank for its out-of-pocket expenses arising out of or in connection with the
engagement. The Company has also agreed to indemnify Joele Frank against certain
liabilities arising out of or in connection with the engagement.
APPRAISAL
RIGHTS
Holders
of
shares of Common Stock do not have appraisal rights under Delaware law in
connection with this solicitation of revocations.
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Mr.
Hitlz
is a senior managing director of Evercore Group L.L.C. (“Evercore”), one of
EPL’s financial advisors that has issued opinions with respect to the ATS offer
and the proposed Stone merger. Because of a potential conflict between Mr.
Hiltz’s role as director of EPL and as a member of Evercore, Mr. Hiltz recused
himself from each vote of the Board relating to the Board’s recommendation with
respect to the ATS offer and approval of the issuance of Common Stock in the
merger and related transactions with Stone. Evercore acted as financial advisor
to EPL in connection with the proposed merger with Stone. EPL agreed to pay
Evercore an opinion fee of $500,000, which became payable upon the delivery
of
the opinion and $7,000,000, which would have been payable upon consummation
of
the Stone merger. EPL also agreed to reimburse Evercore for its expenses in
connection with, and to indemnify Evercore against certain liabilities that
could arise out of, its engagement. Evercore was also retained by the Company
as
a financial advisor to deliver an opinion with respect to the fairness or
adequacy of the consideration being offered in the ATS offer. The Company has
agreed to pay to Evercore a $1,000,000 engagement fee and $7,000,000 on (i)
September 5, 2007, if the Company has not consummated a sale transaction prior
to such date or (ii) the date of consummation of a sale transaction, so long
as
(x) such sale transaction closes prior to September 5, 2007 or (y) the
definitive documentation with respect to such sale transaction is executed
prior
to September 5, 2007. If the Company had completed the acquisition of Stone,
Evercore would have been entitled to receive a fee of $7,000,000 in accordance
with the Company’s prior engagement letter with respect to the Stone
transaction, but Evercore would not be entitled to receive an additional fee
under clause (i) above. The Company has also agreed to reimburse Evercore for
all expenses, including reasonable fees and disbursements of legal counsel;
and
to indemnify it and certain related persons against certain liabilities related
to, arising out of, or in connection with its engagement.
-16-
On
September 13, 2006, the Company entered into indemnification agreements with
the
directors, executive officers and key employees of the Company. The agreements
provides indemnitees with, among other things, certain indemnification and
advancement rights in third-party proceedings, proceedings by or in the right
of
the corporation, proceedings in which the indemnitee is wholly or partly
successful, and for an indemnitee’s expenses incurred as a witness in a
proceeding by reason of his or her corporate status.
LEGAL
PROCEEDINGS
On
August
28, 2006, ATS commenced the ATS Litigation in the Delaware Court of Chancery
for
New Castle County (the “Delaware Court”) styled as ATS, Inc. v. Bachmann et al.,
C.A. No. 2374-N. As amended on September 11, 2006, the complaint alleges that
the termination fee provisions in the Merger Agreement relating to the
termination fee payable by Stone to Plains upon termination of their merger
agreement and the potential termination of the Merger Agreement are unlawful
whether considered in combination or separately. The amended complaint also
asserts that Section 6.2(e) of the Merger Agreement is an impermissible
restriction on the Board’s ability to fulfill its fiduciary obligations and is,
therefore, per se invalid. The amended complaint further contends that the
Company’s directors breached their fiduciary duties by agreeing to these
provisions. Finally, the amended complaint alleges that the Company’s by-laws
contain an invalid provision imposing a supermajority voting requirement on
any
actions taken by written consent of the Company’s stockholders (the
“Supermajority Consent Bylaw”). On the basis of those allegations, ATS seeks
declaratory relief, injunctive relief and damages. On August 31, 2006, ATS
filed
a motion to expedite the proceedings in the ATS Litigation. On September 7,
2006, ATS filed a motion for summary judgment with respect to the claim that
the
Supermajority Consent Bylaw is invalid.
On
September 7, 2006, the Company commenced the Declaratory Action against Stone
in
the Delaware Court styled as Energy Partners, Ltd. v. Stone Energy Corporation,
C.A. No. 2402-N. In that action, the Company is seeking a declaration that
Section 6.2(e) of the Merger Agreement is not and cannot operate as a “no talk”
or “no shop” provision that prevents the Company and its Board from developing,
soliciting, considering, communicating, exchanging information, negotiating,
disclosing, entering into or consummating potential or definitive strategic
alternatives for the Company, including internally generated or third-party
proposals.
On
September 7, 2006, the Company filed a motion for expedited proceedings in
the
Declaratory Action and ATS filed a motion to consolidate the ATS Litigation
and
the Declaratory Action. On September 11, 2006, the Delaware Court expedited
the
Declaratory Action. The Delaware Court also consolidated that portion of the
ATS
Litigation asserting the per se invalidity of Section 6.2(e) of the Merger
Agreement with the Declaratory Action.
On
September 12, 2006, Thomas Farrington, a purported stockholder of the company,
filed a putative class action suit against EPL, all of the EPL directors, EPL
Acquisition Corp. LLC, and Stone in the Court of Chancery of the State of
Delaware, in and for New Castle County (the “Farrington Action”). The complaint
seeks, among other relief, to recover unspecified damages against the
defendants, to require Stone to return to EPL a $43.5 million fee under certain
circumstances, and to enjoin any acquisition of EPL pending a declaration from
the court that the conduct of business pending the merger, EPL stockholder
voting, and the EPL termination and termination fee provisions of the Merger
Agreement between EPL and Stone are unlawful and not enforceable. The complaint
further seeks a declaration that EPL’s bylaw imposing a supermajority
requirement on EPL stockholders’ right to act by written consent is unlawful and
not enforceable. Plaintiff also seeks, pending certain corrective disclosures,
to enjoin EPL from holding a stockholder meeting to consider the Merger
Agreement.
-17-
On
September 13, 2006, the Board amended the Company’s by-laws to delete the
Supermajority Consent Bylaw. ATS has acknowledged that this mooted its claim
relating to the Supermajority Consent Bylaw.
On
September 22, 2006, a hearing in the Declaratory Action was held in the Delaware
Court concerning the Company’s rights and obligations under section 6.2 and
other provisions of the Merger Agreement regarding the range of actions the
Company is permitted to take in response to the Woodside Offer.
On
September 27, 2006, the Delaware Court issued an oral ruling in the Declaratory
Action and the consolidated portion of the ATS action and indicated that a
written opinion would be issued later. In its oral ruling, subsequently
clarified at a hearing on October 5, 2006 and memorialized in a written opinion
issued on October 11, 2006, the Delaware Court stated, among other things,
that
Section 6.2(e) of the Merger Agreement does not limit the ability of EPL to
explore and negotiate, in good faith, any Third Party Acquisition Proposals
(as
defined in the Merger Agreement), including but not limited to the ATS offer.
The Delaware Court dismissed without prejudice the remainder of the claims
raised by EPL in the Declaratory Action as not ripe for a judicial
determination.
At
the
same October 5, 2006 hearing, the Delaware Court granted motions to expedite
the
remaining claims in the ATS Litigation and the Farrington Action and set a
hearing date for the week of November 6, 2006. On October 13, 2006, following
the termination of the Merger Agreement, the Delaware Court held a hearing
at
the Company’s request to address whether the termination rendered expedition of
the ATS Litigation and the Farrington Action unnecessary. Following arguments,
the Delaware Court suggested that ATS and Farrington should amend their
complaints to identify the claims they seek to pursue in light of the
termination and scheduled a hearing for October 19, 2006 to determine whether
those claims merited expedition.
On
October
16, 2006 ATS filed a second amended complaint alleging that the termination
fee
provisions in the Merger Agreement were invalid under Delaware law. ATS also
alleges that the fees the Company has paid Stone in connection with the
termination of the Merger Agreement and Stone’s termination of its merger
agreement with Plains constitute an invalid penalty under Delaware law. ATS
asserts that, absent the invalidation of the termination fee payments, the
Company’s shareholders will be unable to make a fully informed choice as to
whether to accept the ATS offer. ATS seeks declaratory and injunctive
relief.
The
same
day, Farrington also filed a second amended complaint alleging that the EPL
directors breached their fiduciary duties by agreeing to the termination fee
provisions in the Merger Agreement, adopting the Limited Rights Plan, amending
the Severance Plan, and paying a fee to Stone in connection with the termination
of the Merger Agreement. Farrington also alleges that the EPL directors have
failed to adequately disclose material information relevant to the Company’s
shareholders’ decision whether to accept the Tender Offer. Farrington seeks
declaratory and injunctive relief as well as damages.
The
Company and the individual defendants believe the claims set out by Farrington
and ATS in their respective second amended complaint are without merit and
will
continue to vigorously defend against those claims.
-18-
CURRENT
DIRECTORS AND EXECUTIVE OFFICERS OF EPL
Directors
Each
of
the following individuals was elected at EPL’s 2006 annual meeting of
stockholders and will serve as a member of the Board until EPL’s 2007 annual
meeting of stockholders:
Richard
A. Bachmann, age
61,
has been chief executive officer of the Company and chairman of its Board of
Directors since the Company’s incorporation in January 1998. Mr. Bachmann began
organizing the Company in February 1997 and served as the Company’s president
until November 2005. From 1995 to January 1997, he served as director, president
and chief operating officer of The Louisiana Land and Exploration Company
(“LL&E”),
an
independent oil and gas exploration company. From 1982 to 1995, Mr. Bachmann
held various positions with LL&E, including director, executive vice
president, chief financial officer and senior vice president of finance and
administration. From 1978 to 1981, Mr. Bachmann was the treasurer of Itel
Corporation. Prior to 1978, Mr. Bachmann served with Exxon International, Esso
Central America, Esso InterAmerica and Standard Oil of New Jersey. He is also
a
director of Trico Marine Services, Inc.
John
C. Bumgarner, Jr.,
age 63,
has been a director since January 2000. Mr. Bumgarner is currently serving
as
managing member of Utica Plaza Management Company, a family-owned real estate
company. Mr. Bumgarner was chief operating officer and president of strategic
investments for Williams Communications Group, Inc., a high technology company,
from May 2001 to November 2002. Williams Communications Group, Inc. filed a
Plan
of Reorganization with the U.S. Bankruptcy Court for the Southern District
of
New York in August 2002. Mr. Bumgarner joined The Williams Companies, Inc.
in
1977 and served as senior vice president of Williams Corporate Development
and
Planning and then also served as president of Williams International Company
prior to joining Williams Communications Group, Inc. Mr. Bumgarner is also
a
director of Management Planning Systems, Inc. and Sirenza Microdevices, Inc.
Mr.
Bumgarner is a former treasurer of Skelly Oil.
Jerry
D. Carlisle, age
60,
has been a director since March 2003. Mr. Carlisle has been vice president
and
director of DarC Marketing, Inc., a family-owned marketing company, since 1997.
From 1983 to 1997, Mr. Carlisle was vice president, controller and chief
accounting officer of LL&E and, from 1979 to 1983, he held various
management positions at LL&E. Mr. Carlisle has a masters of business
administration from Loyola University, is a certified public accountant, and
serves as a trustee of the Mississippi State University Business
School.
Harold
D. Carter, age
67,
has been a director since May 1998. Since 1995, Mr. Carter has been an
independent oil and natural gas consultant and investment advisor. Mr. Carter
is
a director of Brigham Exploration Company and Abraxas Petroleum Corp., public
oil and gas companies, a director of Longview Energy Company, a privately held
oil and gas company, and former president of Sabine Corporation, an independent
oil and gas exploration company.
Enoch
L. Dawkins, age
68,
has been a director since January 2004. Mr. Dawkins retired from Murphy
Exploration and Production Co., where he served as president from 1991 until
2003. From 1964 until 1991, Mr. Dawkins held various operational, marketing
and
managerial positions at Ocean Drilling and Exploration Company, including
president from 1989 until its acquisition by Murphy Oil Corporation in 1991.
He
is also a director of Superior Energy Services, Inc.
Dr.
Norman C. Francis,
age 75,
has been a director since May 2005. Dr. Francis has served as the President
of
Xavier University of Louisiana since 1968. Dr. Francis is the chairman of the
board for the Southern Education Foundation and for Liberty Bank and Trust,
a
member of the board of directors of
-19-
the
American Council on Education and a Fellow of The American Academy of Arts
and
Sciences (inducted 1993).
Robert
D. Gershen, age
53,
has been a director since May 1998. Mr. Gershen is president of Associated
Energy Managers, LLC, an investment management firm specializing in private
equity investments in the energy sector. He is also a managing director of
the
general partner of Energy Income Fund, an investment fund. In addition, Mr.
Gershen serves as the President of Longview Energy Company, a privately held
oil
and gas company. Since 1989, Mr. Gershen has managed, through Associated Energy
Managers, LLC, three funds that invest in energy companies in the United
States.
Phillip
A. Gobe,
age 54,
has been a director since November 2005. Mr. Gobe joined the Company in December
2004 as chief operating officer and became president in May 2005. Mr. Gobe
has
over 28 years of energy industry experience and was with Nuevo Energy Company
as
chief operating officer from February 2001 until its acquisition by Plains
Exploration & Production Company in May 2004. Mr. Gobe’s primary
responsibilities were managing Nuevo’s domestic and international exploitation
and exploration operations. Prior to his position with Nuevo, Mr. Gobe had
been
the Senior Vice President of Production for Vastar Resources, Inc. since 1997.
From 1976 to 1997, Mr. Gobe worked for Atlantic Richfield Company and its
subsidiaries in positions of increasing responsibility, primarily in the Gulf
of
Mexico and Alaska.
William
R. Herrin, Jr.,
age 71,
has been a director since May 2005. Mr. Herrin served in a number of capacities
for Chevron Corporation, most recently as Vice President and General Manager,
Gulf of Mexico Production Business Unit, Chevron U.S.A. Production Co. from
July
1992 until his retirement in 1998.
William
O. Hiltz, age
55,
has been a director since November 2000. Mr. Hiltz is a senior managing director
of Evercore Partners and has been since joining that firm in October 2000.
From
April 1995 until October 2000, Mr. Hiltz was a managing director and head of
the
global energy group for UBS Warburg LLC and its predecessor firms, SBC Warburg
Dillon Read and Dillon, Read & Co. Inc.
John
G. Phillips, age
84,
has been a director since May 1998. Since 1995, Mr. Phillips has been an
independent financial consultant. Mr. Phillips is former chairman, president
and
chief executive officer of LL&E and, since 1972, continues to serve as a
director of the Whitney National Bank and Whitney Holding Corporation. Mr.
Phillips retired from LL&E in 1985.
Executive
Officers
The
following table sets forth certain information regarding our executive
officers:
|
Name
|
Age
|
Title
|
|
Richard
A. Bachmann
|
61
|
Chairman
and Chief Executive Officer
|
|
T.
Rodney Dykes
|
50
|
Senior
Vice President — Production
|
|
Phillip
A. Gobe
|
54
|
President
and Chief Operating Officer
|
|
Javan
Ottosan
|
48
|
Senior
Vice President —Drilling and Engineering
|
|
John
H. Peper
|
54
|
Executive
Vice President, General Counsel and Corporate Secretary
|
|
Timothy
R. Woodall
|
39
|
Executive
Vice President and Chief Financial
Officer
|
For
information regarding Richard
A. Bachmann,
see
“—Directors” above.
-20-
T. Rodney
Dykes
joined us
in April 2001 as general manager of operations and was elected vice president
of
operations in July 2001. He served as our vice president of exploitation for
the
period from March 2002 through July 2003 and was elected senior vice
president — production in July 2003. Mr. Dykes has over
25 years experience in the energy industry. Immediately prior to joining
us, Mr. Dykes worked as an independent consultant. From 1994 to 1999,
Mr. Dykes held various positions with CMS Oil and Gas Company, including
divisional operations manager, vice president of operations and vice president
of business development. From 1980 to 1994, he held various technical, drilling
and production management positions with Maxus Energy. Prior to 1980,
Mr. Dykes was a petroleum engineer with Kerr McGee.
For
information regarding Phillip
A. Gobe,
see
“—Directors” above.
Javan
D. Ottoson
joined us
in April 2006 as Senior Vice President of Drilling and Engineering. He has
over
26 years of energy experience and previously was with Chevron serving as Permian
Asset Development Manager, a position he has held since Chevron's acquisition of
Unocal in 2005. Prior to that acquisition, he was the West Area Asset Manager
for Pure Resources, Inc., a division of Unocal, a position he had held since
2003. He also spent 20 years with ARCO in a variety of operational and financial
roles, both domestically and abroad.
John
H. Peper
joined us
in January 2002 as executive vice president, general counsel and corporate
secretary. Prior to joining us, Mr. Peper had been senior vice president,
general counsel and secretary of Hall Houston Oil Company (“HHOC”) since
February 1993. Mr. Peper also served as a director of HHOC from October
1991 until we acquired HHOC in January 2002. For more than five years prior
to
joining HHOC, Mr. Peper was a partner in the law firm of Jackson Walker,
L.L.P., where he continued to serve in an of counsel capacity through
2001.
Timothy
R. Woodall
joined us
in August 2006 as executive vice president and chief financial officer. From
October 2004 to July 2006, Mr. Woodall was employed by UBS Investment Bank
as an
Executive Director in their London based Energy Group. From August 2001 to
August 2004, Mr. Woodall was employed by Credit Suisse First Boston as a Vice
President (from August 2001 to January 2004) and Director (from January 2004
to
July 2004) in their New York based Global Energy Group.
OWNERSHIP
OF COMMON STOCK BY
MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The
following table shows the number of shares of Common Stock beneficially owned
by
each director; by the Company’s chief executive officer; by the four other most
highly compensated executive officers of the Company; by all directors and
executive officers as a group; and by such persons known to the Company to
own
beneficially more than five (5%) of the outstanding Common Stock of the
Company.
The
information set forth below is as of October 17, 2006 (the “Record Date”) and is
based upon information supplied or confirmed by the named
individuals:
|
Beneficial
Owner
|
Common
Shares
|
Percent
of Common
Shares (1) |
|
Richard
A. Bachmann (2)
|
2,930,970
|
7.5
|
|
John
C. Bumgarner, Jr. (3)
|
64,346
|
*
|
|
Jerry
D. Carlisle (4)
|
28,824
|
*
|
|
Harold
D. Carter (3)
|
53,652
|
*
|
|
Enoch
L. Dawkins (5)
|
21,221
|
*
|
-21-
|
T.
Rodney Dykes (6)
|
61,577
|
*
|
|
Dr.
Norman C. Francis (7)
|
14,761
|
*
|
|
Robert
D. Gershen (3)
|
56,177
|
*
|
|
Phillip
A. Gobe (8)
|
49,490
|
*
|
|
William
R. Herrin, Jr. (7)
|
18,203
|
*
|
|
William
O. Hiltz (9)
|
121,196
|
*
|
|
Javan
D. Ottoson (10)
|
129
|
*
|
|
John
H. Peper (11)
|
246,557
|
*
|
|
John
G. Phillips (3)
|
51,210
|
*
|
|
Timothy
R. Woodall
|
--
|
*
|
|
All
directors and executive officers as a group (15 persons)
|
3,718,314
|
9.3
|
|
Steadfast
Capital Management LLC (12)
|
1,930,000
|
5.0
|
|
Amber
Master Fund (Cayman) SPC (13)
|
2,046,300
|
5.3
|
__________________
* Represents
beneficial ownership of less than 1%.
(1)
Percentage
ownership of a holder or class of holders is calculated by dividing (1) the
number of shares of Common Stock, including restricted shares, outstanding
attributed to such holder or class of holders, as the case may be, plus the
total number of shares of Common Stock underlying options exercisable and
restricted share units that vest within sixty days from October 17, 2006
and
warrants held by such holder or class of holders, as the case may be, by
(2) the
total number of shares of Common Stock outstanding plus the total number
of
shares of Common Stock underlying options exercisable and restricted share
units
that vest within sixty days from October 17, 2006 and warrants held by such
holder or class of holders, as the case may be, but not Common Stock underlying
such securities held by any other person.
(2)
Includes
930,898 shares of Common Stock pledged to support obligations incurred in five
separate transactions under Forward Purchase Agreements entered into with
Citigroup. Mr. Bachmann retains voting rights with respect to these shares.
The
number of shares to be delivered commencing in June 2007 pursuant to such
agreements will be based on the market price of the Company’s Common Stock and
will not exceed 930,898 shares. Mr. Bachmann has the right to deliver cash
instead of shares of Common Stock. Also includes (i) 350,668 shares of Common
Stock underlying options granted to Mr. Bachmann under our 2006 Long Term Stock
Incentive Plan, which may be exercised within 60 days from October 17, 2006,
(ii) 2,245 shares of Common Stock beneficially owned by Mr. Bachmann and held
in
trust by the Energy Partners, Ltd. 401(k) Plan and (iii) 1,000 shares
beneficially owned by Mr. Bachmann’s wife. The address for Mr. Bachmann is
Energy Partners, Ltd., 201 St. Charles Avenue, Suite 3400, New Orleans,
Louisiana 70170.
(3)
Includes
29,025 shares of Common Stock underlying options exercisable, and 1,858
restricted share units vesting, within 60 days of October 17, 2006 granted
under
our Amended and Restated 2000 Stock Incentive Plan for Non-Employee Directors
to
each of Messrs. Bumgarner, Carter, Gershen and Phillips. Also includes 15,819
and 1,993 phantom shares accrued for Messrs. Bumgarner and Gershen under our
Stock and Deferral Plan for Non-Employee Directors.
(4)
Includes
19,025 shares of Common Stock underlying options exercisable, and 1,858
restricted share units vesting, within 60 days of October 17, 2006 granted
to
Mr. Carlisle under our Amended and Restated 2000 Stock Incentive Plan for
Non-Employee Directors. Includes 500 shares of Common Stock beneficially owned
by Mr. Carlisle’s wife of which Mr. Carlisle disclaims beneficial
ownership.
(5)
Includes
15,025 shares of Common Stock underlying options exercisable, and 1,858
restricted share units vesting, within 60 days of October 17, 2006 granted
to
Mr. Dawkins under our Amended and Restated 2000 Stock Incentive Plan for
Non-Employee Directors.
(6)
Includes
54,000 shares of Common Stock underlying options exercisable within 60 days
of
October 17, 2006 granted to Mr. Dykes under our 2006 Long Term Stock Incentive
Plan. Also includes 1,674 shares of Common Stock beneficially owned by Mr.
Dykes
and held in trust by the Energy Partners, Ltd. 401(k) Plan.
-22-
(7)
Includes
9,025 shares of Common Stock underlying options exercisable, and 1,858
restricted share units vesting, within 60 days of October 17, 2006 granted
under
our Amended and Restated 2000 Stock Incentive Plan for Non-Employee Directors
to
each of Dr. Francis and Mr. Herrin. Also includes 1,780 phantom shares accrued
for Dr. Francis under our Stock and Deferral Plan for Non-Employee
Directors.
(8)
Includes
48,500 shares of Common Stock underlying options exercisable within 60 days
of
October 17, 2006 granted to Mr. Gobe under our 2006 Long Term Stock Incentive
Plan. Also includes 990 shares of Common Stock beneficially owned by Mr. Gobe
and held in trust by the Energy Partners, Ltd. 401(k) Plan.
(9)
Includes
13,025 shares of Common Stock underlying options exercisable, and 1,858
restricted share units vesting, within 60 days of October 17, 2006 granted
under
our Amended and Restated 2000 Stock Incentive Plan for Non-Employee Directors
to
Mr. Hiltz, and 4,314 phantom shares accrued for Mr. Hiltz under our Stock and
Deferral Plan for Non-Employee Directors.
(10)
Shares
of
Common Stock beneficially owned by Mr. Ottoson and held in trust by the Energy
Partners, Ltd. 401(k) Plan.
(11) Includes
127,300 shares of Common Stock underlying options exercisable, within 60 days
of
October 17, 2006 granted under our 2006 Long Term Stock Incentive Plan, and
68,445 warrants granted in the acquisition of Hall-Houston Oil Company in 2002,
which are currently exercisable. Also includes 1,496 shares of Common Stock
beneficially owned by Mr. Peper and held in trust by the Energy Partners, Ltd.
401(k) Plan.
(12) Based
on a
Schedule 13G filed with the SEC on March 17, 2006, for shares held by Steadfast
Capital Management LLC, Steadfast Advisors LLC, Steadfast Capital, L.P.,
American Steadfast, L.P., Steadfast International Ltd. and Robert S. Pitts,
Jr.,
the managing member of Steadfast Capital Management LLC and Steadfast Advisors
LLC (collectively, “Steadfast”). The address for Steadfast is 767 Fifth Avenue,
6th Floor, New York, New York 10153.
(13) Based
on a
Schedule 13G filed with the SEC on September 25, 2006 for shares held by Amber
Master Fund (Cayman) SPC, Amber Capital LP, Amber Capital GP LLC, Michel Brogard
and Joseph Oughourlian. The address for Amber Master Fund (Cayman) SPC is P.O.
Box 309 GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman
Islands. The address for the other reporting persons is 600 Lexington Avenue
-
34th Floor, New York, New York 10022.
CORPORATE
GOVERNANCE
The
Board of Directors
The
directors hold regular meetings, attend special meetings as required and spend
such time on the affairs of the Company as their duties require. The Company’s
Corporate Governance Guidelines provide that directors are expected to attend
regular Board meetings and the Annual Meeting of Stockholders in person and
to
spend the time needed and meet as frequently as necessary to properly discharge
their responsibilities. During calendar year 2005, the Board of Directors held
a
total of nine (9) meetings, regular and special. All directors of the Company
attended at least seventy-five percent (75%) of the meetings of the Board of
Directors and of the committees on which they served during the period. All
of
the Company’s then current directors who were standing for reelection at the
meeting attended the annual meeting of stockholders in 2005.
The
non-management directors meet in executive sessions at least semi-annually
and
our independent directors meet at least annually, to discuss such matters as
they deem appropriate. At least once a year, our non-management directors meet
to review the Compensation Committee’s annual review of the chief executive
officer. These executive sessions are chaired by the Chairman of the Nominating
& Governance Committee. Stockholders may communicate with the non-management
directors by following the procedures under “— Communications with Board of
Directors.”
-23-
Committees
of the Board
The
Audit Committee
The
Board
of Directors has a standing Audit Committee established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934, the current members
of which are Messrs. Bumgarner, Carlisle (Chairman), Carter and Phillips. The
Board of Directors has determined that each of the members of the Audit
Committee is “independent” as defined by New York Stock Exchange (“NYSE”)
listing
standards and the rules of the SEC applicable to audit committee members, and
that Mr. Carlisle qualifies as an “audit committee financial expert” as
described in Item 401(h) of Regulation S-K. The Audit Committee has a charter
under which its primary purpose is to assist the Board in overseeing (1) the
integrity of the Company’s financial statements, (2) the independent registered
public accountants’ qualifications and independence, (3) the performance of the
Company’s internal audit function and independent registered public accountants
and (4) the compliance by the Company with legal and regulatory requirements.
The Audit Committee is directly responsible for the appointment and compensation
of the independent registered public accountants. During fiscal year 2005,
the
Audit Committee held eight (8) meetings.
The
Compensation Committee
The
Board
of Directors has a standing Compensation Committee, the current members of
which
are Messrs. Bumgarner (Chairman), Gershen, Herrin and Phillips. The Compensation
Committee has a charter under which its responsibilities and authorities include
reviewing the Company’s compensation strategy, reviewing the performance of and
approving the compensation for the senior management (other than the chief
executive officer), evaluating the chief executive officer’s performance and,
either as a committee or together with the other independent directors,
determining and approving the chief executive officer’s compensation level. In
addition, the committee approves and administers employee benefit plans and
takes such other action as may be appropriate or as directed by the Board of
Directors to ensure that the compensation policies of the Company are reasonable
and fair. The Board of Directors has determined that each member of the
Compensation Committee is “independent” as defined by NYSE listing standards.
During fiscal year 2005, the Compensation Committee held three (3)
meetings.
The
Nominating & Governance Committee
The
Board
of Directors also has a standing Nominating & Governance Committee, the
current members of which are Dr. Francis (Chairman) and Messrs. Carter, Herrin
and Hiltz. The Nominating & Governance Committee has a charter under which
its responsibilities and authorities include identifying director candidates
and
recommending director nominees for the next annual meeting of stockholders
or
for any vacancy on the Board of Directors and recommending members of the Board
of Directors to serve on the various committees. In addition, the Nominating
& Governance Committee develops and recommends to the Board of Directors the
Corporate Governance Guidelines of the Company and is responsible for the
oversight of the evaluation of the Board of Directors and management. The Board
of Directors has determined that each member of the Nominating & Governance
Committee is “independent” as defined by NYSE listing standards. During fiscal
year 2005, the Nominating & Governance Committee held two (2)
meetings.
Nominee
Qualifications
When
seeking candidates for director, the Nominating & Governance Committee may
solicit suggestions from incumbent directors, management, stockholders or
others. While the Nominating & Governance Committee has authority under its
charter to retain a search firm for this purpose, no such firm was utilized
in
2005. After conducting an initial evaluation of a potential candidate, the
Nominating
-24-
&
Governance Committee will interview that candidate if it believes such candidate
might be suitable to be a director. The Nominating & Governance Committee
may also ask the candidate to meet with management. If the Nominating &
Governance Committee believes a candidate would be a valuable addition to the
Board, it will recommend to the full Board that candidate’s
election.
The
Nominating & Governance Committee selects each nominee based on the
nominee’s skills, achievements and experience. The Nominating & Governance
Committee considers a variety of factors in selecting candidates, including,
but
not limited to the following: independence, wisdom, integrity, an understanding
and general acceptance of the Company’s corporate philosophy, valid business or
professional knowledge and experience, a proven record of accomplishment with
excellent organizations, an inquiring mind, a willingness to speak one’s mind,
an ability to challenge and stimulate management and a willingness to commit
time and energy.
Communications
with Board of Directors
The
Nominating & Governance Committee, on behalf of the Board, reviews letters
from stockholders concerning the Company’s annual general meeting and governance
process and makes recommendations to the Board based on such communications.
Stockholders can send communications to the Board by mail in care of the
Corporate Secretary at 201 St. Charles Avenue, Suite 3400, New Orleans,
Louisiana 70170, and should specify the intended recipient or recipients. All
such communications, other than unsolicited commercial solicitations or
communications, will be forwarded to the appropriate director or directors
for
review. Any such unsolicited commercial solicitation or communication not
forwarded to the appropriate director or directors will be available to any
non-management director who wishes to review it.
Website
Access to Corporate Governance Documents
Copies
of
the charters for the Audit Committee, the Compensation Committee and the
Nominating & Governance Committee, as well as the Company’s Corporate
Governance Guidelines and Code of Business Conduct and Ethics (the “Code”), are
available free of charge on the Company’s website at www.eplweb.com or by
writing to Investor Relations, Energy Partners, Ltd., 201 St. Charles Avenue,
Suite 3400, New Orleans, Louisiana 70170. The Company will also post on its
website any amendment to the Code and any waiver of the Code granted to any
of
its directors or executive officers.
Compensation
of Directors
Non-employee
directors receive an annual retainer of $30,000 and meeting fees of $2,000
for
each Board meeting, and $1,500 for each committee meeting, attended (even if
held on the same date). The Chairman of the Audit Committee receives an
additional $15,000 per year, each other Audit Committee member receives an
additional $5,000 per year and the Chairman of each of the Compensation
Committee and the Nominating & Governance Committee receives an additional
$10,000 per year. Meeting fees are paid in cash. Retainer fees are paid in
shares of Common Stock (valued at fair market value); provided that a director
may elect to receive up to 50% of such retainer fees in cash. Directors may
defer all or a portion of their retainer and meeting fees. Directors are also
reimbursed for their reasonable expenses in connection with attending Board
of
Director meetings and other Company events.
Our
Amended and Restated 2000 Stock Incentive Plan for Non-Employee Directors
provides for grants of stock options and restricted share units to members
of
the Board of Directors who are not employees of the Company or any subsidiary.
The size of any grants of stock options and restricted share units to
non-employee directors, including to new directors, will be determined annually,
based on the analysis of an independent compensation consultant. Based on such
analysis, the Compensation Commit-
-25-
tee
recommended, and the Board approved, the grant of 6,500 stock options and 3,000
restricted stock units to each non-employee director on the date of the 2006
Annual Meeting. All stock options granted under the plan will have a per share
exercise price equal to the fair market value of a share of Common Stock on
the
date of grant (as determined by the committee appointed to administer the plan).
Stock options and restricted share units become 100% vested on the first
anniversary of the date of grant provided the eligible director continues as
a
director of the Company throughout that one-year period. Prior to the first
anniversary of the date of grant, an eligible director shall be vested in the
pro rata number of options or restricted share units based on the number of
days
during that year that the eligible director served. Stock options expire on
the
earlier of (i) ten years from the date of grant or (ii) 36 months after the
optionee ceases to be a director for any reason. The total number of shares
of
our Common Stock that may be issued under the plan is 500,000, subject to
adjustment in the case of certain corporate transactions and
events.
EXECUTIVE
COMPENSATION AND OTHER MATTERS
The
following table sets forth certain summary information for the prior three
years
concerning the compensation earned by the Company’s Chief Executive Officer (Mr.
Bachmann) and our four other most highly compensated executive officers who
earned in excess of $100,000 for services rendered in 2005.
|
Long
Term
Compensation
Awards(1)
|
||||||||||||||||||||||
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Restricted
Share
Award(s)
($)
|
Securities
Underlying
Options/
SARs
(#)
|
Long
Term Incentive Plan Payouts (#)
|
All
Other
Compensation
($)(2)
|
|||||||||||||||
|
Richard
A. Bachmann
Chairman and Chief Executive Officer(3) |
2005
2004
2003
|
415,000
392,000
372,000
|
915,000
600,000
500,000
|
382,571
—
—
|
111,930
62,000
200,000
|
17,777
—
—
|
17,352
6,853
9,096
|
|||||||||||||||
|
Phillip
A. Gobe
|
2005
|
300,000
|
199,000
|
255,721
|
174,817
|
—
|
109,748
|
|||||||||||||||
|
President
and Chief Operating
|
2004
|
21,538
|
100,000
|
758,800
|
95,500
|
—
|
127
|
|||||||||||||||
|
Officer
(3)(4)(5)
|
—
|
|||||||||||||||||||||
|
David
R. Looney
|
2005
|
209,821
|
366,950
|
885,248
|
191,007
|
—
|
144,023
|
|||||||||||||||
|
Executive
Vice President and Chief Financial Officer (3)(4) (6)
|
||||||||||||||||||||||
|
John
H. PeperExecutive
Vice President, General
|
2005
|
227,000
|
129,970
|
103,456
|
130,271
|
7,778
|
13,715
|
|||||||||||||||
|
Executive
Vice President, General Counsel and
|
2004
|
212,000
|
200,000
|
—
|
13,400
|
—
|
35,836
|
|||||||||||||||
|
Corporate
Secretary(3)(7)
|
2003
|
201,500
|
175,000
|
—
|
33,500
|
—
|
4,495
|
|||||||||||||||
|
T.
Rodney Dykes
|
2005
|
206,000
|
120,600
|
81,464
|
77,838
|
4,445
|
13,012
|
|||||||||||||||
|
Senior
Vice President —
|
2004
|
202,000
|
80,000
|
—
|
10,000
|
—
|
4,675
|
|||||||||||||||
|
Production(3)
|
2003
|
184,583
|
160,000
|
—
|
26,000
|
—
|
12,244
|
|||||||||||||||
______________
|
(1)
|
Under
the Amended and Restated 2000 Long Term Stock Incentive Plan, all
outstanding awards will become fully exercisable at the time of a
change
of control of the Company. See “— Employment Agreements and Change of
Control Arrangements” for a summary of the definition of change of
control.
|
|
(2)
|
The
amounts represent the dollar value of term life insurance premiums
paid by
us for the benefit of the executive officers, the dollar value of
the
Company match to the Energy Partners, Ltd. 401(k) Plan on the employees’
behalf, reimbursement of relocation expenses and, in the case of
Mr.
Dykes, the Company’s
|
-26-
contributions
to a key employee retention plan. The plan requires that the 401(k) match be
held in our Common Stock for a period of three years. For 2005, (i) the life
insurance premiums for Messrs. Bachmann, Gobe, Looney, Peper and Dykes were
$4,752, $1,518, $198, $1,115 and $652, respectively; (ii) the value of the
401(k) match for Messrs. Bachmann, Gobe, Looney, Peper and Dykes were $12,600,
$12,600, $11,025, $12,600 and $12,360, respectively; and (iii) the value of
reimbursed relocation expenses for Messrs. Gobe and Looney was $95,630 and
$133,800, respectively.
|
(3)
|
2005
Bonus awards include amounts to be paid in September 2006 for Messrs.
Bachmann, Gobe, Looney, Peper and Dykes of $80,000, $39,000, $26,950,
$24,970 and $20,600, respectively, conditioned upon continued employment
with the Company at that time. 2005 Restricted Share Awards of restricted
stock units include awards granted subject to stockholder approval
of the
2006 Plan for Messrs. Bachmann, Gobe, Looney, Peper and Dykes of
16,648,
11,128, 6,486, 4,502 and 3,545 units, respectively. Restricted stock
units
vest ratably over a three year period. Dividends, if any, will be
credited
to the accounts of the
participants.
|
|
(4)
|
Mr.
Gobe commenced employment with us in December 2004 and Mr. Looney
commenced employment with us in February 2005. Mr. Gobe became the
Company’s President upon his appointment by the Board in May 2005. Mr.
Looney became the Company’s Executive Vice President and Chief Financial
Officer upon his appointment by the Board in March 2005. Mr. Looney
has
since resigned from the Company, effective May 2,
2006.
|
|
(5)
|
On
December 6, 2004, Mr. Gobe was granted 40,000 restricted share units
which
vest on December 6, 2007. As of December 31, 2005, Mr. Gobe’s restricted
shares, all of which are unvested, had a value of $871,000. Dividends,
if
any, will be paid on the restricted shares at the same rate paid
to all
stockholders.
|
|
(6)
|
On
February 21, 2005 Mr. Looney was granted 30,000 restricted share
units
which vest on February 21, 2008. As of December 31, 2005, Mr. Looney’s
restricted shares, all of which are unvested, had a value of $653,700.
Dividends, if any, will be paid on the restricted shares at the same
rate
paid to all stockholders. Upon commencement of his employment, Mr.
Looney
received a payment of $235,000.
|
|
(7)
|
On
May 6, 2003, Mr. Peper was granted 15,000 restricted shares for services
rendered in 2002, all of which vest on May 6, 2006. As of December
31,
2005, Mr. Peper’s restricted shares, all of which are unvested, had a
value of $326,850. Dividends, if any, will be paid on the restricted
shares at the same rate paid to all
stockholders.
|
Incentive
and Other Employee Benefit Plans
The
table
below sets forth information regarding stock options granted to our Chief
Executive Officer and our four other most highly compensated executive officers
for services rendered during the fiscal year ended December 31, 2005 and
includes stock options granted in March 2006. We did not grant any stock
appreciation rights for services rendered during 2005.
|
Individual
Grants
|
|||||||
|
Name
|
Number
of
Securities
Underlying
Options
Granted(#)
|
%
of Total Options
Granted
to
Employees
in
Fiscal
Year
|
Exercise
Price
($/Sh)
|
Expiration
Date
|
Potential
Realizable
Value
at Assumed
Annual Rates of Stock Price
Appreciation for
Option Terms(1) |
||
|
5%($)
|
10%($)
|
||||||
|
Richard
A. Bachmann(2)(3)
|
111,930
|
17%
|
22.98
|
March
23, 2016
|
1,617,612
|
4,099,347
|
|
-27-
|
Phillip
A. Gobe(2)(3)(4)
|
24,939
|
4%
|
22.98
|
March
23, 2016
|
360,418
|
913,371
|
|
49,878
|
7%
|
22.31
|
March
16, 2016
|
699,820
|
1,773,482
|
|
|
100,000
|
5%
|
26.59
|
July
22, 2015
|
1,672,231
|
4,237,761
|
|
|
David
R. Looney(2)(3)(4)(5)
|
14,536
|
2%
|
22.98
|
March
23, 2016
|
210,074
|
532,369
|
|
29,071
|
4%
|
22.31
|
March
16, 2016
|
407,885
|
1,033,660
|
|
|
30,000
|
4%
|
24.54
|
February
21, 2015
|
462,992
|
1,173,313
|
|
|
17,400
|
3%
|
27.34
|
March
17, 2015
|
299,175
|
758,169
|
|
|
100,000
|
15%
|
26.59
|
July
22, 2015
|
1,672,231
|
4,237,761
|
|
|
John
H. Peper(2)(3)(4)
|
10,090
|
1%
|
22.98
|
March
23, 2016
|
145,821
|
369,538
|
|
20,181
|
3%
|
22.31
|
March
16, 2016
|
283,152
|
717,564
|
|
|
100,000
|
15%
|
26.59
|
July
22, 2015
|
1,672,231
|
4,237,761
|
|
|
T.
Rodney Dykes (2)(3)(4)
|
7,946
|
1%
|
22.98
|
March
23, 2016
|
114,836
|
291,016
|
|
15,892
|
2%
|
22.31
|
March
16, 2016
|
222,975
|
565,062
|
|
|
50,000
|
7%
|
26.59
|
July
22, 2015
|
836,115
|
2,118,881
|
________________
|
(1)
|
The
dollar amounts under these columns represent the potential realizable
value of the total grant of non-qualified stock options to each of
the
named executive officers assuming that the market price of the underlying
security appreciates in value from the date of grant at the 5% and
10%
annual rates prescribed by the SEC. These calculations are not intended
to
forecast possible future appreciation, if any, of the price of the
Company’s Common Stock.
|
|
(2)
|
Options
granted on March 23, 2006 have a ten-year term and are exercisable
as
follows: one-third become exercisable beginning on March 23, 2007,
one-third are exercisable beginning on March 23, 2008 and the remainder
are exercisable beginning on March 23,
2009.
|
|
(3)
|
Options
granted on March 16, 2006 have a ten-year term and are exercisable
as
follows: one-third become exercisable beginning on March 16, 2007,
one-third are exercisable beginning on March 16, 2008 and the remainder
are exercisable beginning on March 16,
2009.
|
|
(4)
|
Options
granted in July 2005 have a ten-year term and are all exercisable
on July
22, 2010.
|
|
(5)
|
Mr.
Looney received 30,000 options upon commencement of his employment
in
February 2005. One third of these options became exercisable on February
21, 2006, one third are exercisable beginning on February 21, 2007
and the
remainder are exercisable beginning on February 21, 2008. Mr. Looney’s
options granted in March 2005 are exercisable one third on March
17, 2006,
one third beginning March 17, 2007 and the remainder beginning on
March
17, 2008.
|
The
following table sets forth information concerning each exercise of stock options
during 2004 by each of the named Executive Officers and the value of unexercised
options at December 31, 2004.
-28-
The
table
below sets forth information concerning the value of exercised and unexercised
stock options held by our Chief Executive Officer and our four other most highly
compensated executive officers as of December 31, 2005.
Aggregated
Option Exercises During Fiscal 2005
and
Option Values as of December 31, 2005
|
Number
of Securities
|
||||||
|
Underlying
Unexercised
|
Value
of Unexercised
|
|||||
|
Shares
Acquired
|
Value
Realized
|
Options
at Fiscal Year End(#)
|
In-the-Money
Options at
Fiscal
Year End($)(2)
|
|||
|
Name
|
on
Exercise(#)
|
($)(1)
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|
Richard
A. Bachmann
|
—
|
—
|
288,890
|
126,444
|
2,774,588
|
591,486
|
|
Phillip
A. Gobe
|
—
|
—
|
16,667
|
178,833
|
47,001
|
93,999
|
|
David
R. Looney
|
—
|
—
|
—
|
147,400
|
—
|
—
|
|
John
H. Peper
|
—
|
—
|
106,005
|
139,178
|
1,345,310
|
238,938
|
|
T.
Rodney Dykes
|
10,000
|
124,600
|
37,556
|
81,777
|
404,835
|
194,388
|
________________
|
(1)
|
Fair
market value on date of exercise minus the exercise price of the
stock
options.
|
|
(2)
|
Based
on the positive difference, if any, between the closing sale price
of the
Company’s Common Stock of $21.79 on December 31, 2005, as reported by the
New York Stock Exchange, and the exercise price of such
options.
|
Employment
Agreements and Change of Control Arrangements
Under
our
offer letter agreement with Mr. Gobe dated October 19, 2004, he is entitled
to
an annual salary of at least $300,000. In addition, Mr. Gobe received 40,000
restricted share units which vest on the third anniversary of the date of the
grant, and ten year options to purchase 50,000 shares of Common Stock, which
vest ratably over three years, at an exercise price equal to the market price
of
the Common Stock on the date of grant. Mr. Gobe’s bonus target is 65% of base
salary.
Under
our
offer letter with Javan Ottoson dated March 20, 2006, Mr. Ottoson is entitled
to
an annual salary of $210,000. In addition, Mr. Ottoson received an employment
payment of $50,000, ten year options to purchase 10,000 shares of Common Stock,
which vest ratably over three years at an exercise price equal to the closing
price of the Company’s Common Stock on the date of grant and 5,000 restricted
share units which vest on the third anniversary of the date of his start of
employment. Mr. Ottoson’s bonus target is 50% of base pay.
Under
our
offer letter with Timothy Woodall dated July 11, 2006, he is entitled to an
annual salary of $250,000. In addition, Mr. Woodall received an employment
payment of $150,000, ten year options to purchase 100,000 shares of Common
Stock, which vest ratably over three years at an exercise price equal to the
closing price of the Company’s Common Stock on the date of grant and 30,000
restricted share units which vest on the third anniversary of the date of his
start of employment. Mr. Woodall’s bonus target is 55% of base pay.
Certain
of
our executive officers, Messrs. Bachmann, Gobe, Peper and Woodall, have entered
into a Change of Control Severance Agreement (each a “Severance Agreement”) with
the Company. Messrs. Bachmann, Gobe and Peper entered into their respective
agreements in March 2005 and Mr. Woodall entered into his Severance Agreement
concurrently with his joining the Company in August 2006. Each Severance
Agreement expires on March 28, 2008. None of the executive officers with a
Severance Agreement is covered by the Severance Plan (as defined below). In
addition, the Company has a
-29-
Change
of
Control Severance Plan (the “Severance Plan” and, together with the Severance
Agreements, the “Severance Program”) for certain key employees, including Mr.
Dykes and Mr. Ottosan. The Severance Plan may be amended or terminated by the
Board of Directors in its sole discretion prior to the occurrence of a change
of
control of the Company.
The
Severance Program provides that, upon the occurrence of a change of control,
all
equity awards granted to participants will become fully vested, all stock
options will become fully exercisable and all restrictions on restricted shares
and restricted share units will lapse. With respect to performance shares or
other awards contingent on satisfaction of performance measures, the performance
cycle will end as of the date of the change of control. In addition,
participants in the Severance Program are entitled to receive certain benefits
in the event of certain terminations of employment for “good reason” (including
terminations by the participant following certain changes in duties, benefits,
required relocations, etc. that are treated as involuntary terminations)
occurring within two years after a change of control. An eligible participant
would be entitled to receive between one and three times the sum of (i) the
participant’s annual rate of base salary for the year of termination and (ii)
the participant’s average annual bonus from the Company for the three calendar
years preceding the calendar year in which such termination of employment occurs
(or, if the participant was employed for less than three years, the greater
of
the average annual bonus for all of the calendar years such individual was
employed and the target bonus for the calendar year of termination),
disregarding any reduced bonus for a partial year of employment. Messrs.
Bachmann, Gobe, Looney and Peper are entitled to receive three times, and Mr.
Dykes is entitled to receive two times, the sum described in the preceding
sentence. Each such multiple cannot be reduced after the occurrence of a change
of control. If the participant has not received a bonus for the calendar year
preceding the calendar year of termination of employment, the participant will
receive a bonus for that year in an amount equal to the participant’s target
bonus opportunity for that year. Payments are to be paid in a lump sum in cash
within 30 days following termination. In addition, participants will continue
to
receive medical, dental and life insurance benefits in existence at the time
of
the change of control for a specified period of time (18 months for our
executive officers), provided that the participant continues to pay the same
portion of the required premium for such coverage as was required prior to
termination. If any payments are subject to the excise tax on “excess parachute
payments” under Section 280G of the Internal Revenue Code of 1986, payments to
the participant will be reduced until no amount payable to the participant
would
constitute an “excise parachute payment,” provided that no such reduction will
be made if the net after-tax payment to which the participant would otherwise
be
entitled without such reduction would be greater than the net after-tax payment,
in each case, after taking into account Federal, state, local or other income
and excise taxes, to the participant resulting from the receipt of such payments
with such reduction.
For
purposes of the Severance Program and awards under the Amended and Restated
2000
Long Term Stock Incentive Plan and the Amended and Restated 2000 Stock Incentive
Plan for Non-Employee Directors, a change of control generally includes any
of
the following events: (i) an acquisition by any person of 25% or more of the
securities entitled to vote in the election of directors, (ii) the current
directors, or their approved successors, no longer constitute a majority of
the
Board of Directors, (iii) a merger or similar transaction is consummated which
results in the holders of our Common Stock owning 50% or less of the surviving
or transferee entity’s securities entitled to vote generally in the election of
directors or (iv) approval of a plan of liquidation or disposition of all or
substantially all of our assets.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
requires the Company’s executive officers, directors and persons who own more
than ten percent (10%) of the Company’s Common Stock to file initial reports of
ownership and changes in ownership with the SEC.
-30-
To
the
Company’s knowledge, with respect to the year ended December 31, 2005, all
applicable filings were made timely other than one late report by Mr.
Bachmann.
STOCKHOLDER
PROPOSALS FOR THE 2007 ANNUAL MEETING
Stockholder
proposals intended to be included in the Proxy Statement relating to the
Company’s 2007 Annual Meeting pursuant to Rule 14a-8 (“Rule 14a-8”) under the
Exchange Act must be received by the Corporate Secretary of the Company no
later
than December 1, 2006 and must otherwise comply with Rule 14a-8.
Any
stockholder proposals received outside of the Rule 14a-8 procedure for
consideration at the Company’s 2007 Annual Meeting must be delivered to the
Corporate Secretary of the Company no later than March 6, 2007, but no earlier
than February 4, 2007. If such timely notice of a stockholder proposal is not
given, the proposal may not be brought before the 2007 Annual Meeting. If timely
notice is given but is not accompanied by a written statement to the extent
required by applicable securities laws, the Company may exercise discretionary
voting authority over proxies with respect to such proposal, if presented at
the
2007 Annual Meeting.
Stockholder
proposals for nominees for directors must comply with the procedures set forth
in Section 2.10 of the Company’s By-laws. In order to recommend a nominee for a
director position, a stockholder must be a stockholder of record at the time
of
giving notice and must be entitled to vote at the meeting at which such nominee
will be considered. Stockholder recommendations must be made pursuant to written
notice delivered to the Secretary at the principal executive offices of the
Company (i) in the case of a nomination for election at an annual meeting,
not
later than 60 days nor earlier than 90 days prior to the first anniversary
of
the preceding year’s annual meeting; and (ii) in the case of a special meeting
at which directors are to be elected, not earlier than the close of business
on
the 90th day prior to such special meeting and not later than the close of
business on the later of the 60th day prior to such special meeting or the
tenth
day following the day on which public announcement is first made of the date
of
the meeting and of the nominees proposed by the Board of Directors to be elected
at the special meeting. In the event that the date of the annual meeting is
changed by more than 30 days from the anniversary date of the preceding year’s
annual meeting, the stockholder notice described above will be deemed timely
if
it is received not earlier than the close of business on the 90th day prior
to
such annual meeting and not later than the close of business on the later of
the
60th day prior to such annual meeting or the tenth day following the day on
which public announcement of the date of such meeting is first
made.
The
stockholder notice must set forth the following:
| · |
As
to each person the stockholder proposes to nominate for election
as a
director, (i) the name, age, business address and residence address
of the
person, (ii) the principal occupation and employment of the person,
(iii)
the class or series and number of shares of capital stock of the
Company
which are owned beneficially or of record by the person and (iv)
all
information relating to such person that would be required to be
disclosed
in solicitations of proxies for the election of directors pursuant
to
Regulation 14A under the Exchange Act and Rule 14a-11 thereunder,
including such person’s written consent to being named as a nominee and to
serving as a director if elected,
and
|
| · |
As
to the nominating stockholder and the beneficial owner, if any, of
such
stock, (i) such stockholder’s and beneficial owner’s, name and address as
they appear on the Company’s books, (ii) the class and number of shares of
the Company’s capital stock which are owned beneficially or of record by
such stockholder and such beneficial owner, (iii) a description of
all
arrangements or understandings between such stockholder and each
pro-
|
-31-
posed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy
at
the annual meeting to nominate the person named in its notice, (v) a
representation whether the stockholder or the beneficial owner, if any, intends
or is part of a group which intends to (a) deliver a proxy statement and/or
form
of proxy to holders of at least the percentage of the Company’s outstanding
capital stock required to elect the nominee and/or (b) otherwise solicit proxies
from stockholders in support of such nomination and (vi) any other information
relating to such stockholder that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14 of the Exchange
Act,
and the rules and regulations promulgated thereunder.
In
addition to complying with the foregoing procedures, any stockholder nominating
a director must comply with all applicable requirements of the Exchange Act
and
the rules and regulations thereunder. Recommendations must also include a
written statement from the candidate expressing a willingness to
serve.
IMPORTANT
The
Board
of Directors urges you NOT to return any [color] consent card solicited from
you
by Woodside. If you have previously returned any such consent card you have
every right to revoke your consent. Simply complete, sign, date and mail the
enclosed WHITE
Consent
Revocation Card in the postage-paid envelope provided, whether or not you
previously returned the [color] consent card.
For
additional information or assistance, please call our soliciting agent,
MacKenzie Partners, Inc., toll free at (800) 322-2885. MacKenzie Partners,
Inc.’s address is 105 Madison Avenue, New York, NY 10016.
By
Order
of the Board of Directors
John
H.
Peper
Executive
Vice President, General Counsel and Corporate Secretary
,
2006
-32-
Annex
I
CERTAIN
INFORMATION REGARDING PARTICIPANTS
IN
THIS CONSENT REVOCATION SOLICITATION
Under
applicable SEC regulations, members of the Board and certain officers of the
Company may be deemed to be “participants” in our solicitation of revocations of
consents. The following information is provided for those
individuals:
Name,
Present Principal Occupation and Principal Business Address for each
Participant
|
Name
|
Present
Principal Occupation
|
Principal
Business Address
|
|
Richard
A. Bachmann
|
Chairman
and Chief Executive Officer, Energy Partners, Ltd.
|
Energy
Partners, Ltd.
201
St. Charles Ave., Suite 3400
New
Orleans, Louisiana 70170
|
|
John
C. Bumgarner, Jr.
|
Managing
Member, Utica Plaza Management Company
|
Utica
Plaza, L.L.C.
Penthouse
2100
South Utica Avenue
Tulsa,
OK 74114
|
|
Jerry
D. Carlisle
|
President,
DarC Marketing, Inc.
|
Energy
Partners, Ltd.
201
St. Charles Ave., Suite 3400
New
Orleans, Louisiana 70170
|
|
Harold
D. Carter
|
Independent
oil and natural gas consultant and investment advisor.
|
5949
Sherry Lane
Suite
1475
Dallas,
TX 75225
|
|
Enoch
L. Dawkins
|
Retired
President, Murphy Exploration and Production Co.
|
Energy
Partners, Ltd.
201
St. Charles Ave., Suite 3400
New
Orleans, Louisiana 70170
|
|
Dr.
Norman C. Francis
|
President,
Xavier University of Louisiana
|
Xavier
University of Louisiana
Room
205
1
Drexel Drive
New
Orleans, LA 70125
|
|
Robert
D. Gershen
|
President,
Associated Energy Managers, LLC
|
Associated
Energy Managers, L.L.C.
136
Dwight Road
Longmeadow,
MA 01106
|
|
Phillip
A. Gobe
|
President
and Chief Operating Officer, Energy Partners, Ltd.
|
Energy
Partners, Ltd.
201
St. Charles Ave., Suite 3400
New
Orleans, Louisiana 70170
|
|
William
R. Herrin, Jr.
|
Retired
Vice President and General Manager, Gulf of Mexico Production Business
Unit, Chevron U.S.A. Production Co.
|
Energy
Partners, Ltd.
201
St. Charles Ave., Suite 3400
New
Orleans, Louisiana 70170
|
|
William
O. Hiltz
|
Senior
Managing Director, Evercore Partners
|
Evercore
Partners
55
East 52nd
Street
43rd
Floor
New
York, NY 10055
|
|
John
G. Phillips
|
Independent
financial consultant
|
938
Lafayette Street
Suite
240
New
Orleans, LA 70113
|
|
T.J.
Thom
|
Director
of Investor Relations, Energy Partners, Ltd.
|
Energy
Partners, Ltd.
201
St. Charles Ave., Suite 3400
New
Orleans, Louisiana 70170
|
|
John
H. Peper
|
Executive
Vice President, General Counsel and Corporate Secretary, Energy Partners,
Ltd.
|
Energy
Partners, Ltd.
201
St. Charles Ave., Suite 3400
New
Orleans, Louisiana 70170
|
|
Timothy
R. Woodall
|
Executive
Vice President and Chief Financial Officer, Energy Partners,
Ltd.
|
Energy
Partners, Ltd.
201
St. Charles Ave., Suite 3400
New
Orleans, Louisiana 70170
|
Ownership
of EPL
To
the
extent not already included in this Consent Revocation Statement, the
following table shows the number of shares of Common Stock beneficially owned
by
each Participant. The information set forth below is as of the Record Date
and
is based upon information supplied or confirmed by the named
individuals:
|
Beneficial
Owner
|
Common
Shares
|
Percent
of Common
Shares |
|
T.J.
Thom (1)
|
10,662
|
*
|
*
Represents beneficial ownership of less than 1%.
|
(1)
|
Includes
9,766 shares of Common Stock underlying options exercisable within
60 days
of October 17, 2006 granted to Ms. Thom under our 2006 Long Term
Stock
Incentive Plan. Also includes 896 shares of Common Stock beneficially
owned by Ms. Thom and held in trust by the Energy Partners, Ltd.
401(k)
Plan.
|
Arrangements
with EPL
Except
as
otherwise set forth below or in this Consent Revocation Statement, none of
the
Participants nor any of their associates, has any arrangement or understanding
with any person (i) with respect to any future employment by EPL or its
affiliates or (ii) with respect to future transactions to which EPL or any
of
its affiliates will or may be a party, or any material interest, direct or
indirect, in any transaction that has occurred since January 1, 2006, or any
currently proposed transaction or series of similar transactions, which EPL
or
any of its affiliates was or is to be a party and in which the amount involved
exceeds $60,000.
Ms.
Thom
is a participant in the Severance Program described in the Consent Revocation
Statement under “Executive Compensation and other Matters — Employment
Agreements and Change of Control Arrangements.”
Transactions
in Ownership of EPL Common Stock
The
following table sets forth the acquisitions and dispositions of shares of our
Common Stock made by the Participants since during the past two
years:
Recent
Transactions by Participants
|
Date
of
|
Nature
of
|
No.
of
|
Transaction
|
|||||
|
Name
|
Transaction
|
Transaction
|
Shares
|
Type
|
||||
|
Bachmann,
Richard A.
|
12/07/2004
|
Disposition
|
7,200
|
(1)
|
||||
|
12/07/2004
|
Acquisition
|
500
|
(2)
|
|||||
|
01/17/2005
|
Disposition
|
17,197
|
(3)
|
|||||
|
02/25/2005
|
Disposition
|
200,000
|
(4)
|
|||||
|
03/09/2005
|
Disposition
|
100,000
|
(4)
|
|||||
|
03/24/2005
|
Acquisition
|
62,000
|
(5)
|
|||||
|
03/31/2005
|
Acquisition
|
244.75
|
(6)
|
|||||
|
05/06/2005
|
Disposition
|
1,641
|
(3)
|
|||||
|
06/30/2005
|
Acquisition
|
238.94
|
(6)
|
|||||
|
09/30/2005
|
Acquisition
|
6.65
|
(6)
|
|||||
|
11/22/2005
|
Disposition
|
5,100
|
(1)
|
|||||
|
11/22/2005
|
Acquisition
|
500
|
(2)
|
|||||
|
03/16/2006
|
Acquisition
|
17,777
|
(7)
|
|||||
|
03/16/2006
|
Disposition
|
4,721
|
(3)
|
|||||
|
03/23/2006
|
Acquisition
|
16,648
|
(8)
|
|||||
|
03/23/2006
|
Acquisition
|
111,930
|
(5)
|
|||||
|
03/31/2006
|
Acquisition
|
262.39
|
(6)
|
|||||
|
06/30/2006
|
Acquisition
|
365.68
|
(6)
|
|||||
|
08/03/2006
|
Acquisition
|
9,102
|
(8)
|
|||||
|
08/03/2006
|
Acquisition
|
62,659
|
(5)
|
|||||
|
08/16/2006
|
Disposition
|
39,400
|
(4)
|
|||||
|
08/18/2006
|
Disposition
|
5,600
|
(4)
|
|||||
|
09/30/2006
|
Acquisition
|
73.85
|
(6)
|
|||||
|
Bumgarner
Jr., John C.
|
05/12/2005
|
Acquisition
|
2,000
|
(8)
|
||||
|
05/12/2005
|
Acquisition
|
5,000
|
(5)
|
|||||
|
05/12/2005
|
Acquisition
|
1,866.491
|
(9)
|
|||||
|
05/04/2006
|
Acquisition
|
3,000
|
(8)
|
|||||
|
05/04/2006
|
Acquisition
|
6,500
|
(5)
|
|||||
|
05/04/2006
|
Acquisition
|
1,669.7588
|
(9)
|
|||||
|
Carlisle,
Jerry C.
|
05/12/2005
|
Acquisition
|
933
|
(10)
|
||||
|
05/12/2005
|
Acquisition
|
2,000
|
(8)
|
|||||
|
05/12/2005
|
Acquisition
|
5,000
|
(5)
|
|||||
|
05/04/2006
|
Acquisition
|
835
|
(10)
|
|||||
|
05/04/2006
|
Acquisition
|
3,000
|
(8)
|
|||||
|
05/04/2006
|
Acquisition
|
6,500
|
(5)
|
|||||
|
Carter,
Harold D.
|
12/23/2004
|
Acquisition
|
1,028
|
(11)
|
||||
|
05/12/2005
|
Acquisition
|
714
|
(10)
|
|||||
|
05/12/2005
|
Acquisition
|
2,000
|
(8)
|
|||||
|
05/12/2005
|
Acquisition
|
5,000
|
(5)
|
|||||
|
04/04/2006
|
Disposition
|
19,093
|
(12)
|
|||||
|
04/04/2006
|
Acquisition
|
19,093
|
(13)
|
|||||
|
05/04/2006
|
Acquisition
|
649
|
(10)
|
|||||
|
05/04/2006
|
Acquisition
|
3,000
|
(8)
|
|||||
|
05/04/2006
|
Acquisition
|
6,500
|
(5)
|
|||||
|
Dawkins,
Enoch L.
|
05/12/2005
|
Acquisition
|
604
|
(10)
|
||||
|
05/12/2005
|
Acquisition
|
2,000
|
(8)
|
|||||
|
05/12/2005
|
Acquisition
|
5,000
|
(5)
|
|||||
|
05/04/2006
|
Acquisition
|
557
|
(10)
|
|||||
|
05/04/2006
|
Acquisition
|
3,000
|
(8)
|
|||||
|
05/04/2006
|
Acquisition
|
6,500
|
(5)
|
|||||
|
Francis,
Norman C.
|
05/12/2005
|
Acquisition
|
2,000
|
(8)
|
||||
|
05/12/2005
|
Acquisition
|
5,000
|
(5)
|
|||||
|
05/12/2005
|
Acquisition
|
988.1423
|
(9)
|
|||||
|
05/04/2006
|
Acquisition
|
3,000
|
(8)
|
|||||
|
05/04/2006
|
Acquisition
|
6,500
|
(5)
|
|||||
|
05/04/2006
|
Acquisition
|
890.538
|
(9)
|
|||||
|
05/12/2006
|
Acquisition
|
99
|
(14)
|
|||||
|
05/12/2006
|
Disposition
|
99
|
(14)
|
|||||
|
Gershen,
Robert D.
|
12/23/2004
|
Acquisition
|
8,243
|
(11)
|
||||
|
05/12/2005
|
Acquisition
|
1,208
|
(10)
|
|||||
|
05/12/2005
|
Acquisition
|
2,000
|
(8)
|
|||||
|
05/12/2005
|
Acquisition
|
5,000
|
(5)
|
|||||
|
05/04/2006
|
Acquisition
|
1,113
|
(10)
|
|||||
|
05/04/2006
|
Acquisition
|
3,000
|
(8)
|
|||||
|
05/04/2006
|
Acquisition
|
6,500
|
(5)
|
|||||
|
Gobe,
Phillip A.
|
12/06/2004
|
Acquisition
|
40,000
|
(8)
|
-2-
|
12/06/2004
|
Acquisition
|
50,000
|
(5)
|
|||||
|
03/17/2005
|
Acquisition
|
45,500
|
(5)
|
|||||
|
03/31/2005
|
Acquisition
|
138.90
|
(6)
|
|||||
|
06/30/2005
|
Acquisition
|
134.34
|
(6)
|
|||||
|
07/22/2005
|
Acquisition
|
100,000
|
(5)
|
|||||
|
09/30/2005
|
Acquisition
|
112.15
|
(6)
|
|||||
|
12/31/2005
|
Acquisition
|
95.69
|
(6)
|
|||||
|
03/16/2006
|
Acquisition
|
49,878
|
(5)
|
|||||
|
03/23/2006
|
Acquisition
|
11,128
|
(8)
|
|||||
|
03/23/2006
|
Acquisition
|
24,939
|
(5)
|
|||||
|
03/31/2006
|
Acquisition
|
158.07
|
(6)
|
|||||
|
06/30/2006
|
Acquisition
|
195.60
|
(6)
|
|||||
|
08/03/2006
|
Acquisition
|
1,167
|
(8)
|
|||||
|
08/03/2006
|
Acquisition
|
8,036
|
(5)
|
|||||
|
09/30/2006
|
Acquisition
|
153.85
|
(6)
|
|||||
|
Herrin
Jr. , William Robert
|
05/12/2005
|
Acquisition
|
1,208
|
(10)
|
||||
|
05/12/2005
|
Acquisition
|
2,000
|
(8)
|
|||||
|
05/12/2005
|
Acquisition
|
5,000
|
(5)
|
|||||
|
05/04/2006
|
Acquisition
|
1,113
|
(10)
|
|||||
|
05/04/2006
|
Acquisition
|
3,000
|
(8)
|
|||||
|
05/04/2006
|
Acquisition
|
6,500
|
(5)
|
|||||
|
08/15/2006
|
Acquisition
|
3,000
|
(15)
|
|||||
|
Hiltz,
William O.
|
05/12/2005
|
Acquisition
|
2,000
|
(8)
|
||||
|
05/12/2005
|
Acquisition
|
5,000
|
(5)
|
|||||
|
05/12/2005
|
Acquisition
|
1,207.7295
|
(9)
|
|||||
|
05/04/2006
|
Acquisition
|
3,000
|
(8)
|
|||||
|
05/04/2006
|
Acquisition
|
6,500
|
(5)
|
|||||
|
05/04/2006
|
Acquisition
|
1,113.1725
|
(9)
|
|||||
|
Peper,
John H.
|
12/21/2004
|
Disposition
|
1,020
|
(16)
|
||||
|
12/21/2004
|
Acquisition
|
11,943
|
(16)
|
|||||
|
12/31/2004
|
Acquisition
|
45.495
|
(6)
|
|||||
|
03/17/2005
|
Disposition
|
16,279
|
(17)
|
|||||
|
03/17/2005
|
Acquisition
|
13,400
|
(5)
|
|||||
|
03/18/2005
|
Disposition
|
591
|
(3)
|
|||||
|
03/31/2005
|
Acquisition
|
135.124
|
(6)
|
|||||
|
06/30/2005
|
Acquisition
|
130.695
|
(6)
|
|||||
|
07/22/2005
|
Acquisition
|
100,000
|
(5)
|
|||||
|
09/30/2005
|
Acquisition
|
109.107
|
(6)
|
|||||
|
12/31/2005
|
Acquisition
|
108.681
|
(6)
|
|||||
|
03/16/2006
|
Acquisition
|
7,778
|
(7)
|
|||||
|
03/16/2006
|
Disposition
|
2,490
|
(3)
|
|||||
|
03/16/2006
|
Acquisition
|
20,181
|
(5)
|
|||||
|
03/23/2006
|
Acquisition
|
4,502
|
(8)
|
|||||
|
03/23/2006
|
Acquisition
|
10,090
|
(5)
|
|||||
|
03/31/2006
|
Acquisition
|
149.216
|
(6)
|
|||||
|
04/18/2006
|
Acquisition
|
12,067
|
(18)
|
|||||
|
04/18/2006
|
Acquisition
|
36,201
|
(18)
|
|||||
|
04/18/2006
|
Disposition
|
17,960
|
(18)
|
|||||
|
05/06/2006
|
Disposition
|
4,568
|
(3)
|
|||||
|
06/30/2006
|
Acquisition
|
185.593
|
(6)
|
|||||
|
08/03/2006
|
Acquisition
|
1,529
|
(8)
|
|||||
|
08/03/2006
|
Acquisition
|
10,523
|
(5)
|
|||||
|
09/30/2006
|
Acquisition
|
145.231
|
(6)
|
|||||
|
Phillips,
John G.
|
04/01/2005
|
Disposition
|
196
|
(1)
|
||||
|
05/12/2005
|
Acquisition
|
714
|
(10)
|
|||||
|
05/12/2005
|
Acquisition
|
2,000
|
(8)
|
|||||
|
05/12/2005
|
Acquisition
|
5,000
|
(5)
|
|||||
|
05/04/2006
|
Acquisition
|
649
|
(10)
|
|||||
|
05/04/2006
|
Acquisition
|
3,000
|
(8)
|
|||||
|
05/04/2006
|
Acquisition
|
6,500
|
(5)
|
|||||
|
Thom,
T. J.
|
02/23/2005
|
Acquisition
|
2,334
|
(19)
|
||||
|
02/23/2005
|
Disposition
|
2,334
|
(19)
|
|||||
|
03/02/2005
|
Acquisition
|
6,000
|
(19)
|
|||||
|
03/02/2005
|
Disposition
|
6,000
|
(19)
|
|||||
|
03/17/2005
|
Acquisition
|
3,300
|
(8)
|
|||||
|
03/18/2005
|
Disposition
|
185
|
(3)
|
|||||
|
03/31/2005
|
Acquisition
|
77.38
|
(6)
|
|||||
|
05/10/2005
|
Disposition
|
421
|
(17)
|
|||||
|
05/13/2005
|
Disposition
|
549
|
(3)
|
|||||
|
06/27/2005
|
Disposition
|
1,251
|
(17)
|
-3-
|
06/30/2005
|
Acquisition
|
74.85
|
(6)
|
|||||
|
07/22/2005
|
Acquisition
|
10,000
|
(8)
|
|||||
|
09/30/2005
|
Acquisition
|
62.48
|
(6)
|
|||||
|
12/31/2005
|
Acquisition
|
88.86
|
(6)
|
|||||
|
03/16/2006
|
Acquisition
|
3,600
|
(8)
|
|||||
|
03/16/2006
|
Acquisition
|
2,333
|
(7)
|
|||||
|
03/16/2006
|
Disposition
|
855
|
(3)
|
|||||
|
03/17/2006
|
Disposition
|
379
|
(3)
|
|||||
|
03/31/2006
|
Acquisition
|
85.36
|
(6)
|
|||||
|
04/18/2006
|
Disposition
|
2,199
|
(17)
|
|||||
|
05/13/2006
|
Disposition
|
549
|
(3)
|
|||||
|
08/11/2006
|
Disposition
|
1,251
|
(17)
|
|||||
|
06/30/2006
|
Acquisition
|
106.17
|
(6)
|
|||||
|
09/30/2006
|
Acquisition
|
92.31
|
(6)
|
|||||
|
Woodall,
Timothy R.
|
08/21/2006
|
Acquisition
|
30,000
|
(8)
|
||||
|
08/21/2006
|
Acquisition
|
100,000
|
(5)
|
| (1) |
Bona
fide gift
|
| (2) |
Shares
acquired as bona fide gift (indirect
ownership)
|
| (3) |
Shares
withheld to satisfy tax withholding
requirements
|
| (4) |
Sale
pursuant to Forward Purchase Agreement
|
| (5) |
Stock
options acquired pursuant to stock incentive
plan
|
| (6) |
Shares
acquired in 401(k) Plan
|
| (7) |
Performance
shares earned pursuant to stock incentive
plan
|
| (8) |
Restricted
share units acquired pursuant to stock incentive
plan
|
| (9) |
Phantom
shares acquired pursuant to annual
retainer
|
| (10) |
Certificated
shares acquired pursuant to annual
retainer
|
| (11) |
Distribution
received from a limited partnership
|
| (12) |
Distribution
to a limited partnership
|
| (13) |
Distribution
received from a limited partnership (indirect
ownership)
|
| (14) |
Conversion
of phantom stock to certificated shares
|
| (15) |
Stock
purchase
|
| (16) |
Conversion
of preferred shares
|
| (17) |
Stock
sale
|
| (18) |
Exercise
of warrants
|
| (19) |
Exercise
of stock options
|
-4-
[WHITE]
CONSENT
REVOCATION CARD
CONSENT
REVOCATION
SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
OF
ENERGY
PARTNERS, LTD.
The
undersigned, a holder of shares of common stock, par value $0.01 per share,
of
Energy Partners, Ltd. Inc. (the “Company”),
acting
with respect to all shares of the Common Stock held by the undersigned at the
close of business on October 17, 2006, hereby acts as follows concerning the
proposals of Woodside Petroleum Ltd. and ATS Inc. (collectively “Woodside”)
set
forth below.
THE
BOARD OF DIRECTORS OF THE COMPANY URGES YOU TO MARK THE “YES,
REVOKE MY CONSENT” BOXES.
Please
mark your selection as x indicated
in this example.
PROPOSAL
1: Proposal
made by Woodside to remove
all
eleven existing members of the Company’s Board (and
any
person(s) (other than those elected by this consent solicitation) elected or
designated by any of such directors to fill any vacancy or newly created
directorship).
oYES,
REVOKE
MY
CONSENT
oNO,
DO NOT REVOKE
MY
CONSENT
INSTRUCTION:
IF
YOU
WISH TO REVOKE CONSENT TO THE REMOVAL OF CERTAIN OF THE PERSONS NAMED IN
PROPOSAL #1, BUT NOT ALL OF THEM, CHECK THE “YES, REVOKE MY CONSENT” BOX ABOVE
AND WRITE THE NAME OF EACH SUCH PERSON YOU DO NOT
WANT TO
BE REMOVED IN THE FOLLOWING SPACE: __________
PROPOSAL
2:
Proposal
made by Woodside to elect Walter
R.
Arnheim, Terry G. Dallas, Robert B. Holland, III, David R. Martin and J.
Kenneth Thompson
to serve
as directors of the Company (or, if any such nominee is unable or unwilling
to
serve on the Board, any
other
person designated as a nominee by Woodside).
o YES,
REVOKE
MY
CONSENT
oNO,
DO NOT REVOKE
MY
CONSENT
INSTRUCTION:
IF
YOU
WISH TO REVOKE CONSENT TO THE ELECTION OF CERTAIN OF THE PERSONS NAMED IN
PROPOSAL #2, BUT NOT ALL OF THEM, CHECK THE “YES, REVOKE MY CONSENT” BOX ABOVE
AND WRITE THE NAME OF EACH SUCH PERSON YOU DO NOT
WANT TO
BE ELECTED IN THE FOLLOWING SPACE: __________
THE
BOARD OF DIRECTORS OF THE COMPANY URGES YOU TO MARK THE “YES, REVOKE MY CONSENT”
BOXES.
UNLESS
OTHERWISE INDICATED ABOVE, THIS REVOCATION CARD REVOKES ALL PRIOR CONSENTS
GIVEN
WITH RESPECT TO THE PROPOSAL SET FORTH HEREIN.
UNLESS
YOU SPECIFY OTHERWISE, BY SIGNING AND DELIVERING THIS REVOCATION CARD TO THE
COMPANY, YOU WILL BE DEEMED TO HAVE REVOKED CONSENT TO ALL OF THE PROPOSALS
SET
FORTH HEREIN.
THE
UNDERSIGNED HEREBY AFFIRMS THAT THE SHARES REPRESENTED HEREBY WERE HELD OF
RECORD ON OCTOBER 17, 2006.
IN
ORDER FOR YOUR CONSENT REVOCATION TO BE VALID, IT MUST BE DATED. PLEASE MARK,
SIGN, DATE AND MAIL IN THE POSTAGE-PAID ENVELOPE PROVIDED.
|
Dated:
|
,
2006
|
|
Print
Name:
______________________________________________________________________
|
|
|
Signature
(Title, if any):
____________________________________________________________
|
|
|
Signature
(if held jointly):
___________________________________________________________
|
|
|
Title
or
Authority:________________________________________________________________
|
Please
sign in the same form as your name appears hereon. Executors and fiduciaries
should indicate their titles. If signed on behalf of a corporation, give title
of officer signing.
IMPORTANT
WE
STRONGLY RECOMMEND THAT YOU REJECT ATS AND WOODSIDE AND THEIR EFFORTS TO TAKE
CONTROL OF YOUR COMPANY. FIRST, DO NOT SIGN ATS’ [color] CONSENT CARD. SECOND,
IF YOU HAVE PREVIOUSLY SIGNED A [color] CONSENT CARD, YOU MAY REVOKE THAT
CONSENT BY SIGNING, DATING AND MAILING THE ENCLOSED WHITE CONSENT REVOCATION
CARD IMMEDIATELY. FINALLY, IF YOU HAVE NOT SIGNED ATS’ CONSENT CARD, YOU CAN
SHOW YOUR SUPPORT FOR YOUR BOARD BY SIGNING, DATING AND MAILING THE ACCOMPANYING
WHITE CONSENT REVOCATION CARD. PLEASE ACT TODAY.
Your
vote is important. If you have questions or need assistance in voting your
shares, please call:
MACKENZIE
PARTNERS, INC.
105
Madison Avenue
New
York,
New York 10016
(212)
929-5500 (Call Collect)
E-mail:
proxy @ mackenziepartners.com
or
Call
Toll-Free (800) 322-2855
PLEASE
RETURN YOUR WHITE CONSENT REVOCATION CARD IN THE ENVELOPE PROVIDED. IN ADDITION,
YOU MAY ALSO FAX BOTH
SIDES
OF YOUR WHITE CONSENT REVOCATION CARD TO: (212) 929-0308.