AMENDMENT NO. 2 TO RIGHTS AGREEMENT
AMENDMENT (this "Amendment"), dated as of March 13, 1999, to the Rights
Agreement, dated as of January 8, 1996, between Sonat Inc., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C.
(successor to Chemical Mellon Shareholder Services, L.L.C.), as Rights Agent
(the "Rights Agent"), as amended by Amendment No. 1 thereto, dated as of
November 22, 1997 (the "Rights Agreement"). Capitalized terms used but not
defined herein, unless the context otherwise requires, have the meanings
ascribed to such terms in the Rights Agreement.
WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement;
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may
from time to time supplement or amend the Rights Agreement in accordance with
the provisions of Section 27 thereof;
WHEREAS, it is proposed that the Company enter into an Agreement and Plan
of Merger (as it may be amended or supplemented from time to time, the "El Paso
Merger Agreement"), between the Company and El Paso Energy Corporation, a
Delaware corporation ("El Paso"), which provides for, among other things, the
merger of the Company with El Paso or an affiliate thereof (the "El Paso
Merger");
WHEREAS, the El Paso Merger Agreement contemplates that, concurrently with
and as a condition to the execution and delivery of the El Paso Merger
Agreement, (i) El Paso and the Company will enter into the Stock Option
Agreements and (ii) El Paso and the relevant shareholders of the Company will
enter into the Voting Agreements;
WHEREAS, the El Paso Merger Agreement contemplates that the Company will
amend the Rights Agreement to the extent necessary to provide that the approval,
execution and delivery of the El Paso Merger Agreement, the Stock Option
Agreements and the Voting Agreements, and the transactions contemplated by each
of them, will not (i) cause El Paso, Merger Sub, the Surviving Corporation or
any of their affiliates to become an Acquiring Person or (ii) cause the
occurrence of a Share Acquisition Date or a Distribution Date or otherwise cause
the Rights to separate from the underlying Common Stock or give the holders of
such Rights the right to acquire securities of any party thereto; and
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company and its shareholders to amend the Rights Agreement to
exempt the El Paso Merger Agreement, the Stock Option Agreements, the Voting
Agreements and the transactions contemplated by such agreements from the
application of the Rights Agreement.
NOW, THEREFORE, the Company hereby amends the Rights Agreement as follows:
1. Section 1(a) of the Rights Agreement is hereby modified and
amended by adding the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary,
none of El Paso Energy Corporation, a Delaware corporation
("El Paso"), Merger Sub (as defined in the El Paso Merger
Agreement (as defined below), the
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Surviving Corporation (as defined in the El Paso Merger
Agreement), nor any of their Affiliates or Associates, shall
be deemed to be an Acquiring Person by virtue of the approval,
execution or delivery of the Agreement and Plan of Merger,
dated as of March 13, 1999 (as the same may be amended from
time to time, the "El Paso Merger Agreement"), by and between
the Company and El Paso, the Stock Option Agreements (as
defined in the El Paso Merger Agreement), the Voting
Agreements (as defined in the El Paso Merger Agreement), or
the consummation of the transactions contemplated each such
agreement."
2. The definition of "Distribution Date" in Section 1(g) of the
Rights Agreement is amended by adding the following sentence at the end thereof:
"Notwithstanding anything in this Agreement to the contrary, a
Distribution Date shall not be deemed to have occurred as the result of
the execution of the El Paso Merger Agreement, the Stock Option Agreements
or the Voting Agreements, the consummation of the transactions
contemplated by such agreements, including, without limitation, the merger
of the Company and El Paso or an affiliate thereof (the "El Paso Merger"),
or the announcement of any of the foregoing transactions."
3. Section 2 of the Rights Agreement is hereby modified and amended
by deleting from the first sentence thereof the following clause: "and the
holders of the Rights (who, in accordance with Section 3 hereof, shall prior to
the Distribution Date also be the holders of the Common Shares)".
4. Section 7(a) of the Rights Agreement is hereby modified and
amended to change the reference to "February 3, 2006" to "February 3, 2006 or,
if earlier, immediately prior to the consummation of the El Paso Merger as
contemplated by the El Paso Merger Agreement", it being agreed that February 3,
2006 or, if applicable, such earlier date, shall for all purposes of the Rights
Agreement be deemed to be the "Final Expiration Date".
5. Section 18 is hereby modified and amended by inserting the
following sentence at the end of the first paragraph thereof: "Anything herein
to the contrary notwithstanding (but subject to the following exception), in no
event shall the Rights Agent be liable for special, indirect, punitive,
consequential or incidental loss or damage of any kind (including, but not
limited to, lost profits), even if the Rights Agent has been advised of the
likelihood of such loss or damage in accordance with the provisions of this
agreement, except as a result of the Rights Agent's bad faith or wilful
misconduct as finally determined by a court of competent jurisdiction."
6. Section 29 of the Rights Agreement is amended to add the
following sentence at the end thereof:
"Nothing in this Agreement shall be construed to give any holder of
Rights or any other Person any legal or equitable rights, remedies or
claims under this Agreement by virtue of the execution of the El Paso
Merger Agreement, the Stock Option Agreements, the Voting Agreements or by
virtue of any of the transactions contemplated by such agreements."
7. The Rights Agreement is hereby further modified and amended by
adding
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a new Section 34 immediately after the end or Section 33 thereof to read in its
entirety as follows:
"Section 34. Merger Agreement with El Paso and Related
Transactions. Notwithstanding any other provision of this
Rights Agreement, as amended by this Amendment, neither the
approval, execution or delivery of the El Paso Merger
Agreement, the Stock Option Agreements nor the Voting
Agreements, nor the consummation of the transactions
contemplated by such agreements, is or shall be deemed to be
an event described in Section 11(a)(ii) or Section 13 hereof,
nor will such performance or consummation result in the
occurrence of a Share Acquisition Date, a Distribution Date or
any other separation of the Rights from the underlying Common
Shares, nor entitle or permit the holders of the Rights to
exercise the Rights or otherwise affect the rights of the
holders of Rights, including giving the holders of the Rights
the right to acquire securities of any party to the El Paso
Merger Agreement, the Stock Option Agreements or the Voting
Agreements."
8. This Amendment shall become effective as of the date of the El
Paso Merger Agreement. If the El Paso Merger Agreement is terminated without the
Effective Time (as defined in the El Paso Merger Agreement) having occurred,
this Amendment shall be null and void.
9. This Amendment shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
10. This Amendment may be executed in any number of counterparts,
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
11. In all respects not inconsistent with the terms and provisions
of this Amendment, the Rights Agreement is hereby ratified, adopted, approved
and confirmed. In executing and delivering this Amendment, the Rights Agent
shall be entitled to all of the privileges and immunities afforded to the Rights
Agent under the terms and conditions of the Rights Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested, all as of the date and year first above written.
Attest: SONAT INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President-Finance Title: Executive Vice President
and General Counsel
Attest: CHEMICAL MELLON SHAREHOLDER
SERVICES L.L.C.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Relationship Manager Title: Assistant Vice President
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