Exhibit 3
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Agreement") dated as of October 15, 1999
among the persons and entities listed on Schedule 1 hereto (each, a
"Holder" and, collectively, the "Holders"), El Paso Energy Corporation, a
Delaware corporation ("Parent"), and El Paso Energy Acquisition Co., a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub").
Parent, Sub and Crystal Gas Storage, Inc., a Louisiana corporation (the
"Company"), propose to enter into an Agreement and Plan of Merger (the
"Merger Agreement" which term for purposes of this Agreement shall not
include any amendment or waiver of any provision of the Merger Agreement
that would have any adverse effect on a Holder without the prior consent of
such Holder) on the date of this Agreement providing for the merger of the
Company and Sub (as contemplated by the terms of the Merger Agreement, the
"Merger").
Each Holder has the right to vote the number of shares of common
stock, par value $.01 per share, ("Company Common Stock"), or other
securities (the "Voting Securities"), listed opposite the name of such
Holder on Schedule 1. Parent and Sub have required, as a condition to
entering into the Merger Agreement, that the Holders enter into this
Agreement. The Holders believe that it is in the best interest of the
Company and its stockholders to induce Parent and Sub to enter into the
Merger Agreement and, therefore, the Holders are willing to enter into this
Agreement.
Accordingly, in consideration of the mutual covenants and agreements
set forth herein and such other valuable consideration the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. Voting of Equity Securities.
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(a) Each Holder hereby agrees that, during the time this
Agreement is in effect, at any meeting of the stockholders of the
Company, however called, and in any action by written consent of
the stockholders of the Company, he shall (or shall cause the
stockholder of record, if the Holder is the beneficial owner but
not the stockholder of record of Voting Securities) at the
written direction of the Parent (x) vote all Voting Securities of
such Holder in favor of the Merger; (y) not vote any Voting
Securities in favor of any action or agreement which would result
in a breach in any material respect of any covenant,
representation or warranty or any other obligation of the Company
under the Merger Agreement; and (z) vote all Voting Securities of
such Holder against any action or agreement which would impede,
interfere with or attempt to discourage the Merger, including,
but not limited to: (i) any takeover proposal (other than the
Merger) involving the Company or any of its subsidiaries; (ii)
any change in the management or board of directors of the
Company, except as otherwise agreed to in writing by Sub; (iii)
any material change in the present capitalization or dividend
policy of the Company; or (iv) any other material change in the
Company's corporate structure or business.
(b) Without limiting the generality of the foregoing, each
Holder hereby irrevocably appoints designees of Sub, the
attorneys, agents and proxies, with full power of substitution,
for the undersigned and in the name, place and stead of the
undersigned to vote the Voting Securities in favor of the Merger
and other transactions contemplated by the Merger Agreement,
against any transaction in clause (z) of Section 1(a), and
otherwise as contemplated by Section 1(a), including the
execution of written consents, with respect to all Voting
Securities of the Company which the undersigned is or may be
entitled to vote at any meeting of the Company held after the
date hereof, whether annual or special and whether or not an
adjourned meeting, or in respect of which the undersigned is or
may be entitled to act by written consent. This proxy is coupled
with an interest and, except as provided below, shall be
irrevocable and binding on any successor in interest of the
undersigned. This proxy shall operate to revoke any prior proxy
as to Voting Securities heretofore granted by the Holder. Such
proxy shall terminate upon the termination of this Agreement at
the Expiration Date.
2. Term. This Agreement shall terminate and expire on the earliest
of (1) the Effective Time of the Merger (as defined in the Merger
Agreement), (2) the time of termination of the Merger Agreement
pursuant to Section 7.1 thereof, (3) March 31, 2000 or (4) upon
the amendment or waiver of any provision of the Merger Agreement
that would have any adverse effect on Holder (such earliest date
and time being referred to in this Agreement as the "Expiration
Date").
3. Covenants of the Holders.
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(a) During the period from the date of this Agreement until
the Expiration Date, except in accordance with the provisions of
this Agreement, each Holder severally and not jointly agrees that
he will not:
(i) sell, sell short, transfer, pledge, hypothecate,
assign or otherwise dispose of, or enter into any contract,
option, hedging arrangement or other arrangement or
understanding with respect to the sale, transfer, pledge,
hypothecation, assignment or other disposition of, any
Voting Securities;
(ii) deposit any Voting Securities into a voting trust,
or grant any proxies or enter into a voting agreement with
respect to any Voting Securities; or
(iii) initiate, solicit or knowingly encourage,
directly or indirectly, any inquiries or the making or
implementation of any proposal that constitutes, or may
reasonably be expected to lead to, any takeover proposal (as
defined in the Merger Agreement) or enter into discussions
or negotiate with any person or entity in furtherance of
such inquiries or to obtain a takeover proposal, or agree to
or endorse any takeover proposal.
(b) Any additional shares of Company Common Stock, warrants,
options or other securities or rights exercisable for,
exchangeable for or convertible into shares of Company Common
Stock (collectively, "Equity Securities") acquired by any Holder
will become subject to this Agreement and, to the extent entitled
and permitted to vote with respect to the matters contemplated in
Section 1(a), shall, for all purposes of this Agreement, be
considered Voting Securities.
4. Representations and Warranties of each Holder. Each Holder
severally and not jointly represents and warrants to Parent and Sub as
follows:
(a) (i) such Holder has the right to vote the Voting
Securities, listed opposite the name of such Holder on Schedule
1, (ii) such Voting Securities are, except as noted on Schedule
1, the only Equity Securities owned of record or beneficially by
such Holder or in which such Holder has any interest or which
such Holder has the right to vote, as the case may be, and (iii)
such Holder does not have any option or other right to acquire
any other Equity Securities;
(b) such Holder has the right, power and authority to
execute and deliver this Agreement and to perform his obligations
hereunder; other than in connection with or in compliance with
the disclosure provisions of the Securities Exchange Act of 1934,
as amended, and the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and any equivalent state
laws the execution, delivery and performance of this Agreement by
such Holder will not require the consent of or filing with any
other person and will not constitute a violation of, conflict
with or result in a default under (i) any contract, understanding
or arrangement to which such Holder is a party or by which such
Holder is bound, (ii) any judgment, decree or order applicable to
such Holder, or (iii) any law, rule or regulation of any
governmental body applicable to such Holder; and, assuming this
Agreement is the valid and binding obligation of Parent and Sub,
this Agreement constitutes a valid and binding agreement on the
part of such Holder, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles
of equity;
(d) except as set forth on Schedule 1, none of the Voting
Securities are subject to any voting trust or other agreement or
arrangement (except as created by this Agreement) with respect to
the voting or disposition of the Voting Securities; and there are
no outstanding options, warrants or rights to purchase or
acquire, or agreements (except for this Agreement) relating to,
such Voting Securities;
(f) no person is required to withhold any amounts pursuant
to Section 1445 of the Code from any payments of Merger
Consideration (as defined in the Merger Agreement) made to a
Holder pursuant to the Merger ("1445 Withholding").
5. Effect of Representations, Warranties and Covenants of Holders. The
representations, warranties and covenants of the Holders shall be several
and not joint. The liability of each individual Holder shall extend only to
the representations, warranties and covenants of such Holder and not to any
representation, warranty or covenant of any other Holder, and each Holder,
severally, and not jointly, agrees to indemnify and hold harmless Parent
and Sub from and against any liabilities, losses, obligations, costs or
expenses (including reasonable attorneys fees), excluding consequential and
punitive damages, which are finally judicially determined to have arisen
out of, resulted from or been related to any breach by such Holder of its
representations, warranties or covenants.
6. Representations, Warranties and Covenants of Parent and Sub. Each
of Parent and Sub hereby represents and warrants to each Holder that: it is
a corporation duly formed under the laws of the state of its incorporation;
it has all requisite corporate power and authority to enter into and
perform all its obligations under this Agreement; the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on its part; this Agreement has been duly executed and delivered by
it; and this Agreement constitutes a valid and binding agreement on its
part, enforceable in accordance with its terms, subject to applicable
bankruptcy insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity. Parent and Sub shall
not make, or permit to be made, any 1445 Withholding.
7. Adjustments. In the event of any increase or decrease or other
change in the Voting Securities by reason of stock dividends, split-up,
recapitalizations, combinations, exchanges of shares or the like, the
number of Voting Securities subject to this Agreement shall be adjusted
appropriately.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of New York applicable to agreements
entered into and to be performed wholly within such state.
9. Further Assurances. Each party hereto shall, to the extent not
entailing other than de minimis expense, perform such further acts and
execute such further documents as may reasonably be required to carry out
the provisions of this Agreement. Without limiting the generality of the
foregoing, the Holder, to the extent it "controls" the Company, according
to the HSR Act and the rules and regulations promulgated by the Federal
Trade Commission to implement the HSR Act, shall, to the extent required by
the HSR Act, file a premerger notification and report form under the HSR
Act with respect to the Merger as promptly as reasonably possible following
execution and delivery of this Agreement and shall use reasonable efforts
to promptly respond to any request for additional information pursuant to
Section (e)(1) of the HSR Act.
10. Assignment. This Agreement may not be assigned by any party
hereto.
11. Remedies. The parties agree that legal remedies for breach of this
Agreement will be inadequate and that this Agreement may be enforced by
Parent and Sub by injunctive or other equitable relief.
12. Notices. All notices or other communications required or permitted
hereunder shall be in writing (except as otherwise provided herein) and
shall be deemed duly given if delivered in person, by confirmed facsimile
transmission or by overnight courier service, addressed as follows:
To Parent or Sub:
El Paso Energy Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx
& Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
To each Holder:
To Holder:
c/x Xxxxx Fund Management LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
13. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
14. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
15. Binding Effect; Benefits. This Agreement shall survive the death
or incapacity of any Holder and shall inure to the benefit of and shall be
binding upon the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to or shall confer on any
person other than the parties hereto and their respective heirs, legal
representatives and successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
16. No Agency. Nothing herein shall be deemed create any agency or
partnership relationship between the parties hereto.
IN WITNESS WHEREOF, the Holders, Parent and Sub have entered into this
Agreement as of the date first written above.
EL PASO ENERGY CORPORATION
By: /s/ H. Xxxxx Xxxxxx
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Name: H. Xxxxx Xxxxxx
Title: Executive Vice President
and Chief Financial Officer
EL PASO ENERGY ACQUISITION CO.
By: /s/ Xxxxx Xxxx
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Name: Xxxxx Xxxx
Title: Executive Vice President
HOLDER:
XXXXX FUND MANAGEMENT LLC
By: /s/ Xxxx Xxxxxxxxx
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Name: Xxxx Xxxxxxxxx
Title: Managing Director
Schedule 1
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Xxxxx Fund Management LLC is investment advisor to Quantum Fund N.V. and
Quantum Partners LDC, and as such exercises investment and voting
discretion with respect to the Voting Securities held by such entities.
Quantum Fund N.V. holds 183,346 Common shares, and Quantum Partners LDC
holds 1,444,720 Common shares and 3,971,260 $.06 Convertible Voting
Preferred Shares.
