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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
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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.
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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;
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(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
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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
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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
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Holders. The representations, warranties and covenants of the Holders shall be
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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.
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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
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change in the Voting Securities by reason of stock dividends, split-up,
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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
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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
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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
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hereto.
11. Remedies. The parties agree that legal remedies for breach of
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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
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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:
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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
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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
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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,
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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
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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
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partnership relationship between the parties hereto.
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IN WITNESS WHEREOF, the Holders, Parent and Sub have entered into this
Agreement as of the date first written above.
EL PASO ENERGY CORPORATION
By: /S/ EL PASO ENERGY CORPORATION
______________________________________________
Name:
Title:
EL PASO ENERGY ACQUISITION CO.
By: /S/ EL PASO ENERGY ACUISITION CO.
______________________________________________
Name:
Title:
HOLDER:
XXXXX FUND MANAGEMENT LLC
By: /S/ XXXX XXXXXXXXX
______________________________________________
Name: Xxxx Xxxxxxxxx
Title: Managing Director
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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.
