SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): February 3, 1996
SONAT INC.
(Exact name of registrant as specified in its charter)
Delaware 1-7179 63-0647939
(State of Incorporation) (Commission File (IRS Employer
Number) Identification
Number)
AMSOUTH-SONAT TOWER
BIRMINGHAM, ALABAMA 35203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (205) 325-3800<PAGE>
Item 5. Other Events.
On December 1, 1995, the Board of Directors of Sonat
Inc. (the "Company") declared a dividend of one preference
share purchase right (a "Right") for each outstanding share of
common stock, par value $1.00 per share (the "Common Shares"),
of the Company. The dividend is payable on February 3, 1996
(the "Record Date") to the stockholders of record on that date.
Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series A Participating
Preference stock, par value $1.00 per share (the "Preference
Shares"), of the Company at a price of $120 per one one-
hundredth of a Preference Share (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement"), dated as
of January 8, 1996, between the Company and Chemical Mellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired ben-
eficial ownership of 15% or more of the outstanding Common
Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such
time as any person or group of affiliated persons becomes an
Acquiring Person) following the commencement of, or announce-
ment of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial owner-
ship by a person or group of 15% or more of the outstanding
Common Shares (the earlier of such dates being called the "Dis-
tribution Date"), the Rights will be evidenced, with respect to
any of the Common Share certificates outstanding as of the
Record Date, by such Common Share certificate with a copy of
the Summary of Rights attached thereto.
The Rights Agreement provides that, until the Dis-
tribution Date (or earlier redemption or expiration of the
Rights), the Rights will be transferred with and only with the
Common Shares. Until the Distribution Date (or earlier redemp-
tion or expiration of the Rights), new Common Share certifi-
cates issued after the Record Date upon transfer or new issu-
ance of Common Shares will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender
for transfer of any certificates for Common Shares outstanding
as of the Record Date, even without such notation or a copy of
the Summary of Rights being attached thereto, will also consti-
tute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable<PAGE>
following the Distribution Date, separate certificates evidenc-
ing the Rights ("Right Certificates") will be mailed to holders
of record of the Common Shares as of the close of business on
the Distribution Date and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire on February 3, 2006 (the "Final
Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below.
The Purchase Price payable, and the number of Prefer-
ence Shares or other securities or property issuable, upon ex-
ercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the
Preference Shares, (ii) upon the grant to holders of the Pref-
erence Shares of certain rights or warrants to subscribe for or
purchase Preference Shares at a price, or securities convert-
ible into Preference Shares with a conversion price, less than
the then-current market price of the Preference Shares or (iii)
upon the distribution to holders of the Preference Shares of
evidences of indebtedness or assets (excluding regular periodic
cash dividends paid out of earnings or retained earnings or
dividends payable in Preference Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of
one one-hundredths of a Preference Share issuable upon exercise
of each Right are also subject to adjustment in the event of a
stock split of the Common Shares or a stock dividend on the
Common Shares payable in Common Shares or subdivisions, con-
solidations or combinations of the Common Shares occurring, in
any such case, prior to the Distribution Date.
Preference Shares purchasable upon exercise of the
Rights will not be redeemable. Each Preference Share will be
entitled to a minimum preferential quarterly dividend payment
of $1 per share but will be entitled to an aggregate dividend
of 100 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preference Shares will
be entitled to a minimum preferential liquidation payment of
$100 per share but will be entitled to an aggregate payment of
100 times the payment made per Common Share. Each Preference
Share will have 100 votes, voting together with the Common
Shares. Finally, in the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each
Preference Share will be entitled to receive 100 times the
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amount received per Common Share. These rights are protected
by customary antidilution provisions.
Because of the nature of the Preference Shares' div-
idend, liquidation and voting rights, the value of the one one-
hundredth interest in a Preference Share purchasable upon exer-
cise of each Right should approximate the value of one Common
Share.
In the event that the Company is acquired in a merger
or other business combination transaction or 50% or more of its
consolidated assets or earning power are sold after a person or
group has become an Acquiring Person, proper provision will be
made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such trans-
action will have a market value of two times the exercise price
of the Right. In the event that any person or group of affili-
ated or associated persons becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other
than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter have the right to
receive upon exercise that number of Common Shares having a
market value of two times the exercise price of the Right.
At any time after any person or group becomes an Ac-
quiring Person and prior to the acquisition by such person or
group of 50% or more of the outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group, which will
have become void), in whole or in part, at an exchange ratio of
one Common Share, or one one-hundredth of a Preference Share
(or of a share of a class or series of the Company's preference
stock having equivalent rights, preferences and privileges),
per Right (subject to adjustment).
With certain exceptions, no adjustment in the Pur-
chase Price will be required until cumulative adjustments re-
quire an adjustment of at least 1% in such Purchase Price. No
fractional Preference Shares will be issued (other than frac-
tions which are integral multiples of one one-hundredth of a
Preference Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an ad-
justment in cash will be made based on the market price of the
Preference Shares on the last trading day prior to the date of
exercise.
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At any time prior to the acquisition by a person or
group of affiliated or associated persons of beneficial own-
ership of 15% or more of the outstanding Common Shares, the
Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Re-
demption Price"). The redemption of the Rights may be made
effective at such time on such basis with such conditions as
the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board
of Directors of the Company without the consent of the holders
of the Rights, including an amendment to lower certain thresh-
olds described above to not less than the greater of (i) the
sum of .001% and the largest percentage of the outstanding Com-
mon Shares then known to the Company to be beneficially owned
by any person or group of affiliated or associated persons and
(ii) 10%, except that from and after such time as any person or
group of affiliated or associated persons becomes an Acquiring
Person no such amendment may adversely affect the interests of
the holders of the Rights.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company, in-
cluding, without limitation, the right to vote or to receive
dividends.
The Rights have certain anti-takeover effects. The
Rights will cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by
the Company's Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired.
The Rights should not interfere with any merger or other busi-
ness combination approved by the Board of Directors since the
Rights may be redeemed by the Company at the Redemption Price
prior to the time that a person or group has acquired benefi-
cial ownership of 15% or more of the Common Shares.
The Rights Agreement, dated as of January 8, 1996,
between the Company and Chemical Mellon Shareholder Services,
L.L.C., as Rights Agent, specifying the terms of the Rights and
including the form of the Certificate of Designations setting
forth the terms of the Preference Shares as an exhibit thereto
is attached hereto as an exhibit and is incorporated herein by
reference. The foregoing description of the Rights is
qualified in its entirety by reference to such exhibit.
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Item 6. Exhibits.
1. Rights Agreement, including the Exhibits
thereto, set forth as Exhibit 1 to the Registra-
tion Statement on Form 8-A filed in connection
with the Rights, and incorporated herein by
reference. Pursuant to the Rights Agreement,
printed Right Certificates will not be mailed
until as soon as practicable after the earlier
of the tenth day after public announcement that
a person or group has acquired beneficial owner-
ship of 15% or more of the Common Shares or the
tenth business day (or such later date as may be
determined by action of the Board of Directors)
after a person commences, or announces its in-
tention to commence, a tender offer or exchange
offer the consummation of which would result in
the beneficial ownership by a person or group of
15% or more of the Common Shares.
2. Letter, dated as of February 3, 1996, from the
Board of Directors of Sonat Inc. to Stock-
holders, set forth as Exhibit 2 to the Registra-
tion Statement on Form 8-A filed in connection
with the Rights, and incorporated herein by
reference.
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SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: January 10, 1996
SONAT INC.
By /s/ James A. Rubright
James A. Rubright
Senior Vice President and
General Counsel
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EXHIBIT LIST
1. Rights Agreement, including the Exhibits thereto, set
forth as Exhibit 1 to the Registration Statement on Form
8-A relating to the Rights, is hereby incorporated
herein by reference. Pursuant to the Rights Agreement,
printed Right Certificates will not be mailed until as
soon as practicable after the earlier of the tenth day
after public announcement that a person or group has
acquired beneficial ownership of 15% or more of the Com-
mon Shares or the tenth business day (or such later date
as may be determined by action of the Board of Direc-
tors) after a person commences, or announces its inten-
tion to commence, a tender offer or exchange offer the
consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the
Common Shares.
2. Letter, dated as of February 3, 1996, from the Board of
Directors of Sonat Inc. to Stockholders, set forth as
Exhibit 2 to the Registration Statement on Form 8-A
filed in connection with the Rights, is hereby in-
corporated herein by reference.
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