EXHIBIT 10.1

                              EXECUTIVE AWARD PLAN
                                       OF
                                   SONAT INC.
                  (As Amended and Restated as of July 23, 1998)


                                   I. GENERAL

1.1      Purpose of the Plan

         The Executive  Award Plan (the "Plan") of Sonat Inc. (the "Company") is
intended to advance the best  interests of the Company and its  subsidiaries  by
providing key employees with additional  incentives through the grant of options
("Options") to purchase shares of Common Stock of the Company  ("Common  Stock")
and through the award of shares of restricted Common Stock ("Restricted Stock"),
thereby increasing the personal stake of such employees in the continued success
and growth of the  Company and  encouraging  them to remain in the employ of the
Company.

         The Plan was adopted  effective  May 1, 1981,  and has been  amended at
various times. The provisions of the Plan as hereby amended and restated may, at
the  discretion of the  Committee  referred to below,  be made  available to all
grants outstanding on the effective date of this Amendment and Restatement,  and
all awards granted after such date,  except that no such  provision  shall alter
any outstanding grant in a manner  unfavorable to the holder thereof without the
written consent of the holder.

1.2      Administration of the Plan

         (a) The  Plan  shall  be  administered  by the  Executive  Compensation
Committee  or other  designated  committee  (the  "Committee")  of the  Board of
Directors of the Company (the "Board of  Directors")  which shall  consist of at
least three  Directors all of whom are not eligible to  participate  in the Plan
and are  "disinterested"  within the meaning of Rule 16b-3 under the  Securities
Exchange Act of 1934 (the "Exchange Act"). The Committee shall have authority to
interpret  conclusively  the  provisions  of the Plan,  to adopt  such rules and
regulations  for  carrying  out the Plan as it may  deem  advisable,  to  decide
conclusively  all questions of fact arising in the  application of the Plan, and
to make all other  determinations  necessary or advisable for the administration
of the Plan. All decisions and acts of the Committee  shall be final and binding
upon all affected Plan participants.

         (b) The  Committee  shall  meet  once  each  fiscal  year,  and at such
additional  times as it may  determine or at the request of the chief  executive
officer of the Company,  to  designate  the  eligible  employees,  if any, to be
granted  awards  under the Plan and the type and  amount of such  awards and the
time when awards will be granted.  All awards granted under the Plan shall be on
the terms and subject to the conditions hereinafter provided.

1.3      Eligible Participants

         Key employees, including officers, of the Company and its subsidiaries,
and of partnerships or joint ventures in which the Company and its  subsidiaries
have a significant  ownership  interest as  determined by the Committee  (all of
such  subsidiaries,  partnerships  and  joint  ventures  being  referred  to  as
"Subsidiaries")  shall be eligible to participate in the Plan. Directors who are
not  employees  of the  Company or its  Subsidiaries  shall not be  eligible  to
participate in the Plan.

1.4      Awards Under the Plan

         Awards  under the Plan may be in the form of (i)  Options  to  purchase
shares of Common  Stock,  (ii)  Stock  Appreciation  Rights  and  Limited  Stock
Appreciation  Rights  which may be issued in  tandem  with such  Options,  (iii)
shares of Restricted Stock, and (iv) Supplemental  Payments which may be awarded
with respect to Options,  Stock Appreciation Rights,  Limited Stock Appreciation
Rights, and Restricted Stock, or (v) any combination of the foregoing.

1.5      Shares Subject to the Plan

         The aggregate number of shares of Common Stock which may be issued with
respect to Options or Restricted  Stock granted after April 27, 1995  (including
Stock Appreciation  Rights,  Limited Stock Appreciation  Rights and Supplemental
Payments  related  thereto) shall not exceed (i) 4,000,000  shares plus (ii) the
number of shares  previously  authorized for use in the Plan which have not been
issued or have again  become  available  for grants  pursuant  to the  following
paragraph.  At no time  shall the  number of shares  issued  plus the  number of
shares subject to outstanding  awards under the Plan exceed the number of shares
that may be issued  under the Plan.  Options  with  respect to more than 250,000
shares of Common  Stock  shall not be granted to any  optionee  in any  12-month
period.  Shares  distributed  pursuant to the Plan may consist of authorized but
unissued shares or treasury  shares of the Company,  as shall be determined from
time to time by the Board of Directors.

         If any Option  under the Plan shall  expire,  terminate  or be canceled
(except  upon the holder's  exercise of a related  Stock  Appreciation  Right or
Limited Stock  Appreciation  Right) for any reason without having been exercised
in full, or if any shares of Restricted Stock shall be forfeited to the Company,
the unexercised Options and forfeited shares of Restricted Stock shall not count
against the above limit and shall again  become  available  for grants under the
Plan  (regardless  of  whether  the holder of such  Options  or shares  received
dividends or other  economic  benefits  with respect to such Options or shares).
Shares of Common Stock equal in number to the shares  surrendered  in payment of
the option  price,  and shares of Common  Stock  which are  withheld in order to
satisfy federal, state or local tax liability, shall not count against the above
limit  and  shall   again   become   available   for  grants   under  the  Plan.
Notwithstanding  the  foregoing,  any shares which were  authorized for issuance
under  the Plan as in  effect  on April 25,  1985  shall  not be  available  for
issuance with respect to awards granted after April 24, 1995.

1.6      Other Compensation Programs

         The  existence  and terms of the Plan shall not limit the  authority of
the  Board  of  Directors  in  compensating  employees  of the  Company  and its
subsidiaries in such other forms and amounts, including compensation pursuant to
any other plans as may be  currently  in effect or adopted in the future,  as it
may determine from time to time.


                                II. STOCK OPTIONS

2.1      Terms and Conditions of Options

         Subject to the following provisions, all Options granted under the Plan
shall be in such form and shall have such terms and conditions as the Committee,
in its discretion, may from time to time determine.

                  (a) Option Price. The option price per share shall not be less
         than the fair market  value of the Common Stock (as  determined  by the
         Committee) on the date the Option is granted.

                  (b) Term of Option. The term of an Option shall not exceed ten
         years from the date of grant, and,  notwithstanding any other provision
         of this Plan, no Option shall be exercised  after the expiration of its
         term.

                  (c) Exercise of Options.  Options shall be exercisable at such
         time or times and subject to such terms and conditions as the Committee
         shall specify in the Option grant.  The Committee shall have discretion
         to at any time  declare all or any  portion of the Options  held by any
         optionee to be immediately  exercisable.  An Option may be exercised in
         accordance  with  its  terms  as  to  any  or  all  shares  purchasable
         thereunder.

                  (d)  Payment  for  Shares.  Payment  for shares as to which an
         Option is  exercised  shall be made in such  manner and at such time or
         times  as shall be  provided  by the  Committee  in the  Option  grant.
         Payment may be made in cash or in such other manner as the Committee in
         its discretion may authorize.

                  (e)  Nontransferability  of Options. No Option or any interest
         therein shall be  transferable by the optionee other than by will or by
         the laws of descent and  distribution.  During an optionee's  lifetime,
         all  Options  shall  be  exercisable  only by such  optionee  or by the
         guardian or legal representative of the optionee.

                  (f)  Shareholder  Rights.  The holder of an Option  shall,  as
         such, have none of the rights of a shareholder.

                  (g)  Termination  of  Employment.  The  Committee  shall  have
         discretion  to  specify in the Option  grant or an  amendment  thereof,
         provisions with respect to the period, not extending beyond the term of
         the Option,  during  which the Option may be  exercised  following  the
         optionee's termination of employment.

                  (h)  Change of  Control.  Notwithstanding  the  exercisability
         schedule  governing  any  Option,  upon the  occurrence  of a Change of
         Control (as defined in Section 4.9) all Options outstanding at the time
         of such Change of Control and held by  optionees  who are  employees of
         the  Company or its  Subsidiaries  at the time of the Change of Control
         shall become  immediately  exercisable  and, unless the optionee agrees
         otherwise in writing,  shall remain  exercisable  for a period of three
         years following the optionee's termination of employment or such longer
         period as may be  provided in the  Option,  but in no event  beyond the
         term of the Option established pursuant to Section 2.1(b).

2.2      Stock Appreciation Rights in Tandem with Options

         (a) The Committee  may,  either at the time of grant of an Option or at
any time  during the term of the  Option,  grant  Stock  Appreciation  Rights or
Limited  Stock  Appreciation  Rights  with  respect to all or any portion of the
shares of Common Stock covered by such Option. A Stock Appreciation Right may be
exercised  at any time the  Option to which it relates  is then  exercisable.  A
Limited Stock  Appreciation Right may be exercised only within 60 days after the
occurrence of a Change of Control. A Stock Appreciation Right or a Limited Stock
Appreciation  Right may only be  exercised  to the extent the Option to which it
relates is  exercisable,  and shall be subject to the  conditions  applicable to
such Option. When a Stock Appreciation Right or Limited Stock Appreciation Right
is exercised,  the Option to which it relates shall cease to be  exercisable  to
the extent of the number of shares with respect to which the Stock  Appreciation
Right or Limited  Stock  Appreciation  Right is  exercised.  Similarly,  when an
Option is exercised, the Stock Appreciation Rights or Limited Stock Appreciation
Rights relating to the shares covered by such Option  exercise shall  terminate.
Any Stock Appreciation Right which is outstanding on the last day of the term of
the  related  Option  (as  determined  pursuant  to  Section  2.1(b))  shall  be
automatically exercised on such date without any action by the optionee.

         (b) Upon  exercise  of a Stock  Appreciation  Right,  the holder  shall
receive,  for each share with respect to which the Stock  Appreciation  Right is
exercised,  an amount (the  "Appreciation")  equal to the difference between the
option  price per share of the  Option  to which  the Stock  Appreciation  Right
relates and the fair market value (as determined by the Committee) of a share of
Common  Stock on the date of  exercise  of the  Stock  Appreciation  Right.  The
Appreciation  shall be payable in cash,  Common Stock, or a combination of both,
at the option of the Committee, and shall be paid within 30 days of the exercise
of the Stock Appreciation Right.

         (c)  Notwithstanding  the foregoing,  if a Stock  Appreciation Right is
exercised  within  60 days  after the  occurrence  of a Change  of  Control,  in
addition to the Appreciation and any Supplemental Payment (as defined in Section
2.3) to which the holder is  entitled,  the holder  shall  receive (in cash,  in
Common Stock,  or a combination of both, at the discretion of the Committee) (1)
the amount by which the  greater of (a) the  highest  market  price per share of
Common  Stock  during  the  60-day  period  preceding   exercise  of  the  Stock
Appreciation  Right or (b) the highest  price per share of Common  Stock (or the
cash-  equivalent  thereof as determined  by the Board of Directors)  paid by an
acquiring person during the 60-day period preceding a Change of Control, exceeds
the fair market  value of a share of Common Stock on the date of exercise of the
Stock  Appreciation  Right, plus (2) if the holder is entitled to a Supplemental
Payment,  an additional  payment,  calculated under the same formula as used for
calculating  such  holder's  Supplemental  Payment,  with  respect to the amount
referred to in clause (1) of this sentence.

         (d) Upon exercise of a Limited  Stock  Appreciation  Right,  the holder
shall  receive,  for  each  share  with  respect  to  which  the  Limited  Stock
Appreciation Right is exercised, the sum of (i) the Appreciation,  as defined in
Section  2.2(b);  (ii) any  Supplemental  Payment (as defined in Section 2.3) to
which the holder is entitled with respect to the Appreciation;  (iii) the amount
by which the greater of (a) the highest  market  price per share of Common Stock
during the 60-day period  preceding  exercise of the Limited Stock  Appreciation
Right or (b) the highest price per share of Common Stock (or the cash-equivalent
thereof as  determined by the Board of  Directors)  paid by an acquiring  person
during the 60-day period preceding a Change of Control,  exceeds the fair market
value of a share of Common  Stock on the date of exercise  of the Limited  Stock
Appreciation  Right;  and  (iv) if the  holder  is  entitled  to a  Supplemental
Payment,  an additional  payment,  calculated under the same formula as used for
calculating  such  holder's  Supplemental  Payment,  with  respect to the amount
referred to in clause (iii) of this sentence.  All of such amounts shall be paid
within 30 days of the  exercise of the Limited  Stock  Appreciation  Right,  and
shall be paid in  cash,  in  Common  Stock,  or a  combination  of both,  at the
discretion of the Committee.

2.3      Supplemental Payment on Exercise of Options or Stock Appreciation 
         Rights

         The  Committee,  either at the time of grant or at the time of exercise
of any Option or related Stock  Appreciation Right or Limited Stock Appreciation
Right, may provide for a supplemental  payment (the  "Supplemental  Payment") by
the  Company  to the  optionee  with  respect to the  exercise  of any Option or
related  Stock  Appreciation  Right or Limited  Stock  Appreciation  Right.  The
Supplemental  Payment shall be in the amount  specified by the Committee,  which
shall not exceed,  but may be equal to, the amount  necessary to pay the federal
income tax payable with respect to both  exercise of the Option or related Stock
Appreciation  Right or  Limited  Stock  Appreciation  Right and  receipt  of the
Supplemental  Payment,  assuming the optionee is taxed at the maximum  effective
federal income tax rate applicable  thereto.  The Supplemental  Payment shall be
paid in cash,  Common  Stock,  or a  combination  of both,  at the option of the
Committee.  The Supplemental Payment shall be paid within 30 days of the date of
exercise of an Option or Stock  Appreciation Right or Limited Stock Appreciation
Right (or, if later,  within 30 days of the date on which  income is  recognized
for federal income tax purposes with respect to such exercise).

2.4      Statutory Options

         Subject to the  limitations  on Option  terms set forth in Section 2.1,
the  Committee  shall have the  authority to grant (i)  incentive  stock options
within the meaning of Section 422 of the Code and (ii) Options  containing  such
terms  and  conditions  as  shall  be  required  to  qualify  such  Options  for
preferential  tax  treatment  under  the Code as in  effect  at the time of such
grant. Options granted pursuant to this Section 2.4 may contain such other terms
and  conditions  permitted by Article II of this Plan as the  Committee,  in its
discretion,  may from time to time  determine  (including,  without  limitation,
provision for Stock Appreciation  Rights,  Limited Stock Appreciation Rights and
Supplemental  Payments),  to the extent  that such terms and  conditions  do not
cause the Options to lose their  preferential  tax treatment.  To the extent the
Code and Regulations  promulgated thereunder require a plan to contain specified
provisions in order to qualify  options for  preferential  tax  treatment,  such
provisions shall be deemed to be stated in this Plan.


                              III. RESTRICTED STOCK

3.1      Terms and Conditions of Restricted Stock Awards

         Subject to the following  provisions,  all awards of  Restricted  Stock
shall be in such form and shall have such terms and conditions as the Committee,
in its discretion, may from time to time determine:

                  (a) The  Restricted  Stock award  shall  specify the number of
         shares of Restricted Stock to be awarded, the price, if any, to be paid
         by the  recipient  of the  Restricted  Stock,  and the date or dates on
         which the Restricted  Stock will vest. The vesting of Restricted  Stock
         may be conditioned upon the completion of a specified period of service
         with the Company or its Subsidiaries,  upon the attainment of specified
         performance  goals,  or upon such other  criteria as the  Committee may
         determine in its sole discretion.

                  (b)  Stock  certificates  representing  the  Restricted  Stock
         granted to an employee shall be registered in the employee's name. Such
         certificates  shall  either  be held by the  Company  on  behalf of the
         employee,  or delivered  to the  employee  bearing a legend to restrict
         transfer of the certificate  until the Restricted Stock has vested,  as
         determined by the Committee.  The Committee shall determine whether the
         employee shall have the right to vote and/or  receive  dividends on the
         Restricted Stock before it has vested. No share of Restricted Stock may
         be sold,  transferred,  assigned, or pledged by the employee until such
         share has vested in accordance  with the terms of the Restricted  Stock
         award. In the event of an employee's  termination of employment  before
         all  of  his  Restricted  Stock  has  vested,  or in  the  event  other
         conditions to the vesting of Restricted  Stock have not been  satisfied
         prior to any deadline for the satisfaction of such conditions set forth
         in the award,  the  shares of  Restricted  Stock  which have not vested
         shall be forfeited and any purchase price paid by the employee shall be
         returned to the employee.  At the time Restricted  Stock vests (and, if
         the employee has been issued legended certificates of Restricted Stock,
         upon the return of such certificates to the Company), a certificate for
         such  vested  shares  shall  be  delivered  to  the  employee  (or  the
         beneficiary  designated by the employee in the event of death), free of
         all restrictions.

                  (c)  Notwithstanding  the vesting  conditions set forth in the
         Restricted  Stock  award,  (i)  the  Committee  may in  its  discretion
         accelerate  the vesting of Restricted  Stock at any time,  and (ii) all
         shares of  Restricted  Stock shall vest upon a Change of Control of the
         Company.

3.2      Supplemental Payment on Vesting of Restricted Stock

         The Committee, either at the time of grant or at the time of vesting of
Restricted  Stock, may provide for a Supplemental  Payment by the Company to the
employee in an amount specified by the Committee which shall not exceed, but may
be equal to, the amount  necessary  to pay the federal  income tax payable  with
respect  to  both  the  vesting  of the  Restricted  Stock  and  receipt  of the
Supplemental  Payment,  assuming the employee is taxed at the maximum  effective
federal  income tax rate  applicable  thereto and has not  elected to  recognize
income with  respect to the  Restricted  Stock  before the date such  Restricted
Stock vests. The Supplemental  Payment shall be paid within 30 days of each date
that Restricted  Stock vests.  The  Supplemental  Payment shall be paid in cash,
Common Stock, or a combination of both, at the discretion of the Committee.


                            IV. ADDITIONAL PROVISIONS

4.1      General Restrictions

         Each award under the Plan shall be subject to the requirement  that, if
at any time the Committee shall determine that (i) the listing,  registration or
qualification  of the shares of Common Stock subject or related thereto upon any
securities  exchange  or under any state or federal  law, or (ii) the consent or
approval  of any  government  regulatory  body,  or  (iii) an  agreement  by the
recipient of an award with respect to the  disposition of shares of Common Stock
is necessary or desirable (in connection with any requirement or  interpretation
of any federal or state  securities  law, rule or regulation) as a condition of,
or in connection  with, the granting of such award or the issuance,  purchase or
delivery of shares of Common Stock thereunder, such award may not be consummated
in whole or in part unless such listing, registration,  qualification,  consent,
approval  or  agreement  shall  have  been  effected  or  obtained  free  of any
conditions not acceptable to the Committee.

4.2      Adjustments for Changes in Capitalization

         In the event of a reorganization,  recapitalization, stock split, stock
dividend, combination of shares, rights offer, liquidation, dissolution, merger,
consolidation,  spin-off,  sale of  assets,  payment  of an  extraordinary  cash
dividend,  or any other  change  in or  affecting  the  corporate  structure  or
capitalization of the Company,  the Committee shall make appropriate  adjustment
in the  number  and  kind  of  shares  authorized  by the  Plan  (including  any
limitations  on  individual  awards),  in the  number,  price or kind of  shares
covered by the awards and in any outstanding awards under the Plan.

4.3      Amendments

         (a) The Board of  Directors  may  amend the Plan from time to time.  No
such amendment shall require  approval by the  stockholders  unless  stockholder
approval is required by applicable law or stock exchange requirements.

         (b) The  Committee  shall  have the  authority  to amend  any  grant to
include any provision which, at the time of such amendment,  is authorized under
the terms of the Plan; provided,  however,  that (1) no outstanding award may be
revoked or altered in a manner  unfavorable  to the holder  without  the written
consent of the holder,  and (2) no outstanding Option may be altered in a manner
that reduces the option price (except as provided in Section 4.2).

4.4      Cancellation of Awards

         Any award  granted  under the Plan may be canceled at any time with the
consent of the  holder  and a new award may be  granted  to such  holder in lieu
thereof,  which  award  may,  in the  discretion  of the  Committee,  be on more
favorable terms and conditions than the canceled award; provided,  however, that
any Option  that is granted  in lieu of a canceled  Option  shall have an option
price at least equal to the option price of the canceled Option.

4.5      Withholding

         (a) Whenever  the Company  proposes or is required to issue or transfer
shares of Common  Stock  under the Plan,  the  Company  shall  have the right to
require the holder to remit to the Company an amount  sufficient  to satisfy any
federal,  state or local  withholding tax liability prior to the delivery of any
certificate for such shares.  Whenever under the Plan payments are to be made in
cash, such payments shall be net of an amount sufficient to satisfy any federal,
state or local withholding tax liability.

         (b) An employee entitled to receive Common Stock under the Plan who has
not received a cash  Supplemental  Payment may elect to have the federal,  state
and local tax  liability (or a specified  portion  thereof) with respect to such
Common Stock satisfied by having the Company  withhold from the shares otherwise
deliverable  to the employee  shares of Common Stock having a value equal to the
amount of the tax liability to be satisfied with respect to the Common Stock. An
election to have all or a portion of the tax  liability  satisfied  using Common
Stock shall comply with such requirements as may be imposed by the Committee and
shall be subject to the  disapproval of the Committee (if expressed prior to the
making of such election).

4.6      Non-Assignability

         Except as expressly provided in the Plan, no award under the Plan shall
be assignable or  transferable  by the holder  thereof  except by will or by the
laws of descent and  distribution.  During the life of the holder,  awards under
the Plan shall be  exercisable  only by such holder or by the  guardian or legal
representative of such holder.

4.7      Non-Uniform Determinations

         Determinations  by the  Committee  under the Plan  (including,  without
limitation,  determinations  of the persons to receive awards;  the form, amount
and  timing of such  awards;  the terms and  provisions  of such  awards and the
agreements  evidencing  same;  and  provisions  with respect to  termination  of
employment) need not be uniform and may be made by it selectively  among persons
who receive,  or are eligible to receive,  awards under the Plan, whether or not
such persons are similarly situated.

4.8      No Guarantee of Employment

         The grant of an award under the Plan shall not  constitute an assurance
of continued employment for any period.

4.9      Change of Control

                  A "Change of Control" shall mean:

                  (i) The acquisition by any individual, entity or group (within
         the meaning of Section  13(d)(3) or  14(d)(2) of the  Exchange  Act) (a
         "Person")  of  beneficial  ownership  (within the meaning of Rule 13d-3
         promulgated  under the  Exchange  Act) of 20% or more of either (1) the
         then   outstanding   shares  of  common   stock  of  the  Company  (the
         "Outstanding  Common  Stock") or (2) the  combined  voting power of the
         then  outstanding  voting  securities  of the Company  entitled to vote
         generally  in  the  election  of  directors  (the  "Outstanding  Voting
         Securities");  provided,  however, that for purposes of this subsection
         (i),  the  following  acquisitions  shall  not  constitute  a Change of
         Control:  (A)  any  acquisition  directly  from  the  Company,  (B) any
         acquisition by the Company, (C) any acquisition by any employee benefit
         plan (or related  trust)  sponsored or maintained by the Company or any
         corporation  controlled  by the Company or (D) any  acquisition  by any
         corporation  pursuant to a transaction which complies with clauses (A),
         (B) and (C) of subsection (iii); or

                  (ii) Individuals  who, as of December 1, 1995,  constitute the
         Board of  Directors  (the  "Incumbent  Board")  cease for any reason to
         constitute  at least a majority  of the Board of  Directors;  provided,
         however,  that any  individual  becoming a director  subsequent to such
         date whose  election,  or  nomination  for  election  by the  Company's
         shareholders,  was  approved  by a vote of at least a  majority  of the
         directors then  comprising  the Incumbent  Board shall be considered as
         though  such  individual  were a member  of the  Incumbent  Board,  but
         excluding,   for  this  purpose,  any  such  individual  whose  initial
         assumption  of office  occurs  as a result  of an actual or  threatened
         election  contest  with respect to the election or removal of directors
         or other actual or threatened solicitation of proxies or consents by or
         on behalf of a Person other than the Board of Directors; or

                  (iii)   Consummation   of   a   reorganization,    merger   or
         consolidation or sale or other  disposition of all or substantially all
         of the assets of the Company (a "Business Combination"),  in each case,
         unless,  following such Business Combination,  (A) all or substantially
         all of the  individuals  and entities who were the  beneficial  owners,
         respectively,  of the Outstanding  Common Stock and Outstanding  Voting
         Securities immediately prior to such Business Combination  beneficially
         own, directly or indirectly,  more than 50% of, respectively,  the then
         outstanding shares of common stock and the combined voting power of the
         then outstanding  voting  securities  entitled to vote generally in the
         election of directors, as the case may be, of the corporation resulting
         from  such  Business  Combination  (including,  without  limitation,  a
         corporation  which as a result of such  transaction owns the Company or
         all or  substantially  all of the Company's  assets either  directly or
         through one or more subsidiaries) in substantially the same proportions
         as their ownership,  immediately prior to such Business Combination, of
         the Outstanding Common Stock and Outstanding Voting Securities,  as the
         case may be, (B) no Person  (excluding any  corporation  resulting from
         such  Business  Combination  or any  employee  benefit plan (or related
         trust) of the Company or such corporation  resulting from such Business
         Combination) beneficially owns, directly or indirectly, 20% or more of,
         respectively,  the  then  outstanding  shares  of  common  stock of the
         corporation  resulting  from such Business  Combination or the combined
         voting  power  of  the  then  outstanding  voting  securities  of  such
         corporation  except to the extent that such ownership  existed prior to
         the Business  Combination and (C) at least a majority of the members of
         the board of directors of the corporation  resulting from such Business
         Combination  were  members  of the  Incumbent  Board at the time of the
         execution  of the initial  agreement,  or of the action of the Board of
         Directors, providing for such Business Combination.

4.10     Duration and Termination

         (a) The  Plan  shall  be of  unlimited  duration.  Notwithstanding  the
foregoing,  no incentive  stock option (within the meaning of Section 422 of the
Code) shall be granted under the Plan after April 26, 2005,  but awards  granted
prior to such date may extend beyond such date, and the terms of this Plan shall
continue to apply to all awards granted hereunder.

         (b) The Board of Directors may discontinue or terminate the Plan at any
time.  Such action shall not impair any of the rights of any holder of any award
outstanding on the date of the Plan's  discontinuance or termination without the
holder's written consent.

         This document incorporates into a single document the provisions of the
Plan as amended as of July 23, 1998.

         IN WITNESS  WHEREOF,  this  document  has been  executed as of July 23,
1998.


                              SONAT INC.



                              by:
                                       Ronald L. Kuehn, Jr.
                                       Chairman of the Board,
                                       President and Chief Executive Officer