EXHIBIT 10(f)

 
EMPLOYMENT AGREEMENT
 
AGREEMENT, dated as of the 28th day of August, 2008, between Southern Union
Company, a Delaware corporation (the “Company”), and George L. Lindemann (the
“Executive”).
 
WHEREAS, the Executive is willing to serve the Company, and the Company is
willing to employ the Executive, on the terms and conditions set forth below;
 
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
 
1. Employment Period.  The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to work in the employ of the Company, subject to the
terms and conditions of this Agreement, for the period commencing on the date
hereof (the “Effective Date”) and ending on the third anniversary of the
Effective Date (the “Employment Period”).  Commencing on the second anniversary
of the Effective Date and on each anniversary thereafter, the Employment Period
shall be automatically extended for one year terms unless either the Company or
the Executive shall give the other party not less than ninety (90) days’ prior
written notice of the intention to not extend this Agreement (a “Non-Renewal
Notice”).
 
2. Terms of Employment.
 
(a) Position and Duties.
 
(i) During the Employment Period, the Executive shall serve as Chairman and
Chief Executive Officer of the Company with the appropriate authority, duties
and responsibilities attendant to such position and any other duties that may be
assigned by the Company’s Board of Directors (the “Board”).
 
(ii) During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
substantially all of his business attention and time to the business and affairs
of the Company and to use the Executive’s reasonable best efforts to perform
such responsibilities.  During the Employment Period it shall not be a violation
of this Agreement for the Executive to (A) serve on civic or charitable boards
or committees, (B) serve, with the prior approval of the Board, on corporate
boards or committees, (C) deliver lectures, fulfill speaking engagements and
(D) manage personal investments, so long as such activities do not interfere
with the performance of the Executive’s responsibilities as an employee of the
Company in accordance with this Agreement, provided that the Executive may
continue to maintain and participate in any business venture approved by the
Board prior to the date hereof.
 

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(b) Compensation.
 
(i) Annual Base Salary.  During the Employment Period, the Executive shall
receive an annual base salary (“Annual Base Salary”) of at least
$1,000,000.00.  Annual Base Salary shall not be reduced at any time (including
after any such increase), and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased.
 
(ii) Annual Bonus.  During the Employment Period, the Executive shall be
eligible to receive an annual cash bonus (“Annual Bonus”) with a target level of
not less than 200 percent of Annual Base Salary, or such greater amount as
determined by the Compensation Committee of the Board (the “Compensation
Committee”) payable in accordance with the procedures specified by the
Compensation Committee.
 
(iii) Equity Compensation.  During the Employment Period, the Executive shall
receive Company equity compensation awards that are at least commensurate with
the Executive’s 2007 equity compensation awards (provided that the amount of
awards may be decreased as long as the percentage decrease is consistent with
the decrease for other officers of the Company and the type and terms of awards
may be changed as long as the change is consistent with the change for other
officers of the Company).
 
(c) Benefits.  During the Employment Period, except as otherwise expressly
provided herein, the Executive shall be entitled to participate in all employee
benefit and other plans, practices, policies and programs and fringe benefits on
a basis no less favorable than that provided to other similarly situated senior
officers of the Company.
 
3. Termination of Employment.
 
(a) Death or Disability.  The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period.  If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 10(b) of its intention to terminate the Executive’s employment.  In such
event, the Executive’s employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the “Disability
Effective Date”), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive’s
duties.  For purposes of this Agreement, “Disability” shall have the meaning
ascribed under the Company’s long term disability plan.
 
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(b) Cause.  The Company may terminate the Executive’s employment during the
Employment Period with or without Cause.  For purposes of this Agreement,
“Cause” shall mean:
 
(i) the willful and continued failure of the Executive to perform substantially
his duties with the Company (other than any such failure resulting from the
Executive’s incapacity due to physical or mental illness or any such failure
subsequent to the Executive being delivered a notice of termination without
Cause by the Company or delivering a notice of termination for Good Reason to
the Company) after a written demand for substantial performance is delivered to
the Executive by or on behalf of the Board which specifically identifies the
manner in which the Board believes that the Executive has not substantially
performed his duties;
 
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is demonstrably and materially injurious to the Company or its
affiliates; or
 
(iii) the conviction of a felony by the Executive.
 
For purposes of this provision, no act or failure to act by the Executive shall
be considered “willful” unless done or omitted to be done by the Executive in
bad faith and without reasonable belief that the Executive’s action or omission
was in the best interests of the Company or its affiliates.  Any act, or failure
to act, in accordance with authority duly given by the Board, based upon the
advice of counsel for the Company (including counsel employed by the Company)
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.  Cause shall
not exist unless and until the Company has delivered to the Executive a copy of
a resolution duly adopted by three-quarters of the entire Board (excluding the
Executive from both the numerator and denominator if the Executive is a Board
member) at a meeting of the Board called and held for such purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with counsel, to be heard before the Board), that an event set forth in
clause (i), (ii) or (iii) has occurred and specifying the particulars thereof in
detail.  If the Company does not deliver to the Executive a Notice of
Termination (as defined in Section 3(d)) within ninety (90) days after the
Chairman of the Board (or, if the Executive is the Chairman, the head of the
Compensation Committee) has knowledge that an event constituting Cause has
occurred, the event will no longer constitute Cause.
 
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(c) Good Reason.  The Executive’s employment may be terminated by the Executive
with or without Good Reason.  For purposes of this Agreement, “Good Reason”
means the occurrence of one or more of the following circumstances, without the
Executive’s express written consent, and which circumstance(s) are not remedied
by the Company within thirty (30) days of receipt of a written notice from the
Executive describing in reasonable detail the Good Reason event that has
occurred (which notice must be provided within ninety (90) days of the
Executive’s obtaining knowledge of the event), provided that the Executive must
terminate employment within the two (2) years following the Executive’s
obtaining knowledge of the event:
 
(i) any material change in the duties, responsibilities or authority (including
reporting responsibilities) of the Executive that is inconsistent in any
material and adverse respect with the Executive’s position(s), duties,
responsibilities or status with the Company on the date hereof or as may be
increased from time to time in connection with promotions (including any
material and adverse diminution of such duties or responsibilities);
 
(ii) any material and adverse change in the Executive’s titles or offices
(including, if applicable, membership on the Board) with the Company;
 
(iii) a more than 10% reduction by the Company in the Executive’s Annual Base
Salary;
 
(iv) a more than 10% reduction by the Company in the Executive’s Annual Bonus
opportunity (including any material and adverse change in the formula for such
bonus);
 
(v) any requirement of the Company that the Executive (A) be based anywhere more
than fifty (50) miles from the office where the Executive is located on the date
hereof or (B) travel on Company business to an extent substantially greater than
the travel obligations of the Executive on the date hereof;
 
(vi) the failure of the Company to obtain the assumption of the Company’s
obligations hereunder from any successor as contemplated in Section 8(c); or
 
(vii) any material breach by the Company of any other material term of this
Agreement.
 
The Executive’s right to terminate employment for Good Reason shall not be
affected by the Executive’s incapacities due to mental or physical illness and
the Executive’s continued employment shall not constitute consent to, or a
waiver of rights with respect to, any event or condition constituting Good
Reason (except as provided in the lead in to the definition of Good Reason).
 
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(d) Notice of Termination.  Any termination by the Company or by the Executive
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 10(b).  For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the Date of Termination.
 
(e) Date of Termination.  “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company other than for Disability, the date of
receipt of the Notice of Termination or any later date specified therein within
thirty (30) days of such notice, (ii) if the Executive’s employment is
terminated by the Executive, thirty (30) days after receipt of the Notice of
Termination (provided, that, the Company may accelerate the Date of Termination
to an earlier date by providing the Executive with notice of such action, or,
alternatively, the Company may place the Executive on paid leave during such
period) and (iii) if the Executive’s employment is terminated by reason of death
or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
 
4. Obligations of the Company upon Termination.
 
(a) Other than for Cause; For Good Reason.  If, during the Employment Period,
the Company shall terminate the Executive’s employment other than for Cause or
Disability, or the Executive shall terminate employment for Good Reason, the
Company shall have no further obligations to the Executive other than to provide
the Executive:
 
(i) a lump-sum cash payment equal to the result of multiplying (i) the sum of
(A) the Executive’s Annual Base Salary, plus (B) the higher of (i) Executive’s
target Annual Bonus for the year in which the Date of Termination occurs or (ii)
the average Annual Bonus paid to the Executive by the Company (or its
affiliates), including any portion of the annual bonus deferred into a deferred
compensation plan, during the last three (3) completed fiscal years of the
Company (or such shorter period of time during which the Executive was employed
by the Company) immediately preceding the Date of Termination (annualized in the
event that the Executive was not employed by the Company (or its affiliates) for
the whole of any such fiscal year) by (ii) three (3);
 
(ii) a lump-sum cash payment equal to the Executive’s Annual Base Salary through
the Date of Termination and the Executive’s Annual Bonus amounts for completed
fiscal years, to the extent not theretofore paid or deferred;
 
(iii) a lump-sum cash payment equal to the Executive’s Annual Bonus for the full
fiscal year in which the Date of Termination occurs based on the Company’s
actual performance in such year, as determined by the Committee, (except that in
the event such termination occurs following a Change in Control, the Executive’s
target Annual Bonus for the fiscal year in which the Date of Termination occurs
shall be used instead) multiplied by a fraction the numerator of which shall be
the number of days the Executive was employed by the Company during the fiscal
year in which the Date of Termination occurred and the denominator of which is
365;
 
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(iv) a lump-sum cash payment equal to the after-tax value (based on the highest
Federal and State tax rates) of the Company-provided annual health care for the
Executive and/or the Executive’s family at the Date of Termination, multiplied
by three (3);
 
(v) for a period of one (1) year following the Date of Termination, the Company
shall make coaching and/or outplacement services available to the Executive,
provided that the total cost of such coaching and/or outplacement services for
the Executive shall not exceed $20,000; and
 
(vi) to the extent not theretofore paid or provided, any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or other contract or
agreement of the Company and its affiliated companies through the Date of
Termination (such other amounts and benefits shall be hereinafter referred to as
the “Other Benefits”).
 
(b) Death; Disability.  If, during the Employment Period, the Executive’s
employment shall terminate on account of death or Disability, the Company shall
have no further obligations to the Executive other than to provide the Executive
(or his estate) (i) the Annual Base Salary through the Date of Termination and
the Executive’s Annual Bonus amounts for completed fiscal years, to the extent
theretofore unpaid and (ii) the Other Benefits.  Notwithstanding the preceding
sentence, the death of the Executive after Notice of Termination for Good Reason
or without Cause has been validly provided shall be treated as a termination
under Section 4(a) and not under this Section 4(b).
 
(c) For Cause; Other than For Good Reason.  If, during the Employment Period,
the Company shall terminate the Executive’s employment for Cause or the
Executive terminates his employment without Good Reason, the Company shall have
no further obligations to the Executive other than the obligation to pay to the
Executive (i) the Annual Base Salary through the Date of Termination to the
extent theretofore unpaid and (ii) the Other Benefits.
 
(d) Other than for Cause or for Good Reason following a Change in Control.  If,
during the Employment Period, the Company shall terminate the Executive’s
employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason and, in either case, such termination occurs
(i) within 24 months after a Change in Control of the Company (as defined below)
or (ii) prior to and in anticipation of a Change in Control at the request of a
third party who had indicated an intention to consummate a Change in Control and
such Change in Control does occur, in addition to the benefits and payments
specified in Section 4(a), the Company shall provide the Executive with full
vesting of all the Executive’s outstanding equity-based compensation awards
(including stock options, restricted stock, stock appreciation rights and cash
restricted units) granted under the Company’s stock and incentive plans, as in
effect from time to time (for the avoidance of doubt, the vesting provided in
this Section 4(d) shall be in addition to, and not in lieu of, the change in
control vesting provided under the Company’s stock and incentive plans or award
agreements issued thereunder).  “Change in Control” means the occurrence of any
one of the following events:
 
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(i) individuals who, on the effective date of the Agreement, constitute the
Board (the “Incumbent Directors”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the effective date of the Agreement whose election or nomination for election
was approved by a vote of at least two-thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for director, without
written objection to such nomination) shall be an Incumbent Director; provided,
however, that no individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board shall be
deemed to be an Incumbent Director;
 
(ii) any “person” (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power
of the Company’s then outstanding securities eligible to vote generally in the
election of directors (the “Company Voting Securities”); provided, however, that
the event described in this paragraph (ii) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions:  (A) by the Company or
any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, (C) by any underwriter temporarily
holding securities pursuant to an offering of such securities, (D) pursuant to a
Non-Qualifying Transaction (as defined in paragraph (iii)), (E) pursuant to any
acquisition by the Executive or any group of persons including the Executive (or
any entity controlled by the Executive or any group of persons including the
Executive) or (F) by George L. Lindemann, his spouse, descendants and trusts for
their benefit and any person that is and remains a controlled affiliate of
George L. Lindemann or his spouse (individually and collectively, the “Lindemann
Family”);
 
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(iii) the consummation of a merger, consolidation, statutory share exchange,
reorganization, sale of all or substantially all the Company’s assets or similar
form of corporate transaction involving the Company or any of its Subsidiaries
that requires the approval of the Company’s stockholders, whether for such
transaction or the issuance of securities in the transaction (a “Business
Combination”), unless immediately following such Business Combination:  (A) over
50% of the total voting power of (x) the corporation resulting from such
Business Combination (the “Surviving Corporation”), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has beneficial ownership
of at least 95% of the voting securities eligible to elect directors of the
Surviving Corporation (the “Parent Corporation”), is represented by Company
Voting Securities that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which such Company
Voting Securities were converted pursuant to such Business Combination), and
such voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities among the
holders thereof immediately prior to the Business Combination, (B) no person
(other than any employee benefit plan (or related trust) sponsored or maintained
by the Surviving Corporation or the Parent Corporation or the Lindemann Family),
is or becomes the beneficial owner, directly or indirectly, of 20% or more of
the total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the members of the board
of directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation) following the consummation of the Business
Combination were Incumbent Directors at the time of the Board’s approval of the
execution of the initial agreement providing for such Business Combination (any
Business Combination which satisfies all of the criteria specified in (A), (B)
and (C) above shall be deemed to be a “Non-Qualifying Transaction” and any
Business Combination which does not satisfy all of the criteria specified in
(A), (B) and (C) shall be deemed a “Qualifying Transaction”); or
 
(iv) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company.
 
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any person acquires beneficial ownership of more than 20% of the
Company Voting Securities as a result of the acquisition of Company Voting
Securities by the Company or its affiliates which reduces the number of Company
Voting Securities outstanding; provided, that if after the consummation of such
acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.  For purposes of this Change
in Control definition, “corporation” shall include any limited liability
company, partnership, association, business trust and similar organization,
“board of directors” shall refer to the ultimate governing body of such
organization and “director” shall refer to any member of such governing body.
 
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(e) Release Condition.  The Company shall not be required to make the payments
and provide the benefits specified in Section 4(a) unless the Executive executes
and delivers to the Company an agreement releasing the Company, its affiliates
and its officers, directors and employees from all liability (other than the
payments and benefits under this Agreement) in the form attached hereto as
Exhibit A (the “Release”).  The Release shall be provided to the Executive no
later than two (2) days after the Date of Termination, must be executed by the
Executive and become effective and not be revoked by the Executive by the
55th day following the Date of Termination.
 
(f) Time of Payment.  Subject to the Release becoming effective as provided in
Section 4(e), the payments in Sections 4(a)(i) and (iv) shall be paid within
sixty (60) days of the Date of Termination and the payment in Section 4(a)(iii)
shall be paid by March 15 of the year after the year in which the Date of
Termination occurs.  The payments and benefits in Sections 4(a)(ii), 4(b)(i),
4(c)(i) and 4(d) shall be paid within twenty (20) days of the Date of
Termination, provided, however, that any Annual Bonus amount for prior completed
years shall be paid by March 15 of the year in which the Date of Termination
occurs.
 
5. Full Settlement.  The Company’s obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others.  In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.
 
6. Certain Additional Payments by the Company.
 
(a) Gross-Up.  Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment, award, benefit or
distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a Change in Control (or any of its affiliated entities) to or
for the benefit of the Executive (whether pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 6) (the “Payments”) would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the “Excise Tax”), then
the Company shall promptly pay to the Executive an additional payment (a
“Reimbursement Payment”) in an amount such that after payment by the Executive
of all taxes (including any Excise Tax) imposed upon the Reimbursement Payment,
the Executive retains an amount of the Reimbursement Payment equal to the Excise
Tax imposed upon the Payments.  For purposes of determining the amount of the
Reimbursement Payment, the Executive shall be deemed to (i) pay federal income
taxes at the highest marginal rates of federal income taxation for the calendar
year in which the Reimbursement Payment is to be made and (ii) pay applicable
state and local income taxes at the highest marginal rate of taxation for the
calendar year in which the Reimbursement Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.
 
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Notwithstanding the foregoing, if it shall be determined that the Executive is
entitled to a Reimbursement Payment, but that the Payments would not be subject
to the Excise Tax if the Payments were reduced by an amount that is no more than
10% of the portion of the Payments that would be treated as “parachute payments”
under Section 280G of the Code, then the amounts payable to the Executive under
this Agreement shall be reduced (but not below zero) to the maximum amount that
could be paid to the Executive without giving rise to the Excise Tax (the “Safe
Harbor Cap”), and no Reimbursement Payment shall be made to the Executive.  The
reduction of the amounts payable hereunder, if applicable, shall be made by
reducing first the benefits under Section 4(a)(v), then reducing the cash
payments under Section 4(a)(i), 4(a)(ii), 4(a)(iii) and 4(a)(iv), and then
reducing the accelerated vesting under Section 4(d) (first by not vesting equity
awards that are not Section 409A “deferred compensation” and then by not vesting
equity awards that are Section 409A “deferred compensation”).  For purposes of
reducing the Payments to the Safe Harbor Cap, only amounts payable under this
Agreement (and no other Payments) shall be reduced.  If the reduction of the
amounts payable hereunder would not result in a reduction of the Payments to the
Safe Harbor Cap, no amounts payable under this Agreement shall be reduced
pursuant to this provision.
 
(b) Determination.  Subject to the provisions of Section 6(a), all
determinations required to be made under this Section 6, including whether and
when a Reimbursement Payment is required, the amount of such Reimbursement
Payment, the amount of any Option Redetermination (as defined below), the
reduction of the Payments to the Safe Harbor Cap and the assumptions to be
utilized in arriving at such determinations, shall be made by a public
accounting firm that is retained by the Company as of the date immediately prior
to the Change in Control (the “Accounting Firm”) which shall provide detailed
supporting calculations both to the Company and the Executive within fifteen
(15) business days of the receipt of notice from the Company or the Executive
that there has been a Payment, or such earlier time as is requested by the
Company (collectively, the “Determination”).  For the avoidance of doubt, the
Accounting Firm may use the Option Redetermination amount in determining the
reduction of the Payments to the Safe Harbor Cap.  Notwithstanding the
foregoing, in the event that the Board shall determine prior to the Change in
Control that (i) the Accounting Firm is precluded from performing such services
under applicable auditor independence rules or (ii) the Audit Committee of the
Board determines that it does not want the Accounting Firm to perform such
services because of auditor independence concerns or (iii) the Accounting Firm
is serving as accountant or auditor for the person(s) effecting the Change in
Control, the Board shall appoint another nationally recognized public accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder).  All fees and expenses of
the Accounting Firm shall be borne solely by the Company, and the Company shall
enter into any agreement reasonably requested by the Accounting Firm in
connection with the performance of the services hereunder.  The Reimbursement
Payment under this Section 6 with respect to any Payments shall be made no later
than thirty (30) days following such Payment.  If the Accounting Firm determines
that no Excise Tax is payable by a Executive, it shall furnish the Executive
with a written opinion to such effect, and to the effect that failure to report
the Excise Tax, if any, on the Executive’s applicable federal income tax return
will not result in the imposition of a negligence or similar penalty.  In the
event that the Accounting Firm determines that the Payments shall be reduced to
the Safe Harbor Cap, it shall furnish the Executive with a written opinion to
such effect.  The Determination by the Accounting Firm shall be binding upon the
Company and the Executive.
 
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As a result of the uncertainty in the application of Section 4999 of the Code at
the time of the Determination, it is possible that Reimbursement Payments which
will not have been made by the Company should have been made (“Underpayment”) or
Reimbursement Payments are made by the Company which should not have been made
(“Overpayment”), consistent with the calculations required to be made
hereunder.  In the event that the amount of the Reimbursement Payment is less
than the amount necessary to reimburse the Executive for the Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or
for the benefit of the Executive.  In the event that the amount of the
Reimbursement Payment exceeds the amount necessary to reimburse the Executive
for the Excise Tax, the Accounting Firm shall determine the amount of the
Overpayment that has been made and any such Overpayment (together with interest
at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid
by the Executive (to the extent the Executive has received a refund if the
applicable Excise Tax has been paid to the Internal Revenue Service) to or for
the benefit of the Company.  The Executive shall cooperate, to the extent his or
her expenses are reimbursed by the Company, with any reasonable requests by the
Company in connection with any contests or disputes with the Internal Revenue
Service in connection with the Excise Tax.  In the event that the Company makes
a Reimbursement Payment to the Executive and subsequently the Company determines
that the value of any accelerated vesting of stock options held by the Executive
shall be redetermined within the context of Treasury Regulations Section
1.280G-1 Q/A 33 (the “Option Redetermination”), the Executive shall file with
the Internal Revenue Service an amended federal income tax return that claims a
refund of the overpayment of the Excise Tax attributable to such Option
Redetermination and (ii) promptly pay the refunded Excise Tax to the Company;
provided that the Company shall pay all reasonable professional fees incurred in
the preparation of the Executive’s amended federal income tax return.  If the
Option Redetermination occurs in the same year that the Reimbursement Payment is
included in the Executive’s taxable income, then in addition to returning the
refund to the Company, the Executive will also promptly return to the Company
any tax benefit realized by the return of such refund and the return of the
additional tax benefit payment (all determinations pursuant to this sentence
shall be made by the Accounting Firm).  In the event that amounts payable to the
Executive under this Agreement were reduced pursuant to the second paragraph of
Section 6(a) and subsequently the Executive determines there has been an Option
Redetermination that reduces the value of the Payments attributable to such
options, the Company shall promptly pay to the Executive any amounts payable
under this Agreement that were not previously paid solely as a result of the
second paragraph of Section 6(a) up to the Safe Harbor Cap.
 
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7. Covenants Not to Compete or Solicit Company Clients and Employees;
Confidential Information.
 
The Company and the Executive acknowledge and agree that the restrictions in
Section 7 are necessary and reasonable to protect the Company’s disclosure of
its Confidential Information to the Executive and are designed to enforce the
Company’s promise to disclose its Confidential Information to the Executive and
the Executive’s agreement not to disclose or use the Confidential Information
except in connection with the Executive’s employment with the Company and to
return the Company’s Confidential Information as provided for in this Agreement.
 
(a) Non-Compete.  During the Executive’s employment with the Company, and, if
the Date of Termination is during the Employment Period and prior to a Change in
Control, for a one (1) year period after the date the Executive’s employment is
terminated by the Company or by the Executive for any reason, the Executive
shall not directly or indirectly (without the prior written consent of the
Company):
 
(i) hold a 5% or greater equity (including stock options whether or not
exercisable), voting or profit participation interest in a Competitive
Enterprise, or
 
(ii) associate (including as a director, officer, employee, partner, consultant,
agent or advisor) with a Competitive Enterprise and in connection with the
Executive’s association engage, or directly or indirectly manage or supervise
personnel engaged, in any activity:
 
(A) that is substantially related to any activity that the Executive was engaged
in with the Company or its affiliates during the 12 months prior to the Date of
Termination,
 
(B) that is substantially related to any activity for which the Executive had
direct or indirect managerial or supervisory responsibility with the Company or
its affiliates during the 12 months prior to the Date of Termination, or
 
(C) that calls for the application of specialized knowledge or skills
substantially related to those used by the Executive in his activities with the
Company or its affiliates during the 12 months prior to the Date of Termination.
 
For purposes of this Agreement, “Competitive Enterprise” means any business
enterprise that either (A) engages in any material activity that directly
competes within any material geographical location in which the Company or its
affiliates operates with any material activity that the Company or its
affiliates is then engaged in or (B) holds a 5% or greater equity, voting or
profit participation interest in any enterprise that engages in such a
competitive activity.
 
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(b) Non-Solicit.  During the Executive’s employment with the Company, and (i)
for a one (1) year period after the Executive’s employment is terminated by the
Company or the Executive for any reason, the Executive shall not, in any manner,
directly or indirectly (without the prior written consent of the
Company):  (a) Solicit any Client to transact business with a Competitive
Enterprise or to reduce or refrain from doing any business with the Company,
(b) transact business with any Client that would cause the Executive to be a
Competitive Enterprise or (c) interfere with or damage any relationship between
the Company and a Client and (ii) for a six (6) month period after the
Executive’s employment is terminated by the Company or the Executive for any
reason, the Executive shall not, in any manner, directly or indirectly (without
the prior written consent of the Company), Solicit anyone who is then an
employee of the Company (or who was an employee of the Company within the prior
12 months, unless the employment of such person was terminated by the Company
with or without Cause or by the employee for reasons that would have constituted
Good Reason under this Agreement) to resign from the Company or to apply for or
accept employment with any other business or enterprise.
 
For purposes of this Agreement, a “Client” means any client or prospective
client of the Company or its affiliates to whom the Executive provided services
(directly or indirectly by managing or supervising personnel who performed
services to the client or prospective client), or for whom the Executive
transacted business (directly or indirectly by managing or supervising personnel
who performed services to the client or prospective client).  For purposes of
this Agreement, “Solicit” means any direct or indirect communication of any
kind, regardless of who initiates it, that in any way invites, advises,
encourages or requests any person to take or refrain from taking any action.
 
(c) Confidential Information.  The Executive hereby acknowledges that, as an
employee of the Company, the Company will be providing Executive with and access
to its Confidential Information, and that Executive will be making use of,
acquiring and adding to this Confidential Information.  For the purposes of this
Agreement “Confidential Information” means and includes, by way of illustration
only, and not limitation, information regarding: (i) marketing, advertising,
public relations and/or promotional strategies, programs, plans and methods;
(ii) pricing policies, methods and concepts, product and services strategies,
training programs, and methods of operation and other business methods; (iii)
mailing lists and lists of and information relating to current and prospective
clients and accounts of the Company; (iv) the specific needs and preferences of
current, former and/or prospective clients and accounts of the Company; (v)
terms of contracts between the Company and its clients, accounts, vendors and/or
suppliers; (vi) business plans, expansion plans, management policies and other
business policies and strategies; (vii) business and sales forecasts, market
analyses, costs, sales and revenue reports, budgets, other financial data which
relates to the management and operation of the Company and its products and
services, and other analyses not publicly disclosed; (viii) the Company’s
competitors; (ix) employment lists, and salary, compensation and other
information regarding employees, agents, independent contractors, consultants
and representatives of the Company; (x) internally developed computer programs
and software and specialized computer programs and source code; (xi) internal
procedures, programs, reports and forms of the Company; (xii) the Company’s and
its employees’ business relationships with current and prospective clients; and
(xiii) other confidential, trade secret and/or proprietary information that
allows the Company to compete successfully.
 
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The Executive further recognizes and acknowledges that all Confidential
Information is the exclusive property of the Company, is material and
confidential, and is critical to the successful conduct of the business of the
Company.  Accordingly, the Executive hereby covenants and agrees that he will
use the Confidential Information for the benefit of the Company only and shall
not at any time, directly or indirectly, during the term of this Agreement and
thereafter divulge, reveal or communicate any Confidential Information to any
person, firm, corporation or entity whatsoever, or use any Confidential
Information for his own benefit or for the benefit of others.  Further,
Executive agrees that he will return all of the Company’s property, documents
and information including, but without limitation, the Confidential Information
to the Company upon the earlier of (1) a request by the Company or (2) at the
time Executive’s employment with the Company terminates regardless of the reason
for such termination.
 
(d) Survival.  Any termination of the Executive’s employment during the
Employment Period (or breach of this Agreement by the Executive or the Company)
shall have no effect on the continuing operation of this Section 7; provided
that if the Company willfully breaches the payment obligations under Section
4(a) in bad faith and where there is not a bona fide dispute as to the
entitlement to payments under Section 4(a), it shall be considered a material
prior breach hereof and the Executive shall not be obligated to comply with the
non-compete restrictions in Section 7(a).
 
(e) Validity.  Executive acknowledges and agrees that the restrictions in
Section 7 are reasonable and necessary to protect the Company’s legitimate
business interests including, without limitation, the Company’s Confidential
Information and are reasonable, necessary and specifically designed to enforce
the Company’s promise to provide Executive with and access to its Confidential
Information and Executive’s promise not to use or disclose the Confidential
Information except as authorized in this Agreement and to return the
Confidential Information as provided for in the Agreement.  The Executive and
the Company acknowledge and agree that the terms and provisions of this
Section 7 are intended to be separate and divisible provisions and if, for any
reason, any one or more of them is held to be invalid or unenforceable, neither
the validity nor the enforceability of any other provision of this Agreement
shall thereby be affected.  The parties hereto acknowledge that the potential
restrictions on the Executive’s future employment imposed by this Section 7 are
reasonable in both duration and geographic scope and in all other respects.  If
for any reason any court of competent jurisdiction shall find any provisions of
this Section 7 unreasonable in duration or geographic scope or otherwise, the
Executive and the Company agree that the restrictions and prohibitions contained
herein shall be effective to the fullest extent allowed under applicable law in
such jurisdiction.
 
(f) Consideration.  The parties acknowledge that this Agreement would not have
been entered into and the Company would not have agreed to provide Executive
with and access to its Confidential Information as well as the other benefits
described in Section 2, 4 or 6 in the absence of the Executive’s promises under
this Section 7.
 
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(g) Cease Payments.  In the event that the Executive materially breaches any of
Section 7(a), 7(b) or 7(c), the Company’s obligation to make or provide payments
or benefits under Section 4 or 6 shall cease; provided, however, this will not
in any way preclude the Company from seeking specific performance of this
Agreement by a temporary restraining order, injunctive relief or for any other
damages at law or in equity to which the Company may be entitled.
 
(h) Notice to New Employers.  Before the Executive either applies for or accepts
employment with any other person or entity while any of Section 7(a), 7(b) or
7(c) is in effect, the Executive will provide the prospective employer with
written notice of the provisions of this Section 7 and will deliver a copy of
the notice to the Company.
 
(i) Non-disparagement.  During the term of this Agreement and thereafter, (A)
the Executive shall not, in any manner, directly or indirectly make or publish
any statement (orally or in writing) that would libel, slander, disparage,
denigrate or ridicule the Company, any of its affiliates or any of their
employees, officers or directors and (B) the Company’s directors and officers
shall not, in any manner, directly or indirectly make or publish any statement
(orally or in writing) that would libel, slander, disparage, denigrate or
ridicule the Executive.
 
8. Successors.
 
(a) This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution.  This Agreement shall inure to
the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If the Executive shall die while any amounts would be
payable to the Executive hereunder had the Executive continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to such person or persons appointed in writing by the
Executive to receive such amounts or, if no person is so appointed, to the
Executive’s estate.
 
(b) This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns without any further consent of the Executive.
 
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.  As used in
this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid.
 
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9. Disputes.
 
(a) Jurisdiction and Choice of Forum.  The Executive and the Company irrevocably
submit to the exclusive jurisdiction of any state or federal court located in
Houston, Texas (Harris County) over any dispute or controversy involving this
Agreement.  Both the Executive and the Company (i) acknowledge that the forum
stated in this Section 9(a) has a reasonable relation to this Agreement and to
the relationship between the Executive and the Company and that the submission
to the forum will apply even if the forum chooses to apply non-forum law,
(ii) waive, to the extent permitted by law, any objection to personal
jurisdiction or to the laying of venue of any action or proceeding covered by
this Section 9(a) in the forum stated in this Section 9(a), (iii) agree not to
commence any such action or proceeding in any forum other than the forum stated
in this Section 9(a) and (iv) agree that, to the extent permitted by law, a
final and non-appealable judgment in any such action or proceeding in any such
court will be conclusive and binding on the Executive and the Company.  However,
nothing in this Agreement precludes the Executive or the Company from bringing
any action or proceeding in any court for the purpose of enforcing the
provisions of this Section 9(a).
 
(b) Governing Law.  This Agreement will be governed by and construed in
accordance with the law of the State of Texas applicable to contracts made and
to be performed entirely within that State.
 
(c) Costs Pre-Change in Control.  Prior to a Change in Control, the Company
shall reimburse any reasonable expenses, including reasonable attorney’s fees,
the Executive incurs as a result of any controversy or claim between the
Executive and the Company relating to this Agreement in which the Executive
substantially prevails on the merits of such matter.
 
(d) Costs Post-Change in Control.  After a Change in Control, the Company shall
reimburse the Executive on a current basis (as incurred) for all reasonable
expenses, including reasonable attorney’s fees, the Executive incurs as a result
of any controversy or claim between the Executive and the Company relating to
this Agreement regardless of the result thereof; provided, however, that the
Executive shall be required to repay immediately any such amounts to the Company
to the extent that a court issues a final and non-appealable order setting forth
the determination that the position taken by the Executive was frivolous or
advanced by the Executive in bad faith.
 
10. Miscellaneous.
 
(a) The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect.  This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
 
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(b) All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
 
If to the Executive:
 
at the Executive’s primary residential address
as shown on the records of the Company
 
If to the Company:
 
Southern Union Company
Attention:  Secretary
5444 Westheimer Road
Houston, TX 77056-5306
 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice and communications shall be effective
when actually received by the addressee.
 
(c) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
 
(d) The Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
 
(e) The Executive’s or the Company’s failure to insist upon strict compliance
with any provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 3(c)  (subject to the limitation in the lead in of Section 3(c)) or the
Company’s right to terminate the Executive for Cause pursuant to Section 3(b)
(subject to the limitation in the last sentence of Section 3(b)), shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
 
(f) It is the parties’ intention that this Agreement not be construed more
strictly with regard to the Executive or the Company.
 
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(g) From and after the Effective Date, this Agreement shall supersede any other
employment or severance agreement or arrangements between the parties (and the
Executive shall not be eligible for severance benefits under any plan, program
or policy of the Company), provided, however, this Agreement shall not waive any
other rights or benefits provided by the Company to the Executive as of the date
hereof (including, without limitation, the change in control vesting provided
under the Company’s stock and incentive plans or award agreements issued
thereunder).
 
(h) Any reference to a Section herein is a reference to a section of this
Agreement unless otherwise stated.
 
11. Section 409A.
 
(a) To extent the Executive would otherwise be entitled to any payment that
under this Agreement, or any plan or arrangement of the Company or its
affiliates, constitutes “deferred compensation” subject to Section 409A of the
Code (“Section 409A”) and that if paid during the six months beginning on the
Date of Termination would be subject to the Section 409A additional tax because
the Executive is a “specified employee” (within the meaning of Section 409A and
as determined by the Company), the payment will be paid to the Executive on the
earlier of the six-month anniversary of the Date of Termination or the
Executive’s death.  Similarly, to the extent the Executive would otherwise be
entitled to any benefit (other than a payment) during the six months beginning
on the Date of Termination that would be subject to the Section 409A additional
tax, the benefit will be delayed and will begin being provided on the earlier of
the six-month anniversary of the Date of Termination or the Executive’s
death.  In addition, any payment or benefit due upon the Date of Termination
that represents a “deferral of compensation” within the meaning of Section 409A
shall be paid or provided to the Executive only upon a “separation from service”
as defined in Treas. Reg. § 1.409A-1(h).  Each severance payment made under this
Agreement shall be deemed to be separate payments, amounts payable under Section
4 of this Agreement shall be deemed not to be a “deferral of compensation”
subject to Section 409A to the extent provided in the exceptions in Treasury
Regulations Section 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9)
(“separation pay plans,” including the exception under subparagraph (iii)) and
other applicable provisions of Treasury Regulations Sections 1.409A-1 through
A-6.
 
(b) Notwithstanding anything to the contrary in this Agreement or elsewhere, any
payment or benefit under this Agreement or otherwise that is exempt from Section
409A pursuant to Final Treasury Regulations Section 1.409A-1(b)(9)(v)(A) or (C)
(certain “reimbursements”) shall be paid or provided to the Executive only to
the extent that the expenses are not incurred, or the benefits are not provided,
beyond the last day of the Executive’s second taxable year following the
Executive’s taxable year in which the “separation from service” occurs; and
provided further that such expenses are reimbursed no later than the last day of
the Executive’s third taxable year following the taxable year in which the
Executive’s “separation from service” occurs.  Except as otherwise expressly
provided herein, to the extent any expense reimbursement or the provision of any
in-kind benefit under this Agreement is determined to be subject to Section 409A
of the Code, the amount of any such expenses eligible for reimbursement, or the
provision of any in-kind benefit, in one calendar year shall not affect the
expenses eligible for reimbursement in any other taxable year (except for any
life-time or other aggregate limitation applicable to medical expenses), in no
event shall any expenses be reimbursed after the last day of the calendar year
following the calendar year in which the Executive incurred such expenses, and
in no event shall any right to reimbursement or the provision of any in-kind
benefit be subject to liquidation or exchange for another benefit.
 

­NY12529:424933.1
 
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a
duly authorized officer of the Company and Executive has executed this Agreement
as of the day and year first above written.
 
Southern Union Company

/s/ GARY P. SMITH

Name:  Gary P. Smith
Title:    Senior Vice President,
     Human Resources & Administration

/s/ GEORGE L. LINDEMANN
George L. Lindemann

 
­NY12529:424933.1
 
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EXHIBIT A

[Form of Release]

­NY12529:424933.1
 
 

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