EX-10.2






EMPLOYEE AGREEMENT




This EMPLOYEE AGREEMENT (this “Agreement”), is made as of the 26th day of January,
2006, by and between SOUTHERN UNION COMPANY, a Delaware corporation (“Seller”), and UGI
CORPORATION, a Pennsylvania corporation (“Buyer”).



W I T N E S S E T H:




WHEREAS, Seller is engaged in the Business;



WHEREAS, Seller and Buyer have entered into the Purchase and Sale Agreement, dated as of
January 26, 2006 (the “Sale Agreement”), in which this Agreement is incorporated by reference; and



WHEREAS, Buyer intends to cause an Affiliate to offer employment to all persons who are
employed in the Business and to assume responsibility for certain employee benefits upon the terms
and conditions set forth in this Agreement;



NOW, THEREFORE, in consideration of the respective covenants, representations and



warranties herein contained, the parties agree as follows:



ARTICLE I

DEFINITIONS




Section 1.1 General. Capitalized terms used in this Agreement (including Schedules to this
Agreement) not defined herein shall have the meanings ascribed to them in the Sale Agreement. For
purposes of this Agreement (including Schedules to this Agreement), the following terms shall have
the meanings set forth below.



“Base Compensation” shall mean an Employee’s base hourly wages or base salary, as applicable.



“COBRA” shall mean the continuation coverage requirements for group health plans under Title X
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in IRC
Section 4980B and ERISA Sections 601-608.



“Continuation Period” shall mean the one-year period following the Closing Date.



“Employee” shall mean a person who is a full-time or part-time employee of Seller, whether or
not covered by a collective bargaining agreement, whose responsibilities pertain primarily to the
Business on the Closing Date, including an employee who is not actively at work on the Closing Date
because the employee is on workers’ compensation, on an approved leave of absence (including an
approved leave of absence with a legal or contractual right to reinstatement, military leave,
maternity leave, or leave under the Family and Medical Leave Act of 1993) or absent due to
vacation, disability, illness or other similar circumstance except that a person who is absent due
to, and who is on, long-term disability shall not be deemed to be an “Employee” hereunder where
such person is unable to perform the essential functions of his or her job, with or without
reasonable accommodation (or otherwise consistent with applicable Legal Requirements). A
preliminary list of Employees, as of January 26, 2006, is set forth in Schedule 1.1.



“For Cause” shall mean (1) the commission by the Transferred Employee of a criminal or other
act that causes or is reasonably likely to cause substantial economic damage to Buyer or
substantial injury to the business reputation of Buyer, (2) the commission by the Transferred
Employee of an act of fraud, theft or financial dishonesty in the performance of the Transferred
Employee’s duties on behalf of Buyer, (3) the continuing failure or continuing refusal of the
Transferred Employee to satisfactorily perform the duties of the Transferred Employee to Buyer, (4)
the material disregard or violation by the Transferred Employee of the legal rights of any
employees of the Buyer or of the Buyer’s written policies regarding harassment or discrimination,
or (5) any other conduct materially detrimental to the Buyer’s business.



“Former Employee” shall mean a person who was formerly employed by Seller whose
responsibilities pertained primarily to the Business and who is not an Employee on the Closing
Date.



“Liabilities” shall mean any direct or indirect liability (whether absolute, accrued or
unaccrued, fixed or unfixed, choate or inchoate, secured or unsecured, liquidated or unliquidated,
matured or unmatured, known or unknown, contingent or otherwise), indebtedness, obligation,
expense, claim, charge, cause of action, deficiency, guarantee or endorsement of or by a party,
including those arising under any applicable law or action, under any award of any court,
administrative agency, tribunal or arbitrator, and under any contract or undertaking.



“Transferred Employee” shall mean an Employee who accepts Buyer’s offer of employment pursuant
to Section 2.3 and commences employment with Buyer or its Affiliate.



Section 1.2 Terms Defined Elsewhere. For purposes of this Agreement (including Schedules to
this Agreement), the following terms have the meanings set forth in the sections indicated.



	 	 	 	 	 	 	 	 	 
	Term	 	Section
	Absent Employee..........................................
	 	 	2.3	(a)	 	 	 	 
	Absent Employee’s Start Date...........................
	 	 	2.3	(a)	 	 	 	 
	Agreement 
	 	Preamble
	 	 	 	 
	Buyer 
	 	Preamble
	 	 	 	 
	Buyer’s 401(k) Plan 
	 	 	3.2	 	 	 	 	 
	Buyer’s Pension Plan .....................................
	 	 	3.1	 	 	 	 	 
	Pennsylvania VEBAs....................................
	 	 	4.6	(c)	 	 	 	 
	Post-Retirement Benefits.................................
	 	 	4.6	(a)	 	 	 	 
	Sale Agreement ..............................
	 	Preamble
	 	 	 	 
	Seller 
	 	Preamble
	 	 	 	 
	Seller’s 401(k) Plan 
	 	 	3.2	 	 	 	 	 
	Seller’s Flex Plan.......................................
	 	 	 	 	 	 	4.5	 
	Seller’s Pension Plan 
	 	 	3.1	 	 	 	 	 
	WARN Act.................................................
	 	 	 	 	 	 	7.3	(a)






ARTICLE II

EMPLOYEES




Section 2.1 Employee List. As soon as administratively feasible following the execution of
the Sale Agreement, Seller shall provide to Buyer an updated list, as of the date of the Sale
Agreement, of Employees originally provided to Buyer in Schedule 1.1, which shall consist not only
of the names, but also (to the extent permitted by applicable Legal Requirements) job titles, job
locations, Base Compensation, dates of hire, and union or non-union status, of all Employees.
Seller shall provide Buyer with a revised Schedule 1.1, updated as of the Closing Date, within ten
(10) days following the Closing Date.



Section 2.2 Collective Bargaining Agreements. Except as otherwise provided in Section 4.6,
the Collective Bargaining Agreement between PG Energy and International Brotherhood of Electrical
Workers, AFL-CIO, Scranton and Carbondale Operating Areas, including Mid Valley Local Union #2244,
and the Collective Bargaining Agreement between PG Energy and Utility Workers Union of America,
AFL-CIO, Local Unions #406, 407, 408 and 529, shall be binding on Buyer, and Buyer shall assume and
agree to perform all obligations of PG Energy thereunder relating to the period on and after the
Closing Date.



Section 2.3 Offers of Employment to Employees



(a) At least thirty (30) days prior to the anticipated Closing Date, Buyer shall offer
employment to all Employees (including Employees who are not actively at work on the Closing Date
because the Employee is on workers’ compensation, on an approved leave of absence (including an
approved leave of absence with a legal or contractual right to reinstatement, military leave,
maternity leave, or leave under the Family and Medical Leave Act of 1993) or absent due to
vacation, disability, illness or other similar circumstance (each, an “Absent Employee”)),
effective as of 12:01 a.m. on the Closing Date (except as provided in the following sentence), with
at least the same level of Base Compensation as was in effect for each such Employee immediately
prior to the Closing Date. The offer to an Absent Employee shall be made for employment effective
as of the expiration of the approved leave of absence or the Absent Employee’s other return from
workers’ compensation, vacation, disability, illness or other similar circumstance provided that
such offer of employment shall remain open no later than (1) one hundred eighty (180) days
following the Closing Date or (2) such longer period as may be consistent with applicable Legal
Requirements (as to each Absent Employee, the “Absent Employee’s Start Date”). An Absent Employee
who does not return to work after the expiration of an approved leave of absence or otherwise under
the preceding sentence shall not be considered a Transferred Employee hereunder. Notwithstanding
the foregoing, the parties agree that the Employee listed in Schedule 2.3(a) may have the
opportunity to continue employment with Seller; provided that Buyer shall have reasonable access to
the Employee listed in Schedule 2.3(a) prior to and after the Closing Date.



(b) Buyer shall notify Seller of the Employees’ responses to Buyer’s offers of employment
under this Section 2.3 as soon as administratively feasible after receiving each Employee’s
response. Buyer and Seller shall cooperate fully to facilitate the preparation of Buyer’s offers
of employment and such offers shall include the language set forth in Schedule 2.3(b) or similar
language reasonably acceptable to Buyer and Seller.



Section 2.4 Employment of Transferred Employees



(a) Buyer shall employ, as of 12:01 a.m. on the Closing Date, all of the Employees who accept
Buyer’s offer of employment, except that each Absent Employee shall be deemed employed by Buyer as
of 12:01 a.m. on the Absent Employee’s Start Date.



(b) In the event that (1) on the Closing Date or during the Continuation Period, the
employment of a Transferred Employee (other than a Transferred Employee covered by a collective
bargaining agreement) is terminated, other than For Cause, or (2) during the Continuation Period,
Buyer fails to provide a Transferred Employee (other than a Transferred Employee covered by a
collective bargaining agreement) with at least the same level of Base Compensation as was in effect
immediately prior to the Closing Date, then Buyer shall be responsible for and shall pay to such
Transferred Employee, in a lump sum payment, not later than sixty (60) days following the date of
the Transferred Employee’s termination of employment, the following severance benefit: two weeks
of the Employee’s Base Compensation at termination of employment for each full or partial year of
service, measured from the Transferred Employee’s date of hire reflected in Schedule 1.1, not to
exceed fifty-two (52) weeks of such Base Compensation; provided, however, that in no event shall
such severance benefit be less than six (6) weeks of such Base Compensation. The costs incurred,
directly or indirectly, in connection with the termination of employment of any Transferred
Employee on or after the Closing Date shall be borne exclusively by Buyer. The foregoing sets
forth Buyer’s sole obligation for severance payable to any Employee in connection with the Business
and the transactions contemplated by the Sale Agreement.



Section 2.5 Leaves of Absence. Buyer and its Affiliates shall honor all terms and conditions
of leaves of absence that have been granted by Seller to an Employee, including leaves that are
scheduled to commence on or after the Closing Date. As soon as administratively feasible following
execution of the Sale Agreement, Seller shall provide to Buyer a list reflecting the Employees that
have been granted a leave of absence and all of the terms and conditions associated therewith.



Section 2.6 Prior Service Credit. On and after the Closing Date, for each Transferred
Employee, Buyer and its Affiliates shall recognize, for eligibility, vesting and vacation accrual
purposes, under employee benefit and employment-related plans and programs of Buyer and its
Affiliates, such Transferred Employee’s service, as recognized under Seller’s Pension Plan, prior
to the Closing Date. On and after the Closing Date, for each Transferred Employee who, as of the
Closing Date, is covered by a collective bargaining agreement, Buyer and its Affiliates shall
recognize, for benefit accrual purposes under Buyer’s Pension Plan, such Transferred Employee’s
service, as recognized under Seller’s Pension Plan, prior to the Closing Date.



Section 2.7 Vacation. Buyer shall permit each Transferred Employee to carry forward and to
receive paid time off for all vacation days (including sick days and personal days) accrued prior
to the Closing Date. As soon as administratively feasible following execution of the Sale
Agreement, Seller shall provide to Buyer a list reflecting the paid time off balances standing to
the credit of each Transferred Employee as of the date of the Sale Agreement. Seller shall provide
Buyer with a revised list, updated as of the Closing Date, within ten (10) days following the
Closing Date.



ARTICLE III

PENSION, 401(k) AND NONQUALIFIED PLANS




Section 3.1 Pension Plans. Seller has no defined benefit plan that covers the Employees and
that is intended to be a qualified plan other than the Employees’ Retirement Plan of Southern Union
Company Pennsylvania Division (“Seller’s Pension Plan”). Following the Closing Date, Seller shall
retain sponsorship of, and all assets (held in trust), liabilities and obligations under, Seller’s
Pension Plan. Effective as of the Closing Date, all Transferred Employees shall become fully
vested in their accrued benefits, determined as of the Closing Date, under Seller’s Pension Plan,
and shall not accrue additional benefits under Seller’s Pension Plan. In addition to Buyer’s
satisfaction of its other obligations under the collective bargaining agreements referred to in
Section 2.2, Buyer shall cause an existing Buyer-sponsored defined benefit plan, or in the
alternative, Buyer shall establish a defined benefit plan (in either case, “Buyer’s Pension Plan”),
to cover Transferred Employees who are covered by a collective bargaining agreement, shall credit
benefit accrual service recognized under Seller’s Pension Plan as of the Closing Date as benefit
accrual service under Buyer’s Pension Plan, and shall reduce each covered Transferred Employee’s
accrued benefit under Buyer’s Pension Plan by the Transferred Employee’s accrued benefit,
determined as of the Closing Date under Seller’s Pension Plan. As soon as administratively
feasible following the Closing Date, Seller shall provide to Buyer a list that sets forth the
accrued benefit under Seller’s Pension Plan, as of the Closing Date, of each Transferred Employee
who is covered by a collective bargaining agreement.



Section 3.2 401(k) Plans. Seller has no defined contribution plan that covers the Employees
and that is intended to be a qualified plan other than the Southern Union Savings Plan, which
includes a qualified cash or deferred arrangement under IRC Section 401(k) (“Seller’s 401(k)
Plan”). As of the Closing Date, Seller shall vest the Transferred Employees in their account
balances under Seller’s 401(k) Plan. If the Transferred Employees will be eligible to participate
in a defined contribution plan maintained by Buyer (“Buyer’s 401(k) Plan”), immediately following
the Closing Date, Buyer shall take all actions necessary to ensure that Buyer’s 401(k) Plan accepts
from any Transferred Employee a rollover or direct rollover of all of his or her account balance
under Seller’s 401(k) Plan, including his or her loan balances and related loan documentation;
provided that a Transferred Employee shall only be permitted to roll over his or her loan balances
and related loan documentation if the Transferred Employee makes a rollover or direct rollover of
all of his or her account balance under Seller’s 401(k) Plan. If the Transferred Employees will be
eligible to participate in Buyer’s 401(k) Plan, the trustee or recordkeeper of Seller’s 401(k) Plan
shall transfer to the trustee or recordkeeper of Buyer’s 401(k) Plan any loan documentation for
loans to be rolled over or transferred to Buyer’s 401(k) Plan. The Transferred Employees shall not
be required to roll over, or otherwise transfer, their account balances under Seller’s 401(k) Plan
to Buyer’s 401(k) Plan.



Section 3.3 Nonqualified Plans. Seller shall comply fully with, and Buyer shall assume no
liability or responsibility whatsoever with respect to the Southern Union Company Supplemental
Deferred Compensation Plan, which is a nonqualified pension plan maintained by Seller.



ARTICLE IV

OTHER BENEFITS




Section 4.1 Welfare Benefit Plans. Except as provided in Section 4.6, coverage of all
Transferred Employees under each Employee Plan which is an “employee welfare benefit plan” within
the meaning of Section 3(1) of ERISA to which Seller or any Affiliate of Seller is a party or by
which any of them is bound, shall cease as of the Closing Date, subject to the health coverage
continuation rights as are required to be provided by Seller under COBRA attributable to a
“qualifying event” (as defined in COBRA).



Section 4.2 COBRA. On and after the Closing Date, Buyer shall provide continuation coverage
required under COBRA to all eligible Transferred Employees.



Section 4.3 Individuals on Long-Term Disability. Any individual who, as of the Closing Date,
is eligible for long-term disability benefits shall be covered under Seller’s long-term disability
plan and any other applicable Seller benefit plans for which the individual is eligible. In
addition, any Employee who, as of the Closing Date, is absent due to short-term disability, who
does not become a Transferred Employee, and who becomes eligible for long-term disability benefits
under Seller’s long-term disability plan after the Closing Date shall be covered under Seller’s
long-term disability plan. Buyer shall have no Liabilities with respect to any individual
described under this Section 4.3.



Section 4.4 Workers’ Compensation. With respect to occurrences relating to Employees prior to
the Closing Date, workers’ compensation benefits shall be subject to Seller’s workers’ compensation
policies, programs and plans, and Seller shall bear sole financial responsibility with respect to
such benefits. With respect to occurrences relating to Transferred Employees on or after the
Closing Date, workers’ compensation benefits shall be subject to Buyer’s workers’ compensation
policies, programs and plans, and Buyer shall bear sole financial responsibility with respect to
such benefits.



Section 4.5 Flexible Spending Accounts. As soon as administratively feasible after the
Closing Date, Seller shall transfer to Buyer’s flexible benefits plan, in cash, any health care and
dependent care balances standing to the credit of Transferred Employees under the Southern Union
Company Flexible Benefit Plan (“Seller’s Flex Plan”) as of the day immediately preceding the
Closing Date, and Buyer shall reimburse Transferred Employees for all eligible health and dependent
care expenses submitted on or after the Closing Date. As soon as administratively feasible after
the Closing Date, Seller shall provide to Buyer a list of those Transferred Employees who have
participated in the health or dependent care reimbursement accounts under Seller’s Flex Plan,
together with their elections made prior to the Closing Date with respect to such accounts, and
balances standing to their credit as of the day immediately prior to the Closing Date.



Section 4.6 Post-Retirement Benefit Plans



(a) Post-retirement health and life insurance benefits available to Employees and Former
Employees (“Post-Retirement Benefits”) are described in the document entitled “The Southern Union
Company Postretirement Medical and Death Benefits for PG Energy Employees Application of Statement
of Financial Accounting Standards Nos. 106 and 132® to the Fiscal Year Ending December 31, 2005,”
a draft copy of which Seller has provided to Buyer. Following the Closing Date, Seller shall
retain responsibility for all liabilities and obligations of Seller, if any, to provide
Post-Retirement Benefits to Former Employees, Employees who are not Transferred Employees, and
those Transferred Employees who, as of the Closing Date, have attained age fifty-five (55) and
completed twenty (20) years of vesting service under Seller’s Pension Plan.

        .


(b) Following the Closing Date, Buyer shall assume responsibility for all liabilities and
obligations of Seller, if any, to provide Post-Retirement Benefits to those Transferred Employees
who, as of the Closing Date, have not attained age fifty-five (55) and completed twenty (20) years
of vesting service under Seller’s Pension Plan. Nothing herein is intended to confer upon any
person any right to Post-Retirement Benefits to which he or she is not otherwise entitled.



(c) Following the Closing Date, Seller shall retain the “Pennsylvania VEBAs,” as defined in
the following sentence, and the assets held therein shall be applied, in accordance with the terms
of the Pennsylvania VEBAs, for the benefit of the Former Employees, the Employees who are not
Transferred Employees, and those Transferred Employees who, as of the Closing Date, have attained
age fifty-five (55) and completed twenty (20) years of vesting service under Seller’s Pension Plan.
The “Pennsylvania VEBAs” are the Pennsylvania Enterprises, Inc. Employees’ Life Insurance Benefits
Trust – Union (PG Energy Life VEBA Union), the Pennsylvania Enterprises, Inc. Employees’ Life
Insurance Benefits Trust – Non-Union (PG Energy Life VEBA Non-Union), the Pennsylvania Enterprises,
Inc. Employees’ Medical Insurance Benefits Trust – Union (PG Energy Medical VEBA Union), and the
Pennsylvania Enterprises, Inc. Employees’ Medical Insurance Benefits Trust – Non-Union (PG Energy
Medical VEBA Non-Union).



ARTICLE V

LIABILITIES




Except as otherwise provided in this Agreement, Buyer, for itself and its Affiliates, assumes
and agrees to pay, perform, fulfill and discharge when due all Liabilities, including litigation
costs, with respect to a Transferred Employee or a dependent or beneficiary of a Transferred
Employee relating to, arising out of or resulting from employment in connection with the Business
prior to, on or after the Closing Date. Anything herein to the contrary notwithstanding, Seller
retains and shall pay, perform, fulfill and discharge all Liabilities with respect to Former
Employees and Employees who are not Transferred Employees.



ARTICLE VI

RECORDS AND INFORMATION




Section 6.1 Records. On or soon after the Closing Date, Seller shall deliver to Buyer, to the
extent permitted by applicable Legal Requirements, all personnel files and records in its
possession relating to the Transferred Employees, including active contracts, litigation files,
annual reviews, grievances and any other information that is part of the personnel file of a
Transferred Employee. Prior to the Closing Date, subject to applicable Legal Requirements, Seller
shall provide Buyer with reasonable access to information and records in its possession relating to
the Transferred Employees. Subject to applicable Legal Requirements, from and after the Closing
Date, all such files and records shall be the property of Buyer, provided, that Seller may copy
such files and records prior to transferring them to Buyer.



Section 6.2 Access to Information. From and after the Closing Date, Buyer shall afford to
Seller reasonable and timely access and duplicating rights, during normal business hours and upon
reasonable advance notice, to the personnel files and records in the possession or control of
Buyer, insofar as such access is reasonably required for a reasonable business purpose, subject to
applicable Legal Requirements. Without limiting the foregoing, information may be requested under
this Section 6.2 for audit, accounting, claims, litigation and tax purposes, as well as for
purposes of fulfilling disclosure and reporting obligations.



Section 6.3 Confidentiality. Buyer and its Affiliates shall preserve the confidentiality, in
accordance with all applicable Legal Requirements, of all information contained in the personnel
files and records obtained from Seller pursuant to this Agreement.



ARTICLE VII

GENERAL PROVISIONS




Section 7.1 Cooperative Actions. Seller and Buyer shall cooperate with each other in carrying
out, implementing and defending the terms of this Agreement, including cooperating with each other
with respect to any claims or litigation challenging any of the terms of this Agreement. Seller
and Buyer agree to good faith mutual cooperation in any investigation, inquiry or litigation which
jointly involves them or in which a party makes a reasonable request for cooperation. Each party
will make its employees available on a reasonable basis to give testimony and assistance in
connection with any lawsuit, dispute, investigation or proceeding involving the other party;
provided, however, that such other party shall pay for all out-of-pocket costs incurred in
connection with providing such testimony and assistance. Except as otherwise provided in this
Agreement, each party will pay all costs and expenses of its performance of and compliance with
this Agreement.



Section 7.2 Parties in Interest. No provision of this Agreement shall confer upon any person,
other than the parties hereto, their Affiliates, successors and permitted assigns, any rights or
remedies hereunder, including any rights or remedies with respect to the employment, compensation,
benefits or other terms and conditions of employment of any person. Except as otherwise provided
herein, no provision of this Agreement shall be construed to create any right or accelerate any
entitlement to any compensation or benefit on the part of any Employee.



Section 7.3 WARN Act.



(a) On or before the Closing Date, Seller shall provide a list of the name and site of
employment of any and all employees of Seller who have experienced, or who will experience, an
employment loss or layoff (as defined by the Worker Adjustment and Retraining Notification Act of
1988 or any similar applicable state or local law requiring notice to employees in the event of a
closing or layoff (the “WARN Act”)) within ninety (90) days prior to the Closing Date. Seller
shall update this list up to and including the Closing Date.



(b) For a period of ninety (90) days after the Closing Date, Buyer shall not engage in any
conduct which would result in an employment loss or layoff for a sufficient number of employees of
Buyer which, if aggregated with any such conduct on the part of Seller prior to the Closing Date,
would trigger the WARN Act.



Section 7.4 Satisfaction of Liabilities by Affiliate. Obligations of Buyer hereunder may be
satisfied by an Affiliate of Buyer.



[Remainder of this page intentionally left blank]





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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by
their duly authorized officers as of the date first written above.




SOUTHERN UNION COMPANY




By:     

Name:     

Title:     





UGI CORPORATION




By:     

Name:     

Title:     




[Signature page to Employee Agreement between




Southern Union Company and UGI Corporation]








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LIST OF SCHEDULES




	 	 	 
	Schedule 1.1

	 	Employees
	 
	 	 
	Schedule 2.3(a)

	 	Employee who may have Opportunity

to Continue Employment with Seller
	 
	 	 
	Schedule 2.3(b)

	 	Employment Offers
	 
	 	 







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