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Exhibit 10(aa)




EMPLOYMENT AGREEMENT




     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of this 31st day of
July, 2007, to be effective as of the 2nd day of April, 2007, by and between EnergySouth
Midstream, Inc., an Alabama corporation, and Ben J. Reese (the “Executive”).



     WHEREAS, effective April 2, 2007, the Executive became the Company’s President and Chief
Operating Officer; and



     WHEREAS, the Company and the Executive desire for the Executive’s employment with the Company
to be upon the terms and conditions hereinafter set forth.



     NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties set
forth in this Agreement, and other good and valuable consideration, the parties hereto, intending
to be legally bound, agree as follows:



Section 1. Employment; Term; Responsibilities; Standard of Care. 




     1.1 Employment. The Company employs the Executive and the Executive enters into the
employment of the Company as the Company’s President and Chief Operating Officer upon and subject
to all of the terms and conditions set forth in this Agreement.



     1.2 Term. The Company employs the Executive for a term (the “Term”) of four (4)
years, commencing on April 2, 2007 (the “Employment Commencement Date”), and ending on the first to
occur of (a) April 1, 2011, or (b) the date of termination of the Executive’s employment pursuant
to Section 3 of this Agreement. The Company and the Executive may extend the Term by mutual
agreement in writing, or the Term shall be extended on a month-to-month basis in the event that the
Executive’s employment continues beyond April 1, 2011. In event that the Term is extended in
either such manner, the Executive’s employment with the Company will continue to be upon and
subject to all of the terms and conditions of this Agreement, except to the extent that the parties
modify any provisions of this Agreement in writing. The effective date of termination of the
Executive’s employment is referred to as the “Employment Termination Date.”



     1.3. Responsibilities. In the Executive’s capacity as President and Chief Operating
Officer, the Executive will have the duties, functions, responsibilities and authorities that the
Board of Directors or the President and Chief Executive Officer of EnergySouth, Inc., a Delaware
corporation (“EnergySouth”), reasonably assigns to the Executive from time to time, consistent with
the typical duties commensurate with the position of president and chief operating officer of a
company. The Executive will be responsible for the general and active management of the business
of the Company and will perform services from offices of the Company to be established in Houston,
Texas, with travel to Mobile, Alabama, as necessary and appropriate.



     1.4. Standard of Care. During the term of the Executive’s employment with the
Company, the Executive will devote his full business time, skill, attention and reasonable best
efforts to the business of the Company. The Executive may not engage in any other business
activity, whether or not such business activity is pursued for profit, without the prior written
consent of the Board of Directors of EnergySouth. The Executive may serve as a director or trustee
of any other business corporation or charitable organization as long as such service does not
injure the Company and is approved by the Board of Directors of EnergySouth.



 









 




Section 2. Compensation, Benefits and Perquisites. As remuneration for
all services to be rendered by the Executive to the Company during the Term of this Agreement, the
Company will pay and provide to the Executive the following compensation, benefits and allowances:




     2.1 Annual Direct Compensation.



          (a) Annual Base Salary. The Company will pay to the Executive an annual base salary
(the “Base Salary”) of $245,000. The Board of Directors of EnergySouth may, but shall not be
required to, review the Base Salary from time to time during the Term and increase the Base Salary
by such amount, if any, as the Board determines, in its sole and absolute discretion. The Company
will pay the Base Salary to the Executive in equal installments throughout the year, consistent
with the Company’s normal payroll practices. The Base Salary will be prorated for any year of the
Term that is less than a full calendar year.




          (b) Annual Incentive Compensation. The Company will provide to the Executive the
opportunity to earn incentive compensation each year during the Term (the “Annual Incentive
Compensation Award”). The Annual Incentive Compensation Award will be comprised of the following:




               (i) Individual Performance Award. The Company will provide to the Executive the
opportunity to earn an annual award (the “Individual Performance Award”) ranging from 0% to 200% of
the Executive’s Base Salary. The amount of the Individual Performance Award will be determined by
Board of Directors of EnergySouth each year, beginning in 2008, based upon the Company’s actual net
operating income for the previous fiscal year in relation to its budgeted net operating income for
the previous fiscal year. The Individual Performance Award will be paid (A) 75% in cash, and (B)
25% in common stock of EnergySouth or such other medium as may be determined by the Board of
Directors of EnergySouth. The Individual Performance Award will be paid to the Executive no later
than December 31 of the year in which the amount of the award, if any, is determined. The
Individual Performance Award will be prorated for any fiscal year of the Term with respect to which
the award is made that is less than a full fiscal year.



               (ii) Team Performance Award. The Company will provide to the Executive the opportunity
to earn an annual award (the “Team Performance Award”) ranging from 0% to 22.5% of a pool
established by the Company each year, beginning in 2008, and funded with 30% of the amount by which
the Company’s actual net operating income for the previous fiscal year exceeds the Company’s
budgeted net operating income for the previous fiscal year. The Team Performance Award will be paid
(A) one-third (1/3) in cash no later than December 31 of the year in which the award is determined,
and (B) two-thirds (2/3) in common stock of EnergySouth or such other medium as may be determined
by the Board of Directors of EnergySouth, one-half (1/2) of which will be paid on the first
anniversary date of the cash award, and one-half (1/2) of which will be paid on the second
anniversary date of the cash award. No Team Performance Award will be paid with respect to any
fiscal year in which the Company’s actual operating income does not exceed the Company’s budgeted
operating income. If the Executive is employed by the Company on December 2, 2011, and remains
employed by the Company through and including April 2, 2012, then, with respect to any common stock
of EnergySouth or other property which has been awarded to the Executive as part of the Team
Performance Award prior to January 1, 2012, but which has not yet been paid, such common stock or
other property shall be paid over to the Executive on April 2, 2012, if the Executive delivers a
written request therefor to the Board of Directors of EnergySouth at least ninety (90) days but not
more than one hundred twenty (120) days prior to such date.



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     The Executive must be employed by the Company in order for an Annual Incentive Compensation
Award to be made. No Annual Incentive Compensation Award will be made to the Executive following
the Employment Termination Date. If an Annual Incentive Compensation Award has been made prior to
the Employment Termination Date but has not been paid to the Executive as of such date, payment of
such award, if at all, will be in accordance with Section 3.2.



     2.2 Long-Term Incentive Award. The Company will provide to the Executive the
opportunity to earn a long-term incentive award (the “Long-Term Incentive Award”) ranging from 0%
to 40% of the Executive’s Base Salary by participating in a long-term compensation plan of
EnergySouth in effect from time to time.



     2.3 Bridge Stock Option Grant. The Company will grant to the Executive, pursuant to
the terms and provisions of the 2003 Stock Option Plan of EnergySouth, Inc. (the “Stock Option
Plan”), a stock option (the “Option”) to purchase 43,600 shares (the “Option Shares”) of
EnergySouth’s common stock. The Option will vest cumulatively following the date of grant in four
(4) equal annual installments, with the Executive having the right to purchase from the Company up
to 25% of the Option Shares on and after April 2, 2008, and up to an additional 25% of the Option
Shares on and after each of the first anniversary, the second anniversary and the third anniversary
of such date. The terms and provisions of the Stock Option will be set forth in a separate
agreement (the “Option Agreement”) between the Company and the Executive in accordance with the
provisions of the Stock Option Plan, and the Stock Option and the Option Agreement will be subject
to all of the terms and provisions of the Stock Option Plan.



     2.4 Benefits and Perquisites. The Executive will be eligible to participate in all
medical, insurance, retirement and other employee benefit plans, whether now in place or that may
be hereafter implemented from time to time, in which all EnergySouth employees are eligible to
participate, pursuant to the terms of such plans. The Executive will have such additional benefits
and perquisites that are consistent with those provided to EnergySouth’s senior management.



     2.5 Vacation. The Executive will receive four (4) weeks of paid vacation during each
calendar year of the Term, beginning with the first calendar year of the Term, subject, except as
to length, to EnergySouth’s officer vacation policy as in effect from time to time. During any
year in which the Executive is employed for less than the full calendar year, vacation time will be
prorated accordingly.


Section 3. Termination of Employment. The Executive’s employment may be terminated
in accordance with any of the provisions set forth in this Section 3.




     3.1 Events of Termination.



               (a) Termination Due to Death or Disability. The Company may terminate the Executive’s
employment on account of Executive’s disability, and the Executive’s employment will terminate upon
the Executive’s death. The Executive will be deemed to suffer from a disability if, as a result of
the Executive’s incapacity due to physical or mental illness, the Executive is absent from the
full-time performance of his duties with the Company for ninety (90) or more days, whether or not
consecutive, during any six (6) month period.



               (b) Voluntary Termination by the Executive. The Executive may terminate his
employment at any time by delivering to the Board of Directors of EnergySouth written notice of the



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Executive’s intent to terminate, delivered at least thirty (30) calendar days prior to the
effective date of such termination. The termination will become effective automatically upon the
expiration of the thirty (30) day notice period. Such notice will also constitute the resignation
by the Executive of any other positions that he may hold as an officer and/or director of
EnergySouth and/or its affiliates.




               (c) Voluntary Termination by the Company. The Company may terminate the Executive’s
employment at any time, either for Cause or without Cause, by delivering to the Executive written
notice of the Company’s intent to terminate, delivered at least thirty (30) calendar days prior to
the effective date of such termination. The termination will become effective automatically upon
the expiration of the thirty (30) day notice period. Unless otherwise stated in the termination
notice, such notice will also constitute termination of the Executive as to any other positions
that he may hold as an officer and/or director of EnergySouth and/or its affiliates.



               (d) Termination by the Executive for Good Reason. The Executive may terminate his
employment for Good Reason by delivering to the Board of Directors of EnergySouth written notice of
the Executive’s intent to terminate, delivered at least thirty (30) calendar days prior to the
effective date of such termination, and stating in reasonable detail the facts and circumstances
claimed to provide a basis for such termination. For purposes of this Agreement, “Good Reason”
means, without the Executive’s express written consent, the occurrence of any one or more of the
following:



                    (i) The assignment to the Executive of any duties inconsistent with his status as President
and Chief Operating Officer of the Company or a substantial reduction in the nature or status of
the Executive’s responsibilities from those set forth in Section 1.3;



                    (ii) The Company’s or EnergySouth’s requiring the Executive to be based at a location that is
more than fifty (50) miles from Houston, Texas, without the Executive’s consent; or



                    (iii) The failure by the Company or EnergySouth to pay to the Executive or provide the
Executive with the compensation, benefits and perquisites set forth in Section 2.



     Notwithstanding the foregoing, none of the events described in clauses (i) through (iii) of
this Section will constitute Good Reason unless the Executive has delivered written notice to the
Board of Directors of EnergySouth describing the events which constitute Good Reason, and such
events are not cured within thirty (30) days after delivery of such notice.



               (e) Termination by the Company for Cause. The Company may terminate the Executive’s
employment for Cause. For purposes of this Agreement, “Cause” means any one or more of the
following:



                    (i) The Executive’s conviction of, or plea of “guilty” or “no contest” to, any crime
constituting a felony in the jurisdiction in which it is committed, or to any crime involving acts
of theft, fraud, embezzlement, dishonesty, moral turpitude or similar conduct, or to any offense
that materially injures or is likely to materially injure the Company, EnergySouth or any affiliate
of EnergySouth;



                    (ii) Willful or grossly negligent violation of any policy of the Company, EnergySouth or any
affiliate of EnergySouth which materially injures any of them;



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                    (iii) Malfeasance with respect to the Company, EnergySouth or any affiliate of EnergySouth,
including, without limitation, fraud, embezzlement or willful or grossly negligent misuse or
diversion of funds, assets or property belonging to any of them;



                    (iv) The Executive’s (A) gross negligence in the performance of or material failure to perform
the duties of the Executive’s employment under Sections 1.3 or 1.4 or any other duties reasonably
assigned to the Executive or appropriate to or commensurate with his position, or (B) gross
negligence in the performance of or material failure to perform, follow or comply with the
reasonable and lawful written directives of the Board of Directors of EnergySouth or the President
and Chief Executive Officer of EnergySouth, and the Executive fails to cure any such failure within
thirty (30) calendar days after written notice delivered to the Executive of such failure; or



                    (v) The Executive’s material breach of any provision of this Agreement or failure to perform
any obligation under this Agreement, and the Executive fails to cure such breach or to perform such
obligation within thirty (30) calendar days after written notice delivered to Executive of such
breach or failure to perform.



     Notwithstanding the foregoing, the Executive will not be deemed to have been terminated for
Cause unless and until the Company has delivered to the Executive a written notice of termination
which includes a determination by the Chief Executive Officer of EnergySouth finding that, in the
good faith opinion of the Chief Executive Officer or the Board of Directors of EnergySouth, the
Executive is guilty of conduct constituting “Cause” as set forth in this Section and specifying the
particulars thereof in detail. The termination of employment will be effective upon the delivery
of such notice in accordance with the foregoing provisions.



     3.2 Payments Upon Termination.



               (a) Payments Upon Termination Due To Death or Disability.



                    (i) If, prior to the end of the Term, the Executive’s employment with the Company terminates
due to the Executive’s death or disability, the Company will pay to the Executive, or to the
Executive’s personal representative, conservator or legal representative, (A) any accrued but
unpaid Base Salary; (B) any Annual Incentive Compensation Award that has been awarded but not paid;
(C) any Long-Term Incentive Award that has been awarded but not paid; and (D) any amounts payable
to the Executive under the terms of the Company’s benefits plans in which the Executive is a
participant. Any EnergySouth common stock or other property that has been awarded to the Executive
as part of the Annual Incentive Compensation Award and/or the Long-Term Incentive Award but which
has not been paid over to the Executive on the Employment Termination Date will be paid to the
Executive, or to the Executive’s personal representative, conservator or legal representative.



                    (ii) Subject to Section 3.2(e), items (A) through (C) of the preceding paragraph will be paid
in cash within thirty (30) days following the Employment Termination Date, or, if termination is
due to the death of the Executive or the Executive is incompetent, within thirty (30) days
following the date on which the Executive’s personal representative, conservator or legal
representative is qualified and begins serving. Amounts payable under Item (D) of the preceding
paragraph will be paid in accordance with the terms of the respective plans.



                    (iii) On the Employment Termination Date, any stock options that have been granted but have
not vested will immediately vest, and the restrictions shall lapse with respect to any



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restricted stock of EnergySouth that has been granted but as to which the restrictions have
not lapsed. Following the Employment Termination Date, the Executive, or the Executive’s personal
representative, conservator or legal representative, may exercise any vested but unexercised stock
options in accordance with the terms of the stock option plan or grant agreement pursuant to which
such options were granted.




               (b) Payments Upon Termination Due To Voluntary Termination by Executive or Termination by
Company for Cause.



                    (i) If, prior to the end of the Term, the Executive’s employment with the Company terminates
due to voluntary termination by the Executive or termination by the Company for Cause, the Company
will pay to the Executive (A) any accrued but unpaid Base Salary; (B) the cash component of any
Annual Incentive Compensation Award that has been awarded but not paid; (C) the cash component of
any Long-Term Incentive Award that has been awarded but not paid; and (D) any amounts payable to
the Executive under the terms of the Company’s benefits plans in which the Executive is a
participant. Any EnergySouth common stock or other property that has been awarded to the Executive
as part of the Annual Incentive Compensation Award and/or the Long-Term Incentive Award but which
has not been paid over to the Executive on the Employment Termination Date will be forfeited.



                    (ii) Subject to Section 3.2(d), items (A) through (C) of the preceding paragraph will be paid
in cash within thirty (30) days following the Employment Termination Date. Amounts payable under
Item (D) of the preceding paragraph will be paid in accordance with the terms of the respective
plans.



                    (iii) Following the Employment Termination Date, the Executive may exercise any vested but
unexercised stock options in accordance with the terms of the stock option plan or grant agreement
pursuant to which such options were granted. Any stock options that have been granted but which
have not vested as of the Employment Termination Date and any restricted stock of EnergySouth that
has been granted but as to which the restrictions have not lapsed as of the Employment Termination
Date will be forfeited.



               (c) Payments Upon Termination By the Company Without Cause or Termination By the Executive
With Good Reason.



                    (i) If, prior to the end of the Term, the Company terminates the Executive’s employment
without Cause or if the Executive terminates his employment with the Company for Good Reason, the
Company will pay to the Executive (A) any accrued but unpaid Base Salary; (B) any Annual Incentive
Compensation Award that has been awarded but not paid; (C) any Long-Term Incentive Award that has
been awarded but not paid; (D) a cash benefit equal to:




	 	(I)	 	two (2) times the Executive’s Base Salary, plus
	 
	 	(II)	 	either: (1) if the Employment Termination Date
precedes the determination of any Individual Performance Award, an
amount determined in good faith by the Board of Directors of
EnergySouth; (2) if the Employment Termination Date occurs following
the determination of the Individual Performance Award in 2008 but prior
to the determination of the Individual Performance Award in 2009, two
(2) times the amount of the Individual Performance Award for 2008; or
(3) if the Employment




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	 	 	 	Termination Date occurs following the determination of the Individual
Performance Award in 2009, two (2) times the average amount of the
Individual Performance Award for the most recent two (2) years; and




(E) any amounts payable to the Executive under the terms of the Company’s benefits plans in which
the Executive is a participant. Any EnergySouth common stock or other property that has been
awarded to the Executive as part of the Annual Incentive Compensation Award and/or the Long-Term
Incentive Award but which has not been paid over to the Executive on the Employment Termination
Date will be paid to the Executive.




                    (ii) Subject to Section 3.2(e), items (A) through (D) of the preceding paragraph will be paid
in cash within thirty (30) days following the Employment Termination Date. Amounts payable under
Item (E) of the preceding paragraph will be paid in accordance with the terms of the respective
plans.



                    (iii) On the Employment Termination Date, any stock options that have been granted but have
not vested will immediately vest, and the restrictions shall lapse with respect to any restricted
stock of EnergySouth that has been granted but as to which the restrictions have not lapsed.
Following the Employment Termination Date, the Executive may exercise any vested but unexercised
stock options in accordance with the terms of the stock option plan or grant agreement pursuant to
which such options were granted.



               (d) Payments Upon Termination By the Company Without Cause or Termination By the Executive
With Good Reason Within Two Years of a Change in Control.



                    (i) If, within two (2) years following a Change in Control, the Executive’s employment is
terminated without Cause or if the Executive terminates his employment with the Company for Good
Reason, the Company will pay to the Executive (A) any accrued but unpaid Base Salary; (B) any
Annual Incentive Compensation Award that has been awarded but not paid; (C) any Long-Term Incentive
Award that has been awarded but not paid; (D) a cash benefit equal to:




	 	(I)	 	three (3) times the Executive’s Base Salary, plus
	 
	 	(II)	 	either: (1) if the Employment Termination Date
precedes the determination of any Individual Performance Award, an
amount determined in good faith by the Board of Directors of
EnergySouth; (2) if the Employment Termination Date occurs following
the determination of the Individual Performance Award in 2008 but prior
to the determination of the Individual Performance Award in 2009, three
(3) times the amount of the Individual Performance Award for 2008; or
(3) if the Employment Termination Date occurs following the
determination of the Individual Performance Award in 2009, three (3)
times the average amount of the Individual Performance Award for the
most recent two (2) years; and




(E) any amounts payable to the Executive under the terms of the Company’s benefits plans in which
the Executive is a participant. Any EnergySouth common stock or other property that has been
awarded to the Executive as part of the Annual Incentive Compensation Award and/or the Long-Term
Incentive Award but which has not been paid over to the Executive on the Employment Termination
Date will be paid to the Executive.




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                    (ii) Subject to Section 3.2(e), items (A) through (D) of the preceding paragraph will be paid
in cash within thirty (30) days following the Employment Termination Date. Amounts payable under
Item (E) of the preceding paragraph will be paid in accordance with the terms of the respective
plans.



                    (iii) On the Employment Termination Date, any stock options that have been granted but have
not vested will immediately vest, and the restrictions shall lapse with respect to any restricted
stock of EnergySouth that has been granted but as to which the restrictions have not lapsed.
Following the Employment Termination Date, the Executive may exercise any vested but unexercised
stock options in accordance with the terms of the stock option plan or grant agreement pursuant to
which such options were granted.



               (e) Payments Subject to Section 409A. In the event that any payments under this
Section 3.2 are subject to the restrictions of Section 409A of the Internal Revenue Code, then
payment shall not be made until the first (1st) day of the month following the six (6)
month anniversary date of the Employment Termination Date.



               (f) Change in Control. For purposes of this Agreement, a “Change of Control” of the
Company will be deemed to have occurred on the effective date of any of the following events:



                    (i) A consolidation or merger of EnergySouth or the Company in which the majority of the Board
of Directors of EnergySouth or the majority of the Board of Directors of the Company, as the case
may be, is not on the continuing or surviving Board of Directors of such company, or pursuant to
which shares of EnergySouth’s or the Company’s common stock are converted into cash, other
securities or other property;



                    (ii) A recapitalization or any other type of transaction which results in 51% or more of
EnergySouth’s or the Company’s common stock being changed into, or exchanged for, other securities
or interests in other entities;



                    (iii) A sale, lease, exchange, transfer or other disposition (in one transaction or a series
of transactions contemplated or arranged as a single plan) of all or substantially all of the
assets of EnergySouth, or the Company;



                    (iv) A sale, exchange, transfer or other disposition of 51% or more of the Energy South’s
partnership interest in the Company; or



                    (v) The liquidation or dissolution of EnergySouth, or the Company.



     3.3 Business Records. Upon termination of his employment, the Executive agrees to
promptly deliver to EnergySouth, all Business Records belonging to the Company, EnergySouth or any
affiliate of EnergySouth, and all copies thereof and therefrom, and the Executive acknowledges that
such Business Records constitute the exclusive property of EnergySouth. The term “Business
Records” means all customer files, contract files, production records, maintenance records, reports
and related data, memoranda, notes, records, drawings, manuals, correspondence, financial and
accounting information, customer lists, statistical data and compilations, patents, copyrights,
trademarks, trade names, inventions, formulae, methods, processes, agreements, contracts, manuals
or any other documents relating to the business of the Company, EnergySouth or any affiliate of
EnergySouth.



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Section 4. Confidentiality. In consideration of the Executive’s employment by the
Company as President and Chief Operating Officer and of the confidential information that the
Executive will acquire by virtue of such employment, the Executive agrees to comply with the
confidentiality provisions of this Section.




     4.1 Trade Secrets and Confidential Information. During the Term of this Agreement and
thereafter for a period of five (5) years, the Executive will not directly or indirectly divulge or
appropriate to his own use, or to the use of any third party, any “trade secrets” or “confidential
information” (as defined in Section 4.2) of the Company, EnergySouth or any affiliate of
EnergySouth (collectively referred to in this Section 4 as the “EnergySouth Group”), except as may
be in public domain other than by violation of the Agreement or as may be required by law.



     4.2 Definitions. “Trade Secrets” as used herein means all secret discoveries,
inventions, formulae, designs, methods, processes, techniques of production and know-how relating
to the EnergySouth Group’s business. “Confidential Information” as used herein means internal
policies and procedures, suppliers, customers, financial information and marketing practices, as
well as secret discoveries, inventions, formulae, designs, techniques of production, know-how and
other information relating to the EnergySouth Group’s business not rising to the level of a trade
secret under applicable law.



     4.3 Injunctive Relief. The parties acknowledge that the breach or threatened breach
of the provisions of Section 4 may result in irreparable injury to the EnergySouth Group and,
therefore, that monetary damages for such breach may be inadequate. In consideration of the
foregoing, the Executive acknowledges and agrees that, in addition to all other remedies available
to the Company or any other member of the EnergySouth Group at law or in equity, each member of the
EnergySouth Group will be entitled to injunctive relief or specific performance, or both, to
restrain any threatened or continued breach of the provisions of Section 4 or to enforce the terms
hereof. The parties hereby waive any requirement for the posting of a bond or other security in
connection with such injunctive relief.



     Section 5. Assignment.



     5.1 Assignment by the Company. This Agreement may be assigned or transferred to, and
shall be binding upon and shall inure to the benefit of, any successor of the Company, and any
successor shall be deemed substituted for the “Company” for all purposes under this Agreement. As
used in this Agreement, the term “successor” shall mean any person, firm, corporation, or business
entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially
all of the assets of the Company.



     5.2 Assignment by Executive. This Agreement is personal and non-assignable by the
Executive.



Section 6. Miscellaneous.




     6.1 Entire Agreement. This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof, and supersedes all prior or contemporaneous
negotiations, representations, understandings and agreements of, by or among the parties, express
or implied, oral or written all of which are fully merged herein. The express terms of this
Agreement control and supersede any course of performance and/or customary practice inconsistent
with any such terms. Any agreement



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hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this
Agreement unless such agreement is in writing and signed by the parties hereto.




     6.2 Severability. If any provisions of this Agreement shall be determined to be
invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to
delete or modify, as necessary, the offending provisions and to alter the balance of this Agreement
in order to render the same valid and enforceable to the fullest extent permissible, as aforesaid.
The provisions of this Section shall be construed as an agreement independent of the other
provisions of this Agreement. The existence of any claim or cause of action by the Executive
against the Company shall not constitute a defense to the enforcement by the Company of the
provisions of this Agreement.



     6.3 Governing Law and Venue. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed and enforced in accordance with the laws of
the State of Alabama applicable to agreements made and to be performed wholly within the State of
Alabama. Any suit brought hereon shall be brought in the state or federal courts located in Mobile
County, Alabama.



     6.4 Waiver. No waiver by any party to this Agreement of any breach by any other party
of any term, provision, or condition contained in this Agreement, and no failure by any party to
insist upon the performance by any other party of any term, provision or condition contained in
this Agreement, shall be deemed a waiver of such term, provision, or condition, or any subsequent
breach of same, nor shall it be deemed a waiver of any other term, provision, or condition
contained in this Agreement. Neither the failure nor any delay on the part of any party to this
Agreement to exercise any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof. No single or partial exercise of any right, remedy, power or privilege shall
preclude any other or further exercise of the same or any other right, remedy, power or privilege.
Any party’s consent to or approval of any act shall not be deemed to render unnecessary the
obtaining of such party’s consent or approval of any subsequent act. No waiver shall be effective
unless it is in writing and is signed by the parties asserting such waiver.



     6.5 Notices. Any notice required or permitted to be given hereunder shall be in
writing, and, if addressed to the Executive, shall be delivered to the Executive at his last known
address, and, if addressed to the Company, EnergySouth, or any affiliate of EnergySouth, shall be
delivered to the principal office of EnergySouth in Mobile, Alabama. A notice shall be deemed to
have been delivered upon the first to occur of (a) actual receipt by the addressee, or (b) when (i)
personally delivered, (ii) delivered to a nationally recognized overnight delivery service for next
day delivery, (iii) deposited in the United States certified mail, return receipt requested and
postage prepaid, or (iv) transmitted to the addressee by facsimile, with receipt confirmed.



     6.6 Construction. This Agreement shall be construed and interpreted without regard to
any presumption or other rule requiring construction against the party drafting the document or any
provision contained in the document. It shall be construed neither for nor against any party, but
shall be given reasonable interpretation in accordance with the plain meaning of its terms and the
intent of the parties.



     6.7 Survival. The provisions of Sections 3.2, 3.3, and 4 will survive the termination
of this Agreement.



     6.8 Captions; Construction. The captions and headings used in this Agreement are
inserted only for convenience and in no way define, describe, extend, or limit the scope of the
particular provisions to which they refer, or the meaning or intent of this Agreement. The words
“herein,” “hereof,”



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“hereunder,” and other similar compounds of the word “here” as used in this Agreement shall
refer to the entire Agreement and not to any particular provision or section.




     6.9 Section 409A Savings Clause. This Agreement and all provisions hereof are
intended to comply with Section 409A of the Code and the permanent, temporary or proposed
regulations issued thereunder. If any provision of this Agreement violates or fails to comply with
the Section 409A of the Code or the permanent, temporary or proposed regulations thereunder, then
such provision shall be modified, as of the effective date of this Agreement, to the least extent
necessary to comply therewith. This Section supersedes all other provisions of this Agreement to
the extent of any inconsistency.



     6.10 Counterparts. This Agreement and any amendment hereto may be executed in any
number of counterparts, each of which shall be deemed to be an original as to any party whose
signature appears thereon, and all of which shall together constitute one and the same instrument.
This Agreement and any amendment hereto shall be binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties to this Agreement.



     IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective on the day and
year first above written.



	 	 	 	 	 
	 	EnergySouth Midstream, Inc., an Alabama Corporation

 
	 	By:  	/s/ Charles P. Huffman
 	 
	 	 	As its Executive Vice President and C.F.O.  	 
	 
	 	                                               /s/ Ben J. Reese
 	 
	 	Ben J. Reese 	 
	 	 	 
	 




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