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                                                    EXHIBIT 10(a)

                        THOMAS F. KARAM

                     EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT is made and entered into as of this
28th day of December, 1999, by and between Southern Union Company
(hereinafter referred to as the "Company"), a Delaware corpora-
tion, and Thomas F. Karam (hereinafter referred to as the
"Executive").

WHEREAS, the Executive is presently employed by the Company in
the capacity of Executive Vice President Corporate Development
and Chief Executive Officer of the PG Energy Division;

WHEREAS, the Company is desirous of assuring the continued
employment of the Executive as a senior executive of Southern
Union Company and the PG Energy Division, and Executive is
desirous of having such assurance.

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

Section 1.  Term of Employment; Prior Agreements

  1.1   Employment Term.  Subject to the provisions of Section 6
        ---------------
        of this Agreement, the Company hereby agrees to employ
        the Executive and the Executive hereby agrees to serve
        the Company, in accordance with the terms and conditions
        set forth herein, until June 30, 2010, commencing as of
        the date hereof (the "Term").  If, in the sole discretion
        of the President of Southern Union Company (the "Presi-
        dent"), certain mutually agreed financial and performance
        goals are achieved, the agreement will be automatically
        renewed for 12 months, effective July 1 of each year and
        a new Employment Agreement will be executed.  Notwith-
        standing the foregoing, in the event a Change of Control
        of the Company (as defined in Section 6.7) occurs during
        the Term of this agreement or any renewal thereof, the
        Term shall continue until the second anniversary of the
        Change of Control (or such later date as may be agreed to
        by the parties).

  1.2   Prior Agreements.  This Agreement supersedes all prior
        ----------------
        agreements and understandings (including verbal agree-
        ments) between Executive and the Company and/or any of
        its affiliates regarding the terms of Executive's employ-
        ment with the Company and/or its affiliates including,
        without limitation, the Employment Agreement dated May 6,
        1998 between the Executive and Pennsylvania Enterprises,
        Inc, the Change of Control Agreement dated March 6, 1996
        between the Executive and Pennsylvania Enterprises, Inc.,
        and any assumption of those agreements by the Company and
        the parties, shall have no liabilities under any such
        prior agreements.

Section 2.  Position and Responsibilities

During the Term of this Agreement, the Executive agrees to serve
as a senior executive of Southern Union Company and the PG Energy
Division.  In such capacity, the Executive shall have such level
of duties and responsibilities as he may be assigned from time to
time by the President of the Company. The Executive shall have
the same status, privileges, and responsibilities normally
inherent in similarly situated executives of the Company.

Section 3.  Standard of Care

During the term of this Agreement, the Executive agrees to devote
his full business time and reasonable best efforts to the busi-
ness of the Company and the PG Energy Division. Executive shall
not be engaged in any other business activity, whether or not
such business activity is pursued for gain, profit, or other
pecuniary advantage, without the prior written consent of the
President.  The Executive may serve on the board of directors or
trustees of any business corporation or charitable organization
so long as such service is not injurious to the Company and is
agreed upon by the President.  This Section 3 shall not be
construed as preventing the Executive from holding, as a passive
investor, up to two percent (2%) of the common stock of any
public company.

Section 4.  Compensation

As remuneration for all services to be rendered by the Executive
during the term of this Agreement, and as consideration for
complying with the covenants herein, the Company shall pay and
provide to the Executive the following:

  4.1   Base Salary.  During the Term, the Company shall pay the
        -----------
        Executive a Base Salary in an amount which shall be
        established from time to time by the President; provided,
        however, that such Base Salary shall not be less than
        $16,346.15 per biweekly pay period.  This Base Salary
        shall be paid to the Executive in equal installments
        throughout the year, consistent with the normal payroll
        practices of the PG Energy Division.

        While this Agreement is in force, the annual Base Salary
        shall be reviewed at least annually, to ascertain
        whether, in the judgment of the President, such Base
        Salary should be increased, based primarily on the per-
        formance of the Executive during the year and on the base
        salary of similarly situated executives at comparable
        companies.  If so increased, the Base Salary as stated
        above shall, likewise, be increased for all purposes of
        this Agreement.

  4.2   Sign-On Bonus.  The Company shall pay to the Executive an
        -------------
        amount equal to $906,618.31 as a sign-on bonus.  This
        sign-on bonus shall not be treated as compensation for
        purposes of any other benefit plan or agreement
        (including any retirement or severance benefits payable
        to Executive, under this Agreement or otherwise).

  4.3   Annual Bonus.  July 1st of each year of the employment
        ------------
        agreement the company shall pay to the executive an
        amount equal to $600,000 as an annual bonus related to
        the Executives corporate responsibilities.

  4.4   Annual Cash Incentive Compensation.  The Company shall
        ----------------------------------
        provide the Executive with the opportunity to earn an
        annual cash incentive compensation payment, at a level no
        less favorable than that provided to similarly situated
        executives of the Company, based upon goals and measures
        for the Executive, the PG Energy Division and/or the
        Company established by the President.

  4.5   Long-Term Incentives.  The Company shall provide the
        --------------------
        Executive with the opportunity to earn a long-term
        incentive award by participating in the Company's Long-
        Term Incentive Stock Option Plan at a level no less
        favorable than that provided to similarly situated
        executives of the Company.

  4.6   Supplemental Retirement Benefits.  The Company shall
        --------------------------------
        provide the Executive the opportunity to participate in
        the Southern Union Company Supplemental Deferred
        Compensation Plan.

  4.7   Employee Benefits.  During the Term, the Company shall
        -----------------
        provide to the Executive all qualified retirement plan
        benefits and welfare benefits to which other senior
        executives of the PG Energy Division are generally
        entitled, without duplication of benefits.  The Executive
        shall be entitled to paid vacation in accordance with the
        standard written policy of the PG Energy Division with
        regard to vacations of employees.  The Company shall
        provide to the Executive, at the Company's cost, all
        perquisites to which other similarly situated executives
        are entitled.

Section 5.  Expenses

The Company shall pay, or reimburse the Executive, for all
ordinary and necessary expenses that the Executive incurs in
performing his duties under this Agreement in accordance with the
Company's policy.

Section 6.  Termination of Employment

  6.1  General.  Executive's employment may be terminated in
       -------
       accordance with any of the provisions set forth in this
       Section 6, and the Term shall terminate upon the effective
       date of such termination of employment.  Upon such
       termination, Executive shall be entitled solely to the
       rights and benefits set forth in the applicable provision
       of this Section 6.

  6.2  Termination Due to Death or Disability

       (a)  Executive's employment may be terminated by the
            Company on account of Executive's Disability, and
            shall be terminated upon Executive's death.  The
            Company shall have the right to terminate Executive's
            employment on account of Disability if, as a result
            of Executive's incapacity due to physical or mental
            illness, Executive shall have been absent from the
            full-time performance of his duties with the Company
            for six consecutive months.

       (b)  If the Executive's employment is terminated due to
            death or Disability, the Company shall pay Executive
            his accrued but unpaid Base Salary, unpaid bonus
            earned in the previous year, a pro rata portion of
            his target annual bonus for the year of termination,
            based on the portion of the year elapsed prior to
            such termination, plus any amounts otherwise payable
            to Executive under the terms of the Company benefit
            plans and programs in which he is a participant, at
            the times such payments are due.  With the exception
            of the foregoing obligations of the Company, and, in
            the case of Disability, the covenants of Executive
            contained in Section 7 (which shall survive such
            termination), the Company and the Executive there-
            after shall have no further obligations under this
            Agreement.

  6.3   Voluntary Termination by the Executive

        (a)  The Executive may terminate this Agreement at any
             time other than for Good Reason, death or Disability
             by giving the President written notice of intent to
             terminate, delivered at least thirty (30) calendar
             days prior to the effective date of such termina-
             tion.  The termination shall become effective
             automatically upon the expiration of the thirty (30)
             day notice period.  Such notice shall also
             constitute the resignation by the Executive of his
             positions as an officer and/or director of the
             Company and its subsidiaries and affiliates.

        (b)  In the event of such termination, the Company shall
             pay to the Executive his accrued but unpaid Base
             Salary, plus any amounts otherwise payable to
             Executive under the terms of the Company benefit
             plans and programs in which he is a participant, at
             the times such payments are due. With the exception
             of the foregoing obligations of the Company and the
             covenants of the Executive contained in Section 7
             (which shall survive such termination), the Company
             and the Executive thereafter shall have no further
             obligations under this Agreement.

  6.4   Involuntary Termination by the Company Without Cause.
        ----------------------------------------------------
        The Company may terminate the Executive's employment at
        any time by notifying the Executive in writing of the
        Company's intent to terminate, effective thirty (30)
        calendar days following the date on which the Company
        delivers such notice to the Executive.  If Executive's
        employment is terminated by the Company for reasons other
        than death, Disability, or for Cause, then the Executive
        shall be entitled to the benefits provided below:

        (a)  The Company shall pay the Executive his full Base
             Salary through the effective date of termination,
             unpaid bonus earned in the previous year, the unpaid
             annual bonus payments referred to in Section 4.3 (on
             either an annual basis or at the discretion of the
             company a lump sum present value of the bonus
             payments), plus any amounts otherwise payable to
             Executive under the terms of the Company benefit
             plans and programs in which he is a participant, at
             the times such payments are due;

        (b)  In lieu of any further salary and bonus payment to
             the Executive for periods subsequent to the effec-
             tive date of termination (other than the unpaid
             annual bonus referred to in Section 4.3), the Com-
             pany shall pay as a severance payment to the Execu-
             tive, not later than the fifth business day
             following the effective date of termination, a lump
             sum severance payment equal to one times the Execu-
             tive's Covered Compensation.  "Covered Compensation"
             shall mean the Executive's annualized Base Salary
             (determined by multiplying the biweekly rate of base
             salary in effect at the effective date of termina-
             tion by 26). This severance payment will be in lieu
             of payments (if any) from any other Company's
             Severance Plans.

             With the exceptions of the foregoing obligations of
             the Company and the Executive's covenants contained
             in Section 7 herein (which shall survive such
             termination), the Company and the Executive
             hereafter shall have no further obligations under
             this Agreement.

  6.5   Termination for Cause

        (a)  The Company may terminate the Executive's employment
             for "Cause" which shall mean (i) the willful and
             continued failure by the Executive to substantially
             perform his duties with the Company (other than any
             such failure resulting from the Executive's incapa-
             city due to physical or mental illness or any such
             actual or anticipated failure after the occurrence
             of circumstances giving rise to a notice of termina-
             tion by the Executive for Good Reason) after a
             written demand for substantial performance is
             delivered to the Executive by the President, which
             demand specifically identifies the manner in which
             the President believes that the Executive has not
             substantially performed his duties, or (ii) the
             willful engaging by the Executive in conduct which
             is demonstrably injurious to the Company, monetarily
             or otherwise, in a not insignificant amount or
             manner.  For this purpose, no act, or failure to
             act, by the Executive shall be deemed "willful"
             unless done, or omitted to be done, by the Executive
             not in good faith and without reasonable belief that
             the Executive's action or omission was in the best
             interest of the Company.  Notwithstanding the
             foregoing, the Executive shall not be deemed to have
             been terminated for Cause unless and until there
             shall have been delivered to the Executive a copy of
             a written notice of termination which shall include
             a determination by the President (after reasonable
             notice to the Executive and an opportunity for the
             Executive, together with the Executive's counsel, to
             be heard) finding that in the good faith opinion of
             the President, the Executive was guilty of conduct
             constituting "Cause" as set forth in this paragraph
             and specifying the particulars thereof in detail.
             The termination of employment shall be effective
             upon the giving of such notice.

        (b)  In the event of a termination of the Executive's
             employment for "Cause," the Company shall pay the
             Executive his accrued and unpaid Base Salary through
             the date notice of termination is delivered to the
             Executive, plus any amounts otherwise payable to
             Executive under the terms of the Company benefit
             plans and programs in which he is a participant, at
             the times such payments are due.  Except for the
             foregoing obligations of the Company and the
             Executive's covenants under Section 7 (which shall
             survive such termination), upon delivery to the
             Executive of written notice of termination, the
             Company and the Executive thereafter shall have no
             further obligations under this Agreement.

  6.6   Termination for Good Reason

        (a)  The Executive may terminate his employment for Good
             Reason (as defined below) by giving the President 30
             days' written notice of termination, stating in rea-
             sonable detail the facts and circumstances claimed
             to provide a basis for such termination.  In the
             event of termination for Good Reason, the Company
             shall pay and provide to the Executive the amounts
             and benefits set forth in Section 6.4 hereof.  With
             the exceptions of the foregoing obligations of the
             Company and the Executive's covenants contained in
             Section 7 herein (which shall survive such termina-
             tion), the Company and the Executive hereafter shall
             have no further obligations under this Agreement.

        (b)  Good Reason shall mean, 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 a senior exe-
                    cutive of the Company or a substantial reduc-
                    tion in the nature or status of the
                    Executive's responsibilities from those set
                    forth in Section 2 hereof.

             (ii)   A reduction by the Company in the Executive's
                    Base Salary payable under Section 4.1 hereof,
                    as the same may be increased from time to
                    time;

             (iii)  The Company's requiring the Executive to be
                    based at a location which is more than fifty
                    (50) miles from the current principal
                    location of Executive's employment;

             (iv)   The failure by the Company to continue to
                    provide the Executive with the incentive
                    compensation and benefits set forth in
                    Section 4 hereof;

             (v)    The failure by the Company to pay to the
                    Executive any portion of the Executive's
                    current cash compensation, when due;

             (vi)   The failure of the Company to obtain a
                    satisfactory agreement from any successor to
                    assume and agree to perform this Agreement,
                    as contemplated in Section 9.1 hereof; or

             (vii)  Any purported termination of the Executive's
                    employment which does not comply, with the
                    applicable provisions of Section 6 of this
                    agreement; and for purposes of this Agree-
                    ment, no such purported termination shall be
                    effective.

             Notwithstanding the foregoing, none of the events
             described in clauses (i) through (vii) of this
             Section 6.6(b) shall constitute Good Reason unless
             Executive shall have notified the Company in writing
             describing the events which constitute Good Reason
             and then only if the Company shall have failed to
             cure such event within thirty (30) days after the
             Company's receipt of such written notice.

             The Executive's right to terminate employment for
             Good Reason shall not be affected by the Executive's
             incapacity due to physical or mental illness.  How-
             ever, the Executive's failure to assert Good Reason
             within six (6) months from the time he had knowledge
             of the circumstance constituting Good Reason shall
             constitute a waiver of his right to terminate em-
             ployment for Good Reason with respect to such event.

  6.7   Involuntary Termination by the Company Without Cause or
        Termination for Good Reason, following a "Change of
        Control" (as defined below.)  Notwithstanding the provi-
        sions of Sections 6-4 and 6-6, in the event the Company
        terminates the Executive's employment without cause or
        the Executive terminates his employment for good reason,
        in either case, within two years following the date of a
        Change of Control of the Company then the Executive shall
        be entitled to the benefits provided below:

        (a)  The Company shall pay the Executive his full Base
             Salary through the effective date of termination,
             unpaid bonus earned in the previous year, the unpaid
             annual bonus payments referred to in Section 4.3 (on
             either an annual basis or at the discretion of the
             company a lump sum present value of the bonus
             payments), and a pro-rata portion of the target
             bonus established prior to Change of Control plus
             any amounts otherwise payable to Executive under the
             terms of the Company benefit plans and programs in
             which he is a participant, at the times such
             payments are due;

         b)  In lieu of any further salary and bonus payment to
             the Executive for periods subsequent to the effec-
             tive date of termination, the Company shall pay as a
             severance payment to the Executive, not later than
             the fifth business day following the effective date
             of termination, a lump sum severance payment equal
             to three (3) times the Executive's Covered Compensa-
             tion.  "Covered Compensation" shall mean the Execu-
             tive's annual Base Salary (at the rate in effect at
             the effective date of termination) and the target
             bonus potential established prior to Change of
             Control; and

        (c)  For three (3) years after such termination, the
             Company shall provide the Executive with life and
             medical benefits substantially similar to those
             provided from time to time to active employees of
             the PG Energy Division.  In the event that the
             Employee obtains substantially similar benefits or
             coverage from another employer, these benefits shall
             be reduced during such period following the Execu-
             tive's termination.  Executive agrees to report any
             such coverage or benefits he obtains to the Company;

             With the exception of the foregoing obligations of
             the Company and the Executive's covenants contained
             in Section 7 herein (which shall survive such
             termination), the Company and the Executive
             hereafter shall have no further obligations.

        For purposes of this agreement, a "Change of Control" of
        the Company shall be deemed to have occurred if and when:

        (a)  there shall be consummated either (i) any consolida-
             tion or merger of the Company in which the majority
             of the Board of Directors are not on the continuing
             or surviving Board of Directors or pursuant to which
             shares of the Company's common stock are converted
             into cash, securities or other property, other than
             a consolidation or merger of the Company in which
             each holder of the Company's common stock immedi-
             ately prior to the merger has upon consummation of
             the merger the same proportionate ownership of
             common stock of the surviving corporation as such
             holder had of the Company's common stock immediately
             prior to the merger, or (ii) any sale, lease
             exchange or other transfer (in one transaction or a
             series of transactions contemplated or arranged by
             any party as a single plan) of all or substantially
             all of the assets of the Company;

        (b)  the shareholders of the Company shall approve any
             plan or proposal for the liquidation or dissolution
             of the Company;

  6.8   Excise Tax Equalization Payment

        (a)  Anything in this Agreement to the contrary notwith-
             standing, in the event it shall be determined that
             any payment or distribution by the Company to the
             Executive or for the Executive's benefit (whether
             paid or payable or distributed or distributable
             pursuant to the terms of this Agreement or other-
             wise) but determined without regard to any addi-
             tional payments required under this Section (a
             "Payment") would be subject to the excise tax
             imposed by Section 4999 of 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 Executive shall be entitled to
             receive an additional payment (a "Gross-Up Payment")
             in an amount such that after payment by the
             Executive of all taxes (including any interest or
             penalties imposed with respect to such taxes),
             including, without limitation, any income taxes (and
             any interest and penalties imposed with respect
             thereto) and Excise Tax imposed upon the Gross-Up
             Payment, the Executive retains an amount of the
             Gross-Up Payment equal to the Excise Tax imposed
             upon the Payments.

        (b)  Subject to the provisions of Section 6.8(c) below,
             all determinations required to be made under this
             Section, including whether and when a Gross-Up Pay-
             ment is required and the amount of such Gross-Up
             Payment and the assumptions to be utilized in
             arriving at such determination, shall be made by the
             Company's independent audit firm (the "Accounting
             Firm") which shall provide detailed supporting cal-
             culations both to the Company and to the Executive
             within fifteen (15) business days of the making of
             the Payment by the Company or the Company's receipt
             of notice from the Executive that there has been a
             Payment, or such earlier time as is requested by the
             Company.  All fees and expenses of the Accounting
             Firm shall be borne solely by the Company.  Any
             Gross-Up Payment, as determined pursuant to this
             Section 6.8, shall be paid by the Company to the
             Executive within ten (10) business days of the
             receipt of the Accounting Firm's determination.  If
             the Accounting Firm determines that no Excise Tax is
             payable by the Executive, it shall furnish the Exe-
             cutive with a written opinion that failure to report
             the Excise Tax on the Executive's applicable federal
             income tax return would not result in the imposition
             of a negligence or similar penalty.  Any determina-
             tion by the Accounting Firm shall be binding upon
             the Company and the Executive for purposes of this
             Agreement.  As a result of the uncertainty in the
             application of Section 4999 of the Code at the time
             of the initial determination by the Accounting Firm
             hereunder, it is possible that the Gross-Up Payment
             made by the Company is less than the payment which
             should have been made ("Underpayment"), consistent
             with the calculations required to be made hereunder.
             In the event that the Company exhausts its remedies
             pursuant to this Section and the Executive is there-
             after required to make a payment of any Excise Tax,
             the Accounting Firm shall determine the amount of
             the Underpayment that has occurred and any such
             Underpayment shall be promptly paid by the Company
             to the Executive or for the Executive's benefit.

        (c)  The Executive shall notify the Company in writing of
             any claim by the Internal Revenue Service that, if
             successful, would require the payment by the Company
             of the Gross-Up Payment.  Such notification shall be
             given as soon as practicable but no later than ten
             (10) business days after the Executive is informed
             in writing of such claim and shall apprise the Com-
             pany of the nature of such claim and the date on
             which such claim is requested to be paid.  The Exe-
             cutive shall not pay such claim prior to the expira-
             tion of the 30-day period following the date on
             which the Executive gives such notice to the Company
             (or such shorter period ending on the date that any
             payment of taxes with respect to such claim is due).
             If the Company notifies the Executive in writing
             prior to the expiration of such period that it
             desires to contest such claim, the Executive shall:

             (1)  give the Company any information reasonably
                  requested by the Company relating to such
                  claim,

             (2)  take such action in connection with contesting
                  such claim as the Company shall reasonably
                  request in writing from time to time,
                  including, without limitation, accepting legal
                  representation with respect to such claim by an
                  attorney reasonably selected by the Company,

             (3)  cooperate with the Company in good faith in
                  order to effectively contest such claim, and

             (4)  permit the Company to participate in any
                  proceedings relating to such claim;

             provided, however, that the Company shall bear and
             pay directly all costs and expenses (including
             additional interest and penalties) incurred in
             connection with such contest and shall indemnify and
             hold the Executive harmless, on an after-tax basis,
             for any Excise Tax or income tax (including interest
             and penalties with respect thereto) imposed as a
             result of such representation (to the extent it
             relates to issues with respect to which a Gross-Up
             Payment would be payable hereunder) and payment of
             related costs and expenses.  Without limitation on
             the foregoing provisions of this Section 6.8, the
             Company shall control all proceedings taken in con-
             nection with such contest and, at its sole option,
             may pursue or forgo any and all administrative
             appeals, proceedings, hearings and conferences with
             the taxing authority in respect of such claim and
             may, at its sole option, either direct the Executive
             to pay the tax claimed and sue for a refund or
             contest the claim in any permissible manner, and the
             Executive agrees to prosecute such contest to a
             determination before any administrative tribunal, in
             a court of initial jurisdiction and in one or more
             appellate courts, as the Company shall determine;
             provided, however, that if the Company directs the
             Executive to pay such claim and sue for a refund,
             the Company shall advance the amount of such payment
             to the Executive, on an interest-free basis, and
             shall indemnify and hold the Executive harmless, on
             an after-tax basis, from any Excise Tax or income
             tax (including interest or penalties with respect
             thereto) imposed with respect to such advance or
             with respect to any imputed income with respect to
             such advance; and further provided that any
             extension of the statute of limitations relating to
             payment of taxes for the Executive's taxable year
             with respect to which such contested amount is
             claimed to be due is limited solely to such
             contested amount.  Furthermore, the Company's
             control of the contest shall be limited to issues
             with respect to which a Gross-Up Payment would be
             payable hereunder, and the Executive shall be
             entitled to settle or contest, as the case may be,
             any other issue raised by the Internal Revenue
             Service or any other taxing authority.

        (d)  If, after the Executive's receipt of an amount
             advanced by the Company pursuant to this Section
             6.8, the Executive becomes entitled to receive any
             refund with respect to such claim, the Executive
             shall (subject to the Company's complying with the
             requirements of this Section 6.8) promptly pay to
             the Company the amount of such refund (together with
             any interest paid or credited thereon after taxes
             applicable thereto).  If, after the Executive's
             receipt of an amount advanced by the Company pursu-
             ant to this Section 6.8, a determination is made
             that the Executive shall not be entitled to any
             refund with respect to such claim and the Company
             does not notify the Executive in writing of its
             intent to contest such denial of refund prior to the
             expiration of thirty (30) days after such determina-
             tion, then such advance shall be forgiven and shall
             not be required to be repaid and the amount of such
             advance shall offset, to the extent thereof, the
             amount of Gross-Up Payment required to be paid.

  6.9   Payments Conditioned on Waiver.  Notwithstanding any
        ------------------------------
        other provision of this Agreement, where a payment is due
        to Executive under Section 6.4, 6.6 or 6.7 hereunder, no
        such payments shall be made unless and until Executive
        (or his Estate) shall have executed a copy of a waiver
        and release in the form annexed hereto as Exhibit "A";
        provided, however, that any such waiver and release shall
        expressly protect all rights and benefits of Executive
        under this Agreement, including without limitation, the
        rights under Sections 6.4, 6.6 and 6.7.

Section 7.  Confidentiality

  7.1   Confidentiality.  During the Term of this Agreement and
        ---------------
        thereafter in perpetuity, 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 7.2) of
        the Company or any of the Company's subsidiaries or
        affiliates (hereinafter, the Company and its subsidiaries
        and affiliates shall be collectively referred to as the
        "Company Group"), except as may be in the public domain
        other than by violation of this Agreement or as may be
        required by law.

  7.2   Trade Secrets and Confidential Information.  "Trade
        ------------------------------------------
        Secrets" as used herein means all secret discoveries,
        inventions, formulae, designs, methods, processes,
        techniques of production and know-how relating to the
        Company Group's business.  "Confidential Information" as
        used herein means the Company Group's internal policies
        and procedures, suppliers, customers, financial informa-
        tion and marketing practices, as well as secret dis-
        coveries, inventions, formulae, designs, techniques of
        production, know-how and other information relating to
        the Company Group's business not rising to the level of a
        trade secret under applicable law.

Section 8.  Indemnification

The Company hereby covenants and agrees, to the fullest extent
permitted by law, to indemnify and hold harmless the Executive
fully, completely and absolutely against and in respect to any
and all actions, suits, proceedings, claims, demands, judgments,
costs, expenses (including reasonable attorney's fees), losses,
and damages resulting from the Executive's good faith performance
of his duties and obligations under the terms of this Agreement.

Section 9.  Assignment

  9.1   Assignment by 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
        such successor shall be deemed substituted for the "Com-
        pany" 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.  Except as herein provided, this Agreement may
        not be assigned by the Company.

  9.2   Assignment by Executive.  This Agreement shall inure to
        -----------------------
        the benefit of and be enforceable by the Executive's
        personal or legal representatives, executors, and
        administrators, successors, heirs, distributees,
        devisees, and legatees.  If the Executive should die
        while any amounts payable to the Executive hereunder
        remain outstanding, all such amounts, unless otherwise
        provided herein, shall be paid in accordance with the
        terms of this Agreement to the Executive's devisee,
        legatee, or other designee or, in the absence of such
        designee, to the Executive's estate.

Section 10.  Dispute Resolution and Notice

  10.1  Arbitration.  Any dispute or controversy arising under or
        -----------
        in connection with this Agreement shall be settled by
        arbitration, conducted before a panel of three (3)
        arbitrators sitting in a location selected by the
        Executive within fifty (50) miles of the location of his
        employment with the Company, in accordance with the rules
        of the American Arbitration Association then in effect.
        Judgment may be entered on the award of the arbitrator in
        any court having proper jurisdiction.  All expenses of
        such arbitration, other than the fees and expenses of the
        counsel for the Executive shall be borne, by the Company.

  10.2  Notice.  For the purpose of this Agreement, any notices,
        ------
        requests, demands, or other communications provided for
        by this Agreement shall be in writing and shall be deemed
        to have been duly given when delivered or mailed by
        United States registered or certified mail, return
        receipt requested, postage prepaid, or by recognized
        overnight delivery service (such as, but not limited to,
        Federal Express), to the Executive at the last address he
        has filed in writing with the Company or, in the case of
        the Company, at its principal offices, to the attention
        of the President.

Section 11.  Miscellaneous

  11.1  Gender and Number.  Except where otherwise indicated by
        -----------------
        the context, any masculine term used herein also shall
        include the feminine, the plural shall include the
        singular, and the singular shall include the plural.

  11.2  Modification.  This Agreement shall not be varied,
        ------------
        altered, modified, canceled, changed, or in any way
        amended except by mutual agreement of the parties in a
        written instrument executed by the parties hereto or
        their legal representatives.

  11.3  Severability.  In the event that any provision or portion
        ------------
        of this Agreement shall be determined to be invalid or
        unenforceable for any reason, the remaining provisions of
        this Agreement shall be unaffected thereby and shall
        remain in full force and effect.

  11.4  Counterparts.  This Agreement may be executed in one (1)
        ------------
        or more counterparts, each of which shall be deemed to be
        an original, but all of which together will constitute
        one and the same Agreement.

  11.5  Tax Withholding.  The Company may withhold from any
        ---------------
        benefits payable under this Agreement all federal, state,
        city, or other taxes as may be required pursuant to any
        law or governmental regulation or ruling.

  11.6  Beneficiaries.  The Executive may designate one or more
        -------------
        persons or entities as the primary and/or contingent
        beneficiaries of any amounts to be received under this
        Agreement.  Such designation must be in the form of a
        signed writing acceptable to the President.  The Execu-
        tive may make or change such designation at any time.

Section 12.  Governing Law

To the extent not preempted by federal law, the provisions of
this Agreement shall be construed and enforced in accordance with
the laws of the state of Texas, without regard to conflicts of
law principles.

IN WITNESS WHEREOF, the Executive and the Company has executed
this Agreement, as of the day and year first above written.

SOUTHERN UNION COMPANY            Executive:

By: NANCY CAPEZZUTI               THOMAS F. KARAM
    -------------------------     ----------------------------
    Name:  Nancy Capezzuti
    Title: Senior Vice
             President -- HR<PAGE>

                                                    EXHIBIT 10(b)

                    SECURED PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned, Thomas F. Karam ("Maker")
promises to pay to the order of Southern Union Company, a Dela-
ware corporation ("Payee"), at 504 Lavaca, Suite 800, Austin,
Texas 78701, the sum of Four Million Dollars ($4,000,000.00) in
lawful money of the United States of America, together with
interest from the date of this Note on the principal amount from
time to time remaining unpaid, at the rate per annum described
below.

So long as no event of default hereunder has occurred, this Note
shall bear interest at the rate of seven percent (7%) per annum.
From and after the occurrence of any event of default hereunder,
the unpaid principal balance of this note shall bear interest at
a rate equal to the lesser of (a) the maximum rate permitted by
Texas law or (b) the prime lending rate of Chase Texas National
Bank, N.A., plus two percent per annum.

This note shall be paid in ten (10) annual installments.  The
first nine installments will be in the amount of Five Hundred
Sixty-Nine Thousand Five Hundred Ten Dollars ($569,510.00) each
commencing on December 20, 2000, and on December 20 of the next
nine years thereafter. The outstanding principal balance and any
accrued but unpaid interest owing hereunder shall be due and
payable on December 20, 2009.  Maker may at any time prepay, in
whole in part, and without any premium or penalty therefore, the
principal amount of this Note then remaining unpaid, together
with all accrued interest payable on the Note, and interest shall
cease to run from the date of payment of such part on all of the
principal amount of this Note as shall be so prepaid.

Any such prepayment under this Note shall be applied first to
accrued interest and the balance to principal, but no part
prepayment shall delay or otherwise affect the maturity date of
this Note with respect to the unpaid balance thereof.

Payment of this Note is secured by a certain security agreement
of even date herewith between Maker and Payee.

If this Note is not paid at maturity, and after maturity this
Note is placed in the hands of an attorney for collection, or if
any amounts owed under this Note are collected through any legal
proceedings, including but not limited to probate, insolvency, or
bankruptcy proceedings, or if suit is brought on the same, Maker
agrees to pay a reasonable amount as attorney's fees and expenses
of collection.

In the event of a default in Maker's performance of this Note,
the above described security agreement or any other agreement
securing payment hereof, and if Maker shall not have cured such
default within ten (10) days after Maker shall have received from
Payee written notice of such Payee's intent to accelerate the
maturity of this Note, then Payee may, without further demand,
notice or presentment, all of which are hereby severally waived
by Maker, and waived by any and all sureties, guarantors, and
endorsers of this Note, may accelerate the maturity of this Note,
upon which the entire unpaid balance of the principal of this
Note, together with all accrued but unpaid interest on the Note,
shall be at once due and payable.

As used in this Note, the term "Maker" shall be deemed to include
Thomas F. Karam and his heirs, personal representatives, succes-
sors or assigns.  The term "Payee" shall be deemed to include
Southern Union Company and its successors and assigns.

Executed this 20th day of December, 1999.

                                THOMAS F. KARAM
                                ---------------
                                Thomas F. Karam, an individual

<PAGE>

                        SECURITY AGREEMENT

THIS AGREEMENT is made as of the 20th day of December, 1999, by
and between SOUTHERN UNION COMPANY, a Delaware corporation
("Secured Party") and THOMAS F. KARAM ("Debtor").

WHEREAS, Debtor is indebted to Secured Party pursuant to a
certain promissory note of even date herewith in the principal
amount of Four Million Dollars ($4,000,000.00) (the "Note")
executed by Debtor and payable to the order of Secured Party; and

WHEREAS, Debtor desires to secure the prompt payment and
performance of the Note by executing this Agreement in favor of
Secured Party.

NOW, THEREFORE, in consideration of the extension of credit
described above and the mutual covenants contained herein, the
parties agree as follows:

1.  Defined Terms.  The following terms will have the meanings
    -------------
    indicated below:

    1.1  "Collateral" shall mean the Stock Options, and any
         proceeds or products thereof, including stock and cash
         or stock dividends.

    1.2  "Default" shall mean Debtor's breach of any covenant
         contained herein or in the Note, or any renewal,
         modification, extension or amendment thereof.

    1.3  "Stock Options" shall mean all options, warrants, rights
         under any shareholders' rights agreements, or any other
         rights whatsoever to acquire the common stock of
         Southern Union Company, whether now owned or hereafter
         acquired by Debtor.

2.  Grant of Security Interest.  As security for the prompt per-
    --------------------------
    formance and payment of the Note, together with all accrued
    interest thereon and all renewals, extensions, modifications,
    amendments and increases thereof (all of the foregoing is
    referred to herein as the "Secured Indebtedness"), Debtor
    hereby pledges and grants to Secured Party a security
    Interest in and to the Collateral.  Upon Secured Party's
    request, Debtor shall deliver to Secured Party all certifi-
    cates evidencing Debtor's ownership of the Pledged Stock,
    along with duly executed assignments separate from certifi-
    cate for such stock certificates.

    2.1  Voting Rights.  Prior to the occurrence of a Default,
         -------------
         Debtor will retain all voting rights with respect to the
         Collateral.  Immediately and without further notice, on
         and after any Default, Secured Party shall have the
         right to exercise all voting rights, all other corporate
         shareholder's rights with respect to the Collateral as
         if Secured Party were the absolute owner thereof.

    2.2  Dividends.  Unless a Default has occurred and is
         ---------
         continuing, Debtor shall be entitled to receive for his
         own use all cash dividends paid on the Pledged Stock.
         On the occurrence of a Default hereunder, Secured Party
         may require that any such cash dividends be delivered to
         Secured Party as additional security hereunder or
         applied toward satisfaction of the Secured Indebtedness.

    2.3  Sale of Collateral.  On the occurrence of a Default,
         ------------------
         Secured Party may, without demand of performance or
         other demand, advertisement, or notice of any kind to
         Debtor or to any other person, forthwith foreclose on
         the Collateral or any part thereof by self-help
         repossession or by any other method permitted by the
         Uniform Commercial Code or otherwise, and sell or
         otherwise dispose of an deliver the Collateral or any
         part thereof, in one or more parcels, at public or
         private sale or sales, at such prices and on such terms
         as Secured party deems acceptable, with the right to
         Secured Party or any other party to purchase all or any
         part of the Collateral free of any right or equity of
         redemption in Debtor, which right or equity is hereby
         expressly waived and released.

    2.4  Application of Proceeds of Sale.  In the event of any
         -------------------------------
         sale or disposition pursuant to Section 2.3 above, the
         proceeds of such sale or disposition shall be applied as
         follows:  (i) first, to the costs and expenses of
         retaking, preparation for sale and sale of the
         Collateral, including Secured Party's legal expenses;
         (ii) second, to satisfaction of the Secured Indebted-
         ness; (iii) third, to the payment of any other amounts
         required or permitted to be paid under Section 9-504 of
         the Uniform Commercial Code; and (iv) fourth, to Debtor
         to the extend of any surplus proceeds.

    2.5  Notice of Sale.  Secured Party will give Debtor at least
         --------------
         ten (10) days' prior notice of the time and place of any
         public sale or of the time after which a private sale
         may take place, which notice Debtor hereby agrees is
         reasonable.

    2.6  Deficiency.  In the event the Secured Indebtedness is no
         ----------
         completely satisfied from the proceeds of sale or dispo-
         sition, Debtor shall remain liable for such deficiency.

3.  Debtor's Representations and Warranties.  Debtor represents
    ---------------------------------------
    and warrants that the Collateral is owned by Debtor free of
    any pledge, mortgage, hypothecation, lien, charge, emcum-
    brance or security interest other than the Security Interest
    granted herein.

4.  Negative Covenants.  During the term of this Agreement,
    ------------------
    Debtor will not sell, convey, or otherwise dispose of any of
    the Collateral, nor will Debtor create, incur or permit to
    exist any pledge, mortgage, lien, charge, encumbrance or any
    security interest whatsoever in or with respect to any of the
    Collateral, other than the Security Interest granted hereby.

5.  Notices.  All notices permitted or required under this
    -------
    Agreement shall be delivered to the parties at the following
    addresses:

    Debtor                         Thomas F. Karam
                                   -----------------------------
                                   -----------------------------
                                   -----------------------------

    Secured Party                  Southern Union Company
                                   504 Lavaca, Suite 800
                                   Austin, TX  78701
                                   Attention:  Peter H. Kelley

    Any such notice shall be deemed to have been given on the
    earlier of actual receipt or the date two business days after
    deposited in the U.S. Mail, postage prepaid, at the address
    set forth above, or at such other address as the recipient
    shall have designated in writing.

6.  Controlling Law.  This Agreement shall be governed by the
    ---------------
    internal laws of the State of Texas without regard to
    principles of conflicts of laws.

IN WITNESS WHEREOF, the parties have duly executed this Agreement
effective as of the date set forth above.

                                  THOMAS F. KARAM
                                  ------------------------------
                                  Thomas F. Karam, an individual

                                  SOUTHERN UNION COMPANY

                                  By:  PETER H. KELLEY
                                      ---------------------------
                                       Peter H. Kelley, President

</PAGE>

                   FINANCIAL DATA SCHEDULE

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