-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BTzfmESzlPT0QmVi4FOsue+qjyd+ryxoljuVAclYdE1wqbI1T3Dxqd1nKqeGLLfa 3c5Jniio7GEcZhoaTQJeHg== 0000902664-08-003345.txt : 20081209 0000902664-08-003345.hdr.sgml : 20081209 20081209171621 ACCESSION NUMBER: 0000902664-08-003345 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20081209 DATE AS OF CHANGE: 20081209 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN UNION CO CENTRAL INDEX KEY: 0000203248 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION [4922] IRS NUMBER: 750571592 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-20968 FILM NUMBER: 081239139 BUSINESS ADDRESS: STREET 1: 5444 WESTHEIMER RD CITY: HOUSTON STATE: TX ZIP: 77056-5306 BUSINESS PHONE: (713) 989-2000 MAIL ADDRESS: STREET 1: 5444 WESTHEIMER RD CITY: HOUSTON STATE: TX ZIP: 77056-5306 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SANDELL ASSET MANAGEMENT CORP CENTRAL INDEX KEY: 0001140474 IRS NUMBER: 000000000 STATE OF INCORPORATION: E9 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 40 WEST 57TH STREET STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2126035700 MAIL ADDRESS: STREET 1: 40 WEST 57TH STREET STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D/A 1 p08-1454sc13da.txt SOUTHERN UNION COMPANY UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Under the Securities Exchange Act of 1934 (Amendment No. 7)* Southern Union Company - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 844030106 - -------------------------------------------------------------------------------- (CUSIP Number) Sandell Asset Management Corp. 40 West 57th Street 26th Floor New York, NY 10019 Attention: Richard Gashler, General Counsel 212-603-5700 With a Copy to: Marc Weingarten, Esq. David Rosewater, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, NY 10019 212-756-2000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 5, 2008 ----------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 10 Pages) - -------------------- * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ---------------------------- ---------------------------- CUSIP No. 844030106 SCHEDULE 13D/A Page 2 of 10 Pages - ---------------------------- ---------------------------- - ------------- ----------------------------------------------------------------- 1 NAME OF REPORTING PERSON Castlerigg Master Investments Ltd. - ------------- ----------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - ------------- ----------------------------------------------------------------- 3 SEC USE ONLY - ------------- ----------------------------------------------------------------- 4 SOURCE OF FUNDS WC - ------------- ----------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - ------------- ----------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands - ------------- ----------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ----------- ----------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED 12,250,714 ----------- ----------------------------------------------------- BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 ----------- ----------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER 12,250,714 WITH - ------------- ----------- ----------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12,250,714 - ------------- ----------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ------------- ----------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 9.9% - ------------- ----------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- CUSIP No. 844030106 SCHEDULE 13D/A Page 3 of 10 Pages - ---------------------------- ---------------------------- - ------------- ----------------------------------------------------------------- 1 NAME OF REPORTING PERSON Sandell Asset Management Corp. - ------------- ----------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - ------------- ----------------------------------------------------------------- 3 SEC USE ONLY - ------------- ----------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ------------- ----------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - ------------- ----------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - ------------- ----------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ----------- ----------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED 12,250,714 ----------- ----------------------------------------------------- BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 ----------- ----------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER 12,250,714 WITH - ------------- ----------- ----------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12,250,714 - ------------- ----------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ------------- ----------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 9.9% - ------------- ----------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- CUSIP No. 844030106 SCHEDULE 13D/A Page 4 of 10 Pages - ---------------------------- ---------------------------- - ------------- ----------------------------------------------------------------- 1 NAME OF REPORTING PERSON Castlerigg International Limited - ------------- ----------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - ------------- ----------------------------------------------------------------- 3 SEC USE ONLY - ------------- ----------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ------------- ----------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - ------------- ----------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands - ------------- ----------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ----------- ----------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED 12,250,714 ----------- ----------------------------------------------------- BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 ----------- ----------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER 12,250,714 WITH - ------------- ----------- ----------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12,250,714 - ------------- ----------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ------------- ----------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 9.9% - ------------- ----------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- CUSIP No. 844030106 SCHEDULE 13D/A Page 5 of 10 Pages - ---------------------------- ---------------------------- - ------------- ----------------------------------------------------------------- 1 NAME OF REPORTING PERSON Castlerigg International Holdings Limited - ------------- ----------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - ------------- ----------------------------------------------------------------- 3 SEC USE ONLY - ------------- ----------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ------------- ----------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - ------------- ----------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands - ------------- ----------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ----------- ----------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED 12,250,714 ----------- ----------------------------------------------------- BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 ----------- ----------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER 12,250,714 WITH - ------------- ----------- ----------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12,250,714 - ------------- ----------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ------------- ----------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 9.9% - ------------- ----------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- CUSIP No. 844030106 SCHEDULE 13D/A Page 6 of 10 Pages - ---------------------------- ---------------------------- - ------------- ----------------------------------------------------------------- 1 NAME OF REPORTING PERSON Thomas E. Sandell - ------------- ----------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - ------------- ----------------------------------------------------------------- 3 SEC USE ONLY - ------------- ----------------------------------------------------------------- 4 SOURCE OF FUNDS AF - ------------- ----------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - ------------- ----------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Sweden - ------------- ----------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 0 ----------- ----------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED 12,250,714 ----------- ----------------------------------------------------- BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 ----------- ----------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER 12,250,714 WITH - ------------- ----------- ----------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 12,250,714 - ------------- ----------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ------------- ----------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 9.9% - ------------- ----------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- CUSIP No. 844030106 SCHEDULE 13D/A Page 7 of 10 Pages - ---------------------------- ---------------------------- - ------------- ----------------------------------------------------------------- 1 NAME OF REPORTING PERSON Nick Graziano - ------------- ----------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - ------------- ----------------------------------------------------------------- 3 SEC USE ONLY - ------------- ----------------------------------------------------------------- 4 SOURCE OF FUNDS PF - ------------- ----------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) |_| - ------------- ----------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - ------------- ----------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 100 ----------- ----------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED 0 ----------- ----------------------------------------------------- BY EACH 9 SOLE DISPOSITIVE POWER REPORTING 100 ----------- ----------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER 0 WITH - ------------- ----------- ----------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 100 - ------------- ----------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - ------------- ----------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 Less than 0.1% - ------------- ----------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - ------------- ----------------------------------------------------------------- - ---------------------------- ---------------------------- CUSIP No. 844030106 SCHEDULE 13D/A Page 8 of 10 Pages - ---------------------------- ---------------------------- This Amendment No. 7 is filed with respect to the shares of the common stock, par value $1.00 per share (the "Common Stock"), of Southern Union Company, a Delaware corporation (the "Issuer"), beneficially owned by the Reporting Persons (as defined below) and amends and supplements the Schedule 13D, as heretofore amended (the "Schedule 13D"). Except as set forth herein, the Schedule 13D is unmodified. ITEM 2. IDENTITY AND BACKGROUND Paragraphs (a), (b), (c) and (f) of Item 2 of the Schedule 13D are hereby amended and supplemented as follows: (a) We are adding Nick Graziano (the "Nominee") as a Reporting Person for purposes of the Schedule 13D. The filing of this statement on Schedule 13D and any future amendments hereto, and the inclusion of information herein and therein, shall not be construed as an admission that any of the Reporting Persons, for the purpose of Section 13(d) of the Act or otherwise, is the beneficial owner of any shares of Common Stock which such person does not own. Without limiting the foregoing, the other Reporting Persons expressly disclaim beneficial ownership of the shares of Common Stock held by the Nominee and the Nominee expressly disclaims beneficial ownership of the shares of Common Stock held by any of the other Reporting Persons. (b) The principal business address for the Nominee is c/o Sandell Asset Management Corp., 40 West 57th Street, 26th Floor, New York, New York 10019. (c) The Nominee is a Managing Director of SAMC. (f) The Nominee is a citizen of the United States of America. ITEM 4. PURPOSE OF TRANSACTION Item 4 of the Schedule 13D is hereby amended by the addition of the following immediately preceding the penultimate paragraph thereof: On December 5, 2008, Castlerigg Master Investments delivered a notice to the Issuer informing the Issuer of its intention to propose four nominees for election to the board of directors at the Issuer's 2009 annual meeting of stockholders (the "2009 Annual Meeting") and complying with the formal notification process for Board nominations set forth in the Issuer's bylaws. The nominees are Stephen Beasley, Michael Egan, Keith Gollust and Nick Graziano (collectively, the "Nominees"). The Reporting Persons currently intend to conduct a proxy solicitation seeking to elect the Nominees to the Board at the 2009 Annual meeting. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Paragraphs (a) and (c) of Item 5 of the Schedule 13D are hereby amended as follows: (a) Each of Castlerigg Master Investments, SAMC, Castlerigg International, Castlerigg Holdings and Sandell may be deemed to beneficially own the 12,250,714 shares of Common Stock held by Castlerigg Master Investments, representing approximately 9.9% of the outstanding shares of Common Stock. The Reporting Persons, including the Nominee, may be deemed to be a "group," which "group" may be deemed to beneficially own an aggregate of 12,250,814 shares of Common Stock, representing approximately 9.9% of the outstanding shares of Common Stock. However, the other Reporting Persons expressly disclaim beneficial ownership of the shares of Common Stock beneficially owned by the Nominee, and the Nominee expressly disclaims beneficial ownership of the shares of Common Stock owned by the other Reporting Persons. The filing of this statement on Schedule 13D and any future amendments hereto, and the inclusion of information herein and therein, shall not be construed as an admission that any of the Reporting Persons, for the purpose of Section 13(d) of the Act or otherwise, is the beneficial owner of any shares of Common Stock which such person does not own. The percentages used herein are based upon the 123,982,918 shares of Common Stock reported to be outstanding as of October 31, 2008 by the Issuer in its quarterly report on Form 10-Q for the period ended September 30, 2008. - ---------------------------- ---------------------------- CUSIP No. 844030106 SCHEDULE 13D/A Page 9 of 10 Pages - ---------------------------- ---------------------------- (c) No transactions in the shares of Common Stock were effected by the Reporting Persons during the past sixty days. ITEM 6. CONTRACTS, AGREEMENTS UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SECURITIES OF THE ISSUER Item 6 of the Schedule 13D is hereby amended and supplemented as follows: The Nominees have entered into Nominee Agreements, dated December 4, 2008 (the "Nominee Agreements"), with SAMC pursuant to which each has agreed to stand for election to the Issuer's board of directors at the 2009 Annual Meeting and to serve as a director if elected, and, in the case of Mssrs. Gollust and Egan, pursuant to which each is entitled to receive specified compensation in connection with agreeing to serve as a nominee. This description of the Nominee Agreements is a summary only and is qualified by reference to the individual Nominee Agreements, copies of which are filed as Exhibits J, K, L and M to this Schedule 13D and are incorporated herein by reference. In addition, Eaton Group, Inc. ("Eaton Group"), an executive solutions and strategic investment company of which Mr. Beasley is the founder and Chief Executive Officer, has entered into a Consulting Services Agreement (the "Consulting Services Agreement"), dated December 4, 2008, with SAMC pursuant to which Eaton Group is entitled to receive a fee of $75,000, payable in monthly installments from February 2009 to June 2009, subject to extension, for consulting services to be provided by Mr. Beasley. In addition, Mr. Beasley is party to a Cash Bonus Units Agreement (the "Cash Bonus Units Agreement"), dated December 4, 2008, with SAMC pursuant to which Mr. Beasley is entitled to receive payment in cash of an amount equal to the appreciation in value, if any, of 100,000 Shares above a price of $13.50 per Share from the earlier of (i) May 7, 2009, (ii) the 2009 Annual Meeting, or (iii) Mr. Beasley's appointment to the board of directors, until December 31, 2009, subject to a minimum and maximum payment. The Cash Bonus Units Agreement also provides for a separate payment to Mr. Beasley of $250,000 in the event that the price of the Shares exceeds $30/Share prior to December 31, 2009. This description of the Consulting Services Agreement and the Cash Bonus Units Agreement is summary only and is qualified by reference to the Consulting Services Agreement and the Cash Bonus Units Agreement, copies of which are filed as Exhibits N and O to this Schedule 13D and are incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Item 7 of the Schedule 13D is hereby amended and supplemented as follows: EXHIBIT J: Nominee Agreement with K. Gollust EXHIBIT K: Nominee Agreement with M. Egan EXHIBIT L: Nominee Agreement with S. Beasley EXHIBIT M: Nominee Agreement with N. Graziano EXHIBIT N: Consulting Services Agreement EXHIBIT O: Cash Bonus Units Agreement - ---------------------------- ---------------------------- CUSIP No. 844030106 SCHEDULE 13D/A Page 10 of 10 Pages - ---------------------------- ---------------------------- Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: December 9, 2008 CASTLERIGG MASTER INVESTMENTS LTD. By: Sandell Asset Management Corp., its Investment Manager By: /s/ Thomas E. Sandell --------------------- Thomas E. Sandell, Chief Executive Officer SANDELL ASSET MANAGEMENT CORP. By: /s/ Thomas E. Sandell --------------------- Thomas E. Sandell, Chief Executive Officer CASTLERIGG INTERNATIONAL LIMITED By: Sandell Asset Management Corp., its Investment Manager By: /s/ Thomas E. Sandell --------------------- Thomas E. Sandell, Chief Executive Officer CASTLERIGG INTERNATIONAL HOLDINGS LIMITED By: Sandell Asset Management Corp., its Investment Manager By: /s/ Thomas E. Sandell --------------------- Thomas E. Sandell, Chief Executive Officer /s/ Thomas E. Sandell --------------------- Thomas E. Sandell /s/ Nick Graziano --------------------- Nick Graziano EX-99 2 p08-1454exhibit_j.txt EXHIBIT J SANDELL ASSET MANAGEMENT CORP. 40 West 57th Street New York, New York 10019 December 4th, 2008 Keith Gollust 645 Madison Avenue New York, NY 10022 Dear Mr. Gollust: This will confirm our understanding as follows: You agree that you are willing, should we so elect, to become a member of a slate of nominees (the "SLATE") of Castlerigg Master Investments Ltd., a British Virgin Islands company (the "NOMINATING PARTY"), to stand for election as directors of Southern Union Company ("SOUTHERN UNION") in connection with a proxy solicitation (the "PROXY SOLICITATION") to be conducted by the undersigned and certain related parties in respect of the 2009 annual meeting of stockholders of Southern Union (including any adjournment or postponement thereof or any special meeting held in lieu thereof, the "ANNUAL MEETING"), expected to be held in May 2009. You further agree to serve as a director of Southern Union if elected. The undersigned agrees on behalf of the Nominating Party to pay the costs of the Proxy Solicitation. At the time your nomination is made public, the undersigned will pay you $25,000 and if you are included on any proxy solicitation materials the undersigned will pay you an additional $25,000. You understand that it may be difficult, if not impossible, to replace a nominee who, such as yourself, has agreed to serve on the Slate and, if elected, as a director of Southern Union if such nominee later changes his mind and determines not to serve on the Slate or, if elected, as a director of Southern Union. Accordingly, the undersigned is relying upon your agreement to serve on the Slate and, if elected, as a director of Southern Union. In that regard, you are being supplied with a questionnaire (a "QUESTIONNAIRE") in which you will provide the undersigned with information necessary for the Nominating Party to make appropriate disclosure to Southern Union and for the undersigned to use in creating the proxy materials to be sent to stockholders of Southern Union and filed with the Securities and Exchange Commission in connection with the Proxy Solicitation. You agree that (i) you will immediately complete and sign the Questionnaire and return it to the person indicated therein, and (ii) your responses in the Questionnaire will be true, complete and correct in all respects. In addition, you agree that, concurrently with your execution of this letter, you will execute and return to the person indicated in the Questionnaire the attached instrument directed to Southern Union informing Southern Union that you consent to being nominated for election as a director of Southern Union and, if elected, consent to serving as a director of Southern Union. Upon being notified that we have chosen you, we may forward your consent and completed Questionnaire (or summaries thereof) to Southern Union, and we may at any time, in our discretion, disclose such information, as well as the existence and contents of this letter. The undersigned agrees on behalf of the Nominating Party that, so long as you actually serve on the Slate, the undersigned will defend, indemnify and hold you harmless from and against any and all losses, claims, damages, penalties, judgments, awards, liabilities, costs, expenses and disbursements (including, without limitation, reasonable attorneys' fees, costs, expenses and disbursements) incurred by you in the event that you become a party, or are threatened to be made a party, to any civil, criminal, administrative or arbitrative action, suit or proceeding, and any appeal thereof relating solely to your role as a nominee for director of Southern Union on the Slate. Your right of indemnification hereunder shall continue after the Annual Meeting has taken place but only for events that occurred prior to the Annual Meeting and subsequent to the date hereof. Anything to the contrary herein notwithstanding, the undersigned is not indemnifying you for any action taken by you or on your behalf that occurs prior to the date hereof or subsequent to the conclusion of the Proxy Solicitation or such earlier time as you are no longer a nominee on the Slate for election to Southern Union's Board of Directors or for any actions taken by you as a director of Southern Union, if you are elected. Nothing herein shall be construed to provide you with indemnification: (i) if you are found to have engaged in a violation of any provision of state or federal law in connection with the Proxy Solicitation unless you demonstrate that your action was taken in good faith and in a manner you reasonably believed to be in or not opposed to the best interests of electing the Slate; (ii) if you acted in a manner that constitutes gross negligence or willful misconduct; or (iii) if you provided false or misleading information, or omitted material information, in the Questionnaire or otherwise in connection with the Proxy Solicitation. You shall promptly notify the undersigned in writing in the event of any third-party claims actually made against you or known by you to be threatened if you intend to seek indemnification hereunder in respect of such claims. In addition, with respect to any such claim, the undersigned shall be entitled to control your defense with counsel chosen by the undersigned. The undersigned shall not be responsible for any settlement of any claim against you covered by this indemnity without its prior written consent. However, the undersigned may not enter into any settlement of any such claim without your consent unless such settlement includes a release of you from any and all liability in respect of such claim. Each of us recognizes that should you be elected to the Board of Directors of Southern Union all of your activities and decisions as a director will be governed by applicable law and subject to your fiduciary duties, as applicable, to Southern Union and to the stockholders and other constituents of Southern Union and, as a result, that there is, and can be, no agreement between you and the undersigned that governs the decisions which you will make as a director of Southern Union. This letter sets forth the entire agreement between the undersigned and you as to the subject matter contained herein, and cannot be amended, modified or terminated except by a writing executed by the undersigned and you. This letter shall be governed by the laws of the State of New York, without giving effect to principles of conflicts of law. Should the foregoing agree with your understanding, please so indicate in the space provided below, whereupon this letter will become a binding agreement between us. Very truly yours, SANDELL ASSET MANAGEMENT CORP. By: /s/ Thomas E. Sandell ------------------------------- Name: Thomas E. Sandell Title: Chief Executive Officer Agreed to and accepted as of the date first written above: /s/ Keith Gollust - --------------------------- Name: Keith Gollust EX-99 3 p08-1454exhibit_k.txt EXHIBIT K PRIVILEGED AND CONFIDENTIAL SANDELL ASSET MANAGEMENT CORP. 40 West 57th Street New York, New York 10019 December 4th, 2008 Michael Egan 545 Riviera Drive Naples, FL 34103 Dear Mr. Egan: This will confirm our understanding as follows: You agree that you are willing, should we so elect, to become a member of a slate of nominees (the "SLATE") of Castlerigg Master Investments Ltd., a British Virgin Islands company (the "NOMINATING PARTY"), to stand for election as directors of Southern Union Company ("SOUTHERN UNION") in connection with a proxy solicitation (the "PROXY SOLICITATION") to be conducted by the undersigned and certain related parties in respect of the 2009 annual meeting of stockholders of Southern Union (including any adjournment or postponement thereof or any special meeting held in lieu thereof, the "ANNUAL MEETING"), expected to be held in May 2009. You further agree to serve as a director of Southern Union if elected. The undersigned agrees on behalf of the Nominating Party to pay the costs of the Proxy Solicitation. At the time your nomination is made public, the undersigned will pay you $25,000 and if you are included on any proxy solicitation materials the undersigned will pay you an additional $25,000. You understand that it may be difficult, if not impossible, to replace a nominee who, such as yourself, has agreed to serve on the Slate and, if elected, as a director of Southern Union if such nominee later changes his mind and determines not to serve on the Slate or, if elected, as a director of Southern Union. Accordingly, the undersigned is relying upon your agreement to serve on the Slate and, if elected, as a director of Southern Union. In that regard, you are being supplied with a questionnaire (a "QUESTIONNAIRE") in which you will provide the undersigned with information necessary for the Nominating Party to make appropriate disclosure to Southern Union and for the undersigned to use in creating the proxy materials to be sent to stockholders of Southern Union and filed with the Securities and Exchange Commission in connection with the Proxy Solicitation. You agree that (i) you will immediately complete and sign the Questionnaire and return it to the person indicated therein, and (ii) your responses in the Questionnaire will be true, complete and correct in all respects. In addition, you agree that, concurrently with your execution of this letter, you will execute and return to the person indicated in the Questionnaire the attached instrument directed to Southern Union informing Southern Union that you consent to being nominated for election as a director of Southern Union and, if elected, consent to serving as a director of Southern Union. Upon being notified that we have chosen you, we may forward your consent and completed Questionnaire (or summaries thereof) to Southern Union, and we may at any time, in our discretion, disclose such information, as well as the existence and contents of this letter. The undersigned agrees on behalf of the Nominating Party that, so long as you actually serve on the Slate, the undersigned will defend, indemnify and hold you harmless from and against any and all losses, claims, damages, penalties, judgments, awards, liabilities, costs, expenses and disbursements (including, without limitation, reasonable attorneys' fees, costs, expenses and disbursements) incurred by you in the event that you become a party, or are threatened to be made a party, to any civil, criminal, administrative or arbitrative action, suit or proceeding, and any appeal thereof relating solely to your role as a nominee for director of Southern Union on the Slate. Your right of indemnification hereunder shall continue after the Annual Meeting has taken place but only for events that occurred prior to the Annual Meeting and subsequent to the date hereof. Anything to the contrary herein notwithstanding, the undersigned is not indemnifying you for any action taken by you or on your behalf that occurs prior to the date hereof or subsequent to the conclusion of the Proxy Solicitation or such earlier time as you are no longer a nominee on the Slate for election to Southern Union's Board of Directors or for any actions taken by you as a director of Southern Union, if you are elected. Nothing herein shall be construed to provide you with indemnification: (i) if you are found to have engaged in a violation of any provision of state or federal law in connection with the Proxy Solicitation unless you demonstrate that your action was taken in good faith and in a manner you reasonably believed to be in or not opposed to the best interests of electing the Slate; (ii) if you acted in a manner that constitutes gross negligence or willful misconduct; or (iii) if you provided false or misleading information, or omitted material information, in the Questionnaire or otherwise in connection with the Proxy Solicitation. You shall promptly notify the undersigned in writing in the event of any third-party claims actually made against you or known by you to be threatened if you intend to seek indemnification hereunder in respect of such claims. In addition, with respect to any such claim, the undersigned shall be entitled to control your defense with counsel chosen by the undersigned. The undersigned shall not be responsible for any settlement of any claim against you covered by this indemnity without its prior written consent. However, the undersigned may not enter into any settlement of any such claim without your consent unless such settlement includes a release of you from any and all liability in respect of such claim. Each of us recognizes that should you be elected to the Board of Directors of Southern Union all of your activities and decisions as a director will be governed by applicable law and subject to your fiduciary duties, as applicable, to Southern Union and to the stockholders and other constituents of Southern Union and, as a result, that there is, and can be, no agreement between you and the undersigned that governs the decisions which you will make as a director of Southern Union. This letter sets forth the entire agreement between the undersigned and you as to the subject matter contained herein, and cannot be amended, modified or terminated except by a writing executed by the undersigned and you. This letter shall be governed by the laws of the State of New York, without giving effect to principles of conflicts of law. -2- Should the foregoing agree with your understanding, please so indicate in the space provided below, whereupon this letter will become a binding agreement between us. Very truly yours, SANDELL ASSET MANAGEMENT CORP. By: /s/ Thomas E. Sandell ------------------------------- Name: Thomas E. Sandell Title: Chief Executive Officer Agreed to and accepted as of the date first written above: /s/ Michael J. Egan - ---------------------------------- Name: Michael J. Egan -3- EX-99 4 p08-1454exhibit_l.txt EXHIBIT L SANDELL ASSET MANAGEMENT CORP. 40 West 57th Street New York, New York 10019 December 4th, 2008 Stephen C. Beasley 2 Eaton Court Houston, TX 77024 Dear Mr. Beasley: This will confirm our understanding as follows: You agree that you are willing, should we so elect, to become a member of a slate of nominees (the "Slate") of Castlerigg Master Investments Ltd., a British Virgin Islands company (the "NOMINATING PARTY"), to stand for election as directors of Southern Union Company ("SOUTHERN UNION") in connection with a proxy solicitation (the "PROXY SOLICITATION") to be conducted by the undersigned and certain related parties in respect of the 2009 annual meeting of stockholders of Southern Union (including any adjournment or postponement thereof or any special meeting held in lieu thereof, the "ANNUAL MEETING"), expected to be held in May 2009. You further agree to serve as a director of Southern Union if elected. The undersigned agrees on behalf of the Nominating Party to pay the costs of the Proxy Solicitation. You understand that it may be difficult, if not impossible, to replace a nominee who, such as yourself, has agreed to serve on the Slate and, if elected, as a director of Southern Union if such nominee later changes his mind and determines not to serve on the Slate or, if elected, as a director of Southern Union. Accordingly, the undersigned is relying upon your agreement to serve on the Slate and, if elected, as a director of Southern Union. In that regard, you are being supplied with a questionnaire (a "QUESTIONNAIRE") in which you will provide the undersigned with information necessary for the Nominating Party to make appropriate disclosure to Southern Union and for the undersigned to use in creating the proxy materials to be sent to stockholders of Southern Union and filed with the Securities and Exchange Commission in connection with the Proxy Solicitation. You agree that (i) you will immediately complete and sign the Questionnaire and return it to the person indicated therein, and (ii) your responses in the Questionnaire will be true, complete and correct in all respects. In addition, you agree that, concurrently with your execution of this letter, you will execute and return to the person indicated in the Questionnaire the attached instrument directed to Southern Union informing Southern Union that you consent to being nominated for election as a director of Southern Union and, if elected, consent to serving as a director of Southern Union. Upon being notified that we have chosen you, we may forward your consent and completed Questionnaire (or summaries thereof) to Southern Union, and we may at any time, in our discretion, disclose such information, as well as the existence and contents of this letter. The undersigned agrees on behalf of the Nominating Party that, so long as you actually serve on the Slate, the undersigned will defend, indemnify and hold you harmless from and against any and all losses, claims, damages, penalties, judgments, awards, liabilities, costs, expenses and disbursements (including, without limitation, reasonable attorneys' fees, costs, expenses and disbursements) incurred by you in the event that you become a party, or are threatened to be made a party, to any civil, criminal, administrative or arbitrative action, suit or proceeding, and any appeal thereof relating solely to your role as a nominee for director of Southern Union on the Slate. Your right of indemnification hereunder shall continue after the Annual Meeting has taken place but only for events that occurred prior to the Annual Meeting and subsequent to the date hereof. Anything to the contrary herein notwithstanding, the undersigned is not indemnifying you for any action taken by you or on your behalf that occurs prior to the date hereof or subsequent to the conclusion of the Proxy Solicitation or such earlier time as you are no longer a nominee on the Slate for election to Southern Union's Board of Directors or for any actions taken by you as a director of Southern Union, if you are elected. Nothing herein shall be construed to provide you with indemnification: (i) if you are found to have engaged in a violation of any provision of state or federal law in connection with the Proxy Solicitation unless you demonstrate that your action was taken in good faith and in a manner you reasonably believed to be in or not opposed to the best interests of electing the Slate; (ii) if you acted in a manner that constitutes gross negligence or willful misconduct; or (iii) if you provided false or misleading information, or omitted material information, in the Questionnaire or otherwise in connection with the Proxy Solicitation. You shall promptly notify the undersigned in writing in the event of any third-party claims actually made against you or known by you to be threatened if you intend to seek indemnification hereunder in respect of such claims. In addition, with respect to any such claim, the undersigned shall be entitled to control your defense with counsel chosen by the undersigned. The undersigned shall not be responsible for any settlement of any claim against you covered by this indemnity without its prior written consent. However, the undersigned may not enter into any settlement of any such claim without your consent unless such settlement includes a release of you from any and all liability in respect of such claim. Each of us recognizes that should you be elected to the Board of Directors of Southern Union all of your activities and decisions as a director will be governed by applicable law and subject to your fiduciary duties, as applicable, to Southern Union and to the stockholders and other constituents of Southern Union and, as a result, that there is, and can be, no agreement between you and the undersigned that governs the decisions which you will make as a director of Southern Union. With the exception of the agreements attached hereto as Annex 1 and Annex 2, this letter sets forth the entire agreement between the undersigned and you as to the subject matter contained herein, and cannot be amended, modified or terminated except by a writing executed by the undersigned and you. This letter shall be governed by the laws of the State of New York, without giving effect to principles of conflicts of law. In the event that there is a conflict between this letter and the agreements attached hereto, the attached agreements will control. Should the foregoing agree with your understanding, please so indicate in the space provided below, whereupon this letter will become a binding agreement between us. Very truly yours, SANDELL ASSET MANAGEMENT CORP. By: /s/ Patrick T. Burke ------------------------------------ Name: Patrick T. Burke Title: Senior Managing Director Agreed to and accepted as of the date first written above: /s/ Stephen C. Beasley - --------------------------- Name: Stephen C. Beasley EX-99 5 p08-1454exhibit_m.txt EXHIBIT M Sandell Asset Management Corp. 40 West 57th Street New York, New York 10019 December 4, 2008 Nick Graziano 40 West 57th Street 26th Floor New York, NY 10019 Dear Mr. Graziano: This will confirm our understanding as follows: You agree that you are willing, should we so elect, to become a member of a slate of nominees (the "SLATE") of Castlerigg Master Investments Ltd., a British Virgin Islands company (the "NOMINATING PARTY"), to stand for election as directors of Southern Union Company ("SOUTHERN UNION") in connection with a proxy solicitation (the "PROXY SOLICITATION") to be conducted by the undersigned and certain related parties in respect of the 2009 annual meeting of stockholders of Southern Union (including any adjournment or postponement thereof or any special meeting held in lieu thereof, the "ANNUAL MEETING"), expected to be held in May 2009. You further agree to serve as a director of Southern Union if elected. The undersigned agrees on behalf of the Nominating Party to pay the costs of the Proxy Solicitation. You understand that it may be difficult, if not impossible, to replace a nominee who, such as yourself, has agreed to serve on the Slate and, if elected, as a director of Southern Union if such nominee later changes his mind and determines not to serve on the Slate or, if elected, as a director of Southern Union. Accordingly, the undersigned is relying upon your agreement to serve on the Slate and, if elected, as a director of Southern Union. In that regard, you are being supplied with a questionnaire (a "QUESTIONNAIRE") in which you will provide the undersigned with information necessary for the Nominating Party to make appropriate disclosure to Southern Union and for the undersigned to use in creating the proxy materials to be sent to stockholders of Southern Union and filed with the Securities and Exchange Commission in connection with the Proxy Solicitation. You agree that (i) you will immediately complete and sign the Questionnaire and return it to the person indicated therein, and (ii) your responses in the Questionnaire will be true, complete and correct in all respects. In addition, you agree that, concurrently with your execution of this letter, you will execute and return to the person indicated in the Questionnaire the attached instrument directed to Southern Union informing Southern Union that you consent to being nominated for election as a director of Southern Union and, if elected, consent to serving as a director of Southern Union. Upon being notified that we have chosen you, we may forward your consent and completed Questionnaire (or summaries thereof) to Southern Union, and we may at any time, in our discretion, disclose such information, as well as the existence and contents of this letter. The undersigned agrees on behalf of the Nominating Party that, so long as you actually serve on the Slate, the undersigned will defend, indemnify and hold you harmless from and against any and all losses, claims, damages, penalties, judgments, awards, liabilities, costs, expenses and disbursements (including, without limitation, reasonable attorneys' fees, costs, expenses and disbursements) incurred by you in the event that you become a party, or are threatened to be made a party, to any civil, criminal, administrative or arbitrative action, suit or proceeding, and any appeal thereof relating solely to your role as a nominee for director of Southern Union on the Slate. Your right of indemnification hereunder shall continue after the Annual Meeting has taken place but only for events that occurred prior to the Annual Meeting and subsequent to the date hereof. Anything to the contrary herein notwithstanding, the undersigned is not indemnifying you for any action taken by you or on your behalf that occurs prior to the date hereof or subsequent to the conclusion of the Proxy Solicitation or such earlier time as you are no longer a nominee on the Slate for election to Southern Union's Board of Directors or for any actions taken by you as a director of Southern Union, if you are elected. Nothing herein shall be construed to provide you with indemnification: (i) if you are found to have engaged in a violation of any provision of state or federal law in connection with the Proxy Solicitation unless you demonstrate that your action was taken in good faith and in a manner you reasonably believed to be in or not opposed to the best interests of electing the Slate; (ii) if you acted in a manner that constitutes gross negligence or willful misconduct; or (iii) if you provided false or misleading information, or omitted material information, in the Questionnaire or otherwise in connection with the Proxy Solicitation. You shall promptly notify the undersigned in writing in the event of any third-party claims actually made against you or known by you to be threatened if you intend to seek indemnification hereunder in respect of such claims. In addition, with respect to any such claim, the undersigned shall be entitled to control your defense with counsel chosen by the undersigned. The undersigned shall not be responsible for any settlement of any claim against you covered by this indemnity without its prior written consent. However, the undersigned may not enter into any settlement of any such claim without your consent unless such settlement includes a release of you from any and all liability in respect of such claim. Each of us recognizes that should you be elected to the Board of Directors of Southern Union all of your activities and decisions as a director will be governed by applicable law and subject to your fiduciary duties, as applicable, to Southern Union and to the stockholders and other constituents of Southern Union and, as a result, that there is, and can be, no agreement between you and the undersigned that governs the decisions which you will make as a director of Southern Union. This letter sets forth the entire agreement between the undersigned and you as to the subject matter contained herein, and cannot be amended, modified or terminated except by a writing executed by the undersigned and you. This letter shall be governed by the laws of the State of New York, without giving effect to principles of conflicts of law. Should the foregoing agree with your understanding, please so indicate in the space provided below, whereupon this letter will become a binding agreement between us. Very truly yours, SANDELL ASSET MANAGEMENT CORP. By: /s/ Thomas E. Sandell ------------------------------- Name: Thomas E. Sandell Title: Chief Executive Officer Agreed to and accepted as of the date first written above: /s/ Nick Graziano - ---------------------------------- Name: Nick Graziano EX-99 6 p08-1454exhibit_n.txt EXHIBIT N - CONSULTING SERVICES AGREEMENT CONSULTING SERVICES AGREEMENT THIS AGREEMENT is made and entered into this 4th day of December, 2008 by and between EATON GROUP, INC., a Texas corporation, with offices at 2 Eaton Court, Houston, TX 77024 ("Consultant") and SANDELL ASSET MANAGEMENT CORP. ("Client"). WHEREAS, Consultant is in the business of providing senior management level consulting and support services to the oil and gas industry; WHEREAS, Client desires to retain Consultant to provide advice and strategic insight into Southern Union Company ("Southern Union") and its markets; and WHEREAS, Client and Stephen Beasley (the "Principal"), have entered into a Nominee Agreement dated December 4, 2008 setting forth the terms under which Principal has agreed to stand for election as a director of Southern Union Company ("Southern Union") in connection with a proxy solicitation to be conducted by Client with respect to the 2009 annual meeting of stockholders of Southern Union expected to be held in May 2009, including any adjournment, postponement or special meeting held in lieu thereof (the "2009 Annual Meeting"). NOW, THEREFORE, in consideration of the premises and mutual agreements herein, Client and Consultant agree as follows: 1. CONSULTANT'S SERVICES Client hereby retains Consultant and Consultant agrees to be so retained to, among other things, (i) provide strategic insight and guidance into Southern Union and its markets, (ii) assist in the development and implementation of an overall strategy on behalf of Client's proxy initiative in connection with the 2009 Annual Meeting (iii) work with third party alliance partners or investors, and (iv) identify and assist in the aggregation of additional resources which may be required to support the proxy initiative (collectively, the "Services"). It is understood and agreed by the parties that the Services are to be performed by the Principal on behalf of the Consultant. 2. INDEPENDENT CONTRACTOR STATUS In connection with this Agreement, Consultant shall be an independent contractor and as such will not have any authority to bind or commit Client. Nothing herein shall be deemed or construed to create a joint venture, partnership, agency or employee/employer relationship between the parties for any purpose, including but not limited to, withholding for purposes of Social Security or income tax, or entitlement to vacation, insurance, retirement or other employee benefits. Consultant will be solely responsible for payment of any and all taxes and insurance, including workers' compensation hereunder regarding itself and its employees, if any. Consultant further agrees to indemnify Client from and against any and all claims brought against the Client, whether brought by a taxing authority or otherwise, relating to any tax liability arising in connection with Consultant's performance of Services hereunder. Page 2 DECEMBER 4, 2008 3. COMPENSATION Consultant shall be compensated for performance of the Services as set forth in ATTACHMENT A. 4. REIMBURSEMENT OF EXPENSES Consultant shall provide Client with monthly reports detailing the expenses incurred in providing the Services hereunder. Client shall reimburse Consultant for all reasonable expenses incurred by Consultant in connection with providing the Services. In addition, Client agrees to reimburse Consultant for legal fees incurred by Consultant or the Principal in negotiating this Agreement and the Nominee Agreement or relating to the provision of the Services, provided that Client shall not be obligated to reimburse Consultant for any legal fees not based on fair and reasonable market pricing, and provided further that Client shall not be obligated to reimburse Consultant for any legal fees in excess of an aggregate of $20,000, unless such excess legal fees have been pre-approved by Client, with such approval not to be unreasonably withheld. 5. CONSULTANT OBLIGATIONS Consultant agrees as follows: a) In performing the Services hereunder, Consultant will comply at all times with all applicable laws and regulations of the United States and any jurisdiction in which it performs the Services hereunder; b) Consultant agrees that the Services to be performed hereunder shall be performed promptly, in a professional and workmanlike manner and in accordance with the customary standards and guidelines for such Services; c) The Principal is an employee of the Consultant and under no circumstances shall be considered an employee or agent of Client. Consultant shall have sole responsibility for the conduct of the Principal, for controlling, supervising and directing his work, and for payment of his compensation. d) Client will be solely responsible for all public announcements and communications with third parties regarding the solicitation of proxies for the 2009 Annual Meeting, which the Services are expected to support, and any communication with Southern Union; Consultant agrees that it will communicate with third parties, including Southern Union, (directly or by way of a public announcement) in respect to the solicitation or the Services only with the prior consent of Client. 6. TERM This Agreement shall be effective as of the date hereof and shall remain in effect until terminated in accordance with Section 7 hereof. 7. TERMINATION a) Either party may, upon written notice to the other party identifying specifically the basis for such notice, terminate this Agreement for breach of a material term or condition of Page 3 DECEMBER 4, 2008 this Agreement. The breaching party shall have a ten (10) day cure period from the date of the notice to cure the breach. If the breach is not cured before expiration of the cure period the termination will become effective. b) This Agreement shall terminate upon the earliest to occur of (i) a material breach by the Principal of the Nominee Agreement or this Agreement, (ii) May 31, 2009, or (iii) the 2009 Annual Meeting. Upon termination, payment for all Services rendered through such date shall be due in accordance with the payment procedures set forth in Section 3 herein. 8. ASSIGNMENT This Agreement may not be assigned by either party, except upon the prior written consent of the other party. 9. NOTICES Any notice to be given hereunder by any party hereto to any other party shall be in writing and delivered personally or sent by certified mail, return receipt requested, postage prepaid addressed as follows: If to Consultant: If to Client: EATON GROUP, INC. SANDELL ASSET MANAGEMENT CORP. 2 Eaton Court 40 West 57th Street, 26th Floor Houston, TX 77024 New York, NY 10019 Attention: Stephen Beasley Attention: Richard Gashler or at such other address for a party as shall be specified by like written notice. Notices shall be deemed to have been duly given and received as of the date of actual receipt in the case of personal delivery, the date of mailing in the case of certified mail. 10. COMMUNICATION Consultant will keep Client reasonably informed of the progress of the engagement, respond to Client's inquiries and otherwise keep Client reasonably advised of all material matters related to this engagement. Client will take reasonable care to provide complete and accurate information to Consultant known to Client and relevant to this engagement, make resources and personnel available to the Consultant during the course of Consultant's work, keep Consultant reasonably informed of all material developments, pay Consultant's statements on time and otherwise keep Consultant reasonably advised of all material matters related to this engagement. 11. INDEMNITY IN ADDITION TO CLIENT'S OBLIGATION TO REIMBURSE CONSULTANT FOR CERTAIN LEGAL FEES AS DESCRIBED IN SECTION 4, CLIENT HEREBY AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD HARMLESS CONSULTANT FOR, FROM AND AGAINST ANY LOSS, DAMAGE OR LIABILITY, INCLUDING REASONABLE ATTORNEY FEES, TO ANY PARTY WHATSOEVER ARISING OUT OF THE SERVICES TO BE PERFORMED BY CONSULTANT HEREUNDER, EXCEPT AS PROVIDED Page 4 DECEMBER 4, 2008 BELOW. CONSULTANTS RIGHT OF INDEMNIFICATION HEREUNDER SHALL CONTINUE AFTER THE TERMINATION OF THIS AGREEMENT, BUT ONLY FOR EVENTS THAT OCCURRED PRIOR TO THE TERMINATION AND SUBSEQUENT TO THE DATE HEREOF. ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, CLIENT IS NOT INDEMNIFYING CONSULTANT FOR ANY ACTION TAKEN BY OR ON BEHALF OF CONSULTANT THAT OCCURS PRIOR TO THE DATE HEREOF OR SUBSEQUENT TO THE TERMINATION OF THIS AGREEMENT. Nothing herein shall be construed to provide Consultant with indemnification (i) if Consultant is found to have engaged in a violation of any provision of state or federal law in connection with the provision of Services unless Consultant demonstrates that its action was taken in good faith and in a manner Consultant reasonably believed to be in or not opposed to the best interests of Client; (ii) if Consultant acted in a manner that constitutes gross negligence or willful misconduct; or (iii) if Consultant provided false or misleading information, or omitted material information, in the questionnaire completed by Consultant at the request of Client or otherwise in connection with the Services. Consultant shall promptly notify Client in writing in the event of any third-party claims actually made against Consultant or known by Consultant to be threatened if Consultant intends to seek indemnification hereunder in respect of such claims. In addition, upon Consultant's delivery of notice with respect to any such claim, Client shall be entitled to promptly assume control of the defense of such claim with counsel chosen by Client. Client shall not be responsible for any settlement of any claim against Consultant covered by this indemnity without its prior written consent. However, Client may not enter into any settlement of any such claim without Consultant's consent unless such settlement includes (i) no admission of liability or guilt by Consultant, and (ii) a release of Consultant from any and all liability in respect of such claim. 12. CONFIDENTIALITY a) Both parties and their employees, officers, agents and directors shall treat as confidential and proprietary and shall not disclose to others during or subsequent to the term of this Agreement, except (i) as required by law, or (ii) necessary to perform this Agreement or the solicitation (and in the case of (ii), only on a basis satisfactory to both parties), any information whether verbal or written, or any description whatsoever (including any technical information, computer data or programs, experience or data) regarding Consultant's performance of the Services or the other party's employees, plans, programs, facilities, processes, products, costs, equipment or operations which may come within their knowledge. b) Both parties acknowledge that a breach of this Section 12 will cause immediate and irreparable harm and that the damages, which the other party will suffer, may be difficult or impossible to measure. Therefore, upon any actual or impending violation of this Section 12, a party will be entitled to issuance of a restraining order or preliminary and permanent injunction, without bond, restraining or enjoining such violation by the other party or its agents, employees, or contractors. This remedy will be in addition to, and not in limitation of, any other remedy which may otherwise be available under this Agreement. Both parties shall inform their employees, officers, contractors and agents in writing of its confidentiality obligations under this Agreement. Page 5 DECEMBER 4, 2008 c) Notwithstanding the foregoing, nothing contained within this Section 12 shall prevent a party from disclosing to others information that can be shown to: 1. Have become part of the public domain other than by acts, omissions or fault of the disclosing party, its employees and contractors in violation of this Section 12; 2. Have been furnished or made known to the disclosing party by third parties (other than those acting directly or indirectly for or on behalf of the disclosing party); 3. Have been in the disclosing party's possession prior to the disclosure thereof by the other party; or 4. Have been independently developed or learned by the disclosing party. d) In the event that a party shall be required by subpoena or by court or administrative order to disclose any of the information deemed by this Agreement to be confidential and/or proprietary, that party shall give immediate written notice to the other party. Upon receipt of same, the party receiving the notice expressly reserves the right to interpose all objections it may have to the disclosure of such information. 13. SURVIVAL The provisions in Sections 3, 4, 11, 12 and 16 of this Agreement shall survive its termination. 14. MODIFICATIONS This Agreement may not be amended, modified, or otherwise changed except in writing executed by both parties. 15. SEVERABILITY In case any provision of this Agreement shall be invalid, illegal or unenforceable, it shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable but so as to most nearly retain the intent of the parties. If such modification is not possible, such provision shall be severed from this Agreement. In either case the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby. 16. GOVERNING LAW The validity of this Agreement shall be governed by and construed in accordance with the laws of the State of New York, excluding any conflicts-of-law rule or principle which might refer same to another jurisdiction. Each party hereto hereby irrevocably and unconditionally agrees that any action, suit or proceeding, at law or equity, arising out of or relating to this Agreement or any agreements or transactions contemplated hereby shall only be brought in any federal court of the Southern District of New York or any state court located in New York County, State of New York, and hereby irrevocably and unconditionally expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and hereby irrevocably and unconditionally waives (by way of motion, as a defense or otherwise) any and all jurisdictional, venue and convenience Page 6 DECEMBER 4, 2008 objections or defenses that such party may have in such action, suit or proceeding. Each party hereby irrevocably and unconditionally consents to the service of process of any of the aforementioned courts. 17. DESCRIPTIVE HEADINGS The descriptive headings of the several paragraphs, subparagraphs and clauses of this Agreement were inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. 18. COUNTERPARTS This Agreement may be executed in any number of counterparts, and each counterpart hereof shall be deemed to be an original instrument, but all such counterparts shall constitute but one Agreement. Page 7 IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written. EATON GROUP, INC. By: /s/ Stephen Beasley ------------------------------- Name: Stephen Beasley Title: President Date: December 4, 2008 ----------------------------- SANDELL ASSET MANAGEMENT CORP. By: /s/ Patrick T. Burke ------------------------------- Name: Patrick T. Burke Title: Senior Managing Director Date: December 4, 2008 ----------------------------- Page 8 DECEMBER 4, 2008 ATTACHMENT A - COMPENSATION FOR SERVICES Client shall pay Consultant a fee of: $75,000 (the "Base Fee"), paid in five (5) monthly installments of $15,000 (each an "Installment"). The first Installment is due and payable on February 1, 2009 and each subsequent Installment is due and payable on the first day of each month until the Base Fee is paid in full. If for any reason other than a material breach this Agreement is terminated prior to the 2009 Annual Meeting, the Client will pay the aggregate amount of unpaid Installments of the Base Fee on the first day of the month following the month in which this Agreement is terminated; provided that such aggregate amount shall not be payable in the event the termination is the result of a material breach of this Agreement by Consultant. Extension Fee: If the 2009 Annual Meeting takes place after May 31, 2009 and this Agreement has not been terminated, Client shall pay Consultant a $15,000 fee for each month after May 31, 2009 until the month in which the 2009 Annual Meeting takes place (the "Extension Fee"). The Extension Fee will be payable in full, and not pro-rated, regardless of the day of the particular month in which (i) the 2009 Annual Meeting takes place or (ii) this Agreement is terminated. Each Extension Fee is due and payable on the first day of the month following the month for which the Extension Fee is owed. EX-99 7 p08-1454exhibit_o.txt EXHIBIT O - CASH BONUS UNITS AGREEMENT 12/04/2008 CASH BONUS UNITS AGREEMENT This agreement (the "AGREEMENT") is made and entered into as of December 4, 2008 between Sandell Asset Management Corp. ("SANDELL") and Stephen Beasley (the "CONSULTANT"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Sandell has engaged the services of the Consultant in connection with a proxy contest for seats on the board of directors of Southern Union Company ("SOUTHERN UNION"). WHEREAS, Sandell desires to provide compensation to the Consultant in the form of a bonus, the value of which may be based in part on the value of shares of Southern Union, subject to the terms and conditions set forth in this Agreement; and NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: 1. DEFINITIONS. Whenever the following terms are used in this Agreement, they shall have the meanings set forth below. "2009 ANNUAL MEETING" means the 2009 annual meeting of Southern Union stockholders, including any adjournment, postponement or special meeting held in lieu thereof. "CASH BONUS UNIT" means the right to receive an amount in cash equal to the CBU Price as set forth in Section 2. "CBU PRICE" means the excess of the Exercise Price over $13.50. "EXERCISE DATE" means the date of delivery of the most recent Exercise Notice to Sandell by the Consultant in accordance with the terms of this Agreement. "EXERCISE NOTICE" means a written notice of exercise of the right to payment of Cash Bonus Units pursuant to this Agreement, substantially in the form attached hereto as Annex A. Such notice shall be delivered by the Consultant to Sandell by fax with such delivery to be confirmed by telephone by Consultant. "EXERCISE PERIOD" means before January 1, 2010 and after the earlier of (i) May 7, 2009, (ii) the 2009 Annual Meeting or (iii) the Consultant's appointment to the board of directors of Southern Union. "EXERCISE PRICE" means the value, in dollars, equal to (i) the closing share price of common stock of Southern Union on the New York Stock Exchange on the day preceding the Exercise Date, plus (ii) the per share value (equal to the amount of cash per share paid by Southern Union or equal to the fair market value as determined in good faith by Sandell paid by Southern Union if other than in cash) of any special dividend or distributions paid to holders of common stock of Southern Union from the date of this Agreement through the Exercise Date, provided that in no event shall the Exercise Price include any amounts received as regularly scheduled quarterly dividend payments by Southern Union. "SUCCESS FEE COLLAR" means $1,150,000. 2. GRANT OF CASH BONUS UNITS. Sandell grants Consultant 100,000 Cash Bonus Units. Consultant may exercise the Cash Bonus Units as set forth in Section 3.2, in up to three (3) elections, at any time during the Exercise Period, provided that (i) any such exercise shall be for a minimum of 10,000 Cash Bonus Units, (ii) no notice has been given or payment made under Section 3.1, and (iii) the aggregate of any payments made under Sections 3.1, 3.2 and 3.3 are less than the Success Fee Collar. 3. PAYMENT OBLIGATION. Sandell hereby agrees to pay Consultant the following amounts: 3.1. MINIMUM FEE. Sandell agrees to pay the Consultant, within five (5) business days of receipt of a notice from the Consultant, a minimum fee, if such amount is greater than zero, of $150,000 (the "Minimum Fee") less any payments made pursuant to Sections 3.2 and 3.3. The Consultant may only exercise the right to this payment during the Exercise Period. In the event that the Consultant provides notice pursuant to this Section 3.1, all outstanding and remaining Cash Bonus Units will be cancelled and no further payment will be due in respect of such Cash Bonus Units under Sections 3.1, 3.2, 3.3 or 3.5. 3.2. SUCCESS FEE. Sandell agrees to pay the Consultant within five (5) business days of an Exercise Date falling within the Exercise Period, an amount equal to the Cash Bonus Units exercised in an Exercise Notice multiplied by the CBU Price, unless notice has been provided under Section 3.1 on or prior to such Exercise Date. Nothwithstanding anything contained in this Agreement to the contrary, in no event shall the aggregate amount of payments made pursuant to Sections 3.1, 3.2, 3.3 and 3.5 exceed the Success Fee Collar. 3.3. SUCCESS FEE COLLAR. Sandell agrees to pay Consultant the Success Fee Collar less any payments made pursuant to Section 3.2, if, during the Exercise Period, the combination of (i) any payments made pursuant to Section 3.2, and (ii) Consultant's unexercised and uncancelled Cash Bonus Units multiplied by the CBU Price (assuming Consultant had delivered an Exercise Notice), is equal to or greater than the Success Fee Collar. If Sandell pays the Success Fee Collar, all outstanding and remaining Cash Bonus Units will be cancelled. Nothwithstanding anything contained in this Agreement to the contrary, in no event shall the aggregate amount of payments made pursuant to Sections 3.1, 3.2, 3.3 and 3.5 exceed the Success Fee Collar. 3.4. SUPER SUCCESS FEE. In addition to the fees set out in Sections 3.1 3.2, 3.3 and 3.5 if, on any date during calendar year 2009, the aggregate of (i) the closing share price of common stock of Southern Union on the New York Stock Exchange on such date, plus (ii) the per share value (equal to the amount of cash per share paid by Southern Union or equal to the fair market value as determined in good faith by Sandell if paid by Southern Union other than in cash) of any special dividend or distributions paid to holders of common stock of Southern Union on or after January 1, 2009 through such date (provided that in no event shall such aggregate amount include any amounts received as regularly scheduled quarterly dividend payments by Southern Union) is equal to or greater than $30 per share (the "Threshold Price"), Sandell agrees to pay to the Consultant within five (5) business days of the Threshold Price being met, an amount equal to $250,000. 3.5. FINAL PAYMENT. If Consultant has not delivered notice under Section 3.1 prior to December 31, 2009 , Sandell shall pay Consultant on December 31, 2009, an amount equal to the greater of (i) the Minimum Fee, minus any payments made under section 3.2, and (ii) subject to the final sentence of Section 3.3, the remaining unexercised and uncancelled Cash Bonus Units, if any, multiplied by the CBU Price (calculated as if December 31, 2009 were the Exercise Date). Notwithstanding anything herein to the contrary, Sandell agrees to make all payments due and payable under Section 3 during the 2009 calendar year. 4. TERMINATION. This Agreement shall terminate if (i) prior to the 2009 Annual Meeting, the Consultant dies or becomes permanently disabled and unable to perform his duties under the Nominee Agreement dated December 4, 2008 between Consultant and Sandell, (ii) prior to the 2009 Annual Meeting, the Consultant is no longer willing or eligible to serve on a slate of candidates for election to, or as a member of, the board of Southern Union, (iii) in the event Consultant is elected, Consultant resigns from the Board prior to May 9, 2010, unless such resignation results from a business transaction approved by the Southern Union board, or (iv) agreed to by the parties. 5. MISCELLANEOUS. 5.1. AMENDMENTS AND WAIVERS. This Agreement may not be amended, modified, supplemented or terminated without the written consent of each of the parties hereto. 5.2. NOTICES. All notices and other communications provided for or permitted hereunder to any party shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by facsimile, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee as follows: If to Sandell, to: Sandell Asset Management Corp. 40 West 57th Street, 26th floor New York, NY 10019 Attn: Mr. Richard Gashler Fax No.: With a copies to: Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 Attention: Marc Weingarten David Rosewater Telephone: (212) 756-2000 Fax: (212) 593-5955 If to the Consultant, to: Stephen Beasley c/o Eaton Group, Inc. 2 Eaton Court Houston, TX 77024 Telephone: (713) 534-1941 Fax: (713) 975-6412 All such notices, requests, consents and other communications shall be deemed to have been delivered (i) in the case of personal delivery or delivery by confirmed facsimile, on the date of such delivery, (ii) in the case of nationally-recognized overnight courier, on the next business day and (iii) in the case of mailing, on the third business day following such mailing if sent by certified mail, return receipt requested. 5.3. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors and permitted assigns. Neither party to this Agreement may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written consent of the other party. 5.4. NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any rights or remedies upon any person other than the parties and their respective successors and permitted assigns 5.5. COUNTERPARTS. This Agreement may be executed in two or more counterparts or counterpart signature pages, each of which, when so executed and delivered, shall be deemed to be an original, but all of which counterparts, taken together, shall constitute one and the same instrument. 5.6. CAPTIONS. The captions preceding the sections of this Agreement have been inserted solely as a matter of convenience and shall not in any manner define or limit the scope or intent of any provision of this Agreement. 5.7. SEVERABILITY. In the event that any one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the other remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law. 5.8. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of New York. 5.9. CONSENT TO JURISDICTION. Each party hereto hereby irrevocably and unconditionally agrees that any action, suit or proceeding, at law or equity, arising out of or relating to this Agreement shall only be brought in any federal court of the Southern District of New York or any state court located in New York County, State of New York, and hereby irrevocably and unconditionally expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and hereby irrevocably and unconditionally waives (by way of motion, as a defense or otherwise) any and all jurisdictional, venue and convenience objections or defenses that such party may have in such action, suit or proceeding. Each party hereby irrevocably and unconditionally consents to the service of process of any of the aforementioned courts. 5.10. ENTIRE AGREEMENT. With the exception of (i) the Consulting Agreement, dated December 4, 2008, between Eaton Group, Inc. and Sandell, and (ii) the Nominee Agreement, dated December 4, 2008, between Consultant and Sandell, (x) this Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein; (y) there are no restrictions, promises, representations, warranties, covenants or undertakings relating to such subject matter, other than those set forth or referred to herein; and (z) this Agreement supersedes all prior agreements and understandings between the parties hereto with respect to such subject matter. In the event that there is a conflict between this Agreement and the Consulting Agreement or Nominee Agreement, this Agreement will control. 5.11. SURVIVAL. Sections 5.8 and 5.9 shall survive any termination of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. SANDELL ASSET MANAGEMENT CORP. By: /s/ Patrick T. Burke ---------------------------------- Name: Patrick T. Burke Title: Senior Managing Director CONSULTANT /s/ Stephen Beasley ------------------------------------- Stephen Beasley 12/04/2008 Annex A Form of Exercise Notice On this __ day of ___________, 2009, I hereby give Sandell Management Corp. Exercise Notice of the following number of Cash Bonus Units Number of Cash Bonus Units Exercised ________________. Exercise Price ________________. Value of Cash Bonus Units Exercised in this Notice ________________. Method of Payment ____ Wire Transfer ____ Check Payment Instructions ________________. ------------------------------------- Stephen Beasley -----END PRIVACY-ENHANCED MESSAGE-----