12/04/2008
CASH BONUS UNITS AGREEMENT
This agreement (the "AGREEMENT") is made and entered into as of
December 4, 2008 between Xxxxxxx Asset Management Corp. ("SANDELL") and Xxxxxxx
Xxxxxxx (the "CONSULTANT").
W I T N E S S E T H:
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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, Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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. Xxxxxxx 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. Xxxxxxx hereby agrees to pay Consultant the
following amounts:
3.1. MINIMUM FEE. Xxxxxxx 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. Xxxxxxx 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. Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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"), Xxxxxxx
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 , Xxxxxxx 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, Xxxxxxx 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 Xxxxxxx, (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:
Xxxxxxx Asset Management Corp.
00 Xxxx 00xx Xxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxxxx Xxxxxxx
Fax No.:
With a copies to:
Xxxxxxx Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxxx
Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Consultant, to:
Xxxxxxx Xxxxxxx
c/o Eaton Group, Inc.
0 Xxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
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 Xxxxx Group, Inc. and
Xxxxxxx, and (ii) the Nominee Agreement, dated December 4, 2008, between
Consultant and Xxxxxxx, (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.
XXXXXXX ASSET MANAGEMENT CORP.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Senior Managing Director
CONSULTANT
/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
12/04/2008
Annex A
Form of Exercise Notice
On this __ day of ___________, 2009, I hereby give Xxxxxxx 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 ________________.
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Xxxxxxx Xxxxxxx
