AMENDED AND RESTATED
SOUTHERN UNION COMPANY
EXECUTIVE INCENTIVE BONUS PLAN
Southern Union Company, a Delaware corporation (the "Company"), adopts this
Amended and Restated Executive Incentive Bonus Plan (the "Plan") for the purpose
of enhancing the Company's ability to attract and retain highly qualified
executives and to provide additional financial incentives to such executives to
promote the success of the Company and its divisions and subsidiaries.
Remuneration payable under the Plan is intended to constitute "qualified
performance-based compensation" for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and Section 1.162-27 of the Treasury
Regulations promulgated thereunder, and the Plan shall be construed consistently
with such intention. The "performance goal" necessary for the payment of
remuneration under the Plan will be the achievement of positive Consolidated Net
Income (as defined below).
1. Definitions. As used herein, the following terms shall have the
respective meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended,
or the corresponding provisions of any subsequent federal
internal revenue law.
(c) "Committee" shall mean the Compensation Committee of the Board or
such other committee of the Board as is appointed by the Board to
administer the Plan; provided, however, that in any event the
Committee shall be comprised of not less than two directors of
the Company, each of whom shall qualify in all respects as an
"outside director" for purposes of Section 162(m) of the Code and
Section 1.162-27(e)(3) of the Regulations.
(d) "Company" shall mean Southern Union Company, a Delaware
(e) "Consolidated Net Income" shall mean, for any Fiscal Quarter or
Fiscal Year, the net income attributable to continuing operations
before extraordinary items reported in the Company's quarterly or
annual consolidated statement of income included in the
applicable Quarterly Report on Form 10-Q (in the case of a Fiscal
Quarter) or Annual Report on Form 10-K (in the case of a Fiscal
Year), as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
(f) "Eligible Executive" shall mean the Company's Chief Executive
Officer and each other executive officer of the Company that the
Committee determines, in its discretion, is or may be a "covered
employee" of the Company within the meaning of Section 162(m) of
the Code and Section 1.162-27(c)(2) of the Regulations.
(g) "Incentive Bonus" shall mean, for each Eligible Executive, an
annual bonus opportunity amount determined by the Committee
pursuant to Section 4 below.
(h) "Regulations" shall mean the Treasury Regulations promulgated
under the Code, as amended from time to time.
2. Administration of the Plan. The Plan shall be administered by the
Committee, which shall have full power and authority to construe, interpret and
administer the Plan and shall have the exclusive right to establish, adjust, pay
or decline to pay the Incentive Bonus for each Eligible Executive. Such power
and authority shall include the right to exercise discretion to reduce by any
amount the Incentive Bonus payable to any Eligible Executive; provided, however,
that the exercise of such discretion with respect to any Eligible Executive
shall not have the effect of increasing the Incentive Bonus that is payable to
any other Eligible Executive. Any determination by the Committee shall be final,
conclusive and binding upon all persons having any interest under the Plan. All
Committee actions under the Plan shall be taken in accordance with the
applicable provisions of the Company's By-laws and the Committee's Charter.
3. Eligibility. Eligibility under this Plan is limited to Eligible
Executives designated by the Committee in its sole and absolute discretion.
(a) Not later than the 90th day of each fiscal year of the Company,
the Committee, in its sole and absolute discretion, shall
designate one or more Eligible Executives as participants in the
Plan for such Fiscal Year and shall specify the terms and
conditions for the determination and payment of an Incentive
Bonus to each such Eligible Executive for such Fiscal Year.
(b) Not later than the 20th day of each Fiscal Quarter of the
Company, the Committee, in its sole and absolute discretion,
shall designate one or more Eligible Executives as participants
in the Plan for such Fiscal Quarter and shall specify the terms
and conditions for the determination and payment of an Incentive
Bonus to each such Eligible Executive for such Fiscal Quarter.
(c) The Committee may condition the payment of an Incentive Bonus
upon the satisfaction of such objective or subjective standards
as the Committee shall determine to be appropriate, in its sole
and absolute discretion, and shall retain the discretion to
reduce the amount of any Incentive Bonus that would otherwise be
payable to an Eligible Executive (including a reduction in such
amount to zero).
(d) The Incentive Bonus payable to an Eligible Executive with respect
to any Fiscal Quarter shall not exceed 3.0% of the Consolidated
Net Income for such Fiscal Quarter.
(e) The Incentive Bonus payable to an Eligible Executive with respect
to any Fiscal Year shall not exceed 1.5% of the Consolidated Net
Income for such Fiscal Year. In the event that the total payments
made pursuant to the provisions of (d), above, for the Fiscal
Quarters falling within such Fiscal Year exceed the limitation
set forth in the preceding sentence, no payment shall be due by
reference to the Fiscal Year, but no excess payments shall be
required to be refunded by the Eligible Executive to the Company.
5. Committee Certification. As soon as reasonably practicable after the
end of each Fiscal Year or Fiscal Quarter of the Company, the Committee shall
determine whether the stated performance goal has been achieved and the amount
of the Incentive Bonus to be paid to each Eligible Executive for such Fiscal
Year or Fiscal Quarter and shall certify such determinations in writing.
6. Payment of Incentive Bonuses. Subject to any election duly and validly
made by an Eligible Executive in accordance with rules prescribed by the
Committee with respect to the deferral of all or a portion of his or her
Incentive Bonus or the payment of all or a portion of his or her Incentive Bonus
in some form other than cash, Incentive Bonuses shall be paid in cash at such
times and on such terms as are determined by the Committee in its sole and
absolute discretion. Incentive Bonuses payable in a form other than cash shall
be valued by the Committee in its sole and absolute discretion, provided,
however, that the Committee may, in its discretion, engage outside appraisers of
non-cash payments and rely conclusively upon any determination or recommendation
made by such appraisers.
7. No Right to Bonus or Continued Employment. Neither the establishment
of the Plan, the provision for or payment of any amounts hereunder nor any
action of the Company, the Board or the Committee with respect to the Plan shall
be held or construed to confer upon any person (a) any legal right to receive,
or any interest in, an Incentive Bonus or any other benefit under the Plan or
(b) any legal right to continue to serve as an officer or employee of the
Company or any subsidiary or affiliate of the Company. The Company expressly
reserves any and all rights to discharge any Eligible Executive without
incurring liability to any person under the Plan or otherwise. Notwithstanding
any other provision hereof and notwithstanding the fact that the stated
performance goal has been achieved or the individual Incentive Bonus amounts
have been determined, the Company shall have no obligation to pay any Incentive
Bonus hereunder unless the Committee otherwise expressly provides by written
contract or other written commitment.
8. Withholding. The Company shall have the right to withhold, or require
an Eligible Executive to remit to the Company, an amount sufficient to satisfy
any applicable federal, state, local or foreign withholding tax requirements
imposed with respect to the payment of any Incentive Bonus.
9. Nontransferability. Except as expressly provided by the Committee, the
rights and benefits under the Plan are personal to an Eligible Executive and
shall not be subject to any voluntary or involuntary alienation, assignment,
pledge, transfer or other disposition.
10. Unfunded Plan. The Company shall have no obligation to reserve or
otherwise fund in advance any amounts that are or may in the future become
payable under the Plan. Any funds that the Company, acting in its sole and
absolute discretion, determines to reserve for future payments under the Plan
may be commingled with other funds of the Company and need not in any way be
segregated from other assets or funds held by the Company. An Eligible
Executive's rights to payment under the Plan shall be limited to those of a
general creditor of the Company.
11. Adoption, Amendment, Suspension and Termination of the Plan.
(a) Subject to the approval of the Plan by the holders of a majority
of the Company common stock represented and voting on the
proposal at the annual meeting of Company stockholders to be held
on November 4, 2003 (or any adjournment thereof), the Plan shall
be effective for the fiscal year of the Company commencing July
1, 2003 and shall continue in effect until the fifth anniversary
of the date of such stockholder approval, unless earlier
terminated as provided below. Upon such approval of the Plan by
the Company's stockholders, all Incentive Bonuses awarded under
the Plan on or after July 1, 2003 shall be fully effective as if
the stockholders had approved the Plan on or before July 1, 2003.
(b) Subject to the limitations set forth in this subsection, the
Board may at any time suspend or terminate the Plan and may amend
it from time to time in such respects as the Board may deem
advisable; provided, however, that the Board shall not amend the
Plan in any of the following respects without the approval of
stockholders then sufficient to approve the Plan in the first
(1) To increase the maximum amount of Incentive Bonus that may
be paid under the Plan or otherwise materially increase the
benefits accruing to any Eligible Executive under the Plan;
(2) To materially modify the requirements as to eligibility for
participation in the Plan; or
(3) To change the material terms of the stated performance goal.
(c) No Incentive Bonus may be awarded during any suspension or after
termination of the Plan, and no amendment, suspension or
termination of the Plan shall, without the consent of the person
affected thereby, alter or impair any rights or obligations under
any Incentive Bonus previously awarded under the Plan.
12. Governing Law. The validity, interpretation and effect of the Plan,
and the rights of all persons hereunder, shall be governed by and determined in
accordance with the laws of the State of Delaware, other than the choice of law
* * * * *
The foregoing Executive Incentive Bonus Plan was duly approved and adopted
by the Board of Directors of Southern Union Company, a Delaware corporation (the
"Company"), on February 14, 2006.
ROBERT M. KERRIGAN, III
Robert M. Kerrigan, III