Exhibit 10(ii)
AMENDMENT TO
EMPLOYMENT AND SEVERANCE
AGREEMENTS
This Agreement dated 9/30/99 between Fall River Gas Company (the
"Company") and John F. Fanning (the "Executive") shall be effective upon the
consummation of the merger (the "Merger") of the Company into Southern Union
Company ("SUG").
RECITALS
Whereas, the Executive and the Company are parties to an employment
agreement entered into as of November 30, 1998 and amended as of January 1,
1999, (the "Employment Agreement") and a Severance Agreement dated as of January
1, 1999 (the "Severance Agreement"); and
Whereas, the Company desires to assure the continued service of
Executive following the Merger, and Executive is desirous of committing himself
to such service; and
Whereas, the Executive and the Company desire to amend certain
provisions of the Employment Agreement and the Severance Agreement effective
upon consummation of the Merger;
AGREEMENTS
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which is acknowledged by the Company and the Executive, the Company and the
Executive hereby agree as follows:
1. Section 2 of the Employment Agreement shall be amended to read
in its entirety as follows:
"Executive's title and duties shall be those of a division vice
president of SUG. Executive agrees that his duties as described in
this paragraph shall not constitute "Good Reason" under the Severance
Agreement. The Executive shall perform his duties hereunder faithfully
and to the best of his abilities and in furtherance of the business of
the Company and shall devote his full business time, energy, attention
and skill to the business of the Company and to the promotion of its
interests."
2. Section 3 of the Employment Agreement shall be amended to read
in its entirety as follows:
"The term of the Executive's employment hereunder shall be for a
one- year period beginning on the date of consummation of the Merger."
3. Section 4 of the Employment Agreement shall be amended to read
in its entirety as follows:
"The Company agrees to pay and the Executive agrees to accept, in
accordance with the provisions contained herein, as compensation for
performance of his duties and obligations to the Company hereunder, a
salary at an annual rate as established by the Executive Committee of
the Board of Directors of the Company from time to time, but in no
event less than the annual rate in effect for the then immediately
preceding twelve-month period."
4. Section 5 of the Employment Agreement is amended by adding
the following as a new paragraph (b) thereof:
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"(b) In addition to the foregoing, the Executive shall be paid a
cash bonus of $16,666.67 for each full month of the eighteen (18)
months following consummation of the Merger ($300,000 in the
aggregate) during which the Executive shall remain in the employment
of the Company. In the event that Executive's employment is terminated
by Executive or the Company for any reason during the 36-month period
following consummation of the Merger, the Company may set off against
any payments due Executive under the Severance Agreement one hundred
percent (100%) of the cash bonuses received by Executive under this
subsection. Amounts paid under this subsection or under the Severance
Agreement shall not be taken into account as compensation for purposes
of any pension or other benefit plan or program."
5. Subsection 7(a) of the Employment Agreement shall be amended
by replacing the term "Company" with the term "Division" in each place
it appears, and by adding the following to the end of such subsection:
"For this purpose, the term `Division' shall mean the Fall River
Gas Company Division of SUG. In addition, the Executive shall be
eligible to participate in the Southern Union Company Supplemental
Deferred Compensation Plan and shall be eligible to be granted awards
under the Southern Union 1992 Long Term Stock Incentive Plan, as
amended, in the discretion of the committee administering such plan,
in each case in accordance with the terms and conditions of the
respective plan."
6. Subsection 7(d) of the Employment Agreement shall be amended
to read in its entirety as follows:
"For a period commencing with the month in which termination of
employment for other than Cause shall have occurred, and ending upon
the later of the date of the Executive's or the Executive's spouse's
death, or such earlier date as the Executive becomes covered by
another employer's group health plan, the Executive, his spouse, and
any eligible dependents (to the extent they continue to be eligible)
shall continue to be entitled to receive all health and dental care
benefits provided from time to time to active employees of the Fall
River Gas Company Division of SUG, at no cost to the Executive.
Benefits under this subsection shall be provided either under this
Agreement or the Severance Agreement, but not both."
7. Section 9 of the Employment Agreement shall be amended by
adding the following to the end thereof:
"Notwithstanding the foregoing provisions of this Section 9, in
the event Executive's employment is terminated (by Executive or the
Company) for any reason within 36 months following consummation of the
Merger, Executive shall be entitled to receive either (but not both)
of:
(I) the benefits he is entitled to under the Severance
Agreement (offset by the amount of the bonus payments received
under subsection 5(b) of the Employment Agreement); or
(ii) the benefits he is entitled to under Section 9 of the
Employment Agreement.
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As a condition to receiving payments under the Severance Agreement or
Section 9 of the Employment Agreement, the Executive shall execute SUG's
standard form of waiver and release of all claims."
8. The last sentence of Section 15 of the Employment Agreement shall
be amended to read as follows:
"The Parties further agree that all arbitration costs and expenses,
including attorneys' fees for counsel representing the Executive and
counsel representing the Company, shall be paid by the Company, except that
attorneys' fees for counsel representing the Executive shall not be paid by
the Company in the event the Arbitrator determines that the employment of
the Executive hereunder was properly terminated for Cause or that
Executive's material claim is, or claims are, frivolous or without merit,
in which event the Executive shall bear all such fees, costs, and
expenses."
9. Section 3(c) of the Severance Agreement shall be amended to read in
its entirety as follows:
"For a period commencing with the month in which termination of
employment as described in paragraph 3 hereof shall have occurred, and
ending upon the later of the date of the Executive's or the Executive's
spouse's death, or such earlier date as the Executive becomes covered by
another employer's group health plan, the Executive, his spouse, and any
eligible dependents (to the extent they continue to be eligible) shall
continue to be entitled to receive all health and dental care benefits
provided from time to time to active employees of the Fall River Gas
Company Division of SUG, at no cost to the Executive. Benefits under this
subsection shall be provided either under this Agreement or the Employment
Agreement, but not both."
10. Section 3 of the Severance Agreement shall be amended by adding a
new subparagraph (d) to the end thereof, which shall read as follows:
"(d) Any payments due to the Executive under this Severance Agreement
shall be reduced by the amount of any bonus payments made to the Executive
under subsection 5(b) of the Employment Agreement (as amended by the
Amendment to Employment and Severance Agreements dated 9/30/99). As a
condition to receiving payments under this Severance Agreement, the
Executive shall execute SUG's standard form of waiver and release of all
claims. Amounts paid under this Severance Agreement shall not be taken into
account as compensation for purposes of any pension or other benefit plan
or program."
11. The first sentence of Section 7(a) of the Severance Agreement
shall be amended to read as follows:
"Except for the set-off provided for in subsection 5(b) of the
Employment Agreement (as amended by the Amendment to Employment and
Severance Agreements dated 9/30/99), the Company's obligation to make the
payments provided for in this Severance Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others."
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12. Section 11 of the Severance Agreement shall be amended by adding
the following to the end thereof:
"Notwithstanding the foregoing, the definition of Change in Control
shall only apply to the merger of Fall River Gas Company into SUG."
13. The provisions of this Amendment to Employment and Severance
Agreements shall be effective only upon consummation of the Merger. Except
as amended by this document, the provisions of the Employment Agreement and
the Severance Agreement shall remain in effect.
Dated: FALL RIVER GAS COMPANY
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By
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Title:
The Executive
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John F. Fanning
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