Southern Union

Southern Union Co says it has reached an agreement with shareholder Sandell Asset Management Corp, and others known collectively as the "the Sandell Group," to avoid a proxy contest at its 2009 stockholders meeting.

Southern Union said it will increase the number of seats on its board, from ten to twelve, and two members previously nominated by Sandell to its board of directors will be nominated as part of the management slate during its 2009 and 2010 annual meetings.

Sandell, in turn, agrees that it will vote its shares in favor of the whole of that slate and desist from further roiling the corporate waters, i.e. observe a standstill agreement -- apparently lasting throughout 2009, although the wording of the timing of the standstill isn't all that clear to me.

Sandell now owns 8.6 percent of Southern Union's outstanding shares.

The agreement contains one provision I find intriguing. The two seats Sandell gets on the board come in return for an assurance it won't sell off its stake. "In the event that the Sandell Group were to own less than 5% of the Company’s outstanding common stock, the Sandell Nominees must offer to resign from the Board."

I don't believe that sort of clause is a customary part of standstill agreements. Maybe it's an artifact of the ongoing Bear market.