EXHIBIT 10.5

PERFORMANCE AWARD AGREEMENT

This Performance Award Agreement (the “Agreement”) has been made as of
                         ,              (the “Date of Grant”) between Spectra
Energy Corp, a Delaware Company, with its principal offices in Houston, Texas
(the “Company”), and                      (the “Grantee”).

RECITALS

Under the Spectra Energy Corp 2007 Long-Term Incentive Plan as it may, from time
to time, be amended (the “Plan”), the Compensation Committee of the Board of
Directors of the Company (the “Committee”), or its delegatee, has determined the
form of this Agreement and selected the Grantee, as an Employee, to receive the
award evidenced by this Agreement (the “Award”) and the Performance Share Units
and tandem Dividend Equivalents that are subject hereto. The applicable
provisions of the Plan are incorporated in this Agreement by reference,
including the definitions of terms contained in the Plan (unless such terms are
otherwise defined herein).

AWARD

In accordance with the Plan, the Company has made this Award, effective as of
the Date of Grant and upon the following terms and conditions:

Section 1. Number and Nature of Performance Share Units and Tandem Dividend
Equivalents. The number of Performance Share Units and the number of tandem
Dividend Equivalents subject to this Award are each                     
(            ). Each Performance Share Unit, upon becoming vested before its
expiration, represents a right to receive payment in the form of one (1) share
of Common Stock. Each tandem Dividend Equivalent, after its tandem Performance
Share Unit vests, represents a right to receive a cash payment equivalent in
amount to the aggregate cash dividends declared and paid on one (1) share of
Common Stock for the period beginning on the Date of Grant and ending on the
date such Performance Share Unit is vested. Each tandem Performance Share Unit,
consisting of both the Performance Share Unit and the tandem Dividend
Equivalents, is either paid or is deferred in accordance with procedures
established by the Committee that comply with the requirements of Code
Section 409A. Performance Share Units and Dividend Equivalents are used solely
as units of measurement, and are not shares of Common Stock and the Grantee is
not, and has no rights as, a shareholder of the Company by virtue of this Award.

Section 2. Vesting of Performance Share Units. (a) Provided that Grantee’s
continuous employment by the Company, including Subsidiaries, has not
terminated, or as otherwise provided in Sections 2(b) or 2(c), Performance Share
Units subject to this Award shall become vested upon the written certification
by the Committee, or its delegatee, in its sole discretion, of the achievement
of the Performance Goal, which is the Company’s Total Shareholder Return (“TSR”)
relative to the TSR of the peer group of companies listed on Exhibit A to this
Agreement (the “Peer Group”), for the period beginning January 1, 2011 and
ending December 31, 2013 (“Performance Period”), at, or above, the 30th
percentile, in accordance with the applicable vesting percentage specified for
such percentile ranking in the following schedule:

 

Percentile Ranking

  

Vesting Percentage

Lower than 30th    0% 30th    50% *    * 50th    100% *    * 80th or higher   
200%

 

* When such determination is of a percentile ranking between those specified,
such results will be interpolated on a straight-line basis to determine the
applicable vesting percentage.

 

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All Performance Share Units that do not so become vested during the Performance
Period shall be forfeited. For the purposes of this Agreement, TSR shall be
calculated using the formula Percent TSR = ((B*(1 + C) / A) -1), where the
values of A, B and C are as follows:

A = average closing price of a share on the NYSE on the twenty consecutive
trading days ending on December 31, 2010;

B = average closing price of a share on the NYSE on the twenty consecutive
trading days ending on December 31, 2013; and

C = the number of additional shares owned assuming dividends are reinvested as
paid throughout the measurement period.

In addition, when calculating TSR for the Performance Period, (i) the
performance of a company in the Peer Group will not be used in calculating the
Peer Group’s TSR if the company is not publicly traded (i.e., has no ticker
symbol) at the end of the performance period; (ii) the performance of any
company in the Peer Group that becomes bankrupt during the measurement period
will be included in the calculation of peer group performance even if it has no
ticker symbol at the end of the measurement period; (iii) The performance of the
surviving entity(s) will be used in the event there is a combination of any of
the Peer Group companies during the measurement period; (iv) no new companies
will be added to the Peer Group during the measurement period (including a
non-peer company that may acquire a member of the Peer Group); and, (v) the
Committee retains discretion to reduce performance awards that were otherwise
earned in the event that Spectra’s TSR during the measurement period is
negative.

(b) In the event that, prior to the date that the determination of the
achievement of the Performance Goal is made, the Grantee’s continuous employment
by the Company, including Subsidiaries, terminates, the Performance Share Units
subject to this Award shall be forfeited, except that if such employment
terminates (i) at a time when Grantee is eligible for an immediately payable
early or normal retirement benefit under the Spectra Energy Retirement Cash
Balance Plan or under another retirement plan of the Company or a Subsidiary
which plan the Committee, or its delegatee, in its sole discretion, determines
to be the functional equivalent of the Spectra Energy Retirement Cash Balance
Plan (“Functional Equivalent Plan”), unless the Committee, or its delegatee, in
its sole discretion, determines that Grantee is in violation of any obligation
identified in Section 3, (ii) as the result of the termination of such
employment by the Company, or employing Subsidiary, other than for cause, as
determined by the Company or employing Subsidiary, in its sole discretion, or
(iii) as the direct and sole result, as determined by the Company, or employing
Subsidiary, in its sole discretion, of the divestiture of assets, a business, or
a company, by the Company or a Subsidiary, the Performance Share Units subject
to this Award shall vest at the end of the Performance Period upon such
determination of the achievement of the Performance Goal, at such vesting
percentage determined by the Committee, or its delegatee, by prorating on the
basis of the portion of the Performance Period that such employment continued
while Grantee was entitled to payment of salary (unless such termination occurs
after the end of the Performance Period, in which event the number of
Performance Share Units earned, if any, shall not be prorated). For the purposes
of this Agreement, “Cause” for termination by the Company of the Grantee’s
employment shall mean (i) a material failure by the Grantee to carry out, or
malfeasance or gross insubordination in carrying out, reasonably assigned duties
or instructions consistent with the Grantee’s position, (ii) the final
conviction of the Grantee of a felony or crime involving moral turpitude,
(iii) an egregious act of dishonesty by the Grantee (including, without
limitation, theft or embezzlement) in connection with employment, or a malicious
action by the Grantee toward the customers or employees of the Company or any
Affiliate, (iv) a material breach by the Grantee of the Company’s Code of
Business Ethics, or (v) the failure of the Grantee to cooperate fully with
governmental investigations involving the Company or its Affiliates; all as
determined by the Company in its sole discretion.

(c) In the event that (i) Grantee’s employment terminates (A) as the result of
the Grantee’s death, or (B) as the result of the Grantee’s permanent and total
disability within the meaning of Code Section 22(e)(3), or, (ii) a Change in
Control occurs before the Performance Period has ended and (A) before the
Grantee’s continuous

 

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employment by the Company, including Subsidiaries, terminates, or (B) after such
employment terminates during the Performance Period, (1) at a time when Grantee
is eligible for an immediately payable, early or normal retirement benefit under
the Spectra Energy Retirement Cash Balance Plan or Functional Equivalent Plan,
unless the Company, or its successor, in its sole discretion, determines that
Grantee is in violation of any obligation identified in Section 3, or (2) as the
result of an event listed in item (ii) of the first sentence of Section 2(b),
the Performance Share Units subject to this Award shall vest upon such
occurrence, at the 100% vesting percentage, irrespective of any subsequent
determination of the achievement of the Performance Goal.

Section 3. Violation of Grantee Obligation. In consideration of the continued
vesting opportunity provided under Section 2 following the termination of
Grantee’s continuous employment by the Company, including Subsidiaries, if, at
any time of such termination of employment, Grantee is eligible for an
immediately payable early or normal retirement benefit under the Spectra Energy
Retirement Cash Balance Plan or Functional Equivalent Plan, Grantee agrees that
during the period beginning with such termination of employment and ending with
the third anniversary of the Date of Grant (“Restricted Period”), Grantee shall
not (i) without the prior written consent of the Company, or its delegatee,
become employed by, serve as a principal, partner, or member of the board of
directors of, or in any similar capacity with, or otherwise provide service to,
a competitor, to the detriment, of the Company or any Subsidiary, or
(ii) violate any of Grantee’s other noncompetition obligations, or any of
Grantee’s nonsolicitation or nondisclosure obligations, to the Company or any
Subsidiary. The noncompetition obligations of clause (i) of the preceding
sentence shall be limited in scope and shall be effective only to competition
with the Company or any Subsidiary in the businesses of: gathering, processing
or transmission of natural gas, resale or arranging for the purchase or for the
resale, brokering, marketing, or trading of natural gas, or derivatives thereof;
gathering, compression, treating, processing, fractionation, transportation,
trading, marketing of natural gas components, including natural gas liquids; and
sales and marketing of natural gas, domestically and abroad; and any other
business in which the Company, including Subsidiaries, is engaged at the
termination of Grantee’s continuous employment by the Company, including
Subsidiaries; and within the following geographical areas (i) any country in the
world where the Company, including Subsidiaries, has at least US$25 million in
capital deployed as of termination of Grantee’s continuous employment by
Company, including Subsidiaries; (ii) the continent of North America; (iii) the
United States of America and Canada; (iv) the United States of America; (v) the
states of Virginia, Georgia, Florida, Texas, California, Massachusetts,
Illinois, Michigan, New York, Colorado, Oklahoma, Kentucky, Ohio and Louisiana;
and (vi) any state or states or province or provinces with respect to which was
conducted a business of the Company, including Subsidiaries, which business
constituted a substantial portion of Grantee’s employment. The Company and
Grantee intend the above restrictions on competition in geographical areas to be
entirely severable and independent, and any invalidity or enforceability of this
provision with respect to any one or more of such restrictions, including areas,
shall not render this provision unenforceable as applied to any one or more of
the other restrictions, including areas. If any part of this provision is held
to be unenforceable because of the duration, scope or area covered, the Company
and Grantee agree to modify such part, or that the court making such holding
shall have the power to modify such part, to reduce its duration, scope or area,
including deletion of specific words and phrases, i.e., “blue penciling”, and in
its modified, reduced or blue pencil form, such part shall become enforceable
and shall be enforced. Nothing in Section 3 shall be construed to prohibit
Grantee being retained during the Restricted Period in a capacity as an attorney
licensed to practice law, or to restrict Grantee providing advice and counsel in
such capacity, in any jurisdiction where such prohibition or restriction is
contrary to law.

Section 4. Forfeiture/Expiration. Any Performance Share Unit subject to this
Award shall be forfeited upon the termination of the Grantee’s continuous
employment by the Company, including Subsidiaries, from the Date of Grant,
except to the extent otherwise provided in Section 2, and, if not previously
vested and paid, or deferred, or forfeited, shall expire immediately before the
tenth (10th) anniversary of the Date of Grant. Any Dividend Equivalent subject
to this Award shall expire at the time its tandem Performance Share Unit (i) is
vested and paid, or deferred, (ii) is forfeited, or (iii) expires.

 

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Section 5. Dividend Equivalent Payment. Payment with respect to any Dividend
Equivalent subject to this Award that is in tandem with a Performance Share Unit
that is vested and paid shall be paid in cash to the Grantee as soon as
practicable following the vesting and payment of the Performance Share Unit, or,
if the vested Performance Share Unit is deferred by Grantee as provided in
Section 6, payment with respect to the tandem Dividend Equivalent shall likewise
be deferred. Payment under this Section 5 shall be made not later than 30 days
after payment hereunder of the related tandem Performance Share Units. The
Dividend Equivalent payment amount shall equal the aggregate cash dividends
declared and paid with respect to one (1) share of Common Stock for the period
beginning on the Date of Grant and ending on the date the vested, tandem
Performance Share Unit is paid or deferred and before the Dividend Equivalent
expires. However, should the timing of a particular payment under Section 6 to
the Grantee in shares of Common Stock in conjunction with the timing of a
particular cash dividend declared and paid on Common Stock be such that the
Grantee receives such shares without the right to receive such dividend and the
Grantee would not otherwise be entitled to payment under the expiring Dividend
Equivalent with respect to such dividend, the Grantee, nevertheless, shall be
entitled to such payment. Dividend Equivalent payments shall be subject to
withholding for taxes.

Section 6. Payment of Performance Share Units. Payment of Performance Share
Units subject to this Award shall be made to the Grantee as soon as practicable
following the time such Performance Share Units become vested in accordance with
Section 2 prior to their expiration but in no event later than 30 days following
such vesting event, except to the extent deferred by the Grantee in accordance
with such procedure as the Committee, or its designee, may prescribe that
complies with the requirements of Code Section 409A. Payment shall be subject to
withholding for taxes. Payment shall be in the form of one (1) share of Common
Stock for each full vested Performance Share Unit, and any fractional vested
Performance Share Unit shall be rounded up to the next whole share for purposes
of both vesting under Section 2 and payment under Section 6. Notwithstanding the
foregoing, to the extent Grantee fails to timely tender to the Company
sufficient cash to satisfy withholding for tax requirements, such unsatisfied
withholding shall be applied to reduce the number of shares of Common Stock that
would otherwise be paid (valued at Fair Market Value on the date the respective
Performance Share Units became vested). In the event that payment, after any
such reduction in the number of shares of Common Stock to satisfy withholding
for tax requirements, would be for less than ten (10) shares of Common Stock,
then, if so determined by the Committee, or its delegatee, in its sole
discretion, payment, instead of being made in shares of Common Stock, shall be
made in a cash amount equal in value to the shares of Common Stock that would
otherwise be paid, valued at Fair Market Value on the date the respective
Performance Share Units became vested.

Section 7. No Employment Right. Nothing in this Agreement or in the Plan shall
confer upon the Grantee the right to continued employment with the Company or
any Subsidiary, or affect the right of the Company or any Subsidiary to
terminate the employment or service of the Grantee at any time for any reason.

Section 8. Nonalienation. The Performance Share Units and Dividend Equivalents
subject to this Award are not assignable or transferable by Grantee. Upon any
attempt to transfer, assign, pledge, hypothecate, sell or otherwise dispose of
any such Performance Share Unit or Dividend Equivalent, or of any right or
privilege conferred hereby, or upon the levy of any attachment or similar
process upon such Performance Share Unit or Dividend Equivalent, or upon such
right or privilege, shall immediately become null and void.

Section 9. Determinations. Determinations by the Committee, or its delegatee,
shall be final and conclusive with respect to the interpretation of the Plan and
this Agreement.

Section 10. Governing Law and Severability. This Agreement shall be governed,
construed and enforced in accordance with the laws of the State of Delaware
applicable to transactions that take place entirely within that state. The
invalidity of any provision of this Agreement shall not affect any other
provision of this Agreement, which shall remain in full force and effect.

Section 11. Certain Other Definitions. The following shall apply notwithstanding
anything in this Agreement or the Plan to the contrary. The term “Change in
Control” has the meaning given such term in

 

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Section 13.2 of the Spectra Energy Corp 2007 Long-Term Incentive Plan. The term
“Subsidiaries” shall mean any entity that is wholly owned, directly or
indirectly, by the Company, or any other affiliate of the Company that is so
designated, from time to time, by the Committee.

Section 12. Conflicts with Plan, Correction of Errors, and Grantee’s Consent. In
the event that any provision of this Agreement conflicts in any way with a
provision of the Plan, such Plan provision shall be controlling and the
applicable provision of this Agreement shall be without force and effect to the
extent necessary to cause such Plan provision to be controlling. In the event
that, due to administrative error, this Agreement does not accurately reflect an
Award properly granted to the Grantee pursuant to the Plan, the Company, acting
through its Executive Compensation Department, reserves the right to cancel any
erroneous document and, if appropriate, to replace the cancelled document with a
corrected document. It is the intention of the Company and the Grantee that this
Award not result in unfavorable tax consequences to Grantee under Code
Section 409A. Accordingly, Grantee consents to such amendment of this Agreement
as the Company may reasonably make in furtherance of such intention, and the
Company shall promptly provide, or make available to, Grantee a copy of any such
amendment.

Notwithstanding the foregoing, this Award is subject to cancellation by the
Company in its sole discretion unless the Grantee, by not later than
                         ,             , has signed a duplicate of this
Agreement, in the space provided below, and returned the signed duplicate to
Executive Compensation Department—Performance Stock (WO 1P16), Spectra Energy
Corp, P. O. Box 1642, Houston, TX 77251-1642, which, if, and to the extent,
permitted by the Executive Compensation Department, may be accomplished by
electronic means.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and
granted in Houston, Texas, to be effective as of the Date of Grant.

 

ATTEST:     SPECTRA ENERGY CORP By:          By:        Corporate Secretary    
Its:   President & CEO, Spectra Energy Corp

 

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EXHIBIT A

The Peer Group, with their stock symbol listed, consists of the following:

Ameren Corporation (AEE)

CenterPoint Energy, Inc. (CNP)

Consolidated Edison, Inc. (ED)

Dominion Resources, Inc. (D)

DTE Energy Company (DTE)

NiSource Inc. (NI)

PG&E Corporation (PCG)

Public Service Enterprise Group Incorporated (PEG)

Southern Union (SUG)

Xcel Energy Inc. (XEL)

The Williams Companies, Inc. (WMB)

El Paso Corporation (EP)

Enbridge Inc. (ENB)

Equitable Resources, Inc. (EQT)

National Fuel Gas Company (NFG)

ONEOK, Inc. (OKE)

Questar Corporation (STR)

Sempra Energy (SRE)

TransCanada Corporation (TRP)

 

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Acceptance of Performance Award

IN WITNESS OF Grantee’s acceptance of this Performance Award and Grantee’s
agreement to be bound by the provisions of this Agreement and the Plan, Grantee
has signed this Agreement this              day of                     , 2011.

   Grantee’s Signature    (print name)    (social security / social insurance
number)    (address)

 

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