Exhibit








EXHIBIT 10.3
        


SPECTRA ENERGY CORP
PHANTOM STOCK AWARD AGREEMENT




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


RECITALS
Under the amended and restated 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 (which also includes Schedule A      hereto or Schedule B hereto, as applicable to the Grantee) and selected the Grantee,                        as an Employee, to receive the award evidenced by this Agreement (the “Award”) and                     the Phantom Stock units and tandem Dividend Equivalents that are subject hereto.  The     basis for the Award is to provide an incentive for the Employee to remain with the                Company and to improve Employee retention.  Awards are not intended for Employees              who have given notice of resignation or who have been given notice of termination by                        the Company or an employing Subsidiary, and will not accrue to Employees once such      notices are given.  For clarity, Awards do not accrue for Employees who have received         notice, given notice or have been determined to be entitled to a notice period by a court,      and no damages suffered by an Employee due to lack of sufficient notice will include compensation for loss of vesting rights or accrual of an Award, notwithstanding any           statutory, contractual, or common law period of notice of termination, or compensation                      in lieu of such notice, to which an employee may be entitled.  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 Phantom Stock Units and Tandem Dividend Equivalents.  The number of Phantom Stock units and the number of tandem Dividend Equivalents subject to this Award are each ___________ (____).  Each Phantom Stock           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           represents a right to receive cash payments equivalent to the amount of cash dividends declared and paid on one (1) share of Common Stock after the Date of Grant and                          before the Dividend Equivalent expires.  Phantom Stock 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                   




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Award.  The Phantom Stock units and Dividend Equivalents subject to this Award have             been awarded to the Grantee in respect of services to be performed by the Grantee      exclusively in and after the year in which the Award is made.


Section 2.    Vesting of Phantom Stock Units.  The specified percentage of the Phantom Stock units subject to this Award, and not previously forfeited, shall vest, with                such percentage considered satisfied to the extent such Phantom Stock units have      previously vested, as follows:


(a)    Generally.  100% upon Grantee continuously remaining an Employee of              the Company, including Subsidiaries, through the first anniversary of the Date of Grant               (the “Vesting Period”).


(b)      Retirement.  If Grantee’s employment with the Company, including Subsidiaries, terminates 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 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, then the number of     Phantom Stock units and tandem Dividend Equivalents to which the Grantee shall have                a right to payment hereunder shall be prorated to reflect the number of months of the              Vesting Period during which the Grantee’s active employment with the Company,                including Subsidiaries, (“Active Employment”) continued, and the remaining Phantom            Stock units not vested shall be forfeited.  Solely for purposes of calculating the prorated payment in the preceding sentence, if the Grantee’s Active Employment continued for at     least one (1) day during a calendar month in the Vesting Period, Grantee’s Active      Employment shall be considered to have continued for the entirety of such month, but in          no event for more than twelve (12) months.  Grantee shall be considered to have                       “retired” but Grantee’s employment shall be considered to continue, with continued              vesting under Section 2(a) with respect to the prorated payment determined in               accordance with the above, (i) unless the Committee or its delegatee, in its sole                 discretion, determines that (A) Grantee is in violation of any obligation identified in                   Section 4 or (B) the termination of Grantee’s employment is for Cause, in which case all Phantom Stock units not previously vested shall be forfeited, or (ii) unless the Grantee               dies, in which case the Phantom Stock units subject to the provisions of this Section                              2(b) shall vest in accordance with Section 2(c).  The additional provisions of Section 1 of Schedule B hereto are incorporated herein if Schedule B is applicable to the Grantee.     


(c)      Death or Disability.  If Grantee’s employment with the Company,                    including Subsidiaries, terminates (i) as the result of Grantee’s death or (ii) as the result                of Grantee’s “permanent and total disability,” as defined in Section 1 of Schedule A                      hereto or Section 2 of Schedule B hereto, as applicable to the Grantee, 100% of the           Phantom Stock units subject to this Award shall vest immediately.


(d)     Involuntary Termination Without Cause.  If Grantee’s employment is terminated by the  Company,  or  employing  Subsidiary,  other  than for Cause, regardless                    








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of reason for termination or the party giving notice, (i) the number of Phantom Stock                         units and tandem Dividend Equivalents to which the Grantee shall have a right to                   payment hereunder shall be prorated to reflect the number of months of Active              Employment during the Vesting Period, and shall vest immediately, and (ii) the                     remaining Phantom Stock units shall be forfeited.  Solely for purposes of calculating the prorated payment in clause (i) of the preceding sentence, if the Grantee’s Active         Employment continued for at least one (1) day during a calendar month in the Vesting          Period, Grantee’s Active Employment shall be considered to have continued for the                   entire month, but in no event for more than twelve (12) months.  The additional                      provisions of Section 3 of Schedule B hereto are incorporated herein if Schedule B is applicable to the Grantee.               


(e)    Change in Control.  All Phantom Stock units and tandem Dividend      Equivalents to which the Grantee has the right to payment hereunder shall become                    100% vested to the extent not yet vested as provided for in Section 2 above, if, following      the occurrence of a Change in Control and before the second anniversary of such       occurrence, (A) the Grantee’s employment is terminated involuntarily, and not for                     Cause, by the Company, or employing Subsidiary, or their successor; or (B) such        employment is terminated by the Grantee for Good Reason. 


For the purposes of this Agreement, “Good Reason” is defined as the occurrence (without the Grantee’s express written consent) of any of the following, unless such act                      or failure to act is corrected, prior to the effective date of Grantee’s termination of        employment, as specified in Grantee’s notice termination, as provided in the following paragraph: (A) a substantial adverse alteration in the nature or status of the Grantee’s responsibilities; (B) a material reduction in the Grantee’s annual base salary; (C) a                material reduction in the Grantee’s target annual bonus; (D) the elimination of any                 material employee benefit plan in which the Grantee is a participant or the material            reduction of Grantee’s benefits under such plan, unless the Company either (1)             immediately replaces such employee benefit plan or unless the Grantee is permitted to immediately participate in other employee benefit plan(s) providing the Grantee with a substantially equivalent value of benefits in the aggregate to those eliminated or                 materially reduced, or (2) immediately provides the Grantee with other forms of         compensation of comparable value to that being eliminated or reduced; (E) a relocation without the written consent of the Grantee that requires the Grantee to report to a work         location more than thirty-five (35) miles from the work location to which the Grantee was assigned prior to the Change in Control. 


Grantee is required to provide notice to the Company (or its successor) of the       existence of any of the conditions set forth in the “Good Reason” definition in this                 Section 2(e) at least fifteen (15), but not more than sixty (60), days prior to the date of     Grantee’s termination of employment.  Upon receipt of such notice, the Company (or its successor) may, prior to the effective date of Grantee’s termination of employment, cure             or remedy such condition.  If Grantee terminates from employment after providing notice      and after the Company (or its successor) has  cured  the  condition  within  the  time frame                    








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set forth in this Section 2(e), then such termination of employment will be considered to               be a voluntary termination of employment, and not a separation for Good Reason.


The Grantee’s continued employment shall not constitute consent to, or a waiver                 of rights with respect to, any act or failure to act constituting Good Reason pursuant to                      the foregoing provisions of this Section 2(e).
    
Section 3.    Definition of “Cause.”  For the purposes of this Agreement, “Cause”              for termination by the Company or an employing Subsidiary of the Grantee’s                    employment shall include: (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 (A) felony, (B) crime or criminal offense involving moral turpitude, or (C) criminal or summary conviction offense that is related to the Grantee’s employment with the                Company or an employing Subsidiary, (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, (v) the failure of the Grantee to cooperate fully with               governmental investigations involving the Company or its affiliates, or (vi) the usual           meaning of just cause under Canadian common law, if applicable; all as determined by                 the Company in its sole discretion.


Section 4.    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 Grantee is                  considered “retired”, Grantee agrees to the noncompetition and other restrictions set                   forth in Section 2 of Schedule A hereto or Section 4 of Schedule B hereto, as applicable              to the Grantee.  In the event that Grantee violates applicable noncompetition and other restrictions, the continued vesting opportunity provided under Section 2 shall terminate               and be forfeited. 
 
Section 5.    Forfeiture/Expiration.  Any Phantom Stock unit subject to this                     Award shall be forfeited upon notice of the termination of Grantee’s continuous              employment with the Company and its Subsidiaries, whether such notice is given by the Grantee or by the Company, including Subsidiaries, from the Date of Grant, except to                      the extent otherwise provided in Section 2, and, if not previously vested, deferred or           forfeited, shall expire immediately before the first anniversary of the Date of Grant.  Any Dividend Equivalent subject to this Award shall expire at the time the unit of Phantom                 Stock with respect to which the Dividend Equivalent is in tandem (i) is vested and paid,                  or, to the extent permitted by the laws of the applicable jurisdiction, deferred, (ii) is                 forfeited, or (iii) expires.  The additional provisions of Section 5 of Schedule B hereto are incorporated herein if Schedule B is applicable to the Grantee.           


Section 6.    Dividend Equivalent Payments.  Payment with respect to any             Dividend Equivalent subject to this Award that is  in  tandem  with  a  Phantom  Stock  unit                     






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that is vested and paid shall be paid in a single lump sum cash payment as soon as         practicable following the vesting and payment of the Phantom Stock unit, and in no                     event later than the end of the third calendar year following the year of the Date of                          Grant, except, if the vested Phantom Stock unit is deferred by the Grantee as provided                      in Section 7, payment with respect to the tandem Dividend Equivalent shall likewise be deferred.  Payment under this Section 6 shall be made not later than thirty (30) days                         after payment hereunder of the related tandem Phantom Stock 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 Phantom Stock unit is paid or deferred and before the Dividend Equivalent expires.  However, should the Grantee               receive payment of Phantom Stock units under this Award without the right to receive a dividend and, because of the timing of the declaration of such dividend, the Grantee is                     not otherwise 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.  Notwithstanding any                     other provision hereof, to the extent necessary for this Agreement not to be construed                        as a salary deferral arrangement under Canadian law, in no event will any Dividend         Equivalent to which the Grantee may be entitled vest, or will the right to receive a                     payment in respect of any Dividend Equivalent arise, after December 30 of the calendar        year which is three years following the end of the year in which any portion of the                       services to which the award of such Dividend Equivalent relates were performed by the Grantee, and in the event this would, apart from this provision, occur, notwithstanding                    any other provision hereof, the applicable Dividend Equivalent will vest and the Grantee            will be entitled to receive payment of such Dividend Equivalent on December 30 (or the             first date prior thereto that is not a Saturday, Sunday or holiday) in the first calendar                           year which is three years following the end of the year in which any portion of the                      services to which the award of such Dividend Equivalent relates were performed by the Grantee.
  
Section 7.    Payment of Phantom Stock Units.  Payment of Phantom Stock                     units subject to this Award shall be made to the Grantee in a single lump sum payment                   as soon as practicable following the time such units become vested in accordance with Section 2 prior to their expiration but in no event later than thirty (30) days following                          such vesting and in no event later than the end of the third calendar year following the                   year of the Date of Grant, except to the extent deferred by Grantee in accordance with                 such procedures as the Committee, or its delegatee, may prescribe consistent with the requirements of Code Section 409A or any Canadian law equivalent, as applicable.                          Any deferral of Phantom Stock units by the Grantee hereunder shall apply to both the              shares of Common Stock and the related tandem Dividend Equivalents.  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 unit of Phantom Stock and any fractional vested unit           of Phantom Stock shall not be payable unless and until subsequent vesting results in a                  full unit of Phantom Stock becoming vested.  Notwithstanding the foregoing, the number            of shares of Common Stock that would otherwise be paid (valued at Fair Market Value                       on the date the respective  unit  of  Phantom  Stock  became  vested,  or  if  later, payable)                    






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shall be reduced by the Committee, or its delegatee, in its sole discretion, to fully satisfy           any tax required to be withheld, unless the Company, or employing Subsidiary, as            applicable, and the Grantee agree that such tax obligations will instead be satisfied by           Grantee timely tendering to the Company, or employing Subsidiary, as applicable,            sufficient cash to satisfy such obligations and the Grantee does timely tender such                        cash.  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 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 Phantom                       Stock units became vested, or if later, payable.


Section 8.    No Employment Right.  Nothing in this Agreement or in the Plan                              shall confer upon the Grantee the right to continued employment by 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 9.    Nonalienation.  The Phantom Stock units and Dividend Equivalents subject to this Award are not assignable or transferable by the Grantee.  Upon any                           attempt to transfer, assign, pledge, hypothecate, sell or otherwise dispose of any such Phantom Stock unit or Dividend Equivalent, or of any right or privilege conferred hereby,                  or upon the levy of any attachment or similar process upon such Phantom Stock unit or Dividend Equivalent, or upon such right or privilege, such Phantom Stock unit or                             Dividend Equivalent, or right or privilege, shall immediately become null and void.


Section 10.    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 11.    Governing Law and Severability.  The validity and construction of                        this Agreement shall be governed by the laws of the state of Delaware applicable to transactions taking 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 12.  Code Section 409A.  Notwithstanding any provision of this                           Agreement to the contrary, for the purposes of this Agreement, the termination of                         Grantee’s employment shall not result in the payment of any amount hereunder that is                 subject to, and not exempt from, Code Section 409A, unless such termination of                  employment constitutes a “separation from service” as defined under Code Section                          409A.  Further, notwithstanding any provision of this Agreement to the contrary, if any               payment or other benefit provided herein would be subject to unfavorable tax                    consequences under Code Section 409A because the timing of such payment is not                    delayed as provided in Code Section 409A for a “specified employee” (within the                            meaning of Code Section 409A), then  if the Grantee  is a “specified  employee,” any such 








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payment that the Grantee would otherwise be entitled to receive during the first six (6)                     months following Grantee’s termination of employment from the Company, including Subsidiaries, shall be accumulated and paid, within thirty (30) days after the date that is               six (6) months following the Grantee’s date of termination of employment from the                     Company, including Subsidiaries, or such earlier date upon which such amount can be                      paid under Code Section 409A without being subject to such unfavorable tax                      consequences such as, for example, upon the Grantee’s death.


Section 13.    Conflicts with Plan, Correction of Errors, Grantee’s Consent, and Amendments.  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 a Phantom Stock Award properly                           granted to 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 Agreement either (i) comply with the                      salary deferral arrangement rules under Canadian law and Code Section 409A, as                    applicable, or (ii) not be construed as a salary deferral arrangement under Canadian law                  and be exempt from Code Section 409A, to the extent applicable.  Accordingly, this               Agreement shall be interpreted as necessary and to the extent legally permissible to                       comply with the requirements of, or exemption under, Canadian law and Code                     Section 409A, as applicable, as determined by the Committee or its delegatee.  Grantee     shall also be deemed to consent to any amendment of the Plan or the Agreement as the Committee may reasonably make in furtherance of such intention, and the Committee                        shall promptly provide, or make available to, the Grantee a copy of any such                                amendment.  Finally, this Agreement may be amended or modified at any time and from                      time to time by action of the Committee.   


Section 14.    Grantee Confidentiality Obligations.  In accepting this Phantom                         Stock Award, Grantee acknowledges that Grantee is obligated under Company policy,                          and under federal, state, provincial and other applicable law, to protect and safeguard                               the confidentiality of trade secrets and other proprietary and confidential information         belonging to the Company and its affiliates that are acquired by Grantee during                                  Grantee’s employment with the Company and its affiliates, and that such obligations                  continue beyond the termination of such employment.  Grantee agrees to notify any subsequent employer of such obligations and that the Company and its affiliates, in                              order to enforce such obligations, may pursue legal recourse not only against Grantee,                            but against a subsequent employer of Grantee.  Grantee agrees that he shall not                              disclose the existence or terms of this Agreement to anyone other than his spouse, tax                    advisor(s) and/or attorney(s), provided that he first obtains the agreement of such                             persons to be bound by the confidentiality provisions of this paragraph.  Grantee also                     agrees to immediately give the Company written notice in accordance with the                            provisions of this Agreement in the event he is legally required to disclose any of the confidential information covered by the provisions of this paragraph.  


    




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Section 15.  Nonsolicitation. Grantee further agrees that he will not, either                                directly or indirectly, solicit, hire or employ, or cause any other person, company, or                            entity to solicit, hire or employ, any employee or contractor retained or employed by the Company or its affiliates during the period of Grantee’s employment and for the period                            set forth in Section 3 of Schedule A hereto or Section 6 of Schedule B hereto, as                                  applicable to the Grantee. The provisions of this paragraph shall not apply to contact                      initiated by an employee or contractor of the Company or its affiliates in response to a                   general solicitation of applications for employment.  Grantee agrees that this Agreement                        is subject to the provisions of this paragraph. 


Section 16.  Notices.  All notices under this Agreement shall be mailed or                                    delivered by hand to the parties at their respective addresses set forth beneath their      signatures below or at such other address as may be designated in writing by either                              party to the other party, or to their permitted transferees if applicable.  Notices shall be                 effective upon receipt.
Section 17.    Payments Subject to Clawback.  To the extent that any payment                         under this Agreement is subject to clawback under Section 954 of the Dodd-Frank Wall                Street Reform and Consumer Protection Act, as it may be amended from time to time,                         such amount will be clawed back in appropriate circumstances, as determined under                               the terms and conditions prescribed by such Act and the authority issued thereunder.                    Further, the Company will be entitled to the extent permitted or required by any other  applicable law and/or Company policy as in effect from time to time (including, but not                     limited to, the Policy on Recovery of Executive Compensation) to recoup compensation                            of whatever kind paid by the Company or any of its affiliates at any time to the Grantee pursuant to this Agreement. 


Section 18.  Equitable Remedies.  Grantee hereby acknowledges and agrees                          that a breach of Grantee’s obligations under this Agreement would result in damages to                      the Company that could not be adequately compensated for by monetary award.                  Accordingly, in the event of any such breach by Grantee, in addition to all other                                    remedies available to the Company at law or in equity, the Company will be entitled as a matter of right to apply to a court of competent jurisdiction for such relief by way of                      restraining order, injunction, decree or otherwise, as may be appropriate to ensure  compliance with the provisions of this Agreement.


Section 19.  Arbitration Agreement.  The Grantee and the Company both agree                that any dispute arising out of or related to this Agreement, which does not involve the Company seeking a court injunction or other relief as provided for in Section 18, shall be resolved by binding arbitration under the employment dispute resolution rules of the      American Arbitration Association and that any proceeding under the provisions of this      Section 19 shall be held in Houston, Texas.  The parties both irrevocably WAIVE ANY                       AND ALL RIGHTS TO A JURY as to any and all claims and issues in any such dispute.                       By this provision, both the Grantee and the Company understand and agree that any                        and all claims and issues in such dispute shall be decided by such arbitration                                proceeding.


    






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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 the Executive Compensation Department - Phantom                           Stock (WO 1O23), 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.


[Signature Page Follows]


















































































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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               Chair, President & CEO, Spectra Energy Corp




Address for Notices: 


5400 Westheimer Court
Mail Drop 1O23
Houston, Texas 77056


Attention: Karen Gowder


Acceptance of Phantom Stock Award


IN WITNESS OF Grantee’s acceptance of this 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 _____________________, ____.


    
_______________________________
           Grantee’s Signature
                            
_______________________________
(print name)


_______________________________
(employee ID)


Address for Notices:


_______________________________
(address)


_______________________________
(address)


















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SCHEDULE A


This Schedule A and the provisions hereof shall apply to the Grantee if (and only                              if) the Grantee is on the payroll of one of the Company’s directly or indirectly held                   or majority or greater-owned subsidiaries or affiliates that is a United States                  entity.


Section 1.    For purposes of Section 2(c) of the Agreement, “permanent and                            total disability” shall have the meaning set forth in Code Section 22(e)(3).


Section 2.    The following provisions shall apply for purposes of Section 4 of the Agreement:


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 crude oil, electricity or derivatives thereof; energy                         management and the provision of energy solutions; gathering,                            compression, treating, processing, fractionation, transportation, trading, marketing of natural gas components, including natural gas liquids, or of                       crude oil; sales and marketing of electric power and 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 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 states of (A) Virginia, (B) Georgia, (C)                               Florida, (D) Texas, (E) California, (F) Massachusetts, (G) Illinois, (H)                    Michigan, (I) New York, (J) Colorado, (K) Oklahoma, (L) Kentucky, (M)                           Ohio, (N) Louisiana, (O) Kansas, (P) Montana, (Q) Missouri, (R)                          Nebraska, and (S) Wyoming; and (v) any state or states or province or                provinces in which was conducted a business of the Company, including Subsidiaries,  which  business  constituted a  substantial  portion of Grantee’s 








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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 geographical                       areas, shall not render this provision unenforceable as applied to any one                            or more of the other restrictions, including geographical 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 herein 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 3.    The nonsolicitation period for purposes of Section 15 of the                                        Agreement is a period of three (3) years following Grantee’s termination of employment                       with the Company and its affiliates.


























































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SCHEDULE B


This Schedule B and the provisions hereof shall apply to the Grantee if (and only                         if) the Grantee is on the payroll of one of the Company’s directly or indirectly held                    or majority or greater-owned subsidiaries or affiliates that is a Canadian entity.


Section 1.    The following provisions shall be incorporated at the end of Section                                                                                         2(b) of the Agreement:  


The date of the termination of Grantee’s continuous employment with the Company for the purposes of this Section 2(b) shall be deemed to be the                     date on which any notice of termination of employment provided to or by                         such Grantee is stated to be effective (or in the case of an alleged                        constructive dismissal, the date on which the alleged constructive                           dismissal is alleged to have occurred), and not during or as of the end of                                   any period following such date during which the Grantee is in receipt of, or entitled to receive, statutory, contractual, or common law notice of                       termination or any compensation in lieu of such notice.


Section 2.    For purposes of Section 2(c) of the Agreement, an individual shall                                   be considered to have a “permanent and total disability” if the individual is unable to                        engage in any substantial gainful activity by reason of any medically determinable                            physical or mental impairment which can be expected to result in death or which has                          lasted or can be expected to last for a continuous period of not less than twelve (12)                          months.


Section 3.    The following provisions shall be incorporated at the end of Section                  2(d) of the Agreement:  


The date that the Grantee’s employment is terminated by the Company, including Subsidiaries, other than for Cause for the purposes of this                       Section 2(d) shall be deemed to be the date on which any notice of                         termination of employment provided to such Grantee is stated to be                          effective (or in the case of an alleged constructive dismissal, the date on                   which the alleged constructive dismissal is alleged to have occurred), and                     not during or as of the end of any period following such date during which                   the Grantee is in receipt of, or entitled to receive, statutory, contractual, or common law notice of termination or any compensation in lieu of such                        notice.


Section 4.    The following provisions shall apply for purposes of Section 4 of the Agreement:


Grantee agrees that during the period beginning with such termination of employment and ending with the earlier of (1) the third anniversary of the                         Date of Grant or (2) the first anniversary of the  date  of  such  termination  of 


 




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employment ("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 or crude oil, resale or arranging for the purchase or for the resale, brokering, marketing, or                             trading of natural gas, electricity or derivatives thereof; energy                          management and the provision of energy solutions; gathering,                           compression, treating, processing, fractionation, transportation, trading, marketing of natural gas components, including natural gas liquids, or of                     crude oil; sales and marketing of electric power and 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 geographical area of the province in which Grantee was                              employed at termination of employment from the Company and employing Subsidiaries.  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 herein 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 5.    The following provisions shall be incorporated at the end of Section                    5 of the Agreement:  


The date of the termination of Grantee’s continuous employment with the Company, including Subsidiaries, for the purposes of this Section 5 shall                      be deemed to be the date on which any notice of termination of                                 employment provided to or by such Grantee is stated to be effective (or in                      the case of an alleged constructive dismissal, the date on which the                               alleged constructive dismissal is alleged to have occurred), and not during                       or as of the end of any period following such date during which the                                  Grantee  is   in  receipt  of, or entitled  to  receive,  statutory,  contractual,  or                           










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common law notice of termination or any compensation in lieu of such                         notice.


Section 6.    The nonsolicitation period for purposes of Section 15 of the                          Agreement is a period of one (1) year following Grantee’s termination of employment                          with the Company and its affiliates.




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