**Exhibit 10.42**

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**TEXAS EASTERN PRODUCTS PIPELINE COMPANY, LLC**

 

**AMENDED AND RESTATED**

**NONEMPLOYEE DIRECTORS DEFERRED COMPENSATION PLAN**

 

TheAmended and Restated Nonemployee Directors Deferred Compensation Plan (the “Plan”)is hereby established, effective April 1, 2002, by Texas Eastern ProductsPipeline Company, LLC, a Delaware limited liability company (the “Company”),which plan provides for optional deferral of directors’ fees, as describedbelow:

 

1.                                       Eligibility

 

Anymember of the Board of Directors of the Company who isnot also an employee of Duke Energy Corporation, the Company, or any othercompany affiliated with Duke Energy Corporation (“Director”), is eligible toparticipate under the Plan (“Participant”).

 

2.                                       Compensationto be Deferred

 

ADirector may elect to defer any whole percentage of all directors’ fees whichmay become payable to him or her with respect to services as a Director duringany calendar year (the “year”). Directors’ fees shall include retainer fees, committee fees, andattendance fees, but shall not include any expense reimbursement.

 

3.                                       Timeand Method of Election to Defer

 

a.                                       Inthe first year in which a Participant becomes eligible to participate in thePlan (including the first year in which the Plan is in effect), the newly eligibleParticipant may make an election to defer directors’ fees for services to beperformed subsequent to such deferral election by completing the deferralelection form that has been approved by the Committee (“Deferral Election Form”),and filing it with the Secretary of the Company within thirty (30) days afterthe date the Participant becomes eligible (or the date the Plan is first ineffect).

 

b.                                      AParticipant may elect to defer directors’ fees for any subsequent year bycompleting the Deferral Election Form and filing it with the Secretary of theCompany before December 31 of the year preceding the year for whichdirectors’ fees shall be deferred.

 

c.                                       Adeferral election for a year shall be irrevocable and shall remain in effectand be deemed a like election for deferral of directors’ fees for allsubsequent years unless revoked by a new Deferral Election Form filed prior to December 31of the year preceding the first year for which the new deferral election is tobe effective.  To the extent a deferralelection is 

 

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not in effect for a year,directors’ fees for such year shall be paid by the Company in accordance withits usual procedures.

 

4.                                       PhantomInvestment

 

Eachtime a Participant files a Deferral Election Form, the Company shall establishan account (“Deferred Compensation Account”) in the name of theParticipant.  The Participant’s DeferredCompensation Account shall be increased to reflect the directors’ fees deferredby the Participant pursuant to the Deferral Election Form.  The Participant’s Deferred CompensationAccount shall be adjusted for investment gain or loss based upon the phantominvestment elected in the Deferral Election Form.  The Participant’s Deferred CompensationAccount shall be decreased to reflect any payment of the balance thereof.  Deferred Compensation Accounts shall bemaintained by the Company in accordance with such accounting rules andprocedures as the Company, in its sole discretion, shall determine.  In the Deferral Election Form, theParticipant shall irrevocably elect from among the following options, thephantom investment in the Deferred Compensation Account of the directors’ feesdeferred thereby:

 

100%Fixed Income Phantom Investment

 

100%LP Unit Phantom Investment

 

50%Fixed Income/50% LP Unit Phantom Investment

 

FixedIncome Phantom Investment - quarterly interest on the openingbalance for the calendar quarter, at an annual rate of 7% or such other annualrate as a majority of the members of the Compensation Committee of the Board ofDirectors who are not eligible to participate under the Plan may, from time totime, establish.

 

LPUnit Phantom Investment - deemed invested in, or liquidatedfrom, whole and fractional TEPPCO Partners LP Units, based upon the closingprice of a TEPPCO Partners LP Unit as reported on the NYSE Composite ReportingSystem as of the trading day immediately preceding the day on which thedirectors’ fees if not deferred would have been payable, the day on whichquarterly cash distributions are paid to holders of TEPPCO Partners LP Units,or the last day of the year that immediately precedes payment of the balance ofthe Deferred Compensation Account in a lump sum or in an annual installment,whichever day is applicable.

 

CombinedFixed Income and LP Unit Phantom Investment.  should the phantom investment in a DeferredCompensation Account be 50% Fixed Income/50% LP Unit, any payment of thebalance of the Deferred Compensation Account shall be considered taken, to theextent possible, in equal amounts from each phantom investment.

 

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5.                                       Timeof Payment

 

TheCompany shall pay the balance of a Participant’s Deferred Compensation Account,in a lump sum, or in five annual installments as determined below, with thelump sum payment or, the first installment payment, as the case may be, beingmade by January 15 of the year next succeeding the year in which theParticipant’s service as a Director terminates.  Subsequentinstallment payments shall be made by January 15 of subsequent years.

 

6.                                       Formof Payment

 

In theDeferral Election Form that results in the establishment of the DeferredCompensation Account, a Participant shall elect to have payment of the balanceof the Deferred Compensation Account made in one of the following forms:

 

a.                                       Ina lump sum, the amount of which shall be the balance of the Participant’sDeferred Compensation Account, as adjusted for phantom investment through thelast day of the preceding year; or

 

b.                                      Infive annual installments, the amount of each installment shall be the balanceof the Participant’s Deferred Compensation Account, as adjusted for phantominvestment through the last day of the preceding year and for any installmentpreviously paid, divided by the number of installments not yet paid.

 

Notwithstanding the foregoing:

 

a.                                       Ifat the close of the year during which the Participant’s service as a Directorterminates, the aggregate balance of the Participant’s Deferred CompensationAccounts does not exceed $10,000.00, the aggregate balance of the Participant’sDeferred Compensation Accounts shall be paid to the Participant in a lump sumby January 15 of the next succeeding year; or

 

b.                                      Inthe event of the Participant’s death, the aggregate balance of the Participant’sDeferred Compensation Accounts shall be paid to the Participant’s beneficiaryin a lump sum by January 15 of the year next succeeding the year in whichthe Participant died.

 

7.                                       DeathBeneficiary

 

AParticipant may designate a beneficiary or beneficiaries to receive theaggregate balance of the Participant’s Deferred Compensation Account that isunpaid at the time of Participant’s death. Such designation, including the revocation of any prior designation by asuperseding designation, shall be made by completing the approved form andfiling with the Secretary of the Company. A beneficiary 

 

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designationby a Participant who is married at the time of his/her death which fails toname the Participant’s surviving spouse as the sole beneficiary shall not beeffective unless such surviving spouse has consented to the designation inwriting, witnessed by the Secretary of the Company, another representative ofthe Committee or notary public, acknowledging the effect of the designation.  Spousal consent shall not be required if, atthe time of filing such designation, the Participant established to thesatisfaction of the Secretary of the Company that the consent of theParticipant’s spouse could not be obtained because there is no spouse, thespouse could not be located or there exist such other mitigating circumstancesas may be prescribed by the Secretary of the Company.  Any spouse’s consent (or establishment thatthe consent could not be obtained) shall be effective only with respect to thatspouse.  Any Participant may changehis/her beneficiary designation at any time by filing with the Secretary of theCompany a new beneficiary designation (with such spousal consent as may berequired).  Such designation shall notbecome effective until so filed and unless so filed prior to the time ofParticipant’s death.  In the event that abeneficiary designation is not in effect at the time of Participant’s death orin the event that no designated beneficiary has survived the Participant’sdeath, the Participant’s estate shall be the Participant’s sole beneficiary.

 

8.                                       Paymentsto Minors and Incompetents

 

Shouldthe Participant become incompetent or should the Participant’s beneficiary be aminor or incompetent, the Company is authorized to make payment to a parent orguardian of such minor or incompetent in full discharge of its obligations tosuch minor or incompetent under the Plan.

 

9.                                       DistributionEquivalents

 

As soon as possible after each quarterly distributiondate, TEPPCO shall credit to each Participant’s Deferred Compensation Account,a monetary amount (“Distribution Equivalents”) equal to the product of:

 

(a)                                  the total number of LP Unit phantom investments inParticipant’s Deferred Compensation Account, multiplied by

 

(b)                                 the distribution paid with respect to a TEPPCO Partners,L.P. Unit for such quarter.

 

On the date that a credit to Participant’s DeferredCompensation Account is made for LP Unit Phantom Investments any monetarybalance in such account attributable to Distribution Equivalents will be convertedto LP Unit Phantom Investments in accordance with the provisions of Section 4subtitled LP Unit Phantom Investment.

 

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10.                                 PlanAdministration

 

TheCompensation Committee of the Board of Directors of the Company (the “Committee”)is the administrator of the Plan, provided, that any member of the Committeewho is eligible to participate under the Plan shall not participate in anydecision on any matter regarding the administration of the Plan.  As Plan administrator, the Committee shallhave full and exclusive authority to control and manage the operation andadministration of the Plan.  TheCommittee may adopt such rules, and approve such forms, as may be necessary ordesirable for the administration of the Plan and may delegate any of its dutiesand authority to others.  The Committeehas the discretion:

 

a.                                       Tointerpret and construe the terms and provisions of the Plan (including anyrules adopted for the Plan);

 

b.                                      Tocorrect any defect, supply any omission, or reconcile any inconsistency in thePlan;

 

c.                                       Todecide any claim arising under the Plan; and

 

d.                                      Tomake factual determinations in connection with any of the foregoing.

 

A decision by theCommittee with respect to any matter pertaining to the Plan shall be conclusiveand binding on all interested parties.

 

11.                                 UnfundedPlan

 

ThePlan is unfunded.  To the extent that aParticipant or beneficiary acquires a right to receive payments from theCompany under the Plan, such right shall not be greater than the right of anunsecured general creditor of the Company and such right shall be an unsecuredclaim against the general assets of the Company.

 

Titleto and beneficial ownership of any assets, whether cash or investments, whichthe Company may set aside in a grantor trust or otherwise earmark to pay itsobligations hereunder will at all times remain the property of the Company, andneither the Participant nor the Participant’s estate or other beneficiary shallhave any property interest whatsoever in any specific assets of the Company.

 

12.                                 Nonassignability

 

Theright of the Participant to receive payment from the Company under the Planshall not be assigned, transferred, pledged, or encumbered except as providedby Section 7.  Any attemptedassignment, transfer, pledge, or encumbrance in violation of this Section 12shall be null and void.

 

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13.                                 Amendmentor Termination

 

ThePlan may be amended from time to time or terminated by the Board of Directorsof the Company, except that no amendment or termination shall, without theconsent of the Participant, impair the rights of the Participant to receivepayment of the aggregate balance of the Participant’s Deferred CompensationAccounts.

 

14.                                 GoverningLaw

 

ThePlan, and all determinations made and actions taken pursuant thereto, to extentnot governed by the provisions of the Internal Revenue Code or the securitieslaws of the United States, shall be governed by and construed in accordancewith the laws of the state of Texas.

 

This Plan document has been executed on behalf of theCompany this 1st day of November, 2002.

 

 
| ** ** | **TEXAS  EASTERN PRODUCTS  PIPELINE COMPANY, LLC** |                                   |
|------------|----------------------------------------------------|----------------------------------------|
|       |                                               |                                   |   |
|       |                                               |                                   |   |
|       | By:                                                | /s/ BARRY R.  PEARL                    |   |
|       |                                               |                                   |   |
|       | Its:                                               | Chief Executive  Officer and President |   |

 

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