Document:

ex10-1.htm

Exhibit 10.1

FIRST AMENDMENT AND CONSENT AGREEMENT

THIS FIRST AMENDMENT AND CONSENT AGREEMENT dated as of May 6, 2011 (the “Agreement”) is entered into among ExamWorks Group, Inc., a Delaware corporation (the “Borrower”), the Guarantors, the Lenders party hereto and Bank of America, N.A., as Administrative Agent.  All capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement (as defined below).

RECITALS

WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative Agent entered into that certain Credit Agreement dated as of October 11, 2010 (as amended or modified from time to time, the “Credit Agreement”);

WHEREAS, ExamWorks UK Limited (“ExamWorks UK”) wishes to acquire all of the outstanding Equity Interests of Premex Group Limited for cash consideration of approximately £57,000,000 and stock consideration of approximately £10,500,000, subject to post-closing working capital adjustments (collectively, the “Premex Acquisition”);

WHEREAS, the aggregate consideration paid by ExamWorks UK for the Premex Acquisition will exceed the amount of consideration for an Acquisition permitted by clause (ix) of the definition of “Permitted Acquisitions” in Section 1.01 of the Credit Agreement;

WHEREAS, pursuant to Section 2.02(f) of the Credit Agreement, that certain Consent Agreement, dated as of December 22, 2010 (the “December Consent Agreement”) and that certain Consent Agreement, dated as of February 9, 2011 (the “February Consent Agreement”; together with the December Consent Agreement, collectively, the “Consent Agreements”), the Borrower has increased the Aggregate Revolving Commitments subsequent to the Funding Date by a total of $65,000,000;

WHEREAS, pursuant to Section 2.02(f) of the Credit Agreement and the Consent Agreements, the Borrower is presently permitted to increase the Aggregate Revolving Commitments by an additional $35,000,000;

WHEREAS, the Borrower has requested that the Lenders (a) permit the Premex Acquisition notwithstanding the limit on consideration set forth above, (b) permit the Borrower to increase the Aggregate Revolving Commitments by $55,000,000 rather than by $35,000,000 and (c) amend the Credit Agreement as set forth below; and

WHEREAS, the Lenders are willing to (a) consent to the Premex Acquisition, (b) permit the Borrower to increase the Aggregate Revolving Commitments by $55,000,000 rather than by $35,000,000 and (c) amend the Credit Agreement subject to the terms and conditions set forth below;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.           Consents.

(a)        Subject to the other terms and conditions of this Agreement, notwithstanding that the Premex Acquisition exceeds the limit on consideration permitted by clause (ix) of the definition of “Permitted Acquisitions” in Section 1.01 of the Credit Agreement, the Lenders hereby consent to the Premex Acquisition and agree that the Premex Acquisition shall constitute a “Permitted Acquisition” for purposes of Section 8.02(g) of the Credit Agreement; provided that the Premex Acquisition satisfies all other requirements set forth in the definition of “Permitted Acquisitions.”

 

  

  

  

 

(b)            Subject to the other terms and conditions of this Agreement, the Lenders hereby agree that the existing limit on the Borrower’s ability to increase the Aggregate Revolving Commitments pursuant to Section 2.02(f) of the Credit Agreement is hereby increased from $35,000,000 to $55,000,000 (the “Increase Limit”).  For the avoidance of doubt, it being understood that, after adding additional and/or new Revolving Commitments up to the Increase Limit, the Borrower will not have any additional capacity to increase the Aggregate Revolving Commitments pursuant to Section 2.02(f) of the Credit Agreement.

(c)            The above consents shall not modify or affect the Loan Parties’ obligations to comply fully with the terms of Section 8.02 of the Credit Agreement or any other duty, term, condition or covenant contained in the Credit Agreement or any other Loan Document in the future, except as expressly set forth herein. The above consents are limited solely to the matter described above, and nothing contained in this Agreement shall be deemed to constitute a waiver of any other rights or remedies the Administrative Agent or any Lender may have under the Credit Agreement or any other Loan Documents or under applicable law.

2.              Amendments.  The Credit Agreement is hereby amended as follows:

(a)           The following definitions are hereby added to Section 1.01 of the Credit Agreement in the appropriate alphabetical order to read as follows:

“ExamWorks Europe” means ExamWorks Europe, Inc., a Delaware corporation.

“ExamWorks Europe Loan” has the meaning specified in Section 8.02(i).

“First Amendment Effective Date” means May 6, 2011.

“Premex Acquisition” means the acquisition by ExamWorks UK Limited of Premex Group Limited for cash consideration of approximately £57,000,000 and stock consideration of approximately £10,500,000, subject to post-closing working capital adjustments.

“Repatriated Funds” has the meaning specified in Section 8.02(h).

(b)           The pricing grid in the definition of “Applicable Rate” in Section 1.01 of the Credit Agreement is hereby amended to read as follows:

	
Pricing Tier

	
Consolidated

Leverage Ratio

	
Commitment Fee

	
Letter of Credit Fee

	
Eurocurrency Rate Loans

	
Base Rate Loans

	
1

	
>3.0:1.0

	
0.50%

	
4.00%

	
4.00%

	
3.00%

	
2

	

>2.50 to 1.0

but < 3.0:1.0

	
0.50%

	
3.75%

	
3.75%

	
2.75%

	
3

	
< 2.50 to 1.0 but > 1.75 to 1.0

	
0.625%

	
3.50%

	
3.50%

	
2.50%

	
4

	
< 1.75 to 1.0 but > 1.0 to 1.0

	
0.625%

	
3.25%

	
3.25%

	
2.25%

	
5

	
< 1.0 to 1.0

	
0.75%

	
3.00%

	
3.00%

	
2.00%

(c)           The following sentence is hereby added at the end of the definition of “Applicable Rate” in Section 1.01 of the Credit Agreement to read as follows:

The Applicable Rate in effect from the First Amendment Effective Date to the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 7.02(a) for the fiscal quarter ending June 30, 2011 shall be determined based upon Pricing Tier 1.

(d)           The following sentence is hereby added at the end of the definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement to read as follows:

  

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Notwithstanding the foregoing, for purposes of calculating Consolidated EBITDA for any period, the amount of Consolidated EBITDA attributable to the U.K. Subsidiaries for such period shall not exceed twenty-five percent (25%) of total Consolidated EBITDA for such period.

(e)      The definition of “Consolidated Leverage Ratio” in Section 1.01 of the Credit Agreement is hereby amended to read as follows:

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a) the sum of (i) Consolidated Funded Indebtedness as of such date minus (ii) unrestricted cash of the Loan Parties in excess of $2,500,000 on the consolidated balance sheet of the Borrower and its Domestic Subsidiaries as of such date in an amount not exceeding $12,500,000 to (b) Consolidated EBITDA for the period of the four (4) fiscal quarters most recently ended.

(f)           The definition of “Consolidated Senior Leverage Ratio” in Section 1.01 of the Credit Agreement is hereby amended to read as follows

“Consolidated Senior Leverage Ratio” means, as of any date of determination, the ratio of (a) the sum of (i) Consolidated Funded Indebtedness as of such date minus (ii) unrestricted cash of the Loan Parties in excess of $2,500,000 on the consolidated balance sheet of the Borrower and its Domestic Subsidiaries as of such date in an amount not exceeding $12,500,000 minus (iii) the Seller Subordinated Indebtedness as of such date minus (iv) the Other Subordinated Indebtedness as of such date to (b) Consolidated EBITDA for the period of the four (4) fiscal quarters most recently ended.

(g)          The definition of “Disposition” in Section 1.01 of the Credit Agreement is hereby amended to read as follows:

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any Sale and Leaseback Transaction) of any property by any Loan Party or any Subsidiary (including the Equity Interests of any Subsidiary), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding (a) the sale, lease, license, transfer or other disposition of inventory in the ordinary course of business; (b)  the sale, lease, license, transfer or other disposition in the ordinary course of business of surplus, obsolete or worn out property no longer used or useful in the conduct of business of any Loan Party or any Subsidiary; (c) any sale, lease, license, transfer or other disposition of property to any Loan Party or any Subsidiary; provided, that if the transferor of such property is a Loan Party (i) the transferee thereof must be a Loan Party or (ii) to the extent such transaction constitutes an Investment, such transaction is permitted under Section 8.02; (d) any Involuntary Disposition and (e) the sale of accounts receivable with respect to Canadian account debtors only; provided that the aggregate book value of all such accounts receivable sold during any fiscal year shall not exceed $2,000,000 in the aggregate.

(h)           Clause (h) of Section 8.02 of the Credit Agreement is hereby amended to read as follows:

(h)           Investments by the Loan Parties in Foreign Subsidiaries in an aggregate amount not to exceed the aggregate amount of cash previously transferred or otherwise repatriated from such Foreign Subsidiaries back to the Loan Parties (the “Repatriated Funds”); provided that, for purposes of calculating the amount of Investments permitted by this Section 8.02(h), any repayment of the ExamWorks Europe Loan shall only constitute Repatriated Funds to the extent such repayments are made after the principal amount of such ExamWorks Europe Loan is reduced below $60,000,000; and

(i)           A new clause (i) is hereby added to Section 8.02 of the Credit Agreement to read as follows:

(i)           Investment in the form of a loan by ExamWorks Europe to ExamWorks UK Limited (the “ExamWorks Europe Loan”) in an aggregate amount not to exceed $100,000,000; provided that (x) the proceeds of such Investment are promptly used by ExamWorks UK Limited to finance the Premex Acquisition, (y) ExamWorks Europe shall have delivered to the Administrative Agent the original promissory note evidencing such ExamWorks Europe Loan, together with a duly executed in blank and undated note power or allonge and (z) if the ExamWorks Europe Loan exceeds $60,000,000, the aggregate principal amount of Indebtedness permitted by Section 8.03(f) shall not exceed £15 million;

 

  

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(j)           Clause (f) of Section 8.03 of the Credit Agreement is hereby amended to read as follows:

(f)           Indebtedness of UK Independent and other UK Subsidiaries in an aggregate principal amount not to exceed £35 million pursuant to those certain receivables facilities agented by Barclays Bank Plc. (and Guarantees of such Indebtedness by certain other UK Subsidiaries); provided however that the aggregate principal amount of Indebtedness incurred pursuant to this Section 8.03(f) shall not exceed £15 million if the ExamWorks Europe Loan advanced in accordance with Section 8.02(i) exceeds $60,000,000;

(k)           Clause (b) of Section 8.11 of the Credit Agreement is hereby amended to read as follows:

(b)           Consolidated Senior Leverage Ratio.  Permit the Consolidated Senior Leverage Ratio as of the end of any fiscal quarter of the Borrower to be greater than (i) for the fiscal quarters ending June 30, 2011 and September 30, 2011, 3.5:1.0, (ii) for the fiscal quarter ending December 31, 2011, 3.25:1.0 and (ii) for any fiscal quarter ending thereafter, 3.0:1.0.

3.           Conditions Precedent.  This Agreement shall be effective upon:

(a)           the receipt by the Administrative Agent of counterparts of this Agreement duly executed by the Borrower, the Guarantors, the Supermajority Lenders and Bank of America, N.A., as Administrative Agent; and

(b)          the receipt by (i) each Lender consenting to this Agreement on or before 12:00 p.m. Eastern time on May 6, 2011 of an amendment fee equal to 0.20% of such Lender’s Revolving Commitment and (ii) the Administrative Agent and Merrill Lynch, Pierce, Fenner & Smith Incorporated of all fees and expenses due and payable to them in connection with this Agreement.

4.           Miscellaneous.

(a)    The Credit Agreement and the obligations of the Loan Parties thereunder and under the other Loan Documents, are hereby ratified and confirmed and shall remain in full force and effect according to their terms.  The Loan Parties hereby confirm and agree that all Liens now or hereafter held by the Administrative Agent for the benefit of the holders of the Obligations as security for payment thereof remain in full force and effect and are unimpaired by this Agreement.

(b)    Each Guarantor (a) acknowledges and consents to all of the terms and conditions of this Agreement, (b) affirms all of its obligations under the Loan Documents as modified hereby and (c) agrees that this Agreement and all documents executed in connection herewith do not operate to reduce or discharge its obligations under the Credit Agreement or the other Loan Documents except as expressly set forth herein.

(c)    The Loan Parties hereby represent and warrant as follows:

(i)           Each Loan Party has taken all necessary action to authorize the execution, delivery and performance of this Agreement.

(ii)         This Agreement has been duly executed and delivered by the Loan Parties and constitutes each of the Loan Parties’ legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to (A) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (B) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

  

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(iii)           No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by any Loan Party of this Agreement.

       (d)    The Loan Parties represent and warrant to the Lenders that (i) the representations and warranties of the Loan Parties set forth in Article VI of the Credit Agreement and in each other Loan Document are true and correct in all material respects as of the date hereof with the same effect as if made on and as of the date hereof, except to the extent such representations and warranties expressly relate solely to an earlier date or have been previously updated or amended and (ii) no event has occurred and is continuing, or would result from the execution and delivery of this Agreement, which constitutes a Default or an Event of Default.

                                (e)    This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  Delivery of an executed counterpart of this Agreement by telecopy shall be effective as an original and shall constitute a representation that an executed original shall be delivered.

(f)           THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

[Signature pages follow]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

BORROWER:                                        EXAMWORKS GROUP, INC.,

a Delaware corporation

By: /s/ J. Miguel Fernandez de Castro

Name: J. Miguel Fernandez de Castro

Title: Senior Vice President and Chief Financial Officer

GUARANTORS:                                  EXAMWORKS, INC., a Delaware corporation

By: /s/ J. Miguel Fernandez de Castro

Name: J. Miguel Fernandez de Castro

Title: Senior Vice President and Chief Financial Officer

EXAMWORKS CANADA, INC., a Delaware corporation

EXAMWORKS EUROPE, INC., a Delaware corporation

FLORIDA MEDICAL SPECIALISTS, INC.,

a New Jersey corporation

MARQUIS MEDICAL ADMINISTRATORS, INC.,

a New York corporation

THE RICWEL CORPORATION,

an Ohio corporation

SOUTHWEST MEDICAL EXAMINATION SERVICES, INC.,

a Texas corporation

PACIFIC BILLING SERVICES, INC.,

a Texas corporation

DIAGNOSTIC IMAGING INSTITUTE, INC.,

a Texas corporation

EXIGERE CORPORATION, a Washington corporation

NETWORK MEDICAL REVIEW COMPANY,

LTD., an Illinois corporation

NETWORK MEDICAL MANAGEMENT COMPANY,

LTD., an Illinois corporation

INSURANCE APPEALS, LTD.,

an Illinois corporation

ELITE PHYSICIANS, LTD.,

an Illinois corporation

WORKERSFIRST, INC.,

an Illinois corporation

 

  

  

  

 

MES GROUP, INC.,

a Michigan corporation

MEDICAL EVALUATION SPECIALISTS, INC.,

a Michigan corporation

MEDICAL EVALUATION SPECIALISTS,

a California corporation

MEDICAL EVALUATION SPECIALISTS-MASSACHUSETTS, INC.,

a Massachusetts corporation

MEDICAL EVALUATION SPECIALISTS, INC.,

a Pennsylvania corporation

LONE STAR CONSULTING SERVICES, INC.,

a Texas corporation

MES MANAGEMENT SERVICES, INC.,

a New York corporation

By: /s/ J. Miguel Fernandez de Castro

Name: J. Miguel Fernandez de Castro

Title: Senior Vice President and Chief Financial Officer

RICWEL OF WEST VIRGINIA, LLC,

a West Virginia limited liability company

CFO MEDICAL SERVICES, LLC,

a New Jersey limited liability company

By: ExamWorks, Inc., its sole member and manager

By: /s/ J. Miguel Fernandez de Castro

Name: J. Miguel Fernandez de Castro

Title: Senior Vice President and Chief Financial Officer

IME SOFTWARE SOLUTIONS, LLC,

a Michigan limited liability company

EXAMWORKS REVIEW SERVICES, LLC,

a Delaware limited liability company

EXAMWORKS EVALUATIONS OF NEW YORK,

LLC, a New York limited liability company

By: ExamWorks, Inc., its sole member

By: /s/ J. Miguel Fernandez de Castro

Name: J. Miguel Fernandez de Castro

Title: Senior Vice President and Chief Financial Officer

  

  

  

 

DDA MANAGEMENT SERVICES, LLC,

a New York limited liability company

By: Lone Star Consulting Services, Inc., its sole member

By: /s/ J. Miguel Fernandez de Castro

Name: J. Miguel Fernandez de Castro

Title: Senior Vice President and Chief Financial Officer

ADMINISTRATIVE

AGENT:                                                 BANK OF AMERICA, N.A.,

as Administrative Agent

By: /s/ Anne M. Zeschke

Name: Anne M. Zeschke

Title:  Vice President

LENDERS:                                             BANK OF AMERICA, N.A.,

as a Lender, Swing Line Lender and L/C Issuer

By: /s/ John G. Taylor

Name: John G. Taylor

Title:  Senior Vice President

GENERAL ELECTRIC CAPITAL CORPORATION,

as a Lender

By: /s/ W. Grant Johnston

Name: W. Grant Johnston

Title:   Duly Authorized Signatory

FIFTH THIRD BANK,

as a Lender

By: /s/ Philip Renwick

Name: Philip Renwick

Title:   Vice President

SUNTRUST BANK,

as a Lender

By: /s/ D. Scott Catheart

Name: D. Scott Catheart

Title:   First Vice President

CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH,

as a Lender

By: /s/ An Bruger

Name: An Bruger

Title:   Vice President

By: /s/ Kevin Buddhdew

Name: Kevin Buddhdew

Title:   Associate

  

  

  

BARCLAYS BANK PLC,

as a Lender

By: /s/ Diane Rolfe

Name: Diane Rolfe

Title:   Director

COMMUNITY & SOUTHERN BANK,

as a Lender

By: /s/ Thomas A. Bethel

Name: Thomas A. Bethel

Title:   Senior Relationship Manager

GOLDMAN SACHS BANK USA,

as a Lender

By: /s/ Lauren Day

Name: Lauren Day

Title:   Authorized SignatoryForm of Phantom Stock Award Agreement

 EXHIBIT 10.3 
 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 2007 Spectra Energy 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 “Company”), 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 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 Corporation, 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. 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 Award. The 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.
Upon Grantee remaining continuously employed by the Corporation, including Subsidiaries, through the third anniversary of the Date of Grant. 
 (b) Retirement. If Grantee’s employment 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 the delegatee, in its sole discretion, determines to be the functional equivalent of the Spectra Energy Retirement Cash Balance Plan, 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 whole and partial months of
the period beginning on the Date of Grant and ending with the third (3rd) anniversary of the Date of Grant during which such employment continued while Grantee was entitled to payment of salary, and the remaining Phantom Stock units vested shall be forfeited. Grantee
shall be considered to have “retired” but Grantee’s employment shall be considered to continue, with continued vesting under Section 2(a), (i) unless the Committee or its delegatee, in its sole discretion, determines that
(A) Grantee is in violation of any obligation identified in Section 3 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). 
 (c) Death or Disability. If Grantee’s employment terminates (i) as the result of Grantee’s death or (ii) as the result of Grantee’s permanent and total disability within
the meaning of Code Section 22(e)(3) as applicable, the Phantom Stock units subject to this Award shall vest immediately. 
 (d) Involuntary Termination Without Cause. If Grantee’s employment is terminated by the Corporation, or employing Subsidiary, other than for Cause, (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 whole and partial months of employment occurring prior to any notice of termination, regardless of reason for
termination or the party giving notice, and during the period beginning on the Date of Grant and ending with the third
(3rd) anniversary of the Date of Grant, and the
remaining Phantom Stock units shall be forfeited, and (ii) the unforfeited Phantom Stock units determined in accordance with clause (i) shall vest immediately. 
 (e) Change in Control. All Phantom Stock units and tandem Dividend Equivalent units under to which the Grantee has the right to payment hereunder shall become 100% vested, if, following the
occurrence of a Change in Control and before the second anniversary of such occurrence, (i) such employment is terminated involuntarily, and not for Cause, by the Corporation, or employing Subsidiary, or their successor; or (ii) such
employment is terminated by the Grantee for Good Reason. (iii) For the purposes of this paragraph, “Good Reason” is defined as the occurrence (without the Grantee’s express written consent) of any of the following: (A) a
substantial adverse alteration in the nature or status of the Grantee’s responsibilities; (B) a reduction in the Grantee’s annual base salary, provided that there is not an across-the-board reduction similarly affecting all or
substantially all similarly-situated employees of the Corporation; (C) a reduction in the Grantee’s target annual bonus, provided that there is not an across-the-board reduction similarly affecting all or substantially all
similarly-situated employees of the Corporation; (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 any such plan, unless the Company either
(I) 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 (II) 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 35 miles from the work location to which the Grantee was assigned prior to the change in control. 
 Section 3. Definition of “Cause.” 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 Corporation’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. 

  
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 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 Corporation, including Subsidiaries, if Grantee is considered “retired”, 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 Corporation,
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, 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; sales and marketing of electric power and natural gas, domestically and abroad; and any other business in which the Corporation, including Subsidiaries, is engaged at the termination of Grantee’s
continuous employment by the Corporation, including Subsidiaries; and within the following geographical areas (i) any country in the world where the Corporation, including Subsidiaries, has at least US$25 million in capital deployed as of
termination of Grantee’s continuous employment by Corporation, 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 and (L) Louisiana; and (v) any state or states or province or provinces
with respect to which was conducted a business of the Corporation, 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 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 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 5. Forfeiture/Expiration. Any Phantom Stock unit subject to this Award shall be forfeited upon
notice of the termination of Grantee’s continuous employment by the Grantee or by the Corporation, 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 third 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. 

Section 6. Dividend Equivalent Payments. Payments with respect to any Dividend Equivalent subject to
this Award shall be credited by the Company to a bookkeeping account in the Grantee’s name as soon as practicable after any time cash dividends are declared and paid with respect to the Common Stock on or after the Date of Grant and before the
Dividend Equivalent expires. Grantee shall be entitled to payment of the Dividend Equivalents credited to the bookkeeping account in a cash lump sum payment at the same time payment of the related Phantom Stock units subject to this Award is made in
accordance with Section 7 hereof. However, should the Grantee receive shares 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 

  
 3 

 
subject to withholding for taxes. Notwithstanding any other provision hereof, 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. 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 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 30 days following such vesting, 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, to the extent that Grantee fails to timely tender to the Company sufficient cash to satisfy withholding for tax requirements, 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) shall be reduced by the Committee, or its delegatee, in its sole discretion, to fully satisfy such requirements. 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. 
 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 payment that the Grantee would otherwise be entitled to receive during the first six months following his termination of employment from the
Company shall be accumulated and paid, within thirty (30) days after the date that is six months following the Grantee’s date of termination of employment from the Corporation, 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 8. No Employment Rights. 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, 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. 

  
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 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. 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 Section 2(d) 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 Corporation, or any other affiliate of the Company that is so designated, from time to time, by the Committee. The
term “termination of employment”, or any derivation thereof, shall mean “separation from service” as such term is defined in Code Section 409A. 
 Section 13. 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 a Phantom Stock Award properly granted to Grantee pursuant to the Plan, the Corporation, 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 or any Canadian law
equivalent, as applicable. Accordingly, this Agreement shall be interpreted as necessary to comply with the requirements of Code Section 409A, Grantee consents to any 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 the Executive Compensation Department—Phantom 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. 
 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

  
 5 

 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)
	
	  
	(social security/social insurance number)
	
	  
	(address)

  
 6

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