Exhibit 10.1
Execution Copy
TRANSITIONAL EMPLOYMENT AND
SEPARATION AGREEMENT
This Transitional
Employment and Separation Agreement (“
Agreement ”) is made and entered into as of
October 15, 2008 (“ Effective Date
”) between Spectra Energy Corp 1 and Martha B. Wyrsch (“
Executive ”).
RECITALS
The Executive currently serves as
the President and Chief Executive Officer of Spectra Energy
Transmission, LLC and serves in various other capacities for the
entities constituting the Spectra Group. The Executive and certain
entities in the Spectra Group are parties to the following
agreements:
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a.
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Change in
Control Agreement dated December 19, 2006, and as amended
thereafter (“Change in Control Agreement”);
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b.
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Performance
Award Agreement dated 4/04/2006 under the Duke Energy Corporation
1998 Long-Term Incentive Plan (“4/04/2006 Performance
Grant”);
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c.
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Performance
Award Agreement dated 7/01/2006 under the Duke Energy Corporation
1998 Long-Term Incentive Plan (“7/01/2006 Performance
Grant”);
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d.
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Phantom Stock
Award Agreement dated 2/28/2005 under the Duke Energy Corporation
1998 Long-Term Incentive Plan (“2/28/2005 Phantom
Grant”);
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e.
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Phantom Stock
Award Agreement dated 4/04/2006 under the Duke Energy Corporation
1998 Long-Term Incentive Plan (“4/04/2006 Phantom
Grant”);
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f.
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Phantom Stock
Award Agreement dated 7/01/2006 under the Duke Energy Corporation
1998 Long-Term Incentive Plan (“7/01/2006 Phantom
Grant”);
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g.
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Performance
Award Agreement dated 2/26/2008 under the Spectra Energy Corp 2007
Long-Term Incentive Plan (“2/26/2008 Performance
Grant”);
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h.
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Phantom Stock
Award Agreement dated 2/27/2007 under the Spectra Energy Corp 2007
Long-Term Incentive Plan (“2/27/2007 Phantom
Grant”);
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i.
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Phantom Stock
Award Agreement dated 2/26/2008 under the Spectra Energy Corp 2007
Long-Term Incentive Plan (“2/26/2008 Phantom
Grant”);
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j.
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Phantom Unit
Award Agreement dated 7/02/2007 under the Spectra Energy Partners
LP Long-Term Incentive Plan (“7/02/2007 Phantom
Grant”);
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k.
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Nonqualified
Stock Option Agreement dated 10/1/1999 under the Duke Energy
Corporation 1998 Long-Term Incentive Plan (“10/1/1999 Option
Grant”);
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Spectra Energy Corp, Spectra
Energy Transmission, LLC, and Spectra Energy Partners, LP and each
of their respective subsidiary entities and other direct or
indirect affiliates are referred to in this Agreement as the
“Spectra Group.”
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l.
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Nonqualified
Stock Option Agreement dated 12/20/1999 under the Duke Energy
Corporation 1998 Long-Term Incentive Plan (“12/20/1999 Option
Grant”);
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m.
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Nonqualified
Stock Option Agreement dated 12/20/2000 under the Duke Energy
Corporation 1998 Long-Term Incentive Plan (“12/20/2000 Option
Grant”);
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n.
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Nonqualified
Stock Option Agreement dated 12/19/2001 under the Duke Energy
Corporation 1998 Long-Term Incentive Plan (“12/19/2001 Option
Grant”);
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o.
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Nonqualified
Stock Option Agreement dated 1/17/2002 under the Duke Energy
Corporation 1998 Long-Term Incentive Plan (“1/17/2002 Option
Grant”);
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p.
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Nonqualified
Stock Option Agreement dated 2/25/2003 under the Duke Energy
Corporation 1998 Long-Term Incentive Plan (“2/25/2003 Option
Grant”);
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q.
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Nonqualified
Stock Option Agreement dated 2/27/2007 under the Spectra Energy
Corp 2007 Long-Term Incentive Plan (“2/27/2007 Option
Grant”).
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The parties agree that
Executive’s respective positions as an officer (including her
positions as President and Chief Executive Officer) or director of
the Spectra Group will terminate as of the Effective Date and the
Spectra Group desires to avail itself of the experience, sources of
information, advice and assistance available to or possessed by
Executive and to, in turn, have Executive undertake certain
transitional employment duties fully described below in this
Agreement. Executive shall not be entitled to any salary, other
form of compensation perquisites or other benefits after the
Effective Date, except as specifically provided for in this
Agreement.
The parties agree that the Agreement
recitals are true and accurate, and that Executive does not occupy
any offices or have rights to acquire, directly or indirectly, any
Common Stock or options to purchase Common Stock of the entities
constituting the Spectra Group, except as set forth in this
Agreement.
Therefore, in consideration of the
promises and mutual agreements set forth in this Agreement, the
receipt and sufficiency of which is hereby acknowledged by all
parties, the Spectra Group and Executive agree as
follows:
EXECUTIVE’S TERMINATION AS
OFFICER AND DIRECTOR & EMPLOYMENT
DURING TRANSITIONAL
TERM
1. Termination of Executive From
Officer and Director Positions. The Executive will be terminated from all
positions as an officer of the Spectra Group, including her
President and CEO position, effective as of the Effective Date.
Likewise, Executive will be terminated from all positions as a
director or chairman of the Spectra Group, as of the Effective
Date. The Executive will continue to be employed as a Senior
Advisor – SET for the Spectra Group from the Effective
Date through December 22, 2008 (the “ Termination
Date ,” and, the term being the “
Transitional Term ”), unless this Agreement is
earlier terminated under Paragraph 11 hereof. During the
Transitional Term, the Executive will be responsible for providing
transitional assistance to the Spectra Group, as described more
fully in Paragraph 2 hereof.
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2. Description of the
Transitional Employment Duties. Subject to the terms of this Agreement, the
Spectra Group will continue to employ Executive as a Senior
Advisor – SET on a full time basis and upon the request
of the CEO of Spectra Energy Corp to (i) advise and assist the
Spectra Group on all aspects of operations; and (ii) provide
other advice to the Spectra Group and offer assistance on other
matters as reasonably requested by the Spectra Group, including
attending panels, conferences and other professional meetings as
previously agreed upon between Executive and the Spectra Group
(everything in (i) and (ii) collectively, the “
Transitional Employment Duties ”). Executive
will use her reasonable efforts, skills, judgment, and abilities in
this capacity. The Executive will report directly to the CEO of
Spectra Energy Corp, and will be provided office space and
secretarial/administrative assistance by Spectra Group at a
mutually agreed location in Houston, Texas reasonably selected by
Spectra Group.
3. Transitional Term
Consideration. During the
Transitional Term, the Spectra Group shall continue to pay
Executive the same salary and benefits she received before the
Effective Date.
4. Expenses.
The Executive shall be entitled to
reimbursement of all reasonable and documented costs and expenses
incurred by Executive in performing the Transitional Employment
Duties on the same basis applied to other executive officers of
Spectra Group (including, without limitation, travel to and from
panels, conferences and other professional meetings). Such expenses
must be submitted to the Group Vice-President, Human Resources and
Support Services (“ VP/HR ”). The
Executive must obtain the VP/HR’s approval in advance for
expenses outside the Spectra Group’s customary
practices.
5. Limitations on the Spectra
Group’s Liability. By entering into this Agreement and agreeing to
employ the Executive for the Transitional Term, but subject to the
terms of this Agreement, the Spectra Group shall not be liable for
any damages, cost or claims of any kind caused by the dishonesty,
gross negligence or willful misconduct of Executive in the
performance of the Transitional Employment Duties or
Executive’s breach of this Agreement. Except as provided in
the preceding sentence of this Paragraph 5, Executive shall be
indemnified by the Company to the fullest extent permitted by
applicable law.
6. Executive’s Standard of
Care. Subject to the
other provisions of this Agreement, Executive shall perform her
duties under this Agreement with the same degree of care, skill and
prudence that would be customarily exercised by a Spectra Group
employee and for what she reasonably believes to be in the best
interest of the Spectra Group.
7. Confidentiality of Spectra
Group Information. The
Executive shall continue to abide by the Spectra Group’s
confidentiality policies throughout the Transitional Term. The
Executive will not at any time disclose to anyone, including,
without limitation, any person, firm, corporation, or other entity,
or publish, or use for any purpose, any Confidential Information
(as defined in this Paragraph), except as the Spectra Group directs
and authorizes. The Executive shall take all reasonable measures to
protect the secrecy of and avoid disclosure and unauthorized use of
the Confidential Information and agrees to immediately notify the
Spectra Group in the event of any unauthorized use or disclosure of
the Confidential Information. “Confidential
Information” includes, without limitation, all of the Spectra
Group’s technical and business information, which is of a
confidential, trade secret or proprietary character; lists of
customers; identity of customers; identity of prospective
customers; contract terms; bidding
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information and strategies; rates of return of
Spectra Group projects; pricing methods or information;
photographs; internal policies, procedures, communications and
reports; computer software; computer software methods and
documentation; electronically stored information; graphic designs;
hardware; the Spectra Group’s methods of operation; the
procedures, forms and techniques used in servicing accounts; and
other information or documents that the Spectra Group requires to
be maintained in confidence for the Spectra Group’s continued
business success. Confidential Information does not include any
information that is readily available to the public or, upon
reasonable investigation, is readily ascertainable in the public
domain.
8. Confidentiality of Spectra
Group Information – Post Termination.
The Executive further acknowledges
and agrees that all Confidential Information about the Spectra
Group that was previously provided in the course of employment or
through the Executive’s service for the Spectra Group and
Confidential Information that will be provided to her in the course
of the Transitional Term are and will continue to be the exclusive
property of the Spectra Group. The Executive agrees to keep all
Confidential Information in strict confidence, not disclosing any
Confidential Information to any third person except (i) as
consented to in writing by the CEO of Spectra Energy Corp, or
(ii) as required by law or judicial or regulatory process;
provided, however, that Executive shall not be obligated to keep in
confidence any information which has become generally available to
the public without any breach by Executive of this
Paragraph 8. If requested by the Spectra Group, Executive will
obtain from any third party to whom she discloses any Confidential
Information the written agreement (in form and substance
satisfactory to the Spectra Group in its sole discretion) of such
third party to keep such information confidential.
9. Protective
Covenants. The Executive
acknowledges that she has received valuable Confidential
Information during the course of her employment and that she will
continue to remain responsible to safeguard and protect Spectra
Group Confidential Information during the Transitional Term. As a
result, it is necessary to enter into the following protective
covenants, which are ancillary to the enforceable promises between
the Spectra Group and Executive in the other Paragraphs in this
Agreement:
(i) Non-Solicitation . The
Executive agrees that during (A) the Transitional Term and
(B) for a one-year period following the Transitional Term of
the Agreement (collectively, the “ Restricted
Period ”) Executive will not, directly or indirectly,
either individually or as a principal, partner, agent, consultant,
contractor, employee, or as a director or officer of any
corporation or association, or in any other manner or capacity
whatsoever, except on behalf of the Spectra Group, solicit
business, or attempt to solicit business, in products or services
competitive with products or services sold by the Spectra Group,
from any customer or client, or prospective customer or client,
with whom Executive had contact, solicited, or is aware and/or
should have been aware that the Spectra Group solicited or
contacted during the 12 months that immediately preceded the
execution of this Agreement or during the Term of the
Agreement.
(ii) Non-Competition . The
Executive also agrees that during the Restricted Period, Executive
will not within any of the markets in which the Spectra Group
performs services or, to the extent that Executive is aware (or
reasonably should have been aware) that Spectra Group has
formulated within the 12 months that immediately preceded the
execution of this Agreement, a plan to sell its services, without
the prior written consent of the Spectra Group, engage in or
contribute her knowledge to any employment, work, business, or
endeavor which is directly
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competitive with a product, process,
service, or development of the Spectra Group or with respect to
which Executive had access to the Spectra Group’s
Confidential Information, provided, however, that nothing herein
shall prohibit Executive from being a passive owner of not more
than 3% of the outstanding stock of any class of a corporation
which is publicly traded. During the Restricted Period, the
Executive may request in writing exceptions to this restriction
which shall be deemed approved by the Spectra Group if the Spectra
Group has not provided written disapproval within forty-five
(45) days of its receipt of such request. Nothing in this
Sub-Paragraph 9(ii) shall be construed to prohibit the Executive
being retained during the Restricted Period in a capacity as an
attorney licensed to practice law, or to restrict the Executive
providing advise and counsel in such capacity, in any jurisdiction
where such prohibition is contrary to law.
(iii) Non-Recruitment . The
Executive also agrees that during the Restricted Period, she will
not, directly or indirectly, hire, solicit, induce, recruit,
engage, go into business with, encourage to leave their employment
or contractor relationship with the Spectra Group, or otherwise
cease their employment or contractor relationship with the Spectra
Group, or otherwise contract for services with, any employee of the
Spectra Group.
(iv) Nature of the
Restrictions . The Executive agrees that the time, geographical
area, and scope of restrained activities for the restrictions in
Sub-Paragraphs 9(i)-(iii) of this Agreement are reasonable,
especially in light of the Spectra Group’s desire to protect
its Confidential Information. If a court or arbitrator concludes
that any time period, geographical area, or scope of restrained
activities specified in Sub-Paragraphs 9(i)-(iii) of this Agreement
is unenforceable, the court or arbitrator is vested with the
authority to reduce the time period, geographical area, and/or
scope of restrained activities, so that the restrictions may be
enforced to the fullest extent permitted by law. Additionally, if
Executive violates any of the restrictions contained in
Sub-Paragraphs 9(i)-(iii), the Restricted Period shall be suspended
and will not run in favor of the Executive from the time of the
commencement of any such violation until the time when the
Executive cures the violation to the Spectra Group’s
satisfaction.
(v) Equitable Relief and
Restoration . Executive agrees that the Spectra Group may
enforce this Agreement by obtaining a preliminary and permanent
injunction or any other appropriate equitable relief in any court
of competent jurisdiction. Executive acknowledges that the recovery
of damages will not be an adequate means to redress a breach of
this Agreement, and that nothing in this Sub-Paragraph 9(v) shall
prohibit the Spectra Group from pursuing any remedies in addition
to injunctive relief, including recovery of damages and/or any
forfeiture or repayment obligations provided in this
Agreement.
Executive also agrees that, in the
event she violates the provisions of Paragraphs 7 or 8, or
Sub-Paragraphs 9(i), 9(ii), or 9(iii) of this Agreement following
the payment or commencement of any payments in accordance with
Paragraph 13 of this Agreement, the Spectra Group will be
entitled to receive and the Executive will be obligated to pay the
Spectra Group the amount of one-million dollars ($1,000,000) (the
“ Restoration ”) from the total amount of
the Severance Payment, such amount representing a reasonable
forecast of the damages to be incurred by Spectra Group as a result
of the Executive’s breach of Paragraphs 7 or 8, of
Sub-Paragraphs 9(i), 9(ii) or 9(iii). Executive specifically
recognizes and affirms that the terms in Paragraphs 7 and 8, and
Sub-Paragraphs 9(i), 9(ii), and 9(iii) are material terms of this
Agreement, and Executive further agrees that should all or any part
or application of
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Paragraphs 7 or 8, or Sub-Paragraphs 9(i),
9(ii), or 9(iii) be held or found invalid or unenforceable for any
reason whatsoever by a court of competent jurisdiction or
arbitrator in any action between the Executive and the Spectra
Group, then the Spectra Group shall still be entitled to receive
the Restoration from Executive.
10. Agreement to Return Spectra
Group Property/Documents. At the end of the Transitional Term, Executive
agrees that: (i) she will not take with her, copy, alter,
destroy, or delete any Spectra Group files, documents or other
materials whether or not embodying or recording any Confidential
Information, including copies, without obtaining in advance the
written consent of an authorized Spectra Group representative; and
(ii) she will promptly return to the Spectra Group all
Confidential Information, documents, files, records and tapes
(written or electronically stored) that have been in her possession
or control regarding the Spectra Group, and she will not use or
disclose such materials in any way or in any format, including
written information in any form, information stored by electronic
means, and any and all copies of these materials. She further
agrees to return to the Spectra Group immediately all Spectra Group
property, including, without limitation, keys, equipment,
computer(s) and computer equipment, devices, cellular phones, other
telephonic equipment, credit cards, data, lists, information,
correspondence, notes, memos, reports, or other writings prepared
by the Spectra Group or herself on behalf of the Spectra Group. If
Executive so elects, Executive may alternatively notify Spectra
Group that she elects to purchase any such Spectra Group property
in her possession and Spectra Group will sell such Spectra Group
property, if practicable, to Executive at its fair market value as
determined by Spectra Group.
11. Termination.
Unless earlier terminated by
(i) the dissolution, winding-up or termination of any of the
entities constituting the Spectra Group or (ii) the
commencement by any regulatory agency or governmental authority
including, without limitation, the Securities and Exchange
Commission, of an enforcement or similar type of proceeding against
Executive, this Agreement will be automatically terminated on the
Termination Date. This Agreement may also be terminated by the
Spectra Group at any time during the Transitional Term for Cause
and by the Executive for “Good Reason.” “
Cause ” means (i) a material breach or
violation of this Agreement by Executive, unless cured to the
Spectra Group’s satisfaction within ten (10) business
days following written notice given to Executive by the Spectra
Group; (ii) the failure or refusal of Executive to perform
timely and fully in all material respects the Transitional
Employment Duties or to comply fully in all material respects with
her obligations under this Agreement, unless such default is cured
to the Spectra Group’s satisfaction within ten
(10) business days following written notice given to Executive
by the Spectra Group; (iii) conviction of or a plea of nolo
contendere or similar plea by Executive of a crime involving theft,
dishonesty or moral turpitude, or the entry of a court order or
administrative decree or order against the Executive, agreed or
otherwise, involving allegations of criminal or civil fraud;
(iv) Executive’s breach of the non-competition,
non-solicitation, or non-recruitment covenants in Paragraph 9
of this Agreement; or (v) Executive’s breach of her
confidentiality obligations in Paragraphs 7 or 8 of this
Agreement. “ Good Reason ” means a
material breach or violation of this Agreement by the Spectra
Group, unless cured to Executive’s satisfaction within ten
(10) business days following written notice given to the
Spectra Group by Executive. If the Executive breaches her
obligations under Paragraphs 7 or 8, or Sub-Paragraphs 9(i),
9(ii), or 9(iii) of this Agreement, she shall be obligated to pay
the Spectra Group in accordance with Sub-Paragraph 9(v). If this
Agreement is terminated by the Spectra Group without Cause, or if
Executive terminates this Agreement for Good Reason, then the
Spectra Group shall promptly
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pay Executive for any unpaid and accrued salary
and/or benefits in the time period specified by applicable state or
federal law. Finally, if the Spectra Group terminates Executive for
Cause or if Executive terminates her employment without Good
Reason, either during the Agreement Term or Transitional Term, then
Spectra Group will only be obligated to pay Executive any accrued
salary and benefits through the Cause or without Good Reason
termination date, and the Spectra Group will not be liable to pay
Executive any Cash Payment or other compensation as described in
Paragraphs 13 and 14 of this Agreement.
SEVERANCE AND RELEASE UPON
EXECUTIVE’S TERMINATION
12. Global Release of Claims Upon
Termination. Provided
that this Agreement is not earlier terminated pursuant to Paragraph
11, Executive agrees to execute a Global Release (“
Release ”) of the “Spectra Group Released
Parties,” in the form specified on the attached Exhibit A,
upon her termination from the Spectra Group in the time period
allotted by applicable state and federal law (the “
Consideration and Revocation Period ”), but not later
than by the end of the twenty-one (21) calendar day
consideration period set forth in Paragraph 5 of the Release. The
“Spectra Group Released Parties” are defined as Spectra
Energy Transmission, LLC, Spectra Energy Corp, and Spectra Energy
Partners, LP, and each of their respective subsidiaries,
predecessors, successors, parents, joint ventures, holding
companies, subsidiaries, divisions, affiliates, assigns,
partnerships, agents, directors, officers, employees, consultants,
committees, employee benefit committees, fiduciaries,
representatives, attorneys, and all persons and entities acting by,
through, under or in concert or in any such capacity with any of
them.
13. Termination of Other
Agreements and Severance Payment. Executive agrees and acknowledges that except as
specifically provided in this Agreement, any rights she may have to
any payments, benefits, or other perquisites of any kind whatsoever
under the terminated
