TRANSITIONAL EMPLOYMENT AND SEPARATION AGREEMENT

Exhibit 10.1

Execution Copy

TRANSITIONAL EMPLOYMENT AND SEPARATION AGREEMENT

This Transitional Employment and Separation Agreement (“ Agreement ”) is made and entered into as of November 4, 2008 (“ Effective Date ”) between Spectra Energy Corp (together with its successors and assigns, the “ Company ”) and William S. Garner, Jr. (“ Executive ”).

WHEREAS , Executive currently serves as the General Counsel and Corporate Secretary of the Company and serves in various other capacities for the Company, Spectra Energy Transmission, LLC, Spectra Energy Partners, LP, and their respective subsidiaries and other direct or indirect affiliates (collectively, the “ Spectra Group ”);

WHEREAS , Executive and certain of the entities in the Spectra Group are parties to the following agreements (collectively, the “ Award Agreements ,” and the awards granted under the Award Agreements, the “ Awards ”):

WHEREAS , the Company and Executive (each a “ Party ”, and together, the “ Parties ”) agree that Executive’s employment as an officer (including his positions as General Counsel and Corporate Secretary) and a director of the entities that constitute 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.

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NOW 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 Parties agree as follows:

1. Termination of Executive From Officer and Director Positions; Employment as Senior Advisor . Executive will be terminated from each position he holds in any of the entities within the Spectra Group, including but not limited to each position as an officer, director or employee of any such entity, and including but not limited to his role as General Counsel and Corporate Secretary of the Company, effective, in each case, as of the Effective Date. Notwithstanding the foregoing, Executive will continue to be employed as a Senior Advisor for the Spectra Group from the period commencing on the Effective Date and ending on the earlier of December 22, 2008, and the date that such employment is terminated in accordance with Paragraph 11 below (such end date, the “ Termination Date ,” and such period, the “ Transitional Term ”), in accordance with the terms and conditions set forth in this Agreement.

2. Description of the Transitional Employment Duties . During the Transitional Term, Executive shall (a) be available to devote to the Spectra Group business time at least equal to 50%, but shall not devote less than 20%, of the average amount of business time he devoted to the Spectra Group from the commencement of his employment with the Spectra Group to the Effective Date and (b) upon the request of the Chief Executive Officer (the “ CEO ”) of the Company, advise and assist the Spectra Group on all aspects of operations, and provide other advice to the Spectra Group and offer assistance on other matters, as reasonably requested by the Spectra Group (the “ Transitional Employment Duties ”). Executive will use his reasonable efforts, skills, judgment, and abilities in this capacity. During the Transitional Term, Executive

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will report directly to the CEO of the Company. Notwithstanding the foregoing (but subject to the minimum requirements set forth in clause (b) above), Executive may secure and commence employment with another entity during the Transitional Term, so long as the duties and responsibilities in which Executive engages in the course of such employment during the Transitional Term does not constitute a breach by Executive of any obligation arising under or preserved by this Agreement.

3. Transitional Term Consideration . During the Transitional Term, the Company shall continue to pay Executive an annualized base salary equal to $450,000, and Executive shall continue to receive, as a continuing senior-level employee, any and all other or additional benefits that Executive received immediately prior to the Effective Date under, pursuant to, and in accordance with the applicable terms and limitations of any applicable plan, program, agreement or arrangement of any member of the Spectra Group (collectively, “ Company Arrangements ”).

4. Expenses . Executive shall be entitled to prompt reimbursement of all reasonable and documented costs and expenses incurred by Executive in performing the Transitional Employment Duties on the same basis applied to senior executive officers of the Spectra Group. Such expenses must be submitted to the Company’s General Counsel (or individual serving in such capacity on an interim basis) (the “ GC ”). The Executive must obtain the GC’s approval in advance for expenses outside the Spectra Group’s customary practices.

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5. Indemnification; Limitations on the Spectra Group’s Liability .

(a) The Company agrees that if Executive is made a party to, is threatened to be made a party to, receives any legal process in, or receives any discovery request or request for information in connection with, any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”) by reason of the fact that he is or was a director, officer, employee, consultant or agent of any member of the Spectra Group, or is or was serving at the request of, or on behalf of, any member of the Spectra Group as a director, officer, member, employee, consultant or agent of another corporation, limited liability corporation, partnership, joint venture, trust or other entity, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is Executive’s alleged action in an official capacity while serving as a director, officer, member, employee, consultant or agent of the Spectra Group, or if any claim is made against Executive that arises out of or relates to his services in any of the foregoing capacities, then Executive shall promptly be indemnified and held harmless by the Company to the fullest extent permitted or authorized by the Company’s corporate governance documents or, agreements and policies that are generally applicable to the Company’s former officer and directors, against any and all costs, expenses, liabilities and losses (including, without limitation, attorneys’ fees reasonably incurred, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement and any reasonable cost and fees incurred in enforcing his rights to indemnification, contribution, advancement of expenses or coverage under directors’ and officers’ liability insurance) incurred or suffered by Executive in connection therewith, and such indemnification shall continue as to Executive even though he has ceased to be a director, officer, member, employee, consultant or agent of any member of the Spectra Group, and shall inure to the benefit of Executive’s heirs, executors and administrators. Executive shall be entitled to advancement of any and all costs and expenses

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(including, without limitation, reasonable attorneys’ fees and other professional fees and charges) incurred by him in connection with any such Proceeding or claim, or in connection with seeking to enforce his rights under this Sub-Paragraph 5(a), within 30 days after receipt by the Company of a written request for such advance and appropriate documentation of these costs and expenses. Any such request shall include an undertaking by Executive to repay the amount of such advance if it shall ultimately be determined by a non-reviewable decision of a court or arbitrator, as applicable, that he is not entitled to be indemnified against such costs and expenses.

(b) Following the Effective Date, a directors’ and officers’ liability insurance policy (or policies) shall be kept in place covering Executive with respect to any claim that arises in connection with Executive’s actions in an official capacity while serving as a director or officer of the Spectra Group (i) for a period of time following the Effective Date that is, and (ii) at a level and on terms and conditions that are, no less favorable to him in any material respect than the coverage (if any) then enjoyed by any of the Company’s former directors or senior executives.

(c) Notwithstanding the foregoing, the Company shall not be liable to indemnify Executive under Sub-Paragraph 5(a) for any damages, cost or claims of any kind caused by the gross negligence or willful misconduct of Executive in the performance of the Transitional Employment Duties or his other duties under this Agreement. Notwithstanding the foregoing, Executive shall be and remain entitled to the advancement of any and all costs and expenses as described in Sub-Paragraph 5(a) above, subject only to the undertaking described above.

6. Executive’s Standard of Care . Subject to the other provisions of this Agreement, Executive shall perform his duties under this Agreement with the same degree of care, skill and prudence that would be customarily exercised by an employee of the Company and for what he reasonably believes to be the interests of the Spectra Group.

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7. Confidentiality of Spectra Group Information . Executive shall continue to abide by the Spectra Group’s confidentiality policies throughout the Transitional Term. 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 Company directs and authorizes. 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 Company in the event of any unauthorized use or disclosure of the Confidential Information about which he becomes aware. “ 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 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; all information regarding Spectra Group legal matters, including, without limitation, all Spectra Group attorney-client privileged information, Spectra Group attorney work product and investigative information, and all Spectra Group legal confidential information; and other information or documents that the Spectra Group requires to be maintained in confidence for the Spectra Group’s continued business success; provided, however, that Executive shall be permitted to use and disclose Confidential Information (a) in

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connection with his performing services for the Spectra Group, (b) to the extent required by law, (c) in response to a judicial or regulatory order, process or subpoena, (d) to the extent necessary to enforce his rights under this Agreement, or (e) with the written consent of an authorized representative of the Company. Confidential Information does not include any information that has become generally available to the public or, upon reasonable investigation, is readily ascertainable in the public domain, without any breach by Executive of this Paragraph 7.

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 him 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 third person except (a) in connection with his performing services for the Spectra Group, (b) to the extent required by law, (c) in response to a judicial or regulatory order, process or subpoena, (d) to the extent necessary to enforce his rights under this Agreement, or (e) with the written consent of an authorized representative of the Company; 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. Executive further acknowledges and agrees that the prohibition against disclosure of Confidential Information described in Paragraph 7 above shall continue to apply following the end of the Transitional Term.

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9. Protective Covenants . Executive acknowledges that he has received valuable Confidential Information during the course of his employment and that he will continue to remain responsible to safeguard and protect the 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:

(a) Non-Solicitation . Executive agrees that, during the Transitional Term and for the one-year period immediately following the Transitional Term (together, 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 that compete materially with products sold or services performed 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 reasonably have been aware that the Spectra Group solicited or contacted, in each case during the 12 months that immediately preceded the Termination Date.

(b) Non-Competition . Executive also agrees that during the Restricted Period, Executive will not, within any of the markets in which the Spectra Group sells products or performs services or has an established plan (about which Executive is aware and/or should reasonably have been aware) to sell products or perform services, without the prior written consent of the Spectra Group, become employed by, or engaged with (whether as a director, officer, partner, agent, consultant or similar position, other than as a non-employee attorney), any entity of any

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kind or nature that performs services or sells products that compete materially with products and services provided by the Spectra Group; provided, however, that nothing herein shall prohibit Executive from being a passive owner of not more than 2% 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 Company if the Company has not provided written disapproval within forty-five (45) days of its receipt of such request. Nothing in this Sub-Paragraph 9(b) shall be construed to prohibit the Executive from being retained during the Restricted Period in a capacity as an attorney licensed to practice law, or to restrict the Executive from providing advice and counsel in such capacity, in any jurisdiction where such prohibition or restriction is barred by applicable disciplinary rules, cannons of ethics, or the like.

(c) Non-Recruitment . Executive also agrees that during the Restricted Period, he will not, directly or indirectly, (i) solicit, induce, encourage or recruit any employee or independent contractor of any member of the Spectra Group to terminate his or her employment by, or engagement with, such member of the Spectra Group or (ii) hire or engage any employee or independent contractor of any member of the Spectra Group to perform services for an entity outside the Spectra Group in lieu of performing services for the Spectra Group.

(d) Nature of the Restrictions . Executive agrees that the time, geographical area, and scope of restrained activities for the restrictions in Sub-Paragraphs 9(a), (b) and (c) 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(a), (b) and (c) of this

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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(a), (b) and (c), the Restricted Period shall be suspended with respect to the restriction that has been violated and will not run in favor of Executive from the time of the commencement of any such violation until the time when Executive cures the violation to the Spectra Group’s satisfaction.

(e) Equitable Relief . Executive agrees that the Spectra Group may enforce the restrictions in this Paragraph 9 by seeking a preliminary and permanent injunction or any other appropriate equitable relief in accordance with Sub-Paragraph 21(j). Executive acknowledges that the recovery of damages may not be an adequate means to redress a breach of this Agreement, and that nothing in this Sub-Paragraph 9(e) 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.

(f) Restoration . Executive also agrees that, in the event he materially violates the provisions of Paragraphs 7 or 8, or violates Sub-Paragraphs 9(a), (b) or (c), of this Agreement following the payment or commencement of any payments in accordance with Paragraph 13 of this Agreement, the Company will be entitled to receive, and Executive will be obligated to pay the Company, the amount of three hundred thousand dollars ($300,000) (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 any such violation. Executive specifically recognizes and affirms that the terms in Paragraphs 7 and 8, and Sub-Paragraphs 9(a), (b) and (c), are necessary for the protection of the Spectra Group.

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10. Agreement to Return Spectra Group Property/Documents . At the end of the Transitional Term, Executive agrees that: (a) he will not take with him, copy or alter any Spectra Group files, documents or other materials whether or not embodying or recording any Confidential Information, without obtaining in advance the written consent of an authorized Spectra Group representative; and (b) he will promptly return to the Spectra Group all Confidential Information, documents, files and records regarding the Spectra Group that is in his possession or control in hard-copy format, and will delete or destroy all such information that is in his possession or control and electronically stored. He further agrees to return to the Spectra Group, at the end of the Transitional Term, all Spectra Group property that is in his possession or control, 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 himself on behalf of the Spectra Group; provided, however, that the foregoing shall not apply to (i) information concerning Executive’s compensation, benefits or obligations or (ii) his personal rolodex (or equivalent) or other personal items. If Executive so elects, Executive may alternatively notify Spectra Group that he elects to purchase any such Spectra Group property in his possession and Spectra Group will sell such Spectra Group property, if practicable, to Executive at its fair market value as determined by Spectra Group.

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11. Termination .

(a) Executive’s employment with the Company, and the Transitional Term, (i) may be terminated at any time during the Transitional Term by the Spectra Group with or without Cause or by the Executive with or without “Good Reason” and (ii) will terminate upon Executive’s death.

(b) “ Cause ” means (i) a material breach 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 use his best reasonable efforts to perform timely the Transitional Employment Duties or to comply with his obligations under this Agreement, unless such failure or refusal 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 to, 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; (v) Executive’s willful and material breach of his confidentiality obligations in Paragraphs 7 or 8 of this Agreement; or (vi) 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 relating to his employment by the Company and based on alleged willful and material misconduct.

(c) “ Good Reason ” means a material breach of this Agreement, or of rights arising under or preserved by it, by any member of the Spectra Group, unless cured to Executive’s satisfaction within ten (10) business days following written notice given to the Company by Executive.

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