Amendment to Employment Agreement


Amended and Restated Change in Control Agreement


Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is entered into on the 4th day of April, 2006, by and between James E. Rogers (the “Employee”) and Duke Energy Corporation, a Delaware corporation, to be effective as of April 3, 2006.

Recitals

WHEREAS, the Employee previously served as Chairman of the Board, President and Chief Executive Officer of Cinergy Corp. (“Cinergy”);

WHEREAS, Cinergy entered into an Agreement and Plan of Merger by and among Deer Holding Corp., a Delaware corporation, Duke Energy Corporation, a North Carolina corporation (“Old Duke”), Cinergy, Deer Acquisition Corp. and Cougar Acquisition Corp., dated as of May 8, 2005 (as amended, the “Merger Agreement”);

WHEREAS, Deer Holding Corp. has been renamed Duke Energy Corporation (Deer Holding Corp. as so renamed, “Duke Energy”);

WHEREAS, pursuant to the Merger Agreement, effective as of the “Effective Time” (as such term is defined in the Merger Agreement, the “Effective Time”), Cinergy and Old Duke became wholly-owned subsidiaries of Duke Energy;

WHEREAS, Duke Energy desires to employ the Employee to serve as its President and Chief Executive Officer effective as of the Effective Time, and the Employee desires to accept that position with Duke Energy; and

WHEREAS, the Effective Time occurred on April 3, 2006 (the “Effective Date”).

Agreement

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

1. Employment. Duke Energy hereby employs the Employee, and the Employee hereby accepts such employment, effective as of the Effective Time, upon the terms and conditions set forth herein. Except as otherwise expressly provided herein, this Agreement sets forth the terms and conditions of the Employee’s employment by Duke Energy, represents the entire agreement of the parties with respect to that subject, and supersedes all prior understandings and agreements with respect to that subject. Without limiting the foregoing sentence, effective as of the Effective Time, this Agreement supersedes in its entirety the Employment Agreement by and between Cinergy and the Employee dated as of February 4, 2004 (the “Cinergy Employment Agreement”), and Exhibit D to the Merger Agreement, again in each case except as otherwise expressly provided herein.


2. Position and Duties.

(a) Duties. The Employee shall be employed by Duke Energy as President and Chief Executive Officer in accordance with Sections 4.04 and 4.05 of the by-laws of Duke Energy as in effect at the Effective Time, as amended. The Employee shall be responsible for the general management of the affairs of Duke Energy and shall perform all duties incidental to such positions which may be required by law and all such other duties as are properly required by the Board of Directors of Duke Energy (the “Board”). The Employee shall report directly to the Board. For administrative purposes, Duke Energy may designate the Employee as being employed by one or more of its subsidiaries.

(b) Engaging in Other Employment. While employed by Duke Energy, the Employee shall devote his full time and attention to Duke Energy and its subsidiaries and shall not be employed by any other person or entity. The Employee may reasonably participate as a member in community, civic, or similar organizations and may pursue personal investments, so long as such activities do not interfere with the performance of the Employee’s responsibilities as an employee in accordance with this Agreement, provided that the Employee may serve on corporate boards (other than the Board) with the approval of the Board, which approval shall not be unreasonably withheld, and provided further that the Employee’s service described on Exhibit A hereto is hereby approved as of the Effective Date.

(c) Loyal and Conscientious Performance. The Employee shall act at all times in compliance with the policies, rules and decisions adopted from time-to-time by Duke Energy, its Board and any employing subsidiaries and perform all the duties and obligations required of him by this Agreement in a loyal and conscientious manner.

(d) Location. The Employee’s principal office shall be at the principal executive offices of Duke Energy in Charlotte, North Carolina. Except for required business travel to an extent substantially consistent with the business travel obligations of senior Duke Energy executives, the Employee will not be required to relocate to a new principal place of business that is more than fifty (50) miles from such location.

3. Term of Employment. The term of the Employee’s employment pursuant to this Agreement shall commence at the Effective Time and end on the third anniversary of the Effective Date, unless terminated earlier pursuant to the provisions of this Agreement.

4. Salary; Bonus. The Employee shall not be paid a base salary, nor shall the Employee participate in the Duke Energy Corporation Executive Short-Term Incentive Plan (as it may be amended, or any successor thereto, the “STI Plan”) or any other annual cash bonus program. The Employee’s compensation will be primarily through the equity awards specified in Section 5 below.

5. Equity Awards. Duke Energy will cause equity awards (the “LTIP Awards”) to be made to the Employee as provided in this Section 5 to be evidenced by award agreements (each, an

 

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Award Agreement”) with additional customary terms not otherwise inconsistent with the terms of this Section 5. The LTIP awards shall be made effective as of the first day legally permissible on or after the Effective Date (the “Grant Date”).

(a) Option. Duke Energy will grant to the Employee a nonqualified stock option (the “Option”) to purchase 1,877,646 shares of Duke Energy common stock. The exercise price of the Option will be the greater of the closing price of Duke Energy common stock on the Grant Date or the trading day most recently preceding the Grant Date. The normal expiration date of the Option will be the tenth anniversary of the Grant Date. The Option will not be vested at the Grant Date, but, except as otherwise provided herein, the Option will become ratably vested and exercisable on the three successive anniversaries of the Effective Date, as follows:

 

 

 

 

 

 

Date

  

Becoming Vested

  

Total Vested

First anniversary

  

625,882

  

625,882

Second anniversary

  

625,882

  

1,251,764

Third anniversary

  

625,882

  

1,877,646

Except as otherwise provided herein, the Employee may not dispose of any shares of Duke Energy Common Stock acquired upon the exercise of the Option until the earlier of the third anniversary of the Effective Date or the termination of the Employee’s employment with Duke Energy.

(b) Phantom Stock. Duke Energy will grant to the Employee an award of phantom stock units (“Phantom Stock Units”) with respect to 258,180 shares of Duke Energy common stock. One-twelfth (1/12th) of the Phantom Stock Units will be vested as of the Grant Date. Except as otherwise provided herein, the remaining Phantom Stock Units will vest quarterly beginning July 1, 2006, as follows:

 

 

 

 

Date

  

Units

Becoming Vested

July 1, 2006

  

21,515

Quarterly, with respect to each of ten calendar quarters, beginning with October 1, 2006

  

21,515

Vested Phantom Stock Units will be paid to the Employee in the form of shares of Duke Energy common stock (with each Phantom Stock Unit corresponding to one share of Duke Energy common stock) on or as soon as administratively feasible after the third anniversary of the Effective Date or, if earlier, as soon as administratively feasible after the termination of the Employee’s employment with Duke Energy, but not later than the last business day of the month following the month in which his employment with Duke Energy terminates and, in any event, no earlier or later than the applicable date or dates under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), in order to avoid the imposition of any taxation under such Code section.

 

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(c) Performance Shares. Duke Energy will grant to the Employee a performance share award (a “Performance Share Award”) with respect to 322,800 shares of Duke Energy common stock. Each performance share represents the right to receive, conditioned upon vesting, one share of Duke Energy common stock. The Performance Share Award will not be vested at the Grant Date, but, except as otherwise provided herein, the Performance Share Award will vest as follows with respect to the various performance periods if the performance goals established by the Compensation Committee of the Board (the “Compensation Committee”) or other appropriate committee of the Board with respect to such period shall have been achieved:

 

 

 

 

Performance Period

  

Shares Vesting

Period beginning on the Grant Date and ending December 31, 2006

  

107,600

Calendar year ending December 31, 2007

  

107,600

Calendar year ending December 31, 2008

  

107,600

The Corporate Governance Committee and/or other appropriate committee of the Board shall establish performance goals for the Employee in respect of the Performance Share Award for each respective performance period, and the Performance Share Award will not vest unless and to the extent such goals are achieved (provided that vesting can occur at less than (but not more than) the target levels set forth above for any specified performance period as determined by the Compensation Committee and vesting shall be interpolated for performance above the threshold vesting level and below the target level set forth above). Vesting will occur only once the Compensation Committee determines that the performance goals have been met (provided that the determination of whether the performance goals in respect of any performance period have been met shall be made not later than the first March 15 following the end of the performance period). To the extent the performance goals are not met, the Performance Share Award will be forfeited and will cease to be outstanding. With respect to each of the respective performance periods, the performance goals shall be weighted as provided in the STI Plan (currently 80% on Duke Energy financial performance goals and 20% on individual performance goals), provided that the extent of goal attainment for any performance period shall be determined in the aggregate. The Duke Energy financial performance goals for any performance period shall be those established under the STI Plan. Vested Performance Share Award units will be paid to the Employee in the form of shares of Duke Energy common stock (with each Performance Share Award unit corresponding to one share of Duke Energy common stock) on or as soon as administratively feasible after the third anniversary of the Effective Date or, if earlier, as soon as administratively feasible after the termination of the Employee’s employment with Duke Energy, but not later than the last business day of the month following the month in which his employment with Duke Energy terminates and, in any event, no earlier or later than the applicable date or dates under Section 409A of the Code in order to avoid the imposition of any taxation under such Code section.

(d) Dividend Equivalents. Duke Energy will grant to the Employee dividend equivalent rights with respect to the Phantom Stock Award and the Performance Share Award for

 

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all periods while such Awards remain outstanding. Each dividend equivalent right represents the right to receive fully vested cash payments, at the time that cash dividends are paid on Duke Energy common stock, in an amount equivalent to the cash dividend paid on the number of shares of Duke Energy common stock represented by the shares of Duke Energy common stock underlying Phantom Stock Units and Performance Share Award units while such awards remain outstanding (i.e., have not been forfeited) but unpaid.

6. Fringe Benefits. The Employee shall be entitled to no less than five weeks of vacation annually, to be taken in accordance with Duke Energy’s policies, with no diminution in compensation. The Employee and his eligible dependents shall also be entitled to participate in Duke Energy’s or its affiliates’ medical and dental health care plans to the extent such plans are available generally to other similarly situated senior executives of Duke Energy and their eligible dependents (provided that the employee-paid portion of any premium contributions required of the Employee shall be made in any event on a post-tax rather than a pre-tax basis). The Employee shall also be entitled to, at the Employee’s election on an annual basis, either participation in Duke Energy’s Executive Physicals Program or an annual physical to be performed at the Mayo Clinic by a physician of the Employee’s choosing. Except for the foregoing, and except as expressly set forth elsewhere in this Agreement, the Employee will not be entitled to any other retirement, health, or welfare benefits, or to participation in, or the accrual of benefits under, any other retirement, health, or welfare benefit plan, practice, policy, or program of Duke Energy or any of its affiliates. Except as specifically set forth in this Agreement, the Employee shall not be entitled to any perquisite or fringe benefit, such as company automobiles, automobile allowances, and club memberships. The Employee shall be reimbursed for ordinary and reasonable expenses specifically including but not limited to those associated with entertainment and travel in accordance with Duke Energy policies and procedures. To the extent the Employee incurs ordinary and reasonable expenses associated with his spouse accompanying him on business travel, and/or to the extent such travel is treated by the taxing authorities as a taxable personal benefit to the Employee or his spouse, Duke Energy will reimburse the Employee for those expenses and will also pay to the Employee a tax gross-up payment in an amount sufficient to hold him harmless from any federal, state and local income and employment taxes due in respect of such taxable personal benefit and related gross-up payment. Notwithstanding anything in this Section 6 to the contrary, Duke Energy acknowledges that the Employee has previously been employed by Cinergy or its predecessor or affiliated entities, and by virtue of such previous employment he is entitled to benefits under various plans and agreements of Cinergy or its affiliates (exclusive of the Cinergy Employment Agreement or Exhibit D to the Merger Agreement). Duke Energy and the Employee agree that the Employee’s rights to such benefits will be unaffected - neither enhanced nor diminished - as a result of his employment by Duke Energy or its affiliates following the Effective Time. Without limiting the generality of the foregoing, Duke Energy and the Employee agree that his employment under this Agreement shall not be deemed or counted as service with Cinergy or any affiliate (as determined immediately before the Effective Time) or predecessor entity for any purpose, including the determination of retirement dates, under such plans and agreements.

7. Use of Duke Energy Aircraft. Duke Energy desires to provide for the security of the Employee during his travels, and accordingly, whenever feasible, Duke Energy will require the Employee to use Duke Energy aircraft for his business travel. The Employee will also be permitted

 

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to use Duke Energy aircraft for his personal travel within North America. The Employee’s access to such aircraft for personal travel will be subject to availability in light of the use of Duke Energy aircraft for other Duke Energy business. The Employee shall reimburse Duke Energy for the cost of any such personal travel in accordance with Duke Energy’s standard rates and reimbursement policies as in effect from time to time, and, to the extent that the provision of such aircraft is treated by the taxing authorities as a taxable personal benefit to the Employee, the Employee will be responsible for the payment of any taxes on such income, including making payments to Duke Energy to fund withholding obligations as described in Section 10 hereof.

8. Certain Financial Planning and Other Expenses. Duke Energy will reimburse the Employee for the reasonable cost of transitional financial and tax planning and advisory services incurred through April 15, 2007 (or, if later the date of timely filing of the Employee’s individual income tax return for 2006), and will also pay to the Employee a tax gross-up payment in an amount sufficient to hold him harmless from any federal, state and local income and employment taxes due in respect of such reimbursement and related gross-up payment. Duke Energy also will reimburse the Employee for the reasonable professional fees incurred by him incident to the negotiation, preparation and execution of this Agreement, but without provision for any tax gross-up payment.

9. Relocation Payments. The Employee’s employment hereunder requires that he relocate his principal residence to Charlotte, North Carolina. To compensate the Employee for the costs associated with such relocation, Duke Energy will reimburse the Employee for costs incurred on account of such relocation in accordance with the Cinergy relocations policies and procedures or, if more favorable, the Duke Energy relocation policies and procedures, as in effect with respect to other similarly situated senior executives of Cinergy from time to time.

10. Withholding. Duke Energy may effect withholdings, from the payments due to the Employee, for the payment of taxes and other lawful withholdings, in accordance with applicable law, and to pay contributions required with respect to the participation of the Employee and any eligible dependents in Duke Energy’s medical and dental health care plans. If circumstances arise in which such withholding is required on account of any compensation or benefits (including, without limitation, upon the payment of any compensation or benefits pursuant to Sections 5, 6, 7, 8 and 9), at a time when there are not cash payments being made to the Employee from which such withholding obligations can be satisfied, the Employee will deliver to Duke Energy, in advance, amounts sufficient to fund such withholding or contributions obligations; provided that, in satisfaction of any tax withholding requirement that may apply in respect of the delivery or vesting of shares of Duke Energy common stock pursuant to Section 5 hereof, the Employee at his election may require Duke Energy to withhold from any shares of Duke Energy common stock that otherwise would become vested or deliverable pursuant to Section 5 hereof shares with a fair market value (determined as of the date delivery or vesting otherwise would be made or occur) equal to the minimum amount of tax required to be withheld in respect of such vesting or delivery.

11. Confidentiality; Privileged Information.

(a) The Employee shall not, at any time, use (other than in the ordinary course of and for the purpose of fulfilling his duties as an employee of Duke Energy), divulge or otherwise

 

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disclose, directly or indirectly, any confidential and proprietary information (including without limitation any customer or prospect list, supplier list, acquisition or merger target, business plan or strategy, data, records, financial information or other trade secrets) concerning the business, policies or operations of Duke Energy or its affiliates that the Employee may have learned or become aware of at any time on or prior to the date hereof or during the term of the Employee’s employment by Duke Energy.

(b) The Employee further acknowledges and agrees that all “Company Materials,” which include, but are not limited to, computers, computer software, computer disks, tapes, printouts, source, HTML and other code, flowcharts, schematics, designs, graphics, drawings, photographs, charts, graphs, notebooks, customer lists, sound recordings, other tangible or intangible manifestation of content, and all other documents whether printed, typewritten, handwritten, electronic, or stored on computer disks, tapes, hard drives, or any other tangible medium, as well as samples, prototypes, models, products and the like, shall be the exclusive property of Duke Energy and, upon termination of the Employee’s employment with Duke Energy (or, in the event that the Employee continues as a director of Duke Energy, upon his ceasing to be a director of Duke Energy), or upon the request of Duke Energy, all Company Materials, including all copies thereof, as well as all other property of Duke Energy then in the Employee’s possession or control, shall be returned to Duke Energy. For purposes of this Section 11, “Company Materials” shall include all such materials of Duke Energy’s subsidiaries.

(c) The Employee acknowledges that the Company Materials may contain information that is confidential and subject to the attorney-client privilege of Duke Energy or its subsidiaries or otherwise protected by attorney work product immunity. Except as required by law, the Employee agrees not to disclose to any person (other than in-house or outside counsel for Duke Energy and its subsidiaries) the content or substance of any conversations or discussions that the Employee may have or may have had at any time, whether during his employment hereunder or otherwise. In addition, the Employee agrees that he will, if and to the extent directed by the general counsel of Duke Energy, cooperate fully with in-house or outside counsel for Duke Energy and its subsidiaries in connection with any investigation, litigation or other matter in which such counsel represents Duke Energy or its subsidiaries and acknowledges that his communications with such counsel will be subject to Duke Energy’s or its subsidiaries’ attorney-client privilege.

(d) The Employee acknowledges that these restrictions are reasonable and necessary to protect Duke Energy’s business and goodwill, and that the obligations under this Section 11 shall survive any termination of his employment. The Employee acknowledges that if any of these restrictions or obligations are found by a court having jurisdiction to be unreasonable or overly broad or otherwise unenforceable, he and Duke Energy agree that the restrictions or obligations shall be modified by the court so as to be reasonable and enforceable and if so modified shall be fully enforced.

12. Termination.

(a) In General. Notwithstanding anything to the contrary contained herein, the Employee’s employment may be terminated prior to the end of the term specified in Section 3 as follows:

(i) by the Employee, by resigning, with 90 days’ notice;

 

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(ii) automatically, upon the death of the Employee;

(iii) by Duke Energy upon 90 days’ notice.

Upon any termination, the Employee will be entitled to compensation, if any, accrued or payable as of the date of termination.

(b) Certain Terminations. The Employee shall be entitled to certain special severance payments and benefits (in addition to the provision made in Section 12(a), as applicable), as follows:

(i) If the Employee’s employment is terminated before the second anniversary of the Effective Date by Duke Energy without “Cause” or by the Employee with “Good Reason” (as those terms are defined in Exhibit B hereto):

(A) the Employee shall be entitled to the payments and benefits to which he would have been entitled under Section 5a(iii) of the Cinergy Employment Agreement, without interest, had the Employee’s employment been terminated immediately following the Effective Time, except that:

(I) No Accrued Obligations shall be payable;

(II) There shall be no additional vesting or age or service credit provided under Section 5(a)(iii)(3) of the Cinergy Employment Agreement; and

(III) The payments otherwise required under Section 5a(iii)(7) of the Cinergy Employment Agreement (relating to country club annual dues and assessments) shall not be provided; and

(B) a portion of each LTIP Award (to the extent then not already vested) shall vest immediately (in the case of the Performance Share Award, based on the target level of performance), such portion to be equal to (I) the number of days elapsed at the time of termination (inclusive) in the vesting period not yet concluded at the time of termination divided by (II) the number of days in the vesting period not yet concluded at the time of termination, and all vested Options (including those that vest pursuant to the operation of this subsection (b)(i)(B)) will remain exercisable for the full duration of their ten-year term.

 

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(ii) If the Employee’s employment is terminated on or after the second anniversary of the Effective Date but before the third anniversary of the Effective Date by Duke Energy without “Cause” or by the Employee with “Good Reason” (as those terms are defined in Exhibit B hereto):

(A) the Employee shall be entitled to the payments and benefits to which he would have been entitled under Section 5a(ii) of the Cinergy Employment Agreement, without interest, had the Employee’s employment been terminated immediately following the Effective Time (but determined as if no “Change in Control” or “Potential Change in Control” had occurred within the meaning of the Cinergy Employment Agreement), except that:

(I) No Accrued Obligations shall be payable;

(II) The payment otherwise required under Section 5a(ii)(2) of the Cinergy Employment Agreement (relating the Value Creation Plan under the Cinergy Corp. 1996 Long-Term Incentive Compensation Plan) shall not be provided; and

(III) The medical and dental benefits otherwise required under Section 5a(ii)(3) of the Cinergy Employment Agreement shall be based on the medical and welfare benefit plans, practices, programs or policies of Duke Energy as applicable to other senior executives of Duke Energy, subject to the otherwise applicable terms and conditions of Section 5a(ii)(3)(A), (B) and (C) of the Cinergy Employment Agreement; and

(B) a portion of each LTIP Award (to the extent then not already vested) shall vest immediately (in the case of the Performance Share Award, based on the target level of performance), such portion to be equal to (I) the number of days elapsed at the time of termination (inclusive) in the vesting period not yet concluded at the time of termination divided by (II) the number of days in the vesting period not yet concluded at the time of termination, provided that if such a termination of employment occurs after December 31, 2008, then the Performance Share Award shall be payable (if at all) as determined in accordance with its terms without regard to the termination of employment under this subsection (b)(ii), and all vested Options (including those that vest pursuant to the operation of this subsection (b)(ii)(B)) will remain exercisable for the full duration of their ten-year term.

(iii) If the Employee’s employment is terminated for death or disability due to physical or mental illness or injury that precludes the Employee from performing any job for which he is qualified and able to perform based upon his education, training or experience, all outstanding and unvested LTIP Awards will vest immediately (in the case of the Performance Share Award, based on the target level of performance), and all vested Options (including those that vest pursuant to the operation of this subsection (b)(iii)) will remain exercisable for the full duration of their ten-year term.

(iv) If the Employee’s employment is terminated by the Employee other than with “Good Reason” (as defined in Exhibit B hereto), a portion of each LTIP Award (to the extent then not already vested) shall vest immediately (in the case of the Performance

 

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Share Award, based on the target level of performance), such portion to be equal to (I) the number of days elapsed at the time of termination (inclusive) in the vesting period not yet concluded at the time of termination divided by (II) the number of days in the vesting period not yet concluded at the time of termination, provided that if such a termination of employment occurs after December 31, 2008, then the Performance Share Award shall be payable (if at all) as determined in accordance with its terms without regard to the termination of employment under this subsection (b)(iv), and all vested Options (including those that vest pursuant to the operation of this subsection (b)(iv)) will remain exercisable for the full duration of their ten-year term.

(v) If the Employee’s employment is terminated by Duke Energy for “Cause” (as defined in Exhibit B hereto), a portion of each LTIP Award (to the extent then not already vested) shall vest immediately (in the case of the Performance Share Award, based on the target level of performance), such portion to be equal to (I) the number of days elapsed at the time of termination (inclusive) in the vesting period not yet concluded at the time of termination divided by (II) the number of days in the vesting period not yet concluded at the time of termination, provided that if such a termination of employment occurs after December 31, 2008, then the Performance Share Award shall be payable (if at all) as determined in accordance with its terms without regard to the termination of employment under this subsection (b)(v), and all vested Options (including those that vest pursuant to the operation of this subsection (b)(v)) will remain exercisable for a period of 90 days following termination (but not beyond their ten-year term), at which time they will expire.

Any capitalized terms used but not defined in this Section 12(b) shall have the meaning ascribed to them in the Cinergy Employment Agreement. The compensation and benefits to be provided under this Section 12(b) shall be provided only if the Employee timely executes and does not timely revoke a release of claims substantially in the form attached hereto as Exhibit C.

(c) Certain Special Payments.

(i) Whether or not the Employee becomes entitled to payments or benefits pursuant to Section 12(b) of this Agreement, if any of the payments or benefits received or to be received by the Employee during the term of this Agreement (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement of Duke Energy or Duke Energy or their affiliates) or otherwise by reason of this Agreement (a “Payment” or “Payments”) would be subject to any excise tax imposed by Section 4999 of the Code, together with any interest, penalties, additional tax or similar items that are incurred by the Employee with respect to the excise tax imposed by Section 4999 of the Code (collectively, the “Excise Tax”), then the Employee will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Employee of all taxes (including any interest, penalties, additional tax, or similar items imposed with respect thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon or assessable against the Employee due to the Payments.

 

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(ii) Subject to the provisions of this Section 12(c), all determinations required to be made under this Section 12(c), including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the accounting firm which was, immediately prior to the Effective Date, Duke Energy’s independent auditor (the “Accounting Firm”), which shall provide detailed supporting calculations both to Duke Energy and the Employee within fifteen (15) business days of the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by Duke Energy. If the Accounting Firm determines that no Excise Tax is payable by the Employee, it shall, at the same time as it makes such determination, furnish the Employee with an opinion that he has substantial authority not to report any Excise Tax on his federal income tax return. All fees and expenses of the Accounting Firm shall be borne solely by Duke Energy. Any Gross-Up Payment, as determined pursuant to this Section 12(c), shall be paid by Duke Energy to the Employee within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon Duke Energy and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by Duke Energy should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event of any Underpayment, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by Duke Energy to or for the benefit of the Employee, and Duke Energy shall indemnify and hold harmless the Employee for any such Underpayment, on an after-tax basis, including interest and penalties with respect thereto. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Employee’s employment, then, unless otherwise treated as an impermissible loan under applicable law, the Employee shall repay to Duke Energy, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment tax imposed on the Gross-Up Payment being repaid by the Employee to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income or employment tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.

(iii) The value of any non-cash benefits or any deferred payment or benefit paid or payable to the Employee will be determined in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Employee will be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and applicable state and local income taxes at the highest marginal rate of taxation in the state and locality of the Employee’s residence on the date of the Employee’s termination of employment, net of the maximum reduction in federal income taxes that would be obtained from deduction of those state and local taxes.

 

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(iv) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Accounting Firm’s determination, an Excise Tax will be imposed on any Payment or Payments, Duke Energy will pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that Duke Energy has actually withheld from the Payment or Payments in accordance with law.

(d) Certain Payment Disputes. Duke Energy will reimburse the Employee for all reasonable legal fees and expenses incurred by the Employee (i) in successfully disputing pursuant to Section 19 a termination which is ultimately determined to constitute a termination of employment entitling him to benefits pursuant to Section 12(b) or (ii) in reasonably disputing pursuant to Section 19 whether or not Cinergy has terminated his employment for Cause (as defined in Exhibit B hereto). Payment will be made within five (5) business days after delivery of the Employee’s written request for payment accompanied by such evidence of fees and expenses incurred as Duke Energy reasonably may require.

13. Certain Legacy Compensation and Benefits

(a) Nothing herein shall be construed as adversely affecting the Employee’s right to receive compensation and benefits which have been awarded to him prior to the Effective Time, whether pursuant to his employment agreement currently in effect with Cinergy or otherwise, and such compensation and benefits shall not be taken into account by Duke Energy in determining the Employee’s right to compensation and benefits awarded by Duke Energy on or after the Effective Time. For the avoidance of doubt, Exhibit D hereto sets forth a list of key legacy benefits to which Employee is or will be entitled following the Effective Time.

(b) Without limiting the generality of Section 13(a) hereof, Duke Energy acknowledges and agrees that the Employee’s right to his supplemental retirement benefit provided, collectively, under the Cinergy Corp. Excess Pension Plan, the Cinergy Corp. Supplemental Executive Retirement Plan and Section 3b(ii) of the Cinergy Employment Agreement remains unaffected by this Agreement. Duke Energy agrees that, unless Cinergy has undertaken such action under the following clauses (i) and (ii) prior to the Effective Time, an amount equal to the full present value of the supplemental retirement benefit (including any nonvested portion thereof) calculated based on the actuarial factors applicable under the Cinergy Corp. Non-Union Employees’ Pension Plan as in effect at the time of contribution (i) shall be converted as of the Effective Time into an account under the Cinergy Corp. 401(k) Excess Plan and credited with earnings accruing thereon following the Effective Time in accordance with the terms of such 401(k) Excess Plan, and (ii) shall be contributed by Duke Energy on behalf of the Employee into a grantor trust established in respect of the Cinergy Corp. 401(k) Excess Plan. The Employee shall receive the vested portion of his account under the Cinergy Corp. 401(k) Excess Plan, including all earnings accrued thereon, in accordance with his supplemental retirement benefit distribution election.

14. Administration.

(a) Designation of Beneficiary. The Employee shall designate a person or persons (“Beneficiary”) to receive benefits hereunder following the death of the Employee by submitting to the Compensation Committee a designation of Beneficiary in the form required by the

 

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Compensation Committee. In the absence of a valid designation form, all such benefits shall be paid to the legal representative of the Employee’s estate. If Duke Energy has any doubt as to the proper Beneficiary to receive payments hereunder, Duke Energy shall have the right to withhold such payments until the matter is finally determined.

(b) No Assignment. No right or benefit under this Agreement shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge such rights or benefits shall be void.

(c) “Top-Hat” Plan. Duke Energy intends for the aspects of this Agreement that constitute a deferral of compensation until after termination of employment to be a “top-hat” plan (“Plan”) for a single highly compensated management employee which is exempt from substantially all of the requirements of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) pursuant to Sections 201(2), 301(a)(3), and 401(a)(l) of ERISA. Duke Energy is the sponsor of the Plan under Section 3(16)(B) of ERISA. The Compensation Committee is the named fiduciary of the Plan and as such shall have the authority to control and manage the operation and administration of the Plan except as otherwise expressly provided herein. The Compensation Committee may designate other persons to carry out fiduciary responsibilities hereunder. Any such designation must be in writing and must be accepted in writing by any such other person. The Compensation Committee is the administrator of the Plan within the meaning of Section 3(16)(A) of ERISA. As administrator, the Compensation Committee has the authority (without limitation as to other authority) to delegate its duties to agents and to make rules and regulations that it believes are necessary or appropriate to carry out the Plan. The Compensation Committee has the discretion as a Plan fiduciary to interpret and construe the terms and provisions of the Plan and to make factual determinations in connection therewith. A decision of the Compensation Committee with respect to any matter pertaining to the Plan shall be conclusive and binding upon all interested persons.

(d) Claims Procedure.

(i) Claim. If the Employee or a Beneficiary has any grievance, complaint, or claim concerning any aspect of the operation or administration of the Plan (collectively referred to herein as “claim” or “claims”), the Employee or Beneficiary shall submit the claim to the Compensation Committee, which shall have the initial responsibility for deciding the claim.

(ii) Written Claim. A claim for benefits will be considered as having been made when submitted in writing by the claimant to the Compensation Committee. No particular form is required for the claim, but the claim must identify the name of the claimant and describe generally the benefit to which the claimant believes he is entitled. The claim may be delivered personally during normal business hours or mailed to the Compensation Committee. All such claims shall be submitted in writing and shall set forth the relief requested and the reasons the relief should be granted. All such claims must be submitted within the “applicable limitations period.” The “applicable limitations period” shall be two years beginning on: (i) in the case of any lump-sum payment, the date on which the payment was made, (ii) in the case of an installment payment, the date of the first in the series of payments, or (iii) for all other claims, the date on which the action complained or grieved of occurred.

 

13


(iii) Committee Determination. The Compensation Committee will determine whether, or to what extent, the claim may be allowed or denied under the terms of the Plan. If the claim is wholly or partially denied, the claimant shall be so informed by written notice within 90 days after the day the claim is submitted unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 90-day period. Such extension may not exceed an additional 90 days from the end of the initial 90-day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the final decision. If notice of denial of a claim (in whole or in part) is not furnished within the initial 90-day period after the claim is submitted (or, if applicable, the extended 90-day period), the claimant shall consider that his claim has been denied just as if he had received actual notice of denial.

(iv) Notice of Determination. The notice informing the claimant that his claim has been wholly or partially denied shall be written in a manner calculated to be understood by the claimant and shall include:

(1) The specific reason(s) for the denial.

(2) Specific reference to pertinent Plan provisions on which the denial is based.

(3) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary.

(4) Appropriate information as to the steps to be taken if the Employee or Beneficiary wishes to submit his claim for review.

(v) Appeal. If the claim is wholly or partially denied, the claimant (or his authorized representative) may file an appeal of the denied claim with the Compensation Committee requesting that the claim be reviewed. The Compensation Committee shall conduct a full and fair review of each appealed claim and its denial. Unless the Compensation Committee notifies the claimant that due to the nature of the benefit and other attendant circumstances he is entitled to a greater period of time within which to submit his request for review of a denied claim, the claimant shall have 60 days after he (or his authorized representative) receives written notice of denial of his claim within which such request must be submitted to the Compensation Committee.

(vi) Request for Review. The request for review of a denied claim must be made in writing. In connection with making such request, the claimant or his authorized representative may:

(1) Review pertinent documents.

 

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(2) Submit issues and comments in writing.

(vii) Determination of Appeal. The decision of the Compensation Committee regarding the appeal shall be promptly given to the claimant in writing and shall normally be given no later than 60 days following the receipt of the request for review. However, if special circumstances (for example, if the Compensation Committee decides to hold a hearing on the appeal) require a further extension of time for processing, the decision shall be rendered as soon as possible, but no later than 120 days after receipt of the request for review. However, if the Compensation Committee holds regularly scheduled meetings at least quarterly, a decision on review shall be made by no later than the date of the meeting which immediately follows the receipt of a request for review, unless the request is filed within 30 days preceding the date of such meeting. In such case, a decision may be made by no later than the date of the second meeting following the receipt of the request for review. If special circumstances (for example, if the Compensation Committee decides to hold a hearing on the appeal) require a further extension of time for processing, the decision shall be rendered as soon as possible, but no later than the third meeting following the receipt of the request for review. If special circumstances require that the decision will be made beyond the initial time for furnishing the decision, written notice of the extension shall be furnished to the claimant (or his authorized representative) prior to the commencement of the extension. The decision on review shall be in writing and shall be furnished to the claimant or to his authorized representative within the appropriate time for the decision. If a decision on review is not furnished within the appropriate time, the claim shall be deemed to have been denied on appeal.

(viii) Hearing. The Compensation Committee may, in its sole discretion, decide to hold a hearing if it determines that a hearing is necessary or appropriate in order to make a full and fair review of the appealed claim.

(ix) Decision. The decision on review shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Plan provisions on which the decision is based.

(x) Exhaustion of Appeals. The Employee or Beneficiary must exhaust his rights to file a claim and to request a review of the denial of his claim before instituting any arbitration proceeding or bringing any civil action to recover benefits due to him under the terms of the Plan, to enforce his rights under the terms of the Plan, or to clarify his rights to future benefits under the terms of the Plan. No action at law or in equity to recover under this Plan shall be commenced later than one year from the date of the decision on review (or deemed denial if no decision is issued).

(xi) Committee’s Authority. The Compensation Committee shall exercise its responsibility and authority under this claims procedure as a fiduciary and, in such capacity, shall have the discretionary authority and responsibility (1) to interpret and construe the Plan and any rules or regulations under the Plan, and (2) to make factual determinations in connection therewith.

 

15


15. Notice. Any notice to be given hereunder by either party to the other must be in writing and be effectuated either by personal delivery in writing or by mail, registered or certified, postage prepaid, with return receipt requested. Mailed notices shall be addressed to the parties at the following addresses:

If to Duke Energy or any other Duke Energy affiliate:

Chairman, Compensation Committee

 

 

 

 

cc:

  

Mr. Christopher C. Rolfe

 

  

Group Executive and Chief HR Officer

 

  

Duke Energy Corporation

 

  

526 South Church Street

 

  

Charlotte, North Carolina 28202

If to the Employee:

At the most recent contact information on file in the payroll records of Duke Energy

16. Waiver of Breach. The waiver by any party to a breach of any provision in this Agreement cannot operate or be construed as a waiver of any subsequent breach by a party.

17. Severability. The invalidity or unenforceability of any particular provision in this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if the invalid or unenforceable provision were omitted.

18. Amendment. No modifications or amendments of the terms and conditions herein shall be effective unless in writing and signed by the parties or their respective duly authorized agents.

19. Governing Law and Forum Selection. The parties agree that any dispute, claim, or controversy based on common law, equity, or any federal, state, or local statute, ordinance, or regulation (other than workers’ compensation claims) arising out of or relating in any way to the Employee’s employment, the terms, benefits, and conditions of employment, or concerning this Agreement or its termination and any resulting termination of employment, including whether such a dispute is arbitrable, shall be settled by arbitration. This agreement to arbitrate includes but is not limited to all claims for any form of illegal discrimination, improper or unfair treatment or dismissal, and all tort claims. The Employee will still have a right to file a discrimination charge with a federal or state agency, but the final resolution of any discrimination claim will be submitted to arbitration instead of a court or jury. The arbitration proceeding will be conducted under the employment dispute resolution arbitration rules of the American Arbitration Association in effect at the time a demand for arbitration under the rules is made, and such proceeding will be

 

16


adjudicated in Charlotte, North Carolina in accordance with the laws of the state of North Carolina, without regard to any applicable state’s choice of law provisions. The decision of the arbitrator(s), including determination of the amount of any damages suffered, will be exclusive, final, and binding on all parties, their heirs, executors, administrators, successors and assigns. Each party will bear its own expenses in the arbitration for arbitrators’ fees and attorneys’ fees, for its witnesses, and for other expenses of presenting its case. Other arbitration costs, including administrative fees and fees for records or transcripts, will be borne equally by the parties. Notwithstanding anything in this Section 19 to the contrary, if the Employee prevails with respect to any dispute submitted to arbitration under this Section 19, Duke Energy will reimburse or pay all legal fees and expenses that the Employee may reasonably incur as a result of the dispute.

20. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their permitted successors, assigns, legal representatives and heirs, but neither this Agreement nor any rights hereunder shall be assignable by the Employee. Duke Energy will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Duke Energy to assume expressly and agree to perform this Agreement in the same manner and to the same extent that Duke Energy would be required to perform it if no succession had taken place. Duke Energy’s failure to obtain such an assumption and agreement prior to the effective date of a succession will be a breach of this Agreement and will entitle the Employee to compensation from Duke Energy in the same amount and on the same terms as if the Employee’s employment were to terminate pursuant to Section 12(b)(i) or 12(b)(ii) hereof, as the case may be, treating the date on which any such succession becomes effective as the date of employment termination.

21. Full Settlement; Mitigation. Except as otherwise provided in this Agreement, Duke Energy’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations under this Agreement will not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right, or action that Duke Energy may have against the Employee or others. In no event will the Employee be obligated to seek other employment or take any other action by way of mitigation of the amounts (including amounts for damages for breach) payable to the Employee under any of the provisions of this Agreement and, except as provided in regard to medical and dental benefits to be provided in accordance with Sections 5a(ii)(3) and 5a(iii)(4) of the Cinergy Employment Agreement (as incorporated into Section 12(b) of this Agreement), those amounts will not be reduced simply because the Employee obtains other employment.

22. Code § 409A. It is the intention of Duke Energy and the Employee that this Agreement not result in unfavorable tax consequences to the Employee under Section 409A of the Code. Notwithstanding anything to the contrary herein, if the Employee is a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code), any amounts otherwise payable to or in respect of him pursuant to this Agreement shall be delayed until the earliest date permitted by Section 409A(a)(2) of the Code. The Company and the Employee agree to work together in good faith in an effort to comply with Section 409A of the Code including, if necessary, amending this Agreement based on further guidance issued by the Internal Revenue Service from time to time, provided that Duke Energy shall not be required to assume any increased economic burden.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

 

 

 

DUKE ENERGY CORPORATION

 

 

By:

 

James H. Hance, Jr.

Title:

 

Chairman, Compensation Committee

 

EMPLOYEE

 

 

James E. Rogers

 

18


EXHIBIT A

Pursuant to Section 2(b), the following service of the Employee is hereby approved as of the Effective Date:

Service on the board of directors of Fifth Third Bancorp

 

19


EXHIBIT B

For purposes of Section 12(b), “Cause” and “Good Reason” shall have the respective meanings set forth below:

Cause” means:

(a) The willful and continued failure by the Employee to substantially perform the Employee’s duties with Duke Energy or any of its subsidiaries or to comply with the policies, rules and decisions adopted from time-to-time by Duke Energy, its Board and any employing subsidiaries of which the Employee is made aware or reasonably should be aware (other than any such failure resulting from the Employee’s incapacity due to physical or mental illness) that, if curable, has not been cured within 30 days after the Board has delivered to the Employee a written demand for substantial performance, which demand specifically identifies the manner in which the Employee has not substantially performed his duties. This event will constitute Cause even if the Employee issues a Notice of Termination (as described below) for Good Reason after the Board delivers a written demand for substantial performance.

(b) The breach by the Employee of the confidentiality provisions set forth in Section 11.

(c) The conviction of the Employee for the commission of a felony, including the entry of a guilty or nolo contendere plea, or any willful or grossly negligent action or inaction by the Employee that has a materially adverse effect on Duke Energy. For purposes of this definition of Cause, no act, or failure to act, on the Employee’s part will be deemed “willful” unless it is done, or omitted to be done, by the Employee in bad faith and without reasonable belief that the Employee’s act, or failure to act, was in the best interest of Duke Energy.

(d) Notwithstanding the foregoing, Duke Energy shall be deemed to have not terminated the employment of the Employee for Cause unless and until there shall have been delivered to the Employee a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the members of the Board (excluding the Employee, if he is a member of the Board) then in office at a meeting of the members of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity for the Employee, together with his counsel, to be heard by the members of the Board), finding that, in the good faith opinion of the members of the Board (excluding the Employee, if he is a member of the Board), the Employee had committed an act set forth above in this definition of Cause and specifying the particulars thereof in detail.

 

20


Good Reason” means:

(a) The material reduction without his consent of the Employee’s title, authority, duties, or responsibilities from those in effect immediately prior to the reduction, the failure by Duke Energy without the consent of the Employee to nominate the Employee for re-election to the Board, or a material adverse change in the Employee’s reporting responsibilities.

(b) Any breach by Duke Energy of any other material provision of this Agreement (including but not limited to the place of performance as specified in Section 2(d)).

(c) A failure by Duke Energy to require any successor entity to Duke Energy specifically to assume in writing all of Duke Energy’s obligations to the Employee under this Agreement.

Any termination of the Employee’s employment by Duke Energy for Cause or by the Employee for Good Reason will be communicated by a written Notice of Termination to the other party to this Agreement in accordance with the following requirements:

(a) The notice indicates the specific termination provision in this Agreement relied upon as the basis for termination.

(b) To the extent applicable, the notice sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment for Good Reason or Cause (as the case may be).

(c) If the date of termination of employment is other than the date of receipt of the notice, the notice specifies the date of termination, which will be no more than 30 days after the date the notice was given. The failure by the Employee or Duke Energy to set forth in the Notice of Termination any fact or circumstances that contributes to a showing of Good Reason or Cause will not waive any right of the Employee or Duke Energy under this Agreement or preclude the Employee or Duke Energy from asserting that fact or circumstance in enforcing rights under this Agreement.

(d) If for Cause, the notice must include a copy of a resolution duly adopted by the affirmative vote of not less three quarters (3/4) of the entire membership of the Board (excluding the Employee, if he is a member of the Board) at a meeting of the Board called and held for the purpose of considering the termination. The resolution must include a finding that, in the good faith opinion of the Board (excluding the Employee, if he is a member of the Board), the Employee was guilty of conduct set forth in the definition of Cause, and it must specify the particulars of the conduct in detail.

 

21


EXHIBIT C

RELEASE OF CLAIMS

This RELEASE OF CLAIMS (the “Release”) is executed and delivered by James E. Rogers (the “Employee”) to DUKE ENERGY CORPORATION (together with its successors, “Duke”).

In consideration of the agreement by Duke to provide the Employee with the rights, payments and benefits under the Employment Agreement between the Employee and Duke dated                      (the “Employment Agreement”), the Employee hereby agrees as follows:

Section 1. Release and Covenant. The Employee, of his own free will, voluntarily and unconditionally releases and forever discharges Duke, its subsidiaries, parents, affiliates, their directors, officers, employees, agents, stockholders, successors and assigns (both individually and in their official capacities with Duke) (the “Duke Releasees”) from, any and all past or present causes of action, suits, agreements or other claims which the Employee, his dependents, relatives, heirs, executors, administrators, successors and assigns has or may hereafter have from the beginning of time to the date hereof against Duke or the Duke Releasees upon or by reason of any matter, cause or thing whatsoever, including, but not limited to, any matters arising out of his employment by Duke and the cessation of said employment or any claim for compensation, and including, but not limited to, any alleged violation of the Civil Rights Acts of 1964 and 1991, the Equal Pay Act of 1963, the Age Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the Employee Retirement Income Security Act of 1974, the Older Workers Benefit Protection Act of 1990, the Americans with Disabilities Act of 1990, the North Carolina Equal Employment Protection Act and any other federal, state or local law, regulation or ordinance, or public policy, contract or tort law having any bearing whatsoever on the terms and conditions of employment or termination of employment. This Release shall not, however, constitute a waiver of any of the Employee’s rights under the Employment Agreement.

Section 2. Due Care. The Employee acknowledges that he has received a copy of this Release prior to its execution and has been advised hereby of his opportunity to review and consider this Release for 21 days prior to its execution. The Employee further acknowledges that he has been advised hereby to consult with an attorney prior to executing this Release. The Employee enters into this Release having freely and knowingly elected, after due consideration, to execute this Release and to fulfill the promises set forth herein. This Release shall be revocable by the Employee during the 7-day period following its execution, and shall not become effective or enforceable until the expiration of such 7-day period. In the event of such a revocation, the Employee shall not be entitled to the consideration for this Release set forth above.

Section 3. Nonassignment of Claims; Proceedings. The Employee represents and warrants that there has been no assignment or other transfer of any interest in any claim which the Employee may have against Duke or any of the Duke Releasees. The Employee represents that he has not commenced or joined in any claim, charge, action or proceeding whatsoever against Duke or any of the Duke Releasees arising out of or relating to any of the matters set forth in this Release. The

 

22


Employee further agrees that he will not seek or be entitled to any personal recovery in any claim, charge, action or proceeding whatsoever against Duke or any of the Duke Releasees for any of the matters set forth in this Release.

Section 4. Reliance by Employee. The Employee acknowledges that, in his decision to enter into this Release, he has not relied on any representations, promises or agreements of any kind, including oral statements by representatives of Duke or any of the Duke Releasees, except as set forth in this Release and the Employment Agreement.

Section 5. Nonadmission. Nothing contained in this Release will be deemed or construed as an admission of wrongdoing or liability on the part of Duke or any of the Duke Releasees.

Section 6. Communication of Safety Concerns. Notwithstanding any other provision of this Agreement, the Employee remains free to report or otherwise communicate any nuclear safety concern, any workplace safety concern, or any public safety concern to the Nuclear Regulatory Commission, United States Department of Labor, or any other appropriate federal or state governmental agency, and the Employee remains free to participate in any federal or state administrative, judicial, or legislative proceeding or investigation with respect to any claims and matters not resolved and terminated pursuant to this Agreement. With respect to any claims and matters resolved and terminated pursuant to this Agreement, the Employee is free to participate in any federal or state administrative, judicial, or legislative proceeding or investigation if subpoenaed. The Employee shall give Duke, through its legal counsel, notice, including a copy of the subpoena, within twenty-four (24) hours of receipt thereof.

Section 7. Governing Law. This Release shall be interpreted, construed and governed according to the laws of the State of North Carolina, without reference to conflicts of law principles thereof.

This RELEASE OF CLAIMS AND is executed by the Employee and delivered to Duke on                     .

 

 

 

 

 

 

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT D

(Legacy Benefits)

 

1.

Outstanding equity awards granted under the Cinergy Corp. 1996 Long-Term Incentive Compensation Plan and the Cinergy Corp. Stock Option Plan

 

2.

Accrued benefit under the Cinergy Corp. Non-Union Employees’ Pension Plan, Cinergy Corp. Non-Union Employees’ 401(k) Plan, Cinergy Corp. 401(k) Excess Plan and Cinergy Corp. Nonqualified Deferred Incentive Compensation Plan

 

3.

Grandfathered retiree medical benefits under the Cinergy Corp. Welfare Benefit Program

 

4.

Deferred Compensation Agreement, dated December 16, 1992, as amended (PSI annuities)

 

5.

Insurance Agreement, dated October 7, 1992, as amended

 

6.

Performance award pursuant to Section 3.g. of Employment Agreement with Cinergy Corp., dated as of February 4, 2004

 

24

 

EX-10.3 4 a08-22574_1ex10d3.htm EX-10.3

Exhibit 10.3

 

AMENDMENT TO

EMPLOYMENT AGREEMENT

 

The Employment Agreement dated April 4, 2006 between Duke Energy Corporation and James E. Rogers (the “Agreement”) is amended, effective August 26, 2008, as follows:

 

1.             Section 22 of the Agreement is replaced and superseded in its entirety as follows:

 

22.         Compliance with Section 409A.  It is intended that the payments and benefits provided under this Agreement shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code.  This Agreement shall be construed, administered, and governed in a manner that effects such intent.  Notwithstanding anything contained in this Agreement to the contrary, the following provisions shall apply:

 

(a)           The severance benefits described in Section 12(b) shall only be payable if the termination of employment described therein constitutes a “separation from service” within the meaning of Section 409A of the Code, and the date on which such separation from service takes place shall be the “date of termination.”  To the extent that the Employee is required to execute a release of claims to receive severance benefits, the release must be executed by the Employee and returned to Duke Energy no later than 50 days following termination of employment.

 

(b)           To the extent that the continued benefits described in Sections 5(a)(ii)(3) of the Cinergy Employment Agreement and Sections 6, 7, 8 or 9 of the Agreement are subject to Section 409A of the Code, then they shall be subject to the following additional rules: (i) any reimbursement of eligible expenses shall be paid within 30 days following the Employee’s written request for reimbursement; provided that the Employee provides written notice no later than 60 days prior to the last day of the calendar year following the calendar year in which the expense was incurred; (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, during any other calendar year; and (iii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.  The first sentence of Section 5(a)(ii)(3)(B) of the Cinergy Employment Agreement is deleted in its entirety.

 

(c)           Any tax gross-up payments (or related payments) due under the Cinergy Employment Agreement or the Agreement will be paid or reimbursed on the earlier of (i) the date specified for payment therein, or (ii) December 31st of the year following the year in which the applicable

 


 

taxes are remitted or, in the case of reimbursement of expenses incurred due to a tax audit or litigation to which there is no remittance of taxes, the end of the calendar year following the year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation in accordance with Section 409A of the Code.

 

(d)           Any reimbursement of legal fees and expenses described in Section 12(d) or Section 19 of the Agreement shall be subject to the following requirements:  (i) the fees and expenses must be incurred at any time from the Effective Time through the Employee’s remaining lifetime; (ii) the fees and expenses shall be paid within 10 days following Duke Energy’s receipt of an invoice from the Employee, provided that he submits the invoice at least 15 days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred; (iii) the amount of such legal fees and expenses that Duke Energy is obligated to pay in any given calendar year shall not affect the legal fees and expenses that Duke Energy is obligated to pay in any other calendar year; and (iv) the Employee’s right to have Duke Energy pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.  To the extent the reimbursement is contingent on the Employee being named the prevailing party or otherwise being successful in the dispute, then the legal fess shall nonetheless be reimbursed as provided herein, but the Employee shall be required to return (within 10 days following receipt of demand therefore) all reimbursements of the fees and expenses if the Employee does not so prevail in respect of at least one material claim (whether the Employee is prosecuting or defending such claim) in the dispute.

 

(e)           Notwithstanding anything contained in this Agreement to the contrary, if the Employee is a “specified employee,” as determined under Duke Energy’s policy for determining specified employees on the date of termination, then to the extent required in order to comply with Section 409A of the Code, all payments, benefits or reimbursements paid or provided under this Agreement that constitute a “deferral of compensation” within the meaning of Section 409A of the Code, that are provided as a result of a “separation from service” within the meaning of Section 409A of the Code and that would otherwise be paid or provided during the first six months following such date of termination shall be accumulated through and paid or provided (together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the date of termination), within 30 days after the first business day that is more than six months after the date of his separation from service (or, if the Employee dies during such six-month period, within 30 days after the Employee’s death).

 

(f)            Although Duke Energy shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the

 

2


 

Code, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed.  Neither Duke Energy, its affiliates, nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Employee or other taxpayer as a result of the Agreement.”

 

2.             Except as explicitly set forth herein, the Agreement will remain in full force and effect.

 

IN WITNESS WHEREOF, the parties hereto have executed this amendment to the Agreement as of the day and year first above written.

 

 

 

DUKE ENERGY CORPORATION

 

 

 

 

 

/s/Ann Maynard Gray

 

By:

Ann Maynard Gray

 

Title:

Lead Director

 

 

 

/s/James E. Rogers

 

James E. Rogers

 

3



EX-10.4 5 a08-22574_1ex10d4.htm EX-10.4

Exhibit 10.4

 

AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT

 

THIS AGREEMENT, dated as of August 26, 2008, is made by and between Duke Energy Corporation, a Delaware corporation (the “Company”), and                                (the “Executive”).

 

WHEREAS, the Company considers it essential to the best interests of its shareholders to foster the continued employment of key management personnel; and

 

WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders; and

 

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control; and

 

WHEREAS, the Company and the Executive are parties to a Change in Control Agreement dated as of                  (the “Effective Date”), which agreement is hereby amended, restated and replaced in its entirety with this Agreement in order to comply with Section 409A of the Code.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive, intending to be legally bound, do hereby agree as follows:

 

1.        Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated below:

 

(A)          “Accrued Rights” shall have the meaning set forth in Section 3 hereof.

 

(B)           “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

 

(C)           “Auditor” shall have the meaning set forth in Section 4.2 hereof.

 

(D)          “Base Amount” shall have the meaning set forth in Section 280G(b)(3) of the Code.

 

(E)           “Beneficial Ownership” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

 

1


 

(F)           “Board” shall mean the Board of Directors of the Company.

 

(G)           “Cause” for termination by the Company of the Executive’s employment shall mean (i) a material failure by the Executive to carry out, or malfeasance or gross insubordination in carrying out, reasonably assigned duties or instructions consistent with the Executive’s position, (ii) the final conviction of the Executive of a felony or crime involving moral turpitude, (iii) an egregious act of dishonesty by the Executive (including, without limitation, theft or embezzlement) in connection with employment, or a malicious action by the Executive toward the customers or employees of the Company or any Affiliate, (iv) a material breach by the Executive of the Company’s Code of Business Ethics, or (v) the failure of the Executive to cooperate fully with governmental investigations involving the Company or its Affiliates; provided, however, that the Company shall not have reason to terminate the Executive’s employment for Cause pursuant to this Agreement unless the Executive receives written notice from the Company identifying the acts or omissions constituting Cause and gives the Executive a 30-day opportunity to cure, if such acts or omissions are capable of cure.

 

(H)          A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

 

(a)           an acquisition subsequent to the Effective Date by any Person of Beneficial Ownership of thirty percent (30%) or more of either (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (2) any acquisition by the Company and (3) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary;

 

(b)           during any period of two (2) consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board (and any new directors whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was so approved) cease for any reason (except for death, disability or voluntary retirement) to constitute a majority thereof;

 

(c)           the consummation of a merger, consolidation, reorganization or similar corporate transaction which has been approved by the shareholders of the Company, whether or not the Company is the surviving corporation in such transaction, other than a merger, consolidation, or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into

 

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voting securities of the surviving entity) at least fifty percent (50%) of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization;

 

(d)           the consummation of (A) the sale or other disposition of all or substantially all of the assets of the Company or (B) a complete liquidation or dissolution of the Company, which has been approved by the shareholders of the Company (in each case, exclusive of any transactions or events resulting from the separation of the Company’s gas and electric businesses); or

 

(e)           adoption by the Board of a resolution to the effect that any person has acquired effective control of the business and affairs of the Company.

 

(I)            “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

(J)            “Company” shall mean Duke Energy Corporation, a Delaware corporation, and, except in determining under Section 1.H hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

(K)          “Confidential Information” shall have the meaning set forth in Section 8 hereof.

 

(L)           “DB Pension Plan” shall mean any tax-qualified, supplemental or excess defined benefit pension plan maintained by the Company (or a Subsidiary) and any other defined benefit plan or agreement entered into between the Executive and the Company (or a Subsidiary) which is designed to provide the Executive with supplemental retirement benefits.

 

(M)         “DC Pension Plan” shall mean any tax-qualified, supplemental or excess defined contribution plan maintained by the Company (or a Subsidiary) and any other defined contribution plan or agreement entered into between the Executive and the Company (or a Subsidiary) which is designed to provide the executive with supplemental retirement benefits.

 

(N)          “Date of Termination” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor (without the consent of the Company) more than sixty (60) days, respectively, from the date such Notice of Termination is given).

 

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(O)          “Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

 

(P)           “Effective Date” shall have the meaning given to such term in the Preamble to this Agreement.

 

(Q)          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

(R)           “Excise Tax” shall mean any excise tax imposed under Section 4999 of the Code.

 

(S)           “Executive” shall mean the individual named in the first paragraph of this Agreement.

 

(T)           “Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent which specifically references this Agreement) after any Change in Control of any one of the following acts by the Company, or failures by the Company to act, unless such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof: (i) a reduction in the Executive’s annual base salary as in effect immediately prior to the Change in Control (exclusive of any across the board reduction similarly affecting all or substantially all similarly situated employees determined without regard to whether or not an otherwise similarly situated employee’s employment was with the Company prior to the Change in Control), (ii) a reduction in the Executive’s target annual bonus as in effect immediately prior to the Change in Control (exclusive of any across the board reduction similarly affecting all or substantially all similarly situated employees determined without regard to whether or not an otherwise similarly situated employee’s employment was with the Company prior to the Change in Control), or (iii) the assignment to the Executive of a job position with a total point value under the Hay Point Factor Job Evaluation System that is less than seventy percent (70%) of the total point value of the job position held by the Executive immediately before the Change in Control; provided, however, that in the event there is a claim by the Executive that there has been such an assignment and the Company disputes such claim, whether there has been such an assignment shall be conclusively determined by the HayGroup (or any successor thereto) or if such entity (or any successor) is no longer in existence or will not serve, a consulting firm mutually selected by the Company and the Executive or, if none, a consulting firm drawn by lot from two nationally recognized consulting firms that agree to serve and that are nominated by the Company and the Executive, respectively (such consulting firm, the “Consulting Firm”) under such procedures as the Consulting Firm shall in its sole

 

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discretion establish; provided further that such procedures shall afford both the Company and the Executive an opportunity to be heard; and further provided, however, that the Company and the Executive shall use their best efforts to enable and cause the Consulting Firm to make such determination within thirty (30) days of the Executive’s claim of such an assignment.  The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

 

(U)          “Notice of Termination” shall have the meaning set forth in Section 5 hereof.

 

(V)           “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

(W)         “Release Deadline” shall mean the 55th day immediately following the date that the Executive incurs a “separation from service” within the meaning of Section 409A of the Code.

 

(X)          “Repayment Amount” shall have the meaning set forth in Section 7.3 hereof.

 

(Y)           “Restricted Period” shall have the meaning set forth in Section 7.2 hereof.

 

(Z)           “Severance Payments” shall have the meaning set forth in Section 4.1 hereof.

 

(AA)       “Severance Period” shall have the meaning set forth in Section 4.1(C) hereof.

 

(BB)        “Subsidiary” means an entity that is wholly owned, directly or indirectly, by the Company, or any other affiliate of the Company that is so designated from time to time by the Company.

 

(CC)        “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

 

(DD)       “Total Payments” shall mean those payments so described in Section 4.2 hereof.

 

2.        Term of Agreement. The Term of this Agreement shall commence on the Effective Date and shall continue in effect through the second anniversary of the

 

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Effective Date; provided, however, that commencing on the date that is twenty-four (24) months following the Effective Date and each subsequent monthly anniversary, the Term shall automatically be extended for one additional month; further provided, however, the Company or the Executive may terminate this Agreement effective at any time following the second anniversary of the Effective Date only with six (6) months advance written notice (which such notice may be given before such second anniversary); and further provided, however, that, notwithstanding the above, if a Change in Control shall have occurred during the Term, the Term shall in no case expire earlier than twenty-four (24) months beyond the month in which such Change in Control occurred.

 

3.             Compensation Other Than Severance Payments. If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay the Executive (A) the salary amounts payable in the normal course for service through the Date of Termination within 30 days after the Date of Termination, and (B) and any rights or payments that have become vested or that are otherwise due in accordance with the terms of any employee benefit, incentive, or compensation plan or arrangement maintained by the Company that the Executive participated in at the time of his or her termination of employment (together, the “Accrued Rights”).

 

4.             Severance Payments.

 

4.1           Subject to Section 4.2 hereof, and further subject to the Executive executing a release of claims substantially in the form set forth as Exhibit A to this Agreement and the release becoming effective and irrevocable in accordance with its terms by the Release Deadline, if the Executive’s employment is terminated following a Change in Control and during the Term (but in any event not later than twenty-four (24) months following a Change in Control), other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then, in either such case, in addition to the payments and benefits representing the Executive’s Accrued Rights, the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 4.1 (“Severance Payments”).

 

(A)          A lump-sum payment equal to (i) the Executive’s annual bonus payment earned for any completed bonus year prior to termination of employment, if not previously paid, plus (ii) a pro-rata amount of the Executive’s target bonus under any performance-based bonus plan, program, or arrangement in which the Executive participates for the year in which the termination occurs, determined as if all program goals had been met, pro-rated based on the number of days of service during the bonus year occurring prior to termination of employment.  The amount described in clause (i) shall be paid pursuant to the terms of the applicable short-term incentive plan and shall not be conditioned on signing a release described in Section 4.1.  The amounts described in clause (ii) shall be paid within 30 calendar days after the Release Deadline, or such later date as may be required under Section 13.1.

 

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(B)           In lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two (or, if less, the number of years (including partial years) until the Executive reaches the Company’s mandatory retirement age, provided that the Company adopts a mandatory retirement age pursuant to 29 USC §631(c)) times the sum of (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the Executive’s target short-term incentive bonus opportunity for the fiscal year in which the Date of Termination occurs or, if higher, the fiscal year in which the first event or circumstance constituting Good Reason occurs.  The amount described in this Section 4.1(B) shall be paid within 30 calendar days after the Release Deadline, or such later date as may be required under Section 13.1.

 

(C)           For a period of two years immediately following the Date of Termination (or, if less, the period until the Executive reaches the Company’s mandatory retirement age, provided that the Company adopts a mandatory retirement age pursuant to 29 USC §631(c)) (the “Severance Period”), the Company shall arrange to provide the Executive and his or her dependents medical and dental insurance benefits substantially similar to those provided to the Executive and his or her dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his or her dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence.  Benefits otherwise receivable by the Executive pursuant to this Section 4.1(C) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the Severance Period as a result of subsequent employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive).  In addition, the Company shall make a lump sum cash payment, payable within 30 calendar days after the Release Deadline or such later date as may be required under Section 13.1, in an amount equal to the anticipated cost of basic life insurance coverage for the Severance Period, based on the Company’s assumed cost for such coverage for internal accounting purposes at the Date of Termination.  The continued benefits described in this paragraph 4.1(C) that are taxable benefits (and that are not disability pay or death benefit plans within the meaning of Section 409A of the Code) are intended to comply, to the maximum extent possible, with the exception to Section 409A of the Code set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations.  To the extent that any of those benefits either do not qualify for that exception, or are provided beyond the applicable time periods set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations, then they shall be subject to the following additional rules: (1) any reimbursement of eligible expenses shall be paid within 10 calendar days following Executive’s written request for reimbursement, or such later date as may be required under Section 13.1;  provided that the Executive provides written notice no later than 15 calendar days prior to the last day of the calendar year following the calendar year in which the expense was incurred; (2) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect

 

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the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, during any other calendar year; and (3) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

(D)          Executive’s benefits accrued or credited through the Date of Termination under the DC Pension Plan that are not vested as of the Date of Termination but that would have vested had Executive remained employed by the Company for the remainder of the Term shall be fully vested as of the Date of Termination and paid in accordance with the terms of the applicable plan.  In addition to the benefits to which the Executive is entitled under the DC Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the amount that would have been contributed thereto by the Company on the Executive’s behalf during the Severance Period, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period equal to the sum of the Executive’s base salary and target bonus as in effect immediately prior to the Date of Termination, or, if higher, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plan made subsequent to a Change in Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder.  The amount described in the immediately preceding sentence shall be paid within 30 calendar days after the Release Deadline, or such later date as may be required under Section 13.1.

 

(E)           Executive’s benefits accrued or credited through the Date of Termination of employment under the DB Pension Plan that are not vested as of the Date of Termination but that would have vested had Executive remained employed by the Company for the remainder of the Term shall be fully vested as of the Date of Termination and paid in accordance with the terms of the applicable plan. In addition to the benefits to which the Executive is entitled under the DB Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the amount that would have been allocated thereunder by the Company in respect of the Executive (or accrued by the Executive, which accrual shall be calculated based on the actuarial assumptions contained in the DB Pension Plan) during the Severance Period, determined (x) as if the Executive earned compensation during such period equal to the sum of the Executive’s base salary and target bonus as in effect immediately prior to the Date of Termination, or, if higher, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason, and (y) without regard to any amendment to the DB Pension Plan made subsequent to a Change in Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder.  The amount described in the immediately preceding sentence shall be paid within 30 calendar days after the Release Deadline, or such later date as may be required under Section 13.1.

 

(F)           Notwithstanding the terms of any award agreement or plan document to the contrary, the Executive shall be entitled to receive continued vesting of any long term incentive awards, including awards of stock options but excluding awards

 

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of restricted stock, held by the Executive at the time of his or her termination of employment that are not vested or exercisable on such date, in accordance with their terms as if the Executive’s employment had not terminated, for the duration of the Severance Period, with any options or similar rights to remain exercisable (to the extent exercisable at the end of the Severance Period) for a period of 90 days following the close of the Severance Period, but not beyond the maximum original term of such options or rights.

 

4.2           (A)          Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive (including any payment or benefit received in connection with a Change in Control or the termination of the Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as the “Total Payments”) would be subject (in whole or part), to the Excise Tax, then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement, the Severance Payments shall be reduced to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).  If a reduction in Severance Payments is necessary pursuant to this Section 4.2(A), then the reduction shall occur in the following order:  (i) cash payments under Section 4.1(A)(ii), 4.2(B), 4.2(D) and 4.2(E); (ii) cancellation of accelerated vesting of performance-based equity awards (based on the reverse order of the date of grant); (iii) cancellation of accelerated vesting of other equity awards (based on the reverse order of the date of grant); and (iv) reduction of welfare benefits.

 

(B)           For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) who is reasonably acceptable to the Executive and selected by the accounting firm (the “Auditor”) which was, immediately prior to the Change in Control, the Company’s independent auditor, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) 

 

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of the Code, in excess of the Base Amount allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

 

(C)           At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

 

5.             Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 12 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

 

6.             No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 4 hereof. Further, except as specifically provided in Section 4.1(C) hereof, no payment or benefit provided for in this Agreement shall be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits or otherwise.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall be absolute and unconditional and shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company or any of its Subsidiaries may have against the Executive or others.

 

7.             Restrictive Covenants.

 

7.1           Noncompetition and Nonsolicitation. During the Restricted Period (as defined below), the Executive agrees that he or she shall not, without the Company’s prior written consent, for any reason, directly or indirectly, either as principal, agent, manager, employee, partner, shareholder, director, officer, consultant or otherwise (A) become engaged or involved, in a manner that relates to or is similar in nature to those duties performed by Executive at any time during his or her employment with the Company, in any business (other than as a less-than three percent (3%) equity owner of any corporation traded on any national, international or regional stock exchange or in the over-the-counter market) that competes with the Company or any of its Affiliates in the business of production, transmission, distribution, or retail or wholesale marketing or selling of electricity; resale or arranging for the purchase or for the resale, brokering, marketing, or trading of electricity or derivatives thereof; energy management and the provision of energy solutions; development and management of fiber optic communications systems; development and operation of power generation

 

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facilities, domestically and abroad; and any other business in which the Company, including Affiliates, is engaged at the termination of the Executive’s continuous employment with the Company, including Affiliates; or (B) induce or attempt to induce any customer, client, supplier, employee, agent or independent contractor of the Company or any of its Affiliates to reduce, terminate, restrict or otherwise alter its business relationship with the Company or its Affiliates. The provisions of this Section 7.1 shall be limited in scope and effective only within one or more of the following geographical areas: (i) The States of North Carolina, South Carolina, Ohio, Kentucky, and Indiana, or (ii) any other state in the United States where the Company including Affiliates, has at least U.S. $25 million in capital deployed as of the termination of the Executive’s continuous employment with the Company, including Affiliates; or (iii) any state or country with respect to which was conducted a business of the Company, including Affiliates, which business, or oversight of which business, constituted any part of the Executive’s employment.  The parties intend the above geographical areas to be completely severable and independent, and any invalidity or unenforceability of this Agreement with respect to any one area shall not render this Agreement unenforceable as applied to any one or more of the other areas. Nothing in Section 7.1 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 from providing advice and counsel in such capacity, in any jurisdiction where such prohibition or restriction is contrary to law.

 

7.2           Restricted Period. For purposes of this Agreement, “Restricted Period” shall mean the period of the Executive’s employment during the Term and, in the event of a termination of the Executive’s employment following a Change in Control that entitles Executive to Severance Payments covered by Section 4 hereof, the twelve (12) month period following such termination of employment, commencing from the Date of Termination.

 

7.3           Forfeiture and Repayments. The Executive agrees that, in the event he or she violates the provisions of Section 7 hereof during the Restricted Period, he or she will forfeit and not be entitled to any Severance Payments or any non-cash benefits or rights under this Agreement (including, without limitation, stock option rights), other than the payments provided under Section 3 hereof. The Executive further agrees that, in the event he or she violates the provisions of Section 7 hereof following the payment or commencement of any Severance Payments, (A) he or she will forfeit and not be entitled to any further Severance Payments, and (B) he or she will be obligated to repay to the Company an amount in respect of the Severance Payments previously made to him or her under Section 4 hereof (the “Repayment Amount”). The Repayment Amount shall be determined by aggregating the cash Severance Payments made to the Executive and multiplying the resulting amount by a fraction, the numerator of which is the number of full and partial calendar months remaining in the Severance Period at the time of the violation (rounded to the nearest quarter of a month), and the denominator of which is twenty-four (24). The Repayment Amount shall be paid to the Company in cash in a single sum within ten (10) business days after the first date of the violation, whether or not the Company has knowledge of the violation or has made a demand for payment. Any such payment made following such date shall bear interest at a rate equal to the

 

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prime lending rate of Citibank, N.A. (as periodically set) plus 1%. Furthermore, in the event the Executive violates the provisions of Section 7 hereof, and notwithstanding the terms of any award agreement or plan document to the contrary (which shall be considered to be amended to the extent necessary to reflect the terms hereof), the Executive shall immediately forfeit the right to exercise any stock option or similar rights that are outstanding at the time of the violation, and the Repayment Amount, calculated as provided above, shall be increased by the amount of any gains (measured, if applicable, by the difference between the aggregate fair market value on the date of exercise of shares underlying the stock option or similar right and the aggregate exercise price of such stock option or similar right) realized by the Executive upon the exercise of stock options or similar rights or vesting of restricted stock or other equity compensation within the one-year period prior to the first date of the violation.

 

7.4           Permissive Release. The Executive may request that the Company release him or her from the restrictive covenants of Section 7.1 hereof upon the condition that the Executive forfeit and repay all termination benefits and rights provided for in Section 4.1 hereof. The Company may, in its sole discretion, grant such a release in whole or in part or may reject such request and continue to enforce its rights under this Section 7.

 

7.5           Consideration; Survival. The Executive acknowledges and agrees that the compensation and benefits provided in this Agreement constitute adequate and sufficient consideration for the covenants made by the Executive in this Section 7 and in the remainder of this Agreement. As further consideration for the covenants made by the Executive in this Section 7 and in the remainder of this Agreement, the Company has provided and will provide the Executive certain proprietary and other confidential information about the Company, including, but not limited to, business plans and strategies, budgets and budgetary projections, income and earnings projections and statements, cost analyses and assessments, and/or business assessments of legal and regulatory issues. The Executive’s obligations under this Section 7 shall survive any termination of his or her employment as specified herein.

 

8.             Confidentiality. The Executive acknowledges that during the Executive’s employment with the Company or any of its Affiliates, the Executive will acquire, be exposed to and have access to, non-public material, data and information of the Company and its Affiliates and/or their customers or clients that is confidential, proprietary, and/or a trade secret (“Confidential Information”). At all times, both during and after the Term, the Executive shall keep and retain in confidence and shall not disclose, except as required and authorized in the course of the Executive’s employment with the Company or any its Affiliates, to any person, firm or corporation, or use for his or her own purposes, any Confidential Information. For purposes of this Agreement, such Confidential Information shall include, but shall not be limited to: sales methods, information concerning principals or customers, advertising methods, financial affairs or methods of procurement, marketing and business plans, strategies (including risk strategies), projections, business opportunities, inventions, designs, drawings, research and development plans, client lists, sales and cost information and financial results and performance. Notwithstanding the foregoing, “Confidential Information” shall

 

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not include any information known generally to the public (other than as a result of unauthorized disclosure by the Executive or by the Company or its Affiliates). The Executive acknowledges that the obligations pertaining to the confidentiality and non-disclosure of Confidential Information shall remain in effect for a period of five (5) years after termination of employment, or until the Company or its Affiliates has released any such information into the public domain, in which case the Executive’s obligation hereunder shall cease with respect only to such information so released into the public domain. The Executive’s obligations under this Section 8 shall survive any termination of his or her employment. If the Executive receives a subpoena or other judicial process requiring that he or she produce, provide or testify about Confidential Information, the Executive shall notify the Company and cooperate fully with the Company in resisting disclosure of the Confidential Information. The Executive acknowledges that the Company has the right either in the name of the Executive or in its own name to oppose or move to quash any subpoena or other legal process directed to the Executive regarding Confidential Information. Notwithstanding any other provision of this Agreement, the Executive remains free to report or otherwise communicate any nuclear safety concern, any workplace safety concern, or any public safety concern to the Nuclear Regulatory Commission, United States Department of Labor, or any other appropriate federal or state governmental agency, and the Executive remains free to participate in any federal or state administrative, judicial, or legislative proceeding or investigation with respect to any claims and matters not resolved and terminated pursuant to this Agreement. With respect to any claims and matters resolved and terminated pursuant to this Agreement, the Executive is free to participate in any federal or state administrative, judicial, or legislative proceeding or investigation if subpoenaed. The Executive shall give the Company, through its legal counsel, notice, including a copy of the subpoena, within twenty-four (24) hours of receipt thereof.

 

9.             Return of Company Property. All records, files, lists, including, computer generated lists, drawings, documents, equipment and similar items relating to the business of the Company and its Affiliates which the Executive shall prepare or receive from the Company or its Affiliates shall remain the sole and exclusive property of Company and its Affiliates. Upon termination of the Executive’s employment for any reason, the Executive shall promptly return all property of the Company or any of its Affiliates in his or her possession. The Executive further represents that he or she will not copy or cause to be copied, print out or cause to be printed out any software, documents or other materials originating with or belonging to the Company or any of its Affiliates.

 

10.           Acknowledgement and Enforcement. The Executive acknowledges that the restrictions contained in this Agreement with regards to the Executive’s use of Confidential Information and his or her future business activities are fair, reasonable and necessary to protect the Company’s legitimate protectable interests, particularly given the competitive nature and broad scope of the Company’s business and that of its Affiliates, as well as the Executive’s position with the Company. The Executive further acknowledges that the Company may have no adequate means to protect its rights under this Agreement other than by securing an injunction (a court order prohibiting the Executive from violating this Agreement). The Executive therefore agrees that the

 

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Company, in addition to any other right or remedy it may have, shall be entitled to enforce this Agreement by obtaining a preliminary and permanent injunction and any other appropriate equitable relief in any court of competent jurisdiction. The Executive acknowledges that the recovery of damages will not be an adequate means to redress a breach of this Agreement, but nothing in this Section 10 shall prohibit the Company from pursuing any remedies in addition to injunctive relief, including recovery of damages and/or any forfeiture or repayment obligations provided for herein.

 

11.           Successors; Binding Agreement.

 

11.1         In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

11.2         This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate; provided, however, such amounts shall be offset by any amounts owed by the Executive to the Company.

 

12.           Notices. All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered personally, (b) upon confirmation of receipt when such notice or other communication is sent by facsimile, (c) one day after timely delivery to an overnight delivery courier, or (d) when delivered or mailed by United States registered mail, return receipt requested, postage prepaid. The addresses for such notices shall be as follows:

 

To the Company:

 

Duke Energy Corporation

Post Office Box 1006, EC3XB

Charlotte, North Carolina 28201-1006

Attention: Mr. James E. Rogers

Chief Executive Officer

 

With a Copy to:

 

Duke Energy Corporation

Post Office Box 1244, PB04M

Charlotte, North Carolina 28201-1244

Attention: Mr. Marc E. Manly

Group Executive and Chief Legal Officer

 

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To the Executive:

 

At the most recent address on file in the records of the Company

 

Either party hereto may, by notice to the other, change its address for receipt of notices hereunder.

 

13.           Section 409A.

 

13.1         Notwithstanding anything contained in this Agreement to the contrary, if the Executive is a “specified employee” on the Date of Termination, as determined under the Company’s policy for identifying specified employees, then to the extent required in order to comply with Section 409A of the Code, all payments, benefits or reimbursements paid or provided under this Agreement that constitute a “deferral of compensation” within the meaning of Section 409A of the Code, that are provided as a result of a “separation from service” within the meaning of Section 409A of the Code and that would otherwise be paid or provided during the first six months following the Date of Termination shall be accumulated through and paid or provided (together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Date of Termination) within 30 calendar days after the first business day that is more than six months following the Date of Termination (or, if the Executive dies during such six-month period, within 30 calendar days after the Executive’s death).

 

13.2         It is intended that the payments and benefits provided under this Agreement shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code.  This Agreement shall be construed, administered, and governed in a manner that effects such intent, and the Company shall not take any action that would be inconsistent with such intent.  Without limiting the foregoing, the payments and benefits provided under this Agreement may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon Executive.

 

13.3         It is the intention of the Company and the Executive that this Agreement not result in unfavorable tax consequences to the Executive under Section 409A of the Code. Accordingly, the Executive 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, the Executive a copy of such amendment.  Although the Company shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed.  Neither the Company, its affiliates, nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive or other taxpayer as a result of the Agreement.

 

14.           Miscellaneous. Except as otherwise provided in Section 13 hereof, no provision of this Agreement may be modified, waived or discharged unless such waiver,

 

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modification or discharge is agreed to in writing and signed by the Executive and the Chief Executive Officer (or such officer as may be specifically designated by the Chief Executive Officer). No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated during the Term and on or within two years following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of North Carolina. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed and no such payments shall be treated as creditable compensation under any other employee benefit plan, program, arrangement or agreement of or with the Company or its affiliates. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Section 4 hereof) shall survive such expiration.

 

15.           Certain Legal Fees. To provide the Executive with reasonable assurance that the purposes of this Agreement will not be frustrated by the cost of enforcement, the Company shall reimburse the Executive for reasonable attorneys’ fees and expenses incurred by the Executive during the two-year period immediately following the Executive’s Date of Termination as a result of a claim that the Company has breached or otherwise failed to perform its obligations under this Agreement or any provision hereof, regardless of which party, if any, prevails in the contest; provided, however, that Company shall not be responsible for such fees and expenses to the extent incurred in connection with a claim made by the Executive that the trier of fact in any such contest finds to be frivolous or if the Executive is determined to have breached his or her obligations under Sections 7, 8, 9, 16, or 17 of this Agreement; and provided further, however, the Company shall not be responsible for such fees or expenses in excess of $50,000 in the aggregate.  The reimbursement, if any, shall be paid to the Executive within 10 calendar days following the expiration of the two-year period described above, provided that the Executive shall have submitted an invoice for such fees and expenses at least 30 calendar days prior to the expiration of that period.  The amount of such legal fees and expenses that the Company is obligated to pay in any given calendar year shall not affect the legal fees and expenses that the Company is obligated to pay in any other calendar year, and the Executive’s right to have the Company pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.

 

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16.           Cooperation. The Executive agrees that he or she will fully cooperate in any litigation, proceeding, investigation or inquiry in which the Company or its Affiliates may be or become involved. The Executive also agrees to cooperate fully with any internal investigation or inquiry conducted by or on behalf of the Company. Such cooperation shall include the Executive making himself or herself available, upon the request of the Company or its counsel, for depositions, court appearances and interviews by Company’s counsel. The Company shall reimburse the Executive for all reasonable and documented out-of-pocket expenses incurred by him or her in connection with such cooperation. To the maximum extent permitted by law, the Executive agrees that he or she will notify the Board if he or she is contacted by any government agency or any other person contemplating or maintaining any claim or legal action against the Company or its Affiliates or by any agent or attorney of such person. Nothing contained in this Section 16 shall preclude the Executive from providing truthful testimony in response to a valid subpoena, court order, regulatory request or as may be required by law.  To the extent required to comply with Section 409A of the Code, any payment or reimbursement of expenses pursuant to this Section 16 that will not be excluded from the Executive’s income when received is subject to the following requirements: (i) the expenses to be reimbursed must be incurred during the Executive’s lifetime; (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided in any other calendar year; (iii) any reimbursement of eligible expenses shall be paid within 10 calendar days following Executive’s written request for reimbursement, or such later date as may be required under Section 13.1;  provided that the Executive provides written notice no later than 15 calendar days prior to the last day of the calendar year following the calendar year in which the expense was incurred; and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.

 

17.           Non-Disparagement. The Executive agrees that he or she will not make or publish, or cause to be made or published, any statement which is, or may reasonably be considered to be, disparaging of the Company or its Affiliates, or directors, officers or employees of the businesses of the Company or its Affiliates. Nothing contained in this Section 17 shall preclude the Executive from providing truthful testimony in response to a valid subpoena, court order, regulatory request or as may be required by law.

 

18.           Validity; Severability. The invalidity or unenforceability of any provision of any Section or sub-Section of this Agreement, including, but not limited to, any provision contained in Section 7 hereof, shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. If any provision of this Agreement is held to be unenforceable because of the scope, activity or duration of such provision, or the area covered thereby, the parties hereto agree to modify such provision, or that the court making such determination shall have the power to modify such provision, to reduce the scope, activity, duration and/or area of such provision, or to delete specific words or phrases therefrom, and in its reduced or modified form, such provision shall then be enforceable and shall be enforced to the maximum extent permitted by applicable law.

 

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19.           Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

20.           Settlement of Disputes. All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Chief Executive Officer and shall be in writing. Any denial by the Chief Executive Officer of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific provisions of this Agreement relied upon.

 

21.           Trust.  The Company shall establish a trust with an independent trustee prior to the occurrence of a Change in Control for the purpose of paying benefits under this Agreement and other similar agreements maintained by the Company.  The trust shall be a grantor trust subject to the claims of the Company’s creditors and shall, immediately prior to a Change in Control, be funded in cash or such other assets as the Company deems appropriate with an amount equal to 100 percent of the estimated benefits payable under this Agreement (including without limitation the potential legal fees described in Section 15 hereof), which amount shall be determined after assuming that the Executive incurred a termination of employment entitling him to Severance Payments immediately following the Change in Control; provided, that, in the event that such funding would result in the imposition of taxes or penalties under Section 409A of the Code with respect to the Executive, then this Section 21 shall cease to apply.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

 

 

DUKE ENERGY CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

EXECUTIVE

 

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EXHIBIT A

 

RELEASE OF CLAIMS

 

This RELEASE OF CLAIMS (the “Release”) is executed and delivered by                            (the “Employee”) to DUKE ENERGY CORPORATION (together with its Affiliates and any successors thereto, the “Company”). The term “Company” in this Release also includes any employee benefit plan established or maintained by Duke Energy Corporation or any of its Affiliates, and any administrator, trustee, fiduciary or service provider of any such plan).

 

In consideration of the agreement by the Company to provide the Employee with the rights, payments and benefits under the Change in Control Agreement between the Employee and the Company dated                                (the “Severance Agreement”), which the Employee acknowledges is consideration to which he or she would not otherwise be entitled, the Employee hereby agrees as follows:

 

Section 1.  Release and Covenant.  The Employee, of his or her own free will, voluntarily and unconditionally releases and forever discharges the Company, its subsidiaries, parents, affiliates, their directors, officers, employees, agents, stockholders, successors and assigns (both individually and in their official capacities with the Company) (the “Company Releasees”) from any and all past or present causes of action, suits, agreements or other claims which the Employee, his or her dependents, relatives, heirs, executors, administrators, successors and assigns has or may hereafter have from the beginning of time to the date hereof against the Company or the Company Releasees upon or by reason of any matter, cause or thing whatsoever, including, but not limited to, any matters arising out of his or her employment by the Company and the cessation of said employment, and including, but not limited to, any alleged violation of the Civil Rights Acts of 1964 and 1991, the Equal Pay Act of 1963, the Employee Retirement Income Security Act of 1974, the Age Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the Older Workers Benefit Protection Act of 1990, the Americans with Disabilities Act of 1990 and any other federal, state or local law, regulation or ordinance, or public policy, contract or tort law having any bearing whatsoever on the terms and conditions of employment or termination of employment.  This Release shall not, however, constitute a waiver of any of the Employee’s rights under the Severance Agreement nor a waiver of any claims that might arise after the date the Release is signed.

 

Section 2.  Due Care.  The Employee acknowledges that he or she has received a copy of this Release prior to its execution and has been advised hereby of his or her opportunity to review and consider this Release for 21 days prior to its execution.  The Employee further acknowledges that he or she has been advised hereby to consult with an attorney prior to executing this Release.  The Employee enters into this Release having freely and knowingly elected, after due consideration, to execute this Release and to fulfill the promises set forth herein.  This Release shall be revocable by the Employee during the 7-day period following its execution, and shall not become effective or enforceable until the expiration of such 7-day period.  In the event of such a

 

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revocation, the Employee shall not be entitled to the consideration for this Release set forth above.

 

Section 3.  Nonassignment of Claims; Proceedings.  The Employee represents and warrants that there has been no assignment or other transfer of any interest in any claim which the Employee may have against the Company or any of the Company Releasees.   The Employee represents that he or she has not commenced or joined in any claim, charge, action or proceeding whatsoever against the Company or any of the Company Releasees arising out of or relating to any of the matters set forth in this Release. The Employee further agrees that he or she will not seek or be entitled to any personal recovery in any claim, charge, action or proceeding whatsoever against the Company or any of the Company Releasees for any of the matters set forth in this Release.

 

Section 4.  Reliance by Employee.  The Employee acknowledges that, in his or her decision to enter into this Release, he or she has not relied on any representations, promises or agreements of any kind, including oral statements by representatives of the Company or any of the Company Releasees, except as set forth in this Release and the Severance Agreement.

 

Section 5.  Nonadmission.   Nothing contained in this Release will be deemed or construed as an admission of wrongdoing or liability on the part of the Company or any of the Company Releasees.

 

Section 6.  Communication of Safety Concerns.  Notwithstanding any other provision of this Release and the Severance Agreement, the Employee remains free to report any suspected instance of illegal activity of any nature, any nuclear safety concern, any workplace safety concern, or any public safety concern to the United States Nuclear Regulatory Commission, the United States Department of Labor, or any other federal or state governmental agency. Further, nothing in this Release or the Agreement prohibits the Employee from participating in any way in any state or federal administrative, judicial or legislative proceeding or investigation or filing a charge of discrimination with an administrative agency, provided, however, that should an agency pursue any claims on the Employee’s behalf, by signing and not revoking this Release the Employee has waived his or her right to any recovery, monetary or otherwise.  Should the Employee receive a subpoena in connection with any federal or state administrative, judicial, or legislative proceeding involving the Company, the Employee shall, if permitted by law, provide the Company with notice of the subpoena, including a copy of the subpoena, with twenty-four (24) hours of receipt of the subpoena.  The notice shall be provided to the Company’s Chief Legal Officer.

 

Section 7.  Cash Balance Litigation.  Employee may or may not know that a class action lawsuit was commenced on February 6, 2006.  Here is the caption of that case:  Kenneth Walton George, Dennis Reed Bowen, Clyde Freeman, George Moyers, Jim Matthews, and Henry Miller, on their own behalf and on behalf of a class of persons similarly situated v. Duke Energy Retirement Cash Balance Plan and Duke Energy

 

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Corporation, Case No. 8:06-CV-00373-RBH, pending in the United States District Court for the District of South Carolina.  This paragraph deals with that lawsuit, and any lawsuit asserting similar claims (the “Cash Balance Plan Litigation”).  The Cash Balance Plan Litigation seeks additional benefits under the Duke Energy Retirement Cash Balance Plan (the “Cash Balance Plan”), and other relief.  The Company and the Cash Balance Plan intend to defend themselves vigorously in the Cash Balance Plan Litigation and take the position that no damages should result from the litigation.  Employee should consider the Cash Balance Plan Litigation in connection with this Release, because the Company and the Cash Balance Plan will take the position that this Release completely releases Employee’s rights in the Cash Balance Plan Litigation.  In the event that a court in the Cash Balance Plan Litigation should rule that despite this Release Employee is entitled to some recovery of benefits under the terms of the Cash Balance Plan, Employee agrees that he or she will get only the difference, if any, between what the Employee has been paid under the Severance Agreement and what he or she would get under that ruling.  In the event that a court in the Cash Balance Plan Litigation should rule that despite this Release the Company or the Cash Balance Plan must pay damages other than benefits under the Cash Balance Plan, Employee agrees that he or she will get only the difference, if any, between what Employee has been paid under the Severance Agreement and what he or she would get under that ruling.  Employee is free to consult with counsel representing the plaintiff class in the Cash Balance Plan Litigation, whose names and addresses are attached.  Employee may, of course, contact any other lawyer.  Employee is encouraged to discuss this matter with the lawyer of his or her own choosing.

 

Section 8.  Governing Law.  This Release shall be interpreted, construed and governed according to the laws of the State of North Carolina, without reference to conflicts of law principles thereof.

 

Section 9.  Severability.  It is understood by Employee and the Company that if any part of this Release of Claims is held by a court to be invalid, the remaining portions shall not be affected.

 

This RELEASE OF CLAIMS is executed by the Employee and delivered to the Company on                                           .

 

 

 

EMPLOYEE

 

 

[not to be signed upon execution of Change in Control Agreement]

 

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