CONSULTING AGREEMENT

 

This Consulting Agreement (the “Agreement”), effective as of January 1, 2013, is
made by and between Duke Energy Corporation (“Duke Energy”) and John R. McArthur
(the “Consultant”) (collectively referred to herein as the “Parties” and
individually as a “Party”).

1.          Scope.  The Consultant will provide advice and consulting services
on matters relating to legal, regulatory and legislative policy issues advanced
by Duke Energy before the North Carolina General Assembly and the North Carolina
Utilities Commission (the “NCUC”), as well as on methods and procedures for
maintaining good relationships with government officials in North Carolina, as
may be requested from time to time by the Executive Vice President for Regulated
Utilities of Duke Energy (the “Services”).  The Consultant will perform all
Services requested by Duke Energy in a competent manner using reasonable care
and diligence and will only interact or correspond with the NCUC and other
government or regulatory officials regarding Duke Energy at the request, and
with the advance permission, of Duke Energy.  The Consultant will predominantly
provide the Services in Raleigh, North Carolina, but may be required to travel
from time to time in order to perform the Services.

2.           Status as an Independent Contractor.  The relationship of the
Consultant with Duke Energy will at all times be that of an independent
contractor and not an employee or agent.  The Parties acknowledge and agree that
Duke Energy shall not exercise general supervision or control over the time,
place or manner in which the Consultant provides the Services.  The Consultant
will have no authority to (i) bind Duke Energy, its subsidiaries, affiliates or
related entities, or (ii) act, incur any liabilities or obligations, or make any
representations or warranties on its or their behalf.  Nothing in this Agreement
will be construed to create a partnership, joint venture, agency or employment
relationship between Duke Energy and the Consultant.  The Parties acknowledge
and agree that the Consultant will not be required to provide more than 40 hours
of Services pursuant to this Agreement in any calendar month. 

3.             Fees and Reimbursement.  During the term of the Agreement, Duke
Energy will pay the Consultant a retainer, payable in arrears, of $14,880 per
month, for Services requested by Duke Energy and provided by the Consultant. 
The Consultant will return all Duke Energy property to Duke Energy at the end of
the Consulting Term (as defined below).  Duke Energy also will reimburse the
Consultant for actual, necessary, and reasonable out-of-pocket business-related
expenses that the Consultant incurs providing the Services requested by Duke
Energy.  On or before the first day of each month, the Consultant agrees to
submit to Duke Energy his invoice for any reasonable out of pocket businesses
expenses incurred by Consultant during the prior month, with such business
expenses to be documented on a form prescribed by Duke Energy and substantiated
by receipts in a manner consistent with Duke Energy’s policies and Duke Energy
agrees to pay Consultant's invoice for reasonable expenses no later than the
thirtieth (30th) day thereafter.  The Parties agree that, except as specifically
set forth in this Section 3, the Consultant shall be entitled to no compensation
or benefits from Duke Energy with respect to the Services, shall not be eligible
to participate in any employee benefit plans of Duke Energy and its subsidiaries
and affiliates in connection with providing Services and shall not be credited
with service or age credit for purposes of eligibility, vesting or benefit
accrual under any employee benefit plan of Duke Energy or its subsidiaries or
affiliates.

4.        Duration and Termination.  This Agreement will commence on January 1,
2013 (“Effective Date”) and expire/terminate on December 31, 2014, unless
earlier terminated pursuant to the terms of this Agreement (the “Consulting
Term”).  This Agreement will be terminated immediately upon the death or
incapacity of the Consultant, and may be terminated (a) immediately, by the
Consultant for any reason, at any time, upon the provision of written notice;
and (b) by Duke Energy with Cause (as defined below).  In the event of the
termination of this Agreement, as of the time of termination, this Agreement
will be of no further force or effect, and no Party will have any liability to
the other Party, except that (a) Section Three (solely with respect to any fees
or expenses of Consultant for Services accrued or incurred on or prior to the
date of termination but not yet paid or reimbursed in full by Duke Energy in
accordance therewith) and Sections Seven, Eight, Nine and Ten will survive such
termination in accordance with their terms (or, if no survival period is
expressly set forth therein, indefinitely); and (b) nothing herein will relieve
any party from liability for any willful breach of this Agreement prior to its
termination.  For the purposes of this Section 4, “Cause” shall mean (i) a
material failure by the Consultant to carry out, or malfeasance or gross
insubordination in carrying out, reasonably assigned duties or instructions
consistent with the Services set forth in this Agreement, (ii) the final
conviction of the Consultant of a felony or crime involving moral turpitude,
(iii) an egregious act of dishonesty by the Consultant (including, without
limitation, theft or embezzlement) in connection with providing Services, or a
malicious action by the Consultant toward the customers or employees of Duke
Energy or any of its affiliates, (iv) a material breach by the Consultant of the
Duke Energy Code of Business Ethics or any other applicable code of conduct, or
(v) the failure of the Consultant to cooperate fully with governmental
investigations involving Duke Energy and/or any of its affiliates.

5.              Taxes and Compliance.  As an independent contractor, the
Consultant is responsible for all taxes associated with any payment he receives
from Duke Energy pursuant to this Agreement and will indemnify Duke Energy and
its subsidiaries, affiliates and related entities and hold them harmless in any
proceeding, lawsuit, claim or demand pertaining to such taxes.  The Consultant
also will comply with all applicable federal, state, and/or local laws in
performing the Services requested by Duke Energy.  If the Consultant performs
the Services requested by Duke Energy at one of Duke Energy’s facilities or
offices, the Consultant will comply with the policies and procedures of such
facilities or offices that apply to other consultants or contractors of Duke
Energy who perform work on Duke Energy’s premises.  In addition, the Consultant
acknowledges that, while he is providing the Services, he will be subject to the
Duke Energy Code of Business Ethics and all other ethical standards and codes of
conduct applicable to attorneys providing legal advice.

6.                Conflicting Engagements.  During the term of this Agreement,
the Consultant will not accept employment with or perform services or work for a
person or entity that Duke Energy reasonably determines, in its sole discretion,
to be adverse to the interests of Duke Energy or that of its subsidiaries,
affiliates or related entities.  If Duke Energy determines that the Consultant
is in breach of this provision of the Agreement, it will provide written notice
to the Consultant as soon as is practicable.  If the Consultant fails to
discontinue the conflicting employment, work or services within ten (10) days of
the date of said written notice, this Agreement will terminate as of the date
specified by Duke Energy in that notice, which date will be no earlier than the
date of the notice.  For the avoidance of doubt, this Section 6 does not limit
the Consultant’s obligations pursuant to Sections 6 and 7 of the Separation and
Settlement Agreement by and between Duke Energy and the Consultant, dated as of
July 10, 2012 (the “Separation Agreement”).

7.              CONFIDENTIALITY.  THE CONSULTANT MAY ACQUIRE OR HAVE ACCESS TO
CONFIDENTIAL AND PROPRIETARY INFORMATION IN PERFORMING THE SERVICES REQUESTED BY
DUKE ENERGY.  THAT CONFIDENTIAL AND PROPRIETARY INFORMATION MAY INCLUDE, BUT IS
NOT LIMITED TO, INFORMATION RELATING TO TRADE SECRETS, INVENTIONS, PRODUCTS,
PROCESSES, MACHINERY, APPARATUS, PRICES, DISCOUNTS, COSTS, BUSINESS AFFAIRS,
FUTURE PLANS OR TECHNICAL DATA BELONGING TO DUKE

 

 

--------------------------------------------------------------------------------

 

 

 

ENERGY, THOSE WITH WHOM DUKE ENERGY HAS CONTRACTED WITH REGARDING SUCH
INFORMATION, AND/OR THE SUBSIDIARIES, AFFILIATES OR RELATED ENTITIES OF DUKE
ENERGY (THE “CONFIDENTIAL INFORMATION”). THE CONSULTANT WILL NOT, AT ANY TIME,
WITHOUT DUKE ENERGY’S PRIOR WRITTEN CONSENT, DIRECTLY OR INDIRECTLY, USE OR
DISCLOSE ANY CONFIDENTIAL INFORMATION FOR HIS BENEFIT OR THE BENEFIT OF ANY
OTHER PERSON OR ENTITY.   THE CONSULTANT’S OBLIGATIONS UNDER THIS PROVISION WILL
SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT AND ARE IN ADDITION TO,
AND NOT IN LIMITATION OF OR PREEMPTION OF, ALL OTHER OBLIGATIONS OF
CONFIDENTIALITY WHICH THE CONSULTANT MAY HAVE TO DUKE ENERGY AND/OR ITS
SUBSIDIARIES, AFFILIATES OR RELATED ENTITIES.  THE CONSULTANT WILL RETURN ALL
CONFIDENTIAL INFORMATION TO DUKE ENERGY AT THE END OF THE CONSULTING TERM. 

The Consultant acknowledges that the Confidential Information is and at all
times remains the sole and exclusive property of Duke Energy and/or its
affiliates and that Duke Energy and/or its affiliates has the exclusive right,
title, and interest to its Confidential Information.  No right or license, by
implication or otherwise, is granted by Duke Energy as a result of the
disclosure of Confidential Information under this Agreement.  Duke Energy
reserves the right at any time in its sole discretion, for any reason or no
reason, to refuse to provide any further access to and to demand the return of
the Confidential Information.  For the avoidance of doubt, this Section 7 does
not limit the Consultant’s obligations with respect to Section 7 of the
Separation Agreement.

8.        Restrictive Covenants.  The restrictive covenants set forth in Section
7 of the Separation Agreement, including, without limitation, the covenant not
to compete, shall remain in full force and effect until the later of (i) the
date they would expire absent this Agreement or (ii) the date the Consulting
Term ends.  For purposes of clarity, the Parties acknowledge that statements by
the Consultant solely to executive officers of Duke Energy shall not result in a
violation of the non-disparagement provision in Section 6 of the Separation
Agreement.

9.         Indemnity.  The Consultant will indemnify and hold Duke Energy and
its subsidiaries, affiliates and related entities harmless from any and all
claims, demands, suits, actions, causes of action, damages, losses, injuries,
costs and expenses, including, but not limited to, attorneys’ fees, payments,
judgments, and any and all liabilities arising, or alleged to arise, in whole or
in part, from or out of, in any manner whatsoever, the willful misconduct or
gross negligence of the Consultant in performing the Services requested by Duke
Energy pursuant to this Agreement.  Subject to the preceding sentence, Duke
Energy agrees to indemnify and hold the Consultant harmless with respect to the
results of any action taken based on the advice of the Consultant, including all
losses and damages resulting from any legal or regulatory action.  This
provision will continue in full force and effect notwithstanding expiration or
termination of this Agreement. 

10.            Miscellaneous.   

 

a)       Successors.  This Agreement will be binding on the Parties and their
respective successors and permitted assigns.  Any assignment of this Agreement,
in whole or in part, by the Consultant without Duke Energy’s prior written
consent (in its sole discretion) will be null and void.  Nothing in this
Agreement, express or implied, is intended or will be construed to confer upon
any person other than the Parties any right, remedy or claim under or by reason
of this Agreement.

 

b)        Relief.  The Parties agree that the other would be damaged irreparably
in the event any of the provisions of Sections Seven and Eight were not
performed in accordance with their specific terms or were otherwise breached and
that money damages would be an inadequate remedy for any such non-performance or
breach.  The Parties acknowledge and agree that, in the event either party
breaches or threatens to breach any provision of this Agreement, the
non-breaching party will be entitled to seek any and all equitable and legal
relief provided by law, specifically including immediate and permanent
injunctive relief to prevent any breach or threatened breach of any of such
provisions and to enforce such provisions specifically (without posting a bond
or other security).  The Parties hereby waive any claim that the other has an
adequate remedy at law.  The Parties agree that the foregoing relief will not be
construed to limit or otherwise restrict their ability to pursue any other
remedy provided by law, including the recovery of any actual, compensatory or
punitive damages. 

 

c)          Notices.  All notices, requests, demands, consents and other
communications under this Agreement will be in writing and will be delivered by
hand, nationally recognized overnight courier, or registered or certified mail,
return receipt requested, first class postage prepaid, addressed as follows:

 

 

 

--------------------------------------------------------------------------------

 

 

 

If to Duke Energy: 

 

Address:

Duke Energy Corporation

550 South Tryon Street

Charlotte, North Carolina 28202

 

Attention:

Corporate Secretary

 

If to the Consultant: 

At the most recent address in Duke Energy’s records.

 

a)             Applicable Law.  This Agreement will be governed by, construed,
and enforced in accordance with the procedural and substantive laws of the State
of North Carolina.   Any dispute, controversy or claim arising out of or
relating to this Agreement will be submitted to the state or federal court in
North Carolina.

 

b)             Severability.  If any term or provision of this Agreement is
deemed to be invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and conditions of this Agreement will remain
in full force and effect.  If any term or provision of this Agreement is deemed
to be excessively broad in scope, it will be construed by limiting and reducing
it, so as to be enforceable to the extent compatible with the applicable law
then in effect. 

 

c)              Waiver of Breach.  No delay or omission by a Party to exercise
any right under this Agreement will be construed as a waiver unless the waiver
is in writing.  No waiver by either Party of any breach of this Agreement by the
other Party will be construed as a waiver of any subsequent breach. 

 

d)              Amendment.  This Agreement may not be modified except by a
written document signed by both Parties.  This Agreement constitutes the entire
agreement between the Parties and supersedes all previous communications,
representations, and agreements, oral or written, between the Parties with
respect to the subject matter of this Agreement. 

 

e)              Counterparts.  This Agreement may be executed in counterparts,
each of which will be an original, but all of which together will constitute one
and the same agreement. 

 

 

--------------------------------------------------------------------------------

 

 

 

 

IN WITNESS THEREOF, the Consultant has hereunto set his hand, and Duke Energy
has caused these presents to be executed in its name and on its behalf.

CONSULTANT                                                                       
DUKE ENERGY CORPORATION

/s/ John R. McArthur                               
                                 /s/ Jennifer L.
Weber___________________________

Executive Vice President

and Chief Human Resources Officer

 

December 28, 2012                                
                                  1/4/13_______________________________________ 

Date                                                                
                          Date

 

 

 

--------------------------------------------------------------------------------