Exhibit 10.6

 

PHANTOM STOCK AWARD AGREEMENT

 

This Phantom Stock Award Agreement (the “Agreement”) has been made as of May 11,
2005, (the “Date of Award”) between Duke Energy Corporation, a North Carolina
corporation, with its principal offices in Charlotte, North Carolina (the
“Corporation”), and Jimmy W. Mogg (the “Grantee”).

 

RECITALS

 

Under the Duke Energy Corporation 1998 Long-Term Incentive Plan as amended, and
as it may, from time to time, be further amended (the “Plan”), the Compensation
Committee of the Board of Directors of the Corporation (the “Committee”), or its
delegatee, has determined the form of this Agreement and selected the Grantee,
as an Employee, to receive the award evidenced by this Agreement (the “Award”)
and the Phantom Stock units and tandem Dividend Equivalents that are subject
hereto. The applicable provisions of the Plan are incorporated in this Agreement
by reference, including the definitions of terms contained in the Plan.

 

AWARD

 

In accordance with the Plan, the Corporation has made this Award, effective as
of the Date of Award and upon the following terms and conditions:

 

Section 1. Number and Nature of Phantom Stock Units and Tandem Dividend
Equivalents. The number of Phantom Stock units and the number of tandem Dividend
Equivalents subject to this Award are each thirty-five thousand (35,000). Each
Phantom Stock unit, upon becoming vested before its expiration, represents a
right to receive payment in the form of one (1) share of Common Stock. Each
tandem Dividend Equivalent represents a right to receive cash payments
equivalent to the amount of cash dividends declared and paid on one (1) share of
Common Stock after the Date of Award and before the Dividend Equivalent expires.
Phantom Stock units and Dividend Equivalents are used solely as units of
measurement, and are not shares of Common Stock and the Grantee is not, and has
no rights as, a shareholder of the Corporation by virtue of this Award.

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Section 2. Vesting of Phantom Stock Units. The specified percentage of the
Phantom Stock units subject to this Award, and not previously forfeited, shall
vest, with such percentage considered satisfied to the extent such Phantom Stock
units have previously vested, as follows:

 

(a) 100% upon Grantee remaining continuously employed by the Corporation,
including Subsidiaries, until June 1, 2006. For purposes of vesting under this
Section 2(a), if such employment terminates before June 1, 2006, and constitutes
a “separation from service” under Code Section 409A, (i) as the result of
Grantee’s death, or (ii) as the result of Grantee’s permanent and total
disability within the meaning of Code Section 22(e)(3), 100% of the Phantom
Stock units subject to this Award shall vest.

 

(b) 100%, if a Change in Control occurs after the Date of Award and, following
such occurrence and before June 1, 2006, such employment is terminated
involuntarily, and not for cause, by the Corporation, or employing Subsidiary,
and constitutes a “separation from service” under Code Section 409A.

 

Section 3. Forfeiture/Expiration. Any Phantom Stock unit subject to this Award
shall be forfeited upon the termination of Grantee’s continuous employment by
the Corporation, including Subsidiaries, from the Date of Award, except to the
extent otherwise provided in Section 2, and, if not previously vested and paid,
or forfeited, shall expire immediately before the tenth anniversary of the Date
of Award. Any Dividend Equivalent subject to this Award shall expire at the time
the unit of Phantom Stock with respect to which the Dividend Equivalent is in
tandem (i) is vested and paid, (ii) is forfeited, or (iii) expires.

 

Section 4. Dividend Equivalent Payments. Payments with respect to any Dividend
Equivalent subject to this Award shall be paid in cash to the Grantee as soon as
practicable following any time cash dividends are declared and paid with respect
to the Common Stock on or after the Date of Award and before the Dividend
Equivalent expires. However, should the timing of a particular payment under
Section 5 to the Grantee in shares of Common Stock in conjunction with the
timing of a particular cash dividend declared and paid on Common Stock be such
that the Grantee receives such shares without the right to receive such dividend
and the Grantee would not otherwise be entitled to payment under the expiring
Dividend Equivalent with respect to such dividend, the Grantee, nevertheless,
shall be entitled to such payment. Dividend Equivalent payments shall be subject
to withholding for taxes.

 

Section 5. Payment of Phantom Stock Units. Payment of Phantom Stock units
subject to this Award shall be made to the Grantee as soon as practicable
following the time such units become vested in accordance with Section 2 prior
to their expiration. However, in the event such units become vested in
accordance with Section 2(b), or in accordance with the last sentence of Section
2(a), then, unless waived by the Corporation upon its determination that Grantee
is not a “specified employee” under Code Section 409A, such units shall not be
payable before the date which is 6 months after the date of “separation from
service” under Code Section 409A (or, if earlier, the date of death of the
Grantee). Payment shall be subject to withholding for taxes. Payment shall be in
the form of one (1) share of Common Stock for each full vested unit of Phantom
Stock. Notwithstanding the foregoing, to the extent that Grantee fails to timely
tender to the Corporation sufficient cash to satisfy withholding for tax
requirements, the number of

 

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shares of Common Stock that would otherwise be paid (valued at Fair Market Value
on the date the respective unit of Phantom Stock became vested, or if later,
payable) shall be reduced by the Committee, or its delegatee, in its sole
discretion, to fully satisfy such requirements. In the event that, after any
such reduction in the number of shares of Common Stock to satisfy withholding
for tax requirements, payment would be for any fractional vested Phantom Stock
unit, payment, shall be made in a cash amount equal in value to the
corresponding fraction of a share of Common Stock valued at Fair Market Value on
the date the respective Phantom Stock unit became fractionally vested, or if
later, payable.

 

Section 6. No Employment Rights. Nothing in this Agreement or in the Plan shall
confer upon the Grantee the right to continued employment by the Corporation or
any Subsidiary, or affect the right of the Corporation or any Subsidiary to
terminate the employment or service of the Grantee at any time for any reason.

 

Section 7. Nonalienation. The Phantom Stock units and Dividend Equivalents
subject to this Award are not assignable or transferable by the Grantee. Upon
any attempt to transfer, assign, pledge, hypothecate, sell or otherwise dispose
of any such Phantom Stock unit or Dividend Equivalent, or of any right or
privilege conferred hereby, or upon the levy of any attachment or similar
process upon such Phantom Stock unit or Dividend Equivalent, or upon such right
or privilege, such Phantom Stock unit or Dividend Equivalent or right or
privilege, shall immediately become null and void.

 

Section 8. Determinations. Determinations by the Committee, or its delegatee,
shall be final and conclusive with respect to the interpretation of the Plan and
this Agreement.

 

Section 9. Governing Law. The validity and construction of this Agreement shall
be governed by the laws of the state of North Carolina applicable to
transactions taking place entirely within that state.

 

Section 10. Conflicts with Plan, Correction of Errors, and Grantee’s Consent. In
the event that any provision of this Agreement conflicts in any way with a
provision of the Plan, such Plan provision shall be controlling and the
applicable provision of this Agreement shall be without force and effect to the
extent necessary to cause such Plan provision to be controlling. In the event
that, due to administrative error, this Agreement does not accurately reflect a
Phantom Stock Award properly granted to Grantee pursuant to the Plan, the
Corporation, acting through its Executive Compensation and Benefits Department,
reserves the right to cancel any erroneous document and, if appropriate, to
replace the cancelled document with a corrected document. It is the intention of
the Corporation and the Grantee that this Award not result in unfavorable tax
consequences to Grantee under Code Section 409A. Accordingly, Grantee consents
to such amendment of this Agreement as the Corporation may reasonably make in
furtherance of such intention, and the Corporation shall promptly provide, or
make available to, Grantee a copy of any such amendment.

 

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Notwithstanding the foregoing, this Award is subject to cancellation by the
Corporation in its sole discretion unless the Grantee, by not later than
                         , 2005, has signed a duplicate of this Agreement, in
the space provided below, and returned the signed duplicate to the Executive
Compensation and Benefits Department - Phantom Stock (PB04A), Duke Energy
Corporation, P. O. Box 1244, Charlotte, NC 28201-1244, which, if, and to the
extent, permitted by the Executive Compensation and Benefits Department, may be
accomplished by electronic means.

 

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed and
granted in Charlotte, North Carolina, to be effective as of the Date of Award.

 

ATTEST:   DUKE ENERGY CORPORATION

By:

 

 

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By:

 

 

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    Corporate Secretary   Its:   Chairman and Chief Executive Officer

 

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Acceptance of Phantom Stock Award

 

IN WITNESS OF Grantee’s acceptance of this Award and Grantee’s agreement to be
bound by the provisions of this Agreement and the Plan, Grantee has signed this
Agreement this              day of                     , 2005.

 

 

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Grantee’s Signature

 

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(print name)

 

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(social security number)

 

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(address)

 

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