Exhibit 10.6
SEVERANCE AGREEMENT
     THIS AGREEMENT, dated May 1, 2006, is made by and between PIEDMONT NATURAL
GAS COMPANY, INC., a North Carolina corporation (the “Company”), and JANE
LEWIS-RAYMOND (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 of the Company 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.
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:
     1. Defined Terms. The definitions of capitalized terms used in this
Agreement are provided in the last Section hereof.
     2. Term of Agreement. The Term of this Agreement shall commence on the date
hereof and shall continue in effect through December 31, 2006; provided,
however, that commencing on January 1, 2007 and each January 1 thereafter, the
Term shall automatically be extended for one additional year unless, not later
than fifteen (15) months prior to the applicable January 1, the Company or the
Executive shall have given notice not to extend the Term; and further provided,
however, that if a Change in Control shall have occurred during the Term, the
Term shall expire at the end of the thirty-sixth (36th) calendar month after the
calendar month in which such Change in Control occurred. For example, if a
Change in Control were to occur on July 1, 2006, the Term of this Agreement
would expire on June 30, 2009, and if a Change in Control were to occur on
July 1, 2009, the Term of this Agreement would expire on June 30, 2012
(regardless of whether on or before September 30, 2006 either party had given
notice to the other party not to extend the Term as provided above).
     3. Company’s Covenants Summarized. In order to induce the Executive to
remain in the employ of the Company and in consideration of the Executive’s
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments and the
other payments and benefits described herein. Except as provided in Section 9.1

 

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hereof, no Severance Payments shall be payable under this Agreement unless there
shall have been (or, under the terms of the second sentence of Section 6.1
hereof, there shall be deemed to have been) a termination of the Executive’s
employment with the Company following a Change in Control and during the Term.
This Agreement shall not be construed as creating an express or implied contract
of employment and, except as otherwise agreed in writing between the Executive
and the Company, the Executive shall not have any right to be retained in the
employ of the Company.
     4. The Executive’s Covenants. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Potential Change in
Control during the Term, the Executive will remain in the employ of the Company
until the earliest of (i) a date which is twelve (12) months from the date of
such Potential Change of Control, (ii) the date of a Change in Control,
(iii) the date of termination by the Executive of the Executive’s employment for
Good Reason or by reason of death, Disability or Retirement, or (iv) the
termination by the Company of the Executive’s employment for any reason. Should
the Executive fail to comply with the provisions of this paragraph 4, the
Company’s sole remedy shall be to deny the payment of any Severance Payments to
the Executive.
     5. Compensation Other Than Severance Payments.
          5.1 Following a Change in Control and during the Term, during any
period that the Executive fails to perform the Executive’s full-time duties with
the Company as a result of incapacity due to physical or mental illness, the
Company shall pay the Executive’s full salary to the Executive at the rate in
effect at the commencement of any such period, together with all compensation
and benefits payable to the Executive under the terms of any compensation,
benefit or incentive plan, program or arrangement maintained by the Company
during such period, until the Executive’s employment is terminated by the
Company for Disability.
          5.2 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’s full salary to the Executive through the Date of Termination at the
rate in effect immediately prior to the Date of Termination or, if higher, the
rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company’s executive compensation, benefit and incentive plans,
programs or arrangements as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as in effect immediately
prior to the first occurrence of an event or circumstance constituting Good
Reason.
          5.3 If the Executive’s employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay to the
Executive the Executive’s normal post-termination compensation and benefits as
such payments become due, including in a lump sum in cash that portion of the
Executive’s vacation pay vested and accrued but not paid. Such post-termination
compensation and benefits shall be determined under, and paid in accordance
with, the Company’s long-term incentive stock plan, pension, supplemental
retirement, insurance and other executive compensation, benefit or incentive
plans, programs and arrangements as in effect

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immediately prior to the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the occurrence of the first event
or circumstance constituting Good Reason.
     6. Severance Payments.
          6.1 Subject to Section 6.2 hereof, if the Executive’s employment is
terminated following a Change in Control and during the Term, other than (A) by
the Company for Cause, (B) by reason of the Executive’s death or Disability, or
(C) by the Executive without Good Reason (including Retirement by the
Executive), then the Company shall pay the Executive the amounts, and provide
the Executive the benefits, described in this Section 6.1 (“Severance
Payments”), in addition to any payments and benefits to which the Executive is
entitled under Section 5 hereof. For purposes of this Agreement, the Executive’s
employment shall be deemed to have been terminated following a Change in Control
by the Company without Cause or by the Executive with Good Reason, if (i) the
Executive’s employment is terminated by the Company without Cause prior to a
Change in Control (whether or not a Change in Control ever occurs) and such
termination was at the request or direction of a Person who has entered into an
agreement with the Company the consummation of which would constitute a Change
in Control, (ii) the Executive terminates his employment for Good Reason prior
to a Change in Control (whether or not a Change in Control ever occurs) and the
circumstance or event which constitutes Good Reason occurs at the request or
direction of such Person, or (iii) the Executive’s employment is terminated by
the Company without Cause or by the Executive for Good Reason and such
termination or the circumstance or event which constitutes Good Reason is
otherwise in connection with or in anticipation of a Change in Control (whether
or not a Change in Control ever occurs). For purposes of any determination
regarding the applicability of the immediately preceding sentence, any position
taken by the Executive shall be presumed to be correct unless the Company
establishes by clear and convincing evidence that such position is not correct.
               (A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and 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 3.00 times the sum of
(i) the Executive’s annual 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) an
amount equal to the average of the Executive’s annual W-2 Compensation for the
three years ending on the last day of the month prior to the Date of
Termination.
               (B) For the 36-month period immediately following the Date of
Termination, the Company shall arrange to provide the Executive and his
dependents life, disability, accident and health insurance benefits
substantially similar to those provided to the Executive and his dependents
immediately prior to the Date of Termination or, if more favorable to the
Executive, those provided to the Executive and his dependents immediately prior
to the first occurrence of an event or circumstance constituting Good Reason, at
no greater cost to the Executive than the cost to the Executive immediately
prior to such date or occurrence; provided, however, that, unless the Executive
consents to a different method (after taking into account the effect of such
method on the calculation of “parachute payments” pursuant to Section 6.2
hereof), such health insurance benefits shall be

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provided through a third-party insurer. Benefits otherwise receivable by the
Executive pursuant to this Section 6.1(B) shall be reduced to the extent
benefits of the same type are received by or made available to the Executive
during the 36-month period following the Executive’s termination of employment
(and any such benefits received by or made available to the Executive shall be
reported to the Company by the Executive); provided, however, that the Company
shall reimburse the Executive for the excess, if any, of the cost of such
benefits to the Executive over such cost immediately prior to the Date of
Termination or, if more favorable to the Executive, the first occurrence of an
event or circumstance constituting Good Reason. If the Severance Payments shall
be decreased pursuant to Section 6.2 hereof, and the Section 6.1(B) benefits
which remain payable after the application of Section 6.2 hereof are thereafter
reduced pursuant to the immediately preceding sentence, the Company shall, no
later than five (5) business days following such reduction, pay to the Executive
the least of (a) the amount of the decrease made in the Severance Payments
pursuant to Section 6.2 hereof, (b) the amount of the subsequent reduction in
these Section 6.1(B) benefits, or (c) the maximum amount which can be paid to
the Executive without being, or causing any other payment to be, nondeductible
by reason of section 280G of the Code.
          6.2      (A) Notwithstanding any other provisions of this Agreement,
in the event that any payment or benefit received or to be received by the
Executive 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 with the Company, any Person whose actions
result in a Change in Control or any Person affiliated with the Company or such
Person) (all such payments and benefits, including the Severance Payments, being
hereinafter called “Total Payments”) would not be deductible (in whole or part),
by the Company, an affiliate or Person making such payment or providing such
benefit as a result of section 280G of the Code, then, to the extent necessary
to make such portion of the Total Payments deductible (and 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 cash Severance
Payments shall first be reduced (if necessary, to zero), and all other Severance
Payments shall thereafter be reduced (if necessary, to zero); provided, however,
that the Executive may elect to have the noncash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance Payments.
               (B) For purposes of this limitation, (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”) reasonably acceptable to the Executive and selected by
the accounting firm which was, immediately prior to the Change in Control, the
Company’s independent auditor (the “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, (iii) the Severance Payments shall
be reduced only to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii)) in their entirety constitute
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance
as deductions by reason of section 280G of the Code, in the opinion of Tax
Counsel, and (iv) the value of any noncash benefit or any deferred payment or
benefit included in the Total Payments shall be

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determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
               (C) If it is established pursuant to a final determination of a
court or an Internal Revenue Service proceeding that, notwithstanding the good
faith of the Executive and the Company in applying the terms of this
Section 6.2, the Total Payments paid to or for the Executive’s benefit are in an
amount that would result in any portion of such Total Payments being subject to
the Excise Tax under section 4999 of the Code, then, if such repayment would
result in (i) no portion of the remaining Total Payments being subject to the
Excise Tax and (ii) a dollar-for-dollar reduction in the Executive’s taxable
income and wages for purposes of federal, state and local income and employment
taxes, the Executive shall have an obligation to pay the Company upon demand an
amount equal to the sum of (i) the excess of the Total Payments paid to or for
the Executive’s benefit over the Total Payments that could have been paid to or
for the Executive’s benefit without any portion of such Total Payments being
subject to the Excise Tax; and (ii) interest on the amount set forth in clause
(i) of this sentence at the rate provided in section 1274(b)(2)(B) of the Code
from the date of the Executive’s receipt of such excess until the date of such
payment.
          6.3 The payments provided in subsection (A) of Section 6.1 hereof
shall be made not later than the fifth day following the Date of Termination;
provided, however, that if the amounts of such payments, and the limitation on
such payments set forth in Section 6.2 hereof, cannot be finally determined on
or before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Company of the minimum amount of
such payments to which the Executive is clearly entitled and shall pay the
remainder of such payments (together with interest on the unpaid remainder (or
on all such payments to the extent the Company fails to make such payments when
due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth (5th) business day after demand by the Company (together with interest
at 120% of the rate provided in section 1274(b)(2)(B) of the Code). 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).
     7. Termination Procedures and Compensation During Dispute.
          7.1 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 10 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
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for

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termination of the Executive’s employment under the provision so indicated.
Further, a Notice of Termination for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board that was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive’s counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth in clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
          7.2 Date of Termination. “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 more than sixty (60) days, respectively, from the
date such Notice of Termination is given).
          7.3 Dispute Concerning Termination. If within fifteen (15) days after
any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice of
dispute given by the Executive only if such notice is given in good faith and
the Executive pursues the resolution of such dispute with reasonable diligence.
          7.4 Compensation During Dispute. If a purported termination occurs
following a Change in Control and during the Term and the Date of Termination is
extended in accordance with Section 7.3 hereof, the Company shall continue to
pay the Executive the full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the Date of Termination, as determined in accordance with
Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all
other amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
     8. 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 6 hereof or Section 7.4 hereof.
Further, the amount of any payment or benefit provided for in

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this Agreement (other than Section 6.1(B) hereof) shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
     9. Successors; Binding Agreement.
          9.1 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. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive’s employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
          9.2 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.
     10. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive’s signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
To the Company:
Piedmont Natural Gas Company, Inc.
P.O. Box 33068
Charlotte, North Carolina 28233
Attention: Senior Vice President – Corporate and Community Affairs
     11. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the

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Executive and such officer as may be specifically designated by the Board. 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 on or following a
Change in Control (i) by the Company other than for Cause or (ii) 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. 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 Sections 6 and 7 hereof) shall survive such expiration.
     12. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
     13. 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.
     14. Settlement of Disputes; Arbitration.
          14.1 All claims by the Executive for benefits under this Agreement
shall be directed to and determined by the Board and shall be in writing. Any
denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after notification by the
Board that the Executive’s claim has been denied.
     14.2 Any further dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in Charlotte, North
Carolina in accordance with the rules of the American Arbitration Association
then in effect; provided, however, that the evidentiary standards set forth in
this Agreement shall apply. Judgment may be entered on the arbitrator’s award in
any court having jurisdiction. Notwithstanding any provision of this Agreement
to the contrary, the Executive shall be entitled to seek specific performance of
the Executive’s right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.

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     15. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below:
          (A) “Affiliate” shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
          (B) “Auditor” shall have the meaning set forth in Section 6.2 hereof.
          (C) “Base Amount” shall have the meaning set forth in section
280G(b)(3) of the Code.
          (D) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
          (E) “Board” shall mean the Board of Directors of the Company.
          (F) “Cause” for termination by the Company of the Executive’s
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive’s duties with the Company (other than any
such failure resulting from the Executive’s incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)
which failure shall continue unabated for thirty (30) days after a written
demand for substantial performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive’s duties, or
(ii) the willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act,
or failure to act, on the Executive’s part shall be deemed “willful” unless
done, or omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive’s act, or failure to act, was in the best
interest of the Company and (y) in the event of a dispute concerning the
application of this provision, no claim by the Company that Cause exists shall
be given effect unless the Company establishes by clear and convincing evidence
that Cause exists.
          (G) 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:
               (I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates) representing 20% or more of the combined voting power
of the Company’s then outstanding securities, excluding any Person who becomes
such a Beneficial Owner in connection with a transaction described in clause
(i) of paragraph (III) below; or
               (II) the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any

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new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for election
by the Company’s shareholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
on the date hereof or whose appointment, election or nomination for election was
previously so approved or recommended; or
               (III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates other than in connection with the acquisition
by the Company or its Affiliates of a business) representing 20% or more of the
combined voting power of the Company’s then outstanding securities; or
               (IV) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by
shareholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
          (H) “Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time.
          (I) “Company” shall mean Piedmont Natural Gas Company, Inc. and,
except in determining under Section 15(G) 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.
          (J) “Date of Termination” shall have the meaning set forth in
Section 7.2 hereof.
          (K) “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

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Termination is given, the Executive shall not have returned to the full-time
performance of the Executive’s duties.
          (L) “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.
          (M) “Executive” shall mean the individual named in the first paragraph
of this Agreement.
          (N) “Good Reason” for termination by the Executive of the Executive’s
employment shall mean the occurrence (without the Executive’s express written
consent) after any Change in Control, or prior to a Change in Control under the
circumstances described in clauses (ii) and (iii) of the second sentence of
Section 6.1 hereof (treating all references in paragraphs (I) through (VII)
below to a “Change in Control” as references to a “Potential Change in
Control”), of any one of the following acts by the Company, or failures by the
Company to act, unless, in the case of any act or failure to act described in
paragraph (I), (V), (VI) or (VII) below, 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) the assignment to the Executive of any duties inconsistent
with the Executive’s status as a senior executive officer of the Company, a
change in the Executive’s reporting responsibilities, titles or offices, or a
substantial adverse alteration in the nature or status of the Executive’s
responsibilities from those in effect immediately prior to the Change in Control
other than any such alteration primarily attributable to the fact that the
Company may no longer be a public company;
               (II) a reduction by the Company in the Executive’s annual base
salary as in effect on the date hereof or as the same may be increased from time
to time except for across-the-board salary reductions (not to exceed 10%)
similarly affecting all senior executives of the Company and all senior
executives of any Person in control of the Company including the Chief Executive
Officer;
               (III) the relocation of the principal executive offices to a
location more than 35 miles from the Company’s principal executive offices
immediately prior to the Change in Control or the Company’s requiring the
Executive to be based anywhere other than the location of the Company’s
executive offices except for required travel on the Company’s business to an
extent substantially consistent with the Executive’s present business travel
obligations;
               (IV) the failure by the Company to pay to the Executive any
portion of the Executive’s current compensation or benefits except pursuant to
an across-the-board compensation or benefit deferral (not to exceed 10%)
similarly affecting all senior executives of the Company and all senior
executives of any Person in control of the Company including the Chief Executive
Officer, or to pay to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;

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               (V) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately prior to the
Change in Control which is material to the Executive’s total compensation,
including but not limited to the Company’s long-term incentive plans or any
substitute plans adopted prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Company to continue the
Executive’s participation therein (or in such substitute or alternative plan) on
a basis not less favorable, both in terms of the amount or timing of payment of
benefits provided and the level of the Executive’s participation relative to
other participants, as existed immediately prior to the Change in Control;
               (VI) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by the Executive
under any of the Company’s pension, supplement retirement, savings, life
insurance, supplemental life insurance, medical, health and accident, or
disability plans in which the Executive was participating immediately prior to
the Change in Control (except for across-the-board changes similarly affecting
all senior executives of the Company and all senior executives of any Person in
control of the Company, including the Chief Executive Officer, not to exceed
10%), the taking of any other action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive the Executive of
any material fringe benefit enjoyed by the Executive at the time of the Change
in Control, or the failure by the Company to provide the Executive with the
number of paid vacation days to which the Executive is entitled either by prior
written agreements or on the basis of years of service with the Company in
accordance with the Company’s normal vacation policy in effect at the time of
the Change in Control; or
               (VII) any purported termination of the Executive’s employment
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1 hereof; for purposes of this Agreement, no such
purported termination shall be effective.
          The Executive’s right to terminate the Executive’s employment for Good
Reason shall not be affected by the Executive’s incapacity due to physical or
mental illness. 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.
          For purposes of any determination regarding the existence of Good
Reason, any claim by the Executive that Good Reason exists shall be presumed to
be correct unless the Company establishes by clear and convincing evidence that
Good Reason does not exist.
          (O) “Notice of Termination” shall have the meaning set forth in
Section 7.1 hereof.
          (P) “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,

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by the shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company.
          (Q) “Potential Change in Control” shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
               (I) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control;
               (II) the Company or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would constitute a
Change in Control;
               (III) any Person becomes the Beneficial owner, directly or
indirectly, of securities of the Company representing 15% or more of either the
then outstanding shares of common stock of the Company or the combined voting
power of the Company’s then outstanding securities (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its affiliates); or
               (IV) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
          (R) “Retirement” shall be deemed the reason for the termination by the
Executive of the Executive’s employment if such employment is terminated
voluntarily by the Executive in accordance with the Company’s retirement policy,
including early retirement, generally applicable to its salaried employees.
          (S) “Severance Payments” shall have the meaning set forth in
Section 6.1 hereof.
          (T) “Tax Counsel” shall have the meaning set forth in Section 6.2
hereof.
          (U) “Term” shall mean the period of time described in Section 2 hereof
(including any extension, continuation or termination described therein).
          (V) “Total Payments” shall mean those payments so described in
Section 6.2 hereof.
          (W) “W-2 Compensation” shall mean all amounts received for services
actually rendered in the course of employment with the Company to the extent
that such amounts are includible in gross income as wages for federal income tax
purposes plus all amounts that are contributed by the Company pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Executive under Code Sections 125 or 401(k) and minus all amounts includible
in the gross income of the Executive for annual base salary, expense
reimbursements or allowances, moving expenses, club initiation fees or special
assessments, deferred compensation and welfare benefits, or gross-ups for taxes.

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              PIEDMONT NATURAL GAS COMPANY
 
       
 
  By:   /s/ Thomas E. Skains
 
       
 
           Thomas E. Skains
 
           President & CEO

              Name of Officer
 
            /s/ Jane R. Lewis-Raymond      
 
  Address:   314 Center Street North
 
      Vienna, VA 22180

Employment Agreement reviewed and approved by the Board of Directors this 7th
day of June, 2006.

         
 
  By:        /s/ John W. Harris
 
       
 
           John W. Harris
 
           Chairman of Compensation Committee

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