Exhibit 10.1

 

CHANGE IN CONTROL AGREEMENT

 

THIS AGREEMENT, dated as of April 30, 2014, is made by and between Duke Energy
Corporation, a Delaware corporation (the “Company”), and Lloyd M. Yates (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, although the Executive was not a party to a Change in Control Agreement
prior to his execution of this Agreement, the Company was a party to Change in
Control Agreements with certain of its other executives, which agreements were
amended, restated and replaced in their entirety with this Agreement in order to
comply with Section 409A of the Code; and

 

WHEREAS, the Executive was previously provided with severance protection under
the Progress Energy, Inc. Management Change-In-Control Plan, which plan ceases
to provide severance protection to the Executive after July 2, 2014.

 

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.

 

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(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.

 

(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)

 

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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 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

 

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(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).

 

(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 be July 3, 2014.

 

(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 material 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 material 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) a material diminution in the Executive’s positions (including
status, offices, titles and reporting relationships), authority, duties or
responsibilities from those in effect

 

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immediately before the Change in Control.  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 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

 

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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
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.

 

(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

 

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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 dependents medical
and dental 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 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 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.

 

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(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 of restricted stock, held by the Executive at
the time of his 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

 

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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),
4.1(B), 4.1(D) and 4.1(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) 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.

 

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(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 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 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 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

 

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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 violates the provisions of Section 7 hereof during the Restricted Period, he
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 violates the provisions of
Section 7 hereof following the payment or commencement of any Severance
Payments, (A) he will forfeit and not be entitled to any further Severance
Payments, and (B) he will be obligated to repay to the Company an amount in
respect of the Severance Payments previously made to him 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 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

 

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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 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 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 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 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 at all times 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

 

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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 employment. If the Executive receives a subpoena or other judicial process
requiring that he 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 possession. The
Executive further represents that he 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 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 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.

 

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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

Charlotte, North Carolina 28201-1006

Attention: Chief Legal Officer

 

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

 

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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, 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.

 

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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
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.

 

16.   Cooperation. The Executive agrees that he 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
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 in connection with such cooperation. To the maximum extent
permitted by law, the Executive agrees that he will notify the Board if he 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

 

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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 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.

 

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

 

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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:

/s/ JENNIFER L. WEBER

 

Name:

Jennifer L. Weber

 

Title:

Executive Vice President & Chief Human Resources Officer

 

 

 

 

 

/s/ LLOYD M. YATES

 

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 would not otherwise be entitled,  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 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 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 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 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

 

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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 the Company or any of the Company
Releasees.   The Employee represents that he 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 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
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 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 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.  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.

 

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Section 8.  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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