EXHIBIT 10.4


 


PERFORMANCE AWARD AGREEMENT


 


This Performance
Award Agreement (the “Agreement”) has been made as of                                  
(the “Date of Grant”) between Duke Energy Corporation,
a Delaware corporation, with its principal offices in Charlotte, North Carolina
(the “Corporation”), and James E. Rogers (the
“Grantee”).


 


RECITALS


 


The Corporation has entered
into an employment agreement with the Grantee dated February 19, 2009 (the
“Employment Agreement”), pursuant to which it has agreed to make certain
equity-based awards to the Grantee, including the award memorialized by this
Agreement (the “Award”).  The Award
memorialized by this Agreement is made pursuant to the Duke Energy Corporation
2006 Long-Term Incentive Plan, as it may, from time to time, be further amended
(the “Plan”).  The applicable provisions
of the Plan are incorporated in this Agreement by reference, including the
definitions of terms contained in the Plan (unless such terms are otherwise
defined herein).


 


AWARD


 


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


 


Section 1.  Number and Nature of
Performance Shares and Tandem Dividend Equivalents.


 


(a)                                  At maximum
performance, the number of Performance Shares and the number of tandem Dividend
Equivalents subject to Section 2(a)(i) and the remaining provisions
of this Award (other than Section 2(a)(ii)) are each                 ;
at target performance, the number of Performance Shares and the number of
tandem Dividend Equivalents subject Section 2(a)(i) and the remaining
provisions of this Award (other than Section 2(a)(ii)) are each               .  Such maximum and target number of Performance
Shares shall be subject to adjustment in respect of attainment of safety goals
as further described in Section 2(a)(i). 
The Performance Shares described in this Section 1(a) are
herein referred to as the “Annual Performance Shares.”


 


(b)                                 At maximum
performance, the number of Performance Shares and the number of tandem Dividend
Equivalents subject to Section 2(a)(ii) and the remaining provisions
of this Award (other than Section 2(a)(i)) are each               ;
at target performance, the number of Performance Shares and the number of
tandem Dividend Equivalents subject Section 2(a)(ii) and the
remaining provisions of this Award (other than Section 2(a)(i)) are each                  .  The Performance Shares described in this Section 1(b) are
herein referred to as the “Long-Term Performance Shares” and, together with the
Annual Performance Shares, as the “Performance Shares.”


 

















 


(c)                                  Each
Performance Share, upon becoming vested before its expiration, represents a
right to receive payment in the form of one (1) share of Common
Stock.  Each tandem Dividend Equivalent,
after its tandem Performance Share vests, represents a right to receive a cash
payment equivalent in amount to the aggregate cash dividends declared and paid
on one (1) share of Common Stock for the period beginning on the Date of
Grant and ending on the date the vested, tandem Performance Share is paid or
deferred and before the Dividend Equivalent expires.  Performance Shares and Dividend Equivalents
are used solely as units of measurement, and are not shares of Common Stock and
the Grantee is not, and has no rights as, a shareholder of the Corporation by
virtue of this Award.


 


Section 2.  Vesting of Performance Shares.


 


(a)                                  Performance
Goals


 


Except
as otherwise provided in this Section 2, the Performance Shares shall vest
only if and to the extent the Compensation Committee of the Board of Directors
of the Corporation (the “Committee”), or its delegatee, determines that the
performance goals for the respective performance period (the “Performance Goals”)
have been met (provided that such determination in respect of any performance
period shall be made not later than the first March 15 following the end
of the applicable performance period).  To
the extent Performance Goals are not met, the Performance Shares that do not so
become vested shall be forfeited.


 


(i)                                     The following
Performance Goal shall apply with respect to the Annual Performance Shares and the
related Dividend Equivalents.  Provided
Grantee’s
continuous employment by the Corporation, including Subsidiaries, has not
terminated, or as otherwise provided in Sections 2(b) or 2(c), 80% of such
Performance Shares shall become vested upon the written determination by the
Committee, or its delegatee, in its sole discretion, of the extent to which the
Corporation achieves the same goals (including the safety penalty and adder) established
by the Committee for the other executive officers of the Corporation in respect
of corporate performance under the Duke Energy Corporation Executive Short-Term
Incentive Plan for the period beginning                          
and ending                                    
(the “Short-Term Performance Period”), and the remaining 20% of such
Performance Shares shall become vested upon the written determination by the
Committee, or its delegatee, in its sole discretion, of the extent to which the
Grantee achieves the individual goals established by the Committee for the Short-Term
Performance Period (as set forth on Schedule I hereto), in each case in accordance
with the applicable vesting percentage specified in the following schedule
(expressed as a percent of the target number of Annual Performance Shares) and
subject to the adjustments described therein, and such Annual Performance Shares
that do not so become vested shall be forfeited:


 


	
  Nature of 

  Performance 

  Goal*

  	
   

  	
  Vesting
  Percentage 

  (Minimum Performance)

  	
   

  	
  Vesting 

  Percentage (Target

  Performance)

  	
   

  	
  Vesting
  Percentage 

  (Maximum 

  Performance)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


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*When
a performance determination is at a level between those specified, the
Committee, or its delegatee, in its sole discretion, shall interpolate to
determine the applicable vesting percentage.


 


**
If EPS performance is at less than the minimum level, the Committee reserves
discretion to reduce the amounts otherwise payable by reason of attainment of
the O&M and Reliability Goals.


 


(ii)                                  The following
Performance Goal shall apply with respect to the Long-Term Performance Shares
and the related Dividend Equivalents. 
Provided Grantee’s continuous employment by the Corporation, including
Subsidiaries, has not terminated, or as otherwise provided in Sections 2(b) or
2(c), such Performance Shares shall become vested upon the written
determination by the Committee, or its delegatee, in its sole discretion, of
the extent to which the Corporation achieves the same performance share goals
established by the Committee for the other executive officers of the
Corporation under the Corporation’s        
long-term incentive program for the period beginning                           
and ending                        
(the “Long-Term Performance Period” and, together with the Short-Term
Performance Period, each a “Performance Period”) in accordance with the
applicable vesting percentage specified in the following schedule (expressed as
a percent of the target number of Long-Term Performance Shares), and such Long-Term
Performance Shares that do not so become vested shall be forfeited:


 


	
  Nature of 

  Performance 

  Goal*

  	
   

  	
  Vesting
  Percentage 

  (Minimum Performance)

  	
   

  	
  Vesting 

  Percentage (Target 

  Performance)

  	
   

  	
  Vesting
  Percentage 

  (Maximum 

  Performance)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






*When
a performance determination is at a level between those specified, the
Committee, or its delegatee, in its sole discretion, shall interpolate to
determine the applicable vesting percentage.


 


(b)                                 Certain
Terminations


 


The provisions of this Section 2(b) shall
apply in the event that, prior to the date that the determination of the
achievement of each respective Performance Goal is made, the Grantee’s
continuous employment by the Corporation, including Subsidiaries, terminates as
follows:


 


(i)                                     If such
employment terminates as a result of termination of such employment (1) by
the Corporation without “Cause” (as defined in the Employment Agreement) or (2) by
the Grantee with “Good Reason” (as defined in the Employment Agreement) or (3) by
reason of retirement of the Grantee with approval of the Board of Directors of
the Corporation (the “Board”), subject to the timely execution and
non-revocation of a release of claims as described in the Employment Agreement,
each Performance Share outstanding at the time of such termination shall remain
outstanding and shall be payable (if at all) as determined with its terms
without regard to the termination of employment.


 


(ii)                                  If such
employment terminates (1) as the result of the Grantee’s death or (2) as
the result of the Grantee’s disability (meaning any physical or mental illness
or 


 


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injury
that precludes Grantee from performing any job for which he is qualified and
able to perform based upon his education, training or experience), subject to
the timely execution and non-revocation of a release of claims as further described
in the Employment Agreement, each Performance Share outstanding at the time of
such termination shall remain outstanding and shall be payable (if at all) as
determined with its terms without regard to the termination of employment,
provided that the amount payable shall be such proportion of the amount
otherwise payable that the number of days elapsed at the time of termination
(inclusive) in the applicable Performance Period not yet concluded at the time
of termination bears to the total number of days in the applicable Performance
Period.


 


(iii)                               If such
employment terminates as a result of termination of such employment (1) by
the Employee other than with “Good Reason” (as defined in the Employment
Agreement) and other than by reason of retirement with the approval of the
Board or (2) by the Corporation  for
“Cause” (as defined in the Employment Agreement), each Performance Share
outstanding at the time of such termination shall expire and be forfeited
immediately.


 


(iv)                              If, following
the occurrence of a Change in Control (as defined in the Plan as in effect on
the effective date of the Employment Agreement) and before the second
anniversary of such occurrence, such employment is terminated (1) by the
Corporation without “Cause” (as defined in the Employment Agreement), (2) by
the Grantee with “Good Reason” (as defined in the Employment Agreement) or (3) by
reason of retirement of the Grantee with the approval of the Board, each
Performance Share subject to this Award that is then outstanding shall vest
immediately upon such termination based on the target level of performance,
irrespective of any subsequent determination of the achievement of each
Performance Goal.


 


(c)                                  Approved Leave
of Absence


 


In the event that Grantee is
on an employer-approved, personal leave of absence on the date that the
determination of the achievement of each Performance Goal is made, then, unless
prohibited by law, vesting shall be postponed and shall not occur unless and
until Grantee returns to active service in accordance with the terms of the
approved personal leave of absence and before November 1 of the calendar
year immediately following the calendar year in which the applicable Performance
Period ends, and if the Grantee returns after March 15 of the year
following the year in which the applicable Performance Period ends, payment
shall occur not later than the year in which the Grantee returns.  In the event Grantee does not return to
active service from such leave of absence prior to November 1 of the
calendar year immediately following the calendar year in which the Performance
Period ends, any Performance Shares covered by this Award that were not vested
as of the commencement of such leave shall be immediately forfeited (as if
Grantee terminated employment for purposes of Section 4 hereof).   Further, in the event that such
determination is made and during any portion of the applicable Performance
Period the Grantee was on employer-approved, personal leave of absence, the
applicable vesting percentage shall be determined by the Committee, or its
delegatee, in its sole discretion, to reflect only that portion of the applicable
Performance Period during which such employment continued while the Grantee was
entitled to payment of salary.


 


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Section 3.  Grantee
Obligation under Employment Agreement.  Grantee acknowledges that this Award is
subject to Grantee’s obligations under the confidentiality, noncompetition and
nonsolicitation provisions set forth in Section 9 of the Employment
Agreement.


 


Section 4.  Forfeiture/Expiration.  Any
Performance Share subject to this Award shall be forfeited upon the termination
of the Grantee’s continuous employment by the Corporation, including
Subsidiaries, from the Date of Grant, except to the extent otherwise provided
in Section 2.  Any Dividend
Equivalent subject to this Award shall expire at the time its tandem
Performance Share (i) is vested and paid, or deferred, (ii) is
forfeited, or (iii) expires.  The
Grantee agrees that, in the event he violates the confidentiality,
noncompetition or nonsolicitation provisions set forth in Section 9 of the
Employment Agreement, (1) he will forfeit and not be entitled to any
further payments in accordance with Section 2(b)(i) hereof and (2) if
such violation is after the termination of his employment, he will be obligated
to repay to the Corporation any amounts paid (determined as of the date of
payment) after the termination of employment pursuant to Section 2(b) hereof,
with such sum reduced by any amount previously repaid pursuant to this Section 4. 
Such amount shall be paid to the Corporation in cash in a single sum within ten
(10) business days after the first date of the violation, whether or not
the Corporation 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%.


 


Section 5.  Dividend Equivalent
Payment.  Payment with respect to any Dividend
Equivalent subject to this Award that is in tandem with a Performance Share
that is vested and paid shall be paid in cash to the Grantee at the same time
as the vested Performance Share as provided in Section 6, or, if the
vested Performance Share is deferred by Grantee as provided in Section 6,
payment with respect to the tandem Dividend Equivalent shall likewise be
deferred.  The Dividend Equivalent
payment amount shall equal the aggregate cash dividends declared and paid with
respect to one (1) share of Common Stock for the period beginning on the
Date of Grant and ending on the date the vested, tandem Performance Share is
paid or deferred and before the Dividend Equivalent expires.  However, should the timing of a particular
payment under Section 6 to the Grantee in shares of Common Stock in
conjunction with the timing of a particular cash dividend declared and paid on
Common Stock be such that the Grantee receives such shares without the right to
receive such dividend and the Grantee would not otherwise be entitled to
payment under the expiring Dividend Equivalent with respect to such dividend,
the Grantee, nevertheless, shall be entitled to such payment.  Dividend Equivalent payments shall be subject
to withholding for taxes.  Any required
tax withholdings in respect of Dividend Equivalents attributable to Performance
Shares shall be satisfied by reducing the cash payment in respect of the
required withholding amount, unless the Committee, or its delegatee, in its
discretion, permits Grantee to satisfy such tax obligation by other payment to
the Corporation.


 


Section 6.  Payment of Performance
Shares.   Payment of Performance Shares subject to
this Award that become vested shall be made to the Grantee as soon as
practicable following the end of the applicable Performance Period (and in any
event on or before the first March 15 following the end of the applicable
Performance Period), except to the extent deferred by the Grantee in accordance
with such procedure as the Committee, or its delegatee, may prescribe from time
to time; provided that, in the case of Performance Shares that become vested by
reason 


 


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of
the application of Section 2(b)(iv), payment shall be made as soon as
practicable and in any event within thirty (30) days following the applicable
termination of employment unless the Change in Control does not constitute a
change in the ownership or effective control of the Corporation or a change in
the ownership of a substantial portion of the assets of the Corporation within
the meaning of Section 409A of the Code, in which case payment shall be
made as soon as practicable following the end of the applicable Performance
Period (and in any event on or before the first March 15 following the end
of the applicable Performance Period); and provided further that payment shall
in any event be made in a manner required to avoid accelerated taxation and/or
tax penalties under Section 409A of the Code. Payment (or deferrals, as
applicable) shall be subject to withholding for taxes. Payment shall be in the
form of one (1) share of Common Stock for each full vested Performance
Share, and any fractional vested Performance Share shall be rounded down to the
next whole share for purposes of both vesting under Section 2 and payment
under Section 6.  Notwithstanding
the foregoing, the number of shares of Common Stock that would otherwise be
paid or deferred (valued at Fair Market Value on the date the respective Performance
Share became vested, or if later, payable) shall be reduced by the Committee,
or its delegatee, in its sole discretion, to fully satisfy tax withholding
requirements, unless the Committee, or its delegate, in its discretion requires
Grantee to satisfy such tax obligation by other payments to the Corporation.


 


Section 7.  No Employment Right.  Nothing in this Agreement or in the Plan
shall confer upon the Grantee the right to continued employment with the
Corporation or any Subsidiary, or affect the right of the Corporation or any
Subsidiary to terminate the employment or service of the Grantee at any time
for any reason.


 


Section 8.  Nonalienation.  The
Performance Shares and Dividend Equivalents subject to this Award are not
assignable or transferable by Grantee. 
Upon any attempt to transfer, assign, pledge, hypothecate, sell or
otherwise dispose of any such Performance Share or Dividend Equivalent, or of
any right or privilege conferred hereby, or upon the levy of any attachment or
similar process upon such Performance Share or Dividend Equivalent, or upon
such right or privilege, such Performance Share or Dividend Equivalent, or such
right or privilege, shall immediately become null and void.


 


Section 9.  Determinations.  Determinations
by the Committee, or its delegatee, shall be final and conclusive with respect
to the interpretation of the Plan and this Agreement.


 


Section 10.  Governing Law.  This
Agreement shall be governed, construed and enforced in accordance with the laws
of the State of Delaware applicable to transactions that take place entirely
within that state.


 


Section 11.  Conflicts with Plan,
Correction of Errors, Section 409A and Grantee’s Consent.  In the event that any provision of this
Agreement conflicts in any way with a provision of the Plan, such Plan
provision shall be controlling and the applicable provision of this Agreement
shall be without force and effect to the extent necessary to cause such Plan
provision to be controlling.  In
addition, in the event that any provision of this Agreement and/or Plan
conflicts in any way with a provision of the Employment Agreement, such
Employment Agreement provision shall be controlling and the applicable
provision of this Agreement and/or 


 


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Plan
shall be without force and effect to the extent necessary to cause such
Employment Agreement provision to be controlling, except to the extent such
treatment would constitute a material modification of the Plan requiring
stockholder approval.  In the event that,
due to administrative error, this Agreement does not accurately reflect an
Award properly granted to the Grantee pursuant to the Plan and the Employment
Agreement, the Corporation, acting through its Executive Compensation and
Benefits Department, reserves the right to cancel any erroneous document and,
if appropriate, to replace the cancelled document with a corrected
document.  To the extent applicable, it
is intended that this Agreement comply with the provisions of Section 409A
of the Code and that this Award not result in unfavorable tax consequences to
Grantee under Section 409A of the Code.  This Agreement will be
administered and interpreted in a manner consistent with this intent, and any
provision that would cause this Agreement to fail to satisfy Section 409A
of the Code will have no force and effect until amended to comply therewith
(which amendment may be retroactive to the extent permitted by Section 409A
of the Code).  The Corporation and the Grantee agree to work together in
good faith in an effort to comply with Section 409A of the Code including,
if necessary, amending this Agreement based on further guidance issued by the
Internal Revenue Service from time to time, provided that the Corporation shall
not be required to assume any increased economic burden.  Notwithstanding
anything contained herein to the contrary, to the extent required in order to
avoid accelerated taxation and/or tax penalties under Section 409A of the
Code, the Grantee shall not be considered to have terminated employment with Corporation
for purposes of this Agreement and no payments shall be due to him under this
Agreement which are payable upon his termination of employment until he would
be considered to have incurred a “separation from service” from the Corporation
within the meaning of Section 409A of the Code.  To the extent
required in order to avoid accelerated taxation and/or tax penalties under Section 409A
of the Code, amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to this Agreement during the six-month period
immediately following the Grantee’s termination of employment shall instead be
paid within 30 days following the first business day after the date that is six
months following his termination of employment (or upon his death, if earlier). 
In addition, for purposes of this Agreement, each amount to be paid or benefit
to be provided to the Grantee pursuant to this Agreement shall be construed as
a separate identified payment for purposes of Section 409A of the Code. 
Grantee acknowledges and agrees that payments made under this Agreement are
subject to the Corporation’s requirement that the Grantee reimburse the portion
of any payment where such portion of the payment was predicated upon the
achievement of financial results that are subsequently the subject of a
restatement caused or partially caused by Grantee’s fraud or misconduct.


 


Section 12.  Compliance with Law. 
The Corporation shall make reasonable efforts to comply with all applicable
federal and state securities laws applicable to the Plan and this Award;
provided, however, notwithstanding any other provision of this Award, the
Corporation shall not be obligated to deliver any shares of Common Stock
pursuant to this Award if the delivery thereof would result in a violation of
any such law.


 


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


 


	
  ATTEST:

  	
  DUKE
  ENERGY CORPORATION:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  Marc
  E. Manly

  	
  By:
   James H. Hance, Jr.

  
	
   

  	
  Corporate
  Secretary

  	
  Its:
     Chairman, Compensation Committee

  
				



 


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Acceptance
of Performance Award


 


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


 


 


	
   

  	
   

  	
  Grantee’s
  Signature

  
	
   

  	
  James E. Rogers

  



 


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SCHEDULE I


Short-Term Performance Period


Individual Performance Goals


 


10