EXHIBIT 10.3


 


NONQUALIFIED STOCK OPTION AGREEMENT

(Optionee: James E. Rogers

                         Grant
Date)


 


THIS AGREEMENT is made as of the Grant Date specified above
(the “Grant Date”), between Duke Energy Corporation, a Delaware corporation
(the “Corporation”), and the Optionee specified above (the “Optionee”).


 


RECITALS


 


The
Corporation has entered into an employment agreement with the Grantee dated                              
(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 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).


 


Section 1.  Grant
and Designation of Option.  Pursuant
to the provisions of the Employment Agreement, the Corporation hereby grants to
the Optionee, subject to the terms and conditions of the Plan, the Employment
Agreement and this Agreement, the right and option to purchase from the
Corporation the aggregate number of                 
shares of common stock of the Company (“Common Stock”) at a per share price of                 
(the “Option Price”), all subject to adjustment as provided in Section 3.2
of the Plan (collectively, the “Option”). The Option is not an incentive stock
option within the meaning of Section 422 of the Code. This Agreement shall
constitute an “Award Agreement” under the Plan.


 


Section 2.  Term
of Option and Vesting.  Subject to
earlier forfeiture, termination, acceleration or cancellation of the Option as
provided in this Agreement, the term of the Option shall be for a period of ten
(10) years from the Grant Date.  Subject
to the provisions of this Agreement, the Option shall vest at such times and as
to such number of shares as determined on the basis of the following schedule:


 


	
  Number of Shares

  	
   

  	
  Upon
  Optionee remaining 

  continuously employed with the 

  Corporation and Subsidiaries from 

  the Grant Date through

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


Section 3.  Method of Exercise.  To the extent that the right to purchase
shares has become vested, the Option, or any part thereof, may be exercised by
giving signed, written notice 


 

















 


of
exercise to the Corporation (the “Exercise Notice”) specifying the number of
shares to be purchased, subject to Section 7.  The date of exercise shall be the date the
properly completed Exercise Notice is delivered to the Corporation.  The Exercise Notice shall be accompanied by
payment of the aggregate Option Price for the shares to be purchased, in the
following manner:


 


(a)           in U.S. dollars by personal check,
bank draft or money order payable to the order of the Corporation, or by wire
transfer or direct account debit; or


 


(b)           by delivery of shares of Common Stock
or other securities of the Corporation with a Fair Market Value on the date of
exercise at least equal to the Option Price for the shares being purchased; or


 


(c)           by combination of the methods
described in paragraphs (a) and (b) above.


 


For
purposes of paragraph (a) above, if, and in such manner, as the Optionee
is permitted by the Corporation’s Executive Compensation and Benefits
Department, and which is not contrary to federal or state securities or other
laws, rules and regulations, the Optionee may provide for the payment of
the aggregate Option Price for the shares to be purchased by delivering a
properly executed Exercise Notice together with irrevocable instructions to a
broker to promptly deliver to the Corporation the amount of such aggregate
Option Price.  The Corporation, acting
through its Executive Compensation and Benefits Department, may comply with
applicable law or internal procedures by restricting the manner by which the
Optionee may pay the Option Price or permitting an alternate method therefore.


 


Subject
to Section 4 and the other applicable provisions of this Agreement and the
Plan, in the event of the exercise of the Option, the Corporation shall deliver
to the Optionee or, if applicable, to a broker designated by the Optionee, a
certificate representing the shares of Common Stock purchased as a result of the
exercise.


 


Section 4.  Tax Withholding.  Shares of Common Stock shall not be issued
upon the exercise of the Option unless all federal, state and other
governmental withholding tax requirements arising from such exercise have been
satisfied by the Optionee or provision therefor has been made to the
satisfaction of the Executive Compensation and Benefits Department.  The number of shares of Common Stock that
would otherwise be deliverable upon exercise of the Option shall be reduced by
the Committee, or its delegatee, to fully satisfy any tax withholding
requirements, unless the Committee, or its delegatee, in its discretion permits
Optionee to satisfy such tax obligation by other payment to the Corporation.


 


Section 5.  Nonalienation.  The Option granted hereunder is not assignable
or transferable by the Optionee otherwise than by will or the laws of descent
and distribution, and is exercisable, during the Optionee’s lifetime, only by
the Optionee.  Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of the Option, or of
any right or privilege conferred hereby, contrary to the provisions hereof, or
upon the levy of any attachment or similar process upon, or other voluntary or
involuntary attempted alienation of, the Option, or any right or privilege
conferred hereby, the Option and the right and privilege conferred hereby shall
immediately become null and void.  Notwithstanding
the foregoing provisions of this Section 5, 


 


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in
accordance with Section 6.5 of the Plan, the Optionee may, with the
advance approval of the Committee, transfer or assign some or all of the Option
granted hereunder to members of the Optionee’s immediate family (as determined
by the Committee) or to trusts, partnerships or corporations whose
beneficiaries, members or owners are members of the Optionee’s immediate
family. Any such transfer or assignment shall be subject to the terms and
conditions specified by the Committee as described in an Option Transfer
Agreement to be executed by the Corporation, the Optionee and the assignee or
transferee.  Except to the extent
provided in Sections 3 or 4 above or the foregoing provisions of this Section 5,
in no event may shares of Common Stock subject to the Option be sold,
transferred, exchanged, assigned, pledged, hypothecated, alienated or otherwise
encumbered until January 1, 2014 or, if earlier, the termination of the
Optionee’s continuous employment by the Corporation (including its Subsidiaries).


 


Section 6.  Rights as a Stockholder.  The Optionee shall have no rights as a
stockholder with respect to any shares of Common Stock subject to the Option
prior to the date of issuance to Optionee of a certificate or certificates for
such shares.


 


Section 7.  Effect of Termination of Employment.  The Option shall be subject to the following
provisions in the case of the cessation of the Optionee’s employment during the
term of the Option:


 


(a)           In the event that the Optionee’s
continuous employment by the Corporation (including Subsidiaries) terminates by
reason of death or disability (meaning any physical or mental illness or injury
that precludes the Optionee 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 described
in the Employment Agreement, any portion of the Option that is then unvested shall
vest immediately.


 


(b)           In the event that the Optionee’s
continuous employment by the Corporation (including Subsidiaries) terminates as
a result of termination of such employment (i) by the Corporation without “Cause”
(as defined in the Employment Agreement) or (ii) by the Grantee with “Good
Reason” (as defined in the Employment Agreement) or (iii) by reason of
retirement of the Grantee with approval of the Board, subject to the timely
execution and non-revocation of a release of claims as described in the
Employment Agreement, any portion of the Option that is then unvested shall continue
to vest as if the Optionee’s employment had not been terminated.


 


(c)           In the event that the Optionee’s
continuous employment by the Corporation (including Subsidiaries) terminates as
a result of termination of such employment 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, any portion of the Option that is
then unvested shall expire immediately.


 


(d)           In the event that the Optionee’s continuous
employment by the Corporation (including Subsidiaries) terminates as a result
of termination of such employment by the Corporation  for “Cause” (as defined in the Employment
Agreement), each Option (vested or unvested) then outstanding shall expire
immediately.


 


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(e)           In the event that 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, Optionee’s continuous employment by the Corporation
(including Subsidiaries) 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 Optionee with the approval of the Board, any portion of the Option
that is then unvested shall vest immediately.


 


Subject to the limitations
described in the foregoing provisions of this Section 7, the Option may be
exercised, to the extent vested, at any time within ten (10) years from
the Grant Date; provided that, if the Optionee’s employment terminates as
described above in Section 7(c), the Option may be exercised, to the
extent then vested, at any time within ninety (90) days from the date of
termination (provided that in no event may the Option be exercised more than
ten (10) years from the Grant Date), after which time the Option shall
expire.  The Committee may make such
provision as it deems appropriate if the Optionee is on approved leave of
absence from employment by the Corporation (including its Subsidiaries).


 


Section 8.  Notices.  Except as otherwise provided in this
Agreement, any notice to be given to the Corporation under this Agreement shall
be addressed to the Executive Compensation and Benefits Department—Stock Option
(PB04A), Duke Energy Corporation at P.O. Box 1244, Charlotte, North
Carolina 28201-1244, and any notice to be given to the Optionee under this
Agreement shall be addressed to the Optionee at the address for the Optionee
obtained from the records of the Corporation’s Executive Compensation and
Benefits Department; provided, however, that either party may substitute a
different address by notice in writing to the other.  Except as otherwise provided in this
Agreement, any such notice shall be deemed to have been duly given if and when
enclosed in a properly sealed envelope addressed as aforesaid and deposited,
postage prepaid, in a post office or branch post office regularly maintained by
the United States Government.


 


Section 9.  No Employment Rights.  Nothing in the Plan or this Agreement shall
confer upon the Optionee the right to continue in the employment or the service
of the Company or any Subsidiary, or affect the right of the Corporation or any
Subsidiary to terminate the employment or service of the Optionee at any time
for any, or no, reason.


 


Section 10.  Successors and Assigns.  This Agreement shall bind and inure to the
benefit of, and be enforceable by, the Corporation, and its successors and
assigns, and the Optionee, and the Optionee’s successors and assigns expressly
permitted by Section 5.


 


Section 11.  Optionee Obligations under Employment
Agreement and Violations Thereof.  In
accepting the Option, Optionee acknowledges that this Option is subject to Optionee’s
obligations under the confidentiality, noncompetition and nonsolicitation
provisions set forth in Section 9 of the Employment Agreement.  The Optionee agrees that, in the event he
violates the confidentiality, noncompetition or nonsolicitation provisions set
forth in Section 9 of the Employment Agreement, (1) any Options then
outstanding shall expire immediately and (2) if such violation is after
the termination of his employment, he will be obligated to repay to the 


 


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Corporation
the amount of any gains realized by the Optionee upon the exercise of Options
(measured by the difference between the aggregate fair market value on the date
of exercise of shares underlying the Option and the aggregate exercise price of
the Option) within the one-year period prior to the first date of the
violation, with such sum reduced by any amount previously repaid pursuant to
this Section 11.  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 12.  Governing Law.  This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of Delaware applicable to
transactions that take place entirely within the State of Delaware and, where
applicable, the laws of the United States.


 


Section 13.  Determinations.  Determinations by the Committee, or its
delegatee, shall be final and conclusive with respect to the interpretation of
the Plan, the Certificate or this Agreement.


 


Section 14.  Conflicts with Plan, Correction of Errors,
Section 409A and Optionee’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, the
Employment Agreement provision shall be controlling and the applicable
provision of this Agreement and/or 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 the Optionee 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 Optionee 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.


 


By their execution of this
Agreement, the Corporation and Optionee enter into this Agreement and agree to
be bound by its provisions.


 


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IN
WITNESS OF its agreement to be bound by the provisions of this
Agreement, DUKE ENERGY CORPORATION has caused
this Agreement to be signed on its behalf by its duly authorized officer effective
this            day of                          
in duplicate.


 


	
  ATTEST
  

  	
  DUKE
  ENERGY CORPORATION 

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  James
  H. Hance, Jr.

  
	
  Its:
     Corporate Secretary

  	
  Its:
     Chairman, Compensation Committee

  
					



 


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IN
WITNESS OF Optionee’s acceptance of THE OPTION
and Optionee’s agreement to be bound by the provisions of this Agreement
(including, but not limited to, Section 11 hereof) and the Plan, Optionee
has signed this Agreement effective this                                          .


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  James E. Rogers

  



 


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