EXHIBIT 10.2
SEVERANCE AND CONSULTING AGREEMENT
This Severance and Consulting Agreement (the "Agreement"), which is effective as
of this 24th day of October 2006, is entered into by and between Dr. Ruth G.
Shaw (the "Executive") and Duke Energy Corporation, a Delaware corporation, and
its subsidiaries and affiliates (collectively, "Duke"), with the mutual exchange
of promises as consideration (collectively, the "Parties").
Recitals
A.
WHEREAS, THE PARTIES HAVE AGREED TO THE TERMINATION OF THE
EXECUTIVE'S EMPLOYMENT EFFECTIVE APRIL 30, 2007 (THE "TERMINATION DATE"); AND
B.
WHEREAS, as of the Termination Date, the Executive will become
entitled to severance benefits under the Key Employee Severance Agreement and
Release entered into by and between the Executive and Duke Energy Corporation, a
North Carolina corporation, dated August 18, 1999 (the "KESA"); and
C.
WHEREAS, DUKE WOULD LIKE TO ENGAGE THE EXECUTIVE TO PROVIDE
CERTAIN CONSULTING SERVICES TO DUKE AS WELL AS ANY SUCCESSORS THERETO.
D.
NOW, THEREFORE, DUKE AND THE EXECUTIVE ENTER INTO THE FOLLOWING
AGREEMENT:
Agreement
1.
KESA.
DUKE AGREES TO PROVIDE THE EXECUTIVE THE SEVERANCE
BENEFITS DESCRIBED IN SECTION 2(C) OF THE KESA CONTINGENT UPON HER CONTINUED
COMPLIANCE WITH THE POST-TERMINATION OBLIGATIONS CONTAINED IN THE KESA,
INCLUDING BUT NOT LIMITED TO, THE OBLIGATIONS SET FORTH IN SECTIONS 3, 4, 5 AND
16 OF THE KESA.
2.
CONSULTING ARRANGEMENT.
THE EXECUTIVE AGREES TO SERVE AS A
CONSULTANT TO DUKE FOR THE PERIOD BEGINNING ON MAY 1, 2007 AND ENDING ON APRIL
30, 2009 (THE "CONSULTING PERIOD").
THE CONSULTING SERVICES TO BE PROVIDED BY
THE EXECUTIVE DURING THE CONSULTING PERIOD WILL CONSIST OF CONSULTATION WITH,
AND ADVICE TO, THE OFFICERS AND MANAGERIAL EMPLOYEES OF DUKE, AS REQUESTED BY
THE CHIEF EXECUTIVE OFFICER OF DUKE ENERGY CORPORATION (OR HIS SUCCESSOR), ON
MATTERS RELATING TO DUKE'S BUSINESS AFFAIRS ABOUT WHICH THE EXECUTIVE HAS
HISTORICAL KNOWLEDGE AND EXPERIENCE.
WHEN REQUESTED BY DUKE, THE EXECUTIVE WILL
PERFORM THE CONSULTING SERVICES AT REASONABLE TIMES, AS DETERMINED BY MUTUAL
AGREEMENT BETWEEN DUKE AND THE EXECUTIVE; PROVIDED, HOWEVER, THAT IN NO EVENT
WILL THE EXECUTIVE BE REQUIRED, PURSUANT TO THIS AGREEMENT, TO PROVIDE MORE THAN
(I) 80 HOURS OF CONSULTING SERVICES TO DUKE IN ANY CALENDAR MONTH DURING THE
FIRST TWELVE MONTHS OF THE CONSULTING PERIOD, OR (II) 25 HOURS OF CONSULTING
SERVICES TO DUKE IN ANY CALENDAR MONTH DURING THE SECOND TWELVE MONTHS OF THE
CONSULTING PERIOD, WITHOUT HER CONSENT.
WITH RESPECT TO THE CONSULTING PERIOD,
THE EXECUTIVE WILL RECEIVE A CONSULTING FEE, SUBJECT TO THE CONTINUOUS PROVISION
OF CONSULTING SERVICES, EQUAL TO $900,000 (I.E., EXECUTIVE WILL EARN CONSULTING
FEES AT THE RATE OF $37,500 PER MONTH)
WHICH AMOUNT WILL BE PAID TO THE EXECUTIVE IN EQUAL MONTHLY INSTALLMENTS OVER A
36-MONTH PERIOD, WITH THE FIRST SUCH PAYMENT BEING MADE IN MAY 2008.
ALL OF THE
CONSULTING SERVICES TO BE PROVIDED BY THE EXECUTIVE WILL BE PERFORMED AS AN
INDEPENDENT CONTRACTOR, AND THE EXECUTIVE WILL NOT HAVE ANY AUTHORITY TO ACT AS
AN AGENT OR REPRESENTATIVE OF DUKE, EXCEPT TO THE EXTENT EXPRESSLY AUTHORIZED IN
WRITING BY DUKE.
THE