Document:

Exhibit 10.1

    
      

    

     

     

    Exhibit
      10.1

     

     

    

       

      EMPLOYMENT
        AGREEMENT

       

       

                 
        This Employment Agreement (this “Agreement”) is entered into as of the
        11th
        day of
        December, 2006 (the “Effective Date”), between Oasys Mobile, Inc., a Delaware
        corporation (the “Company”),
        and
        Douglas Dyer (the “Executive”).

       

       

      RECITALS:

       

       

                 
        WHEREAS, the Company desires to employ Executive, and Executive desires to
        be
        employed by the Company, on the terms and subject to the conditions set forth
        herein; 

       

                 
        NOW, THEREFOR, in consideration of the mutual premises herein contained,
        the
        parties agree as follows:

       

                 
        1.         Employment. 
        The Company hereby employs Executive as Chief Executive Officer and Executive
        hereby accepts such employment, on the terms and subject to the conditions
        hereinafter set forth.  

       

                 
        2.         Duties
        of Executive.

       

                             
        2.1       Executive shall report directly to the
        Chairman of the Board, and shall perform such duties consistent with his
        position as Chief Executive Officer pursuant to the direction of the Chairman
        of
        the Board. 

       

                             
        2.2       Executive shall be required to devote
        his full business time, attention and effort to the Company’s business and
        affairs except for vacation time and reasonable periods of absence due to
        sickness, personal injury or other disability and shall perform diligently
        such
        duties as are customarily performed by executives in similar positions with
        companies similar in character or size to the Company, all subject to the
        direction of the Board, together with such other duties as may be reasonably
        requested from time to time by the Board, which duties shall be consistent
        with
        his positions as set forth above.  Executive agrees to use all of his
        skills and business judgment and render services to the best of his ability
        to
        serve the interests of the Company.  Subject to the terms of Section 8
        hereof, this shall not preclude Executive from serving on community and civic
        boards, participating in industry associations, pursuing his personal financial
        and legal affairs or otherwise engaging in other activities, so long as such
        activities do not unreasonably interfere with his duties to the
        Company.

       

                 
        3.         Support
        Services. 
        Executive shall be entitled to all the administrative, operational and facility
        support customary to a similarly situated executive.  This support shall
        include, without limitation, a suitably appointed private office, and payment
        of
        or reimbursement for reasonable cellular telephone expenses, travel and
        entertainment expenses, reasonable expenses of Executive maintaining his
        professional license and standing and any and all other business expenses
        reasonably incurred on behalf of or in the course of performing duties for
        the
        Company, all in accordance with the expense reimbursement policies established
        from time to time by the Company.  Executive agrees to provide
        documentation of these expenses as may be reasonably
        required. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

       

       

                 
        4.         Term.
        Unless
        earlier terminated as provided herein, the Executive’s employment shall be for a
        continuing term (the “Term”) of one year from the Effective Date of this
        Agreement which shall be automatically extended (without further action of
        the
        Company, the Board of Directors or the Compensation Committee) each day for
        an
        additional day so that the remaining term shall continue to be one (1) year;
        provided that either party may at any time, by written notice to the other
        party, fix the Term to a finite term of one year, without automatic extension,
        commencing with the date of such notice. 

       

                 
        5.         Compensation. 
        Throughout the Term, the Company shall pay or provide, as the case may be,
        to
        Executive the compensation and other benefits and rights set forth in this
        Section 5.

       

                             
        5.1       Base
        Salary. 
        The  Company shall pay to Executive a base salary (“Base Salary”), payable
        in accordance with the Company’s usual pay practices (and in any event no less
        frequently than monthly), of $190,000 per annum (the “Initial Base
        Salary”).  The Compensation Committee shall annually review Executive’s
        Base Salary in light of the base salaries paid to other executive officers
        of
        the Company and the performance of Executive, and the Compensation Committee
        may, in its discretion, increase such Base Salary by an amount it determines
        is
        appropriate. If any other executive officer of the Company is granted an
        increase in their Base Salary, Executive shall also be entitled to a comparable
        increase in Base Salary. 

       

      Once
        Executive’s Base Salary is increased, it shall not thereafter be reduced for any
        reason. 

       

      5.2      
        Performance
        Bonus.                         
        

       

      (a)    The
        Executive shall receive a cash bonus of up to 100% of his then current Base
        Salary upon the achievement of the Company’s annual objectives, as may be set by
        the Board of Directors. 

       

      Any
        cash
        bonus earned by the Executive pursuant to the provisions of this Section
        5.2 or
        any other provision of this Agreement shall not be paid to the Executive
        unless
        and until the Company has achieved a cash flow positive position, which will
        be
        certified to the Board of Directors by an executive officer of the Company.
        

       

      (b)    The
        Company may also consider the Executive for a cash bonus for each fiscal
        year,
        or part thereof that he is employed by the Company, in an amount to be
        determined at the discretion of the Board, provided that such bonus shall
        be
        commensurate with other bonuses paid to other executive officers of the Company.
        If any other executive officer of the Company is granted a cash bonus, the
        Executive shall also be entitled to a comparable cash bonus.   

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      5.3    Restricted
        Stock Grant and Stock Option Grant. 

       

       

      (a)    The
        Company
        shall grant to the Executive 100,000 shares of restricted stock (the “Restricted
        Stock Grant”); the restrictions on all of the Restricted Stock Grant shall lapse
        on the Effective Date. Executive shall not sell any of the Restricted Stock
        Grant until March 1, 2007, and thereafter may sell such shares of the Restricted
        Stock Grant only in accordance with the policies of the Company and the rules
        and regulations of the Securities and Exchange Commission. 

       

      Oasys
        Mobile shall register all shares of the Restricted Stock Grant on the next
        update filing of its Registration Statement on Form S-8 or such other form
        as
        designated by the Securities and Exchange Commission; provided that the
        Restricted Stock Grant shall be registered by the Company no later than January
        15, 2007

       

      5.4      
        Insurance. 
        The Company shall provide medical, vision, hospitalization, disability and
        dental insurance for Executive, his spouse and eligible family members, subject
        to and in accordance with the Company’s policy, the proportion of the cost
        thereof to be borne by the Company and Executive to be in accordance with
        such
        policy.

       

                             
        5.5       Employee
        Benefit Plans. 
        Executive shall be eligible to participate in all retirement and other benefit
        plans of the Company generally available from time to time to employees of
        the
        Company and for which Executive qualifies under the terms thereof (and nothing
        in this Agreement shall, or shall be deemed to, in any way affect Executive’s
        rights and benefits thereunder except as expressly provided
        herein).

       

                             
        5.6       Other
        Benefit Plans. 
        Executive shall be entitled to participate in any equity or other employee
        benefit plan that is generally available to senior executive officers, as
        distinguished from general management, of the Company, at the highest level
        provided for any employee.  Executive’s participation in and benefits under
        any such plan shall be on the terms and subject to the conditions specified
        in
        the governing document of the particular plan.    

       

                             
        5.7       Vacation. 
        Executive shall be entitled to Twenty (20) days of vacation allowance each
        year,
        which shall accrue at the rate of five (5) days per calendar quarter, but
        may be
        used in advance of accrual.  Vacation days not used in one calendar year
        shall carry over to the following calendar year(s) up to a maximum of ten
        days.
        Executive shall also be entitled to a sick leave allowance as provided under
        the
        Company’s vacation and sick leave policy for executive officers. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      5.8    Moving
        Expenses.
        The
        Company shall pay for moving Executive and his family to San Francisco, CA.
        Such
        moving expenses shall include a trip for house hunting and shall not exceed
        $20,000 in the aggregate.   

       

      6.        
        Permanent
        Disability.

       

                             
        6.1       For purposes of this Agreement,
        Executive’s “Permanent Disability” shall be deemed to have occurred one day
        after one hundred eighty (180) days in the aggregate during any consecutive
        twelve (12) month period, or one day after one hundred twenty consecutive
        days,
        during which the 180 or 120 day period, as the case may be, Executive, by
        reason
        of his physical or mental disability or illness, shall have been unable to
        discharge fully his duties under this Agreement.

       

                             
        6.2       If either the Company or Executive,
        after receipt of notice of Executive’s Permanent Disability from the other,
        disputes that Executive’s Permanent Disability shall have occurred, Executive
        shall promptly submit to a physical examination by a physician at any major
        accredited hospital and, unless such physician shall issue his written statement
        to the effect that, in his opinion, based on his diagnosis, Executive is
        capable
        of resuming his employment and devoting his full time and energy to discharging
        fully his duties hereunder within thirty (30) days after the date of such
        statement, such Permanent Disability shall be deemed to have occurred on
        the day
        above specified.

       

                 
        7.         Termination.

       

                             
        7.1       Bases
        for Termination. 
        Executive’s employment under this Agreement and the Term shall be terminated
        immediately on the death of Executive and may be terminated by the
        Board:

       

      (a)       
        at any time after the Permanent Disability of Executive

       

      (b)       
        at any time without Cause prior to a Change of Control; 

       

      (c)       
        at
        any
        time without Cause upon a Change of Control; or

       

      (d)       
        at any time for “Cause” (as defined in Section 7.8 hereof); 

       

                             7.2      
        Termination
        by Death. 
        If Executive’s employment is terminated by death, Executive’s estate or
        designated beneficiaries shall be entitled to receive:

       

      (a)       
        any
        accrued but unpaid salary;

       

      (b)       
        a
        cash
        lump sum payment in respect of accrued but unused vacation days pursuant
        to the
        terms of this Agreement; 

       

      (c)       
        life insurance benefits pursuant to any life insurance policy purchased by
        the
        Company on the Executive;   

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (d)       
        a pro rata portion of the bonus applicable to the calendar year in which
        such
        termination occurs, payable when and as such bonus is determined under Section
        5.2(a); 

       

      (e)       
        acceleration of the vesting of one hundred percent (100%) of the unvested
        portion of all of Executive’s stock options or other stock-based awards,
        together with the right to exercise such stock options or awards for a period
        equal to the remaining term for exercising such options or awards under the
        applicable agreement and/or plan; and

       

      (f)       
        reimbursement for all expenses incurred by Executive pursuant to Section
        3
        hereof.

       

                             
        7.3       Termination
        for Permanent Disability. 
        If Executive’s employment is terminated by the Company for Permanent Disability,
        Executive shall be entitled to receive:

       

      (a)       
        his then current Base Salary under Section 5.1 hereof, payable at such times
        as
        his Base Salary would have been paid if his employment had not been terminated
        for a period of six (6) months, minus any amounts payable under any short-term
        disability insurance policy provided by the Company. 

       

      (b)       
        a pro rata portion of the bonus applicable to the calendar year in which
        such
        termination occurs, payable when and as such bonus is determined under Section
        5.2(a); 

       

      (c)       
        continuation of the insurance provided by the Company pursuant to Section
        5.4
        for 12 months; 

       

      (d)       
        acceleration of the vesting of one hundred percent (100%) of the unvested
        portion of all of Executive’s stock options or other stock-based awards,
        together with the right to exercise such stock options or awards for a period
        equal to the remaining term for exercising such options or awards under the
        applicable agreement and/or plan; and 

       

      (e)       
        reimbursement for all expenses incurred by Executive pursuant to Section
        3 prior
        to his termination.

       

                             
        7.4       Termination
        by the Company without Cause prior to a Change of Control. 
        If Executive’s employment is terminated by the Company without Cause (as defined
        in Section 7.8(a)) prior to a Change of Control, Executive shall be entitled
        to
        receive: 

       

      (a)      
        accrued
        but unpaid Base Salary to the date of such termination; 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b)      
        a
        cash
        lump sum payment in respect of accrued but unused vacation days pursuant
        to the
        terms of this Agreement; 

       

      (c)      
        a
        cash
        lump sum payment equal to his then-current Base Salary under Section 5.1
        hereof
        payable within ten (10) days of Executive’s termination; 

       

      (d)       
        a cash lump sum payment of the bonus applicable to the calendar year in which
        such termination occurs; this cash lump sum payment shall be payable within
        ten
        (10) days after the determination that the annual objectives, as set by the
        Board of Directors pursuant to Section 5.2(a) of this Agreement, have been
        met;

       

      (e)       
        acceleration of the vesting of one hundred percent (100%) of the unvested
        portion of all of Executive’s stock options or other stock-based awards,
        together with the right to exercise such stock options or awards for a period
        equal to the remaining term for exercising such options or awards under the
        applicable agreement and/or plan; 

       

      (f)        
        continuation of the insurance provided by the Company pursuant to Section
        5.4
        for 12 months; and 

       

      (g)       
        reimbursement for all expenses incurred by Executive pursuant to Section
        3 prior
        to his termination.

       

                   7.5      
        Termination
        by the Company without Cause Upon a Change of Control or by Executive for
        Good
        Reason at Any Time. 
        If Executive’s employment is terminated by the Company without Cause (as defined
        in Section 7.8(a)) upon a Change of Control (as defined in Section 7.8 (c))
        or
        by Executive for Good Reason (as defined in Section 7.8(e)) at any time,
        Executive shall be entitled to receive: 

       

      (a)       
        accrued
        but unpaid Base Salary to the date of such termination; 

       

      (b)      
        a
        cash
        lump sum payment in respect of accrued but unused vacation days pursuant
        to the
        terms of this Agreement; 

       

      (c)      
        a cash lump sum payment of his then-current Base Salary under Section 5.1;
        

       

      (d)      
        a cash lump sum payment of the bonus applicable to the calendar year in which
        such termination occurs. This cash lump sum payment shall be payable within
        ten
        (10) days after the determination that the annual objectives, as set by the
        Board of Directors pursuant to Section 5.2(a) of this Agreement, have been
        met.

       

      (e)      
        acceleration of the vesting of one hundred percent (100%) of the unvested
        portion of Executive’s stock options or other stock-based awards, together with
        the right to exercise such stock options or awards for a period equal to
        the
        remaining term for exercising such options or awards under the applicable
        agreement and/or plan; 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (f)        
        continuation of the insurance provided by the Company pursuant to Section
        5.4
        for 12 months; and 

       

      (g)       
        reimbursement for all expenses incurred by Executive pursuant to Section
        3 prior
        to his termination.

       

      7.6      
        Termination
        by the Company for Cause or by Executive without Good Reason upon a Change
        of
        Control. 
        If Executive’s employment is terminated by the Company for Cause or by Executive
        without Good Reason upon a Change of Control (other than as a result of
        Executive’s Permanent Disability or Death), the Company shall not have any other
        or further obligations to Executive under this Agreement, except 

       

      (a)       as
        may be
        provided in accordance with the terms of retirement and other benefit plans
        pursuant to Sections 5.5 and 5.6 hereof; 

       

      (b)      
        as
        to
        that portion of any unpaid Base Salary and other benefits accrued and earned
        under this Agreement through the date of such termination; 

       

      (c)      
        all
        stock
        option grants that have vested as of the Executive’s date of termination
        pursuant to this Section 7.6 for the remainder of the term of such option
        grants;

       

      (d)      
        as
        to
        benefits, if any, provided by any insurance policies in accordance with their
        terms; and 

       

      (e)       
        reimbursement
        for all expenses incurred by Executive pursuant to Section 3 prior to his
        termination). 

       

       

      In
        addition, if Executive’s employment is terminated by the Company for Cause at
        any time during the Term, Executive shall immediately forfeit any and all
        unvested stock rights, stock options and other such unvested incentives or
        awards previously granted to him by the Company and any Bonus(es) earned
        by him
        but not paid pursuant to Section 5.2(a) of this Agreement.  The foregoing
        sentence shall be in addition to, and not in lieu of, any and all other rights
        and remedies which may be available to the Company under the circumstances,
        whether at law or in equity.  

       

                           
        7.7       Termination
        Upon Cessation of Business. 
        The Company shall have the right to immediately terminate Executive’s employment
        under this Agreement upon a Cessation of Business (as defined in Section
        7.8(b)).  Upon termination in connection with a Cessation of Business, the
        Company shall pay to Executive any accrued but unpaid Base Salary until the
        date
        of Cessation of Business. The Company may make such payments in accordance
        with
        its regular payroll schedule or in a single lump sum payment in its sole
        discretion. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

        7.8      
        Definitions. 
        As used herein: 

       

      (a)       
        “Cause”
shall
        mean: 

       

      (1)       
        active participation by Executive in fraudulent conduct against the Company,
        conviction of or a plea of guilty or nolo
        contendere
        with
        respect to a felony involving theft or moral turpitude, an act or series
        of
        deliberate acts which were not taken in good faith by Executive and which,
        in
        the reasonable judgment of the Board, results or will likely result in material
        injury to the business, operations or business reputation of the Company,
        or an
        act or series of acts constituting willful malfeasance or gross misconduct;
        

       

      (2)       
        a substantial and continual refusal by Executive in breach of this Agreement
        to
        perform the duties, responsibilities or obligations assigned to Executive
        pursuant to the terms hereof, which breach has not been cured (if it is of
        a
        nature that can be cured) to the Board’s reasonable satisfaction within ten (10)
        days after the Company gives written notice thereof to Executive; or

       

      (3)       
        excessive absenteeism by Executive; provided that absenteeism (i) related
        to
        illness or otherwise covered by Section 6 hereof, (ii) required to be permitted
        under applicable federal or state laws, or (iii) permitted under Company
        policy,
        shall not be deemed to be excessive. 

       

                 
        Executive shall be permitted to respond and defend himself before the Board
        within thirty (30) days after delivery to Executive of written notification
        of
        any proposed termination for Cause which specifies in detail the reasons
        for
        such termination.  If the majority of the members of the Board (excluding
        Executive) do not confirm that the Company had grounds for a “Cause”
termination, Executive shall have the option to treat his employment as not
        having terminated or as having been terminated pursuant to a termination
        without
        Cause. 

       

      (b)       
        “Cessation
        of Business”
shall
        mean the Company’s ceasing to operate in the ordinary course of business,
        whether by dissolution, liquidation, or in connection with a good faith
        determination by the Board that the continuing operation of the business
        in its
        ordinary course is reasonably likely to render the Company unable to meet
        its
        liabilities as they mature. 

       

      (c)       
        A “Change
        in Control”
shall
        occur if: 

       

      (1)       
        there shall be consummated any consolidation or merger of the Company in
        which
        the Company is not the continuing or surviving corporation; 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (2)       
        any Person (as defined in Section 2(a)(2) of the Securities Act of 1933,
        as
        amended) other than the Company, subsequently becomes the beneficial owner,
        directly or indirectly (including by holding securities which are exercisable
        for or convertible into shares of capital stock of the Company) of forty
        percent
        (40%) or more of the combined voting power of the then outstanding shares
        of
        capital stock of the Company entitled to vote generally in the election of
        directors; 

       

      (3)       
        the Company sells, leases, exchanges or otherwise transfers all or substantially
        all of its property and assets (in a transaction or series of transactions
        contemplated or arranged by any party as a single plan); 

       

      (4)       
        Continuing Directors cease to constitute at least a majority of the Board;
        or

       

      (5)       
        a majority of the Outside Directors determine that a Change in Control has
        occurred. 

       

      (d)       
        “Continuing
        Directors”
shall
        mean the members of the Board in office on December 4, 2006, and any successor
        to any such director whose nomination or selection was approved by a majority
        of
        the directors in office at the time of the director’s nomination or selection.

       

                              
        (e)        “Good
        Reason”
means
        a
        termination of Executive’s employment by Executive within ninety (90) days
        following: 

       

      (1)       
        a reduction in Executive’s Base Salary or incentive compensation or equity
        participation opportunity; 

       

      (2)       
        a material reduction in Executive’s position(s), duties and responsibilities or
        reporting lines from those described in Section 2 hereof; 

       

      (3)       
        a material breach of this Agreement by the Company if such breach is not
        cured
        within 15 days of written notice thereof by Executive to the Company; or
        

       

      (4)       
        any failure by the Company to obtain from any successor to the Company an
        agreement reasonably satisfactory to Executive to assume and perform this
        Agreement, as contemplated by Section 11.3 hereof. 

       

                 
        Notwithstanding the foregoing, a termination shall not be treated as a
        termination for Good Reason (A) if Executive shall have consented in writing
        to
        the occurrence of the event giving rise to the claim of termination for Good
        Reason, or (B) unless Executive shall have delivered a written notice to
        the
        Board within thirty (30) days of his having actual knowledge of the occurrence
        of one of such events stating that he intends to terminate his employment
        for
        Good Reason and specifying the factual basis for such termination, and such
        event, if capable of being cured, shall not have been cured within ten (10)
        days
        of the receipt of such notice. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (f)        
        “Outside
        Director”
means
        a
        member of the Board who is not, and who during the past six months was not,
        an
        employee of officer of the Company. 

       

      (g)       
        “Termination
        Upon a Change in Control”
means:
        

       

      (1)       
        a termination by Executive for Good Reason within one year following a Change
        in
        Control; 

       

      (2)       
        declination by Executive of an offer of employment from the Company or the
        Company’s successor, for Good Reason at or in anticipation of a Change in
        Control, if Executive would not have been permitted to retain Executive’s
        existing position; or 

       

      (3)       
        termination of Executive’s employment by the Company or the Company’s successor
        within one year following a Change in Control other than a termination for
        Cause
        or a termination resulting from Executive’s death or Permanent
        Disability.

       

                             
        7.9       Mitigation
        of Damages. 
        Executive is not required to mitigate the amount of any payments to be made
        by
        the Company pursuant to this Agreement following his termination by seeking
        other employment or otherwise.  In addition, the amount of any
        post-termination payments provided for in this Agreement shall, except as
        otherwise expressly provided herein, not be reduced by any remuneration earned
        by Executive during the period following the termination of his employment
        as a
        result of employment by another employer or otherwise after the date of
        termination of his employment with the Company.

       

      8.        
        Covenants
        and Confidential Information. 
        

       

                             
        8.1       Restrictive
        Covenants. 
        Executive acknowledges the Company’s reliance on and expectation of Executive’s
        continued commitment to performance of his duties and responsibilities during
        the term.  In light of such reliance and expectation on the part of the
        Company, during the applicable period hereafter specified in Section 8.2,
        Executive shall not

       

      (a)      
        directly
        or indirectly, do or suffer any of the following; 

       

      (1)       
        own, manage, control or participate in the ownership, management or control
        of,
        or be employed or engaged by or otherwise affiliated or associated as a
        consultant, independent contractor or otherwise with, any other corporation,
        partnership, proprietorship, firm, association or other business entity engaged
        in the business of, or otherwise engage in the business of, information
        processing of multimedia over mobile and wireless networks  within the
        United States in competition with the Company; provided, however, that the
        beneficial and/or record ownership of not more than 4.9% of any class of
        publicly traded securities of any entity shall not be deemed a violation
        of this
        covenant; 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (2)       
        solicit any business or contracts from any customers of the Company or its
        affiliates, any past customers of the Company or its affiliates, or any
        prospective customers of the Company or its affiliates (i.e., potential
        customers from which the Company or its affiliates has solicited business
        at any
        time during the one year period preceding the expiration or termination of
        the
        Term), except as necessitated by Executive’s position with the Company and then
        only in furtherance of the business interests of the Company or its affiliates;
        

       

      (3)       
        induce or attempt to induce any such customer to alter its business relationship
        with the Company or its affiliates except as necessitated by Executive’s
        position with the Company and then only in furtherance of the business interests
        of the Company or its affiliates; 

       

      (4)       
        solicit or induce or attempt to solicit or induce any employee of the Company
        or
        its affiliates to leave the employ of the Company or any of its affiliates
        for
        any reason whatsoever or hire any employee or any person who was an employee
        of
        the Company or its affiliates within the twelve (12) month period prior to
        such
        hiring;
        or             

       

                                (b)       
        disclose, divulge, discuss, copy or otherwise use or suffer to be used in
        any
        manner, other than in accordance with Executive’s duties hereunder, any
        confidential or proprietary information relating to the Company’s business,
        prospects, finances, operations or properties or other trade secrets of the
        Company, it being acknowledged by Executive that all such information regarding
        the business of the Company compiled or obtained by, or furnished to, Executive
        while Executive shall have been employed by or associated with the Company
        is
        confidential and/or proprietary information and the Company’s exclusive
        property; provided, however, that the foregoing restrictions shall not apply
        to
        the extent that such information: (A) is clearly obtainable in the public
        domain; (B) becomes obtainable in the public domain, except by reason of
        the
        breach by Executive of the terms hereof or by another person barred by a
        similar
        duty of confidentiality; or (C) is required to be disclosed by rule of law
        or by
        order of a court or governmental body or agency.

       

                             
        8.2       Applicable
        Periods. 
        The applicable periods shall be: 

       

      (a)       
        so long as Executive is an employee of the Company; 

       

      (b)       
        as to Section 8.1(b), at any time after Executive is no longer an employee
        of
        the Company; and 

       

      (c)       
        for a period of 6 months after termination of employment.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

                             
        8.3       Injunctive
        Relief. 
        Executive agrees and understands that the remedy at law for any breach by
        him of
        this Section 8 will be inadequate and that the damages flowing from such
        breach
        are not readily susceptible to being measured in monetary terms. 
Accordingly, it is acknowledged that the Company shall be entitled to immediate
        injunctive relief and may obtain a temporary order restraining any threatened
        or
        further breach.  Nothing in this Section 8 shall be deemed to limit the
        Company’s remedies at law or in equity for any breach by Executive of any of the
        provisions of this Section 8 which may be pursued or availed of by the
        Company.

       

                             
        8.4       Acknowledgment
        by Executive. 
        Executive has carefully considered the nature and extent of the restrictions
        upon him and the rights and remedies conferred upon the Company under this
        Section 8, and hereby acknowledges and agrees that the same are reasonable
        in
        time and territory, are designed to eliminate competition which otherwise
        would
        be unfair to the Company, do not stifle the inherent skill and experience
        of
        Executive, would not operate as a bar to Executive’s sole means of support, are
        fully required to protect the legitimate interests of the Company, and do
        not
        confer a benefit upon the Company disproportionate to the detriment of
        Executive.

       

                             
        8.5       Survival. 
        Executive acknowledges that Executive’s obligations under this Section 8 shall
        survive in accordance with Section 8.2 hereof regardless of whether Executive’s
        employment by the Company is terminated, voluntarily or involuntarily, by
        the
        Company or Executive, with Cause or without Cause, or the Executive with
        or
        without Good Reason.

       

                 
        9.         Proprietary
        Rights.

       

                             
        9.1       At all times during the Term, all right,
        title and interest in all copyrightable material which Executive shall conceive
        or originate, either individually or jointly with others, and which arise
        out of
        the performance of this Agreement, will be the property of the Company and
        are
        by this Agreement assigned to the Company along with ownership of any and
        all
        copyrights in the copyrightable material.  At all times during the Term,
        Executive agrees to execute all papers and perform all other acts necessary
        to
        assist the Company to obtain and register copyrights on such materials in
        any
        and all countries, and the Company agrees to pay expenses associated with
        such
        copyright registration.  Works of authorship created by Executive for the
        Company in performing his responsibilities under this Agreement shall be
        considered “works made for hire” as defined in the U.S. Copyright Act.  In
        addition, Executive hereby assignees to the Company all proprietary rights,
        including but not limited to, all patents, copyrights, trade secrets and
        trademarks Executive might otherwise have, by operation of law or otherwise,
        in
        all inventions, discoveries, works, ideas, information, knowledge and data
        related to Executive’s access to confidential information of the Company during
        the Term.

       

                             
        9.2       All know-how and trade secret
        information conceived or originated by Executive which arises out of the
        performance of his obligations or responsibilities under this Agreement during
        the Term shall be the property of the Company, and all rights therein are
        by
        this Agreement assigned to the Company.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

                             
        9.3       If, during the term, Executive is
        engaged in or associated with the planning or implementing of any project,
        program or venture involving the Company and a third party or parties, all
        rights in such project, program or venture shall belong to the Company. 
Except as formally approved by the Board, Executive shall not be entitled
        to any
        interest in such project, program or venture or to any commission, finder’s fee
        or other compensation in connection therewith other than the compensation
        to be
        paid to Executive as provided in this Agreement.

       

                             
        9.4       Upon termination of the Term, Executive
        shall deliver promptly to the Company all records, manuals, books, documents,
        letters, memoranda, notes, notebooks, reports, data, tables, calculations,
        customer and prospective customer lists, and copies of all of the foregoing,
        which are the property of the Company, and all other property, trade secrets
        and
        confidential information of the Company, including, but not limited to, all
        documents which in whole or in part contain any trade secrets or confidential
        information of the Company, which in any of these cases are in his possession
        or
        under his control.

       

                             
        9.5       The obligations of Executive under this
        Section 9 shall survive the termination or expiration of the Term.

       

                 
        10.       Indemnification. 
        During the Term, the Company shall indemnify Executive and hold Executive
        harmless from and against any claim, loss or cause of action arising from
        or out
        of Executive’s performance as an officer, director or employee of the Company or
        any of its subsidiaries or in any other capacity, including any fiduciary
        capacity, in which Executive serves at the request of the Company to the
        maximum
        extent permitted by applicable law.  If any claim is asserted hereunder
        with respect to which Executive reasonably believes in good faith he is entitled
        to indemnification, the Company shall pay Executive’s legal expenses (or cause
        such expenses to be paid), on a monthly basis, provided that Executive shall
        reimburse the Company for such amounts if Executive shall be found by a court
        of
        competent jurisdiction not to have been entitled to indemnification.  In
        addition, the Company agrees to provide Executive with coverage under a
        directors and officers liability insurance policy.

       

                 
        11.       Miscellaneous.

       

                             
        11.1     Representation
        and Warranty by Executive. 
        Executive represents and warrants that he is not a party to any agreement,
        contract or understanding, whether employment or otherwise, which would restrict
        or prohibit him from undertaking or performing employment in accordance with
        the
        terms and conditions of this Agreement.

       

                             
        11.2     Severability. 
        The provisions of this Agreement are severable and if any one or more provisions
        may be determined to be illegal or otherwise unenforceable, in whole or in
        part,
        the remaining provisions and any partially unenforceable provision, to the
        extent enforceable in any jurisdiction, nevertheless shall be binding and
        enforceable.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

                             
        11.3     Assignment. 
        This Agreement shall be binding upon and inure to the benefit of the heirs
        and
        representatives of Executive and the assigns and successors of the Company,
        but
        neither this Agreement nor any rights or obligations hereunder shall be
        assignable or otherwise subject to hypothecation by Executive (except by
        will or
        by operation of the laws of intestate succession) or by the Company, except
        that
        the Company may assign this Agreement to any successor (whether by merger,
        purchase or otherwise) to all or substantially all of the stock, assets or
        business of the Company, and the Company shall require such successor to
        expressly agree to assume the obligations of the Company hereunder.

       

                             
        11.4     Dispute
        Resolution. 
        Any controversy or claim arising out of or relating to this Agreement, or
        the
        breach thereof, shall be settled by mediation, and if not settled within
        14 days
        of the submission to meditation, by arbitration in accordance with the Voluntary
        Arbitration Rules of the American Arbitration Association, and the arbitration
        shall be held in the Raleigh, North Carolina area.  The arbitrator shall be
        acceptable to both the Company and Executive.  If the parties cannot agree
        on an acceptable arbitrator, the dispute shall be heard by a panel of three
        (3)
        arbitrators, one appointed by each of the parties and the third appointed
        by the
        other two arbitrators.  Judgment upon the award rendered by the arbitrator
        or arbitrators may be entered in any court having jurisdiction thereof. 
The arbitrator or arbitrators shall be deemed to possess the power to issue
        mandatory orders and restraining orders in connection with such arbitration;
        provided, however, that nothing in this Section 11.4 shall be construed so
        as to
        deny the Company the right and power to seek and obtain injunctive relief
        in a
        court of equity for any breach or threatened breach by Executive of his
        covenants contained in Section 8 hereof.  All costs and expenses of
        arbitration shall be paid one-half by the Company and one-half by
        Executive.

       

                             
        11.5     Notices. 
        All notices and other communications required or permitted under this Agreement
        shall be in writing, and shall be deemed properly given if delivered personally,
        mailed by registered or certified mail in the United States mail, postage
        prepaid, return receipt requested, send by facsimile or sent by Express Mail,
        Federal Express or other nationally recognized express delivery service,
        as
        follows:

       

      
        	
                If
                  to Oasys Mobile:

              	
                If
                  to Executive:

              
	 	 
	
                434
                  Fayetteville Street

              	 
	
                Suite
                  600

              	 
	
                Raleigh,
                  North Carolina 27601

              	 
	
                Attn:
                  General Counsel 

              	 

      

       

                 
        Notice given by hand, certified or registered mail, or by Express Mail, Federal
        Express or other such express delivery service, shall be effective upon
        receipt.  Notice given by facsimile transmission shall be effective upon
        actual receipt if received during the recipient’s normal business hours, or at
        the beginning of the recipient’s next business day after receipt if not received
        during the recipient’s normal business hours.  All notices by facsimile
        transmission shall be confirmed promptly after transmission in writing by
        certified mail or personal delivery.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

       

       

                 
        Any party may change any address to which notice is to be given to it by
        giving
        notice as provided above of such change of address. 

       

                             
        11.6     Amendment. 
        This Agreement may only be amended by written agreement of the parties
        hereto.

       

                             
        11.7     Beneficiaries;
        References. 
        Executive shall be entitled to select (and change, to the extent permitted
        under
        applicable law) a beneficiary or beneficiaries to receive any compensation
        or
        benefit payable hereunder following Executive’s death, and may change such
        election, in either case by giving the Company written notice thereof.  In
        the event of Executive’s death or a judicial determination of his incompetence,
        reference in this Agreement to Executive shall be deemed, where appropriate,
        to
        refer to his beneficiary, estate or other legal representative.  Any
        reference to the masculine gender in this Agreement shall include, where
        appropriate, the feminine.

       

                             
        11.8     Survivorship. 
        The respective rights and obligations of the parties hereunder shall survive
        any
        termination of this Agreement to the extent necessary to the intended
        preservation of such rights and obligations.  The provisions of this
        Section are in addition to the survivorship provisions of any other section
        of
        this Agreement.

       

                             
        11.9     Governing
        law. 
        This Agreement shall be construed, interpreted and governed in accordance
        with
        the laws of the State of North Carolina without reference to rules relating
        to
        conflicts of law.  For purposes of jurisdiction and venue, the Company
        hereby consents to jurisdiction and venue in any suit, action or proceeding
        with
        respect to this Agreement in any court of competent jurisdiction in the state
        in
        which Executive resides at the commencement of such suit, action or proceeding
        and waives any objection, challenge or dispute as to such jurisdiction or
        venue
        being proper.

       

                             
        11.10   Effect
        of Prior Agreements. 
        This Agreement contains the entire understanding between the parties hereto
        with
        respect to the subject matter hereof, and supersedes in all respects any
        prior
        or other agreement or understanding between the Company or any affiliate
        of the
        Company and Executive with respect to the subject matter hereof.

       

                             
        11.11   Withholding. 
        The Company shall be entitled, to the extent permitted or required by law,
        to
        withhold from any payment of any kind due Executive under this Agreement
        to
        satisfy the tax withholding obligations of the Company under applicable
        law.

       

                             
        11.12   Counterparts. 
        This Agreement may be executed in two counterparts, each of which shall be
        deemed an original.       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, the
        parties hereto, having duly been authorized, have executed this Agreement
        as of
        December 11, 2006.

       

      

        
          	
                  OASYS
                    MOBILE, INC. 

                	
                  DOUGLAS
                    B. DYER

                
	
                   

                	
                   

                
	
                  By: /s/
                    Donald T. Locke   

                	
                  /s/
                    Douglas B. Dyer

                
	
                   

                	
                   

                
	
                  Name:   
                    Donald T. Locke

                	
                   

                
	
                  Title: 
                    Executive Vice-President 

                	
                   

                
	
                  General
                    CounselExhibit 10.1 Tax Matters Agreement

 Exhibit 10.1 
 EXECUTION COPY 
 TAX MATTERS AGREEMENT 
 by and among 
 DUKE ENERGY CORPORATION, 
 SPECTRA ENERGY CORP, 
 and

 THE OTHER SPECTRA ENERGY PARTIES 
  
 Dated as of 
 December 13, 2006

 TAX MATTERS AGREEMENT 
 THIS TAX MATTERS AGREEMENT is entered into as of December 13, 2006, by and among Duke Energy Corporation, a Delaware corporation (“Duke
Energy”), Spectra Energy Corp (f/k/a Gas SpinCo, Inc.), a Delaware corporation (“Spectra Energy”), and each of the Other Spectra Energy Parties; each a “Party” and collectively, the “Parties”.

 R E C I T A L S: 
 WHEREAS, Duke Energy, acting through its direct and indirect subsidiaries, currently conducts a number of businesses, including (i) the Gas Business, and (ii) the Power Business; 
 WHEREAS, as of the date hereof, Duke Energy and its direct and indirect domestic subsidiaries are members of an Affiliated Group, of which Duke Energy is
the common parent; 
 WHEREAS, the Board of Directors of Duke Energy has determined that it is appropriate, desirable and in the best
interests of Duke Energy and its stockholders to separate Duke Energy into two separate, independent and publicly traded companies: (i) one comprising the Gas Business, which shall be owned and conducted, directly or indirectly, by Spectra
Energy, and (ii) one comprising the Power Business which shall continue to be owned and conducted, directly or indirectly, by Duke Energy (the “Separation”); 
 WHEREAS, in order to effect the Separation, (i) Duke Energy Services Inc. intends to transfer certain Gas Assets and Gas Liabilities to Duke Energy
Enterprises Corp. (“Internal Contribution 1”) and distribute the stock of Duke Energy Enterprises Corp. to PanEnergy Corp. (“Internal Distribution 1”); (ii) PanEnergy Corp. intends to transfer certain Gas
Assets and Gas Liabilities to Duke Energy Enterprises Corp. (“Internal Contribution 2”) and distribute the stock of Duke Energy Enterprises Corp. to Duke Energy Registration Services, Inc. (“Internal Distribution
2”); (iii) Duke Energy Registration Services, Inc. intends to transfer certain Gas Assets and Gas Liabilities to Duke Energy Enterprises Corp. (“Internal Contribution 3” and together with Internal Contribution 1 and
Internal Contribution 2, the “Internal Contributions”) and distribute the stock of Duke Energy Enterprises Corp. to Duke Capital, LLC (“Internal Distribution 3,” and together with Internal Distribution 1 and
Internal Distribution 2, the “Internal Distributions”); and (iv) Duke Energy intends to transfer the membership interests of Duke Capital LLC to Spectra Energy (the “Contribution”) and distribute all of the
issued and outstanding shares of common stock of Spectra Energy, on a pro rata basis (the “Distribution,” and together with the Internal Contributions, Internal Distributions and the Contribution, the “Spin-Off”) to
the holders of the outstanding common stock of Duke Energy. 
 WHEREAS, Duke Energy and Spectra Energy have determined that it is necessary
and desirable, as part of the Separation, to allocate, transfer, retain or assign to the Spectra Energy Group, the Gas Assets and Gas Liabilities, and to allocate, transfer, retain or assign to the Duke Energy Group, the Power Assets and Power
Liabilities; 
 WHEREAS, to effect this separation Duke Energy and Spectra Energy entered into that certain Separation and Distribution
Agreement dated as of even date hereof (as amended or otherwise modified from time to time, the “Separation Agreement”); 
  

 1 

 WHEREAS, it is the intention of the Parties that Internal Contribution 1 and Internal Distribution 1
together qualify as a reorganization within the meaning of sections 368(a)(1)(D) and 355 of the Code; 
 WHEREAS, it is the intention of the
Parties that Internal Contribution 2 and Internal Distribution 2 together qualify as a reorganization within the meaning of sections 368(a)(1)(D) and 355 of the Code; 
 WHEREAS, it is the intention of the Parties that Internal Contribution 3 and Internal Distribution 3 together qualify as a reorganization within the meaning of sections 368(a)(1)(D) and 355 of the Code; 
 WHEREAS, it is the intention of the Parties that the Contribution, and the Distribution together qualify as a reorganization within the meaning of
sections 368(a)(1)(D) and 355 of the Code; 
 WHEREAS, in contemplation of the Separation, pursuant to which the Spectra Energy Group will
cease to be members of the Affiliated Group of which Duke Energy is the parent, if (but only if) the Distribution occurs, the Parties have determined to enter into this Agreement, setting forth their agreement with respect to certain tax matters;
and 
 NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises and covenants hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows: 
 Section 1. Definitions. 
 Capitalized terms used in this Agreement and not otherwise defined in this Section 1
shall have the meanings set forth in the Separation Agreement. As used in this Agreement, the following capitalized terms shall have the following meanings: 
 “Affiliated Group” means an affiliated group of corporations within the meaning of section 1504(a)(1) of the Code that files a consolidated return for United States federal Income Tax purposes.

 “After Tax Amount” means any additional amount necessary to reflect the hypothetical Tax consequences of the receipt or
accrual of any payment required to be made under this Agreement (including payment of an additional amount or amounts hereunder and the effect of the deductions available for interest paid or accrued and for Taxes such as state and local Income
Taxes), determined by using the highest applicable statutory corporate Income Tax rate (or rates, in the case of an item that affects more than one Tax) for the relevant taxable period (or portion thereof). 
 “Agreement” shall have the meaning set forth in the preamble hereto. 
  

 2 

 “Audit” means any audit, assessment of Taxes, other examination by any Taxing Authority,
proceeding, or appeal of such a proceeding relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations. 
 “Business Day” shall have the meaning set forth in the Separation Agreement. 
 “Carryback Period” shall have the meaning set forth in Section 4.02. 
 “Code” means the
Internal Revenue Code of 1986, as amended. 
 “Combined Return” means any Tax Return, other than with respect to United
States federal Income Taxes, filed on a consolidated, combined (including nexus combination, worldwide combination, domestic combination, line of business combination or any other form of combination) or unitary basis wherein Spectra Energy or one
or more Spectra Energy Affiliates join in the filing of such Tax Return (for any taxable period or portion thereof) with Duke Energy or one or more Duke Energy Affiliates. 
 “Consolidated Return” means any Tax Return with respect to United States federal Income Taxes filed on a consolidated basis wherein
Spectra Energy or one or more Spectra Energy Affiliates join in the filing of such Tax Return (for any taxable period or portion thereof) with Duke Energy or one or more Duke Energy Affiliates. 
 “Contribution” shall have the meaning set forth in the recitals hereto. 
 “Deferred Intercompany Item” shall mean any income, gain, deduction or loss from transactions between members of the same Affiliated
Group that is deferred for U.S. federal income tax purposes under the principles in Treasury Regulations § 1.1502-13, or any similar provision under state, local or foreign law. 
 “Distribution” shall have the meaning set forth in the recitals hereto. 
 “Distribution Date” shall have the meaning set forth in the Separation Agreement. 
 “Distribution Taxes” means any Taxes imposed on, or increase in Taxes incurred by, Duke Energy or any Duke Energy Affiliate, and any
Taxes of a Duke Energy shareholder (or former Duke Energy shareholder) that are required to be paid or reimbursed by Duke Energy or any Duke Energy Affiliate pursuant to a Final Determination, provided that Duke Energy shall have vigorously defended
itself in any legal proceeding involving Taxes of a Duke Energy shareholder, (without regard to whether such Taxes are offset or reduced by any Tax Asset, Tax Item, or otherwise) resulting from, or arising in connection with, the failure of Internal
Contribution 1, Internal Distribution 1, Internal Contribution 2, Internal Distribution 2, Internal Contribution 3, Internal Distribution 3, the Contribution or the Distribution to qualify as a transaction in which no income, gain or loss is
recognized pursuant to sections 355 and 368(a)(1)(D) of the Code (including any Tax resulting from the application of section 355(d) or section 355(e) of the Code to Internal Distribution 1, Internal Distribution 2, Internal Distribution 3 or the
Distribution) or corresponding provisions of the laws of any other jurisdictions. Any 

  

 3 

 
Income Tax referred to in the immediately preceding sentence shall be determined using the highest applicable statutory corporate Income Tax rate for the
relevant taxable period (or portion thereof). 
 “Duke Energy” shall have the meaning set forth in the preamble hereto.

 “Duke Energy Affiliate” means any Person included in the Duke Energy Group. 
 “Duke Energy Business Records” shall have the meaning set forth in Section 9.01(c). 
 “Duke Energy Group” shall have the meaning set forth in the Separation Agreement. 
 “Duke Energy Separate Tax Liability” means an amount equal to the Tax liability that Duke Energy and each Duke Energy Affiliate would
have incurred if they had filed a consolidated return, combined return or a separate return, as the case may be, separate from the members of the Spectra Energy Group, for the relevant Tax period, and such amount shall be computed by Duke Energy in
a manner consistent with (i) general Tax accounting principles, (ii) the Code and the Treasury Regulations promulgated thereunder, and (iii) past practice, if any. For the avoidance of doubt, the Duke Energy Separate Tax Liability
shall in no event be less than zero. 
 “Duke Energy Stock Options” means options to acquire Duke Energy common stock.

 “Duke Energy Tax Acts” shall have the meaning set forth in Section 4.01(a). 
 “Effective Time” shall have the meaning set forth in the Separation Agreement. 
 “Estimated Tax Installment Date” means, with respect to United States federal Income Taxes, the estimated Tax installment due dates
prescribed in section 6655(c) of the Code and, in the case of any other Tax, means any other date on which an installment payment of an estimated amount of such Tax is required to be made. 
 “Exchangeco Tax” means any Tax imposed on Spectra Energy or any Spectra Energy Affiliate in connection with (i) the transfer of
shares of Duke Energy stock to Spectra Energy or any Spectra Energy Affiliate during any Post-Distribution Period in connection with a transfer of such stock to holders of Duke Energy Canada Exchangeco Inc. exchangeable shares; (ii) the
transfer of cash by Duke Energy to Spectra Energy or any Spectra Energy Affiliate in connection with any Duke Energy dividend; or (iii) the transfer of shares of Duke Energy stock to holders of Duke Energy Canada Exchangeco Inc. exchangeable
shares. 
 “Excluded Spectra Energy Affiliates” means Duke Energy Early Grove Company and Duke Energy Virginia Pipeline
Company. 
 “Filing Party” shall have the meaning set forth in Section 8.01. 
  

 4 

 “Final Determination” means the final resolution of liability for any Tax for any
taxable period, by or as a result of (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction; (ii) a final settlement with the IRS, a closing agreement or accepted offer in compromise
under section 7121 or section 7122 of the Code, or a comparable agreement under the laws of other jurisdictions, which resolves the entire Tax liability for any taxable period; (iii) any allowance of a refund or credit in respect of an
overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered by the jurisdiction imposing the Tax; or (iv) any other final disposition, including by reason of the expiration of the applicable
statute of limitations. 
 “Force Majeure” shall have the meaning set forth in the Separation Agreement. 
 “Gas Assets” shall have the meaning set forth in the Separation Agreement. 
 “Gas Business” shall have the meaning set forth in the Separation Agreement. 
 “Gas Liabilities” shall have the meaning set forth in the Separation Agreement. 
 “Income Tax” means any federal, state, local or foreign Tax determined (in whole or in part) by reference to net income, net worth,
gross receipts or capital, or any such Taxes imposed in lieu of such a Tax. For the avoidance of doubt, the term “Income Tax” includes any franchise Tax, net worth, gross receipts, capital or any such Taxes imposed in lieu of such a Tax.

 “Income Tax Return” means any Tax Return relating to any Income Tax. 
 “Internal Contribution 1” shall have the meaning set forth in the recitals hereto. 
 “Internal Contribution 2” shall have the meaning set forth in the recitals hereto. 
 “Internal Contribution 3” shall have the meaning set forth in the recitals hereto. 
 “Internal Contributions” shall have the meaning set forth in the recitals hereto. 
 “Internal Distribution 1” shall have the meaning set forth in the recitals hereto. 
 “Internal Distribution 2” shall have the meaning set forth in the recitals hereto. 
 “Internal Distribution 3” shall have the meaning set forth in the recitals hereto. 
 “Internal Distributions” shall have the meaning set forth in the recitals hereto. 
 “IRS” means the United States Internal Revenue Service or any successor thereto, including its agents, representatives, and attorneys.

 “IRS Ruling” means the private letter ruling issued by the IRS in connection with the Spin-Off, which is a condition to
the Distribution under the Separation Agreement. 
  

 5 

 “IRS Ruling Documents” means the request for the IRS Ruling filed with the IRS, together
with all supplemental filings or other materials subsequently submitted on behalf of Duke Energy, the Duke Energy Affiliates and Duke Energy’s shareholders to the IRS, the appendices and exhibits thereto, and the IRS Ruling itself. 

“Joint Responsibility Item” means any Tax Item, including Distribution Taxes, for which the non-Filing Party’s responsibility
under this Agreement could exceed one million dollars ($1,000,000), but not a Sole Responsibility Item. 
 “Non-Income Tax
Return” means any Tax Return relating to any Tax other than an Income Tax. 
 “Officer’s Certificate” means a
letter executed by an officer of Duke Energy or Spectra Energy and provided to Spin-Off Tax Counsel or Tax Counsel as a condition for the completion of the Spin-Off Tax Opinion, a Supplemental Tax Spin-Off Opinion or Supplemental Tax Opinion.

 “Other Spectra Energy Parties” means the entities listed in Schedule 1.1(129) of the Separation Agreement other
than Spectra Energy and the Excluded Spectra Energy Affiliates. 
 “Owed Party” shall have the meaning set forth in
Section 7.05. 
 “Owing Party” shall have the meaning set forth in Section 7.05. 
 “Parties” shall have the meaning set forth in the preamble hereto. 
 “Payment Period” shall have the meaning set forth in Section 7.05(e). 
 “Post-Distribution Period” means any taxable period beginning after the Distribution Date. 
 “Power Assets” shall have the meaning set forth in the Separation Agreement. 
 “Power Business” shall have the meaning set forth in the Separation Agreement. 
 “Power Liabilities” shall have the meaning set forth in the Separation Agreement. 
 “Pre-Distribution Period” means any taxable period beginning on or before the Distribution Date. 
 “Separation” shall have the meaning set forth in the preamble hereto. 
 “Separation Agreement” shall have the meaning set forth in the recitals hereto. 
  

 6 

 “Sole Responsibility Item” means any Tax Item for which the non-Filing Party has the
entire economic liability under this Agreement. 
 “Spectra Energy” shall have the meaning set forth in the preamble hereto.

 “Spectra Energy Affiliate” means any Person included in the Spectra Energy Group. 
 “Spectra Energy Business Records” shall have the meaning set forth in Section 9.01(c). 
 “Spectra Energy Group” shall have the meaning set forth in the Separation Agreement. 
 “Spectra Energy Separate Tax Liability” means an amount equal to the Tax liability that Spectra Energy and each Spectra Energy Affiliate
would have incurred if they had filed a consolidated return, combined return or a separate return, as the case may be, separate from the members of the Duke Energy Group, for the relevant Tax period, and such amount shall be computed by Duke Energy
in a manner consistent with (i) general Tax accounting principles, (ii) the Code and the Treasury Regulations promulgated thereunder, and (iii) past practice, if any. For the avoidance of doubt, the Spectra Energy Separate Tax
Liability shall in no event be less than zero, and nothing in this Agreement shall be construed to require compensation by Duke Energy for any losses of Spectra Energy or any Spectra Energy Affiliate. 
 “Spectra Energy Stock Options” means options to acquire Spectra Energy common stock. 
 “Spectra Energy Tax Acts” shall have the meaning set forth in Section 4.01(b). 
 “Spin-Off” shall have the meaning set forth in the recitals hereto. 
 “Spin-Off Tax Counsel” means Skadden, Arps, Slate, Meagher & Flom LLP. 
 “Spin-Off Tax Opinion” means the opinion to be issued by Spin-Off Tax Counsel, as one of the conditions to completing the Spin-Off,
addressing certain United States federal Income Tax consequences of the Spin-Off under section 355 of the Code. 
 “Supplemental Ruling” means any ruling (other than the IRS Ruling) issued by any Taxing Authority in connection with the Spin-Off. 
 “Supplemental Ruling Documents” means any request for a Supplemental Ruling, together with any supplemental filings or other materials subsequently submitted, the appendices and exhibits thereto, and
any Supplemental Rulings issued. 
 “Supplemental Spin-Off Tax Opinion” means any opinion (other than the Spin-Off
Tax Opinion) issued by any tax counsel in connection with the Spin-Off.  
 “Supplemental Tax Opinion” shall have the
meaning set forth in Section 4.04(d). 
  

 7 

 “Tax Asset” means any Tax Item that has accrued for Tax purposes, but has not been
realized during the taxable period in which it has accrued, and that could reduce a Tax in another taxable period, including a net operating loss, net capital loss, investment tax credit, foreign tax credit, charitable deduction or credit related to
alternative minimum tax or any other Tax credit. 
 “Tax Benefit” means a reduction in the Tax liability (or increase in
refund or credit or any item of deduction or expense) of a taxpayer (or of the Affiliated Group, or similar group of entities as defined under corresponding provisions of the laws of any other jurisdiction, of which it is a member) for any taxable
period. Except as otherwise provided in this Agreement, a Tax Benefit shall be deemed to have been realized or received from a Tax Item in a taxable period only if and to the extent that the Tax liability of the taxpayer (or of the Affiliated Group,
or similar group of entities as defined under corresponding provisions of the laws of any other jurisdiction, of which it is a member) for such period, after taking into account the effect of the Tax Item on the Tax liability of such taxpayer (or of
the Affiliated Group, or similar group of entities as defined under corresponding provisions of the laws of any other jurisdiction, of which it is a member) in the current period and all prior periods, is less than it would have been had such Tax
liability been determined without regard to such Tax Item. 
 “Tax Counsel” means a nationally recognized law firm mutually
agreed upon by Duke Energy and Spectra Energy to provide a Supplemental Tax Opinion. 
 “Tax Detriment” means an increase in
the Tax liability (or reduction in refund or credit or any item of deduction or expense) of a taxpayer (or of the Affiliated Group, or similar group of entities as defined under corresponding provisions of the laws of any other jurisdiction, of
which it is a member) for any taxable period. Except as otherwise provided in this Agreement, a Tax Detriment shall be deemed to have been realized or incurred from a Tax Item in a taxable period only if and to the extent that the Tax liability of
the taxpayer (or of the Affiliated Group, or similar group of entities as defined under corresponding provisions of the laws of any other jurisdiction, of which it is a member) for such period, after taking into account the effect of the Tax Item on
the Tax liability of such taxpayer (or of the Affiliated Group, or similar group of entities as defined under corresponding provisions of the laws of any other jurisdiction, of which it is a member) in the current period and all prior periods, is
more than it would have been had such Tax liability been determined without regard to such Tax Item. 
 “Tax Item” means any
item of income, gain, loss, deduction, expense or credit, or other attribute that may have the effect of increasing or decreasing any Tax. 
 “Tax Return” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, amended tax return, claim
for refund or declaration of estimated Tax) required to be supplied to, or filed with, a Taxing Authority in connection with the determination, assessment or collection of any Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax. 
 “Tax Material” shall have the meaning set forth in Section 9.01(a). 
  

 8 

 “Taxes” means all federal, state, local or foreign taxes, charges, fees, duties, levies,
imposts, rates or other assessments, including income, gross receipts, excise, property, sales, use, license, capital stock, transfer, franchise, payroll, withholding, social security, value added or other taxes, (including any interest, penalties
or additions attributable thereto) and a “Tax” shall mean any one of such Taxes. 
 “Taxing Authority” means any
governmental authority or any subdivision, agency, commission or authority thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS). 

“U.S. Gas Transmission Business” means the U.S. Gas Transmission Business as defined in the IRS Ruling Documents. 
 Section 2. Preparation and Filing of Tax Returns. 
 2.01. Duke Energy’s Responsibility. Subject to the other applicable provisions of this Agreement, Duke Energy shall have sole and exclusive responsibility for the preparation and filing of: 
 (a) all Consolidated Returns and all Combined Returns for any taxable period; 
 (b) all Income Tax Returns (other than Consolidated Returns and Combined Returns) with respect to Duke Energy and/or any Duke Energy Affiliate for any
taxable period; 
 (c) all Non-Income Tax Returns with respect to Duke Energy, any Duke Energy Affiliate, or the Power Business or any part
thereof for any taxable period; and 
 (d) all Non-Income Tax Returns with respect to Spectra Energy, any Spectra Energy Affiliate, or the
Gas Business or any part thereof, that are required to be filed (taking into account any extension of time which has been requested or received) on or prior to the Distribution Date. 
 2.02. Spectra Energy’s Responsibility. Spectra Energy shall have sole and exclusive responsibility for the preparation and filing of:

 (a) all Income Tax Returns (other than Consolidated Returns and Combined Returns) with respect to Spectra Energy and/or any Spectra Energy
Affiliate for any taxable period; and 
 (b) all Non-Income Tax Returns with respect to Spectra Energy, any Spectra Energy Affiliate, or the
Gas Business or any part thereof, that are required to be filed (taking into account any extension of time which has been requested or received) after the Distribution Date. 
 2.03. RESERVED. 
  

 9 

 2.04. Agent. Subject to the other applicable provisions of this Agreement, Spectra Energy hereby
irrevocably designates, and agrees to cause each Spectra Energy Affiliate to so designate, Duke Energy as its sole and exclusive agent and attorney-in-fact to take such action (including execution of documents) as Duke Energy, in its sole
discretion, may deem appropriate in any and all matters (including Audits) relating to any Tax Return described in Section 2.01. 
 2.05. Manner of Tax Return Preparation. 
 (a) Unless otherwise required by a Taxing Authority, the Parties hereby agree to
prepare and file all Tax Returns, and to take all other actions, in a manner consistent with (1) this Agreement, (2) the Spin-Off Tax Opinion, (3) any Supplemental Spin-Off Tax Opinion, (4) any Supplemental Tax Opinion,
(5) the IRS Ruling Documents, and (6) any Supplemental Ruling Documents. All Tax Returns shall be filed on a timely basis (taking into account applicable extensions) by the Party responsible for filing such returns under this Agreement.

 (b) Subject to the other applicable provisions of this Agreement, Duke Energy shall have the exclusive right, in its sole discretion, with
respect to any Tax Return described in Section 2.01, to determine (1) the manner in which such Tax Return shall be prepared and filed, including the elections, method of accounting, positions, conventions and principles of taxation to be
used and the manner in which any Tax Item shall be reported, (2) whether any extensions shall be requested, (3) the elections that will be made by Duke Energy, any Duke Energy Affiliate, Spectra Energy, and/or any Spectra Energy Affiliate
on such Tax Return, (4) whether any amended Tax Returns shall be filed, (5) whether any claims for refund shall be made, (6) whether any refunds shall be paid by way of refund or credited against any liability for the related Tax, and
(7) whether to retain outside firms to prepare and/or review such Tax Returns. 
 (c) With respect to any Consolidated Return or
Combined Return including or reporting a Spectra Energy Separate Tax Liability: (1) Spectra Energy shall provide Duke Energy with a pro forma draft of the portion of such Tax Return that reflects Spectra Energy and/or any Spectra Energy
Affiliate at least seventy-five (75) days prior to the due date (with applicable extensions) for the filing of such Tax Return; (2) Duke Energy shall provide to Spectra Energy a pro forma draft of the portion of such Tax Return that
reflects the Spectra Energy Separate Tax Liability and a statement showing in reasonable detail Duke Energy’s calculation of the Spectra Energy Separate Tax Liability (including copies of all worksheets and other materials used in preparation
thereof) at least forty-five (45) days prior to the due date (with applicable extensions) for the filing of such Tax Return for Spectra Energy’s review and comment; and (3) Spectra Energy shall provide its comments to Duke Energy at
least thirty (30) days prior to the due date (with applicable extensions) for the filing of such Tax Return. For the avoidance of doubt, nothing in this Section 2.05(c) shall alter the sole and exclusive responsibility for the preparation
and filing of Tax Returns under Sections 2.01 and 2.02. Any dispute regarding the reporting of any Tax Item on any Tax Return covered by this section shall be resolved pursuant to Section 9.02. If Spectra Energy has not provided its comments on
the pro forma draft of the portion of the Tax Return, or in the case of a dispute regarding the reporting of any Tax Item, such dispute has not been resolved by the due date (with applicable extensions) for the filing of any Tax Return, Duke Energy
shall file such Tax Return reporting all Tax Items in the manner as originally set forth on the pro forma draft of the portion of the Tax 

  

 10 

 
Return provided to Spectra Energy; provided, however, that Duke Energy agrees that it will thereafter file an amended Tax Return, if necessary,
reporting any disputed Tax Item in the manner determined under Section 9.02, and any other Tax Item as agreed upon by Duke Energy and Spectra Energy. 
 2.06. Tax Services. The Transition Services Agreement shall control the provision of any other Tax related services by Duke Energy for Spectra Energy and/or any Tax related services by Spectra Energy for Duke
Energy. 
 Section 3. Liability for Taxes. 
 3.01. Spectra Energy’s Liability for Taxes. Spectra Energy and each Spectra Energy Affiliate (other than the Excluded Spectra Energy Affiliates) shall be jointly and severally liable for the following Taxes, and shall be
entitled to receive and retain all refunds and credits of Taxes previously incurred by Spectra Energy, any Spectra Energy Affiliate, or the Gas Business with respect to such Taxes: 
 (a) all Taxes with respect to Tax Returns described in Section 2.01(a) to the extent that such Taxes are related to (i) the Spectra Energy
Separate Tax Liability, or (ii) the Gas Business, for any taxable period; 
 (b) all Taxes with respect to Tax Returns described in
Section 2.01(d); 
 (c) all Taxes with respect to Tax Returns described in Section 2.02; 
 (d) all Taxes imposed by any Taxing Authority with respect to Spectra Energy, any Spectra Energy Affiliate, or the Gas Business (other than in connection
with the required filing of a Tax Return described in Sections 2.01(a), 2.01(d) or 2.02) for any taxable period; 
 (e) notwithstanding any
other provision in Sections 3.01 or 3.02, Spectra Energy and any Spectra Energy Affiliates (other than the Excluded Spectra Energy Affiliates) shall be jointly and severally liable for the portion of any Exchangeco Tax as determined based on the
formula for the allocation of Unallocated Liabilities described in Article VI of the Separation Agreement; 
 (f) notwithstanding any other
provision in Sections 3.01 or 3.02, Spectra Energy and any Spectra Energy Affiliates (other than the Excluded Spectra Energy Affiliates) shall be jointly and severally liable for any Taxes resulting from any Deferred Intercompany Item, whenever
created, that is caused to be recognized after the Distribution, by any action or omission of Spectra Energy or any Spectra Energy Affiliate (Duke Energy shall have no liability for any such Taxes); and 
 (g) notwithstanding any other provision in this Agreement, all Taxes with respect to the matters or items described on Schedule 3.01(g) attached
hereto. 
  

 11 

 3.02. Duke Energy’s Liability for Taxes. Duke Energy shall be liable for the following Taxes,
and shall be entitled to receive and retain all refunds and credits of Taxes previously incurred by Duke Energy, any Duke Energy Affiliate, or the Power Business with respect to such Taxes: 
 (a) all Taxes with respect to Tax Returns described in Section 2.01(a) to the extent that such Taxes are related to (i) the Duke Energy Separate
Tax Liability, or (ii) the Power Business, for any taxable period; 
 (b) all Taxes with respect to Tax Returns described in
Section 2.01(b) or Section 2.01(c); 
 (c) all Taxes imposed by any Taxing Authority with respect to Duke Energy, any Duke Energy
Affiliate, or the Power Business (other than in connection with the required filing of a Tax Return described in Sections 2.01(a), 2.01(b) or 2.01(c)) for any taxable period; 
 (d) notwithstanding any other provision in Sections 3.01 or 3.02, Duke Energy shall be liable for the portion of any Exchangeco Tax as determined based
on the formula for the allocation of Unallocated Liabilities described in Article VI of the Separation Agreement; 
 (e) notwithstanding any
other provision in Sections 3.01 or 3.02, Duke Energy shall be liable for any Taxes resulting from any Deferred Intercompany Item, whenever created, that is caused to be recognized after the Distribution, by any action or omission of Duke Energy or
any Duke Energy Affiliate (Spectra Energy shall have no liability for any such Taxes); and 
 (f) notwithstanding any other provision in this
Agreement, all Taxes with respect to the matters or items described on Schedule 3.02(f) attached hereto. 
 3.03. Joint Liability
for Certain Unallocated Taxes. 
 (a) In the event that any Taxes with respect to Tax Returns described in Section 2.01(a) are not
otherwise allocated by Sections 3.01 or 3.02, then the liability for such Taxes shall be allocated in the manner consistent with the allocation of Unallocated Liabilities described in Article VI of the Separation Agreement. 
 (b) Except for Distribution Taxes, any Tax resulting from any transactions undertaken to effectuate the Separation shall be allocated in the manner
consistent with the allocation of Unallocated Liabilities described in Article VI of the Separation Agreement, and for the avoidance of doubt, such Taxes shall not be allocated under the provisions in Section 3.01 or 3.02. 
 3.04. Refunds and Credits. Nothing in this Agreement shall be construed as to require compensation, by payment, credit, offset or otherwise, by
Duke Energy (or any Duke Energy Affiliate) to Spectra Energy (or any Spectra Energy Affiliate) for any loss, deduction, credit or other Tax attribute arising in connection with, or related to, Spectra Energy or any Spectra Energy Affiliate, that is
shown on, or otherwise reflected with respect to, any Tax Return 

  

 12 

 
described in Section 2.01. Nothing in this Agreement shall be construed as to require compensation, by payment, credit, offset or otherwise, by Spectra
Energy (or any Spectra Energy Affiliate) to Duke Energy (or any Duke Energy Affiliate) for any loss, deduction, credit or other Tax attribute arising in connection with, or related to, Duke Energy or any Duke Energy Affiliate, that is shown on, or
otherwise reflected with respect to, any Tax Return described in Section 2.02. 
 3.05. Payment of Tax Liability. If one Party is
liable or responsible for Taxes, under Sections 3.01 through 3.04, with respect to Tax Returns for which another party is responsible for preparing and/or filing, or with respect to Taxes that are paid by another Party, then the liable or
responsible Party shall pay the Taxes (or a reimbursement of such Taxes) to the other Party pursuant to Section 7.05; provided, however, Spectra Energy’s liability to pay Duke Energy under Section 7.05 shall be reduced
by the amount Duke Energy accrued for Income Taxes of Spectra Energy for the 2006 calendar year; provided further, however, that if the amount that Spectra Energy owes Duke Energy is negative as a result of such reduction, Duke Energy shall pay the
absolute value of such negative amount to Spectra Energy. 
 3.06. Computation. Duke Energy shall provide Spectra Energy with a
written calculation in reasonable detail (including copies of all work sheets and other materials used in preparation thereof) setting forth the amount of any Spectra Energy Separate Tax Liability or estimated Spectra Energy Separate Tax Liability
(for purposes of Section 7.01) and any Taxes for which Spectra Energy is liable under Section 3.01. Spectra Energy shall have the right to review and comment on such calculation. Any dispute with respect to such calculation shall be
resolved pursuant to Section 9.02; provided, however, that, notwithstanding any dispute with respect to any such calculation, in no event shall any payment attributable to the amount of any Spectra Energy Separate Tax Liability or
estimated Spectra Energy Separate Tax Liability be paid later than the date provided in Section 7. 
 Section 4. Distribution Taxes and
Deconsolidation. 
 4.01. Distribution Taxes. 
 (a) Duke Energy’s Liability for Distribution Taxes. Notwithstanding Sections 3.01 through 3.04, Duke Energy shall be liable for any Distribution Taxes, to the extent that such Distribution Taxes are
attributable to, caused by, or result from, one or more of the following (collectively, “Duke Energy Tax Acts”): 
 (i) any
action or omission by Duke Energy or any Duke Energy Affiliate, at any time, that is inconsistent with any material, information, covenant or representation in an Officer’s Certificate, Spin-Off Tax Opinion, Supplemental Spin-Off Tax Opinion,
Supplemental Tax Opinion, IRS Ruling Documents or Supplemental Ruling Documents (for the avoidance of doubt, disclosure by Duke Energy (or any Duke Energy Affiliate) to Spectra Energy (or any Spectra Energy Affiliate) of any action or fact that is
inconsistent with any material, information, covenant or representation submitted to Spin-Off Tax Counsel, Tax Counsel, the IRS, or other Taxing Authority, as applicable, in connection with an Officer’s Certificate, Spin-Off Tax Opinion,
Supplemental Spin-Off Tax Opinion, Supplemental Tax Opinion, IRS Ruling Documents or Supplemental Ruling Documents, shall not relieve Duke Energy (or any Duke Energy Affiliate) of liability under this Agreement); 
  

 13 

 (ii) any action or omission by Duke Energy or any Duke Energy Affiliate, after the Distribution
(including any act or omission that is in furtherance of, connected to, or part of a plan or series of related transactions (within the meaning of section 355(e) of the Code) occurring on or prior to the Distribution), including a cessation,
transfer to affiliates, or disposition of the active trades or businesses, stock buyback or payment of an extraordinary dividend; 
 (iii)
any acquisition of any stock or assets of Duke Energy or any Duke Energy Affiliate, by one or more other Persons (other than Spectra Energy or a Spectra Energy Affiliate) prior to or following the Distribution; 
 (iv) any issuance of stock by Duke Energy or any Duke Energy Affiliate, after the Distribution, including any issuance pursuant to the exercise of
employee stock options or other employment related arrangements, or the exercise of warrants; or 
 (v) any change in ownership of stock in
Duke Energy or any Duke Energy Affiliate after the Distribution. 
 (b) Spectra Energy’s Liability for Distribution Taxes.
Notwithstanding Sections 3.01 through 3.04, Spectra Energy, and each Spectra Energy Affiliate (other than the Excluded Spectra Energy Affiliates), shall be jointly and severally liable for any Distribution Taxes, to the extent that such Distribution
Taxes are attributable to, caused by, or result from, one or more of the following (collectively, “Spectra Energy Tax Acts”): 
 (i) any action or omission by Spectra Energy or any Spectra Energy Affiliate, at any time, that is inconsistent with any material, information, covenant or representation in an Officer’s Certificate, Spin-Off Tax Opinion, Supplemental
Spin-Off Tax Opinion, Supplemental Tax Opinion, IRS Ruling Documents or Supplemental Ruling Documents, (for the avoidance of doubt, disclosure by Spectra Energy (or any Spectra Energy Affiliate) to Duke Energy (or any Duke Energy Affiliate) of any
action or fact that is inconsistent with any material, information, covenant or representation submitted to Spin-Off Tax Counsel, Tax Counsel, the IRS, or other Taxing Authority, as applicable, in connection with an Officer’s Certificate,
Spin-Off Tax Opinion, Supplemental Spin-Off Tax Opinion, Supplemental Tax Opinion, IRS Ruling Documents, Supplemental Ruling Documents, shall not relieve Spectra Energy (or any Spectra Energy Affiliate) of liability under this Agreement);

 (ii) any action or omission by Spectra Energy or any Spectra Energy Affiliate, after the Distribution (including any act or omission that
is in furtherance of, connected to, or part of a plan or series of related transactions (within the meaning of section 355(e) of the Code) occurring on or prior to the Distribution), including a cessation, transfer to affiliates, or disposition of
the active trades or businesses, stock buyback or payment of an extraordinary dividend; 
  

 14 

 (iii) any acquisition of any stock or assets of Spectra Energy or any Spectra Energy Affiliate, by one
or more other Persons (other than Duke Energy or any Duke Energy Affiliate) prior to or following the Distribution; 
 (iv) any issuance of
stock by Spectra Energy or any Spectra Energy Affiliate, after the Distribution, including any issuance pursuant to the exercise of employee stock options or other employment related arrangements, or the exercise of warrants; or 
 (v) any change in ownership of stock in Spectra Energy or any Spectra Energy Affiliate after the Distribution. 
 (c) Joint Liability for Remaining Distribution Taxes. In the event that Distribution Taxes are not otherwise allocated by Sections 4.01(a) or (b),
then the liability for such Distribution Taxes shall be allocated in the manner consistent with the allocation of Unallocated Liabilities described in Article VI of the Separation Agreement. In the event that one or more Duke Energy Tax Acts occur
simultaneously with one or more Spectra Energy Tax Acts and these result in Distribution Taxes, then the allocation of the liability for such Distribution Taxes shall be allocated in the manner consistent with the allocation of Unallocated
Liabilities described in Article VI of the Separation Agreement, and, for the avoidance of doubt, Sections 4.01(a) or (b) shall not control the allocation of such Distribution Taxes. 
 (d) Representation. Each of Duke Energy and Spectra Energy represents that, as of the date of this Agreement, neither it nor its Affiliates know
of any fact that may cause Internal Contribution 1, Internal Distribution 1, Internal Contribution 2, Internal Distribution 2, Internal Contribution 3, Internal Distribution 3, the Contribution or the Distribution to fail to qualify as transactions
in which no income, gain, or loss is recognized pursuant to section 355 of the Code. 
 (e) Representative Examples. For the avoidance
of doubt, Appendix A to this Agreement sets forth examples illustrating the intended application of this Section 4.01. 
 4.02.
Carrybacks. 
 (a) In General. Duke Energy agrees to pay to Spectra Energy the United States federal Income Tax Benefit from the
use in any Pre-Distribution Period (the “Carryback Period”) of a carryback of any Tax Asset of the Spectra Energy Group from a Post-Distribution Period (other than a carryback of any Tax Asset attributable to Distribution Taxes for
which the liability is borne by Duke Energy or any Duke Energy Affiliate). If subsequent to the payment by Duke Energy to Spectra Energy of the United States federal Income Tax Benefit of a carryback of a Tax Asset of the Spectra Energy Group, there
shall be a Final Determination which results in a (1) change to the amount of the Tax Asset so carried back or (2) change to the amount of such United States federal Income Tax Benefit, Spectra Energy shall repay to Duke Energy, or Duke
Energy shall repay to Spectra Energy, as the case may be, any amount which would not have been payable to such other Party pursuant to this Section 4.02(a) had the amount of the Tax Benefit been determined in light of these events. Nothing in
this Section 4.02(a) shall require Duke Energy to file an amended Tax Return or claim for refund of United States federal Income Taxes; provided, however, that Duke Energy shall use its reasonable efforts to use any carryback of a
Tax Asset of the Spectra Energy Group that is carried back under this Section 4.02(a). 
  

 15 

 (b) Net Operating Losses. Notwithstanding any other provision of this Agreement, Spectra Energy
hereby expressly agrees to elect (under section 172(b)(3) of the Code and, to the extent feasible, any similar provision of any state, local or foreign Tax law) to relinquish any right to carryback net operating losses to any Pre-Distribution
Periods of Duke Energy (in which event no payment shall be due from Duke Energy to Spectra Energy in respect of such net operating losses). 
 4.03. Allocation of Tax Items. All Tax computations for (1) any Pre-Distribution Periods ending on the Distribution Date and (2) the immediately following taxable period of Spectra Energy or any Spectra Energy Affiliate,
shall be made pursuant to the principles of section 1.1502-76(b) of the Treasury Regulations or of a corresponding provision under the laws of other jurisdictions, as agreed upon by Duke Energy and Spectra Energy. 
 4.04. Continuing Covenants. 
 (a)
In General. Each of Duke Energy and Spectra Energy agrees (1) not to take any action (or cause its Affiliates to take any action) reasonably expected to result in an increased Tax liability to the other, a reduction in a Tax Asset of the
other or an increased liability to the other under this Agreement, and (2) to take any action (and cause its Affiliates to take any action) reasonably requested by the other that would reasonably be expected to result in a Tax Benefit or avoid
a Tax Detriment to the other, provided, in either such case, that the taking or refraining to take such action does not result in any additional cost not fully compensated for by the other Party or any other adverse effect to such Party. The Parties
hereby acknowledge that the preceding sentence is not intended to limit, and therefore shall not apply to, the rights of the Parties with respect to matters otherwise covered by this Agreement. 
 (b) Spectra Energy Restrictions. Spectra Energy agrees that it will not knowingly take or fail to take, or permit any Spectra Energy Affiliate to
knowingly take or fail to take, any action where such action or failure to act would be inconsistent with any material, information, covenant or representation that relates to facts or matters related to Spectra Energy (or any Spectra Energy
Affiliate) or within the control of Spectra Energy and is contained in an Officer’s Certificate, Spin-Off Tax Opinion, Supplemental Tax Opinion, Supplemental Spin-Off Tax Opinion, IRS Ruling Documents or Supplemental Ruling Documents, (except
where such material, information, covenant or representation was not previously disclosed to Spectra Energy) other than as permitted by this Section 4.04. For this purpose an action is considered inconsistent with a representation if the
representation states that there is no plan or intention to take such action. Spectra Energy agrees that it will not take (and it will cause the Spectra Energy Affiliates to refrain from taking) any position on a Tax Return that is inconsistent with
the treatment of Internal Contribution 1, Internal Distribution 1, Internal Contribution 2, Internal Distribution 2, Internal Contribution 3, Internal Distribution 3, the Contribution or the Distribution as transactions in which no income, gain, or
loss is recognized pursuant to section 355 of the Code. 
  

 16 

 (c) Duke Energy Restrictions. Duke Energy agrees that it will not knowingly take or fail to take,
or permit any Duke Energy Affiliate to knowingly take or fail to take, any action where such action or failure to act would be inconsistent with any material, information, covenant or representation that relates to facts or matters related to Duke
Energy (or any Duke Energy Affiliate) or within the control of Duke Energy and is contained in a Spin-Off Tax Opinion, Supplemental Tax Opinion, Supplemental Spin-Off Tax Opinion, IRS Ruling Documents or Supplemental Ruling Documents, other than as
permitted by this Section 4.04. For this purpose an action is considered inconsistent with a representation if the representation states that there is no plan or intention to take such action. Duke Energy agrees that it will not take (and it
will cause the Duke Energy Affiliates to refrain from taking) any position on a Tax Return that is inconsistent with the treatment of Internal Contribution 1, Internal Distribution 1, Internal Contribution 2, Internal Distribution 2, Internal
Contribution 3, Internal Distribution 3, the Contribution or the Distribution as transactions in which no income, gain, or loss is recognized pursuant to section 355 of the Code. 
 (d) Certain Spectra Energy Actions Following the Distribution. Spectra Energy agrees that, during the two (2) year period following the
Distribution, without first obtaining, at Spectra Energy’s own expense, either a supplemental opinion from Tax Counsel that such action will not result in Distribution Taxes (a “Supplemental Tax Opinion”) or a Supplemental
Ruling that such action will not result in Distribution Taxes, unless in any such case Duke Energy and Spectra Energy agree otherwise, in writing, Spectra Energy shall not (1) sell all or substantially all of the assets of the U.S. Gas
Transmission Business, (2) merge any entity that is part of the U.S. Gas Transmission Business with another entity, without regard to which party is the surviving entity, (3) transfer any assets of the U.S. Gas Transmission Business in a
transaction described in section 351 (other than a transfer to a corporation which files a United States federal consolidated Income Tax Return with Spectra Energy and which is wholly-owned, directly or indirectly, by Spectra Energy), section 721 or
subparagraph (C) or (D) of section 368(a)(1) of the Code, (4) issue stock of Spectra Energy or any Spectra Energy Affiliate (or any instrument that is convertible or exchangeable into any such stock) in an acquisition or public or
private offering (excluding any issuance pursuant to the exercise of employee stock options or other employment related arrangements having customary terms and conditions and that satisfy the requirements of Treasury Regulations section
1.355-7(d)(8), or any successor provision thereto), or (5) facilitate or otherwise participate in any acquisition of stock in Spectra Energy that would result in any shareholder owning five percent (5%) or more of the outstanding stock of
Spectra Energy. Spectra Energy (or any Spectra Energy Affiliate) shall only undertake any of such actions after Duke Energy’s receipt of such Supplemental Tax Opinion or Supplemental Ruling and pursuant to the terms and conditions of any such
Supplemental Tax Opinion or Supplemental Ruling or as otherwise consented to in writing in advance by Duke Energy. The Parties hereby agree that they will act in good faith to take all reasonable steps necessary to amend this Section 4.04(d),
from time to time, by mutual agreement, to (i) add certain actions to the list contained herein, or (ii) remove certain actions from the list contained herein, in either case, in order to reflect any relevant change in law, regulation or
administrative interpretation occurring after the date of this Agreement. 
 (e) Spectra Energy and Duke Energy Cooperation. Spectra
Energy and Duke Energy agree that, at the request of the other Party, the Parties shall cooperate fully to seek to 

  

 17 

 
obtain, as expeditiously as possible, the Spin-Off Tax Opinion, any Supplemental Spin-Off Tax Opinion, any Supplemental Tax Opinion, the IRS Ruling, and/or
any Supplemental Ruling. Such cooperation shall include the execution of any documents that may be necessary or reasonably helpful in connection with obtaining the Spin-Off Tax Opinion, Supplemental Spin-Off Tax Opinion, Supplemental Tax Opinion,
IRS Ruling, and/or Supplemental Ruling (including any power of attorney, Officer’s Certificate, IRS Ruling Documents, Supplemental Rulings Documents, and/or reasonably requested written representations confirming that (i) Duke Energy or
Spectra Energy, as the case may be, has read the Officer’s Certificate, IRS Ruling Documents, and/or Supplemental Ruling Documents, and (ii) all information and representations, if any, relating to Duke Energy (or any Duke Energy
Affiliate) or Spectra Energy (or any Spectra Energy Affiliate), as the case may be, contained in the Officer’s Certificate, IRS Ruling Documents, and/or Supplemental Ruling Documents are true, correct and complete in all material respects).

 4.05. Allocation of Tax Assets. 
 (a) In General. In connection with the Spin-Off, Duke Energy and Spectra Energy shall cooperate in determining the allocation of any Tax Assets among Duke Energy, each Duke Energy Affiliate, Spectra Energy, and
each Spectra Energy Affiliate. The Parties hereby agree that in the absence of controlling legal authority or unless otherwise provided under this Agreement, Tax Assets shall be allocated to the legal entity that created such Tax Assets. 

(b) Earnings and Profits. Duke Energy will advise Spectra Energy in writing of the decrease in Duke Energy earnings and profits attributable to
the Spin-Off under section 312(h) of the Code on or before the first anniversary of the Distribution Date; provided, however, that Duke Energy shall provide Spectra Energy with estimates of such amounts (determined in accordance with
past practice) prior to such anniversary as reasonably requested by Spectra Energy. Any reasonable third party cost incurred after the Spin-Off in connection with determining the earnings and profits attributable to the Spin-Off shall be allocated
among Duke Energy and Spectra Energy consistent with the allocation of Unallocated Liabilities described in Article VI of the Separation Agreement. 
 4.06. DEFS Distribution. Notwithstanding anything to the contrary in Article III, Spectra Energy agrees to pay Duke Energy no later than March 9, 2007 an amount equal to the 2006 tax distribution paid or distributed by Duke
Energy Field Services LLC to Duke Energy Enterprises Corporation (which is expected to be paid or distributed in January 2007). Spectra Energy shall notify Duke Energy of the amount of such 2006 tax distribution within ten (10) days of Duke
Energy Enterprises Corporation’s receipt of such tax distribution from Duke Energy Field Services. 
 4.07. Alternative Minimum Tax
Audits. If the proposed settlement associated with the Audit by the IRS of certain Duke Energy entities (including certain members of the Spectra Energy Group) with respect primarily to alternative minimum tax matters for the periods 1997-1998
is not finally agreed to by Duke Energy and the IRS prior to the Effective Time, then Duke Energy will cause the Spectra Energy Target Cash Amount set forth in the Separation Agreement to be increased by $44 million. If such $44 million is required
to be delivered to Spectra Energy 

  

 18 

 
pursuant to this Section 4.07, promptly following effectiveness of the settlement and receipt by Duke Energy of any amounts payable by the Service to
Duke Energy, Spectra Energy shall repay such $44 million to Duke Energy with interest at the rate described in Section 7.05(e). 
 Section 5.
Employee Wages. 
 At Duke Energy’s request, Spectra Energy shall assume the Form W-2 and Form W-3 reporting obligations (including
the filing of all forms necessary to comply with magnetic media reporting requirements) of Duke Energy with respect to any employee of the Gas Business that Spectra Energy or any Spectra Energy Affiliate employs during the calendar year which
includes the Distribution Date consistent with the procedures set forth in section 5 of Rev. Proc. 2004-53, 2004-34 I.R.B. 320. 
 Section 6.
Indemnification. 
 6.01. In General. Duke Energy shall indemnify Spectra Energy, each Spectra Energy Affiliate, and their
respective directors, officers and employees, and hold them harmless from and against any and all Taxes for which Duke Energy or any Duke Energy Affiliate is liable under this Agreement and any loss, cost, damage or expense, including reasonable
attorneys’ fees and costs, that is attributable to, or results from, the failure of Duke Energy, any Duke Energy Affiliate or any director, officer or employee to make any payment required to be made under this Agreement. Spectra Energy and
each Spectra Energy Affiliate (other than the Excluded Spectra Energy Affiliates) shall jointly and severally indemnify Duke Energy, each Duke Energy Affiliate, and their respective directors, officers and employees, and hold them harmless from and
against any and all Taxes for which Spectra Energy or any Spectra Energy Affiliate is liable under this Agreement and any loss, cost, damage or expense, including reasonable attorneys’ fees and costs, that is attributable to, or results from,
the failure of Spectra Energy, any Spectra Energy Affiliate or any director, officer or employee to make any payment required to be made under this Agreement. 
 6.02. Inaccurate or Incomplete Information. Duke Energy shall indemnify Spectra Energy, each Spectra Energy Affiliate, and their respective directors, officers and employees, and hold them harmless from and
against any cost, fine, penalty, or other expenses of any kind attributable to the failure of Duke Energy or any Duke Energy Affiliate to supply Spectra Energy or any Spectra Energy Affiliate with accurate and complete information in connection with
the preparation of any Tax Return. Spectra Energy and each Spectra Energy Affiliate (other than the Excluded Spectra Energy Affiliates) shall jointly and severally indemnify Duke Energy, each Duke Energy Affiliate, and their respective directors,
officers and employees, and hold them harmless from and against any cost, fine, penalty, or other expenses of any kind attributable to the failure of Spectra Energy or any Spectra Energy Affiliate to supply Duke Energy or any Duke Energy Affiliate
with accurate and complete information in connection with the preparation of any Tax Return. 
 6.03. No Indemnification for Tax
Items. Nothing in this Agreement shall be construed as a guarantee of the existence or amount of any loss, credit, carryforward, basis or other Tax Item, whether past, present or future, of Duke Energy, any Duke Energy Affiliate, Spectra Energy
or any Spectra Energy Affiliate. 
  

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 Section 7. Payments. 
 7.01. Estimated Tax Payments. Not later than five (5) Business Days prior to each Estimated Tax Installment Date with respect to a taxable period for which a Consolidated Return or a Combined Return will
be filed, Spectra Energy shall pay to Duke Energy on behalf of the Spectra Energy Group an amount equal to the amount of any estimated Spectra Energy Separate Tax Liability for any Post-Distribution Period that Spectra Energy otherwise would have
been required to pay to a Taxing Authority on such Estimated Tax Installment Date. 
 7.02. True-Up Payments. Not later than five
(5) Business Days after completion of a Tax Return, Spectra Energy shall pay to Duke Energy, or Duke Energy shall pay to Spectra Energy, as appropriate, an amount equal to the difference, if any, between the Spectra Energy Separate Tax
Liability and the aggregate amount paid by Spectra Energy with respect to such period under Section 7.01. 
 7.03. Redetermination
Amounts. In the event of a redetermination of any Tax Item reflected on any Consolidated Return or Combined Return (other than Tax Items relating to Distribution Taxes), as a result of a refund or credit of Taxes paid, a Final Determination or
any settlement or compromise with any Taxing Authority which in any such case would affect the Spectra Energy Separate Tax Liability, Duke Energy shall prepare a revised pro forma Tax Return in accordance with Section 2.01(a) for the relevant
taxable period reflecting the redetermination of such Tax Item as a result of such refund, Final Determination, settlement or compromise. Spectra Energy shall pay to Duke Energy, or Duke Energy shall pay to Spectra Energy, as appropriate, an amount
equal to the difference, if any, between the Spectra Energy Separate Tax Liability reflected on such revised pro forma Tax Return and the Spectra Energy Separate Tax Liability for such period as originally computed pursuant to this Agreement.

 7.04. Payments of Refunds and Credits. If one Party receives a refund or credit of any Tax to which the other Party is entitled
pursuant to Section 3.04, the Party receiving such refund or credit shall pay to the other Party the amount of such refund or credit pursuant to Section 7.05. 
 7.05. Payments Under This Agreement. In the event that one Party (the “Owing Party”) is required to make a payment to another Party (the “Owed Party”) pursuant to this
Agreement, then such payments shall be made according to this Section 7.05. 
 (a) In General. All payments shall be made to the
Owed Party or to the appropriate Taxing Authority as specified by the Owed Party within the time prescribed for payment in this Agreement, or if no period is prescribed, within ten (10) days after delivery of written notice of payment owing
together with a computation of the amounts due. 
 (b) Treatment of Payments. Unless otherwise required by any Final Determination,
the Parties agree that any payments made by one Party to another Party pursuant 

  

 20 

 
to this Agreement (other than (i) payments for tax services pursuant to the Transition Services Agreement, (ii) payments of After Tax Amounts
pursuant to Section 7.05(d), and (iii) payments of interest pursuant to Section 7.05(e)) shall be treated for all Tax purposes as nontaxable payments (dividend distributions or capital contributions, as the case may be) made
immediately prior to the Distribution and, accordingly, as not includible in the taxable income of the recipient or as deductible by the payor. 
 (c) Prompt Performance. All actions required to be taken (including payments) by any Party under this Agreement shall be performed within the time prescribed for performance in this Agreement, or if no period is prescribed, such
actions shall be performed promptly. 
 (d) After Tax Amounts. If pursuant to a Final Determination it is determined that the receipt
or accrual of any payment made under this Agreement (other than (i) payments for Tax Services pursuant to Section 2.06, and (ii) payments of interest pursuant to Section 7.05(e)) is subject to any Tax, the Party making such
payment shall be liable for (a) the After Tax Amount with respect to such payment and (b) interest at the rate described in Section 7.05(e) on the amount of such Tax from the date such Tax accrues with respect to the receipt of such
payment through the date of payment of such After Tax Amount. A Party making a demand for a payment pursuant to this Agreement and for a payment of an After Tax Amount with respect to such payment shall separately specify and compute such After Tax
Amount. However, a Party may choose not to specify an After Tax Amount in a demand for payment pursuant to this Agreement without thereby being deemed to have waived its right subsequently to demand an After Tax Amount with respect to such payment.

 (e) Interest. Payments pursuant to this Agreement that are not made within the period prescribed in this Agreement (the
“Payment Period”) shall bear interest for the period from and including the date immediately following the last date of the Payment Period through and including the date of payment at a per annum rate equal to the prime rate of
interest (the base rate on corporate loans) as published under “Money Rates” in The Wall Street Journal on the last day of such Payment Period, plus two percent (2%). Such interest will be payable at the same time as the payment to
which it relates and shall be calculated on the basis of a year of three hundred sixty-five (365) days and the actual number of days for which due. 
 (f) Procedures. Any claim for indemnification under this Section 7 shall be governed by, and be subject to, the provisions of Article VII of the Separation Agreement, which provisions are hereby
incorporated by reference into this Agreement and any references to “Agreement” in such Article VII as incorporated herein shall be deemed to be references to this Agreement. 
 Section 8. Tax Proceedings. 
 8.01. In General. Except as otherwise provided in this
Agreement, the Party responsible for preparing and filing a Tax Return pursuant to Section 2 (the “Filing Party”) shall have the exclusive right, in its sole discretion, to control, contest, and represent the interests of Duke

  

 21 

 
Energy, any Duke Energy Affiliate, Spectra Energy, and/or any Spectra Energy Affiliate in any Audit relating to such Tax Return and to resolve, settle or
agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Audit. The Filing Party’s rights shall extend to any matter pertaining to the management and control of an Audit,
including execution of waivers, choice of forum, scheduling of conferences and the resolution of any Tax Item. Any costs incurred in handling, settling, or contesting an Audit shall be borne by the Filing Party. 
 8.02. Participation of non-Filing Party. Except as provided in Section 8.04, the non-Filing Party shall, at its own expense, have control
over decisions to resolve, settle or otherwise agree to any deficiency, claim or adjustment with respect to any Sole Responsibility Item. Except as provided in Section 8.04, the Filing Party, at its own expense, and the non-Filing Party, at its
own expense, shall have joint control over decisions to resolve, settle or otherwise agree to any deficiency, claim or adjustment with respect to any Joint Responsibility Item. Except as provided in Section 8.04, the Filing Party shall not
settle any Audit it controls concerning a Tax Item on a basis that would reasonably be expected to adversely affect the non-Filing Party by at least one million dollars ($1,000,000) without obtaining such non-Filing Party’s consent, which
consent shall not be unreasonably withheld, conditioned or delayed if failure to consent would adversely affect the Filing Party. 
 8.03.
Notice. Within ten (10) days after a Party becomes aware of the existence of a Tax issue that may give rise to an indemnification obligation under this Agreement, such Party shall give notice to the other Party of such issue (such notice
shall contain factual information, to the extent known, describing any asserted tax liability in reasonable detail), and shall forward to the other Party copies of all notices and material communications with any Taxing Authority relating to such
issue. Notwithstanding any provision in Section 9.06 to the contrary, if a Party to this Agreement fails to provide the other Party notice as required by this Section 8.03, and the failure results in a detriment to the other Party then any
amount which the other Party is otherwise required to pay pursuant to this Agreement shall be reduced by the amount of such detriment. 
 8.04. Control of Distribution Tax Proceedings. Spectra Energy may assume sole control of any Audits relating to Distribution Taxes if it acknowledges in writing that it has sole liability for any Distribution Taxes under
Section 4.01(b) that might arise in such Audit and can demonstrate to the reasonable satisfaction of Duke Energy that it can satisfy its liability for any such Distribution Taxes. 
 Section 9. Miscellaneous. 
 9.01. Cooperation and Exchange of Information. 
 (a) Cooperation. Spectra Energy and Duke Energy shall each cooperate fully (and each shall cause its respective Spectra Energy Affiliates and Duke
Energy Affiliates to cooperate fully) with all reasonable requests from another Party for information, data files and materials not otherwise available to the requesting Party in connection with the preparation and filing of Tax Returns, claims for
refund, and Audits concerning issues or other matters covered 

  

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by this Agreement or in connection with the determination of a liability for Taxes or a right to a refund of Taxes; provided, however, that
nothing in this Section 9.01 shall be construed to require Duke Energy to provide Spectra Energy or any Spectra Energy Affiliate with any financial accounting or tax-related software. Such cooperation shall include: 
 (i) the retention until the expiration of the applicable statute of limitations, and the provision upon request, of copies of all Tax Returns, books,
records (including information regarding ownership and Tax basis of property), documentation and other information relating to the Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other
determinations by Taxing Authorities (collectively, “Tax Material”), provided, however, that no such retention obligation shall exist to the extent such Tax Material has previously been provided from one Party to the
other Party; 
 (ii) the execution of any document that may be necessary or reasonably helpful in connection with any Tax Proceeding, or the
filing of a Tax Return or refund claim by a member of the Duke Energy Group or the Spectra Energy Group, including certification, to the best of a Party’s knowledge, of the accuracy and completeness of the information it has supplied; and

 (iii) the use of the Party’s reasonable best efforts to obtain any documentation that may be necessary or reasonably helpful in
connection with any of the foregoing. Each Party shall make its employees and facilities available on a reasonable and mutually convenient basis in connection with the foregoing matters. 
 (b) Notices, Withholding, Reporting. 
 (i) Spectra Energy shall notify Duke Energy of any event after the Distribution Date giving rise to income to any current and former employees of Duke Energy (or any Duke Energy Affiliate) in connection with any Spectra Energy Stock
Options, Spectra Energy restricted stock, Spectra Energy performance shares or Spectra Energy phantom stock units by 12:00 P.M. of the first business day after such event, and, subject to any obligations under the Employee Matters Agreement, Duke
Energy shall remit applicable Taxes and satisfy applicable Tax reporting obligations in connection therewith if required by law.
 (ii) Duke
Energy shall notify Spectra Energy of any event after the Distribution Date giving rise to income to any current and former employees of Spectra Energy (or any Spectra Energy Affiliate) in connection with any Duke Energy Stock Options, Duke Energy
restricted stock, Duke Energy performance shares or Duke Energy phantom stock units by 12:00 P.M. of the first business day after such event, and, subject to any obligations under the Employee Matters Agreement, Spectra Energy shall remit applicable
Taxes and satisfy applicable Tax reporting obligations in connection therewith if required by law.
 (c) Retention of Records. Duke
Energy, or any Duke Energy Affiliate, that is in possession of documentation relating to the Gas Business, including books, records, Tax Returns and all supporting schedules and information relating thereto that has not been previously provided to
Spectra Energy by Duke Energy (the “Spectra Energy Business Records”), and 

  

 23 

 
Spectra Energy, or any Spectra Energy Affiliate, that is in possession of documentation relating to the Power Business, including books, records, Tax Returns
and all supporting schedules and information relating thereto that has not been previously provided to Duke Energy by Spectra Energy (the “Duke Energy Business Records”) shall each retain such Spectra Energy Business Records or Duke
Energy Business Records for a period of seven (7) years following the Distribution Date. Thereafter, (i) if Duke Energy wishes to dispose of Spectra Energy Business Records in its possession, shall provide written notice to Spectra Energy
describing the documentation proposed to be destroyed or disposed of sixty (60) Business Days prior to taking such action, and Spectra Energy may arrange to take delivery of any or all of the documentation described in the notice at its expense
during the succeeding sixty (60) day period; and (ii) if Spectra Energy wishes to dispose of Duke Energy Business Records in its possession, shall provide written notice to Duke Energy describing the documentation proposed to be destroyed
or disposed of sixty (60) Business Days prior to taking such action, and Duke Energy may arrange to take delivery of any or all of the documentation described in the notice at its expense during the succeeding sixty (60) day period.

 (d) Gain Recognition Agreement. Duke Energy and Spectra Energy mutually agree to comply with all notification requirements pursuant
to Treas. Reg. § 1.367(a)-8 with respect to the gain recognition agreement entered into with respect to PanEnergy Corp’s April 1, 2003 transfer of shares of Westcoast Energy Inc. (“WEI”) to Duke Energy Nova Scotia Holdings
Company and to take all reasonable steps necessary to preserve the nonrecognition treatment of such transfer. In connection with such requirement, among other notifications, Spectra Energy agrees to notify Duke Energy within twenty (20) days
after any disposition of stock or assets prior to January 1, 2009 that could reasonably be expected to affect the gain recognition agreement or the notification requirements pursuant to Treas. Reg. § 1.367(a)-8. 
 9.02. Dispute Resolution. In the event that Duke Energy and Spectra Energy disagree as to the amount or calculation of any payment to be made
under this Agreement, or the interpretation or application of any provision under this Agreement, the disagreement shall be resolved in accordance with Article IX of the Separation Agreement provided however for the avoidance of doubt that the
provisions in section 9.12 of the Separation Agreement shall not apply. Notwithstanding anything in this Agreement to the contrary, the dispute resolution provisions set forth in this Section 9.02 shall not be applicable to any disagreement
between the Parties relating to Distribution Taxes and any such dispute shall be settled in a court of law or as otherwise agreed to by the Parties. 
 9.03. Complete Agreement; Construction. This Agreement, including the Appendix, shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject matter. This Agreement supersedes any prior tax matters agreements between Duke Energy (or any Duke Energy Affiliate) and Spectra Energy (or any Spectra Energy Affiliate)
and such prior tax matters agreements shall have no further force and effect. In the event of any conflict between the terms and conditions of the body of this Agreement and the terms and conditions of the Appendix, the terms and conditions of such
Appendix shall control. In the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of the Separation Agreement or any other Ancillary Agreement, the terms and conditions of this Agreement shall
control. 
  

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 9.04. Counterparts. This Agreement may be executed in more than one counterparts, all of which
shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties. Execution of this Agreement or any other documents pursuant to
this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as, execution by original signature. 
 9.05. Survival of Agreement. Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Effective Time and remain in full force
and effect in accordance with their applicable terms. 
 9.06. Notices. All notices, requests, claims, demands and other
communications under this Agreement, as between the Parties, shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt unless the day of receipt is not a Business Day, in which case it shall be
deemed to have been duly given or made on the next Business Day) by delivery in person, by overnight courier service, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or
certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.06): 
 To Duke Energy: 
 Duke Energy Corporation 
 526 South Church Street 
 Charlotte, North Carolina 28202 
 Attn: Vice President of Corporate Tax 
 Facsimile: (704) 382-8137 
 To Spectra Energy: 
 Spectra Energy Corp 
 5400 Westheimer Court 
 Houston, Texas 77056 
 Attn: Vice President, Tax 
 Facsimile: (713) 989-3280 
  

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 9.07. Changes in Law. 
 (a) Any reference to a provision of the Code or a law of another jurisdiction shall include a reference to any applicable successor provision or law.

 (b) If, due to any change in applicable law or regulations or their interpretation by any court of law or other governing body having
jurisdiction subsequent to the date of this Agreement, performance of any provision of this Agreement or any transaction contemplated thereby shall become impracticable or impossible, the Parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision. 
 9.08. Waivers. The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any
other provision hereof. 
 9.09. Amendments. Subject to the terms of Section 9.12, this Agreement may not be modified or amended
except by an agreement in writing signed by each of the Parties. 
 9.10. Assignment. Except as otherwise expressly provided for in
this Agreement, this Agreement shall not be assignable, in whole or in part, by any Party without the prior written consent of the other Party, and any attempt to assign any rights or obligations arising under this Agreement without such consent
shall be null and void; provided, that a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets, and upon the
effectiveness of such assignment, the assigning Party shall be released from all of its obligations under this Agreement, if the surviving entity of such merger or the transferee of such Assets shall agree in writing in form and substance reasonably
satisfactory to the other Party, to be bound by the terms of this Agreement as if named as a “Party” hereto. 
 9.11. Successors
and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and
assigns. 
 9.12. Termination, Etc. Notwithstanding anything to the contrary herein, this Agreement (including Section 6
(Indemnification) hereof) may be terminated and abandoned at any time prior to the Distribution Date by and in the sole discretion of Duke Energy without the approval of Spectra Energy or the stockholders of Duke Energy. In the event of such
termination, no Party shall have any liability to any other Party or any other Person. After the Distribution Date, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties. 
 9.13. Third Party Beneficiaries. Except as otherwise expressly provided in this Agreement, this Agreement is solely for the benefit of the Parties
and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement. 
  

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 9.14. Interpretations. Titles and headings to sections herein are inserted for the convenience of
reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 
 9.15. Schedules and
Appendix. The Schedules and Appendix attached hereto are incorporated herein by reference and shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. 
 9.16. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws, and not the laws governing conflicts
of laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law), of the State of New York. 
 9.17. Consent to
Jurisdiction. Subject to the provisions of this section 9.17, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District
Court for the Southern District of New York (the “New York Courts”), for the purposes of any suit, action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with Section 9 or
for provisional relief to prevent irreparable harm, and to the non-exclusive jurisdiction of the New York Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or
document by United States registered mail to such Party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in the New York Courts with respect to any matters to which it has submitted
to jurisdiction in this Section 9.17. Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the
New York Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. 

9.18. Specific Performance. The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not
performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to (i) an injunction or injunctions to enforce specifically the terms and provisions hereof in any arbitration in accordance
with Section 9.02 herein, (ii) provisional or temporary injunctive relief in accordance therewith in any New York Court, and (iii) enforcement of any such award of an arbitral tribunal or a New York Court in any court of the United
States, or any other court or tribunal sitting in any state of the United States or in any foreign country that has jurisdiction, this being in addition to any other remedy or relief to which they may be entitled. 
 9.19. Waiver of Jury Trial. SUBJECT TO SECTIONS 9.02, 9.17 AND 9.18 HEREIN, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF
THE PARTIES 

  

 27 

 
HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.19. 
 9.20. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and the Parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 9.21. Force Majeure. No Party (or any person acting on its behalf) shall have any liability or responsibility for failure to
fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure.
A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other Party of the nature and extent of any such Force Majeure condition and (b) use due
diligence to remove any such causes and resume performance under this Agreement as soon as reasonably practicable. 
 9.22. No
Circumvention. The Parties agree not to directly or indirectly take any actions, act in concert with any person who takes an action, or cause or allow any member Affiliate to take any actions (including the failure to take a reasonable action)
such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification, contribution or payment
pursuant to Sections 6 and 7). 
 9.23. Authorization. Each of the Parties hereby represents and warrants that it has the power and
authority to execute, deliver and perform this Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such Party, that this Agreement constitutes a legal, valid and binding obligation of each such
Party and that the execution, delivery and performance of this Agreement by such Party does not contravene or conflict with any provision of law or of its charter or bylaws or any material agreement, instrument or order binding on such Party.

 9.24. Setoff. All payments to be made by any Party under this Agreement may be netted against payments due to such Party under this
Agreement, but otherwise shall be made without setoff, counterclaim or withholding, all of which are hereby expressly waived. 
 9.25.
Confidentiality. The Parties shall comply with the confidentiality provisions in Article VIII of the Separation Agreement. 
  

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 9.26. Affiliates. Each of the Parties shall cause to be performed all actions, agreements and
obligations set forth herein to be performed by any Affiliate of such Party or by any entity that becomes an Affiliate of such Party on and after the Distribution Date; provided, however, that if a Spectra Energy Affiliate ceases to be a Spectra
Energy Affiliate as a result of a transfer of its stock or other ownership interests to a third party in exchange for consideration in an amount approximately equal to the fair market value of the stock or other ownership interests transferred and
such consideration is not distributed outside of the Spectra Energy Group to the shareholders of Spectra Energy then Duke Energy shall, upon request, execute a release of such Spectra Energy Affiliate from its obligations under this Agreement upon
such transfer provided that such Spectra Energy Affiliate shall have executed a release of any rights it may have against Duke Energy or any Duke Energy Affiliate by reason of this Agreement. 
 9.27. Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed
without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. 
 9.28. Effective Time. This Agreement shall be effective as of the Effective Time. 
 [Signature Pages
Follow] 
  

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 IN WITNESS WHEREOF, the Parties caused this Tax Matters Agreement to be duly executed as of the day and
year first above written. 
  

			
	DUKE ENERGY CORPORATION
		
	By:	 	 /s/ James E. Rogers

	Name:	 	James E. Rogers
	Title:	 	President and Chief Executive Officer
	
	 SPECTRA ENERGY CORP
 on behalf of itself and
each of the Other Spectra Energy Parties

		
	By:	 	 /s/ Fred J. Fowler

	Name:	 	Fred J. Fowler
	Title:	 	President and Chief Executive Officer

 Schedules and exhibits omitted pursuant to Item 601 of Reg. S-K. The Company agrees to furnish supplementally a copy of
any omitted schedule to the Commission upon request.

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