Document:

EXHIBIT 10.62

SEPARATION
AND SETTLEMENT AGREEMENT

This
Separation and Settlement Agreement (this “Agreement”) is entered into as of
December 31, 2012 by and between Jeffrey J. Lyash (the “Executive”), and Duke
Energy Corporation, a Delaware corporation (“Duke Energy”).  The Executive and
Duke Energy are referred to as the “Parties,” and each as a “Party,” in this
Agreement.  

WHEREAS,
the Executive has been employed by Duke Energy and its affiliates as Executive
Vice President of Energy Supply; 

WHEREAS,
the Executive is a participant in the Progress Energy, Inc. Management
Change-in-Control Plan (the “CIC Plan”) and party to an employment agreement
with Progress Energy, Inc. (the “Employment Agreement”) signed as of May 30,
2007; and

WHEREAS,
the Executive has provided notice of his intent to resign, and the Executive
and Duke Energy wish to set forth their mutual agreement as to the terms and
conditions of such resignation;

NOW,
THEREFORE, Duke Energy and the Executive hereby agree as follows:

1.               Resignation. 
Effective as of December 31, 2012 (the “Resignation Date”), the Executive
hereby resigns from his employment with Duke Energy and from all other
positions the Executive then holds with respect to Duke Energy and its
subsidiaries or affiliates (Duke Energy and all of its subsidiaries and
affiliates, including Progress Energy, Inc. and any other predecessor entities,
are hereinafter referred to as the “Affiliated Entities”), including as an
officer or member of the board of directors of any Affiliated Entity.  Within
15 business days following the Resignation Date or such earlier time as
required by applicable law, the Executive will be paid all of his salary and
unused vacation earned or accrued through the Resignation Date.  

2.                Separation Payments and
Benefits.    

a.         Subject to the Executive’s
compliance with the terms of this Agreement and the non-revocation of the
release set forth in Paragraph 5 of this Agreement, following the Revocation
Date (as defined in Paragraph 15 of this Agreement), Duke Energy shall pay or
provide to the Executive the payments and benefits contemplated by Section 6.1,
Section 6.2 and Section 7 of the CIC Plan to which the Executive would have
been entitled upon a resignation by the Executive for “good reason” (as set
forth on Exhibit A hereto). 

b.          Consistent with Section 5.08 of
the Agreement and Plan of Merger, by and among Duke Energy, Diamond Acquisition
Corporation and Progress Energy, Inc., dated as of January 8, 2011 (the “Merger
Agreement”), following the Resignation Date, (i) Duke Energy shall provide or
cause to be provided to the Executive coverage under Duke Energy’s directors’
and officers’ insurance policies for events that occurred while the Executive
was a director or officer of any of the Affiliated Entities on the same terms
and conditions applicable to other former senior executives and directors of
Duke Energy generally and (ii) Duke Energy shall cause Progress Energy, Inc. to
indemnify and hold harmless the Executive as provided in Section 5.08(c) of the
Merger Agreement.

c.            Duke Energy shall reimburse the
Executive for any reasonable and necessary business expenses incurred by the
Executive and unreimbursed on or prior to the Resignation Date pursuant to Duke
Energy’s reimbursement policies, within 30 days following the Executive’s
presentation of an invoice to Duke Energy. 

d.            Duke Energy acknowledges and
agrees that the Executive shall not be required to reimburse Duke Energy for
any relocation benefits provided to the Executive in connection with his
relocation to Charlotte in 2012.

e.            Duke Energy agrees to reimburse
the Executive for reasonable attorney’s fees incurred in connection with
reviewing this Agreement, subject to the Executive providing the applicable
documentation (consistent with the terms of Duke Energy’s reimbursement
policies) relating to such attorney’s fees to Duke Energy no later than 30 days
following the Resignation Date.

f.             Except as provided in Paragraphs
1, 2, 3 and 4 of this Agreement, as well as any benefits that are accrued and
vested as of the Resignation Date under employee benefit plans of an Affiliated
Entity in which the Executive participates, the Executive shall be entitled to
no other compensation and/or benefits of any kind from any of the Affiliated
Entities.  For purposes of clarity, the Parties acknowledge and agree that upon
the Resignation Date the Executive shall forfeit, and have no further rights
under, the Retention Award Agreement dated July 9, 2012.

g.            Duke Energy acknowledges that
this Agreement shall not impact the Executive’s rights under the tax qualified
retirement plans sponsored by Duke Energy and its Affiliated Entities.

4.              Equity Awards.  Subject
to the Executive’s compliance with the terms of this Agreement and the
non-revocation of the Release set forth in Paragraph 5 of this Agreement, the
outstanding equity awards under the applicable Progress Energy, Inc. equity
plans held by the Executive as of the Resignation Date shall immediately vest
on the Resignation Date pursuant to Section 6.4 and Section 6.5 of the CIC Plan
(with performance shares vesting at target level).

 

 

 

 

 

 

5.               280G
Matters.  The Executive shall, subject to the Executive’s reasonable
cooperation with Duke Energy in making determinations with respect to Section
280G of the Internal Revenue Code of 1986, as amended (the “Code”), taking into
account the value of reasonable compensation for services to be rendered by the
Executive before or after the Resignation Date, including any non-competition
provisions that apply to the Executive and Duke Energy, be eligible to receive
“Gross-Up Payments” consistent with, but only to the extent provided by,
Section 11 of the CIC Plan.   

6.                Release
of Claims. 

a.         In consideration of and in
exchange for the benefits provided to him under this Agreement, including but
not necessarily limited to Duke Energy’s acceptance of the Executive’s
resignation effective as of the Resignation Date, and the benefits set forth in
Paragraphs 2, 3 and 4 of this Agreement, the Executive, of his own free will,
voluntarily and unconditionally releases and forever discharges (the “Release”)
the Affiliated Entities, their respective directors, officers, employees,
agents, stockholders, successors and assigns (both individually and in their
official capacities with Duke Energy) (the “Duke Releases”) from, any and all
past or present causes of action, suits, agreements or other claims which the
Executive, his dependents, relatives, heirs, executors, administrators,
successors and assigns has or may hereafter have from the beginning of time to
the date hereof against Duke Energy or the Duke Releases upon or by reason of
any matter, cause or thing whatsoever, including, but not limited to, any
matters arising out of his employment by the Affiliated Entities, and the
cessation of said employment or any claim for compensation, and including, but
not limited to, any alleged violation of the Civil Rights Acts of 1964 and
1991, the Equal Pay Act of 1963, the Age Discrimination in Employment Act of
1967, the Rehabilitation Act of 1973, the Employee Retirement Income Security
Act of 1974, the Older Workers Benefit Protection Act of 1990, the Americans with
Disabilities Act of 1990, the North Carolina Equal Employment Protection Act
and any other federal, state or local law, regulation or ordinance, or public
policy, contract or tort law having any bearing whatsoever on the terms and
conditions of employment or termination of employment.  The Release shall not,
however, constitute a waiver of any of the Executive’s rights to compensation
and benefits due under this Agreement.  

b.        The Executive acknowledges that he
has received a copy of this Agreement prior to its execution and has been
advised hereby of his opportunity to review and consider the Release for 21
days prior to its execution.  The Executive further acknowledges that he has
been advised hereby to consult with an attorney prior to executing this
Agreement.  The Executive enters into this Agreement having freely and
knowingly elected, after due consideration, to execute this Agreement and to
fulfill the promises set forth herein.  The Release shall be revocable by the
Executive during the seven-day period following its execution, and shall not
become effective or enforceable until the expiration of such seven-day period. 
In the event of such a revocation, the Executive shall not be entitled to the
consideration under this Agreement set forth in Paragraphs 2, 3 and 4.  

c.         The Executive represents and
warrants that there has been no assignment or other transfer of any interest in
any claim which the Executive may have against Duke Energy or any of the Duke Releases.
The Executive represents that he has not commenced or joined in any claim,
charge, action or proceeding whatsoever against Duke Energy or any of the Duke Releases
arising out of or relating to any of the matters set forth in this Release. The
Executive further agrees that he will not seek or be entitled to any personal
recovery in any claim, charge, action or proceeding whatsoever against Duke
Energy or any of the Duke Releases for any of the matters set forth in the
Release.  

d.        The Executive acknowledges that, in
his decision to enter into this Agreement, including the Release, he has not
relied on any representations, promises or agreements of any kind, including
oral statements by representatives of Duke Energy or any of the Duke Releases,
except as set forth in the Release and this Agreement.

e.        Nothing contained in the Release
will be deemed or construed as an admission of wrongdoing or liability on the
part of Duke Energy or any of the Duke Releases.   

f.         Nothing in this Agreement shall be
construed to prohibit, restrict or otherwise discourage the Executive from
participating in protected activity as defined in 10 CFR 50.7 and Section 211
of the Energy Reorganization Act of 1974, including, but not limited to
reporting any suspected instance of illegal activity of any nature, any nuclear
safety concern, any workplace safety concern, any public safety concern, or any
other matter within the United States Nuclear Regulatory Commission’s
(“NRC”)regulatory responsibilities to the NRC, the United States Department of
Labor, or any other federal or state governmental agency.  This Agreement
further does not prohibit the Executive from participating in any way in any
state or federal administrative,
judicial, or legislative proceeding or investigation with respect to any claims
and matters not resolved and terminated pursuant to this Agreement. With
respect to any claims and matters resolved and terminated pursuant to this
Agreement, the Executive is free to participate in any federal or state
administrative, judicial, or legislative proceeding or investigation if
subpoenaed.  The Executive shall give Duke Energy, through its legal counsel,
notice, including a copy of the subpoena, within 24 hours of receipt
thereof.

7.              Non-disparagement.  The
Executive shall not disparage any of the Affiliated Entities, their directors,
officers, employees, agents, stockholders, successors and assigns (both
individually and in their official capacities with Duke Energy) (the “Duke
Energy Parties”) or any Duke Energy Parties’ goods, services, employees,
customers, business relationships, reputation or financial condition.  Duke
Energy shall instruct its current officers and directors (as such terms are
used for purposes of Section 16 of the Securities Exchange Act of 1934) not to
disparage the Executive and shall treat any such disparagement as a violation
of Duke Energy’s Code of Business Ethics.  For purposes of this Agreement, to
“disparage” means to make statements, whether oral or written, whether direct or
indirect, whether true or false and whether acting alone or through any other
person, that cast the subject of the statement in a critical or unfavorable
light or that otherwise cause damage to, or intend to embarrass, the subject of
the statement.  Nothing in the foregoing will preclude either the Executive or
Duke Energy from providing truthful disclosures as required by applicable law
or legal process. 

 

 

 

 

 

 

8.               
Confidential Information; Restrictive Covenants; Return of Property.   

a.        Confidentiality; Covenant not to
Compete; Non-Interference.  The Executive shall be subject to each of the
covenants set forth in Section 8(g) (Covenant not to Compete), Section 8(h)
(Non-Interference) and Section 8(i) (Confidential Information; Trade Secrets)
of the Employment Agreement.  In addition, unless otherwise made public by Duke
Energy, the Executive will not disclose the existence and any terms of this
Agreement except (i) to financial and legal advisors or spouse (or domestic
partner) under an obligation for such parties to maintain confidentiality, or
(ii) as required by a valid court order, subpoena or legal, regulatory, or
legislative process (and in such event will use his best efforts to obtain a
protective order requiring that all disclosures be kept under court seal) and
will notify Duke Energy promptly upon receipt of such order or subpoena.   

b.        Forfeiture and
Repayments. The Executive agrees that, in the event he violates the provisions
of Paragraph 6 or Paragraph 7 of this Agreement, in any material respect, on or
following the Resignation Date, he will forfeit and not be entitled to any
further payments in accordance with Paragraph 2 or Paragraph 4 of this
Agreement or settlement in accordance with Paragraph 3 and he will be obligated
to repay to Duke Energy any amounts paid (determined as of the date of payment)
after the termination of employment pursuant to the applicable provisions of
Paragraph 2, Paragraph 3 and Paragraph 4 of this Agreement (other than any
amounts paid pursuant to Paragraph 2(c) and Paragraph 2(e) of this
Agreement).  Such amount shall be paid to Duke Energy in cash in a single
lump sum within ten business days after the first date of the violation,
whether or not Duke Energy has knowledge of the violation or has made a demand
for payment.  Any such payment made following such date shall bear interest at
a rate equal to the prime lending rate of Citibank, N.A. (as periodically set)
plus 1%.

c.        Scope of Restrictions;
Consideration.  The Executive acknowledges that the restrictions set forth
in this Paragraph 7 are reasonable and necessary to protect Duke Energy’s
business and goodwill. The Executive acknowledges that if any of these
restrictions or obligations are found by a court having jurisdiction to be
unreasonable or overly broad or otherwise unenforceable, he and Duke Energy
agree that the restrictions or obligations shall be modified by the court so as
to be reasonable and enforceable and if so modified shall be fully enforced.  The
Executive acknowledges and agrees that the compensation and benefits provided
in this Agreement constitute adequate and sufficient consideration for the
covenants made by the Executive in this Paragraph 7.  As further consideration
for the covenants made by the Executive in this Paragraph 7, the Affiliated
Entities have provided the Executive certain proprietary and other confidential
information about Duke Energy, including, but not limited to, business plans
and strategies, budgets and budgetary projections, income and earnings
projections and statements, cost analyses and assessments, and/or business
assessments of legal and regulatory issues.

d.        Return of Property.  The
Executive acknowledges and agrees that all “Company Materials”, which include,
but are not limited to, computers, blackberry, computer software, computer
disks, tapes, printouts, source, HTML and other code, flowcharts, schematics,
designs, graphics, drawings, photographs, charts, graphs, notebooks, customer
lists, sound recordings, other tangible or intangible manifestation of content,
and all other documents whether printed, typewritten, handwritten, electronic,
or stored on computer disks, tapes, hard drives, or any other tangible medium,
as well as samples, prototypes, models, products and the like, shall be the
exclusive property of Duke Energy and, as of the Resignation Date, all Company
Materials, including all copies thereof, as well as all other property of Duke
Energy then in the Employee’s possession or control, shall be returned to Duke Energy.

9.                  Cooperation. 
The Executive agrees to cooperate with Duke Energy in connection with his
departure as reasonably requested by Duke Energy, including with respect to any
communications to current and former employees or directors of any of the
Affiliated Entities as may reasonably be requested by Duke Energy in connection
with such departure.  The Executive will be available, upon reasonable notice,
to respond to questions and provide assistance to Duke Energy regarding matters
for which he was responsible and about which he had knowledge in connection
with his employment with any of the Affiliated Entities.  The Executive also
will cooperate in any potential or pending litigation or arbitration that may
involve him in any capacity as a result of his employment with, or service as a
member of the board of directors of, any of the Affiliated Entities.  This
includes, if necessary, meeting at mutually convenient times and locations with
attorneys of any of the Affiliated Entities, attending meetings, depositions
and trial, and providing truthful testimony.  All such assistance and
cooperation shall be provided by the Executive at such times, and at such
places (including by teleconference or videoconference), as shall be mutually
agreeable to the Parties, and the Executive shall be reimbursed in accordance
with Duke Energy’s policies for any reasonable expenses incurred in connection
with the provision of services under this Paragraph 8.  Notwithstanding any
provision of this Paragraph 8, in no event will the Executive be required,
without mutually acceptable additional compensation, to provide services under
this Paragraph 8 (i) that exceed 15 hours in any calendar month and/or (ii)
after the second anniversary of the Resignation Date, except that the Executive
shall not be required to provide services under this Paragraph 8 after the
first anniversary of the Resignation Date with respect to any matter unrelated
to the Crystal River nuclear plant.

10.            Governing Law and Forum
Selection.  The Parties agree that any dispute, claim or controversy based
on common law, equity, or any federal, state, or local statute, ordinance, or
regulation (other than workers’ compensation claims) arising out of or relating
in any way to the Executive’s employment, the terms, benefits, and conditions
of employment, or concerning this Agreement and the resulting termination of
employment, including whether such a dispute is arbitrable, shall be settled by
arbitration. The arbitration proceeding will be conducted under the employment
dispute resolution arbitration rules of the American Arbitration Association in
effect at the time a demand for arbitration under the rules is made, and such
proceeding will be adjudicated in Charlotte, North Carolina. The decision of
the arbitrator(s), including determination of the amount of any damages
suffered, will be exclusive, final, and binding on all Parties, their heirs,
executors, administrators, successors and assigns. Each Party will bear its own
expenses in the arbitration for arbitrators’ fees and attorneys’ fees, for its
witnesses, and for other expenses of presenting its case. Other arbitration
costs, including administrative fees and fees for records or transcripts, will
be borne equally by the Parties.  Notwithstanding anything in this
Paragraph 9 to the contrary, if the Executive prevails with respect to any
dispute submitted to arbitration under this Paragraph 9, or such dispute is
settled, Duke Energy will reimburse or pay all legal fees and expenses that the
Executive may reasonably incur as a result of the dispute.  

11.           Applicable Law.  Except
to the extent that federal law governs, this Agreement will be governed by and
construed and enforced in accordance with the laws of the State of North Carolina,
without regard to any applicable state’s choice of law provisions.  

 

 

 

 

 

 

12.            Integrated
Agreement; Amendments.  Except with respect to the provisions of the CIC
Plan and the Employment Agreement expressly referenced herein, this Agreement
sets forth the entire agreement of Duke Energy and the Executive with respect
to the subject matter hereof, and supersedes all other agreements between any
of the Affiliated Entities and the Executive and any employment or severance
plan, policy, agreement or arrangement of any of the Affiliated Entities. 
Without limiting the generality of the foregoing, the Executive expressly
acknowledges and agrees that except as specifically set forth in this
Agreement, he is not entitled to receive any severance pay, severance benefits,
compensation or employee benefits of any kind whatsoever from Duke Energy or
any of its affiliates.  This Agreement may not be amended unless the amendments
are in writing and signed by the Executive and an authorized representative of Duke
Energy.  This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

13.           Severability.  The
invalidity or unenforceability of any particular provision in this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if the invalid or unenforceable provision were
omitted.

14.           Taxes.   Notwithstanding
any other provision of this Agreement, Duke Energy may withhold from any
amounts payable under this Agreement, or any other benefits received pursuant
hereto, such Federal, state and/or local taxes as shall be required to be
withheld under any applicable law or regulation.  The obligations under this
Agreement are intended to comply with the requirements of Section 409A of the
Code, or an exemption or exclusion therefrom, provided that the Executive
acknowledges and agrees that he shall be solely responsible for any taxes
and/or penalties imposed under Section 409A of the Code.  Each payment under
this Agreement shall be treated as a separate payment for purposes of Section
409A of the Code.  In no event may the Executive, directly or indirectly,
designate the calendar year of any payment to be made under this Agreement.  If
the Executive is a “specified employee” (within the meaning of Section 409A of
the Code) then any payments that are required to be made to the Executive
pursuant to this Agreement that constitute the deferral of compensation (within
the meaning of Treasury Regulations Section 1.409A-1(b) and that would in the
absence of this Paragraph 13 have been paid to the Executive within six months
and one day of the Resignation Date shall not be paid to the Executive during
such period, but shall instead be accumulated and paid to the Executive in a
lump sum on the earlier of (i) the day after the date that is six months
from the Resignation Date and (ii) if the Executive shall die prior to the
expiration of such six-month period, as soon as practicable following the date
of the Executive’s death.  All reimbursements and in-kind benefits that
constitute deferred compensation within the meaning of Section 409A of the Code
provided under this Agreement shall be made or provided in accordance with the
requirements of Section 409A of the Code, including, without limitation, that
(i) in no event shall reimbursements by Duke Energy under this Agreement be
made later than the end of the calendar year next following the calendar year
in which the applicable fees and expenses were incurred; (ii) the amount of
in-kind benefits that Duke Energy is obligated to pay or provide in any given
calendar year shall not affect the in-kind benefits that Duke Energy is
obligated to pay or provide in any other calendar year; and (iii) the
Executive’s right to have Duke Energy pay or provide such reimbursements and
in-kind benefits may not be liquidated or exchanged for any other benefit.  

15.              Successors.  This
Agreement is personal to the Executive and without the prior written consent of
Duke Energy shall not be assignable by the Executive other than by will or the
laws of descent and distribution.  This Agreement shall inure to the benefit of
and be enforceable by the Executive’s legal representatives and the legal
representatives of his estate to the extent applicable.  This Agreement shall
inure to the benefit of and be binding upon Duke Energy and its successors and
assigns.

16.               Representations and
Warranties.  By signing this Agreement, the Executive warrants that he or
she:  

a.          has carefully read and reviewed
this Agreement; 

b.         fully
understands all of its terms and conditions; 

c.         fully
understands that this Agreement is legally binding and that by signing it he is
giving up certain rights;

d.         has not
relied on any other representations by Duke Energy or its employees or agents,
whether written or oral, concerning the terms of this Agreement; 

e.         has been
advised of his opportunity to consider for up to 21 days whether to accept the
Release; 

f.          will have
seven days to revoke the Release (but not the remainder of this Agreement)
after signing it, with the eighth day following the execution of this Agreement
being referred to as the “Revocation Date”; 

g.         has been
advised by, and has had the opportunity to consult with, an attorney prior to
executing this Agreement; 

h.        
acknowledges that all notice requirements under any other agreement,
arrangement or plan have been fully satisfied;

i.         executes
and delivers this Agreement freely and voluntarily; 

j.         is waiving
any rights or claims he may have under the Age Discrimination in Employment Act
of 1967; and 

k.         is not
waiving any rights or claims which may arise after this Agreement is signed.  

 

 

 

 

 

 

 

IN WITNESS WHEREOF, each of the parties
hereto has duly executed this Agreement as of the date first set forth above.

EXECUTIVE

__/s/ Jeffrey J. Lyash__________________

        Jeffrey J. Lyash

Date:____December
31, 2012___________ 

 

 

 

DUKE ENERGY
CORPORATION

By:__/s/
Jennifer L. Weber______________

              Executive Vice President

             
and Chief Human Resources Officer 

 

 

Date:____December
31, 2012___________

       

     
 

EXHIBIT A

SEPARATION PAYMENTS
AND BENEFITS

 

 

	
  #

  	
  Description of
  Payment / Benefit

  	
  Payment Terms

   

  
	
  1

  	
  (1) unpaid annual base salary through the
  Resignation Date and (2) accrued and unused paid time off through the
  Resignation Date

  	
  Amount determined based on payroll records,
  paid in a lump sum within fifteen days following the Resignation Date.  

  
	
  2

  	
  Severance Payments

  	
  $2,781,000 (represents the sum of the
  Executive’s annual base salary and “target short term incentive award”
  multiplied by 3).  Paid in a lump sum within ten days following the date that
  is six months following the Resignation Date.

  
	
  3

  	
  Annual Incentive Payment 

  	
  $412,000 (represents the Executive’s target
  short term incentive award for the year during which the Resignation Date
  occurs).  Paid in a lump sum within ten days following the date that is six
  months following the Resignation Date.

  
	
  4

  	
  Unreimbursed business expenses incurred
  through the Resignation Date (including any reasonable relocation expenses)

  	
  Amount to be
  determined after submission of written receipts and substantiation by the
  Executive according to Duke Energy’s policy by no later than January 31,
  2013.  Paid through normal expense reimbursement process not later than 45
  days following the substantiation of such expenses.

  
	
  5

  	
  Accrued and vested amounts under all
  non-qualified and incentive plans, including the Progress,
  Inc. Management Deferred Compensation Plan, the Progress, Inc. Management
  Incentive Compensation Plan, the Progress, Inc. Deferred Compensation Plan
  for Key Management Employees, and the Duke Energy Corporation Executive Cash
  Balance Plan (including amounts previously earned under the Progress Energy,
  Inc. Supplemental Senior Executive Retirement Plan)

  	
  Amount determined
  consistent with the terms of the applicable plan based on accrued and vested
  benefits as of the Resignation Date.  Paid at the time (or times) and in a
  form consistent with the terms of the applicable plan or arrangement.

  
	
  6

  	
  Continued in-kind benefit under health and
  welfare plans

  	
  Paid consistently
  with the terms of the CIC Plan.CONSULTING AGREEMENT

	
   

  

This
Consulting Agreement (the “Agreement”), effective as of January 1, 2013, is
made by and between Duke Energy Corporation (“Duke Energy”) and John R.
McArthur (the “Consultant”) (collectively referred to herein as the “Parties”
and individually as a “Party”).

1.         
Scope.  The Consultant will provide advice and consulting services on
matters relating to legal, regulatory and legislative policy issues advanced by
Duke Energy before the North Carolina General Assembly and the North Carolina
Utilities Commission (the “NCUC”), as well as on methods and procedures for
maintaining good relationships with government officials in North Carolina, as
may be requested from time to time by the Executive Vice President for
Regulated Utilities of Duke Energy (the “Services”).  The Consultant will
perform all Services requested by Duke Energy in a competent manner using
reasonable care and diligence and will only interact or correspond with the
NCUC and other government or regulatory officials regarding Duke Energy at the
request, and with the advance permission, of Duke Energy.  The Consultant will
predominantly provide the Services in Raleigh, North Carolina, but may be
required to travel from time to time in order to perform the Services.

2.          
Status as an Independent Contractor.  The relationship of the Consultant
with Duke Energy will at all times be that of an independent contractor and not
an employee or agent.  The Parties acknowledge and agree that Duke Energy shall
not exercise general supervision or control over the time, place or manner in
which the Consultant provides the Services.  The Consultant will have no
authority to (i) bind Duke Energy, its subsidiaries, affiliates or related
entities, or (ii) act, incur any liabilities or obligations, or make any
representations or warranties on its or their behalf.  Nothing in this
Agreement will be construed to create a partnership, joint venture, agency or
employment relationship between Duke Energy and the Consultant.  The Parties
acknowledge and agree that the Consultant will not be required to provide more
than 40 hours of Services pursuant to this Agreement in any calendar month.  

3.            
Fees and Reimbursement.  During the term of the Agreement, Duke Energy
will pay the Consultant a retainer, payable in arrears, of $14,880 per month,
for Services requested by Duke Energy and provided by the Consultant.  The
Consultant will return all Duke Energy property to Duke Energy at the end of
the Consulting Term (as defined below).  Duke Energy also will reimburse the
Consultant for actual, necessary, and reasonable out-of-pocket business-related
expenses that the Consultant incurs providing the Services requested by Duke
Energy.  On or before the first day of each month, the Consultant agrees to
submit to Duke Energy his invoice for any reasonable out of pocket businesses
expenses incurred by Consultant during the prior month, with such business
expenses to be documented on a form prescribed by Duke Energy and substantiated
by receipts in a manner consistent with Duke Energy’s policies and Duke Energy
agrees to pay Consultant's invoice for reasonable expenses no later than the
thirtieth (30th) day thereafter.  The Parties agree that, except as
specifically set forth in this Section 3, the Consultant shall be entitled to
no compensation or benefits from Duke Energy with respect to the Services,
shall not be eligible to participate in any employee benefit plans of Duke
Energy and its subsidiaries and affiliates in connection with providing
Services and shall not be credited with service or age credit for purposes of
eligibility, vesting or benefit accrual under any employee benefit plan of Duke
Energy or its subsidiaries or affiliates.

4.       
Duration and Termination.  This Agreement will commence on January 1,
2013 (“Effective Date”) and expire/terminate on December 31, 2014, unless
earlier terminated pursuant to the terms of this Agreement (the “Consulting
Term”).  This Agreement will be terminated immediately upon the death or incapacity
of the Consultant, and may be terminated (a) immediately, by the Consultant for
any reason, at any time, upon the provision of written notice; and (b) by Duke
Energy with Cause (as defined below).  In the event of the termination of this
Agreement, as of the time of termination, this Agreement will be of no further
force or effect, and no Party will have any liability to the other Party,
except that (a) Section Three (solely with respect to any fees or expenses of
Consultant for Services accrued or incurred on or prior to the date of
termination but not yet paid or reimbursed in full by Duke Energy in accordance
therewith) and Sections Seven, Eight, Nine and Ten will survive such
termination in accordance with their terms (or, if no survival period is
expressly set forth therein, indefinitely); and (b) nothing herein will relieve
any party from liability for any willful breach of this Agreement prior to its
termination.  For the purposes of this Section 4, “Cause” shall mean (i) a
material failure by the Consultant to carry out, or malfeasance or gross
insubordination in carrying out, reasonably assigned duties or instructions
consistent with the Services set forth in this Agreement, (ii) the final
conviction of the Consultant of a felony or crime involving moral turpitude,
(iii) an egregious act of dishonesty by the Consultant (including, without
limitation, theft or embezzlement) in connection with providing Services, or a
malicious action by the Consultant toward the customers or employees of Duke Energy
or any of its affiliates, (iv) a material breach by the Consultant of the Duke
Energy Code of Business Ethics or any other applicable code of conduct, or (v)
the failure of the Consultant to cooperate fully with governmental
investigations involving Duke Energy and/or any of its affiliates.

5.             
Taxes and Compliance.  As an independent contractor, the Consultant is
responsible for all taxes associated with any payment he receives from Duke
Energy pursuant to this Agreement and will indemnify Duke Energy and its
subsidiaries, affiliates and related entities and hold them harmless in any
proceeding, lawsuit, claim or demand pertaining to such taxes.  The Consultant
also will comply with all applicable federal, state, and/or local laws in performing
the Services requested by Duke Energy.  If the Consultant performs the Services
requested by Duke Energy at one of Duke Energy’s facilities or offices, the
Consultant will comply with the policies and procedures of such facilities or
offices that apply to other consultants or contractors of Duke Energy who
perform work on Duke Energy’s premises.  In addition, the Consultant
acknowledges that, while he is providing the Services, he will be subject to
the Duke Energy Code of Business Ethics and all other ethical standards and
codes of conduct applicable to attorneys providing legal advice.

6.               
Conflicting Engagements.  During the term of this Agreement, the
Consultant will not accept employment with or perform services or work for a
person or entity that Duke Energy reasonably determines, in its sole
discretion, to be adverse to the interests of Duke Energy or that of its
subsidiaries, affiliates or related entities.  If Duke Energy determines that
the Consultant is in breach of this provision of the Agreement, it will provide
written notice to the Consultant as soon as is practicable.  If the Consultant
fails to discontinue the conflicting employment, work or services within ten
(10) days of the date of said written notice, this Agreement will terminate as
of the date specified by Duke Energy in that notice, which date will be no
earlier than the date of the notice.  For the avoidance of doubt, this Section
6 does not limit the Consultant’s obligations pursuant to Sections 6 and 7 of
the Separation and Settlement Agreement by and between Duke Energy and the
Consultant, dated as of July 10, 2012 (the “Separation Agreement”).

7.              Confidentiality.  The
Consultant may acquire or have access to confidential and proprietary
information in performing the Services requested by Duke Energy.  That
confidential and proprietary information may include, but is not limited to,
information relating to trade secrets, inventions, products, processes,
machinery, apparatus, prices, discounts, costs, business affairs, future plans
or technical data belonging to Duke 

 

 

 

 

 

Energy, those with
whom Duke Energy has contracted with regarding such information, and/or the
subsidiaries, affiliates or related entities of Duke Energy (the “Confidential
Information”). The Consultant will not, at any time, without Duke Energy’s
prior written consent, directly or indirectly, use or disclose any Confidential
Information for his benefit or the benefit of any other person or entity.   The
Consultant’s obligations under this provision will survive the expiration or
termination of this Agreement and are in addition to, and not in limitation of
or preemption of, all other obligations of confidentiality which the Consultant
may have to Duke Energy and/or its subsidiaries, affiliates or related
entities.  The Consultant will return all Confidential Information to Duke
Energy at the end of the Consulting Term.  

The
Consultant acknowledges that the Confidential Information is and at all times
remains the sole and exclusive property of Duke Energy and/or its affiliates
and that Duke Energy and/or its affiliates has the exclusive right, title, and
interest to its Confidential Information.  No right or license, by implication
or otherwise, is granted by Duke Energy as a result of the disclosure of
Confidential Information under this Agreement.  Duke Energy reserves the right
at any time in its sole discretion, for any reason or no reason, to refuse to
provide any further access to and to demand the return of the Confidential
Information.  For the avoidance of doubt, this Section 7 does not limit the
Consultant’s obligations with respect to Section 7 of the Separation Agreement.

8.       
Restrictive Covenants.  The restrictive covenants set forth in Section 7
of the Separation Agreement, including, without limitation, the covenant not to
compete, shall remain in full force and effect until the later of (i) the date
they would expire absent this Agreement or (ii) the date the Consulting Term
ends.  For purposes of clarity, the Parties acknowledge that statements by the
Consultant solely to executive officers of Duke Energy shall not result in a
violation of the non-disparagement provision in Section 6 of the Separation
Agreement.

9.        
Indemnity.  The Consultant will indemnify and hold Duke Energy and its
subsidiaries, affiliates and related entities harmless from any and all claims,
demands, suits, actions, causes of action, damages, losses, injuries, costs and
expenses, including, but not limited to, attorneys’ fees, payments, judgments,
and any and all liabilities arising, or alleged to arise, in whole or in part,
from or out of, in any manner whatsoever, the willful misconduct or gross
negligence of the Consultant in performing the Services requested by Duke
Energy pursuant to this Agreement.  Subject to the preceding sentence, Duke
Energy agrees to indemnify and hold the Consultant harmless with respect to the
results of any action taken based on the advice of the Consultant, including
all losses and damages resulting from any legal or regulatory action.  This
provision will continue in full force and effect notwithstanding expiration or
termination of this Agreement.  

10.            Miscellaneous. 
 

 

a)       Successors. 
This Agreement will be binding on the Parties and their respective successors
and permitted assigns.  Any assignment of this Agreement, in whole or in part,
by the Consultant without Duke Energy’s prior written consent (in its sole
discretion) will be null and void.  Nothing in this Agreement, express or
implied, is intended or will be construed to confer upon any person other than
the Parties any right, remedy or claim under or by reason of this Agreement.

 

b)        Relief. 
The Parties agree that the other would be damaged irreparably in the event any
of the provisions of Sections Seven and Eight were not performed in accordance
with their specific terms or were otherwise breached and that money damages
would be an inadequate remedy for any such non-performance or breach.  The
Parties acknowledge and agree that, in the event either party breaches or
threatens to breach any provision of this Agreement, the non-breaching party
will be entitled to seek any and all equitable and legal relief provided by
law, specifically including immediate and permanent injunctive relief to
prevent any breach or threatened breach of any of such provisions and to
enforce such provisions specifically (without posting a bond or other
security).  The Parties hereby waive any claim that the other has an adequate
remedy at law.  The Parties agree that the foregoing relief will not be
construed to limit or otherwise restrict their ability to pursue any other
remedy provided by law, including the recovery of any actual, compensatory or
punitive damages.  

 

c)          Notices. 
All notices, requests, demands, consents and other communications under this
Agreement will be in writing and will be delivered by hand, nationally
recognized overnight courier, or registered or certified mail, return receipt
requested, first class postage prepaid, addressed as follows:

 

 

 

 

 

 

If
to Duke Energy:  

 

	
  Address:

  	
  Duke Energy Corporation

  550 South Tryon Street

  Charlotte, North Carolina 28202

   

  
	
  Attention:

  	
  Corporate Secretary

  

 

If to the Consultant: 

At the most recent
address in Duke Energy’s records.

 

a)             Applicable Law.  This
Agreement will be governed by, construed, and enforced in accordance with the
procedural and substantive laws of the State of North Carolina.   Any dispute,
controversy or claim arising out of or relating to this Agreement will be
submitted to the state or federal court in North Carolina. 

 

b)             Severability.  If any
term or provision of this Agreement is deemed to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
terms and conditions of this Agreement will remain in full force and effect. 
If any term or provision of this Agreement is deemed to be excessively broad in
scope, it will be construed by limiting and reducing it, so as to be
enforceable to the extent compatible with the applicable law then in effect.  

 

c)              Waiver of Breach.  No
delay or omission by a Party to exercise any right under this Agreement will be
construed as a waiver unless the waiver is in writing.  No waiver by either
Party of any breach of this Agreement by the other Party will be construed as a
waiver of any subsequent breach.  

 

d)              Amendment.  This
Agreement may not be modified except by a written document signed by both
Parties.  This Agreement constitutes the entire agreement between the Parties
and supersedes all previous communications, representations, and agreements,
oral or written, between the Parties with respect to the subject matter of this
Agreement.  

 

e)              Counterparts.  This
Agreement may be executed in counterparts, each of which will be an original,
but all of which together will constitute one and the same agreement.  

 

 

 

 

 

 

IN WITNESS
THEREOF, the Consultant has hereunto set his hand, and Duke Energy has caused
these presents to be executed in its name and on its behalf.

CONSULTANT                                                                       
DUKE ENERGY CORPORATION

/s/
John R. McArthur                                                                 /s/
Jennifer L. Weber___________________________

Executive Vice President 

and Chief Human Resources Officer

 

December
28, 2012                                                                   1/4/13_______________________________________ 

Date                                                                
                          Date

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