Document:

Exhibit 10.123
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of October 1, 2006 (the “Effective Date”), between VCampus Corporation, a corporation organized and existing under the laws of the State of Delaware (“VCampus”) and Christopher L. Nelson, a resident of Fairfax County, Virginia (“Nelson”).

WHEREAS, VCampus
and Nelson are parties to that certain Employment Agreement dated as of June 3,
2002, as amended by Amendment No. 1 thereto dated December 13, 2002, Amendment
No. 2 dated June 25, 2003 and Amendment No. 3 dated January 6, 2006
(collectively, the “Prior Agreement”); and

WHEREAS, VCampus and
Nelson have agreed that Nelson shall continue in his capacity as VCampus’ Chief
Financial Officer on the terms described herein and the parties desire hereby
to amend and restate the Prior Agreement; and

WHEREAS, upon the parties’ execution of this Agreement, Nelson shall remain continuously employed by the Company on the terms described herein, but the Prior Agreement shall terminate and be of no further force or effect;
WHEREAS, the parties hereby acknowledge that the goodwill, continued patronage, names, addresses and specific business requirements of VCampus’ clients and customers, and the designs, procedures, systems, strategies, business methods and know-how of VCampus, having been acquired through VCampus’ efforts and the expenditure of considerable time and money, are among the principal assets of VCampus; and
WHEREAS, the parties hereby acknowledge that as a result of the position(s) in which Nelson will continue to be employed, Nelson will develop special skills and knowledge peculiar to VCampus’ business, whereby he will become, through his employment with VCampus, acquainted with the identities of the clients and customers of VCampus, and will acquire access to the techniques of VCampus in carrying on its business, as well as other confidential and proprietary information; and
WHEREAS, the parties hereto acknowledge that the Covenants set forth in Section 7 of this Agreement are necessary for the reasonable and proper protection of VCampus’ confidential and proprietary information (as defined herein), customer relationships, and the goodwill of VCampus’ business, and that such Covenants constitute a material portion of the consideration for Nelson’s employment hereunder.
NOW, THEREFORE, in consideration of the premises and mutual promises and covenants contained herein, and for other good and valuable consideration, the 

 

receipt and legal sufficiency of which are hereby
acknowledged, the parties agree as follows:

1.               Term and Duties.  VCampus agrees to continue to employ Nelson, and Nelson agrees to be and remain employed, as Chief Financial Officer (and specifically not as CIO, COO or other position) of VCampus, for a term that expires on the same expiration date as Nelson’s employment term under the Prior Agreement (May 31, 2007), unless such employment is sooner terminated as provided herein.  The term of this Agreement is not subject to auto-renewal, but it may be renewed by written consent of both parties given prior to the termination date.  Although Nelson will not be required to keep specific office hours at VCampus or account specifically for his hours worked and functions performed, Nelson will be required to devote such time and attention as is required to perform his duties as Chief Financial Officer in a professional and timely manner and shall perform such tasks and functions as the Board may reasonably require from time to time during the term of this Agreement.  Nelson’s duties shall include, without limitation, management and supervision of the duties normally associated with a Chief Financial Officer of a public company, including SEC reporting and compliance, supervision and assistance with completion of the year-end audit, review and supervision of internal controls and disclosure controls, review and execution of required SEC filings, including quarterly, annual and periodic reports (including the contemplated Form 8-K/A and related financial statements for the Prosoft transaction), registration statements (including the contemplated resale S-1 registration statements), required CFO certifications and similar items and functions.  The VCampus Board shall measure Nelson’s performance in his ongoing capacity as Chief Financial Officer only.
2.               Compensation.
(a)           Base Salary.  In consideration of Nelson’s services as Chief Financial Officer, VCampus shall pay Nelson an annualized base salary of Seventy Three Thousand Three Hundred Thirty and 33/100 Dollars  ($73,333.33) per annum (equivalent to $3,055.56 semi-monthly), payable in equal semi-monthly installments in accordance with VCampus’ normal payroll practices.
(b)         Stock Options.  VCampus acknowledges and agrees that all outstanding options held by Nelson on the date hereof shall remain outstanding and be eligible for continued vesting during the term of this Agreement pursuant to the terms of such options and the applicable stock plan.
(c)          Performance Bonus for 2006.  Consistent with VCampus policy with respect to compensation of other executive officers, Nelson’s performance for bonus compensation purposes shall be measured on a calendar year basis in 2006.  Nelson’s performance bonus compensation for the year ending December 31, 2006 shall be determined in accordance with the terms set

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forth on Exhibit A attached hereto (which shall replace and supersede the corresponding provisions of the Prior Agreement for 2006).
3.               Employee Benefits, Vacation.  During the term of this Agreement, Nelson shall be eligible to receive and/or participate in all regular employee benefits that are offered by VCampus to its part-time employees; provided, however, that VCampus shall specifically not be responsible for providing the following benefits (without limitation) beyond October 31, 2006:  major medical, dental, 401(k) Retirement Plan and long- and short-term disability insurance coverage for Nelson.  In addition, VCampus shall have no obligation to provide Nelson with life insurance, car allowance, memberships or any other similar executive benefits.  Nelson and VCampus acknowledge and agree that VCampus has paid Nelson in full for all of his accrued but unpaid vacation through and including September 30, 2006 under the Prior Agreement.  No vacation time will accrue or be payable for Nelson from and after October 1, 2006 under this Agreement or otherwise.
4.               Reimbursement/Allowance for Expenses. Nelson is authorized to incur reasonable expenses in connection with the business of VCampus including expenses for travel and similar items.  VCampus will reimburse Nelson for all such reasonable and management-approved expenses upon itemized account of expenditures.  In addition, during the term of this Agreement Nelson will be entitled to receive a monthly allowance of $230 to cover mobile phone expenses and internet connectivity charges related to VCampus.
5.               Termination.
(a)              Termination Without Cause.  Either VCampus or Nelson may terminate this Agreement without cause with thirty (30) days’ written notice to the other party.  Upon termination without cause by Nelson, Nelson shall receive accrued but unpaid base salary for days worked prior to termination.  If Nelson is terminated without cause by VCampus, Nelson will also receive accrued but unpaid pro rata performance bonus, if any (as determined in the reasonable discretion of VCampus) for days worked prior to termination as well as the Severance Benefit described in Section 7.  If VCampus fails to provide thirty (30) days advance written notice of its intention to terminate without cause, in its sole discretion VCampus may elect to pay Nelson his regular base salary in lieu of such notice for all or a portion of such notice period.
(b)             Termination for “Cause”.  VCampus may discharge Nelson immediately and without any advance notice for “Cause,” which shall be limited to:
(i)                                     Nelson’s gross negligence or willful misconduct that results in material harm to the financial condition, business, assets, or prospects of VCampus;

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(ii)                                  the conviction of, or the entering of a plea of no contest by, Nelson for a felony or crime involving moral turpitude;
(iii)                               the Board of Directors determines that Nelson has engaged in theft, fraud, misappropriation or embezzlement in connection with his services for the Company; or
(iv)                              the Board of Directors determines that Nelson has repeatedly failed to carry out the reasonable directions of the Board of Directors of the Company, which failure cannot be cured or shall not have been cured within thirty (30) days after receipt by Nelson of written notice specifying in reasonable detail the failure to so carry out such directions. 
(c)              Termination Due to Death or Disability.  In the event of Nelson’s death or “disability” (as defined below), this Agreement shall terminate immediately, and VCampus shall pay to Nelson (or his beneficiary), (i) Nelson’s accrued unpaid base salary (ii) a prorated bonus, if earned and approved by the Board, for the portion of the year during which Nelson was employed by VCampus.  For purposes of this Agreement, “disability” shall mean the event of Nelson’s physical or mental inability (as verified by a physician selected by VCampus) to perform his essential functions hereunder, with or without reasonable accommodation, for a period of at least thirty (30) consecutive days during the Agreement.
6.               Severance Benefit.  If this Agreement is terminated by VCampus without cause under Section 5(a) hereof, then Nelson shall be entitled to receive, as his exclusive remedy for such termination, a severance benefit equal to the remaining amount of the base salary that is then still payable to Nelson through the end of the term of this Agreement, less required withholdings.  The severance benefit shall be payable to Nelson in equal semi-monthly installments consistent with VCampus’ standard payroll practices.  VCampus’ obligation to pay the severance benefit described herein is conditioned upon Nelson’s execution of a full release of all claims that Nelson may have against VCampus in a form satisfactory to VCampus.
7.                Restrictive Covenants.  In exchange for VCampus’ agreement to enter into the terms of this amended and restated Agreement, Nelson agrees that the following restrictions shall apply during Nelson’s employment and for the indicated periods of time following the termination of Nelson’s employment.
(a)          Non-solicitation of Customers.  During Nelson’s employment with VCampus, and for the one (1) year period of time following termination of his employment by either party for any reason whatsoever, Nelson agrees not to solicit business with any client or customer of VCampus (which did business with VCampus during Nelson’s employment), whether or not VCampus is doing work for such client or customer as of the date of termination of Nelson’s employment.

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(b)         Nonsolicitation of Employees.  During Nelson’s employment with VCampus, and for the one (1) year period following termination or expiration of his employment by either party for any reason whatsoever, Nelson further agrees not to initiate contact with, solicit, entice, or attempt to entice in any form, fashion or manner any employee of VCampus for the purpose of inducing that employee to terminate his/her employment with VCampus.
(c)          Non-disclosure.  During Nelson’s employment and for a period of three (3) years after termination of his employment by either party for any reason whatsoever, Nelson agrees not to disclose, or to knowingly allow any other employee to disclose, to any other person or business entity, or use for personal profit or gain, any confidential or proprietary information of VCampus, regardless of whether the same shall be or may have been originated, discovered or invented by Nelson or by Nelson in conjunction with others.  For purposes of this Agreement, the term “confidential or proprietary information” shall include, without limitation: the names, addresses and telephone numbers of past, present and prospective clients or customers of VCampus, as well as products, designs, business plans, proposed business development, marketing strategies, customers requirements, contractual provisions, employee capabilities, proposed marketing initiatives, pricing methods, company earnings, computer software and reporting systems; and the procedures, systems and business methods of VCampus.
8.               Remedies for Breach.  Nelson hereby acknowledges and agrees that a violation of any of the covenants set forth in Section 7 (the “Covenants”) would result in immediate and irreparable harm to VCampus, and that VCampus’ remedies at law, including, without limitation, the award of money damages, would be inadequate relief to VCampus for any such violation.  Therefore, any violation or threatened violation by Nelson of the Covenants shall give VCampus the right to enforce such Covenants through specific performance, temporary restraining order, preliminary or permanent injunction, and other equitable relief.  Such remedies shall be cumulative and in addition to any other remedies VCampus may have, at law or in equity.
9.                Employee Representations.
a.  No Conflict. Nelson represents and warrants to VCampus that to his knowledge, neither the execution and delivery of this Agreement, nor the performance of his duties hereunder violates or will violate the provisions of any other agreement to which he is a party or by which he is bound.  Nelson agrees to hold harmless and indemnify VCampus in the event that of any claims against VCampus arising out of such breach.

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b.  Director and Officer Liability Insurance.  Nelson represents and warrants to VCampus that: (i) he is unaware of any act or omission that would make him ineligible to be covered under VCampus’ Directors’ and Officers’ Liability Insurance Policy; and (ii) he is unaware of any act or omission that would materially increase VCampus’ premiums under its Directors and Officers’ Liability Insurance Policy.
10.          Return of VCampus Property; Assignment of Inventions.
a.  Return of Property.  Upon the termination of Nelson’s employment with VCampus for any reason, Nelson shall leave with or return to VCampus all personal property belonging to VCampus  (“VCampus Property”) that is in Nelson’s possession or control as of the date of such termination of employment, including, without limitation, all records, papers, drawings, notebooks, specifications, marketing materials, software, reports, proposals, equipment, or any other device, document or possession, however obtained, whether or not such VCampus Property contains confidential or proprietary information of VCampus as described in Section 7(c) hereof.
b.  Assignment of Inventions.  If at any time or times during Nelson’s employment, Nelson shall (either alone or with others) make, conceive, discover or reduce to practice any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property right whatsoever or any interest therein (whether or not patentable or registrable under copyright or similar statutes or subject to analogous protection)(herein called “Developments”) that (i) relates to the business of VCampus or any of the products or services being developed, manufactured or sold by VCampus or that may be used in relation therewith (but excluding for purposes of this Section 10.b(i) any developments that relate to the business of Nelson’s current full-time employer or any products or services being developed, manufactured or sold by such other employer independent from Nelson’s relationship with VCampus), (ii) results from tasks assigned him by VCampus or (iii) results from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by VCampus, such Developments and the benefits thereof shall immediately become the sole and absolute property of VCampus and its assigns, and Nelson shall promptly disclose to VCampus (or any persons designated by it) each such Development and hereby assigns any rights Nelson may have or acquire in the Developments and benefits and/or rights resulting therefrom to VCampus and its assigns without further compensation, and shall communicate, without cost or delay, and without publishing the same, all available information relating thereto (with all necessary plans and models) to VCampus.
c.  Cooperation.  Upon disclosure of each Development to VCampus, Nelson will, during his employment and at any time thereafter, at the request and expense of VCampus, sign, execute, make and do all such deeds, documents, acts and things as VCampus and its duly authorized agents may reasonable require: (i) to apply for, 

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obtain and vest in the name of VCampus alone (unless VCampus otherwise directs) letters patents, copyrights or other analogous protection in any country throughout the world and when so obtained and vested to renew and restore the same; and (ii) to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection.
d.  Power of Attorney.  In the event VCampus is unable, after reasonable effort, to secure Nelson’s signature on any letters patent, copyright or other analogous protection relating to a Development, whether because of Nelson’s physical or mental incapacity or for any other reason, Nelson hereby irrevocably designates and appoints VCampus and its duly authorized officers and agents as Nelson’s agents and attorneys-in-fact, to act for and on behalf of Nelson and stead to execute and file any such application or applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright or other analogous protection thereon with the same legal force and effect as if executed by Nelson.
11.         Survival.  The provisions of Sections 7, 8, 9, and 10 hereof shall survive the termination of this Agreement, regardless of the manner or cause of such termination.
12.         Effect of Agreement. This Agreement supersedes and replaces the Prior Agreement.  The parties agree and acknowledge that this Agreement sets forth the final and complete Agreement of the parties. It shall not be assigned by Nelson and may not be modified except by way of a writing executed by both parties.  All terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their successors and assigns.
13.         Notices.  Any Notice, demand, or other communication required or permitted hereunder shall be deemed properly given when placed in writing and deposited in the United States Postal Service, by registered mail, postage prepaid, overnight mail, upon confirmation of receipt by facsimile or personal delivery, addressed as follows:
If to Nelson:
Christopher L. Nelson
(at his address as shown on the records of VCampus)
If to VCampus:
VCampus Corporation
1850 Centennial Park Drive, Suite 200
Reston, VA  20191
Attn:  Chief Executive Officer

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With a copy to:
Maupin Taylor, P.A.
3200 Beechleaf Court, Suite 500
Raleigh, NC 27604
Attn:  Kevin A. Prakke
14.          Governing Law.  The provisions of this Agreement and any disputes arising hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia.
15.         Amendment and Waiver.  No amendment or modification of this Agreement shall be valid or binding upon VCampus unless made in writing and signed by a duly authorized representative of VCampus, or upon Nelson unless made in writing and signed by Nelson.
[Signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their seals affixed hereto as of the day and year first above written.

	
  

  	
  VCampus Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Nat Kannan

  	
   

  
	
   

  	
   

  	
  Title: CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
  Christopher L.
  Nelson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

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Exhibit A

All bonus amounts referenced herein are subject
to any withholdings required by law. 
These criteria and bonus determinations are valid only for the year
ending December 31, 2006.

Subjective Bonus:  $50,000 Total Opportunity

A bonus ranging from a
minimum of $30,000 to up to a maximum of $50,000 will be paid based on the
Compensation Committee’s subjective assessment, in its sole discretion, of
Nelson’s overall performance in his capacity as the VCampus’ Chief Financial
Officer in 2006.  The Subjective Bonus
will be payable promptly following the Compensation Committee’s determination
in accordance with VCampus’ normal payroll practices (but in any event, such
payment shall be made by January 31, 2007). 
Nelson shall not be eligible for any discretionary bonus if he is
terminated for cause or if he voluntarily terminates his employment with
VCampus prior to January 31, 2007.

To the fullest extent
provided by this Agreement and applicable law, all discretionary bonuses,
whether paid or payable, shall be subject to recalculation (as determined by
the Compensation Committee in its reasonable discretion) and forfeiture back to
VCampus in the event of any restatement or other adjustment to the financial
statements used to help determine the discretionary bonus.

 

 10Exhibit
10.1

DUKE
ENERGY CORPORATION

2006 LONG-TERM INCENTIVE PLAN

1.     PURPOSE OF THE PLAN

The purpose of the Corporation’s 2006 Long-Term
Incentive Plan is to promote the interests of the Corporation and its
shareholders by strengthening the Corporation’s ability to attract, motivate
and retain key employees and directors of the Corporation upon whose judgment,
initiative and efforts the financial success and growth of the business of the
Corporation largely depend, and to provide an additional incentive for key employees
and directors through stock ownership and other rights that promote and
recognize the financial success and growth of the Corporation.

2.     DEFINITIONS

Wherever the
following capitalized terms are used in this Plan they shall have the meanings
specified below:

(a) “Award” means an award of an Option, Restricted
Stock, Stock Appreciation Right, Performance Award, Phantom Stock, Stock Bonus or
Dividend Equivalent granted under the Plan.

(b) “Award Agreement” means an agreement entered into
between the Corporation and a Participant setting forth the terms and
conditions of an Award granted to a Participant.

(c)  “Board”
means the Board of Directors of the Corporation.

(d)  “Change in
Control” shall have the meaning specified in Section 13 hereof.

(e)  “Code”
means the Internal Revenue Code of 1986, as amended.

(f) “Committee” means the Compensation Committee of
the Board, or such other committee or subcommittee of the Board or group of
individuals appointed by the Board to administer the Plan from time to time.

(g) “Common Stock” means the common stock of the
Corporation, without par value, or any security into which such Common Stock
may be changed by reason of any transaction or event of the type described in
Section 3.2.

(h) “Corporation” means Duke Energy Corporation, a Delaware
corporation.

(i) “Date of Grant” means the date on which an Award
under the Plan is made by the Committee (which date shall not be earlier than
the date on which the Committee takes action with respect thereto), or such later
date as the Committee may specify that the Award becomes effective.

(j) “Dividend Equivalent” means an Award under Section
12 hereof entitling the Participant to receive payments with respect to
dividends declared on the Common Stock.

(k) “Effective Date” means the Effective Date of this
Plan, as defined in Section 16.1 hereof.

(l) “Eligible Person” means any person who is an
Employee or an Independent Director.

(m) “Employee” means any person who is a key employee
of the Corporation or any Subsidiary or who has agreed to serve in such
capacity within 90 days after the Date of Grant; provided, however, that with 

 

respect to Incentive Stock Options, “Employee” means
any person who is considered an employee of the Corporation or any Subsidiary
for purposes of Treasury Regulation Section 1.421-1(h).

(n) “Fair Market Value” of a share of Common Stock as
of a given date means the closing sales price of the Common Stock on the New
York Stock Exchange as reflected on the composite index on the date as of which
Fair Market Value is to be determined or, in the absence of any reported sales
of Common Stock on such date, on the first preceding date on which any such
sale shall have been reported. If Common Stock is not listed on the New York
Stock Exchange on the date as of which Fair Market Value is to be determined,
the Committee shall determine in good faith the Fair Market Value in whatever
manner it considers appropriate (but in any event such amount shall not be less
than fair market value within the meaning of section 409A of the Code).

(o) “Incentive Stock Option” means an option to
purchase Common Stock that is intended to qualify as an incentive stock option
under section 422 of the Code and the Treasury Regulations thereunder.

(p) “Independent Director” means a member of the Board
who is not an employee of the Corporation or any Subsidiary.

(q) “Nonqualified Stock Option” means an option to
purchase Common Stock that is not an Incentive Stock Option.

(r) “Option” means an Incentive Stock Option or a
Nonqualified Stock Option granted under Section 6 hereof.

(s) “Participant” means any Eligible Person who holds
an outstanding Award under the Plan.

(t) “Performance Award” means an Award made under
Section 9 hereof entitling a Participant to a payment based on the Fair Market
Value of Common Stock (a “Performance Share”) or based on specified dollar
units (a “Performance Unit”) at the end of a performance period if certain
conditions established by the Committee are satisfied.

(u) “Phantom Stock” means an Award under Section 10
hereof entitling a Participant to a payment at the end of a vesting period of a
unit value based on the Fair Market Value of a share of Common Stock.

(v) “Plan” means this 2006 Long-Term Incentive Plan as
set forth herein, and as it may be further amended from time to time.

(w) “Restricted Stock” means an Award under Section 8
hereof entitling a Participant to shares of Common Stock that are
nontransferable and subject to forfeiture until specific conditions established
by the Committee are satisfied.

(x) “Section 162(m)” means section 162(m) of the Code
and the Treasury Regulations thereunder.

(y) “Section 162(m) Participant” means any Participant
who, in the sole judgment of the Committee, could be treated as a “covered
employee” under Section 162(m) at the time income may be recognized by such
Participant in connection with an Award that is intended to qualify for
exemption under Section 162(m).

(z) “Stock Appreciation Right” or “SAR” means an Award
under Section 7 hereof entitling a Participant to receive an amount,
representing the difference between the base price per share of the right and
the Fair Market Value of a share of Common Stock on the date of exercise.

(aa) “Stock Bonus” means an Award under Section 11
hereof entitling a Participant to receive an unrestricted share of Common
Stock.

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(bb) “Subsidiary” means an entity that is wholly
owned, directly or indirectly, by the Corporation, or any other affiliate of
the Corporation that is so designated, from time to time, by the Committee,
provided, however, that with respect to Incentive Stock Options, the term “Subsidiary”
shall not include any entity that does not qualify within the meaning of section
424(f) of the Code as a “subsidiary corporation” with respect to the
Corporation.

3.     SHARES
OF COMMON STOCK SUBJECT TO THE PLAN

3.1. Number of Shares. Subject to the following
provisions of this Section 3, the aggregate number of shares of Common Stock
that may be issued pursuant to all Awards under the Plan is 60,000,000 shares
of Common Stock. Shares of Common Stock that are issued in connection with all
Awards other than Options and SARs shall be counted against the 60,000,000
limit described above as four shares of Common Stock for every one share of
Common Stock that is issued in connection with such Award. No more than 60,000,000
shares of Common Stock may be issued pursuant to Incentive Stock Options. The
shares of Common Stock to be delivered under the Plan will be made available
from authorized but unissued shares of Common Stock or treasury stock. If any
share of Common Stock that is the subject of an Award is not issued and ceases
to be issuable for any reason, or is forfeited, canceled or returned to the
Corporation for failure to satisfy vesting requirements or upon the occurrence
of other forfeiture events, such share of Common Stock will no longer be
charged against the foregoing maximum share limitations and may again be made
subject to Awards under the Plan pursuant to such limitations. Common Stock
covered by an Award granted under the Plan shall not be counted unless and
until it is actually issued or transferred to a Participant.  Without limiting the generality of the
foregoing, upon payment in cash of the benefit provided by any Award granted
under the Plan, any Common Stock that is covered by the Award will be available
for issue or transfer hereunder. 
Notwithstanding anything to the contrary contained herein, (A) Common
Stock tendered in payment of the exercise price of an Option shall not be added
to the aggregate Plan limit described above; (B) Common Stock withheld by the
Corporation to satisfy a tax withholding obligation shall not be added to the
aggregate Plan limit described above; (C) Common Stock that is repurchased by
the Corporation with Option proceeds shall not be added to the aggregate Plan
limit described above and (D) all Common Stock covered by an SAR, to the extent
that it is exercised and settled in Common Stock, and whether or not Common
Stock is actually issued or transferred to the Participant upon exercise of the
SAR, shall be considered issued or transferred pursuant to the Plan.

3.2. Adjustments. If there shall occur any merger,
consolidation, liquidation, issuance of rights or warrants to purchase
securities, recapitalization, reclassification, stock dividend, spin-off,
split-off, stock split, reverse stock split or other distribution with respect
to the shares of Common Stock, or any similar corporate transaction or event in
respect of the Common Stock, then the Committee shall, in the manner and to the
extent that it deems appropriate and equitable to the Participants and
consistent with the terms of this Plan, cause a proportionate adjustment to be
made in (i) the maximum numbers and kind of shares provided in Section 3.1
hereof, (ii) the maximum numbers and kind of shares set forth in Sections 6.1,
7.1, 8.2 and 9.4 hereof, (iii) the number and kind of shares of Common Stock,
share units, or other rights subject to the then-outstanding Awards, (iv) the
price for each share or unit or other right subject to then outstanding Awards
without change in the aggregate purchase price or value as to which such Awards
remain exercisable or subject to restrictions, (v) the performance targets or
goals appropriate to any outstanding Performance Awards (subject to such
limitations as appropriate for Awards intended to qualify for exemption under
Section 162(m)) or (vi) any other terms of an Award that are affected by the
event. Moreover, in the event of any such transaction or event, the Committee,
in its discretion, may provide in substitution for any or all outstanding
awards under the Plan such alternative consideration (including cash) as it, in
good faith, may determine to be equitable under the circumstances and may
require in connection therewith the surrender of all awards so replaced. Notwithstanding
the foregoing, any such adjustments shall be made in a manner consistent with
the requirements of section 409A of the Code and, in the case of Incentive
Stock Options, any such adjustments shall be made in a manner consistent with
the requirements of section 424(a) of the Code.

4.     ADMINISTRATION
OF THE PLAN

4.1.
Committee Members. Except as provided in Section 4.4 hereof, the Plan
will be administered by the Committee, which unless otherwise determined by the
Board will consist solely of two or more persons who satisfy 

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the requirements
for a “nonemployee director” under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended and/or the requirements for an “outside
director” under Section 162(m). The Committee may exercise such powers and
authority as may be necessary or appropriate for the Committee to carry out its
functions as described in the Plan. No member of the Committee will be liable
for any action or determination made in good faith by the Committee with
respect to the Plan or any Award under it.

4.2.
Discretionary Authority. Subject to the express limitations of the Plan,
the Committee has authority in its discretion to determine the Eligible Persons
to whom, and the time or times at which, Awards may be granted, the number of
shares, units or other rights subject to each Award, the exercise, base or
purchase price of an Award (if any), the time or times at which an Award will
become vested, exercisable or payable, the performance criteria, performance
goals and other conditions of an Award, and the duration of the Award. The
Committee also has discretionary authority to interpret the Plan, to make all
factual determinations under the Plan, and to determine the terms and provisions
of the respective Award Agreements and to make all other determinations
necessary or advisable for Plan administration. The Committee has authority to
prescribe, amend, and rescind rules and regulations relating to the Plan. All
interpretations, determinations, and actions by the Committee will be final,
conclusive, and binding upon all parties.

4.3.
Changes to Awards. The Committee shall have the authority to effect, at
any time and from time to time, with the consent of the affected Participants,
(i) the cancellation of any or all outstanding Awards and the grant in
substitution therefor of new Awards covering the same or different numbers of
shares of Common Stock and having an exercise or base price which may be the
same as or different than the exercise or base price of the canceled Awards or
(ii) the amendment of the terms of any and all outstanding Awards; provided,
however, that the Committee shall not have the authority to reduce the exercise
or base price of an Award by amendment or cancellation and substitution of an
existing Award without the approval of the Corporation’s shareholders. The
Committee may in its discretion accelerate the vesting or exercisability of an
Award at any time or on the basis of any specified event.

4.4.
Delegation of Authority. The Committee shall have the right, from time
to time, to delegate to one or more officers or directors of the Corporation
the authority of the Committee to grant and determine the terms and conditions
of Awards under the Plan, subject to such limitations as the Committee shall
determine; provided, however, that no such authority may be delegated with
respect to Awards made to any member of the Board or any Section 162(m)
Participant.

4.5.
Awards to Independent Directors. An Award to an Independent Director
under the Plan shall be approved by the Board. With respect to Awards to
Independent Directors, all rights, powers and authorities vested in the
Committee under the Plan shall instead be exercised by the Board, and all
provisions of the Plan relating to the Committee shall be interpreted in a
manner consistent with the foregoing by treating any such reference as a
reference to the Board for such purpose.

5.     ELIGIBILITY
AND AWARDS

All Eligible Persons are eligible to be designated by
the Committee to receive an Award under the Plan. The Committee has authority,
in its sole discretion, to determine and designate from time to time those
Eligible Persons who are to be granted Awards, the types of Awards to be
granted and the number of shares or units subject to the Awards that are
granted under the Plan. Each Award will be evidenced by an Award Agreement as
described in Section 14 hereof between the Corporation and the Participant that
shall include the terms and conditions consistent with the Plan as the Committee
may determine.

6.     STOCK
OPTIONS

6.1.
Grant of Option. An Option may be granted to any Eligible Person
selected by the Committee; provided, however, that only Employees shall be
eligible for Awards of Incentive Stock Options. Each Option shall be designated,
at the discretion of the Committee, as an Incentive Stock Option or a
Nonqualified Stock Option. The 

 4
 

 

maximum number of
shares of Common Stock that may be granted under Options to any one Participant
during any one calendar year shall be limited to 3,000,000 shares (subject to
adjustment as provided in Section 3.2 hereof).

6.2.
Exercise Price. The exercise price of the Option shall be determined by
the Committee; provided, however, that the exercise price per share of an
Option shall not be less than 100 percent of the Fair Market Value per share of
the Common Stock on the Date of Grant.

6.3.
Vesting; Term of Option. The Committee, in its sole discretion, shall
prescribe in the Award Agreement the time or times at which, or the conditions
upon which, an Option or portion thereof shall become vested and exercisable,
and may accelerate the exercisability of any Option at any time. An Option may
become vested and exercisable upon a Participant’s retirement, death,
disability, Change in Control or other event, to the extent provided in an
Award Agreement. The period during which a vested Option may be exercised shall
be ten years from the Date of Grant, unless a shorter exercise period is
specified by the Committee in an Award Agreement, and subject to such
limitations as may apply under an Award Agreement relating to the termination
of a Participant’s employment or other service with the Corporation or any
Subsidiary.

6.4.
Option Exercise; Withholding. Subject to such terms and conditions as
shall be specified in an Award Agreement, an Option may be exercised in whole
or in part at any time during the term thereof by notice to the Corporation
together with payment of the aggregate exercise price therefor. Payment of the
exercise price shall be made (i) in cash or by cash equivalent, (ii) at the
discretion of the Committee, in shares of Common Stock acceptable to the
Committee, valued at the Fair Market Value of such shares on the date of
exercise, (iii) at the discretion of the Committee, by a delivery of a notice
that the Participant has placed a market sell order (or similar instruction)
with a broker with respect to shares of Common Stock then issuable upon
exercise of the Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Corporation in
satisfaction of the Option exercise price (conditioned upon the payment of such
net proceeds), (iv) at the discretion of the Committee, by withholding from
delivery shares of Common Stock for which the Option is otherwise exercised, (v)
at the discretion of the Committee, by a combination of the methods described
above or (vi) by such other method as may be approved by the Committee and set
forth in the Award Agreement. In addition to and at the time of payment of the
exercise price, the Participant shall pay to the Corporation the full amount of
any and all applicable income tax and employment tax amounts required to be
withheld in connection with such exercise, payable under one or more of the
methods described above for the payment of the exercise price of the Options or
as otherwise may be approved by the Committee.

6.5.
Limited Transferability. Solely to the extent permitted by the Committee
in an Award Agreement and subject to such terms and conditions as the Committee
shall specify, a Nonqualified Stock Option (but not an Incentive Stock Option)
may be transferred to members of the Participant’s immediate family (as
determined by the Committee) or to trusts, partnerships or corporations whose
beneficiaries, members or owners are members of the Participant’s immediate
family, and/or to such other persons or entities as may be approved by the
Committee in advance and set forth in an Award Agreement, in each case subject
to the condition that the Committee be satisfied that such transfer is being
made for estate or tax planning purposes or for gratuitous or donative
purposes, without consideration (other than nominal consideration) being
received therefor. Except to the extent permitted by the Committee in accordance
with the foregoing, an Option shall be nontransferable otherwise than by will
or by the laws of descent and distribution, and shall be exercisable during the
lifetime of a Participant only by such Participant.

6.6.
Additional Rules for Incentive Stock Options.

(a) Annual Limits. No Incentive Stock Option
shall be granted to a Participant as a result of which the aggregate fair
market value (determined as of the Date of Grant) of the stock with respect to
which Incentive Stock Options are exercisable for the first time in any
calendar year under the Plan, and any other stock option plans of the
Corporation, any Subsidiary or any parent corporation, would exceed $100,000
(or such other amount provided under section 422(d) of the Code), determined in
accordance with section 422(d) of the Code and Treasury Regulations thereunder.
This limitation shall be applied by taking options into account in the order in
which granted.

 5
 

 

(b) Termination of Employment. An Award
Agreement for an Incentive Stock Option may provide that such Option may be
exercised not later than 3 months following termination of employment of the
Participant with the Corporation and all Subsidiaries, subject to special rules
relating to death and disability, as and to the extent determined by the
Committee to be appropriate with regard to the requirements of section 422 of
the Code and Treasury Regulations thereunder.

(c) Other Terms and Conditions; Nontransferability.
Any Incentive Stock Option granted hereunder shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as are
deemed necessary or desirable by the Committee, which terms, together with the
terms of this Plan, shall be intended and interpreted to cause such Incentive
Stock Option to qualify as an “incentive stock option” under section 422 of the
Code and Treasury Regulations thereunder. Such terms shall include, if
applicable, limitations on Incentive Stock Options granted to ten-percent
owners of the Corporation. An Award Agreement for an Incentive Stock Option may
provide that such Option shall be treated as a Nonqualified Stock Option to the
extent that certain requirements applicable to “incentive stock options” under
the Code shall not be satisfied. An Incentive Stock Option shall by its terms
be nontransferable otherwise than by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of a Participant
only by such Participant.

(d) Disqualifying Dispositions. If shares of
Common Stock acquired by exercise of an Incentive Stock Option are disposed of
within two years following the Date of Grant or one year following the transfer
of such shares to the Participant upon exercise, the Participant shall,
promptly following such disposition, notify the Corporation in writing of the
date and terms of such disposition and provide such other information regarding
the disposition as the Committee may reasonably require.

7.     STOCK
APPRECIATION RIGHTS

7.1.
Grant of SARs. A Stock Appreciation Right granted to a Participant is an
Award in the form of a right to receive, upon surrender of the right, but
without other payment, an amount based on appreciation in the Fair Market Value
of the Common Stock over a base price established for the Award, exercisable at
such time or times and upon conditions as may be approved by the Committee. The
maximum number of shares of Common Stock that may be subject to SARs granted to
any one Participant during any one calendar year shall be limited to 3,000,000 shares
(subject to adjustment as provided in Section 3.2 hereof).

7.2.
Tandem SARs. A Stock Appreciation Right may be granted in connection
with an Option, either at the time of grant or at any time thereafter during
the term of the Option. An SAR granted in connection with an Option will
entitle the holder, upon exercise, to surrender such Option or any portion
thereof to the extent unexercised, with respect to the number of shares as to
which such SAR is exercised, and to receive payment of an amount computed as
described in Section 7.4 hereof. Such Option will, to the extent and when
surrendered, cease to be exercisable. An SAR granted in connection with an
Option hereunder will have a base price per share equal to the per share
exercise price of the Option, will be exercisable at such time or times, and
only to the extent, that a related Option is exercisable, and will expire no
later than the related Option expires.

7.3.
Freestanding SARs. A Stock Appreciation Right may be granted without
relationship to an Option and, in such case, will be exercisable as determined
by the Committee, but in no event after 10 years from the Date of Grant. The
base price of an SAR granted without relationship to an Option shall be
determined by the Committee in its sole discretion; provided, however, that the
base price per share of a freestanding SAR shall not be less than 100 percent
of the Fair Market Value of the Common Stock on the Date of Grant.

7.4.
Payment of SARs. An SAR will entitle the holder, upon exercise of the
SAR, to receive payment of an amount determined by multiplying: (i) the excess
of the Fair Market Value of a share of Common Stock on the date of exercise of
the SAR over the base price of such SAR, by (ii) the number of shares as to
which such SAR will have been exercised. Payment of the amount determined under
the foregoing may be made, in the discretion of the Committee as set forth in
the Award Agreement, in cash, in shares of Common Stock valued at their Fair
Market Value on the date of exercise, or in a combination of cash and shares of
Common Stock.

 6
 

 

8.     RESTRICTED
STOCK

8.1.
Grants of Restricted Stock. An Award of Restricted Stock to a
Participant represents shares of Common Stock that are issued subject to such
restrictions on transfer and other incidents of ownership and such forfeiture
conditions as the Committee may determine. The Committee may, in connection
with an Award of Restricted Stock, require the payment of a specified purchase
price. The Committee may grant Awards of Restricted Stock that are intended to
qualify for exemption under Section 162(m), as well as Awards of Restricted
Stock that are not intended to so qualify.

8.2.
Vesting Requirements. The restrictions imposed on an Award of Restricted
Stock shall lapse in accordance with the vesting requirements specified by the
Committee in the Award Agreement. Such vesting requirements may be based on the
continued employment or service of the Participant with the Corporation or its
Subsidiaries for a specified time period or periods, provided that any such
restriction shall not be scheduled to lapse in its entirety earlier than the
first anniversary of the Date of Grant. Such vesting requirements may also be
based on the attainment of specified business goals or measures established by
the Committee in its sole discretion. In the case of any Award of Restricted
Stock that is intended to qualify for exemption under Section 162(m), the
vesting requirements shall be limited to the performance criteria identified in
Section 9.3 below, and the terms of the Award shall otherwise comply with the
Section 162(m) requirements described in Section 9.4 hereof. The maximum number
of shares of Common Stock that may be subject to an Award of Restricted Stock
granted to any one Participant during any one calendar year shall be separately
limited to 600,000 shares (subject to adjustment as provided in Section 3.2
hereof).

8.3.
Restrictions. Shares of Restricted Stock may not be transferred,
assigned or subject to any encumbrance, pledge or charge until all applicable
restrictions are removed or expire or unless otherwise allowed by the
Committee. The Committee may require the Participant to enter into an escrow
agreement providing that the certificates representing Restricted Stock granted
or sold pursuant to the Plan will remain in the physical custody of an escrow
holder until all restrictions are removed or expire. Failure to satisfy any
applicable restrictions shall result in the subject shares of Restricted Stock
being forfeited and returned to the Corporation, with any purchase price paid
by the Participant to be refunded, unless otherwise provided by the Committee.
The Committee may require that certificates representing Restricted Stock
granted under the Plan bear a legend making appropriate reference to the
restrictions imposed.

8.4.
Rights as Shareholder. Subject to the foregoing provisions of this
Section 8 and the applicable Award Agreement, the Participant will have all
rights of a shareholder with respect to shares of Restricted Stock granted to
him, including the right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto, unless the Committee
determines otherwise at the time the Restricted Stock is granted, as set forth
in the Award Agreement.

8.5.
Section 83(b) Election. The Committee may provide in an Award Agreement
that the Award of Restricted Stock is conditioned upon the Participant
refraining from making an election with respect to the Award under section
83(b) of the Code. Irrespective of whether an Award is so conditioned, if a
Participant makes an election pursuant to section 83(b) of the Code with
respect to an Award of Restricted Stock, the Participant shall be required to
promptly file a copy of such election with the Corporation.

9.     PERFORMANCE
AWARDS

9.1.
Grant of Performance Awards. The Committee may grant Performance Awards
under the Plan, which shall be represented by units denominated on the Date of
Grant either in shares of Common Stock (Performance Shares) or in specified
dollar amounts (Performance Units). The Committee may grant Performance Awards
that are intended to qualify for exemption under Section 162(m), as well as
Performance Awards that are not intended to so qualify. At the time a
Performance Award is granted, the Committee shall determine, in its sole
discretion, one or more performance periods and performance goals to be
achieved during the applicable performance periods, as well as such other
restrictions and conditions as the Committee deems appropriate. In the case of
Performance Units, the Committee shall also determine a target unit value or a
range of unit values for each Award. No performance period 

 7
 

 

shall exceed ten
years from the Date of Grant. The performance goals applicable to a Performance
Award grant may be subject to such later revisions as the Committee shall deem
appropriate to reflect significant unforeseen events such as changes in law,
accounting practices or unusual or nonrecurring items or occurrences. Any such
adjustments shall be subject to such limitations as the Committee deems
appropriate in the case of a Performance Award granted to a Section 162(m)
Participant that is intended to qualify for exemption under Section 162(m).

9.2.
Payment of Performance Awards. At the end of the performance period, the
Committee shall determine the extent to which performance goals have been
attained or a degree of achievement between minimum and maximum levels in order
to establish the level of payment to be made, if any, and shall determine if
payment is to be made in the form of cash or shares of Common Stock (valued at
their Fair Market Value at the time of payment) or a combination of cash and
shares of Common Stock. Payments of Performance Awards shall generally be made
as soon as practicable following the end of the performance period.

9.3.
Performance Criteria. The performance criteria upon which the payment or
vesting of a Performance Award intended to qualify for exemption under Section
162(m) may be based shall be limited to the following business measures, which
may be applied with respect to the Corporation, any Subsidiary or any business
unit, or, if applicable, any Participant, and which may be measured on an
absolute or relative to a peer-group or other market measure basis: total
shareholder return; stock price increase; return on equity; return on capital;
earnings per share; EBIT (earnings before interest and taxes); EBITDA (earnings
before interest, taxes, depreciation and amortization); ongoing earnings; cash
flow (including operating cash flow, free cash flow, discounted cash flow
return on investment, and cash flow in excess of costs of capital); EVA
(economic value added); economic profit (net operating profit after tax, less a
cost of capital charge); SVA (shareholder value added); revenues; net income;
operating income; pre-tax profit margin; performance against business plan;
customer service; corporate governance quotient or rating; market share;
employee satisfaction; safety; employee engagement; supplier diversity;
workforce diversity; operating margins; credit rating; dividend payments;
expenses; fuel cost per million BTU; costs per kilowatt hour; retained
earnings; completion of acquisitions, divestitures and corporate restructurings;
and individual goals based on objective business criteria underlying the goals listed
above and which pertain to individual effort as to achievement of those goals
or to one or more business criteria in the areas of litigation, human
resources, information services, production, inventory, support services, site
development, plant development, building development, facility development,
government relations, product market share or management.  In the case of Performance Awards that are
not intended to qualify for exemption under Section 162(m), the Committee shall
designate performance criteria from among the foregoing or such other business
criteria as it shall determine it its sole discretion.

9.4.
Section 162(m) Requirements. In the case of a Performance Award granted
to a Section 162(m) Participant that is intended to comply with the
requirements for exemption under Section 162(m), the Committee shall make all
determinations necessary to establish a Performance Award within 90 days of the
beginning of the performance period (or such other time period required under
Section 162(m)), including, without limitation, the designation of the Section
162(m) Participants to whom Performance Awards are made, the performance
criteria or criterion applicable to the Award and the performance goals that
relate to such criteria, and the dollar amounts or number of shares of Common
Stock payable upon achieving the applicable performance goals. As and to the
extent required by Section 162(m), the terms of a Performance Award granted to
a Section 162(m) Participant must state, in terms of an objective formula or
standard, the method of computing the amount of compensation payable to the
Section 162(m) Participant, and must preclude discretion to increase the amount
of compensation payable that would otherwise be due under the terms of the
Award, and, prior to the payment of such compensation, the Committee shall have
certified in writing that the applicable performance goal has been satisfied.
The maximum amount of compensation that may be payable under Performance Units
granted to any one Participant during any one calendar year shall not exceed $3,750,000.
The maximum number of Common Stock units that may be subject to a Performance
Share Award granted to any one Participant during any one calendar year shall
be 600,000 share units (subject to adjustment as provided in Section 3.2
hereof).

 8
 

 

10.  PHANTOM
STOCK

10.1. Grant of Phantom Stock. Phantom Stock is
an Award to a Participant of a number of hypothetical share units with respect
to shares of Common Stock, with an initial value based on the Fair Market Value
of the Common Stock on the Date of Grant. Phantom Stock shall be subject to
such restrictions and conditions as the Committee shall determine. On the Date
of Grant, the Committee shall determine, in its sole discretion, the
installment or other vesting period of the Phantom Stock and the maximum value
of the Phantom Stock, if any. No vesting period shall exceed 10 years from the
Date of Grant.

10.2.
Payment of Phantom Stock. Upon the vesting date or dates applicable to
Phantom Stock granted to a Participant, an amount equal to the Fair Market
Value of one share of Common Stock upon such vesting dates (subject to any
applicable maximum value) shall be paid with respect to such Phantom Stock unit
granted to the Participant. Payment may be made, at the discretion of the
Committee, in cash or in shares of Common Stock valued at their Fair Market
Value on the applicable vesting dates, or in a combination thereof.

11.  STOCK
BONUS

11.1. Grant of Stock Bonus. An Award of a Stock
Bonus to a Participant represents a specified number of shares of Common Stock
that are issued without restrictions on transfer or forfeiture conditions. The
Committee may, in connection with an Award of a Stock Bonus, require the
payment of a specified purchase price.

11.2 Payment of Stock Bonus.  In the event that the Committee grants a
Stock Bonus, a certificate for (or book entry representing) the shares of
Common Stock constituting such Stock Bonus shall be issued in the name of the
Participant to whom such grant was made as soon as practicable after the date
on which such Stock Bonus is payable.

12.  DIVIDEND
EQUIVALENTS

12.1. Grant of Dividend Equivalents. A Dividend
Equivalent granted to a Participant is an Award in the form of a right to
receive cash payments determined by reference to dividends declared on the
Common Stock from time to time during the term of the Award, which shall not
exceed 10 years from the Date of Grant. Dividend Equivalents may be granted on
a stand-alone basis or in tandem with other Awards. Dividend Equivalents
granted on a tandem basis shall expire at the time the underlying Award is
exercised or otherwise becomes payable to the Participant, or expires.

12.2.
Payment of Dividend Equivalents. Dividend Equivalent Awards shall be
payable in cash or in shares of Common Stock, valued at their Fair Market Value
on either the date the related dividends are declared or the Dividend
Equivalents are paid to a Participant, as determined by the Committee. Dividend
Equivalents shall be payable to a Participant as soon as practicable following
the time dividends are declared and paid with respect to the Common Stock, or
at such later date as the Committee shall specify in the Award Agreement.
Dividend Equivalents granted with respect to Options shall be payable, in
accordance with the terms and in compliance with section 409A of the Code,
regardless of whether the Option is exercised.

13.  CHANGE
IN CONTROL

13.1.
Effect of Change in Control. The Committee may, in an Award Agreement,
provide for the effect of a Change in Control on an Award. Such provisions may
include any one or more of the following: (i) the acceleration or extension of
time periods for purposes of exercising, vesting in, or realizing gain from any
Award, (ii) the waiver or modification of performance or other conditions
related to the payment or other rights under an Award; (iii) provision for the
cash settlement of an Award for an equivalent cash value, as determined by the
Committee, or (iv) such other modification or adjustment to an Award as the
Committee deems appropriate to maintain and protect the rights and interests of
Participants upon or following a Change in Control.

13.2.
Definition of Change in Control. Except as otherwise provided by the
Committee in an Award Agreement, for purposes hereof, a “Change in Control”
shall be deemed to have occurred upon:

 9
 

 

(a)
an acquisition subsequent to the Effective Date hereof by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of thirty percent (30%) or more of either (A) the then
outstanding shares of Common Stock or (B) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors; excluding, however, the following: (1) any
acquisition directly from the Corporation, other than an acquisition by virtue
of the exercise of a conversion privilege unless the security being so
converted was itself acquired directly from the Corporation, (2) any
acquisition by the Corporation and (3) any acquisition by an employee benefit
plan (or related trust) sponsored or maintained by the Corporation or any
Subsidiary;

(b)
during any period of two (2) consecutive years (not including any period prior
to the Effective Date), individuals who at the beginning of such period
constitute the Board (and any new directors whose election by the Board or
nomination for election by the Corporation’s shareholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was so approved) cease for any reason (except for
death, disability or voluntary retirement) to constitute a majority thereof;

(c) the consummation of a merger, consolidation,
reorganization or similar corporate transaction which has been approved by the
shareholders of the Corporation, whether or not the Corporation is the
surviving corporation in such transaction, other than a merger, consolidation,
or reorganization that would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the combined voting power of
the voting securities of the Corporation (or such surviving entity) outstanding
immediately after such merger, consolidation, or reorganization;

(d)
the consummation of (A) the sale or other disposition of all or substantially
all of the assets of the Corporation or (B) a complete liquidation or
dissolution of the Corporation, which has been approved by the shareholders of
the Corporation (in each case, exclusive of any transactions or events
resulting from the separation of the Corporation’s gas and electric businesses);
or

(e) adoption by the Board of a resolution to the
effect that any person has acquired effective control of the business and
affairs of the Corporation;

provided
that no Change in Control shall be deemed to have occurred in regard to any
transactions contemplated by the Agreement and Plan of Merger dated as of May
8, 2005 by and among Duke Energy Corporation, Cinergy Corp., Deer Holding
Corp., Deer Acquisition Corp. and Cougar Acquisition Corp., as it may be
amended.

14.  AWARD
AGREEMENTS

14.1. Form of Agreement. Each Award under this
Plan shall be evidenced by an Award Agreement in a form approved by the
Committee setting forth the number of shares of Common Stock, units or other
rights (as applicable) subject to the Award, the exercise, base or purchase
price (if any) of the Award, the time or times at which an Award will become
vested, exercisable or payable, the duration of the Award and, in the case of
Performance Awards, the applicable performance criteria and goals. The Award
Agreement shall also set forth other material terms and conditions applicable
to the Award as determined by the Committee consistent with the limitations of
this Plan. Award Agreements evidencing Awards intended to qualify for exemption
under Section 162(m) shall contain such terms and conditions as may be
necessary to meet the applicable requirements of Section 162(m). Award
Agreements evidencing Incentive Stock Options shall contain such terms and
conditions as may be necessary to meet the applicable provisions of section 422
of the Code.

14.2.
Termination of Service. The Award Agreements may include provisions
describing the treatment of an Award in the event of the retirement,
disability, death or other termination of a Participant’s employment with or
other services to the Corporation and all Subsidiaries, such as provisions
relating to the vesting, exercisability, 

 10
 

 

acceleration,
forfeiture or cancellation of the Award in these circumstances, including any
such provisions as may be appropriate for Incentive Stock Options as described
in Section 6.6(b) hereof.

14.3.
Forfeiture Events. The Committee may specify in an Award Agreement that
the Participant’s rights, payments and benefits with respect to an Award shall
be subject to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. Such events shall include, but
shall not be limited to, termination of employment for cause, violation of
material Corporation or Subsidiary policies, breach of noncompetition,
confidentiality or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the
business or reputation of the Corporation or any Subsidiary.

14.4.
Contract Rights; Amendment. Any obligation of the Corporation to any
Participant with respect to an Award shall be based solely upon contractual
obligations created by an Award Agreement. No Award shall be enforceable until
the Award Agreement has been signed on behalf of the Corporation (electronically
or otherwise) by its authorized representative and acknowledged by the
Participant (electronically or otherwise) and returned to the Corporation. By
executing the Award Agreement, a Participant shall be deemed to have accepted
and consented to the terms of this Plan and any action taken in good faith
under this Plan by and within the discretion of the Committee, the Board or
their delegates. Award Agreements covering outstanding Awards may be amended or
modified by the Committee in any manner that may be permitted for the grant of
Awards under the Plan, subject to the consent of the Participant to the extent
provided in the Award Agreement. In
accordance with such procedures as the Corporation may prescribe, a Participant
may sign or otherwise execute an Award Agreement and may consent to amendments
of modifications of Award Agreements covering outstanding Awards by electronic
means.

15.  GENERAL
PROVISIONS

15.1. No Assignment or Transfer; Beneficiaries.
Except as provided in Section 6.5 hereof, Awards under the Plan shall not be
assignable or transferable, except by will or by the laws of descent and
distribution, and during the lifetime of a Participant the Award shall be
exercised only by such Participant or by his guardian or legal representative.
Notwithstanding the foregoing, the Committee may provide in the terms of an
Award Agreement that the Participant shall have the right to designate a
beneficiary or beneficiaries who shall be entitled to any rights, payments or
other specified benefits under an Award following the Participant’s death.

15.2.
Deferrals of Payment. The Committee may permit a Participant to defer
the receipt of payment of cash or delivery of shares of Common Stock that would
otherwise be due to the Participant by virtue of the exercise of a right or the
satisfaction of vesting or other conditions with respect to an Award. If any
such deferral is to be permitted by the Committee, the Committee shall
establish the rules and procedures relating to such deferral, including, without
limitation, the period of time in advance of payment when an election to defer
may be made, the time period of the deferral and the events that would result
in payment of the deferred amount, the interest or other earnings attributable
to the deferral and the method of funding, if any, attributable to the deferred
amount. Unless otherwise expressly agreed between the Participant and the Corporation,
any such deferral shall be effected in accordance with the requirements of
section 409A of the Code so as to avoid any imposition of a tax under section
409A of the Code.

15.3.
Rights as Shareholder. A Participant shall have no rights as a holder of
Common Stock with respect to any unissued securities covered by an Award until
the date the Participant becomes the holder of record of those securities.
Except as provided in Section 3.2 or Section 8.4 hereof, no adjustment or other
provision shall be made for dividends or other shareholder rights, except to
the extent that the Award Agreement provides for Dividend Equivalents, dividend
payments or similar economic benefits.

15.4.
Employment or Service. Nothing in the Plan, in the grant of any Award or
in any Award Agreement shall confer upon any Eligible Person the right to
continue in the capacity in which he is employed by or otherwise serves the
Corporation or any Subsidiary.

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15.5.
Securities Laws. No shares of Common Stock will be issued or transferred
pursuant to an Award unless and until all then applicable requirements imposed
by federal and state securities and other laws, rules and regulations and by
any regulatory agencies having jurisdiction, and by any stock exchanges upon
which the Common Stock may be listed, have been fully met. As a condition
precedent to the issuance of shares pursuant to the grant or exercise of an
Award, the Corporation may require the Participant to take any reasonable
action to meet such requirements. The Committee may impose such conditions on
any shares of Common Stock issuable under the Plan as it may deem advisable,
including, without limitation, restrictions under the Securities Act of 1933,
as amended, under the requirements of any stock exchange upon which such shares
of the same class are then listed, and under any blue sky or other securities
laws applicable to such shares.

15.6.
Tax Withholding. The Participant shall be responsible for payment of any
taxes or similar charges required by law to be withheld from an Award or an
amount paid in satisfaction of an Award, which shall be paid by the Participant
on or prior to the payment or other event that results in taxable income in
respect of an Award. The Award Agreement shall specify the manner in which the
withholding obligation shall be satisfied with respect to the particular type
of Award, provided that, if shares of Common Stock are withheld from delivery
upon exercise of an Option or a Stock Appreciation Right, the Fair Market Value
of the shares withheld shall not exceed, as of the time the withholding occurs,
the minimum amount of tax for which withholding is required.

15.7.
Unfunded Plan. The adoption of this Plan and any setting aside of cash
amounts or shares of Common Stock by the Corporation with which to discharge
its obligations hereunder shall not be deemed to create a trust or other funded
arrangement. The benefits provided under this Plan shall be a general,
unsecured obligation of the Corporation payable solely from the general assets
of the Corporation, and neither a Participant nor the Participant’s permitted
transferees or estate shall have any interest in any assets of the Corporation
by virtue of this Plan, except as a general unsecured creditor of the
Corporation. Notwithstanding the foregoing, the Corporation shall have the
right to implement or set aside funds in a grantor trust subject to the claims
of the Corporation’s creditors to discharge its obligations under the Plan.

15.8.
Other Compensation and Benefit Plans. The adoption of the Plan shall not
affect any other stock incentive or other compensation plans in effect for the
Corporation or any Subsidiary, nor shall the Plan preclude the Corporation from
establishing any other forms of stock incentive or other compensation for
employees of the Corporation or any Subsidiary. The amount of any compensation
deemed to be received by Participant pursuant to an Award shall not constitute
compensation with respect to which any other employee benefits of such
Participant are determined, including, without limitation, benefits under any
bonus, pension, profit sharing, life insurance or salary continuation plan,
except as otherwise specifically provided by the terms of such plan.

15.9.
Plan Binding on Successors. The Plan shall be binding upon the
Corporation, its successors and assigns, and the Participant, his executor,
administrator and permitted transferees and beneficiaries.

15.10.
Construction and Interpretation. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.

15.11.
Severability. If any provision of the Plan or any Award Agreement shall
be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable
and enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.

15.12.
Governing Law. The validity and construction of this Plan and of the
Award Agreements shall be governed by the laws of the State of Delaware.

15.13.
Non-U.S. Employees. In order to facilitate
the making of any grant or
combination of grants
under this Plan, the Committee may provide for such special terms for awards to
Participants who are foreign
nationals, who are employed by the Corporation or any Subsidiary outside of the
United States of America or who provide services to the Corporation under an
agreement with a foreign
nation or agency, as the Committee may consider necessary or appropriate to
accommodate differences in local law, tax policy or custom.  Moreover, the Committee may approve 

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such supplements
to, or amendments, restatements or alternative versions of, this Plan as it may
consider necessary or appropriate for such purposes without thereby affecting
the terms of this Plan as in effect for any other purpose, and the Secretary or
other appropriate officer of the Corporation may certify any such document as
having been approved and adopted in the same manner as this Plan. No such
special terms, supplements, amendments or restatements shall include any
provisions that are inconsistent with the terms of this Plan as then in effect
unless this Plan could have been amended to eliminate such inconsistency
without further approval by the shareholders of the Corporation.

15.14.
Compliance with Section 409A
of the Code.  This Plan is intended to comply and shall be
administered in a manner that is intended to comply with section 409A of the Code and shall
be construed and interpreted in accordance with such intent. To the extent that
an Award, issuance and/or payment is subject to section 409A of the Code, it shall be awarded and/or issued or
paid in a manner that will comply with section 409A of the Code, including proposed, temporary or
final regulations or any other guidance issued by the Secretary of the Treasury
and the Internal Revenue Service with respect thereto.  Any provision of this Plan that would cause
an Award, issuance and/or payment to fail to satisfy section 409A of the Code shall have no force and effect until
amended to comply with Code section 409A
(which amendment may be retroactive to the extent permitted by applicable law).

16.  EFFECTIVE
DATE, TERMINATION AND AMENDMENT

16.1. Effective Date; Shareholder Approval. The
Effective Date of the Plan shall be the date on which the Plan is approved by
the Board (provided that, to the extent the Plan is not approved by the
shareholders of the Corporation within 12 months after the Effective Date, any
Award that at the time of grant was intended to be an Incentive Stock Option
shall be a Nonqualified Stock Option).

16.2.
Termination. The Plan shall terminate on the date immediately preceding
the tenth anniversary of the date the Plan is adopted by the Board. The Board
may, in its sole discretion and at any earlier date, terminate the Plan.
Notwithstanding the foregoing, no termination of the Plan shall in any manner
affect any Award theretofore granted without the consent of the Participant or
the permitted transferee of the Award.

16.3.
Amendment. The Board may at any time and from time to time and in any
respect, amend or modify the Plan; provided, however, that no amendment or
modification of the Plan shall be effective without the consent of the
Corporation’s shareholders that would (i) change the class of Eligible Persons
under the Plan, (ii) increase the number of shares of Common Stock reserved for
issuance under the Plan or for certain types of Awards under Section 3.1
hereof, or (iii) allow the grant of SARs or Options at an exercise price below
Fair Market Value, or allow the repricing of SARs or Options without
shareholder approval. In addition, the Board may seek the approval of any
amendment or modification by the Corporation’s shareholders to the extent it
deems necessary or advisable in its sole discretion for purposes of compliance
with Section 162(m) or section 422 of the Code, the listing requirements of the
New York Stock Exchange or for any other purpose. No amendment or modification
of the Plan shall in any manner affect any Award theretofore granted without
the consent of the Participant or the permitted transferee of the Award.

IN WITNESS OF its adoption by the Board on October 24, 2006, this Plan
is executed on behalf of the Corporation this 26th day of October, 2006.

	
  

  	
  DUKE ENERGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher C. Rolfe

  
	
   

  	
   

  	
  Christopher C. Rolfe

  
	
   

  	
   

  	
  Group Executive, Chief Administrative Officer

  

 

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