Document:

Ex-10.1 Employment Agreement

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT dated as of February 3, 2003, by and between
PIEDMONT NATURAL GAS COMPANY, INC., a North Carolina corporation (the
“Corporation”), and, KIM R. COCKLIN, (the “Officer”).

W I T N E S S E T H:

     WHEREAS, the Board of Directors of the Corporation has determined that the
continued retention of the services of the Officer on a long-term basis as
described herein is in the best interest of the Corporation in that (a) it
promotes the stability of senior management of the Corporation; (b) it enables
the Corporation to obtain and retain the services of a well-qualified executive
officer with extensive contacts in the natural gas industry; and (c) it secures
the continued services of the Officer notwithstanding any change in control of
the Corporation; and

     WHEREAS, the services of the Officer, his experience and knowledge of the
Corporation’s industry, and his reputation and contacts in the Corporation’s
industry are valuable to the Corporation; and

     WHEREAS, the Corporation considers the establishment and maintenance of a
sound and vital management to be part of its overall corporate strategy and to
be essential to protecting and enhancing the best interests of the Corporation
and its stockholders; and

     WHEREAS, the parties desire to enter into this Agreement in order to
clearly set forth the terms and conditions of the Officer’s employment
relationship with the Corporation; and

     WHEREAS, contemporaneous with this Agreement, the parties have entered
into a Severance Agreement (the “Severance Agreement”), which sets forth
certain rights and obligations of the Officer and certain rights and
obligations of the Corporation in the event of a “Potential Change of Control”
(as defined in the Severance Agreement) or following a “Change in Control” (as
defined in the Severance Agreement). Use of the phrases “Potential Change of
Control” and “Change in Control” herein shall have the meanings ascribed to
those phrases in the Severance Agreement.

     NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereby agree as follows:

     1.     Employment. The Corporation hereby employs the Officer and the Officer
hereby accepts such employment, upon the terms and conditions stated herein, as
Senior Vice President and General Counsel of the Corporation. The Officer
shall render such administrative and management services to the Corporation as
are customarily performed by persons situated in a similar executive capacity.
The Officer shall promote the business of the Corporation and perform such
other duties as shall from time to time be reasonably prescribed by the
Directors or the Chief Executive Officer of the Corporation. It is understood
that the Officer’s continued election as an officer of the Corporation is
dependent upon action by the Board of Directors of the Corporation from time to
time and that, subject to the provisions of Section 7 of this Agreement, the
Officer’s title and/or duties may change from time to time; provided that
following a Change in Control and during the term of

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 the Severance Agreement any action affecting a change in title and/or
duties shall be subject to the Severance Agreement.

     2.     Base Salary. The Corporation shall pay the Officer during the term of
this Agreement as compensation for all services rendered by him to the
Corporation a base salary in such amounts and at such intervals as shall be
commensurate with his duties and responsibilities hereunder. Initially such
base salary shall be at the rate of $235,000 per year. The Officer’s base
salary may be increased from time to time to reflect the duties required of the
Officer. In reviewing the Officer’s base salary, the Board of Directors of the
Corporation shall consider the overall performance of the Corporation, the
overall performance of the Officer and the service of the Officer rendered to
the Corporation and its subsidiaries and changes in the cost of living. The
Board of Directors may also provide for performance or merit increases.
Participation by Officer in any incentive, deferred compensation, stock option,
stock purchase, bonus, pension, life insurance or other employee benefit plans
which may be offered by the Corporation from time to time and participation in
any fringe benefits provided by the Corporation shall not cause a reduction of
the base salary payable to the Officer. The Officer will be entitled to such
customary fringe benefits, vacation and sick leave as are consistent with the
normal practices and established policies of the Corporation.

     3.     Participation in Incentive, Retirement and Employee Benefit Plans;
Fringe Benefits. The Officer shall be entitled to participate in any plan
relating to incentive compensation, stock options, stock purchase, pension,
thrift, profit sharing, group life insurance, medical coverage, disability
coverage, education, or other retirement or employee benefits that the
Corporation has adopted, or may from time to time adopt, for the benefit of its
executive employees and for employees generally, subject to the eligibility
rules of such plans.

     The Officer shall also be entitled to participate in any other fringe
benefits which are now or may be or become applicable to the Corporation’s
executive employees, including the payment of reasonable expenses for attending
annual and periodic meetings of trade associations, and any other benefits
which are commensurate with the duties and responsibilities to be performed by
the Officer under this Agreement. Additionally, the Officer shall be entitled
to such vacation and sick leave as shall be established under uniform employee
policies promulgated by the Board of Directors. The Corporation shall
reimburse the Officer for all out-of-pocket reasonable and necessary business
expenses which the Officer may incur in connection with his service on behalf
of the Corporation.

     4.     Term. The initial term of employment under this Agreement shall be for
a one-year period commencing February 3, 2003; provided that this Agreement
shall automatically be extended to a full one-year period on each successive
day during the term of this Agreement. The effect hereof shall be that the
Agreement shall at all times remain subject to a term of one year, unless (i)
written notice has been given that the Agreement shall not be extended as
provided in this Section 4, or (ii) the Agreement is terminated pursuant to
Section 7. If written notice from the Corporation or the Officer is delivered
to the other party advising the other party that this Agreement is not to be
further extended, then upon such notice, the Agreement shall terminate on the
anniversary of the date of notice. Provided, further, no extension shall cause
this Agreement to extend beyond the date on which the Officer reaches 65 years
of age. Upon any extension, the base salary of the extended agreement shall be
the base salary in effect on the effective date of such extension.

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     5.     Loyalty; Noncompetition

		
	 	     (a) The Officer shall devote his best efforts to the performance of his
duties and responsibilities under this Agreement.

		
	 	     (b) During the term of this Agreement, or any renewals hereof, the Officer
agrees he will not, own, manage, operate, join, control or participate in the
management, operation or control of, or be employed by or connected in any
manner with any business which competes with the Corporation or any of its
subsidiary corporations without the prior written consent of the Corporation.
Notwithstanding the foregoing, the Officer shall be free, without such consent,
to purchase or hold as an investment or otherwise, up to five percent of the
outstanding stock or other securities of any corporation which has its
securities publicly traded on any recognized securities exchange or in any
established over-the-counter market.

		
	 	     The Officer shall hold in confidence all knowledge or information of a
confidential nature with respect to the business of the Corporation or any
subsidiary of the Corporation received by him during the term of this Agreement
and will not disclose or make use of such information without the prior written
consent of the Corporation.

		
	 	     The Officer acknowledges that it would not be possible to ascertain the
amount of monetary damages in the event of a breach by the Officer under the
provisions of this Section 5 and agrees that, in the event of a breach of this
Section, injunctive relief enforcing the terms of this Section is an
appropriate remedy.

     6.     Standards. The Officer shall perform his duties and responsibilities
under this Agreement in accordance with such reasonable standards expected of
employees with comparable positions in comparable organizations and as may be
established from time to time by the Board of Directors. The Corporation will
provide the Officer with the working facilities and staff customary for similar
executives and necessary for him to perform his duties.

     7.     Termination and Termination Pay.

		
	 	     (a) Change of Control. Following a Change in Control and during the term
of the Severance Agreement, this Agreement shall become null and void except
with respect to any rights or obligations accruing prior to the Change in
Control and the rights and obligations of the Officer and the Company,
including any termination of the Officer, shall be subject to the provisions of
the Severance Agreement.

		
	 	     (b) By Death. The Officer’s employment under this Agreement shall be
terminated upon the death of the Officer during the term of this Agreement, in
which event the Officer’s estate shall be entitled to receive all compensation
due the Officer through the last day of the calendar month in which his death
shall have occurred.

		
	 	     (c) By Total Disability. Except for that period of time following a
Change in Control and during the term of the Severance Agreement, the Officer’s
employment under this Agreement shall be terminated upon the total permanent
disability of the Officer during the term of

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	 	this Agreement, in which event the Officer shall receive all compensation,
including bonuses, through the date of determination of such disability and for
a period of 90 days thereafter. For purposes of this Section, the Officer
shall be deemed to have suffered permanent disability upon the determination of
such status by the United States Social Security Administration or a
certification to such effect by the Officer’s regular physician.

		
	 	     (d) By Officer. Except as provided in Section 4 of the Severance
Agreement, the Officer’s employment under this Agreement may be terminated at
any time by the Officer upon 60 days’ written notice to the Board of Directors.
Upon such termination, the Officer shall be entitled to receive all
compensation, including bonuses, through the effective date of such
termination.

		
	 	     (e) By Corporation. Except for that period of time following a Change of
Control and during the term of the Severance Agreement, the Board of Directors
may terminate the Officer’s employment at any time, but any such termination by
the Board of Directors, other than termination for cause, shall not prejudice
the Officer’s right to continue to receive payment of all compensation and the
continuance of benefits for a period of 12 months from the effective date of
termination or until such time as the Officer reaches 65 years of age
(whichever is less) as provided below. The Officer shall have no right to
receive compensation or other benefits (other than vested benefits) for any
period after “termination for cause.” Termination for cause shall mean
termination because of the Officer’s personal dishonesty, incompetence, willful
material misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful material violation of a
law, rule or regulation (other than traffic or traffic-related violations or
similar offenses) or final cease-and-desist order, or material breach of any
provisions of this Agreement.

		
	 	     (f) Costs and Expenses. In the event any dispute shall arise between the
Officer and the Corporation as to the terms or interpretation of this
Agreement, including this Section 7, whether instituted by formal legal
proceedings or otherwise, including any action taken by Officer to enforce the
terms of this Section 7 or in defending against any action taken by the
Corporation, the Corporation shall reimburse the Officer for all costs and
expenses, proceedings or actions in the event the Officer prevails in any such
action.

     8.     Successors and Assigns.

		
	 	     (a) This Employment Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Corporation that shall acquire,
directly or indirectly, by conversion, merger, consolidation, purchase or
otherwise, all or substantially all of the assets of the Corporation.

		
	 	     (b) Since the Corporation is contracting for the unique and personal
skills of the Officer, the Officer shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Corporation.

     9.     Modification; Waiver; Amendments. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing, signed by the Officer and on behalf of the Corporation
by such officer as may be specifically

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 designated by the Board of Directors. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No amendments or additions to
this Agreement shall be binding unless in writing and signed by both parties,
except as herein otherwise provided. Any modification, waiver or amendment
shall be made consistent with the terms and conditions of the Severance
Agreement.

     10.     Applicable Law. This Agreement shall be governed in all respects
whether as to validity, construction, capacity, performance or otherwise, by
the laws of North Carolina.

     11.     Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first hereinabove written.

	 	 	 
	 	 	
CORPORATION:
	ATTEST:	 	
Piedmont Natural Gas Company, Inc.
	 	 	 
	/s/ Martin C. Ruegsegger

Secretary	 	
 
	 	 	
By: /s/ Thomas E. Skains
	 	 	

	 	 	
Thomas E. Skains

President & COO
	 	 	 
	 	 	
OFFICER:
	 	 	 
	(SEAL)	 	
By: /s/ Kim R. Cocklin
	 	 	

	 	 	
Kim R. Cocklin

Address: 1904 Griffith Place W

Owensboro, KY 42301

Employment Agreement reviewed and approved by the Board of Directors this 14th
Day of January, 2003.

	 	 	 
	 	 	
By: /s/ John W. Harris
	 	 	

	 	 	
John W. Harris

Chairman of Compensation Committee

5Ex-10.2 Severance Agreement

 

Exhibit 10.2

SEVERANCE AGREEMENT

     THIS AGREEMENT, dated February 3, 2003, is made by and between PIEDMONT
NATURAL GAS COMPANY, INC., a North Carolina corporation (the “Company”), and
KIM R. COCKLIN (the “Executive”).

     WHEREAS, the Company considers it essential to the best interests of its
shareholders to foster the continued employment of key management personnel;
and

     WHEREAS, the Board of the Company recognizes that, as is the case with
many publicly held corporations, the possibility of a Change in Control exists
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders; and

     WHEREAS, the Board has determined that appropriate steps should be taken
to reinforce and encourage the continued attention and dedication of members of
the Company’s management, including the Executive, to their assigned duties
without distraction in the face of potentially disturbing circumstances arising
from the possibility of a Change in Control; and

     WHEREAS, contemporaneous with this Agreement, the Company and the
Executive have entered into an Employment Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:

     1.     Defined Terms. The definitions of capitalized terms used in this
Agreement are provided in the last Section hereof.

     2.     Term of Agreement. The Term of this Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2003; provided,
however, that commencing on January 1, 2004 and each January 1 thereafter, the
Term shall automatically be extended for one additional year unless, not later
than fifteen (15) months prior to the applicable January 1, the Company or the
Executive shall have given notice not to extend the Term; and further provided,
however, that if a Change in Control shall have occurred during the Term, the
Term shall expire at the end of the thirty-sixth (36th) calendar month after
the calendar month in which such Change in Control occurred. For example, if a
Change in Control were to occur on July 1, 2003, the Term of this Agreement
would expire on June 30, 2006, and if a Change in Control were to occur on July
1, 2006, the Term of this Agreement would expire on June 30, 2009 (regardless
of whether on or before September 30, 2003 either party had given notice to the
other party not to extend the Term as provided above).

     3.     Company’s Covenants Summarized. In order to induce the
Executive to remain in
the employ of the Company and in consideration of the Executive’s covenants set
forth in Section 4

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hereof, the Company agrees, under the conditions described herein, to pay the
Executive the Severance Payments and the other payments and benefits described
herein. Except as provided in Section 9.1 hereof, no Severance Payments shall
be payable under this Agreement unless there shall have been (or, under the
terms of the second sentence of Section 6.1 hereof, there shall be deemed to
have been) a termination of the Executive’s employment with the Company
following a Change in Control and during the Term. This Agreement shall not be
construed as creating an express or implied contract of employment and, except
as otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the Company.

     4.     The Executive’s Covenants. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Potential Change in
Control during the Term, the Executive will remain in the employ of the Company
until the earliest of (i) a date which is twelve (12) months from the date of
such Potential Change of Control, (ii) the date of a Change in Control, (iii)
the date of termination by the Executive of the Executive’s employment for Good
Reason or by reason of death, Disability or Retirement, or (iv) the termination
by the Company of the Executive’s employment for any reason. Should the
Executive fail to comply with the provisions of this paragraph 4, the Company’s
sole remedy shall be to deny the payment of any Severance Payments to the
Executive.

     5.     Compensation Other Than Severance Payments.

		
	 	     5.1 Following a Change in Control and during the Term, during any period
that the Executive fails to perform the Executive’s full-time duties with the
Company as a result of incapacity due to physical or mental illness, the
Company shall pay the Executive’s full salary to the Executive at the rate in
effect at the commencement of any such period, together with all compensation
and benefits payable to the Executive under the terms of any compensation,
benefit or incentive plan, program or arrangement maintained by the Company
during such period, until the Executive’s employment is terminated by the
Company for Disability.

		
	 	     5.2 If the Executive’s employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay the
Executive’s full salary to the Executive through the Date of Termination at the
rate in effect immediately prior to the Date of Termination or, if higher, the
rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company’s executive compensation, benefit and incentive plans,
programs or arrangements as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as in effect immediately
prior to the first occurrence of an event or circumstance constituting Good
Reason.

		
	 	     5.3 If the Executive’s employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay to the
Executive the Executive’s normal post-termination compensation and benefits as
such payments become due, including in a

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	 	lump sum in cash that portion of the Executive’s vacation pay vested and
accrued but not paid. Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company’s long-term
incentive stock plan, pension, supplemental retirement, insurance and other
executive compensation, benefit or incentive plans, programs and arrangements
as in effect immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the occurrence of the first
event or circumstance constituting Good Reason.

     6.     Severance Payments.

		
	 	     6.1 Subject to Section 6.2 hereof, if the Executive’s employment is
terminated following a Change in Control and during the Term, other than (A) by
the Company for Cause, (B) by reason of death or Disability, or (C) by the
Executive without Good Reason (including Retirement by the Executive), then the
Company shall pay the Executive the amounts, and provide the Executive the
benefits, described in this Section 6.1 (“Severance Payments”), in addition to
any payments and benefits to which the Executive is entitled under Section 5
hereof. For purposes of this Agreement, the Executive’s employment shall be
deemed to have been terminated following a Change in Control by the Company
without Cause or by the Executive with Good Reason, if (i) the Executive’s
employment is terminated by the Company without Cause prior to a Change in
Control (whether or not a Change in Control ever occurs) and such termination
was at the request or direction of a Person who has entered into an agreement
with the Company the consummation of which would constitute a Change in
Control, (ii) the Executive terminates his employment for Good Reason prior to
a Change in Control (whether or not a Change in Control ever occurs) and the
circumstance or event which constitutes Good Reason occurs at the request or
direction of such Person, or (iii) the Executive’s employment is terminated by
the Company without Cause or by the Executive for Good Reason and such
termination or the circumstance or event which constitutes Good Reason is
otherwise in connection with or in anticipation of a Change in Control (whether
or not a Change in Control ever occurs). For purposes of any determination
regarding the applicability of the immediately preceding sentence, any position
taken by the Executive shall be presumed to be correct unless the Company
establishes by clear and convincing evidence that such position is not correct.

		
	 	     (A) In lieu of any further salary payments to the Executive for periods
subsequent to the Date of Termination and in lieu of any severance benefit
otherwise payable to the Executive, the Company shall pay to the Executive a
lump sum severance payment, in cash, equal to 3.00 times the sum of (i) the
Executive’s annual base salary as in effect immediately prior to the Date of
Termination or, if higher, in effect immediately prior to the first occurrence
of an event or circumstance constituting Good Reason and (ii) an amount equal
to the average of the Executive’s annual W-2 Compensation for the three years
ending on the last day of the month prior to the Date of Termination.

		
	 	     (B) For the 36-month period immediately following the Date of Termination,
the Company shall arrange to provide the Executive and his dependents life,
disability, accident and health insurance benefits substantially similar to
those provided to the Executive and his dependents immediately prior to the
Date of Termination or, if more favorable to the Executive,

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	 	those provided to the Executive and his dependents immediately prior to
the first occurrence of an event or circumstance constituting Good Reason, at
no greater cost to the Executive than the cost to the Executive immediately
prior to such date or occurrence; provided, however, that, unless the Executive
consents to a different method (after taking into account the effect of such
method on the calculation of “parachute payments” pursuant to Section 6.2
hereof), such health insurance benefits shall be provided through a third-party
insurer. Benefits otherwise receivable by the Executive pursuant to this
Section 6.1(B) shall be reduced to the extent benefits of the same type are
received by or made available to the Executive during the 36-month period
following the Executive’s termination of employment (and any such benefits
received by or made available to the Executive shall be reported to the Company
by the Executive); provided, however, that the Company shall reimburse the
Executive for the excess, if any, of the cost of such benefits to the Executive
over such cost immediately prior to the Date of Termination or, if more
favorable to the Executive, the first occurrence of an event or circumstance
constituting Good Reason. If the Severance Payments shall be decreased pursuant
to Section 6.2 hereof, and the Section 6.1(B) benefits which remain payable
after the application of Section 6.2 hereof are thereafter reduced pursuant to
the immediately preceding sentence, the Company shall, no later than five (5)
business days following such reduction, pay to the Executive the least of (a)
the amount of the decrease made in the Severance Payments pursuant to Section
6.2 hereof, (b) the amount of the subsequent reduction in these Section 6.1(B)
benefits, or (c) the maximum amount which can be paid to the Executive without
being, or causing any other payment to be, nondeductible by reason of section
280G of the Code.

		
	 	     6.2 (A) Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by the Executive
in connection with a Change in Control or the termination of the Executive’s
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person)
(all such payments and benefits, including the Severance Payments, being
hereinafter called “Total Payments”) would not be deductible (in whole or
part), by the Company, an affiliate or Person making such payment or providing
such benefit as a result of section 280G of the Code, then, to the extent
necessary to make such portion of the Total Payments deductible (and after
taking into account any reduction in the Total Payments provided by reason of
section 280G of the Code in such other plan, arrangement or agreement), the
cash Severance Payments shall first be reduced (if necessary, to zero), and all
other Severance Payments shall thereafter be reduced (if necessary, to zero);
provided, however, that the Executive may elect to have the noncash Severance
Payments reduced (or eliminated) prior to any reduction of the cash Severance
Payments.

		
	 	     (B) For purposes of this limitation, (i) no portion of the Total Payments
the receipt or enjoyment of which the Executive shall have waived at such time
and in such manner as not to constitute a “payment” within the meaning of
section 280G(b) of the Code shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of tax counsel
(“Tax Counsel”) reasonably acceptable to the Executive and selected by the
accounting firm which was, immediately prior to the Change in Control, the
Company’s independent auditor (the “Auditor”), does not constitute a “parachute
payment” within the meaning of section 280G(b)(2) of

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	 	the Code, including by reason of section 280G(b)(4)(A) of the Code, (iii)
the Severance Payments shall be reduced only to the extent necessary so that
the Total Payments (other than those referred to in clauses (i) or (ii)) in
their entirety constitute reasonable compensation for services actually
rendered within the meaning of section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions by reason of section 280G
of the Code, in the opinion of Tax Counsel, and (iv) the value of any noncash
benefit or any deferred payment or benefit included in the Total Payments shall
be determined by the Auditor in accordance with the principles of sections
280G(d)(3) and (4) of the Code.

		
	 	     (C) If it is established pursuant to a final determination of a court or
an Internal Revenue Service proceeding that, notwithstanding the good faith of
the Executive and the Company in applying the terms of this Section 6.2, the
Total Payments paid to or for the Executive’s benefit are in an amount that
would result in any portion of such Total Payments being subject to the Excise
Tax under Section 4999 of the Code, then, if such repayment would result in (i)
no portion of the remaining Total Payments being subject to the Excise Tax and
(ii) a dollar-for-dollar reduction in the Executive’s taxable income and wages
for purposes of federal, state and local income and employment taxes, the
Executive shall have an obligation to pay the Company upon demand an amount
equal to the sum of (i) the excess of the Total Payments paid to or for the
Executive’s benefit over the Total Payments that could have been paid to or for
the Executive’s benefit without any portion of such Total Payments being
subject to the Excise Tax; and (ii) interest on the amount set forth in clause
(i) of this sentence at the rate provided in section 1274(b)(2)(B) of the Code
from the date of the Executive’s receipt of such excess until the date of such
payment.

		
	 	     6.3 The payments provided in subsection (A) of Section 6.1 hereof shall be
made not later than the fifth day following the Date of Termination; provided,
however, that if the amounts of such payments, and the limitation on such
payments set forth in Section 6.2 hereof, cannot be finally determined on or
before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Company of the minimum amount of
such payments to which the Executive is clearly entitled and shall pay the
remainder of such payments (together with interest on the unpaid remainder (or
on all such payments to the extent the Company fails to make such payments when
due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at 120% of the rate provided in section 1274(b)(2)(B)
of the Code). At the time that payments are made under this Agreement, the
Company shall provide the Executive with a written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from Tax Counsel, the Auditor or other advisors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement).

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     7.     Termination Procedures and Compensation During Dispute.

		
	 	     7.1 Notice of Termination. After a Change in Control and during the Term,
any purported termination of the Executive’s employment (other than by reason
of death) shall be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a “Notice of Termination” shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the
provision so indicated. Further, a Notice of Termination for Cause is required
to include a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board that was called and held for the purpose of considering
such termination (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive’s counsel, to be heard before
the Board) finding that, in the good faith opinion of the Board, the Executive
was guilty of conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail.

		
	 	     7.2 Date of Termination. “Date of Termination” with respect to any
purported termination of the Executive’s employment after a Change in Control
and during the Term, shall mean (i) if the Executive’s employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive’s duties during such thirty (30) day period), and (ii) if the
Executive’s employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given).

		
	 	     7.3 Dispute Concerning Termination. If within fifteen (15) days after any
Notice of Termination is given, or, if later, prior to the Date of Termination
(as determined without regard to this Section 7.3), the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be extended until the earlier of
(i) the date on which the Term ends or (ii) the date on which the dispute is
finally resolved, either by mutual written agreement of the parties or by a
final judgment, order or decree of an arbitrator or a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
however, that the Date of Termination shall be extended by a notice of dispute
given by the Executive only if such notice is given in good faith and the
Executive pursues the resolution of such dispute with reasonable diligence.

		
	 	     7.4 Compensation During Dispute. If a purported termination occurs
following a Change in Control and during the Term and the Date of Termination
is extended in accordance with Section 7.3 hereof, the Company shall continue
to pay the Executive the full compensation in effect

6

 

		
	 	when the notice giving rise to the dispute was given (including, but not
limited to, salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until the
Date of Termination, as determined in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts due
under this Agreement (other than those due under Section 5.2 hereof) and shall
not be offset against or reduce any other amounts due under this Agreement.

     8.     No Mitigation. The Company agrees that, if the Executive’s employment
with the Company terminates during the Term, the Executive is not required to
seek other employment or to attempt in any way to reduce any amounts payable to
the Executive by the Company pursuant to Section 6 hereof or Section 7.4
hereof. Further, the amount of any payment or benefit provided for in this
Agreement (other than Section 6.1(B) hereof) shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.

     9.     Successors; Binding Agreement.

		
	 	     9.1 In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive’s employment for
Good Reason after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.

		
	 	     9.2 This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to the executors, personal representatives or administrators of the Executive’s
estate.

     10.     Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to
the Executive, to the address inserted below the Executive’s signature on the
final page hereof and, if to the Company, to the address set forth below, or to
such other address as either

7

 

 party may have furnished to the other in writing in accordance herewith,
except that notice of change of address shall be effective only upon actual
receipt:

	 	 	 
	 	 	
To the Company:
	 
	 	 	
Piedmont Natural Gas Company, Inc.

P.O. Box 33068

Charlotte, North Carolina 28233
	 	 	 
	 	 	
Attention: Corporate Secretary

     11.     Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement supersedes any
other agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof which have been made by either party;
provided, however, that this Agreement shall supersede any agreement setting
forth the terms and conditions of the Executive’s employment with the Company
only in the event that the Executive’s employment with the Company is
terminated on or following a Change in Control (i) by the Company other than
for Cause or (ii) by the Executive for Good Reason. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of North Carolina. All references to sections
of the Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law
and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under this Agreement which by
their nature may require either partial or total performance after the
expiration of the Term (including, without limitation, those under Sections 6
and 7 hereof) shall survive such expiration.

     12.     Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

     13.     Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

     14.     Settlement of Disputes; Arbitration.

		
	 	     14.1 All claims by the Executive for benefits under this Agreement shall
be directed to and determined by the Board and shall be in writing. Any denial
by the Board of a claim

8

 

		
	 	for benefits under this Agreement shall be delivered to the Executive in
writing and shall set forth the specific reasons for the denial and the
specific provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to the Executive for a review of the decision denying a
claim and shall further allow the Executive to appeal to the Board a decision
of the Board within sixty (60) days after notification by the Board that the
Executive’s claim has been denied.

		
	 	     14.2 Any further dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Charlotte,
North Carolina in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the evidentiary standards
set forth in this Agreement shall apply. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to
seek specific performance of the Executive’s right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.

     15.     Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below:

		
	 	     (A) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act.

		
	 	     (B) “Auditor” shall have the meaning set forth in Section 6.2 hereof.

		
	 	     (C) “Base Amount” shall have the meaning set forth in section 280G(b)(3)
of the Code.

		
	 	     (D) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3
under the Exchange Act.

		
	 	     (E) “Board” shall mean the Board of Directors of the Company.

		
	 	     (F) “Cause” for termination by the Company of the Executive’s employment
shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive’s duties with the Company (other than any
such failure resulting from the Executive’s incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of
a Notice of Termination for Good Reason by the Executive pursuant to Section
7.1 hereof) which failure shall continue unabated for thirty (30) days after a
written demand for substantial performance is delivered to the Executive by the
Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive’s
duties, or (ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, (x) no act, or failure to act, on the Executive’s part shall be
deemed “willful” unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the

9

 

		
	 	Executive’s act, or failure to act, was in the best interest of the
Company and (y) in the event of a dispute concerning the application of this
provision, no claim by the Company that Cause exists shall be given effect
unless the Company establishes by clear and convincing evidence that Cause
exists.

		
	 	     (G) A “Change in Control” shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:

		
	 	     (I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates) representing 20% or more of the combined voting
power of the Company’s then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
clause (i) of paragraph (III) below; or

		
	 	     (II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Board or nomination for election by the Company’s shareholders was approved
or recommended by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended; or

		
	 	     (III) there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other corporation,
other than (i) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates other than in connection with the
acquisition by the Company or its Affiliates of a business) representing 20% or
more of the combined voting power of the Company’s then outstanding securities;
or

		
	 	     (IV) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by

10

 

		
	 	the Company of all or substantially all of the Company’s assets to an
entity, at least 50% of the combined voting power of the voting securities of
which are owned by shareholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such sale.

		
	 	     (H) “Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time.

		
	 	     (I) “Company” shall mean Piedmont Natural Gas Company, Inc. and, except in
determining under Section 15(G) hereof whether or not any Change in Control of
the Company has occurred, shall include any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of law,
or otherwise.

		
	 	     (J) “Date of Termination” shall have the meaning set forth in Section 7.2
hereof.

		
	 	     (K) “Disability” shall be deemed the reason for the termination by the
Company of the Executive’s employment, if, as a result of the Executive’s
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive’s duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within thirty
(30) days after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive’s duties.

		
	 	     (L) “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended from time to time.

		
	 	     (M) “Executive” shall mean the individual named in the first paragraph of
this Agreement.

		
	 	     (N) “Good Reason” for termination by the Executive of the Executive’s
employment shall mean the occurrence (without the Executive’s express written
consent) after any Change in Control, or prior to a Change in Control under the
circumstances described in clauses (ii) and (iii) of the second sentence of
Section 6.1 hereof (treating all references in paragraphs (I) through (VII)
below to a “Change in Control” as references to a “Potential Change in
Control”), of any one of the following acts by the Company, or failures by the
Company to act, unless, in the case of any act or failure to act described in
paragraph (I), (V), (VI) or (VII) below, such act or failure to act is
corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:

		
	 	     (I) the assignment to the Executive of any duties inconsistent with the
Executive’s status as a senior executive officer of the Company, a change in
the Executive’s reporting responsibilities, titles or offices, or a substantial
adverse alteration in the nature or status of the Executive’s responsibilities
from those in effect immediately prior to the Change in Control other

11

 

		
	 	than any such alteration primarily attributable to the fact that the
Company may no longer be a public company;

		
	 	     (II) a reduction by the Company in the Executive’s annual base salary as
in effect on the date hereof or as the same may be increased from time to time
except for across-the-board salary reductions (not to exceed 10%) similarly
affecting all senior executives of the Company and all senior executives of any
Person in control of the Company including the Chief Executive Officer;

		
	 	     (III) the relocation of the principal executive offices to a location more
than 35 miles from the Company’s principal executive offices immediately prior
to the Change in Control or the Company’s requiring the Executive to be based
anywhere other than the location of the Company’s executive offices except for
required travel on the Company’s business to an extent substantially consistent
with the Executive’s present business travel obligations;

		
	 	     (IV) the failure by the Company to pay to the Executive any portion of
the Executive’s current compensation or benefits except pursuant to an
across-the-board compensation or benefit deferral (not to exceed 10%) similarly
affecting all senior executives of the Company and all senior executives of any
Person in control of the Company including the Chief Executive Officer, or to
pay to the Executive any portion of an installment of deferred compensation
under any deferred compensation program of the Company, within seven (7) days
of the date such compensation is due;

		
	 	     (V) the failure by the Company to continue in effect any compensation
plan in which the Executive participates immediately prior to the Change in
Control which is material to the Executive’s total compensation, including but
not limited to the Company’s long-term incentive plans or any substitute plans
adopted prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue the Executive’s
participation therein (or in such substitute or alternative plan) on a basis
not less favorable, both in terms of the amount or timing of payment of
benefits provided and the level of the Executive’s participation relative to
other participants, as existed immediately prior to the Change in Control;

		
	 	     (VI) the failure by the Company to continue to provide the Executive
with benefits substantially similar to those enjoyed by the Executive under any
of the Company’s pension, supplement retirement, savings, life insurance,
supplemental life insurance, medical, health and accident, or disability plans
in which the Executive was participating immediately prior to the Change in
Control (except for across-the-board changes similarly affecting all senior
executives of the Company and all senior executives of any Person in control of
the Company, including the Chief Executive Officer, not to exceed 10%), the
taking of any other action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of the Change in Control,
or the failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled either by prior written
agreements or on the basis of years of service with the Company in

12

 

		
	 	accordance with the Company’s normal vacation policy in effect at the time
of the Change in Control; or

		
	 	     (VII) any purported termination of the Executive’s employment which is
not effected pursuant to a Notice of Termination satisfying the requirements of
Section 7.1 hereof; for purposes of this Agreement, no such purported
termination shall be effective.

		
	 	     The Executive’s right to terminate the Executive’s employment for Good
Reason shall not be affected by the Executive’s incapacity due to physical or
mental illness. The Executive’s continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.

		
	 	     For purposes of any determination regarding the existence of Good Reason,
any claim by the Executive that Good Reason exists shall be presumed to be
correct unless the Company establishes by clear and convincing evidence that
Good Reason does not exist.

		
	 	     (O) “Notice of Termination” shall have the meaning set forth in Section
7.1 hereof.

		
	 	     (P) “Person” shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of stock of the
Company.

		
	 	     (Q) “Potential Change in Control” shall be deemed to have occurred if the
event set forth in any one of the following paragraphs shall have occurred:

		
	 	     (I) the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control;

		
	 	     (II) the Company or any Person publicly announces an intention to take or
to consider taking actions which, if consummated, would constitute a Change in
Control;

		
	 	     (III) any Person becomes the Beneficial owner, directly or indirectly, of
securities of the Company representing 15% or more of either the then
outstanding shares of common stock of the Company or the combined voting power
of the Company’s then outstanding securities (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates); or

13

 

		
	 	     (IV) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control has occurred.

		
	 	     (R) Retirement” shall be deemed the reason for the termination by the
Executive of the Executive’s employment if such employment is terminated
voluntarily by the Executive in accordance with the Company’s retirement
policy, including early retirement, generally applicable to its salaried
employees.

		
	 	     (S) “Severance Payments” shall have the meaning set forth in Section 6.1
hereof.

		
	 	     (T) “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.

		
	 	     (U) “Term” shall mean the period of time described in Section 2 hereof
(including any extension, continuation or termination described therein).

		
	 	     (V) “Total Payments” shall mean those payments so described in Section 6.2
hereof.

		
	 	     (W) “W-2 Compensation” shall mean all amounts received for services
actually rendered in the course of employment with the Company to the extent
that such amounts are includible in gross income as wages for federal income
tax purposes plus all amounts that are contributed by the Company pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Executive under Code Sections 125 or 401(k) and minus all amounts
includible in the gross income of the Executive for annual base salary, expense
reimbursements or allowances, moving expenses, club initiation fees or special
assessments, deferred compensation and welfare benefits, or gross-ups for
taxes.

	 	 	 
	 	 	
PIEDMONT NATURAL GAS COMPANY
	 	 	 
	 	 	
By: /s/ Thomas E. Skains
	 	 	

	 	 	
Name: Thomas E. Skains

Title: President & COO
	 	 	 
	 	 	
/s/ Kim R. Cocklin
	 	 	

	 	 	
Name: Kim R. Cocklin

Address: 1904 Griffith Pl W

Owensboro, KY 42301

Employment Agreement reviewed and approved by the Board of Directors this 14th
day of January, 2003.

	 	 	 
	 	 	
By: /s/ John W. Harris
	 	 	

John W. Harris

Chairman of Compensation Committee

14

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