Exhibit 10.2
PHANTOM STOCK AWARD AGREEMENT
This Phantom Stock Award Agreement (the "Agreement") has been made as of
______________________, 2005, (the "Date of Award") between Duke Energy
Corporation, a North Carolina corporation, with its principal offices in
Charlotte, North Carolina (the "Corporation"), and ________ (the "Grantee").
RECITALS
Under the Duke Energy Corporation 1998 Long-Term Incentive Plan as
amended, and as it may, from time to time, be further amended (the "Plan"), the
Compensation Committee of the Board of Directors of the Corporation (the
"Committee"), or its delegatee, has determined the form of this Agreement and
selected the Grantee, as an Employee, to receive the award evidenced by this
Agreement (the "Award") and the Phantom Stock units and tandem Dividend
Equivalents that are subject hereto. The applicable provisions of the Plan are
incorporated in this Agreement by reference, including the definitions of terms
contained in the Plan.
AWARD
In accordance with the Plan, the Corporation has made this Award,
effective as of the Date of Award and upon the following terms and conditions:
Section 1. Number and Nature of Phantom Stock Units and Tandem Dividend
Equivalents. The number of Phantom Stock units and the number of tandem Dividend
Equivalents subject to this Award are each ___________ (____). Each Phantom
Stock unit, upon becoming vested before its expiration, represents a right to
receive payment in the form of one (1) share of Common Stock. Each tandem
Dividend Equivalent represents a right to receive cash payments equivalent to
the amount of cash dividends declared and paid on one (1) share of Common Stock
after the Date of Award and before the Dividend Equivalent expires. Phantom
Stock units and Dividend Equivalents are used solely as units of measurement,
and are not shares of Common Stock and the Grantee is not, and has no rights as,
a shareholder of the Corporation by virtue of this Award.
Section 2. Vesting of Phantom Stock Units. The specified percentage of the
Phantom Stock units subject to this Award, and not previously forfeited, shall
vest, with such percentage considered satisfied to the extent such Phantom Stock
units have previously vested, as follows:
(a) Upon Grantee remaining continuously employed by the Corporation,
including Subsidiaries, through the specified anniversary of the Date of Award,
Vesting Percentage Anniversary
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20% 1st
40% 2nd
60% 3rd
80% 4th
100% 5th
For purposes of vesting under this Section 2(a), if such employment terminates
at a time when Grantee is eligible for an immediately payable early or normal
retirement benefit under the Duke Energy Retirement Cash Balance Plan, or under
another retirement plan of the Corporation or Subsidiary which plan the
Committee, or the delegatee, in its sole discretion, determines to be the
functional equivalent of the Duke Energy Retirement Cash Balance Plan, Grantee
shall be considered to have "retired" and such employment shall be considered to
continue, with continued vesting under this Section 2(a), unless the
Corporation, in its sole discretion, determines that Grantee is in violation of
any obligation identified in Section 3, or until Grantee's death and, upon such
determination or death, any such Phantom Stock units not previously vested, or
vested by application of the following sentence shall be forfeited. If such
employment terminates, and constitutes a "separation from service" under Code
Section 409A, (i) as the result of Grantee's death, (ii) as the result of
Grantee's permanent and total disability within the meaning of Code Section
22(e)(3), (iii) as the result of termination of such employment by the
Corporation, or employing Subsidiary, other than for cause, as determined by the
Corporation, or employing Subsidiary, in its sole discretion, or (iv) as the
direct and sole result, as determined by the Corporation, or employing
Subsidiary, in its sole discretion, of the divestiture of assets, a business or
a company, by the Corporation or a Subsidiary, the Phantom Stock units subject
to this Award shall vest at such vesting percentage determined by the Committee,
or its delegatee, in its sole discretion, by prorating from the above schedule
to reflect only that portion of the period beginning on the Date of Award and
ending with the fifth (5th) anniversary of the Date of Award during which such
employment continued while Grantee was entitled to payment of salary, and any
such Phantom Stock units not then or previously vested shall be forfeited.
In the event that at a time when vesting would otherwise occur under
this Section 2(a), Grantee is on an employer-approved, personal leave of
absence, then, unless prohibited by law, vesting shall be postponed and shall
not occur unless and until Grantee returns to active service in accordance with
the terms of the approved personal leave of absence and before the tenth
anniversary of the Date of Award.
(b) 100%, if, following the occurrence of a Change in Control and before
the second anniversary of such occurrence, such employment is terminated
involuntarily, and
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not for cause, by the Corporation, or employing Subsidiary, and constitutes a
"separation from service" under Code Section 409A.
Section 3. Violation of Grantee Obligation. In consideration of the
continued vesting opportunity provided under Section 2 following the termination
of Grantee's continuous employment by the Corporation, including Subsidiaries,
if Grantee is considered "retired", Grantee agrees that during the period
beginning with such termination of employment and ending with the fifth
anniversary of the Date of Award ("Restricted Period"), Grantee shall not (i)
without the prior written consent of the Corporation, or its delegatee, become
employed by, serve as a principal, partner, or member of the board of directors
of, or in any similar capacity with, or otherwise provide service to, a
competitor, to the detriment, of the Corporation or any Subsidiary, or (ii)
violate any of Grantee's other noncompetition obligations, or any of Grantee's
nonsolicitation or nondisclosure obligations, to the Corporation or any
Subsidiary. The noncompetition obligations of clause (i) of the preceding
sentence shall be limited in scope and shall be effective only to competition
with the Corporation or any Subsidiary in the businesses of: production,
transmission, distribution, or retail or wholesale marketing or selling of
electricity; gathering, processing or transmission of natural gas, resale or
arranging for the purchase or for the resale, brokering, marketing, or trading
of natural gas, electricity or derivatives thereof; energy management and the
provision of energy solutions; gathering, compression, treating, processing,
fractionation, transportation, trading, marketing of natural gas components,
including natural gas liquids; management of land holdings and development of
commercial, residential and multi-family real estate projects; development and
management of fiber optic communications systems; development and operation of
power generation facilities, and sales and marketing of electric power and
natural gas, domestically and abroad; and any other business in which the
Corporation, including Subsidiaries, is engaged at the termination of Grantee's
continuous employment by the Corporation, including Subsidiaries; and within the
following geographical areas (i) any country in the world where the Corporation,
including Subsidiaries, has at least US$25 million in capital deployed as of
termination of Grantee's continuous employment by Corporation, including
Subsidiaries; (ii) the continent of North America; (iii) the United States of
America and Canada; (iv) the United States of America; (v) the states of North
Carolina, South Carolina, Virginia, Georgia, Florida, Texas, California,
Massachusetts, Illinois, Michigan, New York, Colorado, Oklahoma and Louisiana:
(vi) the states of North Carolina, South Carolina, Texas and Colorado; and (vii)
any state or states with respect to which was conducted a business of the
Corporation, including Subsidiaries, which business constituted a substantial
portion of Grantee's employment. The Corporation and Grantee intend the above
restrictions on competition in geographical areas to be entirely severable and
independent, and any invalidity or enforceability of this provision with respect
to any one or more of such restrictions, including areas, shall not render this
provision unenforceable as applied to any one or more of the other restrictions,
including areas. If any part of this provision is held to be unenforceable
because of the duration, scope or area covered, the Corporation and Grantee
agree to modify such part, or that the court making such holding shall have the
power to modify such part, to reduce its duration, scope or area, including
deletion of specific words and phrases, i.e.,"blue penciling", and in its
modified, reduced
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or blue pencil form, such part shall become enforceable and shall be enforced.
Nothing in Section 3 shall be construed to prohibit Grantee being retained
during the Restricted Period in a capacity as an attorney licensed to practice
law, or to restrict Grantee providing advice and counsel in such capacity, in
any jurisdiction where such prohibition or restriction is contrary to law.
Section 4. Forfeiture/Expiration. Any Phantom Stock unit subject to this
Award shall be forfeited upon the termination of Grantee's continuous employment
by the Corporation, including Subsidiaries, from the Date of Award, except to
the extent otherwise provided in Section 2, and, if not previously vested and
paid, or deferred, or forfeited, shall expire immediately before the tenth
anniversary of the Date of Award. Any Dividend Equivalent subject to this Award
shall expire at the time the unit of Phantom Stock with respect to which the
Dividend Equivalent is in tandem (i) is vested and paid, or deferred, (ii) is
forfeited, or (iii) expires.
Section 5. Dividend Equivalent Payments. Payments with respect to any
Dividend Equivalent subject to this Award shall be paid in cash to the Grantee
as soon as practicable following any time cash dividends are declared and paid
with respect to the Common Stock on or after the Date of Award and before the
Dividend Equivalent expires. However, should the timing of a particular payment
under Section 6 to the Grantee in shares of Common Stock in conjunction with the
timing of a particular cash dividend declared and paid on Common Stock be such
that the Grantee receives such shares without the right to receive such dividend
and the Grantee would not otherwise be entitled to payment under the expiring
Dividend Equivalent with respect to such dividend, the Grantee, nevertheless,
shall be entitled to such payment. Dividend Equivalent payments shall be subject
to withholding for taxes.
Section 6. Payment of Phantom Stock Units. Payment of Phantom Stock units
subject to this Award shall be made to the Grantee as soon as practicable
following the time such units become vested in accordance with Section 2 prior
to their expiration, except to the extent deferred by Grantee in accordance with
such procedure as the Committee, or its delegatee, may prescribe. However, in
the event such units become vested in accordance with Section 2(b), or upon
termination of employment in accordance with the last sentence of the first
paragraph of Section 2(a), then, unless waived by the Corporation upon its
determination that Grantee is not a "specified employee" under Code Section
409A, such units shall not be payable before the date which is 6 months after
the date of "separation from service" under Code Section 409A (or, if earlier,
the date of death of the Grantee). Payment shall be subject to withholding for
taxes. Payment shall be in the form of one (1) share of Common Stock for each
full vested unit of Phantom Stock and any fractional vested unit of Phantom
Stock shall not be payable unless and until subsequent vesting results in a full
unit of Phantom Stock becoming vested. Notwithstanding the foregoing, to the
extent that Grantee fails to timely tender to the Corporation sufficient cash to
satisfy withholding for tax requirements, the number of shares of Common Stock
that would otherwise be paid (valued at Fair Market Value on the date the
respective unit of Phantom Stock became vested, or if later, payable) shall be
reduced by the Committee, or its delegatee, in its sole discretion, to fully
satisfy such
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requirements. In the event that payment, after any such reduction in the number
of shares of Common Stock to satisfy withholding for tax requirements, would be
less than ten (10) shares of Common Stock, then, if so determined by the
Committee, or its delegate, in its sole discretion, payment, instead of being
made in shares of Common Stock, shall be made in a cash amount equal in value to
the shares of Common Stock that would otherwise be paid, valued at Fair Market
Value on the date the respective Phantom Stock units became vested, or if later,
payable.
Section 7. No Employment Rights. Nothing in this Agreement or in the Plan
shall confer upon the Grantee the right to continued employment by the
Corporation or any Subsidiary, or affect the right of the Corporation or any
Subsidiary to terminate the employment or service of the Grantee at any time for
any reason.
Section 8. Nonalienation. The Phantom Stock units and Dividend Equivalents
subject to this Award are not assignable or transferable by the Grantee. Upon
any attempt to transfer, assign, pledge, hypothecate, sell or otherwise dispose
of any such Phantom Stock unit or Dividend Equivalent, or of any right or
privilege conferred hereby, or upon the levy of any attachment or similar
process upon such Phantom Stock unit or Dividend Equivalent, or upon such right
or privilege, such Phantom Stock unit or Dividend Equivalent or right or
privilege, shall immediately become null and void.
Section 9. Determinations. Determinations by the Committee, or its
delegatee, shall be final and conclusive with respect to the interpretation of
the Plan and this Agreement.
Section 10. Governing Law. The validity and construction of this Agreement
shall be governed by the laws of the state of North Carolina applicable to
transactions taking place entirely within that state.
Section 11. Conflicts with Plan, Correction of Errors, and Grantee's
Consent. In the event that any provision of this Agreement conflicts in any way
with a provision of the Plan, such Plan provision shall be controlling and the
applicable provision of this Agreement shall be without force and effect to the
extent necessary to cause such Plan provision to be controlling. In the event
that, due to administrative error, this Agreement does not accurately reflect a
Phantom Stock Award properly granted to Grantee pursuant to the Plan, the
Corporation, acting through its Executive Compensation and Benefits Department,
reserves the right to cancel any erroneous document and, if appropriate, to
replace the cancelled document with a corrected document. It is the intention of
the Corporation and the Grantee that this Award not result in unfavorable tax
consequences to Grantee under Code Section 409A. Accordingly, Grantee consents
to such amendment of this Agreement as the Corporation may reasonably make in
furtherance of such intention, and the Corporation shall promptly provide, or
make available to, Grantee a copy of any such amendment.
Notwithstanding the foregoing, this Award is subject to cancellation by
the Corporation in its sole discretion unless the Grantee, by not later than
_________ __,
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2005, has signed a duplicate of this Agreement, in the space provided below, and
returned the signed duplicate to the Executive Compensation and Benefits
Department - Phantom Stock (PB04A), Duke Energy Corporation, P. O. Xxx 0000,
Xxxxxxxxx, XX 00000-0000, which, if, and to the extent, permitted by the
Executive Compensation and Benefits Department, may be accomplished by
electronic means.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed and granted in Charlotte, North Carolina, to be effective as of the
Date of Award.
ATTEST: DUKE ENERGY CORPORATION
By: By:
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Corporate Secretary Its: Chairman and Chief Executive Officer
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Acceptance of Phantom Stock Award
IN WITNESS OF Grantee's acceptance of this Award and Grantee's agreement
to be bound by the provisions of this Agreement and the Plan, Grantee has signed
this Agreement this _____ day of _____________________, 2005.
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Grantee's Signature
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(print name)
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(social security number)
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(address)
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