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Split Dollar Collateral Assignment Insurance Plan Agreement

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Sectors: Services
Governing Law: North Carolina, View North Carolina State Laws
Effective Date: October 01, 1997
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Exhibit 10.68

SPLIT DOLLAR COLLATERAL ASSIGNMENT INSURANCE PLAN AGREEMENT

AND SUMMARY PLAN DESCRIPTION

THIS AGREEMENT made as of the first day of October, 1997, by and between Duke Energy Corporation, a North Carolina corporation having its principal place of business in Charlotte, North Carolina (the " Company" ), and Henry B. Barron, Jr. (the " Employee" ).

WITNESSETH

WHEREAS, the Employee is a valued employee of the Company; and

WHEREAS, the Employee has purchased, with the assistance of the Company, or the Company may have purchased on behalf of the Employee, an insurance policy (the " Insurance Policy" ) on the Employee' s life as reflected in Schedule A hereto, including all supplemental riders and endorsements to such Insurance Policy, which Insurance Policy the Employee and the Company wish to make subject to a life insurance plan pursuant to the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the foregoing and in mutual covenants hereinafter set forth, the Employee and the Company hereto agree as follow:

ARTICLE 1

Definitions

1.1 Company Death Benefit . The term " Company Death Benefit" shall mean that portion of the death benefit under the Insurance Policy upon the death of the employee equal to the Company Interest.

1.2 Company Interest . The term " Company Interest" shall mean an amount, calculated in accordance with the Priority of Interests, equal to the sum of (i) the aggregate amount of all premiums paid by or on behalf of the Company net of any loans received by the Company; (ii) the aggregate amount of Tax Gross-up; and (iii) the excess, if any, of the Value of the Insurance Policy over and above the aggregate of (A) Section 1.2(i), (B) Section 1.2(ii), and (C) the Employee Interest.

1.3 Covered Plans . The term " Covered Plans" shall mean those nonqualified, unfunded plans of the Company listed on Schedule B, which schedule the Company and the Employee may amend from time to time by mutual consent.

1.4 Employee Death Benefit . The term " Employee Death Benefit" shall mean that portion of the death benefit under the Insurance Policy upon the death of the Employee equal to the Employee Interest, except that the Employee Death Benefit shall be zero prior to January 1, 1998.


1 1.5 Employee Interest . The term " Employee Interest" shall mean an amount, calculated in accordance with the Priority of Interests, equal to the present value of the Employee' s Remaining Unpaid Accrued Benefits under the Company' s Covered Plans at the date of the event requiring the calculation. The discount rate used to calculate the present value of the accrued benefit shall be the immediate annuity discount rate in effect at the date requiring the calculation as established by the Pension Benefit Guaranty Corporation to compute the present value of accrued liabilities for qualified pension plans. 1.6 Employee' s Remaining Unpaid Accrued Benefit . The term " Employee' s Remaining Unpaid Accrued Benefit" shall mean: (i) in the event of the Employee' s death before retirement payments have commenced, an annuity amount representing the Employee' s accrued benefit (payable in the form of a 5-year certain and continuous annuity) calculated immediately prior to the Employee' s death.

(ii) in the event of the Employee' s death after retirement payments have commenced, an annuity amount representing the benefit which would have been payable to the Employee' s beneficiary after the Employee' s death under the retirement payment option the Employee elects.

(iii) in all other events, an annuity amount representing the Employee' s accrued benefit (based on the payment option elected by the employee, if retired; otherwise, based on a 5-year certain and continuous payment option) immediately prior to the date of the event requiring the calculation.

1.7 Modified Company Interest . The term " Modified Company Interest" shall mean an amount, if any, equal to the Value of the Insurance Policy less the amount of the Employee Interest, where all such calculations are made without regard to the Priority of Interests.

1.8 Priority of Interest . The term " Priority of Interests" shall mean whenever a calculation of the Company Interest and the Employee Interest is to be made and the Value of the Insurance Policy shall be insufficient to fully provide for both, the calculation shall be made in the following order of priority:

First - that portion of the Company Interest represented by the aggregate amount of all premiums the Company pays; Second - that portion of the Company Interest represented by the aggregate amount of Tax Gross-up; Third - the Employee Interest represented by the present value of the Employee' s remaining unpaid accrued benefit under the Company' s Covered Plans;


2 Fourth - that portion of the Company Interest represented by the excess of the Value of the Insurance Policy in excess of the first three items.

1.9 Tax Gross-up . The term " Tax Gross-up" shall have the same meaning as " Gross-Up Payment" as defined in the Duke Energy Corporation Grantor Trust Agreement dated October 1, 1997, as amended.

1.10 Value of the Insurance Policy . The term " Value of the Insurance Policy" shall mean (i) if the Employee is living, the cash surrender value of the Insurance Policy, or (ii) if the Employee dies, the death benefit of the Insurance Policy, in each case determined at the date requiring the calculation.

ARTICLE 2

Ownership of the Insurance Policy 2.1 Employee as Owner . The Employee shall be the owner of the Insurance Policy and may exercise all ownership rights granted to the owner thereof by the terms of the Insurance Policy, except as may otherwise be provided herein. If the Employee transfers his or her ownership interest in the Insurance Policy to a Trustee of a Trust or other third party owner, the word Trustee or Owner shall be substituted for the word Employee throughout this Agreement where appropriate.

2.2 Assignment . The Employee agrees to execute an assignment (the " Assignment" ) to the Company to secure the Company' s rights under this Agreement, in the form acceptable to the issuer of the Insurance Policy (the " Insurer" ), a form of which is attached hereto as Schedule A. The Assignment shall set forth the rights of the Company in and with respect to the Insurance Policy pursuant to the terms and conditions of this Agreement. The Employee and the Company agree to be bound by the terms of the Assignment and subject to Section 2.2(c), the Employee may not rescind, revoke or amend the Assignment without the written authorization of the Company.

(a) Company' s Rights. The Company' s rights (the " Company' s Rights" ) with respect to the Insurance Policy shall be limited to: (i). The right to obtain, directly or indirectly, one or more loans or advances against the cash surrender value of the Insurance Policy, to the extent of, but not in excess of, the Company Interest, and the right to pledge or assign the Company Interest as security for such loans or advances;

(ii). The right to realize up to the Company Interest in the cash surrender value of the Insurance Policy on the full or partial surrender of the Insurance Policy;

(iii). The right to realize from the proceeds of the Insurance Policy the Company Interest, in the event of the death of the Employee;

3 (iv). The obligation to release the Assignment upon receipt of the entire Company Interest; and (v). The right to consent to any proposed termination or surrender of the Insurance Policy by the Employee prior to the later of (A) the Employee' s termination of employment from the Company for any reason, or (B) the Company' s release of the Assignment (it being agreed and understood the Employee shall have no right to terminate or surrender the Insurance Policy prior to the occurrence of the later of (A
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