EX-10.1 SEPARATION AGREEMENT AND GENERAL RELEASE

EXHIBIT 10.1

SEPARATION AGREEMENT AND GENERAL RELEASE

     This Separation Agreement and General Release (the “Separation Agreement”) is made and entered into by and between Pike Electric, Inc. (the “Company”), a North Carolina Corporation and Mark Castenada (the “Executive”), an individual domiciled in the State of North Carolina (collectively the “Parties”), this the 31 ^st day of October, 2006.

      Whereas , the Executive has been employed by the Company as its Vice President and Chief Financial Officer under an employment agreement whose effective date is October 18, 2004 (the “Employment Agreement,” an unsigned copy of which is attached hereto as Exhibit A and incorporated herein by reference in its entirety);

      Whereas , for sound business reasons affecting, and in the best interest of, both the Executive and the Company, Executive has submitted his resignation as Vice-President and Chief Financial Officer of Pike Electric, Inc.

      Whereas , the Company and the Executive do not anticipate that there will be any disputes between them or legal claims arising out of the Executive’s separation from the Company, but nevertheless desire to ensure a completely amicable parting and wish to settle fully and finally any and all differences and claims that might arise out of the Executive’s employment with the Company and the termination of that employment;

      Whereas , the Employment Agreement does not provide for the option of receiving severance or continuation pay in a lump sum; and

      Now, therefore , in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed as follows:

     1.  Employment Agreement . Executive hereby affirms that Exhibit A is a true and authentic copy of the Employment Agreement entered into and thereafter performed by the parties and that the Employment Agreement has been terminated according to its terms.

     2.  Resignation . Executive has resigned from his position as Vice President and Chief Financial Officer.

     3.  Continued Pay . The Company agrees to provide the Executive with a lump sum payment of $812,032.00 on February 19, 2007 (reduced by applicable taxes and any salary payments already made since August 18, 2006) in lieu of the periodic salary payments that would otherwise be paid under the Employment Agreement for a period of twenty four (24) months commencing August 18, 2006.

     4.  Continued Benefits . The Company agrees to provide insurance coverage at the same benefit level to which Executive was entitled as of his last day of employment with the Company for a period of twelve (12) months following August 18, 2006.

     5.  Non-Disclosure; Non-Solicitation; Non-Competition . The Executive understands and agrees that any breach of the covenants of Non-Disclosure, Non-Solicitation and Non-Competition contained in the Employment Agreement shall also be a breach of this Separation Agreement, voiding all obligations of the Company under this Separation Agreement and the Employment Agreement.

     6.  Confidentiality . The Parties agree to keep the facts and terms of this Separation Agreement in strict confidence and to refrain from making any negative or critical remarks about each other.

     7.  Release of Claims . In consideration for the benefits and other promises contained herein, and as a material inducement to the Company to enter this Separation Agreement, Executive hereby irrevocably and unconditionally releases, acquits and forever discharges the Company and its assigns, agents, directors, officers, employees, representatives, attorneys, parent companies, divisions, subsidiaries, affiliates (and agents, directors, officers, employees, representatives and attorneys of such parent companies, divisions, subsidiaries and affiliates) and all persons acting by, through, under or in concert with any of them (the “Releasees”) from any and all claims, demands or liabilities whatsoever, other than for breach of this Agreement, whether known or unknown by Executive, which Executive ever had or may now have against the Releasees or any of them, including, without limitation, any claims, demands or liabilities (including attorneys’ fees and other costs of dispute resolution actually incurred), arising from Executive’s employment by and resignation from the Company continuing through the date of Executive’s resignation. This Release expressly covers, but is not limited to any claims that Executive might raise under any state or federal law prohibiting discrimination in employment on the basis of age or on any other basis prohibited by law or any claims that Executive might raise under the Employment Agreement.

     8.  Sale of Stock . Executive acknowledges that he may have had access to material nonpublic information regarding the Company’s financial status prior to the end of Company’s first quarter and to avoid the possibility or appearance of impropriety agrees not to sell any of his shares of Company’s stock into the market until three (3) days after issuance of Company’s first quarter earnings release.

     9.  No Admission of Wrongdoing . This Separation Agreement shall not in any way be construed as an admission by the Releasees of any acts of wrongdoing whatsoever against Executive or any other person.

     10.  Entire Agreement; Conflicts . This Separation Agreement sets forth the entire agreement between the Parties hereto and fully supersedes any and all prior agreements or understandings between the Parties pertaining to the subject matter hereof, except any agreements under which stock options have previously become fully vested. It is intended that there should be no conflict between the provisions of this Separation Agreement and the Employment Agreement, but should any such conflict exist, the Parties intend that this Separation Agreement shall control.

     11.  Dispute Resolution . Any and all disputes arising under this Separation Agreement shall, if not settled by direct negotiation between the Parties, be subject to non-binding mediation before an independent mediator selected by the parties and compensated directly by the parties, which mediation shall be conducted pursuant to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association (the “AAA Rules”) in effect on the date of the first notice of demand for mediation. In the event the dispute is not settled through mediation, the Parties shall proceed to binding arbitration before a single independent arbitrator selected by the parties and compensated directly by the parties, which arbitration shall be conducted pursuant to the AAA Rules. The law to be applied in this arbitration shall be that of the State of North Carolina.

     The Executive has read and carefully considered this Separation Agreement and the general release it contains, has had an opportunity to ask questions about it and has had any questions answered to his satisfaction. Further the Company has indicated that Executive is free to discuss this Separation Agreement with his family and his attorney. Executive is signing this Separation Agreement knowledgably, voluntarily and without coercion of any kind.

EXHIBIT A

EMPLOYMENT AGREEMENT

ARTICLE I
EMPLOYMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the [*] day of October, 2004, by and between PIKE ELECTRIC, INC., a North Carolina corporation (hereinafter, “Employer”) and MARK CASTANEDA, an individual domiciled in the State of North Carolina (hereinafter, “Executive”).

     Section 1.1 Position . Employer hereby hires Executive as Chief Financial Officer of Employer. Executive shall perform the duties of his position s determined by the Board of Directors of Employer (hereinafter the “Board”), including responsibility for financial and managerial reporting, strategic planning, accounting, payroll, taxes, management information systems, mergers and acquisitions, regulatory reporting, banking relationships, financial systems and controls, acquisition integration, budgets and capital structure optimization, in accordance with the policies, practices and bylaws of Employer. Executive shall report directly to the chief Executive Officer of Employer.

     Section 1.2 Time and Effort . Executive shall serve Employer faithfully, loyally, honestly and to the best of his ability. Executive shall devote all his business time and best efforts to the performance of his duties on behalf of Employer. During his term of employment, Executive shall not at any time or place or to any extent whatsoever, either directly or indirectly, without the express written consent of the Board, engage in any outside employment or in any activity competitive with or adverse to Employer’s business practice or affairs. This is not intended to prohibit Executive from engaging in nonprofessional activities such as personal investments or conducting to a reasonable extent private business affairs, which may include service on other board of directors as long as they do not conflict or interfere with the Executive’s responsibilities to Employer. Participation to a reasonable extent in civic, social or community activities is encouraged.

     Section 1.3 Term . The term (“Term”) of this Agreement shall commence on and as of the [date of this Agreement] [[___], 2004], and shall continue for a period of two years (hereinafter, the “Initial Term”). Thereafter, the term of this Agreement shall be automatically extended for additional one year periods (each, hereinafter, an “Additional Term”), subject to either party’s right to terminate this Agreement by giving the other party written notice of its intention to do so at least sixty (60) days prior to the expiration of the Initial Term or the Additional Term, as the case may be.

ARTICLE II
COMPENSATION

     Section 2.1 Base Salary . Employer agrees to pay Executive, and Executive agrees to accept, as compensation for the services and obligations set forth herein, base salary (hereinafter,

“Base Salary”) in cash equal to the sum of Four Hundred Thousand and no/100 dollars ($400,000.00) per year, which sum shall be paid to Executive by Employer, less any taxes required to be withheld under federal, state, and local law, in accordance with Employer’s standard payroll practices for executive personnel, as same may change from time to time. The amount of Base Salary shall be subject to adjustment as provided in Section 2.2 below.

     Section 2.2 Adjustments to Base Salary . Upward adjustments to Executive’s Base Salary shall be determined by the Board in their sole discretion. For so long as Executive is employed by Employer there shall be no reductions in Executive’s Base Salary.

     Section 2.3 Additional Compensation . Executive shall further be eligible to participate in the exis