FPL GROUP, INC.
DEFERRED COMPENSATION PLAN
Effective January 1,2005
FPL GROUP, INC.
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
Page | ||
ARTICLE I DEFINITIONS | 2 | |
1.01 | Account or Accounts | 2 |
1.02 | Administrator | 2 |
1.03 | Award Agreement | 2 |
1.04 | Base Salary | 2 |
1.05 | Beneficiary Designation Form | 2 |
1.06 | Board | 2 |
1.07 | Bonus | 2 |
1.08 | Change of Control | 3 |
1.09 | Change of Control Event | 5 |
1.10 | Code | 5 |
1.11 | Committee | 5 |
1.12 | Common Stock | 5 |
1.13 | Company | 5 |
1.14 | Compensation | 5 |
1.15 | Deferral Election Form | 6 |
1.16 | Director's Fees | 6 |
1.17 | Disability | 6 |
1.18 | Distribution Election Form | 6 |
1.19 | Distribution Starting Date | 6 |
1.20 | Election Period | 6 |
1.21 | Employee | 7 |
1.22 | Employer | 7 |
1.23 | ERISA | 7 |
1.24 | Exchange Act | 7 |
1.25 | Investment Account | 7 |
1.26 | Investment Election Form | 8 |
1.27 | LTIP | 8 |
1.28 | LTIP Award | 8 |
1.29 | Market Value Per Share | 8 |
1.30 | Non-Employee Director | 8 |
1.31 | Officer | 8 |
1.32 | Participant | 8 |
1.33 | Phantom Stock Account | 8 |
1.34 | Phantom Shares | 8 |
1.35 | Plan | 9 |
1.36 | Plan Year | 9 |
1.37 | Section 16 Committee | 9 |
1.38 | Section 16 Reporting Person | 9 |
1.39 | Service Recipient | 9 |
1.40 | Subsidiary | 9 |
ARTICLE II ELIGIBILITY | 9 | |
2.01 | Eligibility to Participate in the Plan | 9 |
ARTICLE III DEFERRED COMPENSATION BENEFITS | 9 | |
3.01 | Deferral Election | 9 |
3.02 | Accounts and Investment Allocation | 10 |
ARTICLE IV DISTRIBUTIONS | 13 | |
4.01 | Manner of Distribution | 13 |
4.02 | Form of Distribution | 13 |
4.03 | Unforeseeable Emergency | 14 |
4.04 | Distribution Upon a Termination of Employment following a Change of Control | 14 |
4.05 | Beneficiary Designation | 14 |
4.06 | Taxes | 15 |
4.07 | Distributions under Domestic Relations Orders | 15 |
4.08 | Distribution to Comply with Federal Conflict of Interest Requirements | 15 |
ARTICLE V ADMINISTRATION | 15 | |
5.01 | Administration | 15 |
5.02 | Liability of Committee and Administrator; Indemnification | 16 |
5.03 | Determination of Benefits | 16 |
5.04 | Expenses | 18 |
5.05 | Compliance with Securities Laws | 18 |
5.06 | Compliance with Code Section 409A | 18 |
ARTICLE VI MISCELLANEOUS | 18 | |
6.01 | No Trust Created | 18 |
6.02 | No Requirement to Fund | 18 |
6.03 | Benefits Payable from General Assets | 18 |
6.04 | Successors | 19 |
6.05 | No Contract of Employment | 19 |
6.06 | Amendment or Termination of Plan | 19 |
6.07 | Top Hat Plan | 20 |
6.08 | Governing Law | 20 |
6.09 | Severability | 20 |
6.10 | Construction | 21 |
6.11 | Merger or Consolidation or Sale of Assets of Employer | 21 |
6.12 | Transfer to an Affiliate of the Employer | 21 |
6.13 | Assignment | 21 |
6.14 | Incapacity | 21 |
6.15 | Effect on Benefits Under Other Plans | 21 |
6.16 | Indemnity Upon Change of Control | 22 |
6.17 | No Rights as Shareholders | 22 |
Execution Page | 22 | |
FPL GROUP, INC.
DEFERRED COMPENSATION PLAN
THIS FPL GROUP, INC. DEFERRED COMPENSATION PLAN (the "Plan") effective as of January 1,2005 (the "Effective Date"), isa successor to the FPL Group, Inc. Deferred Compensation Planeffective as of January 1, 1995,as amended and restated effective January 1,2003 (the "PriorPlan").
WHEREAS, the officers and a select group of management or highly compensated employees of FPL Group, Inc. (the "Company") and its subsidiaries and affiliates (hereinafter collectively referred to as the "Employer") are entitled to compensation which results from or is attributable to their performance of services as officers and employees of the Employer and may be awarded bonuses and performance-related compensation pursuant to the Annual Incentive Plan, the FPL Group Long Term Incentive Plan 1985, the FPL Group, Inc. Long Term Incentive Plan 1994 and other incentive compensation plans; and
WHEREAS, directors of theCompany are entitled to fees which result from or are attributable to their performance of services as members of the Board of Directors (and committees thereof) of theCompany; and
WHEREAS, the Board of Directors of the Company adopted thePrior Plan in order to permit the officers, directors, and a select group of management or highly compensated employees of the Employerto elect to defer receipt of all or a portion of their base salary,annual incentives, incentive plan awards and/or directors' fees in accordance with the provisions of the Plan; and
WHEREAS, the Employerintends thatthe Plan be considered an unfunded arrangement that is maintained primarily to provide deferred compensation to members of a select group of management or highly compensated employees of the Employer, for purposes of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
NOW, THEREFORE, the Company herebyfreezes the PriorPlan as of December 31, 2004 and adopts the Plan effective as ofJanuary 1, 2005 for the exclusive benefit of participants and their beneficiaries on the following terms and conditions:
The following terms when used herein shall have the designated meaning unless a different meaning is plainly required by the context in which the term is used:
1.01 "Account" or "Accounts" shall mean the account or accounts established and maintained for a Participant pursuant to Article III of the Plan. A Participant's Account shall consist of the Participant's Investment Account and Phantom Stock Account (including the Cash Account).
1.02 "Administrator" shall mean an officer or officers of the Employer designated by the Company to administer the Plan or, until the Companyotherwisedesignates such an officer or officers, theExecutiveVice President, Human Resources (or other most senior Human Resources officer of the Company, however designated) of the Company.
1.03 "Award Agreement" shall mean an agreement executed between the Company anda Participant pursuant to the LTIP setting forth theterms and conditions applicable to such Participant's LTIP Award.
1.04 "Base Salary" shall mean the base salary of a Participant paid by the Employer and generally designated as such, exclusive of Bonuses, LTIP Awards,Director's Fees or any other form of compensation which is not designated as Base Salary.
1.05 "Beneficiary Designation Form" shall mean the form or forms that may be approved by the Administrator from time to time for use by a Participant to designate a beneficiary or beneficiaries pursuant to Section 4.05.
1.06 "Board" shall mean the Board of Directors of the Company.
1.07 "Bonus" shall mean any bonusthat the Participant is awarded pursuant tothe Annual Incentive Plan and such other payments awarded under such otherincentive compensationplans that aredesignated by the Administrator aseligible for deferral under this Plan.
1.08 "Change of Control" shall mean:
(a)The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (x) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions (collectively, the "Excluded Acquisitions") shall not constitute a Change of Control (it being understood that shares acquired in an Excluded Acquisition may nevertheless be considered in determining whether any subsequent acquisition by such individual, entity or group (other than an Excluded Acquisition) constitutes a Change of Control): (i) any acquisition directly from the Company or any Subsidiary; (ii) any acquisition by the Company or any Subsidiary; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; (iv) any acquisition by an underwriter temporarily holding Company securities pursuant to an offering of such securities; (v) any acquisition in connection with which, pursuant to Rule 13d-1 promulgated pursuant to the Exchange Act, the individual, entity or group is permitted to, and actually does, report its beneficial ownership on Schedule 13G (or any successor Schedule); provided that, if any such individual, entity or group subsequently becomes required to or does report its beneficial ownership on Schedule 13D (or any successor Schedule), then, for purposes of this paragraph, such individual, entity or group shall be deemed to have first acquired, on the first date on which such individual, entity or group becomes required to or does so report, beneficial own ership of all of the Outstanding Company Common Stock and/or Outstanding Company Voting Securities beneficially owned by it on such date; or (vi) any acquisition in connection with a Business Combination (as hereinafter defined) which, pursuant to subsection (3) below, does not constitute a Change of Control; or
(b)Individuals who, as of the Restated Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to such date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, entity or group other than the Board; or
(c) Consummationof a reorganization, merger, consolidation or other business combination (any of the foregoing, a "Business Combination") of the Company or any Subsidiary with any other corporation, in any case with respect to which:
(i) the Outstanding Company Voting Securities outstanding immediately prior to such Business Combination do not, immediately following such Business Combination, continue to represent (either by remaining outstanding or being converted into voting securities of the resulting or surviving entity or any ultimate parent thereof) more than60% of the outstanding common stock and of the then outstanding voting securities entitled to vote generally in the election of directors of the resulting or surviving entity (or any ultimate parent thereof); or
(ii) less than a majority of the members of the board of directors of the resulting or surviving entity (or any ultimate parent thereof) in such Business Combination (the "New Board") consists of individuals ("Continuing Directors") who were members of the Incumbent Board (as defined in subsection (2) above) immediately prior to consummation of such Business Combination (excluding from Continuing Directors for this purpose, however, any individual whose election or appointment to the Board was at the request, directly or indirectly, of the entity which entered into the definitive agreement with the Company or any Subsidiary providing for such Business Combination); or
(iii) in the case of a Business Combination with an unaffiliated third party as a result of which at least a majority of the New Board will initially consist of Continuing Directors, the Board determines, prior to such approval by shareholders, that there does not exist a reasonable assurance that, for at least a two-year period following consummation of such Business Combination, at least a majority of the members of the New Board will continue to consist of Continuing Directors and individuals whose election, or nomination for election by shareholders of the resulting or surviving entity (or any ultimate parent thereof) in such Business Combination, would be approved by a vote of at least a majority of the Continuing Directors and individuals whose election or nomination for election has previously been so approved;
provided, however, that prior to any such approval by shareholders, the Board may determine, in its sole discretion, that under the particular facts and circumstances, a Change of Control shall not occur until the consummation of such Business Combination; or
(d) (i) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company or (ii) consummation of a sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation with respect to which, following such sale or other disposition, more than60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities as the case may be; provided, however, that prior to any such approval by shareholders, the Board may determine, in its sole discretion, that under the particular facts and circumstances, a Change of Control shall not occur until the consummation of such sale or other disposition.
The term "the sale or disposition by the Company of all or substantially all of the assets of the Company" shall mean a sale or other disposition transaction or series of related transactions involving assets of the Company or of any Subsidiary (including the stock of any Subsidiary) in which the value of the assets or stock being sold or otherwise disposed of (as measured by the purchase price being paid therefor or by such other method as the Board determines is appropriate in a case where there is no readily ascertainable purchase price) constitutes more than two-thirds of the fair market value of the Company (as hereinafter defined). The "fair market value of the Company" shall be the aggregate market value of the then Outstanding Company Common Stock (on a fully diluted basis) plus the aggregate market value of the Company's other outstanding equity securities. The aggregate market value of the shares of Outstanding Company Common Stock shall be determined by multiplying the number of shares of Outstanding Company Common Stock (on a fully diluted basis) outstanding on the date of the execution and delivery of a definitive agreement with respect to the transaction or series of related transactions (the "Transaction Date") by the average closing price of the shares of Outstanding Company Common Stock for the ten trading days immediately preceding the Transaction Date. The aggregate market value of any other equity securities of the Company shall be determined in a manner similar to that prescribed in the immediately preceding sentence for determining the aggregate market value of the shares of Outstanding Company Common Stock or by such other method as the Board shall determine is appropriate.
1.09 "Change of Control Event" shall mean, with respect to a Participant, a Change of Control that also constitutes: (a) a change in ownership of the Participant's Service Recipient; (b) a change in effective control of the Participant's Service Recipient; or (c) a change in the ownership of a substantial portion of the assets of the Participant's Service Recipient. The existence of a Change of Control Event shall be determined by the Administrator in accordance with Code Section 409A and the regulations thereunder.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
1.11 "Committee" shall mean a committee composed of not less than two directors designated by the Board to administer the Plan; provided, however, that each member of the Committee shall be a "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange Act, an "outside director" within the meaning of Code Section 162(m)(4)(c)(i) and the regulations thereunder, and an "independent director" within the meaning of Section 303A of the New York Stock Exchange Listed Company Manual (or, in each case, any successor term or provision). The Committee may, without limitation, be the Compensation Committee of the Board or a subcommittee thereof, if such committee or subcommittee satisfies the foregoing requirements.
1.12 "Common Stock" shall mean the common stock, $.01 par value per share, of the Company, or such other securities of the Company as may be substituted for Common Stock or such other securities in the event of the occurrence of any of the events set forth in Section 3.02(b)(2)(iv).
1.13 "Company" shall mean FPL Group, Inc.
1.14 "Compensation" shall mean Base Salary, Bonus, LTIP Award or other compensation approved for deferral by the Committee.
1.15 "Deferral Election Form" shall mean the form or forms that may be approved by the Administrator from time to time for use by a Participant to elect to defer Compensation or Director's Fees under the Plan, subject to the applicable limitations contained in the Plan.
1.16 "Director's Fees" shall mean the fees of a Participant which result from or are attributable to the performance of services by such Participant as a member of the Board of Directors (or committee thereof) of the Company, whether payable in cash or in equity.
1.17 "Disability" shall mean: (a) the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (b) the receipt of income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (c) any condition as a result of which a Participant is determined to be totally disabled by the Social Security Administration or Railroad Retirement Board.
1.18 "Distribution Election Form" shall mean the form or forms that may be approved by the Administrator from time to time for use by a Participant to elect a Distribution Starting Date and payment schedule pursuant toSection 4.01.
1.19 "Distribution Starting Date" shall mean:
(a) subject to subsection 1.19(b) below, (i) the first day of the first Plan Year or (ii)the first day of the first month following the earliest of the Participant's death, Disability, or otherseparation from service (within the meaning of Treas. Reg. Section 1.409A-1(h)) from the Employer, as elected by the Participant during the applicable Election Period; or
1.20 "Election Period" shall mean:
(a) with respect to a Participant, the periodestablished by the Administrator during which a Participant may delivera Deferral Election Formto the Administrator; provided that an Election Period with respect to any Compensation will occur during the calendar year prior to theyear (i) such Compensation is earned, in the case of Compensation that is earned and payable within a single calendar year and (ii) the Participant obtains a legal right to such Compensation (within the meaning of Code Section 409A), in the case of Compensation (including but not limited to an LTIP Award) to which the Participant obtains a legal right in one calendar year but which does not become vested and payable until a subsequent calendar year;
1.21 "Employee" shall mean an employee of the Employerwith a Base Salary of at least one hundred and fifty thousand dollars ($150,000), provided that such individual is among a select group of management or highly compensated employees within the meaning of ERISASection 201(2).
1.22 "Employer" shall mean the Company and its subsidiaries and affiliates.
1.23 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.
1.24 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
1.25 "Investment Account" shall meana bookkeeping account established and maintained for a Participant pursuant toSections 3.02(a) and3.02(b)(1).
1.26 "Investment Election Form" shall mean the form or forms that may be approved by the Administrator from time to time for use by a Participant to allocate deferredcompensation, and to the extent allocated to the Participant's Investment Account, Director's Fees, among the investment funds selected by the Company pursuant to Section 3.02(b)(1)(ii) and/or 3.02(b)(1)(iii), as applicable.
1.27 "LTIP" shall mean the Amended and Restated FPL Group, Inc. Long Term Incentive Plan,the FPL Group, Inc. Long Term Incentive Plan 1994 or the FPL Group, Inc. Long Term Incentive Plan 1985, as applicable..
1.28 "LTIP Award" shall mean an award granted pursuant to the terms of the LTIP, other than(a)an award ofrestricted stock or other equity which is actually issued in the name of the Participant on the date of grant, unless otherwise specifically approved by the Committee and (b) any award of a stock option, stock appreciation right or other equity, derivative or equity-linked instrument, however denominated, the value of which is derived exclusively from appreciation in the value of shares of Common Stock above the Market Value Per Share (or higher value specified in the terms of the award) that occurs after the date of the award.
1.29 "Market Value Per Share" shall mean the closing sales price on the relevant date for shares of Common Stock as reportedin the Composite TransactionsIndex of the New York Stock Exchange on such date. If such date is not a trading day or no sales occur on such date, the "Market Value Per Share" means theclosingprice on the nearesttradingdate beforethe valuation date.
1.30 "Non-Employee Director"shall mean a member of the Board who is not an employee of the Company or any of its subsidiaries or affiliates.
1.31 "Officer" shall mean an electedor appointedofficer of the Employer, provided that such individual is among a select group of management or highly compensated employees within the meaning of ERISASection 201(2).
1.32 "Participant" shall mean a Non-Employee Director, Officer or Employee who is eligible to participate in the Plan and has elected to deferCompensation and/or Director's Fees, as provided in Section 3.01.
1.33 "Phantom Stock Account" shall mean an account established and maintained for a Participant pursuant to Sections 3.02(a) and 3.02(b)(2).
1.34 "Phantom Shares" shall mean hypothetical shares of Common Stock.
1.35 "Plan" shall meanthis FPL Group, Inc. Deferred Compensation Plan, asamended from time to time.
1.36 "Plan Year" shall mean the calendar year.
1.37 "Section 16 Committee" shall mean the committee of the Board established for the purposes of approving certain matters relating to Section 16 Reporting Persons.
1.38 "Section 16 Reporting Person" shall mean any (a) director of the Company or (b) officer of the Employer designated by the Boardto be an "executive officer" for purposes of Section 16(a) of the Exchange Act.
1.39 "Service Recipient" means with respect to a Participant on any date: (a) the corporation or non-corporate entity for which the Participant is performing services on such date; (b) all corporations or non-corporate entities that are liable to the Participant for the benefits due to him under the Plan; (c) a corporation or non-corporate entity that is a majority shareholder of a corporation or non-corporate entity described in Section 1.39(a) or (b); or (d) any corporation or non-corporate entity in a chain of corporations or non-corporate entities each of which is a majority shareholder of another corporation or non-corporate entity in the chain, ending in a corporation or non-corporate entity described in Section 1.39 (a) or (b).
1.40 "Subsidiary" shall mean any corporation (other than the Company) with respect to which the Company owns, directly or indirectly, 50% or more of the total combined voting power of all classes of stock or membership or partnership interests. In addition, any other related entity may be designated by the Board as a Subsidiary, provided such entity could be considered as aSubsidiaryaccording to generally accepted accounting principles.
2.01Eligibility to Participate in the Plan. A Non-Employee Director, Officer or Employee shall be eligible to participate in the Plan to the extent provided herein.
ARTICLE III
DEFERRED COMPENSATION BENEFITS
(a)A Participant mayirrevocablyelect to defer all or a portion of his or herCompensation in a manner consistent with Code Section 409A by completing, signing, and deliveringa Deferral Election Form to the Administrator duringthe applicable Election Period as set forth below:
(1)A Non-Employee Director may defer all or a portion of his or her Director's Fees;
(2)An Officer may defer all or a portion of his or herCompensation; and
(3)An Employee (other than an Officer) may defer all or a portion of his or her Bonuses, and, to the extent that the Administratormay inits sole discretion permit, all or a portion of his or her Base Salary and/or LTIP Awards.
(b)Limitation on Deferrals. Notwithstanding anything to the contrary in this Plan, the amount to be deferred under this Plan may not reduce the amount of Base Salary, Bonuses, LTIP Awards, and/or Director's Fees which would be paid to the Participant (determined after taking the election into account) belowthe amount, if any, required to pay the Participant's portion of any taxes due under Chapter 21 (Federal Insurance Contributions Act) of theCode, any other applicable employment taxes, and the amount, if any, required to be withheld for income tax purposes or any payment of premiums and/or contributions for health benefits or other benefits elected by the Participant or otherwise provided under a cafeteria plan sponsored by the Employer pursuant to Code Section 125.
3.02Accounts and Investment Allocation.
(a)In General. An Investment Account and a Phantom Stock Account shall be established and maintained for each Participant.The Investment Account, and the Cash Account within the Phantom Stock Account, shall be measured in dollars and the Phantom Stock Account (except for the Cash Account) shall be measured in Phantom Shares (rounded to three decimal places). The Accounts shall be hypothetical in nature and shall be maintained for bookkeeping purposes only. Neither the Plan nor any of the Accounts shall hold or be required to hold any actual funds or assets.
(i)Crediting Contributions to the Investment Account. When a Participant's Investment Account is to be credited with a deferred amount, that amount shall be credited to the Investment Account as of the close of business on the date that such amountwould have otherwisebeen paid to the Participant.
(ii)Crediting Earnings on the Investment Account. Subject to the limitations of Subsection (b)(1)(iii), the Administrator may permit a Participant to allocate on an Investment Election Form, the deferred amounts credited to his or her Investment Account among one or more investment funds selected by the Company. In the event a Participant fails to elect one or more investment funds on an Investment Election Form, the Participant''s Investment Account shall be invested in a default investment fund designated by the Administrator until such time as the Participant shall submit an Investment Election Form to the Administrator. Subject to the limitations of Subsection (b)(1)(iii), a Participant may re-allocate the deferred amounts among such investment funds at any time or from time to time by submitting a new Investment Election Form to the Administrator. Deferred amounts allocated to an invest ment fund shall be deemed to be invested in such investment fund and shall be adjusted each business day to reflect the hypothetical income, gain and loss, including any unrealized appreciation or depreciation on such investment fund.
(iii)Company Stock Fund. A Participant may allocate deferred amounts to an investment fund that tracks, or invests primarily in, the Common Stock of the Company (a "Company Stock Fund"). If a Participant allocates deferred amounts to the Company Stock Fund, such amounts shall initially be credited to a stable value investment fund designated by the Administrator (the "Interim Investment Fund"). On the immediately following date on which a cash dividend is paid to holders of Common Stock (the "Dividend Payment Date"), all amounts credited to such Interim Investment Fund shall be transferred to the Company Stock Fund in the Participant's Investment Account. Any request to transfer a Participant's allocation of deferred amounts out of the Company Stock Fund will be processed o n the Dividend Payment Date that immediately follows such request. Notwithstanding the foregoing, any allocation in to, or out of, the Company Stock Fund by a Section 16 Reporting Person shall require the prior approval of the Section 16 Committee.
(i)Crediting Stock-Based Contributions to the Phantom Stock Account. When a Participant's Phantom Stock Account is to be credited forCompensation otherwisepayable in shares of Common Stock, then the number of shares of Common Stock which would have otherwise been paid to the Participant shall be credited to the Participant's Phantom Stock Account as of the date that suchpayment would have otherwise occurred.
(ii)Crediting Cash Dividends to the Phantom Stock Account. The Administrator shall establish a cash account within each Participant's Phantom Stock Account (the "Cash Account"). The Cash Account shall be credited on each Dividend Payment Date with an amount equal to the amount of the cash dividends which a holder of Common Stock would have received if on the record date for the dividend the holder was the record holder of a number of shares of Common Stock equal to the number of Phantom Shares then credited to the Phantom Stock Account. The Cash Account shall be credited quarterly with interest on the average weighted balance in such account at the end of the quarter at a rate equal to the lesser of (1) theprime rate as published in the Wall Street Journal or (2) 120% of the applicable federal long-term rate, with compounding (as prescribed under Code Section 127 4(d), determined (in either case)on the last business day of the calendar quarter preceding the calendar quarter to which it applies. On the first Dividend Payment Date of each calendar year commencing on and after the Restated Effective Date, the balance of the Cash Account attributable to Phantom Shares first deferred on or after the Restated Effective Date shall be converted to the number of Phantom Shares (including fractional shares) that could have been purchased with such balance at the Market Value Per Share on such date.
(iii)Crediting Stock Dividends on the Phantom Stock Account. A Participant's Phantom Stock Account shall be credited on each record date for a stock dividend paid to holders of Common Stock with that number of full and fractional shares of Common Stock which the Participant's Phantom Stock Account would have received if on that record date such account had been the holder of record of a number of shares of Common Stock equal to the number of Phantom Shares (including fractions) then credited to his or her Phantom Stock Account.
(iv)Other Adjustments to the Phantom Stock Account. The number of Phantom Shares shall be adjusted as determined in the discretion of the Administrator to reflect (i) any change in the outstanding Common Stock by reason of any stock dividend or split, recapitalization, reorganization, merger, consolidation, split-up, spin-off or any similar corporate change affecting the Common Stock; (ii) unusual or nonrecurring events affecting the Company or anySubsidiary or the financial statements of the Company or anySubsidiary; or (iii) changes in applicable laws, regulations, or accounting principles. Any such adjustment shall be effected in a manner determined by the Administrator that neither enlarges nor dilutes the economic rights represented by a Participant's Phantom Stock Account.
(3)Transfers Prohibited Between Accounts. A Participant shall be prohibited from transferring any amounts credited to his Phantom Stock Account to his Investment Account and from transferring any amounts credited to his Investment Account to his Phantom Stock Account.
(c)Allocating Contributions Between the Investment Account and the Phantom Stock Account.
(1)Deferrals by Officers and Employees.Cash Compensation shall be credited to the Participant's Investment Account in accordance with Subsection (b)(1)(i), unless the Participant elects to invest in the Company Stock Fund, in which case the amounts shall be credited in accordance with Subsection (b)(1)(iii). The portion of LTIP Awards thatwould have otherwise been paid inCommon Stock shall be credited to the Participant's Phantom Stock Account in accordance with Subsection (b)(2)(i).
(2)Deferrals by Non-Employee Directors. Director's Fees thatwould have otherwise been paid in cash shall be credited to an Investment Account. Such amounts shall be credited in accordance with Subsection (b)(1)(i), unless a Non-Employee Director elects to invest in the Company Stock Fund, in which case the amounts shall be credited in accordance with Subsection (b)(1)(iii). The portion of the Director's Fees thatwould have otherwise been paid inCommon Stock shall be credited to the Participant's Phantom Stock Account in accordance with Subsection (b)(2)(i).
(d)Account Statements. The Administrator shall provide to each Participant, within 120 days after the end of each Plan Year, a statement setting forth the balance of Phantom Shares in the Participant's Phantom Stock Account, the dollar value of the Cash Account, and the dollar value of the Participant's Investment Account as of the end of the Plan Year.
4.01Manner of Distribution.. At the time each deferral election is made by a Participant pursuant to Article III, such Participant shall elect, subject to Section 4.02, the form of payment with respect to such deferral. The Participant may elect to receive a distribution in the form of a single sum paymenton the Distribution Starting Date orin substantially equalpayments made monthly (or in accordance with the Company's applicable payroll practice, e.g., bi-weekly) commencing on the Distribution Starting Date and continuing for a period of up to 10 years,asspecified by the Participanton the election form. The Participant may make a separate distribution election with respect to each of his or her Phantom Stock Account and Investment Account. For a distribution election to be valid, it must be made during an Election Periodin accordance with the requirements of Code Section 409A and, in the case of Section 16 Reporting Persons who have a balance in their Phantom Stock Account (other than the Cash Account only) or in the Company Stock Fund, or who have a current deferral election to be credited to a Phantom Stock Account or the Company Stock Fund, with theprior notice to and the approval of the Administrator, the Company's General Counsel or the Company's Corporate Secretary. In the event the Participant fails to make such a distribution election, the Employer shalldistribute to the Participant (or his or her beneficiary or beneficiaries if the P articipant is deceased) his or her entire Account in a single sum on the Distribution Starting Date.
4.02Form of Distribution. Benefits attributable to the value of the Investment Account and Cash Account shall be distributed to the Participant in cash. Benefits attributable to the Phantom Stock Account (other than the Cash Account and any fractional shares) shall be distributed to the Participant in the form of shares of Common Stock. To the extent that the distribution is in the form of shares of Common Stock, such distribution shall be subject to all applicable securities laws and regulations, and the Company shall have taken all steps, if any, including registration and listing, as may be necessary to make the shares immediately transferable (by sale or otherwise) by the Participant without further regulatory action or compliance on the part of the Participant. The Participant shall reasonably cooperate with the Company, at the Company''s expense, to facilitate such compliance and related actions by the Company.
4.03 Unforeseeable Emergency. A Participant shall be entitled to an early distribution of all or a portion of his or her Account upon written application to the Administrator and the determination of the Administrator, inhis or her sole and absolute discretion, except that in the case of a Section 16 Reporting Person requesting distribution of all or a portion of his Phantom Stock Account or Company Stock Fund, the additional prior approval of the Section 16 Committee shall also be required, thatthe Participanthas experienced a severe financial hardshipresulting froman illness or accident of the Participant, the Participant's spouse orother dependent (as defined inCode Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.The amount distributed with respect to such unforeseeable emergency shall not exceed the amount necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or by liquidation of the Participant's assets (to the extent such liquidation would not itself cause severe financial hardship).
4.04Distribution Upon a Termination of Employment following a Change of ControlEvent. Anything in this Plan to the contrary notwithstanding, if a Change of ControlEventoccurs andthe Participant experiences a separation from service (within the meaning of Treas. Reg. Section 1.409A-1(h)) with the Company or its subsidiaries and affiliateswithin two years following the date of such Change of Control Event, then the Employer shall pay to the Participant (or his or her beneficiary or beneficiaries if the Participant is deceased) his or her entire Account in a single sum on thelater of (a) thefirst day of the month following the Participant's separation from service (within the m eaning of Treas. Reg. Section 1.409A-1(h)), or (b) if the Participant is a specified employee (within the meaning of Treas. Reg. Section 1.409A-1(i)) at separation from service, the first day of the seventh month following suchParticipant's separation from service (within the meaning of Treas. Reg. Section 1.409A-1(h)).
4.05Beneficiary Designation. For purposes of this Plan, a Participant's beneficiary or beneficiaries under this Plan shall be the person or persons last designated by a Participant, by written notice filed with the Administrator, to receive a Plan benefit upon the death of the Participant. The designation of a beneficiary other than the spouse of the Participant, if any, shall be void unless such spouse consents to such non-spouse beneficiary designation. In the event a Participant fails to designate a person or persons as provided above, or if no beneficiary so designated survives the Participant, then for all purposes of this Plan, the beneficiary shall be the spouse of the Participant, if living. Ifthere is no spouse orthe spouse is not living,such Participant's beneficiary or beneficiaries under this P lan shall be the beneficiary or beneficiaries of his or herlife insurance benefits under theHealth andWelfare Plan for Employees of FPL Group, Inc.and Affiliates (the "Health and Welfare Plan")(or any successor planthereto). If a Participant is not a participant inthe Health and Welfare Plan, the Participant''s beneficiary shall be his or her estate.
4.06Taxes. All amounts payable to any Participant hereunder may be reduced by any and all federal, state and local taxes imposed upon the Participant or his or her beneficiary or beneficiaries which are required to be withheld by the Employer.
4.07Distributions under Domestic Relations Orders. Nothing contained in this Plan prevents the Employer, in accordance with the direction of the Administrator, from complying with the provisions of a judgment, decree, or order (including approval of a property settlement agreement) resulting from a divorce, legal separation, annulment or change in legal custody that assigns to a spouse, former spouse, child or other dependent of a Participant (an "Alternate Payee") the right to receive all or a portion of the benefits of a Participant under the Plan in a form of payment permitted under the terms of the Plan (a "Domestic Relations Order"). The Employer shall make any payments required under this Section 4.07 by separate checks to each Alternate Payee, unless otherwise explicitly provided i n the Domestic Relations Order. Distribution to an Alternate Payee under a Domestic Relations Order is permitted at any time, irrespective of whether the Participant is currently entitled to a distribution of his or her benefits under the Plan. A distribution to an Alternate Payee prior to the time the Participant is entitled to a distribution of his or her benefits under the Plan (other than a distribution pursuant to Section 4.03) is available only if the Domestic Relations Order explicitly requires distribution at that time. Notwithstanding the foregoing, nothing in this Section 4.07 provides a Participant the right to receive a distribution of his or her benefits at a time not otherwise permitted under the terms of the Plan nor does it permit the Alternate Payee to receive a form of payment not otherwise permitted under the Plan.
Within a reasonable period of time after receiving the Domestic Relations Order, the Administrator will determine whether such order complies with the terms of the Plan and will notify the Participant and each Alternate Payee of its determination. If any portion of the Participant''s benefit is payable during the period the Administrator is making such determination, the Administrator shall make a separate accounting of the amounts payable.
4.08 Distribution to Comply with Federal Conflict of Interest Requirements. To the extent necessary to effect compliance with a certificate of divestiture (within the meaning of Code Section 1043(b)(2)), the Administrator may permit the early distribution of all or a portion of a Participant's benefits under this Plan.
5.01Administration. The Administrator shall administer and interpret this Plan ina manner consistent with the requirements of Code Section 409A and inaccordance with the provisions of the Plan in its sole and absolute discretion. Any determination or decision by the Administrator shall be conclusive and binding on all persons who at any time have, have had, or may have a claim to any interest whatsoever under this Plan.
5.02Liability of Committee and Administrator; Indemnification. To the extent permitted by law, no member of the Committee (or its delegatee), the Section 16 Committeeor the Administrator shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his or her own gross negligence or willful misconduct. The Employer shall indemnify the members of the Committee (or its delegatee), the Section 16 Committee and the Administrator against any and all claims, losses, damages, expenses, including any counsel fees and costs, incurred by them, and any liability, including any amounts paid in settlement with their approval, arising from their action or failure to act, except when the same is judicially determined to be attributable to their gross negligence or willful misconduct.
5.03Determination of Benefits.
(a)Claim for Benefits.A person, or his or her duly authorized representative, who believes that he or she is being denied a benefit to which he or she is entitled under the Plan (hereinafter referred to as a "Claimant") may file a written request for such benefit with the Administrator, setting forth his or her claim. The request must be addressed to the Company at its then principal place of business.
(b)Timing and Notification of Benefit Determination.
(1)Timing. If a claim is wholly or partially denied, the Administrator shall notify the Claimant of the Plan's adverse benefit determination within a reasonable period of time, but not later than 90 days after receipt of the claim by the Plan, unless the Administrator determines that special circumstances require an extension of time for processing the Claim. If the Administrator determines that an extension of time for processing is required, notice of the extension shall be furnished to the Claimant prior to the termination of the initial 90-day period; however, in no event shall such extension exceed a period of 90 days from the end of such initial period. Any extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefit determination. For purposes of this Subsection (b), the period of time within which a benefit determination is required to be mad e shall begin at the time a Claim is filed in accordance with the procedures set forth in this Subsection (b) without regard to whether all the information necessary to make a benefit determination accompanies such filing.
(2)Manner and Content of Notification of Benefit Determination. The Administrator shall provide a Claimant with written or electronic notification of any adverse benefit determination. Any electronic notification shall comply with the standards imposed by the Department of Labor. The notification shall set forth, in a manner calculated to be understood by the Claimant (i) the specific reason or reasons for the adverse determination, (ii) reference to the specific Plan provisions on which the determination is based, (iii) a description of any additional material or information necessary for the Claimant to perfect the Claim and an explanation of why such material or information is necessary, and (iv) a description of the Plan's review procedures and the time limits applicable to such procedures, including a statement of the Claimant's right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on revi ew.
(c)Appeal of Adverse Benefit Determination; Full and Fair Review. Within 60 days after the receipt by the Claimant of the written opinion described in Subsection (b), the Claimant may request in writing that the Committee review the claim and the Administrator''s initial adverse benefit determination. Such request must be addressed to the Company at its then principal place of business, and may include the submission of written comments, documents, records, and other information relating to the claim for benefits. The Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant's claim for benefits. The Committee''s review shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. If the Claimant does not request a review of the Administrator''s initial determination within such 60 day period, he shall be barred and estopped from challenging such determination.
(d)Notification of Benefit Determination on Review.
(1)Timing of Notification of Benefit Determination on Review. The Committee shall notify a Claimant of the Plan's determination of a request for review within a reasonable period of time, but not later than 60 days after receipt of the Claimant's request for review by the Plan, unless the Committee determines that special circumstances require an extension of time for processing the Claim. If the Committee determines that an extension of time for processing is required, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 60-day period. In no event shall such extension exceed a period of 60 days from the end of the initialperiod. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the determination on review. For purposes of this Subsection (d), the pe riod of time within which a benefit determination on review is required to be made shall begin at the time an appeal is filed in accordance with the procedures set forth in Subsection (c), without regard to whether all the information necessary to make a benefit determination accompanies such filing. In the event that a period of time is extended due to a Claimant's failure to submit information necessary to decide a claim, the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the Claimant until the date on which the Claimant responds to the request for additional information.
(2)Manner and Content of Notification of Benefit Determination on Review. The Committee shall provide a Claimant with written or electronic notification of a Plan's benefit determination on review. Any electronic notification shall comply with the standards imposed by the Department of Labor. In the case of an adverse benefit determination, the notification shall set forth, in a manner calculated to be understood by the Claimant (i) the specific reason or reasons for the adverse determination, (ii) reference to the specific Plan provisions on which the benefit determination is based, (iii) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant's claim for benefits, and (iv) a statement of the Claimant's right to bring a civil action under ERISA Section 502(a).
5.04Expenses. The cost of this Plan and the expenses of administering the Plan shall be borne by the Employer.
5.05Compliance with Securities Laws. Notwithstanding anything else to the contrary contained herein,
(a)the Section 16 Committee shall have final discretion with respect to the application, administration and interpretation of the Plan with regard to, and the deferral of compensation by, any Participant who is a Section 16 Reporting Person; and
(b)a Section 16 Reporting Person shall not take any actions or make any elections under this Plan which could result in short-swing trading liability under Section 16 of the Exchange Act.
5.06 Compliance with Code Section 409A. It is intended that the provisions of this Plan satisfy the requirements of Code Section 409A and that the Plan be operated in a manner consistent with such requirements to the extent applicable. Therefore, the Administrator may make adjustments to the Plan and may construe the provisions of the Plan in accordance with the requirements of Code Section 409A.
6.01No Trust Created. Nothing contained in this Plan, and no action taken pursuant to its provisions by any party shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Employer and the Participants or their beneficiaries.
6.02No Requirement to Fund. The Employer is not required to and shall not fund (within the meaning of the Federal tax laws) this Plan. Even though amounts deferred under this Plan are credited to the Accounts of the Participants, the Employer shall not be required to earmark, deposit, contribute to a trust, or otherwise set aside funds for such Accounts.
6.03Benefits Payable from General Assets. The benefits payable under this Plan to a Participant or his or her beneficiary or beneficiaries may be made from the general assets of the Employer or from such other assets earmarked, deposited, contributed to a trust, or otherwise set aside to fund benefits under this Plan. It is intended that the Employer''s obligation under this Plan be an unfunded and unsecured promise to pay money in the future. Any funds earmarked, deposited, contributed to a trust, or otherwise set aside by the Employer to assist it in satisfying its obligations under this Plan shall be subject to the claims of general creditors of the Employer. The Participants' (or their beneficiaries') rights to benefits under this Plan which are payable by the Employer shall be no greater than the right of any unsecured general credi tor of the Employer, and the Participants (and their beneficiaries) shall not have any security interest in any assets (including, but not limited to, assets earmarked, deposited, contributed to a trust, or otherwise set aside to fund benefits provided under this Plan) of the Employer.
6.04Successors. This Plan shall be binding upon the Employer and its successors and assigns, and the Participant, his or her successors, heirs, executors, administrators and beneficiaries.
6.05No Contract of Employment. Nothing contained in this Plan shall be construed to be a contract of employment or as conferring upon an eligible Non-Employee Director, Officer or Employee the right to continue to be employed by the Employer in his or her present capacity, or in any capacity, or any rights as an officer or director of the Employer.
6.06Amendment or Termination of Plan.
(a)Except to the extent otherwise reserved to the Administrator, the Chief Executive Officer, the President, any Vice President or the General Counsel of the Company (the "Corporate Officers") shall have the right to amend this Plan at any time and from time to time, including a retroactive amendment. The Committee expressly reserves the right to terminate the Plan and to amend(a) the definition of the following terms: Base Salary, Bonus, Change of Control, Committee, Common Stock, Company, Compensation, Director's Fees, Disability, Distribution Starting Date, Employee, Employer, Market Value Per Share, Non-Employee Director, Officer, or Participant; or (b) Sections 2.01 (Eligibility to Participate), 3.01 (Deferral Elections), 4.01 (Manner of Distribution), 4.03 (Unforeseeable Emergency), 4.04 (Distribution Upon a Termination of Employment following a Change of Control Event), 6.02 ( No Requirement to Fund), 6.03 (Benefits Payable from General Assets), and 6.06 (Amendment or Termination of Plan) hereof and shall have the right to amend any suchSection orSections at any time or from time to time, including a retroactive amendment. No amendment or termination of the Plan shall, without the consent of any person affected thereby, modify or in any way affect any right or obligation under this Plan created prior to such amendment or termination. Notwithstanding the foregoing, the Plan shall be subject to amendment to the extent necessary to effect compliance with Code Section 409A, but any such amendment shall, to the maximum practicable extent, preserve the economic rights of each Participant.
(ii) at such other time and in such other circumstances as may be permitted under Code Section 409A.
(ii) At such other time and in such other circumstances as may be permitted under Code Section 409A.
6.07Top Hat Plan. It is the Employer's intention that this Plan be construed as an unfunded, non-qualified deferred compensation plan maintained for a select group of management or highly compensated employees within the meaning of ERISASection 201(2).
6.08Governing Law. The validity and effect of this Plan and the rights and obligations of all persons affected hereby shall be construed and determined in accordance with the laws of the State of Florida unless superseded by federal law.
6.09Severability. In the event that any provision of this Plan shall be declared illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of this Plan but shall be fully severable and this Plan shall be construed and enforced as if said illegal or invalid provisions had never been inserted herein.
6.10Construction. The article andsection headings and numbers are included only for convenience of reference and are not to be taken as limiting or extending the meaning of any of the terms and provisions of the Plan. Whenever appropriate, words used in the singular shall include the plural or the plural may be read as the singular.
6.11Merger or Consolidation or Sale of Assets of Employer. Subject to the requirement that the Employer make distributions upon termination of a Participant's employment following a Change of Control pursuant to Section 4.04, in the event of the merger or consolidation of the Employer with any other entity, or in the event substantially all of the assets of the Employer are to be transferred to another entity, the successor entity resulting from the merger or consolidation, or the transferee of such assets, as the case may be, shall assume the obligations of the Employer hereunder and shall be substituted for the Employer hereunder.
6.12Transfer to an Affiliate of the Employer. An election to deferCompensation, and/or Director's Fees under this Plan shall apply with respect to such items of compensation paid by a Participant's Employer at the time such deferral election is properly made. In the event the Participant has a deferral election in effect and transfers from oneSubsidiary or affiliate of the Employer to anotherSubsidiary or affiliate of the Employer, theEmployer shall to the extent possible continue to comply with such deferral election (and the other related administrative elections). As soon as administratively practicable, the Administrator shall notify such new Emplo yer of the Participant's elections in effect and shall make available copies of the relevant forms on which such elections were made.
6.13Assignment. No right, title or interest of any kind in the Plan shall be transferable or assignable by a Participant or beneficiary or be subject to alienation, anticipation, encumbrance, garnishment, attachment, execution or levy or any kind, whether voluntary or involuntary nor subject to the debts, contracts, liabilities, engagements, or torts of a Participant or beneficiary, except as provided by Sections 4.06 and 4.07. Except as provided in this Section, any attempt to alienate, sell, transfer, assign, pledge, garnish, attach or otherwise subject to legal or equitable process or encumber or dispose of any interest in the Plan shall be void.
6.14Incapacity. If the Administrator determines that any person to whom any distribution is payable under this Plan is unable to care for his or her affairs because of illness or accident, or is a minor, any payment due (unless a prior claim thereto has been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, a child, a parent, or a brother or sister, or to any person deemed by the Administrator to have incurred expense for such person otherwise entitled to payment, in such manner as the Administrator may determine. Any such payment shall be a complete discharge of the liabilities of the Employer under this Plan.
6.15Effect on Benefits Under Other Plans. AnyCompensation and/or Director's Fees deferred hereunder and any benefits payable under this Plan shall not be considered salary or other compensation to the Participant for the purposes of computing benefits to which he or she may be entitled under any other employee benefit plan established or maintained by the Employer, except to the extent provided in such other employee benefit plan.
6.16Indemnity Upon Change of Control. If upon a Change of Control it becomes necessary for a Participant (or his or her beneficiary or beneficiaries) to institute a claim, by litigation or otherwise, to enforce his or her rights under this Plan, the Employer (and its successors or transferee in accordance with Section6.11) shall indemnify such Participant (or his or her beneficiary or beneficiaries) from and against all costs and expenses, including legal fees,incurred by him or her in instituting and maintaining such claim. Each indemnity payment shall be made no later than thirty days following the date of request for reimbursement of such costs and expenses by the Participant or beneficiary, as applicable. In no event shall such reimbursement occur later than the last day of the calendar year following the calendar year in whi ch such costs and expenses are incurred by the Participant or beneficiary, as applicable.
6.17No Rights asShareholders. No Participant who elects to defer compensation into a Phantom Stock Account or the Company Stock Fund will have any rights arising out of the ownership of Common Stock as a result of such election.