Exhibit 10(ii)
PROGRESS ENERGY, INC.
NON-EMPLOYEE DIRECTOR STOCK UNIT PLAN
1.0 RECITALS
1.1 Whereas, Carolina Power & Light Company ("CP&L") adopted the Carolina Power
& Light Company Retirement Plan for Outside Directors (the "Directors
Retirement Plan") in 1986, which provided for a fixed-dollar retirement
benefit for non-employee directors of CP&L following their termination of
service as a member of the Board of Directors of CP&L.
1.2 Whereas, effective January 1, 1998, CP&L froze the Directors Retirement
Plan so that no further benefits would accrue under such plan, and adopted
the Carolina Power & Light Company Non-Employee Director Stock Unit Plan
(the "Plan"), the purpose of which was to provide deferred compensation to
the non-employee directors of CP&L based on the value of CP&L common stock.
1.3 Whereas, sponsorship of the Plan was transferred to CP&L Energy, Inc.
effective August 1, 2000, and the name of the Plan was subsequently changed
to Progress Energy, Inc. Non-Employee Director Stock Unit Plan.
1.4 Whereas, the Company desires to amend and restate the Plan to reflect the
new name of the Plan and to provide additional protection to participants
in the event of a Change of Control.
1.5 Now, therefore, effective July 10, 2002, the Company adopts this amended
and restated Progress Energy, Inc. Non-Employee Director Stock Unit Plan.
2.0 PURPOSE
2.1 Purpose. The purpose of the Plan is to attract and retain highly qualified
individuals as non-employee directors of the Company, and to provide
deferred compensation to the Company's non-employee directors based on the
value of the Company's stock.
3.0 DEFINITIONS
The following terms shall have the following meanings unless the context
indicates otherwise:
3.1 "Annual Stock Unit Grant" shall mean a grant of Stock Units as described in
Section 5.2 below.
3.2 "Board" shall mean the Board of Directors of the Company.
3.3 "Change of Control" shall mean the earliest of the following dates:
(1) the date any person or group of persons (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934), excluding
employee benefit plans of the Company, becomes, directly or
indirectly, the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Securities Act of 1934) of securities of the
Company representing twenty-five percent (25%) or more of the combined
voting power of the Company's then outstanding securities (excluding
the acquisition of securities of the Company by an entity at least
eighty percent (80%) of the outstanding voting securities of which
are, directly or indirectly, beneficially owned by the Company); or
(2) the date of consummation of a tender offer for the ownership of more
than fifty percent (50%) of the Company's then outstanding voting
securities; or
(3) the date of consummation of a merger, share exchange or consolidation
of the Company with any other corporation or entity regardless of
which entity is the survivor, other than a merger, share exchange or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or being converted into voting
securities of the surviving or acquiring entity) more than sixty
percent (60%) of the combined voting power of the voting securities of
the Company or such surviving or acquiring entity outstanding
immediately after such merger or consolidation; or
(4) the date, when as a result of a tender offer or exchange offer for the
purchase of securities of the Company (other than such an offer by the
Company for its own securities), or as a result of a proxy contest,
merger, share exchange, consolidation or sale of assets, or as a
result of any combination of the foregoing, individuals who are
Continuing Directors cease for any reason to constitute at least
two-thirds (2/3) of the members of the Board of Directors; or
(5) the date the shareholders of the Company approve a plan of complete
liquidation or winding-up of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets; or
(6) the date of any event which the Board of Directors determines should
constitute a Change of Control.
A Change of Control shall not be deemed to have occurred until a majority
of the members of the Board of Directors receive written certification from
the Committee that one of the events set forth in this Section 3.3 as
occurred. Any determination that an event described in this Section 3.3 has
occurred shall, if made in good faith on the basis of information available
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at that time, be conclusive and binding on the Board of Directors, the
Company, the Participants and their beneficiaries for all purposes of the
Plan.
3.4 "Committee" shall mean the Board's Committee on Organization and
Compensation.
3.5 "Common Stock" shall mean the common stock of the Company.
3.6 "Company" shall mean Progress Energy, Inc., a North Carolina corporation,
including any successor entity.
3.7 "Continuing Directors" shall mean the members of the Board as of July 10,
2002; provided, however, that any person becoming a director subsequent to
such date whose election or nomination for election was supported by 75
percent or more of the directors who then comprised Continuing Directors
shall be considered to be a Continuing Director.
3.8 "Distribution Date" shall mean the later of (i) the date a Participant is
no longer a member of the Board or (ii) the date such Participant attains
age 65.
3.9 "Effective Date" shall mean January 1, 1998.
3.10 "Common Stock Value" shall mean:
(1) the average of the highest and lowest selling prices of Common Stock
on the relevant date (or on the last preceding trading date if Common
Stock was not traded on the relevant date) if Common Stock is readily
tradable on a national securities exchange or other market system; or
(2) an amount determined in good faith by the Board as the fair market
value of Common Stock on the date of determination if Common Stock is
not readily tradable on a national securities exchange or other market
system.
3.11 "Initial Stock Unit Grant" shall mean a grant of Stock Units us described
in Section 5.1 below.
3.12 "Matching Stock Unit Grant" shall mean a grant of Stock Units as described
in Section 5.3 below.
3.13 "Participant" shall mean a member of the Board who is not an employee of
the Company or any of its Subsidiaries.
3.14 "Stock Unit" shall mean a unit maintained by the Company for bookkeeping
purposes, equal in value to one (1) share of Common Stock.
3.15 "Stock Unit Account" shall mean a bookkeeping account established and
maintained (or caused to be established and maintained) by the Company for
the Participant which shall record the number of Stock Units granted to the
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Participant under Section 5 below. This account shall be established (or
caused to be established) by the Company for bookkeeping purposes only, and
no separate funds shall be segregated by the Company for the benefit of the
Participant.
3.16 "Plan" shall mean the Progress Energy, Inc. Non-Employee Director Stock
Unit Plan.
3.17 "Subsidiary" shall mean a corporation of which the Company directly or
indirectly owns more than 50 percent of the Voting Stock (meaning the
capital stock of any class or classes having general voting power under
ordinary circumstances, in the absence of contingencies, to elect the
directors of a corporation) or any other business entity in which the
Company directly or indirectly has an ownership interest of more than 50
percent.
4.0 ADMINISTRATION
4.1 Responsibility. The Committee shall have the responsibility, in its sole
discretion, to control, operate, manage and administer the Plan in
accordance with its terms.
4.2 Authority of the Committee. The Committee shall have all the discretionary
authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan, including but not limited to the
following:
(a) to determine eligibility for participation in the Plan;
(b) to correct any defect, supply any omission, or reconcile any
inconsistency in the Plan in such manner and to such extent as it
shall deem appropriate in its sole discretion to carry the same into
effect;
(c) to issue administrative guidelines as an aid to administer the Plan
and make changes in such guidelines as it from time to time deems
proper;
(d) to make rules for carrying out and administering the Plan and make
changes in such rules as it from time to time deems proper;
(e) to the extent permitted under the Plan, grant waivers of Plan terms,
conditions restrictions, and limitations;
(f) to make reasonable determinations as to a Participant's eligibility
for benefits under the Plan, including determinations as to vesting;
and
(g) to take any and all other actions it deems necessary or advisable for
the proper operation or administration of the Plan.
4.3 Action by the Committee. The Committee may act only by a majority of its
members. Any determination of the Committee may be made, without a meeting,
by a writing or writings signed by all of the members of the Committee. In
addition, the Committee may authorize any one or more of its members to
execute and deliver documents on behalf of the Committee.
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4.4 Delegation of Authority. The Committee may delegate to one or more of its
members, or to one or more agents, such administrative duties as it may
deem advisable; provided, however, that any such delegation shall be in
writing. In addition, the Committee, or any person to whom it has delegated
duties as aforesaid, may employ one or more persons to render advice with
respect to any responsibility the Committee or such person may have under
the Plan. The Committee may employ such legal or other counsel, consultants
and agents as it may deem desirable for the administration of the Plan and
may rely upon any opinion or computation received from any such counsel,
consultant or agent. Expenses incurred by the Committee in the engagement
of such counsel, consultant or agent shall be paid by the Company, or the
Subsidiary whose employees have benefited from the Plan, as determined by
the Committee.
4.5 Determinations and Interpretations by the Committee. All determinations and
interpretations made by the Committee shall be binding and conclusive on
all Participants and their heirs, successors, and legal representatives.
4.6 Information. The Company shall furnish to the Committee in writing all
information the Committee may deem appropriate for the exercise of its
powers and duties in the administration of the Plan. Such information may
include, but shall not be limited to, the full names of all Participants,
their earnings and their dates of birth, employment, retirement or death.
Such information shall be conclusive for all purposes of the Plan, and the
Committee shall be entitled to rely thereon without any investigation
thereof.
4.7 Self-Interest. No member of the Committee may act, vote or otherwise
influence a decision of the Committee specifically relating to his or her
benefits, if any, under the Plan.
5.0 STOCK UNIT GRANTS
5.1 Rollover. CP&L granted an Initial Stock Unit Grant to the Participants
listed on Schedule A (who were participants in the CP&L Retirement Plan for
Outside Directors) who elected by December 31, 1997, pursuant to an
election made in writing to the CP&L Vice President-Human Resources to
rollover their accrued benefit under such plan (the "Accrued Benefit") into
the Plan. The number of shares underlying each Initial Stock Unit Grant was
equal to the present value of the Participant's Accrued Benefit as of
December 31, 1997, divided by the Common Stock Value of CP&L common stock
on the last trading day of 1997. Any fractional Stock Unit greater than 50
percent was rounded up to one Stock Unit, and any fractional Stock Unit
equal to or less than 50 percent was disregarded. Such number of Stock
Units underlying the Initial Stock Unit Grant was entered and recorded in
the Participant's Stock Unit Account, and later adjusted to reflect the
change in the capital structure of CP&L as a result of which CP&L became a
Subsidiary of the Company.
5.2 Annual Grant. The Company shall grant to each Participant who has been a
member of the Board for a least 1 year an Annual Stock Unit Grant equal to
350 Stock Units. The Annual Stock Unit Grant shall be made on or about the
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date of the Company's annual meeting of shareholders. The Company shall
enter and record (or shall cause to be entered and recorded) in the
Participant's Stock Unit Account such number of Stock Units underlying the
Annual Stock Unit Grant.
5.3 Matching Grant. With respect to any specific year, if the corporate
incentive goals established by the Board are met for purposes of
determining the Company stock incentive matching contributions under the
Progress Energy 401(k) Savings and Stock Ownership Plan, the Company shall
grant to each Participant on or about the date of the Company's annual
meeting of shareholders following such year a Matching Stock Unit Grant
equal to up to 350 Stock Units in accordance with the terms of such
program. The Company shall enter and record (or shall cause to be entered
and recorded) in the Participant's Stock Unit Account such number of Stock
Units underlying the Annual Stock Unit Grant.
5.4 Dividend Stock Units. On the date that any holder of Common Stock receives
a dividend with respect to Common Stock, the Company shall grant to each
Participant, and shall enter and record (or shall cause to be entered and
recorded) in each such Participant's Stock Unit Account a number of Stock
Units equal to the result of (x) the dollar amount of such dividend paid
with respect to one share of Common Stock multiplied by (y) the number of
Stock Units in the Stock Unit Account as of the date such dividend is paid
divided by (z) the Common Stock Value as of the date such dividend is paid.
Any fractional Stock Unit greater than 50 percent shall be rounded up to
one Stock Unit, and any fractional Stock Unit equal to or less than 50
percent shall be disregarded.
6.0 BENEFIT
6.1 Vesting. A Participant shall be entitled to a Benefit described in this
Section 6 only after such Participant has been a member of the Board for 5
years. If there is a Change in Control, the Participant shall be entitled
to a Benefit described in this Section 6 as of the date of the Change in
Control, regardless of the number of years such Participant has been a
member of the Board.
6.2 Timing of Benefit. In accordance with Section 6.4 below, the Company shall
pay or begin paying a Benefit to a vested Participant during the 60-day
period following the Distribution Date. If the Participant has selected
annual payments in accordance with Section 6.4(b) below, all payments other
than the first payment shall be made on the applicable anniversary of the
Distribution Date.
6.3 Valuation. The value of a Participant's Stock Unit Account for purposes of
the Benefit shall be equal to the product of (x) the number of Stock Units
in the Participant's Stock Unit Account as of the Distribution Date or the
applicable anniversary of the Distribution Date multiplied by (y) the
Common Stock Value on the Distribution Date or the applicable anniversary
of the Distribution Date, in accordance with Section 6.4 below.
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6.4 Form of Benefit. The Company shall pay a Benefit to a vested Participant in
one of the following four (4) forms, as selected by the Participant within
60 days after becoming a Participant:
(a) a lump sum payment, with such payment equal to the value of the
Participant's Stock Unit Account as of the Distribution Date: or
(b) annual payments over 5, 10 or 15 years, with each annual payment equal
to (x) the value of the Participant's Stock Unit Account as of the
Distribution Date or the applicable anniversary of the Distribution
Date divided by (y) the number of payments yet to be made.
6.5 Change of Form of Benefit. The Participant may change the form of Benefit,
provided, however, that such change is made at least six (6) months prior
to the Distribution Date.
6.6 Death of Participant Prior to the Distribution Date. If the Participant's
death occurs prior to the Distribution Date, the Company shall pay or begin
paying a Benefit to a vested Participant's beneficiary (as designated by
the Participant under Section 6.8 below) on the first day of the sixth
month following the date of the Participant's death, and if the Participant
has selected a form of Benefit under Section 6.4(b) above, the Company
shall pay the remaining annual payments on the anniversary of the first
payment date as determined under this Section 6.6.
6.7 Death of Participant Following the Distribution Date. If the Participant's
death occurs following the Distribution Date, the Company shall continue to
pay the Benefit to the Participant's beneficiary (as designated by the
Participant under Section 6.8 below) following the date of the
Participant's death in the form of Benefit selected by the Participant in
accordance with Section 6.4 above.
6.8 Designation of Beneficiary. Within 60 days after becoming a Participant, a
Participant shall designate a beneficiary to receive the Benefit in the
event of the Participant's death. If the Participant does not designate a
beneficiary, the beneficiary shall be deemed to be the Participant's spouse
on the date of the Participant's death, and if the Participant does not
have a spouse on the date of his or her death, then the Participant's
estate shall be deemed to be the beneficiary under this Section 6.
7.0 TAXES
7.1 Withholding Taxes. The Company shall be entitled to withhold from any and
all payments made to a Participant under the Plan all federal, state, local
and/or other taxes or imposts which the Company determines are required to
be so withheld from such payments or by reason of any other payments made
to or on behalf of the Participant or for his or her benefit hereunder.
7.2 No Guarantee of Tax Consequences. No person connected with the Plan in any
capacity, including, but not limited to, the Company and any Subsidiary and
their directors, officers, agents and employees makes any representation,
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Commitment, or guarantee that any tax treatment, including, but not limited
to, federal, state and local income, estate and gift tax treatment, will be
applicable with respect to amounts deferred under the Plan, or paid to or
for the benefit of a Participant under the Plan, or that such tax treatment
will apply to or be available to a Participant on account of participation
in the Plan.
8.0 TERM OF PLAN; AMENDMENT AND TERMINATION
8.1 Term. The Plan shall be effective as of the Effective Date. The Plan shall
remain in effect until the Board terminates the Plan.
8.2 Termination or Amendment of Plan. The Board may suspend or terminate the
Plan at any time with or without prior notice and the Board may amend the
Plan at any time with or without prior notice; provided, however, that no
action authorized by this Section 8.2 shall reduce the balance of the Stock
Unit Account credited to a Participant or adversely affect the vesting of
such account.
9.0 MISCELLANEOUS
9.1 Adjustments. If there shall be any change in Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend, stock
split, reverse stock split, split up, spin-off, combination of shares,
exchange of shares, dividend in kind or other like change in capital
structure or distribution (other than normal cash dividends) to holders of
Common Stock, the number of Stock Units and the Participant's Stock Unit
Account shall be adjusted to equitably reflect such change or distribution.
9.2 Governing Law. The Plan and all actions taken in connection herewith shall
be governed by and construed in accordance with the laws of the State of
North Carolina without reference to principles of conflict of laws, except
as superseded by applicable federal law.
9.3 No Right Title or Interest in Company Assets. Participants shall have no
right, title, or interest whatsoever in or to any investments which the
Company may make to aid it in meeting its obligations under the Plan.
Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company and any Participant,
beneficiary, legal representative or any other person. To the extent that
any person acquires a right to receive payments from the Company under the
Plan, such right shall be no greater than the right of an unsecured general
creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall
be established and no segregation of assets shall be made to assure payment
of such amounts except as expressly set forth in the Plan.
9.4 No Right to Continued Service. The Participant's rights, if any, to
continue to serve the Company as a member of the Board shall not be
enlarged or otherwise affected by his or her participation in the Plan.
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9.5 Other Rights. The Plan shall not affect or impair the rights or obligations
of the Company or a Participant under any other written plan, contract,
arrangement, or pension, profit sharing or other compensation plan.
9.6 Severability. If any term or condition of the Plan shall be invalid or
unenforceable to any extent or in any application, then the remainder of
the Plan, with the exception of such invalid or unenforceable provision,
shall not be affected thereby and shall continue in effect and application
to its fullest extent. If, however, the Committee determines in its sole
discretion that any term or condition of the Plan which is invalid or
unenforceable is material to the interests of the Company, the Committee
may declare the Plan null and void in its entirety.
9.7 Incapacity. If the Committee determines that a Participant or a designated
beneficiary is unable to care for his or her affairs because of illness or
accident or because he or she is a minor, any benefit due the Participant
or designated beneficiary may be paid to the Participant's spouse or to any
other person deemed by the Committee to have incurred expense for such
Participant (including a duly appointed guardian, committee or other legal
representative), and any such payment shall be a complete discharge of the
Company's obligation hereunder.
9.8 Transferability of Rights. No Participant or spouse of a Participant shall
have any right to encumber, transfer or otherwise dispose of or alienate
any present or future right or expectancy which the Participant or such
spouse may have at any time to receive payments of benefits hereunder,
which benefits and the right thereto are expressly declared to be
nonassignable and nontransferable, except to the extent required by law.
Any attempt to transfer or assign a benefit, or any rights granted
hereunder, by a Participant or the spouse of a Participant shall be null
and void and without effect.
9.9 Entire Document. The Plan, as set forth herein, supersedes any and all
prior practices, understandings, agreements, descriptions or other
non-written arrangements respecting severance, and written employment or
severance contracts signed by the Company.
9.10 Change of Control. In the case of a Change of Control, the Company, subject
to the restrictions in this Section 9.10 and in Section 9.3, shall
irrevocably set aside funds in one or more grantor trusts in an amount that
is sufficient to pay each Participant the value of the Participant's Stock
Unit Account as of the date on which the Change of Control occurs. The
obligations and responsibilities of the Company under this Plan shall be
assumed by any successor or acquiring corporation, and all of the rights,
privileges and benefits of the Participants hereunder shall continue
following the Change of Control.
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SCHEDULE A
Participants Who Are Eligible To Receive Initial Stock Unit Grants
1. Edwin B. Borden
2. Richard L. Daugherty
3. Robert L. Jones
4. Felton J. Capel
5. Charles W. Coker
6. Estell C. Lee
7. Leslie M. Baker, Jr.
8. William O. McCoy
9. J. Tylee Wilson
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