Exhibit 10(iii)
AMENDED AND RESTATED
SUPPLEMENTAL SENIOR EXECUTIVE RETIREMENT PLAN
OF
PROGRESS ENERGY, INC.
Effective January 1, 1984
(As last amended effective July 10, 2002)
TABLE OF CONTENTS
Page
ARTICLE I
STATEMENT OF PURPOSE.........................................................1
ARTICLE II
DEFINITIONS..................................................................1
2.01 Terms..........................................................1
2.02 Affiliated Company.............................................1
2.03 Assumed Deferred Vested Pension Benefit........................2
2.04 Assumed Early Retirement Pension Benefit.......................2
2.05 Assumed Normal Retirement Pension Benefit......................2
2.06 Board..........................................................3
2.07 Change in Control..............................................3
2.08 Committee......................................................5
2.09 Company........................................................5
2.10 Continuing Director............................................5
2.11 Designated Beneficiary.........................................5
2.12 Early Retirement Date..........................................5
2.13 Eligible Spouse................................................6
2.14 Final Average Salary...........................................6
2.15 Normal Retirement Date.........................................7
2.16 Participant....................................................7
2.17 Pension........................................................7
2.18 Plan...........................................................7
2.19 Retirement Plan................................................7
2.20 Salary.........................................................7
2.21 Service........................................................8
2.22 Severance Date.................................................8
2.23 Social Security Benefit........................................8
2.24 Spouse's Pension..............................................10
2.25 Target Early Retirement Benefit...............................10
2.26 Target Normal Retirement Benefit..............................10
2.27 Target Pre-Retirement Death Benefit...........................10
2.28 Target Severance Benefit......................................10
ARTICLE III
ELIGIBILITY AND PARTICIPATION...............................................10
3.01 Eligibility...................................................10
3.02 Date of Participation.........................................11
3.03 Duration of Participation.....................................11
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ARTICLE IV
RETIREMENT BENEFITS.........................................................11
4.01 Normal Retirement Benefit.....................................11
4.02 Early Retirement Benefit......................................12
4.03 Commencement and Duration.....................................13
4.04 Surviving Spouse Benefit......................................14
4.05 Re-employment of Retired Participant..........................14
ARTICLE V
RETIREMENT DEATH BENEFITS...................................................14
5.01 Eligibility...................................................14
5.02 Amount........................................................14
5.03 Alternative Benefit...........................................14
5.04 Commencement and Duration.....................................15
ARTICLE VI
SEVERANCE BENEFITS..........................................................15
6.01 Eligibility...................................................15
6.02 Amount........................................................15
6.03 Commencement and Duration.....................................16
6.04 Surviving Spouse Benefit......................................16
ARTICLE VII
ADMINISTRATION..............................................................17
7.01 Committee.....................................................17
7.02 Voting........................................................17
7.03 Records.......................................................17
7.04 Liability.....................................................17
7.05 Expenses......................................................18
ARTICLE VIII
AMENDMENT AND TERMINATION...................................................18
ARTICLE IX
MISCELLANEOUS...............................................................18
9.01 Non-Alienation of Benefits....................................18
9.02 No Trust, Created.............................................19
9.03 No Employment Agreement.......................................19
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9.04 Binding Effect................................................20
9.05 Suicide.......................................................20
9.06 Claims for Benefits...........................................20
9.07 Entire Plan...................................................21
9.08 Change in Control.............................................21
ARTICLE X
CONSTRUCTION................................................................21
10.01 Governing Law.................................................21
10.02 Gender........................................................21
10.03 Headings, etc.................................................21
10.04 Action........................................................21
iii
ARTICLE I
STATEMENT OF PURPOSE
This Plan is designed and implemented for the purpose of enhancing the
earnings and growth of Progress Energy, Inc. (the "Sponsor") by providing to the
limited group of senior management employees largely responsible for such
earnings and long-term growth deferred compensation in the form of supplemental
retirement income benefits, thereby increasing the incentive of such key senior
management employees to make the Sponsor and its Affiliated Companies more
profitable. The benefits are normally payable to Participants upon retirement or
death. The terms of the benefits operate in conjunction with the Participant's
benefits payable under the Progress Energy Pension Plan and are designed to
supplement such pension plan benefits and provide the Participant with
additional financial security upon retirement or death.
The Plan is intended to constitute an unfunded retirement plan for a select
group of management or highly compensated employees within the meaning of Title
I of the Employee Retirement Income Security Act of 1974, as amended.
The Sponsor hereby restates and amends the Plan effective July 10, 2002.
ARTICLE II
DEFINITIONS
2.01 Terms. Unless otherwise clearly required by the context, the terms used
herein shall have the following meaning. Capitalized terms that are not
defined below shall have the meaning ascribed to them in the Retirement
Plan.
2.02 Affiliated Company. Shall mean any corporation or other entity that is
required to be aggregated with the Sponsor pursuant to Section 414(b), (c),
(m), or (o) of the Internal Revenue Code of 1996, as amended (the "Code"),
but only to the extent required.
2.03 Assumed Deferred Vested Pension Benefit. Shall mean the monthly benefit of
the deferred vested Pension to commence on his Normal Retirement Date
payable in the form of an annuity to which a separated Participant would be
entitled under the Retirement Plan, calculated with the following
assumptions based on such Participant's marital status at the time benefits
hereunder commence:
(a) In the case of a Participant with an Eligible Spouse, in the form of a
50% Qualified Joint and Survivor Annuity as provided in the Retirement
Plan.
(b) In the case of a Participant without an Eligible Spouse, in the form
of a Single Life Annuity as provided in the Retirement Plan.
(c) Without regard to any other benefit payment option under the
Retirement Plan.
2.04 Assumed Early Retirement Pension Benefit. Shall mean the monthly benefit of
the normal retirement Pension payable in the form of an annuity to which a
Participant would be entitled under the Retirement Plan at his Normal
Retirement Date, based upon his projected years of Service at his Normal
Retirement Date and calculated with the following assumptions based upon
his marital status at the time benefits hereunder commence:
(a) In the case of a Participant with an Eligible Spouse, in the form of a
50% Qualified Joint and Survivor Annuity as provided in the Retirement
Plan.
(b) In the case of a Participant without an Eligible Spouse, in the form
of a Single Life Annuity as provided in the Retirement Plan.
(c) Without regard to any other benefit payment option under the
Retirement Plan.
2.05 Assumed Normal Retirement Pension Benefit. Shall mean the monthly benefit
of the normal retirement Pension payable in the form of an annuity to which
2
a Participant would be entitled under the Retirement Plan if he retired at
his Normal Retirement Date, calculated with the following assumptions based
on his marital status at the time benefits hereunder commence:
(a) In the case of a Participant with an Eligible Spouse, in the form of a
50% Qualified Joint and Survivor Annuity as provided in the Retirement
Plan.
(b) In the case of a Participant without an Eligible Spouse, in the form
of a Single Life Annuity as provided in the Retirement Plan.
(c) Without regard to any other benefit payment option under the
Retirement Plan.
2.06 Board. Shall mean the Board of Directors of Sponsor.
2.07 Change in Control. Shall occur on the earliest of the following dates:
(a) 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 Sponsor, becomes, directly or
indirectly, the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Securities Act of 1934) of securities of the
Sponsor representing twenty-five percent (25%) or more of the combined
voting power of the Sponsor's then outstanding securities (excluding
the acquisition of securities of the Sponsor by an entity at least
eighty percent (80%) of the outstanding voting securities of which
are, directly or indirectly, beneficially owned by the Sponsor); or
(b) the date of consummation of a tender offer for the ownership of more
than fifty percent (50%) of the Sponsor's then outstanding voting
securities; or
(c) the date of consummation of a merger, share exchange or consolidation
of the Sponsor with any other corporation or entity regardless of
3
which entity is the survivor, other than a merger, share exchange or
consolidation which would result in the voting securities of the
Sponsor 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 Sponsor or such surviving or acquiring entity outstanding
immediately after such merger or consolidation; or
(d) the date, when as a result of a tender offer or exchange offer for the
purchase of securities of the Sponsor (other than such an offer by the
Sponsor 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; or
(e) the date the shareholders of the Sponsor approve a plan of complete
liquidation or winding-up of the Sponsor or an agreement for the sale
or disposition by the Sponsor of all or substantially all of the
Sponsor's assets; or
(f) the date of any event which the Board determines should constitute a
Change in Control.
A Change in Control shall not be deemed to have occurred until a majority
of the members of the Board receive written certification from the
Committee that such event has occurred. Any determination that such an
event has occurred shall, if made in good faith on the basis of information
4
available at that time, be conclusive and binding on the Committee, the
Sponsor, the Company, the Participants and their beneficiaries for all
purposes of the Plan.
2.08 Committee. Shall mean the Committee on Organization and Compensation of the
Board.
2.09 Company. Shall mean Progress Energy, Inc. or any successor to it in the
ownership of substantially all of its assets, and each Affiliated Company
that, with the consent of the Board adopts the Plan and is included in
Appendix A, as in effect from time to time. Appendix A shall set forth any
limitations imposed on employees of Affiliated Companies that adopt the
Plan, including limitations on "Service," notwithstanding any provision of
the Plan to the contrary.
2.10 Continuing Director. 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
seventy-five percent (75%) or more of the Directors who then comprised
Continuing Directors shall be considered to be a Continuing Director.
2.11 Designated Beneficiary. Shall mean one or more beneficiaries as designated
by a Participant in writing delivered to the Committee. In the event no
such written designation is made by a Participant or if such beneficiary
shall not be living or in existence at the time for commencement of payment
to any Designated Beneficiary under the Plan, the Participant shall be
deemed to have designated his estate as such beneficiary.
2.12 Early Retirement Date. Shall mean the date on which a Participant who
qualifies for the early retirement benefit of Section 4.02 hereof retires
from the employ of the Company and its affiliated entities.
5
2.13 Eligible Spouse. Shall mean the spouse of a Participant who, under the laws
of the State where the marriage was contracted, is deemed married to that
Participant on the date on which the payments from this Plan are to begin
to the Participant, except that for purposes of Articles V and VI hereof,
Eligible Spouse shall mean a person who is married to a Participant for a
period of at least one year prior to his death.
2.14 Final Average Salary. Shall mean a Participant's average monthly Salary (as
defined in Section 2.18 hereof) during the 36 completed calendar months of
highest compensation within the 120-month period immediately preceding the
earliest to occur of the Participant's death, Severance Date, Early
Retirement Date, or Normal Retirement Date, whichever is applicable.
Provided, however, if a Participant becomes entitled to a benefit hereunder
while under a period of long-term disability under the Sponsor's Group
Insurance Plan, Final Average Salary shall be determined for the 12
calendar months immediately preceding the commencement of such period of
long-term disability. Provided, further, in determining average monthly
Salary (i) annual incentives and other similar payments shall be deemed
received in twelve (12) equal payments beginning with the eleventh
preceding month and ending with the month in which actual payment is made,
and (ii) amounts of compensation deferred under any deferred compensation
plan or arrangement shall be deemed received in the months such payments
would have been received assuming no deferral had occurred. For years of
Service granted under the terms of a written employment agreement as
provided under Section 2.21, Salary during each such month is deemed to be
zero dollars ($0.00) for purposes of calculating Final Average Salary.
6
2.15 Normal Retirement Date. Shall mean the first day of the calendar month
coinciding with or next following the Participant's 65th birthday.
2.16 Participant. Shall mean an employee of the Company who is eligible and is
participating in this Plan in accordance with Article III hereof.
2.17 Pension. Shall mean a level monthly annuity which is payable under the
Retirement Plan as of the Benefit Commencement Date if the Participant
elected an annuity form of benefit.
2.18 Plan. Shall mean the "Supplemental Senior Executive Retirement Plan of
Progress Energy, Inc." as contained herein and as it may be amended from
time to time hereafter.
2.19 Retirement Plan. Shall mean the "Progress Energy Pension Plan" (as amended
effective January 1, 2002) as it may be amended from time to time
hereafter.
2.20 Salary. Shall mean the sum of
(1) The annual base compensation paid by the Company to a Participant, and
(2) annual cash awards made under incentive compensation programs
excluding, however, any payment made under the Sponsor's Long-Term
Compensation Program or the Sponsor's 1997 and 2002 Equity Incentive
Plans, and
(3) amounts of annual compensation deferred under any deferred
compensation plan or arrangement (including, without limitation, the
"Executive Deferred Compensation Plan," the "Deferred Compensation
Plan for Key Management Employees of Progress Energy, Inc.," the
"Progress Energy, Inc. Management Deferred Compensation Plan" and the
"Progress Energy 401(k) Savings and Stock Ownership Plan") and which,
but for the deferral, would have been reflected in Internal Revenue
Service Form W-2.
7
2.21 Service. Shall have the same meaning as "Eligibility Service," determined
as provided in Sections 2.02 and 3.01 of the Retirement Plan, plus any
additional years of service that may be granted to the Participant in
connection with this Plan under the terms of a written employment agreement
(or any amendment thereto) entered into between the Company and the
Participant.
2.22 Severance Date. Shall mean the earlier of:
(a) The date a Participant leaves the employ of the Company and all
affiliated entities other than on account of his death, a period of
long-term disability under the Company's Group Insurance Plan, or
retirement at either his Early Retirement Date or upon or after his
Normal Retirement Date, or
(b) The first anniversary of the date on which a Participant is first
absent from the service of the Sponsor and all Affiliated Companies,
with or without pay, other than on account of his death, a period of
long-term disability under the Company's Group Insurance Plan, or his
retirement at either his Early Retirement Date or upon or after his
Normal Retirement Date. If a Participant shall leave the employ of the
Company and all Affiliated Companies under circumstances described in
(b) and shall during such absence (and before the first anniversary of
commencement of said absence) quit or be discharged, his Severance
Date shall be the date he quits or is discharged.
2.23 Social Security Benefit. Means the monthly amount of benefit which a
Participant is or would be entitled to receive at age 65 as a primary
insurance amount under the federal Social Security Act, as amended, whether
or not he applies for such benefit, and even though he may lose part or all
8
of such benefit through delay in applying for it, by making application
prior to age 65 for a reduced benefit, by entering into covered employment,
or for any other reason. The amount of such Social Security Benefit to
which the Participant is or would be entitled shall be estimated by the
Committee for the purposes of this Plan as of the January 1 of the year in
which his Severance Date or retirement occurs on the following basis:
(a) For a Participant entitled to a normal retirement benefit, on the
basis of the federal Social Security Act as in effect on the January 1
coincident with or next preceding his Normal Retirement Date
(regardless of any retroactive changes made by legislation enacted
after said January 1);
(b) For a Participant entitled to an early retirement benefit, on the
basis of the federal Social Security Act as in effect on the January 1
coincident with or next preceding his Early Retirement Date
(regardless of any retroactive change made by legislation enacted
after said January 1), assuming that his employment, and Salary in
effect at his Early Retirement Date, continued to age 65; or
(c) For a Participant entitled to a severance benefit, on the basis of the
federal Social Security Act as in effect on the January 1 coincident
with or next preceding his Severance Date (regardless of any
retroactive change made by legislation enacted after said January 1),
assuming that his employment, and Salary in effect at his Severance
Date, continued to age 65.
For purposes of the calculations required under paragraphs (a) and (b)
above, if a Participant is disabled under a period of long-term
disability under the Company's Group Insurance Plan, said Social
9
Security Benefit shall be calculated as if his Salary in effect at the
commencement of such period of long-term disability continued to age
65.
2.24 Spouse's Pension. Shall mean the actual monthly benefit payable to an
Eligible Spouse under the Retirement Plan, assuming the Eligible Spouse
elected a 50% Joint and Survivor Annuity form of benefit.
2.25 Target Early Retirement Benefit. Shall mean an amount equal to a
Participant's Final Average Salary determined at his Early Retirement Date
multiplied by four percent (4%) for each projected year of Service at his
Normal Retirement Date up to a maximum of sixty-two percent (62%).
2.26 Target Normal Retirement Benefit. Shall mean an amount equal to a
Participant's Final Average Salary determined at his Normal Retirement Date
multiplied by four percent (4%) for each projected year of Service at his
Normal Retirement Date up to a maximum of sixty-two percent (62%).
2.27 Target Pre-Retirement Death Benefit. Shall mean an amount equal to a
deceased Participant's Final Average Salary determined at his death
multiplied by four percent (4%) for each year of Service at his death up to
a maximum of sixty-two percent (62%).
2.28 Target Severance Benefit. Shall mean an amount equal to a Participant's
Final Average Salary determined at his Severance Date multiplied by four
percent (4%) for each year of Service at his Severance Date up to a maximum
of sixty-two percent (62%).
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Eligibility. Any executive employee of a Company who has served on the
Senior Management Committee of the Sponsor and who has been a Senior Vice
10
President or above for a minimum period of three (3) years and who has at
least ten (10) years of Service shall be eligible to participate in this
Plan.
3.02 Date of Participation. Each executive who is eligible to become a
Participant under Section 3.01 shall become a Participant on the first day
of the month following the month in which he is first eligible to
participate.
3.03 Duration of Participation. Each executive who becomes a Participant shall
continue to be a Participant until the termination of his employment with
the Company or, if later, the date he is no longer entitled to benefits
under this Plan.
ARTICLE IV
RETIREMENT BENEFITS
4.01 Normal Retirement Benefit.
(a) Eligibility. A Participant whose employment with the Company
terminates on or after his Normal Retirement Date shall be eligible
for the normal retirement benefit described in this Section 4.01.
(b) Amount and Form. The monthly payment hereunder shall be in the form of
a Single Life Annuity if the Participant has no Eligible Spouse and in
the form of a 50% Qualified Joint and Survivor Annuity if the
Participant has an Eligible Spouse. The eligible Participant's normal
retirement benefit shall be a monthly amount equal to his Target
Normal Retirement Benefit reduced by the sum of (1) his Assumed Normal
Retirement Pension Benefit and (2) his Social Security Benefit.
(c) Commencement and Duration. Monthly normal retirement benefit payments
shall commence at the same time as the eligible Participant's normal
retirement Pension payable from the Retirement Plan and shall continue
11
in monthly installments thereafter ending with a payment for the month
in which such eligible Participant's death occurs, unless the benefit
is being paid in the form of a Qualified Joint and Survivor Annuity,
in which case the survivor benefit shall be paid to the Eligible
Spouse, if living, for his or her life. If at the time of commencement
of payment such eligible Participant does not have an Eligible Spouse
the monthly benefit payments shall be guaranteed for one hundred
twenty (120) monthly payments with any such guaranteed payments
remaining at such Participant's death payable to his Designated
Beneficiary.
4.02 Early Retirement Benefit.
(a) Eligibility. Upon recommendation of the Chief Executive Officer of the
Company and approval of the Committee, a Participant whose employment
with the Company terminates upon or after his attainment of age
fifty-five (55) with at least fifteen (15) years of Service (except
for purposes of calculating benefits payable under Article V.
PRE-RETIREMENT DEATH BENEFITS and Article VI. SEVERANCE BENEFITS, as
applicable) but prior to his Normal Retirement Date, shall be eligible
for the early retirement benefit described in this Section 4.02.
(b) Amount and Form. The monthly payment hereunder shall be in the form of
a Single Life Annuity if the Participant has no Eligible Spouse and in
the form of a 50% Qualified Joint and Survivor Annuity if the
Participant has an Eligible Spouse. The eligible Participant's early
retirement benefit shall be a monthly amount equal to his Target Early
12
Retirement Benefit reduced by the sum of (1) his Assumed Early
Retirement Pension Benefit and (2) his Social Security Benefit;
provided, however, such benefit will be reduced, where applicable, by
the following:
(i) The amount of, 2.5% for each year that such benefit is received
prior to his Normal Retirement Date, and
(ii) If such eligible Participant's projected years of Service at his
Normal Retirement Date are less than fifteen (15), his Target
Early Retirement Benefit and his Assumed Early Retirement Pension
Benefit shall be calculated based upon his actual years of
Service at his Early Retirement Date rather than upon his
projected years of Service at his Normal Retirement Date.
4.03 Commencement and Duration. Monthly early retirement benefit payments shall
commence on the first day of the month following the Participant's
attainment of age 65, provided, such Participant may make written
application to the Committee to have payments commence on the first day of
any month following his Early Retirement Date and the decision of the
Committee, based upon its sole and absolute discretion, to allow such early
commencement of payment shall be final. After commencement of payment, said
early retirement benefit payments shall continue in monthly installments
thereafter ending with a payment for the month in which such eligible
Participant's death occurs, unless the benefit is being paid in the form of
a Qualified Joint and Survivor Annuity, in which case the survivor benefit
shall be paid to the Eligible Spouse, if living, for his or her life. If at
13
the time of commencement of payment such eligible Participant does not have
an Eligible Spouse, the monthly benefit payments shall be guaranteed for
one hundred twenty (120) monthly payments with any such guaranteed payments
remaining at such Participant's death payable to his Designated
Beneficiary.
4.04 Surviving Spouse Benefit. The surviving Eligible Spouse of a Participant
who is receiving a Qualified Joint and Survivor Benefit as a normal
retirement benefit or as an early retirement benefit shall be eligible for
the surviving spouse benefit upon the death of the Participant for the
duration of the Eligible Spouse's life.
4.05 Re-employment of Retired Participant. A retired Participant receiving or
eligible to receive the retirement benefits described in Sections 4.01 and
4.02 hereof who is reemployed by the Company shall be ineligible to again
participate in this Plan.
ARTICLE V
RETIREMENT DEATH BENEFITS
5.01 Eligibility. A Participant's surviving Eligible Spouse shall be eligible
for the pre- retirement death benefit as described in this Article V if
such Participant dies while in the employ of the Company with 10 or more
years of Service.
5.02 Amount. Such surviving Eligible Spouse shall be entitled to a monthly
pre-retirement death benefit payable in the form of an annuity in an amount
equal to the difference, if any, between (a) forty percent (40%) of the
Target Pre-Retirement Death Benefit and (b) the Spouse's Pension.
5.03 Alternative Benefit. If greater than the monthly benefit of Section 5.02
hereof, the surviving Eligible Spouse of a Participant who dies while in
the employ of the Company after attaining age fifty-five (55) with fifteen
(15) years of Service shall be entitled to a monthly pre-retirement death
benefit equal to fifty percent (50%) of the early retirement benefit the
14
Participant would have been entitled to receive under Section 4.02 hereof
(calculated using both reductions, where applicable, in subsections
4.02(b)(i) and 4.02(b)(ii)) as if he had retired immediately prior to his
death with the recommendation of the Chief Executive Officer and approval
of the Committee.
5.04 Commencement and Duration. The surviving Eligible Spouse's monthly
pre-retirement death benefit payments shall commence in the month following
the Participant's death and shall be paid in monthly installments
thereafter ending with a payment for the month in which such surviving
Eligible Spouse's death occurs.
ARTICLE VI
SEVERANCE BENEFITS
6.01 Eligibility. Upon his termination of employment with the Company at his
Severance Date, a Participant who has completed ten (10) or more years of
Service shall be eligible for one of the severance benefits described in
this Article VI.
6.02 Amount.
(a) If at his Severance Date such eligible Participant is not entitled to
a deferred vested Pension pursuant to Section 5.03 of the Retirement
Plan or an early retirement Pension pursuant to Section 5.02 of the
Retirement Plan, his severance benefit shall be a monthly amount equal
to his Target Severance Benefit reduced by his Social Security
Benefit.
(b) If at his Severance Date such eligible Participant is entitled to a
deferred vested Pension pursuant to Section 5.03 of the Retirement
Plan, his severance benefit shall be a monthly amount equal to his
15
Target Severance Benefit reduced by the sum of (1) his Assumed
Deferred Vested Pension Benefit and (2) his Social Security Benefit.
(c) If at his Severance Date such eligible Participant is entitled to an
early retirement Pension pursuant to Section 5.02 of the Retirement
Plan, his severance benefit shall be a monthly amount equal to his
Target Severance Benefit reduced by the sum of (1) his Assumed Early
Retirement Pension Benefit and (2) his Social Security Benefit;
provided, however, such Assumed Early Retirement Pension Benefit shall
be calculated based upon his actual years of Service at his Severance
Date rather than upon his projected years of Service at his Normal
Retirement Date.
6.03 Commencement and Duration. Monthly severance benefit payments shall
commence on the eligible Participant's Normal Retirement Date and shall
continue in monthly installments thereafter ending with a payment for the
month in which such eligible Participant's death occurs.
6.04 Surviving Spouse Benefit.
(a) Eligibility. The surviving Eligible Spouse of a Participant who is
receiving or who dies after attaining age fifty-five (55) entitled to
receive a severance benefit hereunder shall be eligible for the
surviving spouse benefit described in this Section 6.04.
(b) Such surviving Eligible Spouse shall be entitled to a monthly
surviving spouse benefit in an amount equal to fifty percent (50%) of
the severance benefit which the deceased Participant was receiving or
16
entitled to receive at his Normal Retirement Date under either Section
6.02(a) or 6.02(b) hereof on the day before his death.
(c) Commencement and Duration. The monthly surviving spouse benefit
payment shall commence in the month following the Participant's death
and shall be paid in monthly installments thereafter ending with a
payment for the month in which such surviving Eligible Spouse's death
occurs.
ARTICLE VII
ADMINISTRATION
7.01 Committee. This Plan shall be administered by the Committee. The Committee
shall have all powers necessary to enable it to carry out its duties in the
administration of the Plan. Not in limitation, but in application of the
foregoing, the Committee shall have the duty and power to determine all
questions that may arise hereunder as to the status and rights of
Participants in the Plan.
7.02 Voting. The Committee shall act by a majority of the number then
constituting the Committee, and such action may be taken either by vote at
a meeting or in writing , without a meeting.
7.03 Records. The Committee shall keep a complete record of all its proceedings
and all data relating to the administration of the Plan. The Committee
shall select one of its members as a Chairman. The Committee shall appoint
a Secretary to keep minutes of its meetings and the Secretary may or may
not be a member of the Committee. The Committee shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
7.04 Liability. To the extent permitted by law, no member of the Committee 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
17
his own gross negligence or willful misconduct. The Sponsor shall indemnify
the members of the Committee against any and all claims, losses, damages,
expenses, including counsel fees, 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.
7.05 Expenses. The cost of payments from this Plan and the expenses of
administering the Plan shall borne by each Company with respect to its own
employees.
ARTICLE VIII
AMENDMENT AND TERMINATION
The Sponsor reserves the right, at any time or from time to time, by action
of its Board, to modify or amend in whole or in part any or all provisions of
the Plan. In addition, the Sponsor reserves the right by action of its Board to
terminate the Plan in whole or in part. Provided, however, any such
modification, amendment or termination shall not reduce benefits accrued at such
time nor increase vesting requirements with respect to such accrued benefits.
ARTICLE IX
MISCELLANEOUS
9.01 Non-Alienation of Benefits. No right or benefit under the Plan shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance,
or charge, and any attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge any right or benefit under the Plan shall be void. No
right or benefit hereunder shall in any manner be liable for or subject to
the debts, contracts, liabilities or torts of the person entitled to such
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benefits. If the Participant or Eligible Spouse shall become bankrupt, or
attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
any right hereunder, then such right or benefit shall, in the discretion of
the Committee, cease and terminate, and in such event, the Committee may
hold or apply the same or any part thereof for the benefit of the
Participant or his spouse, children, or other dependents, or any of them,
in such manner and in such amounts and proportions as the Committee may
deem proper.
9.02 No Trust, Created. The obligations of the Sponsor and each Company to make
payments hereunder shall constitute a liability of the Sponsor and each
Company, as the case may be, to a Participant. Such payments shall be made
from the general funds of the Sponsor or a Company, and the Sponsor or a
Company shall not be required to establish or maintain any special or
separate fund, or purchase or acquire life insurance on a Participant's
life, or otherwise to segregate assets to assure that such payment shall be
made, and neither a Participant nor Eligible Spouse shall have any interest
in any particular asset of the Sponsor or a Company by reason of its
obligations hereunder. Nothing contained in the Plan shall create or be
construed as creating a trust of any kind or any other fiduciary
relationship between the Sponsor, a Company and a Participant or any other
person.
9.03 No Employment Agreement. Neither the execution of this Plan nor any action
taken by the Sponsor or a Company pursuant to this Plan shall be held or
construed to confer on a Participant any legal right to be continued as an
employee of the Sponsor or a Company in an executive position or in any
other capacity whatsoever. This Plan shall not be deemed to constitute a
contract of employment between the Sponsor or a Company and a Participant,
nor shall any provision herein restrict the right of any Participant to
terminate his employment with the Sponsor or a Company.
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9.04 Binding Effect. Obligations incurred by the Sponsor or a Company pursuant
to this Plan shall be binding upon and inure to the benefit of the Sponsor
or a Company, its successors and assigns, and the Participant or his
Eligible Spouse.
9.05 Suicide. No benefit shall be payable under the Plan to a Participant or
Eligible Spouse where such Participant dies as a result of suicide within
two (2) years of his commencement of participation herein.
9.06 Claims for Benefits. Each Participant or Eligible Spouse must claim any
benefit to which he is entitled under this Plan by a written notification
to the Committee. If a claim is denied, it must be denied within a
reasonable period of time, and be contained in a written notice stating the
following:
A. The specific reason for the denial.
B. Specific reference to the Plan provision on which the denial is
based.
C. Description of additional information necessary for the claimant to
present his claim, if any, and an explanation of why such material is
necessary.
D. An explanation of the Plan's claims review procedure. The claimant
will have 60 days to request a review of the denial by the Committee,
which will provide a full and fair review. The request for review must
be in writing delivered to the Committee. The claimant may review
pertinent documents, and he may submit issues and comments in writing.
The decision by the Committee with respect to the review must be given
within 60 days after receipt of the request, unless special
circumstances require an extension (such as for a hearing). In no
event shall the decision be delayed beyond 120 days after receipt of
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the request for review. The decision shall be written in a manner
calculated to be understood by the claimant, and it shall include
specific reasons and refer to specific Plan provisions as to its
effect.
9.07 Entire Plan. This document and any amendments contain all the terms and
provisions of the Plan and shall constitute the entire Plan, any other
alleged terms or provisions being of no effect.
9.08 Change in Control. In the event of a Change in Control, the Sponsor shall
irrevocably set aside funds in one or more grantor trusts in an amount that
is sufficient to pay each Participant (or Designated Beneficiary) the
amount of benefits accrued under the Plan as of the date of the Change in
Control. Any such trust shall be subject to the claims of the general
creditors of the Company in the event of the bankruptcy or insolvency of
the Company.
ARTICLE X
CONSTRUCTION
10.01Governing Law. This Plan shall be construed and governed in accordance
with the laws of the State of North Carolina, to the extent not preempted
by Federal Law.
10.02Gender. The masculine gender, where appearing in the Plan, shall be deemed
to include the feminine gender, and the singular may include the plural,
unless the context clearly indicates to the contrary.
10.03Headings, etc. The cover page of this Plan, the Table of Contents and all
headings used in this Plan are for convenience of reference only and are
not part of the substance of this Plan.
10.04Action. Any action under this Plan required or permitted by the Sponsor
shall be by action of its Board or its duly authorized designee.
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APPENDIX A
North Carolina Natural Gas Company ("NCNG"); provided that for all purposes
of the Plan, Service for an employee of NCNG on December 31, 1999 (as defined in
Section 2.21) shall include employment only with NCNG (or another adopting
Company) on or after January 1, 2000; and further provided that the accrued
benefit calculated under Sections 2.03, 2.04 and 2.05 shall not include the
"Accrued Benefit" under Supplement A, Paragraph A-2 of the Retirement Plan,
attributable to the NCNG Employees Pension Plan.
Progress Energy Florida, Inc. (non-bargaining employees) ("PEF"); provided
that for all purposes of the Plan, Service for an employee of PEF on December
31, 2001 (as defined in Section 2.21) shall include employment only with PEF (or
another adopting Company) on or after January 1, 2002; and further provided that
the accrued benefit calculated under Sections 2.03, 2.04 and 2.05 shall not
include the "Accrued Benefit" under Supplement B, Paragraph B-2(a) of the
Retirement Plan, attributable to the FPC Plan.
Progress Telecom Corporation ("PTC"); provided that for all purposes of the
Plan, Service for an employee of PTC on December 31, 2001 (as defined in Section
2.21) shall include employment only with PTC (or another adopting Company) on or
after January 1, 2002; and further provided that the accrued benefit calculated
under Sections 2.03, 2.04 and 2.05 shall not include the "Accrued Benefit" under
Supplement B, Paragraph B-2(a) of the Retirement Plan, attributable to the FPC
Plan.
Progress Fuels Corporation (corporate employees) ("PFC"); provided that for
all purposes of the Plan, Service for an employee of PFC on December 31, 2001
(as defined in Section 2.21) shall include employment only with PFC (or another
adopting Company) on or after January 1, 2002; and further provided that the
accrued benefit calculated under Sections 2.03, 2.04 and 2.05 shall not include
the "Accrued Benefit" under Supplement B, Paragraph B-2(a) of the Retirement
Plan, attributable to the FPC Plan.
Progress Energy Carolinas, Inc.
Progress Energy Service Company, LLC
Progress Energy Ventures, Inc.