Exhibit 10c(11)
PROGRESS ENERGY, INC.
AMENDED AND RESTATED
MANAGEMENT DEFERRED COMPENSATION PLAN
Adopted as of January 1, 2000
(As Revised and Restated effective January 1, 2005)
TABLE OF CONTENTS
Page
PREAMBLE......................................................................1
ARTICLE I DEFINITIONS................................................2
1.1 Account Balance................................................2
1.2 Additional Deferral Election...................................2
1.3 Affiliated Company.............................................2
1.4 Board..........................................................2
1.5 Board Committee................................................2
1.6 Change of Control..............................................2
1.7 Change of Form Election........................................4
1.8 Change-of-Investment Election..................................4
1.9 Code...........................................................5
1.10 Committee......................................................5
1.11 Company........................................................5
1.12 Company Incentive Plans........................................5
1.13 Continuing Directors...........................................5
1.14 Deemed Investment Return.......................................5
1.15 Deferral Election..............................................6
1.16 Deferrals......................................................6
1.17 Effective Date.................................................6
1.18 Eligible Employee..............................................6
1.19 Employee Stock Incentive Plan..................................6
1.20 Enrollment Form................................................6
1.21 ERISA..........................................................6
1.22 Incentive Matching Allocations.................................7
1.23 Investment Election............................................7
1.24 Matching Allocation............................................7
1.25 Net Salary.....................................................7
1.26 Participant....................................................7
1.27 Participant Accounts...........................................7
1.28 Participant Company Account....................................7
1.29 Participant Deferral Account...................................8
1.30 Participant Matchable Deferral.................................8
1.31 Payment Commencement...........................................8
1.32 Phantom Investment Fund........................................8
1.33 Phantom Funds Account..........................................9
1.34 Phantom Investment Subaccount..................................9
1.35 Phantom Stock Unit.............................................9
1.36 Plan...........................................................9
1.37 Plan Year......................................................9
1.38 Plan Year Accounts.............................................9
1.39 Progress Energy 401(k) Savings & Stock Ownership Plan.........10
1.40 Retirement Date...............................................10
1.41 Salary........................................................10
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1.42 SMC Participant...............................................10
1.43 Sponsor.......................................................10
1.44 SSERP.........................................................10
1.45 Valuation Date................................................10
1.46 Value.........................................................11
1.47 Years of Service..............................................11
ARTICLE II PARTICIPATION.............................................12
2.1 Eligibility...................................................12
2.2 Commencement of Participation.................................12
2.3 Annual Participation Agreement................................12
2.4 Election of Phantom Investment Subaccounts....................13
ARTICLE III DEFERRAL ELECTIONS........................................14
3.1 Participant Deferred Salary Elections.........................14
3.2 Matching Allocations..........................................15
3.3 Incentive Matching Allocations................................16
ARTICLE IV ACCOUNTS..................................................17
4.1 Maintenance of Accounts.......................................17
4.2 Separate Plan Year Accounts...................................17
4.3 Phantom Investment Subaccounts................................17
4.4 Administration of Deferral Accounts...........................17
4.5 Administration of Company Accounts............................18
4.6 Change of Phantom Investment Subaccounts and Phantom
Stock Units...................................................20
4.7 Transferred Accounts..........................................20
ARTICLE V VESTING...................................................22
5.1 Vesting.......................................................22
ARTICLE VI DISTRIBUTIONS.............................................23
6.1 Distribution Elections........................................23
6.2 Change-of-Form Elections and Additional Deferral Elections....24
6.3 Payment.......................................................24
6.4 Unforeseeable Emergency.......................................25
6.5 Termination of Employment.....................................26
6.6 Taxes.........................................................27
6.7 Acceleration of Payment.......................................27
ARTICLE VII DEATH BENEFITS............................................28
7.1 Designation of Beneficiaries..................................28
7.2 Death Benefit.................................................28
ARTICLE VIII CLAIMS....................................................29
8.1 Claims Procedure..............................................29
8.2 Claims Review Procedure.......................................29
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ARTICLE IX ADMINISTRATION............................................30
9.1 Committee.....................................................30
9.2 Authority.....................................................30
ARTICLE X AMENDMENT AND TERMINATION OF THE PLAN.....................32
10.1 Amendment of the Plan.........................................32
10.2 Termination of the Plan.......................................32
10.3 No Impairment of Benefits.....................................32
ARTICLE XI FUNDING AND CLAIM STATUS..................................33
11.1 General Provisions............................................33
ARTICLE XII EFFECT ON EMPLOYMENT OR ENGAGEMENT........................35
12.1 General.......................................................35
ARTICLE XIII GOVERNING LAW.............................................36
13.1 General.......................................................36
EXHIBIT A....................................................................37
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PREAMBLE
The Progress Energy, Inc. Management Deferred Compensation Plan (the
"Plan") was originally adopted by Carolina Power & Light Company effective as of
January 1, 2000, and was transferred to Progress Energy, Inc. (the "Sponsor")
effective August 1, 2000. The Plan is unfunded and will benefit only 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 ("ERISA").
1
ARTICLE I
DEFINITIONS
1.1 Account Balance
The value in terms of a dollar amount of a Participant's Deferral
Account or Company Account, as the case may be, as of the last Valuation Date.
1.2 Additional Deferral Election
The election by a Participant under Section 6.2 to defer distribution
from a Plan Year Account.
1.3 Affiliated Company
Any corporation or other entity that is required to be aggregated with
the Sponsor pursuant to Sections 414(b), (c), (m), or (o) of the Code.
1.4 Board
The Board of Directors of the Sponsor.
1.5 Board Committee
The Organization and Compensation Committee of the Board.
1.6 Change of Control
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
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(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 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
3
(e) 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
(f) the date of any event which the Board 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 receive written certification
from the Board Committee that one of the events set forth in this
Section 1.6 has occurred. Any determination that an event described in
this Section 1.6 has occurred shall, if made in good faith on the
basis of information available at that time, be conclusive and binding
on the Board Committee, the Company, the Participants and their
beneficiaries for all purposes of the Plan.
1.7 Change of Form Election
The election by a Participant under Section 6.2 to change the form of
distribution of a Plan Year Account.
1.8 Change-of-Investment Election
The election by a Participant under Section 4.6 to change a Phantom
Subaccount for the Participant Deferral Account or Company Account.
4
1.9 Code
The Internal Revenue Code of 1986, as amended, or any successor
statute.
1.10 Committee
The Administrative Committee described in Section 9.1 for
administering the Plan. 1.11 Company
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 Committee, adopts the Plan and is included in Exhibit A, as
in effect from time to time.
1.12 Company Incentive Plans
The Sponsor's Management Incentive Compensation Plan, or any Company
sales incentive plans, marketing incentive plans, and any other cash incentive
plans as determined by the Committee.
1.13 Continuing Directors
The members of the Board at the Effective Date; provided, however,
that any person becoming a director subsequent to such whose election or
nomination for election was supported by 75% or more of the directors who then
comprised Continuing Directors shall be considered to be a Continuing Director.
1.14 Deemed Investment Return
The amounts that are credited (or charged) from time to time to each
Participant's Deferral Account and Company Account to reflect deemed investment
gains and losses of Phantom Investment Subaccounts.
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1.15 Deferral Election
An election to defer Salary pursuant to Section 3.1.
1.16 Deferrals
The deferrals of Salary of a Participant pursuant to Section 3.1.
1.17 Effective Date
January 1, 2000.
1.18 Eligible Employee
An employee of the Company (a) who is eligible to participate in the
Sponsor's Management Incentive Compensation Plan, or (b) who is eligible to
participate in any other eligible Company Incentive Plan and is determined by
the Committee to be eligible to be a Participant; and who is not excluded from
participation pursuant to Section 2.1(b).
1.19 Employee Stock Incentive Plan
The Employee Stock Incentive Plan as adopted by the Board and any
successor to such plan which provides additional matching allocations under the
Progress Energy 401(k) Savings & Stock Ownership Plan.
1.20 Enrollment Form
The enrollment form prepared by the Company which a Participant must
execute to have Deferrals with respect to a Plan Year.
1.21 ERISA
The Employee Retirement Income Security Act of 1974, as amended.
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1.22 Incentive Matching Allocations
The additional match allocation which is to be allocated to a
Participant's Company Account in accordance with Section 3.3.
1.23 Investment Election
The election by a Participant under Sections 2.4 and 4.6 of the
Phantom Investment Subaccounts in which the Participant's Deferral Accounts and
Company Accounts will be allocated.
1.24 Matching Allocation
A match allocation to a Participant's Company Account of a
Participant's Matchable Deferrals in accordance with Section 3.2.
1.25 Net Salary
The Salary of a Participant projected to be payable (assuming no
deferral elections under the Plan or the Progress Energy 401(k) Savings & Stock
Ownership Plan) with respect to a Plan Year reduced by the projected Deferrals
of a Participant for the Plan Year under the Plan.
1.26 Participant
An Eligible Employee participating in the Plan pursuant to ARTICLE II.
1.27 Participant Accounts
The aggregate of a Participant's Deferral Account and Participant's
Company Accounts.
1.28 Participant Company Account
The notational bookkeeping account maintained under Sections 4.1 and
4.5 to record Matching Allocations and Incentive Matching Allocations on behalf
of a Participant and the Deemed Investment Return thereon pursuant to the
provisions of the Plan.
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1.29 Participant Deferral Account
The notational bookkeeping account maintained under Section 4.1 of the
Plan to record Deferrals of a Participant and the Deemed Investment Return
thereon pursuant to the provisions of the Plan.
1.30 Participant Matchable Deferral
6% of the amount of Deferrals of a Participant for a Plan Year but no
greater than 6% of (A-B) where A is the compensation limit under Section
401(a)(17) of the Code for the Plan Year and B is the Net Salary of a
Participant for the Plan Year (with any negative differences equating to $0 for
purposes of this calculation); provided, however, that the Participant Matchable
Deferrals for an SMC Participant for a Plan Year shall be an amount equal to 6%
of (C - D) where C is the projected Salary of a Participant for the Plan Year
and D is the compensation limit under Section 401(a)(17) of the Code for the
Plan Year. Participant Matchable Deferrals for a Plan Year shall be determined
for each payroll period during the Plan Year based on projected Matchable
Deferrals for the entire Plan Year.
1.31 Payment Commencement
The date payments are to commence with respect to a Plan Year Account
in accordance with Section 6.1.
1.32 Phantom Investment Fund
A deemed investment option for purposes of the Plan, each of which
shall be the same as those investment options generally available to all
participants in the Progress Energy 401(k) Savings & Stock Ownership Plan, or as
otherwise selected by the Committee.
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1.33 Phantom Funds Account
Notational bookkeeping accounts maintained under the Plan at the
direction of the Committee representing allocations of Participants of Phantom
Investment Subaccounts in a Phantom Investment Fund.
1.34 Phantom Investment Subaccount
A notational bookkeeping account maintained under the Plan at the
direction of the Committee representing a deemed investment in one or more
Phantom Investment Funds as directed by the Participant under Sections 2.4 and
4.6.
1.35 Phantom Stock Unit
A hypothetical share of common stock of the Sponsor or its parent
company, as applicable.
1.36 Plan
The Progress Energy, Inc. Management Deferred Compensation Plan as set
forth herein and as amended from time to time.
1.37 Plan Year
The twelve (12) consecutive month periods beginning January 1 and
ending the following December 31 commencing with the Effective Date.
1.38 Plan Year Accounts
The separate Participant Deferral Account and Participant Company
Account maintained under the Plan pursuant to Section 4.2 with respect to a
Participant for each Plan Year a Participant has Deferrals.
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1.39 Progress Energy 401(k) Savings & Stock Ownership Plan
The Progress Energy 401(k) Savings & Stock Ownership Plan of the
Company adopted by the Board, as amended from time to time, and any successor to
such plan.
1.40 Retirement Date
The date a Participant retires from the Company on or after attaining
(i) age 65 with 5 years of service, (ii) age 55 with 15 years of service, (iii)
35 years of service or (iv) eligibility for retirement under the SSERP if
covered under such plan.
1.41 Salary
The amount of an Eligible Employee's regular annual base salary,
payable from time to time by the Company prior to a Deferral Election under the
Plan and prior to any deferral election under the Progress Energy 401(k) Savings
& Stock Ownership Plan.
1.42 SMC Participant
A senior executive officer of the Company who is a member of the
"Senior Management Committee" of the Sponsor.
1.43 Sponsor
Progress Energy, Inc. and its successors in interest.
1.44 SSERP
The Supplemental Senior Executive Retirement Plan of the Company.
1.45 Valuation Date
The last day of each calendar month and such other dates as selected
by the Committee, in its sole discretion.
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1.46 Value
The value of an account maintained under the Plan based on the fair
market value of notational investments of Phantom Investment Subaccounts and
Phantom Stock Units, as the case may be, as of the last Valuation Date. For
purposes of calculating Value as of the end of a Plan Year, accrued but
unallocated Incentive Matching Allocations shall be taken into consideration
with respect to Participant Company Accounts.
1.47 Years of Service
Years of service of a Participant as calculated under the Progress
Energy 401(k) Savings & Stock Ownership Plan.
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ARTICLE II
PARTICIPATION
2.1 Eligibility
(a) Participation in the Plan shall be limited to Eligible Employees.
(b) The Committee, in its sole discretion, may at any time limit the
participation of an Eligible Employee in the Plan so as to assure that the
Plan will not be subject to the provisions of parts 2, 3 and 4 of Title I
of ERISA.
2.2 Commencement of Participation
Each Eligible Employee on the Effective Date may elect to become a
Participant as of the Effective Date by completing and submitting an Enrollment
Form to the Sponsor's designated agent by November 30, 1999. An employee of the
Company first becoming an Eligible Employee after January 1, 2000, may elect to
become a Participant effective as of thirty days after first becoming an
Eligible Employee by completing and submitting an Enrollment Form to the
Sponsor's designated agent within such thirty-day period. An Eligible Employee
who is not a Participant may elect to become a Participant as of the first day
of a Plan Year commencing after December 31, 2000, by completing and submitting
an Enrollment Form to the Sponsor's designated agent by November 30 prior to the
first day of the Plan Year as of which participation is to commence.
2.3 Annual Participation Agreement
Each Participant shall complete a new Enrollment Form with respect to
a Plan Year by November 30 prior to the commencement of the Plan Year. If the
Participant does not complete such form and submit it to the Sponsor's
designated agent by November 30, the Participant will have no Deferrals for the
following Plan Year.
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2.4 Election of Phantom Investment Subaccounts
Each Participant shall elect on his Enrollment Form the allocation of
his Plan Year Participant Deferral Account among the Phantom Investment
Subaccounts.
13
ARTICLE III
DEFERRAL ELECTIONS
3.1 Participant Deferred Salary Elections
(a) A Participant completing an Enrollment Form in accordance with
Sections 2.2 or 2.3 may make an election, pursuant to this Section 3.1, to
defer his or her Salary (a "Deferral Election") in accordance with the
Plan. A Deferral Election shall apply only to the Participant's Salary for
the Plan Year specified in the Enrollment Form.
(b) The amount of Salary that may be deferred by a Participant shall
be based on their target incentive level under the Sponsor's Management
Incentive Compensation Plan ("MICP"); or, for Participants in Company
Incentive Plans other than the MICP, their target incentive level assuming
that they participated in the MICP. Deferral Elections shall be made on the
Enrollment Form for the applicable Plan Year pursuant to the following
limitations:
(i) A Participant who is (or would be) eligible for a bonus at
the 20% of salary target incentive level (the "Target") for the Plan
Year under the MICP may defer up to 15% of Salary.
(ii) A Participant who is (or would be) eligible for a bonus at
the 25% of salary Target for the Plan Year under the MICP may defer up
to 25% of Salary.
14
(iii) A Participant who is (or would be) eligible for a bonus at
the 35% or more of salary Target under the MICP may defer up to 50% of
Salary.
All Deferrals shall be in increments of 5% of Salary. The minimum
projected Deferrals for a Plan Year for a Participant who commences
Deferrals after the beginning of a Plan Year in accordance with Section 2.2
shall be $1,000.
(c) A Deferral Election once made with respect to a Plan Year, cannot
be changed or revoked. In the case of a new Participant, the Deferral
Election will apply only to amounts that are both paid after the election
is made and earned for services performed after the election is made. The
amount of Salary that is deferred pursuant to a Deferral Election will
reduce the Participant Salary proportionately throughout the applicable
Plan Year or, in the case of a new Participant, throughout the portion of
the Plan Year to which the Deferral Election is applicable.
(d) A dollar amount equal to the Salary deferred pursuant to this
Section 3.1 ("Deferrals") at each applicable payroll date shall be credited
to the Participant's Deferral Account within ten business days following
the applicable payroll date.
3.2 Matching Allocations
A Participant who has made a Deferral Election with respect to a Plan
Year and has Participant Matchable Deferrals for such Plan Year shall receive a
credit to his Participant Company Account of a Matching Allocation for such Plan
Year. The Matching Allocation with respect to a Plan Year shall equal 50% of the
Participant Matchable Deferrals. Matching Allocations shall be credited to the
Participant Company Account within ten business days following the applicable
payroll date, based on a pro-rata portion of projected Matchable Deferrals for
the Plan Year applicable to each payroll period during the Plan Year.
15
3.3 Incentive Matching Allocations
Participants with Matchable Deferrals for a Plan Year shall receive a
credit to their Participant Company Account for the Plan Year of an Incentive
Matching Allocation if an "Incentive Matching Allocation" is provided under the
Progress Energy 401(k) Savings & Stock Ownership Plan for the Plan Year. The
Incentive Matching Allocation shall equal that percentage of the Participant
Matchable Deferrals for the Plan Year equal to the "Incentive Matching
Allocation" (stated as a percentage) provided (or that would have been provided
if the Participant participated) under the Progress Energy 401(k) Savings &
Stock Ownership Plan for such Plan Year. Incentive Matching Allocations with
respect to a Plan Year, if any, shall be credited to a Participant's Company
Account in accordance with Section 4.5 pursuant to rules and procedures adopted
by the Committee approximately coincident with the credit under the Progress
Energy 401(k) Savings & Stock Ownership Plan of "Incentive Matching Allocations"
following the end of a Plan Year; provided, however, no such allocation shall be
made if a Participant is not employed at the end of the applicable Plan Year,
unless the Participant retired, died, or became disabled during the Plan Year.
16
ARTICLE IV
ACCOUNTS
4.1 Maintenance of Accounts
The Committee shall maintain a Participant Deferral Account and a
Participant Company Account for each Participant. There shall be credited to a
Participant's Deferral Account all Deferrals by a Participant under the Plan and
there shall be credited to a Participant's Company Account all Matching
Allocations and Incentive Matching Allocations with respect to a Participant
under the Plan in accordance with Sections 3.2 and 3.3.
4.2 Separate Plan Year Accounts
The Committee shall maintain a separate Participant Deferral Account
and Participant Company Account for each Plan Year a Participant has Deferrals
(separately a "Plan Year Deferral Account" and a "Plan Year Company Account" and
together the "Plan Year Account").
4.3 Phantom Investment Subaccounts
The Committee shall maintain separate Phantom Investment Subaccounts
representing deemed investments in Phantom Investment Funds as directed by the
Participant. Phantom Investment Subaccounts shall be valued as of each Valuation
Date based on the notional investments of each such account, pursuant to rules
and procedures adopted by the Committee.
4.4 Administration of Deferral Accounts
(a) A Participant's Deferral Accounts shall be comprised in total, of
units in Phantom Investment Subaccounts.
17
(b) Participants shall allocate their Deferrals among Phantom
Investment Subaccounts pursuant to elections under Section 2.4.
(c) The Value of that portion of a Participant's Deferral Account
allocated to a Phantom Investment Subaccount shall be changed on each
Valuation Date to reflect the new Value of the Phantom Investment
Subaccount.
(d) The interest of a Participant's Deferral Account in a Phantom
Investment Subaccount shall be stated in a unit value or dollar amount, as
determined by the Committee.
4.5 Administration of Company Accounts
(a) A Participant's Company Account shall be comprised of Phantom
Investment Fund units which shall be recorded in Phantom Investment
Subaccounts. All Matching Allocations and Incentive Matching Allocations
shall be recorded in Phantom Investment Subaccounts and shall be deemed
invested in Phantom Stock Units, units of other Phantom Investment Funds,
or a combination of Phantom Stock Units and other Phantom Investment Funds
as determined by the Committee in its sole discretion. To the extent the
Matching Allocations and Incentive Matching Allocations are initially
deemed to be invested in Phantom Stock Units, the number of Phantom Stock
Units will be determined on the date of each allocation under the Plan
based on the closing price of a share of common stock of the Sponsor on the
New York Stock Exchange on the date of each allocation. To the extent the
Matching Allocations and Incentive Matching Allocations are initially
deemed to be invested in one or more Phantom Investment Funds (other than
Phantom Stock Units), the number of units in these Phantom Investment Funds
will be determined on the date of each allocation under the Plan, using the
closing price of the units of the underlying investment fund on which the
Phantom Investment fund is based, on the date of each allocation.
18
(b) The number of Phantom Stock Units allocated to a Participant's
Company Account shall be adjusted periodically to reflect the deemed
reinvestment of dividends on Sponsor common stock in additional Phantom
Stock Units.
(c) In the event there is any change in the common stock of the
Sponsor, through merger, consolidation, reorganization, recapitalization
(other than pursuant to bankruptcy proceedings), stock dividend, stock
split, reverse stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares, dividend in kind or other like change in
capital structure (an "Adjustment Event"), the number of Phantom Stock
Units subject to the Plan shall be adjusted by the Committee in its sole
judgment so as to give appropriate effect to such Adjustment Event. Any
fractional units resulting from such adjustment may be eliminated. Each
successive Adjustment Event shall result in the consideration by the
Committee of whether any adjustment to the number of Phantom Stock Units
subject to the Plan is necessary in the Committee's judgment. Issuance of
common stock or securities convertible into common stock for value will not
be deemed to be an Adjustment Event unless otherwise expressly determined
by the Committee.
19
4.6 Change of Phantom Investment Subaccounts and Phantom Stock Units
(a) A Participant may elect to reallocate the value of his Phantom
Investment Subaccounts comprising his Deferral Accounts among other Phantom
Investment Subaccounts and change the allocation of future Deferrals among
Phantom Investment Subaccounts once per calendar month, pursuant to uniform
rules and procedures adopted by the Committee.
(b) A Participant may elect to reallocate Phantom Investment
Subaccounts comprising his Company Account, once per calendar month,
pursuant to uniform rules adopted by the Committee.
4.7 Transferred Accounts
(a) Effective as of the Effective Date, the Value of a SMC
Participant's Company Account shall include the value of such Participant's
deferral account as of such date (being a "Transferred Account") under the
Carolina Power & Light Executive Deferred Compensation Plan, but only to
the extent the Participant acknowledges in writing he has no further
interest in the Executive Deferred Compensation Plan.
20
(b) Effective on the Effective Date, the Value of any Participant's
Company Account shall include the value of such Participant's additional
benefits (currently recorded as phantom Company stock units) granted under
Article VIII.2. (also being a "Transferred Account") under the Company's
Deferred Compensation Plan for Key Management Employees, but only to the
extent the Participant acknowledges in writing that he has no further
interest in these benefits in the Company's Deferred Compensation Plan for
key Management Employees.
(c) The total value of the Transferred Accounts as described in this
Section 4.7 shall be deemed a vested Company Account for all purposes of
the Plan.
21
ARTICLE V
VESTING
5.1 Vesting
A Participant's Deferral Accounts shall be 100% vested at all times. A
Participant's Company Accounts shall vest in accordance with the following
schedule:
Years of Service Percent of Vesting
Less than 1 0
1 or more 100%
22
ARTICLE VI
DISTRIBUTIONS
6.1 Distribution Elections
A Participant when making a Deferral Election pursuant to an
Enrollment Form with respect to a Plan Year shall elect on such Enrollment Form
(a) to defer the payment of his Plan Year Accounts with respect to such Plan
Year, in accordance with the Plan until (i) the April 1 following the date that
is five years from the last day of such Plan Year, (ii) the April 1 following
the Participant's Retirement or (iii) the April 1 following the first
anniversary of the Participant's Retirement (each a "Payment Commencement Date")
and (b) to provide for the payment of such Plan Year Account in the form of (i)
a lump sum or (ii) approximately equal installments over a period extending from
two years to ten years (by paying a fraction of the account balance each year
during such period), as elected by the Participant. Except as otherwise provided
in this ARTICLE VI, such elections may not be changed or revoked.
Notwithstanding the foregoing, if the Participant is a "key employee" as defined
in Section 416(i) of the Code (but determined without regard to the 50 employee
limit on the number of officers treated as key employees), payment of amounts
deferred after December 31, 2004, shall not be made pursuant to an election
under Section 6.1(a)(ii) above before six months after the date of separation
from service for any reason including Retirement (or, if earlier, the date of
death of the Participant). For this purpose, an amount will be considered
deferred after December 31, 2004, if it is not earned and vested on such date,
and shall include the Matching Allocation, Incentive Matching Allocation and
Deemed Investment Return with respect to such Deferrals.
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6.2 Change-of-Form Elections and Additional Deferral Elections
(a) Any Participant who has made elections under Section 6.1 with
respect to amounts deferred before January 1, 2005, may change such
elections pursuant to this Section 6.2(a) as in effect prior to January 1,
2005, unless such provisions are materially modified after October 3, 2004.
For this purpose, an amount is considered deferred before January 1, 2005,
if the amount is earned and vested before such date. Such Participant may
elect at least one year prior to the Payment Commencement Date with respect
to such Plan Year Accounts a new Payment Commencement Date that either is
five years from the then current Payment Commencement Date or otherwise is
permitted under Section 6.1(a)(ii) or (iii). Only one such Additional
Deferral Election will be permitted with respect to Plan Year Accounts
relating to a particular Plan Year. In addition, the Participant may elect
to change the form of distribution to any of the forms permitted under
Section 6.1(b) by completing a Change-of-Form Elections with respect to
Plan Year Accounts at least one year prior to the applicable Payment
Commencement Date for such accounts.
(b) Any elections made under Section 6.1 with respect to amounts
deferred after December 31, 2004, shall be irrevocable.
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6.3 Payment
Upon occurrence of an event specified in the Participant's
distribution election under Section 6.1 (a "Distribution Event") with respect to
Plan Year Accounts, as modified by any applicable subsequent Additional Deferral
Election under Section 6.2, the Account Balance of a Participant's Plan Year
Accounts shall be paid by the Company to the Participant in the form elected
under Section 6.1. Such payments shall commence as soon as practicable and in no
event more than 30 days following the occurrence of the Distribution Event.
6.4 Unforeseeable Emergency
In case of an unforeseeable emergency, a Participant may request the
Committee, on a form to be provided by the Committee or its delegate, that
payment of the vested portion of Participant Accounts be made earlier than the
date provided under the Plan.
An "unforeseeable emergency" shall mean a severe financial hardship to
the Participant resulting from an illness or accident of the Participant, the
Participant's spouse or a dependent (as defined in Section 152(a) of the Code)
of the Participant, loss of the Participant's property due to casualty, or other
unforeseeable circumstances arising as a result of events beyond the control of
the Participant.
The Committee shall consider any requests for payment under this
Section 6.4 on a uniform and nondiscriminatory basis and in accordance with the
standards of interpretation described in Section 409A of the Code and the
regulations thereunder. If the request is granted, the amounts distributed will
not exceed the amounts necessary to alleviate the unforeseeable emergency plus
amounts necessary to pay taxes reasonably anticipated as result of the
distribution, after taking into account the extent to which the unforeseeable
emergency may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Participant's assets (to the extent such
liquidation would not itself cause severe financial hardship).
25
In the event of a hardship determination by the Committee, the Company
shall pay out in a lump sum to the Participant such portion of the Participant
Accounts as determined by the Committee and Deferrals by the Participant for the
Plan Year in which the hardship distribution is made will cease.
6.5 Termination of Employment
In the event of the termination of the employment of a Participant
with the Company and any parent, subsidiary or affiliate for any reason, prior
to the Retirement or death of the Participant, the vested portion of the
Participant Accounts of such Participant shall be paid in a lump sum to such
Participant based on the Value of such accounts as of the Valuation Date
coincident with or immediately preceding the date of distribution. Such payment
shall be made as soon as administratively practicable following the
Participant's termination date as determined under the Company's normal
administrative practices. The nonvested portion of a terminated Participant's
Company Account shall be forfeited by the Participant. In the event of the
termination of employment of a SMC Participant for whom no Deferral Election was
made for a Plan Year, any Matching Allocation, Incentive Matching Allocation and
Deemed Investment Return allocated to such Participant shall be distributed to
the Participant following termination of employment in accordance with this
Section 6.5. In the event of the Retirement of a Participant prior to the
Payment Commencement Date elected by the Participant under Section 6.1(a)(i)
with respect to a Plan Year Account, distribution of such account shall commence
no later than April 1 following the first anniversary of the Participant's
Retirement. Notwithstanding the foregoing, if the Participant is a "key
employee" as defined in Section 416(i) of the Code (but determined without
regard to the 50 employee limit on the number of officers treated as key
employees), payment of amounts deferred after December 31, 2004, shall not be
made before six months after the date of separation from service for any reason
including Retirement (or, if earlier, the date of death of the Participant). For
this purpose, an amount will be considered deferred after December 31, 2004, if
it is not earned and vested on such date, and shall include the Matching
Allocation, Incentive Matching Allocation and Deemed Investment Return with
respect to such Deferrals.
26
6.6 Taxes
The Company shall deduct from all payments under the Plan federal,
state and local income and employment taxes, as required by applicable law.
Deferrals will be taken into account for purposes of any tax or withholding
obligation under the Federal Insurance Contributions Act and Federal
Unemployment Tax Act in the year of the Deferrals, as required by Sections
3121(v) and 3306(r) of the Code and the regulations thereunder. Amounts required
to be withheld in the year of the Deferrals pursuant to Sections 3121(v) and
3306(r) shall be withheld out of current wages or other compensation paid by the
Company to the Participant.
6.7 Acceleration of Payment
The acceleration of the time or schedule of any payment due under the
Plan is prohibited except as provided in regulations and administrative guidance
provided under Section 409A of the Code. It is not an acceleration of the time
or schedule of payment if the Company waives or accelerates the vesting
requirements applicable to a benefit under the Plan.
27
ARTICLE VII
DEATH BENEFITS
7.1 Designation of Beneficiaries
The Participant's beneficiary under this Plan entitled to receive
benefits under the Plan in the event of the Participant's death shall be
designated by the Participant on a form provided by the Committee. In the
absence of such designation or in the event the designated beneficiary has
predeceased the Participant, the beneficiary shall be deemed the estate of the
Participant.
7.2 Death Benefit
In the event of the death of a Participant prior to the payout of his
Participant Accounts, the Value of the remaining portion of the Participant
Accounts shall be paid by the Company in a lump sum to the Participant's
beneficiary (as defined under Section 7.1) based on the Value of such accounts
on the Valuation Date immediately following the date of death. Payment shall be
made as soon as administratively practicable following such Valuation Date
pursuant to rules and procedures adopted by the Committee.
28
ARTICLE VIII
CLAIMS
8.1 Claims Procedure
If any Participant or his or her beneficiary has a claim for benefits
which is not being paid, such claimant may file with the Committee a written
claim setting forth the amount and nature of the claim, supporting facts, and
the claimant's address. The Committee shall notify each claimant of its decision
in writing by registered or certified mail within sixty (60) days after its
receipt of a claim or, under special circumstances, within ninety (90) days
after its receipt of a claim. If a claim is denied, the written notice of denial
shall set forth the reasons for such denial, refer to pertinent Plan provisions
on which the denial is based, describe any additional material or information
necessary for the claimant to realize the claim, and explain the claims review
procedure under the Plan.
8.2 Claims Review Procedure
A claimant whose claim has been denied, or such claimant's duly
authorized representative, may file, within sixty (60) days after notice of such
denial is received by the claimant, a written request for review of such claim
by the Committee. If a request is so filed, the Committee shall review the claim
and notify the claimant in writing of its decision within sixty (60) days after
receipt of such request. In special circumstances, the Committee may extend for
up to sixty (60) additional days the deadline for its decision. The notice of
the final decision of the Committee shall include the reasons for its decision
and specific references to the Plan provisions on which the decision is based.
The decision of the Committee shall be final and binding on all parties.
29
ARTICLE IX
ADMINISTRATION
9.1 Committee
The Administrative Committee consisting of not less than three (3) or
more than seven (7) persons appointed by the Board Committee or its delegate to
administer the Plan.
9.2 Authority
(a) The Committee shall have the exclusive right to interpret the Plan
to the maximum extent permitted by law, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other determinations
necessary or advisable for the administration of the Plan, including the
determination under Section 9.2(b) herein. The decisions, actions and
records of the Committee shall be conclusive and binding upon the Company
and all persons having or claiming to have any right or interest in or
under the Plan
(b) The Committee may delegate to one or more agents, or to the
Company such administrative duties as it may deem advisable. The Committee
may employ such legal or other counsel and consultants as it may deem
desirable for the administration of the Plan and may rely upon any opinion
or determination received from counsel or consultant.
(c) No member of the Committee shall be directly or indirectly
responsible or otherwise liable for any action taken or any failure to take
action as a member of the Committee, except for such action, default,
exercise or failure to exercise resulting from such member's gross
negligence or willful misconduct. No member of the Committee shall be
liable in any way for the acts or defaults of any other member of the
Committee, or any of its advisors, agents or representatives.
30
(d) The Company shall indemnify and hold harmless each member of the
Committee against any and all expenses and liabilities arising out of his
or her own activities relating to the Committee, except for expenses and
liabilities arising out of a member's gross negligence or willful
misconduct.
(e) The Company shall furnish to the Committee all information the
Committee may deem appropriate for the exercise of its powers and duties in
the administration of the Plan. The Committee shall be entitled to rely on
any information provided by the Company without any investigation thereof.
(f) No member of the Committee may act, vote or otherwise influence a
decision of such Committee relating to his or her benefits, if any, under
the Plan.
31
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
10.1 Amendment of the Plan
The Plan may be wholly or partially amended or otherwise modified at
any time by the Board or the Board Committee consistent with the requirements of
Section 409A of the Code.
10.2 Termination of the Plan
The Plan may be terminated at any time by written action of the Board
or the Board Committee or by the Committee as provided under the Plan; provided,
that termination of the Plan shall not affect the distribution of the
Participant Accounts (except as otherwise permitted under Section 409A of the
Code). Notwithstanding the foregoing, the Plan may be terminated and Participant
Accounts distributed to Participants within twelve months of a "change in
control" as defined for purposes of Section 409A of the Code.
10.3 No Impairment of Benefits
Notwithstanding the provisions of Sections 10.1 and 10.2, no amendment
to or termination of the Plan shall impair any rights to benefits which
theretofore accrued hereunder; provided, however, the payout of all Plan
benefits on termination of the Plan, if permitted pursuant to Section 10.2, or a
change of any Phantom Investment Funds or creation of a substitute for Phantom
Investment Funds as a result of a Plan amendment or action of the Committee
shall not constitute an impairment of any rights or benefits.
32
ARTICLE XI
FUNDING AND CLAIM STATUS
11.1 General Provisions
(a) The Company shall make no provision for the funding of any
Participant Accounts payable hereunder that (i) would cause the Plan to be
a funded plan for purposes of Section 404(a)(5) of the Code or for purposes
of Title I of ERISA, or (ii) would cause the Plan to be other than an
"unfunded and unsecured promise to pay money or other property in the
future" under Treasury Regulations ss. 1.83-3(e); and, except in the case
of a Change of Control of the Sponsor, the Company shall have no obligation
to make any arrangements for the accumulation of funds to pay any amounts
under this Plan. Subject to the restrictions of this Section 11.1(a), the
Company, in its sole discretion, may establish one or more grantor trusts
described in Treasury Regulations ss. 1.677(a)-1(d) to accumulate funds to
pay amounts under this Plan, provided that the assets of such trust(s)
shall be required to be used to satisfy the claims of the Company's general
creditors in the event of the Company's bankruptcy or insolvency.
(b) In the case of a Change of Control, the Company shall, subject to
the restrictions in this paragraph and in Section 11.1(a), irrevocably set
aside funds in one or more such grantor trusts in an amount that is
sufficient to pay each Participant employed by such Company (or
beneficiary) the net present value as of the date on which the Change of
Control occurs, of the benefits to which Participants (or their
beneficiaries) would be entitled pursuant to the terms of the Plan if the
Value of their Participant Account would be paid in a lump sum upon the
Change of Control.
33
(c) In the event that the Company shall decide to establish an advance
accrual reserve on its books against the future expense of payments from
any Participant, such reserve shall not under any circumstances be deemed
to be an asset of this Plan but, at all times, shall remain a part of the
general assets of the Company, subject to claims of the Company's
creditors.
(d) Participants, their legal representatives and their beneficiaries
shall have no right to anticipate, alienate, sell, assign, transfer, pledge
or encumber their interests in the Plan, nor shall such interests be
subject to attachment, garnishment, levy or execution by or on behalf of
creditors of the Participants or of their beneficiaries.
(e) 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 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 with respect to
a Participant shall be paid from the general funds of the Company employing
such Participant.
34
ARTICLE XII
EFFECT ON EMPLOYMENT OR ENGAGEMENT
12.1 General
Nothing contained in the Plan shall affect, or be construed as
affecting, the terms of employment or engagement of any Participant except to
the extent specifically provided herein. Nothing contained in the Plan shall
impose, or be construed as imposing, an obligation on the Company to continue
the employment or engagement of any Participant.
35
ARTICLE XIII
GOVERNING LAW
13.1 General
The Plan and all actions taken in connection with the Plan 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.
* * *
36
EXHIBIT A
Progress Energy Carolinas, Inc.
Progress Energy Service Company, LLC
Progress Energy Ventures, Inc.
Progress Energy Florida, Inc.
Progress Fuels Corporation (corporate employees only)
37