Exhibit 10(a)
AMENDED MANAGEMENT INCENTIVE COMPENSATION PLAN
OF
PROGRESS ENERGY, INC.
 
 
 
 
 
 
AS AMENDED JANUARY 1, 2006

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TABLE OF CONTENTS
 
 

   
 Page
 ARTICLE I  PURPOSE
 1
 ARTICLE II  DEFINITIONS
 1
 ARTICLE III      ADMINISTRATION
 7
 ARTICLE IV      PARTICIPATION
 8
 ARTICLE V  AWARDS
 9
 ARTICLE VI      DISTRIBUTION AND DEFERRAL OF AWARDS
 11
 ARTICLE VII      TERMINATION OF EMPLOYMENT
 17
 ARTICLE VIII      MISCELLANEOUS
 18

 
 

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ARTICLE I
PURPOSE
The purpose of the Management Incentive Compensation Plan (the “Plan”) of
Progress Energy, Inc. is to promote the financial interests of the Company,
including its growth, by (i) attracting and retaining executive officers and
other management-level employees who can have a significant positive impact on
the success of the Company; (ii) motivating such personnel to help the Company
achieve annual incentive, performance and safety goals; (iii) motivating such
personnel to improve their own as well as their business unit/work group’s
performance through the effective implementation of human resource strategic
initiatives; and (iv) providing annual cash incentive compensation opportunities
that are competitive with those of other major corporations.
The Sponsor amends and restates the Plan effective January 1, 2005.
 
ARTICLE II 
DEFINITIONS
The following definitions are applicable to the Plan:
1.  “Achievement Factor”: The sum of the Weighted Achievement Percentages
determined for each of the Performance Measures for the Year.
2.  “Award”: The benefit payable to a Participant hereunder based upon
achievement of the Performance Measures.
3.  “Affiliated Entity”: 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
Internal Revenue Code of 1986, as amended (the “Code”), but only to the extent
required.
4.  “Board”: The Board of Directors of the Sponsor.
 

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5.  “Cause”: means:

(a)  
embezzlement or theft from the Company, or other acts of dishonesty, disloyalty
or otherwise injurious to the Company;

(b)  
disclosing without authorization proprietary or confidential information of the
Company;

(c)  
committing any act of negligence or malfeasance causing injury to the Company;

(d)  
conviction of a crime amounting to a felony under the laws of the United States
or any of the several states;

(e)  
any violation of the Company’s Code of Ethics; or

(f)  
unacceptable job performance which has been substantiated in accordance with the
normal practices and procedures of the Company.

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

(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

(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 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 Compensation
Committee that one of the events set forth in this Section 6 has occurred. Any
determination that an event described in this Section 6 has occurred shall, if
made in good faith on the basis of information available at that time, be
conclusive and binding on the Compensation Committee, the Sponsor, each
Affiliated Entity, the Participant and their Beneficiaries for all purposes of
the Plan.

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7.  “Company”: The Sponsor and each Affiliated Entity.
8.  “Compensation Committee”: The Organization and Compensation Committee of the
Board of Directors of the Sponsor.
9.  “Continuing Director”: The members of the Board as of the Effective Date;
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.
10.  “Date of Retirement”: The first day of the calendar month immediately
following the Participant’s Retirement.
11.  “Designated Beneficiary”: The beneficiary designated by the Participant,
pursuant to procedures established by the Human Resources Department of the
Company, to receive amounts due to the Participant or to exercise any rights of
the Participant to the extent permitted hereunder in the event of the
Participant’s death. If the Participant does not make an effective designation,
then the Designated Beneficiary will be deemed to be the Participant's estate.
12.  “EBITDA”: The earnings of the Participating Employer before interest,
taxes, depreciation, and amortization as determined from time to time by the
Compensation Committee.
13.  “ECIP Goals” The goals set forth to receive a payment under the Employee
Cash Incentive Plan of each department or business unit of the Company.
14.  “Effective Date”: The Effective Date of this Plan, as amended, is January
1, 2005.
15.  “EPS”: The on-going earnings per share of the Sponsor’s Common Stock for a
Year as determined by the Compensation Committee from time to time.
16.  “Legal Entity EBITDA”: The EBITDA of the Participating Employer which
employs the Participant.
17.  “Participant”: An employee of a Participating Employer who is selected
pursuant to Article IV hereof to be eligible to receive an Award under the Plan.
18.  “Participating Employer”: Each Affiliated Entity that, with the consent of
the Compensation Committee, adopts the Plan and is included in Exhibit C, as in
effect from time to time.
19.  “Performance Measures”: The EPS, Legal Entity EBITDA and ECIP Goals.
20.  “Performance Unit”: A unit or credit, linked to the value of the Sponsor’s
Common Stock under the terms set forth in Article VI hereof.
21.  “Plan”: The Management Incentive Compensation Plan of Progress Energy, Inc.
as contained herein, and as it may be amended from time to time.

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22.  “Retirement”: A Participant’s termination of employment 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) age 50 with 5 years of service as
of March 31, 2005, and where the Participant elects during the period beginning
March 15, 2005, and ending April 15, 2005, to retire no later than December 1,
2005, pursuant to the terms of the Voluntary Enhanced Retirement Program (a
“VERP Participant”). Notwithstanding any other provision of the Plan to the
contrary, a VERP Participant may elect on or before December 31, 2005, to (a)
commence payment of the Plan Deferral Account as of (i) April 1, 2006, (ii)
April 1, 2007, or (iii) April 1, 2011 (each a “Payment Commencement Date”) and
(b) provide for the payment of the Plan Deferral Account in the form of (i) a
lump sum or (ii) annual installments over a period extending from two years to
ten years following the Payment Commencement Date. In the event no other payment
election is made by the VERP Participant prior to January 1, 2006, the VERP
Participant shall be deemed to have elected for payment of the Plan Deferral
Account to be made in accordance with the deferral election submitted by the
VERP Participant; provided, that if the VERP 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), the Payment
Commencement Date shall not be earlier than six months after the date of
Retirement of the VERP Participant (or, if earlier, the date of death of the
Participant). A VERP Participant may not make any election with respect to the
payment of the Plan Deferral Account after December 31, 2005.
23.  “Salary”: The compensation paid by the Company to a Participant in a
relevant Year, consisting of regular or base compensation, such compensation
being understood not to include bonuses, if any, or incentive compensation, if
any. Provided, that such compensation shall not be reduced by any cash deferrals
of said compensation made under any other plans or programs maintained by such
Company.

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24.  “Senior Management Committee”: The Senior Management Committee of the
Company.
25.  “Sponsor”: Progress Energy, Inc., a North Carolina corporation, or any
successor to it in the ownership of substantially all of its assets.
26.  “Target Award Opportunity”: The target for an Award under this Plan as set
forth in Section 1 of Article V hereof.
27.  “Unforeseeable Emergency”: 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.
28.  “Weighted Achievement Percentage”: The percentage determined by multiplying
the relative percentage weight assigned to each of the Performance Measures
applicable to the Participant for the Year by the payout percentage
corresponding to the level of achievement of the Performance Measure as
determined for each department or business unit for the Year.
29.  “Year”: A calendar year.

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ARTICLE III 
ADMINISTRATION
The Plan shall be administered by the Chief Executive Officer of the Sponsor.
Except as otherwise provided herein, the Chief Executive Officer of the Sponsor
shall have sole and complete authority to (i) select the Participants; (ii)
establish and adjust (either before or during the Year) the performance criteria
necessary for a Participant to attain an Award for the Year; (iii) adjust and
approve Awards; (iv) establish from time to time regulations for the
administration of the Plan; and (v) interpret the Plan and make all
determinations deemed necessary or advisable for the administration of the Plan,
all subject to its express provisions. Notwithstanding the foregoing, the
Compensation Committee shall (a) approve the applicable threshold, target and
outstanding levels of performance for a Performance Measure for the Year; (b)
approve the performance criteria and Awards for all Participants who are members
of the Senior Management Committee; (c) determine the total payout under the
Plan up to a maximum of four percent (4%) of the Sponsor’s after-tax income for
a relevant Year; and (d) certify to the Board that a Change of Control has
occurred as provided in Section 5 of Article II.
A majority of the Compensation Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the members of the
Committee without a meeting, shall be the acts of such Committee.
 
ARTICLE IV 
PARTICIPATION
The Chief Executive Officer of the Sponsor shall select from time to time the
Participants in the Plan for each Year from those employees of each Company who,
in his opinion, have the capacity for contributing in a substantial measure to
the successful performance of the Company that Year. No employee shall at any
time have a right to be selected as a Participant in the Plan for any Year nor,
having been selected as a Participant for one Year, have the right to be
selected as a Participant in any other Year.

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ARTICLE V 
AWARDS
1.  Target Award Opportunities. The following table sets forth Target Award
Opportunities, expressed as a percentage of Salary, for various levels of
participation in the Plan:
Participation
Target Award Opportunities
Chief Executive Officer of Sponsor*
85%
Chief Operating Officer of Sponsor*
70%
Presidents*/Executive Vice Presidents*
55%
Senior Vice Presidents*
45%
Department Heads
35%
Other Participants:
Key Managers
Other Managers
 
25%
20%

 
*Senior Management Committee level positions.
 
The Target Award Opportunity for the Chief Executive Officer of the Sponsor
shall be 85%; however, the Compensation Committee of the Board shall be
authorized to change that amount from year to year, or to award an amount of
compensation based on other considerations, in its complete discretion.
2.  Award Components. Awards under the Plan to which Participants are eligible
shall depend upon the achievement of the Performance Measures for the Year.
Prior to the beginning of each Year, or as soon as practical thereafter, the
Chief Executive Officer of the Sponsor will establish and the Compensation
Committee will approve the Performance Measures for the Year, their relative
percentage weight, and the performance criteria necessary for attainment of
various performance levels. Attached hereto as Exhibit A are the relative
percentage weights for each of the Performance Measures for each level of
participation as of the Effective Date, which may be changed from time to time
by the Compensation Committee.

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3.  Performance Levels. The Compensation Committee may establish three levels of
performance related to a Performance Measure: outstanding, target, and
threshold. In such case, the payout percentages to be applied to each
Participant’s Target Award Opportunity are as follows:
Performance Level     Payout Percentage
                      Outstanding                          200%
                      Target            100%
                         Threshold      50%
 
Payout percentages shall be adjusted for performance between the designated
performance levels, provided, however, that performance which falls below the
“Threshold” performance level results in a payout percentage of zero.
4.  Determination of Award Amount. The Chief Executive Officer of the Sponsor
shall determine the amount of the Award, if any, earned by each Participant for
the Year; provided, that the Compensation Committee shall approve the amount of
the Award for a Participant who is a member of the Senior Management Committee.
The amount of an Award earned by the Participant shall be determined by
multiplying the Salary times the Target Award Opportunity times the Achievement
Factor applicable to the Participant for the Year. The amount of the Award of a
Participant is subject to further adjustment as provided in Section 6 of this
Article V.
5.  New Participants. Any Award that is earned during the initial Year of
participation shall be pro rated based on the length of time served in the
qualifying job.
6.  Adjustment of Award Amount. The Chief Executive Officer of the Sponsor, in
his sole discretion, may adjust the Award payable to a Participant for the Year
based upon management’s determination of the performance goals and core skill
achievement of the Participant, the succession planning leadership rating of the
Participant and any other applicable performance criteria.

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7.  Example. Attached as Exhibit B and incorporated by reference is an example
of the process by which an Award is granted hereunder. Said exhibit is intended
solely as an example and in no way modifies the provisions of this Article V.
ARTICLE VI 
DISTRIBUTION AND DEFERRAL OF AWARDS
1.  Distribution of Awards. Unless a Participant elects to defer an Award
pursuant to the remaining provisions of this Article VI, Awards under the Plan
earned during any Year shall be paid in cash by March 15 of the succeedingYear.
2.  Deferral Election. A Participant may elect to defer the Plan Award he or she
has earned for any Year by completing and submitting a deferral election in a
form acceptable to the Vice President, Human Resources, by the later of (i) the
last day of the preceding Year (or such other time as permitted by Section 409A
of the Code and the regulations thereunder), or (ii) the thirtieth (30th) day
after first becoming eligible to participate in the deferral election provisions
of the Plan. Such election shall apply to the Participant’s Award, if any,
otherwise to be paid after the Year during which it was earned. A Participant’s
deferral election may apply to 100%, 75%, 50%, or 25% of the Plan Award;
provided, however, that in no event shall the amount deferred be less than
$1,000.
The election to defer shall be irrevocable as to the Award earned during the
particular Year.

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3.  Period of Deferral. At the time of a Participant’s deferral election, a
Participant must also select a distribution date and form of distribution.
Subject to Section 6, the distribution date may be: (a) any date that is at
least five (5) years subsequent to the date the Plan Award would otherwise be
payable, but not later than the second anniversary of the Participant’s Date of
Retirement; or (b) any date that is within two years following the Participant’s
Date of Retirement. Subject to Section 6, the form of distribution may be either
(i) a lump sum or (ii) equal installments over a period extending from two years
to ten years, as elected by the Participant. A Participant may not subsequently
change the distribution date and form of distribution designated in the initial
deferral election.
4.  Performance Units. All Awards which are deferred under the Plan shall be
recorded in the form of Performance Units. Each Performance Unit is generally
equivalent to a share of the Sponsor’s Common Stock. In converting the cash
award to Performance Units, the number of Performance Units granted shall be
determined by dividing the amount of the Award by 85% of the average value of
the opening and closing price of a share of the Sponsor’s Common Stock on the
last trading day of the month preceding the date of the Award. The Performance
Units attributable to the 15% discount from the average value of the Sponsor’s
Common Stock shall be referred to as the “Incentive Performance Units.” The
Incentive Performance Units and any adjustments or earnings attributable to
those Performance Units shall be forfeited by the Participant if he or she
terminates employment either voluntarily or involuntarily other than for death
or Retirement prior to five years from March 15 of the Year in which payment
would have been made if the Award had not been deferred; provided, however, that
if before such date the employment of the Participant is terminated by the
Company without Cause following a Change in Control, the Incentive Performance
Units shall not be forfeited but shall be payable to the Participant in
accordance with Section 8 of this Article VI.

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5.  Plan Accounts. A Plan Deferral Account will be established on behalf of each
Participant, and the number of Performance Units awarded to a Participant shall
be recorded in each Participant’s Plan Deferral Account as of the first of the
month coincident with or next following the month in which a deferral becomes
effective. The number of Performance Units recorded in a Participant’s Plan
Deferral Account shall be adjusted to reflect any splits or other adjustments in
the Sponsor’s Common Stock, the payment of any cash dividends paid on the
Sponsor’s Common Stock and the payment of Awards under this Plan to the
Participant. To the extent that any cash dividends have been paid on the
Sponsor’s Common Stock, the number of Performance Units shall be adjusted to
reflect the number of Performance Units that would have been acquired if the
same dividend had been paid on the number of Performance Units recorded in the
Participant’s Plan Deferral Account on the dividend record date. For purposes of
determining the number of Performance Units acquired with such dividend, the
average of the opening and closing price of the Sponsor’s Common Stock on the
payment date of the Sponsor’s Common Stock dividend shall be used.
Each Participant shall receive an annual statement of the balance of his Plan
Deferral Account, which shall include the Incentive Performance Units and
associated earnings and adjustments that are subject to being forfeited as
provided above.
6.  Payment of Deferred Plan Awards. Subject to Section 4 related to forfeiture
of Incentive Performance Units, Deferred Plan Awards shall be paid in cash by
each Company on the deferred distribution date specified by the Participant in
accordance with Section 3, or as soon as practicable thereafter. To convert the
Performance Units in a Participant’s Plan Deferral Account to a cash payment
amount, Performance Units shall be multiplied by the average of the opening and
closing price of the Sponsor’s Common Stock on the last trading day preceding
the applicable distribution date specified by the Participant for the Deferred
Plan Award. Except as otherwise provided, deferred amounts will be paid either
in a single lump-sum payment or in up to ten (10) annual payments as elected by
the Participant at the time of the deferral election.

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In the event that a Participant elects to receive the deferred Plan Award in
equal annual payments, the amount of the Award to be received in each year shall
be determined as follows:
(a)  To determine the amount of the initial annual payment, the number of
Performance Units in the Participant’s Plan Deferral Account will be divided by
the total number of annual payments to be received, and the result will be
multiplied by the average of the opening and closing price of the Sponsor’s
Common Stock on the last trading day preceding the due date of the initial
payment.
(b)  To determine the amount of each successive annual payment, the Plan
Deferral Account balance will be divided by the number of annual payments
remaining, and the result will be multiplied by the average of the opening and
closing price of the Sponsor’s Common Stock on the last trading day preceding
the due date of the annual payment.
7.  Termination of Employment/Effect on Deferral Election. If the employment of
a Participant terminates prior to the last day of a Year for which a Plan Award
is determined, then any deferral election made with respect to such Plan Award
for such Year shall not become effective and any Plan Award to which the
Participant is otherwise entitled shall be paid as soon as practicable after the
end of the Year during which it was earned, in accordance with paragraph 1 of
this Article VI.
8.  Termination of Employment/Payment of Deferral. Notwithstanding the
foregoing, if a Participant terminates employment by reason other than death or
Retirement, full payment of all amounts due to the Participant shall be made on
the first day of the month following the date of termination, or as soon as
practical thereafter. However, 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 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).
Incentive Performance Units shall be subject to forfeiture to the extent
provided in Section 4.

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9.  Payments Due to Unforeseeable Emergency. In the event of an Unforeseeable
Emergency, a Participant may apply to receive a distribution earlier than
initially elected. The Chief Executive Officer of Sponsor or his designee may,
in his sole discretion, either approve or deny the request. The determination
made by the Chief Executive Officer of Sponsor will be final and binding on all
parties. 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). Incentive Performance Units shall
not be subject to early distribution under this Section 9 until five years from
March 15 of the Year in which payment would have been made if the Award had not
been deferred.
10.  Death of a Participant. If the death of a Participant occurs before a full
distribution of the Participant’s Plan Deferral Account is made, payment shall
be made to the Designated Beneficiary of the Participant in accordance with the
schedule specified in the Participant’s Deferral Election form. Said payment
shall be made as soon as practical following notification that death has
occurred.
11.  Non-Assignability of Interests. The interests herein and the right to
receive distributions under this Article VI may not be anticipated, alienated,
sold, transferred, assigned, pledged, encumbered, or subjected to any charge or
legal process, and if any attempt is made to do so, or a Participant becomes
bankrupt, the interests of the Participant under this Article VI may be
terminated by the Chief Executive Officer of Sponsor, which, in his sole
discretion, may cause the same to be held or applied for the benefit of one or
more of the dependents of such Participant or make any other disposition of such
interests that he deems appropriate.

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12.  Unfunded Deferrals. Nothing in this Plan, including this Article VI, shall
be interpreted or construed to require the Sponsor or any Company in any manner
to fund any obligation to the Participants, terminated Participants or
beneficiaries hereunder. Nothing contained in this Plan nor any action taken
hereunder shall create, or be construed to create, a trust of any kind, or a
fiduciary relationship between the Sponsor or any Company and the Participants,
terminated Participants, beneficiaries, or any other persons. Any funds which
may be accumulated in order to meet any obligation under this Plan shall for all
purposes continue to be a part of the general assets of the Sponsor or Company;
provided, however, that the Sponsor or Company may establish a trust to hold
funds intended to provide benefits hereunder to the extent the assets of such
trust become subject to the claims of the general creditors of the Sponsor or
Company in the event of bankruptcy or insolvency of the Sponsor or Company. To
the extent that any Participant, terminated Participant, or beneficiary acquires
a right to receive payments from the Sponsor or Company under this Plan, such
rights shall be no greater than the rights of any unsecured general creditor of
the Sponsor or Company.
13.  Change of Control. In the case of a Change of Control, the Company shall,
subject to the restrictions in this Section 13 and Section 12 of Article VI,
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 Designated
Beneficiary) the net present value as of the date on which the Change of Control
occurs, of the benefits to which Participants (or their Designated
Beneficiaries) would be entitled pursuant to the terms of the Plan if the value
of their Plan Deferral Account would be paid in a lump sum upon the Change of
Control.

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ARTICLE VII 
TERMINATION OF EMPLOYMENT
Except as otherwise provided in this Article VII, a Participant must be actively
employed by a Company on the next January 1 immediately following the Year for
which a Plan Award is earned in order to be entitled to payment of the full
amount of any Award for that Year. In the event the active employment of a
Participant shall terminate or be terminated for any reason before the next
January 1 immediately following the Year for which a Plan Award is earned, such
Participant shall receive his or her Award for the year, if any, in an amount
that the Chief Executive Officer of the Sponsor deems appropriate.
Notwithstanding the foregoing provisions of this Article VII, in the event the
employment of the Participant is terminated by the Company without Cause
following a Change in Control, the Award of the Participant for the Year in
which the termination occurs shall equal the amount of the Award which would
have been earned for the Year if the Participant had remained in the employment
of the Company until the next January 1, pro rated to reflect the portion of the
Year completed by the Participant as an employee; provided, however, that such
Award shall not be less than the Target Award Opportunity of the Participant for
the Year, pro rated to reflect the portion of the Year completed by the
Participant as an employee.
ARTICLE VIII 
MISCELLANEOUS
1.  Assignments and Transfers. The rights and interests of a Participant under
the Plan may not be assigned, encumbered or transferred except, in the event of
the death of a Participant, by will or the laws of descent and distribution.
2.  Employee Rights Under the Plan. No Company employee or other person shall
have any claim or right to be granted an Award under the Plan or any other
incentive bonus or similar plan of the Sponsor or any Company. Neither the Plan,
participation in the Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained in the employ of the Sponsor or any
Company.

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3.  Withholding. The Sponsor or Company (as applicable) shall have the right to
deduct from all amounts paid in cash any taxes required by law to be withheld
with respect to such cash payments.
4.  Amendment or Termination. The Compensation Committee may in its sole
discretion amend, suspend or terminate the Plan or any portion thereof at any
time; provided, that in the event of a Change of Control, no such action shall
take effect prior to the January 1 next following the Year in which occurs the
Change of Control. No action to amend, suspend or terminate the Plan shall
affect the right of a Participant to the payment of a Plan Award earned prior to
the effective date of such action, or permit the acceleration of the time or
schedule of any payment of amounts deferred under the Plan (except as provided
in regulations under Section 409A of the Code).
5.  Governing Law. This Plan shall be construed and governed in accordance with
the laws of the state of North Carolina.
6.  Entire Agreement. This document (including the Exhibits attached hereto)
sets forth the entire Plan.

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EXHIBIT A
 
MICP Relative Performance Weightings
 

POSITION
 
COMPANY
EPS
 
 
LEGAL
ENTITY
EBITDA
 
ECIP
GOALS
 
SMC - CEO
 
100%
 
 
-
 
 
-
 
 
SMC - COO
 
 
40%
 
 
50%
 
 
10%
 
 
SMC - Presidents
 
 
40%
 
 
50%
 
 
10%
 
 
SMC - Service Company CEO
 
 
90%
 
 
-
 
 
10%
 
 
SMC - Non Service Company
 
 
30%
 
 
60%
 
 
10%
 
 
SMC - Service Company
 
 
90%
 
 
-
 
 
10%
 
 
Non Service Company Department Heads and Managers
 
 
25%
 
 
50%
 
 
25%
 
 
Service Company Department Heads and Managers
 
 
75%
 
 
-
 
 
25%
 

Note:
This structure may be modified based upon a recommendation by the CEO and
approval by the Committee.

 

 

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EXHIBIT B
 
Management Incentive Example
(Assumes preliminary PDP and Succession Planning rates are complete)
                       
Achievement Level
Achievement Percentage
Weighting
(see Pro Rate %)
Achievement Factor
     
Step 1: Calculate achievement factor for members of a department
     
PGN EPS
Target
100%
25.0%
25.0%
     
Legal entity EBITDA
Outstanding
200%
50.0%
100.0%
     
ECIP goals
At least 7
100%
25.0%
25.0%
       
Total achievement factor
150.0% Would be calculated for each BU
               
Step 2: Apply achievement factor to target levels
       
Target
%
Achievement Factor
Initial
Payout %
       
Department Head
35.0%
150.0%
52.5%
       
Section Manager
25.0%
150.0%
37.5%
       
Unit Manager
20.0%
150.0%
30.0%
                       
Step 3: Determine dollars eligible by department:
       
 
Salary
Target
%
Initial
Payout %
Calculated
Award
     
John Doe, Department Head
200,000
35.0%
52.5%
105,000
     
Jane Doe, Section Manager
100,000
25.0%
37.5%
37,500
     
John Smith, Section Manager
120,000
25.0%
37.5%
45,000
     
Jane Smith, Unit Manager
80,000
20.0%
30.0%
24,000
     
John Jones, Unit Manager
75,000
20.0%
30.0%
22,500
     
Jane Jones, Unit Manager
90,000
20.0%
30.0%
27,000
             
261,000
                     
Step 4: Provide each group executive a list of their departments and calculated
award totals.
Allow them to redistribute dollars based on organization performance within
group.
                   
Step 5: Allocate dollars by group and department:
       
 
Salary
Target
%
Initial
Payout %
Calculated Award
Discretionary Adjustment
Actual Award
Award
%
John Doe
200,000
35%
52.5%
105,000
(12,600)
92,400
46.2%
Jane Doe
100,000
25%
37.5%
37,500
5,000
42,500
42.5%
John Smith
120,000
25%
37.5%
45,000
(3,000)
42,000
35%
Jane Smith
80,000
20%
30.0%
24,000
-
24,000
30%
John Jones
75,000
20%
30.0%
22,500
5,000
27,500
36.7%
Jane Jones
90,000
20%
30.0%
27,000
(10,400)
16,600
18.4%
       
261,000
 
245,000
                     
Per group executive, department total to spend is $245,000
     
(Step 4)
                       
General notes:
             
The departmental sheets would still be rolled into group level sheets and
reviewed by level as in prior years (all dh’s together, 25% participants, 20%
participants)
Discretion based on PDP (core skills and performance goals) and succession
planning ratings
Discretionary percentage should reflect a range of +/- TBD% of payout % for
group
Steps 1 & 2 (MICP) fund determination) based on legal entities. Steps 3-5 (MICP
allocation) utilize reporting organization/group.

 

--------------------------------------------------------------------------------

EXHIBIT C
 
Progress Energy Carolinas, Inc.
 
Progress Energy Service Company, LLC
 
Progress Energy Florida, Inc.
 
Progress Energy Ventures, Inc.
 
Progress Fuels Corporation (corporate employees)
 

 

--------------------------------------------------------------------------------

DESIGNATION OF BENEFICIARY
MANAGEMENT INCENTIVE COMPENSATION PLAN
OF
PROGRESS ENERGY, INC.

As provided in the Management Incentive Compensation Plan of Progress Energy,
Inc., I hereby designate the following person as my beneficiary in the event of
my death before a full distribution of my Deferral Account is made.

PRIMARY BENEFICIARY:

_______________________________

_______________________________

_______________________________

CONTINGENT BENEFICIARY:

_______________________________

_______________________________

_______________________________

Any and all prior designations of one or more beneficiaries by me under the
Management Incentive Compensation Plan of Progress Energy, Inc. are hereby
revoked and superseded by this designation. I understand that the primary and
contingent beneficiaries named above may be changed or revoked by me at any time
by filing a new designation with the Sponsor’s Human Resources Department.

DATE:__________________

SIGNATURE OF PARTICIPANT:_________________________________

The Participant named above executed this document in our presence on the date
set forth above

WITNESS:                                      WITNESS: