EXHIBIT 10(a)
 

DEFERRED COMPENSATION PLAN

FOR

KEY MANAGEMENT EMPLOYEES OF

PROGRESS ENERGY, INC.

(Amended and Restated Effective July 13, 2011)
 
 

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TABLE OF CONTENTS

 
Page
ARTICLE 1 STATEMENT OF PURPOSE; EFFECTIVENESS
1
ARTICLE II DEFINITIONS
1
ARTICLE III ELIGIBILITY AND PARTICIPATION
5
ARTICLE IV RETIREMENT BENEFITS
6
ARTICLE V SURVIVOR BENEFITS
8
ARTICLE VI DISABILITY BENEFITS
9
ARTICLE VII SEVERANCE BENEFITS
10
ARTICLE VIII ADDITIONAL BENEFITS
11
ARTICLE IX ACCRUAL OF BENEFITS
12
ARTICLE X ADMINISTRATIVE COMMITTEE
12
ARTICLE XI AMENDMENT AND TERMINATION
13
ARTICLE XII MISCELLANEOUS
14
ARTICLE XIII CONSTRUCTION
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ARTICLE I
 
STATEMENT OF PURPOSE; EFFECTIVENESS
 
This Plan was originally adopted by Carolina Power & Light Company and
sponsorship of the Plan was transferred to CP&L Energy, Inc. (whose name was
subsequently changed to Progress Energy, Inc.) (the “Sponsor”) effective as of
August 1, 2000.  The purpose of the Plan was to provide increased incentive on
the part of key management employees of the Company and to further the long-term
growth and earnings of the Company by offering long-term incentives in addition
to current compensation to the limited group of key management employees of the
Company who were largely responsible for such growth.
 
Participation in the Plan was suspended effective January 1, 2000.  Benefits due
under those Deferred Compensation Agreements and Deferred Incentive Awards made
prior to January 1, 2000, remain payable pursuant to the terms of the Plan,
except that the Additional Benefits granted pursuant to ARTICLE VIII of the Plan
were transferred to and are payable under the Progress Energy, Inc. Amended and
Restated Management Deferred Compensation Plan.  The amended and restated Plan
provisions, as contained herein, are effective as of July 10, 2002, but shall
have no adverse affect on any Deferred Compensation Agreements and Deferred
Incentive Awards, and benefits payable pursuant thereto, made prior to January
1, 2000.
 
 
ARTICLE II
 
DEFINITIONS
 
When used herein the following terms shall have the meanings indicated unless a
different meaning is clearly required by the context.
 
1. “Annuity Starting Date”: The date on which payment of a benefit payable
hereunder is to commence.
 
2. “Board of Directors”: The Board of Directors of the Sponsor.
 
3. “Change in 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 of Directors;
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 of Directors determines should constitute
a Change of Control.

 
A Change of Control shall not be deemed to have occurred until a majority of the
members of the Board of Directors receive written certification from the
Organization and Compensation Committee of the Board that one of the events set
forth in this Section 1.3 as occurred.  Any determination that an event
described in this Section 1.3 has occurred shall, if made in good faith on the
basis of information available at that time, be conclusive and binding on the
Board of Directors, the Sponsor, the Participants and their beneficiaries for
all purposes of the Plan.
 
4. “Committee”: The Administrative Committee appointed by the Board of Directors
to administer this Plan.
 
5. “Company”: Carolina Power & Light Company, a North Carolina corporation, and
its corporate successors and affiliates under common ownership and control of
the Sponsor.
 
6. “Continuing Directors”:  The members of the Board of Directors on July 10,
2002; provided, however, that any person becoming a director subsequent to such
whose election
 
 
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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.
 
7. “Deferred Compensation Agreement”: Written agreement between the Company and
a Participant pursuant to which the Participant agreed to defer a portion of his
Compensation under the Plan.
 
8. “Deferred Incentive Award”: A deferred award made to an Eligible Employee
under the Management Incentive Compensation Plan.
 
9. “Designated Beneficiary”: One or more beneficiaries, as designated in writing
to the Committee, to whom payments otherwise due to or for the benefit of the
Participant hereunder shall be made in the event of death prior to the complete
payment of such benefit. In the event no such written designation is made by a
Participant or if such beneficiary shall not be in existence at the
Participant’s death or if such beneficiary predeceases the Participant, the
Participant shall be deemed to have designated his estate as such beneficiary.
 
10. “Disability Retirement”: Retirement from the employ of the Company because
of Total Disability.
 
11. “Disability Retirement Date”: The date upon which a Participant retires from
the employ of the Company because of Total Disability.
 
12. “Early Retirement”: Retirement from the employ of the Company upon or after
attaining age sixty (60) but prior to the calendar year in which the Participant
attains age sixty-five (65).
 
13. “Early Retirement Date”: The date of Early Retirement.
 
14. “Eligible Employee”: An Employee eligible to participate in this Plan, as
provided in Section 1 of ARTICLE III hereof.
 
15. “Employee”: A person who is employed by the Company.
 
16. “Insurable”: The life of a Participant at the time of a deferral election or
Deferred Incentive Award for which the Participant is notified in writing by the
Committee that the Participant is insurable by an insurance company approved by
the Committee and at premium rates acceptable to the Committee in the exercise
of its sole and absolute discretion.
 
17. “Management Incentive Compensation Plan”: The Management Incentive
Compensation Plan of Progress Energy, Inc., as amended.
 
18. “Normal Retirement”: Retirement from the employ of the Company in the
calendar year in which occurs the Participant’s Normal Retirement Date.
 
19. “Normal Retirement Date”: The date upon which such Participant attains the
age of sixty-five (65).
 
 
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20. “Participant”: An Employee who is eligible to participate in the Plan, in
the manner specified herein.
 
21. “Plan”: The amended and restated Deferred Compensation Plan for Key
Management Employees of Progress Energy, Inc. as contained herein, and as it may
be amended from time to time hereafter.
 
22. “Postponed Retirement”: Retirement from the employ of the Company after the
end of the calendar year in which the Participant attains age sixty-five (65).
 
23. “Postponed Retirement Date”: The date of Postponed Retirement.
 
24. “Present Value Interest Rate”: The rate stated in a Participant’s Deferred
Compensation Agreement or Deferred Incentive Award as the Present Value Interest
Rate or, if no such rate is stated, ten percent (10%) per annum.
 
25. “Stock Purchase-Savings Plan”: The Stock Purchase-Savings Plan of Carolina
Power & Light Company (as amended and restated effective December 31, 1989), and
as later amended.
 
26. “Salary”: The compensation payable by the Company to a Participant
consisting of regular or base compensation, such compensation being understood
not to include bonuses, if any, incentive compensation, if any, or amounts of
compensation payment of which has been deferred under any deferred compensation
plan or arrangement maintained by the Company.
 
27. “Sponsor”:  Progress Energy, Inc. and its successors in interest.
 
28. “Total Compensation”: The sum of (1) the annual regular or base compensation
and amounts of incentive compensation or bonuses paid by the Company to a
Participant as reflected in Internal Revenue Service Form W-2, and (2) amounts
of such compensation deferred under any plan or arrangement maintained by the
Sponsor, including this Plan, and which but for such deferrals would have been
reflected in such Form W-2.
 
29. “Total Disability”: During the first twelve (12) months of disability, a
disability where a Participant is wholly and continuously disabled by reason of
sickness or injury such that he is unable to perform the normal duties of his
actual occupation, and is under the regular care of a physician acceptable to
the Committee during said 12 months. After the first 12 months of disability, a
disability where a Participant is found to be wholly and permanently prevented
from engaging in any occupation as determined by the Committee, for which he is
reasonably qualified, by training, education, background and experience, as a
result of said sickness or injury, provided he is still under the regular care
of a physician acceptable to the Committee.
 
30. “Year of Service”: A period of twelve (12) consecutive months (no month to
be counted in more than one Year of Service) during which the Participant has
been or hereafter (i) is continuously employed by the Company, or (ii) is
continuously on leave of absence approved by the Company.
 
 
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ARTICLE III
 
ELIGIBILITY AND PARTICIPATION
 
1. Eligibility. Any key management Employee whose position with the Company is
at the department manager level or higher was eligible to participate in this
Plan prior to January 1, 2000.  Effective January 1, 2000, no new Participants
were eligible to enter the Plan.
 
2. Elective Participation.
 
(a) An Eligible Employee participated in the Deferred Compensation feature of
the Plan by irrevocably electing, in the manner specified herein, to defer
future Salary in an annual amount for one (1) or four (4) consecutive calendar
years (or for such fewer years as remain until the Employee’s Normal Retirement
Date or for such fewer years as approved by the Chief Executive Officer of the
Company; or if the Chief Executive Officer is the affected Participant then for
such fewer years as approved by the Committee).  An Eligible Employee could
defer a minimum of $1,000 per year under the four (4) year election and $3,000
per year under the one (1) year election.. No deferral election was permitted
which would have the result of causing to be deferred under this Plan in any
calendar year (as a result of such deferral election and, where applicable, any
previous deferral elections pursuant to this Plan or the predecessor Plan
provisions) amounts of Salary which exceed fifteen percent (15%) of such
Eligible Employee’s Total Compensation for the year in which such deferral
election was made; except when approved in advance on a case-by-case basis by
the Company’s Chief Executive Officer, or if the Chief Executive Officer is the
affected Participant then when approved in advance on a case-by-case basis by
the Committee.  Should the amount of any deferral election made by any Eligible
Employee exceed the fifteen percent (15%) limitation without the prior approval
of the Company’s Chief Executive Officer, the amount of deferrals so elected
would be automatically reduced to the maximum level permitted by the Plan.
 
(b) An Eligible Employee became a Participant in the Deferred Compensation
feature of the Plan upon the execution and delivery of a Deferred Compensation
Agreement. Such Agreement must be executed as follows:
 
 (i)           Within thirty (30) days following the date on which an Employee
first became eligible to participate in this Plan in order to defer Salary to be
earned in the remainder of the calendar year following such deferral election;
or
 
 (ii)           In all other cases, on or before December 31 to defer Salary to
be earned in succeeding calendar years.
 
(c) During a deferral period(s), the annual amount of Salary to be deferred was
deferred on a basis as determined by the Committee.
 
(d) The Committee was empowered to deny any eligible Employee the right to make
a new deferral election pursuant to the Plan in any calendar year. Any such
denial may apply to one or more but less than all eligible Employees.
 
 
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3. Participation through Management Incentive Compensation Plan. An Eligible
Employee participated in the Management Incentive Compensation feature of the
Plan when notified, in the manner specified herein, of a Deferred Incentive
Award under the Management Incentive Compensation Plan. Written notification of
such Deferred Incentive Award was made by the Committee at the direction of the
Board of Directors.
 
4. Benefits. The amount of benefits payable under the Plan will differ depending
upon the Participant’s age at the time of the deferral election and/or,
notification of a Deferred Incentive Award and the amounts deferred. In
addition, the amount of Survivor Benefits and Disability Benefits payable under
the Plan may vary from Participant to Participant depending upon whether the
Participant is Insurable or not Insurable. Each year in which the right to defer
was offered to an Employee and/or notification of a Deferred Incentive Award was
made, the Committee furnished such Eligible Employee with a schedule disclosing
how benefits are computed.
 
 
ARTICLE IV
 
RETIREMENT BENEFITS
 
1. Normal Retirement Benefit.
 
(a) Upon the Normal Retirement of a Participant, such Participant becomes
entitled to his Normal Retirement Benefit. The Normal Retirement Benefit is a
level fifteen (15) year annuity payable in one hundred eighty (180) equal
monthly installments in the amount stated in the Participant’s Deferred
Compensation Agreement or Deferred Incentive Award. Payment of the Normal
Retirement Benefit shall commence on the January 1st immediately following the
Participant’s Normal Retirement Date (such date being the “Regular Annuity
Starting Date”) and shall continue on the first day of each month thereafter
until one hundred eighty (180) monthly payments have been made.
 
(b) The Normal Retirement Benefit amount which the Company agreed to pay depends
on a number of factors, including, among other things, the amount of the
deferral, the Participant’s age and the length of time between the time of the
deferral and the Annuity Starting Date of the benefit.
 
2. Postponed Retirement Benefit.
 
(a) Upon the Postponed Retirement of a Participant, such Participant becomes
entitled to his Postponed Retirement Benefit. The Postponed Retirement Benefit
is a level fifteen (15) year annuity payable in equal monthly installments.
Payment of the Postponed Retirement Benefit shall commence on the January 1st
immediately following the Participant’s Postponed Retirement Date (such date
being the “Postponed Annuity Starting Date”), and shall continue on the first
day of each month thereafter until one hundred eighty (180) monthly payments
have been made.
 
(b) The monthly benefit of the Postponed Retirement Benefit shall be an amount
equal to the monthly benefit of the Normal Retirement Benefit increased by six
 
 
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percent (6%) compounded annually for each year that the Regular Annuity Starting
Date precedes Postponed Annuity Starting Date.
 
3. Early Retirement Benefit.
 
(a) Upon the Early Retirement of a Participant, such Participant becomes
entitled to his Early Retirement Benefit. The Early Retirement Benefit is a
level fifteen (15) year annuity payable in equal monthly installments, the
amount of which shall be the same as those of the Normal Retirement Benefit.
Subject to Sections 3(b) and 3(c) of this ARTICLE IV, payment of the Early
Retirement Benefit shall commence on the January 1st immediately following the
Participant’s Normal Retirement Date (such date being the “Regular Annuity
Starting Date”), and shall continue on the first day of each month thereafter
until one hundred eighty (180) monthly payments have been made.
 
(b) A Participant may irrevocably elect in advance to have payment of his Early
Retirement Benefit commence, in a reduced amount, on the January lst following
his Early Retirement Date (such date being the “Accelerated Annuity Starting
Date”). Such election shall be made in writing delivered to the Committee at the
same time the Participant irrevocably elects (in accordance with ARTICLE III
hereof) to defer future Salary giving rise to such Early Retirement Benefit.
 
(c) To the extent that such Early Retirement Benefit is the result of a Deferred
Incentive Award, payment of such benefits shall commence in accordance with the
terms contained in the written notification made by the Committee with respect
to such Award.
 
(d) In the event a Participant elects an Accelerated Annuity Starting Date, his
Early Retirement Benefit shall be reduced by six percent (6%) compounded
annually for each year that the Accelerated Annuity Starting Date precedes his
Regular Annuity Starting Date.
 
4. Death Prior to Commencement of Benefit. Anything herein to the contrary
notwithstanding, in the event a Participant dies after becoming entitled to his
Normal Retirement Benefit, Postponed Retirement Benefit, or Early Retirement
Benefit and prior to the Annuity Starting Date of such Retirement Benefit, the
Participant’s Designated Beneficiary shall receive, in lieu of such Retirement
Benefit, the Survivor Benefit Specified in ARTICLE V hereof.
 
5. Payments to Beneficiary. In the event a Participant dies prior to full
payment of his Retirement Benefit under this ARTICLE IV, all remaining payments
due hereunder shall be made to such Participant’s Designated Beneficiary.
 
 
ARTICLE V
 
SURVIVOR BENEFITS
 
1. Survivor Benefit. Upon the occurrence of any of the following events, the
Company shall pay to a Participant’s Designated Beneficiary the Survivor Benefit
as defined in this ARTICLE V.
 
 
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(a) The death of the Participant while employed by the Company;
 
(b) The death of the Participant after becoming entitled to a Retirement Benefit
of ARTICLE IV hereof, but prior to commencement of payment of such benefit;
 
(c) The death of the Participant after becoming entitled to the Disability
Benefit of ARTICLE VI, Section 2, hereof, but prior to commencement of payment
of such Benefit; or
 
(d) The death of the Participant after becoming entitled to the Severance
Benefit under ARTICLE VII, Section 1(b) hereof, but prior to commencement of
payment of such benefit.
 
2. Payment. Payment of the Survivor Benefit shall commence on the first day of
the month following receipt by the Committee of written proof of the
Participant’s death and shall continue on the first day of each month thereafter
until one hundred eighty (180) monthly payments have been made.
 
3. Amount.
 
(a) If the Participant is Insurable, then the Survivor Benefit is, a level
fifteen (15) year annuity payable to his Designated Beneficiary in one hundred
eighty (180) equal monthly installments of cash in the amount(s) stated in the
Participant’s Deferred Compensation Agreement or the Deferred Incentive Award.
 
(b) If the Participant is not Insurable and his death both (i) occurs after
attaining age sixty (60) and (ii) constitutes one of the events described in
Section 1(a), 1(b), and 1(c) of this ARTICLE V, then the Survivor Benefit is a
level fifteen (15) year annuity payable in one hundred eighty (180) equal
monthly installments in a monthly amount equal to the present value at the
Participant’s date of death of the Participant’s monthly Normal Retirement
Benefit, as set forth in the Participant’s Deferred Compensation Agreement or
the Deferred Incentive Award, discounted, for the period between the
Participant’s Regular Annuity Starting Date (as defined in ARTICLE IV, Section
1) and the Participant’s date of death, by the Present Value Interest Rate
stated in the Participant’s Deferred Compensation Agreement or Deferred
Incentive Award, compounded annually.
 
(c) If the Participant is not Insurable and either the Participant has not
attained age sixty (60) at the time of his death or his death constitutes the
event described in Section (d) of this ARTICLE V, then the total amount of the
Survivor Benefit shall equal his actual gross deferrals plus interest thereon at
nine percent (9%) per annum compounded annually until his date of death. Such
amount shall be payable to the Participant’s Designated Beneficiary at the
option of the Committee in either a lump sum on the first day of the month
immediately following receipt by the Committee of written proof of the
Participant’s death or in up to one hundred eighty (180) equal consecutive
monthly installments with interest at nine percent (9%) per annum, compounded
annually, commencing on the first day of the month immediately following receipt
by the Committee of proof of the Participant’s death.
 
 
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(d) Notwithstanding anything herein to the contrary, if the Participant’s death
occurs prior to May 1 of the calendar year next following the calendar year in
which the Participant enters into a Deferred Compensation Agreement or is
notified of a Deferred Incentive Award, or if the Participant’s death occurs by
reason of suicide prior to the May 1 of the third calendar year following the
calendar year in which the Participant enters into a Deferred Compensation
Agreement or is notified of a Deferred Incentive Award, then no Survivor Benefit
shall be payable pursuant to such Deferred Compensation Agreement or Deferred
Incentive Award. In lieu of any such Survivor Benefit, the Company shall pay to
the Participant’s Designated Beneficiary, in one lump sum, the actual gross
deferrals made, if any, pursuant to such Deferred Compensation Agreement or
Deferred Incentive Award plus interest thereon at nine percent (9%) per annum
compounded annually until date of payment.
 
(e) Anything to the Contrary herein notwithstanding, if the Survivor Benefit is
payable by reason of the Participant’s death occurring at a time when, had he
retired on the day of his death, he would have been entitled to the Postponed
Retirement Benefit (as provided in ARTICLE IV, Section 2), then the monthly
amount of the Survivor Benefit shall equal the monthly amount of the
Participant’s Normal Retirement Benefit, as set forth in the Participant’s
Deferred Compensation Agreement or Deferred Incentive Award, increased by six
percent (6%) per annum compounded annually for the period between the
Participant’s Regular Annuity Starting Date (as defined in ARTICLE IV, Section
1) and the Participant’s death.
 
4. Other. The Survivor Benefits payable hereunder are in lieu of any other
benefit under this Plan.
 
 
ARTICLE VI
 
DISABILITY BENEFITS
 
1. Entitlement. Upon Disability Retirement a Participant becomes entitled to the
Disability Benefit described in this ARTICLE VI.
 
2. Disability Benefit.
 
(a) Subject to paragraphs (b) and (c) below, the Disability Benefit shall be a
deferred benefit identical to the Normal Retirement Benefit to which the retired
Participant would have become entitled under ARTICLE IV if he had retired on his
Normal Retirement Date.
 
(b) Paragraph (a) above notwithstanding, but subject to paragraph (c) below, if
the Disability Retirement occurs before the Participant has attained age sixty
(60), and the Participant is not Insurable, then his Disability Benefit shall
equal his actual gross deferrals plus interest thereon at nine percent (9%) per
annum compounded annually until his Disability Retirement Date. Payment of such
benefit shall commence on the first day of the month immediately following (i)
his Disability Retirement Date and (ii) the expiration of six (6) months of
Total Disability. Such benefit shall be payable in sixty
 
 
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(60) equal consecutive monthly installments with interest at nine percent (9%)
per annum.
 
(c) The foregoing notwithstanding, in the event such Participant dies prior to
commencement of payment of such Disability Benefit, the Participant’s Designated
Beneficiary shall receive, in lieu of such Disability Benefit, the Survivor
Benefit specified in ARTICLE V hereof.
 
3. Re-Employment. In the event a retired Participant entitled to a Disability
Benefit hereunder but prior to commencement of payment of such benefit is
re-employed by the Company in a capacity which entitles him to participate in
the Plan, he shall forfeit such Disability Benefit and shall participate in the
Plan as if his service with the Company had never terminated. Anything in the
foregoing to the contrary notwithstanding, however, if at the time of the
retired Participant’s re-employment payment of his Disability Benefit hereunder
has already commenced, he shall be ineligible to again commence participation in
the Plan and shall, therefore, have no right, claim or entitlement to any
benefits hereunder other than full payment of such Disability Benefit.
 
4. Payments to Beneficiary. In the event that a retired disabled Participant
dies prior to full payment of his Disability Benefit under this ARTICLE VI, all
remaining payments due hereunder shall be made to such Participant’s Designated
Beneficiary.
 
 
ARTICLE VII
 
SEVERANCE BENEFITS
 
1. Severance Benefit.
 
(a) In the event a Participant’s employment with the Company terminates for any
reason other than death, Disability Retirement, Early, Normal or Postponed
Retirement, and at the time of such termination such Participant has neither (i)
accrued twenty (20) Years of Service, nor (ii) attained age fifty (50) with
fifteen (15) Years of Service, nor (iii) attained age fifty-five (55) with ten
(10) Years of Service, the Participant’s participation in the Plan shall cease
as of the date of such termination. In such event, the Company shall pay the
former Participant the amount of his actual gross deferrals plus interest
thereon at seven percent (7%) per annum, compounded annually. Such amount shall
be, payable to the former Participant in sixty (60) equal consecutive monthly
installments with interest at seven percent (7%) per annum commencing within
ninety (90) days following such termination.
 
(b) In the event a Participant’s employment with the Company terminates for any
reason other than death, Disability Retirement, Early, Normal or Postponed,
Retirement, and at the time of such termination such Participant has either (i)
accrued twenty (20) or more Years of Service, or (ii) attained age fifty (50)
with fifteen (15) or more Years of Service or (iii) attained age fifty-five (55)
with ten (10) or more Years of Service, such Participant shall receive a
Severance Benefit identical to the Normal Retirement Benefit as provided in
ARTICLE IV hereof to which such Participant would
 
 
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have become entitled if he retired upon or after his Normal Retirement Date.
Provided, however, in the event a Participant dies prior to commencement of
payment of such Severance Benefit, the Participant’s Designated Beneficiary
shall receive, in lieu of such Severance Benefit, the Survivor Benefit specified
in ARTICLE V hereof.
 
2. Payments to Beneficiary. In the event a Participant dies prior to full
payment of his Severance’ Benefit under this ARTICLE VII, all remaining payments
due hereunder shall be made to such Participant’s Designated Beneficiary.
 
 
ARTICLE VIII
 
ADDITIONAL BENEFITS
 
1. Loss of Benefits. It is anticipated that the deferral of a Participant’s
Salary pursuant to the Deferred Compensation feature of this Plan may result in
a loss of benefits through a reduction of amounts actually or potentially
credited to his account(s) under the Stock Purchase-Savings Plan, and/or other
qualified plans now or hereafter maintained by the Company. For example, it is
expected that elections to defer Salary under the Deferred Compensation feature
of this Plan could result in reduced Company contributions to the account of a
Participant under the Stock Purchase-Savings Plan. The Committee shall determine
the amount of such losses of benefits (hereafter “Benefit Loss”).
 
2. Additional Benefits. If the Committee determines that a Participant has
suffered a Benefit Loss in any year, additional benefits shall be provided to
the Participant as described herein:
 
(a) In the case of all Benefit Losses, if any, additional benefits shall be
provided under this Plan as if the Participant had made a one (1) year deferral
election to defer Salary in an amount equal to such Benefit Loss. The Committee
shall determine when such deferral is deemed to occur. The amount of such
additional benefits will be determined under this Plan in the year such deferral
is deemed to occur but shall be based upon the level of benefits payable
pursuant to, the deferral election to which the Benefit Loss is attributable,
and the Participant’s age at the time of such deferral election.
 
3. Transfer of Additional Benefits.  Effective January 1, 2000, the value of the
Additional Benefits provided under this ARTICLE VIII were transferred for
payment under the Progress Energy, Inc. Amended and Restated Management Deferred
Compensation Plan upon the written acknowledgement of the Participant that he
had no further right or interest to the Additional Benefits under this Plan.
 
 
ARTICLE IX
 
ACCRUAL OF BENEFITS
 
1. If the employment of a Participant terminates for any reason prior to the
completion of the deferrals agreed upon in the Deferred Compensation Agreement
or if the agreed deferrals are not made for any other reason, then all of his
benefits under the Plan shall be
 
 
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reduced by a fraction, the numerator of which is the amount of the gross
deferrals agreed to be deferred which were not deferred, and the denominator of
which is the amount of gross deferrals agreed to be deferred.
 
2. The reduction of benefits under Section I of this ARTICLE IX shall not apply
to any benefits receivable by a Participant or his Designated Beneficiary under:
 
(a) ARTICLE V, Section 3(a) only, but only when the Participant dies while
employed by the Company;
 
(b) ARTICLE V, Section 3(c);
 
(c) ARTICLE V, Section 3(d);
 
(d) ARTICLE VI, Section 2(b);
 
(e) ARTICLE VII, Section 1(a); or
 
(f) ARTICLE VIII.
 
 
ARTICLE X
 
ADMINISTRATIVE COMMITTEE
 
1. This Plan shall be administered by an Administrative Committee of not less
than three (3) nor more than seven (7) members appointed by the Board of
Directors of the Sponsor. The Board of Directors may from time to time appoint
members of the Committee in substitution for the members previously appointed
and may fill vacancies, however caused. 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.
 
2. The Committee shall act by a majority of the number then constituting the
Committee, and such action may be taken either by a vote at a meeting or in
writing without a meeting.
 
3. The Committee shall keep a complete record of all its proceedings and all
data relating to the administration of the Plan.
 
4. The Committee shall elect 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.
 
5. No member of the Committee shall be personally liable for any actions taken
by the Committee unless the member’s action involves willful misconduct. To the
extent permitted by applicable law, the Company shall indemnify and hold
harmless each member of the
 
 
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Committee and each Employee of the Company acting pursuant to direction of the
Committee from and against any and all liability, claims, demands, costs and
expenses (including reasonable attorneys’ fees) arising out of or incident to
any act or failure to act in connection with the administration of the Plan,
except for any such act or failure to act that involves willful misconduct.
 
 
ARTICLE XI
 
AMENDMENT AND TERMINATION
 
The Sponsor reserves the right, at any time and from time to time, by action of
its Board of Directors, to modify or amend in whole or in part any or all of the
provisions of the Plan. In addition, the Sponsor reserves the right, by action
of its Board of Directors, to terminate the Plan in whole or in part; provided,
however, any such modification, amendment or termination shall not adversely
affect the Deferred Compensation Agreements or Deferred Incentive Awards then in
effect.
 
Notwithstanding the foregoing, the Sponsor reserves the right, by action of its
Board of Directors, to terminate the Plan in the event that there occur changes
in the tax laws which, in the determination of the Committee in the good faith
exercise of its sole and absolute discretion, adversely affect the Sponsor or
the Participants. Such changes may include, without limitation, changes in laws
governing taxation of life insurance proceeds received by the Company or the
Sponsor or taxation of the internal build-up of cash surrender value of life
insurance owned by the Company or the Sponsor. To be effective, such action of
the Board of Directors terminating the Plan must be made within sixty (60) days
of such changes. In the event of such a termination, the Company shall have the
right to refund to each Participant (or his Designated Beneficiary) the sum of
the Participant’s actual gross deferrals under the Plan, with interest on such
amounts until date of payment at the rate of nine percent (9%) per annum,
compounded annually, such sum to be paid in a lump sum within sixty (60) days
following the date the Plan is terminated. The foregoing notwithstanding, such a
termination shall not apply to any Participant or Designated Beneficiary who has
begun receiving benefits under the Plan at the time of the termination, and such
benefits shall continue to be paid in accordance with the terms of the Plan as
if such termination had not occurred.
 
 
ARTICLE XII
 
MISCELLANEOUS
 
1. Non-Alienation of Benefits. No right or benefit under the Plan shall be
subject to anticipation, alienation, sale, assignment, pledged encumbrance, or
charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber,
or charge any right or benefit under this Agreement 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 benefits. If the
Participant or any beneficiary hereunder 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
 
 
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beneficiary, spouse, children, or other dependents, or any of them in such
manner and in such amounts and proportions as the Committee may deem proper.
 
2. No Trust Created. The obligations of the Sponsor and the Company to make
payments hereunder shall constitute a liability of the Sponsor and the Company
to a Participant and his Beneficiary. Such payments shall be made from. assets
which shall continue, for all purposes, to be part of the general assets of the
Sponsor and the Company, and no person shall have, by virtue of this Plan, any
interest in such assets. The Sponsor and the 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, his Beneficiary, or
any other Beneficiary shall have any interest in any particular asset of the
Sponsor or the Company by reason of its obligations hereunder. To the extent
that any person acquires a right to receive payments from the Sponsor and the
Company under the provision of this Plan, such right shall be no greater than
the right of any unsecured general creditor of the Sponsor and the
Company.  Nothing contained in the Plan, and no action taken pursuant to its
provisions by any party, shall create, or be construed as creating, a trust of
any kind, or a fiduciary relationship between the Sponsor, the Company and a
Participant, his Beneficiary, or any other person.
 
In the event that, in its discretion, the Sponsor or the Company purchases an
insurance policy or policies insuring the life of any Participant to allow the
Sponsor or the Company to recover, in whole, or in part, the cost of providing
the benefits hereunder, neither the Participant, his Beneficiary or any other
beneficiary shall have any rights whatsoever therein; the Sponsor or  Company
shall be the sole owner and beneficiary thereof and shall possess and may
exercise all incidents of ownership therein.
 
3. No Employment Agreement. Neither the execution of this Plan or any Deferred
Compensation Agreement or Deferred Incentive Award nor any action taken by the
Sponsor or the 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 the 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 the Company and a Participant, nor shall any provision
herein restrict the right of the Sponsor or the Company to discharge any
Participant or restrict the right of any Participant to terminate his employment
with the Sponsor or the Company.
 
4. Designation of Beneficiary. Participants shall file with the Committee a
notice in writing designating one or more Designated Beneficiaries to whom
payments otherwise due to or for the benefit of the Participant hereunder shall
be made in the event of his death prior to the complete payment of such benefit.
Participants shall have the right to change the beneficiary or beneficiaries so
designated from time to time; provided, however, that any change shall not
become effective until received in writing by the Committee.
 
5. Claims for Benefits. Each Participant or beneficiary 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.
 
 
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(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 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 special Plan provisions as to its effect.
 
6. Change of Control. In the case of a Change of Control, the Sponsor, subject
to the restrictions in this Section 6 and in Section 2 of this ARTICLE XII,
shall irrevocably set aside funds in one or more such grantor trusts in an
amount that is sufficient to pay each Participant the net present value as of
the date on which the Change of Control occurs, of the benefits to which the
Participant (or the beneficiaries) would be entitled pursuant to the terms of
the Plan if the value of the benefit were to be paid in a lump sum upon the
Change of Control; provided, however, that the Sponsor shall not set aside
funds, revocably or irrevocably, in one or more such grantor trusts in
connection with the transactions described in the Agreement and Plan of Merger
between the Sponsor and Duke Energy Corporation dated as of January 8,
2011.  The net present value of such benefits shall be determined as of the
Change of Control by application of the Present Value Interest Rate.  The
obligations and responsibilities of the Sponsor and Company under this Plan
shall be assumed by any successor or acquiring corporation, and all of the
rights, privileges and benefits of the Participants hereunder shall continue
following the Change of Control.
 
7. Withdrawals on Account of Hardship. A Participant may, in the Committee’s
sole discretion, receive a withdrawal of all or any part of such Participant’s
deferrals under the Plan in the case of an “immediate and heavy financial
hardship.” A Participant requesting a withdrawal pursuant to this Section shall
have the burden of proof of establishing, to the Committee’s satisfaction, the
existence of such hardship, and the amount needed to satisfy the same. In that
regard, the Participant shall provide the Committee with such financial data and
information as the Committee may request. If the Committee determines that a
withdrawal should be permitted under this Section, such withdrawal shall be made
within a reasonable time after the Committee’s determination of the existence of
such hardship and the amount so needed. Any such withdrawal pursuant to this
Section shall be expressly conditional upon the Participant receiving such
distribution entering into such modification or amendment to such Participant’s
Deferred Compensation Agreement as the Committee may deem appropriate in its
sole and exclusive discretion to reduce the benefits that would have otherwise
been payable to such Participant had such payment not been made to the
Participant pursuant to this Section. As used herein, the term “hardship” means
an immediate and heavy financial need of the Participant for which resources are
not reasonably available from other sources to the Participant. The
 
 
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circumstances that shall constitute a hardship shall depend upon the facts of
each case. Withdrawals of amounts because of an immediate and heavy financial
need shall not exceed an amount reasonably needed to satisfy the hardship. If
any withdrawal is permitted pursuant to this Section before all the
Participant’s deferrals have been completed pursuant to Deferred Compensation
Agreements then in effect, no further deferrals of salary shall be made pursuant
to such Participant’s Deferred Compensation Agreements from and after the
effective date of the withdrawal.
 
8. Payment to Incompetents. The Committee shall make the payments provided
herein directly to the Participant or Designated Beneficiary entitled thereto
or, if such Participant or Designated Beneficiary has been determined by a court
of competent jurisdiction to be mentally or physically incompetent, then payment
shall be made to the duly appointed guardian, committee or other authorized
representative of such Participant or Designated Beneficiary. The Sponsor or the
Company shall have the right to make payment directly to a Participant or
Designated Beneficiary until is has received actual notice of the physical or
mental incapacity of such Participant or Designated Beneficiary and actual
notice of the appointment of a duly authorized representative of his estate. Any
payment to or for the benefit of a Participant or Designated Beneficiary shall
be a complete discharge of all liability of the Sponsor and the Company
therefore. The Committee is authorized to interpret and administer this Section
in accordance with the laws of the State of North Carolina.
 
9. Binding Effect. Obligations incurred by the Sponsor and the Company pursuant
to this Plan shall be binding upon and inure to the benefit of the Sponsor and
the Company, their successors and assigns, and the Participant and the
beneficiary or beneficiaries designated pursuant to ARTICLE XII, Section 4
hereinabove.
 
10. Entire Plan. This document and any amendments contains all the terms and
provisions of the Plan and shall constitute the entire Plan, any other alleged
terms or provisions being of no effect.
 
 
ARTICLE XIII
 
CONSTRUCTION
 
1. Governing Law. This Plan shall be construed and governed in accordance with
the laws of the State of North Carolina.
 
2. Gender. 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.
 
3. Headings, etc. The cover page of this Plan, the Table of Contents and all
heading used in this Plan are for convenience of reference only and are not part
of the substance of this Plan.
 

 
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THIS PLAN is adopted and duly executed effective as of the 31st day of October,
2011.
 

 
 
 
By:
PROGRESS ENERGY, INC.
 
/s/ William D. Johnson
William D. Johnson
Chairman, President
and Chief Executive Officer
 
 
ATTEST:
/s/ Holly H. Wenger
Holly H. Wenger
Assistant Secretary
 
 
[Corporate Seal]
 

 

 
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