Document:

exhibit102.htm

    EXHIBIT
10.2

    Progress
Energy, Inc.

    

    RESTRICTED
STOCK UNIT AWARD AGREEMENT

    

    Non-transferable

    

    GRANT
TO

    

    name

    (“Grantee”)

    

    by
Progress Energy, Inc. (the “Sponsor”) of xxx

    

    Restricted
Stock Units (the “Units”) representing the right to earn, on a one-for-one
basis, shares of the Sponsor’s common stock (“Stock”), pursuant to and subject
to the provisions of the Progress Energy, Inc. Amended and Restated 2007 Equity
Incentive Plan (the “Plan”) and to the terms and conditions set forth on the
following pages of this award agreement (“Agreement”).  Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Plan.

    

    By
accepting this award, Grantee shall be deemed to have agreed to the terms and
conditions of this Agreement and the Plan.  Unless vesting is
accelerated as provided in section 2 of the Terms and Conditions or otherwise in
the discretion of the Sponsor’s Committee on Organization and Compensation
(“Committee”), the Units shall vest (become non-forfeitable) on the third
anniversary of the Grant Date.

     

    IN
WITNESS WHEREOF, Progress Energy, Inc. has caused this Agreement to be executed
as of the Grant Date, as indicated below.

    

                                        PROGRESS ENERGY,
INC.

     

    
      	
                     

            	
               
      

              _____________________________________

            	 
      
	
                                                                                    By:

            
	 
      	
              William
      D. Johnson

              Chairman,
      Chief Executive Officer and President

            
	
               

               

                                                                                         Grant
      Date:  Month
      d,yyyy

            

    

    
      
         

      

      
         

        
        

      

      
         

      

    

    TERMS
AND CONDITIONS

    

    1.  Grant
of Units.  Each
Unit represents the right to receive one share of the Sponsor’s Stock on
the terms set forth in this Agreement.

     

    2.  Vesting of
Units.  The Units have been credited to a bookkeeping account
on behalf of Grantee.  The Units will vest and become non-forfeitable
on the earliest to occur of the following (the “Vesting Date”):

     

    
      	
              (a)

            	
              As
      to all of the units, on the third anniversary of the Grant
      Date;

            

    

    
      	
              (b)

            	
              As
      to all of the Units, the termination of Grantee’s employment with the
      Company due to death or Disability (as defined for purposes of Code
      Section 409A) at least one year following the Grant
  Date;

            

    

    
      	
               (c)
      

            	
              As
      to all of the Units, the involuntary termination of Grantee’s employment
      with the Company due to
Divestiture;

            

    

    
      	
              (d)

            	
              As
      to all of the Units, upon the occurrence of a Change in Control (as
      defined for purposes of Code Section 409A), if the Units are not assumed
      by the surviving company or equitably converted or
      substituted;

            

    

    
      	
              (e)

            	
              As
      to all of the Units, upon termination of Grantee’s employment by Sponsor
      without Cause at any time after a Change in Control;
  or

            

    

    
      	
              (f)

            	
              As
      to all of the Units, upon Grantee’s Normal Retirement on or after
      attaining age 65.  Upon Grantee’s Early Retirement on or after
      age 55 with 10 or more years of service, a prorata percentage of the
      then-unvested Units, if any, will vest based upon the number of full
      months elapsed between the Grant Date and the date of Early Retirement,
      divided by 36.

            

    

     

    If
Grantee’s employment terminates prior to the Vesting Date for any reason other
than as described in (b), (c) or (e) or (f) above, Grantee shall forfeit all
right, title and interest in and to the then unvested Units as of the date of
such termination and the unvested Units will be reconveyed to the Sponsor
without further consideration or any act or action by Grantee.

     

    3.  Conversion to
Stock.  Unless the Units are forfeited prior to the Vesting
Date as provided in Section 2 above, the Units will be converted to Shares on
the later of (i) the Vesting Date, or (ii) if required to comply with Code
Section 409A and Treasury regulations and guidance with respect to such law, the
six-month anniversary of Grantee’s separation from service (the “Conversion
Date”).  Such Shares will be registered on the books of the Sponsor in
Grantee’s name as of the Conversion Date and delivered to Grantee within 30 days
thereafter, in certificated or uncertificated form, as the Participant shall
direct.

     

    4.      Dividend
Equivalents.  If and when cash dividends or other cash
distributions are paid with respect to the Stock while the Units are
outstanding, the dollar amount of such dividends or distributions with respect
to the number of Shares then underlying the Units will be paid to Grantee within
30 days after the date that dividends are paid to shareholders of the
Sponsor.

     

    5.  Rights as
Stockholder.  Except for the right to receive Dividend
Equivalents as provided in Section 4 above, Grantee shall not have any rights as
a stockholder of the Sponsor with respect to the Units, including voting rights,
until conversion of the Units to shares of Stock.  Upon conversion of
the Units into shares of Stock, Grantee will obtain full voting and other rights
as a stockholder of the Sponsor.

     

    6. Restrictions on
Transfer.  The Units may not be sold, transferred, exchanged,
assigned, pledged, hypothecated or otherwise encumbered to or in favor of any
party other than the Company, or be subjected to any lien, obligation or
liability of Grantee to any other party other than the Company.

     

    7.  No Right of Continued
Employment.  Nothing in this Agreement shall interfere with or
limit in any way the right of the Company to terminate Grantee’s employment at
any time, nor confer upon Grantee any right to continue in the employ of the
Company.

     

    8.  Payment of
Taxes.  The Company has the authority and the right to deduct
or withhold, or require Grantee to remit to the employer, an amount sufficient
to satisfy federal, state, and local taxes (including Grantee’s FICA obligation)
required by law to be withheld with respect to any taxable event arising as a
result of the vesting or settlement of the Units.  The obligations of
the Sponsor under this Agreement will be conditional on such payment or
arrangements, and the Sponsor, and, where applicable, its Affiliates will, to
the extent permitted by law, have the right to deduct any such

     

    taxes
from any payment of any kind otherwise due to Grantee.  Grantee hereby
authorizes the Company to instruct a third party broker or plan administrator to
sell Shares earned by Grantee upon settlement of the Units in an amount
sufficient to satisfy the amount required to be withheld for tax purposes, and
to remit the cash proceeds from such sale to the Company.

     

    9.  Amendment.  The
Committee may amend, modify or terminate this Agreement without approval of
Grantee; provided, however, that such amendment, modification or termination
shall not, without Grantee’s consent, reduce or diminish the value of this award
determined as if it had been fully vested (i.e., as if all restrictions on the
Units hereunder had expired) on the date of such amendment or
termination.

     

    10.  Plan
Controls.  The terms contained in the Plan are incorporated
into and made a part of this Agreement and this Agreement shall be governed by
and construed in accordance with the Plan.  In the event of any actual
or alleged conflict between the provisions of the Plan and the provisions of
this Agreement, the provisions of the Plan shall be controlling and
determinative.

     

    11.  Successors.  This
Agreement shall be binding upon any successor of the Sponsor, in accordance with
the terms of this Agreement and the Plan.

     

    12.  Severability.  If
any one or more of the provisions contained in this Agreement is invalid,
illegal or unenforceable, the other provisions of this Agreement will be
construed and enforced as if the invalid, illegal or unenforceable provision had
never been included.

     

    13. Notice.  Notices
and communications under this Agreement must be in writing and either personally
delivered or sent by registered or certified United States mail, return receipt
requested, postage prepaid.  Notices to the Sponsor must be addressed
to:

     

    Progress
Energy, Inc.

    410 South
Wilmington Street

    Raleigh,
NC 27601

    Attn:
General Counsel

     

    or any
other address designated by the Sponsor in a written notice to Grantee. Notices
to Grantee will be directed to the address of Grantee then currently on file
with the Sponsor, or at any other address given by Grantee in a written notice
to the Sponsor.exhibit103.htm

    
      EXHIBIT
10.3

       

      AMENDED
MANAGEMENT INCENTIVE COMPENSATION PLAN

    

    OF

    PROGRESS
ENERGY, INC.

     

    AS
AMENDED JANUARY 1, 2010

    
      
         

      

      
         

        
        

      

      
         

      

    

    
      TABLE OF
CONTENTS

       

      
        
          	 	 	 Page
	ARTICLE
      I	PURPOSE	 1
	ARTICLE
      II	DEFINITIONS	 1
	ARTICLE
      III	ADMINISTRATION	 8
	ARTICLE
      IV	PARTICIPATION	 9
	ARTICLE
      V	
                  AWARDS

                	 9
	ARTICLE
      VI	DISTRIBUTION
      AND DEFERRAL OF AWARDS	12
	ARTICLE
      VII	TERMINATION
      OF EMPLOYMENT 	
                  18

                
	
                  ARTICLE
      VIII

                	
                  MISCELLANEOUS 

                	
                  19

                

        

      

      
        	
                EXHIBIT A

              	
                MICP RELATIVE PERFORMANCE
      WEIGHTINGS

              

      

      
        	
                EXHIBIT B

              	
                MANAGEMENT INCENTIVE
  EXAMPLE

              

      

      
        	
                EXHIBIT C

              	
                PARTICIPATING
  EMPLOYERS

              

      

      
        	
                 
      

              	
                FORM OF DESIGNATION OF
      BENEFICIARY

              

      

    
      
         

      

      
         

        
        

      

      
         

      

    

    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, 2010.  The
terms of the amended and restated Plan shall govern the payment of any benefits
commencing after January 1, 2010.

     

    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 and as may be adjusted in accordance with Section 6 of
Article V below.

    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.

    5. “Cause”:  Any
of the following:

    
    

    
      	(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 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

            

    

    
      	
              (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 in
      Control.

            

    

    A Change
in Control shall not be deemed to have occurred until a majority of the members
of the Board receive written certification from the 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.

    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. “Earnings”:  The
net income of the Participating Employer 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, 2009.

    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
Earnings”:  The Earnings 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 Earnings 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. “Performance Unit
Subaccount”:  A notational bookkeeping account maintained under
the Plan at the direction of the Compensation Committee representing a deemed
investment in Performance Units, including the Incentive Performance Units
described in Section 4 of Article VI, and associated earnings and
adjustments.  The number of Performance Units awarded to a Participant
shall be recorded in each Participant’s Performance Unit Subaccount as of the
first day of the month coincident with or next following the month in which a
deferral becomes effective with respect to Awards deferred for Years beginning
prior to January 1, 2009, and thereafter with respect to deferred Awards
allocated to the Performance Unit Subaccount by the Participant.  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.

    22. “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, as amended from time to time, or as otherwise selected by the
Compensation Committee.

    23. “Phantom Investment
Subaccount”:  A notational bookkeeping account maintained under
the Plan at the direction of the Compensation Committee representing a deemed
investment in one or more Phantom Investment Funds as directed by the
Participant under Section 6 of Article VI, including the Performance Unit
Subaccount of the Participant, if any.

    24. “Plan”:  The
Management Incentive Compensation Plan of Progress Energy, Inc. as contained
herein, and as it may be amended from time to time.

    25. “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, or (iii) 35 years of
service.

    26. “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.

    27. “Senior Management
Committee”:  The Senior Management Committee of the
Company.

    

    28. “Section
409A”:  Section 409A of the Code, or any successor section
under the Code, as amended and as interpreted by final or proposed regulations
promulgated thereunder from time to time and by related guidance.

    29. “Separation from
Service”:  The death, Retirement or other termination of
employment with the Company as defined for purposes of Section
409A.

    30. “Sponsor”:  Progress
Energy, Inc., a North Carolina corporation, or any successor to it in the
ownership of substantially all of its assets.

    31. “Target Award Opportunity”:  The
target for an Award under this Plan as set forth in Section 1 of Article V
hereof.

    32. “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
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.

    33. “Valuation
Date”:  The last day of each calendar month and such other
dates as selected by the Compensation Committee, in its sole
discretion.

    34. “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.

    35. “Year”:  A
calendar year.

    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;
and (c) certify to the Board that a Change in Control has occurred as provided
in Section 6 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.

     

    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

              Supervisory
      Personnel

            	
               

                           25%
      and 30%

              20%

                  10%,
      12%, and 15%

            

    

        *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.

    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 for the Year payable to Participants who
are not members of the Senior Management Committee 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.  Similar adjustments of
Awards to Participants who are members of the Senior Management Committee shall
be subject to approval by the Compensation Committee.

    7. Example.  Attached
as Exhibit B
and incorporated by reference is an example of the process by which an Award is
granted hereunder.  Exhibit B 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 succeeding
Year.

    2. Deferral
Election.  A Participant may elect to defer the Plan Award he
or she will earn for any Year by completing and submitting a deferral election
in a form acceptable to the Vice President, Human Resources, by the last day of
the preceding Year (or such other time as permitted by Section
409A).  Such election shall apply to the Participant’s Award, if any,
otherwise to be paid after the Year during which it is 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 except as provided in Section 10 of this Article VI or as may be
permitted by rules promulgated under Section 409A and the plan
administrator.

    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 7, 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 7,
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 with
respect to Years beginning prior to January 1, 2009, 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 with respect to Years beginning prior to January 1, 2009, 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 9 of this Article VI.

    5. Phantom
Investments.  Effective with respect to Awards earned in Years
beginning on and after January 1, 2009, the Participant shall allocate in his
deferral election the deferred Award among the Phantom Investment Subaccounts
made available by the Compensation Committee.  The Participant may
elect to reallocate the value of his Phantom Investment Subaccounts among other
Phantom Investment Subaccounts once per calendar month, pursuant to uniform
rules and procedures adopted by the Compensation Committee.  A
Participant having a Plan Deferral Account as of December 31, 2008, may
reallocate any part of the balance in the Plan Deferral Account (other than
amounts attributable to Incentive Performance Units) among the Phantom
Investment Subaccounts pursuant to uniform rules and procedures adopted by the
Compensation Committee.

    6. Plan
Accounts.  A Plan Deferral Account will be established on
behalf of each Participant electing to defer payment of an Award under the
Plan.  The Plan Deferral Account shall represent the aggregate balance
in the Phantom Investment Subaccounts of the Participant.  Phantom
Investment Subaccounts shall be valued as of each Valuation Date based on the
notional investments of each such account, and shall be stated in a unit value
or dollar amount, pursuant to rules and procedures adopted by the Compensation
Committee.  Each Participant shall receive an annual statement of the
balance of his Plan Deferral Account.

    7. Payment of Deferred Plan
Awards.  Subject to Section 4 related to forfeiture of
Incentive Performance Units, the balance in the Plan Deferral Account shall be
paid in cash to the Participant within sixty (60) days after the deferred
distribution date specified by the Participant in accordance with Section
3.  The balance in the Plan Deferral Account shall be determined as of
the Valuation Date next preceding the date of payment to the
Participant.  To convert the Performance Units in a Participant’s
Performance Unit Subaccount to a cash payment amount, Performance Units shall be
multiplied by the closing price of the Sponsor’s Common Stock on the last
trading day coincident with or next preceding the applicable Valuation
Date.  Except as otherwise provided in Sections 7, 8, 9 and 10 of this
Article VI, the 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.

    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 balance in the
Participant’s Plan Deferral Account as of the applicable Valuation Date will be
divided by the total number of annual payments to be received by the
Participant.

                          (b)           To
determine the amount of each successive annual payment, the balance in the
Participant’s Plan Deferral Account as of the Valuation Date next preceding the
date of payment will be divided by the number of annual payments remaining to be
received.

    8. 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 Section 1 of this Article
VI.

    9. Separation from
Service/Payment of Deferral.  Notwithstanding the foregoing, if
a Participant Separates from Service by reason other than death or Retirement,
full payment of all amounts due to the Participant shall be made within sixty
(60) days following the date of Separation.  However, if the
Participant is a “key employee” as defined in Section 416(i) of the Code (but
determined without regard to paragraph 5 thereof or the 50 employee limit on the
number of officers treated as key employees), payment shall not be made before
the date that is 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.

    10. 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 amount distributed will not exceed the amount necessary to satisfy
the emergency need plus amounts necessary to pay taxes reasonably anticipated to
result from the distribution, after taking into account the extent to which such
hardship is or may be relieved through cancellation of a deferral election under
this Section 10, reimbursement or compensation by insurance or otherwise or by
liquidation of the Participant’s assets (to the extent such liquidation of
assets would not itself cause severe financial hardship).  Any
deferral election made with respect to a Plan Award that would otherwise become
payable by the next succeeding March 15 shall be cancelled and such Plan Award
shall be paid in cash by the next succeeding March 15 pursuant to Section
1.  Incentive Performance Units shall not be subject to early
distribution under this Section 10 until five years from March 15 of the Year in
which payment would have been made if the Award had not been
deferred.

    11. Death of a
Participant.  If the death of a Participant occurs before a
full distribution of the Participant’s Plan Deferral Account is made, the
remaining portion of the Participant’s Plan Deferral Account shall be paid in a
lump sum to the Designated Beneficiary of the Participant within sixty (60) days
following notification that death has occurred.  The balance in the
Plan Deferral Account shall be determined as of the Valuation Date next
preceding the date of payment.

    12. 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.

    13. 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.  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.

    14. Change in
Control.  In the case of a Change in Control, the Company
shall, subject to the restrictions in this Section 14 and Section 13 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
in 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 in
Control.

    15. Limitation on
Trust.  Notwithstanding the provisions of the foregoing
Sections 13 and 14, the Company shall establish no such trust if the assets
thereof shall be includable in the income of Participants thereby pursuant to
Section 409A(b).

     

    ARTICLE
VII

     

    TERMINATION OF
EMPLOYMENT

     

    Except as
otherwise provided in this Article VII, a Participant must be actively employed
by the Company on the next January 1 immediately following the Year for which a
Plan Award is earned in order to be eligible for payment of an Award for that
Year.  In the event the active employment of a Participant shall
terminate or be terminated for any reason, including death, 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 within one (1) year 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 through December 31, 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.

    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 in Control, no such action shall
take effect prior to the January 1 next following the Year in which occurs the
Change in 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).

    5. Governing
Law.  This Plan shall be construed and governed in accordance
with the laws of the state of North Carolina to the extent not preempted by
federal law and in a manner consistent with the requirements of Section
409A.

    6. Entire
Agreement.  This document (including the Exhibits attached
hereto) sets forth the entire Plan.

    

        IN WITNESS
WHEREOF, this instrument has been executed this ___ day of _________,
2009.

    

    PROGRESS ENERGY, INC.

    

    

    By:         ___________________________________

    William D. Johnson

    Chief Executive Officer

    

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    EXHIBIT
A

     

    MICP
RELATIVE PERFORMANCE WEIGHTINGS

     

    

    
      	
              
                 

                POSITION

                 

              

            	
              
                 

                 COMPANY

                EPS

                 

              

            	
              
                 

                LEGAL
      ENTITY

                EARNINGS

                 

              

            	
              
                 

                ECIP

                GOALS

                 

              

            
	
              SMC
      – CEO

            	
              100%

            	
              –

            	
              –

            
	
              SMC
      – COO

            	
              45%

            	
              55%

            	
              –

            
	
              SMC
      – Presidents

            	
              45%

            	
              55%

            	
              –

            
	
              SMC
      – Service Company CEO

            	
              100%

            	
              –

            	
              –

            
	
              SMC
      – Non Service Company

            	
              35%

            	
              65%

            	
              –

            
	
              SMC
      – Service Company

            	
              100%

            	
              –

            	
              –

            
	
              Non
      Service Company Department Heads and Managers

            	
              50%

            	
              50%

            	
              –

            
	
              Service
      Company Department Heads and Managers

            	
              50%

            	
              50%

            	
              –

            

    

    

    
      	
              Note:

            	
              This
      structure may be modified from time to time as provided in Section 2 of
      Article V of the Plan.  The Compensation Committee may consider
      ECIP Goals achievement in determining any reduction of Awards of
      Participants who are members of the Senior Management
      Committee.  In addition, the CEO may consider ECIP Goals
      achievement in determining any reduction of Awards for all other
      Participants.

            

    

     

    
      
         

      

      
         

        
        

      

      
         

      

    

    EXHIBIT
B

     

    
      
        
          	
                                                                                                                                                     MANAGEMENT
      INCENTIVE EXAMPLE

                	 
      
	
                                                                                                                                 (Assumes
      preliminary PDP and Succession Planning rates are
complete)

                	 
      	 
      	 
      	 
      
	 Step
      1:   Calculate achievement factor 

                                   for
      members of a department

                	 	 	 	 
	 
      	
                  Achievement
      Level

                	
                  Achievement
      Percentage

                	
                  Weighting

                  (see
      Pro Rate %)

                	
                  Achievement

                   Factor

                	 
      	 
      	 
      	 
      
	
                  PGN
      EPS

                	
                  Target

                	
                  100%

                	
                  50.0%

                	
                               50.0%

                	 
      	 
      	 
      	 
      
	
                  Legal
      Entity Earnings

                	
                  Outstanding

                	
                  200%

                	
                  50.0%

                	
                              100.0%

                	 
      	 
      	 
      	 
      
	 
      	
                  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%

                	 
      	 
      	 
      	 
      	 
      
	 
      	
                  Other
      Section Manager

                  Section
      Manager

                	
                  30.0%

                  25.0%

                	
                  150.0%

                  150.0%

                	
                  45.0%

                  37.5%

                	 
      	 
      	 
      	 
      	 
      
	 
      	
                  Unit
      Manager

                	
                  20.0%

                	
                  150.0%

                	
                  30.0%

                	 
      	 
      	 
      	 
      	 
      
	 
      	
                  Supervisor

                	
                  15.0%

                	
                  150.0%

                	
                  22.5%

                	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  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

                	 
      	 
      	 
      	 
      
	 
      	
                  John
      Que, Other Section Manager

                  Jane
      Doe, Section Manager

                   

                	
                  100,000

                  100,000

                	
                  30.0%

                  25.0%

                   

                	
                  45.0%

                  37.5%

                	
                  45,000

                  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, Supervisor

                	
                  90,000

                	
                  15.0%

                	
                  22.5%

                	
                  20,250

                	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                  $299,250

                	 
      	 
      	 
      	 
      
	
                  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

                	
                  35.0%

                	
                  52.5%

                	
                  $105,000

                	
                  ($12,600)

                	
                  $92,400

                	
                  46.2%

                	 
      
	 
      	
                  John
      Que,

                  Jane
      Doe

                	
                  100,000

                  100,000

                	
                  30.0%

                  25.0%

                	
                  45.0%

                  37.5%

                	
                  45,000

                  37,500

                	
                  0

                  5,000

                	
                  45,000

                  42,500

                	
                  45.0%

                  42.5%

                	 
      
	 
      	
                  John
      Smith

                	
                  120,000

                	
                  25.0%

                	
                  37.5%

                	
                  45,000

                	
                  (3,000)

                	
                  42,000

                	
                  35%

                	 
      
	 
      	
                  Jane
      Smith

                	
                  80,000

                	
                  20.0%

                	
                  30.0%

                	
                  24,000

                	
                  -

                	
                  24,000

                	
                  30%

                	 
      
	 
      	
                  John
      Jones

                	
                  75,000

                	
                  20.0%

                	
                  30.0%

                	
                  22,500

                	
                  5,000

                	
                  27,500

                	
                  36.7%

                	 
      
	
                     
      Jane Jones

                	
                  90,000

                	
                  15.0%

                	
                  22.5%

                	
                  20,250

                	
                  (3,050)

                	
                  17,200

                	
                  19.11%

                	 
      
	 
      	 
      	 
      	 
      	
                  $299,250

                	 
      	
                  $290,600

                	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  Per group executive, department
      total to spend is $245,600

                	 
      	 
      
	 
      	 
      	
                  (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, 10%  participants, 12%
      participants,  and15% participants)

                  Discretion
      based on PDP (core skills and performance goals) , succession planning
      ratings, and ECIP Goals achievement

                  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

     

    PARTICIPATING
EMPLOYERS

    

    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:  _________________________________

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