FORM OF EMPLOYMENT AGREEMENT BETWEEN PROGRESS ENERGY FLORIDA, INC. AND JEFFREY J. LYASH June 1, 2006
FORM
OF
BETWEEN
PROGRESS
ENERGY FLORIDA, INC.
AND
XXXXXXX
X. XXXXX
June
1, 2006
This
EMPLOYMENT AGREEMENT ("Agreement"), dated as of the ____________ day of
____________, 2006, is between Progress Energy Florida, Inc., a corporation
headquartered in St. Petersburg, Florida, and a wholly-owned subsidiary of
Progress Energy, Inc., its successors or assigns and Xxxxxxx X. Xxxxx (“Lyash”).
Progress Energy Florida, Inc. shall be referred to as “PEF” or “the Company”
throughout. Progress Energy, Inc. shall be referred to as “Progress Energy”
throughout.
Preamble
The
Company and Lyash agree to enter into an employment relationship in which Lyash
will serve as President and Chief Executive Officer - PGN Florida, for the
term
as set forth within the Agreement, and in consideration of this Agreement,
the
parties agree to the terms and provisions outlined herein:
Provisions
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and accepted, the parties hereto
hereby agree as follows:
1. RESPONSIBILITIES;
OTHER ACTIVITIES.
Lyash
shall occupy the position of President and Chief Executive Officer - PGN Florida
at PEF and shall undertake the general responsibilities and duties of such
position as directed by PEF senior management. During the Term of the Agreement
as defined in Section 2, below, Lyash shall perform faithfully the duties of
Lyash’s position, devote all of Lyash’s working time and energies to the
business and affairs of PEF and shall use Lyash’s best efforts, skills and
abilities to promote PEF’s general business interests. PEF reserves the right to
reassign Lyash to other positions within the controlled group of Progress Energy
companies.
2. TERM
OF THE AGREEMENT.
(a) The
Agreement is effective as of June 1, 2006 (“the Effective Date”), and shall
remain in effect until December 31, 2007.
(b) On
January 1, 2007 and on January 1 of each year thereafter (“the Extension Date”),
the Agreement will be extended such that each prospective term will always
be
three years forward (“Evergrow provisions”).
(c) The
Company may elect to not extend the Agreement and must notify Lyash no later
than 60 days prior to the Extension Date that it does not intend to renew the
Agreement pursuant to paragraph 2(b), above. Should the Company elect not to
renew the Agreement, the Agreement will continue in effect for the remainder
of
its term.
(d) The
Agreement cannot extend beyond Lyash’s normal retirement date unless Lyash is
requested to serve in his full-time position for a defined period as set forth
by the Chief Executive Officer of Progress Energy.
3. BASE
SALARY.
As
compensation for the services to be performed hereunder, Lyash will be paid
a
Base Salary (“Base Salary”) at the annual rate of Three Hundred Forty Thousand
Dollars ($340,000.00) during 2006. Base Salary for each subsequent year of
employment under the Agreement shall be subject to adjustment by PEF during
the
normal annual salary review process for similarly situated executives as
determined by PEF in its discretion. Annual Base Salary shall be deemed earned
proportionally as Lyash performs services over the course of each year the
Agreement is in effect. Payments of annual Base Salary shall be made, except
as
otherwise provided herein, in accordance with PEF’s standard payroll policies
and procedures.
4. EMPLOYEE
BENEFIT PLANS.
During
the Employment Term, Lyash shall be entitled to participate in all applicable
Company and Progress Energy sponsored benefits plans as may be in effect upon
terms and in accordance with policies and procedures equivalent to those then
in
effect and applicable generally to PEF employees.
5. EXECUTIVE
INCENTIVES, BENEFITS AND PERQUISITES.
Lyash
will be eligible to participate in the following executive incentive and benefit
plans and to receive the following executive perquisites:
(a) Short
Term Incentive Plan.
Lyash
is eligible to participate in the Progress Energy sponsored Management Incentive
Compensation Plan (MICP), subject to its terms.
(b) Long
Term Incentive Plans.
Lyash
is eligible to participate in the Progress Energy long term incentive program,
subject to its terms, with the following components:
(i) PSSP.
An
award of performance shares/units earned over a three-year period and adjusted
based on Progress Energy performance. These annual awards are generally made
in
March.
(ii) Restricted
Stock.
An
award of restricted common stock vesting ratably on the 3rd,
4th
and
5th
anniversaries from the date of grant. These annual awards are generally made
in
March.
(c) Base
Salary Deferral Plan.
Lyash
is eligible to participate in the Progress Energy sponsored Management Deferred
Compensation Plan (MDCP), subject to its terms.
(d) Incentive
Deferral Plans.
Lyash
is eligible to defer up to 100% of his earned MICP and/or PSSP awards into
deemed investments of Progress Energy common stock on an unfunded
basis.
(e) Restoration
Pension Plan.
Lyash
is eligible to participate in the Progress Energy sponsored non-qualified
pension plan (“the Restoration Retirement Plan”), subject to its terms. If Lyash
becomes eligible for benefits under Progress Energy’s Supplemental Senior
Executive Retirement Plan, Lyash forfeits all benefits under the Restoration
Retirement Plan.
(f) Supplemental
Senior Executive Retirement Plan.
Upon
meeting the Plan’s eligibility requirements, Lyash shall be eligible for
participation in Progress Energy’s Supplemental Senior Executive Retirement Plan
(SERP), subject to its terms.
(g) Split
Dollar Insurance Plan.
Lyash
shall continue to participate in the Progress Energy sponsored Split Dollar
Life
Insurance Plan, subject to its terms and consistent with applicable laws and
regulations.
(h) Executive
AD&D Life Insurance.
Lyash
shall be eligible to participate in Progress Energy’s Executive AD&D Life
Insurance Plan, subject to its terms.
(i) Financial
Planning.
Consistent with PEF’s practice with respect to other executives, Lyash will be
reimbursed for financial planning and tax preparation.
(j) Estate
Planning.
Lyash
is eligible to receive reimbursement of up to $5,000 annually for the
preparation and periodic update of Lyash’s estate plan.
(k) Automobile
Allowance.
Lyash
is eligible to receive an automobile allowance of One Thousand Three Hundred
Fifty Dollars ($1350) per month (less withholdings), subject to the terms of
applicable PEF policies.
(l) Annual
Physical.
Consistent with PEF’s practice with respect to other executives, PEF will pay
for an annual physical examination by a physician of Lyash’s
choice.
(m) Luncheon
Club.
PEF
will pay the monthly dues for a membership at a luncheon club approved by PEF
senior management. Business related expenses will be reimbursed consistent
with
PEF’s expense account guidelines.
(n) Country
Club Membership.
PEF
will pay an initiation fee and monthly dues for a membership for Lyash at a
country club approved by PEF. Business related expenses will be reimbursed
consistent with PEF expense account guidelines.
(o)
Health
Club Membership.
Progress Energy will pay an initiation fee and monthly dues to a health club
for
Lyash’s membership.
(p)
Home
Security.
Progress Energy will provide a home security system at Lyash’s residence and
reimburse Lyash for applicable monitoring fees.
(q) Air
Travel.
(i) PEF
will
provide an airline club membership in accordance with Company
policy.
(ii) PEF
will
reimburse Lyash’s spouse’s travel expenses when she accompanies Lyash to
business meetings where spousal attendance is customary.
(iii) PEF
will
provide chartered aircraft for Lyash’s business related travel as
needed.
(iv) PEF
will
allow Lyash to travel first class at his discretion for business related
travel.
(r) Personal
Computer.
PEF
will provide a personal computer to Lyash to be used at his personal
residence.
6. COMPANY
PLAN AND PROGRAM MAINTENANCE.
Lyash’s
entitlement to the benefits described in Sections 4 and 5 shall be governed
exclusively by the terms of the plans and programs described in those
provisions. Nothing in the Agreement shall require Progress Energy or the
Company to continue or maintain any short term incentive, long term incentive,
employee or executive benefit plan or program or any perquisite. Progress Energy
and the Company shall have the right to modify, replace or eliminate any
incentive or benefit plans or programs, including perquisites.
7. VACATION
AND HOLIDAYS.
Lyash
will be entitled to four weeks of vacation leave per year, unless his combined
years of service to Progress Energy subsidiaries entitle him to additional
vacation leave pursuant to Company policy. Lyash will be granted paid holidays
per Company policy.
8. TERMINATION
OF EMPLOYMENT.
(a) Involuntary
Termination.
(i) For
purposes of this Agreement, PEF shall be deemed to have terminated Lyash’s
employment if Lyash is displaced from an assignment within the controlled group
of Progress Energy subsidiaries and (1) is not simultaneously reassigned to
another position within the controlled group of Progress Energy companies;
or
(2) in the event that Progress Energy sells more than 50% of its interest in
a
Progress Energy subsidiary to which Lyash is assigned to a third party during
the term of Lyash’s assignment, the third party purchaser does not offer Lyash a
position with comparable authority, duties, wages and benefits.
(ii) Termination
Without Cause.
During
the term of this Agreement, if Lyash’s employment from the controlled group of
Progress Energy companies is terminated without Cause as Cause is defined in
paragraph 8(a)(iii), then Lyash will be provided with salary continuation
payments consisting of his then-Base Salary at the rate at the time of
termination for 2.99 years. Additionally, PEF will reimburse Lyash for the
costs
of continued coverage under certain health and welfare benefit plans pursuant
to
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for up to
eighteen (18) months after the termination of his employment; provided, however,
that Lyash shall not be eligible for COBRA reimbursement beyond the date on
which his continued coverage terminates in accordance with COBRA. Receipt of
the
benefits in this paragraph is subject to the requirements of paragraphs 8(f),
(g) and (h) of this Agreement. In addition, Lyash will be eligible to retain
all
benefits under existing benefit plans to the extent vested within the terms
of
those plans. Any monthly payments made pursuant to this paragraph for
continuation of salary or benefits shall begin six months following the date
of
termination. The first payment, however, shall be equal to six months of his
Base Salary at the time of termination.
(iii) Termination
for Cause.
During
the Term of the Agreement, PEF may elect at any time to terminate Lyash’s
employment immediately hereunder and remove Lyash from employment for Cause.
For
purposes of this paragraph 8(a)(iii), Cause for the termination of employment
shall be defined as: (1) any act of Lyash’s including, but not limited to,
misconduct, negligence, unlawfulness, dishonesty or inattention to the business,
which is detrimental to PEF’s interests; or (2) Lyash’s unsatisfactory job
performance or failure to comply with PEF policies, rules or regulations. If
Lyash is terminated for Cause as defined herein, then he shall be eligible
to
retain all benefits under existing benefit plans that have vested pursuant
to
those plans, but he shall not be entitled to any form of salary continuation
or
severance benefits. Upon termination for Cause, Lyash shall be entitled to
any
earned but unpaid salary accrued to the date of termination. Any continued
rights or benefits Lyash or his legal representatives may have under any PEF
or
Progress Energy sponsored employee benefit plan or program upon his termination
for Cause shall be determined in accordance with the terms or provisions of
the
plan or program.
(b)
Change
in Control.
In the
event that Progress Energy experiences a Change in Control, as defined by the
Progress Energy, Inc. Change in Control Plan (“the Change in Control Plan”) and
Lyash is (1) designated as covered by the Plan, and (2) is Involuntarily
Terminated or Constructively Terminated under the terms of the Change in Control
Plan, then the greater of the benefits under the Change in Control Plan, if
applicable, and the benefits available in the event of an involuntary
termination without Cause as Cause is defined in paragraph 8(a)(iii), will
be
the legal authority regarding any severance compensation and
benefits.
(c) Voluntary
Termination.
If
Lyash terminates his employment voluntarily for any reason at any time, then
he
shall be eligible to retain all benefits under existing benefit plans that
have
vested pursuant to the terms of those plans, but as of the last date of regular
employment, he shall not be entitled to any form of salary continuation or
other
severance benefit.
(d) Termination
Due to Death.
In the
event of Lyash’s death during the Term of the Agreement, Lyash’s employment
hereunder shall terminate and the Company shall have no further obligation
to
Lyash under this Agreement except as specifically provided in this Agreement.
Lyash’s estate shall be entitled to receive all earned but unpaid Base Salary
accrued to the date of termination and any short term incentive for a prior
fiscal year that has been earned but not paid. The short term incentive, if
any,
for the year in which Lyash’s death occurs shall be calculated on a pro rata
basis for the portion of the fiscal year prior to Lyash’s death occurring and
shall be paid at the regularly scheduled time for the payment of the short
term
incentive. Any rights and benefits Lyash, or Lyash’s estate or other legal
representatives, may have under employee benefit plans and programs of PEF
or
Progress Energy upon Lyash’s death during the Term of the Agreement, if any,
shall be determined in accordance with the terms and provisions of such plans
and programs.
(e) Termination
Due to Medical Condition.
(i) PEF
may
terminate Lyash’s employment hereunder, subject to the Americans With
Disabilities Act or other applicable law, due to medical condition if (1) for
a
period of 180 consecutive days during the Term of the Agreement, Lyash is
totally and permanently disabled as determined in accordance with the Company's
long term disability plan (LTD), if any, as in effect during such time; or
(2)
at any time during which no such plan is in effect, Lyash is substantially
unable to perform his duties hereunder because of a medical condition for a
period of 180 consecutive days during the Term of the Agreement. Provided,
however, that if Lyash applies for and is deemed qualified for benefits under
the Progress Energy sponsored Long Term Disability Plan (LTD Benefits), Lyash
shall receive such benefits and his employment will not be terminated as long
as
he is receiving LTD Benefits.
(ii) Upon
the
termination of Lyash’s employment due to medical condition or any period during
which Lyash is qualified for LTD Benefits, PEF shall have no
further
obligation to Lyash under this Agreement except as specifically provided in
this
Agreement. Upon such termination or qualification for LTD Benefits, Lyash shall
be entitled to all earned but unpaid Base Salary accrued to the date of
termination or placement on LTD and any short term incentive for a prior fiscal
year that has been earned but not paid. The short term incentive, if any, for
the current fiscal year shall be calculated on a pro rata basis for the portion
of the fiscal year Lyash was performing the duties of his position and shall
be
paid at the regularly scheduled time for the payment of the short term
incentive. Any continued rights and benefits Lyash, or Lyash’s legal
representatives, may have under employee benefit plans and programs of PEF
or
Progress Energy upon Lyash’s termination or placement on LTD due to medical
condition, if any, shall be determined in accordance with the terms and
provisions of such plans and programs.
(f) Release
of Claims.
In
order to receive continuation of salary under paragraph 8(a) or 8(b), Lyash
agrees to execute a written release of all claims against PEF, and its
employees, officers, directors, subsidiaries and affiliates, on a form
acceptable to PEF.
(g) Covenant
Not to Compete.
If PEF
terminates Lyash’s employment without Cause under paragraph 8(a), or if Lyash
becomes eligible for the benefits available under paragraph 8(a) as the result
of a Change in Control as set forth in paragraph 8(b), Lyash, for one year
after
the Termination Date, shall not compete directly or indirectly with the Company,
or its affiliates within fifty (50) miles of any geographic area in which the
Company or its affiliates has a material business interest with which Lyash
was
involved at the time of his separation.
(h) Non
Interference.
If PEF
terminates Lyash’s employment without Cause under paragraph 8(a) or if Lyash
becomes eligible for the benefits available under paragraph 8(a) as the result
of a Change in Control as set forth in paragraph 8(b), Lyash, for one year
after
the Termination Date, shall not whether on his own account or on the account
of
another individual, partnership, firm, corporation, or other business
organization (other than the Company and its affiliates), directly or
indirectly, intentionally solicit, endeavor to entice away from the Company
or
any of its affiliates, or otherwise interfere with the relationship of the
Company or its affiliates, any person who is employed by or otherwise engaged
to
perform services for the Company or its affiliates including but not limited
to,
any independent representatives or organizations, or any person or entity that
is a customer of the Company or its affiliates.
9. ASSIGNABILITY.
No
rights
or obligations of Lyash under this Agreement may be assigned or transferred
by
Lyash, except that (i) Lyash’s rights to compensation and benefits
hereunder may be transferred by will or laws of intestacy to the extent
specified herein and (ii) Lyash’s rights under employee benefit plans or
programs described in Sections 4 and 5 may be assigned or transferred in
accordance with the terms of such plans or programs, or regular practices
thereunder. The Company may assign or transfer its rights and obligations under
this Agreement.
10. CONFIDENTIALITY.
Lyash
will not disclose the terms of this Agreement except (i) to financial and legal
advisors under an obligation to maintain confidentiality, or (ii) as required
by
a valid court order or subpoena (and in such event will use his best efforts
to
obtain a protective order requiring that all disclosures be kept under court
seal) and will notify PEF promptly upon receipt of such order or
subpoena.
11. MISCELLANEOUS.
(a) Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Florida without reference to laws governing conflicts of
law.
(b) Entire
Agreement.
This
Agreement contains all of the understandings and representations between the
parties hereto pertaining to the subject matter hereof and supersedes all
undertakings and agreements, whether oral or in writing, if any, previously
entered into by them with respect thereto.
(c) Amendment
or Modification; Waiver.
No
provision in this Agreement may be amended or waived unless such amendment
or
waiver is agreed to in writing, signed by Lyash and by an officer of PEF
thereunto duly authorized to do so. Except as otherwise specifically provided
in
the Agreement, no waiver by a party hereto of any breach by the other party
hereto of any condition or provision of the Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar provision or
condition at the same or any prior or subsequent time.
(d) Notice.
Any
notice (with the exception of notice of termination by PEF, which may be given
by any means and need not be in writing except that if termination is for Cause,
oral notice must be followed by written notice) or other document or
communication required or permitted to be given or delivered hereunder shall
be
in writing and shall be deemed to have been duly given or delivered if
(i) mailed by United States mail, certified, return receipt requested, with
proper postage prepaid, or (ii) otherwise delivered by hand or by overnight
delivery, against written receipt, by a common carrier or commercial courier
or
delivery service, to the party to whom it is to be given at the address of
such
party as set forth below (or to such other address as a party shall have
designated by notice to the other parties given pursuant hereto):
If
to
Lyash:
Xxxxxxx
X. Xxxxx
Progress
Energy Florida, Inc.
000
Xxxxxxx Xxxxxx
Xx.
Xxxxxxxxxx, Xxxxxxx 00000-0000
If
to
PEF:
Progress
Energy Florida, Inc.
c/o
Progress Energy Service Company, LLC
000
X.
Xxxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxx Xxxxxxxx 00000
Attn.:
Vice President of Human Resources
Any
such
notice, request, demand, advice, schedule, report, certificate, direction,
instruction or other document or communication so mailed or sent shall be deemed
to have been duly given, if sent by mail, on the third business day following
the date on which it was deposited at a United States post office, and if
delivered by hand, at the time of delivery by such commercial courier or
delivery service, and, if delivered by overnight delivery service, on the first
business day following the date on which it was delivered to the custody of
such
common carrier or commercial courier or delivery service, as all such dates
are
evidenced by the applicable delivery receipt, airbill or other shipping or
mailing document.
(e) Severability.
In the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, the remaining provisions or portions
of
this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.
(f) References.
In the
event of Lyash’s death or a judicial determination of Lyash’s incompetence,
reference in this Agreement to Lyash shall be deemed, where appropriate, to
refer to Lyash’s legal representative, or, where appropriate, to Lyash’s
beneficiary or beneficiaries.
(g) Headings.
Headings contained herein are for convenient reference only and shall not in
any
way affect the meaning or interpretation of this Agreement.
(h) Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original, but all of which together shall constitute one and the same
instrument.
(i) Rules
of Construction.
The
following rules shall apply to the construction and interpretation of this
Agreement:
(1) Singular
words shall connote the plural number as well as the singular and vice versa,
and the masculine shall include the feminine and the neuter.
(2) All
references herein to particular articles, paragraphs, sections, subsections,
clauses, Schedules or Exhibits are references to articles, paragraphs, sections,
subsections, clauses, Schedules or Exhibits of this Agreement.
(3) Each
party and its counsel have reviewed and revised (or requested revisions of)
this
Agreement, and therefore any rule of construction requiring that ambiguities
are
to be resolved against a particular party shall not be applicable in the
construction and interpretation of this Agreement or any exhibits hereto or
amendments hereof.
(4) As
used
in this Agreement, "including" is illustrative, and means "including but not
limited to."
(j) Remedies.
Remedies specified in this Agreement are in addition to any others available
at
law or in equity.
(k) Withholding
Taxes.
All
payments under this Agreement shall be subject to applicable income, excise
and
employment tax withholding requirements.
IN
WITNESS WHEREOF, the parties hereto have executed, or have caused this Agreement
to be executed by their duly authorized officer, as the case may be, all as
of
the day and year written below.
XXXXXXX
X. XXXXX
___________________________________ Date:
_________________________
PROGRESS
ENERGY FLORIDA, INC.
By:
___________________________________ Date:
_________________________
H.
XXXXXXX XXXXXXXXXX, XX.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
