PROGRESS ENERGY, INC. AMENDED AND RESTATED MANAGEMENT DEFERRED COMPENSATION PLAN Adopted as of January 1, 2000 (As Revised and Restated effective July 12, 2011)

The Progress Energy, Inc. Management Deferred Compensation Plan (the “Plan”) was originally adopted by Carolina Power & Light Company effective as of January 1, 2000, and was transferred to Progress Energy, Inc. (the “Sponsor”) effective August 1, 2000.  The Plan is unfunded and will benefit only a select group of management or highly compensated employees within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

The Plan is intended to constitute a non-qualified deferred compensation plan that complies with Section 409A of the Code, related regulations and other guidance (“Section 409A”).  Notwithstanding any provision of the Plan to the contrary, the Plan shall be construed in accordance with Section 409A.

 The Plan as amended and restated effective January 1, 2008 shall govern deferrals under the Plan beginning January 1, 2008.

The value in terms of a dollar amount of a Participant’s Deferral Account or Company Account, as the case may be, as of the last Valuation Date.

The election by a Participant under Section 6.2 to defer distribution from a Plan Year Account.

Any corporation or other entity that is required to be aggregated with the Sponsor pursuant to Sections 414(b), (c), (m), or (o) of the Code.

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 Board Committee that one of the events set forth in this Section 1.6 has occurred.  Any determination that an event described in this Section 1.6 has occurred shall, if made in good faith on the basis of information available at that time, be conclusive and binding on the Board Committee, the Company, the Participants and their beneficiaries for all purposes of the Plan.

The election by a Participant under Section 6.2 to change the form of distribution of a Plan Year Account.

The election by a Participant under Section 4.6 to change a Phantom Subaccount for the Participant Deferral Account or Company Account.

The Internal Revenue Code of 1986, as amended, or any successor statute.

The Administrative Committee described in Section 9.1 for administering the Plan.

Progress Energy, Inc. or any successor to it in the ownership of substantially all of its assets and each Affiliated Company that, with the consent of the Board Committee, adopts the Plan and is included in Exhibit A, as in effect from time to time.

The Sponsor’s Management Incentive Compensation Plan, or any Company sales incentive plans, marketing incentive plans, and any other cash incentive plans as determined by the Committee.

The members of the Board at the Effective Date; provided, however, that any person becoming a director subsequent to such whose election or nomination for election was supported by 75% or more of the directors who then comprised Continuing Directors shall be considered to be a Continuing Director.

The amounts that are credited (or charged) from time to time to each Participant’s Deferral Account and Company Account to reflect deemed investment gains and losses of Phantom Investment Sub accounts.

An election to defer Salary pursuant to Section 3.1.

An employee of the Company (a) who is eligible to participate in the Sponsor’s Management Incentive Compensation Plan, or (b) who is eligible to participate in any other eligible Company Incentive Plan and is determined by the Committee to be eligible to be a Participant; and who is not excluded from participation pursuant to Section 2.1(b).

The Employee Stock Incentive Plan as adopted by the Board and any successor to such plan which provides additional matching allocations under the Progress Energy 401(k) Savings & Stock Ownership Plan.

The enrollment form prepared by the Company which a Participant must execute to have Deferrals with respect to a Plan Year.

The Employee Retirement Income Security Act of 1974, as amended.

The election by a Participant under Sections 2.4 and 4.6 of the Phantom Investment Sub accounts in which the Participant’s Deferral Accounts and Company Accounts will be allocated.

A match allocation to a Participant's Company Account of a Participant’s Matchable Deferrals in accordance with Section 3.2.

The Salary of a Participant projected to be payable (assuming no deferral elections under the Plan or the Progress Energy 401(k) Savings & Stock Ownership Plan) with respect to a Plan Year reduced by the projected Deferrals of a Participant for the Plan Year under the Plan.

An Eligible Employee participating in the Plan pursuant to Article II.

The aggregate of a Participant’s Deferral Account and Participant’s Company Accounts.

The notational bookkeeping account maintained under Sections 4.1 and 4.5 to record Matching Allocations on behalf of a Participant and the Deemed Investment Return thereon pursuant to the provisions of the Plan.

The notational bookkeeping account maintained under Section 4.1 of the Plan to record Deferrals of a Participant and the Deemed Investment Return thereon pursuant to the provisions of the Plan.

6% of the amount of Deferrals of a Participant for a Plan Year but no greater than 6% of (A-B) where A is the compensation limit under Section 401(a)(17) of the Code for the Plan Year and B is the Net Salary of a Participant for the Plan Year (with any negative differences equating to $0 for purposes of this calculation); provided, however, that the Participant Matchable Deferrals for an SMC Participant for a Plan Year shall be an amount equal to 6% of (C – D) where C is the projected Salary of a Participant for the Plan Year and D is the compensation limit under Section 401(a)(17) of the Code for the Plan Year.  Participant Matchable Deferrals for a Plan Year shall be determined for each payroll period during the Plan Year based on projected Matchable Deferrals for the entire Plan Year.

The date payments are to commence with respect to a Plan Year Account in accordance with Section 6.1.

A deemed investment option for purposes of the Plan, each of which shall be the same as those investment options generally available to all participants in the Progress Energy 401(k) Savings & Stock Ownership Plan, or as otherwise selected by the Committee, exclusive of Phantom Stock Units which shall not be a deemed investment option under this Plan for Deferrals made after September 1, 2010.

Notational bookkeeping accounts maintained under the Plan at the direction of the Committee representing allocations of Participants of Phantom Investment Subaccounts in a Phantom Investment Fund.

A notational bookkeeping account maintained under the Plan at the direction of the Committee representing a deemed investment in one or more Phantom Investment Funds as directed by the Participant under Sections 2.4 and 4.6, and which may include Phantom Stock Units for Deferrals made prior to September 1, 2010 and for Matching Allocations made prior to January 1, 2003.

A hypothetical share of common stock of the Sponsor or its parent company, as applicable.

The Progress Energy, Inc. Management Deferred Compensation Plan as set forth herein and as amended from time to time.

The twelve (12) consecutive month periods beginning January 1 and ending the following December 31 commencing with the Effective Date.

The separate Participant Deferral Account and Participant Company Account maintained under the Plan pursuant to Section 4.2 with respect to a Participant for each Plan Year a Participant has Deferrals.

The Progress Energy 401(k) Savings & Stock Ownership Plan of the Company adopted by the Board, as amended from time to time, and any successor to such plan.

The date a Participant retires from the Company on or after attaining (i) age 65 with 5 years of service, (ii) age 55 with 15 years of service, (iii) 35 years of service, or (iv) eligibility for retirement under the SSERP if covered under such plan.

The amount of an Eligible Employee's regular annual base salary, payable from time to time by the Company prior to a Deferral Election under the Plan and prior to any deferral election under the Progress Energy 401(k) Savings & Stock Ownership Plan.

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.

A participant separates from service if the Participant dies, retires or otherwise has a “termination of employment” with the Company, as defined for purposes of Section 409A.

A senior executive officer of the Company who is a member of the “Senior Management Committee” of the Sponsor.

Progress Energy, Inc. and its successors in interest.

The Supplemental Senior Executive Retirement Plan of the Company.

The last day of each calendar month and such other dates as selected by the Committee, in its sole discretion.

The value of an account maintained under the Plan based on the fair market value of notational investments of Phantom Investment Subaccounts and Phantom Stock Units, as the case may be, as of the last Valuation Date.  For purposes of calculating Value as of the end of a Plan Year, accrued but unallocated Incentive Matching Allocations shall be taken into consideration with respect to Participant Company Accounts.

Years of service of a Participant as calculated under the Progress Energy 401(k) Savings & Stock Ownership Plan.

(a) Participation in the Plan shall be limited to Eligible Employees.

(b) The Committee, in its sole discretion, may at any time limit the participation of an Eligible Employee in the Plan so as to assure that the Plan will not be subject to the provisions of parts 2, 3 and 4 of Title I of ERISA.

An Eligible Employee who is not a Participant may elect to become a Participant as of the first day of a Plan Year by completing and submitting an Enrollment Form to the Sponsor’s designated agent by November 30 prior to the first day of the Plan Year as of which participation is to commence.

Each Participant shall complete a new Enrollment Form with respect to a Plan Year by November 30 prior to the commencement of the Plan Year.  If the Participant does not complete such form and submit it to the Sponsor’s designated agent by November 30, the Participant will have no Deferrals for the following Plan Year.

Each Participant shall elect on his Enrollment Form the allocation of his Plan Year Participant Deferral Account among the Phantom Investment Subaccounts.

(a) A Participant completing an Enrollment Form in accordance with Sections 2.2 or 2.3 may make an election, pursuant to this Section 3.1, to defer his or her Salary (a “Deferral Election”) in accordance with the Plan.  A Deferral Election shall apply only to the Participant’s Salary for the Plan Year specified in the Enrollment Form.

(b) The amount of Salary that may be deferred by a Participant shall be based on their target incentive level under the Sponsor’s Management Incentive Compensation Plan (“MICP”); or, for Participants in Company Incentive Plans other than the MICP, their target incentive level assuming that they participated in the MICP.  Deferral Elections shall be made on the Enrollment Form for the applicable Plan Year pursuant to the following limitations:

(i) A Participant who is (or would be) eligible for a bonus at the 10%, 12%, or 15% of salary target incentive level (the “Target”) for the Plan Year under the MICP may defer up to 10% of Salary.

(ii) A Participant who is (or would be) eligible for a bonus at the 20% of salary target incentive level (the “Target”) for the Plan Year under the MICP may defer up to 15% of Salary.

(iii) A Participant who is (or would be) eligible for a bonus at the 25% of salary Target for the Plan Year under the MICP may defer up to 25% of Salary.

(iv) A Participant who is (or would be) eligible for a bonus at the 35% or more of salary Target under the MICP may defer up to 50% of Salary.

All Deferrals shall be in increments of 5% of Salary.  The minimum projected Deferrals for a Plan Year for a Participant who commences Deferrals after the beginning of a Plan Year in accordance with Section 2.2 shall be $1,000.

 

(c) A Deferral Election once made with respect to a Plan Year, cannot be changed or revoked.  In the case of a new Participant, the Deferral Election will apply only to amounts that are both paid after the election is made and earned for services performed after the election is made.  The amount of Salary that is deferred pursuant to a Deferral Election will reduce the Participant Salary proportionately throughout the applicable Plan Year or, in the case of a new Participant, throughout the portion of the Plan Year to which the Deferral Election is applicable.

(d) A dollar amount equal to the Salary deferred pursuant to this Section 3.1 (“Deferrals”) at each applicable payroll date shall be credited to the Participant’s Deferral Account within ten business days following the applicable payroll date.

A Participant who has made a Deferral Election with respect to a Plan Year and has Participant Matchable Deferrals for such Plan Year shall receive a credit to his Participant Company Account of a Matching Allocation for such Plan Year.  The Matching Allocation with respect to a Plan Year shall equal 100% of the Participant Matchable Deferrals.  Matching Allocations shall be credited to the Participant Company Account within ten business days following the applicable payroll date, based on a pro-rata portion of projected Matchable Deferrals for the Plan Year applicable to each payroll period during the Plan Year.

The Committee shall maintain a Participant Deferral Account and a Participant Company Account for each Participant.  There shall be credited to a Participant's Deferral Account all Deferrals by a Participant under the Plan and there shall be credited to a Participant's Company Account all Matching Allocations with respect to a Participant under the Plan in accordance with Sections 3.2 and 3.3.

The Committee shall maintain a separate Participant Deferral Account and Participant Company Account for each Plan Year a Participant has Deferrals (separately a “Plan Year Deferral Account” and a “Plan Year Company Account” and together the “Plan Year Account”).

The Committee shall maintain separate Phantom Investment Sub-accounts representing deemed investments in Phantom Investment Funds as directed by the Participant.  Phantom Investment Sub-accounts shall be valued as of each Valuation Date based on the notional investments of each such account, pursuant to rules and procedures adopted by the Committee.

(a) A Participant's Deferral Accounts shall be comprised in total, of units in Phantom Investment Sub-accounts.

(b) Participants shall allocate their Deferrals among Phantom Investment Sub-accounts pursuant to elections under Section 2.4.

(c) The Value of that portion of a Participant’s Deferral Account allocated to a Phantom Investment Sub-account shall be changed on each Valuation Date to reflect the new Value of the Phantom Investment Sub-account.

(d) The interest of a Participant’s Deferral Account in a Phantom Investment Sub-account shall be stated in a unit value or dollar amount, as determined by the Committee.

(a) A Participant’s Company Account shall be comprised of Phantom Investment Fund units which shall be recorded in Phantom Investment Subaccounts.  Effective September 1, 2010, all Matching Allocations shall be recorded in Phantom Investment Subaccounts as elected by the Participant for his Plan Year Participant Deferral Account, or in the event the Participant has not made an election, the Matching Allocations shall be recorded in the phantom stable value fund.  Prior to September 1, 2010, to the extent Matching Allocations are initially deemed to be invested in Phantom Stock Units, the number of Phantom Stock Units will be determined on the date of each allocation under the Plan based on the closing price of a share of common stock of the Sponsor on the New York Stock Exchange on the date of each allocation.  To the extent the Matching Allocations are initially deemed to be invested in one or more Phantom Investment Funds (other than Phantom Stock Units), the number of units in these Phantom Investment Funds will be determined on the date of each allocation under the Plan, using the closing price of the units of the underlying investment fund on which the Phantom Investment Fund is based, on the date of each allocation.

(b) The number of Phantom Stock Units allocated to a Participant’s Company Account shall be adjusted periodically to reflect the deemed reinvestment of dividends on Sponsor common stock in additional Phantom Stock Units.

(c) In the event there is any change in the common stock of the Sponsor, through merger, consolidation, reorganization, recapitalization (other than pursuant to bankruptcy proceedings), stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure (an “Adjustment Event”), the number of Phantom Stock Units subject to the Plan shall be adjusted by the Committee in its sole judgment so as to give appropriate effect to such Adjustment Event.  Any fractional units resulting from such adjustment may be eliminated.  Each successive Adjustment Event shall result in the consideration by the Committee of whether any adjustment to the number of Phantom Stock Units subject to the Plan is necessary in the Committee’s judgment.  Issuance of common stock or securities convertible into common stock for value will not be deemed to be an Adjustment Event unless otherwise expressly determined by the Committee.

(a) A Participant may elect to reallocate the value of his Phantom Investment Subaccounts comprising his Deferral Account among other Phantom Investment Subaccounts and change the allocation of future Deferrals among Phantom Investment Subaccounts once per calendar month pursuant to uniform rules and procedures adopted by the Committee.  Provided, however, that Participants may not reallocate the value of his Phantom Investment Subaccounts into Phantom Stock Units.

(b) A Participant may elect to reallocate Phantom Investment Subaccounts comprising his Company Account once per calendar month pursuant to uniform rules adopted by the Committee.  Provided, however, that Participants may not reallocate the value of his Phantom Investment Subaccounts into Phantom Stock Units.

(a) Effective as of the Effective Date, the Value of a SMC Participant’s Company Account shall include the value of such Participant’s deferral account as of such date (being a “Transferred Account”) under the Carolina Power & Light Executive Deferred Compensation Plan, but only to the extent the Participant acknowledges in writing he has no further interest in the Executive Deferred Compensation Plan.

 

(b) Effective on the Effective Date, the Value of any Participant’s Company Account shall include the value of such Participant’s additional benefits (currently recorded as phantom Company stock units) granted under Article VIII.2. (also being a “Transferred Account”) under the Company’s Deferred Compensation Plan for Key Management Employees, but only to the extent the Participant acknowledges in writing that he has no further interest in these benefits in the Company’s Deferred Compensation Plan for Key Management Employees.

(a) Any Participant who has made elections under Section 6.1 with respect to amounts deferred before January 1, 2005, may change such elections pursuant to this Section 6.2(a) as in effect prior to January 1, 2005, unless such provisions are materially modified after October 3, 2004.  For this purpose, an amount is considered deferred before January 1, 2005, if the amount is earned and vested before such date.  Such Participant may elect at least one year prior to the Payment Commencement Date with respect to such Plan Year Accounts a new Payment Commencement Date that either is five years from the then current Payment Commencement Date or otherwise is permitted under Section 6.1(a)(ii) or (iii).  Only one such Additional Deferral Election will be permitted with respect to Plan Year Accounts relating to a particular Plan Year.  In addition, the Participant may elect to change the form of distribution to any of the forms permitted under Section 6.1(b) by completing a Change-of-Form Elections with respect to Plan Year Accounts at least one year prior to the applicable Payment Commencement Date for such accounts.

(b) Any elections made under Section 6.1 with respect to amounts deferred after December 31, 2004, shall be irrevocable except as permitted by rules promulgated under Section 409A and consented to by the Committee.

Upon occurrence of an event specified in the Participant’s distribution election under Section 6.1 (a “Distribution Event”) with respect to Plan Year Accounts, as modified by any applicable subsequent Additional Deferral Election under Section 6.2, the Account Balance of a Participant’s Plan Year Accounts shall be paid by the Company to the Participant in the form elected under Section 6.1.  Such payments shall commence within 60 days following the occurrence of the Distribution Event.

In case of an unforeseeable emergency, a Participant may request the Committee, on a form to be provided by the Committee or its delegate, that payment of the vested portion of Participant Accounts be made earlier than the date provided under the Plan.

An “unforeseeable emergency” shall mean a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s

The Committee shall consider any requests for payment under this Section 6.4 on a uniform and nondiscriminatory basis and in accordance with the standards of interpretation described in Section 409A.  If the request is granted, the amounts distributed will not exceed the amounts necessary to satisfy the emergency need plus amounts necessary to pay taxes reasonably anticipated as result of the distribution, after taking into account the extent to which such hardship is or may be relieved by reason of the cessation of Deferrals for the Plan Year in which the distribution is made and through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent such liquidation would not itself cause severe financial hardship).

In the event of a hardship determination by the Committee, the Company shall pay out in a lump sum to the Participant such portion of the Participant Accounts as determined by the Committee and Deferrals by the Participant for the Plan Year in which the hardship distribution is made shall cease.

In the event of the Separation from Service of a Participant with the Company and any parent, subsidiary or affiliate for any reason, prior to the Retirement or death of the Participant, the vested portion of the Participant Accounts of such Participant shall be paid in a lump sum to such Participant based on the Value of such accounts as of the Valuation Date coincident with or immediately preceding the date of distribution.  Such payment shall be made within 60 days following the Participant’s termination date as determined under the Company’s normal administrative practices.  The nonvested portion of a terminated Participant’s Company Account shall be forfeited by the Participant.  In the event of the Separation from Service of a SMC Participant for whom no Deferral Election was made for a Plan Year, any Matching Allocation, and Deemed Investment Return allocated to such Participant shall be distributed to the Participant following termination of employment in accordance with this Section 6.5.  In the event of the Retirement of a Participant prior to the Payment Commencement Date elected by the Participant under Section 6.1(a)(i) with respect to a Plan Year Account, distribution of such account shall commence no later than April 1 following the first anniversary of the Participant’s Retirement.  Notwithstanding the foregoing, if the Participant is a “key employee” as defined in Section 416(i) of the Code (but determined without regard to paragraph 5 thereof or the 50 employee limit on the number of officers treated as key employees), payment of deferred amounts 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).  Such payment shall commence within 60 days following the six-month delay period.

The Company shall report Deferrals in the year they occur as required by Section 6041 and Section 6051 of the Code.  The Company shall deduct from all payments under the Plan federal, state and local income and employment taxes, as required by applicable law.  Deferrals will be taken into account for purposes of any tax or withholding obligation under the Federal Insurance Contributions Act and Federal Unemployment Tax Act in the year of the Deferrals, as required by Sections 3121(v) and 3306(r) of the Code and the regulations thereunder.  Amounts required to be withheld in the year of the Deferrals pursuant to Sections 3121(v) and 3306(r) shall be withheld out of current wages or other compensation paid by the Company to the Participant.

The acceleration of the time or schedule of any payment due under the Plan is prohibited except as provided in regulations and administrative guidance provided under Section 409A of the Code.  It is not an acceleration of the time or schedule of payment if the Company waives or accelerates the vesting requirements applicable to a benefit under the Plan.

The Participant’s beneficiary under this Plan entitled to receive benefits under the Plan in the event of the Participant’s death shall be designated by the Participant on a form provided by the Committee.  In the absence of such designation or in the event the designated beneficiary has predeceased the Participant, the beneficiary shall be deemed the estate of the Participant.

In the event of the death of a Participant prior to the payout of his Participant Accounts, the Value of the remaining portion of the Participant Accounts shall be paid by the Company in a lump sum to the Participant’s beneficiary (as defined under Section 7.1) based on the Value of such accounts on the Valuation Date immediately following the date of death.  Payment shall be made within 60 days following such Valuation Date pursuant to rules and procedures adopted by the Committee.

(b) The Committee may delegate to one or more agents, or to the Company such administrative duties as it may deem advisable.  The Committee may employ such legal or other counsel and consultants as it may deem desirable for the administration of the Plan and may rely upon any opinion or determination received from counsel or consultant.

(c) No member of the Committee shall be directly or indirectly responsible or otherwise liable for any action taken or any failure to take action as a member of the Committee, except for such action, default, exercise or failure to exercise resulting from such member’s gross negligence or willful misconduct.  No member of the Committee shall be liable in any way for the acts or defaults of any other member of the Committee, or any of its advisors, agents or representatives.

(d) The Company shall indemnify and hold harmless each member of the Committee against any and all expenses and liabilities arising out of his or her own activities relating to the Committee, except for expenses and liabilities arising out of a member’s gross negligence or willful misconduct.

(e) The Company shall furnish to the Committee all information the Committee may deem appropriate for the exercise of its powers and duties in the administration of the Plan.  The Committee shall be entitled to rely on any information provided by the Company without any investigation thereof.

(f) No member of the Committee may act, vote or otherwise influence a decision of such Committee relating to his or her benefits, if any, under the Plan.

(a) The Company shall make no provision for the funding of any Participant Accounts payable hereunder that (i) would cause the Plan to be a funded plan for purposes of Section 404(a)(5) of the Code or for purposes of Title I of ERISA, or (ii) would cause the Plan to be other than an “unfunded and unsecured promise to pay money or other property in the future” under Treasury Regulations § 1.83-3(e); and, except in the case of a Change in Control of the Sponsor, the Company shall have no obligation to make any arrangements for the accumulation of funds to pay any amounts under this Plan.  Subject to the restrictions of this Section 11.1(a), the Company, in its sole discretion, may establish one or more grantor trusts described in Treasury Regulations § 1.677(a)-1(d) to accumulate funds to pay amounts under this Plan, provided that the assets of such trust(s) shall be required to be used to satisfy the claims of the Company’s general creditors in the event of the Company’s bankruptcy or insolvency.

(b) In the case of a Change in Control that is not a “change in the financial health” of the Company, as defined for purposes of  Section 409A, the Company shall, subject to the restrictions in this paragraph and in Section 11.1(a), irrevocably set aside funds in one or more such grantor trusts in an amount that is sufficient to pay each Participant employed by such Company (or beneficiary) the net present value as of the date on which the Change in Control occurs, of the benefits to which Participants (or their beneficiaries) would be entitled pursuant to the terms of the Plan if the Value of their Participant Account would be paid in a lump sum upon the Change of Control.  Notwithstanding the preceding sentence, the Company shall not set aside funds, revocably or irrevocably, in one or more grantor trusts in connection with the transactions described in the Agreement and Plan of Merger between the Company and Duke Energy Corporation dated as of January 8, 2011.

(c) In the event that the Company shall decide to establish an advance accrual reserve on its books against the future expense of payments from any Participant, such reserve shall not under any circumstances be deemed to be an asset of this Plan but, at all times, shall remain a part of the general assets of the Company, subject to claims of the Company’s creditors.

(d) Participants, their legal representatives and their beneficiaries shall have no right to anticipate, alienate, sell, assign, transfer, pledge or encumber their interests in the Plan, nor shall such interests be subject to attachment, garnishment, levy or execution by or on behalf of creditors of the Participants or of their beneficiaries.

(e) Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan.  Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other person.  To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.  All payments to be made hereunder with respect to a Participant shall be paid from the general funds of the Company employing such Participant.

(f) The foregoing provisions of this Article XI notwithstanding, the Company shall establish no grantor trust if its assets are includable in the income of Participants thereby pursuant to Section 409A(b).

Nothing contained in the Plan shall affect, or be construed as affecting, the terms of employment or engagement of any Participant except to the extent specifically provided herein.  Nothing contained in the Plan shall impose, or be construed as imposing, an obligation on the Company to continue the employment or engagement of any Participant.

The Plan and all actions taken in connection with the Plan shall be governed by and construed in accordance with the laws of the State of North Carolina