EXHIBIT 10(i)

                                                              EXECUTION COPY


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                              AMENDED AND RESTATED
                                CREDIT AGREEMENT
                          Dated as of November 10, 2003


                              PROGRESS ENERGY, INC.
                                   (Borrower)

                                       and

                 THE BANKS LISTED ON THE SIGNATURE PAGES HEREOF
                                     (Banks)

                                       and

                                 CITIBANK, N.A.
                             (Administrative Agent)




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         CITIGROUP GLOBAL MARKETS, INC. and J.P. MORGAN SECURITIES INC.
                             (Joint Lead Arrangers)

                               JPMORGAN CHASE BANK
                               (Syndication Agent)


<PAGE>

                                TABLE OF CONTENTS


Section                                                                     Page


                                    Article I
                        DEFINITIONS AND ACCOUNTING TERMS

Section 1.01. Certain Defined Terms............................................1
Section 1.02. Computation of Time Periods.....................................12
Section 1.03. Accounting Terms................................................12

                                   Article II
                        AMOUNTS AND TERMS OF THE ADVANCES

Section 2.01. The  Advances...................................................12
Section 2.02. Making the Advances.............................................13
Section 2.03. Fees............................................................14
Section 2.04. Reduction and Increase of the Commitments.......................14
Section 2.05. Repayment of Advances...........................................16
Section 2.06. Interest on Advances............................................16
Section 2.07. Additional Interest on Eurodollar Rate Advances.................16
Section 2.08. Interest Rate Determination.....................................17
Section 2.09. Voluntary Conversion of Advances................................18
Section 2.10. Prepayments of Advances.........................................18
Section 2.11. Increased Costs.................................................19
Section 2.12. Illegality......................................................20
Section 2.13. Payments and Computations.......................................20
Section 2.14. Sharing of Payments, Etc........................................21
Section 2.15. Extension of  Commitment Termination Date.......................21
Section 2.16. Term Loan Conversion Option.....................................23

                                   Article III
                              CONDITIONS OF LENDING

Section 3.01. Conditions Precedent to Closing.................................24
Section 3.02. Conditions Precedent to Each Borrowing and to the Exercise
              of the Term Loan Conversion Option..............................24

                                   Article IV
                         REPRESENTATIONS AND WARRANTIES

Section 4.01. Representations and Warranties of the Borrower..................25

                                       i

<PAGE>

                                    Article V
                            COVENANTS OF THE COMPANY

Section 5.01. Affirmative Covenants...........................................27
Section 5.02. Negative Covenants..............................................30

                                   Article VI
                                EVENTS OF DEFAULT

Section 6.01. Events of Default...............................................31

                                   Article VII
                                    THE AGENT

Section 7.01. Authorization and Action........................................33
Section 7.02. The Agent's Reliance, Etc.......................................33
Section 7.03. The Administrative Agent and its Affiliates.....................34
Section 7.04. Lender Credit Decision..........................................34
Section 7.05. Indemnification.................................................34
Section 7.06. Successor Administrative Agent..................................34

                                  Article VIII
                                  MISCELLANEOUS

Section 8.01. Amendments, Etc.................................................35
Section 8.02. Notices, Etc....................................................36
Section 8.03. No Waiver; Remedies.............................................36
Section 8.04. Costs, Expenses, Taxes and Indemnification......................36
Section 8.05. Right of Set-off................................................39
Section 8.06. Binding Effect..................................................39
Section 8.07. Assignments and Participations..................................39
SECTION 8.08. Tax Disclosure..................................................43
Section 8.09. Governing Law...................................................43
Section 8.10. Waiver of Jury Trial............................................44
Section 8.11. Execution in Counterparts.......................................44
Section 8.12. Severability....................................................44
Section 8.13. Headings........................................................44
Section 8.14. Entire Agreement................................................44

                                    SCHEDULES

I        -        List of Commitments and Applicable Lending Offices

                                       ii

<PAGE>

                                    EXHIBITS

A-1      -        Form of Notice of Borrowing
A-2      -        Form of Notice of Conversion
B        -        Form of Assignment and Acceptance
C-1      -        Form of Opinion of General Counsel to the Borrower
C-2      -        Form of Opinion of Special Counsel for the Borrower
C-3      -        Form of Opinion of General Counsel to the Borrower upon
                  Extension of the Commitment Termination Date or Exercise
                  of the Term Loan Conversion Option
C-4      -        Form of Opinion of Special Counsel for the Borrower upon
                  Extension of the Commitment Termination Date or Exercise
                  of the Term Loan Conversion Option
D        -        Form of Opinion of Counsel for the Administrative Agent and
                  the Arrangers
E        -        Form of Request for Extension of Commitment Termination Date
F        -        Form of Term Loan Conversion Notice
G        -        Form of Compliance Certificate


                                      iii
<PAGE>

                              AMENDED AND RESTATED
                                CREDIT AGREEMENT

                          Dated as of November 10, 2003


     This AMENDED AND RESTATED CREDIT  AGREEMENT  (this  "Agreement") is made by
PROGRESS ENERGY, INC., a North Carolina corporation (the "Borrower"),  the banks
listed  on  the  signature  pages  hereof  (the  "Banks")  and  CITIBANK,   N.A.
("Citibank"),  as  administrative  agent (the  "Administrative  Agent")  for the
Lenders (as  hereinafter  defined).  This  Agreement  amends and restates in its
entirety the Existing Credit Facility (as hereinafter defined).

                                   Article I
                        DEFINITIONS AND ACCOUNTING TERMS

     Section 1.01. Certain Defined Terms.

     As used in this  Agreement,  the  following  terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):

     "Additional  Lender"  shall have the meaning  assigned such term in Section
2.04(b).

     "Administrative  Agent"  has  the  meaning  specified  in the  introductory
paragraph of this Agreement.

     "Advance"  means  an  advance  by a  Lender  to the  Borrower  as part of a
Borrowing and refers to a Base Rate Advance or a Eurodollar  Rate Advance,  each
of which shall be a "Type" of Advance.

     "Affiliate"  means,  as to any Person,  any other Person that,  directly or
indirectly,  controls,  is controlled  by, or is under common  control with such
Person or is a director or officer of such Person.

     "Applicable  Lending Office" means,  with respect to each Lender,  (i) such
Lender's  Domestic  Lending  Office in the case of a Base Rate Advance,  or (ii)
such  Lender's  Eurodollar  Lending  Office,  in the case of a  Eurodollar  Rate
Advance.

     "Applicable  Margin"  means for each Type of  Advance  at all times  during
which any  Applicable  Rating  Level set forth below is in effect,  the interest
rate per annum set forth below next to such Applicable Rating Level:

<PAGE>
                                                                               2
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

-------------------------------- -------------------------- -------------------------------------
    Applicable Rating Level        Applicable Margin for      Applicable Margin for Base Rate
                                 Eurodollar Rate Advances                 Advances
-------------------------------- -------------------------- -------------------------------------
               1                          0.525%                             0%
-------------------------------- -------------------------- -------------------------------------
               2                          0.750%                             0%
-------------------------------- -------------------------- -------------------------------------
               3                          0.850%                             0%
-------------------------------- -------------------------- -------------------------------------
               4                          0.950%                             0%
-------------------------------- -------------------------- -------------------------------------
               5                          1.125%                           0.125%
-------------------------------- -------------------------- -------------------------------------
               6                          1.875%                           0.875%
-------------------------------- -------------------------- -------------------------------------
</TABLE>

provided, that

          (i) the  Applicable  Margins for  Eurodollar  Rate  Advances set forth
     above for each Applicable Rating Level shall increase by 0.250% at any time
     following the exercise of the Term Loan  Conversion  Option at Levels 1, 2,
     3, 4 or 5 and by 0.500% at Level 6,

          (ii) the  Applicable  Margins for  Eurodollar  Rate Advances set forth
     above for each  Applicable  Rating  Level  shall  increase  at any time the
     aggregate  principal amount of Advances  outstanding is greater than 33% of
     the  aggregate  Commitments  by  0.125%  at  Levels 1, 2, 3, 4 and 5 and by
     0.250% at Level 6,

          (iii)  the  Applicable  Margins  set forth  above for each  Applicable
     Rating Level shall increase upon the occurrence and during the  continuance
     of any Event of Default by 2.0%, and

          (iv) any change in the  Applicable  Margin  resulting from a change in
     the  Applicable  Rating  Level  shall  become  effective  upon  the date of
     announcement  of a change  in the  Moody's  Rating or the S&P  Rating  that
     results in a change in the Applicable Rating Level.

     "Applicable  Rating  Level" at any time shall be  determined  in accordance
with the then-applicable  S&P Rating and the  then-applicable  Moody's Rating as
follows:

-------------------------------------------------------------------------------
     S&P Rating/Moody's Rating                   Applicable Rating Level
-------------------------------------------------------------------------------
     A or higher or A2 or higher                            1
-------------------------------------------------------------------------------
     A- or A3                                               2
-------------------------------------------------------------------------------
     BBB+ or Baa1                                           3
-------------------------------------------------------------------------------
     BBB or Baa2                                            4
-------------------------------------------------------------------------------
     BBB- and Baa3                                          5
-------------------------------------------------------------------------------
     lower than BBB- and Baa3 or unrated                    6
-------------------------------------------------------------------------------
<PAGE>
                                                                               3

In the event  that the S&P  Rating  and the  Moody's  Rating are not at the same
Applicable Rating Level but differ by only one Applicable Rating Level, then the
higher of the two ratings shall  determine the Applicable  Rating Level.  In the
event  that the S&P  Rating  and the  Moody's  Rating  differ  by more  than one
Applicable  Rating Level, then the Applicable Rating Level immediately below the
higher of the two ratings shall be the Applicable  Rating Level.  The Applicable
Rating Level shall be  redetermined  on the date of  announcement of a change in
the S&P Rating or the Moody's Rating.

     "Arrangers" means Citigroup Global Markets, Inc. and J.P. Morgan Securities
Inc.

     "Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender and an Eligible Assignee,  and accepted by the Administrative Agent,
in substantially the form of Exhibit B hereto.

     "Banks" has the meaning  specified  in the  introductory  paragraph of this
Agreement.

     "Base  Rate"  means,  for  any  Interest  Period  or any  other  period,  a
fluctuating  interest  rate per annum as shall be in  effect  from time to time,
which rate per annum shall at all times be equal to the higher from time to time
of:

          (i) the rate of interest  announced  publicly by Citibank in New York,
     New York, from time to time, as Citibank's base rate; and

          (ii) 1/2 of one  percent  per annum  above the  Federal  Funds Rate in
     effect from time to time.

     "Base Rate  Advance"  means an Advance  that bears  interest as provided in
Section 2.06(a).

     "Borrower" has the meaning specified in the introductory  paragraph of this
Agreement.

     "Borrowing"  means a borrowing  consisting of simultaneous  Advances of the
same Type made by each of the  Lenders  pursuant  to Section  2.01 or  Converted
pursuant to Section 2.08 or 2.09.

     "Business  Day" means a day of the year on which banks are not  required or
authorized to close at the principal office of any Lender and, if the applicable
Business Day relates to any  Eurodollar  Rate  Advances,  on which  dealings are
carried on in the London interbank market.

     "Change of Control" means the occurrence, after the date of this Agreement,
of (i) any Person or "group"  (within  the meaning of Rule 13(d) or 14(d) of the
Securities  and  Exchange  Commission  under  the  Exchange  Act),  directly  or
indirectly,  acquiring beneficial ownership of or control over securities of the
Borrower (or other securities convertible into such securities) representing 30%
or more of the combined voting power of all securities of the Borrower  entitled
to vote in the election of directors.

     "Citibank" has the meaning specified in the introductory  paragraph of this
Agreement.
<PAGE>
                                                                               4

     "Commitment" has the meaning specified in Section 2.01.

     "Commitment  Increase" shall have the meaning assigned such term in Section
2.04(b).

     "Commitment Increase Approvals" means any governmental approval, resolution
of the  Board  of  Directors  of the  Borrower  or  resolution  of the  Board of
Directors of any Subsidiary not obtained by or on behalf of the Borrower or such
Subsidiary,  as  applicable,  and in full force and  effect on the date  hereof,
which governmental approval or resolution is required to be obtained in order to
authorize the  Commitment  Increase and the  performance by the Borrower and the
Subsidiaries of their respective  obligations  under this Agreement after giving
effect to the Commitment Increase.

     "Commitment  Termination Date" means, with respect to a Lender, the earlier
to occur of (i) the  Extension  Date,  or as to any Lender that has extended its
Commitment  pursuant to Section  2.15,  such later date that may be  established
pursuant  to  Section  2.15,  and (ii) the date of  termination  in whole of the
Commitments pursuant to Section 2.04 or 6.01.

     "Consolidated"  refers to the consolidation of the accounts of the Borrower
and its subsidiaries in accordance with GAAP.

     "Convert",  "Conversion"  and  "Converted"  each refers to a conversion  of
Advances of one Type into  Advances of another  Type, or the selection of a new,
or the  renewal of the same,  Interest  Period  for  Eurodollar  Rate  Advances,
pursuant to Section 2.08(g) or 2.09.

     "CP&L" means the Carolina Power & Light Company.

     "Declining Lender" has the meaning assigned to that term in Section 2.15.

     "Domestic Lending Office" means, with respect to any Lender,  the office of
such Lender  specified as its  "Domestic  Lending  Office"  opposite its name on
Schedule  I hereto or in the  Assignment  and  Acceptance  pursuant  to which it
became a Lender,  or such other  office of such  Lender as such  Lender may from
time to time specify to the Borrower and the Administrative Agent.

     "EBITDA"  means,   with  respect  to  the  Borrower  and  its  Consolidated
Subsidiaries  for any  period,  the sum of (i) net income  (or net  loss),  (ii)
Interest  Expense,  (iii) income tax expense,  (iv)  depreciation  expense,  (v)
amortization expense and (vi) other non-cash charges deducted in determining net
income (or net loss), in each case determined in accordance with GAAP.

     "Eligible Assignee" means (i) any other Lender or any Affiliate of a Lender
meeting  the  criteria  set forth in clause  (ii)  hereof and (ii) (A) any other
commercial  bank  organized  under the laws of the United  States,  or any State
thereof,  and having a combined capital and surplus of at least $250,000,000 (as
established  in its most recent  report of condition to its primary  regulator),
(B) a savings and loan  association or savings bank organized  under the laws of
the United  States,  or any State  thereof,  and having a combined  capital  and
surplus of at least  $250,000,000  (as  established in its most recent report of
condition to its primary  regulator),  (C) a commercial bank organized under the
laws of any other country that is a member of the OECD or has concluded  special
lending  arrangements with the  International  Monetary Fund associated with its

<PAGE>
                                                                               5

General Arrangements to Borrow of the Cayman Islands, or a political subdivision
of any such  country,  and having a  combined  capital  and  surplus of at least
$250,000,000  (as  established  in its most recent  report of  condition  to its
primary regulator); provided that such bank is acting through a branch or agency
located  in the United  States or in the  country  in which it is  organized  or
another  country  that is  described in this clause (C), (D) the central bank of
any country that is a member of the OECD,  or (E) a finance  company,  insurance
company  or  other  financial   institution  or  fund  (whether  a  corporation,
partnership or other entity) that is engaged in making,  purchasing or otherwise
investing in  commercial  loans in the ordinary  course of its  business,  whose
outstanding  unsecured  indebtedness  is rated  AA- or  better  by S&P or Aa3 or
better by Moody's  (or an  equivalent  rating by  another  nationally-recognized
credit rating agency of similar standing if neither of such corporations is then
in the business of rating unsecured indebtedness).

     "Environmental Laws" means any federal,  state or local laws, ordinances or
codes, rules,  orders, or regulations relating to pollution or protection of the
environment,   including,   without  limitation,   laws  relating  to  hazardous
substances, laws relating to reclamation of land and waterways and laws relating
to  emissions,  discharges,  releases  or  threatened  releases  of  pollutants,
contaminants,  chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, surface water,
ground water,  land surface or subsurface  strata) or otherwise  relating to the
manufacture,   processing,  distribution,  use,  treatment,  storage,  disposal,
transport or handling of  pollution,  contaminants,  chemicals,  or  industrial,
toxic or hazardous substances or wastes.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time, and the  regulations  promulgated  and rulings issued
thereunder.

     "Eurocurrency  Liabilities"  has  the  meaning  assigned  to  that  term in
Regulation  D of the Board of  Governors of the Federal  Reserve  System,  as in
effect from time to time.

     "Eurodollar  Lending Office" means, with respect to each Lender, the office
of such Lender specified as its "Eurodollar Lending Office" opposite its name on
Schedule  I hereto or in the  Assignment  and  Acceptance  pursuant  to which it
became a Lender  (or,  if no such  office is  specified,  its  Domestic  Lending
Office),  or such other  office of such  Lender as such  Lender may from time to
time specify to the Borrower and the Administrative Agent.

     "Eurodollar  Rate" means,  for the Interest Period for each Eurodollar Rate
Advance  comprising  part of the same Borrowing an interest rate per annum equal
to the average  (rounded  upward to the nearest whole  multiple of 1/8 of 1% per
annum,  if such  average is not such a multiple) of the rates per annum at which
deposits  in U.S.  dollars are  offered by the  principal  office of each of the
Reference Banks in London, England to prime banks in the London Interbank market
at 11:00  A.M.  (London  time) two  Business  Days  before the first day of such
Interest  Period  for a period  equal to such  Interest  Period and in an amount
substantially  equal to the amount of such  Eurodollar  Rate Advance  comprising
part of such Borrowing to be outstanding  during such Interest  Period from such
Reference  Bank. The Eurodollar Rate for the Interest Period for each Eurodollar
Rate Advance  comprising  part of the same Borrowing  shall be determined by the
Administrative  Agent on the  basis of the  applicable  rates  furnished  to and
received by the Administrative  Agent from the Reference Banks two Business Days
before  the  first  day  of  such  Interest  Period,  subject,  however,  to the
provisions of Section 2.08.

<PAGE>
                                                                               6

     "Eurodollar  Rate Advance" means an Advance that bears interest as provided
in Section 2.06(b).

     "Eurodollar Rate Reserve  Percentage" of any Lender for the Interest Period
for any Eurodollar Rate Advance means the reserve  percentage  applicable during
such  Interest  Period  (or  if  more  than  one  such  percentage  shall  be so
applicable,  the  daily  average  of such  percentages  for  those  days in such
Interest Period during which any such percentage  shall be so applicable)  under
regulations  issued from time to time by the Board of  Governors  of the Federal
Reserve  System  (or  any  successor)  for   determining   the  maximum  reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal  reserve  requirement)  for such Lender with respect to  liabilities or
assets consisting of or including  Eurocurrency  Liabilities having a term equal
to such Interest Period.

     "Events of Default" has the meaning assigned to that term in Section 6.01.

     "Exchange  Act"  means  the  Securities  Exchange  Act  of  1934,  and  the
regulations promulgated  thereunder,  in each case as amended and in effect from
time to time.

     "Existing Credit Facility" means the Credit Agreement, dated as of November
12, 2002, as amended to the date hereof,  among the Borrower,  the lenders party
thereto, and Citibank, N.A., as administrative agent for such lenders.

     "Extending  Commitment  Lender"  has the  meaning  assigned to that term in
Section 2.15(b).

     "Extension Date" means the 364th day following the date of this Agreement.

     "Facility Fee  Percentage"  means, at all times during which any Applicable
Rating  Level set forth  below is in effect,  the rate per annum set forth below
next to such Applicable Rating Level:

------------------------------------ -------------------------------------
      Applicable Rating Level              Facility Fee Percentage
------------------------------------ -------------------------------------
                 1                                  0.100%
------------------------------------ -------------------------------------
                 2                                  0.125%
------------------------------------ -------------------------------------
                 3                                  0.150%
------------------------------------ -------------------------------------
                 4                                  0.175%
------------------------------------ -------------------------------------
                 5                                  0.250%
------------------------------------ -------------------------------------
                 6                                  0.375%
------------------------------------ -------------------------------------

provided,  that a change in the Facility Fee Percentage  resulting from a change
in the  Applicable  Rating  Level  shall  become  effective  upon  the  date  of
announcement of a change in the Moody's Rating or the S&P Rating that results in
a change in the Applicable Rating Level.  Notwithstanding  any of the foregoing,
if the  Term  Loan  Conversion  Option  has been  exercised,  the  Facility  Fee
Percentage  shall be  determined  with  reference  to Level 6 at and  after  the
Commitment Termination Date.

<PAGE>
                                                                               7

     "Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight  Federal  funds  transactions  with members of the Federal  Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next  preceding  Business Day) by the Federal
Reserve Bank of New York,  or, if such rate is not so published for any day that
is a  Business  Day,  the  average  of the  quotations  for  such  day  on  such
transactions  received  by the  Administrative  Agent from three  Federal  funds
brokers of recognized standing selected by it.

     "First  Mortgage  Bonds" means those bonds issued from time to time by CP&L
pursuant to the Mortgage.

     "Florida Power" means Florida Power Corporation.

     "Florida Power Mortgage" means the Indenture,  dated as of January 1, 1944,
between  Florida  Power,  Guaranty  Trust  Company  of New York and the  Florida
National Bank of Jacksonville, as modified, amended or supplemented from time to
time.

     "Florida Power  Mortgage  Bonds" means those bonds issued from time to time
by Florida Power pursuant to the Florida Power Mortgage.

     "FPC" means Florida Progress Corporation.

     "GenCo  Financing"  means the  $440,000,000  credit facility among Progress
Genco Ventures,  LLC,  certain lenders named therein and JPMorgan Chase Bank, as
agent for the lenders, as amended, and the supporting agreements entered into in
connection with the  development,  construction,  operation and financing of the
projects to be financed  with the proceeds of such credit  agreement,  including
(i) the  "Support  Guarantee",  (ii) the  "Tolling  Guarantee",  (iii) the "Fuel
Guarantee" and (iv) the "Master Guarantee and Support Agreement".

     "GAAP" means generally accepted accounting principles, including principles
of  consolidation,  consistent  with  those  applied in the  preparation  of the
financial statements referred to in Section 4.01(e).

     "Guaranty" of any Person means any obligation,  contingent or otherwise, of
such  Person  (i) to pay any  Liability  of any  other  Person  or to  otherwise
protect,  or having the practical  effect of protecting,  the holder of any such
Liability  against loss (whether such obligation arises by virtue of such Person
being a  partner  of a  partnership  or  participant  in a joint  venture  or by
agreement  to pay,  to keep well,  to  purchase  assets,  goods,  securities  or
services or to take or pay, or otherwise)  or (ii)  incurred in connection  with
the  issuance  by a third  Person of a Guaranty  of any  Liability  of any other
Person  (whether such  obligation  arises by agreement to reimburse or indemnify
such third Person or otherwise).  The word  "Guarantee"  when used as a verb has
the correlative meaning.

<PAGE>
                                                                               8

     "Hostile  Acquisition" shall mean any Target Acquisition (as defined below)
involving  a tender  offer or proxy  contest  that has not been  recommended  or
approved by the board of  directors  (or similar  governing  body) of the Person
that is the  subject  of such  Target  Acquisition  prior  to the  first  public
announcement or disclosure relating to such Target Acquisition.  As used in this
definition,  the term "Target  Acquisition"  shall mean any transaction,  or any
series of related  transactions,  by which any Person directly or indirectly (i)
acquires any ongoing business or all or  substantially  all of the assets of any
other Person or division thereof,  whether through purchase of assets, merger or
otherwise,  (ii) acquires (in one transaction or as the most recent  transaction
in a series of  transactions)  control of at least a majority in ordinary voting
power of the  securities of any such Person that have ordinary  voting power for
the election of directors or (iii) otherwise acquires control of more than a 50%
ownership interest in any such Person.

     "Increasing  Lender"  shall have the meaning  assigned such term in Section
2.04(b).

     "Indebtedness"  of any Person means (i) any  obligation  of such Person for
borrowed  money,  (ii)  any  obligation  of  such  Person  evidenced  by a bond,
debenture, note or other similar instrument, (iii) any obligation of such Person
to pay the  deferred  purchase  price of  property or  services,  except a trade
account  payable that arises in the ordinary  course of business but only if and
so long as the same is payable on customary trade terms,  (iv) any obligation of
such Person as lessee  under a capital  lease,  (v) any  Mandatorily  Redeemable
Stock of such  Person  (the amount of such  Mandatorily  Redeemable  Stock to be
determined for this purpose as the higher of the liquidation  preference and the
amount payable upon redemption of such Mandatorily  Redeemable Stock),  (vi) any
obligation of such Person to purchase  securities or other  property that arises
out of or in  connection  with  the sale of the  same or  substantially  similar
securities or property,  (vii) any  non-contingent  obligation of such Person to
reimburse  any other  Person in respect of amounts paid under a letter of credit
or  other  Guaranty  issued  by  such  other  Person  to the  extent  that  such
reimbursement  obligation remains  outstanding after it becomes  non-contingent,
(viii) any  Indebtedness  of others  secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) a
mortgage, lien, pledge, charge or other encumbrance on any asset of such Person,
(ix) any  Liabilities in respect of unfunded vested benefits under plans covered
by Title IV of ERISA,  (x) any Synthetic  Lease  Obligations  of such Person and
(xi) any Indebtedness of others Guaranteed by such Person.

     "Interest Expense" means, with respect to the Borrower and its Consolidated
Subsidiaries for any period,  the sum of (i) all interest expense (including all
amortization  of  debt  discount  and  expense  and  reported  interest)  on all
Indebtedness  of the  Borrower  and its  Consolidated  Subsidiaries  during such
period and (ii) the interest element of rental payments under operating  leases,
to the extent  deducted in determining  net income (or net loss) of the Borrower
and its Consolidated Subsidiaries during such period.

     "Interest  Period" means, for each Eurodollar Rate Advance  comprising part
of the same Borrowing,  the period commencing on the date of such Advance or the
date of the  Conversion  of any  Advance  into such an Advance and ending on the
last day of the period selected by the Borrower pursuant to the provisions below
and,  thereafter,  each  subsequent  period  commencing  on the  last day of the
immediately  preceding  Interest Period and ending on the last day of the period
selected by the Borrower  pursuant to the provisions below. The duration of each
such  Interest  Period shall be one, two,  three or six months,  as the Borrower
may, in the Notice of  Borrowing  given by the  Borrower  to the  Administrative
Agent pursuant to Section 2.02, select; provided, however, that:

<PAGE>
                                                                               9

          (i) the Borrower  may not select any  Interest  Period that ends after
     the Commitment Termination Date;

          (ii)  Interest  Periods  commencing  on the  same  date  for  Advances
     comprising the same Borrowing shall be of the same duration; and

          (iii)  whenever  the last day of any Interest  Period would  otherwise
     occur on a day other than a  Business  Day,  the last day of such  Interest
     Period  shall be extended  to occur on the next  succeeding  Business  Day;
     provided that if such  extension  would cause the last day of such Interest
     Period to occur in the next following  calendar month, the last day of such
     Interest Period shall occur on the next preceding Business Day.

The  Administrative  Agent  shall  promptly  advise  each  Lender by or telecopy
transmission of each Interest Period so selected by the Borrower.

     "Lenders"  means the Lenders listed on the signature  pages hereof and each
Eligible Assignee that shall become a party hereto pursuant to Section 8.07.

     "Liability" of any Person means any  indebtedness,  liability or obligation
of or binding  upon,  such Person or any of its assets,  of any kind,  nature or
description,  direct  or  indirect,  absolute  or  contingent,  due or not  due,
contractual  or tortious,  liquidated  or  unliquidated,  whether  arising under
contract,  applicable  law,  or  otherwise,  whether now  existing or  hereafter
arising.

     "Majority  Lenders"  means at any time Lenders  holding at least 66-2/3% of
the aggregate principal amount of the Advances then outstanding,  or, if no such
principal  amount is then  outstanding,  Lenders  having at least 66-2/3% of the
Commitments (provided that, for purposes hereof,  neither the Borrower,  nor any
of its  Affiliates,  if a Lender,  shall be included in (i) the Lenders  holding
such amount of the  Advances or having  such amount of the  Commitments  or (ii)
determining the aggregate  unpaid  principal amount of the Advances or the total
Commitments).

     "Mandatorily Redeemable Stock" means, with respect to any Person, any share
of such Person's capital stock to the extent that it is (i) redeemable,  payable
or required to be purchased or otherwise retired or extinguished, or convertible
into any  Indebtedness  or other  Liability  of such  Person,  (A) at a fixed or
determinable date,  whether by operation of a sinking fund or otherwise,  (B) at
the option of any Person other than such Person or (C) upon the  occurrence of a
condition  not solely  within the control of such  Person,  such as a redemption
required to be made out of future earnings or (ii)  convertible into Mandatorily
Redeemable Stock.

     "Moody's" means Moody's Investors Service, Inc., or any successor thereto.

     "Moody's Rating" means, on any date of determination,  the debt rating most
recently  announced by Moody's with respect to the Borrower's  long-term  senior
unsecured non-credit-enhanced debt.

<PAGE>
                                                                              10

     "Mortgage"  means the Mortgage and Deed of Trust,  dated as of May 1, 1940,
from  CP&L to The  Bank of New  York  (formerly  Irving  Trust  Company)  and to
Frederick  G. Herbst  (W.T.  Cunningham,  successor),  as  modified,  amended or
supplemented from time to time.

     "Multiemployer  Plan"  means a  "multiemployer  plan" as defined in Section
4001(a)(3) of ERISA.

     "Notice of Borrowing" has the meaning specified in Section 2.02(a).

     "Notice of Conversion" has the meaning specified in Section 2.09.

     "OECD" means the Organization for Economic Cooperation and Development.

     "Person"  means  an  individual,  partnership,   corporation  (including  a
business  trust),  limited  liability  company,  joint  stock  company,   trust,
unincorporated association, joint venture or other entity, or a foreign state or
political subdivision thereof or any agency of such state or subdivision.

     "Plan"  means an employee  benefit plan (other than a  Multiemployer  Plan)
maintained for employees of the Borrower or any of its Affiliates and covered by
Title IV of ERISA.

     "Progress Capital" means Progress Capital Holdings, Inc.

     "Portfolio  Transaction"  means the sale of Florida  Progress's  and CP&L's
portfolio of affordable housing investments.

     "Rail  Transaction"  means the sale of  substantially  all of the assets or
capital stock of either Progress Rail Services, Inc. or Railcar, Ltd.

     "Reference Banks" means Citibank and JPMorgan Chase Bank.

     "Register" has the meaning specified in Section 8.07(c).

     "Responsible  Officer" means the President,  any Vice President,  the Chief
Financial Officer,  the Treasurer,  the Controller or any Assistant Treasurer of
the Borrower the  signatures of whom, in each case,  have been  certified to the
Administrative  Agent and each other Lender pursuant to Section 3.01(d), or in a
certificate  delivered to the  Administrative  Agent  replacing or amending such
certificate.  Each Lender may conclusively rely on each certificate so delivered
until it shall have  received a copy of a  certificate  from the Secretary or an
Assistant  Secretary of the  Borrower  amending,  canceling  or  replacing  such
certificate.

     "S&P" means Standard & Poor's Ratings Group or any successor thereto.

     "S&P  Rating"  means,  on any date of  determination,  the debt rating most
recently  announced  by S&P with  respect  to the  Borrower's  long-term  senior
unsecured non-credit-enhanced debt.

<PAGE>
                                                                              11

     "SEC Order" means Order Nos.  35-27728 and 70-10130 of the  Securities  and
Exchange Commission issued September 29, 2003.

     "Significant  Subsidiary" means CP&L, FPC, Florida Power,  Progress Capital
and any  other  Subsidiary  of the  Borrower  that  at any  time  constitutes  a
"significant  subsidiary",  as such term is  defined  in  Regulation  S-X of the
Securities  and Exchange  Commission  as in effect on the date hereof (17 C.F.R.
Part 210).

     "Solvent"  means,  with respect to any person as of a particular date, that
on such  date  such  person  is able to pay its  debts  and  other  liabilities,
contingent obligations and other commitments as they mature in the normal course
of business.  In computing the amount of contingent  liabilities at any time, it
is intended that such liabilities will be computed as the amount which, in light
of all the facts and circumstances  existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.

     "Subsidiary"  means,  with  respect  to  any  Person,  any  corporation  or
unincorporated  entity of which more than 50% of the  outstanding  capital stock
(or comparable  interest) having ordinary voting power  (irrespective of whether
at the time capital stock (or comparable interest) of any other class or classes
of such  corporation  or  entity  shall  or might  have  voting  power  upon the
occurrence of any  contingency)  is at the time directly or indirectly  owned by
said Person (whether directly or through one or more other Subsidiaries).

     "Synthetic  Lease" means a lease transaction under which the parties intend
that (i) the  lease  will be  treated  as an  "operating  lease"  by the  lessee
pursuant to Statement of Financial  Accounting Standards No. 13, as amended, and
(ii) the lessee will be entitled  to various tax and other  benefits  ordinarily
available to owners (as opposed to lessees) of like property.

     "Synthetic Lease Obligations" means, with respect to any Person, the sum of
(i) all remaining  rental  obligations of such Person as lessee under  Synthetic
Leases that are  attributable to principal and,  without  duplication,  (ii) all
rental  and  purchase  price  payment  obligations  of such  Person  under  such
Synthetic Leases assuming such Person exercises the option to purchase the lease
property at the end of the lease term.

     "Term Loan  Conversion  Notice"  has the  meaning  assigned to that term in
Section 2.16.

     "Term Loan  Conversion  Option" means the option of the Borrower to convert
outstanding  Advances into a term loan with a maturity of one year in accordance
with Section 2.16.

     "Termination  Date"  means,  with respect to all  Lenders,  the  Commitment
Termination  Date,  unless the Term Loan Conversion  Option has been effectively
exercised in accordance  with Section 2.16, in which case the  Termination  Date
means the earliest to occur of (i) the date the Advances  become due and payable
in  accordance  with  Section  2.16,  (ii) the date of  repayment in full of the
Advances pursuant to Section 2.10(b),  and (iii) the date of acceleration of the
Borrower's payment obligations hereunder in accordance with Section 6.01.

<PAGE>
                                                                              12

     "Termination  Event" means (i) a Reportable Event described in Section 4043
of ERISA and the regulations  issued  thereunder  (other than a Reportable Event
not subject to the provision for 30-day notice to the Pension  Benefit  Guaranty
Corporation under such  regulations),  or (ii) the withdrawal of the Borrower or
any of its  Affiliates  from  a Plan  during  a  plan  year  in  which  it was a
"substantial  employer" as defined in Section  4001(a)(2) of ERISA, or (iii) the
filing  of a notice of intent to  terminate  a Plan or the  treatment  of a Plan
amendment as a termination  under Section 4041 of ERISA, or (iv) the institution
of proceedings to terminate a Plan by the Pension Benefit Guaranty  Corporation,
or (v) any other event or condition that might constitute  grounds under Section
4042 of ERISA  for the  termination  of,  or the  appointment  of a  trustee  to
administer, any Plan.

     "Total  Capitalization"  means  the sum of the value of the  common  stock,
retained  earnings,  and preferred and preference stock of the Borrower (in each
case, determined in accordance with GAAP), plus Consolidated Indebtedness of the
Borrower.

     Section 1.02. Computation of Time Periods.

     In this  Agreement in the  computation  of periods of time from a specified
date to a later  specified  date, the word "from" means "from and including" and
the words "to" and "until" each means "to but excluding".

     Section 1.03. Accounting Terms.

     All accounting terms not specifically  defined herein shall be construed in
accordance with GAAP.

                                   Article II
                        AMOUNTS AND TERMS OF THE ADVANCES

     Section 2.01. The Advances.

     (a) Each Lender severally agrees,  on the terms and conditions  hereinafter
set forth,  to make  Advances to the Borrower  from time to time on any Business
Day during the  period  from the date  hereof to and  including  the  Commitment
Termination  Date, in an aggregate amount  outstanding not to exceed at any time
the amount set forth  opposite  such  Lender's  name on Schedule I hereto or, if
such Lender has entered into any Assignment and  Acceptance,  set forth for such
Lender in the  Register  maintained  by the  Administrative  Agent  pursuant  to
Section  8.07(c),  as such amount may be reduced  pursuant to Section 2.04(a) or
increased  pursuant  to  Section  2.04(b)  (such  Lender's  "Commitment").  Each
Borrowing  shall be in an  aggregate  amount  not less  than  $10,000,000  or an
integral  multiple of $1,000,000 in excess thereof and shall consist of Advances
of the same Type made on the same day by the Lenders ratably  according to their
respective Commitments. Until the Commitment Termination Date, within the limits
of each Lender's  Commitment,  the Borrower may from time to time borrow,  repay
pursuant  to Section  2.05 or prepay  pursuant to Section  2.10(b) and  reborrow
under this Section 2.01.

<PAGE>
                                                                              13

     (b) Any Lender may request that any Advances made by it be evidenced by one
or more promissory notes. In such event, the Borrower shall prepare, execute and
deliver to such Lender one or more promissory notes payable to the order of such
Lender (or, if requested by such Lender,  to such Lender and its  assignees) and
in a form approved by the Administrative Agent.

     Section 2.02. Making the Advances.

     (a) Each Borrowing shall be made on notice, given not later than 10:00 A.M.
(New York City  time) on the day of such  proposed  Borrowing,  in the case of a
Borrowing comprised of Base Rate Advances, or on the third Business Day prior to
the date of the  proposed  Borrowing,  in the case of a Borrowing  comprised  of
Eurodollar Rate Advances,  by the Borrower to the  Administrative  Agent,  which
shall give to each Lender prompt notice thereof by telecopier.  Each such notice
of a  Borrowing  (a "Notice of  Borrowing")  shall be by  telecopier,  confirmed
promptly in writing, in substantially the form of Exhibit A-1 hereto, specifying
therein  the  requested  (i)  date  of such  Borrowing,  (ii)  Type of  Advances
comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in
the case of a Borrowing  comprised of  Eurodollar  Rate  Advances,  the Interest
Period for each such Advance.  In the case of a proposed Borrowing  comprised of
Eurodollar Rate Advances,  the  Administrative  Agent shall promptly notify each
Lender of the applicable interest rate under Section 2.06(b). Each Lender shall,
before  12:00  P.M.  (New York City  time) on the date of such  Borrowing,  make
available for the account of its Applicable Lending Office to the Administrative
Agent at its  address  referred  to in Section  8.02,  in same day  funds,  such
Lender's  ratable portion of such Borrowing.  After the  Administrative  Agent's
receipt of such funds and upon  fulfillment  of the  applicable  conditions  set
forth in Article III, the Administrative Agent will make such funds available to
the Borrower at the Administrative Agent's aforesaid address.

     (b) Each  Notice of  Borrowing  shall be  irrevocable  and  binding  on the
Borrower and, in respect of any Borrowing comprised of Eurodollar Rate Advances,
the Borrower shall indemnify each Lender against any loss or expense incurred by
such Lender as a result of any  failure by the  Borrower to fulfill on or before
the date  specified for such  Borrowing the  applicable  conditions set forth in
Article  III,  including,  without  limitation,  any  loss  (including  loss  of
anticipated  profits)  or  expense  incurred  by  reason of the  liquidation  or
reemployment  of  deposits  or other  funds  acquired by such Lender to fund the
Advance to be made by such Lender as part of such  Borrowing  when such Advance,
as a result of such failure, is not made on such date.

     (c) Unless the  Administrative  Agent  shall have  received  notice  from a
Lender  prior  to the  date of any  Borrowing  that  such  Lender  will not make
available to the  Administrative  Agent such  Lender's  ratable  portion of such
Borrowing,  the  Administrative  Agent may assume that such Lender has made such
portion available to the  Administrative  Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such  assumption,  make  available to the Borrower on such
date a corresponding  amount. If and to the extent such Lender shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the  Borrower  severally  agree to repay to the  Administrative  Agent  (without
duplication),  forthwith on demand,  such  corresponding  amount,  together with
interest thereon for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the  Administrative  Agent,  at
(x) in the case of the  Borrower,  the interest  rate  applicable at the time to
Advances  comprising  such  Borrowing  and (y) in the case of such  Lender,  the
Federal Funds Rate. If such Lender shall repay to the Administrative  Agent such
corresponding  amount,  such amount so repaid  shall  constitute  such  Lender's
Advance as part of such Borrowing for purposes of this Agreement.

<PAGE>
                                                                              14

     (d) The  failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its  obligation,  if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be  responsible  for the  failure of any other  Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.

     (e) If, for any reason,  a Borrowing  is not made on the date  specified in
any Notice of Borrowing, the Administrative Agent hereby agrees to repay to each
Lender  the  amount,  if  any,  that  such  Lender  has  made  available  to the
Administrative  Agent  as such  Lender's  ratable  portion  of  such  Borrowing,
together  with  interest  thereon for each day from the date such amount is made
available  to the  Administrative  Agent until the date such amount is repaid to
such Lender, at the Federal Funds Rate.

     Section 2.03. Fees.

     (a) The Borrower agrees to pay to the Administrative  Agent for the account
of each  Lender a facility  fee on each  Lender's  Commitment,  irrespective  of
usage,  from the date hereof,  in the case of each Bank,  and from the effective
date specified in the  Assignment  and Acceptance  pursuant to which it became a
Lender, in the case of each other Lender, until the Termination Date at the rate
per annum equal to the Facility Fee Percentage from time to time in effect. Such
fee shall be  calculated on the basis of actual number of days elapsed in a year
of 365 or 366 days.  Such fee shall be payable  quarterly in arrears on the last
day of each March, June, September and December during the term of such Lender's
Commitment, and on the Termination Date.

     (b) The Borrower agrees to pay to the Administrative Agent an agency fee in
such  amounts and payable at such times,  as shall be agreed to between  them in
writing.

     Section 2.04. Reduction and Increase of the Commitments.

     (a) The Borrower  shall have the right,  upon at least three Business Days'
notice to the Administrative Agent,  irrevocably to terminate in whole or reduce
ratably  in part  the  unused  portions  of the  respective  Commitments  of the
Lenders;  provided that the aggregate  amount of the  Commitments of the Lenders
shall not be  reduced  to an amount  that is less than the  aggregate  principal
amount of the  Advances  then  outstanding;  and  provided,  further,  that each
partial reduction of Commitments shall be in the aggregate amount of $10,000,000
or an integral  multiple of $1,000,000  in excess  thereof.  Once  terminated or
reduced, the Commitments may not be reinstated.

     (b) (i) At any  time  prior  to the  Termination  Date,  the  Borrower  may
increase the aggregate  amount of the  Commitments to an amount not greater than
$500,000,000 (any such increase, a "Commitment  Increase") by designating either
one or more of the existing Lenders (each of which, in its sole discretion,  may
determine  whether and to what degree to offer to participate in such Commitment
Increase) or one or more other banks or other financial institutions  reasonably
acceptable to the  Administrative  Agent that at the time agree,  in the case of

<PAGE>
                                                                              15

any such bank or financial  institution  that is an existing  Lender to increase
its Commitment (an "Increasing  Lender") and, in the case of any other such bank
or financial  institution  (an "Additional  Lender"),  to become a party to this
Agreement. The sum of the increases in the Commitments of the Increasing Lenders
pursuant to this subsection (b) plus the  Commitments of the Additional  Lenders
upon giving effect to the Commitment  Increase shall not in the aggregate exceed
the amount of the Commitment Increase.  The Borrower shall provide prompt notice
of any proposed  Commitment  Increase  pursuant to this  Section  2.04(b) to the
Administrative  Agent, which shall promptly provide a copy of such notice to the
Lenders.

          (ii) Any  Commitment  Increase  shall  become  effective  upon (A) the
     receipt  by the  Administrative  Agent  of (1) an  agreement  in  form  and
     substance  satisfactory to the Administrative Agent signed by the Borrower,
     each Increasing  Lender and each Additional  Lender,  setting forth the new
     Commitment  of each such Lender and  setting  forth the  agreement  of each
     Additional  Lender to become a party to this  Agreement  and to be bound by
     all the terms and provisions hereof binding upon each Lender, (2) certified
     copies of the  Commitment  Increase  Approvals and such opinions of counsel
     for  the  Borrower  with  respect  to  the   Commitment   Increase  as  the
     Administrative  Agent may reasonably  request,  and (3) a certificate  (the
     statements  contained in which shall be true) of a duly authorized  officer
     of the Borrower  stating  that both before and after giving  effect to such
     Commitment Increase (x) no Event of Default has occurred and is continuing,
     (y)  all  representations  and  warranties  made  by the  Borrower  in this
     Agreement  are true  and  correct  in all  material  respects,  and (z) all
     Commitment  Increase Approvals have been obtained and are in full force and
     effect, and (B) the funding by each Increasing Lender and Additional Lender
     of the Loan(s) to be made by each such Lender  described in paragraph (iii)
     below.

          (iii)  Upon  the  effective  date  of any  Commitment  Increase,  each
     Increasing  Lender and each  Additional  Lender shall  provide funds to the
     Administrative  Agent in the manner  described in Section 2.01 in an amount
     equal to the  product of (x) the  aggregate  principal  amount of  Advances
     outstanding  hereunder,  expressed  as  a  percentage  of  the  Commitments
     (calculated,  in each case,  immediately prior to such Commitment Increase)
     and (y) the  amount  of such  Lender's  Commitment  Increase.  The funds so
     provided by any Lender shall be deemed to be an Advance or Advances made by
     such Lender on the date of such Commitment  Increase,  with such Advance(s)
     being  (A)  in an  amount  equal  to  the  product  of  (x)  the  aggregate
     outstanding  principal amount of each Advance  expressed as a percentage of
     the  Commitments  (calculated,  in each  case,  immediately  prior  to such
     Commitment  Increase)  and  (y) the  amount  of  such  Lender's  Commitment
     Increase and (B) of the same Type(s) and having the same Interest Period(s)
     as each Advance  described  in the  preceding  clause (A),  such that after
     giving effect to such Commitment  Increase and the Advances(s)  made on the
     date of such Commitment Increase,  each Advance outstanding hereunder shall
     consist of Advances made by the Lenders  ratably in  accordance  with their
     pro rata shares of the Commitments.

          (iv)  Notwithstanding  any provision contained herein to the contrary,
     from and after the date of any  Commitment  Increase  and the making of any
     Advances on such date pursuant to paragraph (iii) above,  all  calculations
     and payments of interest on the Advance  comprising any Advances shall take
     into account the actual  Commitment of each Lender and the principal amount
     outstanding of each Advance made by such Lender during the relevant  period
     of time.

<PAGE>
                                                                              16

     Section 2.05. Repayment of Advances.

     The Borrower shall repay the principal  amount of each Advance made by each
Lender on the Termination Date, subject to Section 2.16 hereof.

     Section 2.06. Interest on Advances.

     The  Borrower  shall pay  interest on the unpaid  principal  amount of each
Advance made by each Lender from the date of such Advance  until such  principal
amount shall be paid in full, at the following rates per annum:

     (a) Base Rate Advances.  If such Advance is a Base Rate Advance, a rate per
annum equal at all times to the Base Rate in effect from time to time,  plus the
Applicable  Margin,  payable quarterly in arrears on the last day of each March,
June,  September  and December  and on the date such Base Rate Advance  shall be
paid in full; provided,  however, that if and for so long as an Event of Default
has occurred and is continuing,  interest on the unpaid principal amount of each
Base Rate Advance shall be payable on demand.

     (b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate Advance,
a rate per annum equal at all times during each Interest Period for such Advance
to the sum of the Eurodollar Rate for such Interest Period,  plus the Applicable
Margin for such Eurodollar Rate Advance in effect from time to time,  payable on
the last day of such  Interest  Period  and,  if such  Interest  Period for such
Advance has a duration of more than three months, on each day that occurs during
such  Interest  Period  every three  months from the first day of such  Interest
Period;  provided,  however,  that if and for so long as an Event of Default has
occurred and is  continuing,  interest on the unpaid  amount of each  Eurodollar
Rate Advance shall be payable on demand.

     Section 2.07. Additional Interest on Eurodollar Rate Advances.

     The  Borrower  shall pay to each Lender  additional  interest on the unpaid
principal  amount of each Eurodollar Rate Advance of such Lender,  from the date
of such Advance until such principal amount is paid in full, at an interest rate
per annum equal at all times to the remainder  obtained by  subtracting  (i) the
Eurodollar  Rate for the  Interest  Period for such  Advance  from (ii) the rate
obtained by dividing such  Eurodollar  Rate by a percentage  equal to 100% minus
the Eurodollar Rate Reserve  Percentage of such Lender for such Interest Period,
payable on each date on which  interest is payable on such  Advance.  All claims
for such  additional  interest shall be submitted by such Lender to the Borrower
(with a copy to the Administrative  Agent) as soon as is reasonably possible and
in all  events  within 90 days  after the  first  day of such  Interest  Period;
provided,  however, that if a claim is not submitted to the Borrower within such
90-day  period,  such Lender shall  thereby  waive its claim to such  additional
interest  incurred  during  such  90-day  period but not to any such  additional
interest incurred thereafter.  A certificate as to the amount of such additional
interest, submitted to the Borrower (with a copy to the Administrative Agent) by
such Lender,  shall be conclusive and binding for all purposes,  absent manifest
error.

<PAGE>
                                                                              17

     Section 2.08. Interest Rate Determination.

     (a) Each  Reference  Bank  agrees to  furnish to the  Administrative  Agent
timely  information for the purpose of determining  the Eurodollar  Rate. If any
one or more of the Reference Banks shall not furnish such timely  information to
the  Administrative  Agent for  determination  of any such  interest  rate,  the
Administrative  Agent shall  determine such interest rate on the basis of timely
information furnished by the remaining Reference Banks.

     (b) The  Administrative  Agent shall give prompt notice to the Borrower and
the Lenders of the  applicable  interest rate  determined by the  Administrative
Agent for purposes of Section  2.06(a) or (b), and the applicable  rate, if any,
furnished by each Reference Bank for  determining  the applicable  interest rate
under Section 2.06(b).

     (c) If fewer than two Reference  Banks furnish  timely  information  to the
Administrative Agent for determining the Eurodollar Rate for any Eurodollar Rate
Advances,

          (i) the  Administrative  Agent shall forthwith notify the Borrower and
     the Lenders that the interest rate cannot be determined for such Eurodollar
     Rate Advances,

          (ii) each such Advance will automatically, on the last day of the then
     existing Interest Period therefor,  Convert into a Base Rate Advance (or if
     such  Advance is then a Base Rate  Advance,  will  continue  as a Base Rate
     Advance), and

          (iii) the  obligation of the Lenders to make,  or to Convert  Advances
     into,  Eurodollar Rate Advances shall be suspended until the Administrative
     Agent shall  notify the  Borrower  and the Lenders  that the  circumstances
     causing such suspension no longer exist.

     (d) If, with respect to any Eurodollar Rate Advances,  the Majority Lenders
notify the Administrative Agent that the Eurodollar Rate for any Interest Period
for such Advances will not adequately  reflect the cost to such Majority Lenders
of making,  funding or maintaining their respective Eurodollar Rate Advances for
such Interest  Period,  the  Administrative  Agent shall forthwith so notify the
Borrower and the Lenders, whereupon

          (i) each Eurodollar Rate Advance will  automatically,  on the last day
     of the then existing  Interest  Period  therefor,  Convert into a Base Rate
     Advance, and

          (ii) the  obligation  of the Lenders to make,  or to Convert  Advances
     into,  Eurodollar Rate Advances shall be suspended until the Administrative
     Agent shall  notify the  Borrower  and the Lenders  that the  circumstances
     causing such suspension no longer exist.

     (e) If the  Borrower  shall fail to select  the  duration  of any  Interest
Period for any  Eurodollar  Rate  Advances  in  accordance  with the  provisions
contained  in  the  definition  of  "Interest   Period"  in  Section  1.01,  the
Administrative  Agent will  forthwith so notify the Borrower and the Lenders and
such Advances will automatically,  on the last day of the then existing Interest
Period therefor, Convert into Base Rate Advances.

<PAGE>
                                                                              18

     (f) On the date on which the aggregate  unpaid principal amount of Advances
comprising any Borrowing shall be reduced,  by prepayment or otherwise,  to less
than $20,000,000, such Advances shall, if they are Advances of a Type other than
Base Rate Advances,  automatically  Convert into Base Rate Advances,  and on and
after such date the right of the Borrower to Convert such Advances into Advances
of a Type other than Base Rate Advances shall terminate; provided, however, that
if and so long as each such Advance  shall be of the same Type and have the same
Interest Period as Advances  comprising  another  Borrowing or other Borrowings,
and the aggregate  unpaid  principal  amount of all such Advances shall equal or
exceed  $20,000,000,  the  Borrower  shall have the right to  continue  all such
Advances as, or to Convert all such Advances into,  Advances of such Type having
such Interest Period.

     (g) If an  Event  of  Default  has  occurred  and is  continuing,  (i) each
Eurodollar Rate Advance will automatically, on the last day of the then existing
Interest  Period  therefor,  Convert  into a Base  Rate  Advance  and  (ii)  the
obligation of the Lenders to make, or to Convert Advances into,  Eurodollar Rate
Advances shall be suspended.

     Section 2.09. Voluntary Conversion of Advances.

     The  Borrower  may,  on any  Business  Day  prior to the  Termination  Date
(including  any date occurring on and after the  effectiveness  of the Term Loan
Conversion Option), upon notice given to the Administrative Agent not later than
10:00 A.M.  (New York City time) on the third  Business Day prior to the date of
the proposed Conversion,  in the case of any proposed Conversion into Eurodollar
Rate Advances,  and on the date of the proposed  Conversion,  in the case of any
proposed  Conversion  into Base Rate Advances,  and subject to the provisions of
Sections  2.08 and 2.12,  Convert all Advances of one Type  comprising  the same
Borrowing into Advances of another Type; provided,  however, that any Conversion
of any Eurodollar  Rate Advances into Advances of another Type shall be made on,
and  only on,  the  last day of an  Interest  Period  for such  Eurodollar  Rate
Advances,  except as otherwise  provided in Section 2.12.  Each such notice of a
Conversion (a "Notice of Conversion") shall be by telecopier, confirmed promptly
in writing,  in substantially  the form of Exhibit A-2 hereto and shall,  within
the restrictions specified above, specify (i) the date of such Conversion,  (ii)
the  aggregate  amount  of,  Type of, and  Interest  Periods  applicable  to the
Advances to be  Converted,  (iii) the Type of Advance to which such Advances (or
portions  thereof) are proposed to be Converted,  and (iv) if such Conversion is
into or with respect to Eurodollar  Rate Advances,  the duration of the Interest
Period for each such Advance.

     Section 2.10. Prepayments of Advances.

     (a) The Borrower shall have no right to prepay any principal  amount of any
Advances other than as provided in subsection (b) below.

     (b) The  Borrower  may,  upon notice given to the  Administrative  Agent at
least two  Business  Days prior to the proposed  prepayment,  in the case of any
Eurodollar Rate Advance, and on the date of the proposed prepayment, in the case
of any Base Rate Advance, and if such notice is given the Borrower shall, prepay
the outstanding  principal amounts of the Advances comprising the same Borrowing
in whole or ratably in part,  together with accrued interest to the date of such
prepayment  on the  amount  prepaid  and,  in the  case of any  Eurodollar  Rate

<PAGE>
                                                                              19

Advance, any amount payable pursuant to Section 8.04(b); provided, however, that
(i) each partial  prepayment shall be in an aggregate  principal amount not less
than  $5,000,000  and in integral  multiples of $1,000,000 in excess thereof and
(ii) in the  case of any such  prepayment  of a  Eurodollar  Rate  Advance,  the
Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant
to Section 8.04(b) on the date of such prepayment.

     Section 2.11. Increased Costs.

     (a) If, due to either (i) the introduction of or any change (other than any
change by way of imposition or increase of reserve requirements,  in the case of
Eurodollar Rate Advances,  included in the Eurodollar Rate Reserve  Percentage),
in or in the  interpretation  of any law or  regulation,  or (ii) the compliance
with any  guideline  or  request  from any  central  bank or other  governmental
authority  (whether or not having the force of law), there shall be any increase
in the cost to any Lender of agreeing to make or making,  funding or maintaining
Eurodollar Rate Advances, then the Borrower shall from time to time, upon demand
by such Lender (with a copy of such demand to the Administrative  Agent), pay to
the  Administrative   Agent  for  account  of  such  Lender  additional  amounts
sufficient  to reimburse  such Lender for such  increased  cost.  All claims for
increased cost shall be submitted by such Lender to the Borrower (with a copy to
the  Administrative  Agent) as soon as is reasonably  possible and in all events
within 90 days after such  introduction,  such change,  or the beginning of such
compliance,  the occurrence of which  resulted in such  increased  cost, and the
Borrower  shall make such payment within five Business Days after notice of such
claim is received;  provided,  however,  that if a claim is not submitted to the
Borrower within such 90-day period, such Lender shall thereby waive its claim to
such  increased  cost  incurred  during such  90-day  period but not to any such
increased  cost  incurred  thereafter.  A  certificate  as to the amount of such
increased  cost,  submitted to the Borrower  (with a copy to the  Administrative
Agent) by such Lender, shall be conclusive and binding for all purposes,  absent
manifest error.

     (b) If any Lender  determines that compliance with any law or regulation or
any guideline or request from any central bank or other  governmental  authority
(whether or not having the force of law)  affects or would  affect the amount of
capital  required or expected to be maintained by such Lender or any corporation
controlling  such Lender and that the amount of such  capital is increased by or
based upon the existence of such Lender's commitment to lend hereunder and other
commitments of this type,  then, upon demand by such Lender (with a copy of such
demand to the  Administrative  Agent), the Borrower shall immediately pay to the
Administrative  Agent  for the  account  of such  Lender,  from  time to time as
specified by such Lender,  additional  amounts  sufficient  to  compensate  such
Lender or such  corporation  in the light of such  circumstances,  to the extent
that such Lender reasonably  determines such increase in capital to be allocable
to the existence of such Lender's  commitment to lend hereunder.  All claims for
such  additional  amounts  shall be submitted by such Lender (with a copy to the
Administrative Agent) as soon as is reasonably possible and in all events within
90 days after such  determination  by such Lender,  and the Borrower  shall make
such payment  within five  Business Days after notice of such claim is received;
provided,  however, that if a claim is not submitted to the Borrower within such
90-day  period,  such Lender shall  thereby  waive its claim to such  additional
amounts  incurred  during  such  90-day  period  but not to any such  additional
amounts incurred  thereafter.  A certificate as to such amounts submitted to the
Borrower and the  Administrative  Agent by such Lender shall be  conclusive  and
binding for all purposes, absent manifest error.

<PAGE>
                                                                              20

     Section 2.12. Illegality.

     Notwithstanding any other provision of this Agreement,  if any Lender shall
notify the Administrative  Agent that the introduction of or any change in or in
the  interpretation  of any law or regulation makes it unlawful,  or any central
bank or other  governmental  authority  asserts  that it is  unlawful,  for such
Lender or its Eurodollar Lending Office to perform its obligations  hereunder to
make  Eurodollar  Rate Advances or to fund or maintain  Eurodollar Rate Advances
hereunder, (i) the obligation of the Lenders to make Eurodollar Rate Advances or
to Convert  Advances into  Eurodollar Rate Advances shall be suspended until the
Administrative  Agent  shall  notify  the  Borrower  and the  Lenders  that  the
circumstances  causing such  suspension no longer  exist,  and (ii) the Borrower
shall forthwith  prepay in full all Eurodollar Rate Advances of all Lenders then
outstanding, together with interest accrued thereon, unless the Borrower, within
five  Business  Days of  notice  from the  Administrative  Agent,  Converts  all
Eurodollar  Rate  Advances  of all Lenders  then  outstanding  into  Advances of
another Type in accordance with Section 2.09.

     Section 2.13. Payments and Computations.

     (a) The Borrower shall make each payment  hereunder,  without  condition or
deduction for any counterclaim,  defense,  recoupment or setoff,  not later than
11:00  A.M.  (New York  City  time) on the day when due in U.S.  dollars  to the
Administrative  Agent at its  address  referred  to in Section  8.02 in same day
funds. The Administrative Agent will promptly thereafter cause to be distributed
like funds  relating to the payment of principal or interest or fees (other than
pursuant  to  Section  2.02(c),  2.07 or 2.11)  ratably to the  Lenders  for the
account of their respective  Applicable Lending Offices, and like funds relating
to the payment of any other amount  payable to any Lender to such Lender for the
account  of its  Applicable  Lending  Office,  in  each  case to be  applied  in
accordance  with  the  terms  of  this  Agreement.  Upon  its  acceptance  of an
Assignment and Acceptance and recording of the information  contained therein in
the Register  pursuant to Section  8.07(d),  from and after the  effective  date
specified in such Assignment and Acceptance, the Administrative Agent shall make
all payments hereunder in respect of the interest assigned thereby to the Lender
assignee  thereunder,  and the parties to such  Assignment and Acceptance  shall
make all  appropriate  adjustments  in such  payments for periods  prior to such
effective date directly between themselves.

     (b) All  computations  of  interest  based on the base rate  referred to in
clause (i) of the  definition  of Base Rate shall be made by the  Administrative
Agent on the  basis of a year of 365 or 366  days,  as the case may be,  and all
computations  of interest based on the Eurodollar  Rate or Federal Funds Rate or
of fees payable  hereunder shall be made by the  Administrative  Agent,  and all
computations of interest  pursuant to Section 2.07 shall be made by a Lender, on
the basis of a year of 360  days,  in each  case for the  actual  number of days
(including  the first day but excluding the last day) occurring in the period of
which  such   interest  or  fees  are  payable.   Each   determination   by  the
Administrative  Agent  (or,  in the case of  Section  2.07,  by a Lender)  of an
interest rate hereunder shall be conclusive and binding for all purposes.

<PAGE>
                                                                              21

     (c) Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding  Business
Day,  and  such  extension  of time  shall  in  such  case  be  included  in the
computation  of  payment  of  interest  or fees,  as the case may be;  provided,
however,  that if such extension would cause payment of interest on or principal
of Eurodollar  Rate Advances to be made in the next  following  calendar  month,
such payment shall be made on the next preceding Business Day.

     (d) Unless the  Administrative  Agent shall have  received  notice from the
Borrower prior to the date on which any payment is due to the Lenders  hereunder
that the Borrower will not make such payment in full, the  Administrative  Agent
may assume that the Borrower has made such payment in full to the Administrative
Agent on such date and the  Administrative  Agent  may,  in  reliance  upon such
assumption,  cause to be  distributed  to each Lender on such due date an amount
equal to the amount  then due such  Lender.  If and to the  extent the  Borrower
shall not have so made such payment in full to the  Administrative  Agent,  each
Lender shall repay to the  Administrative  Agent forthwith on demand such amount
distributed to such Lender, together with interest thereon for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Administrative Agent at the Federal Funds Rate.

     Section 2.14. Sharing of Payments, Etc.

     If any Lender shall  obtain any payment  (whether  voluntary,  involuntary,
through the exercise of any right of set-off,  or  otherwise)  on account of the
Advances  made by it (other than pursuant to Section  2.02(c),  2.07 or 2.11) in
excess of its ratable  share of payments on account of the Advances  obtained by
all the Lenders,  such Lender shall  forthwith  purchase  from the other Lenders
such  participation  in the Advances made by them as shall be necessary to cause
such  purchasing  Lender to share the excess payment  ratably with each of them;
provided,  however,  that  if all or any  portion  of  such  excess  payment  is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be  rescinded  and such Lender  shall repay to the  purchasing  Lender the
purchase price to the extent of such recovery,  together with an amount equal to
such Lender's  ratable share  (according to the  proportion of (i) the amount of
such Lender's required  repayment to (ii) the total amount so recovered from the
purchasing  Lender)  of any  interest  or other  amount  paid or  payable by the
purchasing  Lender in respect of the total  amount so  recovered.  The  Borrower
agrees  that any  Lender so  purchasing  a  participation  from  another  Lender
pursuant  to this  Section  2.14 may, to the fullest  extent  permitted  by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

     Section 2.15. Extension of Commitment Termination Date.

     (a) So long as no Event of Default  shall have  occurred and be  continuing
and the Commitment  Termination  Date shall not have occurred,  then at least 30
days but not more than 45 days prior to the  Extension  Date,  the  Borrower may
request  that the Lenders,  by written  notice to the  Administrative  Agent (in
substantially  the  form  attached  hereto  as  Exhibit  E)  with a copy  to the
Arrangers,  consent to a 364-day  extension of the Commitment  Termination Date.
Each Lender shall, in its sole discretion,  determine whether to consent to such
request and shall notify the Administrative  Agent of its determination at least
20 days but not more than 30 days prior to such  Extension  Date. The failure to
respond by any Lender  within such time period  shall be deemed a denial of such

<PAGE>
                                                                              22

request. The Administrative Agent shall deliver a notice to the Borrower and the
Lenders at least 15 days but not more than 20 days prior to the  Extension  Date
of the identity of the Lenders that have  consented  to such  extension  and the
Lenders that have declined such consent (the  "Declining  Lenders").  If Lenders
holding in the aggregate 50% or less of the  Commitments  have  consented to the
requested extension,  the Commitment Termination Date shall not be extended, and
the  Commitments of all Lenders shall  terminate on the then current  Commitment
Termination Date.

     (b) If Lenders  holding in the aggregate more than 50% but less than 85% of
the  Commitments  have  consented  to the  requested  extension,  subject to the
conditions  set forth in Section  2.15(c),  the Borrower  will within 5 Business
Days after notice from the Administrative  Agent of the Lenders'  determinations
irrevocably notify the Administrative Agent in writing whether it still requests
an extension of the Commitment  Termination Date. If the Borrower still requests
such  extension  or if  Lenders  holding  in the  aggregate  85% or  more of the
Commitments have consented to the requested extension, subject to the conditions
set forth in Section 2.15(c), the Commitment  Termination Date shall be extended
as to such  consenting  Lenders only (and not as to any Declining  Lender) for a
period  of 364 days  from the then  current  Commitment  Termination  Date,  the
Commitments  of  any  Declining   Lenders  shall  terminate  on  the  Commitment
Termination Date (as theretofore in effect),  and all Advances of such Declining
Lenders shall be repaid to them on such date. If the Borrower so requests,  each
Lender  consenting to such request shall be given the opportunity at least seven
days but not more than 15 days prior to such  Extension  Date,  in each Lender's
sole discretion, to commit to increase its Commitment by submission of a written
notice  setting forth the desired  increase in such  Lender's  Commitment to the
Administrative  Agent in amounts such that the aggregate  Commitments  hereunder
after giving effect to any such extension and increase in the Commitments  shall
not exceed the aggregate Commitments immediately prior to the Extension Date. If
the Administrative  Agent receives  commitments to increase the Commitments from
the Lenders,  that, when aggregated with the existing Commitments,  (i) are less
than or equal to the  Commitments  immediately  prior to the Extension Date, the
Administrative  Agent shall accept all such  Commitments,  (ii) are greater than
the Commitments on the date hereof, the Administrative  Agent may determine,  in
its reasonable discretion,  which Commitments to accept and the amounts by which
each submitting  Lender's  Commitments  shall be increased so that the aggregate
Commitments  after the  Extension  Date shall  equal the  aggregate  Commitments
immediately prior to the Extension Date (any Lender whose commitment to increase
its Commitment hereunder is accepted by the Administrative  Agent, an "Extending
Commitment  Lender").  If  Lenders  do not  consent to  increase  the  aggregate
Commitments  to an  amount  equal to the  Commitments  immediately  prior to the
Extension Date, the Borrower may, at least two days but not more than seven days
prior to the Extension Date, request that the Administrative  Agent, in its sole
discretion,  accept the  Commitment or  Commitments  of an Eligible  Assignee or
Eligible  Assignees  such that the  aggregate  Commitments  hereunder  after the
Extension  Date shall not be greater than the  aggregate  Commitments  hereunder
immediately  prior to the  Extension  Date.  If the  Administrative  Agent shall
accept the Commitment of any Extending  Commitment Lender or Eligible  Assignee,
the Commitments of the Declining  Lenders shall terminate on the Extension Date,
and any Advances made by such Declining  Lenders shall be repaid on such date in
accordance with this Agreement.

<PAGE>
                                                                              23

     (c) Each such  accepted  Eligible  Assignee and each  Extending  Commitment
Lender shall deliver a signature page hereto  indicating that it is bound by the
terms hereof and setting  forth its  aggregate  Commitment  hereunder.  Such new
signature  page  shall   constitute  a  part  hereof  upon   acceptance  by  the
Administrative  Agent and, in the case of any  signature  page  submitted by any
Extending  Commitment Lender,  shall replace such Extending  Commitment Lender's
signature  page.  Any such extension  shall become  effective upon the Extension
Date, if the Borrower shall have delivered to the Administrative  Agent and each
Lender,  on or prior to the  Extension  Date,  (i)  opinions  of  counsel to the
Borrower substantially in the forms of Exhibits C-3 and C-4 attached hereto upon
which  each  Lender and the  Administrative  Agent may rely,  together  with any
governmental  order referred to therein  attached thereto and (ii) a certificate
of a duly authorized officer of the Borrower (the statements  contained in which
shall  be true)  to the  effect  that  (x) the  representations  and  warranties
contained in Section 4.01 are correct on and as of the Extension Date before and
after giving  effect to the  extension of the  Commitment  Termination  Date, as
though made on and as of the Extension  Date,  and (y) no event has occurred and
is continuing, or would result from such extension of the Commitment Termination
Date, that  constitutes an Event of Default or that would constitute an Event of
Default but for the  requirement  that notice be given or time elapse,  or both.
Upon  satisfaction of such conditions and the  effectiveness  of such extension,
each new Lender and  Extending  Commitment  Lender  shall make  Advances  to the
Borrower  (A) in the case of each new  Lender,  equal to such  Lender's  ratable
portion of the Advances outstanding  immediately prior to the Extension Date and
(B) in the case of each Extending  Commitment  Lender,  equal to such portion of
such  Lender's  ratable  portion of the Advances  (assuming  that such  Lender's
Commitment   consists  only  of  the  increased  portion  thereof)   outstanding
immediately prior to the Extension Date, in each case,  without giving effect to
any repayment of Advances to Declining Lenders made on the Extension Date.

     Section 2.16. Term Loan Conversion Option.

     At least one Business  Day but not more than 45 Business  Days prior to any
Commitment  Termination  Date,  and subject to the  delivery on or prior to such
Commitment   Termination   Date  of  an  opinion  of  counsel  to  the  Borrower
substantially  in the form of Exhibit C-3  attached  hereto,  together  with any
required governmental approvals referred to therein and attached thereto, to the
Administrative  Agent and each of the Lenders, by submission of a written notice
(substantially  in the form of Exhibit F, the "Term Loan Conversion  Notice") to
the Administrative  Agent, the Borrower may request that the Lenders convert all
Advances  outstanding  hereunder on such Commitment  Termination  Date into term
loans.  Upon  satisfaction  of such  conditions  and  delivery of such Term Loan
Conversion  Notice,  all Advances  outstanding  on the then  current  Commitment
Termination  Date shall convert into term loans on such  Commitment  Termination
Date, and all such converted  Advances shall become due and payable on the first
anniversary of such Commitment Termination Date.  Notwithstanding the foregoing,
any Term Loan Conversion  Notice may be delivered by the Borrower in conjunction
with (and  simultaneously  with) any request  for  extension  of the  Commitment
Termination  Date  pursuant to Section  2.15,  above.  If such  extension of the
Commitment  Termination  Date shall occur as provided in Section 2.15, such Term
Loan  Conversion  Notice  shall be deemed  withdrawn  and shall be of no further
effect.

<PAGE>
                                                                              24

                                  Article III
                              CONDITIONS OF LENDING

     Section 3.01. Conditions Precedent to Closing.

     The Commitments of the Lenders shall not become  effective unless and until
all fees due and payable by the Borrower in connection  with this Agreement have
been paid and the Administrative Agent shall have received the following:

     (a) Promissory  notes,  in a form acceptable to the  Administrative  Agent,
payable to the order of each Lender that has requested such a note.

     (b) Copies of the  resolutions  of the Board of  Directors  of the Borrower
approving this Agreement and all documents  evidencing other necessary corporate
action,  certified by the Secretary or an Assistant Secretary of the Borrower to
be true and correct, and in full force and effect on and as of the date hereof.

     (c) A  certificate  of  the  Secretary  or an  Assistant  Secretary  of the
Borrower, dated as of the date hereof,  certifying the names and true signatures
of the officers of the Borrower  authorized to sign this Agreement and the other
documents to be delivered hereunder.

     (d) A certificate of a Responsible Officer of the Borrower, dated as of the
date hereof,  certifying (i) the accuracy of the  representations and warranties
contained  herein and (ii) that no event has  occurred  and is  continuing  that
constitutes an Event of Default or that would constitute an Event of Default but
for the requirement that notice be given or time elapse, or both.

     (e)  Certified  copies of all  governmental  approvals  and  authorizations
required  to  be  obtained  in  connection  with  the  execution,  delivery  and
performance by the Borrower of this Agreement.

     (f) Certified copies of the Restated Charter and By-Laws of the Borrower.

     (g)  Favorable  opinions  of William  D.  Johnson,  General  Counsel of the
Borrower, and of Hunton & Williams LLP, counsel for the Borrower,  substantially
in the forms of Exhibit C-1 and C-2,  respectively,  hereto and as to such other
matters as any Lender through the Administrative Agent may reasonably request.

     (h)  A  favorable   opinion  of  King  &  Spalding  LLP,  counsel  for  the
Administrative Agent, substantially in the form of Exhibit D hereto.

     Section 3.02. Conditions Precedent to Each Borrowing and to the Exercise of
the Term Loan Conversion Option.

     The  obligation  of each Lender to make an Advance on the  occasion of each
Borrowing  (including  the initial  Borrowing)  and to convert the Advances into
term loans in  accordance  with  Section  2.16  shall be subject to the  further
conditions  precedent  that (a) in the case of the  making  of an  Advance,  the
Administrative  Agent shall have  received  the written  confirmatory  Notice of
Borrowing with respect thereto, (b) on the date of such Borrowing or exercise of
the Term Loan Conversion  Option,  as the case may be, the following  statements
shall be true (and each of the  giving of the Notice of  Borrowing  or Term Loan

<PAGE>
                                                                              25

Conversion Notice, as the case may be, and the acceptance by the Borrower of the
proceeds of such Borrowing, in the case of a Borrowing, or the conversion of the
Advances  into  term  loans,  in the  case  of the  exercise  of the  Term  Loan
Conversion  Option,  shall  constitute  a  representation  and  warranty  by the
Borrower that, on the date of such Borrowing,  exercise or request,  as the case
may be, such statements are true):

          (i) The representations  and warranties  contained in Section 4.01 are
     correct  on  and  as  of  the  date  of  such  Borrowing  or  the  date  of
     effectiveness  of the  Term  Loan  Conversion  Option,  as the case may be,
     before and after giving effect to (x) such Borrowing and to the application
     of the proceeds therefrom,  or (y) such effectiveness,  as the case may be,
     as though made on and as of such date; and

          (ii) No event has  occurred  and is  continuing,  or would result from
     such Borrowing or from the  application of the proceeds  therefrom,  or the
     exercise  of such Term Loan  Conversion  Option,  as the case may be,  that
     constitutes  an Event  of  Default  or that  would  constitute  an Event of
     Default but for the  requirement  that notice be given or time  elapse,  or
     both;

and (c) the  Administrative  Agent  shall have  received  such other  approvals,
opinions  and  documents  as any Lender  through  the  Administrative  Agent may
reasonably request.

                                   Article IV
                         REPRESENTATIONS AND WARRANTIES

     Section 4.01. Representations and Warranties of the Borrower.

     The Borrower represents and warrants as follows:

     (a) Each of the Borrower and each  Significant  Subsidiary is a corporation
duly  incorporated,  validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and is duly qualified to do business in
and is in good  standing  under the laws of each  other  jurisdiction  where the
nature of its business or the nature of property  owned or used by it makes such
qualification  necessary  (except  where  failure to so qualify would not have a
material adverse affect on the financial condition,  operations or properties of
the Borrower and its Subsidiaries, taken as a whole).

     (b)  The  execution,  delivery  and  performance  by the  Borrower  of this
Agreement are within the Borrower's  corporate powers, have been duly authorized
by all necessary  corporate  action,  and do not  contravene  (i) the Borrower's
charter  or  by-laws or (ii) any law or  contractual  restriction  binding on or
affecting the Borrower or its properties.

     (c) No  authorization  or approval or other  action by, and no notice to or
filing with any  governmental  authority or regulatory  body is required for the
due execution, delivery and performance by the Borrower of this Agreement, other
than the SEC Order, which has been duly issued and is in full force and effect.

<PAGE>
                                                                              26

     (d) This Agreement has been duly executed and delivered by the Borrower and
is, and any promissory note when delivered  pursuant to Section 2.01(b) will be,
the legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms.

     (e) The Consolidated balance sheets of the Borrower and its Subsidiaries as
at December  31, 2002,  and the related  Consolidated  statements  of income and
retained  earnings of the Borrower and its Subsidiaries for the fiscal year then
ended, and the Consolidated  balance sheets of the Borrower and its Subsidiaries
as at June 30,  2003,  and the  related  Consolidated  statements  of income and
retained earnings of the Borrower and its Subsidiaries,  copies of each of which
have been furnished to each Lender, fairly present (subject, in the case of such
financial statements dated June 30, 2003, to year end adjustments) the financial
condition of the Borrower and its  Subsidiaries as at such dates and the results
of the operations of the Borrower and its  Subsidiaries for the periods ended on
such dates,  all in accordance  with generally  accepted  accounting  principles
consistently  applied.  Since  December  31,  2002,  there has been no  material
adverse  change in the  financial  condition,  operations  or  properties of the
Borrower and its Subsidiaries, taken as a whole.

     (f) Except as described in the reports and registration statements that the
Borrower,  CP&L,  FPC and  Florida  Power  have filed  with the  Securities  and
Exchange Commission prior to the date of this Agreement,  there is no pending or
threatened action or proceeding  affecting the Borrower or any Subsidiary before
any court,  governmental  agency or arbitrator,  that may  materially  adversely
affect the financial condition, operations or properties of the Borrower and its
Subsidiaries, taken as a whole.

     (g) No proceeds of any Advance  will be used to acquire any security in any
transaction that is subject to Sections 13 and 14 of the Exchange Act.

     (h) No proceeds of any Advance will be used in connection  with any Hostile
Acquisition.

     (i) The Borrower is not engaged in the business of extending credit for the
purpose of buying or carrying  margin stock  (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System), and no proceeds
of any Advance will be used to buy or carry any margin stock or to extend credit
to others for the purpose of buying or carrying any margin stock.

     (j) Following application of the proceeds of each Advance, not more than 5%
of the value of the assets  (either of the Borrower  only or of the Borrower and
the  Subsidiaries on a Consolidated  basis) subject to the provisions of Section
5.02(a) or 5.02(e)  will be margin  stock  (within the meaning of  Regulation  U
issued by the Board of Governors of the Federal Reserve System).

     (k) No  Termination  Event has occurred or is reasonably  expected to occur
with respect to any Plan.

     (l) The Borrower is not an "investment  company" or a company  "controlled"
by an "investment company",  within the meaning of the Investment Company Act of
1940, as amended.

<PAGE>
                                                                              27

     (m) The Borrower is in substantial  compliance  with all  applicable  laws,
rules,  regulations and orders of any governmental authority,  the noncompliance
with which would  materially  and adversely  affect the business or condition of
the  Borrower,  such  compliance  to include,  without  limitation,  substantial
compliance  with  ERISA,  Environmental  Laws and paying  before the same become
delinquent all material taxes, assessments and governmental charges imposed upon
it or upon  its  property,  except  to the  extent  compliance  with  any of the
foregoing  is  then  being   contested  in  good  faith  by  appropriate   legal
proceedings.

     (n) All written information furnished by the Borrower to the Administrative
Agent  and the  Lenders  in  connection  with  this  Agreement  (the  "Disclosed
Information")  was (and all information  furnished in the future by the Borrower
to the Administrative Agent and the Lenders will be) complete and correct in all
respects material to the creditworthiness of the Borrower when delivered.  As of
the date hereof, the Disclosed Information does not contain any untrue statement
of a  material  fact or omit to  state a  material  fact  necessary  to make the
statements  contained therein not misleading in light of the circumstances under
which made.

     (o) The Borrower is Solvent.

                                   Article V
                            COVENANTS OF THE COMPANY

     Section 5.01. Affirmative Covenants.

     So  long  as any  Advance  or any  other  amount  payable  by the  Borrower
hereunder shall remain unpaid or any Lender shall have any Commitment hereunder,
the Borrower  shall,  unless the Majority  Lenders  shall  otherwise  consent in
writing:

     (a)  Compliance  with Laws,  Etc.  Except to the extent  contested  in good
faith,  comply,  and cause each Subsidiary to comply,  with all applicable laws,
rules,  regulations and orders (such compliance to include,  without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges  imposed upon it or upon its property),  the  non-compliance  with which
would materially adversely affect the Borrower's business or credit.

     (b) Preservation of Corporate Existence, Etc. Except as provided in Section
5.02(d),  preserve  and  maintain,  and cause  each  Significant  Subsidiary  to
preserve and maintain,  its corporate existence,  rights (charter and statutory)
and franchises.

     (c) Visitation Rights. At any reasonable time and from time to time, permit
the Administrative  Agent or any of the Lenders or any agents or representatives
thereof to examine and make copies of and  abstracts  from the records and books
of account of, and visit the properties of, the Borrower and any Subsidiary, and
to discuss the affairs, finances and accounts of the Borrower and any Subsidiary
with any of their respective officers or directors.

     (d) Keeping of Books. Keep, and cause each Subsidiary to keep, proper books
of record and account,  in which full and correct  entries  shall be made of all
financial  transactions  and the assets and  business of the  Borrower  and such
Subsidiary in accordance with GAAP.

<PAGE>
                                                                              28

     (e) Maintenance of Properties,  Etc. Maintain and preserve,  and cause each
Subsidiary  to maintain and  preserve,  all of its  properties  that are used or
useful in the  conduct of its  business  in good  working  order and  condition,
ordinary wear and tear excepted.

     (f)  Maintenance  of  Insurance.  Maintain,  and cause each  Subsidiary  to
maintain,  insurance  with  responsible  and  reputable  insurance  companies or
associations  in such amounts and covering  such risks as is usually  carried by
companies  engaged in similar  businesses and owning  similar  properties in the
same general areas in which the Borrower or such Subsidiary operates.

     (g)  Taxes.  File,  and cause  each  Subsidiary  to file,  all tax  returns
(federal, state and local) required to be filed and paid and pay all taxes shown
thereon to be due,  including  interest  and  penalties  except,  in the case of
taxes,  to the extent the Borrower or such  Subsidiary is contesting the same in
good faith and by appropriate  proceedings  and has set aside adequate  reserves
for the  payment  thereof  in  accordance  with  generally  accepted  accounting
principles.

     (h) Material  Obligations.  Pay, and cause each  Significant  Subsidiary to
pay,  promptly  as the same shall  become due each  material  obligation  of the
Borrower or such Significant Subsidiary.

     (i) Reporting Requirements. Furnish to the Lenders:

          (i) as soon as available and in any event within 60 days after the end
     of each of the first three quarters of each fiscal year of the Borrower,  a
     Consolidated  balance sheet of the Borrower and the  Subsidiaries as at the
     end of such  quarter and  Consolidated  statements  of income and  retained
     earnings of the Borrower and the Subsidiaries for the period  commencing at
     the  end of the  previous  fiscal  year  and  ending  with  the end of such
     quarter,  certified by the treasurer or the chief financial  officer of the
     Borrower,  together with a certificate of the treasurer or chief  financial
     officer of the Borrower, setting forth in reasonable detail the calculation
     of the Borrower's compliance with Section 5.01(j) and stating that no Event
     of Default and no event that, with the giving of notice or lapse of time or
     both,  would constitute an Event of Default has occurred and is continuing,
     or if an Event of Default or such event has occurred and is  continuing,  a
     statement  setting  forth details of such Event of Default or event and the
     action  that the  Borrower  has taken  and  proposes  to take with  respect
     thereto;

          (ii) as soon as  available  and in any event within 120 days after the
     end of each fiscal year of the  Borrower,  a copy of the annual  report for
     such year for the Borrower and the  Subsidiaries,  containing  Consolidated
     financial  statements for such year certified by Deloitte & Touche or other
     independent public accountants acceptable to the Majority Lenders, together
     with a  certificate  of the  treasurer  or chief  financial  officer of the
     Borrower,  substantially in the form of Exhibit G hereto,  setting forth in
     reasonable detail the calculation of the Borrower's compliance with Section
     5.01(j)  and stating  that no Event of Default and no event that,  with the
     giving  of notice or lapse of time or both,  would  constitute  an Event of
     Default has occurred and is  continuing,  or if an Event of Default or such
     event has occurred and is continuing,  a statement setting forth details of
     such Event of Default or event and the action that the  Borrower  has taken
     and proposes to take with respect thereto;

<PAGE>
                                                                              29

          (iii)  promptly  after the  sending or filing  thereof,  copies of all
     reports that the Borrower sends to any of its security holders,  and copies
     of all  reports  and  registration  statements  that  the  Borrower  or any
     Subsidiary  files  with  the  Securities  and  Exchange  Commission  or any
     national securities  exchange,  to the extent not delivered by the Borrower
     pursuant to clause (i) or (ii) of this Section 5.01(i);

          (iv) immediately upon any Responsible Officer's obtaining knowledge of
     the  occurrence of any Event of Default or any event that,  with the giving
     of notice or lapse of time, or both,  would constitute an Event of Default,
     a statement  of the chief  financial  officer or  treasurer of the Borrower
     setting forth details of such Event of Default or event and the action that
     the Borrower proposes to take with respect thereto;

          (v) immediately upon obtaining knowledge thereof, notice of any change
     in either the Moody's Rating or the S&P Rating;

          (vi) as soon as possible  and in any event  within five days after the
     commencement  thereof or any adverse  determination or development therein,
     notice of all actions,  suits and proceedings that may adversely affect the
     Borrower's ability to perform its obligations under this Agreement;

          (vii) as soon as possible  and in any event within five days after the
     occurrence of a Termination Event, notice of such Termination Event; and

          (viii) such other information  respecting the condition or operations,
     financial or  otherwise,  of the Borrower or any  Subsidiary  as any Lender
     through the Administrative Agent may from time to time reasonably request.

     (j) Indebtedness to Total Capitalization. Maintain, at all times a ratio of
Consolidated  Indebtedness  of  the  Borrower  and  its  Subsidiaries  to  Total
Capitalization of not more than .68:1.0.

     (k) Interest  Coverage Ratio.  Maintain,  as of the last day of each fiscal
quarter of the  Borrower,  a ratio of EBITDA for the 12-month  period  ending on
such date to Interest Expense for the 12-month period ending on such date of not
less than 2.5:1.

     (l) Use of Proceeds.  Use the  proceeds of each Advance  solely for general
corporate purposes (including, in each case, without limitation, as a commercial
paper  back-up).  No proceeds of any Advance  will be used to acquire any equity
security of a class that is  registered  pursuant to Section 12 of the  Exchange
Act, or any security in any transaction that is subject to Sections 13 and 14 of
the Exchange Act.

     (m) Ownership of Subsidiaries. Own at all times, directly or indirectly and
free and clear of all liens and encumbrances,  100% of the common stock of CP&L,
FPC and Florida Power.

<PAGE>
                                                                              30

     Section 5.02. Negative Covenants.

     So  long  as any  Advance  or any  other  amount  payable  by the  Borrower
hereunder shall remain unpaid or any Lender shall have any Commitment hereunder,
the Borrower will not, without the written consent of the Majority Lenders:

     (a) Liens,  Etc.  Create,  incur,  assume or suffer to exist, or permit any
Subsidiary  to  create,  incur,  assume or suffer to exist,  any lien,  security
interest  or other  charge or  encumbrance,  or any other  type of  preferential
arrangement, upon or with respect to any of its properties, whether now owned or
hereafter acquired,  or assign, or permit any Subsidiary to assign, any right to
receive income,  in each case to secure any  Indebtedness  of any Person,  other
than (i) liens, mortgages and security interests created by the Mortgage and the
Florida Power Mortgage,  (ii) liens and security interests against the fuel used
by the Borrower in its power  generating  operations  in favor of the  suppliers
thereof, (iii) liens and security interests created in connection with the GenCo
Financing,  and (iv) liens,  mortgages  and security  interests  securing  other
Indebtedness of the Borrower and its Subsidiaries not exceeding  $100,000,000 in
the aggregate.

     (b) Indebtedness.  Create,  incur, assume or suffer to exist, or permit any
Subsidiary to create,  incur,  assume or suffer to exist, any Indebtedness other
than (i) Indebtedness hereunder, (ii) Indebtedness secured by liens and security
interests  permitted  pursuant  to clauses  (ii),  (iii) and (iv) of  subsection
5.02(a),  (iii)  Indebtedness  evidenced  by the  First  Mortgage  Bonds and the
Florida  Power  Mortgage  Bonds  and  (iv)  unsecured  Indebtedness,   including
guarantees  issued  in  connection  with  the  financing  of  pollution  control
facilities  operated by CP&L, FPC or Florida Power,  guarantees of  Indebtedness
incurred by any wholly-owned Subsidiary and guarantees of debt securities issued
by any financing Subsidiary established to secure debt financing in the offshore
markets.

     (c) Lease Obligations.  Create, incur, assume or suffer to exist, or permit
any Subsidiary to create,  incur, assume or suffer to exist, any obligations for
the  payment of rental for any  property  under  leases or  agreements  to lease
having a term of one year or more  that  would  cause the  direct or  contingent
Consolidated  liabilities of the Borrower and its Subsidiaries in respect of all
such obligations  payable in any calendar year to exceed 10% of the Consolidated
operating  revenues of the Borrower  and its  Subsidiaries  for the  immediately
preceding calendar year.

     (d)  Mergers,  Etc.  Merge  with or into or  consolidate  with or into,  or
acquire all or  substantially  all of the assets or  securities  of, any Person,
unless,  in each case, (i)  immediately  after giving effect  thereto,  no event
shall occur and be continuing  that  constitutes an Event of Default or an event
that with the giving of notice or lapse of time,  or both,  would  constitute an
Event of Default,  and (ii) in the case of any such merger to which the Borrower
is a party,  such  other  Person  is a  utility  company  and the  resulting  or
surviving corporation,  if not the Borrower, (x) is organized and existing under
the  laws of the  United  States  of  America  or any  State  thereof,  (y) is a
corporation  satisfactory to the Majority Lenders,  and (z) shall have expressly
assumed,  by an  instrument  satisfactory  in form and substance to the Majority
Lenders,  the due and punctual  payment of all amounts due under this  Agreement
and the performance of every covenant and undertaking of the Borrower  contained
in this Agreement.

<PAGE>
                                                                              31

     (e) Sales, Etc. of Assets.  Sell, lease,  transfer or otherwise dispose of,
or permit any Subsidiary to sell,  lease,  transfer or otherwise dispose of, any
of its assets,  other than the following sales: (i) sales of generating capacity
to the wholesale  customers of the Borrower and the Subsidiaries,  (ii) sales of
nuclear fuel, (iii) sales of accounts receivable,  (iv) sales in connection with
a transaction  authorized by subsection  (d) of this Section,  (v) the Portfolio
Transaction, (vi) the Rail Transaction, (vii) sales of investments in securities
with a  maturity  of less than one year,  or (viii)  other  sales not  exceeding
$150,000,000 in the aggregate in any fiscal year of the Borrower.

     (f) Margin  Stock.  Use any  proceeds of any Advance to buy or carry margin
stock  (within the meaning of  Regulation  U issued by the Board of Governors of
the Federal Reserve System).

     (g)  Change in  Nature  of  Business.  Engage,  or cause or permit  CP&L or
Florida Power to engage,  in a material manner in businesses other than those in
which they are  engaged on the date  hereof and  businesses  reasonably  related
thereto.

     (h) Hostile  Acquisitions.  Use any  proceeds of any Advance in  connection
with any Hostile Acquisition.

                                   Article VI
                                EVENTS OF DEFAULT

     Section 6.01. Events of Default.

     If any of the  following  events  ("Events of Default")  shall occur and be
continuing:

     (a) The Borrower  shall fail to pay any  principal of any Advance when due,
or shall fail to pay any interest on the principal  amount of any Advance or any
fees or other amount  payable  hereunder  within five  Business  Days after such
interest or fees or other amount shall become due; or

     (b) Any  representation  or warranty made by the Borrower  herein or by the
Borrower (or any of its  officers) in any  document  delivered  pursuant to this
Agreement  shall prove to have been incorrect in any material  respect when made
or deemed made; or

     (c) The Borrower shall fail to perform or observe any other term,  covenant
or  agreement  contained  in Section  5.01(b),  5.01(i)(iv),  5.01(j),  5.01(k),
5.01(m) or 5.02 on its part to be performed or observed;  or the Borrower  shall
fail to perform or observe any other term,  covenant or  agreement  contained in
this  Agreement  on its part to be  performed  or observed  and any such failure
shall remain unremedied for 30 days after written notice thereof shall have been
given to the Borrower by the Administrative Agent or any Lender; or

     (d) The Borrower or any Significant Subsidiary shall fail to pay any amount
in  respect  of  any  Indebtedness  in  excess  of  $10,000,000  (but  excluding
Indebtedness  hereunder) of the Borrower or such Significant  Subsidiary (as the
case may be), or any interest or premium thereon, when due (whether by scheduled
maturity,  required  prepayment,  acceleration,  demand or  otherwise)  and such
failure shall continue after the applicable grace period,  if any,  specified in
the agreement or instrument relating to such Indebtedness;  or any other default

<PAGE>
                                                                              32

under any  agreement or  instrument  relating to any such  Indebtedness,  or any
other event,  shall occur and shall continue after the applicable  grace period,
if any, specified in such agreement or instrument, if the effect of such default
or event is to  accelerate,  or to permit the  acceleration  of, the maturity of
such  Indebtedness;  or any such  Indebtedness  shall be  declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or

     (e) The Borrower or any Significant  Subsidiary shall generally not pay its
debts as such debts  become due, or shall admit in writing its  inability to pay
its debts  generally,  or shall  make a general  assignment  for the  benefit of
creditors;  or any proceeding  shall be instituted by or against the Borrower or
any Significant Subsidiary seeking to adjudicate it a bankrupt or insolvent,  or
seeking  liquidation,  winding  up,  reorganization,   arrangement,  adjustment,
protection,  relief, or composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar  official for it or for any  substantial  part of its  property;  or the
Borrower  or any  Significant  Subsidiary  shall  take any  corporate  action to
authorize any of the actions set forth above in this subsection (e); or

     (f) Any judgment or order for the payment of money in excess of $10,000,000
shall be rendered against the Borrower or any Significant  Subsidiary and either
(i) enforcement  proceedings shall have been commenced by any creditor upon such
judgment  or order or (ii)  there  shall be any  period of 30  consecutive  days
during which a stay of  enforcement  of such  judgment or order,  by reason of a
pending appeal or otherwise, shall not be in effect; or

     (g) Any Termination Event with respect to a Plan shall have occurred,  and,
30  days  after  the  occurrence   thereof,   (i)  such  Termination  Event  (if
correctable)  shall not have been  corrected  and (ii) the then present value of
such Plan's vested benefits exceeds the then current value of assets accumulated
in such  Plan by more  than  the  amount  of  $20,000,000  (or in the  case of a
Termination  Event  involving  the  withdrawal of a  "substantial  employer" (as
defined  in  Section   4001(a)(2)   of  ERISA),   the   withdrawing   employer's
proportionate share of such excess shall exceed such amount); or

     (h) The Borrower or any of its Affiliates as employer under a Multiemployer
Plan shall have made a complete or partial  withdrawal  from such  Multiemployer
Plan and the plan sponsor of such  Multiemployer  Plan shall have  notified such
withdrawing  employer that such employer has incurred a withdrawal  liability in
an annual amount exceeding $20,000,000; or

     (i) A Change of Control shall occur;

then, and in any such event, the Administrative  Agent shall at the request,  or
may with the consent,  of the Majority Lenders,  by notice to the Borrower,  (i)
declare the Commitments and the obligation of each Lender to make Advances to be
terminated,  whereupon the same shall forthwith terminate,  and (ii) declare the
principal amount of the Advances then outstanding,  all interest thereon and all
other  amounts  payable  under this  Agreement to be forthwith  due and payable,
whereupon  such principal  amount,  all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further  notice of any kind,  all of which are  hereby  expressly  waived by the

<PAGE>
                                                                              33

Borrower;  provided,  however, that in the event of an actual or deemed entry of
an order for relief with  respect to the  Borrower or any  Subsidiary  under the
Federal  Bankruptcy  Code,  (A) the  obligation  of each Lender to make Advances
shall  automatically  be terminated and (B) the principal amount of the Advances
then   outstanding,   all  such  interest  and  all  such  other  amounts  shall
automatically  become  and be due  and  payable,  without  presentment,  demand,
protest or any notice of any kind, all of which are hereby  expressly  waived by
the Borrower.

                                  Article VII
                                    THE AGENT

     Section 7.01. Authorization and Action.

     Each Lender hereby appoints and authorizes the Administrative Agent to take
such  action as agent on its  behalf  and to  exercise  such  powers  under this
Agreement as are  delegated  to the  Administrative  Agent by the terms  hereof,
together  with such  powers as are  reasonably  provided  for by this  Agreement
(including, without limitation,  enforcement or collection of the Advances), the
Administrative  Agent shall not be required to exercise any  discretion  or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders,  and such instructions  shall be binding upon all Lenders;
provided,  however,  that the Administrative Agent shall not be required to take
any action that exposes the  Administrative  Agent to personal liability or that
is contrary to this Agreement or applicable law.

     Section 7.02. The Agent's Reliance, Etc.

     Neither the Administrative Agent nor any of its directors, officers, agents
or employees shall be liable for any action taken or omitted to be taken by each
or any of them under or in connection with this Agreement,  except for their own
gross negligence or willful misconduct.  Without limitation of the generality of
the  foregoing,  the  Administrative  Agent:  (i) may consult with legal counsel
(including  counsel for the Borrower),  independent public accountants and other
experts  selected by it and shall not be liable for any action  taken or omitted
to be taken in good faith by it in  accordance  with the advice of such counsel,
accountants or experts;  (ii) makes no warranty or  representation to any Lender
and shall not be  responsible  to any Lender for any  statements,  warranties or
representations  made in or in connection with this  Agreement;  (iii) shall not
have any duty to ascertain or to inquire as to the  performance or observance of
any of the terms,  covenants or conditions of this  Agreement on the part of the
Borrower or to inspect the  property  (including  the books and  records) of the
Borrower;  (iv) shall not be  responsible  to any Lender for the due  execution,
legality, validity,  enforceability,  genuineness,  sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto; and (v)
shall incur no  liability  under or in respect of this  Agreement by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopy or e-mail) believed by it to be genuine and signed or sent by
the proper party or parties.
<PAGE>
                                                                              34

     Section 7.03. The Administrative Agent and its Affiliates.

     With  respect  to its  Commitments  and,  the  Advances  made  by  it,  the
Administrative  Agent shall have the same rights and powers under this Agreement
as any  other  Lender  and may  exercise  the  same  as  though  it were  not an
Administrative Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly  indicated,   include  each  Agent  in  its  individual  capacity,  as
applicable.  The  Administrative  Agent and its Affiliates  may accept  deposits
from, lend money to, act as trustee under indentures of, and generally engage in
any kind of business with,  the Borrower,  any Subsidiary and any Person who may
do business with or own securities of the Borrower or any Subsidiary,  all as if
the Administrative  Agent were not the Administrative Agent and without any duty
to account therefor to the Lenders.

     Section 7.04. Lender Credit Decision.

     Each Lender  acknowledges  that it has,  independently and without reliance
upon the  Administrative  Agent or any other  Lender and based on the  financial
statements  referred  to  in  Section  4.01(e)  and  such  other  documents  and
information  as it has  deemed  appropriate,  made its own credit  analysis  and
decision to enter into this  Agreement.  Each Lender also  acknowledges  that it
will,  independently and without reliance upon the  Administrative  Agent or any
other  Lender  and based on such  documents  and  information  as it shall  deem
appropriate at the time,  continue to make its own credit decisions in taking or
not taking action under this Agreement.

     Section 7.05. Indemnification.

     The Lenders agree to indemnify the Administrative Agent (to the extent
not reimbursed by the Borrower), ratably according to the respective principal
amounts of the Advances then held by each of them (or if no Advances are at the
time outstanding, ratably according to the respective amounts of their
Commitments), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement or any action taken or omitted by the Administrative Agent
under this Agreement; provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Administrative Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Administrative Agent in connection with
the preparation, execution, administration, or enforcement of, or legal advice
in respect of rights or responsibility under, this Agreement, to the extent that
the Administrative Agent is not reimbursed for such expenses by the Borrower.

     Section 7.06. Successor Administrative Agent.

     The  Administrative  Agent may resign at any time by giving  written notice
thereof to the Lenders and the  Borrower  and may be removed at any time with or
without cause by the Majority Lenders. Upon any such resignation or removal, the
Majority  Lenders  shall  have the right to appoint a  successor  Administrative
Agent. If no successor  Administrative Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the  retiring  Administrative  Agent's  giving of notice of  resignation  or the
Majority   Lenders'   removal  of  the  retiring   Administrative   Agent,   the
Administrative Agent may appoint a successor  Administrative  Agent, which shall

<PAGE>
                                                                              35

be a commercial bank organized under the laws of the United States of America or
of any State  thereof  and having a  combined  capital  and  surplus of at least
$500,000,000.  Upon the acceptance of any  appointment as  Administrative  Agent
hereunder by a successor  Administrative  Agent,  such successor  Administrative
Agent shall thereupon succeed to and become vested with all the rights,  powers,
privileges  and duties of the retiring  Administrative  Agent,  and the retiring
Administrative  Agent shall be discharged from its duties and obligations  under
this Agreement. After any retiring Administrative Agent's resignation or removal
hereunder as  Administrative  Agent,  the  provisions  of this Article VII shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Administrative Agent under this Agreement.

                                  Article VIII
                                  MISCELLANEOUS

     Section 8.01. Amendments, Etc.

     No amendment or waiver of any provision of this  Agreement,  nor consent to
any departure by the Borrower therefrom,  shall in any event be effective unless
the same shall be in writing and signed by the Majority Lenders,  in the case of
any such amendment,  waiver or consent of or in respect of this  Agreement,  and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided,  however, that no amendment,
waiver or consent shall,  unless in writing and signed by all of the Lenders, do
any of the following:  (i) waive any of the conditions specified in Section 3.01
or 3.02, (ii) increase the Commitment of any Lender or subject any Lender to any
additional  obligations (other than pursuant to Section 2.04(b)),  (iii) reduce,
or waive the payment of, the  principal  of, or interest on, the Advances or any
fees or other amounts  payable to the Lenders ratably  hereunder,  (iv) postpone
any date fixed for any payment of principal  of, or interest on, the Advances or
any fees or other amounts payable to the Lenders ratably  hereunder,  (v) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Advances, or the number of Lenders,  which shall be required for the Lenders
or any of them to take any action under this Agreement, or (vi) amend, waive, or
in any way modify or suspend any provision requiring the pro rata application of
payments or of Section 2.15 or of this Section 8.01;  provided further,  that no
amendment,  waiver or consent shall, unless in writing and signed by each Lender
affected  thereby,  reduce,  waive or postpone the date of payment of any amount
payable to such  Lender,  other  than any such  amount  payable  to the  Lenders
ratably; and provided,  further, that (A) no amendment, waiver or consent shall,
unless in writing  and signed by the  Administrative  Agent in  addition  to the
Lenders required hereinabove to take such action, affect the rights or duties of
such  Administrative  Agent under this  Agreement and (B) this  Agreement may be
amended and  restated  without  the consent of any Lender or the  Administrative
Agent if, upon giving effect to such amendment and  restatement,  such Lender or
Administrative  Agent,  as the case may be,  shall no  longer be a party to this
Agreement  (as so  amended  and  restated)  or  have  any  Commitment  or  other
obligation  hereunder  and  shall  have been  paid in full all  amounts  payable
hereunder to such Lender or the Administrative Agent, as the case may be.
<PAGE>
                                                                              36

     Section 8.02. Notices, Etc.

     All notices and other  communications  provided for hereunder shall, unless
otherwise stated herein, be in writing (including telegraphic communication) and
mailed, telecopied, e-mailed or delivered, if to the Borrower, at its address at
410 S. Wilmington Street, PEB 19A3,  Raleigh,  North Carolina 27601,  Attention:
Director of  Financial  Operations,  Treasury  Department,  Facsimile  no. (919)
546-7826, e-mail: charles.beuris@pgnmail.com;  if to any Lender, at its Domestic
Lending Office set forth  opposite its name on Schedule I hereto;  and if to the
Administrative  Agent,  at its address at Two Penns Way,  Suite 200, New Castle,
Delaware  19720,  Attention:  Bank  Loan  Syndications,   Facsimile  no.:  (212)
816-8098, e-mail: j.nicholas.mckee@citi.com; or, as to each party, at such other
address as shall be  designated  by such party in a written  notice to the other
parties. All such notices and communications shall be effective when received by
the addressee thereof.

     Section 8.03. No Waiver; Remedies.

     No  failure  on the  part of any  Lender  or the  Administrative  Agent  to
exercise,  and no delay in exercising,  any right  hereunder  shall operate as a
waiver thereof;  nor shall any single or partial exercise of any right hereunder
preclude  any other or further  exercise  thereof or the  exercise  of any other
right.  The remedies  herein  provided are  cumulative  and not exclusive of any
remedies provided by law.

     Section 8.04. Costs, Expenses, Taxes and Indemnification.

     (a) The  Borrower  agrees to pay on demand  all costs and  expenses  of the
Administrative  Agent (and as  described  in clause (iv) below,  the Lenders) in
connection with (i) the  preparation,  execution,  negotiation,  syndication and
delivery of this  Agreement and the other  documents to be delivered  hereunder,
(ii) the first Borrowing under this Agreement, (iii) any modification, amendment
or  supplement  to  this  Agreement  and the  other  documents  to be  delivered
hereunder and (iv) the enforcement of the rights and remedies of the Lenders and
the  Administrative  Agent under this  Agreement  and the other  documents to be
delivered hereunder (whether through negotiations or legal proceedings), all the
above costs and expenses to include, without limitation, the reasonable fees and
out-of-pocket  expenses of counsel for the Administrative  Agent and each of the
Lenders with respect  thereto.  In addition,  the Borrower shall pay any and all
stamp and other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement and the other documents to be delivered
hereunder,  and agrees to save the Administrative Agent and each Lender harmless
from and against any and all  liabilities  with respect to or resulting from any
delay in paying or omission to pay such taxes.

     (b) If (i) due to payments made by the Borrower due to the  acceleration of
the  maturity  of the  Advances  pursuant  to  Section  6.01 or due to any other
reason, any Lender receives payments of principal of any Eurodollar Rate Advance
based upon the Eurodollar Rate other than on the last day of the Interest Period
for such Advance, or (ii) due to any Conversion of Eurodollar Advance other than
on the last day of an Interest  Period  pursuant to Section  2.12,  the Borrower
shall,  upon  demand  by  such  Lender  (with  a  copy  of  such  demand  to the
Administrative  Agent), pay to the Administrative  Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses,
costs or  expenses  that it may  reasonably  incur as a result of such  payment,
including, without limitation, any loss (including loss of anticipated profits),
cost or  expense  incurred  by  reason of the  liquidation  or  reemployment  of
deposits or other funds acquired by any Lender to fund or maintain such Advance.
In addition,  if the Borrower  fails to prepay any Advance on the date for which

<PAGE>
                                                                              37

notice of  prepayment  has been given,  the Borrower  shall,  upon demand by any
Lender  (with a copy of such  demand to the  Administrative  Agent),  pay to the
Administrative  Agent for the  account of such  Lender any  amounts  required to
compensate  such Lender for any losses,  costs or  expenses  (including  loss of
anticipated profits) that it may reasonably incur as a result of such prepayment
not having been made on the date specified by the Borrower for such prepayment.

     (c) Any and all  payments  by the  Borrower  hereunder  shall be  made,  in
accordance  with Section 2.13,  free and clear of and without  deduction for any
and all  present  or future  taxes,  levies,  imposts,  deductions,  charges  or
withholdings,  and all liabilities with respect thereto,  excluding, in the case
of each Lender and the  Administrative  Agent,  taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction  under the laws of which such
Lender or Agent (as the case may be) is organized or any  political  subdivision
thereof  and,  in the case of each  Lender,  taxes  imposed on its  income,  and
franchise taxes imposed on it, by the  jurisdiction of such Lender's  Applicable
Lending  Office or any  political  subdivision  thereof  (all such  non-excluded
taxes, levies, imposts, deductions,  charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable  hereunder  to any Lender
or Agent,  (i) the sum payable  shall be  increased  as may be necessary so that
after  making  all  required  deductions  (including  deductions  applicable  to
additional  sums payable  under this Section  8.04) such Lender or Agent (as the
case may be) receives an amount  equal to the sum it would have  received had no
such  deductions  been made,  (ii) the Borrower  shall make such  deductions and
(iii) the Borrower shall pay the full amount  deducted to the relevant  taxation
authority or other authority in accordance with applicable law.

     (d) The Borrower will  indemnify each Lender and the  Administrative  Agent
for the full amount of Taxes (including,  without limitation,  any Taxes imposed
by any  jurisdiction  on amounts  payable  under this Section 8.04) paid by such
Lender or Agent  (as the case may be) and any  liability  (including  penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally  asserted.  This  indemnification  shall be
made  within  30 days  from the date  such  Lender or Agent (as the case may be)
makes written demand therefor.

     (e)  Prior  to the  date of the  initial  Borrowing  or on the  date of the
Assignment and Acceptance  pursuant to which it became a Lender,  in the case of
each Lender that becomes a Lender by virtue of entering into an  Assignment  and
Acceptance, and from time to time thereafter if requested by the Borrower or the
Administrative  Agent,  each Lender  organized  under the laws of a jurisdiction
outside  the  United  States  shall  provide  the  Administrative  Agent and the
Borrower with the forms prescribed by the Internal Revenue Service of the United
States  certifying  that such Lender is exempt from  United  States  withholding
taxes with respect to all payments to be made to such Lender  hereunder.  If for
any reason  during the term of this  Agreement,  any  Lender  becomes  unable to
submit  the  forms  referred  to above  or the  information  or  representations
contained  therein are no longer accurate in any material  respect,  such Lender
shall  notify  the  Administrative  Agent and the  Borrower  in  writing to that
effect.  Unless the Borrower and the Administrative Agent have received forms or
other documents  satisfactory to them indicating that payments hereunder are not
subject to United  States  withholding  tax, the Borrower or the  Administrative
Agent shall withhold  taxes from such payments at the applicable  statutory rate
in the case of  payments  to or for any  Lender  organized  under  the laws of a
jurisdiction outside the United States.
<PAGE>
                                                                              38

     (f) Any Lender claiming any additional  amounts payable pursuant to Section
8.04(c) or (d) shall use its reasonable  efforts  (consistent  with its internal
policy and legal and regulatory  restrictions) (i) to change the jurisdiction of
its  Applicable  Lending  Office if the making of such a change  would avoid the
need for,  or  reduce  the  amount  of,  any such  additional  amounts  that may
thereafter  accrue and would not, in the reasonable  judgment of such Lender, be
otherwise  disadvantageous  to such Lender and (ii) to  otherwise  minimize  the
amounts due, or to become due, under Sections 8.04(c) and (d).

     (g) If the Borrower makes any additional  payment to any Lender pursuant to
Sections  8.04(c) and (d) in respect of any Taxes,  and such  Lender  determines
that it has  received  (i) a refund of such  Taxes or (ii) a credit  against  or
relief or  remission  for,  or a  reduction  in the  amount of, any tax or other
governmental  charge solely as a result of any deduction or credit for any Taxes
with respect to which it has received  payments under Sections  8.04(c) and (d),
such  Lender  shall,  to the extent that it can do so without  prejudice  to the
retention of such refund,  credit,  relief,  remission or reduction,  pay to the
Borrower such amount as such Lender shall have  determined to be attributable to
the deduction or withholding of such Taxes. If such Lender later determines that
it was not entitled to such refund,  credit,  relief,  remission or reduction to
the full  extent of any  payment  made  pursuant  to the first  sentence of this
Section  8.04(g),  the Borrower shall upon demand of such Lender  promptly repay
the amount of such overpayment.  Any determination  made by such Lender pursuant
to this Section  8.04(g) shall in the absence of bad faith or manifest  error be
conclusive,  and nothing in this Section 8.04(g) shall be construed as requiring
any Lender to conduct its business or to arrange or alter in any respect its tax
or financial affairs so that it is entitled to receive such a refund,  credit or
reduction  or as  allowing  any Person to inspect  any  records,  including  tax
returns, of any Lender.

     (h) The Borrower  hereby agrees to indemnify and hold harmless each Lender,
the  Administrative  Agent,  counsel  to  the  Administrative  Agent  and  their
respective officers, directors,  partners, employees,  Affiliates,  Subsidiaries
and  advisors  (each,  an  "Indemnified  Person")  from and  against any and all
claims, damages, losses,  liabilities,  costs, or expenses (including reasonable
attorney's fees and expenses, whether or not such Indemnified Person is named as
a party to any proceeding or is otherwise subjected to judicial or legal process
arising  from any such  proceeding),  joint and  several,  that may  actually be
incurred by or asserted or awarded  against any Indemnified  Person  (including,
without  limitation,  in  connection  with  any  investigation,   litigation  or
proceeding or the preparation of a defense in connection therewith) in each case
by reason of or in connection  with the execution,  delivery,  or performance of
this  Agreement,  or the use by the  Borrower of the  proceeds  of any  Advance,
except to the extent that such claims, damages, losses,  liabilities,  costs, or
expenses  are  determined  in a final  non-appealable  judgment  by a  court  of
competent  jurisdiction  to have  resulted  solely from the gross  negligence or
willful  misconduct  of the party  seeking  indemnification.  The Borrower  also
agrees not to assert any claim  against any  Indemnified  Party on any theory of
liability for special or punitive  damages arising out of or otherwise  relating
to this Agreement, any of the transactions  contemplated herein or the actual or
proposed use of the proceeds of the Advances.

<PAGE>
                                                                              39

     (i)  Without  prejudice  to the  survival  of any  other  agreement  of the
Borrower hereunder,  the agreements and obligations of the Borrower contained in
this  Section 8.04 shall  survive the payment in full of principal  and interest
hereunder and the termination of the Commitments.

     Section 8.05. Right of Set-off.

     Upon (i) the occurrence and during the  continuance of any Event of Default
and (ii) the making of the request or the  granting of the consent  specified by
Section 6.01 to authorize the  Administrative  Agent to declare the Advances due
and payable  pursuant to the  provisions of Section 6.01,  each Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all  deposits  (general  or  special,  time or
demand,  provisional  or final) at any time held and other  indebtedness  at any
time owing by such  Lender to or for the credit or the  account of the  Borrower
now or hereafter  existing under this Agreement,  irrespective of whether or not
such Lender shall have made any demand under this  Agreement  and although  such
obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such set-off and  application  made by such Lender;  provided that the
failure to give such notice  shall not affect the  validity of such  set-off and
application.  The rights of each  Lender  under this  Section are in addition to
other  rights and  remedies  (including,  without  limitation,  other  rights of
set-off) that such Lender may have.

     Section 8.06. Binding Effect.

     This Agreement  shall become  effective when it shall have been executed by
the  Borrower and the  Administrative  Agent and when the  Administrative  Agent
shall have been  notified by each  Lender  that such Lender has  executed it and
thereafter  shall be binding upon and inure to the benefit of the Borrower,  the
Administrative  Agent  and each  Lender  and  their  respective  successors  and
assigns,  except that the Borrower shall not have the right to assign its rights
hereunder  or any  interest  herein  without the prior  written  consent of each
Lender.

     Section 8.07. Assignments and Participations.

     (a) Each Lender may, with the consent of the  Administrative  Agent and the
Borrower (such consent not to be  unreasonably  withheld and, in the case of the
Borrower, such consent shall not be required if an Event of Default has occurred
and is  continuing),  assign  to one or more  banks or other  entities  all or a
portion of its rights and obligations under this Agreement  (including,  without
limitation,  all or a portion of its  Commitment  and the Advances owing to it);
provided, however, that (i) each such assignment shall be of a constant, and not
a varying,  percentage of all rights and obligations under this Agreement,  (ii)
prior to the effectiveness of the Term Loan Conversion Option, the amount of the
Commitment  of the  assigning  Lender  being  assigned  pursuant  to  each  such
assignment  (determined as of the date of the  Assignment  and  Acceptance  with
respect  to such  assignment)  shall in no event be less than the  lesser of (A)
$10,000,000  and (B) all of such  Lender's  rights and  obligations  and, if the
preceding clause (A) is applicable, shall be an integral multiple of $1,000,000,
(iii)  each  such  assignment  shall be to an  Eligible  Assignee,  and (iv) the
parties to each such assignment shall execute and deliver to the  Administrative
Agent,  for its  acceptance  and  recording in the Register,  an Assignment  and
Acceptance  and such parties  (other than when  Citibank is an assigning  party)
shall also deliver to the Administrative  Agent a processing and recordation fee

<PAGE>
                                                                              40

of $3,500.  Upon such execution,  delivery,  acceptance and recording,  from and
after the effective date specified in each  Assignment and  Acceptance,  (x) the
assignee  thereunder  shall be a party hereto and, to the extent that rights and
obligations  hereunder have been assigned to it pursuant to such  Assignment and
Acceptance,  have the rights and  obligations of a Lender  hereunder and (y) the
Lender  assignor  thereunder  shall,  to the extent that rights and  obligations
hereunder have been assigned by it pursuant to such  Assignment and  Acceptance,
relinquish its rights and be released from its obligations  under this Agreement
(and, in the case of an Assignment and Acceptance  covering all or the remaining
portion of an assigning  Lender's rights and  obligations  under this Agreement,
such Lender shall cease to be a party hereto).

     (b) By executing and  delivering an Assignment and  Acceptance,  the Lender
assignor  thereunder and the assignee  thereunder confirm to and agree with each
other and the other  parties  hereto as  follows:  (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or  representations  made in or in connection  with this Agreement or
the execution, legality, validity, enforceability,  genuineness,  sufficiency or
value of this Agreement or any other instrument or document  furnished  pursuant
hereto;  (ii) such  assigning  Lender  makes no  representation  or warranty and
assumes  no  responsibility  with  respect  to the  financial  condition  of the
Borrower  or  the  performance  or  observance  by  the  Borrower  of any of its
obligations  under this Agreement or any other instrument or document  furnished
pursuant  hereto;  (iii) such  assignee  confirms that it has received a copy of
this Agreement,  together with copies of the financial statements referred to in
Section  4.01(e)  and such  other  documents  and  information  as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into such
Assignment and Acceptance;  (iv) such assignee will,  independently  and without
reliance  upon the  Administrative  Agent,  such  assigning  Lender or any other
Lender and based on such documents and information as it shall deem  appropriate
at the time,  continue to make its own credit  decisions in taking or not taking
action under this Agreement;  (v) such assignee  confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise  such powers  under this
Agreement as are  delegated  to the  Administrative  Agent by the terms  hereof,
together with such powers as are reasonably  incidental thereto;  and (vii) such
assignee  agrees that it will perform in accordance  with their terms all of the
obligations  that by the terms of this Agreement are required to be performed by
it as a Lender.

     (c) The  Administrative  Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance (and copies of the related
consents  of the  Borrower  and the  Administrative  Agent  to such  assignment)
delivered to and accepted by it and a register for the  recordation of the names
and addresses of the Lenders and the Commitment of, and principal  amount of the
Advances owing to, each Lender from time to time (the  "Register").  The entries
in the  Register  shall be  conclusive  and  binding  for all  purposes,  absent
manifest error, and the Borrower,  the Administrative  Agent and the Lenders may
treat each Person whose name is recorded in the  Register as a Lender  hereunder
for all  purposes  of this  Agreement.  The  Register  shall  be  available  for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
<PAGE>
                                                                              41

     (d) Upon  its  receipt  of an  Assignment  and  Acceptance  executed  by an
assigning Lender and an assignee  representing that it is an Eligible  Assignee,
the  Administrative  Agent shall,  if such  Assignment  and  Acceptance has been
completed and is in substantially the form of Exhibit B hereto,  (i) accept such
Assignment and Acceptance,  (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.

     (e) Each  Lender  may  assign to one or more  banks or other  entities  any
Advance made by it.

     (f) Each  Lender  may  sell  participations  to one or more  banks or other
entities  in or to all or a portion  of its rights  and  obligations  under this
Agreement  (including,  without limitation,  all or a portion of its Commitment,
the Advances owing to it); provided, however, that (i) such Lender's obligations
under this  Agreement  (including,  without  limitation,  its  Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any  promissory  note held pursuant
to Section  2.01(b) for all purposes of this Agreement,  (iv) the Borrower,  the
Administrative  Agent and the other  Lenders  shall  continue to deal solely and
directly  with  such  Lender  in  connection   with  such  Lender's  rights  and
obligations  under this Agreement and (v) the holder of any such  participation,
other than an Affiliate  of such  Lender,  shall not be entitled to require such
Lender to take or omit to take any action hereunder, except action (A) extending
the time for payment of interest on, or the final maturity of any portion of the
principal amount of, the Advances or (B) reducing the principal amount of or the
rate of interest payable on the Advances. Without limiting the generality of the
foregoing:  (i) such participating  banks or other entities shall be entitled to
the cost protection provisions contained in Sections 2.08, 2.12 and 8.04(b) only
if, and to the same extent,  the Lender from which such  participating  banks or
other entities  acquired its  participation  would,  at the time, be entitled to
claim  thereunder;  and (ii) such  participating  banks or other  entities shall
also, to the fullest extent permitted by law, be entitled to exercise the rights
of set-off  contained  in Section 8.05 as if such  participating  banks or other
entities were Lenders hereunder.

     (g) If any Lender (or any bank, financial  institution,  or other entity to
which such  Lender has sold a  participation)  shall make any demand for payment
under Section  2.11(b),  then within 30 days after any such demand (if, but only
if, such demanded payment has been made by the Borrower), the Borrower may, with
the  approval  of  the  Administrative   Agent  (which  approval  shall  not  be
unreasonably  withheld)  demand that such Lender assign in accordance  with this
Section 8.07 to one or more  Eligible  Assignees  designated by the Borrower all
(but not less than all) of such  Lender's  Commitment  (if any) and the Advances
owing to it within the period  ending on the later to occur of such 30th day and
the last  day of the  longest  of the then  current  Interest  Periods  for such
Advances,  provided that (i) no Event of Default or event that, with the passage
of time or the giving of notice,  or both,  would constitute an Event of Default
shall  then have  occurred  and be  continuing,  (ii) the  Borrower  shall  have
satisfied all its presently due obligations to such Lender under this Agreement,
and  (iii)  if such  Eligible  Assignee  designated  by the  Borrower  is not an
existing Lender on the date of such demand, the Borrower shall have delivered to
the  Administrative  Agent an administrative fee of $3,500. If any such Eligible
Assignee  designated by the Borrower shall fail to consummate such assignment on
terms acceptable to such Lender,  or if the Borrower shall fail to designate any
such Eligible Assignees for all or part of such Lender's Commitment or Advances,
then such demand by the Borrower shall become  ineffective;  it being understood

<PAGE>
                                                                              42

for purposes of this subsection (g) that such  assignment  shall be conclusively
deemed  to be on terms  acceptable  to such  Lender,  and such  Lender  shall be
compelled to consummate  such assignment to an Eligible  Assignee  designated by
the Borrower,  if such Eligible  Assignee (i) shall agree to such  assignment by
entering into an Assignment and Acceptance in substantially  the form of Exhibit
B hereto with such Lender and (ii) shall offer compensation to such Lender in an
amount equal to all amounts then owing by the Borrower to such Lender  hereunder
made by the  Borrower to such Lender,  whether for  principal,  interest,  fees,
costs or expenses (other than the demanded payment referred to above and payable
by  the  Borrower  as a  condition  to  the  Borrower's  right  to  demand  such
assignment), or otherwise.

     (h) Any Lender may, in connection with any assignment or  participation  or
proposed assignment or participation  pursuant to this Section 8.07, disclose to
the assignee or participant or proposed assignee or participant, any information
relating  to the  Borrower  furnished  to such  Lender  by or on  behalf  of the
Borrower;  provided  that,  prior  to  any  such  disclosure,  the  assignee  or
participant  or proposed  assignee or  participant  shall agree to preserve  the
confidentiality  of  any  confidential  information  relating  to  the  Borrower
received by it from such Lender.

     (i)  Anything in this Section  8.07 to the  contrary  notwithstanding,  any
Lender may (i) assign and pledge all or any  portion of its  Commitment  and the
Advances  owing to it to any  Federal  Reserve  Bank  (and its  transferees)  as
collateral  security  pursuant to  Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank; provided,  that no such assignment shall release the assigning Lender from
its obligations  hereunder;  or (ii) assign its Commitments,  Advances and other
rights and  obligations  hereunder to any of its Affiliates  upon notice to, but
without the consent of, the Borrower and the Administrative Agent.

     (j)  Notwithstanding  anything to the contrary contained herein, any Lender
(a "Granting  Lender") may grant to a special purpose funding vehicle (an "SPC")
of such Granting  Lender  identified as such in writing from time to time by the
Granting  Lender to the  Administrative  Agent and the  Borrower,  the option to
provide to the Borrower all or any part of any Advance that such Granting Lender
would otherwise be obligated to make to the Borrower pursuant to this Agreement;
provided that (i) nothing  herein shall  constitute a commitment by any such SPC
to make any  Advance,  (ii) if such SPC elects not to  exercise  such  option or
otherwise fails to provide all or any part of such Advance,  the Granting Lender
shall be obligated  to make such Advance  pursuant to the terms hereof and (iii)
no SPC or Granting  Lender  shall be  entitled  to receive  any  greater  amount
pursuant  to  Section  2.07 or 2.11 than the  Granting  Lender  would  have been
entitled to receive had the Granting  Lender not otherwise  granted such SPC the
option to provide  any Advance to the  Borrower.  The making of an Advance by an
SPC hereunder  shall utilize the  Commitment of the Granting  Lender to the same
extent,  and as if, such Advance were made by such Granting  Lender.  Each party
hereto  hereby  agrees that no SPC shall be liable for any  indemnity or similar
payment  obligation  under this Agreement for which a Lender would  otherwise be
liable so long as, and to the extent that, the related  Granting Lender provides
such indemnity or makes such payment.  In  furtherance  of the  foregoing,  each
party hereto hereby agrees (which  agreement  shall survive the  termination  of
this Agreement)  that,  prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any  SPC,  it  will  not  institute  against  or join  any  other  person  in
instituting  against  such  SPC  any  bankruptcy,  reorganization,  arrangement,
insolvency or liquidation proceedings under the laws of the United States or any

<PAGE>
                                                                              43

State   thereof.    Notwithstanding   the   foregoing,   the   Granting   Lender
unconditionally  agrees to indemnify the Borrower,  the Administrative Agent and
each Lender against all liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  of any kind or
nature whatsoever that may be incurred by or asserted against the Borrower,  the
Administrative  Agent or such Lender, as the case may be, in any way relating to
or arising as a consequence  of any such  forbearance or delay in the initiation
of any such  proceeding  against its SPC. Each party hereto hereby  acknowledges
and agrees that no SPC shall have the rights of a Lender hereunder,  such rights
being  retained by the  applicable  Granting  Lender.  Accordingly,  and without
limiting the foregoing,  each party hereby further  acknowledges and agrees that
no SPC  shall  have any  voting  rights  hereunder  and that the  voting  rights
attributable  to any  Advance  made by an SPC  shall  be  exercised  only by the
relevant  Granting  Lender  and that each  Granting  Lender  shall  serve as the
administrative agent and attorney-in-fact for its SPC and shall on behalf of its
SPC receive any and all  payments  made for the benefit of such SPC and take all
actions  hereunder  to the  extent,  if any,  such SPC  shall  have  any  rights
hereunder.  In addition,  notwithstanding  anything to the contrary contained in
this Agreement any SPC may with notice to, but without the prior written consent
of any other  party  hereto,  assign  all or a portion  of its  interest  in any
Advances to the Granting  Lender.  This  Section may not be amended  without the
prior written consent of each Granting Lender,  all or any part of whose Advance
is being funded by an SPC at the time of such amendment.

     Section 8.08. Tax Disclosure

     Notwithstanding  any agreement  between the parties hereto to the contrary,
any  Person  with  respect  to  whom  participation,  in any  capacity,  in this
Agreement has been discussed (and each employee,  representative, or other agent
of such Person) may disclose to any and all other Persons, without limitation of
any  kind,  the tax  treatment  and tax  structure  of  this  Agreement  and all
materials  of any kind  (including  opinions  or other  tax  analyses)  that are
provided  to such  Person  relating  to such tax  treatment  and tax  structure;
provided,  however,  that such disclosure may not be made to the extent required
to be  kept  confidential  to  comply  with  any  applicable  federal  or  state
securities  laws. The foregoing is intended to comply with the  presumption  set
forth  in  Treasury  Regulation  Section   1.6011-4(b)(3)(iii)   and  should  be
interpreted in a manner consistent with such regulation.

     Section 8.09. Governing Law.

     This Agreement shall be governed by, and construed in accordance  with, the
laws of the State of New York.  The  Borrower  (i)  irrevocably  submits  to the
non-exclusive  jurisdiction of any New York State court or Federal court sitting
in New York City in any action arising out of this  Agreement,  (ii) agrees that
all claims in such action may be decided in such  court,  (iii)  waives,  to the
fullest extent it may  effectively do so, the defense of an  inconvenient  forum
and (iv)  consents  to the service of process by mail.  A final  judgment in any
such action  shall be  conclusive  and may be  enforced in other  jurisdictions.
Nothing herein shall affect the right of any party to serve legal process in any
manner  permitted  by law or affect  its right to bring any  action in any other
court.

<PAGE>
                                                                              44

     Section 8.10. Waiver of Jury Trial.

     THE  BORROWER,  THE  ADMINISTRATIVE  AGENT  AND  EACH  LENDER  EACH  HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY AND LAWFULLY DO SO,
ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE  RELATING  TO THIS  AGREEMENT  IN ANY
ACTION,  PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR THEREUNDER.

     Section 8.11. Execution in Counterparts.

     This  Agreement  may be  executed  in any  number  of  counterparts  and by
different  parties  hereto  in  separate  counterparts,  each of  which  when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

     Section 8.12. Severability.

     Any provision of this Agreement that is  prohibited,  unenforceable  or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition,  unenforceability or  non-authorization  without
invalidating  the  remaining   provisions  hereof  or  affecting  the  validity,
enforceability or legality of such provision in any other jurisdiction.

     Section 8.13. Headings.

     Section  headings in this Agreement are included  herein for convenience of
reference  only and shall not  constitute a part of this Agreement for any other
purpose.

     Section 8.14. Entire Agreement.

     This Agreement constitutes the entire contract between the parties relative
to the subject  matter  hereof.  Any previous  agreement  among the parties with
respect to the subject matter hereof is superseded by this Agreement.  Except as
is  expressly  provided  for herein,  nothing in this  Agreement,  expressed  or
implied,  is intended to confer upon any party other than the parties hereto any
rights,  remedies,  obligations  or  liabilities  under  or by  reason  of  this
Agreement.



<PAGE>
                                                                             S-1



     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.


                                       PROGRESS ENERGY, INC.

                                       By
                                         ---------------------------------------
                                         Thomas R. Sullivan
                                         Treasurer



<PAGE>
                                                                             S-2



$51,994,127.64                         CITIBANK, N.A., as Administrative Agent
                                       and Lender


                                       By
                                         ---------------------------------------
                                         Name:
                                         Title:



<PAGE>

                                                                             S-3


$51,994,127.64                         JPMORGAN CHASE BANK


                                       By
                                         ---------------------------------------
                                         Name:
                                         Title:



<PAGE>

                                                                             S-4


$38,230,976.48                         BANK ONE, NA


                                       By
                                         ---------------------------------------
                                         Name:
                                         Title:



<PAGE>

                                                                             S-5


$26,731,098.62                         BANK OF AMERICA, N.A.


                                       By
                                         ---------------------------------------
                                         Name:
                                         Title:



<PAGE>

                                                                             S-6


$38,230,976.48                         BANK OF TOKYO-MITSUBISHI TRUST COMPANY


                                       By
                                         ---------------------------------------
                                         Name:
                                         Title:



<PAGE>

                                                                             S-7


$27,526,302.90                         WACHOVIA BANK, N.A.


                                       By
                                         ---------------------------------------
                                         Name:
                                         Title:



<PAGE>

                                                                             S-8


$15,292,390.24                         SUNTRUST BANK


                                       By
                                         ---------------------------------------
                                         Name:
                                         Title:



<PAGE>

                                   SCHEDULE I

               LIST OF COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


                                                 Eurodollar                          Domestic
          Name of Bank                         Lending Office                      Lending Office             Commitment

Citibank, N.A.                    Two Pennsway, Ste. 200                    Same as Eurodollar Lending      $51,994,127.64
                                  New Castle, Delaware  19720               Office

                                  Attention: Bank Loan Syndications

JPMorgan Chase Bank                                                         Same as Eurodollar Lending      $51,994,127.64
                                                                            Office

Bank One, NA                      1 Bank One Plaza, Suite 0363              Same as Eurodollar Lending      $38,230,976.48
                                  Chicago, Illinois  60670-0363             Office

                                  Attention: Robert G. Bussa

Bank of Tokyo-Mitsubishi Trust    1251 Avenue of the Americas               Same as Eurodollar Lending      $38,230,976.48
Company                           12th Floor                                Office
                                  New York, New York 10020-1104

                                  Attention:  Nicholas R. Battista

Wachovia Bank. N.A.               191 Peachtree St.                         Same as Eurodollar Lending      $27,526,302.90
                                  Atlanta, Georgia 30303                    Office

                                  Attention: Loan Administration

Bank of America, N.A.             Bank of America Plaza                     Same as Eurodollar Lending      $26,731,098.62
                                  901 Main Street                           Office
                                  14th Floor, TX1-492-14-05
                                  Dallas, Texas 75202-3714

                                  Attention: Nora Taylor

SunTrust Bank                     200 South Orange Avenue                   Same as Eurodollar Lending      $15,292,390.24
                                  Orlando, Florida 32801                    Office

                                  Attention: William Barr

</TABLE>

<PAGE>

                                   EXHIBIT A-1

                               NOTICE OF BORROWING

                                                         [Date]


Citibank, N.A., as Administrative Agent
   for the Lenders parties to the
   Credit Agreement referred to below
Two Penns Way, Suite 200
New Castle, Delaware 19720

Attention: Bank Loan Syndications

Ladies and Gentlemen:

     The undersigned,  PROGRESS ENERGY,  INC. refers to the Amended and Restated
Credit  Agreement,  dated as of November 10, 2003 (the "Credit  Agreement",  the
terms  defined  therein  being  used  herein  as  therein  defined),  among  the
undersigned,  certain Lenders from time to time parties  thereto,  and CITIBANK,
N.A.,  as  Administrative  Agent for the  Lenders,  and hereby  gives you notice
pursuant to Section 2.02 of the Credit  Agreement  that the  undersigned  hereby
requests a Borrowing  under the Credit  Agreement,  and in that  connection sets
forth  below  the   information   relating  to  such  Borrowing  (the  "Proposed
Borrowing") as required by Section 2.02(a) of the Credit Agreement:

          (i) The Business Day of the Proposed Borrowing is            , 20    .
                                                            ----------     ----

          (ii) The Type of Advances  comprising the Proposed  Borrowing is [Base
     Rate Advances][Eurodollar Rate Advances].

          (iii) The aggregate amount of the Proposed Borrowing is $     .
                                                                   -----

          (iv) The Interest  Period for each  Eurodollar Rate Advance that is an
     Advance made as part of the Proposed Borrowing is months.

     The undersigned hereby certifies that the following  statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:

          (v) the  representations  and warranties  contained in Section 4.01 of
     the Credit  Agreement  are correct,  before and after giving  effect to the
     Proposed  Borrowing and to the  application of the proceeds  therefrom,  as
     though made on and as of such date; and

          (vi) no event has  occurred  and is  continuing,  or would result from
     such Proposed Borrowing or from the application of the proceeds  therefrom,
     that  constitutes  an Event of  Default  or  would  constitute  an Event of
     Default  but for the  requirement  that  notice be given or time  elapse or
     both.

                                       Very truly yours,

                                       PROGRESS ENERGY, INC.


                                       By
                                         ---------------------------------------
                                         Name:
                                         Title:

                                     A-1-1
<PAGE>

                                   EXHIBIT A-2

                              NOTICE OF CONVERSION

                                                           [Date]


Citibank, N.A., as Administrative Agent
  for the Lenders parties to the
  Credit Agreement referred to below
Two Penns Way, Suite 200
New Castle, Delaware 19720

Attention: Bank Loan Syndications

Ladies and Gentlemen:

     The undersigned,  PROGRESS ENERGY,  INC. refers to the Amended and Restated
Credit  Agreement,  dated as of November 10, 2003 (the "Credit  Agreement",  the
terms  defined  therein  being  used  herein  as  therein  defined),  among  the
undersigned,  certain Lenders from time to time parties  thereto,  and CITIBANK,
N.A.,  as  Administrative  Agent for the  Lenders,  and hereby  gives you notice
pursuant to Section 2.09 of the Credit  Agreement  that the  undersigned  hereby
requests a Conversion  under the Credit  Agreement,  and in that connection sets
forth  the  terms  on which  such  Conversion  (the  "Proposed  Conversion")  is
requested to be made:


          (vii) The Business Day of the Proposed  Conversion is  ______________,
     20____.

          (viii) The Type of, and Interest  Period  applicable  to, the Advances
     (or portions thereof) proposed to be Converted:                .
                                                    ----------------

          (ix) The Type of Advance to which such Advances (or portions  thereof)
     are proposed to be Converted: ________________________.

          (x)  Except in the case of a  Conversion  to Base Rate  Advances,  the
     initial  Interest  Period to be applicable to the Advances  resulting  from
     such Conversion: ______________________________.

          (xi) The aggregate amount of Advances (or portions  thereof)  proposed
     to be Converted is $               .
                         ---------------

                                     A-2-1
<PAGE>

     The undersigned  hereby certifies that, on the date hereof, and on the date
of the Proposed  Conversion,  no event has occurred and is continuing,  or would
result from such Proposed Conversion, that constitutes an Event of Default.

                                       Very truly yours,

                                       PROGRESS ENERGY, INC.



                                       By
                                         ---------------------------------------
                                         Name:
                                         Title:

                                     A-2-2
<PAGE>


                                    EXHIBIT B

                            ASSIGNMENT AND ACCEPTANCE

                           Dated                  , 20
                                    --------------    ----


     Reference is made to the Amended and Restated Credit Agreement, dated as of
November 10, 2003 (as amended,  modified and supplemented from time to time, the
"Credit  Agreement",  the terms  defined  therein  being used  herein as therein
defined), among PROGRESS ENERGY, INC., certain Lenders (as defined in the Credit
Agreement)  from  time  to  time  parties  thereto,   and  CITIBANK,   N.A.,  as
Administrative Agent for the Lenders (the "Administrative Agent").

                  (the  "Assignor") and                (the "Assignee") agree as
     -------------                      --------------
follows:

     1. The Assignor hereby sells and assigns to the Assignee,  and the Assignee
hereby  purchases and assumes from the Assignor,  that interest in and to all of
the Assignor's  rights and obligations under the Credit Agreement as of the date
hereof that  represents the percentage  interest  specified on Schedule 1 of all
outstanding  rights  and  obligations  under the  Credit  Agreement,  including,
without limitation, such interest in the Assignor's Commitment (to the extent it
has not been  terminated),  the  Advances  owing to the  Assignor.  After giving
effect to such sale and assignment,  the Assignee's  Commitment (if any) and the
amount of the Advances  owing to the Assignee  will be as set forth in Section 2
of Schedule 1.

     2. The  Assignor  (i)  represents  and  warrants  that it is the  legal and
beneficial  owner of the interest  being  assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability,  genuineness,  sufficiency
or value of the Credit Agreement or any other  instrument or document  furnished
pursuant  thereto;  and (iii) makes no representation or warranty and assumes no
responsibility  with respect to the  financial  condition of the Borrower or the
performance  or observance by the Borrower of any of its  obligations  under the
Credit Agreement or any other instrument or document furnished pursuant thereto.

     3. The  Assignee  (i)  confirms  that it has  received a copy of the Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section  4.01(e)  thereof and such other  documents  and  information  as it has
deemed  appropriate  to make its own credit  analysis and decision to enter into
this  Assignment and  Acceptance;  (ii) agrees that it will,  independently  and
without reliance upon the Administrative Agent, the Assignor or any other Lender
and based on such documents and information as it shall deem  appropriate at the
time,  continue to make its own credit  decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Administrative Agent to take such action as agent on
its  behalf and to  exercise  such  powers  under the  Credit  Agreement  as are

                                      B-1
<PAGE>

delegated to the Administrative  Agent by the terms thereof,  together with such
powers as are reasonably  incidental thereto; (v) agrees that it will perform in
accordance  with  their  terms all of the  obligations  that by the terms of the
Credit  Agreement  are required to be  performed  by it as a Lender;  [and] (vi)
specifies  as  its  Domestic  Lending  Office  (and  address  for  notices)  and
Eurodollar  Lending  Office  the  offices  set  forth  beneath  its  name on the
signature pages hereof [and (vii) attaches the forms  prescribed by the Internal
Revenue Service of the United States  certifying as to the Assignee's status for
purposes of  determining  exemption  from United States  withholding  taxes with
respect to all payments to be made to the Assignee under the Credit Agreement or
such other  documents as are  necessary to indicate  that all such  payments are
subject to such rates at a rate reduced by an applicable tax treaty].(1)

     4.  Following  the  execution  of this  Assignment  and  Acceptance  by the
Assignor and the Assignee,  it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent. The effective date of this
Assignment  and  Acceptance  shall  be the  date of  acceptance  thereof  by the
Administrative  Agent,  unless  otherwise  specified  on  Schedule 1 hereto (the
"Effective Date").

     5. Upon such  acceptance and recording by the  Administrative  Agent, as of
the Effective  Date, (i) the Assignee  shall be a party to the Credit  Agreement
and, to the extent provided in this  Assignment and Acceptance,  have the rights
and  obligations  of a Lender  thereunder  and (ii) the Assignor  shall,  to the
extent provided in this Assignment and Acceptance,  relinquish its rights and be
released from its obligations under the Credit Agreement.

     6. Upon such acceptance and recording by the Administrative Agent, from and
after the Effective Date, the Administrative Agent shall make all payments under
the Credit  Agreement in respect of the  interest  assigned  hereby  (including,
without limitation, all payments of principal, interest and commitment fees with
respect  thereto) to the  Assignee.  The Assignor  and  Assignee  shall make all
appropriate adjustments in payments under the Credit Agreement for periods prior
to the Effective Date directly between themselves.

     7. This  Assignment and  Acceptance  shall be governed by, and construed in
accordance with, the laws of the State of New York.



                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]





----------------
(1) If the Assignee is organized under the laws of a jurisdiction outside the
United States.

                                      B-2
<PAGE>



     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Assignment  and
Acceptance  to  be  executed  by  their  respective   officers   thereunto  duly
authorized,  as of the date first above written,  such  execution  being made on
Schedule 1 hereto.



[NAME OF ASSIGNOR]                     [NAME OF ASSIGNEE]



By                                     By
  --------------------------------       --------------------------------------
    Name:                                  Name:
    Title:                                 Title:



                                       Domestic Lending Office (and
                                       address for notices):
                                       [Address]


                                       Eurodollar Lending Office:
                                       [Address]


Accepted this      day
              ----
of             , 20
   ------------    --


CITIBANK, N.A.,
  as Administrative Agent



By
  -------------------------------
    Title:

PROGRESS ENERGY, INC.(2)



By
  -------------------------------
    Title:


--------------------
(2) If required.

                                      B-3
<PAGE>

                                   SCHEDULE 1

                                       TO

                            ASSIGNMENT AND ACCEPTANCE



                           Dated               , 20
                                 --------------    ----

         Section 1

                  Percentage Interest Assigned:           %
                                                    ------

         Section 2

                  Assignee's Commitment(3):                        $

                  Aggregate Outstanding Principal Amount of
                   Advances owing to Assignee [specify Facility]:  $


         Section 3

                  Effective Date(4)



-----------------
(3) For use in connection with the Extension.
(4) This date should be no earlier than the date of acceptance by the
    Administrative Agent.

<PAGE>

                                   EXHIBIT C-1

                FORM OF OPINION OF GENERAL COUNSEL TO THE COMPANY



                                                             November 10, 2003



To each of the Lenders parties to the
Credit Agreement referred to below and to
Citibank, N.A., as Administrative Agent

         Re:      Progress Energy, Inc.

Ladies and Gentlemen:

     This  opinion  is  furnished  to you by me as General  Counsel to  Progress
Energy,  Inc. (the  "Borrower")  pursuant to Section  3.01(g) of the Amended and
Restated  Credit  Agreement,   dated  as  of  November  10,  2003  (the  "Credit
Agreement",  the terms defined  therein  being used herein as therein  defined),
among Progress Energy,  Inc.,  certain lenders named therein (the "Lenders") and
Citibank, N.A., as Administrative Agent for the Lenders.

     In connection  with the  preparation,  execution and delivery of the Credit
Agreement, I have examined:

     (1) The Credit Agreement.

     (2) The documents furnished by the Borrower pursuant to Section 3.01 of the
Credit Agreement.

     (3) The Amended and Restated Articles of Incorporation of the Borrower (the
"Charter").

         (4) The By-Laws of the Borrower and all amendments thereto (the
"By-Laws").

     I have also  examined  the  originals,  or copies of such  other  corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower  and  agreements,  instruments  and other  documents  as I have  deemed
necessary as a basis for the opinions  expressed  below. As to questions of fact
material to such opinions,  I have,  when relevant facts were not  independently
established by me, relied upon  certificates  of the Borrower or its officers or
of public officials.  I have assumed the authenticity of all documents submitted
to me as originals,  the  conformity to originals of all documents  submitted as
certified or photostatic  copies and the authenticity of signatures  (other than
those of the  Borrower),  and the due execution  and  delivery,  pursuant to due

                                     C-1-1
<PAGE>

authorization,  of the Credit  Agreement  by the  Lenders  and the Agent and the
validity and binding effect thereof on such parties. For purposes of my opinions
expressed in paragraph 1 below as to existence and good standing,  I have relied
as of their  respective  dates on  certificates of public  officials,  copies of
which are attached hereto as Exhibit A. Whenever the phrase "to my knowledge" is
used in this opinion it refers to my actual  knowledge and the actual  knowledge
of the  attorneys  who work under my  supervision  and who were  involved in the
representation of the Borrower in connection with the transactions  contemplated
by the Credit Agreement.

     I or attorneys  working under my supervision  are qualified to practice law
in the States of North Carolina and Florida,  and the opinions  expressed herein
are limited to the law of the States of North Carolina and Florida,  the Federal
law of the  United  States  and,  in  reliance  on a  certificate  issued by the
Secretary of State of South  Carolina and attached  hereto as part of Exhibit A,
the laws of the State of South  Carolina for  purposes of the first  sentence of
opinion paragraph 1 below.

     Based  upon the  foregoing  and upon such  investigation  as I have  deemed
necessary, I am of the following opinion:

     1. Each of the Borrower and CP&L is a corporation  duly organized,  validly
existing and in good standing under the laws of the State of North Carolina, and
CP&L is duly qualified to do business and in good standing in the State of South
Carolina. Each of Florida Power and FPC is a corporation duly organized, validly
existing and in good standing  under the laws of the State of Florida.  Progress
Capital is a corporation  duly organized,  validly existing and in good standing
under the laws of the State of Florida. The Borrower has the corporate power and
authority to enter into the transactions contemplated by the Credit Agreement.

     2. The execution,  delivery and performance of the Credit  Agreement by the
Borrower have been duly authorized by all necessary corporate action on the part
of the Borrower and the Credit Agreement has been duly executed and delivered by
the Borrower.

     3. The execution,  delivery and performance of the Credit  Agreement by the
Borrower  will not (i) violate  the  Charter or the By-Laws or any law,  rule or
regulation applicable to the Borrower (including, without limitation, Regulation
X of the Board of Governors of the Federal  Reserve  System) or (ii) result in a
breach of, or constitute a default under, any judgment,  decree or order binding
on the Borrower,  or any indenture,  mortgage,  contract or other  instrument to
which it is a party or by which it is bound.

     4. No  authorization,  approval  or other  action  by,  and no notice to or
filing with any  governmental  authority or regulatory  body is required for the
due execution, delivery and performance by the Borrower of the Credit Agreement,
other  than the SEC Order,  which has been duly  issued and is in full force and
effect.

                                     C-1-2
<PAGE>

     5. To my  knowledge,  except as described  in the reports and  registration
statements  that the Borrower,  CP&L,  FPC and Florida Power have filed with the
Securities and Exchange  Commission,  there are no pending or overtly threatened
actions or proceedings  against the Borrower or any of such Subsidiaries  before
any court,  governmental  agency or arbitrator,  that may  materially  adversely
affect the financial condition, operations or properties of the Borrower and its
Subsidiaries, taken as a whole.

     The  opinions  set forth  above are  subject to the  qualification  that no
opinion is expressed herein as to the  enforceability of the Credit Agreement or
any other document.

     The  foregoing  opinions  are solely for your benefit and may not be relied
upon by any other  Person  other  than (i) any other  Person  that may  become a
Lender  under the  Credit  Agreement  after the date  hereof  and (ii)  Hunton &
Williams  LLP and King & Spalding  LLP,  in  connection  with  their  respective
opinions  delivered  on the  date  hereof  under  Section  3.01  of  the  Credit
Agreement.


                                       Very truly yours,



                                     C-1-3
<PAGE>

                                   EXHIBIT C-2

               FORM OF OPINION OF SPECIAL COUNSEL FOR THE COMPANY




                                                            November 10, 2003


To each of the Lenders parties to the
Credit Agreement referred to below and to
Citibank, N.A., as Administrative Agent

         Re:      Progress Energy, Inc.

Ladies and Gentlemen:

     This opinion is furnished to you by us as counsel for Progress Energy, Inc.
(the "Borrower")  pursuant to Section 3.01(g) of the Amended and Restated Credit
Agreement,  dated as of November  10, 2003 (the  "Credit  Agreement",  the terms
defined therein being used herein as therein  defined),  among Progress  Energy,
Inc.,  certain  lenders named  therein (the  "Lenders")  and Citibank,  N.A., as
Administrative Agent for the Lenders.

     In connection  with the  preparation,  execution and delivery of the Credit
Agreement, we have examined:

     (1) The Credit Agreement.

     (2) The documents furnished by the Borrower pursuant to Section 3.01 of the
Credit Agreement.

     (3) The opinion letter of even date  herewith,  addressed to you by William
D. Johnson,  General Counsel to the Company and delivered in connection with the
transactions   contemplated  by  the  Credit  Agreement  (the  "Company  Opinion
Letter").

     We have also  examined  the  originals,  or copies of such other  corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower  and  agreements,  instruments  and other  documents  as we have deemed
necessary as a basis for the opinions  expressed  below. As to questions of fact
material to such opinions,  we have, when relevant facts were not  independently
established by us, relied upon  certificates  of the Borrower or its officers or
of public officials. We have assumed the authenticity of all documents submitted
to us as originals,  the  conformity to originals of all documents  submitted as
certified or photostatic  copies and the  authenticity  of the originals  (other
than those of the Borrower), and the due execution and delivery, pursuant to due
authorization,  of the Credit  Agreement  by the  Lenders  and the Agent and the

                                     C-2-1
<PAGE>

validity and binding effect thereof on such parties. Whenever the phrase "to our
knowledge"  is used in this  opinion  it refers to the actual  knowledge  of the
attorneys of this firm involved in the  representation  of the Borrower  without
independent investigation.

     We are qualified to practice law in the States of North  Carolina,  Florida
and New York,  and the opinions  expressed  herein are limited to the law of the
States of North Carolina, Florida and New York and the federal law of the United
States.  To the extent that our opinions  expressed  herein depend upon opinions
expressed  in  paragraphs  1 through 4 of the Company  Opinion  Letter,  we have
relied  without  independent  investigation  on the  accuracy  of  the  opinions
expressed  in  the  Company   Opinion  Letter,   subject  to  the   assumptions,
qualifications and limitations set forth in the Company Opinion Letter.

     Based upon the  foregoing  and upon such  investigation  as we have  deemed
necessary,  we are of the  opinion  that the Credit  Agreement  constitutes  the
legal,  valid and binding  obligation  of the Borrower  enforceable  against the
Borrower in accordance  with its terms except as  enforcement  may be limited or
otherwise  affected by (a) bankruptcy,  insolvency,  reorganization,  fraudulent
transfer,  moratorium  or other  similar laws  affecting the rights of creditors
generally and (b) principles of equity, whether considered at law or in equity.

     The opinion set forth above is subject to the following qualifications:

     (a) In addition to the application of equitable principles described above,
courts have imposed an obligation on  contracting  parties to act reasonably and
in good faith in the exercise of their contractual rights and remedies,  and may
also apply public policy considerations in limiting the right of parties seeking
to obtain  indemnification under circumstances where the conduct of such parties
is determined to have constituted negligence.

     (b) No opinion is  expressed  herein as to (i)  Section  8.05 of the Credit
Agreement,  (ii) the enforceability of provisions purporting to grant to a party
conclusive  rights  of   determination,   (iii)  the  availability  of  specific
performance or other equitable  remedies,  (iv) the  enforceability of rights to
indemnity under federal or state  securities laws or (v) the  enforceability  of
waivers by parties of their respective rights and remedies under law.

     (c) No opinion is expressed herein as to provisions,  if any, in the Credit
Agreement,  which (A)  purport  to  excuse,  release  or  exculpate  a party for
liability for or indemnify a party against the consequences of its own acts, (B)
purport  to make void any act done in  contravention  thereof,  (C)  purport  to
authorize a party to make binding  determinations  in its sole  discretion,  (D)
relate to the  effects of laws which may be enacted in the  future,  (E) require
waivers, consents or amendments to be made only in writing, (F) purport to waive
rights  of offset or to create  rights  of set off  other  than as  provided  by
statute,  or (G) purport to permit acceleration of indebtedness and the exercise
of remedies by reason of the  occurrence of an  immaterial  breach of the Credit
Agreement  or any  related  document.  Further,  we express no opinion as to the
necessity for any Lender, by reason of such Lender's  particular  circumstances,
to qualify to transact  business in the State of New York or as to any  Lender's
liability for taxes in any jurisdiction.

     The foregoing opinion is solely for your benefit and may not be relied upon
by any other  Person  other than (i) any other  Person  that may become a Lender
under  the  Credit  Agreement  after  the date  hereof  in  accordance  with the
provisions  thereof  and (ii) King &  Spalding  LLP,  in  connection  with their
opinion delivered on the date hereof under Section 3.01 of the Credit Agreement.


                                       Very truly yours,




                                     C-2-2
<PAGE>


                                   EXHIBIT C-3

             FORM OF OPINION OF GENERAL COUNSEL TO THE COMPANY UPON
                  EXTENSION OF THE COMMITMENT TERMINATION DATE
                 AND EXERCISE OF THE TERM LOAN CONVERSION OPTION

                                                         ___________ ___, 20__


To each of the  Lenders  parties to the
Credit  Agreement  referred  to below and to
Citibank, N.A., as Administrative Agent

         Re:  Progress Energy, Inc.

Ladies and Gentlemen:

     This  opinion  is  furnished  to you by me as General  Counsel to  Progress
Energy,  Inc.  (the  "Borrower")  in  connection  with  [the  extension  of  the
Commitment  Termination  Date until  ________ __, _____ under  Section 2.15 (the
"Extension")]1  [the exercise of the Term Loan  Conversion  Option under Section
2.16 (the  "Exercise")]2 of the Amended and Restated Credit Agreement,  dated as
of November 10, 2003 (the "Credit  Agreement",  the terms defined  therein being
used herein as therein defined),  among Progress Energy,  Inc.,  certain lenders
from time to time  parties  thereto  (the  "Lenders")  and  Citibank,  N.A.,  as
Administrative Agent for the Lenders.

     In connection  with the  preparation,  execution and delivery of the Credit
Agreement, I have examined:

     (1) The Credit Agreement.

     (2) The documents furnished by the Borrower pursuant to Section 3.01 of the
Credit Agreement.

     [(3)  The  Request  for  Extension  of  Commitment   Termination  Date  and
Certificate,  dated  _____,  submitted by the  Borrower in  connection  with the
Extension.](1)

     [(4) The Notice of Term Loan Conversion Option,  dated _____,  submitted by
the Borrower in connection with the Exercise.](2)

     (5) The Amended and Restated Articles of Incorporation of the Borrower (the
"Charter").

------------------------
(1) For use in connection with the Extension.
(2) For use in connection with the Exercise.

                                     C-3-1
<PAGE>

     (6) The By-Laws of the Borrower and all amendments thereto (the "By-Laws").

     I have also  examined  the  originals,  or copies of such  other  corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower  and  agreements,  instruments  and other  documents  as I have  deemed
necessary as a basis for the opinions  expressed  below. As to questions of fact
material to such opinions,  I have,  when relevant facts were not  independently
established by me, relied upon  certificates  of the Borrower or its officers or
of public officials.  I have assumed the authenticity of all documents submitted
to me as originals,  the  conformity to originals of all documents  submitted as
certified or photostatic  copies and the  authenticity of the signatures  (other
than those of the Borrower), and the due execution and delivery, pursuant to due
authorization,  of the Credit  Agreement  by the Lenders and the  Administrative
Agent and the validity and binding effect thereof on such parties.  For purposes
of my opinions expressed in paragraph 1 below as to existence and good standing,
I have relied as of their respective dates on certificates of public  officials,
copies of which are  attached  hereto as Exhibit A.  Whenever  the phrase "to my
knowledge" is used in this opinion it refers to the my actual  knowledge and the
actual  knowledge of the  attorneys who work under my  supervision  and who were
involved  in  the   representation  of  the  Borrower  in  connection  with  the
transactions contemplated by the Credit Agreement.

     [We have also reviewed the NCUC Order and the SCPSC Order, each of which is
attached hereto.]

     I or attorneys  working under my supervision  are qualified to practice law
in the States of North Carolina and Florida,  and the opinions  expressed herein
are limited to the law of the States of North Carolina and Florida,  the Federal
law of the  United  States  and,  in  reliance  on a  certificate  issued by the
Secretary of State of South  Carolina and attached  hereto as part of Exhibit A,
the laws of the State of South  Carolina for  purposes of the first  sentence of
opinion paragraph 1 below.

     Based  upon the  foregoing  and upon such  investigation  as I have  deemed
necessary, I am of the following opinion:

     1. The Borrower is a corporation  duly organized,  validly  existing and in
good  standing  under  the  laws of the  State of  North  Carolina,  and is duly
qualified to do business and in good standing in the State of South Carolina.

     2. The  execution,  delivery and  performance by the Borrower of the Credit
Agreement,  [after giving effect to the  Extension,](1)  [after giving effect to
the  Exercise,](2) are within the Borrower's  corporate  powers,  have been duly
authorized by all necessary corporate action, and do not violate (i) the Charter
or the  By-Laws  or any  law,  rule or  regulation  applicable  to the  Borrower
(including,  without  limitation,  Regulation X of the Board of Governors of the
Federal  Reserve  System) or (ii) result in breach of, or  constitute  a default
under, any judgment,  decree or order binding on the Borrower, or any indenture,
mortgage,  contract or other instrument to which it is a party or by which it is
bound.  The Credit  Agreement  has been duly executed and delivered on behalf of
the Borrower.
------------------------
(1) For use in connection with the Extension.
(2) For use in connection with the Exercise.

                                     C-3-2
<PAGE>

     3. No  authorization,  approval  or other  action  by,  and no notice to or
filing with any  governmental  authority or regulatory  body is required for the
due  execution,  delivery  and  performance,  by  the  Borrower  of  the  Credit
Agreement,  [after giving effect to the Extension,]1 [after giving effect to the
Exercise,]2 other than the SEC Order,  which has been duly issued and is in full
force and effect.

     4. To my  knowledge,  except as described  in the reports and  registration
statements  that the  Borrower  has  filed  with  the  Securities  and  Exchange
Commission,  there are no pending or overtly  threatened  actions or proceedings
against the Borrower or any of the Subsidiaries  before any court,  governmental
agency  or  arbitrator,  that may  materially  adversely  affect  the  financial
condition, operations or properties of the Borrower and its Subsidiaries,  taken
as a whole.

     The  opinions  set forth  above are  subject to the  qualification  that no
opinion is expressed herein as to the  enforceability of the Credit Agreement or
any other document.

     The  foregoing  opinions  are solely for your benefit and may not be relied
upon by any other  Person  other  than (i) any other  Person  that may  become a
Lender  under the  Credit  Agreement  after the date  hereof  and (ii)  Hunton &
Williams LLP and King & Spalding LLP, in connection with their opinion delivered
on the date hereof under Section 3.01 of the Credit Agreement.


                                                              Very truly yours,


------------------------
(1) For use in connection with the Extension.
(2) For use in connection with the Exercise.

                                     C-3-3
<PAGE>
                                   EXHIBIT C-4

             FORM OF OPINION OF SPECIAL COUNSEL TO THE COMPANY UPON
                  EXTENSION OF THE COMMITMENT TERMINATION DATE
                 AND EXERCISE OF THE TERM LOAN CONVERSION OPTION

                                                        ___________ ___, 20__


To each of the Lenders  parties to the
Credit  Agreement  referred to below
and to Citibank, N.A., as Administrative Agent

         Re:  Progress Energy, Inc.

Ladies and Gentlemen:

     This opinion is furnished to you by us as counsel for Progress Energy, Inc.
(the "Borrower") in connection with [the extension of the Commitment Termination
Date until  ________  __,  _____ under  Section  2.15 (the  "Extension")]1  [the
exercise  of  the  Term  Loan   Conversion   Option  under   Section  2.16  (the
"Exercise")]2 of the Amended and Restated Credit Agreement, dated as of November
10, 2003 (the "Credit Agreement", the terms defined therein being used herein as
therein defined), among Progress Energy, Inc., certain lenders from time to time
parties thereto (the "Lenders") and Citibank,  N.A., as Administrative Agent for
the Lenders.

     In connection  with the  preparation,  execution and delivery of the Credit
Agreement, we have examined:

     (1) The Credit Agreement.

     (2) The documents furnished by the Borrower pursuant to Section 3.01 of the
Credit Agreement.

     [(3)  The  Request  for  Extension  of  Commitment   Termination  Date  and
Certificate,  dated  _____,  submitted by the  Borrower in  connection  with the
Extension.]1

     [(4) The Notice of Term Loan Conversion Option,  dated _____,  submitted by
the Borrower in connection with the Exercise.]2

     (5) The opinion letter of even date herewith,  addressed to you by [William
D. Johnson],  General  Counsel to the Borrower and delivered in connection  with
the  transactions  contemplated by the Credit  Agreement (the "Borrower  Opinion
Letter").

------------------------
(1) For use in connection with the Extension.
(2) For use in connection with the Exercise.

                                     C-4-1
<PAGE>

     We have also  examined  the  originals,  or copies of such other  corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower  and  agreements,  instruments  and other  documents  as we have deemed
necessary as a basis for the opinions  expressed  below. As to questions of fact
material to such opinions,  we have, when relevant facts were not  independently
established by us, relied upon  certificates  of the Borrower or its officers or
of public officials. We have assumed the authenticity of all documents submitted
to us as originals,  the  conformity to originals of all documents  submitted as
certified or photostatic  copies and the  authenticity  of the originals  (other
than those of the Borrower), and the due execution and delivery, pursuant to due
authorization,  of the Credit  Agreement  by the Lenders and the  Administrative
Agent and the validity and binding effect thereof on such parties.  Whenever the
phrase  "to our  knowledge"  is used in this  opinion  it refers  to the  actual
knowledge of the  attorneys of this firm involved in the  representation  of the
Borrower without independent investigation.

     [We have also reviewed the NCUC Order and the SCPSC Order, each of which is
attached hereto.]

     We are qualified to practice law in the States of North  Carolina,  Florida
and New York,  and the opinions  expressed  herein are limited to the law of the
States of North Carolina,  Florida and New York  applicable to public  utilities
and the  federal  law of the  United  States.  To the extent  that our  opinions
expressed herein depend upon opinions expressed in paragraphs 1 through 4 of the
Borrower Opinion Letter, we have relied without independent investigation on the
accuracy of the opinions  expressed in the Borrower  Opinion Letter,  subject to
the  assumptions,  qualifications  and  limitations  set  forth in the  Borrower
Opinion Letter.

     Based upon the  foregoing  and upon such  investigation  as we have  deemed
necessary,  we are of the following  opinion the Credit  Agreement [after giving
effect to the  Extension]  [after giving effect to the exercise of the Term Loan
Conversion Option]  constitutes the valid and binding obligation of the Borrower
enforceable  against  the  Borrower  in  accordance  with its  terms  except  as
enforcement may be limited or otherwise affected by (a) bankruptcy,  insolvency,
reorganization,  fraudulent transfer, moratorium or other similar laws affecting
the  rights  of  creditors  generally  and (b)  principles  of  equity,  whether
considered at law or in equity.

     The opinion set forth above is subject to the following qualifications:

     (a) In addition to the application of equitable principles described above,
courts have imposed an obligation on  contracting  parties to act reasonably and
in good faith in the exercise of their contractual rights and remedies,  and may
also apply public policy considerations in limiting the right of parties seeking
to obtain  indemnification under circumstances where the conduct of such parties
is determined to have constituted negligence.

     (b) No opinion is  expressed  herein as to (i)  Section  8.05 of the Credit
Agreement,  (ii) the enforceability of provisions purporting to grant to a party
conclusive  rights  of   determination,   (iii)  the  availability  of  specific
performance or other equitable  remedies,  (iv) the  enforceability of rights to
indemnity under federal or state  securities laws or (v) the  enforceability  of
waivers by parties of their respective rights and remedies under law.

                                     C-4-2
<PAGE>

     (c) No opinion is expressed herein as to provisions,  if any, in the Credit
Agreement,  which (A)  purport  to  excuse,  release  or  exculpate  a party for
liability for or indemnify a party against the consequences of its own acts, (B)
purport  to make void any act done in  contravention  thereof,  (C)  purport  to
authorize a party to make binding  determinations  in its sole  discretion,  (D)
relate to the  effects of laws which may be enacted in the  future,  (E) require
waivers, consents or amendments to be made only in writing, (F) purport to waive
rights  of offset or to create  rights  of set off  other  than as  provided  by
statute,  or (G) purport to permit acceleration of indebtedness and the exercise
of remedies by reason of the  occurrence of an  immaterial  breach of the Credit
Agreement  or any  related  document.  Further,  we express no opinion as to the
necessity for any Lender, by reason of such Lender's  particular  circumstances,
to qualify to transact  business in the State of New York or as to any  Lender's
liability for taxes in any jurisdiction.

     The foregoing opinion is solely for your benefit and may not be relied upon
by any other  Person  other than (i) any other  Person  that may become a Lender
under  the  Credit  Agreement  after  the date  hereof  in  accordance  with the
provisions  thereof  and (ii) King &  Spalding  LLP,  in  connection  with their
opinion delivered on the date hereof under Section 3.01 of the Credit Agreement.


                                       Very truly yours,



                                     C-4-3
<PAGE>

                                    EXHIBIT D

                           FORM OF OPINION OF COUNSEL
                           TO THE ADMINISTRATIVE AGENT
                                AND THE ARRANGERS


                                     [DATE]


To Citibank,  N.A. ("Citibank"),  as
Administrative Agent for the Lenders
referred to  below,  and to  each  of
the  Arrangers  and  Lenders  parties
to the  Credit Agreement referred to below


     Re: Progress Energy, Inc.


Ladies and Gentlemen:

     We have acted as counsel to the  Administrative  Agent and the Arrangers in
connection  with the  preparation,  execution  and  delivery  of the Amended and
Restated  Credit  Agreement,   dated  as  of  November  10,  2003  (the  "Credit
Agreement",  the terms defined  therein  being used herein as therein  defined),
among Progress Energy,  Inc., certain Lenders from time to time parties thereto,
and Citibank, N.A., as Administrative Agent for the Lenders.

     In this connection, we have examined the following documents:

          1. a  counterpart  of the Credit  Agreement,  executed  by the parties
     thereto;

          2. the documents furnished by or on behalf of the Borrower pursuant to
     subsections  (b)  through  (g) of  Section  3.01 of the  Credit  Agreement,
     including,  without  limitation,  the opinion of Hunton & Williams LLP (the
     "Borrower Opinion").

     In our examination of the documents  referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the genuineness
of all signatures, the due authority of the parties executing such documents and
the conformity to the originals of all such documents submitted to us as copies.
We have also assumed that you have  independently  evaluated,  and are satisfied
with, the  creditworthiness  of the Borrower and the business terms reflected in
the Credit Agreement. We have relied, as to factual matters, on the documents we
have examined.

     To the extent that our opinions  expressed below involve  conclusions as to
matters  governed  by law other  than the law of the State of New York,  we have
relied  upon  the  Borrower   Opinion  and  have  assumed  without   independent
investigation  the  correctness of the matters set forth  therein,  our opinions
expressed below being subject to the assumptions, qualifications and limitations
set forth in the Borrower Opinion.

                                      D-1

<PAGE>

     Based upon and subject to the foregoing,  and subject to the qualifications
set forth below,  we are of the opinion that the Credit  Agreement is the legal,
valid and binding obligation of the Borrower,  enforceable  against the Borrower
in accordance with its terms.

     Our opinion is subject to the following qualifications:

     (b) The  enforceability  of the  Borrower's  obligations  under the  Credit
Agreement  is subject to the effect of any  applicable  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,  moratorium  or similar  law  affecting
creditors' rights generally.

     (c) The  enforceability  of the  Borrower's  obligations  under the  Credit
Agreement is subject to the effect of general  principles  of equity,  including
(without  limitation)  concepts of materiality,  reasonableness,  good faith and
fair dealing  (regardless of whether  considered in a proceeding in equity or at
law).  Such  principles of equity are of general  application,  and, in applying
such  principles,  a court,  among other  things,  might not allow a contracting
party to exercise remedies in respect of a default deemed  immaterial,  or might
decline to order an obligor to perform covenants.

     (d) We note  further  that,  in addition to the  application  of  equitable
principles  described  above,  courts have imposed an obligation on  contracting
parties to act reasonably and in good faith in the exercise of their contractual
rights and remedies, and may also apply public policy considerations in limiting
the right of parties seeking to obtain indemnification under circumstances where
the conduct of such parties is determined to have constituted negligence.

     (e) We express no opinion  herein as to (i) the  enforceability  of Section
8.05 of the Credit Agreement,  (ii) the enforceability of provisions  purporting
to grant to a party conclusive rights of  determination,  (iii) the availability
of specific performance or other equitable remedies,  (iv) the enforceability of
rights  to  indemnity  under  federal  or  state  securities  laws,  or (v)  the
enforceability  of waivers by parties of their  respective  rights and  remedies
under law.

     (f) Our opinions expressed above are limited to the law of the State of New
York, and we do not express any opinion herein concerning any other law.

     The foregoing opinion is solely for your benefit and may not be relied upon
by any other person or entity.

                                       Very truly yours,



                                      D-2
<PAGE>

                                    EXHIBIT E

                        FORM OF REQUEST FOR EXTENSION OF
                         THE COMMITMENT TERMINATION DATE


                              AMENDED AND RESTATED
                                CREDIT AGREEMENT

                          dated as of November 10, 2003
                       -----------------------------------

                              PROGRESS ENERGY, INC.
                                   (Borrower)

                                       AND

                 THE BANKS LISTED ON THE SIGNATURE PAGES HEREOF
                                     (Banks)

                                       and

                                 CITIBANK, N.A.
                             (Administrative Agent)




              Request for Extension of Commitment Termination Date
                                       and
          Certificate of Representations and Warranties and No Default


     I,  [______________],  [_________________]  of Progress  Energy,  Inc.,  do
hereby request that the Commitment  Termination Date of the Amended and Restated
Credit  Agreement,  dated as of November 10, 2003 (the "Credit  Agreement",  the
terms defined  therein  being used herein as therein  defined),  among  Progress
Energy,  Inc., certain Lenders from time to time parties thereto,  and Citibank,
N.A.,  as  Administrative  Agent for the Lenders,  be extended for an additional
364-day period (hereinafter the "Proposed  Extension")  pursuant to Section 2.15
of the Credit Agreement and, in connection therewith, hereby certify as follows:

          (i) as of the date hereof,  the  representations  and  warranties  set
     forth in Section 4.01  (including  without  limitation  those regarding any
     required  approvals  of or  notices to  governmental  bodies) of the Credit
     Agreement  are  and  will  be as of the  effective  date  of  the  Proposed
     Extension  accurate  both before and after  giving  effect to the  Proposed
     Extension; and

                                      E-1
<PAGE>

          (ii) as of the date hereof, no Event of Default, as defined in Section
     6.01 of the Credit  Agreement,  has occurred,  nor has any event  occurred,
     that  with the  giving  of notice  or the  passage  of time or both,  would
     constitute an Event of Default, in either case both before and after giving
     effect to the Proposed Extension.

         Witness my hand this ______ day of _________, ____.

                            ------------------------
                               [----------------]

                                      E-2
<PAGE>

                                    EXHIBIT F

                               FORM OF REQUEST FOR
                           TERM LOAN CONVERSION OPTION


                              AMENDED AND RESTATED
                                CREDIT AGREEMENT
                          dated as of November 10, 2003
                       -----------------------------------

                              PROGRESS ENERGY, INC.
                                   (Borrower)

                                       AND

                 THE BANKS LISTED ON THE SIGNATURE PAGES HEREOF
                                     (Banks)

                                       and

                                 CITIBANK, N.A.
                             (Administrative Agent)


                     Request for Term Loan Conversion Option
                                       and
          Certificate of Representations and Warranties and No Default


     I, [______________],  [_______________] of Progress Energy, Inc., do hereby
exercise  the Term Loan  Conversion  Option of the Amended and  Restated  Credit
Agreement,  dated as of November  10, 2003 (the  "Credit  Agreement",  the terms
defined therein being used herein as therein  defined),  among Progress  Energy,
Inc., certain Lenders from time to time parties thereto the Banks, and Citibank,
N.A., as Administrative  Agent for the Lenders,  pursuant to Section 2.16 of the
Credit Agreement and, in connection therewith, hereby certify as follows:

          (iii) as of the date hereof,  the  representations  and warranties set
     forth in Section 4.01  (including  without  limitation  those regarding any
     required  approvals  of or  notices to  governmental  bodies) of the Credit
     Agreement  are  and  will be as of the  effective  date  of the  Term  Loan
     Conversion Option accurate both before and after giving effect thereto; and

                                      F-1
<PAGE>

          (iv) as of the date hereof, no Event of Default, as defined in Section
     6.01 of the Credit  Agreement,  has occurred,  nor has any event  occurred,
     that  with the  giving  of notice  or the  passage  of time or both,  would
     constitute an Event of Default, in either case both before and after giving
     effect to the effectiveness of the Term Loan Conversion Option.

          Witness my hand this ______ day of _________, ____.


                            ------------------------
                               [----------------]
                          Vice President and Treasurer




                                      F-2
<PAGE>

                                    EXHIBIT G

                         FORM OF COMPLIANCE CERTIFICATE

                      [Letterhead of Progress Energy, Inc.]



                                                                      [Date]


To the Lenders party to the
 Credit Agreement referred
 to below and to Citibank, N.A.
 as Administrative Agent


                              Progress Energy, Inc.

Ladies and Gentlemen:

This compliance  certificate is furnished to you pursuant to Section 5.01(i)(ii)
of the Amended and Restated Credit Agreement, dated as of November 10, 2003 (the
"Credit  Agreement"),  among Progress Energy, Inc., a North Carolina corporation
(the "Borrower"), the banks listed on the signature pages thereof (the "Banks"),
and Citibank,  N.A.  ("Citibank"),  as administrative agent (the "Administrative
Agent") for the Lenders (as  hereinafter  defined).  Terms defined in the Credit
Agreement are used herein as therein defined.

1. As of [_______], 200_, the ratio of Consolidated Indebtedness of the Borrower
and its Subsidiaries to Total  Capitalization was _____ to 1.0,  calculated,  in
accordance with Section 5.01(j) of the Credit Agreement, as follows:

A. Indebtedness as of such date was $________, calculated as follows:

Current Indebtedness:                                                    Amount
                                                                         ------
         [List all forms of current Debt]
         ---------------------------------                         $
         ---------------------------------
         ---------------------------------
         ---------------------------------                           -----------
Total current Indebtedness                                         $
                                                                     -----------
                                      G-1
<PAGE>
Long-term Indebtedness :                                                Amount
                                                                        ------
         [list all forms of long-term Indebtedness ]
         --------------------------------                          $
         --------------------------------
         --------------------------------
Total long-term Indebtedness                                       $
                                                                     -----------
Total Indebtedness (current Indebtedness plus long-term            $
Indebtedness )                                                       -----------

B. Total Capitalization as of such date was $_____, calculated as follows:

                  Consolidated Indebtedness                        $

                  Preferred Stock                                  $

                  Common Stock                                     $

                  Retained Earnings                                $
                                                                     -----------


2. The ratio of EBITDA  for the  12-month  period  ending on ______ to  Interest
Expense for the 12 month period  ending on ______ was _____ to 1.0,  calculated,
in accordance with Section 5.01(k) of the Credit Agreement, as follows:

A. EBITDA of such date was $______, calculated as follows:

   Net income (or loss)                                            $

   Income tax expense                                              $

   Depreciation expense                                            $

   Amortization expense                                            $

   Other non-cash charges                                          $

   Total EBITDA                                                    $
                                                                      ----------

 B. Interest Expense of such date was $_____, calculated as follows:

                  All Interest Expense                                   Amount
                  [List all forms of interest expense on all
                  Indebtedness of Borrower or Subsidiaries]
                  ----------------------------------               $
                  ----------------------------------
                  ----------------------------------
                  Total Interest Expense                           $
                                                                      ----------

                                      G-2
<PAGE>

                  All rental payment interest                            Amount
                  [List all interest elements of rental payments
                  under operating leases]
                  ----------------------------------               $
                  ----------------------------------
                  ----------------------------------
                  Total rental payment interest                    $

                  Total Interest Expense                           $
                                                                      ----------

3. As of [_______],  200_, and as of the date hereof, no Event of Default and no
event that,  with the giving of notice or lapse of time or both, will constitute
an Event of Default, has occurred and in continuing.

I hereby  certify  that the  calculations  set forth in  paragraph 1 hereof were
prepared in accordance with GAAP.



                                       Very truly yours,

                                       PROGRESS ENERGY, INC.



                                       By:
                                          --------------------------------------
                                            Name:
                                            Title:




                                      G-3