**PROGRESS
      ENERGY, INC.**


**MANAGEMENT
      CHANGE-IN-CONTROL PLAN**





**(Amended
      and Restated Effective January 1, 2007)**





1.0 **PURPOSE
      OF PLAN**





1.1 **Purpose.** The
      purpose of the Progress Energy, Inc. Management Change-in-Control Plan (the
      “Plan”) is to attract and retain certain highly qualified individuals as
      management employees of Progress Energy, Inc. and its subsidiaries, and to
      provide a benefit to such management employees if their employment is terminated
      in connection with a Change in Control (as defined below). This Plan is intended
      to qualify as a “top-hat” plan under the Employee Retirement Income Security Act
      of 1974, as amended (“ERISA”), in that it is intended to be an “employee pension
      benefit plan” (as such term is defined under Section 3(2) of ERISA) which is
      unfunded and provides benefits only to a select group of management or highly
      compensated employees of the Company or any Subsidiary. The Plan amends and
      restates the Plan as restated effective January 1, 2005 and July 10, 2002.
      The
      Carolina Power & Light Company Management Change-in-Control Plan was
      originally adopted effective January 1, 1998.





2.0 **DEFINITIONS**





The
      following terms shall have the following meanings unless the context indicates
      otherwise:





2.1 *“Beneficiary”* shall
      mean a beneficiary designated in writing by a Participant to receive any
      payments to be made under the Plan to ** such
      Participant, and if no beneficiary is designated by the Participant, then the
      Participant’s estate shall be deemed to be the Participant’s designated
      beneficiary.





2.2 *“Board”* shall
      mean the Board of Directors of the Company.





2.3 *“Cash
      Payment”* shall
      mean a payment in cash by the Company or any Subsidiary to a Participant in
      accordance with Section 6.1 below.





2.4 *“Cause”* shall
      mean:





(a)  embezzlement
      or theft from the Company or any Subsidiary, or other acts of dishonesty,
      disloyalty or otherwise injurious to the Company or any Subsidiary;





(b)  disclosing
      without authorization proprietary or confidential information of the Company
      or
      any Subsidiary;





(c)  committing
      any act of negligence or malfeasance causing injury to the Company or any
      Subsidiary;





(d)  conviction
      of a crime amounting to a felony under the laws of the United States or any
      of
      the several states;







(e)  any
      violation of the Company’s Code of Ethics; or





(f)  unacceptable
      job performance which has been substantiated in accordance with the  normal
      practices and procedures of the Company or any Subsidiary.





2.5 *Change-in-Control”* shall
      mean:





2.5.1
            *General:*A
                Change-in-Control shall be deemed to have occurred on the earliest
                of the
                following dates:





(a)  t he
      date
      any person or group of persons (within the meaning of Section 13(d) or 14(d)
      of
      the Securities Exchange Act of 1934), excluding employee benefit plans of the
      Company, becomes, directly or indirectly, the “beneficial owner” (as defined in
      Rule 13d-3 promulgated under the Securities Act of 1934) of securities of the
      Company representing twenty-five percent (25%) or more of the combined voting
      power of the Company’s then outstanding securities (excluding the acquisition of
      securities of the Company by an entity at least eighty percent (80%) of the
      outstanding voting securities of which are, directly or indirectly, beneficially
      owned by the Company); or





(b)
            the
                date of consummation of a tender offer for the ownership of more
                than
                fifty percent (50%) of the Company’s then outstanding voting securities;
                or





(c)
            the
                date of consummation of a merger, share exchange or consolidation
                of the
                Company with any other corporation or entity regardless of which
                entity is
                the survivor, other than a merger, share exchange or consolidation
                which
                would result in the voting securities of the Company outstanding
                immediately prior thereto continuing to represent (either by remaining
                outstanding or being converted into voting securities of the surviving
                or
                acquiring entity) more than sixty percent (60%) of the combined voting
                power of the voting securities of the Company or such surviving or
                acquiring entity outstanding immediately after such merger or
                consolidation; or




(d)
            the
                date, when as a result of a tender offer or exchange offer for the
                purchase of securities of the Company (other than such an offer by
                the
                Company for its own securities), or as a result of a proxy contest,
                merger, share exchange, consolidation or sale of assets, or as a
                result of
                any combination of the foregoing, individuals who are Continuing
                Directors
                cease for any reason to constitute at least two-thirds (2/3) of the
                members of the Board; or





(e) the
      date
      the shareholders of the Company approve a plan of complete  liquidation
      or winding-up of the Company or an agreement for the sale
      or


disposition
      by the Company of all or substantially all of the Company’s  assets;
      or











(f) the
      date
      of any event which the Board determines should constitute a  Change-in-Control.





A
      Change-in-Control shall not be deemed to have occurred until a majority of
      the
      members of the Board receive written certification from the Committee that
      one
      of the events set forth in this Section 2.5.1 has occurred. Any determination
      that an event described in this Section 2.5.1 has occurred shall, if made in
      good faith on the basis of information available at that time, be conclusive
      and
      binding on the Committee, the Company, the Participants and their Beneficiaries
      for all purposes of the Plan.





2.5.2  *Definition
      Applicable to Change-in-Control Benefits Subject to Section
      409A* :
      Notwithstanding the preceding provisions of Section 2.5.1, in the event that
      any
      Change-in-Control Benefits under the Plan are deemed to be deferred compensation
      subject to the provisions of Section 409A, then distributions related to such
      benefits may be permitted, in the Committee’s discretion, upon the occurrence of
      one or more of the following events (as they are defined and interpreted under
      Section 409A): (A) a change in the ownership of the Company, (B) a change in
      effective control of the Company, or (C) a change in the ownership of a
      substantial portion of the assets of the Company.





2.6 *“Change-in-Control
      Benefits”* shall
      mean the benefits described under Section 6 below provided to Terminated
      Participants. Except as otherwise provided herein, a Terminated Participant
      who
      is terminated in anticipation of a Change-in-Control as described in Section
      5.1
      shall be entitled to receive the Change-in-Control Benefits as of the
      Termination Date notwithstanding the fact that the anticipated Change-in-Control
      does not occur.




2.7 *“Change-in-Control
      Date”* shall
      mean the date that a Change-in-Control first occurs.




2.8 *“Code”* shall
      mean the Internal Revenue Code of 1986, as amended from time to
      time.





2.9 *“Committee”* shall
      mean (i) the Board or (ii) a committee or subcommittee of the Board appointed
      by
      the Board from among its members. The Committee shall be the Board’s Committee
      on Organization and Compensation until a different Committee is appointed.
      On a
      Change-in-Control Date, and during the 36-month period following such
      Change-in-Control Date, the Committee shall be comprised of such persons as
      appointed by the Board prior to the Change-in-Control Date, with any additions
      or changes to the Committee following such Change-in-Control Date to be made
      and
      or approved by all Committee members then in office.





2.10 *“Company”* shall
      mean Progress Energy, Inc., a North Carolina corporation, including any
      successor entity or any successor to the assets of the Company that has assumed
      the Plan.





2.11 *“Continuing
      Directors”* shall
      mean the members of the Board as of the Effective Date; *provided,
      however* ,
      that
      any person becoming a director subsequent to such date whose election or
      nomination for election was supported by seventy-five percent (75%) or more
      of
      the directors who then comprised Continuing Directors shall be considered to
      be
      a Continuing Director.










2.12 “ *Effective
      Date”* of the
      Plan, as amended and restated herein, ** shall
      mean January 1, 2007.




2.13 *“Good
      Reason”* shall
      mean the occurrence of any of the following:





(a)  a
      reduction in the Participant’s base salary without the Participant’s prior
      written consent (other than any reduction applicable to management employees
      generally);





(b)  a
      material adverse change in the Participant’s position, duties or
      responsibilities with respect to his or her employment with the Company and/or
      any Subsidiary without the Participant’s prior written consent;





(c) a
      material reduction in the Participant’s total incentive compensation opportunity
      under the Company’s Management Incentive Compensation Plan, the 1997 Equity
      Incentive Plan, the 2002 Equity Incentive Plan, the Performance Share Sub-Plans,
      or any other incentive compensation plan (based on the total incentive
      compensation opportunity previously granted to such Participant during the
      12-month period preceding a Change-in-Control Date) without the Participant’s
      prior written consent;





(d) an
      actual
      change in the Participant’s principal work location by more than 50 miles and
      more than 50 miles from the Participant’s principal place of abode as of the
      date of such change in job location without the Participant’s prior written
      consent;





(e) the
      failure of the Company to obtain the assumption of its obligation under the
      Plan
      by any successor to all or substantially all of the assets of the Company within
      30 days after a merger, consolidation, sale or similar transaction constituting
      a Change-in-Control; or





(f) a
      material breach by the Company of any term or provision of the Plan without
      the
      Participant’s prior written consent.





2.14  *“Gross-Up
      Payment”* shall
      mean a payment described in Section 11 below.





2.15  *“Management
      Employee”* shall
      mean a regular full-time employee of the Company or any Subsidiary with
      managerial duties and responsibilities.





2.16  *“Participant”* shall
      mean any Management Employee who has been designated to participate in the
      Plan
      under Section 3 ** below.





2.17 *“Plan”* shall
      mean the Progress Energy, Inc. Management Change-in-Control Plan.





2.18 *“Retirement”* shall
      mean the termination of employment of a Participant after having attained the
      age of 65 with five or more years of service, or the age of 55 with 15 or more
      years of service, or after having completed 35 or more years of service
      regardless of age.





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










2.20 *“Separation
      from Service”* shall
      mean the death, Retirement or other termination of employment with the Company
      as defined for purposes of Section 409A.





2.21 *“Specified
      Employee”* shall
      mean a “key employee,” as defined in Section 416(i) of the Code without regard
      to paragraph 5 thereof or the 50-employee limit on the number of officers
      treated as key employees.





2.22 *“Subsidiary”* shall
      mean a corporation of which the Company directly or indirectly owns more than
      fifty percent (50%) of the voting stock (meaning the capital stock of any class
      or classes having general voting power under ordinary circumstances, in the
      absence of contingencies, to elect the directors of a corporation) or any other
      business entity in which the Company directly or indirectly has an ownership
      interest of more than 50 percent.





2.23 *“Terminated
      Participant”* shall
      mean a Participant whose employment is terminated as described in Section 5
      below; *provided,
      however,* that a
      Participant who is reemployed by the Company or any Subsidiary without an
      intervening break in service shall not be a Terminated Participant for purposes
      of this Plan.





2.24 *“Termination
      Date”* ** shall
      mean the date a Terminated Participant’s employment with the Company and/or a
      Subsidiary is terminated as described in Section 5 below.





2.25 *“Trigger
      Trust”* shall
      mean a trust as described in Section 8 below.





3.0 **ELIGIBILITY
      AND PARTICIPATION**





3.1 **Eligibility.** An
      individual shall be eligible to participate in the Plan who is a Management  Employee
      in one of the following positions:





(a) Tier
      I
      -  Chief
      Executive Officer, Chief Operating Officer, President and Executive Vice
      Presidents who are members of the Senior Management Committee of the
      Company.





(b) Tier
      II
      -  Senior
      Vice Presidents who are members of the Senior Management Committee of the
      Company.





(c) Tier
      III
      -  Vice
      Presidents, Department Heads and other selected Management Employees of the
      Company or any Subsidiary.





3.2 **Participation.** The
      Committee shall designate each eligible Management Employee who is a Participant
      in the Plan. The Committee may, in its sole discretion, terminate the
      participation of a Participant at any time prior to the date that substantive
      negotiations **** occur
      in
      connection with a potential Change-in-Control.





4.0 **ADMINISTRATION**





4.1 **Responsibility.** The
      Committee shall have the responsibility, in its sole discretion, to control,
      operate, manage and administer the Plan in accordance with its
      terms.










4.2 **Authority
      of the Committee.** The
      Committee shall have the maximum discretionary authority permitted by law that
      may be necessary to enable it to discharge its responsibilities with respect
      to
      the Plan, including but not limited to the following:





(a) to
      determine eligibility for participation in the Plan;





(b) to
      designate Participants;





(c) to
      determine and establish the formula to be used in calculating a Participant’s
      Change-in-Control Benefits;





(d) to
      correct any defect, supply any omission, or reconcile any inconsistency in
      the
      Plan in such manner and to such extent as it shall deem appropriate in its
      sole
      discretion to carry the same into effect;





(e) to
      issue
      administrative guidelines as an aid to administer the Plan and make changes
      in
      such guidelines as it from time to time deems proper;





(f) to
      make
      rules for carrying out and administering the Plan and make changes in such
      rules
      as it from time to time deems proper;





(g) to
      the
      extent permitted under the Plan, grant waivers of Plan terms, conditions,
      restrictions, and limitations;





(h) to
      make
      reasonable determinations as to a Participant’s eligibility for benefits under
      the Plan, including determinations as to Cause and Good Reason; and





(i) to
      take
      any and all other actions it deems necessary or advisable for the proper
      operation or administration of the Plan.





4.3 **Action
      by the Committee.** The
      Committee may act only by a majority of its members. Any determination of the
      Committee may be made, without a meeting, by a writing or writings signed by
      all
      of the members of the Committee. In addition, the Committee may authorize any
      one or more of its members to execute and deliver documents on behalf of the
      Committee.





4.4 **Delegation
      of Authority.** The
      Committee may delegate to one or more of its members, or to one or more agents,
      such administrative duties as it may deem advisable; *provided,
      however,* that
      any
      such delegation shall be in writing. In addition, the Committee, or any person
      to whom it has delegated duties as aforesaid, may employ one or more persons
      to
      render advice with respect to any responsibility the Committee or such person
      may have under the Plan. The Committee may employ such legal or other counsel,
      consultants and agents as it may deem desirable for the administration of the
      Plan and may rely upon any opinion or computation received from any such
      counsel, consultant or agent. Expenses incurred by the Committee in the
      engagement of such counsel, consultant or agent shall be paid by ** the
      Company, or the Subsidiary whose employees have benefited from the Plan, as
      determined by the Committee.










4.5 **Determinations
      and Interpretations by the Committee.** All
      determinations and interpretations made by the Committee shall be binding and
      conclusive to the maximum extent permitted by law on all Participants and their
      heirs, successors, and legal representatives.





4.6 **Information.** The
      Company shall furnish to the Committee in writing all information the Committee
      may deem appropriate for the exercise of its powers and duties in the
      administration of the Plan. Such information may include, but shall not be
      limited to, the full names of all Participants, their earnings and their dates
      of birth, employment, retirement or death. Such information shall be conclusive
      for all purposes of the Plan, and the Committee shall be entitled to rely
      thereon without any investigation thereof.





4.7 **Self-Interest.** No
      member
      of the Committee may act, vote or otherwise influence a decision of the
      Committee specifically relating to his or her benefits, if any, under the
      Plan.





5.0 **TERMINATION
      OF EMPLOYMENT**





5.1 **Termination
      of Employment.** If
      the
      Company or a Subsidiary employing a Participant terminates such Participant’s
      employment without Cause, or if a Participant terminates his or her employment
      with the Company or a Subsidiary for Good Reason, and in either case such
      termination of employment is a Separation from Service that is not due to the
      death or Retirement of the Participant, and such termination of employment
      occurs during the 24-month period following the Change-in-Control Date, or
      occurs prior to the Change-in-Control Date but after substantive
      negotiations **** leading
      to the Change-in-Control and can be demonstrated to have occurred at the request
      or initiation of parties to the Change-in-Control (such date of termination
      of
      employment shall be referred to herein as the “Termination Date”), the
      Terminated Participant shall be entitled to receive the Change-in-Control
      Benefits in accordance with Section 6 below.





6.0 **CHANGE-IN-CONTROL
      BENEFITS**





6.1 **Cash
      Payment.** Within
      ten days following the Termination Date, the Company shall pay to the Terminated
      Participant, in a lump sum, an amount in cash as determined under a formula
      established by the Committee (such formula to be established by the Committee,
      in its sole discretion, on the date the Committee designates such individual
      as
      a Participant in accordance with Section 3.2 above); *provided,
      however,* that
      such
      Cash Payment shall not exceed in the aggregate an amount equal to the sum
      of:





(a)
            The
                Applicable Percentage of the Terminated Participant’s annual base salary
                in effect on the Termination Date;
                plus





(b)
            The
                Applicable Percentage of the greater of (i) the average of the Terminated
                Participant's annual incentive bonus paid to the Terminated
                Participant under the Company's Management Incentive Compensation
                Plan or otherwise with respect to the three completed calendar years
                immeidately preceding the year in which the Termination Date occurs;
                *provided however*, that if the Terminated Participant was not
                eligible to receive an annual incentive bous with respect to each
                of the
                three calendar years immediately preceding the year in which the
                Termination Date occurs, the average shall be determined for that
                period
                of calendar years, if any, for which the Terminated Participant was
                eleigle to receive an annual incentive bonus or (ii) the Terminated
                Participant's target annual incentive bonus for the year in which
                the
                Termination Date occurs.







For
      this
      purpose, the “Applicable Percentage” shall be determined as
      follows:





Participant  Applicable
      Percentage





Tier
      I                  
      300%


Tier
      II 200%


Tier
      III 150%





6.2 **Annual
      Cash Incentive Compensation Plans.** The
      Terminated Participant shall be entitled to receive an amount equal to his
      or
      her compensation under the annual cash incentive compensation plan covering
      the
      Terminated Participant based on 100 percent (100%) of his or her target bonus
      under such plan, which shall be paid during the 10-day period following the
      Termination Date.




6.3 **Long
      Term Compensation Plan.** The
      Terminated Participant shall be entitled to receive any awards which have been
      earned prior to the Termination Date under the Company’s Amended and Restated
      Long
      Term Compensation Plan, which shall be paid during the 10-day period following
      the Termination Date.




6.4 **Restricted
      Stock Agreements.** The
      Terminated Participant shall become vested as of the Termination Date in any
      restricted share awards which have been granted to     him
      or her under the Company’s 1997 Equity Incentive Plan, the 2002 Equity Incentive
      Plan or any successor plans, and such shares shall be delivered to him or her
      without restriction during the 10-day period following the Termination
      Date.





6.5 **Performance
      Share Sub-Plans.** The
      Terminated Participant shall become vested as of the  Termination
      Date in any awards which have been granted to such Participant under the  Company’s
      Performance Share Sub-Plans. The Terminated Participant shall be entitled to  payment
      of any awards which have been granted to him or her under such plans prior
      to
      the  Termination
      Date within ten days following the date that the data needed to calculate the  value
      of
      the awards is available to the Company.





6.6 **Stock
      Option Agreements.** Except
      to
      the extent that greater rights are provided to the Terminated Participant under
      the terms of a Stock Option Agreement between the Terminated Participant and
      the
      Company, the Terminated Participant shall have the following rights under any
      Stock Option Agreement following the Termination Date:





(a) Option
      Assumed by Successor. If the Stock Option Agreement has been assumed by the
      successor to the Company on or before the Change-in-Control Date, any options
      not previously forfeited shall vest in accordance with the terms of the Stock
      Option Agreement and any vested options may be exercised by the Terminated
      Participant during the remaining term of such options notwithstanding the
      termination of employment by the Terminated Participant.










(b)  Option
      Not Assumed by Successor. If the Stock Option Agreement has not been assumed
      by
      the successor on or before the Change-in-Control Date, any outstanding options
      shall be fully vested as of the Change-in-Control Date and, in lieu of exercise,
      the value of such options shall be paid to the Terminated Participant in an
      amount equal to the excess, if any, of the aggregate fair market value as of
      the
      Change-in-Control Date of the shares subject to such options over the aggregate
      exercise price for such shares. Such payment shall be made during the 10-day
      period following the later of (i) the Termination Date, or (ii) the
      Change-in-Control Date. Notwithstanding the foregoing, if the Terminated
      Participant was terminated in anticipation of a Change-in-Control as described
      in Section 5.1 and the anticipated Change-in-Control does not occur, this
      Section 6.6(b) shall not apply and the terms of the Stock Option Agreement
      shall
      control.





For
      purposes of this Section 6.6, the successor shall be deemed to have “assumed” a
      Stock Option Agreement if the excess of the aggregate fair market value of
      the
      shares subject to the options over the aggregate exercise price immediately
      after the assumption is no less than the excess of the aggregate fair market
      value of the shares subject to the options over the aggregate exercise price
      immediately prior to the assumption.





6.7 **Other
      Company Incentive Compensation Plans.** The
      Terminated Participant shall become vested as of the Termination Date in any
      awards which have been granted to such Participant under any Company incentive
      compensation plan, program or agreements (other than those plans or agreements
      specified in Sections 6.2, 6.3, 6.4, 6.5 and 6.6 above) prior to the Termination
      Date. A Terminated Participant shall be entitled to (i) payment of any cash
      awards and (ii) delivery of any unrestricted shares (if such award is in the
      form of restricted stock), which have been granted to him or her under such
      plan(s) prior to the Termination Date during the 10-day period following the
      Termination Date.





6.8 **Payment
      of Change-in-Control Benefits to Beneficiaries.** In
      the
      event of the Participant’s death, all Change-in-Control Benefits that would have
      been paid to the Participant under this Section 6 but for his or her death
      shall
      be paid to the Participant’s Beneficiary.





7.0 **PARTICIPATION
      IN NONQUALIFIED PENSION AND WELFARE BENEFIT PLANS**





7.1 **Nonqualified
      Deferred Compensation Plans; Restoration Retirement Plan.** The
      Terminated Participant shall be entitled to payment of his or her benefit in
      any
      nonqualified deferred compensation or restoration pension plan of the Company
      (including, but not limited to, the Management Deferred Compensation Plan,
      the
      Deferred Compensation Plan for Key Management Employees and the Restoration
      Retirement Plan) in accordance with the terms of such plan.





7.2 **Supplemental
      Senior Executive Retirement Plan.** A
      Terminated Participant who is a member of the Senior Management Committee and
      would otherwise be eligible to participate in the Company’s Supplemental Senior
      Executive Retirement Plan but for the applicable service requirements shall
      (i)
      be deemed to have a minimum of three years of service on the Senior Management
      Committee and as a Senior Vice President or more senior officer and (ii) receive
      a grant of additional service so that such Terminated Participant has a
      minimum
      of ten years of service with the Company for benefit purposes. Such a terminated
      Participant shall be entitled to payment of his or her benefit under the
      Supplemental Senior Executive Retirement Plan in accordance with the terms
      of
      such plan upon reaching the earliest age for receipt of benefits (including
      any
      additional credited service described in the previous sentence).





7.3 **Split-Dollar
      Life Insurance Policies.** Following the Termination Date, the Terminated Participant shall be entitled
      to
      payment by the Company of all premiums due under any split-dollar life insurance
      arrangement of the Company (including, but not limited to, the Split Dollar
      Life
      Insurance Plan, the Executive Estate Conservation Plan and the Executive
      Permanent Life Insurance Plan) for any life insurance policy under which the
      Terminated Participant is the insured that come due during the Applicable Period
      following the Termination Date.





7.4 **Employee
      Welfare Benefits.** The
      Company or the applicable Subsidiary shall pay the total cost for the Terminated
      Participant to continue coverage after the Termination Date in the medical,
      dental, vision, and life insurance plans of the Company or the applicable
      Subsidiary in which he or she was participating on the Termination Date until
      the earlier of:





(a)
            the
                end of the Applicable Period following the Termination
                Date;





(b)
            the
                date, or dates, he or she receives comparable coverage and benefits
                under
                the plans, programs and/or arrangements of a subsequent employer
                (such
                coverage and benefits to be determined on a coverage-by-coverage
                or
                benefit-by-benefit basis); or





(c) the
      Retirement of the Terminated Participant.





Notwithstanding
      the foregoing, however, the termination of the Participant shall constitute
      a
      qualifying event with respect to the right of the Terminated Participant and
      any
      covered dependents to continue group medical, dental and vision coverage in
      accordance with COBRA, and the continuation period for purposes of COBRA shall
      run concurrently with the Applicable Period.





7.5
            **Applicable
                Period.**For
                purposes of Section 7.3 and 7.4, the Applicable Period shall be determined
                as follows:





Participant  Applicable
      Period





Tier
      I  36
      Months


Tier
      II 24
      Months


Tier
      III 18
      Months











8.0
            **TRIGGER
                TRUST**





8.1
            **Establishment
                of Trigger Trust.**The Board may, in its sole discretion, establish or cause to be
                established a Trigger Trust as described in Section 8.2 below, the
                purpose
                of which is to provide a fund for the payment of some or all of the
                Change-in-Control Benefits and other benefits under Sections 6 and
                7 above
                to Terminated Participants following a Change-in-Control Date, and
                such
                other benefits as may be determined by the Board from time to
                time.





8.2
            **Trigger
                Trust Requirements.**The Trigger Trust shall be a trust:





(a)
            of
                which the Company is the grantor, within the meaning of subpart E,
                part I,
                subchapter J, chapter 1, subtitle A of the
                Code;





(b)
            under
                which all Participants as of the Change-in-Control Date are beneficiaries;





(c) the
      assets of which shall be subject to the claims of the Company’s general
      creditors in accordance with Internal Revenue Service Revenue Procedure 92-64;
      and





(d) none
      of
      the assets of which shall be includable in the income of Participants solely
      as
      a result of Section 409A of the Code.





9.0 **CLAIMS**





9.1 **Claims
      Procedure.** If
      any
      Participant or Beneficiary, or their legal representative, has a claim for
      benefits which is not being paid, such claimant may file a written claim with
      the Committee setting forth the amount and nature of the claim, supporting
      facts, and the claimant’s address. Written notice of the disposition of a claim
      by the Committee shall be furnished to the claimant within 90 days after the
      claim is filed. In the event of special circumstances, the Committee may extend
      the period for determination for up to an additional 90 days, in which case
      it
      shall so advise the claimant. If the claim is denied, the reasons for the denial
      shall be specifically set forth in writing, the pertinent provisions of the
      Plan
      will be cited, including an explanation of the Plan’s claim review procedure,
      and, if the claim is perfectible, an explanation as to how the claimant can
      perfect the claim shall be provided.





9.2 **Claims
      Review Procedure.** If a
      claimant whose claim has been denied wishes further consideration of his or
      her
      claim, he or she may request the Committee to review his or her claim in a
      written statement of the claimant’s position filed with the Committee no later
      than 60 days after receipt of the written notification provided for in Section
      9.1 above. The Committee shall fully and fairly review the matter and shall
      promptly advise the claimant, in writing, of its decision within the next 60
      days. Due to special circumstances, the Committee may extend the period for
      determination for up to an additional 60 days.





9.3 **Reimbursement
      of Expenses.** If there
      is any dispute between the Company and a Participant with respect to a claim
      under the Plan, the Company shall reimburse such Participant all reasonable
      fees, costs and expenses incurred by such Participant with respect to such
      disputed claim; *provided,
      however,* that (i)
      such Participant is the prevailing party with respect to such disputed claim
      or
      (ii) the disputed claim is settled.










10.0 **TAXES**





10.1 **Withholding
      Taxes.** The
      Company shall be entitled to withhold from any and all payments  made
      to
      a **** Participant
      under the Plan all federal, state, local and/or other taxes or imposts  which
      the
      Company determines are required to be so withheld from such payments or by  reason
      of
      any other payments made to or on behalf of the Participant or for his or her
      benefit  hereunder.





10.2 **No
      Guarantee of Tax Consequences.** No
      person connected with the Plan in any capacity, including, but not limited
      to,
      the Company and any Subsidiary and their directors, officers, agents and
      employees makes any representation, commitment, or guarantee that any tax
      treatment, including, but not limited to, federal, state. and local income,
      estate and gift tax treatment, will be applicable with respect to amounts
      deferred under the Plan, or paid to or for the benefit of a Participant under
      the Plan, or that such tax treatment will apply to or be available to a
      Participant on account of participation in the Plan.





11.0 **ADDITIONAL
      PAYMENTS**





11.1 **Gross-Up
      Payment.** In the
      event that any payment or benefit received or to be received by any Participant
      pursuant to the terms of the Plan other than the Gross-Up Payment described
      in
      this Section 11.1 (the “Plan Payments”) or of any other plan, arrangement or
      agreement of the Company or any Subsidiary (“Other Payments” and, together with
      the Plan Payments, the “Payments”) would be subject to the excise tax (the
“Excise Tax”) imposed by Section 4999 of the Code as determined as provided
      below, the Company shall pay to such Participant, at the time specified in
      Section 11.3 below, an additional amount (the “Gross-Up Payment”) such that the
      net amount of such Gross-Up Payment retained by such Participant, after
      deduction of the Excise Tax on the Gross-Up Payment and any federal, state
      and
      local income tax on the Gross-Up Payment, and any interest, penalties or
      additions to tax payable by such Participant with respect to the Gross-Up
      Payment, shall be **** equal
      to
      the total present value (using the applicable federal rate (as defined in
      Section 1274(d) of the Code in such calculation) of the amount of the Exise
      Tax
      on the Payments at the time such Payments are to be made. Notwithstanding the
      foregoing provisions of this Section 11.1, if it shall be determined that a
      Participant in Tier II or Tier III **** is
      entitled to a Gross-Up Payment, but that the Payments would not be subject
      to
      the Excise Tax if the Payments were reduced by an amount that does not exceed
      ten percent (10%) of the portion of the Payments that would be treated as
“parachute payments” under Section 280G of the Code, then the Plan Payments
      shall be reduced (but not below zero) to the maximum amount that could be paid
      to the Participant without giving rise to the Excise Tax (the “Safe Harbor
      Cap”), and no Gross-Up Payment shall be made to the Participant. The reduction
      of the Plan Payments hereunder, if applicable, shall be made by reducing first
      the Cash Payment under Section 6.1, unless an alternative method of reduction
      is
      elected by the Participant and agreed to by the Committee. For purposes of
      reducing the Payments to the Safe Harbor Cap, only Plan Payments (and no other
      Payments) shall be reduced. If the reduction of the Plan Payments would not
      result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable
      under this Plan shall be reduced pursuant to this provision.










11.2 **Determination.** For
      purposes of determining whether any of the Payments will be subject to the
      Excise Tax and the amounts of such Excise Tax:


(a)  the
      total
      amount of the Payments shall be treated as “parachute payments” within the
      meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments”
within the meaning of Section 280G(b)(1) of the Code shall be treated as subject
      to the Excise Tax, except to the extent that, in the opinion of independent counsel
      selected by the Company and reasonably acceptable to such Participant
      (“Independent Counsel”), a Payment (in whole or in part) does not constitute a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code, or
      such “excess parachute payments” (in whole or in part) are not subject to the
      Excise Tax;





(b)  the
      amount of the Payments that shall be treated as subject to the Excise Tax shall
      be equal to the lesser of (i) the total amount of the Payments or (ii) the
      amount of “excess parachute payments” within the meaning of Section 280G(b)(1)
      of the Code (after applying Section 11.2(a) above); and





(c) the
      value
      of any noncash benefits or any deferred payment or benefit shall be determined
      by Independent Counsel in accordance with the principles of Sections 280G(d)(3)
      and (4) of the Code.





For
      purposes of determining the amount of the Gross-Up Payment, such Participant
      shall be deemed to pay federal income taxes at the highest marginal rates of
      federal income taxation applicable ** to
      the
      individuals ** in ** the
      calendar year in which the Gross-Up Payment is to be made and state and local
      income taxes at the highest marginal rates of taxation applicable to individuals
      as are **** in
      effect
      in the state and locality of such Participant’s residence in the calendar year
      in which the Gross-Up Payment is to be made, net of the maximum reduction in
      federal income taxes that can be obtained from deduction of such state and
      local
      taxes, taking into account any limitations applicable to individuals subject
      to
      federal income tax at the highest marginal rates.





11.3  **Date
      of Payment** ****** **of
      Gross-Up Payments.** The
      Gross-Up Payments provided for in Section 11.1 above shall be paid upon
      the **** earlier
      of (i) the payment to such Participant of any Payment or (ii) the imposition
      upon such Participant or payment by such Participant of any Excise
      Tax.




11.4 **Adjustment.** If it
      is **** established
      pursuant to a final determination of a court or an Internal Revenue
      Service **** proceeding
      or the **** opinion
      of Independent Counsel that the Excise Tax is less than the amount taken into
      account under Section 11.1 above, such Participant shall repay to the Company
      within 30 days of such Participant’s receipt of notice of such final
      determination or opinion the portion of the **** Gross-Up
      Payment attributable to such reduction (plus the portion of the Gross-Up Payment
      attributable to the Excise Tax and federal, state and local income tax imposed
      on the Gross-Up Payment being repaid by such Participant if such repayment
      results in a reduction in Excise Tax or a federal, state and local income tax
      deduction) plus any interest received by such Participant on the amount of
      such
      repayment.





If
      it is
      established pursuant to a final determination of a **** court
      or
      an Internal Revenue **** Service
      proceeding or the opinion of independent Counsel that the Excise Tax exceeds
      the
      amount taken into account hereunder (including by reason of any payment the
      existence or amount of which cannot be determined at the time of the Gross-Up
      Payment), the Company shall make an additional Gross-Up Payment in respect
      of
      such excess within 30 days of the Company’s receipt **** of
      notice
      of such final determination or opinion.





11.5 **Further
      Interpretation of Section 280G or 4999 of the Code.** In
      the
      event of any change in, or further interpretation of, Section 280G or 4999
      of
      the Code and the regulations promulgated thereunder, such Participant shall
      be **** entitled,
      by written notice to the Company, to request an opinion of Independent Counsel
      regarding the application of such change to any of the foregoing, and the
      Company shall use its best efforts to cause such opinion to be rendered as
      promptly as practicable. All fees and expenses of Independent Counsel incurred
      in connection with this agreement shall be borne by the Company.





12.0 **TERM
      OF PLAN; AMENDMENT AND TERMINATION**





12.1 **Term
      of Plan, Amendment, Termination.** The
      Plan
      shall be effective as of the Effective Date and shall remain in effect until
      the
      Board terminates the Plan. The Plan may be terminated, suspended or amended
      by
      the Board at any time with or without prior notice prior to a Change-in-Control; *provided,
      however,* that
      the
      Plan shall not be **** terminated,
      suspended or amended on a Change-in-Control Date or during the 3-year period
      following such Change-in-Control Date, and if the Plan is terminated, suspended
      or amended thereafter, such action shall not adversely affect the **** benefits
      of any Terminated Participant.





13.0 **COMPLIANCE
      WITH SECTION 409A**





13.1 **General.** Notwithstanding any other provision in the Plan to the contrary, if and to
      the
      extent that Section 409A is deemed to apply to the Plan or any Change-in-Control
      Benefit provided under the Plan, it is the general intention of the Company
      that
      the Plan and all such benefits shall comply with Section 409A, related
      regulations or other guidance, and the Plan and any such Change-in-Control
      Benefit shall, to the extent practicable, be construed in accordance therewith.
      Without in any way limiting the effect of the foregoing, in the event that
      Section 409A, related regulations or other guidance require that any special
      terms, provisions or conditions be included in the Plan or any Change-in-Control
      Benefit, then such terms, provisions and conditions shall, to the extent
      practicable, be deemed to be made a part of the Plan or Change-in-Control
      Benefit, as applicable. Further, in the event that the Plan or any
      Change-in-Control Benefit shall be deemed not to comply with Section 409A or
      any
      related regulations or other guidance, then neither the Company, the Committee
      nor its or their designees or agents shall be liable to any Participant or
      other
      person for actions, decisions or determinations made in good faith.





13.2 **Specific
      Terms Applicable to Change-in-Control Benefits Subject to Section
      409A.** Without
      limiting the effect of Section 13.1 above, and notwithstanding any other
      provision in the Plan to the contrary, the following provisions shall, to the
      extent required under Section 409A, related regulations or other guidance,
      apply
      with respect to Change-in-Control Benefits deemed to involve the deferral of
      compensation under Section 409A:








(a)
            Distributions:
                Distributions may be made with respect to Change-in-Control Benefits
                subject to Section 409A not earlier than upon the occurrence of one
                or
                more of the following events: (A) Separation from Service; (B) disability;
                (C) death; (D) a specified time or pursuant to a fixed schedule;
                (E) a
                change in the ownership or effective control of the Company, or in
                the
                ownership of a substantial portion of the assets of the Company,
                as
                defined in Section 2.5.2; or (F) the occurrence of an unforeseeable
                emergency. Each of the preceding distribution events shall be defined
                and
                interpreted in accordance with Section 409A and related regulations
                or
                other guidance.




(b)
            Specified
                Employees:
                With respect to Participants who are Specified Employees, a distribution
                of deferred compensation due to Separation from Service may not be
                made
                before the date that is six months after the Termination Date (or,
                if
                earlier, the date of death of the Participant), except as may be
                otherwise
                permitted pursuant to Section 409A. To the extent that a Participant
                is
                subject to this section and a distribution is to be paid in installments,
                through an annuity, or in some other manner where payment will be
                periodic, the Participant shall be paid, during the seventh month
                following the Termination Date, the aggregate amount of payments
                he or she
                would have received but for the application of this section; all
                remaining
                payments shall be made in their ordinary
                course.




(c)  No
      Acceleration :
      Unless
      permissible under Section 409A, related regulations or other guidance, the
      acceleration of the time or schedule for the payment of any Change-in-Control
      Benefit under the Plan is prohibited.





14.0 **MISCELLANEOUS**





14.1 **Offset.** The
      Change-in-Control Benefits shall be reduced by any payment or benefit made
      or
      provided by the Company or any Subsidiary to the Participant pursuant to (i)
      any
      severance plan, program, policy or arrangement of the Company or any subsidiary
      of the Company not otherwise referred to in the Plan, (ii) any employment
      agreement between the Company or any Subsidiary and the Participant, and (iii)
      any federal, state or local statute, rule, regulation or ordinance.





14.2 **No
      Right, Title, or Interest in Company Assets.** Participants shall have no right, title, or interest whatsoever in or to any
      assets of the Company or any investments which the Company may make to aid
      it in
      meeting its obligations under the Plan. Nothing contained in the Plan, and
      no
      action taken pursuant to its provisions, shall create or be construed to create
      a trust of any kind, or a fiduciary relationship between the Company and any
      Participant, Beneficiary, legal representative or any other person. To the
      extent that any person acquires a right to receive payments from the Company
      under the Plan, such right shall be no greater than the right of an unsecured
      general creditor of the Company. Subject to Section 8 above, all payments to
      be
      made hereunder shall be paid from the general funds of the Company and no
      special or separate fund shall be established and no segregation of assets
      shall
      be made to assure payment of such amounts except as expressly set forth in
      the
      Plan.










14.3 **No
      Right to Continued Employment.** The
      Participant’s rights, if any, to continue to serve the Company or any Subsidiary
      as an employee shall not be enlarged or otherwise affected by his or her
      designation as a Participant under the Plan, and the Company or the applicable
      Subsidiary reserves the right to terminate the employment of any employee at
      any ** time.
      The
      adoption ** of
      the
      Plan shall not be deemed to give any employee, or any other individual any
      right
      to be selected **** as
      a
      Participant or to continued employment with the Company or any
      Subsidiary.





14.4 **Other
      Rights.** The Plan
      shall not affect or impair the rights or obligations of the Company, any
      Subsidiary or a Participant under any other written plan, contract, arrangement,
      or pension, profit sharing or other compensation plan.





14.5 **Governing
      Law.** The Plan
      shall be governed by and construed in accordance with the laws of the State
      of
      North Carolina without reference to principles of conflict of laws, except
      as
      superseded by applicable federal law.





14.6 **Severability.** If
      any
      term or condition of the Plan shall be invalid or unenforceable to any extent
      or
      in any application, then the remainder of the Plan, with the exception of such
      invalid or unenforceable provision, shall not be affected thereby and shall
      continue in effect and application to its fullest extent.





14.7 **Incapacity.** If the
      Committee determines that a Participant or a Beneficiary is unable to care
      for
      his or her affairs because of illness or accident or because he or she is a
      minor, any benefit due the Participant or Beneficiary may be paid to the
      Participant’s spouse ** or
      to any
      other person deemed by the Committee to have incurred expense for such
      Participant (including a duly appointed guardian, committee or other legal
      representative), and any such payment shall be a complete discharge of the
      Company’s obligation hereunder.





14.8 **Transferability
      of Rights.** The
      Company shall have the unrestricted right to transfer its obligations under
      the
      Plan with respect to one or more Participants to any person, including, but
      not
      limited to, any purchaser of all or any part of the Company’s business. No
      Participant or Beneficiary shall have any right to commute, encumber, transfer
      or otherwise dispose of or alienate any present or future right or expectancy
      which the Participant or Beneficiary may have at any time to receive payments
      of
      benefits hereunder, which benefits and the right thereto are expressly declared
      to be non-assignable and nontransferable, except to the extent required by
      law.
      Any attempt to transfer or assign a benefit, or any rights granted hereunder,
      by
      a Participant or the spouse of a Participant shall,  in
      the
      sole discretion of the Committee (after consideration of such facts as it deems
      pertinent), be grounds for terminating any rights of the Participant or
      Beneficiary to any portion of the Plan benefits not previously
      paid.








IN
      WITNESS WHEREOF, this instrument has been executed this 15th day of December,
      2006.





PROGRESS
      ENERGY,
      INC.








By:
      /s/ Robert
      B. McGehee


Robert B. McGehee


Chief
      Executive
      Officer