<PAGE>

                                                                 Exhibit 10c(16)

                              PROGRESS ENERGY, INC.

                              AMENDED AND RESTATED

                      MANAGEMENT DEFERRED COMPENSATION PLAN

                          Adopted as of January 1, 2000

               (As Revised and Restated effective January 1, 2002)

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                                TABLE OF CONTENTS

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<S> <C>                                                                                                <C>
PREAMBLE...............................................................................................1

ARTICLE I.        DEFINITIONS..........................................................................2
    1.1           Account Balance......................................................................2
    1.2           Additional Deferral Election.........................................................2
    1.3           Board................................................................................2
    1.3           Affiliated Company...................................................................2
    1.5           Board Committee......................................................................2
    1.6           Change of Control....................................................................2
    1.7           Change-of-Form Election..............................................................3
    1.8           Change-of-Investment Election........................................................3
    1.9           Code.................................................................................4
    1.10          Committee............................................................................4
    1.11          Company..............................................................................4
    1.12          Company Incentive Plans..............................................................4
    1.13          Continuing Directors.................................................................4
    1.14          Deemed Investment Return.............................................................4
    1.15          Deferral Election....................................................................5
    1.16          Deferrals............................................................................5
    1.17          Effective Date.......................................................................5
    1.18          Eligible Employee....................................................................5
    1.19          Employee Stock Incentive Plan........................................................5
    1.20          Enrollment Form......................................................................5
    1.21          ERISA................................................................................5
    1.22          Incentive Matching Allocations.......................................................6
    1.23          Investment Election..................................................................6
    1.24          Matching Allocation..................................................................6
    1.25          Matured Plan Year Company Account....................................................6
    1.26          Net Salary...........................................................................6
    1.27          Participant..........................................................................6
    1.28          Participant Accounts.................................................................6
    1.29          Participant Company Account..........................................................7
    1.30          Participant Deferral Account.........................................................7
    1.31          Participant Matchable Deferral.......................................................7
    1.32          Payment Commencement.................................................................7
    1.33          Phantom Investment Fund..............................................................8
    1.34          Phantom Funds Account................................................................8
    1.35          Phantom Investment Subaccount........................................................8
    1.36          Phantom Stock Unit...................................................................8
    1.37          Plan.................................................................................8
    1.38          Plan Year............................................................................8
    1.39          Plan Year Accounts...................................................................9
    1.40          Progress Energy 401(k) Savings & Stock Ownership Plan................................9
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                                        i

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    1.41          Retirement Date.......................................................................9
    1.42          Salary................................................................................9
    1.43          SMC Participant.......................................................................9
    1.44          Sponsor...............................................................................9
    1.45          SSERP.................................................................................9
    1.46          Valuation Date.......................................................................10
    1.47          Value................................................................................10
    1.48          Years of Service.....................................................................10

ARTICLE II.       PARTICIPATION........................................................................11
    2.1           Eligibility..........................................................................11
    2.2           Commencement of Participation........................................................11
    2.3           Annual Participation Agreement.......................................................11
    2.4           Election of Phantom Investment Subaccounts...........................................12

ARTICLE III.      DEFERRAL ELECTIONS...................................................................13
    3.1           Participant Deferred Salary Elections................................................13
    3.2           Matching Allocations.................................................................14
    3.3           Incentive Matching Allocations.......................................................15

ARTICLE IV.       ACCOUNTS.............................................................................16
    4.1           Maintenance of Accounts..............................................................16
    4.2           Separate Plan Year Accounts..........................................................16
    4.3           Phantom Investment Subaccounts.......................................................16
    4.4           Administration of Deferral Accounts..................................................16
    4.5           Administration of Company Accounts...................................................17
    4.6           Change of Phantom Investment Subaccounts and Phantom Stock Units.....................18
    4.7           Transferred Accounts.................................................................19

ARTICLE V.        VESTING..............................................................................20
    5.1           Vesting..............................................................................20

ARTICLE VI.       DISTRIBUTIONS........................................................................21
    6.1           Distribution Elections...............................................................21
    6.2           Change-of-Form Elections and Additional Deferral Elections...........................21
    6.3           Payment..............................................................................22
    6.4           Hardships............................................................................22
    6.5           Termination of Employment............................................................23
    6.6           Taxes................................................................................23
    6.7           Acceleration of Payment..............................................................24

ARTICLE VII.      DEATH BENEFITS.......................................................................25
    7.1           Designation of Beneficiaries.........................................................25
    7.2           Death Benefit........................................................................25
</TABLE>

                                       ii

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ARTICLE VIII.     CLAIMS...............................................................................26
    8.1           Claims Procedure.....................................................................26
    8.2           Claims Review Procedure..............................................................26

ARTICLE IX.       ADMINISTRATION.......................................................................28
    9.1           Committee............................................................................28
    9.2           Authority............................................................................28

ARTICLE X.        AMENDMENT AND TERMINATION OF THE PLAN................................................30
    10.1          Amendment of the Plan................................................................30
    10.2          Termination of the Plan..............................................................30
    10.3          No Impairment of Benefits............................................................30

ARTICLE XI.       FUNDING AND CLAIM STATUS.............................................................31
    11.1          General Provisions...................................................................31

ARTICLE XII.      EFFECT ON EMPLOYMENT OR ENGAGEMENT...................................................33
    12.1          General..............................................................................33

ARTICLE XIII.     GOVERNING LAW........................................................................34
    13.1          General..............................................................................34
</TABLE>

                                       iii

<PAGE>

                                    PREAMBLE

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

                                        1

<PAGE>

                                    Article I
                                   DEFINITIONS

          1.1       Account Balance
                    ---------------

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

          1.2       Additional Deferral Election
                    ----------------------------

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

          1.3       Affiliated Company
                    ------------------

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

          1.4       Board
                    -----

          The Board of Directors of the Sponsor.

          1.5       Board Committee
                    ---------------

          The Organization and Compensation Committee of the Board.

          1.6       Change of Control
                    -----------------

          The first to occur of the following circumstances:

                    (i) the acquisition by any person (including a group, within
          the meaning of Section 13(d) of the Securities Exchange Act of 1934,
          as amended), of beneficial ownership of 15% or more of the Company's
          then outstanding voting securities;

                    (ii) a tender offer is made and consummated for the
          ownership of 51% or more of the Sponsor's then outstanding voting
          securities;

                                        2

<PAGE>

                    (iii) the first day on which less than 66-2/3 percent of the
          total membership of the Board are Continuing Directors;

                    (iv) approval by the stockholders of the Sponsor of a
          merger, consolidation, liquidation or dissolution of the Sponsor, or
          the sale of all or substantially all of the assets of the Sponsor.

          A Change of Control shall not be deemed to have occurred until the
Board or a committee or subcommittee of the Board receives written certification
from the Sponsor's President and Chief Executive Officer or, in the event of his
or her inability to act, the Sponsor's Chief Financial Officer, or any Executive
or Senior Vice President of the Sponsor that one of the events set forth in
Section 1.5(i) through (iv) has occurred. The officers referred to in the
previous sentence shall be those officers in office immediately prior to the
occurrence of one of the events set forth above in Section 1.5(i) through (iv)
above. Any determination under the Plan that an event described in Section
1.5(i) through (iv) above has occurred shall be made in good faith by the Board
Committee on the basis of information available at the time and be conclusive
and binding for all purposes of the Plan.

          1.7       Change-of-Form Election
                    -----------------------

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

          1.8       Change-of-Investment Election
                    -----------------------------

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

                                        3

<PAGE>

          1.9       Code
                    ----

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

          1.10      Committee
                    ---------

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

          1.11      Company
                    -------

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

          1.12      Company Incentive Plans
                    -----------------------

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

          1.13      Continuing Directors
                    --------------------

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

          1.14      Deemed Investment Return
                    ------------------------

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

                                        4

<PAGE>

          1.15      Deferral Election
                    -----------------

          An election to defer Salary pursuant to Section 3.1.

          1.16      Deferrals
                    ---------

          The deferrals of Salary of a Participant pursuant to Section 3.1.

          1.17      Effective Date
                    --------------

          January 1, 2000.

          1.18      Eligible Employee
                    -----------------

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

          1.19      Employee Stock Incentive Plan
                    -----------------------------

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

          1.20      Enrollment Form
                    ---------------

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

          1.21      ERISA
                    -----

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

                                        5

<PAGE>

          1.22      Incentive Matching Allocations
                    -----------------------------

          The additional match allocation which is to be allocated to a
Participant's Company Account in accordance with Section 3.3.

          1.23      Investment Election
                    -------------------

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

          1.24      Matching Allocation
                    -------------------

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

          1.25      Matured Plan Year Company Account
                    ---------------------------------

          A Plan Year Company Account of a Participant which has matured in
accordance with Section 5.1(c).

          1.26      Net Salary
                    ----------

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

          1.27      Participant
                    -----------

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

          1.28      Participant Accounts
                    --------------------

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

                                        6

<PAGE>


          1.29      Participant Company Account
                    ---------------------------

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

          1.30      Participant Deferral Account
                    ----------------------------

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

          1.31      Participant Matchable Deferral
                    ------------------------------

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

          1.32      Payment Commencement
                    --------------------

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

                                        7

<PAGE>

          1.33      Phantom Investment Fund
                    -----------------------

          A deemed investment option for purposes of the Plan, each of which
shall be the same as those investment options generally available to all
participants in the Progress Energy 401(k) Savings & Stock Ownership Plan, or as
otherwise selected by the Committee.

          1.34      Phantom Funds Account
                    ---------------------

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

          1.35      Phantom Investment Subaccount
                    -----------------------------

          A notational bookkeeping account maintained under the Plan at the
direction of the Committee representing a deemed investment in one or more
Phantom Investment Funds as directed by the Participant under Sections 2.4 and
4.6.

          1.36      Phantom Stock Unit
                    ------------------

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

          1.37      Plan
                    ----

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

          1.38      Plan Year
                    ---------

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

                                        8

<PAGE>


          1.39      Plan Year Accounts
                    ------------------

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

          1.40      Progress Energy 401(k) Savings & Stock Ownership Plan
                    -----------------------------------------------------

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

          1.41      Retirement Date
          -------------------------

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

          1.42      Salary
          ----------------

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

          1.43      SMC Participant
          -------------------------

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

          1.44      Sponsor
          -----------------

          Progress Energy, Inc. and its successors in interest.

          1.45      SSERP
          ---------------

          The Supplemental Senior Executive Retirement Plan of the Company.

                                        9

<PAGE>

          1.46      Valuation Date
          ------------------------

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

          1.47      Value
          ---------------

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

          1.48      Years of Service
          --------------------------

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

                                       10

<PAGE>

                                   ARTICLE II
                                  PARTICIPATION

          2.1       Eligibility
                    -----------

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

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

          2.2       Commencement of Participation
                    -----------------------------

          Each Eligible Employee on the Effective Date may elect to become a
Participant as of the Effective Date by completing and submitting an Enrollment
Form to the Sponsor's designated agent by November 30, 1999. An employee of the
Company first becoming an Eligible Employee after January 1, 2000 may elect to
become a Participant effective as of thirty days after first becoming an
Eligible Employee by completing and submitting an Enrollment Form to the
Sponsor's designated agent within such thirty-day period. An Eligible Employee
who is not a Participant may elect to become a Participant as of the first day
of a Plan Year commencing after December 31, 2000 by completing and submitting
an Enrollment Form to the Sponsor's designated agent by November 30 prior to the
commencement of the Plan Year.

          2.3       Annual Participation Agreement
                    ------------------------------

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

                                       11

<PAGE>

          2.4       Election of Phantom Investment Subaccounts
                    ------------------------------------------

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

                                       12

<PAGE>

                                  Article III
                               DEFERRAL ELECTIONS

          3.1       Participant Deferred Salary Elections
                    -------------------------------------

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


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

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

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

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

                                       13

<PAGE>

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

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

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

          3.2       Matching Allocations
                    --------------------

          A Participant who has made a Deferral Election with respect to a Plan
Year and has Participant Matchable Deferrals for such Plan Year shall receive a
credit to his Participant Company Account of a Matching Allocation for such Plan
Year. The Matching Allocation with respect to a Plan Year shall equal 50% of the
Participant Matchable Deferrals. Matching Allocations shall be credited to the
Participant Company Account within ten business days following the applicable
payroll date, based on a pro-

                                       14

<PAGE>

rata portion of projected Matchable Deferrals for the Plan Year applicable to
each payroll period during the Plan Year.

          3.3       Incentive Matching Allocations
                    ------------------------------

          Participants with Matchable Deferrals for a Plan Year shall receive a
credit to their Participant Company Account for the Plan Year of an Incentive
Matching Allocation if an "Incentive Matching Allocation" is provided under the
Progress Energy 401(k) Savings & Stock Ownership Plan for the Plan Year. The
Incentive Matching Allocation shall equal that percentage of the Participant
Matchable Deferrals for the Plan Year equal to the "Incentive Matching
Allocation" (stated as a percentage) provided (or that would have been provided
if the Participant participated) under the Progress Energy 401(k) Savings &
Stock Ownership Plan for such Plan Year. Incentive Matching Allocations with
respect to a Plan Year, if any, shall be credited to a Participant's Company
Account in accordance with Section 4.5 pursuant to rules and procedures adopted
by the Committee approximately coincident with the credit under the Progress
Energy 401(k) Savings & Stock Ownership Plan of "Incentive Matching Allocations"
following the end of a Plan Year; provided, however, no such allocation shall be
made if a Participant is not employed at the end of the applicable Plan Year,
unless the Participant retired, died, or became disabled during the Plan Year.

                                       15

<PAGE>

                                   ARTICLE IV
                                    ACCOUNTS

          4.1       Maintenance of Accounts
                    -----------------------

          The Committee shall maintain a Participant Deferral Account and a
Participant Company Account for each Participant. There shall be credited to a
Participant's Deferral Account all Deferrals by a Participant under the Plan and
there shall be credited to a Participant's Company Account all Matching
Allocations and Incentive Matching Allocations with respect to a Participant
under the Plan in accordance with Sections 3.1 and 3.2.

          4.2       Separate Plan Year Accounts
                    ---------------------------

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

          4.3       Phantom Investment Subaccounts
                    ------------------------------

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

          4.4       Administration of Deferral Accounts
                    -----------------------------------

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

                                       16

<PAGE>

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

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

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

          4.5       Administration of Company Accounts
                    ----------------------------------

          (a) A Participant's Company Account shall be comprised of Phantom
     Stock Units or fractions thereof, and of units in Phantom Investment
     Subaccounts pursuant to an election by the Participant under Section
     4.6(b). All Matching Allocations and Incentive Matching Allocations shall
     be deemed invested in Phantom Stock Units on the date of allocations under
     the Plan based on the closing price of a share of common stock of the
     Sponsor on the New York Stock Exchange on the date of such allocation.

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

          (c) In the event there is any change in the common stock of the
     Sponsor, through merger, consolidation, reorganization, recapitalization
     (other than pursuant to bankruptcy proceedings), stock dividend, stock
     split, reverse stock

                                       17

<PAGE>

     split, split-up, split-off, spin-off, combination of shares, exchange of
     shares, dividend in kind or other like change in capital structure (an
     "Adjustment Event"), the number of Phantom Stock Units subject to the Plan
     shall be adjusted by the Committee in its sole judgment so as to give
     appropriate effect to such Adjustment Event. Any fractional units resulting
     from such adjustment may be eliminated. Each successive Adjustment Event
     shall result in the consideration by the Committee of whether any
     adjustment to the number of Phantom Stock Units subject to the Plan is
     necessary in the Committee's judgment. Issuance of common stock or
     securities convertible into common stock for value will not be deemed to be
     an Adjustment Event unless otherwise expressly determined by the Committee.

          4.6       Change of Phantom Investment Subaccounts and Phantom Stock
                    ----------------------------------------------------------
Units
-----

          (a) A Participant may elect to reallocate the value of his Phantom
     Investment Subaccounts comprising his Deferral Accounts among other Phantom
     Investment Subaccounts and change the allocation of future Deferrals among
     Phantom Investment Subaccounts once per calendar month, pursuant to uniform
     rules and procedures adopted by the Committee.

          (b) A Participant may elect to reallocate (i) the Phantom Stock Units
     which are part of a Matured Plan Year Company Account among Phantom
     Investment Subaccounts and (ii) Phantom Investment Subaccounts comprising
     part of his Company Account, once per calendar month, pursuant to uniform
     rules adopted by the Committee.

                                       18

<PAGE>

          4.7       Transferred Accounts
                    --------------------

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

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

          (c) The total value of the Transferred Accounts as described in this
     Section 4.7 shall be deemed a vested Matured Plan Year Company Account for
     all purposes of the Plan.

                                       19

<PAGE>

                                    ARTICLE V
                                     VESTING

          5.1       Vesting
                    -------

          (a) A Participant's Deferral Accounts shall be 100% vested at all
     times. A Participant's Company Accounts shall vest in accordance with the
     following schedule:

           Years of Service                         Percent of Vesting
           ----------------                         ------------------
             Less than 1                                     0
              1 or more                                    100%

          (b) A Participant's Plan Year Company Account shall be deemed a
     Matured Plan Year Company Account two years after the end of the applicable
     Plan Year.

                                       20

<PAGE>

                                   ARTICLE VI
                                  DISTRIBUTIONS

          6.1       Distribution Elections
                    ----------------------

          A Participant when making a Deferral Election pursuant to an
Enrollment Form with respect to a Plan Year shall elect on such Enrollment Form
(a) to defer the payment of his Plan Year Accounts with respect to such Plan
Year, in accordance with the Plan until (i) the April 1 following the date that
is five years from the last day of such Plan Year, (ii) the April 1 following
the Participant's Retirement or (iii) the April 1 following the first
anniversary of the Participant's Retirement (each a "Payment Commencement Date")
and (b) to provide for the payment of such Plan Year Account in the form of (i)
a lump sum or (ii) approximately equal installments over a period extending from
two years to ten years (by paying a fraction of the account balance each year
during such period), as elected by the Participant. Except as otherwise provided
in this ARTICLE VI, such elections may not be changed or revoked.

          6.2       Change-of-Form Elections and Additional Deferral Elections
                    ----------------------------------------------------------

          Any Participant who has made elections under Section 6.1 with respect
to Plan Year Accounts may elect at least one year prior to the Payment
Commencement Date with respect to such accounts a new Payment Commencement Date
that either is five years from the then current Payment Commencement Date or
otherwise is permitted under Section 6.1(a)(ii) or (iii). Only one such
Additional Deferral Election will be permitted with respect to Plan Year
Accounts relating to a particular Plan Year. In addition a Participant may elect
to change the form of distribution to any of the forms permitted under Section
6.1(b) by completing a Change-of-Form Elections with respect

                                       21

<PAGE>

to Plan Year Accounts at least one year prior to the applicable Payment
Commencement Date for such accounts.

          6.3       Payment
                    -------

          Upon occurrence of an event specified in the Participant's
distribution election under Section 6.1 (a "Distribution Event") with respect to
Plan Year Accounts, as modified by any applicable subsequent Additional Deferral
Election under Section 6.2, the Account Balance of a Participant's Plan Year
Accounts shall be paid by the Company to the Participant in the form elected
under Section 6.1 as modified by any subsequent Change-of-Form Election under
Section 6.2. Such payments shall commence as soon as practicable and in no event
more than 30 days following the occurrence of the Distribution Event.

          6.4       Hardships
                    ---------

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

          An "unforeseeable emergency" shall be limited to a severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident of the Participant or of a dependent (as defined in Section 152(a) of
the Code) of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant. The circumstances
that will constitute an unforeseeable emergency will depend upon the facts of
each case, but, in any case, payment may not be

                                       22

<PAGE>

made to the extent that such hardship is or may be relieved: (i) through
reimbursement or compensation by available insurance or otherwise or (ii) by
liquidation of the Participant's assets, to the extent the liquidation of such
assets would not itself cause severe financial hardship.

          The Committee shall consider any requests for payment under this
Section 6.4 on a uniform and nondiscriminatory basis and in accordance with the
standards of interpretation described in Section 457 of the Code and the
regulations thereunder.

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

          6.5       Termination of Employment
                    -------------------------

          In the event of the termination of the employment of a Participant
with the Company and any parent, subsidiary or affiliate for any reason, other
than Retirement or death, the vested portion of the Participant Accounts of such
Participant shall be paid in a lump sum to such Participant based on the Value
of such accounts on the Valuation Date immediately following the termination
date. Such payment shall be made as soon as administratively practicable
following the Participant's termination date as determined under the Company's
normal administrative practices. The nonvested portion of a terminated
Participant's Company Account shall be forfeited by the Participant.

          6.6       Taxes
                    -----

          The Company shall deduct from all payments under the Plan federal,
state and local income and employment taxes, as required by applicable law.
Deferrals will be

                                       23

<PAGE>

taken into account for purposes of any tax or withholding obligation under the
Federal Insurance Contributions Act and Federal Unemployment Tax Act in the year
of the Deferrals, as required by Sections 3121(v) and 3306(r) of the Code and
the regulations thereunder. Amounts required to be withheld in the year of the
Deferrals pursuant to Sections 3121(v) and 3306(r) shall be withheld out of
current wages or other compensation paid by the Company to the Participant.

          6.7       Acceleration of Payment
                    -----------------------

          Notwithstanding any provision contained in the Plan to the contrary,
the Committee may, in its sole discretion, accelerate the distribution in a lump
sum of the Value of all Participant Accounts on the date of a Change of Control.
Such payment shall be made by the Company, to the extent practicable, on the
date of such Change of Control.

                                       24

<PAGE>

                                   ARTICLE VII
                                 DEATH BENEFITS

          7.1       Designation of Beneficiaries
                    ----------------------------

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

          7.2       Death Benefit
                    -------------

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

                                       25

<PAGE>

                                  ARTICLE VIII
                                     CLAIMS

          8.1       Claims Procedure
                    ----------------

          If any Participant or his or her beneficiary has a claim for benefits
which is not being paid, such claimant may file with the Committee a written
claim setting forth the amount and nature of the claim, supporting facts, and
the claimant's address. The Committee shall notify each claimant of its decision
in writing by registered or certified mail within sixty (60) days after its
receipt of a claim or, under special circumstances, within ninety (90) days
after its receipt of a claim. If a claim is denied, the written notice of denial
shall set forth the reasons for such denial, refer to pertinent Plan provisions
on which the denial is based, describe any additional material or information
necessary for the claimant to realize the claim, and explain the claims review
procedure under the Plan.

          8.2       Claims Review Procedure
                    -----------------------

          A claimant whose claim has been denied, or such claimant's duly
authorized representative, may file, within sixty (60) days after notice of such
denial is received by the claimant, a written request for review of such claim
by the Committee. If a request is so filed, the Committee shall review the claim
and notify the claimant in writing of its decision within sixty (60) days after
receipt of such request. In special circumstances, the Committee may extend for
up to sixty (60) additional days the deadline for its decision. The notice of
the final decision of the Committee shall include the reasons for its decision
and specific references

                                       26

<PAGE>

to the Plan provisions on which the decision is based. The decision of the
Committee shall be final and binding on all parties.

                                       27

<PAGE>

                                   ARTICLE IX
                                 ADMINISTRATION

          9.1       Committee
                    ---------

          The Administrative Committee consisting of not less than three (3) or
more than seven (7) persons appointed by the Board Committee or its delegate to
administer the Plan.

          9.2       Authority
                    ---------

          (a) The Committee shall have the exclusive right to interpret the Plan
     to the maximum extent permitted by law, to prescribe, amend and rescind
     rules and regulations relating to it, and to make all other determinations
     necessary or advisable for the administration of the Plan, including the
     determination under Section 9.2(b) herein. The decisions, actions and
     records of the Committee shall be conclusive and binding upon the Company
     and all persons having or claiming to have any right or interest in or
     under the Plan

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

          (c) No member of the Committee shall be directly or indirectly
     responsible or otherwise liable for any action taken or any failure to take
     action as a member of the Committee, except for such action, default,
     exercise or failure to exercise resulting from such member's gross
     negligence or willful misconduct.

                                       28

<PAGE>

     No member of the Committee shall be liable in any way for the acts or
     defaults of any other member of the Committee, or any of its advisors,
     agents or representatives.

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

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

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

                                       29

<PAGE>

                                   ARTICLE X
                      AMENDMENT AND TERMINATION OF THE PLAN

          10.1      Amendment of the Plan
                    ---------------------

          The Plan may be wholly or partially amended or otherwise modified at
any time by the Board or the Board Committee.

          10.2      Termination of the Plan
                    -----------------------

          The Plan may be terminated at any time by written action of the Board
or the Board Committee or by the Committee as provided under the Plan. On
termination of the Plan, the Committee may (but shall not be required to) direct
the immediate payment of all benefits under the Plan by the Company employing
each respective Participant.

          10.3      No Impairment of Benefits
                    --------------------------

          Notwithstanding the provisions of Sections 10.1 and 10.2, no amendment
to or termination of the Plan shall impair any rights to benefits which
theretofore accrued hereunder; provided, however, an immediate payout of all
Plan benefits on termination of the Plan, pursuant to Section 10.2, or a change
of any Phantom Investment Funds or creation of a substitute for Phantom
Investment Funds as a result of a Plan amendment or action of the Committee
shall not constitute an impairment of any rights or benefits.

                                       30

<PAGE>

                                   Article XI
                            FUNDING AND CLAIM STATUS

          11.1      General Provisions
                    ------------------

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

          (b) In the case of a Change of Control, the Company shall, subject to
     the restrictions in this paragraph and in Section 11.1, irrevocably set
     aside funds in one or more such grantor trusts in an amount that is
     sufficient to pay each Participant employed by such Company (or
     beneficiary) the net present value as of the date on which the Change of
     Control occurs, of the benefits to which Participants (or their
     beneficiaries) would be entitled pursuant to the terms of the

                                       31

<PAGE>

     Plan if the Value of their Participant Account would be paid in a lump sum
     upon the Change of Control.

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

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

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

                                       32

<PAGE>

                 Article XII EFFECT ON EMPLOYMENT OR ENGAGEMENT

          12.1      General
                    -------

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

                                       33

<PAGE>

                                  ARTICLE XIII
                                  GOVERNING LAW

          13.1      General
                    -------

          The Plan and all actions taken in connection with the Plan shall be
governed by and construed in accordance with the laws of the State of North
Carolina without reference to principles of conflict of laws, except as
superseded by applicable federal law.

                                      * * *

                                       34

<PAGE>
                                    EXHIBIT A
                                    ---------

                         Carolina Power & Light Company

                       Progress Energy Service Company LLC

                         Progress Energy Ventures, Inc.

                       North Carolina Natural Gas Company

                            Florida Power Corporation

                              Progress Telecom, LLC

              Electric Fuels Corporation (corporate employees only)

                                       35