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                                                                     Exhibit 4.3
                                                                     -----------

                              Progress Energy, Inc.
                           1997 Equity Incentive Plan
                  Amended and Restated as of September 26, 2001


Section 1. Purpose

Progress Energy, Inc. (hereinafter referred to as the "Sponsor"), a North
Carolina corporation, hereby establishes the 1997 Equity Incentive Plan (the
"Plan") to promote the interests of the Company and Sponsor's shareholders
through the (i) attraction and retention of executive officers and other key
employees essential to the success of the Company; (ii) motivation of executive
officers and other key employees using performance-related and stock-based
incentives linked to longer-range performance goals and the interests of
Sponsor's shareholders; and (iii) enabling of such employees to share in the
long-term growth and success of the Company. The Plan permits the grant of
Nonqualified Stock Options, Incentive Stock Options (intended to qualify under
Section 422 of the Internal Revenue Code of 1986, as amended), Stock
Appreciation Rights, Restricted Stock, Performance Shares, Performance Units,
and any other Stock Unit Awards or stock-based forms of awards as the Committee
may determine under its sole and complete discretion at the time of grant,
subject to the provisions of this Plan document and applicable law.

Section 2. Effective Date and Duration

The Plan, which was approved by the Board of Directors and the shareholders of
Carolina Power & Light Company (CP&L), became effective on January 1, 1997. In
2000, CP&L transformed to a holding company structure, and thus became a
wholly-owned subsidiary of the Sponsor. Effective August 1, 2000, the Sponsor
assumed sponsorship of the Plan. No Stock, rights or Options may be sold,
awarded or granted under the Plan until the Sponsor has filed a Registration
Statement under the Securities Act covering the shares of Stock to be issued
under the Plan. The Plan shall expire on January 1, 2007; however, all Awards
made prior to, and outstanding on such date, shall remain valid in accordance
with their terms and conditions.

Section 3. Definitions

Except as otherwise defined in the Plan, the following terms shall have the
meanings set forth below:

3.1    "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
       under the Exchange Act.

3.2    "Award" means individually or collectively, a grant under this Plan of
       Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
       Rights, Restricted Stock, Performance Units, Performance Shares, or other
       Stock Unit Awards.


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3.3    "Award Date" or "Grant Date" means the date on which an Award is made by
       the Committee under this Plan.

3.4    "Award Agreement" or "Agreement" means a written agreement implementing
       the grant of each Award signed by an authorized officer of the Sponsor
       and by the Participant.

3.5    "Beneficial Owner" shall have the meaning ascribed to such term in Rule
       13d-3 under the Exchange Act.

3.6    "Board" or "Board of Directors" means the Board of Directors of the
       Sponsor.

3.7    "Cashless Exercise" means the exercise of an Option by the Participant
       through the use of a brokerage firm to make payment to the Sponsor of the
       exercise price either from the proceeds of a loan to the Participant from
       the brokerage firm or from the proceeds of the sale of Stock issued
       pursuant to the exercise of the Option, and upon receipt of such payment,
       the Sponsor delivers the exercised Shares to the brokerage firm. The date
       of exercise of a Cashless Exercise shall be the date the broker executes
       the sale of exercised Shares, or if no sale is made, the date the broker
       receives the exercise loan notice from the Participant to pay the Sponsor
       for the exercised Shares.

3.8    "Change in Control" means a change in control of the Company of a nature
       that would be required to be reported in response to Item 1(a) of the
       Current Report on Form 8-K, as in effect on the date hereof, pursuant to
       Section 13 or 15(d) of the Exchange Act; provided, that without
       limitation, such a Change in Control shall be deemed to have occurred at
       such time as a "person" (as used in Section 14(d) of the Exchange Act) is
       or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
       Exchange Act), directly or indirectly, of 25% or more of the combined
       voting power of the Sponsor's outstanding securities ordinarily having
       the right to vote in elections of directors; or (b) individuals who
       constitute the Board of Directors of the Sponsor on the date hereof (the
       "Incumbent Board") cease for any reason to constitute at least a majority
       thereof, provided that any person becoming a Director subsequent to the
       date hereof whose election, or nomination for election by the Sponsor's
       shareholders, was approved by a vote of at least three quarters of the
       Directors comprising the Incumbent Board shall be, for purposes of this
       subsection (b), considered as though such person were a member of the
       Incumbent Board. Notwithstanding the foregoing definition, no Change in
       Control shall be deemed to have occurred unless and until the Participant
       has actual knowledge from one of the following sources: a report filed
       with the Securities and Exchange Commission, a public statement issued by
       the Sponsor, or a periodical of general circulation, including but not
       limited to The New York Times or The Wall Street Journal.
                  ------------------    -----------------------

3.9    "Code" means the Internal Revenue Code of 1986, as amended from time to
       time.

3.10   "Committee" means the Organization and Compensation Committee of the
       Board which will administer the Plan pursuant to Section 4 herein.

3.11   "Common Stock" or "Stock" means the Common Stock of the Sponsor, or such
       other security or right or instrument into which such Common Stock may be
       changed or converted in the future.


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3.12   "Company" means Progress Energy, Inc., including all Affiliates and
       Subsidiaries, or any successor thereto.

3.13   "Covered Participant" means a Participant who is a "covered employee" as
       defined in Section 162 (m) (3) of the Code, and the regulations
       promulgated thereunder.

3.14   "Department" means the Human Resources Department of Progress Energy
       Service Company LLC.

3.15   "Designated Beneficiary" means the beneficiary designated by the
       Participant, pursuant to procedures established by the Department, to
       receive amounts due to the Participant in the event of the Participant's
       death. If the Participant does not make an effective designation, then
       the Designated Beneficiary will be deemed to be the Participant's estate.

3.16   "Director" shall mean a non-employee member of the Board of Directors.

3.17   "Disability" means (i) the mental or physical disability, either
       occupational or non-occupational in origin, of the Participant defined as
       "total disability" in the Long-term Disability Plan of the Sponsor
       currently in effect and as amended from time to time; or (ii) a
       determination by the Committee of "Total Disability" based on medical
       evidence that precludes the Participant from engaging in any occupation
       or employment for wage or profit for at least twelve months and appears
       to be permanent.

3.18   "Divestiture" means the sale of, or closing by, the Company of the
       business operations in which the Participant is employed.

3.19   "Early Retirement" means retirement of a Participant from employment with
       the Company after age 55, but prior to age 65 under the provisions of the
       Sponsor's Supplemental Retirement Plan. In the event of a change in the
       Supplemental Retirement Plan such that there is no longer a definition of
       "Early Retirement", for purposes of this plan "Early Retirement" shall
       continue to mean retirement before age 65 after reaching the 55th
       birthday together with completion of 15 years of Vesting Service, or
       after completion of 35 Vesting Years with no age limitation. "Vesting
       Service" shall continue to mean each year of employment with the Company
       in which a Participant works 1,000 hours.

3.20   "Exchange Act" means the Securities Exchange Act of 1934, as amended.

3.21   "Executive Officer" means those individuals designated as "officers" for
       purposes of Section 16 of the Securities Exchange Act of 1934 by the
       Board pursuant to resolution adopted at a meeting of the Board held on
       November 28, 2000.

3.22   "Fair Market Value" means, on any given date, the closing price of Stock
       as reported on the New York Stock Exchange composite tape on such day or,
       if no Shares were traded on the New York Stock Exchange on such day, then
       on the next preceding day that Stock was traded on such exchange, all as
       reported by such source as the Committee may select.

3.23   "Full-time Employee" means an employee designated by the Department as
       being a "regular, full-time employee" who is eligible for all plans and
       programs of the Company


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       set forth for such employees. This designation excludes all part-time,
       temporary, leased or contract employees and consultants to the Company.

3.24   "Incentive Stock Option" or "ISO" means an option to purchase Stock,
       granted under Section 7 herein, which is designated as an incentive stock
       option and is intended to meet the requirements of Section 422A of the
       Code.

3.25   "Key Employee" means an officer or other employee of the Company, who, in
       the opinion of the Committee, can contribute significantly to the growth
       and profitability of, or perform services of major importance to, the
       Company.

3.26   "Nonqualified Stock Option" or "NQSO" means an Option to purchase Stock,
       granted under Section 7 herein, which is not intended to be an Incentive
       Stock Option.

3.27   "Normal Retirement" means the retirement of any Participant under the
       Sponsor's Supplemental Retirement Plan at age 65. In the event of a
       change in the Supplemental Retirement Plan such that there is no longer a
       definition of "Normal Retirement", for purposes of this plan "Normal
       Retirement" shall continue to mean retirement upon attaining the age of
       65 years.

3.28   "Option" means an Incentive Stock Option or a Nonqualified Stock Option.

3.29   "Other Stock Unit Award" means awards of Stock or other awards that are
       valued in whole or in part by reference to, or are otherwise based on,
       Shares or other securities of the Sponsor.

3.30   "Participant" means a Key Employee or Director who has been granted an
       Award under the Plan.

3.31   "Performance Based Exception" means the performance-based exception from
       the tax deductibility limitations of Code Section 162(m).

3.32   "Performance Measures" mean, unless and until the Committee proposes for
       shareholder approval and the Sponsor's shareholders approve a change in
       the general performance measures set forth in this article, the
       attainment of which may determine the degree of payout and/or vesting
       with respect to Awards which are designed to qualify for the
       Performance-Based Exception, measure(s) chosen from among the following
       alternatives:

               (a) Total shareholder return (absolute or peer-group comparative)
               (b) Stock price increase (absolute or peer-group comparative)
               (c) Dividend payout as a percentage of net income (absolute or
                   peer-group comparative)
               (d) Return on equity (absolute or peer-group comparative)
               (e) Return on capital employed (absolute or peer-group
                   comparative)
               (f) Cash flow, including operating cash flow, free cash flow,
                   discounted cash flow return on investment, and cash flow in
                   excess of cost of capital
               (g) Economic value added (income in excess of capital costs)
               (h) Cost per KWH (absolute or peer-group comparative)
               (i) Revenue per KWH (absolute or peer-group comparative)


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               (j) Market share
               (k) Customer satisfaction as measured by survey instruments
                   (absolute or peer-group comparative)

       The Committee shall have the discretion to adjust the determinations of
       the degree of attainment of the pre-established performance objectives;
       provided, however, that Awards which are designed to qualify for the
       Performance-Based Exception may not be adjusted upward (the Committee
       shall retain the discretion to adjust such Awards downward), except to
       the extent permitted under Code Section 162(m) to reflect accounting
       changes or other events.

3.33   "Performance Award" means a performance-based Award, which may be in the
       form of either Performance Shares or Performance Units.

3.34   "Performance Period" means the time period designated by the Committee
       during which performance goals must be met.

3.35   "Performance Share" means an Award, designated as a Performance Share,
       granted to a Participant pursuant to Section 10 herein, the value of
       which is determined, in whole or in part, by the value of Stock in a
       manner deemed appropriate by the Committee and described in the Agreement
       or Sub-Plan.

3.36   "Performance Unit" means an Award, designated as a Performance Unit,
       granted to a Participant pursuant to Section 10 herein, the value of
       which is determined, in whole or in part, by the attainment of
       pre-established goals relating to Sponsor financial or operating
       performance as deemed appropriate by the Committee and described in the
       Agreement or Sub-Plan.

3.37   "Period of Restriction" means the period during which the transfer of
       Shares of Restricted Stock is restricted, pursuant to Section 9 of the
       Plan.

3.38   "Person" shall have the meaning ascribed to such term in Section 3 (a)
       (9) of the Exchange Act and used in Sections 13 (d) and 14 (d) thereof,
       including a "group" as defined in Section 13 (d).

3.39   "Plan" means the Progress Energy, Inc. 1997 Equity Incentive Plan as
       herein described and as hereafter from time to time amended.

3.40   "Restricted Stock" means an Award of Stock granted to a Participant
       pursuant to Section 9 of the Plan.

3.41   "Rule l6b-3" means Rule 16b-3 under Section 16(b) of the Exchange Act as
       adopted in Exchange Act Release No. 34-37260 (May 31, 1996, effective
       August 15, 1996), or any successor rule as amended from time to time.

3.42   "Section 162(m)" means Section 162(m) of the Code, or any successor
       section under the Code, as amended from time to time and as interpreted
       by final or proposed regulations promulgated thereunder from time to
       time.

3.43   "Securities Act" means the Securities Act of 1933 and the rules and
       regulations promulgated thereunder, or any successor law, as amended from
       time to time.


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3.44   "Sponsor" means Progress Energy, Inc., or any successor thereto.

3.45   "Stock" or "Shares" means the Common Stock of the Sponsor.

3.46   "Stock Appreciation Right" means the right to receive an amount equal to
       the excess of the Fair Market Value of a share of Stock (as determined on
       the date of exercise) over the Exercise Price of a related Option or the
       Fair Market value of the Stock on the date of grant of the Stock
       Appreciation Right.

3.47   "Stock Unit Award" means an Award of Common Stock or units granted under
       Section 11 of the Plan.

3.48   "Sub-Plan" means a written document that permits the grant of Awards
       consistent with the provisions of this Plan.

3.49   "Subsidiary" means a corporation in which the Sponsor owns, either
       directly or through one or more of its Subsidiaries, at least 50% of the
       total combined voting power of all classes of stock.

Section 4. Administration

4.1  The Committee. The Plan shall be administered and interpreted by the
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Committee which shall have full authority and all powers necessary or desirable
for such administration. The express grant in this Plan of any specific power to
the Committee shall not be construed as limiting any power or authority of the
Committee. In its sole and complete discretion the Committee may adopt, alter,
suspend and repeal any such administrative rules, regulations, guidelines, and
practices governing the operation of the Plan as it shall from time to time deem
advisable. In addition to any other powers and, subject to the provisions of the
Plan, the Committee shall have the following specific powers: (i) to determine
the terms and conditions upon which the Awards may be made and exercised; (ii)
to determine all terms and provisions of each Agreement and/or Sub-Plan, which
need not be identical for types of Awards nor for the same type of Award to
different Participants; (iii) to construe and interpret the Agreements,
Sub-Plans and the Plan; (iv) to establish, amend, or waive rules or regulations
for the Plan's administration; (v) to accelerate the exercisability of any
Award, the length of a Performance Period or the termination of any Period of
Restriction; and (vi) to make all other determinations and take all other
actions necessary or advisable for the administration of the Plan. The Committee
may take action by a meeting in person, by unanimous written consent, or by
meeting with the assistance of communications equipment which allows all
Committee members participating in the meeting to communicate in either oral or
written form. The Committee may seek the assistance or advice of any persons it
deems necessary to the proper administration of the Plan.

4.2  Selection of Participants. The Committee shall have sole and complete
------------------------------
discretion in determining those Key Employees and Directors who shall
participate in the Plan. The Committee may request recommendations for
individual Awards from the Chief Executive Officer of the Sponsor and may
delegate to the Chief Executive Officer of the Sponsor the authority to make
Awards to Participants who are not Executive Officers, subject to a fixed
maximum Award amount for such a group and a maximum Award amount for any one


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Participant, as determined by the Committee. Awards made to the Executive
Officers shall be determined by the Committee.

4.3  Award Agreements and Sub-Plans. Each Award granted under the Plan shall be
-----------------------------------
granted either under the terms of an Award Agreement and/or a Sub-Plan. Award
Agreements and Sub-Plans shall specify the terms, conditions and any rules
applicable to the Award, including but not limited to the effect of
transferability, a Change in Control, or death, Disability, Divestiture, Early
Retirement, Normal Retirement or other termination of employment of the
Participant on the Award. If the Award is granted under the terms of an Award
Agreement, the Award Agreement shall be signed by an authorized representative
of the Sponsor and the Participant, and a copy of the signed Award Agreement
shall be provided to the Participant. If the Award is granted under the terms
and conditions of a Sub-Plan, the Sub-Plan shall be approved by the Committee as
an Exhibit to the Plan, and a copy of the Sub-Plan or a summary description
thereof shall be provided to each Participant.

4.4  Committee Decisions. All determinations and decisions made by the Committee
------------------------
pursuant to the provisions of the Plan shall be final, conclusive, and binding
upon all persons, including the Company, its employees, Participants, and
Designated Beneficiaries, and the Sponsor's stockholders, except when the terms
of any sale or award of shares of Stock or any grant of rights or Options under
the Plan are required by law or by the Articles of Incorporation or Bylaws of
the Sponsor to be approved by the Sponsor's Board of Directors or shareholders
prior to any such sale, award or grant.

4.5  Rule 16b-3 and Section 162(m) Requirements. Notwithstanding any other
-----------------------------------------------
provision of the Plan, the Committee may impose such conditions on any Award,
and the Board may amend the Plan in any such respects, as may be required to
satisfy the requirements of Rule 16b-3 or Section 162(m).

4.6  Indemnification of Committee. In addition to such other rights of
---------------------------------
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Sponsor against
reasonable expenses incurred from their administration of the Plan. Such
reasonable expenses include, but are not limited to, attorneys' fees, actually
and reasonably incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Award granted or made hereunder, and against all
amounts reasonably paid by them in settlement thereof or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, if such
members acted in good faith and in a manner which they believed to be in, and
not opposed to, the best interests of the Company.


Section 5. Eligibility

The Committee in its sole and complete discretion shall determine the Key
Employees, including officers and Directors, who shall be eligible for
participation under the Plan, subject to the following limitations: (i) no
member of the Committee or Director shall be eligible to participate under the
Plan except with full Board approval; (ii) no person owning, directly or
indirectly, more than 5% of the total combined voting power of all classes of
Stock shall be eligible to participate


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under the Plan; and (iv) only Full-time Employees shall be eligible to
participate under the Plan, except that Directors may be granted Nonqualified
Stock Options or Restricted Stock awards.


Section 6. Shares Subject to the Plan

6.1  Number of Shares. Subject to adjustment as provided in Section 6.4 herein,
---------------------
the maximum aggregate number of Shares that may be issued pursuant to Awards
made under the Plan shall not exceed 5,000,000 Shares of Common Stock, which may
be in any combination of Options, Restricted Stock, or any other right or
Option. Shares of Common Stock may be available from the authorized but unissued
Shares of Common Stock, or any Shares of Common Stock acquired by the Sponsor,
including Shares of Common Stock purchased in the open market. Except as
provided in Sections 6.2 and 6.3 herein, the issuance of Shares in connection
with the exercise of, or as other payment for, Awards under the Plan shall
reduce the number of Shares available for future Awards under the Plan.

6.2  Lapsed Awards of Forfeited Shares. In the event that (i) any Option or
--------------------------------------
other Award granted under the Plan terminates, expires, or lapses for any reason
other than exercise of the Award, or (ii) if Shares issued pursuant to the
Awards are canceled or forfeited for any reason, such Shares subject to such
Award shall thereafter again be available for grant of an Award under the Plan.

6.3  Delivery of Shares as Payment. In the event a Participant pays for any
----------------------------------
Option or other Award granted under the Plan through the delivery of previously
acquired shares of Common Stock, the number of shares of Common Stock available
for Awards under the Plan shall be increased by the number of Shares surrendered
by the Participant, subject to Rule 16b-3 as interpreted by the Securities and
Exchange Commission or its staff.

6.4  Capital Adjustments. The number and class of Shares subject to each
------------------------
outstanding Award, the Option Price and the aggregate number, type and class of
Shares for which Awards thereafter may be made shall be subject to adjustment,
if any, as the Committee deems appropriate, based on the occurrence of a number
of specified and non-specified events. Such specified events include but are not
limited to the following:

(a)  If the outstanding Shares of the Sponsor are increased, decreased or
     exchanged through merger, consolidation, sale of all or substantially all
     of the property of the Sponsor, reorganization, recapitalization,
     reclassification, stock dividend, stock split or other distribution in
     respect to such Shares, for a different number or type of Shares, or if
     additional Shares or new or different Shares are distributed with respect
     to such Share, an appropriate and proportionate adjustment shall be made
     in: (i) the maximum number of shares of Stock available for the Plan as
     provided in Section 6.1 herein, (ii) the type of Shares or others
     securities available for the Plan, (iii) the number of shares of Stock
     subject to any then outstanding Awards under the Plan, and (iv) the price
     (including exercise price) for each share of Stock (or other kind of shares
     or securities) subject to then outstanding awards, but without change in
     the aggregate purchase price as to which such Options remain exercisable or
     Restricted Stock releasable.

(b)  If other events not specified above in this Section 6.4, such as any
     extraordinary cash dividend, split-up, spin-off, combination, exchange of
     shares, warrants or rights offering to purchase Common Stock, or other
     similar corporate event affect the Common Stock such that an adjustment is
     necessary to maintain the benefits or potential benefits


                                       8

<PAGE>

     intended to be provided under this Plan, then the Committee in its
     discretion may make adjustments to any or all of (i) the number and type of
     Shares which thereafter may be optioned and sold or awarded or made subject
     to Stock Appreciation Rights under the Plan, (ii) the grant, exercise or
     conversion price of any Award made under the Plan thereafter, and (iii) the
     number and price (including Exercise Price) of each share of Stock (or
     other kind of shares or securities) subject to then outstanding Awards, but
     without change in the aggregate purchase price as to which such Options
     remain exercisable or Restricted Stock releasable. Any adjustment as
     provided above shall be subject to any applicable restrictions set forth in
     Section 13 or in Section 162(m).

(c)  Any adjustment made by the Committee pursuant to the provisions of this
     Section 6.4, subject to approval by the Board of Directors, shall be final,
     binding and conclusive. A notice of such adjustment, including
     identification or the event causing such an adjustment, the calculation
     method of such adjustment, and the change in price and the number of shares
     of Stock, or securities, cash or property purchasable subject to each Award
     shall be sent to each Participant. No fractional interests shall be issued
     under the Plan based on such adjustments, and shall be forfeited.

Section 7. Stock Options

7.1  Grant of Stock Options. Subject to the terms and provisions of the Plan and
---------------------------
applicable law, the Committee, at any time and from time to time, may grant
Options to Key Employees and Directors as it shall determine, provided however,
that Directors may only receive NQSO's. The Committee shall have sole and
complete discretion in determining the type of Option granted, the Option Price
(as hereinafter defined), the duration of the Option, the number of Shares to
which an Option pertains, any conditions imposed upon the exercisability of the
Options, the conditions under which the Option may be terminated and any such
other provisions as may be warranted to comply with the law or rules of any
securities trading system or stock exchange. Notwithstanding the preceding,
grants to Directors must be approved by the full Board. Each Option grant shall
have such specified terms and conditions detailed in an Award Agreement. The
Agreement shall specify whether the Option is intended to be an Incentive Stock
Option within the meaning of Section 422A of the Code, or a Nonqualified Stock
Option.

7.2  Option Price. The exercise price per share of Stock covered by an Option
-----------------
("Option Price") shall be determined at the time of grant by the Committee,
subject to the limitation that the Option Price shall not be less than 100% or
Fair Market Value of the Common Stock on the Grant Date.

7.3  Exercisability. Options granted under the Plan shall be exercisable at such
-------------------
times and be subject to such restrictions and conditions as the Committee shall
determine, which will be specified in the Award Agreement and need not be the
same for each Participant. However, no Option may be exercisable after the
expiration of ten years from the Grant Date.

7.4  Method of Exercise. Options shall be exercised by the delivery of a written
-----------------------
notice from the Participant to the Sponsor in the form prescribed by the
Committee setting forth the number of Shares with respect to which the Option is
to be exercised, accompanied by full payment for the Shares. The Option Price
shall be payable to the Sponsor in full in cash, or its equivalent, or by
delivery of Shares of Stock (not subject to any security interest or pledge)
valued at Fair Market Value at the time of exercise or by a combination of the
foregoing. In addition, at the request of


                                       9

<PAGE>

the Participant, and subject to applicable laws and regulations, the Sponsor may
(but shall not be required to) cooperate in a Cashless Exercise of the Option.
As soon as practicable, after receipt of written notice and payment, the Sponsor
shall deliver to the Participant, Stock certificates in an appropriate amount
based upon the number of Shares with respect to which the option is exercised,
issued in the Participant's name.

7.5  Notice. Each Participant shall give prompt notice to the Sponsor of any
-----------
disposition of Shares acquired upon exercise of an Incentive Stock Option if
such disposition occurs within either two (2) years after the date of grant or
one (1) year after the date of transfer of such Shares to the Participant upon
the exercise of such Incentive Stock Option.

7.6  Maximum Award. Each Participant's Award shall be limited to the maximum
------------------
Award set out in Section 12 of this Plan.

Section 8. Stock Appreciation Rights

8.1  Grant of Stock Appreciation Rights. Subject to the terms and provisions of
---------------------------------------
the Plan and applicable law, the Committee, at any time and from time to time,
may grant freestanding Stock Appreciation Rights, Stock Appreciation Rights in
tandem with an Option, or Stock Appreciation Rights in addition to an Option.
Stock Appreciation Rights granted in tandem with an Option or in addition to an
Option may be granted at the time of the Option or at a later time.

8.2  Price. The exercise price of each Stock Appreciation Right shall be
----------
determined at the time of grant by the Committee, subject to the limitation that
the grant price shall not be less than 100% of Fair Market Value of the Common
Stock on the Grant Date.

8.3  Exercise. The Participant is entitled to receive an amount equal to the
-------------
excess of the Fair Market Value of a Share over the grant price thereof on the
date of exercise of the Stock Appreciation Right.

8.4  Payment. Upon exercise of the Stock Appreciation Right, the Participant
------------
shall be entitled to receive payment from the Company in an amount determined by
multiplying (a) the difference between the Fair Market Value of a Share on the
date of Exercise of the Stock Appreciation Right over the grant price specified
in the Award Agreement by (b) the number of Shares with respect to which the
Stock Appreciation Right is exercised.

8.5  Maximum Award. Each Participant's Award shall be limited to the maximum
------------------
Award set out in Section 12 of this Plan.

Section 9. Restricted Stock

9.1  Grant of Restricted Stock. Subject to the terms and provisions of the Plan
------------------------------
and applicable law, the Committee, at any time and from time to time, may grant
shares of Restricted Stock under the Plan to such Participants, and in such
amounts and for such duration and/or consideration as it shall determine.
Participants receiving Restricted Stock Awards are not required to pay the
Sponsor or the Company therefor (except for applicable tax withholding) other
than the rendering of services and/or until other considerations are satisfied
as determined by the Committee at its sole discretion.


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9.2  Restricted Stock Agreement. Each Restricted Stock grant shall be evidenced
-------------------------------
by an Agreement that shall specify the Period of Restriction; the conditions
which must be satisfied prior to removal of the restriction; the number of
Shares of Restricted Stock granted; and such other provisions as the Committee
shall determine. The Committee may specify, but is not limited to, the following
types of restrictions in the Award Agreement: (i) restrictions on acceleration
or achievement of terms or vesting based an any business or financial goals of
the Company, including, but not limited to the Performance Measures set out in
Section 3.33, and (ii) any other further restrictions that may be advisable
under the law, including requirements set forth by the Securities Act, any
securities trading system or stock exchange upon which such Shares under the
Plan are listed.

9.3  Removal of Restrictions. Except as otherwise noted in this Section 9,
----------------------------
Restricted Stock covered by each Award made under the Plan shall be provided and
become freely transferable by the Participant after the last day of the Period
of Restriction and/or upon the satisfaction of other conditions as determined by
the Committee. Except as specifically provided in this Section 9, the Committee
shall have no authority to reduce or remove the restrictions or to reduce or
remove the Period of Restriction without the express consent of the stockholders
of the Sponsor. If the grant of Restricted Stock is performance based, the total
Restricted Period for any or all shares or units of Restricted Stock so granted
shall be no less than one (1) year. Any other shares of Restricted Stock issued
pursuant to this Section 9 shall provide that the minimum Period of Restrictions
shall be three (3) years, which Period of Restriction may permit the removal of
restrictions on no more than one-third (1/3) of the shares of Restricted Stock
at the end of the first year following the Grant Date, and the removal of the
restrictions on an additional one-third (1/3) of the Shares at the end of each
subsequent year. In no event shall any restrictions be removed from shares of
Restricted Stock during the first year following the Grant Date, except in the
event of a Change in Control.

9.4  Voting Rights. During the Period of Restriction, Participants in whose name
------------------
Restricted Stock is granted under the Plan may exercise full voting rights with
respect to those Shares.

9.5  Dividends and Other Distributions. During the Period of Restriction,
--------------------------------------
Participants in whose name Restricted Stock is granted under the Plan shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares. If any such dividends or distributions are paid in Shares, the
Shares shall be subject to the same restrictions on transferability as the
Restricted Stock with respect to which they were distributed.

9.6  Maximum Award. Each Participant's Award shall be limited to the maximum
------------------
Award set out in Section 12 of this Plan.

Section 10. Performance Based Awards

10.1 Grant of Performance Awards. Subject to the terms and provisions of the
--------------------------------
Plan and applicable law, the Committee, at any time and from time to time, may
issue Performance Awards in the form of either Performance Units or Performance
Shares to Participants subject to the Performance Measures and Performance
Period as it shall determine. The Committee shall have complete discretion in
determining the number and value of Performance Units or Performance Shares
granted to each Participant. Participants receiving Performance Awards are not
required to pay the Sponsor or an Subsidiary or Affiliate therefor (except for
applicable tax withholding) other than the rendering of services.


                                       11

<PAGE>

10.2  Value of Performance Awards. The Committee shall determine the number and
---------------------------------
value of Performance Units or Performance Shares granted to each Participant as
a Performance Award. The Committee shall set Performance Measures in its
discretion for each Participant who is granted a Performance Award. The extent
to which such Performance Measures are met will determine the value of the
Performance Unit to the Participant or the number of Performance Shares earned
by the Participant. Such Performance Measures may be particular to a
Participant, may relate to the performance of the Subsidiary or Affiliate which
employs him or her, may be based on the division which employees him or her, may
be based on the performance of the Company generally, or a combination of the
foregoing. The terms and conditions of each Performance Award will be set forth
in an Agreement and/or a Sub-Plan.

10.3  Settlement of Performance Awards. After a Performance Period has ended,
--------------------------------------
the holder of a Performance Unit or Performance Share shall be entitled to
receive the value thereof based on the degree to which the Performance Measures
established by the Committee and set forth in the Agreement and/or Sub-Plan have
been satisfied.

10.4  Form of Payment. Payment of the amount to which a Participant shall be
---------------------
entitled upon the settlement of Performance Award shall be made in cash, Stock,
or a combination thereof as determined by the Committee. Payment may be made in
a lump sum or installments as prescribed by the Committee.

10.5  Maximum Award. Each Participant's Award shall be limited to the maximum
-------------------
Award set out in Section 12 of this Plan.

Section 11. Other Stock Based Awards

11.1  Grant of Other Stock Based Awards. Subject to the terms and provisions of
---------------------------------------
the Plan and applicable law, the Committee, at any time and from time to time,
may issue to Participants, either alone or in addition to other Awards made
under the Plan, Stock Unit Awards which may be in the form of Common Stock or
other securities. The value of each such Award shall be based, in whole or in
part, on the value of the underlying Common Stock or other securities. The
Committee, in its sole and complete discretion, may determine that an Award,
either in the form of a Stock Unit Award under this Section 11 or as an Award
granted pursuant to Sections 7 through 10, may provide to the Participant (i)
dividends or dividend equivalents (payable on a current or deferred basis) and
(ii) cash payments in lieu of or in addition to an Award. Subject to the
provisions of the Plan, the Committee in its sole and complete discretion, shall
determine the terms, restrictions, conditions, vesting requirements, and payment
rules (all of which are sometimes hereinafter collectively referred to as
"rules") of the Award. The Award Agreement and/or Sub-Plan shall specify the
rules of each Award as determined by the Committee. However, each Stock Unit
Award need not be subject to identical rules.

11.2  Rules. The Committee, in its sole and complete discretion, may grant a
-----------
Stock Unit Award subject to the following rules:

     (a)  Common Stock or other securities issued pursuant to Other Stock Awards
          may not be sold, transferred, pledged, assigned or otherwise alienated
          or hypothecated by a Participant until the expiration of at least six
          months from the Award Date, except that such limitation shall not
          apply in the case of death or disability of the Participant. All
          rights with respect to such other Stock Unit Awards granted to a


                                       12

<PAGE>

          Participant under the Plan shall be exercisable during his or her
          lifetime only by such Participant or his or her guardian or legal
          representative.

     (b)  Stock Unit Awards may require the payment of cash consideration by the
          Participant in receipt of the Award or provide that the Award, and any
          Common Stock or other securities issued in conjunction with the Award
          be delivered without the payment of cash consideration.

     (c)  The Committee, in its sole and complete discretion, may establish
          certain Performance Measures that may relate in whole or in part to
          receipt of the Stock Unit Awards.

     (d)  Stock Unit Awards may be subject to a deferred payment schedule and/or
          vesting over a specified employment period.

     (e)  The Committee, in its sole and complete discretion, as a result of
          certain circumstances, may waive or otherwise remove, in whole or in
          part, any restriction or condition imposed on a Stock Unit Award at
          the time of grant.

Section 12. Special Provisions Applicable to Covered Participants

Unless the Committee in its sole discretion determines that any Award made to a
Covered Employee is not intended to qualify for the exemption for
performance-based compensation under Section 162(m), Awards subject to
Performance Measures paid to Covered Participants under this Plan shall be
governed by the conditions of this Section 12 in addition to the requirements of
Sections 9, 10, and 11 above. Should conditions set forth under this Section 12
(when applicable) conflict with the requirements of Sections 9, 10, and 11, the
conditions of this Section 12 shall prevail.

     (a)  Performance Measures for Covered Participants shall be established by
          the Committee in writing prior to the beginning of the Performance
          Period, or by such other later date during the Performance Period as
          may be permitted under Section 162(m). Performance Measures for
          Covered Participants may include alternative and multiple Performance
          Measures and may be based on one or more business criteria.

     (b)  All Performance Measures must be objective and must satisfy third
          party "objectivity" standards under Section 162(m).

     (c)  The Performance Measures shall not allow for any discretion by the
          Committee as to an increase in any Award, but discretion to lower an
          Award is permissible.

     (d)  The Award and payment of any Award under this Plan to a Covered
          Participant with respect to relevant Performance Period shall be
          contingent upon the attainment of the Performance Measures that are
          applicable to such Covered Participant. The Committee shall certify in
          writing prior to payment of any such Award that such applicable
          Performance Measures relating to the Award are satisfied. Approved
          minutes of the Committee may be used for this purpose.


                                       13

<PAGE>

     (e)  The maximum Award that may be paid to any Covered Participant under
          the Plan pursuant to Sections 9, 10, and 11 for any Performance Period
          is $1,500,000. The maximum number of shares of Stock subject to
          Options, Stock Appreciation Rights and/or Restricted Stock granted to
          any Covered Participant for any Performance Period shall be 250,000
          Shares.

     (f)  All Awards to Covered Participants under this Plan shall be further
          subject to such other conditions, restrictions, and requirements as
          the Committee may determine to be necessary to carry out the purpose
          of this Section 12.

Section 13. General Provisions

13.1  Withholding. The Company shall have the right to deduct or withhold, or
-----------------
require a Participant to remit to the Company, any taxes required by law to be
withheld with respect to the Awards made under this Plan. In the event an Award
is paid in the form of Common Stock, the Committee may require the Participant
to remit to the Company the amount of any taxes required to be withheld from
such payment in Common Stock, or, in lieu thereof the Company may withhold (or
the Participant may be provided the opportunity to elect to tender) the number
of shares of Common Stock equal in Fair Market Value to the amount required to
be withheld.

13.2  No Right to Employment. No granting of an Award shall be construed as a
----------------------------
right to employment with the Company.

13.3  Rights as Shareholder. Subject to the Award provisions, no Participant or
---------------------------
Designated Beneficiary shall be deemed a shareholder of the Sponsor nor have any
rights as such with respect to any shares of Common Stock to be provided under
the Plan until he or she has become the holder of such Shares. Notwithstanding
the aforementioned, with respect to Stock granted under a Restricted Stock
Agreement under this Plan, the Participant or Designated Beneficiary of such
Award shall be deemed the owner of such Shares. As such, unless contrary to the
provisions herein or in any such related Award Agreement, such stockholder shall
be entitled to full voting, dividend and distribution rights as provided any
other Sponsor stockholder.

13.4  Construction of the Plan. The Plan, and its rules, rights, Agreements,
------------------------------
Sub-Plans and regulations, shall be governed, construed, interpreted and
administered in accordance with applicable Federal laws, or to the extent that
Federal laws do not apply, the laws of the State of North Carolina. In the event
any provision of the Plan shall be held invalid, illegal or unenforceable, in
whole or in part, for any reason, such determination shall not affect the
validity, legality or enforceability of any remaining provision, or portion of
provision, of the Plan overall, which shall remain in full force and effect.

13.5  Amendment of Plan. The Committee or Board of Directors may amend, suspend,
-----------------------
or terminate the Plan or any portion thereof at any time, provided such
amendment is made with shareholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these purposes any
approval requirement for the performance-based compensation exception under
Section 162(m). The Committee in its discretion may amend the Plan so as to
conform with local rules and regulations subject to any provisions to the
contrary specified herein.

13.6  Amendment of Award. At any time and in its sole and complete discretion,
------------------------
the Committee may amend any Award for the following reasons: (i) additions
and/or changes are made to the


                                       14

<PAGE>

Code, any federal or state securities law, or other law or regulations
subsequent to the date of grant, and have an impact on the Award; or (ii) for
any other reason not described in clause (i) provided the Participant gives his
or her consent to such amendment.

13.7  Exemption from Computation of Compensation for Other Purposes. By
-------------------------------------------------------------------
accepting an Award under this Plan, each Participant agrees that such Award
shall be considered special incentive compensation and will be exempt from
inclusion as "wages" or "salary" for purposes of calculating benefits under
pension, profit sharing, disability, severance, life insurance, and other
employee benefit plans of the Company, except as otherwise provided in those
benefit plans.

13.8  Legend. In its sole and complete discretion, the Committee may elect to
------------
legend certificates representing shares of Stock sold or awarded under the Plan,
to make appropriate references to the restrictions imposed on such Shares.

13.9  Executive Officers and Covered Participants. All Award Agreements and/or
-------------------------------------------------
Sub-Plans for Participants subject to Section 16(b) shall be deemed to include
any such additional terms, conditions, limitations and provisions as Rule l6b-3
requires, unless the Committee in its discretion determines that any such Award
should not be governed by Rule 16b-3. All performance-based Awards shall be
deemed to include any such additional terms, conditions, limitations and
provisions as are necessary to comply with the performance-based compensation
exemption of Section 162(m), unless the Committee, in its sole discretion,
determines that an Award to a Covered Participant is not intended to qualify as
exempt performance-based compensation.

13.10 Change in Control. In the event of a Change in Control, the Committee may,
-----------------------
in its sole and complete discretion, accelerate the payment or vesting of any
Award and release any restrictions on any Awards.

13.11 Divestiture. In the event of a Divestiture, the Committee may, in its sole
-----------------
and complete discretion, accelerate the payment or vesting of any Award and
release any restrictions on any Awards.

13.12 Unfunded Obligation. Nothing in this Plan shall be interpreted or
-------------------------
construed to require the Company in any manner to fund any obligation to the
Participants or any Designated Beneficiary. Nothing contained in this Plan nor
any action taken hereunder shall create, or be construed to create a trust of
any kind, or a fiduciary relationship between the Company and/or the Committee,
and the Participants and/or any Designated Beneficiary. To the extent that any
Participant or Designated beneficiary acquires a right to receive payments under
this Plan, such rights shall be no greater than the rights of any unsecured
general creditor of the Company.

13.13 Plan Expenses. All reasonable expenses of the Plan shall be paid by the
-------------------
Company.

     IN WITNESS WHEREOF, this Amended and Restated Plan has been executed this
26/th/ day of September, 2001.

                                                      PROGRESS ENERGY, INC.

                                                      /s/ Robert B. McGehee
                                                      --------------------------
                                                      By: Robert B. McGehee
                                                      Executive Vice President

                                       15