Document:

Exhibit 10c(7)

     

    Exhibit
      10c(7)

    EXHIBIT
      A

    TO

    2002
      EQUITY INCENTIVE PLAN

    

    EXECUTIVE
      AND KEY MANAGER PERFORMANCE SHARE SUB-PLAN

    (As
      amended effective January 1, 2007)

    

    This
      Executive and Key Manager Performance Share Sub-Plan (“Sub-Plan”) sets forth the
      rules and regulations adopted by the Committee for issuance of Performance
      Share
      Awards under Section 10 of the 2002 Equity Incentive Plan (“Plan”). These rules
      and regulations shall apply to Awards granted effective on and after January
      1,
      2005. In addition, the rules and regulations relating to the deferral of Awards
      set forth in this Sub-Plan shall apply to any Awards which become vested on
      or
      after January 1, 2005. Capitalized terms used in this Sub-Plan that are not
      defined herein shall have the meaning given in the Plan. In the event of any
      conflict between this Sub-Plan and the Plan, the terms and conditions of the
      Plan shall control. No Award Agreement shall be required for participation
      in
      this Sub-Plan.

    

    Section
      1. Definitions

    

    When
      used
      in this Sub-Plan, the following terms shall have the meanings as set forth
      below, and are in addition to the definitions set forth in the
      Plan.

    

    
      	
              1.1

            	
              “Account”
                means the account used to record and track the number of Performance
                Shares granted to each Participant as provided in Section
                2.4.

            

    

    

    
      	
              1.2

            	
              “Award”
                as used in this Sub-Plan means each aggregate award of Performance
                Shares
                as provided in Section 2.2.

            

    

    

    
      	
              1.3

            	
              “EBITDA”
                means earnings before interest, taxes, depreciation, and amortization
                as
                determined from time to time by the
                Committee.

            

    

    

    
      	
              1.4

            	
              “EBITDA
                Growth”
                means the percentage increase (if any) in EBITDA for any Year, as
                compared
                to the previous Year as determined from time to time by the
                Committee.

            

    

    

    
      	
              1.5

            	
              “Peer
                Group”
                means the peer group of utilities designated by the Committee prior
                to the
                beginning of the Performance Period for which an Award is granted.
                

            

    

    

    
      	
              1.6

            	
              “Performance
                Period”
                for purposes of this Sub-Plan means three consecutive Years beginning
                with
                the Year in which an Award is
                granted.

            

    

    

    
      	
              1.7

            	
              “Performance
                Schedule”
                means Attachment 1 to this Sub-Plan, which sets forth the Performance
                Measures applicable to this Sub-Plan.

               

            

    

    
      	
              1.8

            	
              “Performance
                Share”
                for purposes of this Sub-Plan means each unit of an Award granted
                to a
                Participant, the value of which is equal to the value of Company
                Stock as
                hereinafter provided.

            

    

    

    
      	
              1.9

            	
              “Retire”
                or “Retirement”
                means Separation from Service on or
                after:

            

    

    

    (a)
      becoming 65 years old with at least 5 years of service;

    

    (b)
      becoming 55 years old with at least 15 years of service; or

    

    (c)
      achieving at least 35 years of service, regardless of age.

    

    
      	
              1.10

            	
              “Salary”
                means the regular base rate of compensation payable by the Company
                to a
                Participant on an annual basis. Salary does not include bonuses,
                if any,
                or incentive compensation, if any. Such compensation shall not be
                reduced
                by any deferrals made under any other plans or programs maintained
                by the
                Company.

            

    

    

    
      	
              1.11

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

            

    

    

    
      	
              1.12

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

            

    

    

    
      	
              1.13

            	
              “Total
                Shareholder Return”
                means the total percentage return realized by the owner of a share
                of
                stock during a relevant Year or any part thereof. Total Shareholder
                Return
                is equal to the appreciation or depreciation in value of the stock
                (which
                is equal to the closing value of the stock on the last trading day
                of the
                relevant period minus the closing value of the stock on the last
                trading
                day of the preceding Year) plus the dividends declared during the
                relevant
                period, divided by the closing value of the stock on the last trading
                day
                of the preceding Year.

            

    

    

    
      	
              1.14

            	
              “Year”
                means a calendar year.

            

    

    

    Section
      2. Sub-Plan Participation and Awards

    

    2.1 Participant
      Selection.
      Participants under this Sub-Plan shall be selected by the Committee in its
      sole
      discretion as provided in Section 4.2 of the Sponsor of the Plan.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.2 Awards.
      Subject
      to any adjustments to be made under Section 2.5, the Compensation Committee
      may,
      in its sole discretion, grant Awards to some or all of the Participants in
      the
      form of a specific number of Performance Shares. The target and maximum value
      of
      any Award granted to any Participant in any calendar Year will be based upon
      the
      following:

     

    
      	
              Participant

            	
              Target
                Award 

            	
              Maximum
                Award 

            
	
              CEO*

            	
              290%
                of Salary

            	
              362.5%
                of Salary

            
	
              COO*

            	
              200%
                of Salary

            	
              250%
                of Salary

            
	
              Presidents*/Executive
                VPs*

            	
              133%
                of Salary

            	
              166.25%
                of Salary

            
	
              Senior
                VPs*

            	
              110%
                of Salary

            	
              137.5%
                of Salary

            
	
              VP/Department
                Heads**

              Level
                I

              Level
                II

              Level
                III

            	
               

              100%
                of Salary

              80%
                of Salary

              60%
                of Salary

            	
               

              125%
                of Salary

              100%
                of Salary

              75%
                of Salary

            
	
              Key
                Managers

            	
              55%
                of Salary

            	
              68.75%
                of Salary

            

    

    *
      Senior
      Management Committee level position

    **Levels
      shall be determined in the sole discretion of the Committee

    

    2.3 Award
      Valuation at Grant.
      In
      calculating the value of an Award for purposes of Section 2.2, the value of
      each
      Performance Share shall be equal to the closing price of a share of Stock on
      the
      last trading day of the Year before the Performance Period begins. The
      Participant’s Salary shall be determined as of the January 1 preceding the date
      the Award is granted, or such other time as is determined in the discretion
      of
      the Committee. Each Award is deemed to be granted on the day that it is approved
      by the Committee.

    

    2.4 Accounting
      and Adjustment of Awards.
      The
      number of Performance Shares awarded to a Participant shall be recorded in
      a
      separate Account for each Participant. The number of Performance Shares recorded
      in a Participant’s Account shall be adjusted to reflect any splits or other
      adjustments in the Stock. If any cash dividends are paid on the Stock, the
      number of Performance Shares in each Participant’s Account shall be increased by
      a number equal to (i) the dividend multiplied by the number of Performance
      Shares in each Participant’s Account, divided by (ii) the closing price of a
      share of Stock on the payment date of the dividend. No adjustment shall be
      made
      to any outstanding Awards of a Retired Participant for cash dividends paid
      on
      Stock during the Performance Period following the Retirement of the
      Participant.

    

    2.5 Performance
      Schedule and Calculation of Awards.
      Except
      as otherwise provided, each Award shall become vested on January 1 immediately
      following the end of the applicable Performance Period, subject to adjustment
      in
      accordance with the following procedure. In no event shall such date be
      construed to be earlier than January 1 immediately following the end of the
      applicable Performance Period:

     

    (a) One-half
      of the Award shall be adjusted as follows:

    

    (i) The
      Total
      Shareholder Return for the Company shall be determined for each Year during
      the
      Performance Period, and shall then be averaged (the “Company TSR”).

    

    (ii) The
      average Total Shareholder Return for the Peer Group utilities shall be
      determined for each Year during the Performance Period, and shall then be
      averaged ( the “Peer Group TSR”). The two highest and two lowest performing
      utilities within the Peer Group shall be excluded for purposes of determining
      the Peer Group TSR.

    

    (iii) The
      Peer
      Group TSR for the Performance Period shall be subtracted from the Company TSR
      for the Performance Period. The remainder shall then be used to determine the
      number of vested Performance Shares using the Performance Schedule, based on
      one-half of the number of Performance Shares in the Participant’s
      Account.

    

    (b) The
      other
      one-half of the Award shall be adjusted as follows:

    

    (i) The
      EBITDA Growth for the Company shall be determined for each Year during the
      Performance Period, and shall then be averaged (the “Company EBITDA
      Growth”).

    

    (ii) The
      average EBITDA Growth for the Peer Group utilities shall be determined for
      each
      Year during the Performance period, and shall be averaged (the “Peer Group
      EBITDA Growth”). The two highest and two lowest performing utilities within the
      Peer Group shall be excluded for purposes of determining the Peer Group EBITDA
      Growth.

    

    (iii) The
      Peer
      Group EBITDA Growth for the Performance Period shall be subtracted from the
      Company EBITDA Growth for the Performance Period. The remainder shall then
      be
      used to determine the number of vested Performance Shares using the Performance
      Schedule, based on one-half of the number of Performance Shares in the
      Participant’s Account.

    

    (c) Except
      as
      provided in Section 3, the total number of vested Performance Shares payable
      to
      the Participant shall be the sum of the amounts determined in accordance with
      subsections (a) and (b) above.

    

    (d) The
      Performance Measures and the Performance Schedule will not change during any
      Performance Period with regard to any Awards that have already been granted.
      The
      Committee reserves the right to modify or adjust the Performance Measures and/or
      the Performance Schedule in the Committee’s sole discretion with regard to
      future grants.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.6 Payment
      Options.
      Except
      as provided in Section 3, Awards shall be paid after expiration of the
      Performance Period. The Company will issue one share of Stock in payment for
      each vested Performance Share (rounded to the nearest whole Performance Share)
      credited to the Account of the Participant. Payment shall be made as
      follows:

    

    (a) 100%
      during the month of April of the Year immediately following expiration of the
      Performance Period, or as soon as practicable thereafter; or

    

    (b) in
      accordance with an alternative payment election made by Participant
      substantially in the form attached hereto as Attachment 2, provided that such
      election is executed by the Participant and returned to the Vice President,
      Human Resources Department no later than the end of the first Year of the
      Performance Period. Once made, this election shall be irrevocable except as
      may
      be permitted by rules promulgated under Section 409A and allowed by the
      Committee. A deferral election may only be made by a Participant who is employed
      as a Department Head or in a higher position on the date the deferral election
      is solicited. Awards that are deferred pursuant to this Section 2.6(b) are
      referred to herein as “Deferred Awards.”

    

    2.7 Grantor
      Trust.
      In the
      case of a Change in Control, the Company shall, subject to the restrictions
      in
      this Section 2.7 and Section 13.12 of the Plan, irrevocably set aside shares
      of
      Stock or cash in one or more such grantor trusts in an amount that is sufficient
      to pay each Participant employed by such Company (or Designated Beneficiary),
      the net present value as of the date on which the Change in Control occurs,
      of
      the earned benefits to which Participants (or their Designated Beneficiaries)
      would be entitled pursuant to the terms of the Plan if the value of their
      deferral account (if any) established pursuant to section 2.6(b) would be paid
      in a lump sum upon the Change in Control. Any such trust shall be subject to
      the
      claims of the general creditors of the Sponsor or Company in the event of
      bankruptcy or insolvency of the Sponsor or Company. Notwithstanding the
      foregoing provisions of this Section 2.7, the Company shall establish no such
      trust if the assets thereof shall be includable in the income of Participants
      thereby pursuant to Section 409A(b).

    

    Section
      3. Early Vesting and Forfeiture

    

    3.1 Retirement,
      Death or Divestiture.
      If the
      Participant Retires or dies prior to expiration of the Performance Period,
      or
      terminates employment as the result of a Divestiture during a Performance
      Period, any outstanding Awards of the Participant for any unexpired Performance
      Period shall immediately become vested. Payment of the outstanding Awards of
      such Participant shall be subject to the following special
      provisions:

    

    (a) In
      the
      event of the Retirement of the Participant, the Participant’s outstanding Awards
      shall be adjusted in accordance with Section 2.5 and paid in accordance with
      Section 2.6 following the end of the Performance Period for the Award; provided,
      that if the Participant has elected to defer payment until a specified date
      certain and Retires before the date specified in the deferral election, the
      Company will commence distribution of the Deferred Award as soon as practicable
      on or after the later of: (i) the April 1 following the first anniversary of
      the
      date of Retirement, or (ii) the April 1 of the year following the end of the
      Performance Period, even though said date is earlier than the date specified
      in
      the deferral election. If the Participant dies following Retirement but prior
      to
      the expiration of the Performance Period, the Participant’s outstanding Awards
      shall be adjusted and paid in accordance with Section 3.3. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) In
      the
      event of the death of the Participant, or termination of employment as the
      result of a Divestiture during a Performance Period, the Participant’s
      outstanding Awards shall be adjusted and paid in accordance with Section 3.3.
      
       

      3.2 
        Change
        in Control.
        In the
        event of a Change in Control prior to the expiration of the Performance Period,
        any outstanding Award of the Participant for any unexpired Performance Period
        shall be treated as follows:

    

     

           
      (a) If
      the
      Award is assumed by the successor to the Sponsor as of the date of the Change
      in
      Control, each outstanding Award not previously forfeited shall continue to
      vest
      and shall be paid pursuant to the terms of this Sub-Plan; provided, however,
      that in the event the employment of the Participant is terminated by the Company
      without Cause following the Change in Control, any outstanding Award shall
      become vested as of the termination date, and the aggregate value of the Award
      shall be paid after being adjusted in accordance with Section 3.3.

    

    (b) If
      the
      Award is not assumed by the successor to the Sponsor as of the date of the
      Change in Control, any outstanding Award shall become vested as of the date
      of
      the Change in Control, and the aggregate value of the Award shall be paid after
      being adjusted in accordance with Section 3.3.

    

    3.3 Adjustment
      and Payment of Awards.
      Any
      Award which is vested prior to the end of the Performance Period due to the
      death of the Participant, termination of employment as a result of a Divestiture
      a Change in Control during the Performance Period, or becomes payable upon
      death
      following Retirement pursuant to Section 3.1(a) above shall be adjusted and
      paid
      pursuant to the following procedure:

    

    (a) One-half
      of the Award shall be adjusted as follows:

    

    (i) The
      Company TSR shall be determined for each Year or partial Year, and a weighted
      average Company TSR shall be calculated for the period between the first day
      of
      the Performance Period and the date the Participant dies, the date of
      termination as a result of the Divestiture or the date that the Award is vested
      pursuant to Section 3.2 (the “Prorated Company TSR”).

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii) The
      average Peer Group TSR shall be determined for each Year or partial Year, and
      a
      weighted average Peer Group TSR shall be calculated for the period between
      the
      first day of the Performance Period and the date the Participant dies, the
      date
      of termination as a result of the Divestiture or the date that the Award is
      vested pursuant to Section 3.2 (the “Prorated Peer Group TSR”). The two highest
      and two lowest performing utilities within the Peer Group shall be excluded
      for
      purposes of determining the Peer Group TSR.

    

    (iii) The
      Prorated Peer Group TSR for the Performance Period shall be subtracted from
      the
      Prorated Company TSR for the Performance Period. The remainder shall then be
      used to determine the vested Performance Shares using the Performance Schedule,
      based on one-half of the number of Performance Shares in the Participant’s
      Account.

    

    (b) The
      other
      one-half of the Award shall be adjusted as follows:

    

    (i) The
      Company EBITDA Growth shall be determined for each Year or partial Year, and
      a
      weighted average Company EBITDA Growth shall be calculated for the period
      between the first day of the Performance Period and the end of the calendar
      quarter immediately preceding the date the Participant dies, the date of
      termination as a result of the Divestiture or the date that the Award is vested
      pursuant to Section 3.2 (the “Prorated Company EBITDA Growth”).

    

    (ii) The
      average Peer Group EBITDA Growth shall be determined for each Year or partial
      Year, and a weighted average Peer Group EBITDA Growth shall be calculated for
      the period between the first day of the Performance Period and the end of the
      calendar quarter immediately preceding the date the Participant dies, the date
      of termination as a result of the Divestiture or the date that the Award is
      vested pursuant to Section 3.2 (the “Prorated Peer Group EBITDA Growth”). The
      two highest and two lowest performing utilities within the Peer Group shall
      be
      excluded for purposes of determining the Peer Group EBITDA Growth.

    

    (iii) The
      Prorated Peer Group EBITDA Growth for the Performance Period shall be subtracted
      from the Prorated Company EBITDA Growth for the Performance Period. The
      remainder shall then be used to determine the vested Performance Shares using
      the Performance Schedule, based on one-half of the number of Performance Shares
      in the Participant’s Account.

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

                   
      (c) The
      total
      number of vested Performance Shares payable to the Participant shall be the
      sum
      of the amounts determined in accordance with subsections (a) and (b)
      above.

     

    (d) In
      the
      event of the death of the Participant, payment shall be made within a reasonable
      time after the Participant dies to the Participant’s Designated Beneficiary. In
      the event of the termination of employment of the Participant as a result of
      a
      Divestiture payment shall be made within a reasonable time after the date of
      termination. If the Award vests pursuant to Section 3.2, the Award shall be
      paid
      within a reasonable time after the date of vesting. However, with respect to
      Deferred Awards, if the Participant is a “key employee” as defined in Section
      416(i) of the Code (but determined without regard to paragraph 5 thereof or
      the
      50 employee limit on the number of officers treated as key employees), payment
      shall not be made before the date that is six months after the date of
      Separation from Service (or, if earlier, the date of death of the Participant)
      and the amount of any payment made in cash (i.e.,
      with
      respect to Awards granted prior to January 1, 2005) shall be based upon the
      value of the Performance Shares as determined by reference to the closing price
      of the Stock on the trading day occurring on or next following the date that
      is
      six months after the date of Separation from Service of the Participant (or,
      if
      earlier the date of death of the Participant). If the Award vests pursuant
      to
      Section 3.2(b), the Award shall be paid within a reasonable time after the
      date
      of vesting, notwithstanding any election under Section 2.6. The Company will
      issue one share of Stock in payment for each Performance Share (rounded to
      the
      nearest whole Performance Share) credited to the Account of the Participant.
      

    

    3.4 Termination
      of Employment.
      In the
      event that a Participant’s employment with the Company terminates for any reason
      other than as provided in this Section 3, any Award made to the Participant
      which has not vested as provided in Section 2 or Section 3 shall be forfeited.
      Provided such termination is Separation from Service, any vested Awards shall
      be
      paid within a reasonable time after Separation (for reasons other than
      Retirement), notwithstanding any election to defer the payment of any Award
      under Section 2.6. However, with respect to Deferred Awards, if the Participant
      is a “key employee” as defined in Section 416(i) of the Code (but determined
      without regard to paragraph 5 thereof or the 50 employee limit on the number
      of
      officers treated as key employees), payment shall not be made before the date
      that is six months after the date of Separation from Service for any reason
      including Retirement (or, if earlier, the date of death of the Participant)
      and
      the amount of any payment made in cash (i.e.,
      with
      respect to Awards granted prior to January 1, 2005) shall be based upon the
      value of the Performance Shares as determined by reference to the closing price
      of the Stock on the trading day occurring on or next following the date that
      is
      six months after the date of Separation from Service of the Participant (or,
      if
      earlier the date of death of the Participant).

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    Section
      4. Non-Assignability of Awards

    

    The
      Awards and any right to receive payment under the Plan and this Sub-Plan may
      not
      be anticipated, alienated, pledged, encumbered, or subject to any charge or
      legal process, and if any attempt is made to do so, or a Participant becomes
      bankrupt, then in the sole discretion of the Committee, any Award made to the
      Participant which has not vested as provided in Sections 2 and 3 shall be
      forfeited.

    

    Section
      5. Amendment and Termination

    

    This
      Sub-Plan shall be subject to amendment, suspension, or termination as provided
      in the Plan. No action to amend, suspend or terminate this Sub-Plan shall permit
      the acceleration of the time or schedule of the payment of any Award granted
      under this Sub- Plan (except as provided in regulations under Section
      409A).

    

    Section
      6. Section 409A

    

    This
      Sub-Plan shall be administered in compliance with Section 409A.

    

    

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

    

                           PROGRESS
      ENERGY, INC.

    

    

                                    By:
/s/
      Robert
      B. McGehee

                                                                        
      Robert B. McGehee

                                                                Chief
      Executive Officer

    

    

    

    
 

    

    

    

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

      ATTACHMENT
        1

      

      PERFORMANCE
        SCHEDULE

      

      PERFORMANCE
        SHARE CALCULATION1

      

      

      The
        following table shall be used to adjust one half of the Participant’s Award in

      accordance
        with Section 2.5(a) or Section 3.4(a) of the Plan:

      

      
        	
                If
                  the Company TSR2
                  minus

                the
                  Peer Group TSR2
                  is:

              	
                Then
                  the 50% of the vested

                Performance
                  Share Award

                shall
                  be multiplied by:

              
	
                5%
                  or better

              	
                2.00

              
	
                4.0
                  - 4.99

              	
                1.75

              
	
                3.0
                  - 3.99

              	
                1.50

              
	
                2.0
                  - 2.99

              	
                1.25

              
	
                1.0
                  - 1.99

              	
                1.00

              
	
                (0.99)
                  - 0.99

              	
                .50

              
	
                (1.0)
                  - (1.99)

              	
                .25

              
	
                (2.0)
                  or less

              	
                0.00

              

      

      

      The
        following table shall be used to adjust one half of the Participant’s Award in

      accordance
        with Section 2.5(b) or Section 3.3(b) of the Plan:

      

      
        	
                If
                  the Company EBITDA Growth2
                  minus

                the
                  Peer Group EBITDA Growth2
                  is:

              	
                Then
                  the 50% of the vested

                Performance
                  Share Award

                shall
                  be multiplied by:

              
	
                5%
                  or better

              	
                2.00

              
	
                4.0
                  - 4.99

              	
                1.75

              
	
                3.0
                  - 3.99

              	
                1.50

              
	
                2.0
                  - 2.99

              	
                1.25

              
	
                1.0
                  - 1.99

              	
                1.00

              
	
                0.00
                  - 0.99

              	
                .50

              
	
                Less
                  than 0

              	
                0

              

      

      

      1 The
        number of Performance Shares as calculated above shall be paid in accordance
        with the provisions of 

      Section
        2.5 and 2.6 of this Sub-Plan.

      

      
        

2
        For
        purposes of Section 3, the Prorated Company TSR and EBITDA Growth and Prorated
        Peer Group TSR 

      and
        EBITDA Growth shall be used, and the number of Performance Shares as calculated
        above shall be paid in accordance with the provisions of the
        Sub-Plan. 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      ATTACHMENT
        2

      

      PERFORMANCE
        SHARE SUB-PLAN

      200_
        DEFERRAL ELECTION FORM

      

      As
        a
        Participant in the Performance Share Sub-Plan of the 2002 Equity Incentive
        Plan
        ("Sub-Plan"), I hereby elect to defer payment of my Award otherwise payable
        to
        me by the Company and attributable to services to be performed by me during
        the
        Performance Period beginning on January __, 200__. This election shall apply
        to
[CHECK
        ONE]:

      

      [
        ] 100%
        of
        the Award   [
        ] 50%
        of the Award

      [
        ] 75%
        of
        the
        Award                             
[
        ] 25%
        of the Award

      

      Upon
        vesting, I understand that my Award shall continue to be recorded in my Account
        as Performance Shares as described in the Sub-Plan and adjusted to reflect
        the
        payment and reinvesting of the Company’s common stock dividends over the
        deferral period, until paid in full.

      

      I
        hereby
        elect to defer receipt (or commencement of receipt) of my Award until the
        date
        specified below, or as soon as practical thereafter
        [CHECK ONE]:*

      

      [
        ] a
        specific date certain at least 5 years from expiration of
        the
        Performance Period:      
        4 / 1
        /     

                    (month/day/year)

          

                       
          [ ]  the
          April
          1 following the date of Retirement, or if later, the date which is six
          months
          after the date of my Separation from Service for any reason (including
          Retirement), 

                            
          if I am a “key employee” as defined in Section 416(i) of the Code (but
          determined without regard to paragraph 5 thereof or the 50 employee limit
          on the
          number of

                           
           officers treated as key employees).

      

       

      [
        ] the
        April
        1 following the first anniversary of my date of Retirement

      

      *
        Notwithstanding any election above, if I elect a date certain distribution
        and I
        Retire before that date certain, I understand that the Company will commence
        distribution of my Account as soon as practicable on or after the later of:
        (i)
        the April 1 following the first anniversary of the date of Retirement, or
        (ii)
        the April 1 of the year following the end of the Performance Period, even
        though
        said date is earlier than 5 years from the expiration of the Performance
        Period.

      

      I
        hereby
        elect to be paid as described in the Sub-Plan in the form of [CHECK
        ONE]:

      

      [
        ] a
        single
        payment          
 [
        ]
 annual
        payments commencing on the date set forth above and payable

       on
        the anniversary date thereof over:

      

      [
        ] a two
        year period [ ] a three year period

             
        [ ] a four year period [ ] a five year period

      

      I
        understand that I will receive “earnings” on those deferred amounts when they
        are paid to me.

      

      I
        understand that the election made as indicated herein is irrevocable and
        that
        all deferral elections are subject to the provisions of the Sub-Plan, including
        provisions that may affect timing of distributions.

      

      I
        understand that this deferral election is subject to the requirements of
        Section
        409A of Code, and regulations and other guidance issued thereunder. The Company
        makes no representation or guarantee that any tax treatment, including, but
        not
        limited to, federal, state and local income, or estate and gift tax treatment,
        will be applicable with respect to the amounts deferred. The Company shall
        have
        no responsibility for the tax consequences that I may incur as a result of
        Section 409A, regulations or guidance issued thereunder, or any other provision
        of the Internal Revenue Code. I understand it is my responsibility to consult
        a
        legal or tax advisor regarding the tax effects of this deferral election.
        I
        further acknowledge and agree that the Company may (but shall not be required
        to) modify this election as necessary to comply with Section 409A and any
        guidance or regulations issued thereunder. I further agree to cooperate in
        any
        manner necessary to ensure that this election is in compliance with Section
        409A
        and any guidance or regulations issued thereunder.

      

      I
        understand and acknowledge that my interests herein and my rights to receive
        distribution of the deferred amounts may not be anticipated, alienated, sold,
        transferred, assigned, pledged, encumbered, or subjected to any charge or
        legal
        process, and if any attempt is made to do so, or I become bankrupt, my interest
        may be terminated by the Committee, in its sole discretion, may cause the
        same
        to be held or applied for the benefit of one or more of my dependents or
        make
        any other disposition of such interests that it deems appropriate. I further
        understand that nothing in the Sub-Plan shall be interpreted or construed
        to
        require the Company in any manner to fund any obligation to me, or to my
        beneficiary(ies) in the event of my death.

      

       

                                  

      (Signature)      (Date)

       

                                                                                                                           

      (Print
        Name)      (Company
        Location)

      

      Received:

      Agent
        of
        Chief Executive Officer

      

                                  

                  (Signature)      (Date)Exhibit 10c(8)

    Exhibit
      10c(8)

     

     

    
 

    AMENDED
      MANAGEMENT INCENTIVE COMPENSATION PLAN

     

    OF

     

    PROGRESS
      ENERGY, INC.

     

     

     

     

     

     

     

    AS
      AMENDED JANUARY
      1, 2007

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      TABLE
        OF
        CONTENTS

    

    
      

      

      

      
        	 	 	
                Page

              
	 	 	 
	
                ARTICLE
                  I

              	
                PURPOSE
                  

              	
                1

              
	 	 	 
	
                ARTICLE
                  II

              	
                DEFINITIONS
                  

              	
                1

              
	 	 	 
	
                ARTICLE
                  III

              	
                ADMINISTRATION

              	
                7

              
	 	 	 
	
                ARTICLE
                  IV

              	
                PARTICIPATION
                  

              	
                8

              
	 	 	 
	
                ARTICLE
                  V

              	
                AWARDS
                  

              	
                8

              
	 	 	 
	
                ARTICLE
                  VI

              	
                DISTRIBUTION
                  AND DEFERRAL OF AWARDS 

              	
                11

              
	 	 	 
	
                ARTICLE
                  VII

              	
                TERMINATION
                  OF EMPLOYMENT 

              	
                17

              
	 	 	 
	
                ARTICLE
                  VIII

              	
                MISCELLANEOUS
                  

              	
                18

              
	 	 	 
	
                EXHIBIT
                  A

              	
                MICP
                  RELATIVE PERFORMANCE WEIGHTINGS 

              	 
	 	 	 
	
                EXHIBIT
                  B

              	
                MANAGEMENT
                  INCENTIVE EXAMPLE 

              	 
	 	 	 
	
                EXHIBIT
                  C

              	
                PARTICIPATING
                  EMPLOYERS

              	 
	 	 	 
	
                FORM
                  OF DESIGNATION OF BENEFICIARY

              	 	 

      

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      I

    PURPOSE

     

    The
      purpose of the Management Incentive Compensation Plan (the “Plan”) of Progress
      Energy, Inc. is to promote the financial interests of the Company, including
      its
      growth, by (i) attracting and retaining executive officers and other
      management-level employees who can have a significant positive impact on the
      success of the Company; (ii) motivating such personnel to help the Company
      achieve annual incentive, performance and safety goals; (iii) motivating such
      personnel to improve their own as well as their business unit/work group’s
      performance through the effective implementation of human resource strategic
      initiatives; and (iv) providing annual cash incentive compensation opportunities
      that are competitive with those of other major corporations.

    The
      Sponsor amends and restates the Plan effective January 1, 2007. The terms of
      the
      amended and restated Plan shall govern the payment of any benefits commencing
      after January 1, 2007.

     

    ARTICLE
      II 

    DEFINITIONS

     

    The
      following definitions are applicable to the Plan:

    1.  “Achievement
      Factor”:
      The
      sum of the Weighted Achievement Percentages determined for each of the
      Performance Measures for the Year.

    2.  “Award”:
      The
      benefit payable to a Participant hereunder based upon achievement of the
      Performance Measures and as may be adjusted in accordance with Section 6 of
      Article V below.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.  “Affiliated
      Entity”:
      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 Internal Revenue Code
      of
      1986, as amended (the “Code”), but only to the extent required.

    4.  “Board”:
      The
      Board of Directors of the Sponsor.

    5.  “Cause”:
      Any of
      the following:

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

            

    

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

            

    

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

            

    

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

            

    

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

            

    

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

            

    

    6.  “Change
      in Control”:
      The
      earliest of the following dates:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	(a)  	
              the
                date any person or group of persons (within the meaning of Section
                13(d)
                or 14(d) of the Securities Exchange Act of 1934), excluding employee
                benefit plans of the Sponsor, becomes, directly or indirectly, the
                “beneficial owner” (as defined in Rule 13d-3 promulgated under the
                Securities Act of 1934) of securities of the Sponsor representing
                twenty-five percent (25%) or more of the combined voting power of
                the
                Sponsor’s then outstanding securities (excluding the acquisition of
                securities of the Sponsor by an entity at least eighty percent (80%)
                of
                the outstanding voting securities of which are, directly or indirectly,
                beneficially owned by the Sponsor);
                or

            

    

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

            

    

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

            

    

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

            

    

    
      	(e)  	
              the
                date the shareholders of the Sponsor approve a plan of complete
                liquidation or winding-up of the Sponsor or an agreement for the
                sale or
                disposition by the Sponsor of all or substantially all of the Sponsor’s
                assets; or

            

    

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

            

    

     

    A
      Change
      in Control shall not be deemed to have occurred until a majority of the members
      of the Board receive written certification from the Compensation Committee
      that
      one of the events set forth in this Section 6 has occurred. Any determination
      that an event described in this Section 6 has occurred shall, if made in good
      faith on the basis of information available at that time, be conclusive and
      binding on the Compensation Committee, the Sponsor, each Affiliated Entity,
      the
      Participant and their Beneficiaries for all purposes of the Plan.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.  “Company”:
      The
      Sponsor and each Affiliated Entity.

    8.  “Compensation
      Committee”:
      The
      Organization and Compensation Committee of the Board of Directors of the
      Sponsor.

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

    10.  “Date
      of Retirement”:
      The
      first day of the calendar month immediately following the Participant’s
      Retirement.

    11.  “Designated
      Beneficiary”:
      The
      beneficiary designated by the Participant, pursuant to procedures established
      by
      the Human Resources Department of the Company, to receive amounts due to the
      Participant or to exercise any rights of the Participant to the extent permitted
      hereunder 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.

    12.  “EBITDA”:
      The
      earnings of the Participating Employer before interest, taxes, depreciation,
      and
      amortization as determined from time to time by the Compensation
      Committee.

    13.  “ECIP
      Goals”:
      The
      goals set forth to receive a payment under the Employee Cash Incentive Plan
      of
      each department or business unit of the Company.

    14.  “Effective
      Date”:
      The
      Effective Date of this Plan, as amended, is January 1, 2007.

    15.  “EPS”:
      The
      on-going earnings per share of the Sponsor’s Common Stock for a Year as
      determined by the Compensation Committee from time to time. 

    16.  “Legal
      Entity EBITDA”:
      The
      EBITDA of the Participating Employer which employs the Participant.

    17.  “Participant”:
      An
      employee of a Participating Employer who is selected pursuant to Article IV
      hereof to be eligible to receive an Award under the Plan.

    18.  “Participating
      Employer”:
      Each
      Affiliated Entity that, with the consent of the Compensation Committee, adopts
      the Plan and is included in Exhibit
      C,
      as in
      effect from time to time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    19.  “Performance
      Measures”:
      The
      EPS, Legal Entity EBITDA and ECIP Goals.

    20.  “Performance
      Unit”:
      A unit
      or credit, linked to the value of the Sponsor’s Common Stock under the terms set
      forth in Article VI hereof.

    21.  “Plan”:
      The
      Management Incentive Compensation Plan of Progress Energy, Inc. as contained
      herein, and as it may be amended from time to time.

    22.  “Retirement”:
      A
      Participant’s termination of employment from the Company on
      or
      after attaining (i) age 65 with 5 years of service, (ii) age 55 with 15 years
      of
      service, or (iii) 35 years of service.

    23.  “Salary”:
      The
      compensation paid by the Company to a Participant in a relevant Year, consisting
      of regular or base compensation, such compensation being understood not to
      include bonuses, if any, or incentive compensation, if any. Provided, that
      such
      compensation shall not be reduced by any cash deferrals of said compensation
      made under any other plans or programs maintained by such Company.

    24.  “Senior
      Management Committee”:
      The
      Senior Management Committee of the Company.

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

    26. “Separation
      from Service”:
      The
      death, Retirement or other termination of employment with the Company as defined
      for purposes of Section 409A.

    27. “Sponsor”:
      Progress Energy, Inc., a North Carolina corporation, or any successor to it
      in
      the ownership of substantially all of its assets.

    28. “Target
      Award Opportunity”:
      The
      target for an Award under this Plan as set forth in Section 1 of Article V
      hereof.

    29. “Unforeseeable
      Emergency”:
      A
      severe financial hardship to the Participant resulting from an illness or
      accident of the Participant, the Participant’s spouse, or 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.

    30. “Weighted
      Achievement Percentage”:
      The
      percentage determined by multiplying the relative percentage weight assigned
      to
      each of the Performance Measures applicable to the Participant for the Year
      by
      the payout percentage corresponding to the level of achievement of the
      Performance Measure as determined for each department or business unit for
      the
      Year.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    31. “Year”:
      A
      calendar year.

     

    ARTICLE
      III 

    ADMINISTRATION

     

    The
      Plan
      shall be administered by the Chief Executive Officer of the Sponsor. Except
      as
      otherwise provided herein, the Chief Executive Officer of the Sponsor shall
      have
      sole and complete authority to (i) select the Participants; (ii) establish
      and
      adjust (either before or during the Year) the performance criteria necessary
      for
      a Participant to attain an Award for the Year; (iii) adjust and approve Awards;
      (iv) establish from time to time regulations for the administration of the
      Plan;
      and (v) interpret the Plan and make all determinations deemed necessary or
      advisable for the administration of the Plan, all subject to its express
      provisions. Notwithstanding the foregoing, the Compensation Committee shall
      (a)
      approve the applicable threshold, target and outstanding levels of performance
      for a Performance Measure for the Year; (b) approve the performance criteria
      and
      Awards for all Participants who are members of the Senior Management Committee;
      (c) determine the total payout under the Plan up to a maximum of four percent
      (4%) of the Sponsor’s after-tax income for a relevant Year; and (d) certify to
      the Board that a Change in Control has occurred as provided in Section 6 of
      Article II.

    A
      majority of the Compensation Committee shall constitute a quorum, and the acts
      of a majority of the members present at any meeting at which a quorum is
      present, or acts approved in writing by a majority of the members of the
      Committee without a meeting, shall be the acts of such Committee.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV 

    PARTICIPATION

     

    The
      Chief
      Executive Officer of the Sponsor shall select from time to time the Participants
      in the Plan for each Year from those employees of each Company who, in his
      opinion, have the capacity for contributing in a substantial measure to the
      successful performance of the Company that Year. No employee shall at any time
      have a right to be selected as a Participant in the Plan for any Year nor,
      having been selected as a Participant for one Year, have the right to be
      selected as a Participant in any other Year.

     

    ARTICLE
      V 

    AWARDS

     

    1.  Target
      Award Opportunities.
      The
      following table sets forth Target Award Opportunities, expressed as a percentage
      of Salary, for various levels of participation in the Plan:

     

    
      	
              Participation

            	
              Target
                Award Opportunities

            
	
              Chief
                Executive Officer of Sponsor*

            	
              85%

            
	
              Chief
                Operating Officer of Sponsor*

            	
              70%

            
	
              Presidents*/Executive
                Vice Presidents*

            	
              55%

            
	
              Senior
                Vice Presidents*

            	
              45%

            
	
              Department
                Heads

            	
              35%

            
	
              Other
                Participants:

              Key
                Managers

              Other
                Managers

            	
               

              25%

              20%

            

    

     

    *Senior
      Management Committee level positions.

     

    The
      Target Award Opportunity for the Chief Executive Officer of the Sponsor shall
      be
      85%; however, the Compensation Committee of the Board shall be authorized to
      change that amount from year to year, or to award an amount of compensation
      based on other considerations, in its complete discretion.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.  Award
      Components.
      Awards
      under the Plan to which Participants are eligible shall depend upon the
      achievement of the Performance Measures for the Year. Prior to the beginning
      of
      each Year, or as soon as practical thereafter, the Chief Executive Officer
      of
      the Sponsor will establish and the Compensation Committee will approve the
      Performance Measures for the Year, their relative percentage weight, and the
      performance criteria necessary for attainment of various performance levels.
      Attached hereto as Exhibit
      A
      are the
      relative percentage weights for each of the Performance Measures for each level
      of participation as of the Effective Date, which may be changed from time to
      time by the Compensation Committee.

    3.  Performance
      Levels.
      The
      Compensation Committee may establish three levels of performance related to
      a
      Performance Measure: outstanding, target, and threshold. In such case, the
      payout percentages to be applied to each Participant’s Target Award Opportunity
      are as follows:

     

    Performance
      Level Payout
      Percentage

                            Outstanding  200%

                                
      Target            
100%

                             
      Threshold                
50%

     

    Payout
      percentages shall be adjusted for performance between the designated performance
      levels; provided, however, that performance which falls below the “Threshold”
performance level results in a payout percentage of zero.

    4.  Determination
      of Award Amount.
      The
      Chief Executive Officer of the Sponsor shall determine the amount of the Award,
      if any, earned by each Participant for the Year; provided, that the Compensation
      Committee shall approve the amount of the Award for a Participant who is a
      member of the Senior Management Committee. The amount of an Award earned by
      the
      Participant shall be determined by multiplying the Salary times the Target
      Award
      Opportunity times the Achievement Factor applicable to the Participant for
      the
      Year. The amount of the Award of a Participant is subject to further adjustment
      as provided in Section 6 of this Article V.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.  New
      Participants.
      Any
      Award that is earned during the initial Year of participation shall be pro
      rated
      based on the length of time served in the qualifying job.

    6.  Adjustment
      of Award Amount.
      The
      Chief Executive Officer of the Sponsor, in his sole discretion, may adjust
      the
      Award for the Year payable to Participants who are not members of the Senior
      Management Committee based upon management’s determination of the performance
      goals and core skill achievement of the Participant, the succession planning
      leadership rating of the Participant and any other applicable performance
      criteria. Similar adjustments of Awards to Participants who are members of
      the
      Senior Management Committee shall be subject to approval by the Compensation
      Committee.

    7.  Example.
      Attached as Exhibit
      B
      and
      incorporated by reference is an example of the process by which an Award is
      granted hereunder. Exhibit
      B
      is
      intended solely as an example and in no way modifies the provisions of this
      Article V.

     

    ARTICLE
      VI  

    DISTRIBUTION
      AND DEFERRAL OF AWARDS

     

    1.  Distribution
      of Awards.
      Unless
      a Participant elects to defer an Award pursuant to the remaining provisions
      of
      this Article VI, Awards under the Plan earned during any Year shall be paid
      in
      cash by March 15 of the succeeding Year. 

    2.  Deferral
      Election.
      A
      Participant may elect to defer the Plan Award he or she will earn for any Year
      by completing and submitting a deferral election in a form acceptable to the
      Vice President, Human Resources, by the last day of the preceding Year (or
      such
      other time as permitted by Section 409A). Such election shall apply to the
      Participant’s Award, if any, otherwise to be paid after the Year during which it
      is earned. A Participant’s deferral election may apply to 100%, 75%, 50%, or 25%
      of the Plan Award; provided, however, that in no event shall the amount deferred
      be less than $1,000.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      election to defer shall be irrevocable as to the Award earned during the
      particular Year except as provided in Section 9 of this Article VI or as may
      be
      permitted by rules promulgated under Section 409A and the plan
      administrator.

    3.  Period
      of Deferral.
      At the
      time of a Participant’s deferral election, a Participant must also select a
      distribution date and form of distribution. Subject to Section 6, the
      distribution date may be: (a) any date that is at least five (5) years
      subsequent to the date the Plan Award would otherwise be payable, but not later
      than the second anniversary of the Participant’s Date of Retirement; or (b) any
      date that is within two years following the Participant’s Date of Retirement.
      Subject to Section 6, the form of distribution may be either (i) a lump sum
      or
      (ii) equal installments over a period extending from two years to ten years,
      as
      elected by the Participant. A Participant may not subsequently change the
      distribution date and form of distribution designated in the initial deferral
      election. 

    4.  Performance
      Units.
      All
      Awards which are deferred under the Plan shall be recorded in the form of
      Performance Units. Each Performance Unit is generally equivalent to a share
      of
      the Sponsor’s Common Stock. In converting the cash award to Performance Units,
      the number of Performance Units granted shall be determined by dividing the
      amount of the Award by 85% of the average value of the opening and closing
      price
      of a share of the Sponsor’s Common Stock on the last trading day of the month
      preceding the date of the Award. The Performance Units attributable to the
      15%
      discount from the average value of the Sponsor’s Common Stock shall be referred
      to as the “Incentive Performance Units.” The Incentive Performance Units and any
      adjustments or earnings attributable to those Performance Units shall be
      forfeited by the Participant if he or she terminates employment either
      voluntarily or involuntarily other than for death or Retirement prior to five
      years from March 15 of the Year in which payment would have been made if the
      Award had not been deferred; provided, however, that if before such date the
      employment of the Participant is terminated by the Company without Cause
      following a Change in Control, the Incentive Performance Units shall not be
      forfeited but shall be payable to the Participant in accordance with Section
      8
      of this Article VI.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.  Plan
      Accounts.
      A Plan
      Deferral Account will be established on behalf of each Participant, and the
      number of Performance Units awarded to a Participant shall be recorded in each
      Participant’s Plan Deferral Account as of the first of the month coincident with
      or next following the month in which a deferral becomes effective. The number
      of
      Performance Units recorded in a Participant’s Plan Deferral Account shall be
      adjusted to reflect any splits or other adjustments in the Sponsor’s Common
      Stock, the payment of any cash dividends paid on the Sponsor’s Common Stock and
      the payment of Awards under this Plan to the Participant. To the extent that
      any
      cash dividends have been paid on the Sponsor’s Common Stock, the number of
      Performance Units shall be adjusted to reflect the number of Performance Units
      that would have been acquired if the same dividend had been paid on the number
      of Performance Units recorded in the Participant’s Plan Deferral Account on the
      dividend record date. For purposes of determining the number of Performance
      Units acquired with such dividend, the average of the opening and closing price
      of the Sponsor’s Common Stock on the payment date of the Sponsor’s Common Stock
      dividend shall be used.

    Each
      Participant shall receive an annual statement of the balance of his Plan
      Deferral Account, which shall include the Incentive Performance Units and
      associated earnings and adjustments that are subject to being forfeited as
      provided above.

    6.  Payment
      of Deferred Plan Awards.
      Subject
      to Section 4 related to forfeiture of Incentive Performance Units, deferred
      Plan
      Awards shall be paid in cash by each Company on the deferred distribution date
      specified by the Participant in accordance with Section 3, or as soon as
      practicable thereafter. To convert the Performance Units in a Participant’s Plan
      Deferral Account to a cash payment amount, Performance Units shall be multiplied
      by the average of the opening and closing price of the Sponsor’s Common Stock on
      the last trading day preceding the applicable distribution date specified by
      the
      Participant for the deferred Plan Award. Except as otherwise provided, deferred
      amounts will be paid either in a single lump-sum payment or in up to ten (10)
      annual payments as elected by the Participant at the time of the deferral
      election.

    In
      the
      event that a Participant elects to receive the deferred Plan Award in equal
      annual payments, the amount of the Award to be received in each year shall
      be
      determined as follows:

    (a) To
      determine the amount of the initial annual payment, the number of Performance
      Units in the Participant’s Plan Deferral Account will be divided by the total
      number of annual payments to be received, and the result will be multiplied
      by
      the average of the opening and closing price of the Sponsor’s Common Stock on
      the last trading day preceding the due date of the initial payment.

    (b) To
      determine the amount of each successive annual payment, the Plan Deferral
      Account balance will be divided by the number of annual payments remaining,
      and
      the result will be multiplied by the average of the opening and closing price
      of
      the Sponsor’s Common Stock on the last trading day preceding the due date of the
      annual payment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7.  Termination
      of Employment/Effect on Deferral Election.
      If the
      employment of a Participant terminates prior to the last day of a Year for
      which
      a Plan Award is determined, then any deferral election made with respect to
      such
      Plan Award for such Year shall not become effective and any Plan Award to which
      the Participant is otherwise entitled shall be paid as soon as practicable
      after
      the end of the Year during which it was earned, in accordance with Section
      1 of
      this Article VI.

    8.  Separation
      from Service/Payment of Deferral.
      Notwithstanding the foregoing, if a Participant Separates from Service by reason
      other than death or Retirement, full payment of all amounts due to the
      Participant shall be made on the first day of the month following the date
      of
      Separation, or as soon as practicable thereafter. However, if the Participant
      is
      a “key employee” as defined in Section 416(i) of the Code (but determined
      without regard to paragraph 5 thereof or the 50 employee limit on the number
      of
      officers treated as key employees), payment shall not be made before the date
      that is six months after the date of Separation from Service for any reason
      including Retirement (or, if earlier, the date of death of the Participant).
      Incentive Performance Units shall be subject to forfeiture to the extent
      provided in Section 4.

    9.  Payments
      Due to Unforeseeable Emergency.
      In the
      event of an Unforeseeable Emergency, a Participant may apply to receive a
      distribution earlier than initially elected. The Chief Executive Officer of
      Sponsor or his designee may, in his sole discretion, either approve or deny
      the
      request. The determination made by the Chief Executive Officer of Sponsor will
      be final and binding on all parties. If the request is granted, the amount
      distributed will not exceed the amount necessary to satisfy the emergency need
      plus amounts necessary to pay taxes reasonably anticipated to result from the
      distribution, after taking into account the extent to which such hardship is
      or
      may be relieved through cancellation of a deferral election under this Section
      9, reimbursement or compensation by insurance or otherwise or by liquidation
      of
      the Participant’s assets (to the extent such liquidation of assets would not
      itself cause severe financial hardship). Any deferral election made with respect
      to a Plan Award that would otherwise become payable by the next succeeding
      March
      15 shall be cancelled and such Plan Award shall be paid in cash by the next
      succeeding March 15 pursuant to Section 1. Incentive Performance Units shall
      not
      be subject to early distribution under this Section 9 until five years from
      March 15 of the Year in which payment would have been made if the Award had
      not
      been deferred.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10.  Death
      of a Participant.
      If the
      death of a Participant occurs before a full distribution of the Participant’s
      Plan Deferral Account is made, the remaining portion of the Participant’s Plan
      Deferral Account shall be paid in a lump sum to the Designated Beneficiary
      of
      the Participant based on the value of such account immediately following the
      date of death. Said payment shall be made as soon as practicable following
      notification that death has occurred. 

    11.  Non-Assignability
      of Interests.
      The
      interests herein and the right to receive distributions under this Article
      VI
      may not be anticipated, alienated, sold, transferred, assigned, pledged,
      encumbered, or subjected to any charge or legal process, and if any attempt
      is
      made to do so, or a Participant becomes bankrupt, the interests of the
      Participant under this Article VI may be terminated by the Chief Executive
      Officer of Sponsor, which, in his sole discretion, may cause the same to be
      held
      or applied for the benefit of one or more of the dependents of such Participant
      or make any other disposition of such interests that he deems
      appropriate.

    12.  Unfunded
      Deferrals.
      Nothing
      in this Plan, including this Article VI, shall be interpreted or construed
      to
      require the Sponsor or any Company in any manner to fund any obligation to
      the
      Participants, terminated Participants or beneficiaries hereunder. 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 Sponsor or any Company and the Participants, terminated Participants,
      beneficiaries, or any other persons. Any funds which may be accumulated in
      order
      to meet any obligation under this Plan shall for all purposes continue to be
      a
      part of the general assets of the Sponsor or Company. The Sponsor or Company
      may
      establish a trust to hold funds intended to provide benefits hereunder to the
      extent the assets of such trust become subject to the claims of the general
      creditors of the Sponsor or Company in the event of bankruptcy or insolvency
      of
      the Sponsor or Company. To the extent that any Participant, terminated
      Participant, or beneficiary acquires a right to receive payments from the
      Sponsor or Company under this Plan, such rights shall be no greater than the
      rights of any unsecured general creditor of the Sponsor or Company.

    13.  Change
      in Control.
      In the
      case of a Change in Control, the Company shall, subject to the restrictions
      in
      this Section 13 and Section 12 of Article VI, 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 Designated Beneficiary) the net present
      value as of the date on which the Change in Control occurs, of the benefits
      to
      which Participants (or their Designated Beneficiaries) would be entitled
      pursuant to the terms of the Plan if the value of their Plan Deferral Account
      would be paid in a lump sum upon the Change in Control.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    14. Limitation
      on Trust.
      Notwithstanding the provisions of the foregoing Sections 12 and 13, the Company
      shall establish no such trust if the assets thereof shall be includable in
      the
      income of Participants thereby pursuant to Section 409A(b).

     

    ARTICLE
      VII 

    TERMINATION
      OF EMPLOYMENT

     

    Except
      as
      otherwise provided in this Article VII, a Participant must be actively employed
      by the Company on the next January 1 immediately following the Year for which
      a
      Plan Award is earned in order to be eligible for payment of an Award for that
      Year. In the event the active employment of a Participant shall terminate or
      be
      terminated for any reason, including death, before the next January 1
      immediately following the Year for which a Plan Award is earned, such
      Participant shall receive his or her Award for the year, if any, in an amount
      that the Chief Executive Officer of the Sponsor deems appropriate.
      Notwithstanding the foregoing provisions of this Article VII, in the event
      the
      employment of the Participant is terminated by the Company without Cause within
      one (1) year following a Change in Control, the Award of the Participant for
      the
      Year in which the termination occurs shall equal the amount of the Award which
      would have been earned for the Year if the Participant had remained in the
      employment of the Company through December 31, pro rated to reflect the portion
      of the Year completed by the Participant as an employee; provided, however,
      that
      such Award shall not be less than the Target Award Opportunity of the
      Participant for the Year, pro rated to reflect the portion of the Year completed
      by the Participant as an employee.

     

    ARTICLE
      VIII 

    MISCELLANEOUS

     

    1.  Assignments
      and Transfers.
      The
      rights and interests of a Participant under the Plan may not be assigned,
      encumbered or transferred except, in the event of the death of a Participant,
      by
      will or the laws of descent and distribution.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.  Employee
      Rights Under the Plan.
      No
      Company employee or other person shall have any claim or right to be granted
      an
      Award under the Plan or any other incentive bonus or similar plan of the Sponsor
      or any Company. Neither the Plan, participation in the Plan nor any action
      taken
      hereunder shall be construed as giving any employee any right to be retained
      in
      the employ of the Sponsor or any Company.

    3.  Withholding.
      The
      Sponsor or Company (as applicable) shall have the right to deduct from all
      amounts paid in cash any taxes required by law to be withheld with respect
      to
      such cash payments.

    4.  Amendment
      or Termination.
      The
      Compensation Committee may in its sole discretion amend, suspend or terminate
      the Plan or any portion thereof at any time; provided, that in the event of
      a
      Change in Control, no such action shall take effect prior to the January 1
      next
      following the Year in which occurs the Change in Control. No action to amend,
      suspend or terminate the Plan shall affect the right of a Participant to the
      payment of a Plan Award earned prior to the effective date of such action,
      or
      permit the acceleration of the time or schedule of any payment of amounts
      deferred under the Plan (except as provided in regulations under Section
      409A).

    5.  Governing
      Law.
      This
      Plan shall be construed and governed in accordance with the laws of the state
      of
      North Carolina to the extent not preempted by federal law and in a manner
      consistent with the requirements of Section 409A.

    6.  Entire
      Agreement.
      This
      document (including the Exhibits attached hereto) sets forth the entire
      Plan.

    

    

    (Signature
      page follows)

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

                        PROGRESS
      ENERGY,
      INC.

     

     

                                        By:
      /s/ Robert B. McGehee

          
                                    Robert
      B. McGehee

          
                                    Chief
      Executive Officer

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

     

    MICP
      RELATIVE
      PERFORMANCE WEIGHTINGS

     

    

    
      	
              POSITION

            	
               

              COMPANY

              EPS

            	
              LEGAL

               ENTITY
                

              EBITDA

            	
               

              ECIP
                

              GOALS

            
	
              SMC
                - CEO

               

            	
              100%

               

            	
              -

               

            	
              -

               

            
	
              SMC
                - COO

               

            	
              45%

               

            	
              55%

               

            	
              -

               

            
	
              SMC
                - Presidents

               

            	
              45%

               

            	
              55%

               

            	
              -

               

            
	
              SMC
                - Service Company CEO

               

            	
              100%

               

            	
              -

               

            	
              -

               

            
	
              SMC
                - Non Service Company

               

            	
              35%

               

            	
              65%

               

            	
              -

               

            
	
              SMC
                - Service Company

               

            	
              100%

               

            	
              -

               

            	
              -

               

            
	
              Non
                Service Company Department Heads and Managers

               

            	
              25%

               

            	
              50%

               

            	
              25%

               

            
	
              Service
                Company Department Heads and Managers

               

            	
              45%

               

            	
              30%

               

            	
              25%

               

            

    

    

    
      	
              Note:

            	
              This
                structure may be modified from time to time as provided in Section
                2 of
                Article V of the Plan. In addition, the Compensation Committee may
                consider ECIP Goals in determining any reduction of Awards of Participants
                who are members of the Senior Management
                Committee.

            

    

     

    

     

    
      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    

    EXHIBIT
      B

    
      	
              MANAGEMENT
                INCENTIVE EXAMPLE

            
	
                                          (Assumes
                preliminary PDP and Succession Planning rates are
                complete)

            	 	 	 
	 	 	 	 	 	 	 	 
	
              Step
                1: Calculate achievement factor

              for
                members of a department

            	 	 	 	 	 	 	 
	 	
              Achievement
                Level

            	
              Achievement
                Percentage

            	
              Weighting

              (see
                Pro Rate %)

            	
              Achievement

              Factor

            	 	 	 
	
              PGN
                EPS

            	
              Target

            	
              100%

            	
              25.0%

            	
              25.0%

            	 	 	 
	
              Legal
                entity EBITDA

            	
              Outstanding

            	
              200%

            	
              50.0%

            	
              100.0%

            	 	 	 
	
              ECIP
                goals

            	
              At
                least 7

            	
              100%

            	
              25.0%

            	
              25.0%

            	 	 	 
	 	
              Total
                achievement factor

            	
              150.0%
                Would
                be calculated for each BU

            
	 	 	 	 	 	 	 	 
	
              Step
                2: Apply
                achievement factor to target levels

            	 	 	 
	 	
              Target

              %

            	
              Achievement
                Factor

            	
              Initial

              Payout
                %

            	 	 	 	 
	
              Department
                Head

            	
              35.0%

            	
              150.0%

            	
              52.5%

            	 	 	 	 
	
              Section
                Manager

            	
              25.0%

            	
              150.0%

            	
              37.5%

            	 	 	 	 
	
              Unit
                Manager

            	
              20.0%

            	
              150.0%

            	
              30.0%

            	 	 	 	 
	 	 	 	 	 	 	 	 
	
              Step
                3: Determine
                dollars eligible by department:

            	 	 	 
	 	
               

              Salary

            	
              Target

              %

            	
              Initial

              Payout
                %

            	
              Calculated
                Award

            	 	 	 
	
              John
                Doe, Department Head

            	
              200,000

            	
              35.0%

            	
              52.5%

            	
              105,000

            	 	 	 
	
              Jane
                Doe, Section Manager

            	
              100,000

            	
              25.0%

            	
              37.5%

            	
              37,500

            	 	 	 
	
              John
                Smith, Section Manager

            	
              120,000

            	
              25.0%

            	
              37.5%

            	
              45,000

            	 	 	 
	
              Jane
                Smith, Unit Manager

            	
              80,000

            	
              20.0%

            	
              30.0%

            	
              24,000

            	 	 	 
	
              John
                Jones, Unit Manager

            	
              75,000

            	
              20.0%

            	
              30.0%

            	
              22,500

            	 	 	 
	
              Jane
                Jones, Unit Manager

            	
              90,000

            	
              20.0%

            	
              30.0%

            	
              27,000

            	 	 	 
	 	 	 	 	
              261,000

            	 	 	 
	 	 	 	 	 	 	 	 
	
              Step
                4: Provide
                each group executive a list of their departments and calculated award
                totals.

              Allow
                them to redistribute dollars based on organization performance within
                group.

            	 	 
	 	 	 	 	 	 	 	 
	
              Step
                5: Allocate
                dollars by group and department:

            	 	 	 
	 	
               

              Salary

            	
              Target

              %

            	
              Initial

              Payout
                %

            	
              Calculated
                Award

            	
              Discretionary
                Adjustment

            	
              Actual
                Award

            	
              Award

              %

            
	
              John
                Doe

            	
              200,000

            	
              35%

            	
              52.5%

            	
              105,000

            	
              (12,600)

            	
              92,400

            	
              46.2%

            
	
              Jane
                Doe

            	
              100,000

            	
              25%

            	
              37.5%

            	
              37,500

            	
              5,000

            	
              42,500

            	
              42.5%

            
	
              John
                Smith

            	
              120,000

            	
              25%

            	
              37.5%

            	
              45,000

            	
              (3,000)

            	
              42,000

            	
              35%

            
	
              Jane
                Smith

            	
              80,000

            	
              20%

            	
              30.0%

            	
              24,000

            	
              -

            	
              24,000

            	
              30%

            
	
              John
                Jones

            	
              75,000

            	
              20%

            	
              30.0%

            	
              22,500

            	
              5,000

            	
              27,500

            	
              36.7%

            
	
              Jane
                Jones

            	
              90,000

            	
              20%

            	
              30.0%

            	
              27,000

            	
              (10,400)

            	
              16,600

            	
              18.4%

            
	 	 	 	 	
              261,000

            	 	
              245,000

            	 
	 	 	 	 	 	 	 	 
	 	 	
              Per
                group executive, department total to spend is $245,000

            	 
	 	 	
              (Step
                4)

            	 	 	 	 
	 	 	 	 	 	 	 	 
	
              General
                notes:

            	 	 	 	 	 	 	 
	
              The
                departmental sheets would still be rolled into group level sheets
                and
                reviewed by level as in prior years (all dh’s together, 25% participants,
                20% participants)

              Discretion
                based on PDP (core skills and performance goals) and succession planning
                ratings

              Discretionary
                percentage should reflect a range of +/- TBD% of payout % for
                group

              Steps
                1 & 2 (MICP) fund determination) based on legal entities. Steps 3-5
                (MICP allocation) utilize reporting
                organization/group.

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

     

    PARTICIPATING
      EMPLOYERS

     

    

    Progress
      Energy Carolinas, Inc.

     

    Progress
      Energy Service Company, LLC

     

    Progress
      Energy Florida, Inc.

     

    Progress
      Energy Ventures, Inc.

     

    Progress
      Fuels Corporation (corporate employees)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    DESIGNATION
      OF BENEFICIARY

    MANAGEMENT
      INCENTIVE COMPENSATION PLAN

    OF

    PROGRESS
      ENERGY, INC.

    

    As
      provided in the Management
      Incentive Compensation Plan of
      Progress Energy, Inc., I hereby designate the following person as my beneficiary
      in the event of my death before a full distribution of my Deferral Account
      is
      made.

    

    PRIMARY
      BENEFICIARY:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    

    

    CONTINGENT
      BENEFICIARY:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    

    Any
      and
      all prior designations of one or more beneficiaries by me under the Management
      Incentive Compensation Plan of
      Progress Energy, Inc. are hereby revoked and superseded by this designation.
      I
      understand that the primary and contingent beneficiaries named above may be
      changed or revoked by me at any time by filing a new designation with the
      Sponsor’s Human Resources Department.

    

    

    DATE:__________________

    

    

    SIGNATURE
      OF PARTICIPANT:_________________________________

    

    The
      Participant named above executed this document in our presence on the date
      set
      forth above.

    

    

    WITNESS::__________________              WITNESS:

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