Document:

Exhibit 10(b)

     

    Exhibit
      10(b)

    PROGRESS
      ENERGY, INC.

     

    AMENDED
      AND RESTATED

     

    MANAGEMENT
      DEFERRED COMPENSATION PLAN

     

    

     

    Adopted
      as of January 1, 2000

     

    (As
      Revised and Restated effective April
      1,
      2005)

     

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    TABLE
      OF CONTENTS

    

                                                                            Page

     

    PREAMBLE                                                                         1

     

    ARTICLE
      I     DEFINITIONS                                                           2

    1.1    Account
      Balance                                                           2

    1.2    Additional
      Deferral
      Election                                                                                        2

    1.3    Affiliated
      Company                                                       2

    1.4    Board                                                               2

    1.5    Board
      Committee                                                          
      2

    1.6    Change
      of
      Control                                                                
      2

    1.7    Change
      of
      Form
      Election                                                                                     
      4

    1.8    Change-of-Investment
      Election                                                         
      4

    1.9    Code                                                                                                               
      5

    1.10         
      Committee                                                              
      5

    1.11         
      Company                                                                                                                               
      5

    1.12         
      Company
      Incentive
      Plans                                                                                                                                                           
5

    1.13         
      Continuing
      Directors                                                                                                                                                                   
5

    1.14         
      Deemed
      Investment
      Return                                                                 5

    1.15         
      Deferral
      Election                                                           
      6

    1.16         
      Deferrals                                                                
      6

    1.17         
      Effective
      Date                                                                                                                                                                                6

    1.18         
      Eligible
      Employee                                                                                                                                                                         
6

    1.19         
      Employee
      Stock Incentive
      Plan                                                                                                                                                  
6

    1.20         
      Enrollment
      Form                                                                                                                                                                            6

    1.21         
      ERISA                                                                                                                                                                                             6

    1.22         
      Incentive
      Matching
      Allocations                                                                                                                                                
7

    1.23         
      Investment
      Election                                                                                                                                                                      7

    1.24        
      Matching
      Allocation                                                             7

    1.25        
      Net
      Salary                                                                                                                       
7

    1.26        
      Participant                                                                                                                                                                                      
      7

    1.27        
      Participant
      Accounts                                                                                                                                                                   
7

    1.28        
      Participant
      Company Account                                                   
      7

    1.29        
      Participant
      Deferral Account                                                      
      8

    1.30        
      Participant
      Matchable Deferral                                                   
      8

    1.31        
      Payment
      Commencement                                                     
8

    1.32        
      Phantom
      Investment
      Fund                                                                           8

    1.33        
      Phantom
      Funds Account                                                    
9

    1.34        
      Phantom
      Investment Subaccount                                               9

    1.35        
      Phantom
      Stock Unit                                              
      9

    1.36        
      Plan                                                                  
      9

    1.37        
      Plan
      Year                                                                                                                                                                                         
9

    1.38        
      Plan
      Year
      Accounts                                                                                                                                                                      
9

    1.39        
      Progress
      Energy 401(k) Savings & Stock Ownership
      Plan                                                                                                     
10

    1.40        
      Retirement
      Date                                                                                                                                                                              10

    1.41        
      Salary                                                                                                                                                                                              
      11

    1.42        
      SMC
      Participant                                                                                                                                                                             11

    1.43         Sponsor                                                                                                                                                                                          
      11

    1.44        
      SSERP                                                                                                                                                                                             
      11

    1.45        
      Valuation
      Date                                                                                                                                                                                11

    1.46        
      Value                                                                                                                                                                                               
      11

    1.47        
      Years
      of
      Service                                                                                                                                                                              12

     

    ARTICLE
      II           PARTICIPATION                                                          
      13

    2.1          
      Eligibility                                                                          13

    2.2   Commencement
      of Participation                                                  
      13

    2.3   Annual
      Participation Agreement                                                 
      13

    2.4   Election
      of Phantom Investment Subaccounts                                         
14

     

    ARTICLE
      III          DEFERRAL
      ELECTIONS                                                      
      15

    3.1    Participant
      Deferred Salary Elections                                                 
      15

    3.2    Matching
      Allocations                                                                           
      16

    3.3    Incentive
      Matching
      Allocations                                                                                                                                                 
17

     

    ARTICLE
      IV           ACCOUNTS                                                                   
      18

    4.1    Maintenance
      of
      Accounts                                                                                    18

    4.2    Separate
      Plan Year Accounts                                                      
      18

    4.3    Phantom
      Investment Subaccounts                                                                     
      18

    4.4    Administration
      of
      Deferral Accounts                                                 
      18

    4.5    Administration
      of
      Company
      Accounts                                                                                                                                      
19

    4.6    Change
      of
      Phantom Investment Subaccounts and Phantom Stock
      Units                                                                            
21

    4.7    Transferred
      Accounts                                                                                                                                                                   
21

     

    ARTICLE
      V    VESTING                                                                 
      23

    5.1    Vesting                                                                            
      23

     

    ARTICLE
      VI   DISTRIBUTIONS                                                                                                                          
      24

    6.1    Distribution
      Elections                                                                                   
      24

    6.2    Change-of-Form
      Elections and Additional Deferral
      Elections                                                                                               
25

    6.3    Payment                                                                                          
      25

    6.4    Unforeseeable
      Emergency                                                    26

    6.5    Termination
      of Employment                                                                
      27

    6.6    Taxes                                                                28

    6.7    Acceleration
      of Payment                                                      
      28

     

    ARTICLE
      VII         DEATH
      BENEFITS                                                        
29

    7.1    Designation
      of Beneficiaries                                                        
      29

    7.2    Death
      Benefit                                                           29

     

    ARTICLE
      VIII        CLAIMS                                                                  
      30

    8.1    Claims
      Procedure                                                           
      30

    8.2    Claims
      Review
      Procedure                                                             
      30

     

    ARTICLE
      IX          ADMINISTRATION                                                                                     
31

    9.1           
      Committee                                                                               
      31

    9.2           
      Authority                                                                
      31

     

    ARTICLE
      X    AMENDMENT
      AND TERMINATION OF THE
      PLAN                                           33

    10.1   Amendment
      of the Plan                                                       
      33

    10.2   Termination
      of the
      Plan                                                                                                                                                               
33

    10.3   No
      Impairment of
      Benefits                                                                                   33

     

    ARTICLE
      XI    FUNDING
      AND CLAIM STATUS                                                                                           
      34

    11.1    General
      Provisions                                                                                                                                                                      
34

     

    ARTICLE
      XII   EFFECT
      ON
      EMPLOYMENT OR
      ENGAGEMENT                                                                                                                
36

    12.1    General                                                                                                                                                                                          
      36

     

    ARTICLE
      XIII         GOVERNING
      LAW                                                                                                                                                                      
37

    13.1          
      General                                                                                                                                                                                           
      37

     

    EXHIBIT
      A                                                                                                                                                                                                              
38

      

     

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    PREAMBLE

     

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

    ARTICLE
      I  

     

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      I

    DEFINITIONS

     

    
      	1.1  	
              Account
                Balance

            

    

     

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

    
      	1.2  	
              Additional
                Deferral Election

            

    

     

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

    
      	1.3  	
              Affiliated
                Company

            

    

     

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

    
      	1.4  	
              Board

            

    

     

    The
      Board
      of Directors of the Sponsor.

    
      	1.5  	
              Board
                Committee

            

    

     

    The
      Organization and Compensation Committee of the Board.

    
      	1.6  	
              Change
                of Control

            

    

     

    The
      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 Company approve a plan of complete
                liquidation or winding-up of the Company or an agreement for the
                sale or
                disposition by the Company of all or substantially all of the Company’s
                assets; or

            

    

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

            

    

    A
      Change-of-Control shall not be deemed to have occurred until a majority of
      the
      members of the Board receive written certification from the Board Committee
      that
      one of the events set forth in this Section 1.6 has occurred. Any determination
      that an event described in this Section 1.6 has occurred shall, if made in
      good
      faith on the basis of information available at that time, be conclusive and
      binding on the Board Committee, the Company, the Participants and their
      beneficiaries for all purposes of the Plan.

    
      	1.7  	
              Change
                of Form Election

            

    

     

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

    
      	1.8  	
              Change-of-Investment
                Election

            

    

     

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

    
      	1.9  	
              Code

            

    

     

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

    
      	1.10  	
              Committee

            

    

     

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

    
      	1.11  	
              Company

            

    

     

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

    
      	1.12  	
              Company
                Incentive Plans

            

    

     

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

    
      	1.13  	
              Continuing
                Directors

            

    

     

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

    
      	1.14  	
              Deemed
                Investment Return

            

    

     

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

    
      	1.15  	
              Deferral
                Election

            

    

     

    An
      election to defer Salary pursuant to Section 3.1.

    
      	1.16  	
              Deferrals

            

    

     

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

    
      	1.17  	
              Effective
                Date

            

    

     

    January
      1, 2000.

    
      	1.18  	
              Eligible
                Employee

            

    

     

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

    
      	1.19  	
              Employee
                Stock Incentive Plan

            

    

     

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

    
      	1.20  	
              Enrollment
                Form

            

    

     

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

    
      	1.21  	
              ERISA

            

    

     

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

    
      	1.22  	
              Incentive
                Matching Allocations

            

    

     

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

    
      	1.23  	
              Investment
                Election

            

    

     

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

    
      	1.24  	
              Matching
                Allocation

            

    

     

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

    
      	1.25  	
              Net
                Salary

            

    

     

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

    
      	1.26  	
              Participant

            

    

     

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

    
      	1.27  	
              Participant
                Accounts

            

    

     

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

    
      	1.28  	
              Participant
                Company Account

            

    

     

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

    
      	1.29  	
              Participant
                Deferral Account

            

    

     

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

    
      	1.30  	
              Participant
                Matchable Deferral

            

    

     

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

    
      	1.31  	
              Payment
                Commencement

            

    

     

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

    
      	1.32  	
              Phantom
                Investment Fund

            

    

     

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

    
      	1.33  	
              Phantom
                Funds Account

            

    

     

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

    
      	1.34  	
              Phantom
                Investment Subaccount

            

    

     

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

    
      	1.35  	
              Phantom
                Stock Unit

            

    

     

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

    
      	1.36  	
              Plan

            

    

     

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

    
      	1.37  	
              Plan
                Year

            

    

     

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

    
      	1.38  	
              Plan
                Year Accounts

            

    

     

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

    
      	1.39  	
              Progress
                Energy 401(k) Savings & Stock Ownership
                Plan

            

    

     

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

    
      	1.40  	
              Retirement
                Date

            

    

     

    The
      date
      a Participant retires from the Company on or after attaining (i) age 65 with
      5
      years of service, (ii) age 55 with 15 years of service, (iii) 35 years of
      service,
      (iv)
      eligibility for retirement under the SSERP if covered under such plan, or (v)
      age 50 with 5 years of service as of March 31, 2005, and where the Participant
      elects during the period beginning March 15, 2005, and ending April 15, 2005,
      to
      retire no later than December 1, 2005, pursuant to the terms of the Voluntary
      Enhanced Retirement Program (a “VERP Participant”). Notwithstanding any other
      provision of the Plan to the contrary, a VERP Participant may elect on or before
      December 31, 2005, to (a) commence payment of the Plan Year Accounts as of
      (i)
      April 1, 2006, (ii) April 1, 2007, or (iii) April 1, 2011 (each a
“Payment Commencement Date”) and (b) provide for the payment of such Plan Year
      Accounts in the form of (i) a lump sum or (ii) annual installments over a period
      extending from two years to ten years following the Payment Commencement Date.
      In the event no other payment election is made by the VERP Participant prior
      to
      January 1, 2006, the VERP Participant shall be deemed to have elected for
      payment of the Plan Year Accounts to be made in accordance with the Enrollment
      Form submitted by the VERP Participant; provided, that if the VERP Participant
      is a “key employee” as defined in Section 416(i) of the Code (but determined
      without regard to the 50 employee limit on the number of officers treated as
      key
      employees), the Payment Commencement Date shall not be earlier than six months
      after the date of Retirement of the VERP Participant (or, if earlier, the date
      of death of the Participant). A VERP Participant may not make any election
      with
      respect to the payment of the Plan Year Accounts after December 31,
      2005.

    
      	1.41  	
              Salary

            

    

     

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

    
      	1.42  	
              SMC
                Participant

            

    

     

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

    
      	1.43  	
              Sponsor

            

    

     

    Progress
      Energy, Inc. and its successors in interest.

    
      	1.44  	
              SSERP

            

    

     

    The
      Supplemental Senior Executive Retirement Plan of the Company.

    
      	1.45  	
              Valuation
                Date

            

    

     

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

    
      	1.46  	
              Value

            

    

     

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

    
      	1.47  	
              Years
                of Service

            

    

     

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      II

    PARTICIPATION

     

    
      	2.1  	
              Eligibility

            

    

     

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

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

    
      	2.2  	
              Commencement
                of Participation

            

    

     

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

    
      	2.3  	
              Annual
                Participation Agreement

            

    

     

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

    
      	2.4  	
              Election
                of Phantom Investment
                Subaccounts

            

    

     

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      III

    DEFERRAL
      ELECTIONS

     

    
      	3.1  	
              Participant
                Deferred Salary Elections

            

    

     

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

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

    (i)  A
      Participant who is (or would be) eligible for a bonus at the 20% of salary
      target incentive level (the “Target”) for the

     Plan Year  under
      the MICP may defer up to 15% of
      Salary.

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

    up
      to 25%
      of Salary.

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

     50%
      of Salary.

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

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

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

    
      	3.2  	
              Matching
                Allocations

            

    

     

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

    
      	3.3  	
              Incentive
                Matching Allocations

            

    

     

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      IV

    ACCOUNTS

     

    
      	4.1  	
              Maintenance
                of Accounts

            

    

     

    The
      Committee shall maintain a Participant Deferral Account and a Participant
      Company Account for each Participant. There shall be credited to a Participant's
      Deferral Account all Deferrals by a Participant under the Plan and there shall
      be credited to a Participant's Company Account all Matching Allocations and
      Incentive Matching Allocations with respect to a Participant under the Plan
      in
      accordance with Sections 3.2 and 3.3.

    
      	4.2  	
              Separate
                Plan Year Accounts

            

    

     

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

    
      	4.3  	
              Phantom
                Investment Subaccounts

            

    

     

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

    
      	4.4  	
              Administration
                of Deferral Accounts

            

    

     

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

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

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

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

    
      	4.5  	
              Administration
                of Company Accounts

            

    

     

    (a)  A
      Participant’s Company Account shall be comprised of Phantom Investment Fund
      units which shall be recorded in Phantom Investment Subaccounts. All Matching
      Allocations and Incentive Matching Allocations shall be recorded in Phantom
      Investment Subaccounts and shall be deemed invested in Phantom Stock Units,
      units of other Phantom Investment Funds, or a combination of Phantom Stock
      Units
      and other Phantom Investment Funds as determined by the Committee in its sole
      discretion. To the extent the Matching Allocations and Incentive Matching
      Allocations are initially deemed to be invested in Phantom Stock Units, the
      number of Phantom Stock Units will be determined on the date of each allocation
      under the Plan based on the closing price of a share of common stock of the
      Sponsor on the New York Stock Exchange on the date of each allocation. To the
      extent the Matching Allocations and Incentive Matching Allocations are initially
      deemed to be invested in one or more Phantom Investment Funds (other than
      Phantom Stock Units), the number of units in these Phantom Investment Funds
      will
      be determined on the date of each allocation under the Plan, using the closing
      price of the units of the underlying investment fund on which the Phantom
      Investment fund is based, on the date of each allocation.

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

    (c)  In
      the
      event there is any change in the common stock of the Sponsor, through merger,
      consolidation, reorganization, recapitalization (other than pursuant to
      bankruptcy proceedings), stock dividend, stock split, reverse stock split,
      split-up, split-off, spin-off, combination of shares, exchange of shares,
      dividend in kind or other like change in capital structure (an “Adjustment
      Event”), the number of Phantom Stock Units subject to the Plan shall be adjusted
      by the Committee in its sole judgment so as to give appropriate effect to such
      Adjustment Event. Any fractional units resulting from such adjustment may be
      eliminated. Each successive Adjustment Event shall result in the consideration
      by the Committee of whether any adjustment to the number of Phantom Stock Units
      subject to the Plan is necessary in the Committee’s judgment. Issuance of common
      stock or securities convertible into common stock for value will not be deemed
      to be an Adjustment Event unless otherwise expressly determined by the
      Committee.

    
      	4.6  	
              Change
                of Phantom Investment Subaccounts
                and Phantom Stock Units

            

    

     

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

    (b)  A
      Participant may elect to reallocate Phantom Investment Subaccounts comprising
      his Company Account, once per calendar month, pursuant to uniform rules adopted
      by the Committee.

    
      	4.7  	
              Transferred
                Accounts

            

    

     

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

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

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      V

    VESTING

     

    
      	5.1  	
              Vesting

            

    

     

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

    
      	
              Years
                of Service

               

            	
               Percent
                of Vesting

               

            
	
              Less
                than 1

            	
              0

            
	
              1
                or more

               

            	
              100%

               

            

    

    

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      VI

    DISTRIBUTIONS

     

    
      	6.1  	
              Distribution
                Elections

            

    

     

    A
      Participant when making a Deferral Election pursuant to an Enrollment Form
      with
      respect to a Plan Year shall elect on such Enrollment Form (a) to defer the
      payment of his Plan Year Accounts with respect to such Plan Year, in accordance
      with the Plan until (i) the April 1 following the date that is five years
      from the last day of such Plan Year, (ii) the April 1 following the
      Participant’s Retirement or (iii) the April 1 following the first
      anniversary of the Participant’s Retirement (each a “Payment Commencement Date”)
      and (b) to provide for the payment of such Plan Year Account in the form of
      (i)
      a lump sum or (ii) approximately equal installments over a period extending
      from
      two years to ten years (by paying a fraction of the account balance each year
      during such period), as elected by the Participant. Except as otherwise provided
      in this ARTICLE VI, such elections may not be changed or revoked.
      Notwithstanding the foregoing, if the Participant is a “key employee” as defined
      in Section 416(i) of the Code (but determined without regard to the 50 employee
      limit on the number of officers treated as key employees), payment of amounts
      deferred after December 31, 2004, shall not be made pursuant to an election
      under Section 6.1(a)(ii) above before six months after the date of separation
      from service for any reason including Retirement (or, if earlier, the date
      of
      death of the Participant). For this purpose, an amount will be considered
      deferred after December 31, 2004, if it is not earned and vested on such date,
      and shall include the Matching Allocation, Incentive Matching Allocation and
      Deemed Investment Return with respect to such Deferrals.

    
      	6.2  	
              Change-of-Form
                Elections and Additional Deferral
                Elections

            

    

     

    (a)  Any
      Participant who has made elections under Section 6.1 with respect to amounts
      deferred before January 1, 2005, may change such elections pursuant to this
      Section 6.2(a) as in effect prior to January 1, 2005, unless such provisions
      are
      materially modified after October 3, 2004. For this purpose, an amount is
      considered deferred before January 1, 2005, if the amount is earned and vested
      before such date. Such Participant may elect at least one year prior to the
      Payment Commencement Date with respect to such Plan Year Accounts a new Payment
      Commencement Date that either is five years from the then current Payment
      Commencement Date or otherwise is permitted under Section 6.1(a)(ii) or (iii).
      Only one such Additional Deferral Election will be permitted with respect to
      Plan Year Accounts relating to a particular Plan Year. In addition, the
      Participant may elect to change the form of distribution to any of the forms
      permitted under Section 6.1(b) by completing a Change-of-Form Elections with
      respect to Plan Year Accounts at least one year prior to the applicable Payment
      Commencement Date for such accounts.

    (b)  Any
      elections made under Section 6.1 with respect to amounts deferred after December
      31, 2004, shall be irrevocable. 

    
      	6.3  	
              Payment

            

    

     

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

    
      	6.4  	
              Unforeseeable
                Emergency

            

    

     

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

    An
      “unforeseeable emergency” shall mean 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
      unforeseeable circumstances arising as a result of events beyond the control
      of
      the Participant.

    The
      Committee shall consider any requests for payment under this Section 6.4 on
      a
      uniform and nondiscriminatory basis and in accordance with the standards of
      interpretation described in Section 409A of the Code and the regulations
      thereunder. If the request is granted, the amounts distributed will not exceed
      the amounts necessary to alleviate the unforeseeable emergency plus amounts
      necessary to pay taxes reasonably anticipated as result of the distribution,
      after taking into account the extent to which the unforeseeable emergency may
      be
      relieved through reimbursement or compensation by insurance or otherwise or
      by
      liquidation of the Participant’s assets (to the extent such liquidation would
      not itself cause severe financial hardship).

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

    
      	6.5  	
              Termination
                of Employment

            

    

     

    In
      the
      event of the termination of the employment of a Participant with the Company
      and
      any parent, subsidiary or affiliate for any reason, prior to the Retirement
      or
      death of the Participant, the vested portion of the Participant Accounts of
      such
      Participant shall be paid in a lump sum to such Participant based on the Value
      of such accounts as of the Valuation Date coincident with or immediately
      preceding the date of distribution. Such payment shall be made as soon as
      administratively practicable following the Participant’s termination date as
      determined under the Company’s normal administrative practices. The nonvested
      portion of a terminated Participant’s Company Account shall be forfeited by the
      Participant. In the event of the termination of employment of a SMC Participant
      for whom no Deferral Election was made for a Plan Year, any Matching Allocation,
      Incentive Matching Allocation and Deemed Investment Return allocated to such
      Participant shall be distributed to the Participant following termination of
      employment in accordance with this Section 6.5. In the event of the Retirement
      of a Participant prior to the Payment Commencement Date elected by the
      Participant under Section 6.1(a)(i) with respect to a Plan Year Account,
      distribution of such account shall commence no later than April 1 following
      the
      first anniversary of the Participant’s Retirement. Notwithstanding the
      foregoing, if the Participant is a “key employee” as defined in Section 416(i)
      of the Code (but determined without regard to the 50 employee limit on the
      number of officers treated as key employees), payment of amounts deferred after
      December 31, 2004, shall not be made before six months after the date of
      separation from service for any reason including Retirement (or, if earlier,
      the
      date of death of the Participant). For this purpose, an amount will be
      considered deferred after December 31, 2004, if it is not earned and vested
      on
      such date, and shall include the Matching Allocation, Incentive Matching
      Allocation and Deemed Investment Return with respect to such
      Deferrals.

    
      	6.6  	
              Taxes

            

    

     

    The
      Company shall deduct from all payments under the Plan federal, state and local
      income and employment taxes, as required by applicable law. Deferrals will
      be
      taken into account for purposes of any tax or withholding obligation under
      the
      Federal Insurance Contributions Act and Federal Unemployment Tax Act in the
      year
      of the Deferrals, as required by Sections 3121(v) and 3306(r) of the Code and
      the regulations thereunder. Amounts required to be withheld in the year of the
      Deferrals pursuant to Sections 3121(v) and 3306(r) shall be withheld out of
      current wages or other compensation paid by the Company to the
      Participant.

    
      	6.7  	
              Acceleration
                of Payment

            

    

     

    The
      acceleration of the time or schedule of any payment due under the Plan is
      prohibited except as provided in regulations and administrative guidance
      provided under Section 409A of the Code. It is not an acceleration of the time
      or schedule of payment if the Company waives or accelerates the vesting
      requirements applicable to a benefit under the Plan.

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      VI

    DEATH
      BENEFITS

     

    
      	7.1  	
              Designation
                of Beneficiaries

            

    

     

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

    
      	7.2  	
              Death
                Benefit

            

    

     

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      VIII

    CLAIMS

     

    
      	8.1  	
              Claims
                Procedure

            

    

     

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

    
      	8.2  	
              Claims
                Review Procedure

            

    

     

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      IX

    ADMINISTRATION

     

    
      	9.1  	
              Committee

            

    

     

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

    
      	9.2  	
              Authority

            

    

     

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

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

    (c)  No
      member
      of the Committee shall be directly or indirectly responsible or otherwise liable
      for any action taken or any failure to take action as a member of the Committee,
      except for such action, default, exercise or failure to exercise resulting
      from
      such member’s gross negligence or willful misconduct. No member of the Committee
      shall be liable in any way for the acts or defaults of any other member of
      the
      Committee, or any of its advisors, agents or representatives.

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

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

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      X

    AMENDMENT
      AND TERMINATION OF THE PLAN

     

    
      	10.1  	
              Amendment
                of the Plan

            

    

     

    The
      Plan
      may be wholly or partially amended or otherwise modified at any time by the
      Board or the Board Committee consistent with the requirements of Section 409A
      of
      the Code.

    
      	10.2  	
              Termination
                of the Plan

            

    

     

    The
      Plan
      may be terminated at any time by written action of the Board or the Board
      Committee or by the Committee as provided under the Plan; provided, that
      termination of the Plan shall not affect the distribution of the Participant
      Accounts (except as otherwise permitted under Section 409A of the Code).
      Notwithstanding the foregoing, the Plan may be terminated and Participant
      Accounts distributed to Participants within twelve months of a “change in
      control” as defined for purposes of Section 409A of the Code.

    
      	10.3  	
              No
                Impairment of Benefits

            

    

     

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      XI

    FUNDING
      AND CLAIM STATUS

     

    
      	11.1  	
              General
                Provisions

            

    

     

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

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

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

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

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      XII

    EFFECT
      ON
      EMPLOYMENT OR ENGAGEMENT

     

    
      	12.1  	
              General

            

    

     

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    ARTICLE
      XIII

    GOVERNING
      LAW

     

    
      	13.1  	
              General

            

    

     

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

    *
      *
      *

    

    

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

     

     EXHIBIT
      A

     

    Progress
      Energy Carolinas, Inc.

    Progress
      Energy Service Company, LLC

    Progress
      Energy Ventures, Inc.

    Progress
      Energy Florida, Inc.

    Progress
      Fuels Corporation (corporate employees only)Exhibit 10(c)

    Exhibit
      10(c)

    [CONFORMED
      COPY]

    

    

    

    
      

      

    

    

    

    CREDIT
      AGREEMENT

    Dated
      as of May 3, 2006

    

    Among

    

    PROGRESS
      ENERGY, INC.

    (Borrower)

    

    and

    

    THE
      BANKS LISTED ON THE SIGNATURE PAGES HEREOF

    (Banks)

    

    and

    

    CITIBANK,
      N.A.

    (Administrative
      Agent)

    

    and

    

    SUNTRUST
      BANK

    (Issuing
      Bank)

    

    

    
      

      

    

    

    

    CITIGROUP
      GLOBAL MARKETS, INC. and
      J.P. MORGAN SECURITIES INC.  

    (Joint
      Lead Arrangers)

    

    JPMORGAN
      CHASE BANK, N.A.

    (Syndication
      Agent)

    

    
      
        
          
             

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          2

          

        

      

    

    TABLE
      OF CONTENTS

    

    

    Section                                                                                   Page

     

    ARTICLE
      I

    DEFINITIONS
      AND ACCOUNTING TERMS

     

    SECTION
      1.01.
      Certain
      Defined Terms.                                                                 1    

    SECTION
      1.02.
      Computation of Time Periods.                                                             12

    SECTION
      1.03.
      Accounting Terms.                                                                       12

    ARTICLE
      II

    AMOUNTS
      AND TERMS OF THE ADVANCES

     

    SECTION
      2.01.
      The
      Advances.                                                                     12

    SECTION
      2.02.
      Making
      the Advances.                                                                13

    SECTION
      2.03.
      Fees                                                                                14

    SECTION
      2.04.
      Reduction and Increase of the
      Commitments.                                                                                                                                                        
15

    SECTION
      2.05.
      Repayment of Advances.                                                                                                                                                                                          
      16

    SECTION
      2.06.
      Interest
      on
      Advances.                                                                                                                                                                                               
16

    SECTION
      2.07.
      Additional Interest on Eurodollar Rate Advances.                                    
                                                                                                                
17

    SECTION
      2.08.
      Interest
      Rate Determination.                                                                                                                                                                                      17

    SECTION
      2.09.
      Voluntary Conversion of Advances.                                                                                                                                                                       18

    SECTION
      2.10.
      Prepayments of Advances.                                                                                                                                                                                       19

    SECTION
      2.11.
      Increased Costs.                                                                                                                                                                                                         
      19

    SECTION
      2.12.
      Illegality.                                                                                                                                                                                                                       20

    SECTION
      2.13.
      Payments
      and Computations.                                                                                                                                                                                   21

    SECTION
      2.14.
      Sharing
      of Payments, Etc.                                                                                                                                                                                        
      22

    SECTION
      2.15.
      Extension of Termination Date.                                                                                                                                                                               
      22

    SECTION
      2.16.
      Letters
      of Credit.                                                                                                                                                                                                        
      23

     

    ARTICLE
      III

    CONDITIONS
      OF LENDING

     

    SECTION
      3.01.
      Conditions Precedent to
      Closing.                                                                                                                                                                             28

    SECTION
      3.02.
      Conditions Precedent to Each Borrowing and to the Issuance of Letters of
      Credit.                                                                                       
      29

     

    ARTICLE
      IV

    REPRESENTATIONS
      AND WARRANTIES

     

    SECTION
      4.01.
      Representations and Warranties of the Borrower.                                                                                                                                                
      29

     

    ARTICLE
      V

    COVENANTS
      OF THE COMPANY

     

    SECTION
      5.01.
      Affirmative Covenants.                                                                                                                                                                                            
       31

    SECTION
      5.02.
      Negative
      Covenants.                                                                                                                                                                                                 
      34

     

    ARTICLE
      VI

    EVENTS
      OF
      DEFAULT

     

    SECTION
      6.01.
      Events
      of Default.                                                                                                                                                                                                       
      35

                                                                                                                              
      

     

    ARTICLE
      VII

    THE
      ADMINISTRATIVE AGENT AND THE ISSUING BANKS

     

    SECTION
      7.01.
      Authorization and Action.                                                                                                                                                                                         
      37

    SECTION
      7.02.
      The
      Administrative Agent’s Reliance, Etc.                                                                                                                                                             
      38

    SECTION
      7.03.
      The
      Administrative Agent and its Affiliates.                                                                                                                                                          
      38

    SECTION
      7.04.
      Lender
      Credit Decision.                                                                                                                                                                                               39

    SECTION
      7.05.
      Indemnification.                                                                                                                                                                                                           
39

    SECTION
      7.06.
      Successor Administrative Agent.                                                                                                                                                                             
      39

    SECTION
      7.07.
      Appointment and Resignation of Issuing Banks.                                                                                                                                                  
      40

     

    ARTICLE
      VIII

    MISCELLANEOUS 

     

    SECTION
      8.01.
      Amendments, Etc.                                                                                                                                                                                                        40

    SECTION
      8.02.
      Notices,
      Etc.                                                                                                                                                                                                                  41

    SECTION
      8.03.
      No
      Waiver; Remedies.                                                                                                                                                                                                 41

    SECTION
      8.04.
      Costs,
      Expenses, Taxes and Indemnification.                                                                                                                                                          41

    SECTION
      8.05.
      Right of
      Set-off.                                                                                                                                                                                                            44

    SECTION
      8.06.
      Binding
      Effect.                                                                                                                                                                                                              45

    SECTION
      8.07.
      Assignments and Participations.                                                                                                                                                                               45

    SECTION
      8.08.
      Waiver
      of Consequential Damages.                                                                                                                                                                          49

    SECTION
      8.09.
      USA
      PATRIOT Act Notice.                                                                                                                                                                                        49

    SECTION
      8.10.
      Tax
      Disclosure.                                                                                                                                                                                                              49

    SECTION
      8.11.
      Governing Law.                                                                                                                                                                                                             49

    SECTION
      8.12. WAIVER OF JURY TRIAL.                                                                                                                                                                                         50

    SECTION
      8.13.
      Execution in Counterparts.                                                                                                                                                                                          50

    SECTION
      8.14.
      Severability.                                                                                                                                                                                                                   50

    SECTION
      8.15.
      Headings.                                                                                                                                                                                                                       50

    SECTION
      8.16.
      Entire
      Agreement.                                                                                                                                                                                                         50

    

    

    SCHEDULES

    

    I     - List
      of
      Commitments and Applicable Lending Offices

    II    - Adopted
      Letters of Credit

    

    EXHIBITS

    

    A-1   
- Form
      of
      Notice of Borrowing

    A-2    - Form
      of
      Notice of Conversion

    B                
      - Form
      of
      Assignment and Acceptance

    C-1    - Form
      of
      Opinion of General Counsel to Progress Energy Service Company, LLC

    C-2    - Form
      of
      Opinion of Special Counsel for the Borrower

    C-3    - Form
      of
      Opinion of General Counsel to the Borrower upon Extension of the  Termination
      Date

    C-4    - Form
      of
      Opinion of Special Counsel for the Borrower upon Extension of the  Termination
      Date

    D               
      - Form
      of
      Opinion of Counsel for the Administrative Agent

    E      
       - Form
      of
      Request for Extension of Termination Date 

    F                - Form
      of
      Compliance Certificate

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    CREDIT
      AGREEMENT

    

    Dated
      as of May 3, 2006

    

    

    This
      CREDIT AGREEMENT (this “Agreement”)
      is
      made by PROGRESS ENERGY, INC., a North Carolina corporation (the “Borrower”),
      the
      banks listed on the signature pages hereof (the “Banks”),
      CITIBANK, N.A. (“Citibank”),
      as
      administrative agent (the “Administrative
      Agent”)
      for the
      Lenders (as hereinafter defined) and SUNTRUST BANK, as the initial Issuing
      Bank.

     

     

    ARTICLE
      I  

    DEFINITIONS
      AND ACCOUNTING TERMS

     

    SECTION
      1.01.   Certain
      Defined Terms.

     

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

     

    “Additional
      Commitment Lender”
has
      the
      meaning assigned to that term in Section 2.15(b).

     

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

     

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

     

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

     

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

     

    “Anniversary
      Date”
has
      the
      meaning assigned to that term in Section 2.15(a).

     

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

     

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

     

    
      	
               

              Applicable
                Rating Level

               

            	
               

              Applicable
                Margin for Eurodollar Rate Advances

               

            	
               

              Applicable
                Margin for Base Rate Advances

               

            
	
               

              1

               

            	
               

              0.230%

               

            	
               

              0%

               

            
	
               

              2

               

            	
               

              0.270%

               

            	
               

              0%

               

            
	
               

              3

               

            	
               

              0.350%

               

            	
               

              0%

               

            
	
               

              4

               

            	
               

              .475%

               

            	
               

              0%

               

            
	
               

              5

               

            	
               

              .575%

               

            	
               

              0%

               

            

    

    

    provided,
      that

     

    (i)  the
      Applicable Margins for Eurodollar Rate Advances set forth above for each
      Applicable Rating Level shall increase at any time the aggregate principal
      amount of Outstanding Credits is greater than 50% of the aggregate Commitments
      by 0.050% at Levels 1 and 2, by 0.100 at Levels 3 and 4 and by 0.125% at Level
      5, 

     

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

     

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

     

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

     

    
      	
               

              S&P
                Rating/Moody’s Rating

               

            	
               

              Applicable
                Rating Level

               

            
	
               

              A_
                or
                higher or A3 or higher

               

            	
               

              1

               

            
	
               

              BBB+
                or Baa1

               

            	
               

              2

               

            
	
               

              BBB
                or Baa2

               

            	
               

              3

               

            
	
               

              BBB_
                or
                Baa3

               

            	
               

              4

               

            
	
               

              lower
                than Level 4 or unrated

               

            	
               

              5

               

            

    

    

    In
      the
      event that the S&P Rating and the Moody’s Rating are not at the same
      Applicable Rating Level but differ by only one Applicable Rating Level, then
      the
      higher of the two ratings shall determine the Applicable Rating Level, unless
      the S&P Rating is below BBB- or the Moody’s Rating is below Baa3. In the
      event that the S&P Rating and the Moody’s Rating differ by more than one
      Applicable Rating Level or the S & P Rating is below BBB- or the Moody’s
      Rating is below Baa3, then the Applicable Rating Level immediately below the
      higher of the two ratings shall be the Applicable Rating Level. The Applicable
      Rating Level shall be redetermined on the date of announcement of a change
      in
      the S&P Rating or the Moody’s Rating. 

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Citibank”
has
      the
      meaning specified in the introductory paragraph of this Agreement.

     

    “Commitment”
      has the
      meaning specified in Section 2.01.

     

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

     

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

     

    “Consolidated”
      refers
      to the consolidation of the accounts of the Borrower and its Subsidiaries in
      accordance with GAAP.

     

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

     

    “CP&L”
means
      the Carolina Power and Light Company.

     

    “Current
      Termination Date”
has
      the
      meaning assigned to that term in Section 2.15(a).

     

    “Declining
      Lender”
      has the
      meaning assigned to that term in Section 2.15(a).

     

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

     

    “Eligible
      Assignee”
      means
      (i) any other Lender or any Affiliate of a Lender meeting the criteria set
      forth
      in clause (ii) hereof and (ii) (A) any other commercial bank organized under
      the
      laws of the United States, or any State thereof, and having a combined capital
      and surplus of at least $250,000,000 (as established in its most recent report
      of condition to its primary regulator), (B) a savings and loan association
      or
      savings bank organized under the laws of the United States, or any State
      thereof, and having a combined capital and surplus of at least $250,000,000
      (as
      established in its most recent report of condition to its primary regulator),
      (C) a commercial bank organized under the laws of any other country that is
      a
      member of the OECD, or has concluded special lending arrangements with the
      International Monetary Fund associated with its General Arrangements to Borrow,
      or the Cayman Islands, or a political subdivision of any such country, and
      having a combined capital and surplus of at least $250,000,000 (as established
      in its most recent report of condition to its primary regulator);
      provided
      that
      such bank is acting through a branch or agency located in the United States
      or
      in the country in which it is organized or another country that is described
      in
      this clause (C), (D) the central bank of any country that is a member of the
      OECD, or (E) a finance company, insurance company or other financial institution
      or fund (whether a corporation, partnership or other entity) that is engaged
      in
      making, purchasing or otherwise investing in commercial loans in the ordinary
      course of its business, whose outstanding unsecured indebtedness is rated AA-
      or
      better by S&P or Aa3 or better by Moody’s (or an equivalent rating by
      another nationally-recognized credit rating agency of similar standing if
      neither of such corporations is then in the business of rating unsecured
      indebtedness) or, in the case of an Affiliate of a Lender only, whose
      obligations are fully guaranteed by a finance company, insurance company or
      other financial institution or fund whose outstanding unsecured indebtedness
      has
      such a rating.

     

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

     

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

     

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

     

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

     

    “Eurodollar
      Rate” means,
      for the Interest Period for each Eurodollar Rate Advance made as part of the
      same Borrowing, an interest rate per
      annum
      equal to
      (i) the rate appearing on Page 3750 of the Telerate Service (or such other
      page or service as may replace such Page 3750 for the purpose of displaying
      London Interbank Offered Rates of prime banks in the London interbank market)
      as
      of 11:00 a.m. (London time) on the day that is two Business Days prior to the
      first day of such Interest Period, as the London Interbank Offered Rate for
      Dollar deposits for a period comparable to such Interest Period or (ii) if
      no quotation is given on Page 3750 of the Telerate Service (or such other page
      or service as may replace such Page 3750 for the purpose of displaying London
      Interbank Offered Rates of prime banks in the London interbank market), the
      rate
      (rounded upward to the nearest whole multiple of 1/16 of 1% per
      annum,
      if such
      average is not such a multiple) at which Dollar deposits are offered to the
      principal London offices of Citibank in immediately available funds for a period
      comparable to such Interest Period as of 11:00 a.m. (London time) on the day
      that is two Business Days prior to the first day of such Interest
      Period.

     

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

     

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

     

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

     

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

     

    “Existing
      Credit Facility”
means
      the Credit Agreement, dated as of August 5, 2004, as amended, among Borrower,
      the lenders and issuing banks party thereto and Citibank, N.A., as
      administrative agent.

     

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

     

    “Extension
      of Credit”
means
      (i) the making of an Advance or (ii) the issuance of a Letter of Credit or
      the
      amendment of any Letter of Credit having the effect of extending the stated
      termination date thereof or increasing the maximum amount to be drawn
      thereunder.

     

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

     

    
      	
               

              Applicable
                Rating Level

               

            	
               

              Facility
                Fee Percentage

               

            
	
               

              1

               

            	
               

              0.070%

               

            
	
               

              2

               

            	
               

              0.080%

               

            
	
               

              3

               

            	
               

              0.100%

               

            
	
               

              4

               

            	
               

              0.125%

               

            
	
               

              5

               

            	
               

              0.175%

               

            

    

    

    provided,
      that a
      change in the Facility Fee Percentage resulting from a change in the Applicable
      Rating Level shall become effective upon the date of announcement of a change
      in
      the Moody’s Rating or the S&P Rating that results in a change in the
      Applicable Rating Level. 

     

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

     

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

     

    “Florida
      Power”
means
      Florida Power Corporation.

     

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

     

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

     

    “FPC”
means
      Florida Progress Corporation.

     

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

     

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

     

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

     

    “ISP”
means,
      with respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice (or such
      later version thereof as may be in effect at the time of issuance).

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Issuing
      Bank”
shall
      mean SunTrust Bank, as issuer of Letters of Credit, and any other Lender or
      Affiliate thereof that agrees pursuant to Section 7.07 to act as an Issuing
      Bank
      hereunder.

     

    “LC
      Commitment”
shall
      mean, with respect to any Issuing Bank, the commitment of such Issuing Bank
      to
      issue Letters of Credit on the terms and conditions hereof in an aggregate
      stated amount not to exceed the amount agreed from time to time by such Issuing
      Bank and the Borrower pursuant to Section 7.07.

     

    “LC
      Disbursement”
shall
      mean a payment made by an Issuing Bank pursuant to a Letter of
      Credit.

     

    “LC
      Documents”
shall
      mean the Letters of Credit and all applications, agreements and instruments
      relating to the Letters of Credit.

     

    “LC
      Exposure”
shall
      mean, at any time, the sum of (i) the aggregate undrawn amount of all
      outstanding Letters of Credit at such time plus
      (ii) the aggregate amount of all LC Disbursements that have not been
      reimbursed by or on behalf of the Borrower at such time. The LC Exposure of
      any
      Lender shall be its Pro Rata Share of the total LC Exposure at such time. For
      all purposes of this Agreement, if on any date of determination a Letter of
      Credit has expired by its terms but any amount may still be drawn thereunder
      by
      reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall
      be
      deemed to be “outstanding” in the amount so remaining available to be
      drawn.

     

     
      “Lenders”
      means
      the Banks, each Additional Lender and each Eligible Assignee that shall become
      a
      party hereto pursuant to Section 8.07.

     

              
      “Letter
      of Credit”
shall
      mean any letter of credit issued pursuant to Section 2.16 by an Issuing Bank
      for
      the account of the Borrower.

     

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

     

    “Majority
      Lenders”
      means at
      any time Lenders holding more than 50% of the aggregate Outstanding Credits,
      or,
      if no Outstanding Credits are then outstanding, Lenders having more than 50%
      of
      the Commitments (provided
      that,
      for purposes hereof, neither the Borrower, nor any of its Affiliates, if a
      Lender, shall be included in (i) the Lenders holding such amount of the Advances
      or having such amount of the Commitments or (ii) determining the aggregate
      unpaid principal amount of the Advances or the total Commitments).

     

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

     

    “Moody’s”
      means
      Moody’s Investors Service, Inc., or any successor thereto.

     

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

     

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

     

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

     

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

     

    “Notice
      of Conversion”
      has the
      meaning specified in Section 2.09.

     

    “OECD”
      means
      the Organization for Economic Cooperation and Development.

     

    “Outstanding
      Credits”
      means,
      on any date of determination, an amount equal to the sum of (i) the aggregate
      principal amount of all Advances outstanding on such date plus
      (ii) the
      LC Exposure on such date. The “Outstanding Credits” of any Lender means, on any
      date of determination, an amount equal to the sum of (A) the aggregate principal
      amount of all outstanding Advances made by such lender plus
      (B) such
      Lender’s LC Exposure on such date.

     

    “Patriot
      Act”
means
      the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
      2001), as in effect from time to time.

     

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

     

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

     

    “Pro
      Rata Share”
shall
      mean, with respect to any Commitment of any Lender at any time, a percentage,
      the numerator of which shall be such Lender’s Commitment (or if the Commitments
      have been terminated or expired or the Outstanding Credits have been declared
      to
      be due and payable, the Outstanding Credits made by such Lender), and the
      denominator of which shall be the sum of the Commitments of all Lenders (or
      if
      the Commitments have been terminated or expired or the Outstanding Credits
      have
      been declared to be due and payable, the Outstanding Credits made by all
      Lenders). 

     

    “Progress
      Capital”
means
      Progress Capital Holdings, Inc.

     

    “Portfolio
      Transaction” means
      the
sale
      of
Florida
      Progress’s and CP&L’s
      portfolio of affordable housing investments.

     

    “Reference
      Banks”
      means
      Citibank and JPMorgan Chase Bank, N.A.

     

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

     

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

     

    “S&P”
      means
      Standard & Poor’s Ratings Group or any successor thereto.

     

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

     

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

     

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

     

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

     

    “Syndication
      Agent”
means
      JPMorgan Chase Bank, N.A.

     

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

     

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

     

    “Termination
      Date”
      means,
      with respect to any Lender, the earlier to occur of (i) May 3, 2011, subject
      to
      extension to a later date for such Lender pursuant to Section 2.15, and (ii)
      the
      date of termination in whole of the Commitments pursuant to Section 2.04 or
      6.01.

     

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

     

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

     

    SECTION
      1.02.   Computation
      of Time Periods.

     

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

     

    SECTION
      1.03.   Accounting
      Terms.

     

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

     

     

    ARTICLE
      II  

    AMOUNTS
      AND TERMS OF THE ADVANCES

     

    SECTION
      2.01.   The
      Advances. 

     

    (a)  Each
      Lender severally agrees, on the terms and conditions hereinafter set forth,
      to
      make Advances to the Borrower from time to time on any Business Day during
      the
      period from the date hereof to and including the day prior to the Termination
      Date, in an aggregate amount outstanding not to exceed at any time the amount
      set forth opposite such Lender’s name on Schedule I hereto or, if such Lender
      has entered into any Assignment and Acceptance, set forth for such Lender in
      the
      Register maintained by the Administrative Agent pursuant to Section 8.07(c),
      as
      such amount may be reduced pursuant to Section 2.04(a) (such Lender’s
“Commitment”), and
      each
      Issuing Bank agrees to issue Letters of Credit for the account of the Borrower
      from time to time on any Business Day during the period from the date hereof
      until the tenth Business Day prior to the Termination Date in an aggregate
      amount not to exceed the amount of such Issuing Bank’s LC
      Commitment. 
      Each
      Borrowing shall be in an aggregate amount not less than $10,000,000 or an
      integral multiple of $1,000,000 in excess thereof and shall consist of Advances
      of the same Type made on the same day by the Lenders ratably according to their
      respective Commitments. Until the day prior to the Termination Date, within
      the
      limits of each Lender’s Commitment, the Borrower may from time to time borrow,
      repay pursuant to Section 2.05 or prepay pursuant to Section 2.10(b) and
      reborrow under this Section 2.01. In no event shall the Borrower be entitled
      to
      request or receive any Extension of Credit that would cause the aggregate
      Outstanding Credits to exceed the Commitments.

     

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

     

    SECTION
      2.02.   Making
      the Advances.

     

    (a)  Each
      Borrowing shall be made on notice, given not later than 11:00 A.M. (New York
      City time) on the day of such proposed Borrowing, in the case of a Borrowing
      comprised of Base Rate Advances, or on the third Business Day prior to the
      date
      of the proposed Borrowing, in the case of a Borrowing comprised of Eurodollar
      Rate Advances, by the Borrower to the Administrative Agent, which shall give
      to
      each Lender prompt notice thereof by telecopier. Each such notice of a Borrowing
      (a “Notice
      of Borrowing”)
      shall
      be by telecopier, confirmed promptly in writing, in substantially the form
      of
      Exhibit A-1 hereto, specifying therein the requested (i) date of such Borrowing,
      (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of
      such
      Borrowing, and (iv) in the case of a Borrowing comprised of Eurodollar Rate
      Advances, the Interest Period for each such Advance. In the case of a proposed
      Borrowing comprised of Eurodollar Rate Advances, the Administrative Agent shall
      promptly notify each Lender of the applicable interest rate under Section
      2.06(b). Each Lender shall, before 1:00 P.M. (New York City time) on the date
      of
      such Borrowing, make available for the account of its Applicable Lending Office
      to the Administrative Agent at its address referred to in Section 8.02, in
      same
      day funds, such Lender’s ratable portion of such Borrowing. After the
      Administrative Agent’s receipt of such funds and upon fulfillment of the
      applicable conditions set forth in Article III, the Administrative Agent will
      make such funds available to the Borrower at the Administrative Agent’s
      aforesaid address.

     

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

     

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

     

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

     

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

     

    SECTION
      2.03.   Fees.

     

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

     

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

     

    (c)  The
      Borrower agrees to pay to the Administrative Agent for the account of each
      Lender a letter of credit fee at a rate per
      annum
      equal to
      the Applicable Margin for Eurodollar Rate Advances in effect from time to time
      on the average daily amount of each such Lender’s LC Exposure from the date
      hereof until the later to occur of the Termination Date and the date on which
      there is no amount remaining available to be drawn under any Letter of Credit.
      Such fee shall be calculated on the basis of actual number of days elapsed
      in a
      year of 360 days. Such fee shall be payable quarterly in arrears on the last
      day
      of each March, June, September and December and on the later to occur of the
      Termination Date and the date on which there is no amount remaining available
      to
      be drawn under any Letter of Credit. 

     

    (d)  The
      Borrower agrees to pay to each Issuing Bank for its own account a fronting
      fee
      and such other customary fees and expenses relating to the issuance, amendment,
      and drawings under the Letters of Credit, in such amounts and payable at such
      times as shall be agreed between them in writing. 

     

    SECTION
      2.04.   Reduction
      and Increase of the Commitments.

     

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

     

    (b) (i) At
      any
      time prior to the Termination Date, the Borrower may increase the aggregate
      amount of the Commitments to an amount not greater than $1,500,000,000 (any
      such
      increase, a “Commitment
      Increase”)
      by
      designating either one or more of the existing Lenders (each of which, in its
      sole discretion, may determine whether and to what degree to offer to
      participate in such Commitment Increase) or one or more other banks or other
      financial institutions reasonably acceptable to the Administrative Agent that
      at
      the time agree, in the case of any such bank or financial institution that
      is an
      existing Lender to increase its Commitment (an “Increasing
      Lender”)
      and,
      in the case of any other such bank or financial institution (an “Additional
      Lender”),
      to
      become a party to this Agreement. The sum of the increases in the Commitments
      of
      the Increasing Lenders pursuant to this subsection (b) plus the Commitments
      of
      the Additional Lenders upon giving effect to the Commitment Increase shall
      not
      in the aggregate exceed the amount of the Commitment Increase. The Borrower
      shall provide prompt notice of any proposed Commitment Increase pursuant to
      this
      Section 2.04(b) to the Administrative Agent, which shall promptly provide a
      copy
      of such notice to the Lenders.

     

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

     

    (iii) On
      the
      effective date of any Commitment Increase, the Borrower shall prepay the
      outstanding Borrowings (if any) in full, and shall simultaneously make new
      Borrowings hereunder in an amount equal to such prepayment, so that, after
      giving effect thereto, the Borrowings are held ratably by the Lenders in
      accordance with their respective Commitments (after giving effect to such
      Commitment Increase). Prepayments made under this paragraph (iii) shall not
      be
      subject to the notice requirements of Section 2.13. Promptly following the
      effective date of any Commitment Increase, the Administrative Agent shall
      deliver to each Lender and Issuing Bank a revised Schedule I setting forth
      the
      Commitment of each Lender after giving effect to such Commitment Increase,
      and
      such Schedule I shall replace the Schedule I in effect before such Commitment
      Increase.

     

    SECTION
      2.05.   Repayment
      of Advances.

     

    The
      Borrower shall repay the principal amount of each Advance made by each Lender
      on
      the Termination Date of such Lender, subject to Section 2.15
      hereof.

     

    SECTION
      2.06.   Interest
      on Advances. 

     

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

     

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

     

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

     

    SECTION
      2.07.   Additional
      Interest on Eurodollar Rate Advances. 

     

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

     

    SECTION
      2.08.   Interest
      Rate Determination. 

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    SECTION
      2.09.   Voluntary
      Conversion of Advances. 

     

    The
      Borrower may, on any Business Day prior to the Termination Date, upon notice
      given to the Administrative Agent not later than 11:00 A.M. (New York City
      time)
      on the third Business Day prior to the date of the proposed Conversion, in
      the
      case of any proposed Conversion into Eurodollar Rate Advances, and on the date
      of the proposed Conversion, in the case of any proposed Conversion into Base
      Rate Advances, and subject to the provisions of Sections 2.08 and 2.12, Convert
      all Advances of one Type comprising the same Borrowing into Advances of another
      Type; provided,
      however,
      that
      any Conversion of any Eurodollar Rate Advances into Advances of another Type
      shall be made on, and only on, the last day of an Interest Period for such
      Eurodollar Rate Advances, except as otherwise provided in Section 2.12. Each
      such notice of a Conversion (a “Notice
      of Conversion”)
      shall
      be by telecopier, confirmed promptly in writing, in substantially the form
      of
      Exhibit A-2 hereto and shall, within the restrictions specified above, specify
      (i) the date of such Conversion, (ii) the aggregate amount of, Type of, and
      Interest Periods applicable to, the Advances to be Converted, (iii) the Type
      of
      Advance to which such Advances (or portions thereof) are proposed to be
      Converted, and (iv) if such Conversion is into or with respect to Eurodollar
      Rate Advances, the duration of the Interest Period for each such
      Advance.

     

    SECTION
      2.10.   Prepayments
      of Advances. 

     

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

     

    (b)  The
      Borrower may, upon notice given to the Administrative Agent at least two
      Business Days prior to the proposed prepayment, in the case of any Eurodollar
      Rate Advance, and on the date of the proposed prepayment, in the case of any
      Base Rate Advance, and if such notice is given the Borrower shall, prepay the
      outstanding principal amounts of the Advances comprising the same Borrowing
      in
      whole or ratably in part, together with accrued interest to the date of such
      prepayment on the amount prepaid and, in the case of any Eurodollar Rate
      Advance, any amount payable pursuant to Section 8.04(b); provided,
      however,
      that (i)
      each partial prepayment shall be in an aggregate principal amount not less
      than
      $5,000,000 and in integral multiples of $1,000,000 in excess thereof and (ii)
      in
      the case of any such prepayment of a Eurodollar Rate Advance, the Borrower
      shall
      be obligated to reimburse the Lenders in respect thereof pursuant to Section
      8.04(b) on the date of such prepayment.

     

    SECTION
      2.11.   Increased
      Costs. 

     

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

     

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

     

    SECTION
      2.12.   Illegality. 

     

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

     

    SECTION
      2.13.   Payments
      and Computations. 

     

    (a)  The
      Borrower shall make each payment hereunder, without condition or deduction
      for
      any counterclaim, defense, recoupment or setoff, not later than 11:00 A.M.
      (New
      York City time) on the day when due in U.S. dollars to the Administrative Agent
      at its address referred to in Section 8.02 in same day funds. The Administrative
      Agent will promptly thereafter cause to be distributed like funds relating
      to
      the payment of principal or interest or fees (other than pursuant to Section
      2.02(c), 2.07, 2.11 or 2.15(b)) ratably to the Lenders for the account of their
      respective Applicable Lending Offices, and like funds relating to the payment
      of
      any other amount payable to any Issuing Bank or to any Lender to such Issuing
      Bank or to such Lender for the account of its Applicable Lending Office, in
      each
      case to be applied in accordance with the terms of this Agreement. Upon its
      acceptance of an Assignment and Acceptance and recording of the information
      contained therein in the Register pursuant to Section 8.07(d), from and after
      the effective date specified in such Assignment and Acceptance, the
      Administrative Agent shall make all payments hereunder in respect of the
      interest assigned thereby to the Lender assignee thereunder, and the parties
      to
      such Assignment and Acceptance shall make all appropriate adjustments in such
      payments for periods prior to such effective date directly between
      themselves.

     

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

     

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

     

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

     

    SECTION
      2.14.   Sharing
      of Payments, Etc. 

     

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

     

    SECTION
      2.15.   Extension
      of Termination Date. 

     

    (a)  So
      long
      as no Event of Default shall have occurred and be continuing and the Termination
      Date shall not have occurred, then at least 30 days but not more than 60 days
      prior to each of the first and second anniversaries of the date hereof (each,
      an
“Anniversary
      Date”),
      the
      Borrower may request that the Lenders, by written notice to the Administrative
      Agent (in substantially the form attached hereto as Exhibit E) with a copy
      to
      the Arrangers, consent to a one-year extension of the Termination Date. Each
      Lender shall, in its sole discretion, determine whether to consent to such
      request and shall notify the Administrative Agent of its determination at least
      20 days prior to the applicable Anniversary Date. The failure to respond by
      any
      Lender within such time period shall be deemed a denial of such request. The
      Administrative Agent shall deliver a notice to the Borrower and the Lenders
      at
      least 15 days prior to such Anniversary Date of the identity of the Lenders
      that
      have consented to such extension and the Lenders that have declined such consent
      (the “Declining
      Lenders”).
      If
      Lenders holding in the aggregate 50% or less of the Commitments have consented
      to the requested extension, the Termination Date shall not be extended, and
      the
      Commitments of all Lenders shall terminate on the then current Termination
      Date
      (the “Current
      Termination Date”).

     

    (b)  If
      Lenders holding in the aggregate more than 50% of the Commitments have consented
      to the requested extension, subject to the conditions set forth in Section
      2.15(c), the Termination Date shall be extended as to such consenting Lenders
      only (and not as to any Declining Lender) for a period of one year following
      the
      Current Termination Date. Unless assigned to another Lender as set forth below,
      the commitments of the Declining Lenders shall terminate on such Current
      Termination Date, all Advances of and other amounts payable to such Declining
      Lenders shall be repaid to them on such Current Termination Date, and such
      Declining Lenders shall have no further liability with respect to Letters of
      Credit as of such Current Termination Date. The Borrower shall have the right
      at
      any time on or before the applicable Anniversary Date to replace each Declining
      Lender with, and add as “Lenders” under this Agreement in place thereof, one or
      more Eligible Assignees (each, an “Additional
      Commitment Lender”)
      as
      provided in Section 8.07(g), each of which Additional Commitment Lenders shall
      have entered into an Assignment and Acceptance pursuant to which each such
      Additional Commitment Lender shall, effective as of such Anniversary Date,
      assume a Commitment (and, if any such Additional Commitment Lender is already
      a
      Lender, its Commitment shall be in addition to such Lender’s Commitment
      hereunder on such date) and accept as such Additional Lender’s Termination Date
      with respect to the Commitment so assumed the latest date to which the
      Termination Date has been extended pursuant to this Section 2.15.

     

    (c)  Any
      extension of the Termination Date pursuant to this Section 2.15 shall become
      effective upon the applicable Anniversary Date if the Borrower shall have
      delivered to the Administrative Agent and each Lender, on or prior to such
      Anniversary Date, (i) opinions of counsel to the Borrower substantially in
      the forms of Exhibits C-3 and C-4 attached hereto upon which each Lender, each
      Issuing Bank and the Administrative Agent may rely, together with any
      governmental order referred to therein attached thereto and (ii) a
      certificate of a duly authorized officer of the Borrower (the statements
      contained in which shall be true) to the effect that (x) the representations
      and
      warranties contained in Section 4.01 are correct on and as of such Anniversary
      Date before and after giving effect to the extension of the Termination Date,
      as
      though made on and as of such Anniversary Date, and (y) no event has occurred
      and is continuing, or would result from such extension of the Termination Date,
      that constitutes an Event of Default or that would constitute an Event of
      Default but for the requirement that notice be given or time elapse, or both.
      

     

    (d)  Upon
      the
      extension of any Termination Date in accordance with this Section 2.15, the
      Administrative Agent shall deliver to each Lender and Issuing Bank a revised
      Schedule I setting forth the Commitment of each Lender and Issuing Bank after
      giving effect to such extension, and such Schedule I shall replace the Schedule
      I in effect before the applicable Anniversary Date.

     

    SECTION
      2.16.   Letters
      of Credit.

     

    (a)  From
      time
      to time and on any Business Day during the period from the date hereof to the
      tenth Business Day preceding the Termination Date, each Issuing Bank, in
      reliance upon the agreements of the other Lenders pursuant to
      subsection (d) of this Section 2.16, agrees to issue, at the request of the
      Borrower, Letters of Credit for the account of the Borrower on the terms and
      conditions hereinafter set forth; provided,
      that
      (i) each Letter of Credit shall expire on the earlier of (A) the date one year
      after the date of issuance of such Letter of Credit (or in the case of any
      renewal or extension thereof, one year after such renewal or extension) and
      (B)
      the date that is five Business Days prior to the Termination Date, provided
      that
      no Letter of Credit may expire after the Termination Date of any Declining
      Lender if, after giving effect to such issuance, the aggregate Commitments
      of
      the consenting Lenders (including any replacement Lenders) for the period
      following such Termination Date would be less than the available amount of
      the
      Letters of Credit expiring after such Termination Date; (ii) each Letter of
      Credit shall be in a stated amount of at least $25,000; and (iii) the Borrower
      may not request any Extension of Credit relating to a Letter of Credit if,
      after
      giving effect to such Extension of Credit, (X) the aggregate Outstanding Credits
      would exceed the Commitments or (Y) that portion of the LC Exposure arising
      from
      Letters of Credit issued by such Issuing Bank and from LC Disbursements made
      by
      such Issuing Bank would exceed the amount of such Issuing Bank’s LC Commitment.
      Upon each Extension of Credit relating to a Letter of Credit issued by any
      Issuing Bank, each Lender shall be deemed, and hereby irrevocably and
      unconditionally agrees, to purchase from such Issuing Bank without recourse
      a
      participation in such Letter of Credit equal to such Lender’s Pro Rata Share of
      the aggregate amount available to be drawn under such Letter of Credit. Each
      Letter of Credit shall utilize the Commitment of each Lender by an amount equal
      to the amount of such participation.

     

    (b)  To
      request an Extension of Credit relating to a Letter of Credit, the Borrower
      shall give an Issuing Bank and the Administrative Agent irrevocable written
      notice at least three Business Days prior to the requested date of such
      Extension of Credit specifying the date (which shall be a Business Day) on
      which
      such Extension of Credit is to occur, the expiration date of such Letter of
      Credit, the amount of such Letter of Credit, the name and address of the
      beneficiary thereof and such other information as shall be necessary to prepare,
      amend, renew or extend such Letter of Credit. In addition to the satisfaction
      of
      the conditions in Section 3.02, such Extension of Credit will be subject to
      the
      further conditions that such Letter of Credit shall be in such form and contain
      such terms as such Issuing Bank shall approve and that the Borrower shall have
      executed and delivered any additional applications, agreements and instruments
      relating to such Extension of Credit as such Issuing Bank shall reasonably
      require; provided,
      that in
      the event of any conflict between such applications, agreements or instruments
      and this Agreement, the terms of this Agreement shall control. 

     

    (c)  At
      least
      two Business Days prior to each Extension of Credit relating to a Letter of
      Credit, the applicable Issuing Bank will confirm with the Administrative Agent
      (by telephone or in writing) that the Administrative Agent has received the
      notice related thereto and, if it has not, such Issuing Bank will provide the
      Administrative Agent with a copy thereof. Unless such Issuing Bank has received
      notice from the Administrative Agent on or before the Business Day immediately
      preceding the date on which such Issuing Bank is to make the requested Extension
      of Credit relating to such Letter of Credit directing such Issuing Bank not
      to
      make such Extension of Credit because such Extension of Credit is not then
      permitted hereunder because of the limitations set forth in subsection (a)
      of
      this Section 2.16, or that one or more conditions specified in Section 3.02
      are
      not then satisfied, then, subject to the terms and conditions hereof, such
      Issuing Bank shall, on the requested date, make such Extension of Credit in
      accordance with such Issuing Bank’s usual and customary business
      practices.

     

    (d)  Each
      Issuing Bank shall examine all documents purporting to represent a demand for
      payment under a Letter of Credit promptly following its receipt thereof. Such
      Issuing Bank shall notify the Borrower and the Administrative Agent (i) of
      such
      demand for payment and (ii) whether such Issuing Bank has made or will make
      a LC
      Disbursement thereunder; provided,
      that
      any failure to give or delay in giving such notice shall not relieve the
      Borrower of its obligation to reimburse such Issuing Bank and the Lenders with
      respect to such LC Disbursement. The Borrower shall be irrevocably and
      unconditionally obligated to reimburse such Issuing Bank for any LC
      Disbursements paid by such Issuing Bank in respect of such drawing, without
      presentment, demand or other formalities of any kind. Unless the Borrower shall
      have notified such Issuing Bank and the Administrative Agent prior to 11:00
      A.M.
      on the Business Day immediately prior to the date on which such drawing is
      honored that the Borrower intends to reimburse such Issuing Bank for the amount
      of such drawing in funds other than from the proceeds of Advances, the Borrower
      shall be deemed to have timely given a Notice of Borrowing to the Administrative
      Agent requesting a Borrowing compromising Base Rate Advances on the date on
      which such drawing is honored in the amount payable to such Issuing Bank in
      respect of such LC Disbursement; provided,
      that
      for purposes solely of such Borrowing, the conditions precedents set forth
      in
      Section 3.02 hereof shall not be applicable. The Administrative Agent shall
      notify the Lenders of such Borrowing in accordance with Section 2.03(a), and
      each Lender shall make the proceeds of its Base Rate Advance included in such
      Borrowing available to the Administrative Agent for the account of such Issuing
      Bank in accordance with Section 2.03(a). The proceeds of such Borrowing shall
      be
      applied directly by the Administrative Agent to reimburse such Issuing Bank
      for
      such LC Disbursement. 

     

    (e)  If
      for
      any reason a Borrowing may not be (as determined in the sole discretion of
      the
      Administrative Agent), or is not, made in accordance with the foregoing
      provisions and the Borrower has not otherwise reimbursed an Issuing Bank for
      an
      LC Disbursement, then each Lender shall be obligated to fund the participation
      that such Lender purchased pursuant to subsection (a) in an amount equal to
      its
      Pro Rata Share of such LC Disbursement on and as of the date on which such
      Borrowing should have occurred. Each Lender’s obligation to fund its
      participation shall be absolute and unconditional and shall not be affected
      by
      any circumstance, including without limitation (i) any setoff, counterclaim,
      recoupment, defense or other right that such Lender or any other Person may
      have
      against any Issuing Bank or any other Person for any reason whatsoever, (ii)
      the
      existence of an Event of Default or the termination of the Commitments, (iii)
      any adverse change in the condition (financial or otherwise) of the Borrower
      or
      any of its Subsidiaries, (iv) any breach of this Agreement by the Borrower
      or
      any other Lender, (v) any amendment, renewal or extension of any Letter of
      Credit or (vi) any other circumstance, happening or event whatsoever, whether
      or
      not similar to any of the foregoing. On the date that such participation is
      required to be funded, each Lender shall promptly transfer, in immediately
      available funds, the amount of its participation to the Administrative Agent
      for
      the account of such Issuing Bank. Whenever, at any time after such Issuing
      Bank
      has received from any such Lender the funds for its participation in a LC
      Disbursement, such Issuing Bank (or the Administrative Agent on its behalf)
      receives any payment on account thereof from the Borrower, the Administrative
      Agent or such Issuing Bank, as the case may be, will distribute to such Lender
      its Pro Rata Share of such payment; provided,
      that if
      such payment is required to be returned for any reason to the Borrower or to
      a
      trustee, receiver, liquidator, custodian or similar official in any bankruptcy
      proceeding, such Lender will return to the Administrative Agent or such Issuing
      Bank any portion thereof previously distributed by the Administrative Agent
      or
      such Issuing Bank to it.

     

    (f)  To
      the
      extent that any Lender shall fail to pay when due any amount required to be
      paid
      pursuant to subsection (d) of this Section 2.16, such Lender shall pay to the
      applicable Issuing Bank (through the Administrative Agent) interest on such
      amount from the date such amount became due and payable to the date such payment
      is made at a rate per
      annum
      equal to
      the Federal Funds Rate.

     

    (g)  If
      any
      Event of Default shall occur and be continuing, on the Business Day that the
      Borrower receives notice from the Administrative Agent or the Majority Lenders
      demanding the deposit of cash collateral pursuant to this paragraph, the
      Borrower shall deposit in an account with the Administrative Agent, in the
      name
      of the Administrative Agent and for the benefit of each Issuing Bank and the
      Lenders, an amount in cash equal to the LC Exposure as of such date plus any
      accrued and unpaid fees thereon; provided,
      that
      the obligation to deposit such cash collateral shall become effective
      immediately, and such deposit shall become immediately due and payable, without
      demand or notice of any kind, upon the occurrence of any Event of Default
      described in subsection (e) of Section 6.01. Such deposit shall be held by
      the
      Administrative Agent as collateral for the payment and performance of the
      obligations of the Borrower under this Agreement. The Administrative Agent
      shall
      have exclusive dominion and control, including the exclusive right of
      withdrawal, over such account. The Borrower agrees to execute any documents
      and/or certificates to effectuate the intent of this subsection. Other than
      any
      interest earned on the investment of such deposits, which investments shall
      be
      made at the option and sole discretion of the Administrative Agent and at the
      Borrower’s risk and expense, such deposits shall not bear interest. Interest and
      profits, if any, on such investments shall accumulate in such account. Moneys
      in
      such account shall be applied by the Administrative Agent to reimburse each
      Issuing Bank for LC Disbursements for which it has not been reimbursed and,
      to
      the extent not so applied, shall be held for the satisfaction of the
      reimbursement obligations of the Borrower for the LC Exposure at such time;
      or,
      if the maturity of the Advances has been accelerated, with the consent of the
      Majority Lenders, be applied to satisfy other obligations of the Borrower under
      this Agreement. If the Borrower is required to provide an amount of cash
      collateral hereunder as a result of the occurrence of an Event of Default,
      such
      amount (to the extent not so applied as aforesaid) shall be returned to the
      Borrower promptly after all Events of Default have been cured or
      waived.

     

    (h)  Promptly
      following the end of each fiscal quarter of the Borrower, each Issuing Bank
      shall deliver (through the Administrative Agent) to each Lender and the Borrower
      a report describing the Letters of Credit outstanding and the LC Exposure
      relating to such Issuing Bank at the end of such fiscal quarter. Upon the
      request of any Lender from time to time, each Issuing Bank shall deliver to
      such
      Lender any other information reasonably requested by such Lender with respect
      to
      each Letter of Credit then outstanding.

     

    (i)  The
      Borrower’s obligation to reimburse LC Disbursements hereunder shall be absolute,
      unconditional and irrevocable and shall be performed strictly in accordance
      with
      the terms of this Agreement under all circumstances whatsoever and irrespective
      of any of the following circumstances:

     

    (i)  any
      lack
      of validity or enforceability of any Letter of Credit or this
      Agreement;

     

    (ii)  the
      existence of any claim, set-off, defense or other right that the Borrower or
      any
      Subsidiary or Affiliate of the Borrower may have at any time against a
      beneficiary or any transferee of any Letter of Credit (or any Person or entity
      for which any such beneficiary or transferee may be acting), any Lender
      (including any Issuing Bank) or any other Person, whether in connection with
      this Agreement or any Letter of Credit or any document related hereto or thereto
      or any unrelated transaction; 

     

    (iii)  any
      draft
      or other document presented under a Letter of Credit proving to be forged,
      fraudulent or invalid in any respect or any statement therein being untrue
      or
      inaccurate in any respect;

     

    (iv)  payment
      by any Issuing Bank under a Letter of Credit against presentation of a draft
      or
      other document to such Issuing Bank that does not comply with the terms of
      such
      Letter of Credit;

     

    (v)  any
      other
      event or circumstance whatsoever, whether or not similar to any of the
      foregoing, that might, but for the provisions of this Subsection, constitute
      a
      legal or equitable discharge of, or provide a right of setoff against, the
      Borrower’s obligations hereunder; or

     

    (vi)  the
      existence of an Event of Default.

     

    Neither
      the Administrative Agent, any Issuing Bank, any Lender nor any Affiliate of
      the
      foregoing Persons, nor any director, officer, employee, agent of any such Person
      or Affiliate shall have any liability or responsibility by reason of or in
      connection with the issuance or transfer of any Letter of Credit or any payment
      or failure to make any payment thereunder (irrespective of any of the
      circumstances referred to above), or any error, omission, interruption, loss
      or
      delay in transmission or delivery of any draft, notice or other communication
      under or relating to any Letter of Credit (including any document required
      to
      make a drawing thereunder), any error in interpretation of technical terms
      or
      any consequence arising from causes beyond the control of the Issuing Bank;
      provided,
      that
      the foregoing shall not be construed to excuse any Issuing Bank from liability
      to the Borrower to the extent of any direct damages (as opposed to consequential
      damages, claims in respect of which are hereby waived by the Borrower to the
      extent permitted by applicable law) suffered by the Borrower that are caused
      by
      such Issuing Bank’s failure to exercise care when determining whether drafts or
      other documents presented under a Letter of Credit comply with the terms
      thereof. The parties hereto expressly agree, that in the absence of gross
      negligence or willful misconduct on the part of such Issuing Bank (as finally
      determined by a court of competent jurisdiction), such Issuing Bank shall be
      deemed to have exercised care in each such determination. In furtherance of
      the
      foregoing and without limiting the generality thereof, the parties agree that,
      with respect to documents presented that appear on their face to be in
      substantial compliance with the terms of a Letter of Credit, such Issuing Bank
      may, in its sole discretion, either accept and make payment upon such documents
      without responsibility for further investigation, regardless of any notice
      or
      information to the contrary, or refuse to accept and make payment upon such
      documents if such documents are not in strict compliance with the terms of
      such
      Letter of Credit.

     

    (j)  Each
      Letter of Credit (1) if a standby Letter of Credit, shall be subject to the
      rules of the ISP, and (2) if a commercial Letter of Credit shall be subject
      to
      the Uniform Customs and Practices for Documentary Credits (1993 Revision),
      International Chamber of Commerce Publication No. 500, as the same may be
      amended from time to time, and, to the extent not inconsistent therewith, the
      governing law of this Agreement set forth in Section 8.09.

     

    (k)  Upon
      the
      satisfaction of the conditions precedent set forth in Sections 3.01 and 3.02,
      and without any further action on the part of the Borrower or the applicable
      Issuing Bank pursuant to Section 2.16(b) or (c), the letters of credit described
      in Schedule II shall be deemed to be Letters of Credit for all purposes under
      this Agreement.

     

     

     

    ARTICLE
      III

    CONDITIONS
      OF LENDING

     

    SECTION
      3.01.   Conditions
      Precedent to Closing. 

     

    The
      obligation of each Lender to make its initial Advance and of each Issuing Bank
      to issue its initial Letter of Credit shall not become effective unless and
      until all fees due and payable by the Borrower in connection with this Agreement
      have been paid and the Administrative Agent shall have received the
      following:

     

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

     

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

     

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

     

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

     

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

     

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

     

    (g)  Favorable
      opinions of Frank A. Schiller, General Counsel of Progress Energy Service
      Company LLC, and of Hunton & Williams LLP, counsel for the Borrower,
      substantially in the forms of Exhibit C-1 and C-2, respectively, hereto and
      as
      to such other matters as any Issuing Bank or any Lender through the
      Administrative Agent may reasonably request.

     

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

     

    (i)  The
      commitments under the Existing Credit Facility shall have been terminated (and
      such termination may be conditioned on the satisfaction of the conditions
      precedent set forth in Section 3.02 and the deemed issuance of certain Letters
      of Credit pursuant to Section 2.16(k)) and all amounts outstanding and other
      amounts payable thereunder shall have been paid in full.

     

    SECTION
      3.02.   Conditions
      Precedent to Each Borrowing and to the Issuance of Letters of
      Credit.

     

    The
      obligation of each Lender to make an Advance on the occasion of each Borrowing
      (including the initial Borrowing) and of each Issuing Bank to make any Extension
      of Credit relating to a Letter of Credit shall be subject to the further
      conditions precedent that (a)
      in the
      case of the making of an Advance, the Administrative Agent shall have received
      the written confirmatory Notice of Borrowing with respect thereto, and (b)
      on
      the date of any Extension of Credit, the following statements shall be true
      (and
      the giving of the Notice of Borrowing or the giving of notice of a requested
      Letter of Credit pursuant to Section 2.16(b) and the acceptance by the Borrower
      of the proceeds of the Borrowing or the issuance of a requested Letter of Credit
      related thereto shall constitute a representation and warranty by the Borrower
      that on the date of such Borrowing or issuance of such Letter of Credit such
      statements are true):

     

    (i)  The
      representations and warranties contained in Section 4.01 (other than the
      last sentence of Section 4.01(e) and Section 4.01(f)) are correct on and as
      of
      the date of such Extension of Credit before and after giving effect to such
      Extension of Credit and to the application of the proceeds therefrom, as though
      made on and as of such date; and 

     

    (ii)  No
      event
      has occurred and is continuing, or would result from such Extension of Credit
      or
      from the application of the proceeds therefrom that would constitute an Event
      of
      Default but for the requirement that notice be given or time elapse, or both;
      

     

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

    

     

    ARTICLE
      IV

    REPRESENTATIONS
      AND WARRANTIES

     

    SECTION
      4.01.   Representations
      and Warranties of the Borrower. 

     

    The
      Borrower represents and warrants as follows:

     

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

     

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

     

    (c)  No
      authorization or approval or other action by, and no notice to or filing with
      any governmental authority or regulatory body is required for the due execution,
      delivery and performance by the Borrower of this Agreement, other than
a
      notification to the North Carolina Utilities Commission, which has been timely
      made.

     

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

     

    (e)  The
      Consolidated balance sheets of the Borrower and its Subsidiaries as of December
      31, 2005, and the related Consolidated statements of income and retained
      earnings of the Borrower and its Subsidiaries for the fiscal year then ended,
      copies of which have been furnished to each Lender and each Issuing Bank, fairly
      present the financial condition of the Borrower and its Subsidiaries as at
      such
      date and the results of the operations of the Borrower and its Subsidiaries
      for
      the period ended on such date, all in accordance with generally accepted
      accounting principles consistently applied. Since December 31, 2005, there
      has
      been no material adverse change in the financial condition, operations or
      properties of the Borrower and its Subsidiaries, taken as a whole. 

     

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

     

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

     

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

     

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

     

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

     

    (k)  No
      Termination Event has occurred or is reasonably expected to occur with respect
      to any Plan, which is reasonably likely to materially adversely affect the
      financial condition, operation or properties of the Borrower and its
      Subsidiaries, taken as a whole.

     

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

     

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

     

    (n)  The
      written information furnished by the Borrower to the Administrative Agent,
      the
      Issuing Banks and the Lenders in connection with this Agreement when taken
      together with reports filed by the Borrower with the Securities and Exchange
      Commission under Section 13 of the Exchange Act as of any date of determination,
      does not (and all such information furnished in the future by the Borrower
      to
      the Administrative Agent, the Issuing Banks and the Lenders, when taken together
      with such reports filed in the future by the Borrower will not) contain any
      untrue statement of a material fact or omit to state a material fact necessary
      to make the statements contained therein not misleading in light of the
      circumstances under which made.

     

    (o)  The
      Borrower is Solvent.

     

     

    ARTICLE
      V

    COVENANTS
      OF THE COMPANY

     

    SECTION
      5.01.   Affirmative
      Covenants. 

     

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

     

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

     

    (b)  Preservation
      of Corporate Existence, Etc.
      Except
      as provided in Section 5.02(d), preserve and maintain, and cause each
      Significant Subsidiary to preserve and maintain, its corporate existence, rights
      (charter and statutory) and franchises; provided,
      however,
      that
      Borrower may cause FPC to be merged into Borrower.

     

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

     

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

     

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

     

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

     

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

     

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

     

    (i)  Reporting
      Requirements.
      Furnish
      to each Issuing Bank and the Lenders: 

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (viii)  from
      time
      to time upon the reasonable request of any Lender or any Issuing Bank through
      the Administrative Agent, all information necessary for such Lender or Issuing
      Bank to comply with the Patriot Act; and

     

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

     

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

     

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

     

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

     

    SECTION
      5.02.   Negative
      Covenants. 

     

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

     

    (a)  Liens,
      Etc. Create,
      incur, assume or suffer to exist, or permit any Subsidiary to create, incur,
      assume or suffer to exist, any lien, security interest or other charge or
      encumbrance, or any other type of preferential arrangement, upon or with respect
      to any of its properties, whether now owned or hereafter acquired, or assign,
      or
      permit any Subsidiary to assign, any right to receive income, in each case
      to
      secure any Indebtedness of any Person, other than (i) liens, mortgages and
      security interests created by the Mortgage and the Florida Power Mortgage,
      (ii) liens and security interests against the fuel used by the Borrower in
      its power generating operations in favor of the suppliers thereof and (iii)
      liens, mortgages and security interests securing other Indebtedness of the
      Borrower and its Subsidiaries not exceeding $500,000,000 in the
      aggregate.

     

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

     

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

     

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

     

    (e)  Sales,
      Etc. of Assets.
      Sell,
      lease, transfer or otherwise dispose of, or permit any Subsidiary to sell,
      lease, transfer or otherwise dispose of, any of its assets, other than the
      following sales: (i) sales of generating capacity to the wholesale customers
      of
      the Borrower and the Subsidiaries, (ii) sales of nuclear fuel, (iii) sales
      of
      accounts receivable, (iv) sales in connection with a transaction authorized
      by
      subsection (d) of this Section, (v) the Portfolio Transaction, (vi) sales of
      investments in securities with a maturity of less than one year, (vii) the
      sale
      of the 925 MW Rowan facility (or
      the
      equity interests of any Person the assets of which consist of the 925 MW Rowan
      facility),
      the 320
      MW DeSoto facility (or the equity interests of any Person the assets of which
      consist of the 320 MW DeSoto facility), all coal mines and assets used in their
      operation and all river terminal facilities and assets used in their operation
      and (viii) other sales not exceeding $250,000,000 in the aggregate in any fiscal
      year of the Borrower.

     

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

     

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

     

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

     

     

    ARTICLE
      VI

    EVENTS
      OF DEFAULT

     

    SECTION
      6.01.   Events
      of Default. 

     

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

     

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

     

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

     

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

     

    (d)  The
      Borrower or any Significant Subsidiary shall fail to pay any amount in respect
      of any Indebtedness in excess of $50,000,000 (but excluding Indebtedness
      hereunder) of the Borrower or such Significant Subsidiary (as the case may
      be),
      or any interest or premium thereon, when due (whether by scheduled maturity,
      required prepayment, acceleration, demand or otherwise) and such failure shall
      continue after the applicable grace period, if any, specified in the agreement
      or instrument relating to such Indebtedness; or any other default under any
      agreement or instrument relating to any such Indebtedness, or any other event,
      shall occur and shall continue after the applicable grace period, if any,
      specified in such agreement or instrument, if the effect of such default or
      event is to accelerate, or to permit the acceleration of, the maturity of such
      Indebtedness; or any such Indebtedness shall be declared to be due and payable,
      or required to be prepaid (other than by a regularly scheduled required
      prepayment), prior to the stated maturity thereof; or

     

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

     

    (f)  Any
      judgment or order for the payment of money in excess of $50,000,000 shall be
      rendered against the Borrower or any Significant Subsidiary and either (i)
      enforcement proceedings shall have been commenced by any creditor upon such
      judgment or order or (ii) there shall be any period of 30 consecutive days
      during which a stay of enforcement of such judgment or order, by reason of
      a
      pending appeal or otherwise, shall not be in effect; or

     

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

     

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

     

    (i)  A
      Change
      of Control shall occur;

     

    then,
      and
      in any such event, the Administrative Agent shall at the request, or may with
      the consent, of the Majority Lenders, by notice to the Borrower, (i) declare
      the
      Commitments and the obligation of each Lender and each Issuing Bank to make
      Extensions of Credit to be terminated, whereupon the same shall forthwith
      terminate, (ii) declare the Outstanding Credits, all interest thereon and all
      other amounts payable under this Agreement to be forthwith due and payable,
      whereupon such principal amount, all such interest and all such amounts shall
      become and be forthwith due and payable, without presentment, demand, protest
      or
      further notice of any kind, all of which are hereby expressly waived by the
      Borrower, and (iii) exercise the remedies specified in Section 2.16(g);
provided,
      however,
      that in
      the event of an actual or deemed entry of an order for relief with respect
      to
      the Borrower or any Subsidiary under the Federal Bankruptcy Code, (A) the
      obligation of each Lender and each Issuing Bank to make Extensions of Credit
      shall automatically be terminated and (B) Outstanding Credits, all such interest
      and all such other amounts shall automatically become and be due and payable,
      without presentment, demand, protest or any notice of any kind, all of which
      are
      hereby expressly waived by the Borrower.

     

     

    ARTICLE
      VII

    THE
      ADMINISTRATIVE AGENT

    AND
      THE ISSUING BANKS

     

    SECTION
      7.01.   Authorization
      and Action.  

     

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

     

    (b)  Each
      Issuing Bank shall act on behalf of the Lenders with respect to any Letters
      of
      Credit issued by it and the documents associated therewith until such time
      and
      except for so long as the Administrative Agent may agree at the request of
      the
      Majority Lenders to act for such Issuing Bank with respect thereto; provided,
      that
      such Issuing Bank shall have all the benefits and immunities (i) provided to
      the
      Administrative Agent in this Article VII with respect to any acts taken or
      omissions suffered by each Issuing Bank in connection with Letters of Credit
      issued by it or proposed to be issued by it and the application and agreements
      for letters of credit pertaining to the Letters of Credit as fully as if the
      term “Administrative Agent” as used in this Article VII included such Issuing
      Bank with respect to such acts or omissions and (ii) as additionally provided
      in
      this Agreement with respect to such Issuing Bank.

     

    (c)  In
      the
      event that Citibank or any of its Affiliates shall be or become an indenture
      trustee under the Trust Indenture Act of 1939 (as amended, the “Trust
      Indenture Act”)
      in
      respect of any securities issued or guaranteed by the Borrower, the parties
      hereto acknowledge and agree that any payment or property received in
      satisfaction of or in respect of any obligation of the Borrower hereunder by
      or
      on behalf of Citibank in its capacity as the Administrative Agent for the
      benefit of any Lender or Issuing Bank (other than Citibank or an Affiliate
      of
      Citibank) and that is applied in accordance with this Agreement shall be deemed
      to be exempt from the requirements of Section 311 of the Trust Indenture Act
      pursuant to Section 311(b)(3) of the Trust Indenture Act.

     

    SECTION
      7.02.   The
      Administrative Agent’s Reliance, Etc. 

     

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

     

    SECTION
      7.03.   The
      Administrative Agent and its Affiliates. 

     

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

     

    SECTION
      7.04.   Lender
      Credit Decision. 

     

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

     

    SECTION
      7.05.   Indemnification.

     

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

     

    SECTION
      7.06.   Successor
      Administrative Agent. 

     

    The
      Administrative Agent may resign at any time by giving written notice thereof
      to
      the Lenders, each Issuing Bank and the Borrower and may be removed at any time
      with or without cause by the Majority Lenders. Upon any such resignation or
      removal, the Majority Lenders shall have the right to appoint a successor
      Administrative Agent. If no successor Administrative Agent shall have been
      so
      appointed by the Majority Lenders, and shall have accepted such appointment,
      within 30 days after the retiring Administrative Agent’s giving of notice of
      resignation or the Majority Lenders’ removal of the retiring Administrative
      Agent, the Administrative Agent may appoint a successor Administrative Agent,
      which shall be a commercial bank organized under the laws of the United States
      of America or of any State thereof and having a combined capital and surplus
      of
      at least $500,000,000. Upon the acceptance of any appointment as Administrative
      Agent hereunder by a successor Administrative Agent, such successor
      Administrative Agent shall thereupon succeed to and become vested with all
      the
      rights, powers, privileges and duties of the retiring Administrative Agent,
      and
      the retiring Administrative Agent shall be discharged from its duties and
      obligations under this Agreement. After any retiring Administrative Agent’s
      resignation or removal hereunder as Administrative Agent, the provisions of
      this
      Article VII shall inure to its benefit as to any actions taken or omitted to
      be
      taken by it while it was Administrative Agent under this Agreement.

     

    SECTION
      7.07.   Appointment
      and Resignation of Issuing Banks.

     

    The
      Borrower may, from time to time, appoint one or more Lenders (or Affiliates
      thereof) to act as additional Issuing Banks under this Agreement. Any such
      appointment shall be evidenced by a written agreement between the Borrower
      and
      any such Issuing Bank, setting forth such Issuing Bank’s agreement to act in
      such capacity, the LC Commitment of such Issuing Bank and information required
      for delivery of notices to such LC Issuing Bank pursuant to Section 8.02. Upon
      the delivery of a duly executed copy of such agreement to the Administrative
      Agent, such Issuing Bank shall become vested with all the rights, powers,
      privileges and duties of an “Issuing Bank” under this Agreement. In addition,
      any Issuing Bank may resign as an Issuing Bank under this Agreement, with the
      written consent of the Borrower and upon notice of such resignation to the
      Administrative Agent, at any time that no Letters of Credit issued by such
      Issuing Bank and no LC Disbursements payable to such Issuing Bank are
      outstanding. The Administrative Agent shall give prompt notice to each Lender
      of
      the appointment or resignation of any Issuing Bank pursuant to this Section
      7.07.

     

     

    ARTICLE
      VIII

    MISCELLANEOUS

     

    SECTION
      8.01.   Amendments,
      Etc. 

     

    No
      amendment or waiver of any provision of this Agreement, nor consent to any
      departure by the Borrower therefrom, shall in any event be effective unless
      the
      same shall be in writing and signed by the Majority Lenders, in the case of
      any
      such amendment, waiver or consent of or in respect of this Agreement, and then
      such waiver or consent shall be effective only in the specific instance and
      for
      the specific purpose for which given; provided,
      however,
      that no
      amendment, waiver or consent shall, unless in writing and signed by all of
      the
      Lenders, do any of the following: (i) waive any of the conditions specified
      in Section 3.01 or 3.02, (ii) increase the Commitment of any Lender or
      subject any Lender to any additional obligations, (iii) reduce, or waive
      the payment of, the principal of, or interest on, the Advances, reimbursement
      obligations in respect of LC Disbursements, or any fees or other amounts payable
      to the Lenders ratably hereunder, (iv) postpone any date fixed for any
      payment of principal of, or interest on, the Advances, reimbursement obligations
      in respect of LC Disbursements, or any fees or other amounts payable to the
      Lenders ratably hereunder, (v) change the percentage of the Commitments or
      of the aggregate unpaid principal amount of the Advances, or the number of
      Lenders, which shall be required for the Lenders or any of them to take any
      action under this Agreement, or (vi) amend, waive, or in any way modify or
      suspend any provision requiring the pro rata application of payments or of
      Section 2.15 or of this Section 8.01; provided
      further,
      that no
      amendment, waiver or consent shall, unless in writing and signed by each Lender
      affected thereby, reduce, waive or postpone the date of payment of any amount
      payable to such Lender; and provided,
      further,
      that
      (A) no amendment, waiver or consent shall, unless in writing and signed by
      the Administrative Agent and each Issuing Bank in addition to the Lenders
      required hereinabove to take such action, affect the rights or duties of such
      Administrative Agent or each Issuing Bank under this Agreement, (B) this
      Agreement may be amended and restated without the consent of any Lender, the
      Administrative Agent or any Issuing Bank if, upon giving effect to such
      amendment and restatement, such Lender, Administrative Agent or such Issuing
      Bank, as the case may be, shall no longer be a party to this Agreement (as
      so
      amended and restated) or have any Commitment or other obligation hereunder
      and
      shall have been paid in full all amounts payable hereunder to such Lender,
      the
      Administrative Agent or such Issuing Bank, as the case may be, and (C) any
      Issuing Bank may be appointed and may resign pursuant to Section 7.07, and
      the
      LC Commitment of any Issuing Bank may be increased or decreased pursuant to
      a
      written agreement between the Borrower and such Issuing Bank, a copy of which
      shall be delivered to the Administrative Agent, in each case, without the
      consent of any Lender.

     

    SECTION
      8.02.   Notices,
      Etc. 

     

    All
      notices and other communications provided for hereunder shall, unless otherwise
      stated herein, be in writing (including telegraphic communication) and mailed,
      telecopied, e-mailed or delivered, if to the Borrower, at its address at
410
      S.
      Wilmington Street, PEB 19A3, Raleigh, North Carolina 27601, Attention: Assistant
      Treasurer, Treasury Department, Facsimile no.: (919) 546-7826, e-mail:
      sherri.daughtridge@pgnmail.com; if to any Lender, at its Domestic Lending Office
      set forth opposite its name on Schedule I hereto; if to SunTrust Bank, as
      Issuing Bank, at its address at 25
      Park
      Place, 16th
      Floor,
      Atlanta, Georgia, 30303, Attention: International Operations, SunTrust Bank,
      Facsimile no.: (404) 588-8129;
      and if
      to the Administrative Agent, at its address at Two Penns Way, Suite 200, New
      Castle, Delaware 19720, Attention: Bank Loan Syndications, Facsimile no.: (212)
      994-0161; or, as to each party, at such other address as shall be designated
      by
      such party in a written notice to the other parties or, in the case of any
      Lender, to the Administrative Agent, each Issuing Bank and the Borrower. All
      such notices and communications shall be effective when received by the
      addressee thereof.

     

    SECTION
      8.03.   No
      Waiver; Remedies. 

     

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

     

    SECTION
      8.04.   Costs,
      Expenses, Taxes and Indemnification.

     

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

     

    (b)  If
      (i)
      due to payments made by the Borrower due to the acceleration of the maturity
      of
      the Advances pursuant to Section 6.01 or due to any other reason, any Lender
      receives payments of principal of any Eurodollar Rate Advance based upon the
      Eurodollar Rate other than on the last day of the Interest Period for such
      Advance, or (ii) due to any Conversion of Eurodollar Advance other than on
      the
      last day of an Interest Period pursuant to Section 2.12, the Borrower shall,
      upon demand by such Lender (with a copy of such demand to the Administrative
      Agent), pay to the Administrative Agent for the account of such Lender any
      amounts required to compensate such Lender for any additional losses, costs
      or
      expenses that it may reasonably incur as a result of such payment, including,
      without limitation, any loss (including loss of anticipated profits), cost
      or
      expense incurred by reason of the liquidation or reemployment of deposits or
      other funds acquired by any Lender to fund or maintain such Advance. In
      addition, if the Borrower fails to prepay any Advance on the date for which
      notice of prepayment has been given, the Borrower shall, upon demand by any
      Lender (with a copy of such demand to the Administrative Agent), pay to the
      Administrative Agent for the account of such Lender any amounts required to
      compensate such Lender for any losses, costs or expenses (including loss of
      anticipated profits) that it may reasonably incur as a result of such prepayment
      not having been made on the date specified by the Borrower for such
      prepayment.

     

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

     

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

     

    (e)  Prior
      to
      the date of the initial Borrowing or on the date of the Assignment and
      Acceptance pursuant to which it became a Lender, in the case of each Lender
      that
      becomes a Lender by virtue of entering into an Assignment and Acceptance, or
      on
      the date that any Eligible Assignee becomes an Additional Lender pursuant to
      Section 2.04(b) and from time to time thereafter if requested by the Borrower
      or
      the Administrative Agent, each Lender organized under the laws of a jurisdiction
      outside the United States shall provide the Administrative Agent and the
      Borrower with the forms prescribed by the Internal Revenue Service of the United
      States certifying that such Lender is exempt from United States withholding
      taxes with respect to all payments to be made to such Lender hereunder. If
      for
      any reason during the term of this Agreement, any Lender becomes unable to
      submit the forms referred to above or the information or representations
      contained therein are no longer accurate in any material respect, such Lender
      shall notify the Administrative Agent and the Borrower in writing to that
      effect. Unless the Borrower and the Administrative Agent have received forms
      or
      other documents satisfactory to them indicating that payments hereunder are
      not
      subject to United States withholding tax, the Borrower or the Administrative
      Agent shall withhold taxes from such payments at the applicable statutory rate
      in the case of payments to or for any Lender organized under the laws of a
      jurisdiction outside the United States.

     

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

     

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

     

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

     

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

     

    SECTION
      8.05.   Right
      of Set-off. 

     

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

     

    SECTION
      8.06.   Binding
      Effect. 

     

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

     

    SECTION
      8.07.   Assignments
      and Participations.

     

    (a)  Each
      Lender may, with the consent of the Administrative Agent, each Issuing Bank
      and
      the Borrower (each such consent not to be unreasonably withheld or delayed
      and,
      in the case of the Borrower, such consent shall not be required if an Event
      of
      Default has occurred and is continuing), assign to one or more banks or other
      entities all or a portion of its rights and obligations under this Agreement
      (including, without limitation, all or a portion of its Commitment and the
      Advances owing to it); provided,
      however,
      that
      (i) each such assignment shall be of a constant, and not a varying,
      percentage of all rights and obligations under this Agreement, (ii) the
      amount of the Commitment of the assigning Lender being assigned pursuant to
      each
      such assignment (determined as of the date of the Assignment and Acceptance
      with
      respect to such assignment) shall in no event be less than the lesser of
      (A) $10,000,000 and (B) all of such Lender’s rights and obligations
      and, if the preceding clause (A) is applicable, shall be an integral multiple
      of
      $1,000,000, (iii) each such assignment shall be to an Eligible Assignee,
      and (iv) the parties to each such assignment shall execute and deliver to the
      Administrative Agent, for its acceptance and recording in the Register, an
      Assignment and Acceptance and such parties (other than when Citibank is an
      assigning party) shall also deliver to the Administrative Agent a processing
      and
      recordation fee of $3,500. Upon such execution, delivery, acceptance and
      recording, from and after the effective date specified in each Assignment and
      Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
      extent that rights and obligations hereunder have been assigned to it pursuant
      to such Assignment and Acceptance, have the rights and obligations of a Lender
      hereunder and (y) the Lender assignor thereunder shall, to the extent that
      rights and obligations hereunder have been assigned by it pursuant to such
      Assignment and Acceptance, relinquish its rights and be released from its
      obligations under this Agreement (and, in the case of an Assignment and
      Acceptance covering all or the remaining portion of an assigning Lender’s rights
      and obligations under this Agreement, such Lender shall cease to be a party
      hereto).

     

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

     

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

     

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

     

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

     

    (f)  Each
      Lender may sell participations to one or more banks or other entities in or
      to
      all or a portion of its rights and obligations under this Agreement (including,
      without limitation, all or a portion of its Commitment, the Advances owing
      to
      it); provided,
      however,
      that (i)
      such Lender’s obligations under this Agreement (including, without limitation,
      its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such
      Lender shall remain solely responsible to the other parties hereto for the
      performance of such obligations, (iii) such Lender shall remain the holder
      of
      any promissory note held pursuant to Section 2.01(b) for all purposes of
      this Agreement, (iv) the Borrower, each Issuing Bank, the Administrative Agent
      and the other Lenders shall continue to deal solely and directly with such
      Lender in connection with such Lender’s rights and obligations under this
      Agreement and (v) the holder of any such participation, other than an Affiliate
      of such Lender, shall not be entitled to require such Lender to take or omit
      to
      take any action hereunder, except action (A) extending the time for payment
      of
      interest on, or the final maturity of any portion of the principal amount of,
      the Advances or (B) reducing the principal amount of or the rate of interest
      payable on the Advances. Without limiting the generality of the foregoing:
      (i)
      such participating banks or other entities shall be entitled to the cost
      protection provisions contained in Sections 2.07, 2.11 and 8.04(b) only if,
      and
      to the same extent, the Lender from which such participating banks or other
      entities acquired its participation would, at the time, be entitled to claim
      thereunder; and (ii) such participating banks or other entities shall also,
      to
      the fullest extent permitted by law, be entitled to exercise the rights of
      set-off contained in Section 8.05 as if such participating banks or other
      entities were Lenders hereunder.

     

    (g)  If
      (x)
      any Lender shall be a Declining Lender or (y) any Lender (or any bank, financial
      institution, or other entity to which such Lender has sold a participation)
      shall make any demand for payment under Section 2.11(b), then within the time
      period specified in Section 2.15(b) or within 30 days after any such demand
      (if,
      but only if, such demanded payment has been made by the Borrower) (as
      applicable), the Borrower may, with the approval of the Administrative Agent
      (which approval shall not be unreasonably withheld) demand that such Lender
      assign in accordance with this Section 8.07 to one or more Eligible Assignees
      designated by the Borrower all (but not less than all) of such Lender’s
      Commitment (if any) and the Advances owing to it no later than the applicable
      Anniversary Date or within the period ending on the later to occur of such
      30th
      day and the last day of the longest of the then current Interest Periods for
      such Advances (as applicable), provided
      that (i)
      no Event of Default or event that, with the passage of time or the giving of
      notice, or both, would constitute an Event of Default shall then have occurred
      and be continuing, (ii) the Borrower shall have satisfied all its presently
      due
      obligations to such Lender under this Agreement, and (iii) if such Eligible
      Assignee designated by the Borrower is not an existing Lender on the date of
      such demand, the Borrower shall have delivered to the Administrative Agent
      an
      administrative fee of $3,500 and (iv) in the case of any assignment by a
      Declining Lender, such Declining Lender shall have consented to such assignment.
      If any such Eligible Assignee designated by the Borrower shall fail to
      consummate such assignment on terms acceptable to such Lender, or if the
      Borrower shall fail to designate any such Eligible Assignees for all or part
      of
      such Lender’s Commitment or Advances, then such demand by the Borrower shall
      become ineffective; it being understood for purposes of this subsection (g)
      that
      such assignment shall be conclusively deemed to be on terms acceptable to such
      Lender, and such Lender shall be compelled to consummate such assignment to
      an
      Eligible Assignee designated by the Borrower, if such Eligible Assignee (i)
      shall agree to such assignment by entering into an Assignment and Acceptance
      in
      substantially the form of Exhibit B hereto with such Lender and (ii) shall
      offer
      compensation to such Lender in an amount equal to all amounts then owing by
      the
      Borrower to such Lender hereunder made by the Borrower to such Lender, whether
      for principal, interest, fees, costs or expenses (other than the demanded
      payment referred to above and payable by the Borrower as a condition to the
      Borrower’s right to demand such assignment), or otherwise.

     

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

     

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

     

    (j)  Notwithstanding
      anything to the contrary contained herein, any Lender (a “Granting
      Lender”)
      may
      grant to a special purpose funding vehicle (an “SPC”)
      of
      such Granting Lender identified as such in writing from time to time by the
      Granting Lender to the Administrative Agent, each Issuing Bank and the Borrower,
      the option to provide to the Borrower all or any part of any Advance that such
      Granting Lender would otherwise be obligated to make to the Borrower pursuant
      to
      this Agreement; provided
      that
      (i) nothing herein shall constitute a commitment by any such SPC to make
      any Advance, (ii) if such SPC elects not to exercise such option or
      otherwise fails to provide all or any part of such Advance, the Granting Lender
      shall be obligated to make such Advance pursuant to the terms hereof and
      (iii) no SPC or Granting Lender shall be entitled to receive any greater
      amount pursuant to Section 2.07 or 2.11 than the Granting Lender would have
      been entitled to receive had the Granting Lender not otherwise granted such
      SPC
      the option to provide any Advance to the Borrower. The making of an Advance
      by
      an SPC hereunder shall utilize the Commitment of the Granting Lender to the
      same
      extent, and as if, such Advance were made by such Granting Lender. Each party
      hereto hereby agrees that no SPC shall be liable for any indemnity or similar
      payment obligation under this Agreement for which a Lender would otherwise
      be
      liable so long as, and to the extent that, the related Granting Lender provides
      such indemnity or makes such payment. In furtherance of the foregoing, each
      party hereto hereby agrees (which agreement shall survive the termination of
      this Agreement) that, prior to the date that is one year and one day after
      the
      payment in full of all outstanding commercial paper or other senior indebtedness
      of any SPC, it will not institute against or join any other person in
      instituting against such SPC any bankruptcy, reorganization, arrangement,
      insolvency or liquidation proceedings under the laws of the United States or
      any
      State thereof. Notwithstanding the foregoing, the Granting Lender
      unconditionally agrees to indemnify the Borrower, the Administrative Agent,
      each
      Issuing Bank and each Lender against all liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses or disbursements
      of any kind or nature whatsoever that may be incurred by or asserted against
      the
      Borrower, the Administrative Agent, such Issuing Bank or such Lender, as the
      case may be, in any way relating to or arising as a consequence of any such
      forbearance or delay in the initiation of any such proceeding against its SPC.
      Each party hereto hereby acknowledges and agrees that no SPC shall have the
      rights of a Lender hereunder, such rights being retained by the applicable
      Granting Lender. Accordingly, and without limiting the foregoing, each party
      hereby further acknowledges and agrees that no SPC shall have any voting rights
      hereunder and that the voting rights attributable to any Advance made by an
      SPC
      shall be exercised only by the relevant Granting Lender and that each Granting
      Lender shall serve as the administrative agent and attorney-in-fact for its
      SPC
      and shall on behalf of its SPC receive any and all payments made for the benefit
      of such SPC and take all actions hereunder to the extent, if any, such SPC
      shall
      have any rights hereunder. In addition, notwithstanding anything to the contrary
      contained in this Agreement any SPC may with notice to, but without the prior
      written consent of any other party hereto, assign all or a portion of its
      interest in any Advances to the Granting Lender. This Section may not be amended
      without the prior written consent of each Granting Lender, all or any part
      of
      whose Advance is being funded by an SPC at the time of such
      amendment.

     

    SECTION
      8.08.   Waiver
      of Consequential Damages.

     

    To
      the
      fullest extent permitted by applicable law, the Borrower shall not assert,
      and
      hereby waives, any claim against any Indemnified Person, on any theory of
      liability, for special, indirect, consequential or punitive damages (as opposed
      to direct or actual damages) arising out of, in connection with, or as a result
      of, this Agreement, any other Loan Document or any agreement or instrument
      contemplated hereby, the transactions contemplated hereby or thereby, any
      Extension of Credit or the use of proceeds thereof. No Indemnified Person
      referred to in Section 8.04(h) shall be liable for any damages arising from
      the
      use by unintended recipients of any information or other materials distributed
      by it through telecommunications, electronic or other information transmission
      systems in connection with this Agreement or the other Loan Documents or the
      transactions contemplated hereby or thereby.

     

    SECTION
      8.09.   USA
      PATRIOT Act Notice.

     

    Each
      Lender that is subject to the Patriot Act, each Issuing Bank and the
      Administration Agent (for itself and not on behalf of any Lender) hereby
      notifies the Borrower pursuant to the requirements of the Patriot Act that
      it is
      required to obtain, verify and record information that identifies the Borrower,
      which information includes the name and address of the Borrower and other
      information that will allow such Lender, such Issuing Bank or the Administrative
      Agent, as applicable, to identify the Borrower in accordance with the Patriot
      Act.

     

    SECTION
      8.10.   Tax
      Disclosure.

     

    Notwithstanding
      any agreement between the parties hereto to the contrary, the Borrower (and
      each
      employee, representative, or other agent of the Borrower) may disclose to any
      and all other Persons, without limitation of any kind, the tax treatment and
      tax
      structure of this Agreement and all materials of any kind (including opinions
      or
      other tax analyses) that are provided to the Borrower relating to such tax
      treatment and tax structure; provided,
      however,
      that
      such disclosure may not be made to the extent required to be kept confidential
      to comply with any applicable federal or state securities laws.

     

    SECTION
      8.11.   Governing
      Law. 

     

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

     

    SECTION
      8.12.   WAIVER
      OF JURY TRIAL. 

     

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

     

    SECTION
      8.13.   Execution
      in Counterparts. 

     

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

     

    SECTION
      8.14.   Severability. 

     

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

     

    SECTION
      8.15.   Headings. 

     

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

     

    SECTION
      8.16.   Entire
      Agreement. 

     

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

     

    

     

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

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

    

    

    PROGRESS
      ENERGY, INC.

    

    

    By
/s/
      Thomas R. Sullivan

         
      Thomas R. Sullivan

          Treasurer

     

     

    

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    CITIBANK,
      N.A., as Administrative Agent 

    and
      Lender

    

    

    By
/s/
      Stuart J. Glen

         
      Stuart J. Glen

         
Director

     

     

    

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    JPMORGAN
      CHASE BANK, N.A.

    

    

    By
/s/
      Thomas L. Casey

         
      Thomas L. Casey

          Vice
      President

     

     

    

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    SUNTRUST
      BANK,

    as
      Initial Issuing Bank and Lender

    

    

    By
/s/
      Kelley B. Brandenburg

         
Kelley
      B.
      Brandenburg

         
Vice
      President

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    THE
      BANK
      OF TOKYO-MITSUBISHI

    UFJ,
      LTD., NEW YORK BRANCH

    

    

    By
/s/
      Linda Tam

         
      Linda Tam

         
Authorized
      Signatory

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    BARCLAYS
      BANK PLC

    

    

    By
/s/
      Sydney G. Dennis

         
Sydney
      G.
      Dennis

         
      Director

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    BANK
      OF
      AMERICA, N.A.

    

    

    By
/s/
      Gabriela Millhorn

         
Gabriela
      Millhorn

         
Senior
      Vice
      President

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    THE
      ROYAL
      BANK OF SCOTLAND PLC

    

    

    By
/s/
      Emily Freedman

         
Emily
      Freedman

         
      Vice President

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    WACHOVIA
      BANK, N.A.

    

    

    By
/s/
      Lawrence N. Gross

         
      Lawrence N. Gross

         
Assistant
      Vice
      President

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    BNP
      PARIBAS

    

    

    By
/s/
      Mark A. Renaud

         
      Mark A. Renaud

         
      Managing Director

     

    By
/s/
      Prisca Owens

         
      Prisca Owens

         
      Director

     

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    CALYON
      NEW YORK BRANCH

    

    

    By
/s/
      Dennis Petito

         
      Dennis Petito

         
      Managing Director

     

    By
/s/
      Michael Willis

         
      Michael Willis

         
Vice
      President

     

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    DEUTSCHE
      BANK AG

    NEW
      YORK
      BRANCH

    

    

    By
/s/
      Marcus Tarkington

         
      Marcus Tarkington

         
Director

     

    By
/s/
      Rainer Meier

         
      Rainer Meier

         
      Vice President

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    LEHMAN
      BROTHERS BANK, FSB

    

    

    By
/s/
      Gary T. Taylor

         
      Gary T. Taylor

         
Senior
      Vice
      President

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    UBS
      LOAN
      FINANCE LLC

    

    

    By
/s/
      Richard L. Tavrow

         
Richard
      L.
      Tavrow

         
      Director

     

     

    By
/s/
      Iria R. Otsa

         
      Iria R. Otsa

         
      Associate Director

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    WILLIAM STREET COMMITMENT
      CORPORATION

    

    

    By
/s/
      Mark Walton

         
Mark
      Walton

         
Assistant
      Vice
      President

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

         

        

      

    

    THE
      BANK
      OF NEW YORK

    

    

    By
/s/
      David Sunderwirth

         
      David Sunderwirth

         
Vice
      President

     

     

    
      
        SIGNATURE
          PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        
        

      

      
        
        

        
          

        

      

      
        
        

        S-

        

      

    

    MELLON
      BANK, N.A.

    

    

    By
/s/
      Thomas J. Tarasovich, Jr.

         
      Thomas J. Tarasovich, Jr.

          
Assistant
      Vice
      President

     

     

    

    
      
        
          SIGNATURE
            PAGE TO 2006 PROGRESS ENERGY CREDIT AGREEMENT

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

          

        

      

    

    SCHEDULE
      I

    

    LIST
      OF COMMITMENTS AND APPLICABLE LENDING OFFICES

    

    

    
      	
              Name
                of Bank

            	
              Eurodollar

              Lending
                Office

            	
              Domestic

              Lending
                Office

            	
               

              Commitment

            
	
               

              Citibank,
                N.A.

            	
               

              Two
                Penns Way, Ste. 200

              New
                Castle, Delaware 19720

              Attention:
                Bank Loan Syndications

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $141,000,000

            
	
               

              JPMorgan
                Chase Bank, N.A.

            	
              1111
                Fannin - 10

              Houston,
                TX 77002

              Attention:
                Kelly Collins, Account Manager

              Telephone:
                713.750.2530

              Telecopier:
                713.427.6307

               

              Email:
                kelly.collins@jpmchase.com

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $141,000,000

            
	
               

              The
                Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch

            	
              BTM
                Information Services, Inc.

              c/o
                The Bank of Tokyo-Mitsubishi, Ltd., NY Branch

              1251
                Avenue of the Americas, 12th
                Floor

              New
                York, NY 10020-1104

              Attention:
                Rolando Uy, AVP, Loan Operations Dept.

              Telephone:
                201.413.8570

              Telecopier:
                201.521.2304 

              Email:
                N/A

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $120,000,000

            
	
               

              Barclays
                Bank PLC

            	
               

              200
                Park Avenue

              New
                York, NY 10166

              Attention:

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $100,000,000

            
	
               

              Bank
                of America, N.A.

            	
               

              100
                N. Tryon St.

              NC1-007-13-13

              Charlotte,
                NC 28255

              Attention:
                Jacqueline Archuleta

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $98,000,000

            
	
               

              The
                Royal Bank of Scotland plc

            	
               

              101
                Park Avenue

              New
                York, NY 10178

              Attention:
                Li Yao

              Telephone:
                212.401.1335

              Telecopier:
                212.401.1494

              E-Mail:
                LiYao.Li@rbos.com

               

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $92,000,000

            
	
               

              Wachovia
                Bank, N.A.

            	
               

              Wachovia
                Bank

              3
                Bishops Gate

              London

              EC2N-0000

              GBR

            	
               

              201
                South College Street

              Mail
                Code: CP-8, NC0680

              Charlotte,
                NC 28288-0680

              Attention:
                Brad Riggenbach

              Telephone:
                704-715-8946

              Telecopier:
                704-383-0288/0835

              E-Mail:
                bradley.rigge nbach@wachovia.com

            	
               

              $53,000,000

            
	
               

              SunTrust
                Bank

            	
               

              SunTrust
                Bank

              Mail
                Code 1929

              303
                Peachtree Street, 10th
                Floor

              Atlanta,
                GA 30308

              Attn:
                Tina Marie Edwards

              Telephone:
                404-588-8660

              Telecopier:
                404-588-4402

              Email:

              tinamarie.edwards@suntrust.com

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $50,000,000

            
	
               

              BNP
                Paribas

            	
               

              787
                Seventh Avenue

              New
                York, NY 10019

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $50,000,000

            
	
               

              Calyon
                New York Branch 

            	
               

              1301
                Avenue of the Americas

              New
                York, NY 10019

              Attention:
                David Gener

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $50,000,000

            
	
               

              Deutsche
                Bank AG New York Branch

            	
               

              60
                Wall Street, 11th
                Floor

              New
                York, NY 10005

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $50,000,000

            
	
               

              Lehman
                Brothers Bank, FSB

            	
               

              745
                7th
                Avenue, 16th
                Floor

              New
                York, NY 10005

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $50,000,000

            
	
               

              UBS
                Loan Finance LLC 

            	
               

              677
                Washington Boulevard

              Stamford,
                CT 06901

              Attention:
                Marie Haddad

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $50,000,000

            
	
               

              William
                Street Commitment Corporation

            	
               

              85
                Broad Street, 6th
                Floor

              New
                York, NY 

              Attention:
                Philip F. Green

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $50,000,000

            
	
               

              The
                Bank of New York

            	
               

              One
                Wall Street

              19th
                Floor

              New
                York, NY 10286

              Attention:
                Frank Su, Energy Division

              Telephone:
                212.635.7532

              Telecopier:
                212.635.7552 

              Email:
                fsu@bankofny.com 

            	
               

              Same
                as Eurodollar Lending Office

            	
               

              $25,000,000

            
	
               

              Mellon
                Bank, N.A.

            	
               

              One
                Mellon Center 151-4530

              Pittsburgh,
                PA 15258

              Attention:
                Richard A. Matthews

            	
               

              Same
                as Eurodollar Lending Office 

            	
               

              $10,000,000

            

    

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

          

        

      

    

    SCHEDULE
      II

    

    ADOPTED
      LETTERS OF CREDIT

    

    
      	
              ISSUING
                BANK: SUNTRUST
                BANK

            
	
              BORROWER:
                PROGRESS
                ENERGY, INC.

            
	 
	
              Letter
                of Credit Reference

            	
              Letter
                of Credit Face Amount

            	
              Expiry
                Date

            
	 	 	 
	
              F840430

            	
              $16,300,000.00

            	
              1/31/2007

            
	
              F840892

            	
              $395,000.00

            	
              2/25/2007

            
	
              F840893

            	
              $80,000.00

            	
              1/12/2007

            
	
              F841182

            	
              $1,350,000.00

            	
              5/1/2007

            
	
              F841469

            	
              $250,000.00

            	
              6/24/2007

            
	
              F841643

            	
              $500,000.00

            	
              7/31/2006

            
	
              F841697

            	
              $1,000,000.00

            	
              7/31/2006

            
	
              F841863

            	
              $1,250,000.00

            	
              9/1/2006

            
	
              F841910

            	
              $1,800,000.00

            	
              9/15/2006

            
	
              F841916

            	
              $1,800,000.00

            	
              9/15/2006

            
	
              F842084

            	
              $175,000.00

            	
              10/31/2006

            
	
              F842190

            	
              $50,000.00

            	
              11/21/2006

            
	
              F842197

            	
              $750,000.00

            	
              11/13/2006

            
	
              F842246

            	
              $100,000.00

            	
              11/8/2006

            
	
              F842334

            	
              $2,800,000.00

            	
              11/8/2006

            
	
              F842336

            	
              $3,072,930.00

            	
              11/8/2006

            
	
              F843042

            	
              $318,000.00

            	
              11/8/2006

            
	
              F843225

            	
              $175,000.00

            	
              11/8/2006

            
	
              F844059

            	
              $575,966.00

            	
              11/1/2006

            
	
              F844115

            	
              $378,978.00

            	
              12/1/2006

            
	
              F848138

            	
              $11,325,000.00

            	
              10/1/2007

            
	
              F848139

            	
              $11,287,500.00

            	
              10/1/2007

            
	
              F848307

            	
              $16,350,000.00

            	
              10/1/2007

            

    

    

    

    

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

          

        

      

    

    EXHIBIT
      A-1

    Form
      of Notice of Borrowing

    

    NOTICE
      OF
      BORROWING

    

    [Date]

    

    

    Citibank,
      N.A., as Administrative Agent

    for
      the
      Lenders parties to the 

    Agreement
      referred to below

    Two
      Penns
      Way, Suite 200

    New
      Castle, Delaware 19720

    

    Attention:
      Bank Loan Syndications

    

    Ladies
      and Gentlemen:

     

    The
      undersigned, Progress Energy, Inc., refers to the Credit Agreement, dated as
      of
      May 3, 2006 (the “Credit
      Agreement”,
      the
      terms defined therein being used herein as therein defined), among the
      undersigned, the Lenders thereunder, Citibank, N.A., as Administrative Agent
      for
      the Lenders, and the Issuing Banks thereunder, and hereby gives you notice
      pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby
      requests a Borrowing under the Credit Agreement, and in that connection sets
      forth below the information relating to such Borrowing (the “Proposed
      Borrowing”)
      as
      required by Section 2.02(a) of the Agreement:

     

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

     

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

     

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

     

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

     

    

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

    

    (v)  the
      representations and warranties contained in Section 4.01 (other than the last
      sentence of Section 4.01(e) and Section 4.01(f)) of the Credit Agreement are
      correct, before and after giving effect to the Proposed Borrowing and to the
      application of the proceeds therefrom, as though made on and as of such date;
      and (ii) no event has occurred and is continuing, or would result from such
      Proposed Borrowing or from the application of the proceeds therefrom, that
      constitutes an Event of Default or would constitute an Event of Default but
      for
      the requirement that notice be given or time elapse or both.

     

    Very
      truly yours,

    

    PROGRESS
      ENERGY, INC.

    

    

    By      

    Name:

    Title:

    

    
      
        
          -

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

          

        

      

    

    EXHIBIT
      A-2

    Form
      of Notice of Conversion

    

    NOTICE
      OF
      CONVERSION

    

    

    

    [Date]

    

    

    Citibank,
      N.A., as Administrative Agent

    for
      the
      Lenders parties to the 

    Agreement
      referred to below

    Two
      Penns
      Way, Suite 200

    New
      Castle, Delaware 19720

    

    Attention:
      Bank Loan Syndications

    

    

    

    Ladies
      and Gentlemen:

     

    The
      undersigned, Progress Energy, Inc., refers to the Credit Agreement, dated as
      of
      May 3, 2006 (the “Credit
      Agreement”,
      the
      terms defined therein being used herein as therein defined), among the
      undersigned, the Lenders thereunder, Citibank, N.A., as Administrative Agent
      for
      the Lenders, and SunTrust Bank, and the Issuing Banks thereunder, and hereby
      gives you notice pursuant to Section 2.09 of the Credit Agreement that the
      undersigned hereby requests a Conversion under the Credit Agreement, and in
      that
      connection sets forth the terms on which such Conversion (the “Proposed
      Conversion”)
      is
      requested to be made:

     

    

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

     

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

     

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

     

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

     

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

     

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

     

    Very
      truly yours,

    

    PROGRESS
      ENERGY, INC.

    

    

    

    By      

    Name:

    Title:

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      B

    Form
      of Assignment and Acceptance

    

    ASSIGNMENT
      AND ACCEPTANCE

    

    Dated
                              
      ,
      20___

    

    

    

    Reference
      is made to the Credit Agreement, dated as of May 3, 2006 (as amended, modified
      and supplemented from time to time, the “Credit
      Agreement”,
      the
      terms defined therein being used herein as therein defined), among Progress
      Energy, Inc., the Lenders (as defined in the Credit Agreement) thereunder,
      Citibank, N.A., as Administrative Agent for the Lenders thereunder (the
“Administrative
      Agent”)
      and
      the Issuing Banks thereunder. 

     

                   
      (the
“Assignor”)
      and
                           
       (the
      “Assignee”)
      agree
      as follows:

     

    1. The
      Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
      purchases and assumes from the Assignor, that interest in and to all of the
      Assignor’s rights and obligations under the Credit Agreement as of the date
      hereof that represents the percentage interest specified on Schedule 1 of all
      outstanding rights and obligations under the Credit Agreement, including,
      without limitation, such interest in the Assignor’s Commitment (to the extent it
      has not been terminated), the Advances owing to the Assignor and,
      to
      the extent permitted by applicable law, all claims, suits, causes of action
      and
      any other right of the Assignor (in its capacity as a Lender) against any
      Person, whether known or unknown, arising under or in connection with the Credit
      Agreement, any other documents or instruments delivered pursuant thereto or
      the
      transactions governed thereby, including but not limited to contract claims,
      tort claims, malpractice claims, statutory claims and all other claims at law
      or
      in equity related to the rights and obligations sold and assigned
      hereby.
      After
      giving effect to such sale and assignment, the Assignee’s Commitment (if any)
      and the amount of the Advances owing to the Assignee will be as set forth in
      Section 2 of Schedule 1.

     

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

     

    3. The
      Assignee (i) confirms that it has received a copy of the Credit Agreement,
      together with copies of the financial statements referred to in Section 4.01(e)
      thereof and such other documents and information as it has deemed appropriate
      to
      make its own credit analysis and decision to enter into this Assignment and
      Acceptance; (ii) agrees that it will, independently and without reliance upon
      the Administrative Agent, the Assignor or any other Lender and based on such
      documents and information as it shall deem appropriate at the time, continue
      to
      make its own credit decisions in taking or not taking action under the Credit
      Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
      authorizes the Administrative Agent to take such action as agent on its behalf
      and to exercise such powers under the Credit Agreement as are delegated to
      the
      Administrative Agent by the terms thereof, together with such powers as are
      reasonably incidental thereto; (v) agrees that it will perform in accordance
      with their terms all of the obligations that by the terms of the Credit
      Agreement are required to be performed by it as a Lender; [and] (vi) specifies
      as its Domestic Lending Office (and address for notices) and Eurodollar Lending
      Office the offices set forth beneath its name on the signature pages hereof
      [and
      (vii) attaches the forms prescribed by the Internal Revenue Service of the
      United States certifying as to the Assignee’s status for purposes of determining
      exemption from United States withholding taxes with respect to all payments
      to
      be made to the Assignee under the Credit Agreement or such other documents
      as
      are necessary to indicate that all such payments are subject to such rates
      at a
      rate reduced by an applicable tax treaty].1 

     

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

     

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

     

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

     

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

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK.]

    

     

    

      

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

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

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

     

    

     

    [NAME
      OF
      ASSIGNOR]                     [NAME
      OF
      ASSIGNEE]

     

    

     

    By______________________                 By______________________

    Name:                                   Name:

    Title:                                    
      Title:

    

    

    

    Domestic
      Lending Office (and

    address
      for notices):

    [Address]

    

    

    Eurodollar
      Lending Office:

    [Address]

    Accepted
      this              
       day
      of                   
      ,
      20__ 

     

    CITIBANK,
      N.A., as Administrative Agent

    

    

    By_________________________

    Name:
      

    Title:
      

    

    SUNTRUST
      BANK, as Issuing Bank

    

    

    By_________________________

    Name:
      

    Title:
      

    

    PROGRESS
      ENERGY, INC.2 

    

    

    By__________________________

    Name:
      

    Title:
      

    

     

    

      

      
        2 If
          required.

      

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    SCHEDULE
      1

     

    TO

     

    ASSIGNMENT
      AND ACCEPTANCE

     

    

    

    Dated
                                             
      ,
      20____

    

    

    Section
      1

    

    Percentage
      Interest Assigned:                   
      %

    

    Section
      2

    

    Assignee’s
      Commitment:    $                   
      

    

    Aggregate
      Outstanding Principal Amount of

    Advances
      owing to Assignee: $                      
      

    

    

    Section
      3

    

    Effective
      Date3 

    

    

    

      

      
        3
          This
          date
          should be no earlier than the date of acceptance by the Administrative
          Agent.

      

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    

     EXHIBIT
      C-1

    Form
      of Opinion of General Counsel to 

    Progress
      Energy Service Company, LLC

    

    

    

    [DATE]

    

    

    

    To
      each
      of the Lenders parties to the Credit

    Agreement
      referred to below, Citibank, N.A.,

    as
      Administrative Agent, and the Issuing

    Banks
      thereunder

    

    Re: Progress
      Energy, Inc.

    

    Ladies
      and Gentlemen:

    

    This
      opinion is furnished to you by me as General Counsel to Progress Energy Service
      Company, LLC pursuant to Section 3.01(g) of the Credit Agreement, dated as
      of
      May 3, 2006 (the “Credit
      Agreement”,
      the
      terms defined therein being used herein as therein defined), among Progress
      Energy, Inc. (the “Borrower”),
      certain lenders thereunder (the “Lenders”),
      Citibank, N.A., as Administrative Agent for the Lenders, and the Issuing Banks
      thereunder.

     

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

     

    (1) The
      Credit Agreement.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    4. No
      authorization, approval or other action by, and no notice to or filing with
      any
      governmental authority or regulatory body is required for the due execution,
      delivery and performance by the Borrower of the Credit Agreement, other than
      a
      notification to the North Carolina Utilities Commission, which has been timely
      made, and a filing of certain financing orders previously issued by the U.S.
      Securities and Exchange Commission with the Federal Energy Regulatory
      Commission, which has been timely made.

     

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

     

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

     

    The
      foregoing opinions are solely for your benefit and may not be relied upon by
      any
      other Person other than (i) any other Person that may become a Lender or Issuing
      Bank under the Credit Agreement after the date hereof and (ii) Hunton &
Williams LLP and King & Spalding LLP, in connection with their respective
      opinions delivered on the date hereof under Section 3.01 of the Credit
      Agreement. This letter speaks only as of the date hereof and may not be relied
      on by any person with respect to any date after the date hereof. I do not
      undertake to advise you of any changes in the opinions expressed herein from
      matters that may hereafter arise or be brought to my attention.

     

    

    Very
      truly yours,

    

    

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      C-2

    Form
      of Opinion of Special Counsel for the Borrower

    

    

    

    

    [DATE]

    

    

    

    To
      each
      of the Lenders parties to the Credit

    Agreement
      referred to below, Citibank, N.A.,

    as
      Administrative Agent, and the Issuing

     Banks
      thereunder

    

    Re: Progress
      Energy, Inc.

    

    Ladies
      and Gentlemen:

    

    This
      opinion is furnished to you by us as counsel for Progress Energy, Inc. (the
      “Borrower”)
      pursuant to Section 3.01(g) of the Credit Agreement, dated as of May 3, 2006
      (the “Credit
      Agreement”,
      the
      terms defined therein being used herein as therein defined), among Progress
      Energy, Inc., certain lenders thereunder (the “Lenders”),
      Citibank, N.A., as Administrative Agent for the Lenders, and the Issuing Banks
      thereunder.

     

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

     

    (1) The
      Credit Agreement.

     

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

     

    (3) The
      opinion letter of even date herewith, addressed to you by Frank A. Schiller,
      counsel to the Borrower and delivered in connection with the transactions
      contemplated by the Credit Agreement (the “Company
      Opinion Letter”).

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    The
      foregoing opinion is solely for your benefit and may not be relied upon by
      any
      other Person other than any other Person that may become a Lender or Issuing
      Bank under the Credit Agreement after the date hereof in accordance with the
      provisions thereof. This letter speaks only as of the date hereof and may not
      be
      relied on by any person with respect to any date after the date hereof. We
      do
      not undertake to advise you of any changes in the opinions expressed herein
      from
      matters that may hereafter arise or be brought to our attention.

     

    

    Very
      truly yours,

    

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      C-3

    FORM
      OF OPINION OF GENERAL COUNSEL TO PROGRESS ENERGY

     SERVICE
      COMPANY, LLC UPON EXTENSION OF THE TERMINATION DATE

    

    ___________
      ___, 20__

    

    

    To
      each
      of the Lenders and Issuing Banks parties

    to
      the
      Credit Agreement referred to below and

    to
      Citibank, N.A., as Administrative Agent 

    

    Re:
      Progress Energy, Inc.

    

    Ladies
      and Gentlemen:

    

    This
      opinion is furnished to you by me as General Counsel to Progress Energy Service
      Company, LLC in connection with the extension of the Termination Date until
      ________ __, _____ under Section 2.15 (the “Extension”)
      of the
      Credit Agreement, dated as of May 3, 2006 (the “Credit
      Agreement”,
      the
      terms defined therein being used herein as therein defined), among Progress
      Energy, Inc. (the “Borrower”),
      certain lenders from time to time parties thereto (the “Lenders”),
      Citibank, N.A., as Administrative Agent for the Lenders, and the Issuing Banks
      thereunder.

     

    In
      connection with the Extension, I have examined:

     

    (1) The
      Credit Agreement.

     

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

     

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

     

    (4) The
      Amended and Restated Articles of Incorporation of the Borrower (the
“Charter”).

     

    (5) The
      By-Laws of the Borrower and all amendments thereto (the “By-Laws”).

     

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

     

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

     

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

     

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

     

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

     

    3. No
      authorization, approval or other action by, and no notice to or filing with
      any
      governmental authority or regulatory body is required for the due execution,
      delivery and performance, by the Borrower of the Credit Agreement, after giving
      effect to the Extension, other than a
      notification to the North Carolina Utilities Commission, which has been timely
      made, and a filing of certain financing orders previously issued by the U.S.
      Securities and Exchange Commission with the Federal Energy Regulatory
      Commission, which has been timely made.

     

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

     

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

     

    The
      foregoing opinions are solely for your benefit and may not be relied upon by
      any
      other Person other than any other Person that may become a Lender or Issuing
      Bank under the Credit Agreement after the date hereof and Hunton & Williams
      LLP, in connection with their opinion delivered on the date hereof under Section
      2.15(c) of the Credit Agreement. This letter speaks only as of the date hereof
      and may not be relied on by any person with respect to any date after the date
      hereof. I do not undertake to advise you of any changes in the opinions
      expressed herein from matters that may hereafter arise or be brought to my
      attention.

     

    

    Very
      truly yours, 

    

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      C-4

    

    FORM
      OF OPINION OF SPECIAL COUNSEL TO THE BORROWER UPON

     EXTENSION
      OF THE TERMINATION DATE

    

    

    ___________
      ___, 20__

    

    

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

    

    Re:
      Progress Energy, Inc.

    

    Ladies
      and Gentlemen:

    

    This
      opinion is furnished to you by us as counsel for Progress Energy, Inc. (the
      “Borrower”)
      in
      connection with the extension of the Termination Date until May [ ], 2012
      under Section 2.15 (the “Extension”)
      of the
      Credit Agreement, dated as of May 3, 2006 (the “Credit
      Agreement”,
      the
      terms defined therein being used herein as therein defined), among Progress
      Energy, Inc., certain lenders from time to time parties thereto (the
“Lenders”),
      Citibank, N.A., as Administrative Agent for the Lenders and the Issuing Banks
      thereunder.

     

    In
      connection with the Extension, we have examined:

     

    (1) The
      Credit Agreement.

     

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

     

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

     

    (4) The
      opinion letter of even date herewith, addressed to you by __________, counsel
      to
      the Borrower and delivered in connection with the transactions contemplated
      by
      the Credit Agreement (the “Borrower
      Opinion Letter”).

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    The
      foregoing opinion is solely for your benefit and may not be relied upon by
      any
      other Person other than any other Person that may become a Lender or Issuing
      Bank under the Credit Agreement after the date hereof in accordance with the
      provisions thereof. This letter speaks only as of the date hereof and may not
      be
      relied on by any person with respect to any date after the date hereof. We
      do
      not undertake to advise you of any changes in the opinions expressed herein
      from
      matters that may hereafter arise or be brought to our attention.

     

    

    Very
      truly yours, 

    

    

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      D

    

    FORM
      OF OPINION OF COUNSEL

    TO
      THE ADMINISTRATIVE AGENT

    

    

    

    May
      3,
      2006

    

    

    To
      Citibank, N.A. (“Citibank”),
      as
      Administrative Agent for the Lenders referred to below, and to each of the
      Lenders and Issuing Banks parties to the Credit Agreement referred to
      below

    

    

    Re: Progress
      Energy, Inc.

    

    

    Ladies
      and Gentlemen:

    

    We
      have
      acted as counsel to the Administrative Agent in connection with the preparation,
      execution and delivery of the Credit Agreement, dated as of May 3, 2006 (the
      “Credit
      Agreement”,
      the
      terms defined therein being used herein as therein defined), among Progress
      Energy, Inc., certain Lenders from time to time parties thereto, Citibank,
      N.A.,
      as Administrative Agent for the Lenders, and SunTrust Bank, as initial Issuing
      Bank thereunder.

     

    In
      this
      connection, we have examined the following documents:

     

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

     

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

     

    In
      our
      examination of the documents referred to above, we have assumed the authenticity
      of all such documents submitted to us as originals, the genuineness of all
      signatures, the due authority of the parties executing such documents and the
      conformity to the originals of all such documents submitted to us as copies.
      We
      have also assumed that you have independently evaluated, and are satisfied
      with,
      the creditworthiness of the Borrower and the business terms reflected in the
      Credit Agreement. We have relied, as to factual matters, on the documents we
      have examined. We note that we do not represent the Borrower and, accordingly,
      are not privy to the nature or character of its business. Accordingly, we have
      assumed that the borrower is subject only to statutes, rules, regulations,
      judgments, orders and other requirements of law general applicability to
      corporations doing business in the State of New York.

     

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

     

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

     

    Our
      opinion is subject to the following qualifications:

     

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

     

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

     

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

     

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

     

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

     

    The
      foregoing opinion is solely for your benefit and may not be relied upon by
      any
      other person or entity, other than any Person that may become a Lender or
      Issuing Bank after the date hereof.

     

    Very
      truly yours,

     

    

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      E

    

    FORM
      OF REQUEST FOR EXTENSION OF 

    THE
      TERMINATION DATE

    

    

    CREDIT
      AGREEMENT

    

    dated
      as
      of May 3, 2006

    ___________________________________

    

    PROGRESS
      ENERGY, INC.

    (Borrower)

    

    AND

    

    THE
      BANKS
      LISTED ON THE SIGNATURE PAGES HEREOF

    (Banks)

    

    and

    

    CITIBANK,
      N.A.

    (Administrative
      Agent)

    

    and

    

    SUNTRUST
      BANK

    (Issuing
      Bank)

    

     

    

    

    Request
      for Extension of Termination Date

    

    

    I,
      [______________], [_________________] of Progress Energy, Inc., do hereby
      request that the Termination Date of the Credit Agreement, dated as of May
      3,
      2006 (the “Credit
      Agreement”,
      the
      terms defined therein being used herein as therein defined), among Progress
      Energy, Inc., certain Lenders from time to time parties thereto, Citibank,
      N.A.,
      as Administrative Agent for the Lenders, and the Issuing Banks thereunder,
      be
      extended for a one-year period (hereinafter the “Proposed
      Extension”)
      pursuant to Section 2.15 of the Credit Agreement and, in connection therewith,
      hereby certify as follows: 

     

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

     

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

     

    Witness
      my hand this ______ day of _________, ____.

     

    ________________________

    [________________]

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

    EXHIBIT
      F

    

    FORM
      OF COMPLIANCE CERTIFICATE

    

    [Letterhead
      of Progress Energy, Inc.]

    

    

    

    [Date]

    

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

    

    Progress
      Energy, Inc.

    

    Ladies
      and Gentlemen:

    

    This
      compliance certificate is furnished to you pursuant to Section 5.01(i)(ii)
      of
      the Credit Agreement, dated as of May 3, 2006 (the “Credit
      Agreement”),
      among
Progress
      Energy, Inc., a North Carolina corporation (the “Borrower”),
      the
      lenders parties thereto (the “Lenders”),
      Citibank, N.A. (“Citibank”),
      as
      administrative agent (the “Administrative
      Agent”)
      for the
      Lenders, and the letter of credit issuing banks parties thereto.
      Terms
      defined in the Credit Agreement are used herein as therein defined.

    

    1. As
      of
      [_______], 20__, the ratio of Consolidated Indebtedness of the Borrower and
      its
      Subsidiaries to Total Capitalization was _____ to 1.0, calculated, in accordance
      with Section 5.01(j) of the Credit Agreement, as follows:

    

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

    

    
      	
              Current
                Indebtedness:

              [List
                all forms of current Debt]

            	 	
              Amount

            
	
              __________________________________

            	 	
              $

            
	
              __________________________________

            	 	 
	
              __________________________________

            	 	 
	
              __________________________________

            	 	
              __________

            
	
              Total
                current Indebtedness 

            	 	
              $__________

            
	 	 	 
	
              Long-term
                Indebtedness : 

              [list
                all forms of long-term Indebtedness ]

            	 	
              Amount

            
	
              __________________________________

            	 	
              $

            
	
              __________________________________

            	 	 
	
              __________________________________

            	 	 
	
              __________________________________

            	 	 
	
              Total
                long-term Indebtedness 

            	 	
              $__________

            
	 	 	 
	
              Total
                Indebtedness (current Indebtedness plus
                long-term Indebtedness )

            	 	
              $__________

            

    

    

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

    

    
      	 	
              Consolidated
                Indebtedness

            	
              $

            
	 	 	 
	 	
              Preferred
                Stock

            	
              $

            
	 	 	 
	 	
              Common
                Stock

            	
              $

            
	 	 	 
	 	
              Retained
                Earnings

            	
              $__________

            

    

    

    2. As
      of
      [_______], 20__, and as of the date hereof, no Event of Default and no event
      that, with the giving of notice or lapse of time or both, will constitute an
      Event of Default, has occurred and in continuing.

    

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

    

    

    

    Very
      truly yours,

    

    PROGRESS
      ENERGY, INC.

    

    

    

    By______________________________________

    Name:
      

    Title:

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