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WWW.EXFILE.COM, INC. -- 14358 -- MEDIS TECHNOLOGIES LTD. -- EXHIBIT 10.1 TO FORM 10-Q

     

    EXHIBIT
      10.1

    CONSULTANCY
      AGREEMENT

     

    THIS
      CONSULTANCY AGREEMENT ("Agreement") is made as of the 1st day of January, 2003
      between More Energy Ltd. (the “Company") and HT Consultants, Inc. (the
“Consultant”), (together with the Company, the "Parties", and each individually
      a "Party").

     

    W I T N E S S E T H:

     

    WHEREAS,
      the Company desires to engage the services of the Consultant to advise the
      Company on management, financial and business development of the
      Company;

     

    WHEREAS,
      the Consultant is willing and able to undertake engagement with the Company
      subject to the terms and conditions stated herein,

     

    NOW,
      THEREFORE, the Company and the Consultant agree as follows:

     

    
      	1.	
              Services.
                

            

    

     

    (a)    The
      services to be provided by the Consultant hereunder (the "Services") shall
      be:

     

    (i)     
      to
      advise
      and assist the company on management and business development policy and issues;
      and

     

    (ii)    
to
      advise
      and assist the company in the area of financing; and

     

    (iii)    to
      advise
      and assist the company in managing its relationship with legal, financial and
      business advisers; and

     

    (iii)    to
      provide such additional services relating to the management of the company
      as
      the Company may request from time to time, (the "Additional Services"), as
      mutually agreed between the Company and the Consultant.

     

    (b)    It
      is
      expressly understood that the Company is not engaging the Consultant to provide
      legal advice or perform legal services and that the Consultant shall not serve
      as the Company's legal advisor or attorney in any capacity. Furthermore the
      Consultant's relationship with the Company is as an independent contractor
      and
      not as an employee and the parties do not intend to create an employee employer
      relationship as a result of this Agreement. 

     

    
      	2.	
              Term.
                This Agreement shall have an initial term (the "Base Term") of twelve
                (12)
                months, commencing on the date first written above. The Base Term
                shall be
                automatically extended for additional twelve (12) month periods unless
                terminated by a written executed letter of termination by either
                Party
                thirty days prior to the end of the respective term period. The Base
                Term
                and any renewal terms are collectively referred to herein as the
                "Term".
                

            

    

     

    
      	3.	
              Compensation.
                During the Term, the Company shall pay the Consultant in accordance
                with
                the following:

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (a)    Retainer.
      The Company shall pay to the Consultant a monthly retainer equal to Twelve
      thousands US Dollars (US$ 12,000) (the "Retainer"). The amount of the Retainer
      shall be paid monthly prorated for any partial calendar month of the Term.
      Payment of the Retainer to the Consultant shall be made net thirty days from
      the
      submission of invoices by the Consultant. 

     

    (b)    Expenses:
      The Company will pay for any business expenses incurred by the Consultant n
      the
      performance of his Consulting services hereunder. The Consultant will be
      entitled to a cellular phone on account of the Company as well as a Company
      credit card to be used only in the case of foreign travel for the Company.
      The
      Consultant shall travel business class when traveling abroad for the
      Company.

     

    (c)    The
      Company shall also pay to the Consultant any applicable Value Added Tax against
      appropriate documentation.

     

    
      	4.	
              Termination
                by the Consultant. In the event of the failure in any material way
                of the
                Company to fulfill any of its material obligations under this Agreement
                (hereinafter "Breach"), the Consultant, after furnishing the Company
                with
                thirty (30) days prior written notice and the opportunity to cure,
                shall be entitled to terminate this Agreement (and thus terminate
                the
                Term) in the absence of any cure by the
                Company.

            

    

     

    
      	5.	
              Termination
                by the Company. During the Term or an extended term, the Company
                shall be
                entitled, by thirty days notice in writing, to terminate this Agreement
                for any reason whereupon this Agreement shall terminate thereafter
                immediately and the Company shall no longer be obligated to make
                further
                payments to the Consultant except for any accrued and unpaid amounts
                due
                to the Consultant prior to such date.

            

    

     

    
      	6.	
              Company
                Matters, Restrictive Covenants.

            

    

     

    (a)    Non-Compete.
      The Consultant hereby acknowledges and recognizes that the services the
      Consultant is to render are of a special character with a unique value to the
      Company, the loss of which cannot adequately be compensated by damages in an
      action at law. In light of the foregoing, and because of the proprietary or
      confidential information to be obtained by or disclosed to the Consultant,
      the
      Consultant covenants and agrees that during the term of this Agreement and
      for
      one year thereafter, he shall not engage in or assist others to engage in any
      activity which is competitive with the business of the Company or its
      affiliates.

     

    (b)    Confidentiality.
      The Consultant and the Company shall not disclose to any other Party the terms
      of this Agreement, without the prior written consent of the Company or as
      otherwise required by law.

     

    
      	7.	
              Miscellaneous.

            

    

     

    (a)    Entire
      Agreement, Binding Effect. This Agreement sets forth the entire understanding
      between the Parties as to the subject matter of this Agreement and merges and
      supersedes all prior agreements, commitments, representations, writings and
      discussions between them; and neither of the Parties shall be bound by any
      obligations, conditions, warranties or representations with respect to the
      

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    subject
      matter of this Agreement, other than as expressly provided in this Agreement
      or
      as duly set forth on or subsequent to the date hereof in writing and signed
      by
      the proper and duly authorized representative of the Party to be bound hereby.
      This Agreement is binding on the Consultant and on the Company and their
      respective successors and assigns (whether by assignment, by operation of law
      or
      otherwise).

     

    (b)    Severability.
      The Parties hereby agree that if any particular provision or section of this
      Agreement is adjudicated to be invalid or unenforceable, the remainder of the
      provisions and sections of this Agreement shall not thereby be affected and
      shall be given full effect, without regard to the invalid or unenforceable
      provisions.

     

    (c)    Notices.
      All notices, approvals, consents, requests or demands required or permitted
      to
      be given under this Agreement shall be in writing and shall be deemed
      sufficiently given three business days after being deposited in the mail,
      registered or certified, postage prepaid, on receipt if hand delivered or sent
      by facsimile (answer-back received) or one business day after being given to
      a
      reputable overnight courier and addressed to the Party entitled to receive
      such
      notice at the following address (or other such addresses as the Parties may
      subsequently designate):

     

     

    
      	 	Company: 	More Energy Ltd. 
	 	 	14 Shabazi Street, P.O. Box
              132  
	 	 	Yehud, Israel, 56191
	 	 	Attention: Israel Fisher,
              CFO 
	 	 	 
	 	Consultant: 	HT Consultants Inc. 
	 	 	c/o 805 3rd
              Avenue  
	 	 	NY, NY, 10022 
	 	 	Email:
              jweiss@medisel.co.il 

    

      

    If
      notice
      is given by any other written method, it shall be deemed effective when actually
      received.

     

    (d)    Waivers.
      No Party shall be deemed to have waived any right, power or privilege under
      this
      Agreement or any provisions hereof unless such waiver shall have been duly
      executed in writing and acknowledged by the Party to be charged with such
      waiver. The failure of a Party at any time to insist on performance of any
      of
      the provisions of this Agreement shall in no way be construed to be a waiver
      of
      such provisions, nor in any way to affect the validity of this Agreement or
      any
      part hereof. No waiver of any breach of this Agreement shall be held to be
      a
      waiver of any other subsequent breach.

     

    (e)    Governing
      Law; Jurisdiction. This Agreement shall be governed by, and construed and
      enforced in accordance with, the laws of the State of Israel.

     

    (f)    Counterparts.
      This Agreement may be executed in multiple counterparts, each of which shall
      be
      deemed to be an original, and all such counterparts shall constitute but one
      instrument

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Parties have duly executed this Agreement on the date
      first
      written above.

     

    

    HT
      Consultants Inc.

    By:  
      /s/ Jacob Weiss

    
      
        

      

    

    Name:
      Jacob
      Weiss  

    Title:
      President  

    

    

    More
      Energy Ltd.

    

    By: 
      /s/ Gennadi Finkelshtain

    
      
        

      

    

    Name:
      Gennadi
      Finkelshtain 

    Title:
      General Manager 

    

    By: 
      /s/ Israel Fisher

      
        

      

    

    Name:
      Israel
      Fisher  

    Title:
      CFO______

     

     

    
      
        
        

      

      
        4Exhibit 10(a)

    Exhibit
      10(a)

    AMENDED
      MANAGEMENT INCENTIVE COMPENSATION PLAN

    OF

    PROGRESS
      ENERGY, INC.

     

     

     

     

     

     

    AS
      AMENDED JANUARY
      1, 2006

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    TABLE
      OF
      CONTENTS

     

     

    
      	 	 	
               Page

            
	 ARTICLE I	 PURPOSE	
               1

            
	 ARTICLE II	 DEFINITIONS	
               1

            
	 ARTICLE III    	 ADMINISTRATION	
               7

            
	 ARTICLE IV    	 PARTICIPATION	
               8

            
	 ARTICLE V	 AWARDS	
               9

            
	 ARTICLE VI    	 DISTRIBUTION AND DEFERRAL OF
              AWARDS	
               11

            
	 ARTICLE VII    	 TERMINATION OF EMPLOYMENT	
               17

            
	 ARTICLE VIII    	 MISCELLANEOUS	
               18

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                

     

     

    ARTICLE
      I

    PURPOSE

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

    The
      Sponsor amends and restates the Plan effective January 1, 2005.

     

    ARTICLE
      II 

    DEFINITIONS

    The
      following definitions are applicable to the Plan:

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

    2.  “Award”:
      The
      benefit payable to a Participant hereunder based upon achievement of the
      Performance Measures.

    3.  “Affiliated
      Entity”:
      Any
      corporation or other entity that is required to be aggregated with the Sponsor
      pursuant to Sections 414(b), (c), (m), or (o) of the Internal Revenue Code
      of
      1986, as amended (the “Code”), but only to the extent required.

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.  “Cause”:
      means:

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

            

    

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

            

    

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

            

    

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

            

    

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

            

    

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

            

    

    6.  “Change
      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 Sponsor approve a plan of complete
                liquidation or winding-up of the Sponsor or an agreement for the
                sale or
                disposition by the Sponsor of all or substantially all of the Sponsor’s
                assets; or

            

    

    
      	(f)  	
              the
                date of any event which the Board determines should constitute a
                Change 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 Compensation Committee
      that
      one of the events set forth in this Section 6 has occurred. Any determination
      that an event described in this Section 6 has occurred shall, if made in good
      faith on the basis of information available at that time, be conclusive and
      binding on the Compensation Committee, the Sponsor, each Affiliated Entity,
      the
      Participant and their Beneficiaries for all purposes of the Plan.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

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

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

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

    11.  “Designated
      Beneficiary”:
      The
      beneficiary designated by the Participant, pursuant to procedures established
      by
      the Human Resources Department of the Company, to receive amounts due to the
      Participant or to exercise any rights of the Participant to the extent permitted
      hereunder in the event of the Participant’s death. If the Participant does not
      make an effective designation, then the Designated Beneficiary will be deemed
      to
      be the Participant's estate.

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

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

    14.  “Effective
      Date”:
      The
      Effective Date of this Plan, as amended, is January 1, 2005.

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

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

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

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

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

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

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    22.  “Retirement”:
      A
      Participant’s termination of employment from the Company on
      or
      after attaining (i) age 65 with 5 years of service, (ii) age 55 with 15 years
      of
      service, (iii) 35 years of service, or (iv) 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 Deferral Account 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 the Plan Deferral Account 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 Deferral
      Account to be made in accordance with the deferral election 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 Deferral Account after December 31, 2005.

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

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

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

    27.  “Unforeseeable
      Emergency”:
      A
      severe financial hardship to the Participant resulting from an illness or
      accident of the Participant, the Participant’s spouse, or a dependent (as
      defined in Section 152(a) of the Code) of the Participant, loss of the
      Participant’s property due to casualty, or other unforeseeable circumstances
      arising as a result of events beyond the control of the
      Participant.

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

    29.  “Year”:
      A
      calendar year.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      III 

    ADMINISTRATION

    The
      Plan
      shall be administered by the Chief Executive Officer of the Sponsor. Except
      as
      otherwise provided herein, the Chief Executive Officer of the Sponsor shall
      have
      sole and complete authority to (i) select the Participants; (ii) establish
      and
      adjust (either before or during the Year) the performance criteria necessary
      for
      a Participant to attain an Award for the Year; (iii) adjust and approve Awards;
      (iv) establish from time to time regulations for the administration of the
      Plan;
      and (v) interpret the Plan and make all determinations deemed necessary or
      advisable for the administration of the Plan, all subject to its express
      provisions. Notwithstanding the foregoing, the Compensation Committee shall
      (a)
      approve the applicable threshold, target and outstanding levels of performance
      for a Performance Measure for the Year; (b) approve the performance criteria
      and
      Awards for all Participants who are members of the Senior Management Committee;
      (c) determine the total payout under the Plan up to a maximum of four percent
      (4%) of the Sponsor’s after-tax income for a relevant Year; and (d) certify to
      the Board that a Change of Control has occurred as provided in Section 5 of
      Article II.

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

     

    ARTICLE
      IV 

    PARTICIPATION

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      V 

    AWARDS

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

    
      	
              Participation

            	
              Target
                Award Opportunities

            
	
              Chief
                Executive Officer of Sponsor*

            	
              85%

            
	
              Chief
                Operating Officer of Sponsor*

            	
              70%

            
	
              Presidents*/Executive
                Vice Presidents*

            	
              55%

            
	
              Senior
                Vice Presidents*

            	
              45%

            
	
              Department
                Heads

            	
              35%

            
	
              Other
                Participants:

              Key
                Managers

              Other
                Managers

            	
               

              25%

              20%

            

    

     

    *Senior
      Management Committee level positions.

     

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

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    Performance
      Level     Payout
      Percentage

                          Outstanding                         
      200%

                         
Target           
100%

                            
      Threshold      50%

     

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

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

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

    6.  Adjustment
      of Award Amount.
      The
      Chief Executive Officer of the Sponsor, in his sole discretion, may adjust
      the
      Award payable to a Participant for the Year based upon management’s
      determination of the performance goals and core skill achievement of the
      Participant, the succession planning leadership rating of the Participant and
      any other applicable performance criteria.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    ARTICLE
      VI 

    DISTRIBUTION
      AND DEFERRAL OF AWARDS

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

    2.  Deferral
      Election.
      A
      Participant may elect to defer the Plan Award he or she has earned for any
      Year
      by completing and submitting a deferral election in a form acceptable to the
      Vice President, Human Resources, by the later of (i) the last day of the
      preceding Year (or such other time as permitted by Section 409A of the Code
      and
      the regulations thereunder), or (ii) the thirtieth (30th) day after first
      becoming eligible to participate in the deferral election provisions of the
      Plan. Such election shall apply to the Participant’s Award, if any, otherwise to
      be paid after the Year during which it was earned. A Participant’s deferral
      election may apply to 100%, 75%, 50%, or 25% of the Plan Award; provided,
      however, that in no event shall the amount deferred be less than
      $1,000.

    The
      election to defer shall be irrevocable as to the Award earned during the
      particular Year.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

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

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

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

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

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

    8.  Termination
      of Employment/Payment of Deferral.
      Notwithstanding the foregoing, if a Participant terminates employment by reason
      other than death or Retirement, full payment of all amounts due to the
      Participant shall be made on the first day of the month following the date
      of
      termination, or as soon as practical thereafter. However, 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 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). Incentive Performance Units shall be subject
      to forfeiture to the extent provided in Section 4.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.  Payments
      Due to Unforeseeable Emergency.
      In the
      event of an Unforeseeable Emergency, a Participant may apply to receive a
      distribution earlier than initially elected. The Chief Executive Officer of
      Sponsor or his designee may, in his sole discretion, either approve or deny
      the
      request. The determination made by the Chief Executive Officer of Sponsor will
      be final and binding on all parties. If the request is granted, the 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).
      Incentive Performance Units shall not be subject to early distribution under
      this Section 9 until five years from March 15 of the Year in which payment
      would
      have been made if the Award had not been deferred.

    10.  Death
      of a Participant.
      If the
      death of a Participant occurs before a full distribution of the Participant’s
      Plan Deferral Account is made, payment shall be made to the Designated
      Beneficiary of the Participant in accordance with the schedule specified in
      the
      Participant’s Deferral Election form. Said payment shall be made as soon as
      practical following notification that death has occurred. 

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    12.  Unfunded
      Deferrals.
      Nothing
      in this Plan, including this Article VI, shall be interpreted or construed
      to
      require the Sponsor or any Company in any manner to fund any obligation to
      the
      Participants, terminated Participants or beneficiaries hereunder. Nothing
      contained in this Plan nor any action taken hereunder shall create, or be
      construed to create, a trust of any kind, or a fiduciary relationship between
      the Sponsor or any Company and the Participants, terminated Participants,
      beneficiaries, or any other persons. Any funds which may be accumulated in
      order
      to meet any obligation under this Plan shall for all purposes continue to be
      a
      part of the general assets of the Sponsor or Company; provided, however, that
      the Sponsor or Company may establish a trust to hold funds intended to provide
      benefits hereunder to the extent the assets of such trust become subject to
      the
      claims of the general creditors of the Sponsor or Company in the event of
      bankruptcy or insolvency of the Sponsor or Company. To the extent that any
      Participant, terminated Participant, or beneficiary acquires a right to receive
      payments from the Sponsor or Company under this Plan, such rights shall be
      no
      greater than the rights of any unsecured general creditor of the Sponsor or
      Company.

    13.  Change
      of Control.
      In the
      case of a Change of Control, the Company shall, subject to the restrictions
      in
      this Section 13 and Section 12 of Article VI, irrevocably set aside funds in
      one
      or more such grantor trusts in an amount that is sufficient to pay each
      Participant employed by such Company (or Designated Beneficiary) the net present
      value as of the date on which the Change of Control occurs, of the benefits
      to
      which Participants (or their Designated Beneficiaries) would be entitled
      pursuant to the terms of the Plan if the value of their Plan Deferral Account
      would be paid in a lump sum upon the Change of Control.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      VII 

    TERMINATION
      OF EMPLOYMENT

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

    ARTICLE
      VIII 

    MISCELLANEOUS

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

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

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

    5.  Governing
      Law.
      This
      Plan shall be construed and governed in accordance with the laws of the state
      of
      North Carolina.

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

    

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      A

     

    MICP
      Relative
      Performance Weightings

     

    

    
      	
              POSITION

            	
               

              COMPANY

              EPS

            	
               

               

              LEGAL
                

              ENTITY
                

              EBITDA

            	
               

              ECIP
                

              GOALS

            
	
               

              SMC
                - CEO

            	
               

              100%

               

            	
               

              -

               

            	
               

              -

               

            
	
               

              SMC
                - COO

               

            	
               

              40%

               

            	
               

              50%

               

            	
               

              10%

               

            
	
               

              SMC
                - Presidents

               

            	
               

              40%

               

            	
               

              50%

               

            	
               

              10%

               

            
	
               

              SMC
                - Service Company CEO

               

            	
               

              90%

               

            	
               

              -

               

            	
               

              10%

               

            
	
               

              SMC
                - Non Service Company

               

            	
               

              30%

               

            	
               

              60%

               

            	
               

              10%

               

            
	
               

              SMC
                - Service Company

               

            	
               

              90%

               

            	
               

              -

               

            	
               

              10%

               

            
	
               

              Non
                Service Company Department Heads and Managers

               

            	
               

              25%

               

            	
               

              50%

               

            	
               

              25%

               

            
	
               

              Service
                Company Department Heads and Managers

               

            	
               

              75%

               

            	
               

              -

               

            	
               

              25%

               

            

    

    

    
      	
              Note:

            	
              This
                structure may be modified based upon a recommendation by the CEO
                and
                approval by the Committee.

            

    

     

    

     

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      B

     

    
      	
              Management
                Incentive Example

            
	
              (Assumes
                preliminary PDP and Succession Planning rates are
                complete)

            	 	 	 
	 	 	 	 	 	 	 	 
	 	
              Achievement
                Level

            	
              Achievement
                Percentage

            	
              Weighting

              (see
                Pro Rate %)

            	
              Achievement
                Factor

            	 	 	 
	
              Step
                1: Calculate
                achievement factor for members of a department

            	 	 	 
	
              PGN
                EPS

            	
              Target

            	
              100%

            	
              25.0%

            	
              25.0%

            	 	 	 
	
              Legal
                entity EBITDA

            	
              Outstanding

            	
              200%

            	
              50.0%

            	
              100.0%

            	 	 	 
	
              ECIP
                goals

            	
              At
                least 7

            	
              100%

            	
              25.0%

            	
              25.0%

            	 	 	 
	 	
              Total
                achievement factor

            	
              150.0%
                Would
                be calculated for each BU

            
	 	 	 	 	 	 	 	 
	
              Step
                2: Apply
                achievement factor to target levels

            	 	 	 
	 	
              Target

              %

            	
              Achievement
                Factor

            	
              Initial

              Payout
                %

            	 	 	 	 
	
              Department
                Head

            	
              35.0%

            	
              150.0%

            	
              52.5%

            	 	 	 	 
	
              Section
                Manager

            	
              25.0%

            	
              150.0%

            	
              37.5%

            	 	 	 	 
	
              Unit
                Manager

            	
              20.0%

            	
              150.0%

            	
              30.0%

            	 	 	 	 
	 	 	 	 	 	 	 	 
	
              Step
                3: Determine
                dollars eligible by department:

            	 	 	 
	 	
               

              Salary

            	
              Target

              %

            	
              Initial

              Payout
                %

            	
              Calculated
                

              Award

            	 	 	 
	
              John
                Doe, Department Head

            	
              200,000

            	
              35.0%

            	
              52.5%

            	
              105,000

            	 	 	 
	
              Jane
                Doe, Section Manager

            	
              100,000

            	
              25.0%

            	
              37.5%

            	
              37,500

            	 	 	 
	
              John
                Smith, Section Manager

            	
              120,000

            	
              25.0%

            	
              37.5%

            	
              45,000

            	 	 	 
	
              Jane
                Smith, Unit Manager

            	
              80,000

            	
              20.0%

            	
              30.0%

            	
              24,000

            	 	 	 
	
              John
                Jones, Unit Manager

            	
              75,000

            	
              20.0%

            	
              30.0%

            	
              22,500

            	 	 	 
	
              Jane
                Jones, Unit Manager

            	
              90,000

            	
              20.0%

            	
              30.0%

            	
              27,000

            	 	 	 
	 	 	 	 	
              261,000

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

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

            	 	 
	 	 	 	 	 	 	 	 
	
              Step
                5: Allocate
                dollars by group and department:

            	 	 	 
	 	
               

              Salary

            	
              Target

              %

            	
              Initial

              Payout
                %

            	
              Calculated
                Award

            	
              Discretionary
                Adjustment

            	
              Actual
                Award

            	
              Award

              %

            
	
              John
                Doe

            	
              200,000

            	
              35%

            	
              52.5%

            	
              105,000

            	
              (12,600)

            	
              92,400

            	
              46.2%

            
	
              Jane
                Doe

            	
              100,000

            	
              25%

            	
              37.5%

            	
              37,500

            	
              5,000

            	
              42,500

            	
              42.5%

            
	
              John
                Smith

            	
              120,000

            	
              25%

            	
              37.5%

            	
              45,000

            	
              (3,000)

            	
              42,000

            	
              35%

            
	
              Jane
                Smith

            	
              80,000

            	
              20%

            	
              30.0%

            	
              24,000

            	
              -

            	
              24,000

            	
              30%

            
	
              John
                Jones

            	
              75,000

            	
              20%

            	
              30.0%

            	
              22,500

            	
              5,000

            	
              27,500

            	
              36.7%

            
	
              Jane
                Jones

            	
              90,000

            	
              20%

            	
              30.0%

            	
              27,000

            	
              (10,400)

            	
              16,600

            	
              18.4%

            
	 	 	 	 	
              261,000

            	 	
              245,000

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

            	 
	 	 	
              (Step
                4)

            	 	 	 	 
	 	 	 	 	 	 	 	 
	
              General
                notes:

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

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

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

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

            

    

    

     

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      C

     

    Progress
      Energy Carolinas, Inc.

     

    Progress
      Energy Service Company, LLC

     

    Progress
      Energy Florida, Inc.

     

    Progress
      Energy Ventures, Inc.

     

    Progress
      Fuels Corporation (corporate employees)

     

    
      
        

         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    DESIGNATION
      OF BENEFICIARY

    MANAGEMENT
      INCENTIVE COMPENSATION PLAN

    OF

    PROGRESS
      ENERGY, INC.

    

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

    

    PRIMARY
      BENEFICIARY:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    

    

    CONTINGENT
      BENEFICIARY:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    

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

    

    

    DATE:__________________

    

    

    SIGNATURE
      OF PARTICIPANT:_________________________________

    

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

    

    

    WITNESS:                                      WITNESS:

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