Document:

EXHIBIT 10(iii)

                              EMPLOYMENT AGREEMENT

                                     BETWEEN

                         CAROLINA POWER & LIGHT COMPANY

                                       AND

                                   TOM KILGORE

                                 AUGUST 1, 2000

<PAGE>

                              EMPLOYMENT AGREEMENT
                              --------------------

         EMPLOYMENT AGREEMENT ("Agreement"), dated as of the ____________ day of
August, 2000, between Carolina Power and Light Company, a North Carolina
corporation headquartered in Raleigh, North Carolina, and a subsidiary of CP&L
Energy, its successors or assigns and Tom Kilgore ("Kilgore"). Carolina Power &
Light and CP&L Energy shall be referred to as CP&L throughout.

                                    Recitals
                                    --------

         1. The Company and Kilgore wish to enter into an employment
relationship whereby Kilgore will be employed initially as Senior Vice President
at Carolina Power & Light, a subsidiary of CP&L Energy, and President of Energy
Ventures, a subsidiary of CP&L Energy.

         2. Kilgore will be employed as an "at will" employee of Carolina Power
& Light. The parties wish to enter into this Agreement to set forth certain
terms related to that relationship.

                                   Provisions
                                   ----------

         NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and accepted, the parties hereto
hereby agree as follows:

         1.       TERM OF THE AGREEMENT:
                  ----------------------

                  (a) The Agreement becomes effective on August 1, 2000 and
shall remain in effect for a three-year period;

                  (b) Each year, the Agreement will be extended such that
prospective term will always be three years forward ("Evergrow provisions") on
the anniversary date of the effective date.

                  (c) Company may elect to not extend Agreement and must notify
Kilgore at least 60 days prior to the annual anniversary date of the Agreement's
effective date. In each event, the Agreement will be effective for the remainder
of its term.

                  (d) The Agreement cannot extend beyond Kilgore's normal
retirement date unless Kilgore is requested to serve in his full-time position
for a defined period as set forth by the Board of Directors.

<PAGE>

         2.       RESPONSIBILITIES; OTHER ACTIVITIES.
                  ----------------------------------

                  Kilgore shall initially occupy the position of Senior Vice
President at CP&L and President-Energy Ventures and shall undertake the general
responsibilities and duties of such position as directed by Energy Ventures and
CP&L. During the Employment Term, Kilgore shall perform faithfully the duties of
Kilgore's position, devote all of Kilgore's working time and energies to the
business and affairs of Energy Ventures and shall use Kilgore's best efforts,
skills and abilities to promote Energy Ventures. Energy Ventures and CP&L
reserve the right to reassign Kilgore to other positions.

         3.       SALARY.
                  ------

                  As compensation for the services to be performed hereunder:
Kilgore will be paid a salary at the annual rate of Three Hundred Thousand
Dollars ($300,000.00) (less applicable withholdings) beginning on August 1,
2000. Annual salary for each subsequent year of the Employment Term shall be
subject to adjustment by Energy Ventures or CP&L during the normal annual salary
review process for similarly situated executives as determined by Energy
Ventures or CP&L in its discretion. Annual Salary shall be deemed earned
proportionally as Kilgore performs services over the course of the Salary Year.
Payments of annual Salary shall be made, except as otherwise provided herein, in
accordance with Energy Ventures' standard payroll policies and procedures.

         4.       BENEFITS
                  --------

                  During the Employment Term, Kilgore shall be entitled to
participate in all Company sponsored benefits programs as Energy Ventures and
CP&L may have in effect upon terms and in accordance with policies and
procedures substantially equivalent to those then in effect and applicable
generally to employees of Energy Ventures. Provided, however, that nothing
contained in this Agreement shall require Energy Ventures or CP&L to continue to
offer such benefits or programs or to limit Energy Ventures' or CP&L's absolute
right to modify or eliminate these benefits.

                  (a). Management Incentive Compensation Plan. Kilgore will be
eligible to participate in the Management Incentive Compensation Plan (MICP).
Pursuant to the terms of MICP, Kilgore's target compensation under such plan
will be approximately 35% of base salary earnings. Kilgore's target compensation
under such plan increase to 45% of base salary earning in January 1, 2001
contingent upon the closing of the Florida Progress Corporation ("FPC")
acquisition.

                                       2
<PAGE>

                  (b). Long Term Incentives. Kilgore will be eligible to
participate in the Performance Share Sub-Plan under the 1997 Equity Incentive
Plan in accordance with the terms of the plan. Pursuant to the terms of the
plan, Kilgore's target compensation under such plan will be 50% of Kilgore's
base salary at the time of the award. Kilgore's annual target will increase to
100% effective 2001, contingent upon the closing of the FPC acquisition.

                  (c). Restricted Share Grant. Kilgore will be eligible to
participate in the Restricted Share Grant Plan under the 1997 Equity Incentive
Plan in accordance with the terms of the plan. Additionally, Kilgore has
previously received other grants of CP&L restricted common stock pursuant to
Restricted Stock Agreement(s). Restrictions are based on continued employment.

                  (d). Management Deferred Compensation Plan. Kilgore will be
eligible for participation in CP&L's Management Deferred Compensation Plan
(MDCP), subject to its terms. Additionally, Kilgore continues all vested
benefits under CP&L's suspended Deferred Compensation for Key Management
Employees including a retention bonus with CP&L under the Plan pursuant to an
August 3, 1998 Employment Agreement. This latter bonus vests based on continued
employment until or beyond age 60.

                  (e). Supplemental Retirement Plan. Pursuant to its terms,
Kilgore will be eligible for participation in CP&L's Supplemental Retirement
Plan (SRP), subject to its terms.

                  (f). Restoration Retirement Plan. Kilgore shall be eligible
for participation in CP&L's Restoration Retirement Plan, subject to its terms.
If Kilgore becomes eligible for benefits under CP&L's Supplemental Senior
Executive Retirement Plan, Kilgore forfeits all benefits under the Restoration
Retirement Plan.

                  (g). Supplemental Senior Executive Retirement Plan. Kilgore
shall continue participation in CP&L's Supplemental Senior Executive Retirement
Plan (SERP), subject to its terms. In connection with Kilgore's participation in
SERP, Kilgore has been awarded 5 years of service toward the benefits and
vesting requirements of SERP. This credit will not apply to the benefits and
vesting requirements of any other plan or benefit program at Energy Ventures or
CP&L.

                  (h). Executive Permanent Life Insurance Plan. Kilgore shall be
eligible to participate in CP&L's Executive Permanent Life Insurance Plan,
subject to its terms.

                  (i). Executive AD&D Life Insurance. Kilgore shall be eligible
to participate in CP&L's Executive AD&D Life Insurance Plan, subject to its
terms.
                  (j). Stock Purchase-Savings Plan. Kilgore shall be eligible to
participate in CP&L's Stock Purchase-Savings Plan, subject to its terms.

                                       3
<PAGE>

                  (k). Financial Planning. Consistent with CP&L's practice with
respect to other senior executives, Kilgore will be reimbursed for financial
planning and tax preparation.

                  (l). Vacation. Kilgore shall be entitled to four (4) weeks of
paid vacation days.

                  (m). Holiday. Kilgore will be eligible for 11 paid holidays in
each calendar year as provided in the CP&L Handbook.

                  (n). Automobile Allowance. Kilgore will be eligible to receive
an automobile allowance of One Thousand, Three Hundred Fifty Dollars ($1350) per
month (less withholdings) subject to the terms of Energy Ventures' or CP&L's
policies. Kilgore will also be eligible for a cellular phone and reserved
parking at Energy Ventures' or CP&L's expense.

                  (o). Annual Physical. Energy Ventures or CP&L will pay for an
annual physical examination by a physician of Kilgore's choice.

                  (p). Capital City Club. Energy Ventures or CP&L will pay an
initiation fee and monthly dues for a membership at the Capital City Club for
Kilgore.

                  (q). Health Club Membership. Energy Ventures or CP&L will pay
the initiation fee and monthly dues for a membership for Kilgore.

                  (r). Air Travel.

                       (i). Energy Ventures or CP&L will provide airline club
membership in accordance with CP&L's policy.

                       (ii). Energy Ventures or CP&L will reimburse Kilgore's
spouse's travel expenses when she accompanies Kilgore to business meetings where
spousal attendance is customary.

                       (iii). Energy Ventures or CP&L will provide chartered
aircraft for Kilgore's business related travel as needed.

                       (iv). CP&L or Energy Ventures will allow Kilgore to
travel first class at his discretion for business related travel.

                  (s). Country Club Membership. At Kilgore's option, if joined,
Energy Ventures or CP&L will pay an initiation fee and monthly dues for a
membership for Kilgore at a

                                       4
<PAGE>

country club approved by Energy Ventures or CP&L. Business related expenses will
be reimbursed consistent with Energy Ventures' or CP&L's expense account
guidelines.

                  (t). Personal Computer. Energy Ventures or CP&L will provide a
personal computer to Kilgore to be used at his personal residence.

                  (u). Home Security. Energy Ventures or CP&L will install a
home security system at Kilgore's personal residence.

                  (v). Other Benefits. Kilgore shall be eligible for
participation in other CP&L benefit plans, subject to the terms of the
respective plans, as described in more detail in the Employee Handbook or
Summary Plan Descriptions. In addition, upon retirement from CP&L, as defined by
the relevant CP&L retirement plan, Kilgore will be entitled to the same medical
and dental coverage provided to other future retirees, provided that to the
extent any such benefit may not be provided to Kilgore due to statutory or
regulatory limitation, CP&L will obtain substantially equivalent coverage on an
insured basis.

         5.       TERMINATION OF EMPLOYMENT.
                  -------------------------

                  (a). Termination Without Cause. During the terms of this
Agreement, if Kilgore's employment is terminated without cause, then Kilgore
will be provided with his base salary at Kilgore's current rate for the
remainder of the term of this Agreement. Additionally, Energy Ventures or CP&L
will reimburse Kilgore for his COBRA premium for up to eighteen (18) months
after the termination of Kilgore's employment as long as Kilgore is not eligible
for coverage under the same type of benefit plan covered by COBRA. Receipt of
these benefits is subject to the requirements of paragraph 5(g),(h) and (i) of
this Agreement. In addition, Kilgore will be eligible to retain all benefits
under existing benefit programs to the extent vested within the terms of those
programs.

                  (b) Termination for Cause. During the term of this Agreement,
Energy Ventures may elect at any time to terminate Kilgore's employment
immediately hereunder and remove Kilgore from employment for cause. For purposes
of this paragraph 5, cause for the termination of employment shall be defined
as: (i) any act of Kilgore's including, but not limited to, misconduct,
negligence, unlawfulness, dishonesty or inattention to the business, which is
detrimental to Energy Ventures' or CP&L's interests; or (ii) Kilgore's
unsatisfactory job performance or failure to comply with Energy Ventures' or
CP&L's direction, policies, rules or regulations. If Kilgore is terminated for
Cause as defined, then he shall be eligible to retain all benefits under
existing benefit programs which he has vested pursuant to those plans, but he
shall not be entitled to any form of salary continuance or any form of severance
benefits. Upon such termination, Kilgore shall be entitled to any earned but
unpaid salary accrued to the date of termination. Any continued rights or
benefits Kilgore's legal representatives may have under

                                       5
<PAGE>

employee benefit plans and programs of Energy Ventures or CP&L upon Kilgore's
termination for cause shall be determined in accordance with the terms or
provisions of the plan or program.

                  (c).     Constructive Termination.
                           -------------------------

                           (i) Within the term of this Agreement, if Kilgore's
employment is constructively terminated, then Kilgore will be provided with his
base salary at the current rate for the remainder of the term of this Agreement.
Additionally, Energy Ventures or CP&L will reimburse Kilgore for his COBRA
premiums for up to eighteen (18) months after the termination of Kilgore's
employment as long as Kilgore is not eligible for coverage under the same types
of benefits plans covered by COBRA. Receipt of these benefits is subject to the
requirements of paragraph 5(g), (h) and (i) of this Agreement. In addition,
Kilgore will be eligible to retain all benefits under existing benefit programs
to the extent vested within the terms of those programs.

                           (ii) For the purposes of paragraph 5 of this
Agreement, a constructive termination will be deemed to occur if: aa) there is a
change in the form of ownership of Energy Ventures or CP&L (e.g., Energy
Ventures or CP&L is acquired, enters into a business combination with another
company or otherwise changes form of ownership) and bb) Kilgore is offered a new
position with a material change in authority, duties, wages or benefits, or
Kilgore is asked to relocate more than 50 miles. If Kilgore's employment is
constructively terminated under this paragraph, Kilgore is entitled to the
greater of either the benefits contained in this paragraph or the benefits he is
entitled to, if any, under the CP&L Management Change-in-Control Plan, according
to the terms of the Plan. Changes in the corporation structure of Energy
Ventures or CP&L not related to an acquisition of Energy Ventures shall not
constitute a grounds for constructive termination.

                  (d). Voluntary Termination - If Kilgore terminates his
employment voluntarily for any reason at any time, then he shall be eligible to
retain all benefits under existing benefit plans which have vested pursuant to
the terms of those plans, but he shall not be entitled to any form of salary
continuance or any form of severance benefit.

                  (e). Termination Due to Death. In the event of the death of
Kilgore during the Employment Term, Kilgore's employment hereunder shall
terminate and CP&L shall have no further obligation to Kilgore under this
Agreement except as specifically provided in this Agreement. Kilgore's estate
shall be entitled to receive all earned but unpaid Salary accrued to the date of
termination and any Bonus for a prior fiscal year that has been earned but not
paid. The Bonus, if any, for the current fiscal year shall be calculated on a
pro rata basis for the portion of the fiscal year in which death occurred and
shall be paid at the regularly scheduled time for the payment of the Bonus. Any
rights and benefits Kilgore, or Kilgore's estate or other legal representatives,
may have under employee benefit plans and programs of Energy Ventures or CP&L
upon Kilgore's death during the Employment Term, if any, shall be determined in
accordance with the terms and provisions of such plans and programs.

                                       6
<PAGE>

                  (f).     Termination Due to Medical Condition.
                           -------------------------------------

                           (i). CP&L may terminate Kilgore's employment
hereunder, subject to the Americans With Disabilities Act or other applicable
law, due to medical condition if (i) for a period of 180 consecutive days during
the Employment Term, Kilgore is totally and permanently disabled as determined
in accordance with the Company's long-term disability plan, if any, as in effect
during such time or (ii) at any time during which no such plan is in effect,
Kilgore is substantially unable to perform Kilgore's duties hereunder because of
a medical condition for a period of 180 consecutive days during the Employment
Term. Provided, however, that if Kilgore applies for and is deemed eligible for
benefits under CP&L's Long-Term Disability Plan (LTD Benefits), Kilgore shall
receive such benefits and his employment will not be terminated as long as he is
receiving LTD Benefits.

                           (ii). Upon the termination of Kilgore's employment
due to medical condition or placement of Kilgore on Long Term Disability (LTD),
CP&L shall have no further obligation to Kilgore under this Agreement except as
specifically provided in this Agreement. Upon such termination or placement on
LTD, Kilgore shall be entitled to all earned but unpaid Salary accrued to the
date of termination or placement on LTD and any Bonus for a prior fiscal year
that has been earned but not paid. The Bonus, if any, for the current fiscal
year shall be calculated on a pro rata basis for the portion of the fiscal year
Kilgore was employed by or placed on LTD by CP&L and shall be paid at the
regularly scheduled time for the payment of the Bonus. Any continued rights and
benefits Kilgore, or Kilgore's legal representatives, may have under employee
benefit plans and programs of CP&L upon Kilgore's termination or placement on
LTD due to medical condition, if any, shall be determined in accordance with the
terms and provisions of such plans and programs.

                  (g). Release of Claims - In order to receive continuation of
salary under this paragraph 5(a) and 5(c), Kilgore agrees to execute a written
release of all claims against CP&L, and its employees, officers, directors,
subsidiaries and affiliates, on a form acceptable to Energy Ventures or CP&L.

                  (h) Covenant Not to Compete. If CP&L terminates Kilgore's
employment without Cause under paragraph 5(a) or Constructively terminates
Kilgore's employment under paragraph 5(c) of this Agreement, Kilgore, for one
year after the Termination Date, shall not compete directly or indirectly with
the Company, or its affiliates within fifty (50) miles of any geographic area in
which the Company or its affiliates has a material business interests with which
Kilgore is involved at the time of the termination of Kilgore's employment.

                  (i) Non Interference. If CP&L terminates Kilgore's employment
without Cause under paragraph 5(a) or Constructively terminates Kilgore's
employment under paragraph 5(c) of this Agreement, Kilgore, for one year after
the Termination Date, shall not whether on his

                                       7
<PAGE>

own account or on the account of another individual, partnership, firm,
corporation, or other business organization (other than the Company and its
affiliates), directly or indirectly, intentionally solicit, endeavor to entice
away from the Company or any of its affiliates, or otherwise interfere with the
relationship of the Company or its affiliates with, any person who is employed
by or otherwise engaged to perform services for the Company or its affiliates
including but not limited to, any independent representatives or organizations,
or any person or entity that is a customer of the Company or its affiliates.

         6.       ASSIGNABILITY.
                  -------------

                  No rights or obligations of Kilgore under this Agreement may
be assigned or transferred by Kilgore, except that (a) Kilgore's rights to
compensation and benefits hereunder may be transferred by will or laws of
intestacy to the extent specified herein and (b) Kilgore's rights under employee
benefit plans or programs described in Section 4 may be assigned or transferred
in accordance with the terms of such plans or programs, or regular practices
thereunder. The Company may assign or transfer its rights and obligations under
this Agreement.

         7. CONFIDENTIALITY. Kilgore will not disclose the terms of this
Agreement except (i) to financial and legal advisors under an obligation to
maintain confidentiality, or (ii) as required by a valid court order or subpoena
(and in such event will use Kilgore's best efforts to obtain a protective order
requiring that all disclosure be kept under court seal) and will notify Energy
Ventures promptly upon receipt of such order or subpoena.

         8.       MISCELLANEOUS.
                  -------------

                  (a) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of North Carolina without
reference to laws governing conflicts of law.

                  (b) Entire Agreement. This Agreement contains all of the
understandings and representations between the parties hereto pertaining to the
subject matter hereof and supersedes all undertakings and agreements, whether
oral or in writing, if any, previously entered into by them with respect
thereto.

                  (c) Amendment or Modification; Waiver. No provision in this
Agreement may be amended or waived unless such amendment or waiver is agreed to
in writing, signed by Kilgore and by an officer of Energy Ventures thereunto
duly authorized to do so. Except as otherwise specifically provided in the
Agreement, no waiver by a party hereto of any breach by the other party hereto
of any condition or provision of the Agreement to be performed by such other
party shall be deemed a wavier of a similar or dissimilar provision or condition
at the same or any prior or subsequent time.

                                       8
<PAGE>

                  (d) Notice. Any notice (with the exception of notice of
termination by Energy Ventures, which may be given by any means and need not be
in writing except that if termination is for Cause, oral notice must be followed
by written notice required under Section 5(c) hereof) or other document or
communication required or permitted to be given or delivered hereunder shall be
in writing and shall be deemed to have been duly given or delivered if (i)
mailed by United States mail, certified, return receipt requested, with proper
postage prepaid, or (ii) otherwise delivered by hand or by overnight delivery,
against written receipt, by a common carrier or commercial courier or delivery
service, to the party to whom it is to be given at the address of such party as
set forth below (or to such other address as a party shall have designated by
notice to the other parties given pursuant hereto):

                  If to Kilgore:

                           Tom Kilgore
                           Carolina Power & Light
                           411 Fayetteville Street Mall
                           Raleigh, North Carolina 27602

                  If to Energy Ventures or CP&L:

                           CP&L Service Company
                           411 Fayetteville Street Mall
                           Raleigh, North Carolina 27602
                           Attn.:  Vice President of Human Resources

Any such notice, request, demand, advice, schedule, report, certificate,
direction, instruction or other document or communication so mailed or sent
shall be deemed to have been duly given, if sent by mail, on the third business
day following the date on which it was deposited at a United States post office,
and if delivered by hand, at the time of delivery by such commercial courier or
delivery service, and, if delivered by overnight delivery service, on the first
business day following the date on which it was delivered to the custody of such
common carrier or commercial courier or delivery service, as all such dates are
evidenced by the applicable delivery receipt, airbill or other shipping or
mailing document.

                  (e) Severability. In the event that any provision or portion
of this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions or portions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.

                  (f) References. In the event of Kilgore's death or a judicial
determination of Kilgore's incompetence, reference in this Agreement to Kilgore
shall be deemed, where

                                       9
<PAGE>

appropriate, to refer to Kilgore's legal representative, or, where appropriate,
to Kilgore's beneficiary or beneficiaries.

                  (g) Headings. Headings contained herein are for convenient
reference only and shall not in any way affect the meaning or interpretation of
this Agreement.

                  (h) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

                  (i) Rules of Construction. The following rules shall apply to
the construction and interpretation of this Agreement:

                       (i) Singular words shall connote the plural number as
well as the singular and vice versa, and the masculine shall include the
feminine and the neuter.

                       (ii) All references herein to particular articles,
paragraphs, sections, subsections, clauses, Schedules or Exhibits are references
to articles, paragraphs, sections, subsections, clauses, Schedules or Exhibits
of this Agreement.

                       (iii) Each party and its counsel have reviewed and
revised (or requested revisions of) this Agreement, and therefore any rule of
construction requiring that ambiguities are to be resolved against a particular
party shall not be applicable in the construction and interpretation of this
Agreement or any exhibits hereto or amendments hereof.

                       (iv) As used in this Agreement, "including" is
illustrative, and means "including but not limited to."

                  (j) Remedies. Remedies specified in this Agreement are in
addition to any others available at law or in equity.

                  (k) Withholding Taxes. All payments under this Agreement shall
be subject to applicable income, excise and employment tax withholding
requirements.

                                       10
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed, or have caused
this Agreement to be executed by their duly authorized officer, as the case may
be, all as of the day and year written below.

By:      /s/Tom Kilgore                              Date: August 21, 2000
         -----------------------------------               --------------------
         Tom Kilgore

By:      /s/William Cavanaugh III                    Date: September 29, 2000
         -----------------------------------               --------------------
         Carolina Power and Light Company

Title:   Chairman, President & CEO
         -----------------------------------

                                       11EXHIBIT 10(iv)

                              EMPLOYMENT AGREEMENT

                                     BETWEEN

                            CP&L SERVICE COMPANY, LLC

                                       AND

                                 ROBERT MCGEHEE

                                 AUGUST 1, 2000

<PAGE>
                              EMPLOYMENT AGREEMENT
                              --------------------

         EMPLOYMENT AGREEMENT ("Agreement"), dated as of the ____________ day of
August, 2000, between CP&L Service Company, LLC ("CP&L"), a North Carolina
corporation headquartered in Raleigh, North Carolina, and a subsidiary of CP&L
Energy, its successors or assigns and Robert McGehee ("McGehee"). CP&L Energy
and CP&L Service Company will be referred to herein as "CP&L" or the "Company".

                                    Recitals
                                    --------

         1. The Company and McGehee wish to enter into an employment
relationship whereby McGehee will be employed initially as President and Chief
Executive Officer-CP&L Service Company LLC.

         2. McGehee will be employed as an "at will" employee of CP&L. The
parties wish to enter into this Agreement to set forth certain terms related to
that relationship.

                                   Provisions
                                   ----------

         NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and accepted, the parties hereto
hereby agree as follows:

         1.       TERM OF THE AGREEMENT:
                  ----------------------

                  (a) The Agreement becomes effective on August 1, 2000, and
shall remain in effect for a three-year period;

                  (b) Each year, the Agreement will be extended such that
prospective term will always be three years forward ("Evergrow provisions") on
the anniversary date of the effective date.

                  (c) Company may elect to not extend Agreement and must notify
McGehee at least 60 days prior to the annual anniversary date of the Agreement's
effective date. In each event, the Agreement will be effective for the remainder
of its term.

                  (d) The Agreement cannot extend beyond McGehee's normal
retirement date unless McGehee is requested to serve in his full-time position
for a defined period as set forth by the Board of Directors.

<PAGE>

         2.       RESPONSIBILITIES; OTHER ACTIVITIES.
                  ----------------------------------

                  McGehee shall initially occupy the position of President and
Chief Executive Officer-CP&L Service Company LLC and shall undertake the general
responsibilities and duties of such position as directed by CP&L. During the
Employment Term, McGehee shall perform faithfully the duties of McGehee's
position, devote all of McGehee's working time and energies to the business and
affairs of CP&L and shall use McGehee's best efforts, skills and abilities to
promote CP&L. CP&L reserves the right to reassign McGehee to other positions.

         3.       SALARY.
                  ------

                  As compensation for the services to be performed hereunder:
McGehee will be paid a salary at the annual rate of Three Hundred Fifty Thousand
Dollars ($350,000.00) (less applicable withholdings) beginning on August 1,
2000. Annual salary for each subsequent year of the Employment Term shall be
subject to adjustment by CP&L during the normal annual salary review process for
similarly situated executives as determined by CP&L in its discretion. Annual
Salary shall be deemed earned proportionally as McGehee performs services over
the course of the Salary Year. Payments of annual Salary shall be made, except
as otherwise provided herein, in accordance with CP&L's standard payroll
policies and procedures.

         4.       BENEFITS
                  --------

                  During the Employment Term, McGehee shall be entitled to
participate in all Company sponsored benefits programs as CP&L may have in
effect upon terms and in accordance with policies and procedures substantially
equivalent to those then in effect and applicable generally to employees of
CP&L. Provided, however, that nothing contained in this Agreement shall require
CP&L to continue to offer such benefits or programs or to limit CP&L's absolute
right to modify or eliminate these benefits.

                  (a). Management Incentive Compensation Plan. McGehee will be
eligible to participate in the Management Incentive Compensation Plan (MICP).
Pursuant to the terms of MICP, McGehee's target compensation under such plan
will be 40% of base salary earnings. Effective January 1, 2001, McGehee's target
compensation under such plan will be 45% of base salary earnings contingent upon
the closing of the Florida Progress Corporation ("FPC") acquisition.

                  (b). Long Term Incentives. McGehee will be eligible to
participate in the Performance Share Sub-Plan under the 1997 Equity Incentive
Plan in accordance with the terms of the plan. Pursuant to the terms of the
plan, McGehee's target compensation under such plan will be 50% of McGehee's
base salary at the time of the award. The annual target will increase to 100%
effective January 1, 2001, contingent upon the closing of the FPC acquisition.

                                       2
<PAGE>

                  (c). Restricted Share Grant. McGehee will be eligible to
participate in the Restricted Share Grant Plan under the 1997 Equity Incentive
Plan in accordance with the terms of the plan. Additionally, McGehee has
previously received other grants of CP&L restricted common stock pursuant to
Restricted Stock Agreement(s). Restrictions are based on continued employment.

                  (d). Management Deferred Compensation Plan. McGehee will be
eligible for participation in CP&L's Management Deferred Compensation Plan
(MDCP), subject to its terms. Additionally, McGehee has a vested benefit under
the suspended CP&L Deferred Compensation for Key Management Employees and a
retention agreement bonus under the CP&L Deferred Compensation for Key
Management Employees based on a May 20, 1997 Employment Agreement. This latter
bonus vests based on continued employment beyond age 60.

                  (e). Supplemental Retirement Plan. Pursuant to its terms,
McGehee will be eligible for participation in CP&L Supplemental Retirement Plan
(SRP), subject to its terms.

                  (f). Restoration Retirement Plan. McGehee will be eligible for
participation in CP&L's Restoration Retirement Plan, subject to its terms. If
McGehee becomes eligible for benefits under CP&L's Supplemental Senior Executive
Retirement Plan, McGehee forfeits all benefits under the Restoration Retirement
Plan.

                  (g). Supplemental Senior Executive Retirement Plan. McGehee
shall be eligible for participation in CP&L's Supplemental Senior Executive
Retirement Plan (SERP), subject to its terms. In connection with McGehee's
participation in SERP, McGehee, upon hire, was awarded 10 years of service
toward the benefits and vesting requirements of SERP. Three (3) years of deemed
service were years deemed to have been service on the Senior Management Council
(SMC) pursuant to a May 20, 1997 Employment Agreement. These credits will not
apply to the benefits and vesting requirements of any other plan or benefit plan
at CP&L.

                  (h). Executive Permanent Life Insurance Plan. McGehee shall be
eligible to participate in CP&L's Executive Permanent Life Insurance Plan,
subject to its terms.

                  (i). Executive AD&D Life Insurance. McGehee shall be eligible
to participate in CP&L's Executive AD&D Life Insurance Program, subject to its
terms.

                  (j). Stock Purchase-Savings Plan. McGehee shall be eligible to
participate in CP&L's Stock Purchase-Savings Plan, subject to its terms.

                  (k). Financial Planning. Consistent with CP&L's practice with
respect to other senior executives, McGehee will be reimbursed for financial
planning and tax preparation.

                  (l). Vacation. McGehee shall be entitled to four (4) weeks of
paid vacation days.

                                       3
<PAGE>

                  (m). Holiday. McGehee will be eligible for 11 paid holidays in
each calendar year as provided in the CP&L Handbook.

                  (n). Automobile Allowance. McGehee will be eligible to receive
an automobile allowance of One Thousand Three Hundred Fifty Dollars ($1350) per
month (less withholdings) subject to the terms of CP&L's policies. McGehee will
also be eligible for a cellular phone and reserved parking at CP&L's expense.

                  (o). Annual Physical. CP&L will pay for an annual physical
examination by a physician of McGehee's choice.

                  (p). Health Club Membership. CP&L shall pay for the initiation
fee and monthly dues to a health club for McGehee.

                  (q). Capital City Club. CP&L will pay an initiation fee and
monthly dues for a membership at the Capital City Club for McGehee.

                  (r). Air Travel.

                       (i). CP&L will provide airline club membership in
accordance with CP&L's policy.

                       (ii). CP&L will reimburse McGehee's spouse's travel
expenses when she accompanies McGehee to business meetings where spousal
attendance is customary.

                       (iii). CP&L will provide chartered aircraft for McGehee's
business related travel as needed.

                       (iv). CP&L will allow McGehee to travel first class at
his discretion for business related travel.

                  (s). Country Club Membership. At McGehee's option, if joined,
CP&L will pay an initiation fee and monthly dues for a membership for McGehee at
a country club approved by CP&L. Business related expenses will be reimbursed
consistent with CP&L's expense account guidelines.

                  (t). Personal Computer. CP&L will provide a personal computer
to McGehee to be used at his personal residence.

                  (u). Home Security. CP&L will install a home security system
at McGehee's personal residence.

                                       4
<PAGE>

                  (v). Other Benefits. McGehee shall be eligible for
participation in other CP&L benefit plans, subject to the terms of the
respective plans, as described in more detail in the Employee Handbook or
Summary Plan Descriptions. In addition, upon retirement from CP&L, as defined by
the relevant CP&L retirement plan, McGehee will be entitled to the same medical
and dental coverage provided to other future retirees, provided that to the
extent any such benefit may not be provided to McGehee due to statutory or
regulatory limitation, CP&L will obtain substantially equivalent coverage on an
insured basis.

         5.       TERMINATION OF EMPLOYMENT.
                  -------------------------

                  (a). Termination Without Cause. During the terms of this
Agreement, if McGehee's employment is terminated without cause, then McGehee
will be provided with his base salary at McGehee's current rate for the
remainder of the term of this Agreement. Additionally, CP&L will reimburse
McGehee for his COBRA premium for up to eighteen (18) months after the
termination of McGehee's employment as long as McGehee is not eligible for
coverage under the same type of benefit plan covered by COBRA. Receipt of these
benefits is subject to the requirements of paragraph 5(g),(h) and (i) of this
Agreement. In addition, McGehee will be eligible to retain all benefits under
existing benefit programs to the extent vested within the terms of those
programs.

                  (b) Termination for Cause. During the term of this Agreement,
CP&L may elect at any time to terminate McGehee's employment immediately
hereunder and remove McGehee from employment for cause. For purposes of this
paragraph 5, cause for the termination of employment shall be defined as: (i)
any act of McGehee's including, but not limited to, misconduct, negligence,
unlawfulness, dishonesty or inattention to the business, which is detrimental to
CP&L's interests; or (ii). McGehee's unsatisfactory job performance or failure
to comply with CP&L's direction, policies, rules or regulations. If McGehee is
terminated for Cause as defined, then he shall be eligible to retain all
benefits under existing benefit programs which he has vested pursuant to those
plans, but he shall not be entitled to any form of salary continuance or any
form of severance benefits. Upon such termination, McGehee shall be entitled to
any earned but unpaid salary accrued to the date of termination. Any continued
rights or benefits McGehee's legal representatives may have under employee
benefit plans and programs of CP&L upon McGehee's termination for cause shall be
determined in accordance with the terms or provisions of the plan or program.

                  (c).     Constructive Termination.
                           -------------------------

                           (i) Within the term of this Agreement, if McGehee's
employment is constructively terminated, then McGehee will be provided with his
base salary at the current rate for the remainder of the term of this Agreement.
Additionally, CP&L will reimburse McGehee for his COBRA premiums for up to
eighteen (18) months after the termination of McGehee's employment as long as
McGehee is not eligible for coverage under the same types of benefits plans
covered by COBRA. Receipt of these benefits is subject to the requirements of
paragraph

                                       5
<PAGE>

5(g), (h) and (i) of this Agreement. In addition, McGehee will be eligible to
retain all benefits under existing benefit programs to the extent vested within
the terms of those programs.

                           (ii) For the purposes of paragraph 5 of this
Agreement, a constructive termination will be deemed to occur if: aa) there is a
change in the form of ownership of CP&L (e.g., Service Company is acquired,
enters into a business combination with another company or otherwise changes
form of ownership) and bb) McGehee is offered a new position with a material
change in authority, duties, wages or benefits, or McGehee is asked to relocate
more than 50 miles. If McGehee's employment is constructively terminated under
this paragraph, McGehee is entitled to the greater of either the benefits
contained in this paragraph or the benefits he is entitled to, if any, under the
CP&L Management Change-in-Control Plan, according to the terms of the Plan.
Changes to the corporation structure of CP&L not related to an acquisition of
CP&L shall not constitute grounds for constructive termination.

                  (d). Voluntary Termination - If McGehee terminates his
employment voluntarily for any reason at any time, then he shall be eligible to
retain all benefits under existing benefit plans which have vested pursuant to
the terms of those plans, but he shall not be entitled to any form of salary
continuance or any form of severance benefit.

                  (e). Termination Due to Death. In the event of the death of
McGehee during the Employment Term, McGehee's employment hereunder shall
terminate and CP&L shall have no further obligation to McGehee under this
Agreement except as specifically provided in this Agreement. McGehee's estate
shall be entitled to receive all earned but unpaid Salary accrued to the date of
termination and any Bonus for a prior fiscal year that has been earned but not
paid. The Bonus, if any, for the current fiscal year shall be calculated on a
pro rata basis for the portion of the fiscal year in which death occurred and
shall be paid at the regularly scheduled time for the payment of the Bonus. Any
rights and benefits McGehee, or McGehee's estate or other legal representatives,
may have under employee benefit plans and programs of CP&L upon McGehee's death
during the Employment Term, if any, shall be determined in accordance with the
terms and provisions of such plans and programs.

                  (f). Termination Due to Medical Condition.
                      --------------------------------------

                       (i). CP&L may terminate McGehee's employment hereunder,
subject to the Americans With Disabilities Act or other applicable law, due to
medical condition if (i) for a period of 180 consecutive days during the
Employment Term, McGehee is totally and permanently disabled as determined in
accordance with the Company's long-term disability plan, if any, as in effect
during such time or (ii) at any time during which no such plan is in effect,
McGehee is substantially unable to perform McGehee's duties hereunder because of
a medical condition for a period of 180 consecutive days during the Employment
Term. Provided, however, that if McGehee applies for and is deemed eligible for
benefits under CP&L's Long-Term Disability Plan (LTD Benefits), McGehee shall
receive such benefits and his employment will not be terminated as long as he is
receiving LTD Benefits.

                                       6
<PAGE>

                       (ii). Upon the termination of McGehee's employment due to
medical condition or placement of McGehee on Long Term Disability (LTD), CP&L
shall have no further obligation to McGehee under this Agreement except as
specifically provided in this Agreement. Upon such termination or placement on
LTD, McGehee shall be entitled to all earned but unpaid Salary accrued to the
date of termination or placement on LTD and any Bonus for a prior fiscal year
that has been earned but not paid. The Bonus, if any, for the current fiscal
year shall be calculated on a pro rata basis for the portion of the fiscal year
McGehee was employed or placed on LTD by CP&L and shall be paid at the regularly
scheduled time for the payment of the Bonus. Any continued rights and benefits
McGehee, or McGehee's legal representatives, may have under employee benefit
plans and programs of CP&L upon McGehee's termination or placement on LTD due to
medical condition, if any, shall be determined in accordance with the terms and
provisions of such plans and programs.

                  (g). Release of Claims - In order to receive continuation of
salary under this paragraph 5(a) and 5(c), McGehee agrees to execute a written
release of all claims against CP&L, and its employees, officers, directors,
subsidiaries and affiliates, on a form acceptable to CP&L.

                  (h) Covenant Not to Compete. If CP&L terminates McGehee's
employment without Cause under paragraph 5(a) or Constructively terminates
McGehee's employment under paragraph 5(c) of this Agreement, McGehee, for one
year after the Termination Date, shall not compete directly or indirectly with
the Company, or its affiliates within fifty (50) miles of any geographic area in
which the Company or its affiliates has a material business interests with which
McGehee is involved at the time of the termination of McGehee's employment.

                  (i) Non Interference. If CP&L terminates McGehee's employment
without Cause under paragraph 5(a) or Constructively terminates McGehee's
employment under paragraph 5(c) of this Agreement, McGehee, for one year after
the Termination Date, shall not whether on his own account or on the account of
another individual, partnership, firm, corporation, or other business
organization (other than the Company and its affiliates), directly or
indirectly, intentionally solicit, endeavor to entice away from the Company or
any of its affiliates, or otherwise interfere with the relationship of the
Company or its affiliates with, any person who is employed by or otherwise
engaged to perform services for the Company or its affiliates including but not
limited to, any independent representatives or organizations, or any person or
entity that is a customer of the Company or its affiliates.

         6.       ASSIGNABILITY.
                  -------------

                  No rights or obligations of McGehee under this Agreement may
be assigned or transferred by McGehee, except that (a) McGehee's rights to
compensation and benefits hereunder may be transferred by will or laws of
intestacy to the extent specified herein and

                                       7
<PAGE>

(b) McGehee's rights under employee benefit plans or programs described in
Section 4 may be assigned or transferred in accordance with the terms of such
plans or programs, or regular practices thereunder. The Company may assign or
transfer its rights and obligations under this Agreement.

         7. CONFIDENTIALITY. McGehee will not disclose the terms of this
Agreement except (i) to financial and legal advisors under an obligation to
maintain confidentiality, or (ii) as required by a valid court order or subpoena
(and in such event will use McGehee's best efforts to obtain a protective order
requiring that all disclosure be kept under court seal) and will notify CP&L
promptly upon receipt of such order or subpoena.

         8.       MISCELLANEOUS.
                  -------------

                  (a) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of North Carolina without
reference to laws governing conflicts of law.

                  (b) Entire Agreement. This Agreement contains all of the
understandings and representations between the parties hereto pertaining to the
subject matter hereof and supersedes all undertakings and agreements, whether
oral or in writing, if any, previously entered into by them with respect
thereto.

                  (c) Amendment or Modification; Waiver. No provision in this
Agreement may be amended or waived unless such amendment or waiver is agreed to
in writing, signed by McGehee and by an officer of CP&L thereunto duly
authorized to do so. Except as otherwise specifically provided in the Agreement,
no waiver by a party hereto of any breach by the other party hereto of any
condition or provision of the Agreement to be performed by such other party
shall be deemed a wavier of a similar or dissimilar provision or condition at
the same or any prior or subsequent time.

                  (d) Notice. Any notice (with the exception of notice of
termination by CP&L, which may be given by any means and need not be in writing
except that if termination is for Cause, oral notice must be followed by written
notice required under Section 5(c) hereof) or other document or communication
required or permitted to be given or delivered hereunder shall be in writing and
shall be deemed to have been duly given or delivered if (i) mailed by United
States mail, certified, return receipt requested, with proper postage prepaid,
or (ii) otherwise delivered by hand or by overnight delivery, against written
receipt, by a common carrier or commercial courier or delivery service, to the
party to whom it is to be given at the address of such party as set forth below
(or to such other address as a party shall have designated by notice to the
other parties given pursuant hereto):

                                       8
<PAGE>

                  If to McGehee:

                           Robert B. McGehee
                           CP&L Service Company LLC
                           411 Fayetteville Street Mall
                           Raleigh, North Carolina 27602

                  If to Service Company:

                           CP&L Service Company LLC
                           411 Fayetteville Street Mall
                           Raleigh, North Carolina 27602
                           Attn.:  Vice President of Human Resources

Any such notice, request, demand, advice, schedule, report, certificate,
direction, instruction or other document or communication so mailed or sent
shall be deemed to have been duly given, if sent by mail, on the third business
day following the date on which it was deposited at a United States post office,
and if delivered by hand, at the time of delivery by such commercial courier or
delivery service, and, if delivered by overnight delivery service, on the first
business day following the date on which it was delivered to the custody of such
common carrier or commercial courier or delivery service, as all such dates are
evidenced by the applicable delivery receipt, airbill or other shipping or
mailing document.

                  (e) Severability. In the event that any provision or portion
of this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions or portions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.

                  (f) References. In the event of McGehee's death or a judicial
determination of McGehee's incompetence, reference in this Agreement to McGehee
shall be deemed, where appropriate, to refer to McGehee's legal representative,
or, where appropriate, to McGehee's beneficiary or beneficiaries.

                  (g) Headings. Headings contained herein are for convenient
reference only and shall not in any way affect the meaning or interpretation of
this Agreement.

                  (h) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

                  (i) Rules of Construction. The following rules shall apply to
the construction and interpretation of this Agreement:

                                       9
<PAGE>

                       (i) Singular words shall connote the plural number as
well as the singular and vice versa, and the masculine shall include the
feminine and the neuter.

                       (ii) All references herein to particular articles,
paragraphs, sections, subsections, clauses, Schedules or Exhibits are references
to articles, paragraphs, sections, subsections, clauses, Schedules or Exhibits
of this Agreement.

                       (iii) Each party and its counsel have reviewed and
revised (or requested revisions of) this Agreement, and therefore any rule of
construction requiring that ambiguities are to be resolved against a particular
party shall not be applicable in the construction and interpretation of this
Agreement or any exhibits hereto or amendments hereof.

                       (iv) As used in this Agreement, "including" is
illustrative, and means "including but not limited to."

                  (j) Remedies. Remedies specified in this Agreement are in
addition to any others available at law or in equity.

                  (k) Withholding Taxes. All payments under this Agreement shall
be subject to applicable income, excise and employment tax withholding
requirements.

         IN WITNESS WHEREOF, the parties hereto have executed, or have caused
this Agreement to be executed by their duly authorized officer, as the case may
be, all as of the day and year written below.

By:      Robert B. McGehee                          Date: September 8, 2000
         -------------------------------------            ---------------------
         Robert B.  McGehee

By:      /s/William Cavanaugh III                   Date: September 29, 2000
         -------------------------------------            ---------------------
         CP&L Service Company LLC

Title:   ___________________________________

                                       10

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