FLORIDA POWER CORP /
EXHIBIT 10(II) FLORIDA 1ST QTR 10-Q 2003
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>pei_fpexhibit10ii-.txt
<DESCRIPTION>EXHIBIT 10(II) FLORIDA 1ST QTR 10-Q 2003
<TEXT>
                                                                 Exhibit 10(ii)


                                                                 EXECUTION COPY

--------------------------------------------------------------------------------


                                    (364-day)
                                  $200,000,000

                                CREDIT AGREEMENT
                            Dated as of April 1, 2003

                         FLORIDA POWER CORPORATION d/b/a
                          PROGRESS ENERGY FLORIDA, INC.
                                    (Company)

                                       and

                 THE BANKS LISTED ON THE SIGNATURE PAGES HEREOF
                                     (Banks)

                                       and

                       THE OTHER LENDERS FROM TIME TO TIME
                                  PARTY HERETO
                                    (Lenders)

                                       and

                               JPMORGAN CHASE BANK
                             (Administrative Agent)


--------------------------------------------------------------------------------


                                 BANK ONE, N.A.
                                       and
                        DEUTSCHE BANK AG NEW YORK BRANCH
                             (Co-Syndication Agents)

                                       and

                       WACHOVIA BANK, NATIONAL ASSOCIATION
                              (Documentation Agent)


<PAGE>

                                TABLE OF CONTENTS


Section                                                                     Page

Article I
                      DEFINITIONS AND ACCOUNTING TERMS.........................1

         Section 1.01.     Certain Defined Terms...............................1
         Section 1.02.     Computation of Time Periods........................10
         Section 1.03.     Accounting Terms...................................10


Article II
                      AMOUNTS AND TERMS OF THE ADVANCES.......................11

         Section 2.01.     The Advances.......................................11
         Section 2.02.     Making the Advances................................11
         Section 2.03.     Facility Fee.......................................12
         Section 2.04.     Changes in the Commitments.........................13
         Section 2.05.     Repayment of Advances..............................13
         Section 2.06.     Evidence of Indebtedness...........................14
         Section 2.07.     Interest on Advances...............................14
         Section 2.08.     Additional Interest on Eurodollar Rate Advances....14
         Section 2.09.     Interest Rate Determination........................15
         Section 2.10.     Voluntary Conversion of Advances...................16
         Section 2.11.     Prepayments of Advances............................16
         Section 2.12.     Increased Costs....................................17
         Section 2.13.     Illegality.........................................17
         Section 2.14.     Payments and Computations..........................18
         Section 2.15.     Sharing of Payments, Etc...........................19
         Section 2.16.     Extension of the Revolving Period..................19
         Section 2.17.     Term Loan Conversion Option........................21


Article III
                      CONDITIONS OF LENDING...................................21

         Section 3.01.     Conditions Precedent to Closing....................21
         Section 3.02.     Conditions Precedent to Each Borrowing and to
                           the Exercise of the Term Loan Conversion Option....22


Article IV
                      REPRESENTATIONS AND WARRANTIES..........................23

         Section 4.01.     Representations and Warranties of the Company......23

<PAGE>

Article V
                      COVENANTS OF THE COMPANY................................24

         Section 5.01.     Affirmative Covenants..............................24
         Section 5.02.     Negative Covenants.................................27


Article VI
                      EVENTS OF DEFAULT.......................................28

         Section 6.01.     Events of Default..................................28


Article VII
                      THE ADMINISTRATIVE AGENT................................30

         Section 7.01.     Authorization and Action...........................30
         Section 7.02.     Administrative Agent's Reliance, Etc...............30
         Section 7.03.     The Administrative Agent and its Affiliates........31
         Section 7.04.     Lender Credit Decision.............................31
         Section 7.05.     Indemnification....................................31
         Section 7.06.     Successor Administrative Agent.....................32


Article VIII
                      MISCELLANEOUS...........................................32

         Section 8.01.     Amendments, Etc....................................32
         Section 8.02.     Notices, Etc.......................................33
         Section 8.03.     No Waiver; Remedies................................33
         Section 8.04.     Costs, Expenses and Taxes..........................33
         Section 8.05.     Right of Set-off...................................36
         Section 8.06.     Binding Effect.....................................36
         Section 8.07.     Assignments and Participations.....................36
         Section 8.08.     Tax Structure Disclosure...........................40
         Section 8.09.     Governing Law......................................40
         Section 8.10.     WAIVER OF JURY TRIAL...............................40
         Section 8.11.     Execution in Counterparts..........................41
         Section 8.12.     Severability.......................................41
         Section 8.13.     Headings...........................................41
         Section 8.14.     Entire Agreement...................................41

SCHEDULES

I        Existing Facilities
II       Commitments

                                       ii
<PAGE>

EXHIBITS

A-1      Form of Notice of Borrowing
A-2      Form of Notice of Conversion
B        Form of Assignment and Acceptance
C-1      Form of Opinion of General Counsel for the Company
C-2      Form of Opinion of Counsel for the Company
C-3      Form of Opinion of General Counsel for the Company upon Extension
         of the Revolving Period and Exercise of the Term Loan Conversion Option
C-4      Form of Opinion of Counsel for the Company upon Extension
         of the Revolving Period and Exercise of the Term Loan Conversion Option
D        Form of Opinion of Counsel for the Administrative Agent
E        Form of Request for Extension of the Revolving Period
F        Form of Term Loan Conversion Notice


                                      iii
<PAGE>

                                CREDIT AGREEMENT
                            Dated as of April 1, 2003


     FLORIDA POWER  CORPORATION  d/b/a PROGRESS ENERGY FLORIDA,  INC., a Florida
corporation (the "Company"), the banks listed on the signature pages hereof (the
"Banks"), BANK ONE, N.A. and DEUTSCHE BANK AG NEW YORK BRANCH, as Co-Syndication
Agents, WACHOVIA BANK, NATIONAL ASSOCIATION, as Documentation Agent and JPMORGAN
CHASE BANK  ("JPMorganChase"),  as  administrative  agent  (the  "Administrative
Agent") for the Lenders (as hereinafter defined) hereunder.

                                   Article I
                        DEFINITIONS AND ACCOUNTING TERMS

     Section 1.01. Certain Defined Terms.

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

          "Administrative  Agent" has the meaning  specified in the introductory
     paragraph hereof.

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

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

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

          "Applicable  Margin"  means on any date,  the rate per annum set forth
     below for the  applicable  Type of Advance,  determined by reference to the
     ratings assigned to the Reference Securities:



<PAGE>

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

----------------------------------------------------------------------------------------------------------------------------
                    LEVEL 1           LEVEL 2           LEVEL 3            LEVEL 4           LEVEL 5           LEVEL 6

Basis for      If the Reference  If the Reference  If the Reference   If the Reference  If the Reference  If the Reference
Pricing        Securities are    Securities are    Securities are     Securities are    Securities are    Securities are
               rated at least    rated lower than  rated lower than   rated lower       rated lower       rated low than
               A+ by S&P or      Level 1 but at    Level 2 but at     than Level 3      than Level 4      Level 5 or
               at lease A1 by    least A by S&P    least A- by S&P    but at least      but at least      unrated
               Moody's           or at least A2    or at least A3     BBB+ by S&P or    BBB by S&P or
                                 by Moody's        by Moody's         or Baa1 by        Baa2 by Moody's
                                                                      Moody's
----------------------------------------------------------------------------------------------------------------------------
Eurodollar          0.400%            0.500%             0.600%            0.825%            0.925%            1.200%
Rate
----------------------------------------------------------------------------------------------------------------------------
Base Rate           0.0%              0.0%               0.0%              0.0%              0.0%             0.200%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

     The  Applicable  Margin  will  increase by 0.125% for at any time that more
     than 33% of the  Commitments  are utilized.  The Applicable  Margin will be
     redetermined on the date of any change in the rating assigned by Standard &
     Poor's or Moody's, as the case may be, to the Reference Securities.  If and
     so long as an Event of Default shall have occurred and shall be continuing,
     the Applicable  Margin will increase by 2.00%.  If the ratings  assigned to
     the  Reference  Securities  by  Standard  &  Poor's  and  Moody's  are  not
     comparable  (i.e., a "split rating"),  and (i) the ratings  differential is
     one category,  the higher of such two ratings shall control,  unless either
     rating is below  BBB- (in the case of  Standard  & Poor's)  or Baa3 (in the
     case of  Moody's),  in which  case the  lower  of such  two  ratings  shall
     control,  or (ii) the ratings  differential is two or more categories,  the
     rating  that is one below  the  higher of the two  ratings  shall  control,
     unless  either  rating is below BBB- (in the case of  Standard & Poor's) or
     Baa3 (in the case of Moody's),  in which case the lower of such two ratings
     shall control. If the Company exercises the Term Loan Conversion Option, at
     all times after the last day of the Revolving Period, the Applicable Margin
     will increase by 0.250% for Levels 1 through 5 and by 0.500% for Level 6.

          "Approved  Fund" means any Fund that is administered or managed by (a)
     a Lender,  (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
     an entity that administers or manages a Lender.

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

          "Bank" has the meaning specified in the introductory paragraph hereof.

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

                                       2
<PAGE>

               (i) the rate of interest  announced  publicly by JPMorganChase in
          New York, New York, from time to time, as JPMorganChase's  prime rate;
          and

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

          "Base Rate Advance"  means an Advance that bears  interest as provided
     in Section 2.07(a).

          "Borrowing" means a borrowing  consisting of simultaneous  Advances of
     the same Type  made by each of the  Lenders  pursuant  to  Section  2.01 or
     Converted pursuant to Section 2.09, 2.10 or 2.17.

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

          "Change  of  Control"  means  the  occurrence,  after the date of this
     Agreement,  of (i) any Person or "group"  (within the meaning of Rule 13(d)
     or 14(d) of the Securities and Exchange Commission under the Exchange Act),
     directly or indirectly,  acquiring  beneficial ownership of or control over
     securities of Progress Energy,  Inc.,  representing in excess of 30% of the
     combined voting power of all securities of Progress Energy,  Inc.  entitled
     to vote in the  election  of  directors  of Progress  Energy,  Inc. or (ii)
     Progress Energy, Inc. shall fail to own, directly or indirectly, 95% of all
     securities of the Company  entitled to vote in the election of directors of
     the Company.

          "Commitment" has the meaning specified in Section 2.01.

          "Company"  has the meaning  specified  in the  introductory  paragraph
     hereof.

          "Consolidated"  refers to the  consolidation  of the  accounts  of the
     Company and its Subsidiaries in accordance with GAAP,  including principles
     of  consolidation,  consistent with those applied in the preparation of the
     financial statements referred to in Section 4.01(e).

          "Convert", "Conversion" and "Converted" each refers to a conversion of
     Advances of one Type into  Advances of another  Type, or the selection of a
     new,  or the  renewal  of the same,  Interest  Period for  Eurodollar  Rate
     Advances, pursuant to Section 2.09 or 2.10.

          "Declining  Lender" has the  meaning  assigned to that term in Section
     2.16.

          "Domestic  Lending  Office"  means,  with  respect to any Lender,  the
     office of such Lender specified as its "Domestic  Lending Office" below its
     name on  Schedule  II hereto or such  other  office of such  Lender as such
     Lender may from time to time specify to the Company and the  Administrative
     Agent.

                                       3

<PAGE>

          "EBITDA"  of any  Person  means,  for any  period,  the sum of (i) net
     income of such Person for such  period,  but  excluding  therefrom  (to the
     extent otherwise included therein) any extraordinary  gains or losses, plus
     (ii) to the extent deducted in determining such net income for such period,
     Interest Expense, income taxes, depreciation,  depletion,  amortization and
     other non-cash charges constituting  operating expense,  determined in each
     case in accordance with GAAP consistently applied.

          "Eligible  Assignee"  means (i) any other Lender or any Affiliate of a
     Lender and (ii) (A) any other  commercial  bank organized under the laws of
     the United States, or any State thereof,  and having a combined capital and
     surplus of at least  $250,000,000 (as established in its most recent report
     of condition to its primary regulator),  (B) a savings and loan association
     or savings bank organized under the laws of the United States, or any State
     thereof, and having a combined capital and surplus of at least $250,000,000
     (as  established  in its most  recent  report of  condition  to its primary
     regulator),  (C) a commercial  bank  organized  under the laws of any other
     country  which is a member  of the OECD or has  concluded  special  lending
     arrangements  with the  International  Monetary  Fund  associated  with its
     General  Arrangements  to  Borrow of the  Cayman  Islands,  or a  political
     subdivision of any such country,  and having a combined capital and surplus
     of at least  $250,000,000  (as  established  in its most  recent  report of
     condition  to its  primary  regulator);  provided  that such bank is acting
     through a branch or agency  located in the United  States or in the country
     in which it is  organized  or another  country  which is  described in this
     clause (C),  (D) the central  bank of any country  which is a member of the
     OECD,  (E)  a  finance  company,   insurance  company  or  other  financial
     institution  or fund (whether a  corporation,  partnership or other entity)
     which is engaged in making, purchasing or otherwise investing in commercial
     loans in the ordinary course of its business,  whose outstanding  unsecured
     indebtedness  is rated AA- or better by S&P or Aa3 or better by Moody's (or
     an equivalent rating by another  nationally-recognized credit rating agency
     of similar standing if neither of such corporations is then in the business
     of rating  unsecured  indebtedness)  and (F) a Person (other than a natural
     person) approved by the Administrative  Agent and the Company (such consent
     not to be  unreasonably  withheld  and,  in the case of the  Company,  such
     consent  shall not be required  if an Event of Default or event that,  with
     the giving of notice or the passage of time, or both,  would  constitute an
     Event of Default, has occurred and is continuing);  provided,  that, in the
     case of this clause (F), "Eligible  Assignee" shall not include the Company
     or any of the Company's Affiliates or Subsidiaries;  provided, that, in the
     case of any such Person described in this clause (ii), the identity of such
     Person  is  notified  by the  proposed  assignor  to the  Company  and  the
     Administrative  Agent  (or  by the  Company  to  the  Administrative  Agent
     pursuant to Section 8.07(f)) in writing at least ten Business Days prior to
     the date of the proposed  assignment under Section 8.07 and is consented to
     in writing by the Company and the Administrative Agent (each of which shall
     not unreasonably withhold their respective consents) at least five Business
     Days prior to the date of such proposed assignment.

                                       4

<PAGE>

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

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

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

          "Eurodollar  Lending Office" means,  with respect to each Lender,  the
     office of such Lender  specified as its  "Eurodollar  Lending Office" below
     its name on Schedule II hereto  (or,  if no such office is  specified,  its
     Domestic  Lending  Office),  or such  other  office of such  Lender as such
     Lender may from time to time specify to the Company and the  Administrative
     Agent.

          "Eurodollar  Rate" means,  for the Interest Period for each Eurodollar
     Rate Advance  comprising  part of the same  Borrowing an interest  rate per
     annum equal to the average (rounded upward to the nearest whole multiple of
     1/8 of 1% per annum,  if such  average is not such a multiple) of the rates
     per annum at which  deposits in U.S.  dollars are offered by the  principal
     office of each of the Reference Banks in London,  England to prime banks in
     the London  Interbank  market at 11:00 A.M. (London time) two Business Days
     before the first day of such  Interest  Period  for a period  equal to such
     Interest Period and in an amount  substantially equal to the amount of such
     Eurodollar Rate Advance comprising part of such Borrowing to be outstanding
     during such Interest  Period from such Reference  Bank. The Eurodollar Rate
     for the Interest Period for each Eurodollar Rate Advance comprising part of
     the same Borrowing shall be determined by the  Administrative  Agent on the
     basis  of  the   applicable   rates   furnished  to  and  received  by  the
     Administrative  Agent from the Reference Banks two Business Days before the
     first day of such Interest Period,  subject,  however, to the provisions of
     Section 2.08.

          "Eurodollar  Rate  Advance"  means an Advance  that bears  interest as
     provided in Section 2.07(b).

                                       5

<PAGE>

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

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

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

          "Existing CP&L Facility" means the 364-Day Credit Agreement,  dated as
     of July 31, 2002, as amended,  among Carolina  Power & Light  Company,  the
     lenders party thereto and Citibank, N.A., as administrative agent.

          "Existing  Facilities"  refers to those  credit  agreements  listed on
     Schedule I hereto.

          "Extension  Date"  means at any  time  the  last day of the  Revolving
     Period then in effect.

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

          "First  Mortgage  Bonds"  means  those  bonds  issued  by the  Company
     pursuant to the Mortgage.

          "FPSC Order" means the order by the Florida Public Service  Commission
     that authorizes the Company to execute, deliver and perform this Agreement.

          "Fund" means any Person (other than a natural person) that is (or will
     be)  engaged  in making,  purchasing,  holding or  otherwise  investing  in
     commercial loans and similar extensions of credit in the ordinary course of
     its business.

          "GAAP" means, with respect to the covenants  contained in Section 5.01
     and all defined  terms  relating  thereto,  generally  accepted  accounting
     principles in the United States of America in effect on the date hereof and
     consistent with those used in the preparation of the most recent  financial
     statemetns referred to in Section 4.01(e) and, for all other purposes under
     this  Agreement,  generally  accepted  accounting  principles in the United
     States of America in effect from time to time.

                                       6

<PAGE>

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

          "Increasing  Commitment  Lender" has the meaning assigned to that term
     in Section 2.16(b).

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

          "Interest  Coverage Ratio" means,  for any period of four  consecutive
     fiscal quarters of the Company, the ratio of (i) Consolidated EBITDA of the
     Company and its Subsidiaries for such period to (ii) Consolidated  Interest
     Expense of the Company and its Subsidiaries for such period.

          "Interest  Expense" of any Person means, for any period,  the interest
     expense in respect of Indebtedness of such Person during such period.

                                       7

<PAGE>

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

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

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

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

     The  Administrative  Agent  shall  promptly  advise  each  Lender by telex,
     telecopy  transmission  or cable of each Interest Period so selected by the
     Company.

          "JPMorganChase"   has  the  meaning   specified  in  the  introductory
     paragraph hereof.

          "Lenders" means the Lenders listed on the signature pages hereof, each
     Assuming Lender and each Eligible Assignee that shall become a party hereto
     pursuant to Section 8.07.

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

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

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

                                       8

<PAGE>

          "Moody's"  means  Moody's  Investors  Service,  Inc., or any successor
     thereto.

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

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

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

          "Notice of Conversion" has the meaning specified in Section 2.10.

          "OECD"   means  the   Organization   for  Economic   Cooperation   and
     Development.

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

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

          "Reference  Banks" means  JPMorganChase  and Wachovia  Bank,  National
     Association.

          "Reference   Securities"   means  the  long-term   unsecured   senior,
     non-credit enhanced debt of the Company.

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

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

          "Revolving  Period" means the period  beginning on the date hereof and
     ending on March 30,  2004,  or, as to any Lender  other than any  Declining
     Lender, such later date as to which the Lenders may from time to time agree
     pursuant to Section 2.16.

          "S&P" means Standard & Poor's Ratings Group, or any successor thereto.

                                       9

<PAGE>

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

          "Term Loan Conversion Notice" has the meaning assigned to that term in
     Section 2.17.

          "Term  Loan  Conversion  Option"  means the  option of the  Company to
     convert the Advances into term loans in accordance with Section 2.17.

          "Termination  Date"  means the earlier to occur of (i) the last day of
     the Revolving Period, or, if the Company shall have exercised the Term Loan
     Conversion  Option,  the first anniversary of the last day of the Revolving
     Period,  and (ii)  the date of  termination  or  reduction  in whole of the
     Commitments pursuant to Section 2.04(a) or 6.01.

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

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

     Section 1.02. Computation of Time Periods.

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

Section 1.03.     Accounting Terms.

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

                                       10

<PAGE>

                                   Article II
                        AMOUNTS AND TERMS OF THE ADVANCES

     Section 2.01. The Advances.

     Each Lender severally agrees,  on the terms and conditions  hereinafter set
forth,  to make  Advances to the Company  from time to time on any  Business Day
during  the period  from the date  hereof to but  excluding  the last day of the
Revolving Period,  in an aggregate amount  outstanding not to exceed at any time
the amount set  opposite  such  Lender's  name on Schedule II hereto or, if such
Lender has entered into any Assignment and Acceptance or is an Assuming  Lender,
set forth for such Lender in the Register maintained by the Administrative Agent
pursuant to Section 8.07(c), as such amount may be reduced or increased pursuant
to Section 2.04 (such  Lender's  "Commitment").  Each  Borrowing  shall be in an
aggregate amount not less than $10,000,000 or an integral multiple of $1,000,000
in excess  thereof  and shall  consist of  Advances of the same Type made on the
same day by the Lenders ratably according to their respective Commitments. Until
the last  day of the  Revolving  Period,  within  the  limits  of each  Lender's
Commitment,  the Company may from time to time borrow, repay pursuant to Section
2.05 or prepay pursuant to Section 2.11(b) and reborrow under this Section 2.01.

     Section 2.02. Making the Advances.

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

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

                                       11

<PAGE>

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

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

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

     Section 2.03. Facility Fee.

     The Company  agrees to pay to the  Administrative  Agent for the account of
each Lender a facility fee on each Lender's  Commitment,  irrespective of usage,
from the date  hereof,  in the case of each Bank,  and from the  effective  date
specified in the Assignment and Acceptance pursuant to which it became a Lender,
in the case of each other Lender,  until the Termination Date, payable quarterly
in arrears on the last day of each March,  June,  September and December  during
the term of such Lender's  Commitment and on the Termination Date, at a rate per
annum  determined  by  reference  to  the  ratings  assigned  to  the  Reference
Securities as set forth below:

                                       12

<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

---------------------------------------------------------------------------------------------------
                   LEVEL 1       LEVEL 2      LEVEL 3       LEVEL 4       LEVEL 5       LEVEL 6
Basis for
Pricing         If the        If the        If the       If the        If the        If the
                Reference     Reference     Reference    Reference     Reference     Reference
                Securities    Securities    Securities   Securities    Securities    Securities
                are rated at  are rated     are rated    are rated     are rated     are rated
                least A+ by   lower than    lower than   lower than    lower than    lower than
                S&P or at     Level 1 but   Level 2 but  Level 3 but   Level 4 but   Level 5 or
                least A1 by   at least A    at least A-  at least      at least BBB  unrated
                Moody's       by S&P or at  by S&P or    BBB+ by S&P   by S&P or at
                              least A2 by   at least A3  or at least   least Baa2
                              Moody's       by Moody's   Baa1 by       by Moody's
                                                         Moody's
---------------------------------------------------------------------------------------------------

Facility Fee        0.10%        0.125%        0.150%       0.175%        0.200%        0.300%
---------------------------------------------------------------------------------------------------
</TABLE>

The  Facility  Fee rate will be  redetermined  on the date of any  change in the
rating  assigned  by  Standard & Poor's or  Moody's,  as the case may be, to the
Reference  Securities.  If the ratings  assigned to the Reference  Securities by
Standard & Poor's and Moody's are not comparable  (i.e., a "split rating"),  and
(i) the ratings  differential  is one  category,  the higher of such two ratings
shall  control,  unless  either  rating is below BBB- (in the case of Standard &
Poor's)  or Baa3 (in the case of  Moody's),  in which case the lower of such two
ratings  shall  control,  or  (ii)  the  ratings  differential  is two  or  more
categories,  the rating  that is one below the higher of the two  ratings  shall
control,  unless  either rating is below BBB- (in the case of Standard & Poor's)
or Baa3 (in the case of  Moody's),  in which case the lower of such two  ratings
shall control.

     Section 2.04. Changes in the Commitments.

     Reduction or  Termination  of the  Commitments.  The Company shall have the
right,  upon at least three Business Days' notice to the  Administrative  Agent,
irrevocably  and permanently to terminate in whole or reduce ratably in part the
respective Commitments of the Lenders; provided that the aggregate amount of the
Commitments  of the Lenders shall not be reduced to an amount which is less than
the aggregate  principal amount of the Advances then  outstanding;  and provided
further,  that  each  partial  reduction  shall be in the  aggregate  amount  of
$10,000,000  or an  integral  multiple  of  $1,000,000  in  excess  thereof.  In
addition,  on  each  day on and  after  the  effective  date  of the  Term  Loan
Conversion Option on which the aggregate  Commitments shall exceed the aggregate
principal  amount  of the  Advances  then  outstanding,  the  Commitments  shall
automatically and permanently reduce by an amount equal to such excess.

     Section 2.05. Repayment of Advances.

     The Company shall repay the  principal  amount of each Advance made by each
Lender on the Termination Date.

                                       13

<PAGE>

     Section 2.06. Evidence of Indebtedness.

     Any Lender may request that any Advances  made by it be evidenced by one or
more  promissory  notes. In such event,  the Company shall prepare,  execute and
deliver to such Lender one or more notes payable to the order of such Lender (or
if  requested by such Lender,  to such Lender and its  assignees)  and in a form
approved by the Administrative Agent. Thereafter, the Advances evidenced by such
notes and  interest  thereon  shall at all  times  (including  after  assignment
pursuant  to  Section  8.07) be  represented  by one or more  notes in such form
payable to the order of the payee named therein.

     Section 2.07. Interest on Advances.

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

     (a) Base Rate Advances.  If such Advance is a Base Rate Advance, a rate per
annum equal at all times to the Base Rate in effect from time to time,  plus the
Applicable  Margin for Base Rate Advances,  payable  quarterly in arrears on the
last day of each September,  December, March, and June and on the date such Base
Rate Advance shall be paid in full.

     (b) Eurodollar Rate Advances. If such Advance is a Eurodollar Rate Advance,
a rate per annum equal at all times during the Interest  Period for such Advance
to the Eurodollar Rate for such Interest Period,  plus the Applicable Margin for
Eurodollar  Rate Advances,  payable on the last day of such Interest Period and,
if such Interest  Period has a duration of more than three  months,  on each day
which occurs during such  Interest  Period every three months from the first day
of such Interest Period.

     Section 2.08. Additional Interest on Eurodollar Rate Advances.

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

                                       14

<PAGE>

     Section 2.09. Interest Rate Determination.

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

     (b) The  Administrative  Agent shall give prompt  notice to the Company and
the Lenders of the  applicable  interest rate  determined by the  Administrative
Agent for purposes of Section  2.07(a) or (b), and the applicable  rate, if any,
furnished by each Reference Bank for  determining  the applicable  interest rate
under Section 2.07(b).

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

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

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

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

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

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

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

     (e) If the Company shall fail to select the duration of any Interest Period
for any Eurodollar Rate Advances in accordance with the provisions  contained in
the definition of "Interest  Period" in Section 1.01, the  Administrative  Agent
will  forthwith  so notify the Company and the  Lenders and such  Advances  will
automatically,  on the last day of the then existing  Interest Period  therefor,
Convert into Base Rate Advances.  If an Event of Default shall have occurred and
be continuing,  each Eurodollar Rate Advance shall automatically  Convert into a
Base Rate  Advance  at the end of the  Interest  Period  then in effect for such
Eurodollar Rate Advance.

                                       15

<PAGE>

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

     Section 2.10. Voluntary Conversion of Advances.

     The  Company  may,  on any  Business  Day  prior  to the  Termination  Date
(including  any date occurring on and after the  effectiveness  of the Term Loan
Conversion Option), upon notice given to the Administrative Agent not later than
11:00 A.M.  (New York City time) on the third  Business Day prior to the date of
the proposed Conversion,  in the case of any proposed Conversion into Eurodollar
Rate Advances,  and on the date of the proposed  Conversion,  in the case of any
proposed  Conversion  into Base Rate Advances,  and subject to the provisions of
Sections  2.09 and 2.13 and so long as no Event of Default has  occurred  and is
continuing on the date of such proposed Conversion,  Convert all Advances of one
Type  comprising  the same  Borrowing  into Advances of another Type;  provided,
however,  that any  Conversion  of any  Eurodollar  Rate Advances into Base Rate
Advances  shall be made on, and only on, the last day of an Interest  Period for
such  Eurodollar  Rate Advances.  Each such notice of a Conversion (a "Notice of
Conversion")  shall be by telex,  telecopier  or cable,  confirmed  promptly  in
writing,  in substantially the form of Exhibit A-2 hereto and shall,  within the
restrictions specified above, specify (i) the date of such Conversion,  (ii) the
aggregate  amount of, Type of, and Interest  Periods (if any)  applicable to the
Advances to be  Converted,  (iii) the Type of Advance to which such Advances (or
portions  thereof) are proposed to be Converted,  and (iv) if such Conversion is
into Eurodollar Rate Advances, the duration of the Interest Period for each such
Advance.

     Section 2.11. Prepayments of Advances.

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

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

                                       16

<PAGE>

     Section 2.12. Increased Costs.

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

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

17

<PAGE>

     Section 2.13. Illegality.

     Notwithstanding any other provision of this Agreement,  if any Lender shall
notify the Administrative  Agent that the introduction of or any change in or in
the  interpretation  of any law or regulation makes it unlawful,  or any central
bank or other  governmental  authority  asserts  that it is  unlawful,  for such
Lender or its Eurodollar Lending Office to perform its obligations  hereunder to
make  Eurodollar  Rate Advances or to fund or maintain  Eurodollar Rate Advances
(i) the  obligation  of the  Lenders to make  Eurodollar  Rate  Advances,  or to
Convert  Advances into  Eurodollar  Rate Advances,  shall be suspended until the
Administrative  Agent  shall  notify  the  Company  and  the  Lenders  that  the
circumstances causing such suspension no longer exist and (ii) the Company shall
forthwith  prepay in full all  Eurodollar  Rate  Advances  of all  Lenders  then
outstanding,  together with interest accrued thereon, unless the Company, within
five  Business  Days of  notice  from the  Administrative  Agent,  Converts  all
Eurodollar Rate Advances of all Lenders then outstanding into Base Rate Advances
in accordance with Section 2.10.

     Section 2.14. Payments and Computations.

     (a) The Company shall make each payment hereunder not later than 11:00 A.M.
(New York City time) on the day when due in U.S.  dollars to the  Administrative
Agent  at its  address  referred  to in  Section  8.02 in same  day  funds.  The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or fees (other than pursuant to
Section 2.08 or 2.12) ratably to the Lenders for the account of their respective
Applicable Lending Offices,  and like funds relating to the payment of any other
amount  payable to any Lender to such Lender for the  account of its  Applicable
Lending Office,  in each case to be applied in accordance with the terms of this
Agreement.  Upon its acceptance of an Assignment and Acceptance and recording of
the information  contained  therein in the Register pursuant to Section 8.07(d),
from and after the effective date specified in such  Assignment and  Acceptance,
the  Administrative  Agent  shall  make all  payments  hereunder  respect of the
interest assigned thereby to the Lender assignee thereunder,  and the parties to
such Assignment and Acceptance  shall make all  appropriate  adjustments in such
payments for periods prior to such effective date directly between themselves.

     (b) All  computations  of interest based on clause (i) of the definition of
"Base Rate" or of fees  payable  hereunder  shall be made by the  Administrative
Agent on the  basis of a year of 365 or 366  days,  as the case may be,  and all
computations  of interest based on the Eurodollar  Rate or on clause (ii) of the
definition  of "Base Rate" shall be made by the  Administrative  Agent,  and all
computations of interest  pursuant to Section 2.08 shall be made by a Lender, on
the basis of a year of 360  days,  in each  case for the  actual  number of days
(including  the first day but excluding the last day) occurring in the period of
which  such   interest  or  fees  are  payable.   Each   determination   by  the
Administrative  Agent  (or,  in the case of  Section  2.08,  by a Lender)  of an
interest rate hereunder shall be conclusive and binding for all purposes.

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

                                       18

<PAGE>

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

     Section 2.15. Sharing of Payments, Etc.

     If any Lender shall  obtain any payment  (whether  voluntary,  involuntary,
through the exercise of any right of set-off,  or  otherwise)  on account of the
Advances  made by it (other than  pursuant to Section 2.08 or 2.12) in excess of
its ratable  share of payments  on account of the  Advances  obtained by all the
Lenders,  such Lender  shall  forthwith  purchase  from the other  Lenders  such
participation  in the Advances  made by them as shall be necessary to cause such
purchasing  Lender  to share  the  excess  payment  ratably  with  each of them;
provided,  however,  that  if all or any  portion  of  such  excess  payment  is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be  rescinded  and such Lender  shall repay to the  purchasing  Lender the
purchase price to the extent of such recovery,  together with an amount equal to
such Lender's  ratable share  (according to the  proportion of (i) the amount of
such Lender's required  repayment to (ii) the total amount so recovered from the
purchasing  Lender)  of any  interest  or other  amount  paid or  payable by the
purchasing  Lender in  respect of the total  amount so  recovered.  The  Company
agrees  that any  Lender so  purchasing  a  participation  from  another  Lender
pursuant  to this  Section  2.15 may, to the fullest  extent  permitted  by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Company in the amount of such participation.

     Section 2.16. Extension of the Revolving Period.

     (a) Unless (i) the Termination Date shall have occurred or (ii) the Company
shall have exercised the Term Loan Conversion  Option in accordance with Section
2.17, at least 30 days but not more than 45 days prior to each  Extension  Date,
the  Company  may  request   that  the  Lenders,   by  written   notice  to  the
Administrative  Agent (in  substantially the form attached hereto as Exhibit E),
consent to a 364-day  extension of the Revolving  Period.  Each Lender shall, in
its sole  discretion,  determine  whether to consent to such  request  and shall
notify the  Administrative  Agent of its  determination at least 20 days but not
more than 30 days prior to such  Extension  Date.  The failure to respond by any
Lender  within such time period  shall be deemed a denial of such  request.  The
Administrative  Agent  shall  deliver a notice to the Company and the Lenders no
later than 15 days prior to such  Extension  Date of the identity of the Lenders
that have consented to such extension (the "Extending  Lenders") and the Lenders
that have declined such consent (the "Declining Lenders"). If Lenders holding in
the aggregate  50% or less of the  Commitments  have  consented to the requested
extension,  the Revolving  Period shall not be extended,  and the Commitments of
all Lenders shall terminate on the last day of the Revolving Period.

                                       19

<PAGE>

     (b) If (x) Lenders holding 85% or more of the Commitments have consented to
the requested  extension or (y) Lenders  holding in the aggregate  more than 50%
but less than 85% of the Commitments  have consented to the requested  extension
and the Company  shall have,  within 5 Business  Days  following  receipt of the
notice from the Administrative Agent described in subsection (a) above, notified
the  Administrative  Agent (which notice shall be irrevocable)  that the Company
still seeks an extension of the Revolving Period, then subject to the conditions
set forth in Section 2.16(c),  then the Revolving Period shall be extended as to
such Extending Lenders only (and not as to any Declining Lender) for a period of
364 days, and the  Commitments of any Declining  Lenders shall  terminate on the
Extension Date (as  theretofore  in effect),  and all Advances of such Declining
Lenders shall be repaid to them on such date.  If the Company so requests,  each
Extending Lender shall be given the opportunity at least seven days but not more
than 15 days prior to such  Extension  Date,  in each  Extending  Lender's  sole
discretion,  to commit to increase its  Commitment  by  submission  of a written
notice setting forth the desired increase in such Extending Lender's  Commitment
to the  Administrative  Agent in  amounts  such that the  aggregate  Commitments
hereunder  after  giving  effect  to any  such  extension  and  increase  in the
Commitments shall not exceed the aggregate Commitments immediately prior to such
Extension Date. If the Administrative Agent receives commitments to increase the
Commitments from the Extending Lenders, which, when aggregated with the existing
Commitments,  (i) are less than or equal to the Commitments immediately prior to
such Extension Date, the Administrative Agent shall accept all such Commitments,
(ii) are greater than the Commitments  immediately prior to such Extension Date,
the  Administrative  Agent may determine,  in its reasonable  discretion,  which
Commitments  to  accept  and the  amounts  by  which  each  submitting  Lender's
Commitments  shall be increased  so that the  aggregate  Commitments  after such
Extension Date shall equal the aggregate  Commitments  immediately prior to such
Extension Date (any Lender whose commitment to increase its Commitment hereunder
is accepted by the Administrative Agent, an "Increasing  Commitment Lender"). If
Lenders do not consent to increase the aggregate  Commitments to an amount equal
to the Commitments immediately prior to such Extension Date, the Company may, at
least  two days but not more  than  seven  days  prior to such  Extension  Date,
request  that the  Administrative  Agent,  in its sole  discretion,  accept  the
Commitment or  Commitments  of an Eligible  Assignee or Eligible  Assignees such
that the aggregate  Commitments hereunder after such Extension Date shall not be
greater than Commitments hereunder immediately prior to such Extension Date.

     (c) Each such accepted  Eligible  Assignee and each  Increasing  Commitment
Lender shall deliver a signature page hereto  indicating that it is bound by the
terms hereof and setting  forth its  aggregate  Commitment  hereunder.  Such new
signature  page  shall   constitute  a  part  hereof  upon   acceptance  by  the
Administrative  Agent and, in the case of any  signature  page  submitted by any
Increasing  Commitment Lender, shall replace such Increasing Commitment Lender's
signature  page.  Any such extension  shall become  effective upon the Extension
Date then in effect,  if the Company shall have delivered to the  Administrative
Agent and each Lender,  on or prior to such Extension Date,  opinions of counsel
to the  Company  substantially  in the forms of  Exhibit  C- 3 and  Exhibit  C-4
attached  hereto upon which each Lender and the  Administrative  Agent may rely,
together with any governmental order referred to therein attached thereto.  Upon
satisfaction of such condition and the effectiveness of such extension, each new
Lender and Increasing  Commitment  Lender shall make Advances to the Company (A)
in the case of each new Lender,  equal to such Lender's  ratable  portion of the
Advances  outstanding  immediately  prior to such  Extension Date and (B) in the
case of each Increasing  Commitment  Lender,  equal to of such Lender's  ratable
portion of the Advances (assuming that such Lender's Commitment consists of only
the increased portion thereof)  outstanding  immediately prior to such Extension
Date,  in each case,  without  giving  effect to any  repayment  of  Advances to
Declining Lenders made on such Extension Date.

                                       20

<PAGE>

Section 2.17.     Term Loan Conversion Option.

         At least one Business Day but not more than 45 Business Days prior to
the last day of the Revolving Period, and subject to the conditions set forth in
Section 3.02 and delivery on or prior to such date of opinions of counsel to the
Company substantially in the forms of Exhibit C-3 and Exhibit C-4 attached
hereto, together with the FPSC Order referred to therein and attached thereto,
to the Administrative Agent and each of the Lenders, by submission of a written
notice (substantially in the form of Exhibit F) to the Administrative Agent, the
Company may request that the Lenders convert all Advances made hereunder into
term loans. Upon satisfaction of such conditions and delivery of such notice
(the "Term Loan Conversion Notice"), the Advances shall convert into term loans
on the last day of the Revolving Period and all such Advances shall become due
and payable on the first anniversary of the last day of the Revolving Period.
Notwithstanding the foregoing, any Term Loan Conversion Notice may be delivered
by the Company in conjunction with (and simultaneously with) any request for
extension of the Revolving Period pursuant to Section 2.16, above. If such
extension of the Revolving Period shall occur as provided in Section 2.16, such
Term Loan Conversion Notice shall be deemed withdrawn and shall be of no further
effect.

                                  Article III
                              CONDITIONS OF LENDING

     Section 3.01. Conditions Precedent to Closing.

     The Commitments of the Lenders shall not become  effective unless and until
the Administrative Agent shall have received the following:

     (a) Promissory notes, if requested by any Lender pursuant to Section 2.06.

     (b) Certified  copies of the  resolutions  of the Board of Directors of the
Company  approving  this  Agreement,  and  of  all  documents  evidencing  other
necessary corporate action and governmental approvals, including the FPSC Order,
with respect to this Agreement.

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

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

                                       21

<PAGE>

     (e)   Certified   copies  of  all  required   governmental   approvals  and
authorizations.

     (f) Certified copy of the restated charter and bylaws of the Company.

     (g)  Evidence  satisfactory  to  the  Administrative  Agent  that  (i)  the
conditions  precedent set forth in Section 3.01 of the  three-year  $200,000,000
Credit Agreement,  dated as of the date hereof,  among the Company,  the lenders
named  therein  and  JPMorganChase,  as  administrative  agent,  shall have been
satisfied,  (ii) the  Existing  Facilities  shall have been  terminated  and all
amounts  outstanding  thereunder  shall  have  been  paid in full and  (iii) the
Commitments  (as defined  therein)  under the Existing CP&L Facility  shall have
been reduced to no more than $165,000,000. Each Bank that is also a lender under
the  Existing  Facility  described  in  item  (ii)  of  the  Schedule  I  hereof
(hereinafter referred to in this subsection (g) as the "Existing JPMC Facility")
hereby  agrees that the  termination  notice  delivered  on April 1, 2003 by the
Company to the agent under the Existing JPMC  Facility  shall be effective as of
the date hereof,  notwithstanding  any lack of prior notice that would otherwise
be required under the Existing JPMC Facility.

     (h)  Favorable  opinions of counsel for the Company,  substantially  in the
forms of Exhibit C-1 and Exhibit C-2 hereto and as to such other  matters as any
Lender through the Administrative Agent may reasonably request.

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

     Section 3.02. Conditions Precedent to Each Borrowing and to the Exercise of
the Term Loan Conversion Option.

     The  obligation  of each Lender to make an Advance on the  occasion of each
Borrowing  (including  the initial  Borrowing) and the obligation to convert the
Advances into term loans in accordance with Section 2.17 shall be subject to the
further  conditions  precedent that (i) in the case of the making of an Advance,
the Administrative  Agent shall have received the written confirmatory Notice of
Borrowing  with  respect  thereto,  and  (ii) on the date of such  Borrowing  or
exercise of the Term Loan Conversion  Option,  as the case may be, the following
statements  shall be true (and each of the  giving of the  applicable  Notice of
Borrowing or Term Loan Conversion Notice, as the case may be, and the acceptance
by the Company of the proceeds of such Borrowing, in the case of a Borrowing, or
the  conversion of the Advances into term loans,  in the case of such  exercise,
shall constitute a representation  and warranty by the Company that, on the date
of such Borrowing or exercise, as the case may be, such statements are true):

     (a)  The   representations   and  warranties   contained  in  Section  4.01
(excluding,  in the case of any Borrowing that will not result in an increase in
the aggregate principal amount of Advances  outstanding,  the representation and
warranty  contained in the last sentence of Section  4.01(e)) are correct on and
as of the date of such Borrowing or the date of  effectiveness  of the Term Loan
Conversion  Option,  as the case may be,  before and after giving  effect to (x)
such  Borrowing  and to the  application  of the proceeds  therefrom or (y) such
effectiveness, as the case may be, as though made on and as of such date; and

                                       22

<PAGE>

     (b) No event has  occurred  and is  continuing,  or would  result from such
Borrowing or from the  application of the proceeds  therefrom or the exercise of
such Term Loan Conversion  Option, as the case may be, that constitutes an Event
of Default or that would  constitute an Event of Default but for the requirement
that notice be given or time elapse, or both.

                                   Article IV
                         REPRESENTATIONS AND WARRANTIES

     Section 4.01. Representations and Warranties of the Company.

     The Company represents and warrants as follows:

     (a) The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Florida.

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

     (c) No  authorization  or approval or other  action by, and no notice to or
filing with any  governmental  authority or regulatory  body is required for the
due execution,  delivery and performance by the Company of this Agreement, other
than the FPSC Order,  which has been duly issued, is final and in full force and
effect.

     (d) This  Agreement  is the  legal,  valid and  binding  obligation  of the
Company enforceable against the Company in accordance with its terms.

     (e) The  Consolidated  balance sheet of the Company and its Subsidiaries as
at December  31, 2002,  and the related  Consolidated  statements  of income and
retained  earnings of the Company and its  Subsidiaries for the fiscal year then
ended,  copies of which have been  furnished to each Lender,  fairly present the
financial  condition of the Company and its Subsidiaries as at such date and the
results of the  operations  of the Company and its  Subsidiaries  for the period
ended on such date,  all in accordance  with GAAP  consistently  applied.  Since
December 31, 2002,  there has been no material  adverse  change in the financial
condition,  operations or properties of the Company and its Subsidiaries,  taken
as a whole.

     (f) Except as described in the reports and  registration  statements  which
the Company has filed with the Securities and Exchange  Commission  prior to the
date of this Agreement,  there is no pending or threatened  action or proceeding
affecting  the  Company  or any  Subsidiary  of the  Company  before  any court,
governmental  agency or arbitrator,  which may materially  adversely  affect the
financial condition, operations or properties of the Company.

     (g) No proceeds of any Advance  will be used to acquire any security in any
transaction  which  is  subject  to  Sections  12,  13 and 14 of the  Securities
Exchange Act of 1934.

                                       23

<PAGE>

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

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

     (j) No  Termination  Event has occurred or is reasonably  expected to occur
with respect to any Plan.

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

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

     (m) All written information  furnished by the Company to the Administrative
Agent  and the  Lenders  in  connection  with  this  Agreement  (the  "Disclosed
Information") was (and all information furnished in the future by the Company to
the  Administrative  Agent and the Lenders  will be) complete and correct in all
respects material to the  creditworthiness of the Company when delivered.  As of
the date hereof, the Disclosed Information does not contain any untrue statement
of a  material  fact or omit to  state a  material  fact  necessary  to make the
statements  contained therein not misleading in light of the circumstances under
which made.

                                   Article V
                            COVENANTS OF THE COMPANY

     Section 5.01. Affirmative Covenants.

     So long as any Advances  shall  remain  unpaid or any Lender shall have any
Commitment  hereunder,  the Company  shall,  unless the Majority  Lenders  shall
otherwise consent in writing:

                                       24

<PAGE>

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

     (b)  Preservation of Corporate  Existence,  Etc.  Preserve and maintain its
corporate existence, rights (charter and statutory) and franchises.

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

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

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

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

     (g) Taxes.  File, and cause each Subsidiary of the Company to file, all tax
returns  (federal,  state and local)  required  to be filed and paid and pay all
taxes shown  thereon to be due,  including  interest and  penalties,  or provide
adequate  reserves for payment thereof other than such taxes that the Company or
such Subsidiary is contesting in good faith by appropriate legal proceedings and
for which adequate reserves are made in accordance with GAAP.

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

     (i) Reporting Requirements. Furnish to the Lenders:

          (i) as soon as available and in any event within 60 days after the end
     of each of the first three  quarters of each fiscal year of the Company,  a
     Consolidated  balance sheet of the Company and its  Subsidiaries  as at the
     end of such  quarter and  Consolidated  statements  of income and  retained
     earnings of the Company and its Subsidiaries  for the period  commencing at
     the  end of the  previous  fiscal  year  and  ending  with  the end of such
     quarter,  certified by the treasurer or the chief financial  officer of the
     Company,  together with a certificate  of the treasurer or chief  financial

                                       25

<PAGE>

     officer of the Company, setting forth in reasonable detail the calculations
     of the Company's  compliance with Sections  5.01(j) and 5.01(k) and stating
     that no Event of Default  and no event  that,  with the giving of notice or
     lapse of time or both,  would  constitute  an Event of Default has occurred
     and is continuing, or if an Event of Default or such event has occurred and
     is continuing,  a statement  setting forth details of such Event of Default
     or event and the action  that the  Company  has taken and  proposes to take
     with respect thereto;

          (ii) as soon as  available  and in any event  within 90 days after the
     end of each fiscal  year of the  Company,  a copy of the annual  report for
     such year for the Company  and its  Subsidiaries,  containing  Consolidated
     financial  statements  for such year  audited and  certified  by Deloitte &
     Touche or other independent public  accountants  acceptable to the Majority
     Lenders,  together with a certificate  of the treasurer or chief  financial
     officer of the Company, setting forth in reasonable detail the calculations
     of the Company's  compliance with Sections  5.01(j) and 5.01(k) and stating
     that no Event of Default  and no event  that,  with the giving of notice or
     lapse of time or both,  would  constitute  an Event of Default has occurred
     and is continuing, or if an Event of Default or such event has occurred and
     is continuing,  a statement  setting forth details of such Event of Default
     or event and the action  that the  Company  has taken and  proposes to take
     with respect thereto;

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

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

          (v) immediately  upon any Responsible  Officer's  obtaining  knowledge
     thereof,  notice of any change in any rating  assigned by Standard & Poor's
     or Moody's to the Reference Securities;

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

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

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

                                       26

<PAGE>

     (j) Indebtedness to Total Capitalization.  Maintain at all times a ratio of
Consolidated   Indebtedness  of  the  Company  and  its  Subsidiaries  to  Total
Capitalization of not more than 0.65:1.0.

     (k) Interest  Coverage  Ratio.  As of the end of each fiscal quarter of the
Company, maintain an Interest Coverage Ratio of not less than 3.0:1.0.

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

     Section 5.02. Negative Covenants.

     So long as any Advances  shall  remain  unpaid or any Lender shall have any
Commitment  hereunder,  the Company will not, without the written consent of the
Majority Lenders:

     (a) Liens,  Etc.  Create,  incur,  assume or suffer to exist, or permit any
Subsidiary of the Company to create, incur, assume or suffer to exist, any lien,
security  interest  or  other  charge  or  encumbrance,  or any  other  type  of
preferential arrangement, upon or with respect to any of its properties, whether
now owned or hereafter  acquired,  or assign,  or permit any  Subsidiary  of the
Company  to  assign,  any right to  receive  income,  in each case to secure any
Indebtedness  of any  Person,  other  than (i)  liens,  mortgages  and  security
interests created by the Mortgage,  (ii) liens and security interests  affecting
the fuel used by the Company in its power generating operations and (iii) liens,
mortgages  and security  interests  securing  other  Indebtedness  not exceeding
$100,000,000;  provided, however, that, in the event that and for so long as the
First  Mortgage  Bonds are  rated  lower  than  BBB- or Baa3 by S&P or  Moody's,
respectively, or, in the event that neither of such credit rating agencies is in
the business of rating the First Mortgage Bonds, lower than an equivalent rating
of the First  Mortgage  Bonds by  another  nationally-recognized  credit  rating
agency of similar standing, the Company's right to continue to create, incur and
suffer  to  exist  liens,   mortgages  and  security  interests  securing  other
Indebtedness pursuant to the foregoing clause (iii) shall be suspended.

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

                                       27

<PAGE>

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

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

     (e) Sales, Etc. of Assets.  Sell, lease,  transfer or otherwise dispose of,
or permit any  Subsidiary of the Company to sell,  lease,  transfer or otherwise
dispose  of, any of its assets,  other than the  following  sales:  (i) sales of
generating capacity to the Company's wholesale customers,  (ii) sales of nuclear
fuel,  (iii)  sales of  accounts  receivable,  (iv) sales in  connection  with a
transaction  authorized  by  subsection  (d)  of  this  Section,  (v)  sales  of
investments  in securities  with a maturity of less than one year, or (vi) other
sales not  exceeding  $250,000,000  in the  aggregate  in any fiscal year of the
Company.

     (f) Line of Business.  Engage in any business other than  businesses of the
type  conducted  by the  Company  and its  Subsidiaries  on the date  hereof and
businesses reasonably related thereto.

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

                                   Article VI
                                EVENTS OF DEFAULT

     Section 6.01. Events of Default.

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

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

     (b) Any  representation  or warranty  made by the Company  herein or by the
Company (or any of its officers) in connection  with this Agreement  shall prove
to have been incorrect in any material respect when made; or

                                       28

<PAGE>

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

     (d) The Company or any of its Subsidiaries  shall fail to pay any amount in
respect of any Indebtedness in excess of $35,000,000 (but excluding Indebtedness
hereunder)  of the  Company  or such  Subsidiary  (as the case  may be),  or any
interest or premium thereon,  when due (whether by scheduled maturity,  required
prepayment,  acceleration,  demand or otherwise) and such failure shall continue
after the  applicable  grace  period,  if any,  specified  in the  agreement  or
instrument  relating  to such  Indebtedness;  or any  other  default  under  any
agreement or instrument  relating to any such Indebtedness,  or any other event,
shall  occur and shall  continue  after the  applicable  grace  period,  if any,
specified  in such  agreement  or  instrument,  if the effect of such default or
event is to accelerate,  or to permit the  acceleration of, the maturity of such
Indebtedness;  or any such Indebtedness shall be declared to be due and payable,
or  required  to be  prepaid  (other  than  by a  regularly  scheduled  required
prepayment), prior to the stated maturity thereof; or

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

     (f) Any judgment or order for the payment of money in excess of $35,000,000
shall be rendered  against the Company or any of its Subsidiaries and either (i)
enforcement  proceedings  shall have been  commenced by any  creditor  upon such
judgment  or order or (ii)  there  shall be any  period of 30  consecutive  days
during which a stay of  enforcement  of such  judgment or order,  by reason of a
pending appeal or otherwise, shall not be in effect; or

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

                                       29

<PAGE>

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

     (i) A Change of Control shall occur;

then, and in any such event, the Administrative  Agent shall at the request,  or
may with the consent,  of the Majority  Lenders,  by notice to the Company,  (i)
declare the Commitments and the obligation of each Lender to make Advances to be
terminated,  whereupon the same shall forthwith terminate,  and (ii) declare the
Advances,  all  interest  thereon  and all  other  amounts  payable  under  this
Agreement to be forthwith  due and payable,  whereupon  the  Advances,  all such
interest  and all such amounts  shall  become and be forthwith  due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Company; provided, however, that in the event
of an actual or deemed  entry of an order for relief with respect to the Company
or any of its Subsidiaries under the Federal Bankruptcy Code, (A) the obligation
of each Lender to make Advances  shall  automatically  be terminated and (B) the
Advances,  all such interest and all such amounts shall automatically become and
be due and payable,  without presentment,  demand,  protest or any notice of any
kind, all of which are hereby expressly waived by the Company.

                                  Article VII
                            THE ADMINISTRATIVE AGENT


     Section 7.01. Authorization and Action.

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

     Section 7.02. Administrative Agent's Reliance, Etc.

     Neither the Administrative Agent nor any of its directors, officers, agents
or  employees  shall be liable for any action taken or omitted to be taken by it
or them under or in connection with this Agreement,  except for its or their own
gross negligence or willful misconduct.  Without limitation of the generality of
the  foregoing,  the  Administrative  Agent:  (i) may consult with legal counsel
(including  counsel for the Company),  independent  public accountants and other
experts  selected by it and shall not be liable for any action  taken or omitted
to be taken in good faith by it in  accordance  with the advice of such counsel,
accountants or experts;  (ii) makes no warranty or  representation to any Lender
and shall not be  responsible  to any Lender for any  statements,  warranties or
representations  made in or in connection with this  Agreement;  (iii) shall not

                                       30

<PAGE>

have any duty to ascertain or to inquire as to the  performance or observance of
any of the terms,  covenants or conditions of this  Agreement on the part of the
Company or to inspect  the  property  (including  the books and  records) of the
Company;  (iv) shall not be  responsible  to any  Lender for the due  execution,
legality, validity,  enforceability,  genuineness,  sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto; and (v)
shall incur no  liability  under or in respect of this  Agreement by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telegram,  telecopy,  cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.

     Section 7.03. The Administrative Agent and its Affiliates.

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

     Section 7.04. Lender Credit Decision.

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

     Section 7.05. Indemnification.

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

                                       31

<PAGE>

     Section 7.06. Successor Administrative Agent.

     The  Administrative  Agent may resign at any time by giving  written notice
thereof to the  Lenders  and the  Company and may be removed at any time with or
without cause by the Majority Lenders. Upon any such resignation or removal, the
Majority  Lenders  shall  have the right to appoint a  successor  Administrative
Agent. If no successor  Administrative Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the  retiring  Administrative  Agent's  giving of notice of  resignation  or the
Majority  Lenders'  removal  of the  retiring  Administrative  Agent,  appoint a
successor Administrative Agent, which shall be a commercial bank organized under
the laws of the United  States of America or of any State  thereof  and having a
combined capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment  as  Administrative  Agent  hereunder by a successor  Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested  with all the  rights,  powers,  privileges  and  duties of the  retiring
Administrative Agent, and the retiring  Administrative Agent shall be discharged
from its  duties  and  obligations  under  this  Agreement.  After any  retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent,
the  provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative  Agent under this
Agreement.

                                  Article VIII
                                  MISCELLANEOUS

     Section 8.01. Amendments, Etc.

     No amendment or waiver of any provision of this  Agreement,  nor consent to
any departure by the Company  therefrom,  shall in any event be effective unless
the same shall be in writing and signed by the Majority  Lenders,  and then such
waiver or consent shall be effective  only in the specific  instance and for the
specific purpose for which given; provided,  however, that no amendment,  waiver
or consent shall,  unless in writing and signed by all of the Lenders, do any of
the following: (a) waive any of the conditions specified in Section 3.01 or 3.02
(b) change the  Commitment of any Lender or subject any Lender to any additional
obligations  (other than pursuant to Section 2.04 or Section  2.16),  (c) reduce
the  principal  of, or  interest  on, the  Advances or any fees  hereunder,  (d)
postpone  any date fixed for any payment of  principal  of, or interest  on, the
Advances or any fees  hereunder  (other than pursuant to Sections 2.16 or 2.17),
(e)  change  the  percentage  of  the  Commitments  or of the  aggregate  unpaid
principal  amount of the  Advances,  or the number of  Lenders,  which  shall be
required for the Lenders or any of them to take any action under this Agreement,
and (f) amend,  waive,  or in any way modify or suspend any provision of Section
2.16,  Section 2.17 or of this Section  8.01;  and  provided,  further,  that no
amendment,  waiver  or  consent  shall,  unless  in  writing  and  signed by the
Administrative  Agent in addition to the Lenders  required  hereinabove  to take
such action,  affect the rights or duties of the Administrative Agent under this
Agreement.

                                       32

<PAGE>

     Section 8.02. Notices, Etc.

     All notices and other  communications  provided for hereunder shall, unless
otherwise stated herein, be in writing (including telegraphic communication) and
mailed,  telecopied,  delivered or, in the case of the Company,  e-mailed, if to
the Company,  at its address at 410 S.  Wilmington  Street,  PEB 19A3,  Raleigh,
North Carolina  27601,  Attention:  Director of Financial  Operations,  Treasury
Department,  Facsimile No.: (919) 546-7826, e-mail:  charles.beuris@pgnmail.com;
if to any Lender,  at its  Domestic  Lending  Office set forth under its name on
Schedule II hereto; and if to the  Administrative  Agent, at its address at 1111
Fannin - 10th Floor;  Houston,  Texas 77002;  Phone: (713) 750-2501;  Fax: (713)
427-6307; Attention: Janene English; or, as to each party, at such other address
as shall be designated by such party in a written  notice to the other  parties.
All such  notices and  communications  shall be effective  when  received by the
addressee thereof.

     Notwithstanding  the  foregoing,  the  Borrower  may satisfy the  reporting
requirements  of  Sections  5.01(i)(i),  (ii)  and  (iii)  by  (a)  posting  the
information required under such Sections on an Intralinks(C)  website accessible
by the  Administrative  Agent and the Lenders (or on another  comparable website
acceptable to the  Administrative  Agent and  accessible  by the  Administrative
Agent and the  Lenders)  within  the time  requirements  specified  in  Sections
5.01(i)(i), (ii) or (iii), as the case may be or (b) delivering such information
to the Administrative  Agent within the time requirements  specified in Sections
5.01(i)(i),  (ii) or (iii),  as the case may be, to be  posted  promptly  by the
Administrative Agent on such an Intralinks(C) or other website.

     Section 8.03. No Waiver; Remedies.

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

     Section 8.04. Costs, Expenses and Taxes.

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

                                       33

<PAGE>

     (b) If, due to  payments  made by the Company  due to  acceleration  of the
maturity of the Advances  pursuant to Section  6.01, or due to any other reason,
any Lender  receives  payments of principal of any Eurodollar Rate Advance based
upon the Eurodollar  Rate other than on the last day of the Interest  Period for
such Advance, the Company shall, upon demand by such Lender (with a copy of such
demand to the Administrative  Agent),  pay to the  Administrative  Agent for the
account of such Lender any amounts  required to  compensate  such Lender for any
additional  losses,  costs or expenses which it may reasonably incur as a result
of such payment,  including,  without  limitation,  any loss  (including loss of
anticipated  profits),  cost or expense incurred by reason of the liquidation or
reemployment  of  deposits  or other  funds  acquired  by any  Lender to fund or
maintain such Advance.

     (c) Any and all  payments  by the  Company  hereunder  shall  be  made,  in
accordance  with Section 2.14,  free and clear of and without  deduction for any
and all  present  or future  taxes,  levies,  imposts,  deductions,  charges  or
withholdings,  and all liabilities with respect thereto,  excluding, in the case
of each Lender and the  Administrative  Agent,  taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction  under the laws of which such
Lender  or the  Administrative  Agent (as the case may be) is  organized  or any
political  subdivision thereof and, in the case of each Lender, taxes imposed on
its income,  and  franchise  taxes  imposed on it, by the  jurisdiction  of such
Lender's  Applicable  Lending Office or any political  subdivision  thereof (all
such non-excluded taxes, levies, imposts, deductions,  charges, withholdings and
liabilities being hereinafter  referred to as "Taxes").  If the Company shall be
required  by law to  deduct  any Taxes  from or in  respect  of any sum  payable
hereunder to any Lender or the  Administrative  Agent, (i) the sum payable shall
be increased  as may be  necessary so that after making all required  deductions
(including  deductions  applicable to additional sums payable under this Section
8.04) such Lender or the  Administrative  Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Company shall make such  deductions and (iii) the Company shall pay the
full amount  deducted to the relevant  taxation  authority or other authority in
accordance with applicable law.

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

     (e)  Prior  to the  date of the  initial  Borrowing  or on the  date of the
Assignment and Acceptance  pursuant to which it became a Lender,  in the case of
each Lender that becomes a Lender by virtue of entering into an  Assignment  and
Acceptance,  and from time to time thereafter if requested by the Company or the
Administrative  Agent,  each Lender  organized  under the laws of a jurisdiction
outside the United States shall provide the Administrative Agent and the Company
with the forms  prescribed by the Internal  Revenue Service of the United States
certifying that such Lender is exempt from United States  withholding taxes with

                                       34

<PAGE>

respect to all payments to be made to such Lender  hereunder.  If for any reason
during the term of this Agreement, any Lender becomes unable to submit the forms
referred to above or the information or representations contained therein are no
longer  accurate  in  any  material  respect,   such  Lender  shall  notify  the
Administrative  Agent and the  Company  in writing  to that  effect.  Unless the
Company and the  Administrative  Agent have  received  forms or other  documents
satisfactory to them indicating that payment hereunder are not subject to United
States withholding tax, the Company or the  Administrative  Agent shall withhold
taxes  from  such  payments  at the  applicable  statutory  rate in the  case of
payments to or for any Lender organized under the laws of a jurisdiction outside
the United States.

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

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

     (h) The Company  hereby  agrees to indemnify and hold harmless each Lender,
the  Administrative  Agent,  counsel  to  the  Administrative  Agent  and  their
respective officers,  directors,  partners,  employees,  Affiliates and advisors
(each,  an "Indemnified  Person") from and against any and all claims,  damages,
losses, liabilities, costs or expenses (including reasonable attorney's fees and
expenses,  whether  or not such  Indemnified  Person  is named as a party to any
proceeding or is otherwise  subjected to judicial or legal process  arising from
any such  proceeding),  joint and  several,  that may actually be incurred by or
asserted  or  awarded  against  any  Indemnified  Person   (including,   without
limitation,  in connection with any  investigation,  litigation or proceeding or
the preparation of a defense in connection  therewith) in each case by reason of
or in connection with the execution, delivery, or performance of this Agreement,
except to the extent that such claims, damages, losses,  liabilities,  costs, or
expenses  are  determined  in a final  non-appealable  judgment  by a  court  of
competent  jurisdiction  to have  resulted  solely from the gross  negligence or
willful  misconduct of the party seeking  indemnification  (it being  understood
that the posting of documents and information on  JPMorganChase's  Intralinks or
other comparable website using  JPMorganChase's  customary procedures will in no
event constitute gross negligence or wilful misconduct).

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<PAGE>

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

     Section 8.05. Right of Set-off.

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

     Section 8.06. Binding Effect.

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

     Section 8.07. Assignments and Participations.

     (a)  Each   Lender  may  (i)  with   notice  to  the  Company  and  to  the
Administrative  Agent,  assign to any other Lender, any Affiliate of a Lender or
any  Approved  Fund all or a portion of its rights  and  obligations  under this
Agreement,  and (ii) with the consent of the Agent and the Company (such consent
not to be  unreasonably  withheld and, in the case of the Company,  such consent
shall not be required  if an Event of Default or event that,  with the giving of
notice or the passage of time,  or both,  would  constitute an Event of Default,
has occurred and is continuing), assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Agreement (including, without
limitation,  all or a portion of its  Commitment  and the Advances  owing to it;
provided, however, that (A) each such assignment shall be of a constant, and not
a varying,  percentage of all rights and obligations  under this Agreement,  (B)
prior to the effectiveness of the Term Loan Conversion Option, the amount of the
Commitment  of the  assigning  Lender  being  assigned  pursuant  to  each  such
assignment  (determined as of the date of the  Assignment  and  Acceptance  with

                                       36

<PAGE>

respect  to such  assignment)  shall in no event be less than the  lesser of (1)
$5,000,000  and (2) all of such  Lender's  rights and  obligations  and,  if the
preceding clause (1) is applicable, shall be an integral multiple of $1,000,000,
(C) the  parties  to each such  assignment  shall  execute  and  deliver  to the
Administrative  Agent,  for its  acceptance  and recording in the  Register,  an
Assignment and Acceptance  substantially in the form of Exhibit B hereto and (D)
such parties  shall also deliver to the  Administrative  Agent a processing  and
recordation  fee of  $3,500.  Upon  such  execution,  delivery,  acceptance  and
recording,  from and after the effective date  specified in each  Assignment and
Acceptance,  (x) the  assignee  thereunder  shall be a party  hereto and, to the
extent that rights and  obligations  hereunder have been assigned to it pursuant
to such Assignment and  Acceptance,  have the rights and obligations of a Lender
hereunder  and (y) the Lender  assignor  thereunder  shall,  to the extent  that
rights and  obligations  hereunder  have been  assigned  by it  pursuant to such
Assignment  and  Acceptance,  relinquish  its  rights and be  released  from its
obligations  under  this  Agreement  (and,  in the  case  of an  Assignment  and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and  obligations  under this  Agreement,  such Lender  shall cease to be a party
hereto).

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

     (c) The  Administrative  Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance (and copies of the related
consents  of the  Company  and the  Administrative  Agent  to  such  assignment)
delivered to and accepted by it and a register for the  recordation of the names
and  addresses  of the Lenders  (including,  without  limitation,  the  Assuming
Lenders) and the Commitment  of, and principal  amount of the Advances owing to,
each Lender  from time to time (the  "Register").  The  entries in the  Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Company,  the  Administrative  Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender  hereunder for all purposes of this
Agreement.  The Register shall be available for inspection by the Company or any
Lender  at any  reasonable  time and from  time to time  upon  reasonable  prior
notice.

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<PAGE>

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

     (e) Each  Lender  may  sell  participations  to one or more  banks or other
entities  in or to all or a portion  of its rights  and  obligations  under this
Agreement  (including,  without limitation,  all or a portion of its Commitment,
the Advances owing to it); provided, however, that (i) such Lender's obligations
under this  Agreement  (including,  without  limitation,  its  Commitment to the
Company hereunder) shall remain unchanged,  (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such  Advances for all purposes
of this  Agreement,  (iv) the Company,  the  Administrative  Agent and the other
Lenders  shall  continue  to deal  solely  and  directly  with  such  Lender  in
connection with such Lender's  rights and  obligations  under this Agreement and
(v) the  holder  of any such  participation,  other  than an  Affiliate  of such
Lender, shall not be entitled to require such Lender to take or omit to take any
action  hereunder,  except action (A) extending the time for payment of interest
on, or the final  maturity  of any  portion  of the  principal  amount  of,  the
Advances or (B) reducing the principal amount of or the rate of interest payable
on the Advances.  Without  limiting the  generality of the  foregoing:  (i) such
participating  banks or other entities shall be entitled to the cost  protection
provisions contained in Sections 2.08, 2.12 and 8.04(b) only if, and to the same
extent,  the  Lender  from  which  such  participating  banks or other  entities
acquired its participation  would, at the time, be entitled to claim thereunder;
and (ii) such  participating  banks or other entities shall also, to the fullest
extent permitted by law, be entitled to exercise the rights of set-off contained
in Section 8.05 as if such  participating  banks or other  entities were Lenders
hereunder.

     (f) If any Lender (or any bank, financial  institution,  or other entity to
which such  Lender has sold a  participation)  shall make any demand for payment
under Section  2.12(b),  then within 30 days after any such demand (if, but only
if, such demanded  payment has been made by the Company),  the Company may, with
the  approval  of  the  Administrative   Agent  (which  approval  shall  not  be
unreasonably  withheld)  and  provided  that no Event of Default or event which,
with the passage of time or the giving of notice,  or both,  would constitute an
Event of Default  shall then have occurred and be  continuing,  demand that such
Lender  assign in  accordance  with this  Section  8.07 to one or more  Eligible
Assignees designated by the Company all (but not less than all) of such Lender's
Commitment (if any) and the Advances owing to it within the period ending on the
later  to occur of such  30th  day and the last day of the  longest  of the then
current  Interest  Periods  for such  Advances.  If any such  Eligible  Assignee
designated  by the  Company  is not a Lender  on the date of such  demand by the
Company,  the  Company  shall pay the  $3,500  processing  and  recordation  fee
described in Section 8.07(a).  If any such Eligible  Assignee  designated by the
Company shall fail to  consummate  such  assignment on terms  acceptable to such
Lender,  or if the Company shall fail to designate  any such Eligible  Assignees
for all or part of such Lender's Commitment or Advances, then such demand by the

                                       38

<PAGE>

Company  shall  become  ineffective;  it being  understood  for purposes of this
subsection (f) that such assignment shall be conclusively  deemed to be on terms
acceptable to such Lender, and such Lender shall be compelled to consummate such
assignment to an Eligible Assignee  designated by the Company,  if such Eligible
Assignee (i) shall agree to such  assignment by entering into an Assignment  and
Acceptance  in  substantially  the form of Exhibit B hereto with such Lender and
(ii) shall offer  compensation  to such Lender in an amount equal to all amounts
then owing by the  Company to such  Lender  hereunder,  whether  for  principal,
interest,  fees,  costs or expenses (other than the demanded payment referred to
above and payable by the Company as a condition to the Company's right to demand
such assignment), or otherwise.

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

     (h)  Anything in this Section  8.07 to the  contrary  notwithstanding,  any
Lender  may assign and  pledge  all or any  portion  of its  Commitment  and the
Advances  owing to it to any  Federal  Reserve  Bank  (and its  transferees)  as
collateral  security  pursuant to  Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank. No such assignment shall release the assigning Lender from its obligations
hereunder.

     (i)  Notwithstanding  anything to the contrary contained herein, any Lender
(a "Granting  Lender") may grant to a special purpose funding vehicle (an "SPC")
of such Granting  Lender  identified as such in writing from time to time by the
Granting  Lender to the  Administrative  Agent and the  Company,  the  option to
provide to the Company all or any part of any Advance that such Granting  Lender
would otherwise be obligated to make to the Company  pursuant to this Agreement;
provided that (i) nothing  herein shall  constitute a commitment by any such SPC
to make any  Advance,  (ii) if such SPC elects not to  exercise  such  option or
otherwise fails to provide all or any part of such Advance,  the Granting Lender
shall be obligated  to make such Advance  pursuant to the terms hereof and (iii)
no SPC or Granting  Lender  shall be  entitled  to receive  any  greater  amount
pursuant  to  Section  2.08 or 2.12 than the  Granting  Lender  would  have been
entitled to receive had the Granting  Lender not otherwise  granted such SPC the
option to provide any Advance to the Company. The making of an Advance by an SPC
hereunder  shall  utilize  the  Commitment  of the  Granting  Lender to the same
extent,  and as if, such Advance were made by such Granting  Lender.  Each party
hereto  hereby  agrees that no SPC shall be liable for any  indemnity or similar
payment  obligation  under this Agreement for which a Lender would  otherwise be
liable so long as, and to the extent that, the related  Granting Lender provides
such indemnity or makes such payment.  In  furtherance  of the  foregoing,  each
party hereto hereby agrees (which  agreement  shall survive the  termination  of
this Agreement)  that,  prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any  SPC,  it  will  not  institute  against  or join  any  other  person  in
instituting  against  such  SPC  any  bankruptcy,  reorganization,  arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State   thereof.    Notwithstanding   the   foregoing,   the   Granting   Lender
unconditionally  agrees to indemnify the Company,  the Administrative  Agent and
each Lender against all liabilities,  obligations,  losses, damages,  penalties,
actions,  judgments,  suits,  costs,  expenses or  disbursements  of any kind or
nature  whatsoever that may be incurred by or asserted against the Company,  the

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<PAGE>

Administrative  Agent or such Lender, as the case may be, in any way relating to
or arising as a consequence  of any such  forbearance or delay in the initiation
of any such  proceeding  against its SPC. Each party hereto hereby  acknowledges
and agrees that no SPC shall have the rights of a Lender hereunder,  such rights
being  retained by the  applicable  Granting  Lender.  Accordingly,  and without
limiting the foregoing,  each party hereby further  acknowledges and agrees that
no SPC  shall  have any  voting  rights  hereunder  and that the  voting  rights
attributable  to any  Advance  made by an SPC  shall  be  exercised  only by the
relevant  Granting  Lender  and that each  Granting  Lender  shall  serve as the
administrative agent and attorney-in-fact for its SPC and shall on behalf of its
SPC receive any and all  payments  made for the benefit of such SPC and take all
actions  hereunder  to the  extent,  if any,  such SPC  shall  have  any  rights
hereunder.  In addition,  notwithstanding  anything to the contrary contained in
this Agreement any SPC may with notice to, but without the prior written consent
of any other  party  hereto,  assign  all or a portion  of its  interest  in any
Advances to the Granting  Lender.  This  Section may not be amended  without the
prior written consent of each Granting Lender,  all or any part of whose Advance
is being funded by an SPC at the time of such amendment.

     Section 8.08. Tax Structure Disclosure.

     Notwithstanding anything in this Agreement to the contrary, any person with
respect to whom  participation,  in any  capacity,  in this  Agreement  has been
discussed (and each employee, representative, or other agent of such person) may
disclose to any and all other persons,  without  limitation of any kind, the tax
treatment  and tax  structure of this  Agreement  and all  materials of any kind
(including  opinions  or other tax  analyses)  that are  provided to such person
relating to such tax treatment and tax structure. For the avoidance of doubt, no
disclosure  to any  person  is  permitted  with  respect  to any  aspect  of the
transaction  contemplated by this Agreement,  to the extent such aspect does not
relate to tax  treatment or tax  structure.  The foregoing is intended to comply
with   the    presumption   set   forth   in   Treasury    Regulation    Section
1.6011-4(b)(3)(iii)  and should be interpreted in a manner  consistent with such
regulation.

     Section 8.09. Governing Law.

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

     Section 8.10. WAIVER OF JURY TRIAL.

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

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<PAGE>

     Section 8.11. Execution in Counterparts.

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

     Section 8.12. Severability.

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

     Section 8.13. Headings.

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

     Section 8.14. Entire Agreement.

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


                                       41
<PAGE>

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

                                        FLORIDA POWER CORPORATION d/b/a
                                        PROGRESS ENERGY FLORIDA, INC.


                                        By ____________________________
                                           Thomas R. Sullivan
                                           Treasurer


                                        JPMORGAN CHASE BANK, as Administrative
                                        Agent and as a Lender


                                        By ____________________________
                                           Name:
                                           Title:



<PAGE>



                                        BANK ONE, N.A.


                                        By ____________________________
                                           Name:
                                           Title:


<PAGE>



                                        DEUTSCHE BANK AG
                                        NEW YORK BRANCH


                                        By ____________________________
                                           Name:
                                           Title:


<PAGE>



                                        WACHOVIA BANK, NATIONAL ASSOCIATION


                                        By ____________________________
                                           Name:
                                           Title:


<PAGE>



                                        THE BANK OF NEW YORK


                                        By ____________________________
                                           Name:
                                           Title:


<PAGE>



                                        BANK OF AMERICA, N.A.


                                        By ____________________________
                                           Name:
                                           Title:




<PAGE>



                                        SUNTRUST BANK, ATLANTA


                                        By ____________________________
                                           Name:
                                           Title:


<PAGE>



                                        THE BANK OF NOVA SCOTIA


                                        By ____________________________
                                           Name:
                                           Title:


<PAGE>




                                        MELLON BANK, N.A.


                                        By ____________________________
                                           Name:
                                           Title:


<PAGE>



                                        THE BANK OF TOKYO-MITSUBISHI, LTD.,
                                        NEW YORK BRANCH


                                        By ____________________________
                                           Name:
                                           Title:



<PAGE>

                                   SCHEDULE I

                               Existing Facilities

(i) $90,000,000  364-Day  Revolving Credit  Agreement,  dated as of December 18,
2001,  as amended,  among the  Company,  the lenders  party  thereto and Bank of
America, N.A., as administrative agent.

(ii) Five Year Florida  Power  Corporation  Third  Amended and  Restated  Credit
Agreement B, dated as of November 17, 1998, which has a maturity of November 30,
2003,  among the  Company,  the  lenders  party  thereto and  JPMorganChase,  as
administrative agent.


<PAGE>



                                   SCHEDULE II

                                   Commitments


                          Lender                               Commitment

JPMorgan Chase Bank                                           $ 25,000,000
Bank One, N.A.                                                $ 24,000,000
Deutsche Bank AG New York Branch                              $ 24,000,000
Wachovia Bank, National Association                           $ 24,000,000
The Bank of New York                                          $ 20,000,000
Bank of America, N.A.                                         $ 20,000,000
SunTrust Bank                                                 $ 20,000,000
The Bank of Nova Scotia                                       $ 20,000,000
Mellon Bank, N.A.                                             $ 11,500,000
The Bank of Tokyo-Mitsubishi, Ltd., New York Branch           $ 11,500,000
                          Total:                              $200,000,000


<PAGE>


                                   EXHIBIT A-1

                               NOTICE OF BORROWING


                                                                          [Date]


JPMorgan Chase Bank, as Administrative Agent
   for the Lenders parties to the
   Credit Agreement referred to below
1111 Fannin - 10th Floor
Houston, Texas 77002

Attention: Loan and Agency Services Group



Ladies and Gentlemen:

     The undersigned,  FLORIDA POWER  CORPORATION d/b/a PROGRESS ENERGY FLORIDA,
INC.,  refers to the 364-day  Credit  Agreement,  dated as of April 1, 2003 (the
"Credit  Agreement",  the terms  defined  therein  being used  herein as therein
defined),  among the  undersigned,  certain  Lenders  from time to time  parties
thereto and JPMORGAN CHASE BANK, as Administrative  Agent for said Lenders,  and
hereby gives you notice  pursuant to Section 2.02 of the Credit  Agreement  that
the undersigned  hereby requests a Borrowing under the Credit Agreement,  and in
that connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by Section 2.02(a) of the Credit Agreement:

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

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

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

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



<PAGE>
                                                                               2


                                        Very truly yours,

                                        FLORIDA POWER CORPORATION d/b/a
                                        PROGRESS ENERGY FLORIDA, INC.


                                        By
                                           -------------------------------------
                                           Name:
                                           Title:


<PAGE>

                                   EXHIBIT A-2

                              NOTICE OF CONVERSION



                                                                          [Date]


JPMorgan Chase Bank, as Administrative Agent
  for the Lenders parties to the
  Credit Agreement referred to below
1111 Fannin - 10th Floor
Houston, Texas 77002

Attention: Loan and Agency Services Group





Ladies and Gentlemen:

     The undersigned,  FLORIDA POWER  CORPORATION d/b/a PROGRESS ENERGY FLORIDA,
INC.,  refers to the 364-day  Credit  Agreement,  dated as of April 1, 2003 (the
"Credit  Agreement",  the terms  defined  therein  being used  herein as therein
defined),  among the  undersigned,  certain  Lenders  from time to time  parties
thereto and JPMORGAN CHASE BANK, as Administrative  Agent for said Lenders,  and
hereby gives you notice  pursuant to Section 2.10 of the Credit  Agreement  that
the undersigned hereby requests a Conversion under the Credit Agreement,  and in
that  connection  sets forth the terms on which such  Conversion  (the "Proposed
Conversion") is requested to be made:

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

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

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

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

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

<PAGE>

                                                                               2



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


                                        Very truly yours,

                                        FLORIDA POWER CORPORATION d/b/a
                                        PROGRESS ENERGY FLORIDA, INC.


                                        By
                                           -------------------------------------
                                           Name:
                                           Title:


<PAGE>


                                    EXHIBIT B

                            ASSIGNMENT AND ACCEPTANCE

                             Dated ___________, 20__


     Reference  is made to the 364-day  Credit  Agreement,  dated as of April 1,
2003 (the "Credit  Agreement"),  among FLORIDA POWER  CORPORATION d/b/a PROGRESS
ENERGY FLORIDA,  INC., a Florida  corporation (the  "Company"),  the Lenders (as
defined in the Credit  Agreement) from time to time parties thereto and JPMORGAN
CHASE  BANK,  as  Administrative  Agent  for the  Lenders  (the  "Administrative
Agent").  Terms  defined in the Credit  Agreement  are used herein with the same
meaning.

     ______________  (the "Assignor") and ____________ (the "Assignee") agree as
follows:

     1. The Assignor hereby sells and assigns to the Assignee,  and the Assignee
hereby  purchases and assumes from the Assignor,  that interest in and to all of
the Assignor's  rights and obligations under the Credit Agreement as of the date
hereof which represents the percentage  interest  specified on Schedule 1 of all
outstanding  rights  and  obligations  under the  Credit  Agreement,  including,
without limitation, such interest in the Assignor's Commitment (to the extent it
has not been  terminated)  and the Advances owing to the Assignor.  After giving
effect to such sale and assignment,  the Assignee's  Commitment (if any) and the
amount of the Advances  owing to the Assignee  will be as set forth in Section 2
of Schedule 1.

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

     3. The  Assignee  (i)  confirms  that it has  received a copy of the Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section  4.01(e)  thereof and such other  documents  and  information  as it has
deemed  appropriate  to make its own credit  analysis and decision to enter into
this  Assignment and  Acceptance;  (ii) agrees that it will,  independently  and
without reliance upon the Administrative Agent, the Assignor or any other Lender
and based on such documents and information as it shall deem  appropriate at the
time,  continue to make its own credit  decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Administrative Agent to take such action as agent on

<PAGE>

                                                                               2


its  behalf and to  exercise  such  powers  under the  Credit  Agreement  as are
delegated to the Administrative  Agent by the terms thereof,  together with such
powers as are reasonably  incidental thereto; (v) agrees that it will perform in
accordance  with their  terms all of the  obligations  which by the terms of the
Credit  Agreement  are required to be  performed  by it as a Lender;  [and] (vi)
specifies  as  its  Domestic  Lending  Office  (and  address  for  notices)  and
Eurodollar  Lending  Office  the  offices  set  forth  beneath  its  name on the
signature pages hereof [and (vii) attaches the forms  prescribed by the Internal
Revenue Service of the United States  certifying as to the Assignee's status for
purposes of  determining  exemption  from United States  withholding  taxes with
respect to all payments to be made to the Assignee under the Credit Agreement or
such other  documents as are  necessary to indicate  that all such  payments are
subject to such rates at a rate reduced by an applicable tax treaty].(1)

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

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

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

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

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



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

<PAGE>


                                   Schedule 1
                                       to
                            Assignment and Acceptance

                              Dated __________, 20


Section 1

         Percentage Interest Assigned:                     %
                                                     ------

Section 2

         Assignee's Commitment:                          $


         Aggregate Outstanding Principal
         Amount of Advances owing to Assignee:        $



Section 3

         Effective Date(1)


                                        [NAME OF ASSIGNOR]


                                        By
                                           -------------------------------------
                                           Name:
                                           Title:



                                        [NAME OF ASSIGNEE]


                                        By
                                           -------------------------------------
                                           Name:
                                           Title:


                                        Domestic Lending Office
                                        (and address for notices):

--------------------
1        This date should be no earlier than the date of acceptance by the
         Admnistrative Agent.

<PAGE>

                                                                               2


                                        [Address]


                                        Eurodollar Lending Office:

                                        [Address]


Accepted this _____ day of
______________, 20__


JPMORGAN CHASE BANK,
   as Administrative Agent


By_______________________
    Name:
    Title:


[IF REQUIRED]
FLORIDA POWER CORPORATION d/b/a
PROGRESS ENERGY FLORIDA, INC.


By_______________________
    Name:
    Title:

<PAGE>

                                   EXHIBIT C-1

                   FORM OF OPINION OF COUNSEL FOR THE COMPANY



                                     [Date]



To each of the Lenders parties to the
Agreement referred to below and JPMorgan
Chase Bank, as Administrative Agent

     Re: Florida Power Corporation d/b/a Progress Energy Florida, Inc.

Ladies and Gentlemen:

     This  opinion  is  furnished  to you by us as  counsel  for  Florida  Power
Corporation  d/b/a Progress Energy Florida,  Inc. (the  "Borrower")  pursuant to
Section 3.01(h) of the 364-day Credit Agreement,  dated as of April 1, 2003 (the
"Agreement",  the terms defined  therein being used herein as therein  defined),
among the Borrower,  certain  lenders  thereunder  (the  "Lenders") and JPMorgan
Chase Bank, as administrative agent for the Lenders.

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

     (1) The Agreement.

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

     (3) The  opinion  letter  of even  date  herewith,  addressed  to you by R.
Alexander Glenn,  Associate  General Counsel of Progress Energy Service Company,
LLC, in his capacity as counsel to the Company and delivered in connection  with
the transactions contemplated by the Agreement (the "Company Opinion Letter").

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

                                                                               2
     We are qualified to practice law in the States of Florida and New York, and
the  opinions  expressed  herein are limited to the law of the States of Florida
and New York and the  federal law of the United  States.  To the extent that our
opinions expressed herein depend upon opinions expressed in paragraphs 1 through
4  of  the  Company   Opinion  Letter,   we  have  relied  without   independent
investigation  on the accuracy of the opinions  expressed in the Company Opinion
Letter, subject to the assumptions,  qualifications and limitations set forth in
the Company Opinion Letter.

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

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

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

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

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

<PAGE>

                                                                               3


     The foregoing opinion is solely for your benefit and may not be relied upon
by any other  Person  other than (i) any other  Person  that may become a Lender
under the  Agreement  after the date hereof in  accordance  with the  provisions
thereof and (ii) King & Spalding LLP, in connection  with its opinion  delivered
on the date hereof under Section 3.01 of the Agreement.


                                        Very truly yours,





<PAGE>

                                   EXHIBIT C-2

                  FORM OF OPINION OF ASSOCIATE GENERAL COUNSEL
                     OF PROGRESS ENERGY SERVICE COMPANY, LLC



                                     [Date]



To each of the Lenders parties to the
Agreement referred to below and
JPMorgan Chase Bank, as Administrative
Agent

     Re: Florida Power Corporation d/b/a Progress Energy Florida, Inc.

Ladies and Gentlemen:

     This  opinion is furnished  to you by me as  Associate  General  Counsel of
Progress  Energy Service  Company,  LLC and in my capacity as counsel to Florida
Power Corporation d/b/a Progress Energy Florida,  Inc. (the "Borrower") pursuant
to Section  3.01(h) of the 364-day Credit  Agreement,  dated as of April 1, 2003
(the  "Agreement",  the terms  defined  therein  being  used  herein as  therein
defined),  among the Borrower,  certain  lenders  thereunder (the "Lenders") and
JPMorgan Chase Bank, as administrative agent for the Lenders.

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

     (1) The Agreement.

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

     (3) The Restated Charter of the Borrower (the "Charter").

     (4) The Bylaws of the Borrower and all amendments thereto (the "Bylaws").

     (5) The FPSC Order.

     I have also  examined  the  originals,  or copies of such  other  corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower  and  agreements,  instruments  and other  documents  as I have  deemed
necessary as a basis for the opinions  expressed  below. As to questions of fact
material to such opinions,  I have,  when relevant facts were not  independently
established by me, relied upon  certificates  of the Borrower or its officers or
of public officials.  I have assumed the authenticity of all documents submitted
to me as originals,  the  conformity to originals of all documents  submitted as

<PAGE>

                                                                               2


certified or photostatic  copies and the authenticity of signatures  (other than
those of the  Borrower),  and the due execution  and  delivery,  pursuant to due
authorization,  of the Agreement by the Lenders and the Administrative Agent and
the  validity and binding  effect  thereof on such  parties.  For purposes of my
opinions  expressed in paragraph 1 below as to existence  and good  standing,  I
have relied as of their  respective  dates on certificates of public  officials,
copies of which are  attached  hereto as Exhibit A.  Whenever  the phrase "to my
knowledge"  is used in this  opinion  it refers to my actual  knowledge  and the
actual  knowledge of the  attorneys who work under my  supervision  and who were
involved  in  the   representation  of  the  Borrower  in  connection  with  the
transactions contemplated by the Agreement.

     I or attorneys  working under my supervision  are qualified to practice law
in the State of Florida,  and the opinions  expressed  herein are limited to the
law of the State of Florida and the federal law of the United States.

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

     1. The Borrower is a corporation  duly organized,  validly  existing and in
good  standing  under the laws of the State of  Florida.  The  Borrower  has the
corporate power and authority to enter into the transactions contemplated by the
Agreement.

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

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

     4. No  authorization,  approval  or other  action  by,  and no notice to or
filing with any  governmental  authority or regulatory  body is required for the
due execution,  delivery and performance by the Borrower of the Agreement, other
than the FPSC Order, which has been duly issued and is in full force and effect.
All periods for review and approval of the FPSC Order have expired,  and no such
request for review or appeal thereof has been filed or is pending.

     5. To my  knowledge,  except as described  in the reports and  registration
statements  that the  Borrower  has  filed  with  the  Securities  and  Exchange
Commission,  there are no pending or overtly  threatened  actions or proceedings
against the Borrower or any of its Subsidiaries  before any court,  governmental
agency or  arbitrator,  that purport to affect the legality,  validity,  binding
effect or  enforceability of the Agreement or that are likely to have a material
adverse effect upon the financial condition or operations of the Borrower or any
of its Subsidiaries.

     The opinions set forth above are subject to the qualification  that, except
as  provided  in  paragraph 4 above,  no opinion is  expressed  herein as to the
enforceability of the Agreement or any other document.


<PAGE>

                                                                               3


     The  foregoing  opinions  are solely for your benefit and may not be relied
upon by any other  Person  other  than (i) any other  Person  that may  become a
Lender under the Agreement  after the date hereof and (ii) Hunton & Williams and
King & Spalding LLP, in connection with their respective  opinions  delivered on
the date hereof under Section 3.01 of the Agreement.


                                        Very truly yours,






<PAGE>


                                   EXHIBIT C-3

        FORM OF OPINION OF COUNSEL FOR THE COMPANY UPON EXTENSION OF THE
                                REVOLVING PERIOD
                 AND EXERCISE OF THE TERM LOAN CONVERSION OPTION




                                                                          [Date]


To each of the Lenders parties to the
Credit Agreement referred to below and
JPMorgan Chase Bank, as Administrative
Agent

     Re: Florida Power Corporation d/b/a Progress Energy Florida, Inc.



Ladies and Gentlemen:

     This  opinion  is  furnished  to you by us as  counsel  for  Florida  Power
Corporation  d/b/a Progress Energy  Florida,  Inc. (the "Company") in connection
with [the  extension  of the  Revolving  Period  until  ________ __, _____ under
Section 2.16 (the  "Extension")](1)  [the  exercise of the Term Loan  Conversion
Option under Section 2.17 (the  "Exercise")](2) of the 364-day Credit Agreement,
dated as of April 1, 2003 (the  "Credit  Agreement"),  among  the  Company,  the
lenders from time to time parties  thereto (the  "Lenders")  and JPMorgan  Chase
Bank,  as  Administrative  Agent for the Lenders (the  "Administrative  Agent").
Terms defined in the Credit Agreement are used herein as therein defined.

     In connection  with the  preparation,  execution and delivery of the Credit
Agreement, we have examined or have had examined under my supervision:

     (1) The Credit Agreement.

--------------------
1        For use in connection with the Extension.

2        For use in connection with the Exercise.

<PAGE>
                                                                               2


     [(2) The  Request for  Extension  of the  Revolving  Period,  dated  _____,
submitted by the Company in connection with the Extension.](1)

     [(3) The Notice of Term Loan Conversion Option,  dated _____,  submitted by
the Company in connection with the Exercise.](2)

     (4)  The  opinion  letter  of  even  date  herewith,  addressed  to  you by
____________, Associate General Counsel of Progress Energy Service Company, LLC,
in [his]  capacity as counsel to the Company and  delivered in  connection  with
[the Extension](1) [the Exercise](2).

     We have also  examined  the  originals,  or copies of such other  corporate
records of the Company,  certificates of public officials and of officers of the
Company  and  agreements,  instruments  and other  documents  as we have  deemed
necessary as a basis for the opinions  expressed  below. As to questions of fact
material to such opinions,  we have, when relevant facts were not  independently
established by us, relied upon certificates of the Company or its officers or of
public officials. We have assumed the authenticity of all documents submitted to
us as  originals,  the  conformity  to originals of all  documents  submitted as
certified or photostatic  copies and the  authenticity  of the originals  (other
than those of the Company), and the due execution and delivery,  pursuant to due
authorization,  of the Credit  Agreement  by the Lenders and the  Administrative
Agent and the validity and binding effect thereof on such parties.

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

     Based upon the  foregoing  and upon such  investigation  as we have  deemed
necessary, we of the opinion that the Credit Agreement,  [after giving effect to
the Extension,]1 [after giving effect to the Exercise,]2  constitutes the legal,
valid and binding  obligation of the Company in accordance with its terms except
as  enforcement  may  be  limited  or  otherwise  affected  by  (a)  bankruptcy,
insolvency,  reorganization,  fraudulent  transfer,  moratorium or other similar
laws  affecting the rights of creditors  generally and (b) principles of equity,
whether considered at law or in equity.

     The opinions set forth above are subject to the following qualifications:


--------------------
1        For use in connection with the Extension.

2        For use in connection with the Exercise.

<PAGE>

                                                                               3


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

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

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

     The foregoing opinion is solely for your benefit and may not be relied upon
by any other  Person  other than any other Person that may become a Lender under
the Credit Agreement after the date hereof.



                                        Very truly yours,




<PAGE>

                                   EXHIBIT C-4

               FORM OF OPINION OF GENERAL COUNSEL FOR THE COMPANY
                     UPON EXTENSION OF THE REVOLVING PERIOD
                 AND EXERCISE OF THE TERM LOAN CONVERSION OPTION




                                                                       [Date]



To each of the Lenders parties to the
Agreement referred to below and
JPMorgan Chase Bank, as Administrative
Agent

     Re: Florida Power Corporation d/b/a Progress Energy Florida, Inc.

Ladies and Gentlemen:

     This opinion is furnished to you by me as Vice President of Progress Energy
Service  Company,  LLC and counsel to Florida Power  Corporation  d/b/a Progress
Energy Florida,  Inc. (the  "Borrower") in connection with [the extension of the
Revolving  Period until _______ under  Section 2.16 (the  "Extension")](1)  [the
exercise  of  the  Term  Loan   Conversion   Option  under   Section  2.17  (the
"Exercise")](2) of the 364-day Credit Agreement,  dated as of April 1, 2003 (the
"Agreement",  the terms defined  therein being used herein as therein  defined),
among the Borrower,  certain  lenders named therein (the "Lenders") and JPMorgan
Chase  Bank,  as  Administrative  Agent  for the  Lenders  (the  "Administrative
Agent").

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

     (1) The Agreement.

     [(2) The Request for Extension of the Revolving Period, dated as of ______,
submitted by the Borrower in connection with the Extension.]

     [(3) The Notice of Term Loan Conversion,  dated as of ______,  submitted by
the borrower in connection with the Exercise.]

     (4) The Restated Charter of the Borrower (the "Charter").

     (5) The Bylaws of the Borrower and all amendments thereto (the "Bylaws").


--------------------
1        For use in connection with the Extension.

2        For use in connection with the Exercise.

<PAGE>

                                                                               2

     (6) The FPSC Order.

     I have also  examined  the  originals,  or copies of such  other  corporate
records of the Borrower, certificates of public officials and of officers of the
Borrower  and  agreements,  instruments  and other  documents  as I have  deemed
necessary as a basis for the opinions  expressed  below. As to questions of fact
material to such opinions,  I have,  when relevant facts were not  independently
established by me, relied upon  certificates  of the Borrower or its officers or
of public officials.  I have assumed the authenticity of all documents submitted
to me as originals,  the  conformity to originals of all documents  submitted as
certified or photostatic  copies and the  authenticity  of the originals  (other
than those of the Borrower), and the due execution and delivery, pursuant to due
authorization,  of the Agreement by the Lenders and the Administrative Agent and
the validity and binding effect thereof on such parties.

     I am qualified  to practice  law in the State of Florida,  and the opinions
expressed  herein are limited to the law of the State of Florida and the federal
law of the United States.

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

     1. The Borrower is a corporation  duly organized,  validly  existing and in
good standing under the laws of the State of Florida.

     2.  The  execution,  delivery  and  performance  by  the  Borrower  of  the
Agreement,  [after giving effect to the  Extension,](1)  [after giving effect to
the  Exercise,](2) are within the Borrower's  corporate  powers,  have been duly
authorized by all necessary  corporate  action,  and do not  contravene  (i) the
Charter  or the Bylaws or (ii) any law,  rule or  regulation  applicable  to the
Borrower (including, without limitation,  Regulation X of the Board of Governors
of the Federal  Reserve  System) or (iii) any  contractual or legal  restriction
binding or affecting the Borrower.

     3. No  authorization,  approval  or other  action  by,  and no notice to or
filing with any  governmental  authority  or  regulatory  body is  required  for
performance  by the  Borrower  of the  Agreement,  [after  giving  effect to the
Extension,]1  [after giving effect to the Exercise,]2 other than the FPSC Order,
which  has been duly  issued,  is final and in full  force and  effect,  and all
periods for review or appeal thereof have expired,  and no request for review or
appeal thereof has been filed or is pending

     4. To my  knowledge,  except as described  in the reports and  registration
statements  which  the  Borrower  has filed  with the  Securities  and  Exchange
Commission,  there are no pending or overtly  threatened  actions or proceedings
against the Borrower or any of its Subsidiaries  before any court,  governmental
agency or  arbitrator  that purport to affect the  legality,  validity,  binding
effect  or  enforceability  of the  Agreement  or  that  are  likely  to  have a
materially  adverse  effect upon the  financial  condition or  operations of the
Borrower or any of its Subsidiaries.


--------------------
1        For use in connection with the Extension.

2        For use in connection with the Exercise.
<PAGE>

                                                                               3


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

     The foregoing opinion is solely for your benefit and may not be relied upon
by any other  Person  other than any other Person that may become a Lender under
the Agreement after the date hereof.



                                        Very truly yours,




<PAGE>



                                    EXHIBIT D

                           FORM OF OPINION OF COUNSEL
                           TO THE ADMINISTRATIVE AGENT




                                                                          [DATE]

To JPMorgan Chase Bank ("JPMorganChase"),
as Administrative Agent for the Lenders
referred to below, and to each of the
Lenders parties to the 364-day Credit
Agreement, dated as of April 1, 2003,
among Florida Power Corporation d/b/a
Progress Energy Florida, Inc., said
Lenders and JPMorganChase, as
Administrative Agent


     Re: Florida Power Corporation d/b/a Progress Energy Florida, Inc.


Ladies and Gentlemen:

     We have acted as your counsel in connection with the preparation, execution
and  delivery  of, and the  closing on April 1, 2003 under,  the 364-Day  Credit
Agreement,  dated as of April 1, 2003 (the "Credit  Agreement"),  among  Florida
Power  Corporation  d/b/a Progress Energy  Florida,  Inc. (the  "Company"),  the
Lenders from time to time parties thereto and  JPMorganChase,  as Administrative
Agent for the Lenders.  Terms defined in the Credit Agreement are used herein as
therein defined.

     In this connection, we have examined the following documents:

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

     2. the  documents  furnished  by or on behalf of the  Company  pursuant  to
subsections  (a)  through (f) and (h) of Section  3.01 of the Credit  Agreement,
including, without limitation, the opinion of the General Counsel to the Company
and the  opinion of Hunton &  Williams,  counsel to the  Company  (the  "Company
Opinions").

     In our examination of the documents  referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the genuineness
of all signatures, the due authority of the parties executing such documents and
the conformity to the originals of all such documents submitted to us as copies.
We have also assumed that you have  independently  evaluated,  and are satisfied
with, the  creditworthiness  of the Company and the business terms  reflected in
the Credit Agreement. We have relied, as to factual matters, on the documents we
have examined.

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

<PAGE>

                                                                               2


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

     Our opinion is subject to the following qualifications:

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

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

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

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

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

     The foregoing opinion is solely for your benefit and may not be relied upon
by any other person or entity.


                                        Very truly yours,




<PAGE>



                                    EXHIBIT E

                          FORM OF REQUEST FOR EXTENSION
                             OF THE REVOLVING PERIOD

                            364-DAY CREDIT AGREEMENT
                            dated as of April 1, 2003
                       -----------------------------------

          FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC.
                                    (Company)

                                       AND

                               JPMORGAN CHASE BANK
                             (Administrative Agent)

                    Request for Extension of Revolving Period
                                       and
          Certificate of Representations and Warranties and No Default


     I,  [______________],   Vice  President  and  Treasurer  of  Florida  Power
Corporation  d/b/a  Progress  Energy  Florida,  Inc., do hereby request that the
Revolving  Period of the  364-day  Credit  Agreement,  dated as of April 1, 2003
(hereinafter  the "Credit  Agreement"),  be extended for an  additional  364-day
period  (hereinafter the "Proposed  Extension")  pursuant to Section 2.16 of the
Credit Agreement and, in connection therewith, hereby certify as follows: (i) as
of the date hereof, the representations and warranties set forth in Section 4.01
(including  without  limitation  those  regarding  any required  approvals of or
notices to  governmental  bodies) of the Credit  Agreement are and will be as of
the  effective  date of the Proposed  Extension  accurate  both before and after
giving  effect to the Proposed  Extension;  and (ii) as of the date  hereof,  no
Event of  Default,  as  defined in Section  6.01 of the  Credit  Agreement,  has
occurred,  nor has any event  occurred,  that  with the  giving of notice or the
passage of time or both,  would  constitute an Event of Default,  in either case
both before and after giving effect to the Proposed Extension.

     Witness my hand this ______ day of _________, ____.




                            ------------------------
                               [----------------]
                          Vice President and Treasurer


<PAGE>


                                    EXHIBIT F

                               FORM OF REQUEST FOR
                           TERM LOAN CONVERSION OPTION


                            364-DAY CREDIT AGREEMENT
                            dated as of April 1, 2003
                       -----------------------------------

          FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC.
                                    (Company)

                                       AND

                               JPMORGAN CHASE BANK
                             (Administrative Agent)

                     Request for Term Loan Conversion Option
                                       and
          Certificate of Representations and Warranties and No Default


     I,  [______________],   Vice  President  and  Treasurer  of  Florida  Power
Corporation  d/b/a Progress  Energy  Florida,  Inc., do hereby exercise the Term
Loan  Conversion  Option of the 364-day Credit  Agreement,  dated as of April 1,
2003  (hereinafter  the "Credit  Agreement"),  pursuant  to Section  2.17 of the
Credit Agreement and, in connection therewith, hereby certify as follows: (i) as
of the date hereof, the representations and warranties set forth in Section 4.01
(including  without  limitation  those  regarding  any required  approvals of or
notices to  governmental  bodies) of the Credit  Agreement are and will be as of
the effective date of the Term Loan  Conversion  Option accurate both before and
after  giving  effect  thereto;  and  (ii) as of the  date  hereof,  no Event of
Default, as defined in Section 6.01 of the Credit Agreement,  has occurred,  nor
has any event occurred, that with the giving of notice or the passage of time or
both, would constitute an Event of Default, in either case both before and after
giving effect to the effectiveness of the Term Loan Conversion Option.

     Witness my hand this ______ day of _________, ____.




                            ------------------------
                               [----------------]
                          Vice President and Treasurer

</TEXT>
</DOCUMENT>
