8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT

        Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

        Date of report (date of earliest event reported): September 30, 2005

Commission File
      Number
                    

      1-15929
                    
                    
                     Exact name of registrant as specified in its charter, state
   of incorporation, address of principal executive offices,
                     and telephone number

                     Progress Energy, Inc.
                  410 South Wilmington Street
              Raleigh, North Carolina 27601-1748
                   Telephone: (919) 546-6111  I.R.S. Employer
Identification Number


      56-2155481

State of Incorporation: North Carolina

        The address of the registrant has not changed since the last report.

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

        Progress Energy, Inc. (“Progress Energy”) has entered into three agreements described in more detail below. The three agreements, taken together, constitute an irrevocable, joint and several, full and unconditional guarantee by Progress Energy of the $300 million outstanding FPC Capital I 7.10% Cumulative Quarterly Income Preferred Securities due 2039, Series A (the “QUIPS”). FPC Capital I is wholly-owned by Progress Energy. Progress Energy’s subsidiary, Florida Progress Corporation, will continue to guarantee the QUIPS on an irrevocable, joint and several, full and unconditional basis.

    (a)        SUPPLEMENTAL INDENTURE NO. 2. Progress Energy has entered into a Supplemental Indenture No. 2, dated September 30, 2005, by and among Progress Energy, Florida Progress Funding Corporation, Florida Progress Corporation, and the Trustee named therein, to amend the Junior Subordinated Indenture, dated April 1, 1999, as supplemented, to provide that Progress Energy irrevocably and unconditionally guarantee the unsecured junior subordinated notes issued from time to time thereunder and that Progress Energy comply with the covenant to provide the reports specified in Section 13 and 15(d) of the Exchange Act of 1934. A copy of Supplemental Indenture No. 2 is filed herewith as Exhibit 4.1.

    (b)        AMENDED AND RESTATED GUARANTEE AGREEMENT. Progress Energy has entered into an Amended and Restated Guarantee Agreement, dated September 30, 2005, by and among Progress Energy, Florida Progress Corporation, and the Guarantee Trustee named therein, pursuant to which Progress Energy and Florida Progress Corporation jointly, severally, irrevocably, and unconditionally guarantee certain payments and distributions with respect to the FPC Capital I 7.10% Cumulative Quarterly Income Preferred Securities due 2039, Series A. A copy of the Amended and Restated Guarantee Agreement is filed herewith as Exhibit 4.2.

    (c)        AMENDED AND RESTATED AGREEMENT AS TO EXPENSES AND LIABILITIES. Progress Energy has entered into an Amended and Restated Agreement as to Expenses and Liabilities, dated September 30, 2005 (“Expenses Agreement”), by and among Progress Energy, Florida Progress Corporation, and FPC Capital I, pursuant to which Progress Energy and Florida Progress Corporation jointly, severally, irrevocably, and unconditionally guarantee to each beneficiary of FPC Capital I the full payment, when and as due, of any costs, expenses or liabilities of FPC Capital I. A copy of the Amended and Restated Agreement as to Expenses and Liabilities is filed herewith as Exhibit 4.3.

ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT

        The information set forth above under Item 1.01 of this Form 8-K is incorporated by reference into this Item 2.03.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

Exhibit No.       Description

4.1          Supplemental Indenture No. 2, dated September 30, 2005, by and among Progress Energy, Florida Progress Funding Corporation, Florida Progress Corporation, and the Trustee named therein.

4.2          Amended and Restated Guarantee Agreement, dated September 30, 2005, by and among Progress Energy, Florida Progress Corporation, and the Guarantee Trustee named therein.

4.3          Amended and Restated Agreement as to Expenses and Liabilities, dated September 30, 2005, by and among Progress Energy, Florida Progress Corporation, and FPC Capital I

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, Progress Energy, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 PROGRESS ENERGY, INC.

 Registrant

 By: /s/Geoffrey S. Chatas
          Geoffrey S. Chatas
          Executive Vice President and
          Chief Financial Officer

Date: October 5, 2005

EX-4

                                                                                                                                                                Exhibit 4.1               

FLORIDA PROGRESS FUNDING CORPORATION, as Issuer,

FLORIDA PROGRESS CORPORATION, as a Guarantor,

PROGRESS ENERGY, INC., as a Guarantor,

and

J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION,

as successor Trustee to The First National Bank of Chicago

SUPPLEMENTAL INDENTURE NO. 2

Dated as of September 30, 2005

SUPPLEMENTAL INDENTURE NO.2

        SUPPLEMENTAL INDENTURE No. 2, dated as of September 30, 2005 among Florida Progress Funding Corporation, a Delaware corporation (the “Company”), Florida Progress Corporation, a Florida corporation, as a Guarantor (“FPC”), Progress Energy, Inc., as a Guarantor (“Progress Energy”, and together with FPC, the “Guarantors”, or when used singularly, a “Guarantor”), and J.P. Morgan Trust Company, National Association, as successor Trustee to The First National Bank of Chicago (the “Trustee”).

RECITALS

        WHEREAS, the Company, FPC and the Trustee have previously executed a Junior Subordinated Indenture, dated as of April 1, 1999, as supplemented by Supplemental Indenture No. 1 thereto, dated as of April 1, 1999 (collectively, the “Indenture”).

        WHEREAS, Section 9.2 of the Indenture provides that with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected, the Company, FPC and the Trustee may enter into an indenture supplemental to the Indenture to change any of the provisions of the Indenture.

        WHEREAS, FPC Capital I, a Delaware statutory business trust (“FPC Capital I”), as Holder of all of the Outstanding Securities, has consented to amend the Indenture to provide (i) that Progress Energy provide the reports specified in Sections 13 and 15(d) of the Exchange Act of 1934, as amended (the “Exchange Act”), instead of FPC and (ii) that Progress Energy irrevocably and unconditionally guarantee the Debt Securities.

        WHEREAS, the Company, the Guarantors and the Trustee desire to enter into this Supplemental Indenture No. 2 to amend the Indenture as provided above.

        NOW, THEREFORE, for and in consideration of the premises provided for herein, it is mutually covenanted and agreed as follows:

ARTICLE I

RELATION TO INDENTURE; DEFINITIONS

Section 1.1. This Supplemental Indenture No. 2 constitutes an integral part of the Indenture.

Section 1.2. For all purposes of this Supplemental Indenture No. 2:

(a)     Capitalized terms used herein without definition shall have the meanings specified in the Indenture or in the Amended and Restated Trust Agreement, dated as of April 1, 1999, as amended, among the Company, as Depositor, J.P. Morgan Trust Company, National Association, as successor Property Trustee to The First National Bank of Chicago, Chase Bank USA, National Association, as successor Delaware Trustee to First Chicago Delaware Inc., and Progress Energy Service Company, LLC, as successor Administrative Trustee of FPC Capital I, as the case may be;

(b)     All references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture No. 2; and

(c)     The terms “herein,” “hereof,” “hereunder” and other words of similar import refer to this Supplemental Indenture No. 2.

ARTICLE II

AMENDMENT TO INDENTURE

Section 2.1. Section 7.4 of the Indenture is amended to read as follows:

“The Guarantors shall file with the Trustee, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided in the Trust Indenture Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is required to be filed with the Commission. Notwithstanding that Progress Energy may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, Progress Energy shall continue to file with the Commission and provide the Trustee with the annual reports and the information, documents and other reports which are specified in Section 13 or 15(d) of the Exchange Act. The Guarantors shall also comply with the other provisions of Section 314(a) of the Trust Indenture Act.”

Section 2.2. Article XIV of the Indenture is amended and restated to read as follows:

      “Section 14.1 Guarantee.

Each Guarantor hereby jointly, severally, irrevocably and unconditionally guarantees to each Holder of a Debt Security of each series the due and punctual payment of the principal of and any premium and interest (including Additional Interest) on such Debt Security when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, call for redemption or otherwise, in accordance with the terms of such Debt Security and this Indenture, regardless of any defense, right of set-off or counterclaim that each Guarantor may have or assert, except the defense of payment. The obligations of each Guarantor to make a payment under this Article XIV may be satisfied by direct payment of the required amounts by each Guarantor to the Holders or by causing the Company to pay such amounts to the Holders.

The Guarantee set forth in this Section 14.1 shall not be valid or become obligatory for any purpose with respect to a Debt Security issued after the date of Supplemental Indenture No. 2 to the Indenture until the certificate of authentication on such Debt Security shall have been authenticated by or on behalf of the Trustee by signature; provided, however, no further action shall be required for Debt Securities issued prior to the date of Supplemental Indenture No. 2 to the Indenture.

      Section 14.2 Waiver of Notice and Demand.

Each Guarantor hereby waives notice of acceptance of the Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Company, other Guarantor or any other Person before proceeding against such Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.

      Section 14.3 Guarantor Obligations Not Affected.

The obligations of each Guarantor under this Article XIV shall in no way be affected or impaired by reason of the happening from time to time of any of the following:

    (a)        the release or waiver, by operation of law or otherwise, of the performance or observance by the Company or any other Guarantor of any express or implied agreement, covenant, term or condition relating to the Debt Securities to be performed or observed by the Company or any other Guarantor;

    (b)        the extension of time for the payment by the Company or any other Guarantor of all or any portion of the interest on the Debt Securities, the Redemption Price or any other sums payable under the terms of the Debt Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Debt Securities (other than an extension of time for payment of interest or any other sums payable that results from the extension of any interest payment period on the Debt Securities of any series permitted by this Indenture);

    (c)        any failure, omission, delay or lack of diligence on the part of the Trustee or the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Trustee or the Holders pursuant to the terms of the Indenture, any Guarantee or the Debt Securities, or any action on the part of the Company, any other Guarantor or the Trustee granting indulgence or extension of any kind;

    (d)        the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Company or any other Guarantor or any of the assets of the Company or any other Guarantor;

    (e)        any invalidity of, or defect or deficiency in, the Debt Securities;

    (f)        the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or

    (g)        any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment of the underlying obligation), it being the intent of this Article XIV that the obligations of each Guarantor hereunder shall be absolute and unconditional under any and all circumstances.

There shall be no obligation of the Trustee or the Holders to give notice to, or obtain the consent of, either Guarantor with respect to the happening of any of the foregoing.

      Section 14.4 Form of Guarantee.

A notation of the Guarantee shall be set forth on each Debt Security in substantially the following form:

FOR VALUE RECEIVED, FLORIDA PROGRESS CORPORATION, a corporation duly organized and existing under the laws of the State of Florida (“FPC”), and PROGRESS ENERGY, INC., a corporation duly organized and existing under the laws of the State of North Carolina (“Progress Energy”, and together with FPC, the “Guarantors”, which term includes any successor Persons under the Indenture referred to herein) hereby jointly, severally, irrevocably and unconditionally guarantee to the Holder of this Security issued by Florida Progress Funding Corporation (the “Company”), pursuant to the terms of the Guarantee contained in Article XIV of the Indenture, the due and punctual payment of the principal of, sinking fund payment, if any, premium, if any, and interest (including Additional Interest) on this Junior Subordinated Note, when and as the same shall due become due and payable, whether at the Stated Maturity, by declaration of acceleration, call for redemption or otherwise, in accordance with the terms of this Security and the Indenture.

The obligations of the Guarantors to the Holders of the Securities and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in Article XIV of the Indenture and reference is hereby made to such Article and Indenture for the precise terms of the Guarantee.

Notwithstanding anything to the contrary in this Guarantee, all payments in respect of the Guarantee are subordinate and subject in right of payment to the prior payment in full of all Senior Debt (as defined in the Indenture) of the Guarantors.

THIS NOTES GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS THEREOF.

The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Security upon which this notation of the Guarantee is endorsed shall have been executed by the Trustee under the Indenture by the signature of one of its authorized officers; provided, however, no further action shall be required for Securities issued prior to the date of Supplemental Indenture No. 2 to the Indenture.

                  (SEAL)
                  Attest:
                                                       
                                                       


                  (SEAL)
                  Attest:
                                                       
                                                        FLORIDA PROGRESS CORPORATION
By:
Name:
Title:


PROGRESS ENERGY, INC.
By:
Name:
Title:

Notwithstanding anything to the contrary in this Guarantte, the notation on Securities issued prior to the date of Supplemental Indenture No. 2 to the Indenture shall remain in force and effect.

      Section 14.5 Execution of Guarantee.

To evidence the Guarantee to the Holders specified in Section 14.1, each Guarantor hereby agrees to execute the notation of the Guarantee, in substantially the form set forth in Section 14.4, to be endorsed on each Security authenticated and delivered by the Trustee. Each Guarantor hereby agrees that the Guarantee set forth in Section 14.1 shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of the Guarantee. Each such notation of the Guarantee shall be signed on behalf of each Guarantor, by a director or officer, prior to the authentication of the Security on which it is endorsed, and the delivery of such Security by the Trustee, after the due authentication thereof by the Trustee hereunder, shall constitute due delivery of the Guarantee on behalf of a Guarantor. Such signature upon the notation of the Guarantee may be a manual or facsimile signature of any such director or officer and may be imprinted or otherwise reproduced below the notation of the Guarantee, and in case any such director or officer who shall have signed the notation of the Guarantee shall cease to be such director or officer before the Security on which such notation is endorsed shall have been authenticated and delivered by the Trustee or disposed of by the Company, such Security nevertheless may be authenticated and delivered or disposed of as though the person who signed the notation of the Guarantee had not ceased to be such director or officer of that Guarantor.

      Section 14.6 Subrogation.

Each of the Guarantors shall be subrogated to all rights (if any) of the Holders against the Company or the other Guarantor in respect of any amounts paid to the Holders by that Guarantor under this Article XIV with respect to any series of Securities; provided, however, that a Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Article XIV with respect to a series of Securities if, at the time of any such payment, any amounts are due and unpaid under such series of Securities. If any amount shall be paid to a Guarantor in violation of the preceding sentence, that Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.

      Section 14.7 Independent Obligations.

Each Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Company and the other Guarantor with respect to the Securities and that each Guarantor shall be liable as principal and as debtor hereunder to make payments pursuant to the terms of the Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 14.3 hereof.

      Section 14.8 Subordination.

Each Guarantor covenants and agrees, and each Holder of a Security, by his acceptance thereof, likewise covenants and agrees, that, to the same extent and in the same manner set forth in Article XIII with respect to subordination and relative rights of the Securities, all payments in respect of the Guarantee are hereby expressly made subordinate and subject in right of payment to the prior payment in full in cash of all Senior Debt of each Guarantor.

      Section 14.9 Assumption by Guarantors.

Each Guarantor may, without the consent of the Holders of the Securities of any series, assume all of the rights and obligations of the Company hereunder with respect to a series of Securities and under the Securities of such series if, after giving effect to such assumption, no Event of Default shall have occurred and be continuing. Upon such an assumption, such Guarantor shall execute a supplemental indenture evidencing its assumption of all such rights and obligations of the Company and the Company shall be released from its liabilities hereunder and under such Securities as obligor on the Securities of such series.

Each Guarantor shall assume all of the rights and obligations of the Company hereunder with respect to a series of Securities and under the Securities of such series if, upon a default by the Company in the due and punctual payment of the principal, sinking fund payment, if any, premium, if any, or interest on such Securities, the Guarantors are prevented by any court order or judicial proceeding from fulfilling their obligations under the Guarantee with respect to such series of Securities. Such assumption shall result in the Securities of such series becoming the direct obligations of such Guarantor(s) and shall be effected without the consent of the holders of the Securities of any series. Upon such an assumption, the Guarantors shall execute a supplemental indenture evidencing the assumption of all such rights and obligations of the Company, and the Company shall be released from its liabilities hereunder and under such Securities as obligor on the Securities of such.”

ARTICLE III

MISCELLANEOUS PROVISIONS

Section 3.1. The Indenture, as supplemented and amended by this Supplemental Indenture No. 2, is in all respects hereby adopted, ratified and confirmed.

Section 3.2. This Supplemental Indenture No. 2 may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

Section 3.3. THIS SUPPLEMENTAL INDENTURE NO. 2 SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

[Remainder of Page Intentionally Left Blank]

        IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture No. 2 to be duly executed, as of the day and year first written above.

                                                    



                                                    
                                                    
Attest: /s/ Frank A. Schiller
                      Secretary
                                                    
                                                    



                                                    
                                                    
Attest: /s/ Frank A. Schiller
                      Secretary
                                                    
                                                    



                                                    
                                                    
Attest: /s/ Frank A. Schiller
                      Secretary
                                                    
                                                    



                                                    
                                                    
Attest: /s/ Christopher C. Holly
                      Secretary FLORIDA PROGRESS FUNDING CORPORATION



By: /s/ Thomas R. Sullivan
Its: Vice President
Executed in Raleigh, North Carolina

FLORIDA PROGRESS CORPORATION
as a Guarantor



By: /s/ Geoffrey S. Chatas
Its: Executive Vice President
Executed in Raleigh, North Carolina

PROGRESS ENERGY, INC.
as a Guarantor



By: /s/ Geoffrey S. Chatas
Its: Executive Vice President and Chief Financial Officer
Executed in Raleigh, North Carolina

J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as successor
Trustee to The First National Bank of Chicago



By: /s/ Janice Ott Rotunno
Its: Vice President
Executed in Chicago, Illinois

EX-4

         Exhibit 4.2

AMENDED AND RESTATED GUARANTEE AGREEMENT

Between

FLORIDA PROGRESS CORPORATION

and

PROGRESS ENERGY, INC.

(as Guarantors)

and

J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION,

as successor Trustee to The First National Bank of Chicago

(as Trustee)

dated as of

September 30, 2005

CROSS-REFERENCE TABLE^*

     Trust Indenture Act
     of 1939, as amended
- ------------------------------
- ------------------------------

310(a)
310(b)
310(c)
311(a)
311(b)
311(c)
312(a)
312(b)
313
314(a)
314(b)
314(c)
314(d)
314(e)
314(f)
315(a)
315(b)
315(c)
315(d)
316(a)
316(b)
316(c)
317(a)
317(b)
318(a)
318(b)
318(c)          Section of
     Guarantee Agreement
 ----------------------------
 ----------------------------

 4.1(a)
 4.1(c), 2.8
 Inapplicable
 2.2(b)
 2.2(b)
 Inapplicable
 2.2(a)
 2.2(b)
 2.3
 2.4
 Inapplicable
 2.5
 Inapplicable
 1,1., 2.5, 3.2
 2.1, 3.2
 3.1(d)
 2.7
 3.1
 3.1(d)
 1.1, 2.6, 5.4
 5.3
 8.2
 Inapplicable
 Inapplicable
 2.1(b)
 2.1
 2.1(a)

____________________________
*This Cross-Reference Table does not constitute part of the Amended and Restated Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions.

TABLE OF CONTENTS

                                                                                                               

ARTICLE I. DEFINITIONS.                                                                             Page

         Section 1.1. Definitions................................................................................1

ARTICLE II. TRUST INDENTURE ACT

         Section 2.1. Trust Indenture Act; Application...........................................................4
         Section 2.2. List of Holders............................................................................4
         Section 2.3. Reports by the Guarantee Trustee...........................................................4
         Section 2.4. Periodic Reports to the Guarantee Trustee..................................................4
         Section 2.5. Evidence of Compliance with Conditions Precedent...........................................5
         Section 2.6. Events of Default; Waiver..................................................................5
         Section 2.7. Event of Default; Notice...................................................................5
         Section 2.8. Conflicting Interests......................................................................5

ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

         Section 3.1. Powers and Duties of the Guarantee Trustee.................................................5
         Section 3.2. Certain Rights of Guarantee Trustee........................................................7
         Section 3.3. Indemnity..................................................................................8

ARTICLE IV. GUARANTEE TRUSTEE

         Section 4.1. Guarantee Trustee: Eligibility.............................................................8
         Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee..............................9

ARTICLE V. GUARANTEE

         Section 5.1. Guarantee.................................................................................10
         Section 5.2. Waiver of Notice and Demand...............................................................10
         Section 5.3. Obligations Not Affected..................................................................10
         Section 5.4. Rights of Holders.........................................................................11
         Section 5.5. Guarantee of Payment......................................................................11
         Section 5.6. Subrogation...............................................................................11
         Section 5.7. Independent Obligations...................................................................11

ARTICLE VI. COVENANTS AND SUBORDINATION

         Section 6.1. Subordination.............................................................................12
         Section 6.2. Pari Passu Guarantees.....................................................................12

ARTICLE VII. TERMINATION

         Section 7.1. Termination...............................................................................12

ARTICLE VIII. MISCELLANEOUS

         Section 8.1. Successors and Assigns....................................................................12
         Section 8.2. Amendments................................................................................12
         Section 8.3. Notices...................................................................................13
         Section 8.4. Benefit...................................................................................14
         Section 8.5. Interpretation............................................................................14
         Section 8.6. Governing Law.............................................................................15

AMENDED AND RESTATED GUARANTEE AGREEMENT

        This AMENDED AND RESTATED GUARANTEE AGREEMENT, dated as of September 30, 2005 (this “Guarantee Agreement”), is executed and delivered by FLORIDA PROGRESS CORPORATION and PROGRESS ENERGY, INC. (each a “Guarantor”, and collectively the “Guarantors”) and J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as successor Guarantee Trustee to The First National Bank of Chicago (the “Guarantee Trustee”), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of FPC Capital I (the “Issuer”).

        WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as of April 1, 1999, as amended on September 30, 2005 (the “Trust Agreement”), among Florida Progress Funding Corporation (the “Company”), as Depositor, the Property Trustee, the Administrative Trustee and the Delaware Trustee named therein and the Holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer issued $300,000,000 aggregate Liquidation Amount (as defined in the Trust Agreement) of its 7.10% Cumulative Quarterly Income Preferred Securities, Series A (Liquidation Amount $25 per Preferred Security) (the “Preferred Securities”), representing preferred undivided beneficial interests in the assets of the Issuer and having the terms set forth in the Trust Agreement;

        WHEREAS, the proceeds of the Preferred Securities issued by the Issuer, together with the proceeds from the issuance of the Issuer’s Common Securities (as defined below), were used to purchase the Notes (as defined in the Trust Agreement) of the Company which were deposited with the Guarantee Trustee, as Property Trustee under the Trust Agreement, as trust assets;

        WHEREAS, pursuant to that Guarantee Agreement dated as of April 1, 1999 (the “Original Guarantee Agreement”), Florida Progress Corporation irrevocably and unconditionally guaranteed certain payments and distributions with respect to the Preferred Securities; and

        WHEREAS, pursuant to Section 8.2 of the Original Guarantee Agreement, the parties hereto desire to amend and restate the Original Guarantee Agreement to provide that the Guarantors jointly, severally, irrevocably and unconditionally guarantee certain payments and distributions with respect to the Preferred Securities on the terms and conditions set forth herein.

        NOW, THEREFORE, in consideration of the agreements and obligations set forth herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Guarantors execute and deliver this Guarantee Agreement for the benefit of the Holders from time to time of the Preferred Securities.

ARTICLE I.  DEFINITIONS.

Section 1.1.   Definitions.

        As used in this Guarantee Agreement, the terms set forth below, unless the context otherwise requires have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof.

        “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however, that an Affiliate of the Guarantors shall not be deemed to be an Affiliate of the Issuer. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

        “Board of Directors” means the board of directors of a Guarantor or the Guarantee Trustee, as the case may be, or any committee of that board duly authorized to act hereunder.

        “Common Securities” means the securities representing common undivided beneficial interests in the assets of the Issuer.

        “Event of Default” means a default by the Guarantors on any of their payment or other obligations under this Guarantee Agreement; provided, however, that, except with respect to a default in payment of any Guarantee Payments, the Guarantors shall have received notice of default and shall not have cured such default within 60 days after receipt of such notice.

        “Guarantee Payments” means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by or on behalf of the issuer: (i) any accrued and unpaid Distributions (as defined in the Trust Agreement) required to be paid on the Preferred Securities, to the extent the Issuer shall have funds on hand available therefor at such time, (ii) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the “Redemption Price”), with respect to any Preferred Securities called for redemption by the Issuer, to the extent the Issuer shall have funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary termination, winding-up or liquidation of the Issuer, unless Notes are distributed to the Holders, the lesser of (a) the aggregate of the Liquidation Amount of $25 per Preferred Security plus accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Issuer shall have funds on hand available therefor at such time and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer (in either case, the “Liquidation Distribution”).

        “Guarantee Trustee” means J.P. Morgan Trust Company, National Association (successor to The First National Bank of Chicago) until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement, and thereafter means each such Successor Guarantee Trustee.

        “Holder” means any holder, as registered on the books and records of the Issuer, of any Preferred Securities; provided, however, that in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, “Holder” shall not include the Guarantors, the Company, the Guarantee Trustee, or any Affiliate of the Guarantors, the Company or the Guarantee Trustee.

        “Indenture” means the Junior Subordinated Indenture dated as of April 1, 1999, as supplemented and amended among the Company, Florida Progress Corporation, as guarantor, and The First National Bank of Chicago, as trustee.

        “List of Holders” has the meaning specified in Section 2.2(a).

        “Majority in Liquidation Amount of the Securities” means, except as provided by the Trust Indenture Act, a vote by the Holder(s), voting separately as a class, of more than 50% of the Liquidation Amount of all then outstanding Preferred Securities issued by the Issuer.

        “Officers’ Certificate” means, with respect to any Person, a certificate signed by the Chairman or a Vice Chairman of the Board of Directors of such Person or the President or a Vice President of such Person, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers’ Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include:

(a)     a statement that each officer signing the Officers’ Certificate has read the covenant or condition and the definitions relating thereto;

(b)     a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers’ Certificate;

(c)     a statement that each officer has made such examination or investigation as, in such officer’s opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d)     a statement as to whether, in the opinion of each officer, such condition or covenant has been complied with.

        “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature.

        “Responsible Officer” means, with respect to the Guarantee Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust Officer or any other officer of the Corporate Trust Department of the Guarantee Trustee and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.

        “Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1.

        “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

ARTICLE II.  TRUST INDENTURE ACT

Section 2.1. Trust Indenture Act; Application.

(a)     This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions.

(b)     If and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control.

Section 2.2. List of Holders.

(a)     The Guarantors shall furnish or cause to be furnished to the Guarantee Trustee (a) semiannually, on or before January 15 and July 15 of each year, a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders (“List of Holders”) as of a date not more than 15 days prior to the delivery thereof, and (b) at such other times as the Guarantee Trustee may request in writing, within 30 days after the receipt by the Guarantors of any such request, a List of Holders as of a date not more than 15 days prior to the time such list is furnished, in each case to the extent such information is in the possession or control of the Guarantors and is not identical to a previously supplied list of Holders or has not otherwise been received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders.

(b)     The Guarantee Trustee shall comply with its obligations under Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.

Section 2.3. Reports by the Guarantee Trustee.

        Not later than 60 days following May 15 of each year, commencing May 15, 2000, the Guarantee Trustee shall provide to the Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act.

Section 2.4. Periodic Reports to the Guarantee Trustee.

        Each Guarantor shall provide to the Guarantee Trustee, the Securities and Exchange Commission and the Holders such documents, reports and information, if any, as required by Section 314 of the Trust Indenture Act and the compliance certificate required by Section 314 of the Trust Indenture Act, in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act.

Section 2.5. Evidence of Compliance with Conditions Precedent.

        The Guarantors shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)( 1) may be given in the form of an Officers’ Certificate.

Section 2.6. Events of Default; Waiver.

        The Holders of a Majority in Liquidation Amount of the Preferred Securities may, by vote, on behalf of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent therefrom.

Section 2.7. Event of Default; Notice.

(a)     The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default actually known to the Guarantee Trustee, transmit by mail, first class postage prepaid, to the Holders, notices of all such Events of Default, unless such defaults have been cured or waived before the giving of such notice, provided, that, except in the case of a default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as the Board of Directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.

(b)     The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of this Guarantee Agreement shall have obtained written notice of such Event of Default.

Section 2.8. Conflicting Interests.

        The Trust Agreement and the Indenture shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Indenture Act.

ARTICLE III.  POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

Section 3.1. Powers and Duties of the Guarantee Trustee.

(a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.

(b) If an Event of Default has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the Holders.

(c) The Guarantee Trustee, before the occurrence of any Event of Default and after the curing or waiving of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants shall be read into this Guarantee Agreement against the Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(d) No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

    (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred:

        A) the duties and obligations of the Guarantee Trustee shall be determined solely by express provisions of this Guarantee Agreement, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee Agreement; and

        B) in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof or of the Trust Indenture Act are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement;

    (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;

    (iii) the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in Liquidation Preference of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and

    (iv) no provision of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not reasonably assured to it.

Section 3.2. Certain Rights of Guarantee Trustee.

(a) Subject to the provisions of Section 3.1:

(i) The Guarantee Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties.

(ii) Any direction or act of the Guarantors contemplated by this Guarantee Agreement shall be sufficiently evidenced by Officers’ Certificates unless otherwise prescribed herein.

(iii) Whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon Officers’ Certificates which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the Guarantors.

(iv) The Guarantee Trustee may consult with legal counsel, and the written advice or opinion of such legal counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or opinion. Such legal counsel may be legal counsel to a Guarantor(s) or any of its Affiliates and may be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction.

(v) The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such adequate security and indemnity as would satisfy a reasonable person in the position of the Guarantee Trustee, against the costs, expenses (including attorneys’ fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement.

(vi) The Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

(vii) The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder.

(viii) Whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (A) may request instructions from the Holders, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (C) shall be protected in acting in accordance with such instructions.

(b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right. power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty to act in accordance with such power and authority.

Section 3.3. Indemnity.

        The Guarantors jointly and severally agree to indemnify the Guarantee Trustee for, and to hold it harmless against any loss, liability or expense incurred without negligence or bad faith on the part of the Guarantee Trustee, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Guarantee Trustee will not claim or exact any lien or charge on any Guarantee Payments as a result of any amount due to it under this Guarantee Agreement. The indemnification provided hereunder shall survive the termination of this Guarantee Agreement and the resignation or oval of the Guarantee Trustee.

ARTICLE IV.  GUARANTEE TRUSTEE

Section 4.1. Guarantee Trustee: Eligibility.

(a) There shall at all times be a Guarantee Trustee which shall:

(i) not be an Affiliate of a Guarantor or the Company; and

(ii) be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000, and shall be a corporation meeting the requirements of Section 310(a) of the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority, then, for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

(b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c).

(c) If the Guarantee Trustee has or shall acquire any “conflicting interest” within the meaning of Section 3l0(b) of the Trust Indenture Act, the Guarantee Trustee and the Guarantors shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act.

Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.

(a)     Subject to Section 4.2(b), the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantors.

(b)     The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantors.

(c)     The Guarantee Trustee appointed hereunder shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantors, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantors and the resigning Guarantee Trustee.

(d)     If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantors of an instrument of resignation, the resigning Guarantee Trustee may petition, at the expense of the Guarantors, any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.

ARTICLE V.  GUARANTEE

Section 5.1. Guarantee.

        The Guarantors jointly, severally, irrevocably and unconditionally agree to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Issuer), as and when due, regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert. The Guarantors’ obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantors to the Holders or by causing the Issuer to pay such amounts to the Holders.

Section 5.2. Waiver of Notice and Demand.

        Each Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Guarantee Trustee, Issuer, other Guarantor or any other Person before proceeding against a Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.

Section 5.3. Obligations Not Affected.

        The obligations, covenants, agreements and duties of each Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following:

(a)     the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Issuer;

(b)     the extension of time for the payment by the Issuer of all or any portion of the Distributions (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Notes as provided in the Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of or in connection with, the Preferred Securities;

(c)     any failure, omission, delay or lack of diligence on the part of the Holders or the Guarantee Trustee to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Issuer granting indulgence or extension of any kind;

(d)     the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer;

(e)     any invalidity of, or defect or deficiency in, the Preferred Securities;

(f)     the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or

(g)     any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and all circumstances.

        There shall be no obligation of the Holders to give notice to, or obtain the consent of, the Guarantors with respect to the happening of any of the foregoing.

Section 5.4. Rights of Holders.

        Each Guarantor expressly acknowledges that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in Liquidation Preference of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder may institute a legal proceeding directly against either Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Issuer or any other Person.

Section 5.5. Guarantee of Payment.

        This Guarantee Agreement creates a guarantee of payment and not of performance or collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Issuer) or upon, distribution of Notes to Holders as provided in the Trust Agreement.

Section 5.6. Subrogation.

        Each Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by that Guarantor under this Guarantee Agreement and shall have the right to waive payment by the Issuer pursuant to Section 5.1; provided, however, that a Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to a Guarantor in violation of the preceding sentence, that Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.

Section 5.7. Independent Obligations.

        Each Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer and each other Guarantor with respect to the Preferred Securities and that each Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.

ARTICLE VI.  COVENANTS AND SUBORDINATION

Section 6.1. Subordination.

        The obligations of the Guarantors under this Guarantee Agreement will constitute unsecured obligations of the Guarantors and will rank subordinate and junior in right of payment to all other liabilities of the Guarantors except those made pari passu or subordinate to such obligations expressly by their terms.

Section 6.2. Pari Passu Guarantees.

        The obligations of the Guarantors under this Guarantee Agreement shall rank pari passu with the obligations of the Guarantors under any similar Guarantee Agreements issued by the Guarantors on behalf of the holders of preferred securities issued by any FPC Capital Trust (as defined in the Indenture).

ARTICLE VII.  TERMINATION

Section 7.1. Termination.

        This Guarantee Agreement shall terminate and be of no further force and effect upon (i) full payment of the Redemption Price of all Preferred Securities, (ii) the distribution of Notes to the Holders in exchange for all of the Preferred Securities or (iii) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to Preferred Securities or this Guarantee Agreement

ARTICLE VIII.  MISCELLANEOUS

Section 8.1. Successors and Assigns.

        All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantors and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Except in connection with a consolidation, merger or sale involving a Guarantor that is permitted under Article VIII of the indenture and pursuant to which the successor or assignee agrees in writing to perform such Guarantor’s obligations hereunder, such Guarantor shall not assign its obligations hereunder.

Section 8.2. Amendments

        Except with respect to any changes which do not adversely affect the rights of the Holders in any material respect (in which case no consent of the Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of a Majority in Liquidation Amount of Securities of all the outstanding Preferred Securities. The provisions of Article VI of the Trust Agreement concerning meetings of the Holders shall apply to the giving of such approval.

Section 8.3. Notices.

        Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows:

(a)     if given to the Guarantors, to the addresses set forth below or such other address, facsimile number or to the attention of such other Person as the Guarantors may give notice to the Holders:

                           Florida Progress Corporation
                           One Progress Plaza
                           St. Petersburg, Florida 33701
                           Facsimile No.: 727-820-5918
                           Attention: Treasurer

                           Progress Energy, Inc.
                           410 South Wilmington Street
                           Suite 319
                           Raleigh, North Carolina 27601
                           Attention: ____________________

(b)     if given to the Issuer, in care of the Guarantee Trustee, at the Issuer’s (and the Guarantee Trustee’s) respective addresses set forth below or such other address as the Guarantee Trustee on behalf of the Issuer may give notice to the Holders:

                           FPC Capital I
                           300 Delaware Avenue
                           Suite 319
                           Wilmington, Delaware 19801
                           Attention: Administrative Trustee

                           with a copy to:

                           J.P. Morgan Trust Company, National Association
                           One First National Plaza
                           Suite IL 1-0126
                           Chicago, Illinois 60670-0126
                           Facsimile No.: 312-407-1708
                           Attention: Global Corporate Trust Services

(c) if given to the Guarantee Trustee, at the Guarantee Trustee's address set forth below or such other address as the Guarantee Trustee may give notice to the Holders:

                           J.P. Morgan Trust Company, National Association
                           One First National Plaza
                           Suite IL 1-0126
                           Chicago, Illinois 60670-0126
                           Facsimile No.: 312-407-1708
                           Attention: Global Corporate Trust Services

All notices hereunder hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall he deemed to have been delivered on the date of such refusal or inability to deliver.

Section 8.4. Benefit.

         This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Preferred Securities.

Section 8.5. Interpretation.

         In this Guarantee Agreement, unless the context otherwise requires:

        (a) capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.1;

        (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout;

        (c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Amended and Restated Guarantee Agreement as modified, supplemented or amended from time to time;

        (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified;

        (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires;

        (f) a reference to the singular includes the plural and vice versa; and

        (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.

Section 8.6. Governing Law

THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

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This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. THIS AMENDED AND RESTATED GUARANTEE AGREEMENT is executed as of the day and year first above written.

                                                  FLORIDA PROGRESS CORPORATION



                                                  By: /s/ Geoffrey S. Chatas
                                                  Name: Geoffrey S. Chatas
                                                  Title: Executive Vice President

                                                  Executed in Raleigh, North Carolina.

                                                  PROGRESS ENERGY, INC.



                                                  By: /s/ Geoffrey S. Chatas
                                                  Name: Geoffrey S. Chatas
                                                   Title: Executive Vice President and Chief Financial Officer

                                                  Executed in New Raleigh, North Carolina.

                                                  J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as Guarantee
                                                  Trustee



                                                  By: /s/ Janice Ott Rotunno
                                                  Name: Janice Ott Rotunno
                                                  Title: Vice President

                                                  Executed in Chicago, Illinois.

^* This Cross-Reference Table does not constitute part of the Amended and Restated Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions.

EX-4

      Exhibit 4.3

AMENDED AND RESTATED AGREEMENT AS TO EXPENSES AND LIABILITIES

        AMENDED AND RESTATED AGREEMENT AS TO EXPENSES AND LIABILITIES dated as of September 30, 2005, between Florida Progress Corporation, a Florida corporation, Progress Energy, Inc., a North Carolina Corporation, and FPC Capital I, a Delaware business trust (the “Trust”).

        WHEREAS, the Trust issued its Common Securities, Series A (the “Common Securities”) to and received Notes (the “Notes”) from Florida Progress Funding Corporation, a Delaware corporation and wholly owned subsidiary of Florida Progress Corporation, and issue its 7.10% Cumulative Quarterly Income Preferred Securities, Series A (the “Preferred Securities”) with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust dated as of April 1, 1999, as the same may be amended from time to time (the “Trust Agreement”).

        WHEREAS, Florida Progress Funding Corporation directly or indirectly owns all of the Common Securities of the Trust and issued the Notes;

        WHEREAS, Florida Progress Corporation and Progress Energy, Inc. are guarantors of the Notes.

        NOW, THEREFORE, in consideration of the agreements and obligations set forth herein, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, Florida Progress Corporation, Progress Energy, Inc. and the Trust hereby agree as follows:

ARTICLE I

Section 1.1. Guarantee by Florida Progress Corporation and Progress Energy, Inc.

        Subject to the terms and conditions hereof, Florida Progress Corporation and Progress Energy, Inc. hereby jointly, severally, irrevocably and unconditionally guarantee to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the “Beneficiaries”) the full payment, when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, “Obligations” means any costs, expenses or liabilities of the Trust, other than obligations of the Trust to pay to holders of any Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof.

Section 1.2. Term of Agreement.

        This Agreement shall terminate and be of no further force and effect upon the later of (a) the date on which full payment has been made of all amounts payable to all holders of all the Preferred Securities (whether upon redemption, liquidation, exchange or otherwise) and (b) the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any Obligation, under the Guarantee Agreement dated the date hereof by Florida Progress Corporation, Progress Energy, Inc. and J.P. Morgan Trust Company, National Association (as successor guarantee trustee to The First National Bank of Chicago) or under this Agreement for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute.

Section 1.3. Waiver of Notice.

        Florida Progress Corporation and Progress Energy, Inc. hereby waive notice of acceptance of this Agreement and of any Obligation to which either applies or may apply, and Florida Progress Corporation and Progress Energy, Inc. hereby waive presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.

Section 1.4. No Impairment.

        The obligations, covenants, agreements and duties of Florida Progress Corporation and Progress Energy, Inc. under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following:

(a)     the extension of time for the payment by the Trust of all or any portion of the Obligations or for the performance of any other obligation under, arising out of, or in connection with, the obligations;

(b)     any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the Obligations or any action on the part of the Trust granting indulgence or extension of any kind; or

(c)     the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust of any of the assets of the Trust.

There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, Florida Progress Corporation or Progress Energy, Inc. with respect to the happening of any of the foregoing.

Section 1.5. Enforcement.

        A Beneficiary may enforce this Agreement directly against Florida Progress Corporation or Progress Energy, Inc. and Florida Progress Corporation and Progress Energy, Inc. waive any right or remedy to require that any action be brought against the Trust, each other, or any other person or entity before proceeding against Florida Progress Corporation and Progress Energy, Inc.

Section 1.6. Subrogation.

        Florida Progress Corporation or Progress Energy, Inc. shall be subrogated to all (if any) rights of the Trust in respect of any amounts paid to the Beneficiaries by it under this Agreement; provided, however, that neither Florida Progress Corporation or Progress Energy, Inc. shall (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Agreement.

ARTICLE II

Section 2.1. Binding Effect.

        All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of Florida Progress Corporation and Progress Energy, Inc. and shall inure to the benefit of the Beneficiaries.

Section 2.2. Amendment.

        So long as there remains any Beneficiary or any Preferred Securities of any series are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to the holders of the Preferred Securities.

Section 2.3. Notices.

        Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same against receipt therefor by facsimile transmission (confirmed by mail), telex or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer-back, if sent by telex):

         FPC Capital I
         300 Delaware Avenue, Suite 319
         Wilmington, Delaware 19801
         Attention: Administrative Trustee

         Florida Progress Corporation
         One Progress Plaza
         St. Petersburg, Florida 33701
         Facsimile No.: (727) 820-5918
         Attention: Treasurer

         Progress Energy, Inc.
         410 South Wilmington Street
         Raleigh, North Carolina 27601
         Attention: __________________

Section 2.4. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

        THIS AGREEMENT is executed as of the day and year first above written and at the location indicated below.

                                                     FLORIDA PROGRESS CORPORATION

                                                     By: /s/ Geoffrey S. Chatas
                                                     Name: Geoffrey S. Chatas
                                                     Title: Executive Vice President

                                                     Executed in Raleigh, North Carolina.


                                                     PROGRESS ENERGY, INC.

                                                     By: /s/ Geoffrey S. Chatas
                                                     Name: Geoffrey S. Chatas
                                                     Title: Executive Vice President and Chief Financial Officer

                                                     Executed in Raleigh, North Carolina.


                                                     FPC CAPITAL I

                                                          PROGRESS ENERGY SERVICE COMPANY, LLC, as Administrative
                                                          Trustee

                                                     By: /s/ Jeffrey M. Stone
                                                     Name: Jeffrey M. Stone
                                                     Title: Vice President

Executed in Raleigh, North Carolina.