Florida Progress Corp, et al. – ‘8-K’ for 8/22/99 – EX-2.1

On:  Monday, 8/30/99   ·   For:  8/22/99   ·   Accession #:  950131-99-5133   ·   File #s:  1-03274, 1-08349

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         4     17K 
 2: EX-2.1      Plan of Exchange                                     124    337K 
 3: EX-4.1      Right's Agreement                                      3     12K 

EX-2.1   —   Plan of Exchange
Exhibit Table of Contents

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==========================================================================      

AGREEMENT AND PLAN OF EXCHANGE  

By and Among  

Carolina Power & Light Company, 

Florida Progress Corporation  

and 

CP&L Holdings, Inc. 

==========================================================================      

Dated as of August 22, 1999 

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TABLE OF CONTENTS 

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                                                                                                               Page
                                                                                                               ----
                                                                                                                   
ARTICLE I DEFINITIONS..........................................................................................   2
         Section 1.1.  Agreement...............................................................................   2
         Section 1.2.  Alternative Proposal....................................................................   2
         Section 1.3.  Atomic Energy Act.......................................................................   2
         Section 1.4.  Certificates............................................................................   2
         Section 1.5.  Closing; Closing Date...................................................................   2
         Section 1.6.  COBRA...................................................................................   2
         Section 1.7.  Code....................................................................................   3
         Section 1.8.  Confidentiality Agreement...............................................................   3
         Section 1.9.  Contracts...............................................................................   3
         Section 1.10. CP&L Common Stock.......................................................................   3
         Section 1.11. CP&L Companies..........................................................................   3
         Section 1.12. CP&L Disclosure Schedule................................................................   3
         Section 1.13. CP&L Exchange...........................................................................   4
         Section 1.14. CP&L Exchange Agreement.................................................................   4
         Section 1.15. CP&L Exchange Registration Statement....................................................   4
         Section 1.16. CP&L Exchange Special Meeting...........................................................   4
         Section 1.17. CP&L SEC Reports........................................................................   4
         Section 1.18. Effective Time..........................................................................   5
         Section 1.19. Encumbrances............................................................................   5
         Section 1.20. Environmental Claim and Environmental Laws..............................................   5
         Section 1.21. Environmental Permits...................................................................   5
         Section 1.22. ERISA...................................................................................   5
         Section 1.23. Exchange................................................................................   6
         Section 1.24. Exchange Act............................................................................   6
         Section 1.25. Exchange Agent..........................................................................   6
         Section 1.26. Exchange Consideration..................................................................   6
         Section 1.27. FBCA....................................................................................   6
         Section 1.28. FCC.....................................................................................   6
         Section 1.29. FERC....................................................................................   6
         Section 1.30. Final Stock Price.......................................................................   7
         Section 1.31. FPC Articles of Exchange................................................................   7
         Section 1.32. FPC Benefit Plans.......................................................................   7
         Section 1.33. FPC Common Stock........................................................................   7
         Section 1.34. FPC Companies...........................................................................   7
         Section 1.35. FPC Disclosure Schedule.................................................................   8
         Section 1.36. FPC LTIP................................................................................   8
         Section 1.37. FPC Pension Plan........................................................................   8
         Section 1.38. FPC Plan of Exchange....................................................................   8
         Section 1.39. FPC Qualified Plan......................................................................   8
         Section 1.40. FPC Rights..............................................................................   8

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         Section 1.41. FPC Rights Agreement....................................................................  9 
         Section 1.42. FPC SEC Reports.........................................................................  9 
         Section 1.43. FPC Share...............................................................................  9 
         Section 1.44. FPC Special Meeting.....................................................................  9 
         Section 1.45. FPC Utility Subsidiary.................................................................. 10 
         Section 1.46. FPSC.................................................................................... 10 
         Section 1.47. Fund.................................................................................... 10 
         Section 1.48. GAAP.................................................................................... 10 
         Section 1.49. Governmental Authority.................................................................. 10 
         Section 1.50. Hazardous Material...................................................................... 10 
         Section 1.51. Holdco.................................................................................. 11 
         Section 1.52. Holdco Common Stock..................................................................... 11 
         Section 1.53. Holdco Special Meeting.................................................................. 11 
         Section 1.54. HSR Act................................................................................. 11 
         Section 1.55. IRS..................................................................................... 11 
         Section 1.56. Knowledge of CP&L....................................................................... 11 
         Section 1.57. Knowledge of FPC........................................................................ 12 
         Section 1.58. Law..................................................................................... 12 
         Section 1.59. Material Adverse Effect................................................................. 12 
         Section 1.60. Merrill Lynch........................................................................... 13 
         Section 1.61. NCBCA................................................................................... 13 
         Section 1.62. NCUC.................................................................................... 13 
         Section 1.63. NRC..................................................................................... 13 
         Section 1.64. NYSE.................................................................................... 13 
         Section 1.65. Partnership; Partnerships............................................................... 13 
         Section 1.66. Permits................................................................................. 14 
         Section 1.67. Power Act............................................................................... 14 
         Section 1.68. Proxy Statement/Prospectus.............................................................. 14 
         Section 1.69. PUHCA................................................................................... 14 
         Section 1.70. Registration Statement.................................................................. 14 
         Section 1.71. Release................................................................................. 15 
         Section 1.72. Salomon Smith Barney.................................................................... 15 
         Section 1.73. SCPSC................................................................................... 15 
         Section 1.74. SEC..................................................................................... 15 
         Section 1.75. Securities Act.......................................................................... 15 
         Section 1.76. Significant Subsidiary.................................................................. 15 
         Section 1.77. Subsidiary; Subsidiaries................................................................ 15 
         Section 1.78. Superior Proposal....................................................................... 16 
         Section 1.79. Tax or Taxes............................................................................ 16 
         Section 1.80. Tax Return.............................................................................. 16 

ARTICLE II THE EXCHANGE........................................................................................ 16 
         Section 2.1.  The Exchange............................................................................ 16 
         Section 2.2.  Closing; Filing of Articles of Exchange................................................. 18 
         Section 2.3.  Exchange of Certificates................................................................ 19 

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ARTICLE III REPRESENTATIONS AND WARRANTIES OF CP&L AND HOLDCO.................................................. 19 
         Section 3.1.  Organization and Authority of the CP&L Companies........................................ 19 
         Section 3.2.  Capitalization.......................................................................... 20 
         Section 3.3.  Authority Relative to this Agreement.................................................... 21 
         Section 3.4.  Consents and Approvals; No Violations................................................... 22 
         Section 3.5.  Reports................................................................................. 23 
         Section 3.6.  Absence of Certain Events............................................................... 25 
         Section 3.7.  Proxy Statement/Prospectus.............................................................. 25 
         Section 3.8.  Litigation.............................................................................. 26 
         Section 3.9.  Contracts; No Default................................................................... 27 
         Section 3.10. Employee Benefit Plans.................................................................. 28 
         Section 3.11. Tax Matters............................................................................. 29 
         Section 3.12. Compliance with Law..................................................................... 31 
         Section 3.13. Environmental Matters................................................................... 32 
         Section 3.14. CP&L Action............................................................................. 34 
         Section 3.15. Votes Required.......................................................................... 34 
         Section 3.16. Material Interests of Certain Persons................................................... 35 
         Section 3.17. Regulation as a Utility................................................................. 35 
         Section 3.18. Absence of Undisclosed Liabilities...................................................... 36 
         Section 3.19. Year 2000 Matters....................................................................... 36 
         Section 3.20. Nuclear Operations...................................................................... 37 
         Section 3.21. NRC Actions............................................................................. 38 
         Section 3.22. Fees and Expenses of Brokers and Others................................................. 38 
         Section 3.23. Opinion of Financial Advisor............................................................ 39 
         Section 3.24. Ownership of FPC Common Stock........................................................... 39 
         Section 3.25. CP&L Partnerships....................................................................... 39 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FPC............................................................... 39 
         Section 4.1.  Organization and Authority of the FPC Companies......................................... 39 
         Section 4.2.  Capitalization.......................................................................... 40 
         Section 4.3.  Authority Relative to this Agreement.................................................... 41 
         Section 4.4.  Consents and Approvals; No Violations................................................... 42 
         Section 4.5.  Reports................................................................................. 44 
         Section 4.6.  Absence of Certain Events............................................................... 45 
         Section 4.7.  Proxy Statement/Prospectus.............................................................. 46 
         Section 4.8.  Litigation.............................................................................. 47 
         Section 4.9.  Real and Personal Property.............................................................. 47 
         Section 4.10. Contracts; No Default................................................................... 49 
         Section 4.11. Labor Matters........................................................................... 50 
         Section 4.12. Employee Benefit Plans.................................................................. 51 
         Section 4.13. Tax Matters............................................................................. 56 
         Section 4.14. Compliance with Law..................................................................... 59 
         Section 4.15. Environmental Matters................................................................... 60 
         Section 4.16. FPC Action.............................................................................. 63 
         Section 4.17. Vote Required........................................................................... 64 

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         Section 4.18. Material Interests of Certain Persons...................................................  65 
         Section 4.19. Insurance...............................................................................  65 
         Section 4.20. Fees and Expenses of Brokers and Others.................................................  65 
         Section 4.21. Opinion of Financial Advisor............................................................  66 
         Section 4.22. Regulation as Utility or as Part of Utility Holding Company System......................  66 
         Section 4.23. Absence of Undisclosed Liabilities......................................................  67 
         Section 4.24. Intellectual Property...................................................................  67 
         Section 4.25. Year 2000 Matters.......................................................................  68 
         Section 4.26. Nuclear Operations......................................................................  69 
         Section 4.27. NRC Actions.............................................................................  69 
         Section 4.28. Ownership of CP&L Common Stock..........................................................  70 
         Section 4.29. FPC Partnerships........................................................................  70 

ARTICLE V COVENANTS............................................................................................  71 
         Section 5.1.  Conduct of the Business of FPC..........................................................  71 
         Section 5.2.  Conduct of the Business of CP&L.........................................................  77 
         Section 5.3.  No Solicitation.........................................................................  78 
         Section 5.4.  The Registration Statement; Listing.....................................................  80 
         Section 5.5.  Special Meetings........................................................................  82 
         Section 5.6.  Access to Information; Confidentiality Agreement........................................  83 
         Section 5.7.  Approvals...............................................................................  84 
         Section 5.8.  Public Announcements....................................................................  85 
         Section 5.9.  Letter of FPC's Accountants.............................................................  86 
         Section 5.10. Letter of CP&L's Accountants............................................................  86 
         Section 5.11. Indemnification; Insurance..............................................................  87 
         Section 5.12. Affiliate Agreements....................................................................  88 
         Section 5.13. Formation of Holdco.....................................................................  88 
         Section 5.14. Directors...............................................................................  90 
         Section 5.15. Regional Headquarters...................................................................  91 
         Section 5.16. Dividends...............................................................................  91 
         Section 5.17. Employee Benefit Matters................................................................  91 
         Section 5.18. Certain Stock Plans.....................................................................  92 

ARTICLE VI CONDITIONS PRECEDENT TO CONSUMMATION OF THE EXCHANGE................................................  92 
         Section 6.1.  Conditions Precedent to Each Party's Obligation to Effect the Exchange..................  92 
         Section 6.2.  Conditions Precedent to Obligations of FPC..............................................  94 
         Section 6.3.  Conditions Precedent to Obligations of CP&L and Holdco..................................  95 

ARTICLE VII TERMINATION; AMENDMENT; WAIVER.....................................................................  96 
         Section 7.1.  Termination.............................................................................  96 
         Section 7.2.  Effect of Termination...................................................................  99 
         Section 7.3.  Termination Fee.........................................................................  99 
         Section 7.4.  Amendment............................................................................... 101 
         Section 7.5.  Extension; Waiver....................................................................... 101 

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ARTICLE VIII MISCELLANEOUS..................................................................................... 102
         Section 8.1.  Survival of Representations, Warranties and Covenants................................... 102
         Section 8.2.  Disclosure Schedules.................................................................... 102
         Section 8.3.  Entire Agreement; Assignment............................................................ 103
         Section 8.4.  Notices................................................................................. 103
         Section 8.5.  Governing Law........................................................................... 104
         Section 8.6.  Descriptive Headings.................................................................... 106
         Section 8.7.  Parties in Interest..................................................................... 106
         Section 8.8.  Counterparts............................................................................ 106
         Section 8.9.  Specific Performance.................................................................... 106
         Section 8.10. Fees and Expenses....................................................................... 106
         Section 8.11. Severability............................................................................ 107

EXHIBITS  

A.  FPC Plan of Exchange                                              
B.  Form of FPC Affiliate Letter                                      
C.  Form of CP&L Exchange Agreement                                   

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AGREEMENT AND PLAN OF EXCHANGE  

      THIS AGREEMENT AND PLAN OF EXCHANGE (the "Agreement"), dated as of
August 22, 1999, is by and among CAROLINA POWER & LIGHT COMPANY, a North        
Carolina corporation ("CP&L"), FLORIDA PROGRESS CORPORATION, a Florida          
corporation ("FPC"), and CP&L HOLDINGS, INC., a North Carolina corporation      
("Holdco").                                                                     

RECITALS  

   A.   Holdco is a wholly owned subsidiary of CP&L.  Prior to the
Exchange, CP&L and Holdco will effect the CP&L Exchange.                        

        B.   The respective Boards of Directors of FPC, CP&L and Holdco have
approved a share exchange pursuant to which all outstanding shares of FPC Common
Stock will be exchanged for shares of Holdco Common Stock and cash to be        
allocated among the holders of FPC Common Stock in accordance with the FPC Plan 
of Exchange and this Agreement.                                                 

NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties, covenants, agreements and conditions set forth     
herein, and other valuable consideration, the receipt and sufficiency of which  
are hereby acknowledged, the parties hereby agree as follows:                   

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ARTICLE I 
DEFINITIONS 

Section 1.1.   Agreement.                                             
---------                               

        "Agreement" means this Agreement and Plan of Exchange, together with
the Disclosure Schedules delivered pursuant hereto and Exhibits attached hereto,
as amended from time to time in accordance with the terms hereof.               

Section 1.2. Alternative Proposal.                                    
--------------------                        

       "Alternative Proposal" has the meaning given in Section 5.3 hereof.
                                               -----------

Section 1.3. Atomic Energy Act.                                       
-----------------                           

        "Atomic Energy Act" means the Atomic Energy Act of 1954, as amended.

Section 1.4. Certificates.                                            
------------                                

"Certificates" has the meaning given in Section 2.3 hereof. 
                               -----------

Section 1.5. Closing; Closing Date.                                   
---------------------                       

       "Closing" means the closing conference held pursuant to Section 2.2
                                                               -----------
hereof, and "Closing Date" will mean the date on which the Closing occurs.      

Section 1.6. COBRA.                                                   
-----                                       

       "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.                                                               

2 

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Section 1.7.   Code.                                                  
----                                    

         "Code" means, as appropriate, the Internal Revenue Code of 1954 or of
1986, each as amended, and the Treasury Regulations promulgated thereunder.     

Section 1.8.   Confidentiality Agreement.                             
-------------------------               

          "Confidentiality Agreement" means the letter agreement, dated July 16,
1999, between FPC and CP&L.                                                     

Section 1.9.   Contracts.                                             
---------                               

  "Contracts" means any contracts, agreements, leases, licenses,
arrangements, understandings, relationships and commitments, written or oral.   

Section 1.10.  CP&L Common Stock.                                     
-----------------                       

      "CP&L Common Stock" means the common stock, no par value, of CP&L.

Section 1.11.  CP&L Companies.                                        
--------------                          

"CP&L Companies" means CP&L, Holdco and their Subsidiaries. 

Section 1.12.  CP&L Disclosure Schedule.                              
------------------------                

    "CP&L Disclosure Schedule" means the letter dated as of the date
hereof and signed by an authorized officer of CP&L and delivered to FPC, hereby 
incorporated by reference into this Agreement.                                  

3 

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Section 1.13.  CP&L Exchange.                                         
-------------                           

         "CP&L Exchange" means the exchange of shares of CP&L Common Stock for
shares of Holdco Common Stock contemplated by Section 5.13 hereof.              
                        ------------

Section 1.14.  CP&L Exchange Agreement.                               
-----------------------                 

   "CP&L Exchange Agreement" means the Agreement and Plan of Share
Exchange between CP&L and Holdco, substantially in the form attached hereto as  
Exhibit C.                                                                      
---------                                                                       

Section 1.15.  CP&L Exchange Registration Statement.                  
------------------------------------    

 "CP&L Exchange Registration Statement" means the Registration
Statement on Form S-4, including the Proxy Statement/Prospectus contained       
therein, filed by Holdco with the SEC with respect to the Holdco Common Stock to
be offered to the holders of CP&L Common Stock in the CP&L Exchange.            

Section 1.16.  CP&L Exchange Special Meeting.                         
-----------------------------           

"CP&L Exchange Special Meeting" means the special meeting of
shareholders of CP&L called to consider and approve the CP&L Exchange, and any  
adjournments thereof.                                                           

Section 1.17.  CP&L SEC Reports.                                      
----------------                        

       "CP&L SEC Reports" means (a) CP&L's Annual Reports on Form 10-K for
the fiscal years ended December 31, 1997 and 1998, (b) CP&L's Reports on Form   
10-Q for the quarters ended March 31 and June 30, 1999, (c) all other documents 
filed by CP&L or Holdco                                                         

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with the SEC pursuant to Sections 13(a) and 13(c) of the Exchange Act, any      
definitive proxy statements filed pursuant to Section 14 of the Exchange Act and
any report filed pursuant to Section 15(d) of the Exchange Act following the    
filing of CP&L's Annual Report on Form 10-K for the fiscal year ended December  
31, 1998 and (d) all registration statements and other documents filed by CP&L  
with the SEC pursuant to the Securities Act since January 1, 1997.              

Section 1.18.  Effective Time.                                        
--------------                          

  "Effective Time" means the effective time specified in the FPC
Articles of Exchange.                                                           

Section 1.19.  Encumbrances.                                          
------------                            

"Encumbrances" has the meaning given in Section 4.9 hereof. 
                               -----------

Section 1.20.  Environmental Claim and Environmental Laws.            
  ------------------------------------------

          "Environmental Claim" and "Environmental Laws" have the meanings given
in Section 4.15 hereof.                                                         
------------                                                              

Section 1.21.  Environmental Permits.                                 
---------------------                   

         "Environmental Permits" has the meaning given in Section 4.15 hereof.
                                                  ------------

Section 1.22.  ERISA.                                                 
-----                                   

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.                                                                        

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Section 1.23.  Exchange.                                              
--------                                

         "Exchange" means the exchange of all outstanding shares of FPC Common
Stock for the Exchange Consideration pursuant to the FPC Plan of Exchange.      

Section 1.24. Exchange Act.                                           
------------                              

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

Section 1.25.  Exchange Agent.                                        
--------------                          

         "Exchange Agent" means the entity designated by Holdco and reasonably
acceptable to FPC to perform the duties of exchange agent in connection with the
Exchange.                                                                       

Section 1.26.  Exchange Consideration.                                
----------------------                  

         "Exchange Consideration" has the meaning given in Section 2.1 hereof.
                                                   -----------

Section 1.27.  FBCA.                                                  
----                                    

  "FBCA" means the Florida Business Corporation Act, as amended.

Section 1.28.  FCC.                                                   
---                                     

"FCC" means the Federal Communications Commission.          

Section 1.29.  FERC.                                                  
----                                    

"FERC" means the Federal Energy Regulatory Commission.      

6 

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Section 1.30.  Final Stock Price.                                     
-----------------                       

       "Final Stock Price" means the average of the closing sale price per
share of Holdco Common Stock as reported on the NYSE Composite Tape on each of  
the twenty (20) consecutive trading days ending with the fifth trading day      
immediately preceding the Closing Date.                                         

Section 1.31.  FPC Articles of Exchange.                              
------------------------                

         "FPC Articles of Exchange" means the Articles of Exchange to be filed
with the Department of State of the State of Florida and the Secretary of State 
of the State of North Carolina with respect to the FPC Plan of Exchange.        

Section 1.32.  FPC Benefit Plans.                                     
-----------------                       

     "FPC Benefit Plans" has the meaning given in Section 4.12 hereof.
                                          ------------

Section 1.33.  FPC Common Stock.                                      
----------------                        

    "FPC Common Stock" means the Common Stock, no par value, of FPC.

Section 1.34.  FPC Companies.                                         
-------------                           

"FPC Companies" means FPC and its Subsidiaries.             

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Section 1.35.  FPC Disclosure Schedule.                               
-----------------------                 

          "FPC Disclosure Schedule" means the letter dated as of the date hereof
and signed by an authorized officer of FPC and delivered to CP&L, hereby        
incorporated by reference into this Agreement.                                  

Section 1.36.  FPC LTIP.                                              
--------                                

"FPC LTIP" has the meaning given in Section 5.17 hereof.    
                        ------------

Section 1.37.  FPC Pension Plan.                                      
----------------                        

    "FPC Pension Plan" has the meaning given in Section 4.12 hereof.
                                        ------------

Section 1.38.  FPC Plan of Exchange.                                  
--------------------                    

        "FPC Plan of Exchange" means the plan of share exchange with respect
to the Exchange, attached hereto as Exhibit A.                                  
 ---------

Section 1.39.  FPC Qualified Plan.                                    
------------------                      

      "FPC Qualified Plan" has the meaning given in Section 4.12 hereof.
                                            ------------

Section 1.40.  FPC Rights.                                            
----------                              

       "FPC Rights" means the Rights defined in and issued pursuant to the
FPC Rights Agreement.                                                           

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Section 1.41.  FPC Rights Agreement.                                  
--------------------                    

          "FPC Rights Agreement" means the Rights Agreement dated as of November
21, 1991 between FPC and Manufacturers Hanover Trust Company, as amended by an  
Amendment dated February 20, 1997 between FPC and The First National Bank of    
Boston.                                                                         

Section 1.42.  FPC SEC Reports.                                       
---------------                         

         "FPC SEC Reports" means (a) FPC's Annual Reports on Form 10-K for the
fiscal years ended December 31, 1997 and 1998, (b) FPC's Reports on Form 10-Q   
for the quarters ended March 31 and June 30, 1999, (c) all other documents filed
by FPC with the SEC pursuant to Sections 13(a) and 13(c) of the Exchange Act,   
any definitive proxy statements filed pursuant to Section 14 of the Exchange Act
and any report filed pursuant to Section 15(d) of the Exchange Act following the
filing of FPC's Annual Report on Form 10-K for the fiscal year ended December   
31, 1998 and (d) all registration statements and other documents filed by FPC   
with the SEC pursuant to the Securities Act since January 1, 1997.              

Section 1.43.  FPC Share.                                             
---------                               

 "FPC Share" means a share of FPC Common Stock, including each
associated FPC Right.                                                           

Section 1.44.  FPC Special Meeting.                                   
-------------------                     

          "FPC Special Meeting" means the special meeting of shareholders of FPC
called to consider and approve the transactions contemplated herein, and any    
adjournments thereof.                                                           

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Section 1.45. FPC Utility Subsidiary.                                 
----------------------                    

       "FPC Utility Subsidiary" means Florida Power Corporation, a Florida
corporation and a wholly owned subsidiary of FPC.                               

Section 1.46.  FPSC.                                                  
----                                    

"FPSC" means the Florida Public Service Commission.         

Section 1.47.  Fund.                                                  
----                                    

"Fund" has the meaning given in Section 3.11 hereof.        
                ------------

Section 1.48.  GAAP.                                                  
----                                    

         "GAAP" means generally accepted accounting principles as in effect in
the United States of America at the time of the preparation of the subject      
financial statement.                                                            

Section 1.49.  Governmental Authority.                                
----------------------                  

  "Governmental Authority" means any federal, state, provincial,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States, any of
its possessions or territories, or of any foreign nation.                       

Section 1.50.  Hazardous Material.                                    
------------------                      

      "Hazardous Material" has the meaning given in Section 4.15 hereof.
                                            ------------

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Section 1.51.  Holdco.                                                
------                                  

     "Holdco" means CP&L Holdings, Inc., a North Carolina corporation.

Section 1.52.  Holdco Common Stock.                                   
-------------------                     

          "Holdco Common Stock" means the Common Stock, no par value, of Holdco.

Section 1.53.  Holdco Special Meeting.                                
----------------------                  

         "Holdco Special Meeting" means the special meeting of shareholders of
Holdco called to consider and approve the issuance of Holdco Common Stock in the
Exchange contemplated herein, and any adjournments thereof.                     

Section 1.54.  HSR Act.                                               
-------                                 

       "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.                                                               

Section 1.55.  IRS.                                                   
---                                     

"IRS" means the Internal Revenue Service.                   

Section 1.56.  Knowledge of CP&L.                                     
-----------------                       

         "Knowledge of CP&L" means the actual knowledge, after due inquiry, of
those officers of CP&L identified on the CP&L Disclosure Schedule.              

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Section 1.57.  Knowledge of FPC.                                      
----------------                        

        "Knowledge of FPC" means the actual knowledge, after due inquiry, of
those officers of FPC identified on the FPC Disclosure Schedule.                

Section 1.58.  Law.                                                   
---                                     

       "Law" means any foreign, federal, state, provincial, local or other
law or governmental requirement of any kind, and the rules, regulations and     
orders promulgated thereunder.                                                  

Section 1.59.  Material Adverse Effect.                               
-----------------------                 

       "Material Adverse Effect" means, with respect to CP&L or FPC as the
context requires, a material adverse effect on the business, operations,        
properties, assets, condition (financial or otherwise), results of operations or
prospects of such entity, together with its Subsidiaries, taken as a whole;     
provided, however that none of the following events or any consequences thereof 
--------  -------                                                               
shall be deemed to have a Material Adverse Effect on CP&L or FPC:  (a) any      
requirement that Holdco become a registered holding company pursuant to Section 
5 of PUHCA; (b) the Exchange and any financing entered into by CP&L or Holdco   
related thereto; or (c) the CP&L Exchange.  For purposes of this Agreement,     
references to a Material Adverse Effect on CP&L shall mean a Material Adverse   
Effect on CP&L and Holdco and each of their Subsidiaries collectively as a      
whole.                                                                          

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Section 1.60. Merrill Lynch.                                          
-------------                             

"Merrill Lynch" means Merrill Lynch, Pierce, Fenner & Smith 
Incorporated, financial advisor to CP&L.                                        

Section 1.61.  NCBCA.                                                 
-----                                   

          "NCBCA" means the North Carolina Business Corporation Act, as amended.

Section 1.62.  NCUC.                                                  
----                                    

"NCUC" means the North Carolina Utilities Commission.       

Section 1.63.  NRC.                                                   
---                                     

"NRC" means the Nuclear Regulatory Commission.              

Section 1.64.  NYSE.                                                  
----                                    

"NYSE" means The New York Stock Exchange, Inc.              

Section 1.65.  Partnership; Partnerships.                             
-------------------------               

       "Partnership" means (i) any general partnership or joint venture in
which the relevant party has an interest, and (ii) any limited partnership,     
limited liability company, or other business association, other than a          
Subsidiary, in which the relevant party has a direct or indirect interest of 5% 
or more or in respect of which such party is obligated, absolutely or           
contingently, to contribute debt or equity in excess of $1,000,000, or which    
contributes 5% or more of such party's consolidated revenues, expenses or assets
(collectively, "Partnerships").                                                 

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Section 1.66.  Permits.                                               
-------                                 

      "Permits" means permits, licenses and governmental authorizations,
registrations and approvals.                                                    

Section 1.67.  Power Act.                                             
---------                               

"Power Act" means the Federal Power Act, as amended.        

Section 1.68.  Proxy Statement/Prospectus.                            
--------------------------              

"Proxy Statement/Prospectus" means the Joint Proxy          
Statement/Prospectus of Holdco and FPC included in the Registration Statement   
and distributed to the shareholders of FPC in connection with the FPC Special   
Meeting and the shareholders of Holdco in connection with the Holdco Special    
Meeting.                                                                        

Section 1.69.  PUHCA.                                                 
-----                                   

    "PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.                                                                        

Section 1.70.  Registration Statement.                                
----------------------                  

          "Registration Statement" means the Registration Statement on Form S-4,
including the Proxy Statement/Prospectus contained therein, to be filed by      
Holdco with the SEC with respect to the Holdco Common Stock to be offered to the
holders of FPC Common Stock in the Exchange.                                    

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Section 1.71.  Release.                                               
-------                                 

"Release" has the meaning given in Section 4.15 hereof.     
                      ------------

Section 1.72.  Salomon Smith Barney.                                  
--------------------                    

     "Salomon Smith Barney" means Salomon Smith Barney Inc., financial
advisor to FPC.                                                                 

Section 1.73.  SCPSC.                                                 
-----                                   

    "SCPSC" shall mean the South Carolina Public Service Commission.

Section 1.74.  SEC.                                                   
---                                     

"SEC" means the Securities and Exchange Commission.         

Section 1.75.  Securities Act.                                        
--------------                          

  "Securities Act" means the Securities Act of 1933, as amended.

Section 1.76.  Significant Subsidiary.                                
----------------------                  

          "Significant Subsidiary" means any "significant subsidiary" as defined
in Rule 1-02 of Regulation S-X adopted under the Exchange Act.                  

Section 1.77.  Subsidiary; Subsidiaries.                              
------------------------                

          "Subsidiary" means each corporate entity with respect to which a party
owns (directly or indirectly through one or more entities or otherwise)         
outstanding capital stock or                                                    

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other voting securities having the power, under ordinary circumstances, to elect
a majority of the directors of such entity, or otherwise to direct the          
management and policies of such entity (collectively, "Subsidiaries").          

Section 1.78.  Superior Proposal.                                     
-----------------                       

    "Superior Proposal" has the meaning given in Section 7.1 hereof.
                                         -----------

Section 1.79.  Tax or Taxes.                                          
------------                            

        "Tax" or "Taxes" means any federal, state, county, local, or foreign
taxes, charges, levies, imposts, duties, other assessments, or similar charges  
of any kind whatsoever, including any interest, penalties, and additions imposed
thereon or with respect thereto.                                                

Section 1.80.  Tax Return.                                            
----------                              

       "Tax Return" means any report, return, information return, or other
information required to be supplied to a taxing authority in connection with    
Taxes, including any return of an affiliated or combined or unitary group.      

ARTICLE II  
THE EXCHANGE  

Section 2.1.   The Exchange.                                          
------------                            

             (a)    At the Effective Time, by virtue of the Exchange and without
any action on the part of FPC, CP&L, Holdco, or the holders of Holdco Common    
Stock or FPC Shares:                                                            

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              (i)  In accordance with the FPC Plan of Exchange, each FPC Share
issued and outstanding immediately prior to the Effective Time (other than FPC  
Shares canceled pursuant to Section 2.1(a)(ii) hereof) shall, by reason of the  
------------------      
Exchange be exchanged for the right to receive:                                 

(1)  $54.00 in cash, or                 

                    (2)  that number of shares of Holdco Common Stock determined
by dividing $54.00 by the Final Stock Price; provided, however, that: 
                                     --------  -------

                         (a)  if the Final Stock Price is less than $37.13, then
        the number of shares of Holdco Common Stock to be delivered pursuant
to this clause (2) shall be equal to 1.4543; and            

                         (b)  if the Final Stock Price is more than $45.39, then
        the number of shares of Holdco Common Stock to be delivered pursuant
to this clause (2) shall be equal to 1.1897; or             

          (3)  a combination of cash and Holdco Common Stock
    determined in accordance with Section 4.2 of the FPC Plan of Exchange (the
"Exchange Consideration").                                            

             (ii) Each FPC Share owned by FPC or held in the treasury of FPC
immediately prior to the Effective Time shall be automatically canceled and     
retired and cease to exist, and no cash or securities or other property shall be
paid or payable in respect thereof.                                             

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          (b)  No certificates or scrip representing fractional shares of Holdco
Common Stock shall be issued upon the delivery of Certificates, and such        
fractional share interests will not entitle the owner thereof to vote or to any 
rights of a shareholder of Holdco. All holders of FPC Shares who would otherwise
be entitled to receive a fractional share of Holdco Common Stock shall receive, 
in lieu thereof upon delivery or exchange of its FPC Shares, an amount of cash  
equal to the amount determined by multiplying the fraction of a share of Holdco 
Common Stock to which such shareholder would otherwise be entitled by the Final 
Stock Price. Immediately prior to the Effective Time, Holdco shall deliver to   
the Exchange Agent cash in such amount as shall be necessary to pay to the      
holders of FPC Shares cash in lieu of such fractional shares.                   

Section 2.2.   Closing; Filing of Articles of Exchange.               
--------------------------------------- 

   Unless otherwise mutually agreed upon in writing by the parties
hereto, the Closing shall take place at the office of Hunton & Williams, One    
Hannover Square, 14th Floor, Raleigh, North Carolina at 10:00 a.m., local time, 
on the third business day following the date that all conditions to the         
obligations of the parties specified in this Agreement have been satisfied or   
waived (the "Closing Date"). On or prior to the Closing Date, Holdco shall in   
the manner required by the FBCA and the NCBCA deliver to and file with the      
Department of State of the State of Florida and the Secretary of State of the   
State of North Carolina the FPC Articles of Exchange, duly executed by Holdco   
and FPC in accordance with the provisions of the FBCA and the NCBCA. The parties
hereto shall take all such other action as may be required by law to make the   
Exchange effective. The effects of the Exchange shall be as provided in the     
applicable provisions of the FBCA and the NCBCA.                                

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Section 2.3.   Exchange of Certificates.                              
------------------------                

        The exchange of certificates that immediately prior to the Effective
Time represented outstanding shares of FPC Common Stock (the "Certificates")    
shall be made in accordance with the provisions of Section 4.3 of the FPC Plan  
of Exchange.                                                                    

ARTICLE III 
REPRESENTATIONS AND WARRANTIES OF CP&L AND HOLDCO 

      Each of CP&L and Holdco represents and warrants to FPC as follows:

Section 3.1.   Organization and Authority of the CP&L Companies.      
        ------------------------------------------------

         Each of the CP&L Companies is duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of organization or  
incorporation, has full corporate or partnership power to carry on its          
respective business as it is now being conducted and to own, operate and hold   
under lease its assets and properties as, and in the places where, such         
properties and assets now are owned, operated or held. Each of the CP&L         
Companies is duly qualified as a foreign entity to do business, and is in good  
standing, in each jurisdiction where the failure to be so qualified may         
reasonably be expected to have a Material Adverse Effect on CP&L. The copies of 
the Amended and Restated Articles of Incorporation and Bylaws of CP&L which have
been delivered to FPC are complete and correct and in full force and effect on  
the date hereof.                                                                

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Section 3.2.   Capitalization.                                        
--------------                          

   (a)     CP&L's authorized equity capitalization consists of
200,000,000 shares of Common Stock, 300,000 shares of $5 Preferred Stock,       
20,000,000 shares of Serial Preferred Stock, 5,000,000 shares of Preferred Stock
A, and 10,000,000 shares of Preference Stock. As of the close of business on    
August 20, 1999, 159,589,744 shares of CP&L Common Stock, 237,259 shares of $5  
Preferred Stock, and 350,000 shares of Serial Preferred Stock were issued and   
outstanding and no additional shares of such capital stock have been issued     
between such time and the date hereof. Such shares of CP&L Common Stock, $5     
Preferred Stock and Serial Preferred Stock constituted all of the issued and    
outstanding shares of capital stock of CP&L as of such date. All issued and     
outstanding shares of CP&L Common Stock, $5 Preferred Stock and Serial Preferred
Stock have been duly authorized and validly issued and are fully paid and       
nonassessable, are not subject to and have not been issued in violation of any  
preemptive rights and have not been issued in violation of any federal or state 
securities Laws. All of the outstanding shares of capital stock of CP&L's       
Subsidiaries are validly issued, fully paid and nonassessable and are, except as
set forth in the CP&L Disclosure Schedule, owned by CP&L, directly or           
indirectly, free and clear of all liens, claims, charges or encumbrances of any 
nature whatsoever. Except as set forth in the CP&L Disclosure Schedule, there   
are no outstanding options, warrants, subscriptions or other rights to purchase 
or acquire any capital stock of CP&L or its Subsidiaries, and there are no      
Contracts pursuant to which any of CP&L or its Subsidiaries is bound to sell or 
issue any shares of its capital stock or any such options, warrants,            
subscriptions or rights.                                                        

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      (b)  At the date hereof, Holdco's authorized equity capitalization
consists of 500,000,000 shares of Holdco Common Stock, 100 of which are issued  
and held by CP&L, and 20,000,000 shares of Preferred Stock, none of which are   
issued.                                                                         

         (c)  All of the shares of Holdco Common Stock to be issued to holders
of FPC Common Stock in the Exchange will have been duly authorized for issuance 
and, when issued in accordance with this Agreement, will be validly issued,     
fully paid and nonassessable, and will not be subject to and will not be issued 
in violation of any preemptive rights.                                          

Section 3.3.   Authority Relative to this Agreement.                  
------------------------------------    

  The execution, delivery and performance of this Agreement, the
execution, delivery and performance of the CP&L Exchange Agreement and of all of
the other documents and instruments required hereby by CP&L and by Holdco are   
within the respective corporate power of CP&L and Holdco. The execution and     
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of each of CP&L and  
Holdco and, except for approval of the CP&L Exchange by the shareholders of CP&L
and the approval of the issuance of Holdco Common Stock in the Exchange by the  
shareholders of Holdco, no other corporate proceedings on the part of CP&L or   
Holdco are necessary to authorize this Agreement or to consummate the           
transactions contemplated herein. This Agreement and all of the other documents 
and instruments required hereby have been or will be (in the case of documents  
and instruments permitted to be delivered after the date hereof) duly and       
validly executed and delivered by CP&L and Holdco and (assuming the due         
authorization, execution and delivery hereof and thereof by FPC) constitute or  

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will constitute valid and binding agreements of CP&L and Holdco, enforceable    
against CP&L and Holdco in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency, reorganization or other Laws affecting    
creditors' rights generally or equitable principles.                            

Section 3.4.   Consents and Approvals; No Violations.                 
-------------------------------------   

          Except for (i) the filing of a premerger notification report under the
HSR Act and the expiration or termination of the applicable waiting period with 
respect thereto; (ii) the filing with the SEC of the CP&L Exchange Registration 
Statement and the Registration Statement, such reports under Section 13(a) of   
the Exchange Act and such other compliance with the Securities Act and the      
Exchange Act and the rules and regulations thereunder as may be required in     
connection with this Agreement and the transactions contemplated hereby, and the
obtaining from the SEC of such orders as may be so required; (iii) the filing of
articles of exchange with respect to the CP&L Exchange with the Secretary of    
State of the State of North Carolina and the FPC Articles of Exchange with the  
Department of State of the State of Florida and the Secretary of State of the   
State of North Carolina; (iv) such filings and approvals as may be required by  
any applicable state securities or "blue sky" laws; and (v) any required filings
with and approvals of the NCUC, the SCPSC, the NRC, the SEC (with respect to    
PUHCA), the FCC and the FERC, no filing or registration with, and no permit,    
authorization, consent, order or approval of, any Governmental Authority is     
necessary or required in connection with the execution and delivery of this     
Agreement by CP&L or Holdco or for the consummation by CP&L or Holdco of the    
transactions contemplated by this Agreement other than as may not reasonably be 
expected to have a Material Adverse Effect on CP&L. Assuming that all filings,  
registrations, permits,                                                         

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authorizations, consents, orders and approvals contemplated by the immediately  
preceding sentence have been duly made or obtained, and the approval of the CP&L
Exchange by the CP&L shareholders has been received, and assuming receipt of the
required approval of the holders of Holdco Common Stock at the Holdco Special   
Meeting, neither the execution, delivery and performance of this Agreement nor  
the consummation of the transactions contemplated hereby by CP&L and Holdco will
(i) conflict with or result in any breach of any provision of the Articles of   
Incorporation, bylaws, partnership or joint venture agreements or other         
organizational documents of any of the CP&L Companies, (ii) subject to obtaining
necessary third party consents, result in a violation or breach of, or          
constitute (with or without due notice or lapse of time or both) a default (or  
give rise to any right of termination, cancellation, acceleration or increased  
cost) under, or otherwise result in any diminution of any of the rights of the  
CP&L Companies with respect to, any of the terms, conditions or provisions of   
any security, note, bond, mortgage, indenture, license, Contract or other       
instrument or obligation to which any of the CP&L Companies is a party or by    
which it or any of them or any of their properties or assets may be bound or    
(iii) violate any order, writ, injunction, decree, statute, rule or regulation  
applicable to any of the CP&L Companies or any of their properties or assets    
except, in the case of clauses (ii) or (iii) above, for violations, breaches or 
defaults that, individually or in the aggregate, may not reasonably be expected 
to have a Material Adverse Effect on CP&L and that will not prevent or delay the
consummation of the transactions contemplated hereby.                           

Section 3.5.  Reports.                                                
-------                                   

        The filings required to be made by any CP&L Company since January 1,
1996 under NYSE rules or any applicable Law, including the Securities Act, the  
Exchange Act,                                                                   

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PUHCA, the Power Act, the Atomic Energy Act, and applicable North Carolina and  
South Carolina laws and regulations, have been filed with the NYSE or each      
applicable Governmental Authority, including the SEC, the FERC, the NRC, the    
NCUC, and the SCPSC, as the case may be, and each of the CP&L Companies has     
complied in all material respects with all requirements of such acts, Laws and  
rules and regulations thereunder with such exceptions that may not reasonably be
expected to have, in the aggregate, a Material Adverse Effect on CP&L. As of    
their respective dates, none of the CP&L SEC Reports, including without         
limitation any financial statements or schedules included therein, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not   
misleading in light of the circumstances under which they were made. Each of the
balance sheets (including the related notes and schedules) included in the CP&L 
SEC Reports fairly presented the consolidated financial position of CP&L and its
Subsidiaries as of the respective dates thereof, and the other related financial
statements (including the related notes and schedules) included therein fairly  
presented the results of operations and cash flows of CP&L and its Subsidiaries 
for the respective fiscal periods set forth therein. Each of the financial      
statements (including the related notes and schedules) included in the CP&L SEC 
Reports (i) complied as to form in all material respects with the applicable    
accounting requirements and rules and regulations of the SEC, and (ii) was      
prepared in accordance with GAAP consistently applied during the periods        
presented, except as otherwise noted therein and subject to normal year-end and 
audit adjustments in the case of any unaudited interim financial statements.    
Except for CP&L and, after the CP&L Exchange, Holdco, none of the CP&L Companies
is required to file any forms, reports or other documents with the SEC, the NYSE
or                                                                              

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any other foreign or domestic securities exchange or Governmental Authority with
jurisdiction over securities laws.                                              

Section 3.6. Absence of Certain Events.                               
-------------------------                   

       Except as set forth in the CP&L SEC Reports filed prior to the date
hereof or the CP&L Disclosure Schedule, since December 31, 1998, none of the    
CP&L Companies has suffered any change in its business, financial condition or  
results of operations that has had or may reasonably be expected to have a      
Material Adverse Effect on CP&L and no event has occurred and no facts or       
conditions exist that have had or may reasonably be expected to have a Material 
Adverse Effect on CP&L. Except as disclosed in the CP&L SEC Reports filed prior 
to the date hereof or as otherwise disclosed in the CP&L Disclosure Schedule,   
there has not been since December 31, 1998: (i) any change in the accounting    
policies or practices of CP&L; or (ii) any damage, destruction or loss, whether 
covered by insurance or not, which has had or may reasonably be expected to have
a Material Adverse Effect on CP&L.                                              

Section 3.7. Proxy Statement/Prospectus.                              
--------------------------                  

   None of the information to be supplied by CP&L for inclusion or
incorporation by reference with respect to the CP&L Companies to be included in 
the Proxy Statement/Prospectus or the Registration Statement will, in the case  
of the Proxy Statement/Prospectus or any amendments thereof or supplements      
thereto, at the time of the mailing of the Proxy Statement/Prospectus or any    
amendments thereof or supplements thereto, and at the time of the FPC Special   
Meeting, or, in the case of the Registration Statement, at the time it becomes  
effective and, as the same may be amended, at the effective time of such        
amendment, contain any                                                          

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untrue statement of a material fact or omit to state any material fact required 
to be stated therein or necessary in order to make the statements therein, in   
light of the circumstances under which they are made, not misleading. The Proxy 
Statement/Prospectus will comply as to form in all material respects with the   
provisions of the Securities Act and the Exchange Act and the rules and         
regulations promulgated thereunder, except that no representation is made by    
CP&L or Holdco with respect to information supplied by FPC or any affiliate of  
FPC for inclusion in the Proxy Statement/Prospectus.                            

Section 3.8. Litigation.                                              
----------                                  

        Except as specifically disclosed in the CP&L SEC Reports filed prior
to the date hereof, or in the CP&L Disclosure Schedule, (a) there are no        
complaints, claims, suits, actions, mediations, arbitrations or proceedings     
(including proceedings related to the rates charged by CP&L) pending or, to the 
Knowledge of CP&L, threatened, nor are there any investigations or reviews      
pending or, to the Knowledge of CP&L, threatened against or affecting CP&L or   
any of its Subsidiaries or Partnerships that, in the aggregate, may reasonably  
be expected to have a Material Adverse Effect on CP&L, (b) there have not been  
any developments since December 31, 1998 with respect to any such disclosed     
complaints, claims, suits, actions, mediations, arbitrations, proceedings,      
investigations or reviews which, in the aggregate, may reasonably be expected to
have a Material Adverse Effect on CP&L, and (c) there are no judgments, decrees,
injunctions, rules or orders of any court, governmental department, commission, 
agency, instrumentality or authority or any arbitrator applicable to CP&L or any
of the CP&L Companies that, in the aggregate, may reasonably be expected to have
a Material Adverse Effect on CP&L or the transactions contemplated by this      
Agreement.                                                                      

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Section 3.9. Contracts; No Default.                                   
---------------------                       

      (a)     The CP&L Disclosure Schedule lists all of the Contracts to
which any CP&L Company is a party that constitute a material contract as defined
in Item 601(10) of Regulation S-K under the Exchange Act. Each such Contract is 
a valid and binding agreement of such CP&L Company, enforceable in accordance   
with its terms, except as may be limited by bankruptcy, insolvency,             
reorganization, or other Laws affecting creditors' rights generally or equitable
principles. The CP&L Companies have performed and, to the Knowledge of CP&L,    
every other party has performed, each material term, covenant and condition of  
each of such Contracts that is to be performed by any of them at or before the  
date hereof. No event has occurred that would, with the passage of time or      
compliance with any applicable notice requirements or both, constitute a default
by any CP&L Company or, to the Knowledge of CP&L, any other party under any of  
such Contracts, and, to the Knowledge of CP&L, no party to any of such Contracts
intends to cancel, terminate or exercise any option under any of such Contracts.

        (b)     No CP&L Company is in default or violation (and no event has
occurred which, with notice or the lapse of time or both, would constitute a    
default or violation) of any term, condition or provision of (i) its respective 
charter, bylaws or other governing or organizational documents, (ii) any note,  
bond, mortgage, indenture, license, agreement or other instrument or obligation 
to which any CP&L Company is now a party or by which any CP&L Company or any of 
its respective properties or assets may be bound or (iii) any order, writ,      
injunction, decree, statute, rule or regulation applicable to any CP&L Company, 
except in the                                                                   

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case of clauses (ii) and (iii) above for defaults or violations which in the    
aggregate may not reasonably be expected to have a Material Adverse Effect on   
CP&L.                                                                           

Section 3.10.  Employee Benefit Plans.                                
----------------------                  

        (a)       Each CP&L employee benefit plan (the "CP&L Benefit Plans")
that is intended to be "qualified" within the meaning of Code Section 401(a) has
been determined by the IRS within the last three (3) years to be so qualified   
(or will be submitted to the IRS for a determination letter prior to the        
applicable Code Section 401(b) deadline) and, to the Knowledge of CP&L, no event
or condition exists or has occurred that may reasonably be expected to result in
the revocation of such determination. CP&L has operated each CP&L Benefit Plan  
in material compliance with all applicable Laws, including ERISA and the Code.  

          (b)       All material contributions required to have been made to the
CP&L Benefit Plans have been made. As of the date hereof, each CP&L Benefit Plan
which is subject to the funding requirements of Code Section 412 has assets that
have a fair market value equal to or exceeding the present value of the accrued 
benefit obligations thereunder on a termination basis, based on the actuarial   
methods, tables and assumptions theretofore utilized by such plan's actuary in  
preparing such plan's most recently prepared actuarial valuation report.        

      (c)       Except as set forth in the CP&L Disclosure Schedule, (i)
none of the CP&L Benefit Plans has experienced a "reportable event" as defined  
in Section 4043(b) of ERISA and its regulations within the last five (5) years  
for which the 30-day notice requirement has not been waived, except for         
reportable events which would not, individually or in the aggregate, be         
reasonably expected to have a Material Adverse Effect on CP&L and (ii) CP&L     

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has not engaged in any prohibited transactions with respect to any CP&L Benefit 
Plan, any or all of which would reasonably be expected to have a Material       
Adverse Effect on CP&L.                                                         

    (d)       The consummation of the Exchange will not constitute a
"change in control" under the CP&L Benefit Plans, any employment agreements, any
plan, program or arrangement for deferred compensation, severance, change of    
control, supplemental retirement, excess benefit or other non-qualified employee
benefit plan, program, or arrangement, or any plan, program or arrangement which
involves stock of CP&L; provided that no holder of FPC Common Stock (including a
--------                        
group, within the meaning of Section 13(d) of the Exchange Act), acquires       
beneficial ownership of 15% or more of Holdco Common Stock in the Exchange, and 
will not, whether alone or in conjunction with a termination of employment,     
otherwise accelerate or increase the time or amount of payment or vesting due to
any current or former employee, officer, director, shareholder or consultant of 
CP&L except as may not reasonably be expected to have a Material Adverse Effect 
on CP&L.                                                                        

Section 3.11.  Tax Matters.                                           
-----------                             

Except as set forth in the CP&L Disclosure Schedule:        

                  (i) CP&L and each of its Subsidiaries that is incorporated
under the laws of the United States or of any of the United States are members  
of the affiliated group, within the meaning of Section 1504(a) of the Code, of  
which CP&L is the common parent, such affiliated group files a consolidated     
federal income tax return and neither CP&L nor any of its Subsidiaries has ever 
filed a consolidated federal income tax return with (or been included in a      
consolidated return of) a different affiliated group;                           

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      (ii)   each of the CP&L Companies has timely filed or caused to be
filed all material Tax Returns required to have been filed by or for it, and all
information set forth in such Tax Returns is accurate and complete in all       
material respects;                                                              

         (iii)  each of the CP&L Companies has paid or made adequate provision
on its books and records in accordance with GAAP for all material Taxes covered 
by such Tax Returns;                                                            

   (iv)   each of the CP&L Companies has collected or withheld all
material Taxes required to be collected or withheld by it, and all such Taxes   
have been paid to the appropriate Governmental Authority or set aside in        
appropriate accounts for future payment when due;                               

       (v)    there are no unpaid Taxes due and payable by any of the CP&L
Companies or by any other person that are or may become a lien on any asset of, 
or otherwise may reasonably be expected to have a Material Adverse Effect on,   
CP&L;                                                                           

        (vi)   none of the CP&L Companies has granted (or is subject to) any
waiver, which is currently in effect, of the period of limitations for the      
assessment of any Tax; no unpaid Tax deficiency has been assessed or asserted   
against or with respect to any of the CP&L Companies by any Governmental        
Authority; there are no currently pending administrative or judicial            
proceedings, or any deficiency or refund litigation, with respect to Taxes of   
any of the CP&L Companies, the adverse outcome of which may reasonably be       
expected to have a Material Adverse Effect on CP&L; and any such assertion,     
assessment, proceeding or litigation disclosed                                  

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in the CP&L Disclosure Schedule hereto is being contested in good faith through 
appropriate measures, and its status is described in the CP&L Disclosure        
Schedule hereto;                                                                

          (vii)   the most recent audited consolidated balance sheet included in
the CP&L SEC Reports fully and properly reflects, as of the date thereof, the   
liabilities of CP&L and its Subsidiaries for all accrued Taxes and deferred     
liability for Taxes and, for periods ending after such date, the books and      
records of each such corporation fully and properly reflect its liability for   
all accrued Taxes; and                                                          

    (viii)  with respect to any Nuclear Decommissioning Reserve Fund
("Fund") within the meaning of Section 468A of the Code that is established by  
or for the benefit of any CP&L Company, (A) such Fund is in compliance with (i) 
all requirements of Sections 468A and 4951 of the Code and (ii) all Tax Return  
and Tax payment requirements resulting from the application of Section 468A of  
the Code (and any similar provision of state or local Law) to the Fund, and (B) 
such CP&L Company (i) has not claimed any deduction for contributions to the    
Fund in excess of the amounts permitted by Section 468A(b) and (ii) has included
in income all amounts includible in its income under Section 468A(c).           

Section 3.12.  Compliance with Law.                                   
-------------------                     

         The CP&L Companies hold all permits, licenses, variances, exemptions,
orders, franchises, consents and approvals of all Governmental Authorities      
necessary for them to own, lease and operate their properties and assets and to 
lawfully conduct their respective businesses (the "CP&L Permits"), except where 
the failure so to hold may not reasonably be expected to have a Material Adverse
Effect on CP&L. Except as set forth in the CP&L Disclosure Schedule,            

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the CP&L Companies are in compliance with the terms of the CP&L Permits, except 
where the failure so to comply may not reasonably be expected to have,          
individually or in the aggregate, a Material Adverse Effect on CP&L. Except as  
disclosed in the CP&L SEC Reports filed prior to the date hereof or as set forth
in the CP&L Disclosure Schedule, the business of the CP&L Companies is not being
conducted in violation of any Law, ordinance or regulation of any Governmental  
Authority, except for possible violations which, individually or in the         
aggregate, may not reasonably be expected to have a Material Adverse Effect on  
CP&L.                                                                           

Section 3.13.  Environmental Matters.                                 
---------------------                   

        (a)       Except as set forth in the CP&L SEC Reports filed prior to
the date hereof or in the CP&L Disclosure Schedule, each of the CP&L Companies  
is in compliance with all applicable Environmental Laws except for noncompliance
which may not reasonably be expected to have a Material Adverse Effect on CP&L. 
Except as set forth in the CP&L Disclosure Schedule, and except for matters that
have been fully resolved, no CP&L Company has received any written communication
from any person or Governmental Authority that alleges that it is not in        
compliance with applicable Environmental Laws where such noncompliance may      
reasonably be expected to have a Material Adverse Effect on CP&L.               

      (b)       Except as set forth in the CP&L Disclosure Schedule, the
CP&L Companies have obtained all Environmental Permits necessary for the        
construction of their facilities or the conduct of their operations, and all    
such permits are in good standing or, where applicable, a renewal application   
has been timely filed and is pending agency approval, and the CP&L Companies are
in compliance with all terms and conditions of the Environmental Permits        

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except where the absence of such permits or such noncompliance may not          
reasonably be expected to have a Material Adverse Effect on CP&L.               

      (c)  Except as set forth in the CP&L Disclosure Schedule or in the
CP&L SEC Reports filed prior to the date hereof, there is no Environmental Claim
pending or, to the Knowledge of CP&L, threatened (i) against a CP&L Company,    
(ii) against any person or entity whose liability for any Environmental Claim a 
CP&L Company has or may have retained or assumed either contractually or by     
operation of law or (iii) against or concerning any real property or operations 
which a CP&L Company owns, leases or manages, in whole or in part, which claim, 
if adversely determined, may reasonably be expected to have a Material Adverse  
Effect on CP&L.                                                                 

      (d)  Except as set forth in the CP&L Disclosure Schedule or in the
CP&L SEC Reports filed prior to the date hereof, and except for any Releases of 
Hazardous Materials the liability for which may not reasonably be expected to   
have a Material Adverse Effect on CP&L, no Releases of any Hazardous Material   
(i) has occurred on any of the properties owned, leased or occupied by a CP&L   
Company or any predecessor, or (ii) is related to the business or operations of 
a CP&L Company or any predecessor, which in either case requires investigation, 
assessment, monitoring, remediation or cleanup under Environmental Laws.        

          (e)  CP&L has disclosed to FPC all material facts that CP&L reasonably
believes form the basis of a Material Adverse Effect on CP&L arising from the   
cost of pollution control equipment currently required or known to be required  
in the future, current remediation costs or remediation costs known to be       
required in the future, or any other environmental matter                       

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affecting a CP&L Company that may be reasonably expected to have a Material     
Adverse Effect on CP&L.                                                         

          (f)  Capitalized terms in this Section 3.13 shall have the meaning set
              ------------
forth in Section 4.15 hereof but any reference therein to FPC shall be deemed to
------------                                                  
refer to CP&L for purposes of this Section 3.13.                                
  ------------

Section 3.14.  CP&L Action.                                           
-----------                             

         The Board of Directors of CP&L (at a meeting duly called, constituted
and held) has unanimously (a) determined that the Exchange is advisable and in  
the best interests of CP&L and its shareholders, (b) approved this Agreement and
the transactions contemplated hereby, including the Exchange, and (c) directed  
that the issuance of Holdco Common Stock in the Exchange be submitted with the  
recommendation of the Board of Directors of Holdco for consideration by Holdco's
shareholders at the Holdco Special Meeting.                                     

Section 3.15.  Votes Required.                                        
--------------                          

        The affirmative vote of holders of (a) a majority of the outstanding
shares of CP&L Common Stock entitled to vote thereon, and (b) a majority of the 
outstanding shares of CP&L Common Stock, $5 Preferred Stock and Serial Preferred
Stock, voting as a single class, are the only votes of the holders of any class 
or series of CP&L capital stock necessary to approve the CP&L Exchange. The     
affirmative vote of a majority of votes cast by Holdco shareholders at the      
Holdco Special Meeting is the only approval of Holdco shareholders required to  
approve the issuance of Holdco Common Stock in the Exchange.                    

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Section 3.16. Material Interests of Certain Persons.                  
-------------------------------------     

     Except as disclosed in CP&L's Proxy Statement for its 1999 Annual
Meeting of Shareholders or as set forth in the CP&L Disclosure Schedule, no     
officer or director of CP&L, or any "associate" (as such term is defined in Rule
14a-1 under the Exchange Act) of any such officer or director, has any material 
interest in any material Contract or property (real or personal), tangible or   
intangible, used in or pertaining to the business of CP&L or any CP&L           
Subsidiary.                                                                     

Section 3.17. Regulation as a Utility.                                
-----------------------                   

        CP&L is regulated as a public utility company in the states of North
Carolina and South Carolina and North Carolina Natural Gas Corporation is       
regulated as a public utility company in the state of North Carolina. CP&L is   
currently a holding company exempt from all provisions of PUHCA except Section  
9(a)(2) thereof under Section 3(a)(2) pursuant to Rule 2 promulgated thereunder.
Interpath Communications, Inc. is regulated as a telephone company in the states
of Florida, Georgia, North Carolina, South Carolina, Tennessee and Virginia and 
by the FCC. Except as set forth above and with respect to their relationship to 
CP&L and Holdco under PUHCA, neither CP&L nor any subsidiary company, affiliate 
or associate company of CP&L is subject to regulation as a holding company, a   
public utility or a public service company (or similar designation) by any other
state in the United States or any agency or instrumentality thereof, by the     
United States or any agency or any agency or instrumentality of the United      
States or by any foreign country. As used in this Section 3.17, the terms       
                                ------------
"holding company",                                                              

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"subsidiary company", "associate company" and "affiliate" shall have the        
respective meanings ascribed to them in PUHCA.                                  

Section 3.18.  Absence of Undisclosed Liabilities.                    
----------------------------------      

       Except as disclosed in the CP&L SEC Reports filed prior to the date
hereof or the CP&L Disclosure Schedule, none of the CP&L Companies has, as of   
the date hereof, or will have, as of the Effective Time, any liabilities or     
obligations of any kind, whether absolute, accrued, asserted or unasserted,     
contingent or otherwise, except to the extent such liabilities, obligations or  
contingencies were (a) reflected on or accrued or reserved against in the       
consolidated balance sheet of CP&L dated June 30, 1999, or reflected in the     
notes thereto, or (b) incurred after the date of such balance sheet in the      
ordinary course of business and consistent with past practices and which, in the
case of either subsection (a) or subsection (b) of this Section 3.18,           
                                            ------------
individually or in the aggregate, has not had and may not reasonably be expected
to have a Material Adverse Effect on CP&L.                                      

Section 3.19.  Year 2000 Matters.                                     
-----------------                       

         The CP&L Companies have assessed their internal software and hardware
components (in both information technology and other applications) for problems 
relating to the Year 2000 issue (the inability of computers and microchips to   
recognize and perform properly date-sensitive functions involving certain dates 
prior to and after December 31, 1999).  Resolution of problems associated with  
the Year 2000 issue with respect to the software and hardware of the CP&L       
Companies can be achieved so as to allow the conduct of the business of the CP&L
Companies as currently conducted, except for interruptions in service that may  
not                                                                             

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reasonably be expected to have a Material Adverse Effect on CP&L. CP&L          
reasonably believes, as of the date hereof, that the remaining cost of          
resolution of the problems discussed above will not exceed the amounts reflected
in CP&L's Report on Form 10-Q for the period ended June 30, 1999. While CP&L has
made diligent inquiry of supplier, vendor and other third party Year 2000 plans,
and, to the Knowledge of CP&L, there are no problems arising from the Year 2000 
issue with respect to third parties that may reasonably be expected to have a   
Material Adverse Effect on CP&L, CP&L makes no representation or warranty with  
respect to Year 2000 compliance by any supplier, vendor or other third party.   

Section 3.20.  Nuclear Operations.                                    
------------------                      

       None of the CP&L Subsidiaries operates nuclear generating stations.
The operations of CP&L's nuclear generating stations are being conducted in     
compliance with applicable health, safety, regulatory and other legal           
requirements, except where the failure to so comply may not reasonably be       
expected to have, individually or in the aggregate, a Material Adverse Effect on
CP&L.  CP&L's nuclear generating stations maintain emergency plans designed to  
respond to an unplanned release therefrom of radioactive materials into the     
environment and liability insurance to the extent required by Law, and such     
further insurance (other than liability insurance) as is consistent with CP&L's 
view of the risks inherent in the operation of a nuclear power facility.  CP&L's
plans for the decommissioning of each of its nuclear generating stations and for
the short-term storage of spent nuclear fuel conform with applicable regulatory 
or other legal requirements, and such plans have at all times been funded to the
extent required by Law, which is consistent with CP&L's reasonable budget       
projections for such plans.  CP&L has not incurred any liability as a result of 
operating nuclear power facilities                                              

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for third parties which liability, in the aggregate, may reasonably be expected 
to have a Material Adverse Effect on CP&L.                                      

Section 3.21.  NRC Actions.                                           
-----------                             

    CP&L has not been given notice of or been charged with actual or
potential violation of, or is the subject of any ongoing proceeding, inquiry,   
special inspection, diagnostic evaluation or other NRC action (including        
rulemakings of general application that may effect the conduct of CP&L's        
business regarding CP&L's nuclear power facilities) of which CP&L has received  
notice under the Atomic Energy Act, any applicable regulations thereunder or the
terms and conditions of any license granted to CP&L regarding CP&L's nuclear    
power facilities operated by CP&L that would have, or may reasonably be expected
to have, a Material Adverse Effect on CP&L.                                     

Section 3.22.  Fees and Expenses of Brokers and Others.               
--------------------------------------- 

        None of the CP&L Companies (a) has had any dealings, negotiations or
communications with any broker or other intermediary in connection with the     
transactions contemplated by this Agreement, (b) is committed to any liability  
for any brokers' or finders' fees or any similar fees in connection with the    
transactions contemplated by this Agreement or (c) has retained any broker or   
other intermediary to act on its behalf in connection with the transactions     
contemplated by this Agreement, except that CP&L has engaged Merrill Lynch to   
represent it in connection with such transactions and shall pay all of Merrill  
Lynch's fees and expenses in connection with such engagement.                   

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Section 3.23.  Opinion of Financial Advisor.                          
----------------------------            

         CP&L has received the opinion of Merrill Lynch to the effect that, as
of August 22, 1999, the Exchange Consideration to be paid by Holdco pursuant to 
the FPC Plan of Exchange is fair from a financial point of view to CP&L and to  
Holdco.                                                                         

Section 3.24.  Ownership of FPC Common Stock.                         
-----------------------------           

        Neither CP&L nor any of the Subsidiaries of CP&L or other affiliates
thereof owns any shares of FPC Common Stock either beneficially or of record.   

Section 3.25.  CP&L Partnerships.                                     
-----------------                       

          The representations and warranties set forth in Section 3.4, 3.6, 3.8,
                                                                  --- ----------
3.10, 3.12, 3.13 and 3.18 are, to the Knowledge of CP&L, true and correct in all
----------- ----     ----                                                       
material respects with regard to the Partnerships of CP&L.                      

ARTICLE IV  
REPRESENTATIONS AND WARRANTIES OF FPC 

FPC represents and warrants to CP&L and Holdco as follows:  

Section 4.1.   Organization and Authority of the FPC Companies.       
       -----------------------------------------------

        Each of the FPC Companies is duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of organization or  
incorporation, has full corporate or partnership power to carry on its          
respective business as it is now being conducted and to own, operate and hold   
under lease its assets and properties as, and in the places where,              

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such properties and assets now are owned, operated or held. Each of the FPC     
Companies is duly qualified as a foreign entity to do business, and is in good  
standing, in each jurisdiction where the failure to be so qualified may         
reasonably be expected to have a Material Adverse Effect on FPC. The copies of  
the Certificate of Incorporation and Bylaws of FPC which have been delivered to 
CP&L are complete and correct and in full force and effect on the date hereof.  

Section 4.2.   Capitalization.                                        
--------------                          

      (a) FPC's authorized equity capitalization consists of 250,000,000
shares of FPC Common Stock.  As of the close of business on August 20, 1999,    
98,338,571 shares of FPC Common Stock were issued and outstanding and no        
additional shares of such capital stock have been issued between such time and  
the date hereof in each case not including shares issued under the FPC Plus     
Stock Plan on August 20, 1999.  Such shares of FPC Common Stock constituted all 
of the issued and outstanding shares of capital stock of FPC as of such date.   
All issued and outstanding shares of FPC Common Stock have been duly authorized 
and validly issued and are fully paid and nonassessable, are not subject to and 
have not been issued in violation of any preemptive rights and have not been    
issued in violation of any federal or state securities Laws.  All of the        
outstanding shares of capital stock of FPC's Subsidiaries are validly issued,   
fully paid and nonassessable and are, except as set forth in the FPC Disclosure 
Schedule, owned by FPC, directly or indirectly, free and clear of all liens,    
claims, charges or encumbrances of any nature whatsoever.  Except as set forth  
in the FPC Disclosure Schedule, there are no outstanding options, warrants,     
subscriptions or other rights to purchase or acquire any capital stock of FPC or
its Subsidiaries, and there are no Contracts pursuant to which any of FPC or its
Subsidiaries is                                                                 

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bound to sell or issue any shares of its capital stock or any such options,     
warrants, subscriptions or rights.                                              

        (b) The FPC Disclosure Schedule lists all Subsidiaries of FPC, their
respective states of incorporation or organization, the jurisdictions in which  
they are qualified or licensed to do business, the authorized equity            
capitalization thereof, a brief description of the principal line or lines of   
business conducted by each such entity, and the interest of FPC therein.        

        (c) The FPC Disclosure Schedule lists all Partnerships of FPC or its
Subsidiaries, their respective states of organization, the jurisdictions in     
which they are qualified or licensed to do business, and the interest of FPC    
therein.                                                                        

Section 4.3.   Authority Relative to this Agreement.                  
------------------------------------    

        The execution, delivery and performance of this Agreement and of all
of the other documents and instruments required hereby by FPC are within the    
corporate power of FPC.  The execution and delivery of this Agreement and the   
consummation of the transactions contemplated hereby have been duly authorized  
by the Board of Directors of FPC and no other corporate proceedings on the part 
of FPC are necessary to authorize this Agreement or to consummate the           
transactions contemplated herein (other than, with respect to the Exchange, the 
approval of the Exchange by a majority of the outstanding shares of FPC Common  
Stock at the FPC Special Meeting).  This Agreement and all of the other         
documents and instruments required hereby have been or will be (in the case of  
documents and instruments permitted to be delivered after the date hereof) duly 
and validly executed and delivered by FPC and (assuming the due authorization,  
execution and delivery hereof and thereof by CP&L and Holdco) constitute or will

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constitute valid and binding agreements of FPC, enforceable against FPC in      
accordance with their respective terms, except as may be limited by bankruptcy, 
insolvency, reorganization or other Laws affecting creditors' rights generally  
or equitable principles.                                                        

Section 4.4.   Consents and Approvals; No Violations.                 
-------------------------------------   

          Except for (i) the filing of a premerger notification report under the
HSR Act and the expiration or termination of the applicable waiting period with 
respect thereto; (ii) the filing with the SEC of the Proxy Statement/Prospectus,
the Registration Statement, such reports under Section 13(a) of the Exchange Act
and such other compliance with the Securities Act and the Exchange Act and the  
rules and regulations thereunder as may be required in connection with this     
Agreement and the transactions contemplated hereby, and the obtaining from the  
SEC of such orders as may be so required; (iii) the filing of FPC Articles of   
Exchange with the Department of State of the State of Florida and the Secretary 
of State of the State of North Carolina; (iv) such filings and approvals as may 
be required by any applicable state securities or "blue sky" laws; and (v) any  
required filings with and approvals of the NRC, the SEC, the Interstate Commerce
Commission, the Surface Transportation Board, the FERC, the FCC and the         
insurance regulatory authorities of the States of Oklahoma and Texas, no filing 
or registration with, and no permit, authorization, consent, order or approval  
of, any Governmental Authority is necessary or required in connection with the  
execution and delivery of this Agreement by FPC or for the consummation by FPC  
of the transactions contemplated by this Agreement other than as may not        
reasonably be expected to have a Material Adverse Effect on FPC.  Subject to the
FPSC's plenary jurisdiction over the operations of FPC Utility Subsidiary, no   
filing with or approval of the FPSC is required by Florida Law in connection    
with the execution and delivery                                                 

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of this Agreement by FPC or for the consummation by FPC of the transactions     
contemplated by this Agreement. Assuming that all filings, registrations,       
permits, authorizations, consents, orders and approvals contemplated by the     
immediately preceding sentence have been duly made or obtained, and assuming    
receipt of the required approval of the holders of FPC Shares at the FPC Special
Meeting, neither the execution, delivery and performance of this Agreement nor  
the consummation of the transactions contemplated hereby by FPC will (i)        
conflict with or result in any breach of any provision of the Certificates of   
Incorporation, bylaws, partnership or joint venture agreements or other         
organizational documents of any of the FPC Companies, (ii) subject to obtaining 
the third party consents identified in the FPC Disclosure Schedule, result in a 
violation or breach of, or constitute (with or without due notice or lapse of   
time or both) a default (or give rise to any right of termination, cancellation,
acceleration or increased cost) under, or otherwise result in any diminution of 
any of the rights of the FPC Companies with respect to, any of the terms,       
conditions or provisions of any security, note, bond, mortgage, indenture,      
license, Contract or other instrument or obligation to which any of the FPC     
Companies is a party or by which it or any of them or any of their properties or
assets may be bound or (iii) violate any order, writ, injunction, decree,       
statute, rule or regulation applicable to any of the FPC Companies or any of    
their properties or assets except, in the case of clauses (ii) or (iii) above,  
for violations, breaches or defaults that, individually or in the aggregate, may
not reasonably be expected to have a Material Adverse Effect on FPC and that    
will not prevent or delay the consummation of the transactions contemplated     
hereby.                                                                         

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Section 4.5.   Reports.                                               
-------                                 

       The filings required to be made by any FPC Company since January 1,
1996 under NYSE rules or any applicable Law, including the Securities Act, the  
Exchange Act, PUHCA, the Power Act, the Atomic Energy Act and applicable Florida
laws and regulations, have been filed with the NYSE or each applicable          
Governmental Authority, including the SEC, the FERC, the NRC, the FPSC, the     
Interstate Commerce Commission, the Surface Transportation Board, and the       
insurance regulatory authorities of the States of Oklahoma and Texas as the case
may be, and each of the FPC Companies has complied in all material respects with
all requirements of such acts, Laws and rules and regulations thereunder with   
such exceptions that may not reasonably be expected to have, in the aggregate, a
Material Adverse Effect on FPC.  As of their respective dates, none of the FPC  
SEC Reports, including without limitation any financial statements or schedules 
included therein, contained any untrue statement of a material fact or omitted  
to state a material fact required to be stated therein or necessary in order to 
make the statements therein not misleading in light of the circumstances under  
which they were made.  Each of the balance sheets (including the related notes  
and schedules) included in the FPC SEC Reports fairly presented the consolidated
financial position of FPC and its Subsidiaries as of the respective dates       
thereof, and the other related financial statements (including the related notes
and schedules) included therein fairly presented the results of operations and  
cash flows of FPC and its Subsidiaries for the respective fiscal periods set    
forth therein.  Each of the financial statements (including the related notes   
and schedules) included in the FPC SEC Reports (i) complied as to form in all   
material respects with the applicable accounting requirements and rules and     
regulations of the SEC, and (ii) was prepared in                                

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accordance with GAAP consistently applied during the periods presented, except  
as otherwise noted therein and subject to normal year-end and audit adjustments 
in the case of any unaudited interim financial statements. Except for FPC, FPC  
Utility Subsidiary and except as disclosed in the FPC Disclosure Schedule, none 
of the FPC Companies is required to file any forms, reports or other documents  
with the SEC, the NYSE or any other foreign or domestic securities exchange or  
Governmental Authority with jurisdiction over securities laws.                  

Section 4.6.   Absence of Certain Events.                             
-------------------------               

      Except as set forth in the FPC SEC Reports filed prior to the date
hereof or the FPC Disclosure Schedule, since December 31, 1998, each of the FPC 
Companies has conducted its business only in the ordinary course consistent with
past practice, and none of the FPC Companies has suffered any change in its     
business, financial condition or results of operations that has had or may      
reasonably be expected to have a Material Adverse Effect on FPC, and no event   
has occurred and no facts or conditions exist that have had or may reasonably be
expected to have a Material Adverse Effect on FPC.  Except as disclosed in the  
FPC SEC Reports filed prior to the date hereof or in the FPC Disclosure         
Schedule, there has not been since December 31, 1998: (i) any material increase 
in the obligations of any of the FPC Companies in respect of compensation,      
severance or termination benefits or any adoption of or material increase in any
bonus, insurance, pension or other employee benefit plan, payment or arrangement
(including, without limitation, the granting of stock options or stock          
appreciation rights or the award of restricted stock); (ii) any entry by any of 
the FPC Companies into any material commitment, agreement, license or           
transaction other than in the ordinary and usual course of business; (iii) any  
declaration or payment of any dividend or other distribution with respect to FPC
Common Stock,                                                                   

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except for regular cash dividends consistent with past practice; (iv) any change
in the accounting policies or practices of FPC; (v) any damage, destruction or  
loss, whether covered by insurance or not, which has had or may reasonably be   
expected to have a Material Adverse Effect on FPC; or (vi) any agreement to do  
any of the foregoing.                                                           

Section 4.7.   Proxy Statement/Prospectus.                            
--------------------------              

  None of the information to be supplied by FPC for inclusion or
incorporation by reference with respect to the FPC Companies to be included in  
the Proxy Statement/Prospectus or the Registration Statement will, in the case  
of the Proxy Statement/Prospectus or any amendments thereof or supplements      
thereto, at the time of the mailing of the Proxy Statement/Prospectus or any    
amendments thereof or supplements thereto, and at the time of the FPC Special   
Meeting, or, in the case of the Registration Statement, at the time it becomes  
effective and, as the same may be amended, at the effective time of such        
amendment, contain any untrue statement of a material fact or omit to state any 
material fact required to be stated therein or necessary in order to make the   
statements therein, in light of the circumstances under which they are made, not
misleading.  The Proxy Statement/Prospectus will comply as to form in all       
material respects with the provisions of the Securities Act, the Exchange Act   
and the rules and regulations promulgated thereunder, except that no            
representation is made by FPC with respect to information supplied by CP&L or   
Holdco or any affiliate of CP&L or Holdco for inclusion in the Proxy            
Statement/Prospectus.                                                           

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Section 4.8.   Litigation.                                            
----------                              

          Except as specifically disclosed in the FPC SEC Reports filed prior to
the date hereof, or in the FPC Disclosure Schedule, (a) there are no complaints,
claims, suits, actions, mediations, arbitrations or proceedings (including      
proceedings related to the rates charged by the FPC Utility Subsidiary) pending 
or, to the Knowledge of FPC, threatened, nor are there any investigations or    
reviews pending or, to the Knowledge of FPC, threatened against or affecting FPC
or any of its Subsidiaries or Partnerships that, in the aggregate, may          
reasonably be expected to have a Material Adverse Effect on FPC, (b) there have 
not been any developments since December 31, 1998 with respect to any such      
disclosed complaints, claims, suits, actions, mediations, arbitrations,         
proceedings, investigations or reviews which, in the aggregate, may reasonably  
be expected to have a Material Adverse Effect on FPC, and (c) there are no      
judgments, decrees, injunctions, rules or orders of any court, governmental     
department, commission, agency, instrumentality or authority or any arbitrator  
applicable to FPC or any of the FPC Companies that, in the aggregate, may       
reasonably be expected to have a Material Adverse Effect on FPC or the          
transactions contemplated by this Agreement.                                    

Section 4.9.   Real and Personal Property.                            
--------------------------              

       (a) The FPC Companies own, or have a valid and enforceable right to
use or a valid and enforceable leasehold interest in, all real property         
(including all buildings, fixtures and other improvements thereto) used by them 
in the conduct of their respective businesses as such businesses are now being  
conducted.  Except as disclosed in the FPC SEC Reports or the FPC Disclosure    
Schedule, none of the FPC Companies' ownership of or leasehold interest in any  
such                                                                            

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property is subject to any mortgage, pledge, lien, option, conditional sale     
agreement, encumbrance, security interest, title exception or restriction or    
claim or charge of any kind ("Encumbrances"), except for such Encumbrances that 
in the aggregate may not reasonably be expected to have a Material Adverse      
Effect on FPC.  All such property is in good condition and repair and is        
suitable in all material respects for the purposes for which it is now being    
used in the conduct of the businesses of the FPC Companies, except to the extent
that the poor condition or unsuitability of any such property would not in the  
aggregate reasonably be expected to have a Material Adverse Effect on FPC.  To  
the Knowledge of FPC, there are no conditions existing in respect of such assets
which would require FPC or any of its Subsidiaries to incur any capital         
expenditures relating thereto which are materially in excess of the amounts     
budgeted by FPC (as reflected in existing budgets of FPC, true and correct      
copies of which were delivered to CP&L) for maintenance, repair or renewal of   
the assets.                                                                     

          (b) Except as otherwise disclosed in the FPC Disclosure Schedule or in
the FPC SEC Reports filed prior to the date hereof, all personal property that  
is owned by the FPC Companies or used by any of them in the conduct of their    
respective businesses is owned free and clear of any Encumbrances, except for   
such Encumbrances that in the aggregate may not reasonably be expected to have a
Material Adverse Effect on FPC.  All such property is in good working condition,
subject to normal wear and tear, and is suitable in all material respects for   
the purposes for which it is now being used in the conduct of the businesses of 
the FPC Companies, except to the extent that the poor condition or unsuitability
of any such property in the aggregate may not reasonably be expected to have a  
Material Adverse Effect on FPC.                                                 

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Section 4.10.  Contracts; No Default.                                 
---------------------                   

       (a) The FPC Disclosure Schedule lists all of the Contracts to which
any FPC Company is a party that constitute: (i) a material contract as defined  
in Item 601 of Regulation S-K under the Exchange Act; (ii) an agreement relating
to the borrowing or lending of money or the purchase or sale of securities;     
(iii) a guaranty, contribution agreement or other agreement that includes any   
material indemnification, surety, contribution or support obligation; (iv) an   
agreement limiting in any material respect the ability of any FPC Company to    
compete in any line of business or with any person; (v) any collective          
bargaining agreement; and (vi) an employment or consulting agreement to which   
any of the FPC Companies is a party or by which any of the FPC Companies is     
bound.  Each such Contract is a valid and binding agreement of such FPC Company,
enforceable in accordance with its terms, except as may be limited by           
bankruptcy, insolvency, reorganization, or other Laws affecting creditors'      
rights generally or equitable principles.  The FPC Companies have performed and,
to the Knowledge of FPC, every other party has performed, each material term,   
covenant and condition of each of such Contracts that is to be performed by any 
of them at or before the date hereof.  No event has occurred that would, with   
the passage of time or compliance with any applicable notice requirements or    
both, constitute a default by any FPC Company or, to the Knowledge of FPC, any  
other party under any of such Contracts, and, to the Knowledge of FPC, no party 
to any of such Contracts intends to cancel, terminate or exercise any option    
under any of such Contracts.                                                    

   (b) No FPC Company is in default or violation (and no event has
occurred which, with notice or the lapse of time or both, would constitute a    
default or violation) of any term, condition or provision of (i) its respective 
charter, bylaws or other governing or                                           

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organizational documents, (ii) any note, bond, mortgage, indenture, license,    
agreement or other instrument or obligation to which any FPC Company is now a   
party or by which any FPC Company or any of its respective properties or assets 
may be bound or (iii) any order, writ, injunction, decree, statute, rule or     
regulation applicable to any FPC Company, except in the case of clauses (ii) and
(iii) above for defaults or violations which in the aggregate may not reasonably
be expected to have a Material Adverse Effect on FPC.                           

Section 4.11.  Labor Matters.                                         
-------------                           

        (a) Except as set forth in the FPC Disclosure Schedule, with respect
to employees of the FPC Companies:  (i) to the Knowledge of FPC, no senior      
executive, key employee or group of employees has any plans to terminate        
employment with any of the FPC Companies; (ii) there is no unfair labor practice
charge or complaint against any FPC Company pending or, to the Knowledge of FPC,
threatened before the National Labor Relations Board or any other comparable    
authority; (iii) no grievance or any arbitration proceeding arising out of or   
under collective bargaining agreements is pending and, to the Knowledge of FPC, 
no claims therefor exist or have been threatened; (iv) there is no litigation,  
arbitration proceeding, governmental investigation, administrative charge,      
citation or action of any kind pending or, to the Knowledge of FPC, proposed or 
threatened against any FPC Company relating to employment, employment practices,
terms and conditions of employment or wages and hours; (v) there is no strike,  
dispute, slowdown, work stoppage or lockout pending, or to the best knowledge of
FPC, threatened against or involving FPC; and (vi) FPC is in compliance with all
applicable Laws respecting employment and employment practices, terms and       
conditions of employment, wages, hours of work and occupational safety and      
health, except, in the cases of the                                             

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preceding clauses (iii), (iv), (v) and (vi), for such proceedings, actions, or  
violations which in the aggregate may not reasonably be expected to have a      
Material Adverse Effect on FPC.                                                 

          (b) Except as described in the FPC Disclosure Schedule, no FPC Company
has any collective bargaining relationship or duty to bargain with any Labor    
Organization (as such term is defined in Section 2(5) of the National Labor     
Relations Act, as amended), and no FPC Company has recognized any Labor         
Organization as the collective bargaining representative of any of its          
employees.                                                                      

Section 4.12.  Employee Benefit Plans.                                
----------------------                  

       (a) For purposes of this Section 4.12, the term "FPC Benefit Plans"
  ------------
shall mean all pension, retirement, profit-sharing, deferred compensation, stock
option, stock purchase, employee stock ownership, severance pay, vacation, bonus
or other incentive plans, and all other payroll practices, employee programs,   
arrangements or agreements, whether arrived at through collective bargaining or 
otherwise, all hospitalization or other medical, vision, dental and other health
plans, all life insurance plans, all disability plans, or other insurance, and  
all other employee benefit plans or fringe benefit plans, including, without    
limitation, any "employee benefit plan," as that term is defined in Section 3(3)
of ERISA, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any of the FPC Companies (which term, for purposes of this    
Section 4.12, includes any entity that is a member of the FPC controlled group  
------------                                                                    
or otherwise affiliated with FPC under Code Sections 414(b), (c), (m) or (o))   
for the benefit of employees, retirees, dependents, spouses, directors,         
independent contractors or other beneficiaries and under which employees,       
retirees, dependents, spouses, directors,                                       

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independent contractors, or other beneficiaries are eligible to participate. Any
of the FPC Benefit Plans which is an "employee pension benefit plan," as that   
term is defined in Section 3(2) of ERISA, is referred to herein as an "FPC      
Pension Plan."                                                                  

          (b) No FPC Benefit Plan is or has been a multiemployer plan within the
meaning of Section 3(37) of ERISA and none of the FPC Companies has contributed 
to any such plan at any time during the current year or the preceding six (6)   
calendar years.                                                                 

   (c) All FPC Benefit Plans are in compliance with the applicable
provisions (including, without limitation, any funding requirements or          
limitations) of ERISA, the Code, COBRA, and any other applicable Laws, the      
breach or violation of which could have a Material Adverse Effect on the FPC    
Companies.  To the Knowledge of FPC, each FPC Benefit Plan has been administered
substantially in accordance with its terms and all reports, returns, and other  
documentation that are required to have been filed with the IRS, the Department 
of Labor, the Pension Benefit Guaranty Corporation or any other governmental    
agency (federal, state, or local) have been properly filed with the appropriate 
governmental agency on a timely basis or distributed as required, in each       
instance in which the failure to file or distribute such reports, returns, and  
other documents may reasonably be expected to result in a Material Adverse      
Effect on FPC.  Except as set forth in the FPC Disclosure Schedule, no lawsuits 
or complaints to or by any person or governmental authority are pending, or to  
the Knowledge of FPC, are contemplated or threatened, with respect to any FPC   
Benefit Plan.                                                                   

          (d) Except as set forth in the FPC Disclosure Schedule, no FPC Benefit
Plan provides for post-retirement medical benefit obligations (without regard to
COBRA obligations).                                                             

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FPC has not incurred any material liability with respect to any "welfare plan"  
(as defined in Section 3(1) of ERISA) or for "welfare benefits" (as defined in  
Code Section 419) that are not fully reflected in FPC's audited financial       
statements. Except as set forth in the FPC Disclosure Schedule, no FPC Pension  
Plan which is a defined benefit pension plan has any "unfunded current          
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the   
present fair market value of the assets of any such plan exceeds the plan's     
"benefit liabilities," as that term is defined in Section 4001(a)(16) of ERISA, 
when determined under actuarial factors that would apply if the plan terminated 
in accordance with all applicable legal requirements.                           

       (e) The FPC Disclosure Schedule contains a true and correct list of
all FPC Benefit Plans.  None of the FPC Benefit Plans will be breached by FPC's 
execution, delivery, and performance of this Agreement.  The FPC Disclosure     
Schedule identifies each FPC Pension Plan and denotes those intended to be      
qualified under Section 401(a) of the Code (the "FPC Qualified Plans").  FPC has
provided CP&L with access to true and correct copies of each governing document 
for each FPC Benefit Plan or a summary of any such FPC Benefit Plan that is not 
evidenced by a written plan document, together with the most recent summary plan
description, the last three (3) years' annual reports and audited financial     
statements for each such plan and the actuarial report for any FPC Pension Plan 
that is a defined benefit pension plan or funded welfare benefit plan.  To the  
Knowledge of FPC, each FPC Benefit Plan is enforceable in accordance with its   
terms.                                                                          

        (f) To the Knowledge of FPC, each FPC Qualified Plan complies in all
material respects with applicable law as of the date hereof, and the IRS has    
issued favorable determination letters to the effect that the form of each FPC  
Qualified Plan satisfies the                                                    

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requirements of Section 401(a) and related sections of the Code. To the         
Knowledge of FPC, there are no facts or circumstances that would jeopardize or  
adversely affect in any material respect the qualification under Section 401(a) 
of the Code of any FPC Qualified Plan.                                          

     (g) As of the Closing Date, full payment will be made to each FPC
Benefit Plan of all contributions (including all employer contributions and     
employee salary reduction contributions), costs, benefits, premiums, and other  
amounts due in connection with the FPC Benefit Plans that are required under the
terms thereof, and under ERISA or the Code, to be made prior to that date.  No  
FPC Company, and no organization to which FPC is a successor or parent          
corporation, within the meaning of Section 4069(b) of ERISA, has engaged in any 
transaction within the meaning of Section 4069 of ERISA.  None of the FPC       
Benefit Plans has experienced a "reportable event" as defined in Section 4043(b)
of ERISA and its regulations within the last five (5) years for which the 30-day
notice requirement has not been waived, except for reportable events which may  
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on FPC.                                                          

  (h) To the Knowledge of FPC, no FPC Company has engaged in any
prohibited transaction, as defined in Section 4975 of the Code or Section 406 of
ERISA, that could subject any FPC Benefit Plan to any tax or penalty imposed    
under Section 4975(a) of the Code or Section 502(i) of ERISA which may be       
reasonably expected to have a Material Adverse Effect on FPC.  No FPC Company   
(i) has engaged in any transaction that may result in the imposition on FPC or  
its affiliates of any such excise tax under Sections 4971, 4972, 4975, and 4976 
through 4980 of the Code, or otherwise incurred a liability for any excise tax, 
other than excise taxes that have heretofore been paid or have been accrued,    
and, in either case, are fully                                                  

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reflected in FPC's audited financial statements, or (ii) is now, nor at any time
will be by virtue of any action taken prior to the Effective Time, subject to a 
requirement to provide security under Section 401(a)(29) of the Code, nor shall 
any asset of a FPC Company be subject to a lien by reason of the provisions of  
Section 412(n) of the Code. To the Knowledge of FPC, the FPC Benefit Plans      
comply and have in the past complied in all material respects with all          
applicable non-discrimination and coverage requirements under the Code. FPC     
currently complies and has in the past complied with all applicable workers'    
compensation statutes.                                                          

        (i) Except as set forth in the FPC Disclosure Schedule, there are no
FPC employment or severance agreements that cannot be terminated without        
triggering severance or "parachute" obligations thereunder.  The FPC Disclosure 
Schedule lists all payments required to be made to employees, officers or       
directors of any FPC Company as a result of this Agreement or the transactions  
contemplated thereby.                                                           

        (j) An  aggregate number of 314,458 nominal FPC Shares are currently
subject to grants under the FPC LTIP.  If an FPC change in control were to occur
as of the date this Agreement is signed, 150% of such FPC Shares would be       
distributable thereunder together with dividend equivalents, for a total of     
580,175 FPC Shares, assuming a 23% dividend equivalency rate.  Grants will      
continue to be made or adjusted in the normal course of business consistent with
past practice under the FPC LTIP through the Effective Time.  In addition, as   
each three-year performance cycle is completed, an additional amount of 25% of  
the FPC Shares awarded under the FPC LTIP may be issued to current participants 
who have met certain stock ownership guidelines.  The maximum total additional  
FPC Shares which could be issued under these provisions as of the date of this  
Agreement is 769,856, based upon the FPC Disclosure                             

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Schedule which includes FPC's good faith estimate of the impact of the FPC LTIP 
and the related provisions of this Agreement as of an estimated Closing Date of 
December 31, 2000.                                                              

      (k) Neither FPC nor any FPC Subsidiary has any liability under the
Coal Industry Retiree Health Benefit Act of 1992.                               

Section 4.13.  Tax Matters.                                           
-----------                             

(a) Except as set forth in the FPC Disclosure Schedule:     

              (i)    FPC and each of its Subsidiaries that is incorporated under
the laws of the United States or of any of the United States are members of the 
affiliated group, within the meaning of Section 1504(a) of the Code, of which   
FPC is the common parent, such affiliated group files a consolidated federal    
income tax return and neither FPC nor any of its Subsidiaries has ever filed a  
consolidated federal income tax return with (or been included in a consolidated 
return of) a different affiliated group;                                        

             (ii)   each of the FPC Companies has timely filed or caused to be
filed all material Tax Returns required to have been filed by or for it, and all
information set forth in such Tax Returns is accurate and complete in all       
material respects;                                                              

      (iii)  each of the FPC Companies has paid or made adequate
provision on its books and records in accordance with GAAP for all material     
Taxes covered by such Tax Returns;                                              

            (iv)   each of the FPC Companies is in material compliance with,
and its records contain all information and documents (including, without       
limitation, properly completed                                                  

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IRS Forms W-8 and Forms W-9) necessary to comply with, all applicable           
information reporting requirements under federal, state, local and foreign Laws,
and such records identify with specificity all accounts subject to withholding  
under Section 1441, 1442 or 3406 of the Code or similar provisions of state,    
local or foreign Laws;                                                          

          (v)    each of the FPC Companies has collected or withheld all
material Taxes required to be collected or withheld by it, and all such Taxes   
have been paid to the appropriate Governmental Authority or set aside in        
appropriate accounts for future payment when due;                               

              (vi)   there are no unpaid Taxes due and payable by any of the FPC
Companies or by any other person that are or may become a lien on any asset of, 
or otherwise may reasonably be expected to have a Material Adverse Effect on,   
FPC;                                                                            

           (vii)  none of the FPC Companies has granted (or is subject to)
any waiver, which is currently in effect, of the period of limitations for the  
assessment of any Tax; no unpaid Tax deficiency has been assessed or asserted   
against or with respect to any of the FPC Companies by any Governmental         
Authority; no power of attorney relating to Taxes that is currently in effect   
has been granted by or with respect to any of the FPC Companies; there are no   
currently pending administrative or judicial proceedings, or any deficiency or  
refund litigation, with respect to Taxes of any of the FPC Companies, the       
adverse outcome of which may reasonably be expected to have a Material Adverse  
Effect on FPC; and any such assertion, assessment, proceeding or litigation     
disclosed in the FPC Disclosure Schedule hereto is being                        

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contested in good faith through appropriate measures, and its status is         
described in the FPC Disclosure Schedule hereto;                                

         (viii) none of the FPC Companies has made or entered into, or
holds any asset subject to, a consent filed pursuant to Section 341(f) of the   
Code or a "safe harbor lease" subject to former Section 168(f)(8) of the Code;  

             (ix)   none of the FPC Companies is required to include in income
any material amount from an adjustment pursuant to Section 481 of the Code or   
any similar provision of state or local Law, and to the Knowledge of FPC no     
Governmental Authority has proposed any such adjustment;                        

     (x)    none of the FPC Companies is obligated to make any
payments, or is a party to any Contract that could obligate it to make any      
payments, that would not be deductible by reason of Section 162(m) or 280G of   
the Code;                                                                       

             (xi)   there are no excess loss accounts or deferred intercompany
gains with respect to any member of the affiliated group of which FPC is the    
common parent which may reasonably be expected to have a Material Adverse Effect
on FPC if taken into account;                                                   

              (xii)  the most recent audited consolidated balance sheet included
in the FPC SEC Reports fully and properly reflects, as of the date thereof, the 
liabilities of FPC and its Subsidiaries for all accrued Taxes and deferred      
liability for Taxes and, for periods ending after such date, the books and      
records of each such corporation fully and properly reflect its liability for   
all accrued Taxes;                                                              

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      (xiii) since April 16, 1997, none of the FPC Companies has
distributed to its stockholders or security holders stock or securities of a    
controlled corporation in a transaction to which Section 355(a) of the Code     
applies; and                                                                    

              (xiv)  with respect to any Fund within the meaning of Section 468A
of the Code that is established by or for the benefit of any FPC Company, (A)   
such Fund is in compliance with (i) all requirements of Sections 468A and 4951  
of the Code and (ii) all Tax Return and Tax payment requirements resulting from 
the application of Section 468A of the Code (and any similar provision of state 
or local Law) to the Fund, and (B) such FPC Company (i) has not claimed any     
deduction for contributions to the Fund in excess of the amounts permitted by   
Section 468A(b) and (ii) has included in income all amounts includible in its   
income under Section 468A(c).                                                   

         (b) The FPC Disclosure Schedule describes all material and continuing
Tax elections, consents and agreements made by or affecting any of the FPC      
Companies, lists all types of material Taxes paid and Tax Returns filed by or on
behalf of any of the FPC Companies and expressly indicates each Tax with respect
to which any of the FPC Companies is or has been included in a consolidated,    
unitary or combined return.                                                     

Section 4.14.  Compliance with Law.                                   
-------------------                     

         The FPC Companies hold, and immediately after the Effective Time will
continue to hold, all permits, licenses, variances, exemptions, orders,         
franchises, consents and approvals of all Governmental Authorities necessary for
them to own, lease and operate their properties and assets and to lawfully      
conduct their respective businesses (the "FPC Permits"), except where the       

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failure so to hold may not reasonably be expected to have a Material Adverse    
Effect on FPC.  Except as set forth in the FPC Disclosure Schedule, the FPC     
Companies are in compliance with the terms of the FPC Permits, except where the 
failure so to comply may not reasonably be expected to have, individually or in 
the aggregate, a Material Adverse Effect on FPC.  Except as disclosed in the FPC
SEC Reports filed prior to the date hereof or as set forth in the FPC Disclosure
Schedule, the business of the FPC Companies is not being conducted in violation 
of any Law, ordinance or regulation of any Governmental Authority, except for   
possible violations which, individually or in the aggregate, may not reasonably 
be expected to have a Material Adverse Effect on FPC.                           

Section 4.15.  Environmental Matters.                                 
---------------------                   

          (a) Except as set forth in the FPC SEC Reports filed prior to the date
hereof or in the FPC Disclosure Schedule, each of the FPC Companies is in       
compliance with all applicable Environmental Laws except for noncompliance which
may not reasonably be expected to have a Material Adverse Effect on FPC.  Except
as set forth in the FPC Disclosure Schedule, and except for matters that have   
been fully resolved, no FPC Company has received any written communication from 
any person or Governmental Authority that alleges that it is not in compliance  
with applicable Environmental Laws where such noncompliance may reasonably be   
expected to have a Material Adverse Effect on FPC.                              

   (b) Except as set forth in the FPC Disclosure Schedule, the FPC
Companies have obtained all environmental, health and safety permits and        
governmental authorizations (collectively, the "Environmental Permits")         
necessary for the construction of their facilities or                           

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the conduct of their operations, and all such permits are in good standing or,  
where applicable, a renewal application has been timely filed and is pending    
agency approval, and the FPC Companies are in compliance with all terms and     
conditions of the Environmental Permits except where the absence of such permits
or such noncompliance may not reasonably be expected to have a Material Adverse 
Effect on FPC.                                                                  

         (c) Except as set forth in the FPC Disclosure Schedule, or in the FPC
SEC Reports filed prior to the date hereof, there is no Environmental Claim     
pending or to the Knowledge of FPC, threatened (i) against a FPC Company, (ii)  
against any person or entity whose liability for any Environmental Claim a FPC  
Company has or may have retained or assumed either contractually or by operation
of law or (iii) against or concerning any real property or operations which a   
FPC Company owns, leases or manages, in whole or in part, which claim, if       
adversely determined, may reasonably be expected to have a Material Adverse     
Effect on FPC.                                                                  

        (d) Except as set forth in the FPC Disclosure Schedule or in the FPC
SEC Reports filed prior to the date hereof, and except for any Releases (as     
hereinafter defined) of Hazardous Materials (as hereinafter defined) the        
liability for which may not reasonably be expected to have a Material Adverse   
Effect on FPC, no Release of any Hazardous Material (i) has occurred on any of  
the properties owned, leased or occupied by a FPC Company or any predecessor, or
(ii)  is related to the business or operations of a FPC Company or any          
predecessor, which in either case requires investigation, assessment,           
monitoring, remediation or cleanup under Environmental Laws.                    

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        (e) FPC has disclosed to CP&L all material facts that FPC reasonably
believes form the basis of a Material Adverse Effect on FPC arising from the    
cost of pollution control equipment currently required or known to be required  
in the future, current remediation costs or remediation costs known to be       
required in the future, or any other environmental matter affecting a FPC       
Company that may be reasonably expected to have a Material Adverse Effect on    
FPC.  To the Knowledge of FPC, it has delivered to CP&L prior to the date hereof
copies of all material environmental investigations, studies, audit tests,      
reviews or other analyses (including all Phase I environmental assessments)     
conducted of the properties or operations of any FPC Company within the last    
five (5) years.                                                                 

          (f) As used in this Agreement: (i) "Environmental Claim" means any and
all administrative, regulatory or judicial actions, suits, demands, demand      
letters, directives, claims, proceedings or notices by any Governmental         
Authority or other person alleging in writing violations of or liability under  
Environmental Laws, or demanding remediation of conditions which, with notice,  
the passage of time, or both would constitute violations of Environmental Laws, 
arising out of, based on or resulting from (a) the presence, manufacture,       
disturbance, generation, use, transportation, treatment, storage, disposal or   
the Release or threatened Release into the environment, of any Hazardous        
Materials at any location, whether or not owned, operated, leased or managed by 
a FPC Company or (b) circumstances forming the basis of any violation of any    
Environmental Law; (ii)  "Environmental Laws" means any Law in effect on the    
date of this Agreement relating to pollution or protection of human health or   
the environment or Releases or threatened Releases of Hazardous Materials, to   
the manufacture, disturbance, generation, use, transportation, treatment,       
storage, disposal, or handling of Hazardous Materials.                          

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"Environmental Laws" include without limitation, the Clean Air Act, the Clean   
Water Act of 1977, the Comprehensive Environmental Response, Compensation and   
Liability Act of 1980, the National Environmental Policy Act of 1969, the Oil   
Pollution Act of 1990, the Resource Conservation and Recovery Act of 1976, the  
Hazardous and Solid Waste Amendments of 1984, the Outer Continental Shelf Lands 
Act, the Superfund Amendments and Reauthorization Act of 1986, the River and    
Harbor Act, and the Toxic Substances Control Act; (iii) "Hazardous Materials"   
means (a) any petroleum or petroleum products, radioactive materials, asbestos  
in any form that is or could become friable, urea formaldehyde foam insulation, 
manufactured gas waste, and transformers or other equipment that contain        
dielectric fluid containing polychlorinated biphenyls; (b) any chemicals,       
materials or substances which are now defined as or included in the definition  
of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic    
pollutants", or words of similar import, under any Law; and (c) any other       
chemical, material, substance or waste, exposure to or the manufacture,         
disturbance, generation, use, transportation or treatment of which is now       
prohibited, limited or regulated under any Law in a jurisdiction in which a FPC 
Company operates; and (iv) "Release" means any release, spill, emission,        
leaking, injection, deposit, disposal, discharge, dispersal, leaching or        
migration into the atmosphere, soil, surface water, groundwater or property.    

Section 4.16.  FPC Action.                                            
----------                              

        The Board of Directors of FPC (at a meeting duly called, constituted
and held) has unanimously (a) determined that the Exchange is advisable and in  
the best interests of FPC and its shareholders, (b) approved this Agreement and 
the transactions contemplated hereby,                                           

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including the Exchange, and (c) subject to the provisions of Section 5.5(b)(ii),
                                                            ------------------
directed that the Exchange be submitted with the recommendation of the Board of 
Directors for consideration by FPC's shareholders at the FPC Special Meeting.   
FPC has taken all steps necessary to exempt (i) the execution and delivery of   
this Agreement, (ii) the Exchange and (iii) the transactions contemplated hereby
and thereby from, (x) assuming that the representation contained in Section 3.24
                                                                    ------------
is accurate, any statute of the State of Florida that purports to limit or      
restrict business combinations or the ability to acquire or to vote shares,     
including, without limitation, Sections 607.0901 and 607.0902 of the FBCA, and  
(y) any applicable provision of FPC's Articles of Incorporation or Bylaws       
containing change of control or anti-takeover provisions. FPC has (A) duly      
entered into an appropriate amendment to the FPC Rights Agreement and (B) taken 
all other action necessary or appropriate so that the execution and delivery of 
this Agreement, and the consummation of the transactions contemplated hereby    
(including, without limitation, the Exchange), do not and will not (I) result in
the ability of any person to exercise any FPC Rights or enable or require the   
FPC Rights to separate from the shares of FPC Common Stock to which they are    
attached, (II) cause CP&L or any of its Affiliates or Associates to be an       
Acquiring Person (as each such term is defined in the FPC Rights Agreement) or  
(III) trigger any other provisions of the FPC Rights Agreement, including giving
rise to a Distribution Date or a Triggering Event (as each such term is defined 
in the FPC Rights Agreement), and such amendment shall be in full force and     
effect from and after the date hereof.                                          

Section 4.17.  Vote Required.                                         
-------------                           

    The affirmative vote of holders of a majority of the outstanding
shares of FPC Common Stock entitled to vote thereon is the only vote of the     
holders of any class or series of                                               

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FPC capital stock necessary to approve this Agreement and the transactions      
contemplated by the Agreement.                                                  

Section 4.18.  Material Interests of Certain Persons.                 
-------------------------------------   

    Except as disclosed in FPC's Proxy Statement for its 1999 Annual
Meeting of Shareholders or as set forth in the FPC Disclosure Schedule, no      
officer or director of FPC, or any "associate" (as such term is defined in Rule 
14a-1 under the Exchange Act) of any such officer or director, has any material 
interest in any material Contract or property (real or personal), tangible or   
intangible, used in or pertaining to the business of FPC or any FPC Subsidiary. 

Section 4.19.  Insurance.                                             
---------                               

        Except as set forth in the FPC Disclosure Schedule, each FPC Company
is, and has been continuously since December 31, 1995, insured by reputable and 
financially responsible insurers in such amounts and against such risks and     
losses as are customary for companies conducting their respective businesses    
during such time period.  No FPC Company has received any notice of cancellation
or termination with respect to any material insurance policy thereof and no FPC 
Company has received notice that any such policy is invalid or unenforceable.   

Section 4.20.  Fees and Expenses of Brokers and Others.               
--------------------------------------- 

       None of the FPC Companies (a) has had any dealings, negotiations or
communications with any broker or other intermediary in connection with the     
transactions contemplated by this Agreement, (b) is committed to any liability  
for any brokers' or finders' fees or any similar fees in connection with the    
transactions contemplated by this Agreement or                                  

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(c) has retained any broker or other intermediary to act on its behalf in       
connection with the transactions contemplated by this Agreement, except that FPC
has engaged Salomon Smith Barney to represent it in connection with such        
transactions, and shall pay all of Salomon Smith Barney's fees and expenses in  
connection with such engagement.                                                

Section 4.21.  Opinion of Financial Advisor.                          
----------------------------            

     The Board of Directors of FPC has received the opinion of Salomon
Smith Barney, dated August 21, 1999, to the effect that, as of such date, the   
Exchange Consideration is fair from a financial point of view to the holders of 
shares of FPC Common Stock.                                                     

    Section 4.22.  Regulation as Utility or as Part of Utility Holding Company
                   -----------------------------------------------------------
System.                                                                         
------                                                                          

        FPC Utility Subsidiary is regulated as a public utility in the State
of Florida and in no other state.  FPC is a holding company exempt from all     
provisions of PUHCA except Section 9(a)(2) thereof under Section 3(a)(1)        
pursuant to Rule 2 promulgated thereunder.  Except as set forth above and with  
respect to their relationship to FPC under PUHCA, neither FPC nor any subsidiary
company, affiliate or associate company of FPC is subject to regulation as a    
holding company, a public utility or public service company (or similar         
designation) by any other state in the United States or any agency or           
instrumentality thereof, by the United States or any agency or instrumentality  
of the United States or by any foreign country.  As used in this Section 4.22,  
                                                              ------------
the terms "holding company", "subsidiary company", "associate company" and      
"affiliate" shall have the respective meanings ascribed to them in PUHCA.       

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Section 4.23.  Absence of Undisclosed Liabilities.                    
----------------------------------      

      Except as disclosed in the FPC SEC Reports filed prior to the date
hereof or the FPC Disclosure Schedule, none of the FPC Companies has, as of the 
date hereof, or will have, as of the Effective Time, any liabilities or         
obligations of any kind, whether absolute, accrued, asserted or unasserted,     
contingent or otherwise, except to the extent such liabilities, obligations or  
contingencies were (a) reflected on or accrued or reserved against in the       
consolidated balance sheet of FPC dated June 30, 1999, or reflected in the notes
thereto, or (b) incurred after the date of such balance sheet in the ordinary   
course of business and consistent with past practices and which, in the case of 
either subsection (a) or subsection (b) of this Section 4.23, individually or in
                            ------------
the aggregate, has not had and may not reasonably be expected to have a Material
Adverse Effect on FPC.                                                          

Section 4.24.  Intellectual Property.                                 
---------------------                   

        The FPC Companies own, or are licensed or otherwise possess, legally
enforceable and otherwise adequate rights to use, all patents, trademarks, trade
names, service marks, logos, trade dress, fictitious names, copyrights and any  
applications therefor, technology, know-how, computer software programs or      
applications, and tangible or intangible proprietary information or material    
that are required or reasonably necessary for the conduct of their businesses as
currently conducted, except as would not, individually or in the aggregate, have
a Material Adverse Effect on FPC (collectively, the "FPC Intellectual Property  
Rights").  All of the FPC Intellectual Property Rights are owned or licensed by 
a FPC Company, free and clear of any and all Encumbrances, except as set forth  
in applicable license agreements or as would not,                               

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individually or in the aggregate, have a Material Adverse Effect on FPC. To the 
Knowledge of FPC, the use of the FPC Intellectual Property Rights by the FPC    
Companies does not, in any material respect, conflict with, infringe upon,      
violate or interfere with or constitute an appropriation of any right, title,   
interest or good will of any other person and neither FPC nor any FPC Company   
has received notice of any claim or otherwise have Knowledge that any FPC       
Intellectual Property Right is invalid, conflicts with the asserted rights of   
any other person, or has not been used or enforced in a manner that would result
in its abandonment, cancellation, or unenforceability, except as would not,     
individually or in the aggregate, have a Material Adverse Effect on FPC.        

Section 4.25.  Year 2000 Matters.                                     
-----------------                       

        The FPC Companies have assessed their internal software and hardware
components (in both information technology and other applications) for problems 
relating to the Year 2000 issue (the inability of computers and microchips to   
recognize and perform properly date-sensitive functions involving certain dates 
prior to and after December 31, 1999).  Resolution of problems associated with  
the Year 2000 issue with respect to the software and hardware of the FPC        
Companies can be achieved so as to allow the conduct of the business of the FPC 
Companies as currently conducted, except for interruptions in service that may  
not reasonably be expected to have a Material Adverse Effect on FPC.  FPC       
reasonably believes, as of the date hereof, that the remaining cost of          
resolution of the problems discussed above will not exceed the amounts reflected
in FPC's Report on Form 10-Q for the period ended June 30, 1999.  While FPC has 
made diligent inquiry of supplier, vendor and other third party Year 2000 plans,
and, to the Knowledge of FPC, there are no problems arising from the Year 2000  
issue with                                                                      

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respect to third parties that may reasonably be expected to have a Material     
Adverse Effect on FPC, FPC makes no representation or warranty with respect to  
Year 2000 compliance by any supplier, vendor or other third party.              

Section 4.26.  Nuclear Operations.                                    
------------------                      

    The operations of FPC's and its Subsidiaries' nuclear generating
station are conducted in compliance with applicable health, safety, regulatory  
and other legal requirements except where the failure to so comply may not      
reasonably be expected to have, individually or in the aggregate, a Material    
Adverse Effect on FPC.  FPC's and its Subsidiaries' nuclear generating station  
maintains emergency plans designed to respond to an unplanned release therefrom 
of radioactive materials into the environment and liability insurance to the    
extent required by Law, and such further insurance (other than liability        
insurance) as is consistent with FPC's view of the risks inherent in the        
operation of a nuclear power facility.  FPC's and its Subsidiaries' plans for   
the decommissioning of its nuclear generating station and for the short-term    
storage of spent nuclear fuel conform with applicable regulatory or other legal 
requirements, and such plans have at all times been funded to the extent        
required by Law, which is consistent with FPC's reasonable budget projections   
for such plans.  Neither FPC nor any of its Subsidiaries has incurred any       
liability as a result of operating nuclear power facilities for third parties   
which liability, in the aggregate, may reasonably be expected to have a Material
Adverse Effect on FPC.                                                          

Section 4.27.  NRC Actions.                                           
-----------                             

       Neither FPC nor any of its Subsidiaries has been given notice of or
been charged with actual or potential violation of, or is the subject of any    
ongoing proceeding, inquiry, special                                            

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inspection, diagnostic evaluation or other NRC action (including rulemakings of 
general application that may effect the conduct of FPC's business regarding     
FPC's nuclear power facilities) of which FPC or any of its Subsidiaries has     
received notice under the Atomic Energy Act, any applicable regulations         
thereunder or the terms and conditions of any license granted to FPC or any of  
its Subsidiaries regarding FPC's or any of its Subsidiaries' nuclear power      
facilities operated by FPC or any of its Subsidiaries that would have, or may   
reasonably be expected to have, a Material Adverse Effect on FPC.               

Section 4.28.  Ownership of CP&L Common Stock.                        
------------------------------          

      Neither FPC nor any of the Subsidiaries of FPC or other affiliates
thereof owns any shares of CP&L Common Stock or Holdco Common Stock either      
beneficially or of record.                                                      

Section 4.29.  FPC Partnerships.                                      
----------------                        

          The representation and warranties set forth in Sections 4.4, 4.6, 4.8,
                                                        ------------  ---  ---
4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.23, 4.24 and 4.25,  are, to the      
---  ----  ----  ----  ----  ----  ----  ----  ----     ----                    
Knowledge of FPC, true and correct in all material respects with regard to the  
Partnerships of FPC; provided that for purposes of the representations and      
--------                              
warranties contained in Section 4.13, Partnerships of FPC shall include only    
------------                    
those Partnerships for which FPC is the tax matters partner.                    

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ARTICLE V 
COVENANTS 

Section 5.1.   Conduct of the Business of FPC.                        
------------------------------          

        (a) Except as otherwise expressly provided in this Agreement, during
the period from the date of this Agreement to the Effective Time, FPC shall, and
shall cause the Subsidiaries of FPC to, conduct their respective operations     
according to their ordinary and usual course of business and consistent with    
past practice, and use all their respective commercially reasonable efforts to  
preserve intact their respective business organizations, assets and goodwill, to
keep available the services of their officers and employees (subject to prudent 
management of workforce needs) and to maintain satisfactory relationships with  
suppliers, contractors, distributors, customers and others having material      
business relationships with them to the end that their goodwill and ongoing     
businesses will not be impaired in any material respect at the Effective Time.  
Without limiting the generality of the foregoing, and except as otherwise       
expressly provided in this Agreement, prior to the Effective Time, none of the  
FPC Companies will, without the prior written consent of CP&L:                  

            (i)    except as set forth in the FPC Disclosure Schedule, amend
its Articles or Certificate of Incorporation or bylaws, or, to the extent such  
action is within the control of an FPC Company, any agreements or other         
governing or organizational documents in respect of any Partnerships;           

            (ii)   authorize for issuance or issue, sell or deliver (whether
through the issuance or granting of options, warrants, commitments,             
subscriptions, rights to purchase or otherwise) any stock of any class or any   
other securities or interests, except pursuant to any                           

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plans, options, warrants or rights outstanding as of the date hereof to the     
extent set forth in the FPC Disclosure Schedule and to the extent consistent    
with past practice and, in the case of the FPC LTIP, to the extent permitted by 
Section 5.1(a)(xvii);                                                           
--------------------                                                            

    (iii)  (a) declare or pay any dividends on or make other
distributions in respect of any of their capital stock other than (i) to another
FPC Company or its wholly owned Subsidiaries, (ii) stated dividends on the      
preferred stock outstanding on the date hereof of any FPC Company, and (iii)    
regular quarterly dividends on FPC Common Stock with usual record and payment   
dates and not in excess of an annual rate of $2.18 per share, provided that FPC 
may increase the annualized amount of such dividends at FPC's regular Board of  
Directors' meetings in each of February, 2000 and February, 2001 at a rate of up
to 2% greater than the annualized amount in the preceding year; (b) split,      
combine or reclassify any of their capital stock or issue or authorize or       
propose the issuance of any other securities in respect of, in lieu of, or in   
substitution for, shares of its capital stock; or (c) redeem, repurchase or     
otherwise acquire any shares of their capital stock other than (i) redemptions, 
repurchases and other acquisitions of shares of capital stock in the ordinary   
course of business consistent with past practice including, without limitation, 
repurchases, redemptions and other acquisitions in connection with the          
administration of employee benefit and dividend reinvestment plans as in effect 
on the date hereof in the ordinary course of the operation of such plans, (ii)  
redemptions, purchases or acquisitions required by the respective terms of any  
series of FPC preferred stock, (iii) redemptions in connection with refunding an
equivalent principal amount of FPC Utility Subsidiary preferred stock at a lower
cost of funds, and (iv) intercompany acquisitions of capital stock;             

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       (iv)   (a)  redeem the FPC Rights, (b) amend the FPC Rights
Agreement (other than the amendment contemplated by Section 4.16 hereof) or (c) 
                                    ------------
except in connection with a Superior Proposal that would allow FPC to terminate 
this Agreement under Section 7.1, take any action that would allow any Person   
-----------                           
(as defined in the FPC Rights Agreement) other than CP&L or Holdco to become a  
Beneficial Owner (as defined in the FPC Rights Agreement) of 15% or more of the 
FPC Shares without causing a Distribution Date or a Triggering Event (as such   
terms are defined in the FPC Rights Agreement) to occur;                        

            (v)    except as set forth in the FPC Disclosure Schedule, incur
or assume any indebtedness for borrowed money or guarantee any such             
indebtedness, other than (a) in connection with the refinancing of an equivalent
principal amount of existing indebtedness or preferred stock either at their    
stated maturity or at a lower cost of funds, (b) indebtedness between FPC or any
of its Subsidiaries and another of its Subsidiaries, or (c) additional          
indebtedness in the ordinary course of business, consistent with past practice, 
under existing credit facilities;                                               

            (vi)   except in the ordinary course of business consistent with
past practice or as set forth in the FPC Disclosure Schedule, (a) enter into any
material operating lease or create any mortgages, liens, security interests or  
other encumbrances on the property of any of the FPC Companies, except with     
respect to indebtedness permitted pursuant to this Section 5.1, or (b) enter    
                                 -----------
into any material Contract, or alter, amend, modify, terminate, purchase any    
rights of any other party to, or exercise any option under, any material        
existing Contract, other than as required by this Agreement;                    

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      (vii)  adopt or amend (except as may be required by Law or
pursuant to an existing obligation or agreement described in the FPC Disclosure 
Schedule or as provided in this Agreement) any bonus, profit sharing,           
compensation, severance, termination, stock option, stock appreciation right,   
restricted stock, pension, retirement, deferred compensation, employment,       
severance or other employee benefit agreements, trusts, plans, funds or other   
arrangements for the benefit or welfare of any director, officer or employee, or
(except for normal increases in the ordinary course of business that are        
consistent with past practices and that, in the aggregate, do not result in a   
material increase in benefits or compensation expense) increase in any manner   
the compensation or fringe benefits of any director, officer or employee or pay 
any benefit not required by any existing plan or arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares of 
restricted stock or performance units) or enter into any Contract, agreement,   
commitment or arrangement to do any of the foregoing;                           

             (viii) acquire any stock or equity interests or any assets of any
other entity, or make any capital expenditures, except as follows: (a) to the   
extent such acquisitions or expenditures are within the amounts contained in the
FPC 1999 Profit Plan and 2000-2003 Financial Forecast (the "Forecast"), CP&L's  
consent will be required only if any expenditure or transaction, or series of   
related expenditures or transactions, involves expenditures of more than        
$50,000,000; and (b) to the extent such acquisitions or expenditures are beyond 
the amounts shown in the Forecast, but do not exceed the amounts shown under    
"Amendments to Forecast" and "Acquisition Expenditures" in Exhibit 5.1A to the  
FPC Disclosure Schedule, CP&L's                                                 

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consent will be required only if any expenditure or transaction, or series of   
related expenditures or transactions, involves expenditures of more than        
$10,000,000;                                                                    

            (ix)   except as set forth in the FPC Disclosure Schedule, sell,
lease or dispose of any material assets outside the ordinary course of business 
consistent with past practice;                                                  

       (x)    take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to          
accounting policies or practices except as may be required by changes in Law,   
rules, regulations or GAAP;                                                     

           (xi)   except as set forth in the FPC Disclosure Schedule, make
any material Tax election or settle or compromise any material federal, state,  
local or foreign income Tax liability for which adequate reserves have not been 
provided in FPC's June 30, 1999 financial statements;                           

           (xii)  except as set forth in the FPC Disclosure Schedule, make
any filing with any Governmental Authority to change rates on file, take any    
other action that could result in an increase or decrease of rates or change in 
standards of service or accounting or that could affect costs of service, or    
take any other action to enter into any agreement, commitment, arrangement or   
consent, whether written or oral, formal or informal with respect thereto;      

              (xiii) except as set forth in the FPC Disclosure Schedule, fail to
maintain insurance against risks and losses in accordance with past practice;   

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      (xiv)   fail to use all commercially reasonable efforts to
maintain in effect any existing FPC Permit;                                     

     (xv)    except for the payment of professional fees, pay,
discharge or satisfy any material claims, liabilities or obligations (absolute, 
accrued or unasserted, contingent or otherwise), other than the payment,        
discharge or satisfaction in the ordinary course of business of liabilities     
reflected or reserved against in FPC's June 30, 1999 financial statements or    
incurred in the ordinary course of business since the date thereof or as        
disclosed in the FPC Disclosure Schedule;                                       

   (xvi)   except as otherwise provided in this Agreement,
voluntarily engage in any activities which are reasonably expected to cause a   
change in status of FPC as an exempt holding company under PUHCA;               

      (xvii)  add new participants to the FPC LTIP or, except in
accordance with past practice (including adjustments relating to salary         
increases, target award percentages and share price changes) as set forth in the
provisions of the FPC Disclosure Schedule described in Section 4.12(j), change  
                                             ---------------
the method of allocating or the terms of awards under the LTIP in any manner    
that would increase the nominal FPC Shares pertaining thereto;                  

        (xviii) negotiate with union representatives of a collective
bargaining unit or enter into any collective bargaining with any labor union    
without affording representatives of CP&L the opportunity to review proposals   
and discuss negotiation strategy prior to as well as during such negotiations;  
or                                                                              

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             (xix)  agree in writing or otherwise to take any of the foregoing
actions.                                                                        

        (b) CP&L and FPC agree that, during the period from the date of this
Agreement to the Effective Time:  (i) FPC will confer and coordinate on a       
regular and frequent basis with one or more representatives of CP&L and Holdco  
to discuss the general status of FPC's ongoing operations, including labor      
relations, union negotiations and material contractual and regulatory matters;  
and (ii) each of CP&L and FPC will (x) promptly notify the other of any         
significant changes in its business, operations, properties, assets, condition  
(financial or other), prospects or results of operations, (y) advise the other  
of any change or event that has had or, may reasonably be expected to have a    
Material Adverse Effect and (z) promptly provide the other with copies of all   
filings made by it or any of its Subsidiaries with any state or federal court,  
administrative agency, commission or other Governmental Authority in connection 
with this Agreement and the transactions contemplated hereby.                   

Section 5.2.   Conduct of the Business of CP&L.                       
-------------------------------         

Prior to the Effective Time, except as set forth in the CP&L
Disclosure Schedule, CP&L and Holdco shall not, and shall not permit any of     
their Subsidiaries to, (a) acquire or agree to acquire by merging or            
consolidating with, or by purchasing a substantial portion of the assets of or  
equity in, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise    
acquire or agree to acquire any assets, (b) dispose or agree to dispose of a    
substantial portion of their assets, or (c) take any other action, including    
without limitation, entering into a new line of business, encumbering shares of 
their capital stock or making any changes in their accounting methods (except as
required by                                                                     

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changes in Law, rules, regulations or GAAP), unless the Board of Directors of   
CP&L or Holdco, as the case may be, concludes in good faith that any such action
set forth in subsections (a), (b) or (c) of this Section 5.2 may not reasonably 
                             -----------
be expected to impose any material delay in the obtaining of, or materially     
increase the risk of not obtaining, any material authorizations, consents,      
orders, declarations or approvals of any Governmental Authority necessary to    
consummate the Exchange. Except as otherwise expressly provided in this         
Agreement, prior to the Effective Time, neither CP&L nor Holdco will, without   
the prior written consent of FPC, engage in any material repurchase at a        
premium, recapitalization, restructuring or reorganization with respect to its  
respective capital stock, including, without limitation, the making of any      
extraordinary dividends or other extraordinary distributions.                   

Section 5.3.   No Solicitation.                                       
---------------                         

          Prior to the Effective Time, FPC agrees (a) that neither it nor any of
its Subsidiaries shall, and it shall direct and use all commercially reasonable 
efforts to cause its officers, directors, employees, agents and representatives 
(including, without limitation, any investment banker, attorney or accountant   
retained by it or any of its Subsidiaries or any of the foregoing) not to       
initiate, solicit or encourage, directly or indirectly, any inquiries or the    
making or implementation of any proposal or offer (including, without           
limitation, any proposal or offer to its shareholders) with respect to an       
Alternative Proposal (as defined below) or engage in any negotiations           
concerning, or provide any non-public information or data to, or have any       
discussions with, any person relating to an Alternative Proposal, or otherwise  
facilitate any effort or attempt to make or implement an Alternative Proposal;  
(b) that it will immediately cease and cause to be terminated any existing      
activities, discussions or negotiations with any parties                        

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conducted heretofore with respect to any of the foregoing, and it will take the 
necessary steps to inform the individuals or entities referred to above of the  
obligations undertaken in this Section 5.3; and (c) that it will notify CP&L    
-----------       
promptly if any such inquiries or proposals are received by, any such           
information is requested from, or any such negotiations or discussions are      
sought to be initiated or continued with, it; provided, however, that nothing   
                             --------  -------
contained in this Section 5.3 shall prohibit the Board of Directors of FPC from 
-----------                                 
(i) prior to the FPC Special Meeting, furnishing information to or entering into
discussions or negotiations with, any person or entity that makes an unsolicited
bona fide proposal or offer to the shareholders of FPC that constitutes an      
---- ----                                                                       
Alternative Proposal, if, and only to the extent that (a) the Board of Directors
of FPC determines in good faith upon the advice of outside counsel that such    
action is required for the Board of Directors to comply with its fiduciary      
duties to shareholders imposed by Law, (b) prior to furnishing such information 
to, or entering into discussions or negotiations with, such person or entity,   
FPC provides written notice to CP&L of the identity of the person or entity     
making the Alternative Proposal and that it intends to furnish information to,  
or intends to enter into discussions or negotiations with, such person or       
entity, (c) FPC enters into a confidentiality agreement with such person or     
entity on terms in the aggregate not more favorable to such person or entity    
than the terms of the Confidentiality Agreement, (d) FPC keeps CP&L informed on 
a timely basis of the status of any such discussions or negotiations and all    
material terms and conditions thereof and promptly provides CP&L with copies of 
any written inquiries or proposals relating thereto, and (e) in the event that  
the Board of Directors of FPC determines to accept any such Alternative Proposal
(in accordance with subclause (i)(a) above), FPC provides CP&L with at least    
five (5) days' prior written notice thereof, during which time CP&L may make,   
and in such event, FPC shall in good faith consider, a counterproposal to such  
Alternative Proposal; and                                                       

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(ii) to the extent applicable, complying with Rule 14e-2 promulgated under the  
Exchange Act with regard to an Alternative Proposal. Nothing in this Section 5.3
                                                                     -----------
shall (x) permit FPC to terminate this Agreement (except as specifically        
provided in Article VII hereof), (y) permit FPC to enter into any agreement with
-----------                                             
respect to an Alternative Proposal during the term of this Agreement (it being  
agreed that during the term of this Agreement, FPC shall not enter into any     
agreement with any person that provides for, or in any way facilitates, an      
Alternative Proposal other than the confidentiality agreement referred to in    
subclause (i)(c) above), or (z) affect any other obligation of FPC under this   
Agreement. "Alternative Proposal" means any merger, acquisition, consolidation, 
reorganization, share exchange, tender offer, exchange offer or similar         
transaction involving FPC or any of FPC's Significant Subsidiaries, or any      
proposal or offer to acquire in any manner, directly or indirectly, a           
substantial equity interest in or a substantial portion of the assets of FPC or 
any of FPC's Significant Subsidiaries.                                          

Section 5.4.   The Registration Statement; Listing.                   
-----------------------------------     

  (a) FPC and Holdco shall, as soon as practicable following the
execution of this Agreement, prepare, and FPC shall file with the SEC, a draft  
of the Proxy Statement/Prospectus (in a form mutually agreeable to FPC and      
Holdco).  FPC and Holdco shall cooperate to respond promptly to any comments    
made by the SEC with respect thereto.                                           

     (b) Upon resolution of any SEC comments with respect to the draft
Proxy Statement/Prospectus, or at such other time as may be mutually determined 
by the parties hereto, Holdco shall file the Registration Statement (including  
the then-current draft of the Proxy Statement/Prospectus) with the SEC, and     
shall:                                                                          

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       (i)    after consultation with FPC, respond promptly to any
comments made by the SEC with respect thereto; provided, however, that Holdco   
                               --------  -------
will not file any amendment or supplement to the Registration Statement without 
first furnishing to FPC a copy thereof for its review and will not file any such
proposed amendment or supplement to which FPC reasonably and promptly objects;  

       (ii)   use all commercially reasonable efforts to cause the
Registration Statement to become effective under the Securities Act as soon as  
practicable, and FPC shall cause the Proxy Statement/Prospectus to be mailed to 
its shareholders as promptly as practicable after effectiveness of the          
Registration Statement;                                                         

        (iii)  cause the registration or qualification of the Holdco
Common Stock to be issued in exchange for shares of FPC Common Stock in         
accordance with the Exchange under the state securities or "blue sky" laws of   
each state of residence of a record holder of FPC Common Stock as reflected in  
its stock transfer ledger;                                                      

          (iv)   promptly advise FPC (A) when the Registration Statement
becomes effective, (B) when, prior to the Effective Time, any amendment to the  
Registration Statement shall be filed or become effective, (C) of the issuance  
by the SEC of any stop order suspending the effectiveness of the Registration   
Statement or the institution or threatening of any proceeding for that purpose  
and (D) of the receipt by Holdco of any notification with respect to the        
suspension of the registration or qualification of Holdco Common Stock for sale 
in any jurisdiction or the institution or threatening of any proceeding for that
purpose;                                                                        

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         (v)    use all commercially reasonable efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as possible   
the withdrawal thereof; and                                                     

              (vi)   use all commercially reasonable efforts to cause the shares
of Holdco Common Stock to be issued upon the exchange of shares of FPC Common   
Stock in accordance with the Exchange to be approved for listing on the NYSE.   

         If, at any time when the Proxy Statement/Prospectus is required to be
delivered under the Securities Act or the Exchange Act, any event occurs as a   
result of which the Proxy Statement/Prospectus as then amended or supplemented  
would include any untrue statement of a material fact or omit to state any      
material fact necessary to make the statements contained therein, in light of   
the circumstances under which they were made, not misleading, or if it shall be 
necessary to amend the Registration Statement or supplement the Proxy           
Statement/Prospectus to comply with the Securities Act or the Exchange Act or   
the respective rules thereunder, FPC and Holdco will cooperate to prepare and   
file with the SEC, subject to clause (a) of this Section 5.4, an amendment or   
                             -----------
supplement that will correct such statement or omission or effect such          
compliance.                                                                     

Section 5.5.   Special Meetings.                                      
----------------                        

     (a) FPC shall (i) call the FPC Special Meeting to be held for the
purpose of voting upon the adoption of this Agreement, (ii) through its Board of
Directors, recommend to the holders of FPC Common Stock the adoption of this    
Agreement and not rescind such recommendation (provided that nothing contained  
                      --------
in this Section 5.5 shall require the FPC Board of Directors to make or not     
-----------                                                     
rescind such recommendation if such Board determines in good faith,             

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based upon the advice of counsel and such other matters as such Board in good   
faith deems relevant, that the continuation of such recommendation, would result
in a breach of its fiduciary duties), (iii) use all commercially reasonable     
efforts to have the holders of FPC Common Stock adopt this Agreement and (iv)   
use all commercially reasonable efforts to hold such meeting as soon as         
practicable after the date upon which the Registration Statement becomes        
effective. The FPC Special Meeting shall be held on such date, as soon as       
practicable after the date upon which the Registration Statement becomes        
effective, as the parties shall mutually determine.                             

        (b) Holdco shall (i) call the Holdco Special Meeting for the purpose
of voting upon the issuance of Holdco Common Stock to the holders of FPC Common 
Stock pursuant to the Exchange, and (ii) through its Board of Directors         
recommend to the holders of Holdco Common Stock the issuance of such shares;    
provided that nothing contained in this Section 5.5 shall require the Holdco    
--------                                -----------                             
Board of Directors to make or not rescind such recommendation if such Board     
determines in good faith, based upon the advice of counsel and such other       
matters as such Board in good faith deems relevant, that the continuation of    
such recommendation would result in a breach of its fiduciary duties.           

Section 5.6.   Access to Information; Confidentiality Agreement.      
        ------------------------------------------------

          (a) To the extent permitted by Law and upon reasonable notice, between
the date of this Agreement and the Effective Time, each party shall afford to   
the authorized representatives of the other party reasonable access during      
normal business hours to all facilities and to all books and records, and will  
cause their respective officers and employees and officers and employees of     
their respective Subsidiaries to furnish such financial and operating data and  

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other information with respect to their businesses and properties as may from   
time to time reasonably be requested.  Subject to Section 5.8 hereof, all such  
                               -----------
information shall be kept confidential in accordance with the Confidentiality   
Agreement.                                                                      

(b) Notwithstanding the execution of this Agreement, the    
Confidentiality Agreement shall remain in full force and effect through the     
Effective Time, at which time the Confidentiality Agreement shall terminate and 
be of no further force and effect.  Each party hereto hereby waives the         
provisions of the Confidentiality Agreement as and to the extent necessary to   
permit the solicitation of votes of the shareholders of FPC pursuant to the     
Proxy Statement/Prospectus and to permit consummation of the transactions       
contemplated hereby.  Each party further acknowledges that the Confidentiality  
Agreement shall survive any termination of this Agreement pursuant to Section   
                                                                   -------
7.1 hereof.                                                                     
---                                                                             

Section 5.7.   Approvals.                                             
---------                               

     (a) FPC, CP&L and Holdco shall file or cause to be filed with the
Federal Trade Commission and the Department of Justice any notifications        
required to be filed by them under the HSR Act and the rules and regulations    
promulgated thereunder with respect to the transactions contemplated hereby.    
FPC, CP&L and Holdco will use all commercially reasonable efforts to make such  
filings promptly and to respond on a timely basis to any requests for additional
information made by either of such agencies.                                    

     (b) FPC, CP&L and Holdco shall cooperate and use all commercially
reasonable efforts to promptly prepare and file all necessary documentation, to 
effect all necessary applications, notices, petitions, filings and other        
documents, and to use all                                                       

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commercially reasonable efforts to obtain (and will cooperate with each other in
obtaining) any consent, acquiescence, authorization, order or approval of, or   
any exemption or nonopposition by, any Governmental Authority required to be    
obtained or made by FPC, CP&L or Holdco in connection with the Exchange or the  
taking of any action contemplated thereby or by this Agreement. CP&L shall have 
the right to review and approve in advance all characterizations of the         
information relating to CP&L on the one hand and FPC shall have the right to    
review and approve in advance all characterizations of the information relating 
to FPC, on the other hand, in either case, which appear in any filing made in   
connection with the transactions contemplated by this Agreement, such approvals 
not to be unreasonably withheld. CP&L and FPC shall each consult with the other 
with respect to the obtaining of all such necessary approvals of Governmental   
Authorities and shall keep each other informed of the status thereof.           

      (c) FPC, CP&L and Holdco each will use all commercially reasonable
efforts to obtain consents of all other third parties necessary to the          
consummation of the transactions contemplated by this Agreement.  FPC shall     
promptly notify CP&L and Holdco of any failure or anticipated failure to obtain 
any such consents and, if requested by CP&L and Holdco, shall provide copies of 
all such consents obtained by FPC to CP&L and Holdco.                           

Section 5.8.   Public Announcements.                                  
--------------------                    

         The parties hereto have agreed upon the text of a joint press release
announcing, among other things, the execution of this Agreement, which joint    
press release shall be disseminated promptly following the execution hereof.    
FPC, CP&L and Holdco will consult with each other before issuing any additional 
press release or otherwise making any additional                                

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public statement with respect to this Agreement, the Exchange or the            
transactions contemplated herein and shall not issue any such press release or  
make any such public statement prior to such consultation or as to which the    
other party promptly and reasonably objects, except as may be required by Law or
by obligations pursuant to any listing agreement with any national securities   
exchange or inter-dealer quotation system, in which case the party proposing to 
issue such press release or make such public announcement shall use all         
commercially reasonable efforts to consult in good faith with the other party   
before issuing any such press release or making any such public announcements.  

Section 5.9.   Letter of FPC's Accountants.                           
---------------------------             

       FPC shall use all commercially reasonable efforts to obtain two (2)
letters of KPMG, LLP dated as of a date within two (2) business days before the 
date on which the Registration Statement shall become effective and as of a date
within two (2) business days before the Closing Date, and addressed to FPC, CP&L
and Holdco, in form and substance reasonably satisfactory to CP&L and Holdco and
FPC and customary in scope and substance to the "cold comfort" letters          
customarily delivered by independent public accountants in connection with      
registration statements and proxy statements similar to the Registration        
Statement and the Proxy Statement/Prospectus and transactions such as those     
contemplated by the Agreement.                                                  

Section 5.10.  Letter of CP&L's Accountants.                          
----------------------------            

    CP&L and Holdco shall use all commercially reasonable efforts to
obtain two (2) letters of Deloitte & Touche, LLP, dated as of a date within two 
(2)                                                                             

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business days before the date on which the Registration Statement shall become  
effective and as of a date within two (2) business days before the Closing Date,
and addressed to CP&L, Holdco and FPC, in form and substance reasonably         
satisfactory to FPC, CP&L and Holdco and customary in scope and substance to the
"cold comfort" letters customarily delivered by independent public accountants  
in connection with registration statements and proxy statements similar to the  
Registration Statement and the Proxy Statement/Prospectus and transactions such 
as those contemplated by the Agreement.                                         

Section 5.11.  Indemnification; Insurance.                            
--------------------------              

      (a) Except as may be limited by applicable Law, from and after the
Effective Time, CP&L and Holdco shall cause FPC to maintain all rights of       
indemnification existing in favor of the directors and officers of FPC on terms 
no less favorable than those provided in the Certificate of Incorporation and   
bylaws of FPC on the date of this Agreement with respect to matters occurring   
prior to the Effective Time.                                                    

          (b) CP&L and Holdco shall cause to be maintained in effect for six (6)
years from the Effective Time the current policies for directors' and officers' 
liability insurance maintained by FPC (provided that CP&L and Holdco may        
      --------
substitute therefor policies of at least the same coverage containing terms and 
conditions that are not less advantageous) with respect to matters occurring    
prior to the Effective Time, to the extent such insurance is available to CP&L  
or Holdco in the market; provided that if such insurance cannot be so maintained
--------                      
or obtained, CP&L shall maintain or obtain as much of such insurance as can be  
so maintained or obtained at a cost equal to twice the current premium rate of  
CP&L's directors' and officers' liability insurance.                            

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   (c) In the event Holdco or any of its successors or assigns (i)
consolidates with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets 
to any person or entity, then, and in each such case, proper provision shall be 
made so that the successors and assigns of Holdco shall assume the obligations  
set forth in this Section 5.11.                                                 
------------                                

      (d) The provisions of this Section 5.11 are intended to be for the
      ------------
benefit of, and shall be enforceable by, each indemnified party, his or her     
heirs and his or her representatives and (ii) are in addition to, and not in    
substitution for, any other rights to indemnification that such person may have 
by contract or otherwise.                                                       

Section 5.12.  Affiliate Agreements.                                  
--------------------                    

        FPC will use all commercially reasonable efforts to ensure that each
person who is an "affiliate" of FPC within the meaning of Rule 145 under the    
Securities Act will enter into an agreement in the form attached hereto as      
Exhibit B as soon as practical after the date hereof.                           
---------                                                                       

Section 5.13.  Formation of Holdco.                                   
-------------------                     

     CP&L and Holdco shall take all commercially reasonably efforts to
cause the CP&L Exchange to be completed as soon as reasonably practicable       
following execution of this Agreement.  Without limiting the foregoing, CP&L and
Holdco shall:                                                                   

                   (i)    cause the CP&L Exchange Registration Statement to be
declared effective by the SEC as promptly as practicable;                       

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                    (ii)   cause the registration or qualification of the Holdco
Common Stock to be issued in exchange for shares of CP&L Common Stock in        
accordance with the CP&L Exchange under the state securities or "blue sky" laws 
of each state of residence of a record holder of CP&L Common Stock as reflected 
in its stock transfer ledger;                                                   

             (iii)  promptly advise FPC (A) when the CP&L Exchange
Registration Statement becomes effective, (B) when any amendment to the CP&L    
Exchange Registration Statement shall be filed or become effective, (C) of the  
issuance by the SEC of any stop order suspending the effectiveness of the CP&L  
Exchange Registration Statement or the institution or threatening of any        
proceeding for that purpose and (D) of the receipt by Holdco of any notification
with respect to the suspension of the registration or qualification of Holdco   
Common Stock for sale in any jurisdiction or the institution or threatening of  
any proceeding for that purpose;                                                

                 (iv)   use all commercially reasonable efforts to prevent
the issuance of any such stop order and, if issued, obtain as soon as possible  
the withdrawal thereof;                                                         

                   (v)    use all commercially reasonable efforts to cause the
shares of Holdco Common Stock to be issued upon the exchange of shares of CP&L  
Common Stock in accordance with the CP&L Exchange to be approved for listing on 
the NYSE;                                                                       

             (vi)   call the CP&L Exchange Special Meeting for the
purpose of voting upon the CP&L Exchange Agreement, and through its Board of    
Directors recommend to the holders of the CP&L Common Stock its approval;       

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      (vii)  promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to use all commercially reasonably efforts to obtain   
any consent, acquiescence, authorization, order or approval of, or any exemption
or nonopposition by, any Governmental Authority required to be obtained or made 
by CP&L or Holdco in connection with the CP&L Exchange; and                     

                    (viii) obtain consents of all third parties necessary to the
consummation of the transactions contemplated by the CP&L Exchange Agreement.   

Section 5.14.  Directors.                                             
---------                               

         Holdco's Board of Directors will take such action as may be necessary
to cause the number of directors comprising the full Board of Directors of      
Holdco at the Effective Time to be fourteen (14), ten (10) of whom shall be     
designated by CP&L prior to the Effective Time from its existing Board of       
Directors (each, a "CP&L Designee") and four (4) of whom shall be designated by 
FPC, and acceptable to CP&L, prior to the Effective Time from its then existing 
Board of Directors (each, a "FPC Designee").  The initial designation of such   
directors among the three (3) classes of the Directors of Holdco shall be       
accomplished in such a manner so that, to the extent possible, there are a      
proportionate number of FPC Designees and CP&L Designees in each class.         

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Section 5.15.  Regional Headquarters.                                 
---------------------                   

          Following the Effective Time and to the extent consistent with prudent
fiscal planning, Holdco shall maintain a regional headquarters for the          
operations of FPC Utility Subsidiary in St. Petersburg, Florida.                

Section 5.16.  Dividends.                                             
---------                               

       Prior to the Closing Date, each of the parties agrees to coordinate
the timing of dividend declaration, record and payment dates and the Closing    
Date so as not to adversely affect either party's shareholders because of such  
timing.                                                                         

Section 5.17.  Employee Benefit Matters.                              
------------------------                

At the Effective Time, Holdco shall cause FPC to perform its
obligations under the then outstanding awards under the FPC Long-Term Incentive 
Plan (the "FPC LTIP") and, subject to the consent of the individual plan        
participant, pay such obligations in the cash amount of $54.00 for each nominal 
share of FPC Common Stock subject to such awards.  After the Effective Time,    
Holdco shall cause the FPC Companies to honor their obligations under all       
employment, severance, consulting, retention and change in control agreements or
arrangements and all FPC Benefit Plans as in effect on the date hereof, as set  
forth on the FPC Disclosure Schedule or that are entered into prior to the      
Closing Date in accordance with the provisions of Section 5.1(a) hereof;        
                                  --------------
provided, however, that this Section 5.17 is not intended to prevent Holdco or  
--------  -------            ------------                                       
the FPC Companies from exercising their rights with respect to such agreements  
and arrangements and all FPC Benefit Plans in accordance with their terms,      
including but not limited                                                       

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to, the right to alter, terminate or otherwise amend such agreements and        
arrangements and FPC Benefit Plans.                                             

Section 5.18.  Certain Stock Plans.                                   
-------------------                     

       FPC agrees, as of the earliest practicable date, to cause shares of
FPC Common Stock issued pursuant to the FPC Plus Stock Plan and the FPC Savings 
Incentive Plan identified in the FPC Disclosure Schedule to be shares acquired  
in the open market and not newly issued shares.                                 

ARTICLE VI  
CONDITIONS PRECEDENT TO CONSUMMATION OF THE EXCHANGE  

  Section 6.1.   Conditions Precedent to Each Party's Obligation to Effect
                 ---------------------------------------------------------
the Exchange.                                                                   
------------                                                                    

         The respective obligation of each party to consummate the Exchange is
subject to the satisfaction at or prior to the Effective Time of the following  
conditions precedent:                                                           

  (a) this Agreement shall have been approved and adopted by the
affirmative vote of the shareholders of FPC by the requisite vote in accordance 
with the FBCA and the rules of the NYSE;                                        

         (b) the CP&L Exchange shall have been consummated and the issuance of
Holdco Common Stock in the Exchange shall have been approved by the affirmative 
vote of the shareholders of Holdco by the requisite vote in accordance with the 
rules of the NYSE;                                                              

        (c) no order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or Governmental  
Authority and                                                                   

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remain in effect which prohibits the consummation of the Exchange; provided,    
                                                              --------
however, that the parties hereto shall use all commercially reasonable efforts  
-------                                                                         
to have any such order, decree or injunction vacated or reversed;               

 (d) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order         
suspending such effectiveness shall have been issued and remain in effect;      

       (e) any waiting period applicable to the Exchange under the HSR Act
shall have terminated or expired;                                               

       (f) all consents, authorizations, orders, permits and approvals for
(or registrations, declarations or filings with) any Governmental Authority     
required in connection with the execution, delivery and performance of this     
Agreement and the transactions contemplated hereby shall have been obtained or  
made, except for filings in connection with the Exchange and any other documents
required to be filed after the Effective Time and except where the failure to   
have obtained or made any such consent, authorization, order, approval, filing  
or registration may not reasonably be expected to have a Material Adverse Effect
on CP&L or FPC following the Effective Time; and                                

         (g) the shares of Holdco Common Stock required to be issued hereunder
shall have been approved for listing on the NYSE subject to official notice of  
issuance.                                                                       

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Section 6.2.   Conditions Precedent to Obligations of FPC.            
  ------------------------------------------

        The obligations of FPC to consummate the Exchange are subject to the
satisfaction or waiver at or prior to the Effective Time of the following       
conditions precedent:                                                           

         (a) there shall have occurred no Material Adverse Effect with respect
to CP&L and there shall exist no fact or circumstance that may have, or may be  
reasonably be expected to result in a Material Adverse Effect with respect to   
CP&L;                                                                           

          (b) the representations and warranties of CP&L and Holdco contained in
Article III shall be true and correct when made and at and as of the Effective  
-----------                                                                     
Time with the same force and effect as if those representations and warranties  
had been made at and as of such time (except to the extent such representations 
and warranties speak as of a specified earlier date, in which case, such        
representations and warranties shall be true and correct as of such earlier     
date), except for such failures of representations and warranties to be true and
correct (without giving effect to any materiality qualification or standard     
contained in any such representations and warranties) which, in the aggregate,  
may not reasonably be expected to have a Material Adverse Effect with respect to
CP&L;                                                                           

       (c) CP&L and Holdco shall, in all material respects, have performed
all obligations and complied with all covenants necessary to be performed or    
complied with by it on or before the Effective Time;                            

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 (d) FPC shall have received a certificate of the President or
Executive Vice President of Holdco, in form satisfactory to counsel for FPC,    
certifying fulfillment of the matters referred to in paragraphs (a) through (c) 
of this Section 6.2; and                                                        
-----------                                                     

        (e) the Final Stock Price shall not be less than $30.00 (as adjusted
to reflect any transaction that would require an adjustment of the Exchange     
Consideration pursuant to Section 4.3(e) of the FPC Plan of Exchange).          

Section 6.3.   Conditions Precedent to Obligations of CP&L and Holdco.
              ------------------------------------------------------

     The obligations of CP&L and Holdco to consummate the Exchange are
subject to the satisfaction or waiver at or prior to the Effective Time of the  
following conditions precedent:                                                 

         (a) there shall have occurred no Material Adverse Effect with respect
to FPC and there shall exist no fact or circumstance that may or may reasonably 
be expected to result in a Material Adverse Effect with respect to FPC;         

         (b) the representations and warranties of FPC contained in Article IV
                                                                    ----------
shall be true and correct when made and at and as of the Effective Time with the
same force and effect as if those representations and warranties had been made  
at and as of such time (except to the extent such representations and warranties
speak as of a specified earlier date, in which case, such representations and   
warranties shall be true and correct as of such earlier date), except for such  
failures of representations and warranties to be true and correct (without      
giving effect to any materiality qualification or standard contained in any such
representations and warranties) which,                                          

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in the aggregate, may not reasonably be expected to have a Material Adverse     
Effect with respect to FPC;                                                     

(c) FPC shall, in all material respects, have performed all 
obligations and complied with all covenants necessary to be performed or        
complied with by it on or before the Effective Time;                            

    (d) Holdco shall have received a certificate of the President or
Senior Vice President of FPC, in form satisfactory to counsel for Holdco,       
certifying fulfillment of the matters referred to in paragraphs (a) through (c) 
of this Section 6.3; and                                                        
-----------                                                     

    (e) the consents, authorizations, orders, permits, and approvals
described in Section 6.1(f) shall contain no terms or conditions that may       
--------------                                        
reasonably be expected to have a Material Adverse Effect on CP&L or FPC.        

ARTICLE VII 
TERMINATION; AMENDMENT; WAIVER  

Section 7.1.   Termination.                                           
-----------                             

     This Agreement may be terminated by FPC or CP&L and Holdco if the
requisite shareholder approvals specified in Section 6.1(a) or (b) are not      
                               ---------------------
obtained at the meetings called therefor or at any adjournment thereof.  This   
Agreement may also be terminated and the Exchange contemplated hereby may be    
abandoned at any time prior to the Effective Time whether or not approval       
thereof by the shareholders of FPC and Holdco has been obtained:                

(a) by mutual written consent of FPC, CP&L and Holdco;      

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       (b) by FPC or CP&L and Holdco, if the Effective Time shall not have
occurred on or before December 31, 2000 (the "Initial Termination Date");       
provided that if, on the Initial Termination Date the conditions set forth in   
--------                                                                        
Section 6.1(f) have not been satisfied but all other conditions in Article VI   
--------------                                                     ----------   
either have been satisfied or waived or are capable of satisfaction, then such  
date shall be June 30, 2001; provided further that the right to terminate this  
-------- -------      
Agreement under this Section 7.1(b) shall not be available to any party whose   
--------------                        
failure to fulfill any obligation under this Agreement has been the cause of or 
has resulted in the failure of the Effective Time to occur on or before such    
date;                                                                           

      (c) by FPC if (i) there has been a breach by CP&L or Holdco of any
representation or warranty set forth in this Agreement, which breach,           
individually or in the aggregate, has had or may reasonably be expected to have 
a Material Adverse Effect on CP&L, and such breach has not been cured within    
twenty (20) business days following receipt by the breaching party of written   
notice of such breach; or (ii) there has been a breach by CP&L or Holdco of any 
covenant or agreement set forth in this Agreement, which breach has not been    
cured within twenty (20) business days following receipt by the breaching party 
of written notice of such breach;                                               

       (d) by CP&L and Holdco if (i) there has been a breach by FPC of any
representation or warranty set forth in this Agreement, which breach,           
individually or in the aggregate, has had or may reasonably be expected to have 
a Material Adverse Effect on FPC, and such breach  has not been cured within    
twenty (20) business days following receipt by the breaching party of written   
notice of such breach; (ii) there has been a breach by FPC of any covenant or   
agreement set forth in this Agreement, which breach has not been cured within   

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twenty (20) business days following receipt by the breaching party of written   
notice of such breach; or (iii) the Board of Directors of FPC should fail to    
recommend to its shareholders approval of the transactions contemplated by this 
Agreement or such recommendation shall have been made and subsequently          
withdrawn;                                                                      

   (e) by FPC if, prior to the FPC Special Meeting, a corporation,
partnership, person or other entity or group shall have made a bona fide        
                                                       ---- ----
proposal with respect to the acquisition of all of FPC's outstanding capital    
stock, or all or substantially all of FPC's assets, that the Board of Directors 
of FPC believes, in good faith after consultation with its financial advisors,  
to be superior, from a financial point of view, to the shareholders of FPC than 
the proposal set forth in this Agreement, and to be more favorable generally to 
the shareholders of FPC (taking into account all financial and strategic        
considerations, including relevant legal, financial, regulatory and other       
aspects of such proposal, and the conditions, prospects and time required for   
completion of such proposal) and the Board of Directors of FPC has determined in
good faith upon the advice of outside counsel that it is required to recommend  
such proposal to FPC's shareholders to comply with its fiduciary duty to its    
shareholders imposed by Law (a "Superior Proposal"); provided that CP&L or      
                                  --------
Holdco does not make, within five (5) business days of receiving notice of such 
third party proposal, an offer that the Board of Directors of FPC believes, in  
good faith after consultation with its financial advisors, is at least as       
favorable to FPC's shareholders as such Superior Proposal (taking into account  
all financial and strategic considerations, including relevant legal, financial,
regulatory and other  aspects of such proposal, and the conditions, prospects   
and time required for completion of such proposal); or                          

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        (f) by FPC or CP&L or Holdco, if any court of competent jurisdiction
or other Governmental Authority shall have issued an order, decree or ruling or 
taken any other action restraining, enjoining or otherwise prohibiting the      
Exchange and such order, decree, ruling or other action shall have become final 
and nonappealable.                                                              

Section 7.2.   Effect of Termination.                                 
---------------------                   

If this Agreement is so terminated and the Exchange is not  
consummated, this Agreement shall forthwith become void and have no effect,     
without any liability on the part of either party or its directors, officers or 
shareholders, other than the provisions of Section 5.6(b), this Section 7.2,    
                                      --------------       -----------
Section 7.3 and Section 8.10.                                                   
-----------     ------------                                                    

Section 7.3.   Termination Fee.                                       
---------------                         

          (a) If this Agreement is terminated (i) by CP&L and Holdco pursuant to
Section 7.1(b) hereof, and there shall have been an Alternative Proposal that at
--------------                                                                  
such time shall not have been (y) rejected by FPC and its Board of Directors and
(z) withdrawn by the party making such Alternative Proposal; (ii) by FPC or CP&L
and Holdco pursuant to the first sentence of Section 7.1 hereof because the FPC 
                     -----------
shareholder approval specified in Section 6.1(a) is not obtained at the meeting 
  --------------
called therefor or at any adjournment thereof; provided that at the time of the 
                      --------
FPC Special Meeting there shall have been an Alternative Proposal that at such  
time shall not have been (y) rejected by FPC and its Board of Directors and (z) 
withdrawn by the party making such Alternative Proposal; (iii) by CP&L and      
Holdco pursuant to Section 7.1(d)(ii) and the breach by FPC giving rise to such 
------------------                        
right of termination was a breach of Section 5.3 hereof (except for a breach    
     -----------
that was both inadvertent and was cured as promptly as commercially             

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practicable after FPC became aware of such breach); (iv) by CP&L and Holdco     
pursuant to clause (iii) of Section 7.1(d); or (v) by FPC pursuant to Section   
                         --------------                            -------
7.1(e) hereof, then FPC shall promptly (and in any event within two (2) days of 
------                                                                          
receipt by FPC of written notice from Holdco) pay to Holdco (by wire transfer of
immediately available funds to an account designated by Holdco) a termination   
fee of $150,000,000.00, together with an amount equal to all documented out-of- 
pocket expenses and fees (including, without limitation, fees and expenses      
payable to all legal, accounting, financial, public relations and other         
professional advisors arising out of, in connection with or related to the      
Exchange or the other transactions contemplated by this Agreement) not to exceed
$25,000,000.00 in the aggregate ("Out-of-Pocket Expenses") incurred by CP&L and 
Holdco or on their behalf.                                                      

      (b) If this Agreement is terminated (i) by FPC pursuant to Section
                                                                 -------
7.1(c), or (ii) by CP&L and Holdco pursuant to either clause (i) or (ii) of     
------                                                                          
Section 7.1(d) and the breach by FPC giving rise to such right of termination   
--------------                                                                  
was not a breach described in Section 7.3(a)(iii) hereof, then, (y) in the event
------------------- 
of a termination pursuant to Section 7.1(d)(i) or Section 7.1(d)(ii), FPC shall 
                 -----------------    ------------------
promptly (but not later than five (5) business days after notice of termination)
pay to CP&L or Holdco their Out-of-Pocket Expenses or (x) in the event of a     
termination pursuant to Section 7.1(c), then CP&L and Holdco shall promptly (but
--------------                  
not later than five (5) business days after notice of termination) pay to FPC   
its Out-of-Pocket Expenses; provided that in either case, if this Agreement is  
--------                
terminated as a result of a willful breach of a representation, warranty,       
covenant or agreement by the other party, the non-breaching party may pursue any
remedies available to it at law or in equity and shall be entitled to recover   
any additional amounts pursuant thereto.                                        

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       (c) The parties agree that the agreements contained in this Section
                                                                   -------
7.3 are an integral part of the transactions contemplated by this Agreement and 
---                                                                             
constitute liquidated damages and not a penalty.  If one party fails to promptly
pay to the other any fees due hereunder, such defaulting party shall pay the    
costs and expenses (including legal fees and expenses) in connection with any   
action, including the filing of any lawsuit or other legal action, taken to     
collect payment, together with interest on the amount of any unpaid fee at the  
publicly announced prime rate of Citibank, N.A. in effect from time to time from
the date such fee was required to be paid.                                      

          (d) This Section 7.3 shall be the sole remedy of the parties hereto in
-----------                               
the event of any termination of this Agreement.                                 

Section 7.4.   Amendment.                                             
---------                               

         This Agreement may be amended by action taken by both CP&L and FPC at
any time before or after approval of the transactions contemplated herein by the
shareholders of FPC but, after any such approval, no amendment shall be made    
that would have any of the effects specified in FBCA Section 607.1103(8) without
the approval of the holders of a majority of the outstanding shares of FPC      
Common Stock.  This Agreement may not be amended except by an instrument in     
writing signed on behalf of all of the parties hereto.                          

Section 7.5.   Extension; Waiver.                                     
-----------------                       

     At any time prior to the Effective Time, any party hereto may (i)
extend the time for the performance of any of the obligations or other acts of  
the other parties hereto, (ii) waive                                            

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any inaccuracies in the representations and warranties contained herein or in   
any document, certificate or writing delivered pursuant hereto by any other     
party hereto or (iii) waive compliance with any of the agreements or conditions 
contained herein by any other party hereto. Any agreement on the part of any    
party to any such extension or waiver shall be valid only if set forth in an    
instrument in writing signed on behalf of such party.                           

ARTICLE VIII  
MISCELLANEOUS 

Section 8.1.   Survival of Representations, Warranties and Covenants. 
             -----------------------------------------------------

       The representations, warranties and covenants made herein shall not
survive beyond the Effective Time, except for the covenants contained in Article
                                                                         -------
II and in Sections 5.11, 5.14, and 5.17.                                        
--        -------------  ----      ----                                         

Section 8.2.   Disclosure Schedules.                                  
--------------------                    

  From time to time prior to the Closing Date, the parties shall
promptly supplement or amend their respective Disclosure Schedules with respect 
to any matter, condition or occurrence arising after the date hereof through the
Closing Date which, if existing or occurring on the date of this Agreement,     
would have been required to be listed or described in such Disclosure Schedules.
No supplement or amendment of such Disclosure Schedules, and no disclosure      
contained in FPC SEC Reports or CP&L SEC Reports filed after the date hereof    
shall be deemed to cure any breach of any representation or warranty made in    
this Agreement or have any effect for the purpose of determining satisfaction of
the conditions set forth in Article VI hereof.                                  
----------              

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Section 8.3.   Entire Agreement; Assignment.                          
----------------------------            

          This Agreement, the FPC Plan of Exchange, the letter agreement between
CP&L and FPC dated August 19, 1999, and the Confidentiality Agreement (a)       
constitute the entire agreement between the parties with respect to the subject 
matter hereof and this Agreement supersedes, except as set forth in Section     
                                                               -------
5.6(b) hereof, all other prior agreements and understandings, both written and  
------                                                                          
oral, between the parties or any of them with respect to the subject matter     
hereof, and (b) shall not be assigned by operation of law or otherwise.         

Section 8.4.   Notices.                                               
-------                                 

   All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have   
been duly given upon receipt) by delivery in person, by cable, telecopy,        
telegram or telex, or by registered or certified mail (postage prepaid, return  
receipt requested) to the respective parties as follows:                        

if to CP&L or Holdco:                                       

Carolina Power & Light Company                              
Center Plaza Building - CPB1249                             
411 Fayetteville Street                                     
Raleigh, North Carolina 27602                               
Attn:  William D. Johnson, Esq.                             
Telecopy:  (919) 546-3210                                   
Telephone: (919) 546-6463                                   

with copies to:                                             

Hunton & Williams                                           
200 Park Avenue                                             
New York, New York 10166                                    
Attn:  James A. Jones, III, Esq.                            
Jerry E. Whitson, Esq.                        

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Telecopy:  (212) 309-1100                                   
Telephone: (212) 309-1000                                   

and                                                         

Hunton & Williams                                           
One Hannover Square, Suite 1400                             
Raleigh, North Carolina 27602                               
Attn:  Timothy S. Goettel, Esq.                             
Telecopy:  (919) 833-6352                                   
Telephone: (919) 899-3000                                   

if to FPC:                                                  

Florida Progress Corporation                                
NationsBank Tower, Suite 2600                               
One Progress Plaza                                          
St. Petersburg, Florida 33701                               
Attn: Kenneth E. Armstrong, Esq.                            
Telecopy: (727) 820-5845                                    
Telephone: (727) 820-5153                                   

with copies to:                                             

LeBoeuf, Lamb, Greene & MacRae, L.L.P                       
125 West 55/th/ Street                                      
New York, New York  10019                                   
Attn:  Steven H. Davis, Esq.                                
Benjamin G. Clark, Esq.                       
Telecopy:   (212) 424-8500                                  
Telephone:  (212) 424-8000                                  

or to such other address as the person to whom notice is given may have         
previously furnished to the others in writing in the manner set forth above.    

Section 8.5.   Governing Law.                                         
-------------                           

        This Agreement shall be governed by and construed in accordance with
the Laws of the State of New York regardless of the Laws that might otherwise   
govern under applicable                                                         

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principles of conflicts of Laws thereof. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of the court of the  
United States of America for the Southern District of New York and the courts of
the State of New York located in the Borough of Manhattan, City of New York and 
State of New York in the event any dispute arises out of this Agreement or any  
of the transactions contemplated by this Agreement, (b) agrees that it will not 
attempt to deny such personal jurisdiction by motion or other request for leave 
from any such court and (c) agrees that it will not bring any action relating to
this Agreement or any other transaction contemplated by this Agreement in any   
court other than a federal or state court sitting in the State of New York. Each
of the parties hereby irrevocably consents, to the fullest extent permitted by  
Law, to the service of process in any suit, action or proceeding in said courts 
by the giving of notice thereof to such party in accordance with Section 8.4 at 
                                                             -----------
its address specified therein. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE     
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER    
HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR 
RELATING TO THIS AGREEMENT OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT OF   
ANY THEREOF BROUGHT IN ANY OF THE AFORESAID COURTS AND HEREBY FURTHER           
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY CLAIM THAT ANY  
SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH 
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT      
PERMITTED BY LAW, ITS RIGHT TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR         
PROCEEDING ARISING AS A RESULT OF OR RELATING TO THE TRANSACTIONS CONTEMPLATED  
BY THIS AGREEMENT.                                                              

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Section 8.6.   Descriptive Headings.                                  
--------------------                    

   The descriptive headings herein are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or   
interpretation of this Agreement.                                               

Section 8.7.   Parties in Interest.                                   
-------------------                     

        This Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and, except for rights of indemnified parties as set forth
in Section 5.11 hereof, nothing in this Agreement, express or implied, is       
------------                                                              
intended to or shall confer upon any other person any rights, benefits or       
remedies of any nature whatsoever under or by reason of this Agreement.         

Section 8.8.   Counterparts.                                          
------------                            

        This Agreement may be executed in two (2) or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute   
one and the same agreement.                                                     

Section 8.9.   Specific Performance.                                  
--------------------                    

       The parties hereto agree that irreparable damage would occur in the
event any of the provisions of this Agreement were not performed in accordance  
with the terms hereof and that the parties shall be entitled to specific        
performance of the terms hereof, in addition to any other remedy at law or      
equity.                                                                         

Section 8.10.  Fees and Expenses.                                     
-----------------                       

    Subject to Section 7.3(a) and (b) hereof, all costs and expenses
----------------------                
incurred in connection with this Agreement and the transactions contemplated    
hereby shall be paid by the                                                     

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party incurring such expenses, whether or not the Exchange is consummated,      
except that those expenses incurred in connection with the printing of the Proxy
Statement/Prospectus, as well as the filing fees for the Proxy                  
Statement/Prospectus and the Registration Statement and the HSR Act filing fee  
shall be shared equally by FPC, on the one hand, and CP&L or Holdco, on the     
other hand.                                                                     

Section 8.11.  Severability.                                          
------------                            

        If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other   
conditions and provisions of this Agreement shall nevertheless remain in full   
force and effect so long as the economic or legal substance of the transactions 
contemplated hereby is not affected in any manner adverse to any party.  Upon   
such determination that any term or other provision is invalid, illegal or      
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as     
closely as possible in an acceptable manner, to the end that the transactions   
contemplated hereby are fulfilled to the extent possible.                       

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  IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf by its officers thereunto duly      
authorized, all as of the day and year first above written.                     

                CAROLINA POWER & LIGHT COMPANY

               By: /s/ William Cavanaugh III
                           ---------------------------------
                      Name:  William Cavanaugh III
                                     Title: Chairman of the Board, President and
                               Chief Executive Officer

              FLORIDA PROGRESS CORPORATION

        By: /s/ Richard Korpan
                           ---------------------------------
               Name:  Richard Korpan
                                     Title: Chairman of the Board, President and
                               Chief Executive Officer

     CP&L HOLDINGS, INC.

               By: /s/ William Cavanaugh III
                           ---------------------------------
                      Name:  William Cavanaugh III
                                     Title: Chairman of the Board, President and
                               Chief Executive Officer

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                                                                       EXHIBIT A

PLAN OF SHARE EXCHANGE OF 

SHARES OF FLORIDA PROGRESS CORPORATION  

FOR SHARES OF CP&L HOLDINGS, INC. 

          This Plan of Share Exchange (the "Plan of Exchange") is by and between
Florida Progress Corporation, a Florida corporation ("FPC"), and CP&L Holdings, 
Inc., a North Carolina corporation ("Holdco").                                  

RECITALS

1.   FPC, Holdco and Carolina Power & Light Company are parties to an 
Agreement and Plan of Exchange dated as of August 22, 1999 (the "Agreement of   
Exchange").                                                                     

2.   The respective Boards of Directors of FPC and Holdco have by     
resolution duly approved the Agreement of Exchange and this Plan of Exchange,   
and the Board of Directors of FPC has recommended and directed that the         
Agreement of Exchange, including this Plan of Exchange, be submitted to its     
shareholders for adoption.                                                      

ARTICLE I 

PARTIES TO THE SHARE EXCHANGE 

1.1. Parties.                                                         
-------                                                     

        The name of the corporation the shares of which shall be acquired is
Florida Progress Corporation (the "Acquired Corporation"), and CP&L Holdings,   
Inc. is the acquiring corporation (the "Acquiring Corporation" and collectively 
with the Acquired Corporation, the "Constituent Corporations").                 

ARTICLE II  

EFFECTIVE TIME  

2.1. Effective Time.                                                  
--------------                                              

       The share exchange (the "Exchange") shall become effective upon the
effective time specified in the Articles of Share Exchange filed with respect to
this Plan of Exchange with the Department of State of the State of Florida and  
the Secretary of State of the State of North Carolina (the "Effective Time"), by
virtue of this Plan of Exchange and without any action on the part of the       
shareholders thereof.                                                           

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ARTICLE III 

EFFECT OF THE SHARE EXCHANGE  

3.1. Effect of the Share Exchange.                                    
----------------------------                                

        The Exchange shall have the effects set forth herein and in Sections
607.1106 and 607.1107 of the Florida Business Corporation Act (the "FBCA") and  
Section 55-11-06 of the North Carolina Business Corporation Act ("NCBCA").      
Pursuant to the Exchange, Holdco shall become the owner and holder of all of the
outstanding shares of the common stock, no par value, of FPC ("FPC Common       
Stock").                                                                        

ARTICLE IV  

MANNER AND BASIS OF CONVERTING SHARES OF FPC; EXCHANGE PROCEDURES 

4.1. Certain Definitions.                                             
-------------------                                         

     (a) "Certificate" has the meaning given in Section 4.3(a) hereof.
                                        --------------

   (b) "Closing Date" has the meaning given in Section 1.13 of the
                                        ------------
Agreement of Exchange.                                                          

      (c) "Election Deadline" has the meaning given in Section 4.3(b)(i)
                                                       -----------------
hereof.                                                                         

  (d) "Exchange Agent" means the entity designated by Holdco and
reasonably acceptable to FPC to perform the duties of exchange agent in         
connection with the Exchange.                                                   

 (e) "Exchange Consideration" has the meaning given in Section
                                                       -------
4.2(a)(i) hereof.                                                               
---------                                                                       

       (f) "Final Stock Price" means the average of the closing sale price
per share of Holdco Common Stock as reported on the NYSE Composite Tape on each 
of the twenty (20) consecutive trading days ending with the fifth trading day   
immediately preceding the Closing Date.                                         

     (g) "Form of Election" has the meaning given in Section 4.3(b)(i)
                                                     -----------------
hereof.                                                                         

       (h) "FPC Cash Consideration" shall have the meaning as set forth in

Section 4.2(a)(i)(A) hereof.                                                    
--------------------                                                            

   (i) "FPC Cash Election" has the meaning given in Section 4.2(d)
                                                    --------------
hereof.                                                                         

          (j) "FPC Cash Election Shares" has the meaning given in Section 4.2(e)
                                                                  --------------
hereof.                                                                         

         (k) "FPC Cash Number" has the meaning given in Section 4.2(c) hereof.
                                                --------------

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         (l) "FPC Cash Shares" has the meaning given in Section 4.2(f) hereof.
                                                --------------

          (m) "FPC Non-Election" has the meaning given in Section 4.2(d) hereof.
                                                  --------------

         (n) "FPC Non-Election Shares" has the meaning given in Section 4.2(d)
                                                                --------------
hereof.                                                                         

       (o) "FPC Share" means one share of FPC Common Stock, including each
associated right issued pursuant to the Rights Agreement dated as of November   
21, 1991 between FPC and Manufacturers Hanover Trust Company, as amended by an  
Amendment dated February 20, 1997 between FPC and The First National Bank of    
Boston.                                                                         

        (p) "FPC Stock Consideration" shall have the meaning as set forth in

Section 4.2(a)(i)(B) hereof.                                                    
--------------------                                                            

    (q) "FPC Stock Election" has the meaning given in Section 4.2(d)
                                                      --------------
hereof.                                                                         

    (r) "FPC Stock Election Shares" has the meaning given in Section
                                                             -------
4.2(e) hereof.                                                                  
------                                                                          

          (s) "FPC Stock Number" has the meaning given in Section 4.2(c) hereof.
                                                  --------------

      (t) "Holdco Common Stock" means the Common Stock, no par value per
share, of Holdco.                                                               

4.2. The Exchange.                                                    
------------                                                

         (a)  Exchange of FPC Shares.  At the Effective Time, by virtue of the
---  ----------------------                                 
Exchange and without any action on the part of FPC, Holdco, or the holders of   
Holdco Common Stock or FPC Common Stock:                                        

            (i) Each FPC Share issued and outstanding immediately prior to
the Effective Time (other than FPC Shares canceled pursuant to Section          
                                                     -------
4.2(a)(ii) hereof) shall by reason of the Exchange be exchanged for the right to
---------                                                                       
receive:                                                                        

           (A) $54.00 in cash (the "FPC Cash Consideration"), or

                (B) that number of shares of Holdco Common Stock (the "FPC
                Stock Consideration") determined by dividing $54.00 by the
 Final Stock Price, provided, however, that:
             --------  -------

                        (1) if the Final Stock Price is less than $37.13, then
                   the number of shares of Holdco Common Stock to be
                         delivered pursuant to this clause (B) shall be equal to
1.4543; and                   

                        (2) if the Final Stock Price is more than $45.39, then
                   the number of shares of Holdco Common Stock to be

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                         delivered pursuant to this clause (B) shall be equal to
1.1897, or                    

         (C)   a combination of cash and Holdco Common Stock
     determined in accordance with this Section 4.2,
                                       -----------

(the FPC Cash Consideration, the FPC Stock Consideration, or a combination of   
cash and Holdco Common Stock, as the case may be, the "Exchange Consideration"),
in each case as the holder thereof shall have elected or be deemed to have      
elected, and subject to allocation, in accordance with this Section 4.2.        
                                                   -----------

             (ii) Each FPC Share owned by FPC or held in the treasury of FPC
immediately prior to the Effective Time shall be automatically canceled and     
retired and cease to exist, and no cash or securities or other property shall be
paid or payable in respect thereof.                                             

 (b) Fractional Shares.  No certificates or scrip representing
-----------------                                   
fractional shares of Holdco Common Stock shall be issued upon the delivery of   
Certificates, and such fractional share interests will not entitle the owner    
thereof to vote or to any rights of a shareholder of Holdco.  All holders of FPC
Shares who would otherwise be entitled to receive a fractional share of Holdco  
Common Stock shall receive, in lieu thereof upon delivery or exchange of its FPC
Shares, an amount of cash equal to the amount determined by multiplying the     
fraction of a share of Holdco Common Stock to which such shareholder would      
otherwise be entitled by the Final Stock Price.  Immediately prior to the       
Effective Time, Holdco shall deliver to the Exchange Agent cash in such amount  
as shall be necessary to pay to the holders of FPC Shares cash in lieu of such  
fractional shares.                                                              

     (c) General Allocation.  Notwithstanding anything in this Plan of
------------------                                  
Exchange to the contrary, the aggregate number of FPC Shares that may be        
exchanged for the right to receive the FPC Cash Consideration in the Exchange   
(the "FPC Cash Number") shall be equal to 65% of the total number of FPC Shares 
issued and outstanding immediately prior to the Effective Time (ignoring for    
this purpose any FPC Shares canceled pursuant to Section 4.2(a)(ii)), rounded to
                                    ------------------
the nearest full share.  The number of FPC Shares to be exchanged for the right 
to receive FPC Stock Consideration (and cash in lieu of fractional shares) in   
the Exchange (the "FPC Stock Number") shall be equal to (x) the number of FPC   
Shares issued and outstanding immediately prior to the Effective Time (ignoring 
for this purpose any FPC Shares canceled pursuant to Section 4.2(a)(ii)) less   
                                            ------------------
(y) the FPC Cash Number.                                                        

          (d) Election.  Subject to allocation in accordance with the provisions
--------                                            
of this Section 4.2, each record holder of FPC Shares (other than shares to be  
-----------                                                     
canceled in accordance with Section 4.2(a)(ii)), issued and outstanding         
------------------      
immediately prior to the Election Deadline will be entitled, in accordance with 

Section 4.3(b), (i) to elect to receive in respect of each such FPC Share (A)   
--------------                                                                  
the FPC Cash Consideration (a "FPC Cash Election") or (B) the FPC Stock         
Consideration (a "FPC Stock Election") or (ii) to indicate that such record     
holder has no preference as to the receipt of FPC Cash Consideration or FPC     
Stock Consideration for all such FPC Shares held by such holder (a "FPC Non-    
Election").  FPC Shares in respect of which a FPC Non-Election is made or as to 
which no election is made (collectively, "FPC Non-Election                      

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Shares") shall be deemed to be FPC Shares in respect of which FPC Cash Elections
or FPC Stock Elections have been made on a proportionate basis so that the total
number of FPC Shares exchanged for the right to receive shares of Holdco Common 
Stock and cash, respectively, approximate the FPC Stock Number and the FPC Cash 
Number, respectively, as closely possible.                                      

       (e)  Allocation of FPC Cash Election Shares.  In the event that the
--------------------------------------            
aggregate number of FPC Shares in respect of which FPC Cash Elections have been 
made (the "FPC Cash Election Shares") exceeds the FPC Cash Number, all FPC      
Shares in respect of which FPC Stock Elections have been made (the "FPC Stock   
Election Shares") and all FPC Non-Election Shares will be exchanged for the     
right to receive FPC Stock Consideration (and cash in lieu of fractional shares 
in accordance with Section 4.2(b)), and all FPC Cash Election Shares will be    
--------------                            
exchanged for the right to receive FPC Cash Consideration or FPC Stock          
Consideration in the following manner:                                          

             (i) the number of FPC Cash Election Shares covered by each Form
of Election to be exchanged for FPC Cash Consideration will be determined by    
multiplying the number of FPC Cash Election Shares covered by such Form of      
Election by a fraction, (A) the numerator of which is the FPC Cash Number and   
(B) the denominator of which is the aggregate number of FPC Cash Election       
Shares, rounded down to the nearest whole number; and                           

          (ii) all FPC Cash Election Shares not exchanged for FPC Cash
Consideration in accordance with Section 4.2(e)(i) will be exchanged for the    
   -----------------
right to receive FPC Stock Consideration (and cash in lieu of fractional shares 
in accordance with Section 4.2(b)).                                             
--------------                            

        (f)  Allocation of FPC Stock Election Shares.  In the event that the
---------------------------------------           
aggregate number of FPC Stock Election Shares exceeds the FPC Stock Number, all 
FPC Cash Election Shares and all FPC Non-Election Shares (together, the "FPC    
Cash Shares") will exchanged for the right to receive FPC Cash Consideration,   
and all FPC Stock Election Shares will be exchanged for the right to receive FPC
Cash Consideration or FPC Stock Consideration in the following manner:          

              (i) the number of FPC Stock Election Shares covered by each Form
of Election to be exchanged for FPC Cash Consideration will be determined by    
multiplying the number of FPC Stock Election Shares covered by such Form of     
Election by a fraction, (A) the numerator of which is the FPC Cash Number less  
the number of FPC Cash Shares and (B) the denominator of which is the aggregate 
number of FPC Stock Election Shares, rounded down to the nearest whole number;  
and                                                                             

           (ii) all FPC Stock Election Shares not exchanged for FPC Cash
Consideration in accordance with Section 4.2(f)(i) will be exchanged for the    
   -----------------
right to receive FPC Stock Consideration (and cash in lieu of fractional shares 
in accordance with Section 4.2(b)).                                             
--------------                            

     (g)  No Allocation.  In the event that neither Section 4.2(e) nor
      -------------                             --------------
Section 4.2(f) is applicable, all FPC Cash Election Shares will be exchanged for
--------------                                                                  
the right to receive FPC Cash Consideration, all FPC Stock Election Shares will 
be exchanged for the right to receive FPC                                       

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Stock Consideration (and cash in lieu of fractional shares in accordance with   
Section 4.2(b)) and FPC Non-Election Shares will be exchanged for the right to  
-------------                                                                   
receive FPC Cash Consideration or FPC Stock Consideration (and cash in lieu of  
fractional shares in accordance with Section 4.2(b)) on a proportionate basis so
       -------------
that the total number of FPC Shares exchanged for the right to receive shares of
Holdco Common Stock and cash, respectively, approximate the FPC Stock Number and
the FPC Cash Number, respectively, as closely as possible.                      

         (h)  Computations.  The Exchange Agent, in consultation with Carolina
------------                                      
Power & Light Company, Holdco and FPC, will make all computations to give effect
to this Section 4.2.                                                            
-----------                                                     

4.3. Exchange of Certificates.                                        
------------------------                                    

       (a)  Prior to the Effective Time, Holdco shall appoint the Exchange
Agent to act as the exchange agent in connection with the Exchange.  From and   
after the Effective Time, each holder of a certificate which immediately prior  
to the Effective Time represented outstanding FPC Shares (the "Certificates")   
shall be entitled to receive in exchange therefor, upon surrender thereof to the
Exchange Agent, the Exchange Consideration.  Immediately prior to the Effective 
Time, Holdco will deliver to the Exchange Agent, in trust for the benefit of the
holders of FPC Shares, shares of Holdco Common Stock (together with cash in     
immediately available funds in an amount sufficient to pay cash in lieu of any  
fractional share thereof, as provided in Section 4.2(b) hereof), and cash       
                --------------
necessary to make the exchange contemplated by Section 4.2 hereof on a timely   
                         -----------
basis.                                                                          

       (b)  (i)  Not more than 90 days nor fewer than 30 days prior to the
anticipated Closing Date as determined by Holdco and FPC, the Exchange Agent    
will mail a form of election (the "Form of Election") to holders of record of   
FPC Shares (as of a record date as close as practicable to the date of mailing  
and mutually agreed to by Holdco and FPC).  In addition, the Exchange Agent will
use its best efforts to make the Form of Election available to the persons who  
become shareholders of FPC during the period between such record date and the   
Closing Date.  Any election to receive Exchange Consideration contemplated by   

Section 4.2(d) will have been properly made only if the Exchange Agent shall    
--------------                                                                  
have received at its designated office or offices by 5:00 p.m., New York City   
time, on the second business day immediately preceding the Closing Date (the    
"Election Deadline"), a Form of Election properly completed and accompanied by a
Certificate for the FPC Shares to which such Form of Election relates, duly     
endorsed in blank or otherwise acceptable for transfer on the books of FPC (or  
an appropriate guarantee of delivery), as set forth in such Form of Election.   
An election may be revoked only by written notice received by the Exchange Agent
prior to 5:00 p.m., New York City time, on the Election Deadline.  In addition, 
all elections shall automatically be revoked if the Exchange Agent is notified  
in writing by Holdco and FPC that the Exchange has been abandoned.  If an       
election is so revoked, the Certificate(s) or guarantee of delivery, as         
appropriate, to which such election relates will be promptly returned to the    
person submitting the same to the Exchange Agent.  Holdco shall have the        
discretion, which it may delegate in whole or in part to the Exchange Agent, to 
determine whether Forms of Election have been properly completed, signed and    
submitted or revoked pursuant to this Article IV, and to disregard              
      ----------

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immaterial defects in Forms of Election. The decision of Holdco (or the Exchange
Agent) in such matters shall be conclusive and binding.                         

         (ii) Promptly after the Effective Time, the Exchange Agent shall mail
to each record holder of FPC Shares as of the Effective Time who failed to      
return a properly completed Form of Election (A) a letter of transmittal (which 
shall specify that delivery shall be effected, and risk of loss and title to    
Certificates shall pass, only upon proper delivery of the Certificates to the   
Exchange Agent) and will be in such form and have such other provisions as      
Holdco and FPC may specify consistent with this Plan of Exchange and the        
Agreement of Exchange and (B) instructions for use in effecting the surrender of
Certificates in exchange for the Exchange Consideration.                        

       (iii)At the Effective Time, with respect to elections properly made
in accordance with Section 4.3(b)(i), and upon surrender in accordance with     
-----------------                         
Section 4.3(b)(ii) to the Exchange Agent of a Certificate, together with such   
------------------                                                              
letter of transmittal duly executed, and any other required documents, the      
holder of such Certificate shall be entitled to receive in exchange therefor the
Exchange Consideration that such holder has the right to receive pursuant to the
provisions of this Article IV, and such Certificate shall forthwith be canceled.
----------                                
No holder or transferee of a Certificate or Certificates shall be entitled to   
receive any dividend or other distribution from Holdco with respect to the      
shares of Holdco Common Stock represented thereby, and no cash payment in lieu  
of any fractional shares shall be paid to any such holder pursuant to Section   
                                                                   -------
4.2, until the surrender of such holder's Certificate for the Exchange          
---                                                                             
Consideration in accordance with this Article IV.  Subject to the effect of any 
      ----------
unclaimed property, escheat and other applicable laws, following surrender of   
any such Certificate, there shall be paid to the record holder (or transferee)  
of the whole shares of Holdco Common Stock issued in exchange therefor, without 
interest, (i) at the time of such delivery, the amount of any cash payable in   
lieu of a fractional share of Holdco Common Stock to which such holder (or      
transferee) is entitled pursuant to Section 4.2(b) and the amount of dividends  
      --------------
or other distributions with a record date after the Effective Time theretofore  
paid with respect to such whole shares of Holdco Common Stock and (ii) at the   
appropriate payment date, the amount of dividends or other distributions with a 
record date after the Effective Time but prior to delivery or exchange and a    
payment date subsequent to delivery or exchange payable with respect to such    
whole shares of Holdco Common Stock.  If delivery of Holdco Common Stock or cash
is to be made to a person other than the person in whose name the Certificate   
surrendered is registered or if any certificate for shares of Holdco Common     
Stock is to be issued in a name other than that in which the Certificate        
surrendered therefor is registered, it shall be a condition of such delivery or 
issuance that the Certificate so surrendered shall be properly endorsed or      
otherwise in proper form for transfer and that the person requesting such       
delivery or issuance shall pay any transfer or other taxes required by reason of
such delivery or issuance to a person other than the registered holder of the   
Certificate surrendered or establish to the satisfaction of Holdco that such tax
has been paid or is not applicable.  Until surrendered in accordance with the   
provisions of this Section 4.3, each Certificate shall represent for all        
-----------                               
purposes only the right to receive the Exchange Consideration as provided in    

Section 4.2 hereto, without any interest thereon.                               
-----------                                                                     

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          (c)  The Exchange Consideration issued upon the surrender for exchange
of Certificates in accordance with the terms of this Article IV shall be deemed 
                                    ----------
to have been issued and paid in full satisfaction of all rights pertaining to   
the FPC Shares theretofore represented by such Certificates, subject, however,  
                                                          -------  -------
to any obligation of FPC to pay any dividends or make any other distributions   
with a record date prior to the Effective Time which may have been authorized or
made with respect to FPC Shares which remain unpaid at the Effective Time.  From
and after the Effective Time, the stock transfer books of FPC shall be closed   
and no transfer of any shares of FPC Common Stock shall thereafter be made.  If,
after the Effective Time, Certificates are presented to Holdco, they shall be   
canceled and exchanged for the Exchange Consideration (and cash in lieu of any  
fractional share) as provided in Section 4.2 hereof, in accordance with the     
-----------   
procedures set forth in this Section 4.3.                                       
-----------           

         (d)  Any shares of Holdco Common Stock (and any accrued dividends and
distributions thereon), any cash delivered to the Exchange Agent to make the    
exchange contemplated by Section 4.2 hereof and any cash delivered to the       
-----------                   
Exchange Agent for payment in lieu of fractional shares, that remain unclaimed  
by the former shareholders of FPC six (6) months after the Effective Time shall 
be delivered by the Exchange Agent to Holdco.  Any former shareholders of FPC   
who have not theretofore complied with this Section 4.3 shall thereafter look   
                   -----------
only to Holdco for satisfaction of their claim for the consideration set forth  
herein, without any interest thereon subject to the effect of any unclaimed     
property, escheat and other applicable laws.  Notwithstanding the foregoing,    
neither FPC nor Holdco shall be liable to any holder of FPC Shares for any cash 
or shares of Holdco Common Stock (or dividends or distributions with respect    
thereto) delivered to a public official pursuant to any applicable abandoned    
property, escheat or similar law.                                               

          (e)  In the event that, subsequent to the date hereof but prior to the
Effective Time, the outstanding shares of FPC Common Stock or Holdco Common     
Stock, respectively, shall have been changed into a different number of shares  
or a different class as a result of a stock split, reverse stock split, stock   
dividend, subdivision, reclassification, combination, exchange, recapitalization
or other similar transaction, the Exchange Consideration shall be appropriately 
adjusted to provide the holders of FPC Shares the same economic effect as       
contemplated by this Plan of Exchange prior to such event.                      

          (f)  Each of Holdco and the Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this Plan of  
Exchange to any holder of FPC Shares such amounts as it is required to deduct   
and withhold with respect to the making of such payment under the Internal      
Revenue Code of 1986, as amended, or any provision of state, local or foreign   
tax law.  To the extent that amounts are so withheld, such withheld amounts     
shall be treated for all purposes of this Plan of Exchange as having been paid  
to the holder of FPC Common Stock in respect of which such deduction and        
withholding was made.                                                           

      (g)  If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such        
Certificate to be lost, stolen or destroyed and, if required by Holdco, the     
posting by such person of a bond, in such reasonable amount as Holdco may       
direct, as indemnity against any claim that may be made against it with         

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respect to such Certificate, the Exchange Agent will issue in exchange for such 
lost, stolen or destroyed Certificate any Exchange Consideration (including, any
cash in lieu of fractional shares) and any dividends or other distributions to  
which the holders thereof are entitled pursuant to this Article IV.             
                                          ----------

ARTICLE V 

TERMINATION 

5.1. Termination.                                                     
-----------                                                 

This Plan of Exchange shall be terminated and the Exchange  
contemplated hereby shall be abandoned (notwithstanding approval hereof by the  
holders of FPC Shares) if, at any time prior to the Effective Time, the         
Agreement of Exchange is terminated in accordance with its terms.               

ARTICLE VI  

AMENDMENT 

6.1. Amendment.                                                       
----------                                                  

       At any time before the Effective Time, this Plan of Exchange may be
amended, provided that:                                                         

  (a) any such amendment is approved by the respective Boards of
Directors of Holdco and FPC; and                                                

         (b) no such amendment made subsequent to the approval of this Plan of
Exchange by the shareholders of FPC shall be effective without the approval of  
the holders of a majority of the FPC Shares if such amendment (i) changes the   
Exchange Consideration, (ii) changes any other term or condition of this Plan of
Exchange if such change would materially and adversely affect FPC or the holders
of FPC Shares, or (iii) changes any provision of the articles of incorporation  
of FPC.                                                                         

              FLORIDA PROGRESS CORPORATION

        By: /s/ Richard Korpan
                      ----------------------------
               Name:  Richard Korpan
                                  Title:  Chairman of the Board, President
                     and Chief Executive Officer

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     CP&L HOLDINGS, INC.

                By: /s/ William Cavanaugh, III
                         -------------------------------
                       Name:  William Cavanaugh, III
                                 Title: Chairman of the Board, President
                                   and Chief Executive Officer

10  

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
		6/30/01		103					10-Q
		12/31/00		62		103			10-K405,  11-K
		12/31/99		42		74			10-K,  11-K,  4,  5,  U-3A-2
Filed on:		8/30/99							8-A12B/A
For Period End:		8/22/99		1		115
		8/21/99		72
		8/20/99		26		46
		8/19/99		109
		7/16/99		9					4,  8-K
		6/30/99		10		82			10-Q,  4
		12/31/98		10		53			10-K,  11-K,  4,  5,  U-3A-2
		12/31/97		10		15			10-K,  10-K/A,  11-K,  4,  5,  U-3A-2
		4/16/97		65
		2/20/97		15		117			8-K
		1/1/97		11		15
		1/1/96		29		50
		12/31/95		71					10-K405,  11-K,  U-3A-2
									List all Filings