<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 31,
1999 REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
CP&L HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NORTH CAROLINA 4911 56-2155481
(State of Incorporation) (Primary Standard (I.R.S. Employer
Industrial Classification Number) Identification No.)
</TABLE>
411 FAYETTEVILLE STREET
RALEIGH, NORTH CAROLINA 27601-1748
(919) 546-6111
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
WILLIAM CAVANAUGH III
President and Chief Executive Officer
ROBERT B. McGEHEE, Esq.,
ExecutiveVice President and General Counsel
411 Fayetteville Street
Raleigh, North Carolina 27601-1748
(919) 546-6111
(Names and addresses, including zip codes, and telephone numbers, including area
codes, of agents for service)
IT IS RESPECTFULLY REQUESTED THAT THE COMMISSION SEND COPIES OF ALL NOTICES,
ORDERS AND COMMUNICATIONS TO:
TIMOTHY S. GOETTEL, ESQ.
Hunton & Williams
421 Fayetteville Street Mall
Raleigh, North Carolina 27601-1757
(919) 899-3094
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the proposed share exchange described herein have been satisfied
or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE FEE(2)
<S> <C> <C> <C> <C>
Common Stock, no par value........................ 159,700,000 N.A. $5,873,925,700 $416,577
</TABLE>
(1) This Registration Statement covers (i) the maximum number of shares of
common stock of the Registrant issuable in connection with the share
exchange described herein and (ii) the maximum number of shares of common
stock that the Registrant has reserved for issuance under the Automatic
Dividend Reinvestment and Customer Stock Purchase Plan, the Long-Term
Incentive Plan, the Employee Stock Purchase-Savings Plan, and other
arrangements of Carolina Power & Light Company that will be assumed by the
Registrant upon consummation of the share exchange but which may or may not
be issued prior to consummation of the share exchange. This Registration
Statement covers the number of shares of the Registrant's common stock that
is estimated to be at least as large as the number of shares of Carolina
Power & Light Company common stock expected to be outstanding at the
effective time of the share exchange. Additionally, this Registration
Statement covers additional shares of the common stock of Carolina Power &
Light Company that may be issued to prevent dilution resulting from a stock
split, stock dividend, or similar transaction involving the common stock of
Carolina Power & Light Company, pursuant to Rule 416.
(2) The registration fee was calculated in accordance with Rule 457(f)(1) based
on the average of the high and low sale prices for shares of Carolina Power
& Light Company common stock on the New York Stock Exchange on August 27,
1999. Pursuant to Rule 457(b), the total fee required of $1,632,952 has been
reduced by the $1,216,375 filing fee previously paid at the time of filing
of preliminary proxy materials by Carolina Power & Light Company on Feburary
8, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
CAROLINA POWER & LIGHT COMPANY CP&L HOLDINGS, INC.
PROXY STATEMENT PROSPECTUS
HOLDING COMPANY FORMATION PROPOSED
YOUR VOTE IS VERY IMPORTANT
Dear Shareholders:
You are cordially invited to attend a special meeting of shareholders of
Carolina Power & Light Company on October 20, 1999, at 10:00 a.m., local time,
in Meeting Room B at the Raleigh Convention and Conference Center, 500
Fayetteville Street Mall, Raleigh, North Carolina.
The purpose of the meeting is to consider approval of the formation of a
holding company structure for CP&L. If the holding company proposal is approved,
the current holders of CP&L common stock will receive, on a one-for-one basis,
shares of common stock of CP&L Holdings, Inc., a newly formed holding company.
Current CP&L shareholders will become shareholders of Holdings, and Holdings
will own all of the common stock of CP&L. CP&L's preferred stock will not be
affected. Assuming the share exchange was consummated as of the date of this
document, shares of Holdings common stock would be issued to the current common
shareholders of CP&L.
We expect that Holdings common stock will be listed on the New York Stock
Exchange and the Pacific Exchange under the ticker symbol "CPL."
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE BY COMPLETING AND
MAILING THE ENCLOSED PROXY CARD TO US. This will ensure that your vote is
counted at the meeting if you do not attend in person. Your failure to vote will
amount to a vote against the holding company proposal. If you return your
completed proxy card without identifying how you want to vote, your proxy will
be counted as a vote "FOR" the holding company proposal.
This document provides you with detailed information about the proposed
holding company conversion. Please read it carefully. You can also get
information about CP&L and Holdings from documents we have filed with the
Securities & Exchange Commission.
THE BOARD OF DIRECTORS UNANIMOUSLY BELIEVES THE HOLDING COMPANY PROPOSAL IS
IN THE BEST INTERESTS OF THE SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS YOUR
APPROVAL.
/s/ William Cavanaugh III
William Cavanaugh III
Chairman of the Board, President and
Chief Executive Officer
Carolina Power & Light Company
CP&L Holdings, Inc.
FOR A DISCUSSION OF THE RISKS ASSOCIATED WITH THE HOLDING COMPANY PROPOSAL,
PLEASE READ THE "RISK FACTORS" SECTION BEGINNING ON PAGE 5.
NEITHER THE SEC NOR ANY STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED
THE SHARE EXCHANGE OR THE CP&L HOLDINGS, INC. COMMON STOCK TO BE ISSUED UNDER
THIS DOCUMENT OR DETERMINED IF THIS DOCUMENT IS ACCURATE OR ADEQUATE. ANY
CONTRARY REPRESENTATION IS A CRIMINAL OFFENSE.
THIS PROXY STATEMENT/PROSPECTUS IS DATED AUGUST 31, 1999 AND WAS FIRST
MAILED TO SHAREHOLDERS ON OR ABOUT SEPTEMBER 8, 1999.
<PAGE>
CAROLINA POWER & LIGHT COMPANY
411 FAYETTEVILLE STREET
RALEIGH, NORTH CAROLINA 27601
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 20, 1999
------------------------
Carolina Power & Light Company will hold a special meeting of shareholders
at 10:00 a.m., local time, on October 20, 1999, in Meeting Room B at the Raleigh
Convention and Conference Center, 500 Fayetteville Street Mall, Raleigh, North
Carolina. At the meeting shareholders will consider and vote on the following:
(1) conversion to a holding company structure through an Agreement and Plan
of Share Exchange, under which CP&L Holdings, Inc., a North Carolina
corporation formed by CP&L, will become the parent company of CP&L; and
(2) any other business properly brought before the special meeting or any
adjournments or postponements of the special meeting.
All holders of Carolina Power & Light Company $5 Preferred Stock, Serial
Preferred Stock and common stock of record at the close of business on August
20, 1999, will be entitled to vote. The stock transfer books will remain open.
Holders of $5 Preferred Stock and Serial Preferred Stock may be entitled to
assert dissenters' rights of appraisal under Article 13 of the North Carolina
Business Corporation Act in connection with the holding company proposal. The
attached proxy statement/prospectus contains a summary of these dissenters'
rights provisions under the heading "Rights of Dissenting Shareholders"
beginning on page 15 and a copy of Article 13 of the North Carolina Business
Corporation Act attached as Exhibit D.
WE INVITE YOU TO ATTEND THE SPECIAL MEETING. IF YOU HAVE SHARES REGISTERED
IN THE NAME OF A BROKERAGE FIRM, TRUSTEE OR OTHER NOMINEE AND YOU PLAN TO ATTEND
THE SPECIAL MEETING, PLEASE OBTAIN FROM THE REGISTERED HOLDER A LETTER, ACCOUNT
STATEMENT OR OTHER EVIDENCE OF YOUR BENEFICIAL OWNERSHIP OF THOSE SHARES TO
FACILITATE YOUR ADMITTANCE TO THE MEETING.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU OWN. TO ENSURE YOUR REPRESENTATION AT THE
SPECIAL MEETING, PLEASE SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. YOUR PROXY MAY BE REVOKED IN THE
MANNER DESCRIBED IN THE PROXY STATEMENT/PROSPECTUS ACCOMPANYING THIS NOTICE AT
ANY TIME BEFORE THE PROXY HAS BEEN VOTED AT THE SPECIAL MEETING.
By order of the Board of Directors.
WILLIAM D. JOHNSON
Senior Vice President and
Corporate Secretary
Raleigh, North Carolina
September 8, 1999
<PAGE>
TABLE OF CONTENTS
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PAGE
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INFORMATION THAT WE HAVE INCORPORATED BY REFERENCE......................................................... 1
SUMMARY.................................................................................................... 2
RISK FACTORS............................................................................................... 5
SOLICITATION OF PROXIES FOR THE SPECIAL MEETING............................................................ 7
VOTING SECURITIES.......................................................................................... 7
THE HOLDING COMPANY PROPOSAL............................................................................... 8
Reasons for the Holding Company Structure and Share Exchange............................................. 8
Exchange Agreement....................................................................................... 9
Vote Required to Approve the Share Exchange.............................................................. 10
Regulatory Approvals Required to Complete the Share Exchange............................................. 10
Other Conditions to Effectiveness of the Share Exchange.................................................. 11
No Exchange of Stock Certificates Needed................................................................. 11
Treatment of Existing and Future Subsidiaries............................................................ 12
Amendment or Termination of the Exchange Agreement....................................................... 12
Stock Exchange Listing of Holdings Common Stock.......................................................... 12
CP&L Common Stock Market Prices and Dividends............................................................ 12
Dividend Policy.......................................................................................... 13
Material Federal Income Tax Consequences................................................................. 14
Shares Held in the Automatic Dividend Reinvestment and Customer Stock Purchase Plan...................... 14
CP&L Stock Based Plans................................................................................... 14
Treatment of CP&L Preferred Stock........................................................................ 15
Rights of Dissenting Shareholders........................................................................ 15
Treatment of CP&L Debts, Assets and Liabilities, and Business............................................ 17
DESCRIPTION OF HOLDINGS' CAPITAL STOCK..................................................................... 18
Holdings' Capitalization................................................................................. 18
Holdings' Preferred Stock................................................................................ 18
Holdings' Common Stock................................................................................... 18
Dissenters' Rights....................................................................................... 19
Possible Anti-Takeover Effects of Provisions of Holdings' Charter and By-Laws............................ 19
Transfer Agent and Registrar............................................................................. 20
COMPARATIVE RIGHTS OF HOLDINGS AND CP&L SHAREHOLDERS....................................................... 21
Authorized Capital....................................................................................... 21
Voting Rights............................................................................................ 21
Dividend and Distribution Rights......................................................................... 21
Anti-Takeover Laws....................................................................................... 22
Conflict of Interest Transactions........................................................................ 23
Director and Officer Liability; Indemnification.......................................................... 23
Amendment of Charter and By-Laws......................................................................... 24
BUSINESS OF HOLDINGS....................................................................................... 25
WE RECENTLY AGREED TO ACQUIRE FLORIDA PROGRESS CORPORATION................................................. 25
REGULATION OF HOLDINGS..................................................................................... 25
DIRECTORS AND OFFICERS OF HOLDINGS......................................................................... 26
VALIDITY OF HOLDINGS COMMON STOCK.......................................................................... 26
EXPERTS.................................................................................................... 26
OTHER BUSINESS............................................................................................. 26
FUTURE SHAREHOLDER PROPOSALS............................................................................... 27
WHERE YOU CAN FIND MORE INFORMATION........................................................................ 27
WHAT INFORMATION YOU SHOULD RELY ON........................................................................ 27
</TABLE>
(i)
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PAGE
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EXHIBIT A -- AGREEMENT AND PLAN OF SHARE EXCHANGE................................................. A-1
EXHIBIT B -- ARTICLES OF INCORPORATION OF CP&L HOLDINGS, INC...................................... B-1
EXHIBIT C -- BYLAWS OF CP&L HOLDINGS, INC......................................................... C-1
EXHIBIT D -- ARTICLE 13 OF NORTH CAROLINA BUSINESS CORPORATION ACT, "DISSENTERS' RIGHTS".......... D-1
</TABLE>
(ii)
<PAGE>
INFORMATION THAT WE HAVE INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" important business and
financial information that we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this Prospectus,
and information that we file later with the SEC will automatically update and
supersede this information.
We incorporate by reference the documents listed below (SEC File No. 1-3382)
and any future filings made with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until we sell all of the securities
being registered:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the Quarter ended March 31, 1999;
- Quarterly Report on Form 10-Q for the Quarter ended June 30, 1999;
- Current Report on Form 8-K dated August 22, 1999 and filed August 23,
1999; and
- Current Report on Form 8-K dated August 22, 1999 and filed August 30,
1999.
You may request a copy of these filings at no cost, by writing or calling us
at the following address:
Robert F. Drennan, Jr., Manager
Investor Relations and Funds Management
Treasury Department
Carolina Power & Light Company
411 Fayetteville Street
Raleigh, North Carolina 27601-1748
Telephone: (919) 546-7474
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, REQUESTS SHOULD BE MADE BY
OCTOBER 13, 1999.
1
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION FROM THIS DOCUMENT. IT DOES NOT CONTAIN
ALL OF THE DETAILED INFORMATION THAT MAY BE IMPORTANT TO YOU. TO UNDERSTAND THE
HOLDING COMPANY PROPOSAL FULLY AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL
TERMS OF THE HOLDING COMPANY PROPOSAL, YOU SHOULD READ CAREFULLY THIS ENTIRE
DOCUMENT AND THE OTHER DOCUMENTS TO WHICH WE REFER. IN PARTICULAR, IMPORTANT
FACTORS THAT YOU SHOULD CONSIDER IN DETERMINING WHETHER TO VOTE FOR THE HOLDING
COMPANY PROPOSAL ARE DISCUSSED UNDER "RISK FACTORS" BEGINNING ON PAGE 5. FOR
MORE INFORMATION ABOUT CP&L, SEE "WHERE YOU CAN FIND MORE INFORMATION" BEGINNING
ON PAGE 27. FOR EACH ITEM IN THIS SUMMARY, WE REFER YOU TO THE PAGES WHERE THAT
SUBJECT IS DISCUSSED MORE FULLY.
<TABLE>
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Q: WHY DOES THE BOARD OF DIRECTORS
RECOMMEND A HOLDING COMPANY STRUCTURE?
(PAGE 8)
A: A holding company structure will
provide the flexibility needed to
respond more effectively to the changes
facing the energy industry and to take
advantage of new opportunities that are
available. This structure will also
allow for clearer separation of
regulated businesses from each other
and from unregulated businesses.
This proposed structure will also offer
financing advantages. For instance,
CP&L currently must get state
regulatory approval each time it issues
securities. Under the new structure,
however, Holdings and the unregulated
businesses will not need state
regulatory approval to issue
securities, thus enabling them to
obtain financing on a more flexible
basis. This structure will also put
Holdings and the unregulated
subsidiaries on a level field with
unregulated competitors pursuing the
same opportunities.
Q: WHAT WILL I OWN AFTER THE HOLDING
COMPANY TRANSACTION IS COMPLETED? (PAGE
9)
A: Holders of CP&L common stock will
receive shares of Holdings common stock
in exchange for their shares of CP&L
common stock on a one-for-one basis.
Prior to the closing of the holding
company transaction, Holdings common
stock will be listed, subject to
official notice of issuance, on the New
York Stock Exchange and the Pacific
Exchange.
Holders of CP&L preferred stock will
not be affected by the share exchange.
Q: WHAT WILL THE HOLDING COMPANY STRUCTURE
LOOK LIKE? (PAGE 8)
A: CP&L will operate its utility business
as a subsidiary of Holdings. Some
existing CP&L subsidiaries may become
direct subsidiaries of Holdings, and
some new business entities may be
established as direct subsidiaries of
Holdings.
The following charts show CP&L's
current corporate structure and the
proposed corporate structure for the
holding company:
CURRENT STRUCTURE
[Organizational Chart]
HOLDING COMPANY STRUCTURE
[Organizational Chart]
</TABLE>
2
<PAGE>
<TABLE>
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Q: WILL MY RIGHTS AS A SHAREHOLDER OF
HOLDINGS BE DIFFERENT FROM MY CURRENT
RIGHTS? (PAGE 21)
A: Both Holdings and CP&L are North
Carolina corporations. However, the
charter and by-laws of Holdings differ
from the charter and by-laws of CP&L in
the following areas:
- authorized capital;
- voting rights;
- dividends and distributions;
- anti-takeover provisions;
- conflict of interest transactions;
and
- charter and by-law amendments.
Q: WILL I HAVE DISSENTERS' RIGHTS? (PAGE
15)
A: Holders of CP&L common stock do not
have dissenters' rights in connection
with the share exchange.
Under North Carolina law, holders of
CP&L preferred stock are permitted to
dissent from the share exchange and to
have the fair value of their shares
appraised and paid to them in cash. To
do this, the holders of these shares
must follow prescribed procedures,
including filing notices with us and
either abstaining or voting against the
holding company proposal.
Q. WHY DO I NEED TO VOTE? (PAGE 7)
A. To pass, the holding company proposal
must be approved by both a majority of
the shares of outstanding CP&L stock of
all classes and a majority of the
shares of outstanding CP&L common
stock, voting as a separate class.
A majority of shares voted will not be
sufficient. As a result, failure to
vote will have the effect of a vote
against the holding company proposal.
If you want the holding company
transaction to occur, you should vote
for the holding company proposal by
signing, dating and returning the proxy
card.
Q: I RECENTLY SAW AN ANNOUNCEMENT THAT
CP&L PLANS TO ACQUIRE FLORIDA PROGRESS
CORPORATION. WILL THE FLORIDA PROGRESS
ACQUISITION BE VOTED ON AT THIS SPECIAL
MEETING? (PAGE 25)
A: No. Only the holding company proposal
will be voted on at this special
meeting. A separate meeting will be
held at which Holdings will seek
shareholder approval for the
acquisition of Florida Progress.
Q: WHO ELSE MUST APPROVE THE HOLDING
COMPANY TRANSACTION? (PAGE 10)
A: The holding company transaction must
also be approved by the North Carolina
Utilities Commission, the South
Carolina Public Service Commission, the
Federal Energy Regulatory Commission,
and the Nuclear Regulatory Commission.
Also, the SEC must approve matters
solely relating to the Public Utility
Holding Company Act of 1935.
Q: WILL THE SHARE EXCHANGE AFFECT MY
DIVIDENDS? (PAGE 13)
A: We currently expect that dividends on
Holdings common stock will be no less
than the dividends paid on CP&L common
stock, and that those dividends will be
paid at approximately the same times of
year as CP&L common stock dividends
have been paid. Future dividends will
depend on the financial performance of
Holdings' subsidiaries, principally
CP&L, and other factors.
CP&L preferred stock will continue to
be a security of CP&L. Dividends on
those shares will not be affected by
the share exchange. However, the
subsequent transfer of unregulated
subsidiaries or assets from CP&L to
Holdings could affect CP&L's ability to
pay preferred stock dividends.
</TABLE>
3
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<TABLE>
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Q: CAN I CHANGE MY VOTE AFTER I MAIL MY
SIGNED PROXY? (PAGE 7)
A: Yes. You can change your vote at any
time before your proxy is voted at the
special meeting. You can do this in one
of three ways. First, you can send a
written notice stating that you would
like to revoke your proxy. Second, you
can complete and submit a later dated
proxy. Third, you can attend the
special meeting and vote in person. If
you choose either of the first two
methods, you must submit your notice of
revocation or your new proxy to the
Secretary of CP&L.
Q: MY SHARES ARE HELD IN "STREET NAME."
WILL MY BROKER VOTE MY SHARES ON THE
HOLDING COMPANY PROPOSAL? (PAGE 7)
A: A broker will vote your shares on the
holding company proposal only if you
provide your broker with instructions
on how to vote. You should follow the
directions provided by your broker(s)
regarding how to instruct brokers to
vote your shares.
Q: HOW WILL THE HOLDING COMPANY
TRANSACTION AFFECT MY INCOME TAXES?
(PAGE 14)
A: In the opinion of our tax counsel, the
share exchange will be tax free for
federal income tax purposes to holders
of CP&L common stock.
Q: WHO WILL MANAGE HOLDINGS? (PAGE 26)
A: Initially, the board of directors and
principal executive officers of CP&L
will also serve as the directors and
principal executive officers of
Holdings.
Q: WHEN WILL THE HOLDING COMPANY
TRANSACTION TAKE PLACE? (PAGE 8)
A: The holding company transaction will be
completed as soon as practicable after
receipt of all necessary approvals,
including the shareholder and
regulatory approvals described above.
We hope to close the transaction by
December 31, 1999, but can provide no
assurances in this regard.
Q: WHAT SHOULD I DO WITH MY CP&L STOCK
CERTIFICATE? (PAGE 11)
A: CP&L common stock certificates
automatically will represent the same
number of shares of common stock of
Holdings. YOU WILL NOT NEED TO EXCHANGE
YOUR STOCK CERTIFICATES.
</TABLE>
4
<PAGE>
RISK FACTORS
DIVIDENDS ON HOLDINGS COMMON STOCK WILL BE DEPENDENT ON COMMON STOCK DIVIDENDS
PAID TO HOLDINGS BY CP&L BECAUSE HOLDINGS DOES NOT HAVE INDEPENDENT OPERATIONS.
The ability of Holdings to pay dividends initially will be determined by the
ability of CP&L to pay common stock dividends. Holdings does not now, nor will
it immediately after the share exchange, conduct directly any business
operations from which it will derive any revenues. Holdings' primary asset
initially will be CP&L common stock. Accordingly, for a period of time following
the share exchange, the funds necessary for Holdings to pay dividends on its
common stock are expected to come from dividends paid by CP&L to Holdings.
CP&L's ability to pay common stock dividends will be determined by its future
financial success.
In addition to CP&L's future financial performance, the ability of CP&L to
pay dividends to Holdings will continue to be subject to the limits imposed by:
- state law;
- the provisions of charter and bylaws;
- the prior rights of holders of existing and any future preferred stock
issued by CP&L;
- the prior rights of holders of existing and any future first mortgage
bonds issued by CP&L; and
- the prior rights of holders of existing and future CP&L long-term debt and
other liabilities.
EARNINGS FROM SOME EXISTING CP&L SUBSIDIARIES MAY BE UNAVAILABLE IN THE FUTURE
TO PAY CP&L PREFERRED STOCK DIVIDENDS.
After the share exchange, some of CP&L's current unregulated subsidiaries
and assets may be transferred to Holdings. To the extent that any of CP&L's
unregulated subsidiaries or assets are transferred to Holdings, CP&L will not
have the benefit of the earnings of those subsidiaries and assets to satisfy its
obligations to pay CP&L preferred stock dividends.
UNREGULATED BUSINESS ACTIVITIES MAY INVOLVE MORE RISK AND MAY IMPACT THE
PERFORMANCE OF HOLDINGS' COMMON STOCK.
Following consummation of the proposed holding company restructuring,
Holdings will be able to pursue business opportunities through unregulated
subsidiaries without having to obtain the prior approval of the North Carolina
Utilities Commission or the South Carolina Public Service Commission.
Unregulated businesses may have greater investment risk than those involved in
the regulated electric and natural gas businesses of CP&L. Accordingly, pursuit
of unregulated activities could have an adverse effect on the value of a
shareholder's investment. There can be no assurance that any investments in
unregulated businesses will be successful or, if unsuccessful, that they will
not have a material adverse effect on Holdings.
Holdings anticipates that unregulated business activities will be related to
the core regulated businesses of CP&L and will be designed to leverage the
expertise currently possessed by CP&L. While CP&L, as a regulated entity, will
initially continue to generate most of the revenues, we expect unregulated
business activities to continue to increase. Any losses incurred by such
unregulated businesses will not be recoverable through the electric and natural
gas rates of CP&L. As Holdings engages in more such unregulated business
activities, the market price of Holdings' common stock will be affected to a
lesser extent by the performance of CP&L.
WE WOULD LIKE TO CAUTION YOU ABOUT THE RISKS ASSOCIATED WITH FORWARD-LOOKING
STATEMENTS.
The statements we make throughout this document, or in the other documents
incorporated by reference in this document, that are not historical facts are
forward-looking. These forward-looking
5
<PAGE>
statements involve estimates, projections, goals, forecasts, assumptions, risks
and uncertainties that could cause actual results or outcomes to differ
materially from those we describe in the forward-looking statements.
Any forward-looking statement speaks only as of the date on which we make
it. Neither CP&L nor Holdings undertakes any obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which we make it.
Factors that you should consider with respect to any forward-looking
statements made throughout this document include, but are not limited to, the
following:
- governmental policies and regulatory actions, including those of the
Federal Energy Regulatory Commission, the Environmental Protection Agency,
the Nuclear Regulatory Commission, the Department of Energy, the North
Carolina Utilities Commission and the South Carolina Public Service
Commission;
- legislative and regulatory initiatives that impact the speed and degree of
deregulation and restructuring of the electric utility industry;
- the ability of CP&L to obtain adequate and timely rate recovery of costs,
including the potential impact of stranded costs arising from industry
restructuring;
- general industry trends;
- competition from other energy suppliers;
- the success of efforts to invest in and develop diversified subsidiaries;
- operation of nuclear power facilities;
- availability of nuclear waste storage facilities;
- nuclear decommissioning costs;
- changes in the economy of geographic regions served by CP&L;
- weather conditions and catastrophic weather-related damage;
- market demand for energy;
- the ability of CP&L, Holdings, their suppliers and customers to address
successfully Year 2000 readiness issues;
- inflation;
- capital market conditions;
- unanticipated changes in operating expenses and capital expenditures; and
- legal and administrative proceedings.
These factors are difficult to predict. They also contain uncertainties that
may materially affect actual results, and may be beyond the control of CP&L and
Holdings. New factors emerge from time to time. We cannot predict all possible
factors, nor can we assess the effect that each listed factor may have on either
CP&L or Holdings.
6
<PAGE>
SOLICITATION OF PROXIES FOR THE SPECIAL MEETING
The accompanying proxy is being solicited on behalf of our board of
directors, and we will bear the entire cost of solicitation. In addition to the
solicitation of proxies by mail, officers, directors, employees and agents of
CP&L may solicit proxies by correspondence, telephone, telegraph, telecopy or
other electronic means, or in person, but without extra compensation.
Additionally, Morrow & Co. will solicit proxies on behalf and at the direction
of CP&L at a cost of approximately $25,000 plus out-of-pocket expenses.
If you execute a proxy and then attend the meeting, you may elect to vote in
person rather than by proxy. You may revoke your proxy at any time before it is
exercised by filing written notice of revocation or by filing a later valid
proxy with the Secretary of CP&L. Shares represented by a valid proxy received
pursuant to this solicitation, and not revoked before it is exercised, will be
voted in the manner specified in the proxy. If you submit a proxy and fail to
indicate on the proxy how you desire your shares to be voted, your shares will
be voted FOR approval of the holding company proposal, and in the discretion of
the named proxy upon any other business properly brought before the special
meeting. The CP&L board is not aware of any other matters to be presented at the
special meeting other than matters incidental to the conduct of the special
meeting.
If necessary, the special meeting may be adjourned for the purpose of
soliciting additional votes in favor of the holding company proposal. In that
event, only proxies voted for the approval of the holding company proposal may
be voted in favor of adjourning the meeting.
VOTING SECURITIES
The directors have fixed August 20, 1999, as the record date for
shareholders entitled to vote at the special meeting. Only holders of record of
voting stock, which includes CP&L's $5 Preferred Stock, Serial Preferred Stock
and common stock, at the close of business on the record date will be entitled
to receive notice of and to vote at the special meeting. Each share of voting
stock is entitled to one vote. A majority of the CP&L common stock outstanding
and entitled to vote and a majority of the CP&L voting stock outstanding and
entitled to vote, in person or by proxy, constitutes a quorum for consideration
of each matter at the special meeting. As of August 20, 1999, there were
outstanding 237,259 shares of $5 Preferred Stock, 350,000 shares of Serial
Preferred Stock and 159,589,744 shares of common stock.
The holding company proposal must be approved by the affirmative vote of
BOTH a majority of all the votes entitled to be cast by holders of voting stock,
voting together as one class, AND a majority of all the votes entitled to be
cast by holders of common stock, voting as a separate class. YOUR FAILURE TO
VOTE WILL HAVE THE EFFECT OF A VOTE AGAINST THE HOLDING COMPANY PROPOSAL.
Approvals of other matters to be presented at the special meeting, if any,
generally will require the affirmative vote of a majority of the shares voted.
Voting of shares held by brokers or other nominees is regulated by the New
York Stock Exchange and other securities exchanges. In some cases, referred to
as "discretionary matters," brokers or other nominees may vote shares they hold,
and deliver proxies with respect to them, in their own discretion. In other
cases, referred to as "nondiscretionary matters," brokers or other nominees may
deliver proxies with respect to particular shares, but are not permitted to vote
these shares without specific instructions from the beneficial owner of the
shares. These unvoted shares are called "broker non-votes." The holding company
proposal is considered "non-discretionary," so brokers or other nominees who
have received no instructions from their beneficial owners do not have the
authority to vote on the proposal. AN ABSTENTION OR BROKER NON-VOTE WILL HAVE
THE EFFECT OF A VOTE AGAINST THE HOLDING COMPANY PROPOSAL.
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With respect to any other matters properly presented at the special meeting,
abstentions from voting and broker non-votes will not have the effect of a
negative vote.
As of the record date, approximately 403,943 shares of common stock, or
approximately 0.25% of the shares entitled to vote at the special meeting, were
beneficially owned by directors and executive officers of CP&L. Currently, we
expect that each director and executive officer will vote the shares of CP&L
stock beneficially owned by him or her for approval of the holding company
proposal.
Additional information with respect to beneficial ownership of CP&L stock by
persons and entities owning more than 5% of the outstanding shares of CP&L stock
and more detailed information with respect to beneficial ownership of CP&L stock
by directors and executive officers of CP&L is incorporated by reference from
the CP&L Annual Report on Form 10-K for the year ended December 31, 1998. See
"WHERE YOU CAN FIND MORE INFORMATION" on page 27.
THE HOLDING COMPANY PROPOSAL
The board of directors of CP&L unanimously believes that it is in the best
interests of CP&L and its shareholders to restructure CP&L so that it will
become a separate subsidiary of a new parent holding company, with the current
holders of CP&L common stock becoming the holders of the common stock of the new
parent.
To carry out this restructuring, CP&L has established a North Carolina
corporation, CP&L Holdings, Inc., which now has a nominal amount of stock
outstanding and no present business or properties of its own. All of the
currently outstanding shares of Holdings common stock are owned by CP&L. CP&L
and Holdings have entered into an exchange agreement, which provides for the
exchange of CP&L common stock for Holdings common stock. The exchange agreement
is attached as Exhibit A to this document and is incorporated in this document
by reference.
REASONS FOR THE HOLDING COMPANY STRUCTURE AND SHARE EXCHANGE
Transformation to a holding company structure will enable us to respond more
effectively to the changes facing the energy industry today and to take better
advantage of the opportunities that will be available in the coming years.
Formation of a holding company will permit a clearer separation of regulated and
unregulated businesses, and will provide greater flexibility in establishing and
financing new business initiatives.
The electric power industry has gone through rapid change in recent years.
Federal initiatives have resulted in significant deregulation in the wholesale
power market. At the state level, retail deregulation initiatives in some states
have caused utility companies to separate their generation, transmission and
distribution businesses. Both North Carolina and South Carolina have created
study commissions to review the possibility of deregulation of retail sales.
Although it is impossible to predict the precise nature of the environment we
will face in coming years, these changes may impact our existing businesses, and
may also create opportunities for new initiatives. In keeping with our long-term
strategy to become a regional provider of energy products and services and our
previously announced goals for increasing revenues and earnings, we will likely
explore new business opportunities and acquisitions in the future. Some of these
opportunities will be within the regulated portions of our business; others will
be unregulated.
The holding company structure is quite common, particularly where regulated
and non-regulated businesses are both part of one corporate structure. Several
electric utilities have undergone a similar conversion in recent years. This
structure will give us the optimal regulatory and financial flexibility to
compete effectively, no matter what the competitive landscape looks like.
We expect that some of CP&L's current subsidiaries may be moved up the
corporate structure to become direct subsidiaries of Holdings, and that future
new entities or acquisitions may also be direct
8
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subsidiaries of Holdings. This will allow a better separation of the various
businesses that we will conduct, including a separation of the regulated
businesses from the unregulated ones. Such separation will make regulation of
each regulated subsidiary of Holdings simpler. For example, the regulators will
not have to evaluate the financing and other activities of the unrelated
subsidiaries and should have less concern about cross-subsidization of the costs
of new enterprises, except where the companies engage in transactions with each
other.
Under the current structure, CP&L is regulated by the North Carolina
Utilities Commission and the South Carolina Public Service Commission. Among
other things, these commissions must approve any issuance of securities by CP&L.
When CP&L wants to raise cash in connection with new investments, or to issue
stock in connection with the acquisition of another company, it must seek the
approval of the commissions. As the energy industry continues to change and
become more competitive, CP&L will likely have financing needs in connection
with new business opportunities and acquisitions. The ability to conduct
financing activities at the Holdings level, without the need for regulatory
approvals, will enable us to satisfy these financing needs more quickly and
efficiently. We will then be in a position to exploit business opportunities, or
make acquisitions, in a more timely manner. We will also be on a level playing
field with competitors that are already in a holding company structure, and thus
are not required to obtain regulatory approval for financings.
This structure will allow management to make decisions based on the specific
needs and characteristics of these non-traditional businesses, such as financing
requirements and capital structures, outside of the regulatory regime. At the
same time, CP&L would continue, in a substantially unchanged form, as a separate
subsidiary of Holdings and would remain subject to the jurisdiction of the North
Carolina Utilities Commission, the South Carolina Public Service Commission, the
Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and
other governmental authorities.
EXCHANGE AGREEMENT
The boards of directors of CP&L and Holdings have unanimously adopted the
exchange agreement, and it is subject to adoption by the shareholders of CP&L.
See "Vote Required to Approve the Share Exchange" beginning on page 10. In the
share exchange:
- each share of CP&L common stock outstanding immediately prior to the
effective time of the share exchange will be exchanged automatically for
one new share of Holdings common stock;
- Holdings will become the owner of all outstanding CP&L common stock; and
- the shares of Holdings common stock held by CP&L immediately prior to the
share exchange will be canceled.
As a result, upon completion of the share exchange, Holdings will become a
holding company, Holdings will own all of the common stock of CP&L, and all of
the Holdings common stock outstanding immediately after the share exchange will
be owned by the former holders of CP&L common stock. Each former CP&L common
shareholder will receive an identical number of Holdings common shares.
Following the share exchange, the stock of some of CP&L's existing subsidiaries
may be transferred to Holdings, causing those companies to become subsidiaries
of Holdings. See "Treatment of Existing and Future Subsidiaries" beginning on
page 12.
Except for the exercise of dissenters' rights as described below, CP&L's
outstanding preferred stock will not be exchanged in the share exchange but will
continue to be shares of CP&L preferred stock. The share exchange will not
change the rights of the holders of these shares as currently provided in CP&L's
charter. Debt of CP&L will remain unchanged and will continue as outstanding
obligations of CP&L after the share exchange.
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<PAGE>
VOTE REQUIRED TO APPROVE THE SHARE EXCHANGE
The exchange agreement must be approved by the affirmative votes of BOTH a
majority of all the votes entitled to be cast by holders of CP&L's $5 Preferred
Stock, Serial Preferred Stock, and common stock, voting together as one class,
AND a majority of all the votes entitled to be cast by the holders of common
stock, voting as a separate class.
REGULATORY APPROVALS REQUIRED TO COMPLETE THE SHARE EXCHANGE
SEVERAL REGULATORY APPROVALS MUST BE OBTAINED PRIOR TO CONSUMMATION OF THE
SHARE EXCHANGE. CP&L WILL FILE ALL APPLICATIONS AND NOTICES AND TAKE OTHER
APPLICABLE ACTION WITH RESPECT TO ALL OF THESE APPROVALS AND OTHER REQUIRED
ACTION OF ANY GOVERNMENTAL AUTHORITY. WE BELIEVE THAT WE WILL RECEIVE THE
REQUISITE REGULATORY APPROVALS AND CLEARANCES FOR THE HOLDING COMPANY
TRANSACTION THAT ARE SUMMARIZED BELOW. WE CANNOT GIVE ANY ASSURANCE REGARDING
THE TIMING OF THE REQUIRED APPROVALS OR CLEARANCES OR OUR ABILITY TO OBTAIN THE
REQUIRED APPROVALS AND CLEARANCES ON SATISFACTORY TERMS OR OTHERWISE, OR THAT NO
ACTION WILL BE BROUGHT CHALLENGING THE HOLDING COMPANY TRANSACTION OR THE
GOVERNMENTAL APPROVALS OR OTHER ACTIONS.
UTILITY COMMISSIONS. CP&L is subject to the jurisdiction of the North
Carolina Utilities Commission and the South Carolina Public Service Commission,
both of which must approve the share exchange. Shortly after the date of this
document, CP&L expects to file applications with the North Carolina Utilities
Commission and the South Carolina Public Service Commission seeking the
necessary approvals for the holding company transaction.
ATOMIC ENERGY ACT. A provision in the Atomic Energy Act requires Nuclear
Regulatory Commission consent for the transfer of control of NRC licenses. The
NRC Staff has in the past asserted that this provision applies to the creation
of a holding company over an NRC-licensed utility company in a transaction like
the share exchange. Shortly after the date of this document, CP&L expects to
file an application for NRC approval under the Atomic Energy Act for the
transfer of control of its nuclear plant licenses resulting from the share
exchange.
FEDERAL POWER ACT. The Federal Energy Regulatory Commission has held that
the transfer of common stock of a public utility company, such as CP&L, from its
existing shareholders to a holding company in a transaction like the share
exchange constitutes a transfer of the "ownership and control" of the facilities
of the utility, and is thus a "disposition of facilities" subject to FERC review
and approval under Section 203 of the Federal Power Act. Shortly after the date
of this document, CP&L expects to file an application with the FERC seeking the
necessary approvals for the holding company transaction.
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935. Upon CP&L's acquisition of
North Carolina National Gas Corporation, a Delaware company, it became a
"holding company" under the Public Utility Holding Company Act. CP&L has claimed
an exemption from most of the provisions of PUHCA under Section 3(a)(2), as a
company predominantly a utility, whose utility operations do not extend beyond
North Carolina and South Carolina.
Shortly after the completion of the share exchange, Holdings intends to file
for an exemption under section (3)(a)(1) of PUHCA. Section 3(a)(1) provides an
exemption where a "holding company and every subsidiary company thereof which is
a public utility company from which such holding company derives, directly or
indirectly, any material part of its income, are predominantly intrastate in
character and carry on their business substantially in a single State in which
such holding company and every such subsidiary company thereof are organized."
The availability of the section 3(a)(1) exemption is based in part on specific
facts, including the characteristics of CP&L and Holdings' other utility
subsidiaries after the share exchange. Accordingly, there is no guarantee that
Holdings and its utility subsidiaries will qualify for the exemption.
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<PAGE>
Holdings believes that it will meet the requirements of section 3(a)(1) of
PUHCA. Holdings is incorporated in North Carolina, and Holdings believes that
its North Carolina subsidiaries, including primarily CP&L, will generate most of
its income. Although Holdings will have a Delaware utility subsidiary, Holdings
does not believe that it will derive a material part of its income from this
subsidiary (NCNG's net income was only approximately 4% of CP&L's net income in
recent years). CP&L's utility business is conducted substantially in North
Carolina (approximately 86% in recent years based on energy sales). Holdings
believes, therefore, that its and CP&L's business is predominately intrastate in
character and carried on substantially in a single state. To maintain the
3(a)(1) exemption, Holdings must continue to meet the exemption's requirements
in the future.
The limitations imposed by the exemption may have a material effect on
Holdings because it will limit its ability to make future acquisitions outside
of North Carolina. As a result, Holdings may forgo the exemption if it is in the
best interest of the company and its shareholders to do so.
The section 3(a)(1) exemption will not relieve Holdings from all provisions
of PUHCA. CP&L and Holdings will continue to be subject to section 9(a)(2) of
PUHCA, which requires SEC approval for a direct or indirect acquisition of five
percent or more of the voting securities of any other electric or gas utility
company. Under this provision, the SEC must approve the share exchange. Shortly
after the date of this document, CP&L expects to file an application with the
SEC seeking the necessary approvals for the holding company transaction.
OTHER CONDITIONS TO EFFECTIVENESS OF THE SHARE EXCHANGE
Besides approval by CP&L's shareholders, the share exchange is subject to
the satisfaction of the following conditions:
- all necessary orders, authorizations, approvals or waivers from regulatory
bodies, boards or agencies have been received, remain in full force and
effect, and do not include, in the sole judgment of the board of directors
of CP&L, unacceptable conditions; and
- shares of Holdings common stock to be issued in connection with the share
exchange have been listed, subject to official notice of issuance, by the
New York Stock Exchange.
Following satisfaction of these conditions, the share exchange will become
effective upon the filing of Articles of Share Exchange with the North Carolina
Secretary of State. We cannot predict when all conditions will be satisfied, but
we hope that the share exchange will become effective by the end of 1999.
NO EXCHANGE OF STOCK CERTIFICATES NEEDED
If the share exchange is effected, it will not be necessary for holders of
CP&L common stock to physically exchange their existing stock certificates for
certificates of Holdings common stock. The certificates that represent shares of
CP&L common stock outstanding immediately prior to the effective time of the
share exchange will automatically represent an equal number of shares of
Holdings common stock immediately after the effective time and will no longer
represent CP&L common stock. New certificates bearing the name of Holdings will
be issued after the share exchange, if and as certificates representing shares
of CP&L common stock outstanding immediately prior to the share exchange are
presented for exchange or transfer.
CP&L preferred stock will not be exchanged but will continue as shares of
CP&L preferred stock. The share exchange will not change the rights of the
holders of these shares as provided in CP&L's Amended Certificate of
Incorporation.
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<PAGE>
TREATMENT OF EXISTING AND FUTURE SUBSIDIARIES
Upon completion of the share exchange, Holdings will own all of the common
stock of CP&L.
Companies that are currently subsidiaries of CP&L may become direct
subsidiaries of Holdings, rather than of CP&L. This would be accomplished by
transferring the shares of those companies to Holdings as a dividend. Generally,
we anticipate that our operating subsidiaries that do not directly support the
provision of products and services by CP&L will become direct subsidiaries of
Holdings. We currently expect the following CP&L subsidiaries to become direct
subsidiaries of Holdings after the share exchange:
- North Carolina Natural Gas Corporation; and
- Interpath Communications, Inc.
There can be no assurance as to when or whether these or any other CP&L
subsidiaries will ultimately become direct subsidiaries of Holdings.
In addition, we anticipate that some entities may be established in the
future as subsidiaries of Holdings rather than CP&L. These entities would
primarily be unregulated businesses, such as wholesale electric generation
entities or non-electric utilities. Entities will be transferred to Holdings, or
established as direct subsidiaries of Holdings, based upon factors such as the
need to ensure clear separation of regulated businesses from each other or from
unregulated businesses, and to provide adequate flexibility in capital
structure.
AMENDMENT OR TERMINATION OF THE EXCHANGE AGREEMENT
The boards of directors of CP&L and Holdings may amend any of the terms of
the exchange agreement at any time before or after its approval by the holders
of CP&L common stock and prior to the effective time, but no amendment of the
exchange agreement may, in the sole judgment of the board of directors of CP&L,
materially and adversely affect the rights of CP&L's shareholders.
The CP&L board of directors may terminate the exchange agreement and abandon
the share exchange at any time before or after approval by the shareholders if
the board determines, in its sole judgment, that consummation of the share
exchange would, for any reason, be inadvisable or not be in the best interests
of CP&L or its shareholders.
STOCK EXCHANGE LISTING OF HOLDINGS COMMON STOCK
Holdings has applied to have its common stock listed on the New York Stock
Exchange and the Pacific Exchange. We expect this listing to become effective at
the effective time of the share exchange. Holdings expects its common stock to
continue trading under the ticker symbol "CPL" on both the New York Stock
Exchange and the Pacific Exchange. Following the share exchange, CP&L common
stock will no longer trade and will be delisted and no longer registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
CP&L COMMON STOCK MARKET PRICES AND DIVIDENDS
CP&L common stock is listed and principally traded on the New York Stock
Exchange. The table below sets forth the high and low sales prices of CP&L
common stock for the fiscal periods indicated
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as reported in The Wall Street Journal as New York Stock Exchange Composite
Transactions and per share dividends declared by CP&L for the same periods.
<TABLE>
<CAPTION>
CP&L COMMON STOCK
---------------------------------
<S> <C> <C> <C>
HIGH LOW DIVIDENDS
--------- --------- -----------
Year Ended December 31, 1996
First Quarter.................................................................. $ 38.375 $ 34.500 $ 0.455
Second Quarter................................................................. 38.000 34.875 0.455
Third Quarter.................................................................. 38.250 34.125 0.455
Fourth Quarter................................................................. 37.000 34.250 0.470
Year Ended December 31, 1997
First Quarter.................................................................. 37.875 36.125 0.470
Second Quarter................................................................. 36.250 33.000 0.470
Third Quarter.................................................................. 36.625 33.750 0.470
Fourth Quarter................................................................. 42.500 34.313 0.485
Year Ended December 31, 1998
First Quarter.................................................................. 45.750 40.625 0.485
Second Quarter................................................................. 45.500 39.500 0.485
Third Quarter.................................................................. 46.625 39.938 0.485
Fourth Quarter................................................................. 49.063 45.063 0.500
Year Ended December 31, 1999
First Quarter.................................................................. 47.500 37.813 0.500
Second Quarter................................................................. 44.750 37.063 0.500
Third Quarter (through August 27, 1999)........................................ 43.125 36.688 N.A.
</TABLE>
DIVIDEND POLICY
Future dividends on Holdings common stock will depend primarily upon the
earnings, financial condition and capital requirements of its subsidiaries,
principally CP&L. Holdings expects to make dividend payments on Holdings common
stock initially in the amounts currently paid on CP&L common stock. Holdings
also expects that these dividends will be declared and paid on approximately the
same schedule of dates as that now followed by CP&L with respect to CP&L common
stock dividends.
Subject to the availability of earnings, the needs of its electric utility
business, and other applicable restrictions, CP&L intends to make regular cash
payments to Holdings in the form of dividends on CP&L common stock in amounts
which, to the extent not otherwise provided by Holdings' other subsidiaries,
would be sufficient to pay cash dividends on Holdings common stock as described
above and to pay operating expenses of Holdings and for other purposes as the
board of directors of Holdings may determine.
We anticipate payments of dividends on the CP&L preferred stock to continue
at the current rates without interruption or change. However, the payment of
these dividends also is dependent upon, among other things, the earnings and
financial condition of CP&L, agreements to which CP&L is or may become a party
and upon requirements of North Carolina law. To the extent that current
subsidiaries and assets are transferred to Holdings, CP&L will not have the
benefit of the earnings of those subsidiaries and assets to satisfy its
obligations to pay CP&L preferred stock dividends.
The declaration and payment of future dividends will be at the discretion of
each board of directors. We cannot provide assurances that payment of dividends
will remain at current levels.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
This section summarizes the material federal income tax consequences of the
share exchange to holders of CP&L common stock. This summary is based on current
law, which is subject to change at any time, possibly with retroactive effect.
This summary is not a complete description of all tax consequences of the share
exchange and, in particular, may not address federal income tax consequences
applicable to holders of CP&L common stock subject to special treatment under
federal income tax law. In addition, this summary does not address the tax
consequences of the share exchange under applicable state, local or foreign
laws. YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES OF
THE EXCHANGE IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, INCLUDING THE
APPLICATION OF ANY STATE, LOCAL OR FOREIGN LAW.
We have received the opinion of Hunton & Williams, counsel to CP&L, that the
share exchange will qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code or a transaction described in Section 351(a)
of the Code, and consequently:
- no gain or loss will be recognized by CP&L or Holdings upon consummation
of the share exchange;
- no gain or loss will be recognized by a holder of CP&L common stock upon
the exchange of CP&L common stock for Holdings common stock in the share
exchange;
- the aggregate basis of the shares of Holdings common stock received by a
holder of CP&L common stock in the share exchange will be the same as the
aggregate basis of the shares of CP&L common stock surrendered in the
share exchange; and
- the holding period of the shares of Holdings common stock received by a
holder of CP&L common stock in the share exchange will include the holding
period of the shares of CP&L common stock surrendered in the share
exchange, if they are held as a capital asset at the effective time of the
share exchange.
CP&L expects to receive a tax opinion of Hunton & Williams substantially to
this effect as of the closing date. The opinion of Hunton & Williams is based
on, and the opinion to be given as of the closing date will be based upon,
customary assumptions and representations. Hunton & Williams' opinion represents
its best legal judgment and is not binding on the Internal Revenue Service or
any court. If the share exchange does not qualify as a reorganization or as a
transaction described in Section 351(a) of the Code, the exchange of stock in
the share exchange would be taxable to holders of CP&L common stock.
SHARES HELD IN THE AUTOMATIC DIVIDEND REINVESTMENT AND CUSTOMER STOCK PURCHASE
PLAN
Shares of CP&L common stock held in its Automatic Dividend Reinvestment and
Customer Stock Purchase Plan, including uncertificated whole and fractional
shares, will automatically become a like number of shares of Holdings common
stock at the effective time of the share exchange. At the effective time,
Holdings will succeed to this plan as in effect immediately prior to the
effective time, and shares of Holdings common stock will be issued under this
plan on and after the effective time. Holdings will file a post-effective
amendment to CP&L's registration statement on Form S-3 for this plan shortly
after the effective time of the share exchange.
CP&L STOCK BASED PLANS
The exchange agreement provides that CP&L's 1997 Equity Incentive Plan and
Employee Stock Purchase-Savings Plan will be amended to provide for Holdings to
assume responsibility for these plans upon consummation of the share exchange.
Shares of CP&L common stock held under these plans will automatically become a
like number of shares of Holdings common stock. The exchange agreement
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also provides that CP&L's Deferred Compensation Plan for Key Management
Employees, Directors' Deferred Compensation Plan, Executive Deferred
Compensation Plan, Management Incentive Compensation Plan and Non-Employee
Director Stock Unit Plan will be amended to provide that each unit awarded under
any of these plans will automatically be equal in value to one share of Holdings
common stock. A new Management Deferred Compensation Plan will become effective
on January 1, 2000. The exchange agreement provides that, in the event the share
exchange is not completed prior to January 1, 2000, this plan will be amended to
provide that each phantom stock unit awarded under the plan will automatically
be equal in value to one share of Holdings common stock.
TREATMENT OF CP&L PREFERRED STOCK
Shares of CP&L preferred stock will not be exchanged in the share exchange
but will continue as shares of preferred stock of CP&L. Therefore, holders of
CP&L preferred stock will not become holders of Holdings preferred or common
stock as a result of the share exchange. Except for the exercise of dissenters'
rights as discussed under the caption "Rights of Dissenting Shareholders" and as
discussed under this caption, the share exchange and the holding company
structure will not change the rights of holders of the outstanding shares of
CP&L preferred stock. CP&L preferred stock will continue to rank senior to CP&L
common stock as to dividends and as to the distribution of CP&L's assets upon
any liquidation. The decision to have the preferred stock of CP&L continue as
stock of CP&L is based on a desire not to alter, or potentially alter, the
nature of the investment represented by the preferred stock as a senior equity
investment in a regulated utility.
Dividends on CP&L preferred stock will continue to be paid as before,
depending upon the earnings, financial condition and other relevant factors
affecting CP&L. However, the assets and earnings of CP&L subsidiaries
transferred to Holdings will not be available to pay dividends on CP&L preferred
stock or to make distributions with respect to the preferred stock in the event
of a liquidation. See "Treatment of Existing and Future Subsidiaries" beginning
on page 12.
After the share exchange, CP&L will continue to be subject to the periodic
reporting and other informational requirements of the Securities Exchange Act of
1934. Holdings will have sufficient voting power to approve CP&L actions
required to be taken by the combined vote of holders of CP&L common stock and
preferred stock.
Although the formation of a holding company is not expected to affect
adversely the preferred stock outstanding, any growth of assets and earnings of
Holdings other than growth of assets and earnings of CP&L will not directly
benefit the holders of preferred stock. However, the utility operations of CP&L
now constitute, and are expected to continue to constitute for the foreseeable
future, the predominant part of Holdings' consolidated assets and earnings.
Accordingly, although we are unable to predict the ultimate outcome of
regulatory and other industry changes, we believe that this transaction will not
materially affect the holders of CP&L preferred stock or the investment ratings
of the preferred stock.
RIGHTS OF DISSENTING SHAREHOLDERS
Article 13 of the North Carolina Business Corporation Act, which is attached
as Exhibit D to this document, provides that specified classes of shareholders
of North Carolina corporations are permitted to dissent from, and obtain the
value of, their shares in the event of specified types of corporate actions.
Only holders of CP&L $5 Preferred Stock and Serial Preferred Stock are eligible
to exercise these dissenters' rights with respect to the share exchange.
The following is a summary of the rights of eligible dissenters under
Article 13. Any eligible dissenter who intends to dissent from the share
exchange should carefully review the text and comply with the requirements of
Article 13, as well as consult with an attorney. FAILURE TO COMPLY WITH THE
PROCEDURES PRESCRIBED BY APPLICABLE LAW WILL RESULT IN THE LOSS OF DISSENTERS'
RIGHTS. No further notice
15
<PAGE>
of the events giving rise to dissenters' rights or any steps associated with
exercising these rights will be furnished to eligible dissenters, and no notice
of approval of the share exchange will be given to CP&L shareholders who
exercise dissenters' rights.
If you are an eligible dissenter and desire to dissent from the share
exchange:
- You must give CP&L, and CP&L must actually receive, before the vote is
taken, written notice of your intent to demand payment for your shares if
the share exchange is effected. Your notice to CP&L should be mailed to
William D. Johnson, Corporate Secretary, Carolina Power & Light Company,
411 Fayetteville Street Mall, Raleigh, North Carolina 27601. A vote
against the exchange agreement will not be deemed to satisfy the notice
requirement.
- You must not vote your shares in favor of the exchange agreement but must
instead either vote against or abstain from voting on the exchange
agreement. If you return a signed proxy but fail to provide instructions
as to the manner in which you desire the shares represented by the proxy
to be voted, your shares will be deemed to have been voted in favor of the
exchange agreement, and you will not be entitled to assert dissenters'
rights of appraisal.
- No later than ten days after the share exchange is effected, CP&L must
send to you, by registered or certified mail, return receipt requested,
-- a written dissenters' notice stating where payment demand must be sent
and where and when certificates for certificated dissenting shares must
be deposited,
-- information as to the restrictions on transfer of dissenting shares,
-- a form for demanding payment,
-- a date by which CP&L must receive the payment demand, which shall not be
fewer than 30 nor more than 60 days after the date the notice is mailed,
and
-- a copy of Article 13.
- After receiving the notice from CP&L, you must then demand payment and
deposit your certificates in accordance with the terms of the notice.
Provided you demand payment and deposit your share certificates in
accordance with Article 13, you will retain all other rights of a
shareholder until the rights are canceled or modified by the share
exchange being effected. If you fail to demand payment or deposit your
share certificates as required, each by the date set in the dissenters'
notice, you will not be entitled to payment for your shares under Article
13.
- As soon as the share exchange is effected, if you have complied with the
requirements of Article 13, CP&L will pay you the amount CP&L estimates to
be the fair value of your dissenting shares, plus interest accrued to the
date of payment. The payment must be accompanied by
-- CP&L's balance sheet as of December 31, 1998,
-- CP&L's income statement for the fiscal year ending December 31, 1998,
-- CP&L's statement of cash flows for the fiscal year ending December 31,
1998,
-- CP&L's latest available interim financial statements, if any,
-- an explanation of how CP&L estimated the fair value of your dissenting
shares,
-- an explanation of how the interest was calculated,
-- a statement of your rights to demand payment and
-- a copy of Article 13.
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- If you believe the amount paid by CP&L is less than the fair value of your
dissenting shares or the interest was incorrectly calculated, or if CP&L
fails to make payment as soon as the share exchange is effected or within
30 days of receipt of a payment demand, you may notify CP&L in writing of
your own estimate of the fair value of your dissenting shares and the
amount of interest due, and demand payment of the amount in excess of the
payment by CP&L. The notice must be given within 30 days after CP&L makes
payment or fails to perform. If you fail to notify CP&L in writing of your
demand for payment within the 30-day period, you will be deemed to have
withdrawn your dissent and demand for payment.
- If demand for payment remains unsettled, you may commence a proceeding by
filing a complaint with the North Carolina Superior Court Division of the
General Court of Justice to determine the fair value of the shares and
accrued interest. The complaint must be filed within 60 days after the
earlier of the date payment is made or the date of your payment demand. If
you take no action within the 60-day period, you will be deemed to have
withdrawn your dissent and demand for payment.
Under North Carolina law, holders of CP&L common stock are not entitled to
dissenters' rights in connection with the share exchange.
TREATMENT OF CP&L DEBTS, ASSETS AND LIABILITIES, AND BUSINESS
The current indebtedness of CP&L will continue to be obligations of CP&L and
will be neither assumed nor guaranteed by Holdings in connection with the share
exchange. CP&L's first mortgage bonds will continue to be secured by first liens
on all of the properties of CP&L that are currently subject to these liens. Such
indebtedness will be neither assumed nor guaranteed by Holdings in connection
with the share exchange. The decision to have the indebtedness of CP&L continue
as obligations of CP&L is based upon a desire not to alter, or potentially
alter, the nature of the investment represented by CP&L's fixed income
obligations as a direct investment in a regulated utility.
The consolidated assets and liabilities of CP&L and its subsidiaries
immediately before the effective time of the share exchange will be the same as
the consolidated assets and liabilities of Holdings and its subsidiaries
immediately after the effective time. All the business and operations conducted
immediately before the effective time by CP&L and its subsidiaries will continue
to be conducted immediately after the effective time by CP&L and its
subsidiaries and other subsidiaries of Holdings.
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DESCRIPTION OF HOLDINGS' CAPITAL STOCK
This summary of Holdings' capital stock is qualified in its entirety by
reference to Holdings' articles of incorporation--or charter--and Holdings'
by-laws, each as proposed to be amended and restated and effective at the time
of the share exchange. Copies of Holdings' charter and by-laws are attached to
this document as Exhibits B and C, respectively. In this discussion, we also
refer to the laws of the State of North Carolina.
HOLDINGS' CAPITALIZATION
Holdings' authorized equity capitalization consists of 500,000,000 shares of
Holdings common stock, no par value per share, and 20,000,000 shares of
preferred stock, no par value per share. The shares of Holdings common stock for
which the CP&L common stock will be exchanged upon consummation of the share
exchange will be all of the shares of Holdings common stock outstanding after
the exchange. No shares of Holdings preferred stock will be outstanding as of
the consummation of the share exchange.
HOLDINGS' PREFERRED STOCK
The Holdings board has the authority pursuant to a "blank check" provision
in the Holdings charter to issue, without any vote or action by the Holdings
shareholders, shares of Holdings preferred stock in one or more series and to
fix the designations, preferences, rights, qualifications, limitations and
restrictions of the stock, including the dividend rights, conversion rights,
terms of redemption-- including sinking fund provisions--liquidation preferences
and the number of shares constituting any series. The Holdings board may also
fix the voting rights, if any, of a series, except that it does not have
authority under the "blank check" provision to issue preferred stock with more
than one vote per share.
There are no shares of Holdings preferred stock outstanding as of the date
of this document, and there are no existing agreements or understandings for the
designation of any series of preferred stock or the issuance of preferred
shares.
HOLDINGS' COMMON STOCK
This description of the Holdings common stock assumes that no Holdings
preferred stock is issued and outstanding and that the Holdings board has not
determined the rights and preferences of any shares of Holdings preferred stock.
The rights and preferences of the Holdings common stock, as generally described
below, may change in relation to any shares of Holdings preferred stock that
might be issued in the future.
PAR VALUE. The Holdings common stock, like the CP&L common stock, does not
have a stated par value. A designated par value is not required under North
Carolina law and has no useful purpose under modern corporate practice.
DIVIDEND RIGHTS. Subject to the prior rights, if any, of holders of
Holdings preferred stock, holders of Holdings common stock are entitled to any
dividends that might be declared by Holdings' board of directors. Holdings may
purchase or otherwise acquire outstanding shares of Holdings common stock out of
funds or other property legally available for this purpose.
VOTING RIGHTS AND CUMULATIVE VOTING. Each share of Holdings common stock is
entitled to one vote on all matters on which holders of common stock are
entitled to vote. Holders of Holdings common stock do not have cumulative voting
rights for the election of directors. Consequently, the holders of more than 50%
of the shares voting can elect all of Holdings' directors, and in this event the
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holders of the remaining shares voting--less than 50%--would not have sufficient
votes to elect any directors.
PREEMPTIVE RIGHTS. The holders of Holdings common stock have no preemptive
rights to purchase additional shares of Holdings common stock or other
securities of Holdings.
CALLS AND ASSESSMENTS. The shares of Holdings common stock to be issued in
connection with the share exchange will be validly issued, fully-paid and
non-assessable after completion of the exchange.
REDEMPTION/CONVERSION. Shares of Holdings common stock are not subject to
any redemption provisions and are not convertible into any other securities or
property.
DISSENTERS' RIGHTS
North Carolina law generally provides appraisal rights to dissenting
shareholders in connection with
- mergers and prescribed types of share exchanges that require shareholder
approval,
- sales of all or substantially all of a corporation's assets, other than
sales that are in the usual and regular course of business and specified
types of liquidations and court-ordered sales,
- amendments to the articles of incorporation that materially and adversely
affect rights in respect of dissenters' shares and
- any corporate action taken pursuant to a shareholder vote to the extent
the articles of incorporation, by-laws or a resolution of the board of
directors entitles shareholders to dissent.
However, North Carolina law does not provide dissenters' rights to specified
holders of shares of public corporations, which CP&L is and which Holdings will
be upon consummation of the share exchange. The Holdings charter, like the CP&L
charter, also does not provide holders of Holdings capital stock with any
appraisal rights.
POSSIBLE ANTI-TAKEOVER EFFECTS OF PROVISIONS OF HOLDINGS' CHARTER AND BY-LAWS
Although it is not the intention of the Holdings board to discourage
legitimate offers to enhance shareholder value, some provisions in Holdings'
charter and by-laws described below could permit Holdings' board to render more
difficult or to discourage a merger, tender offer, proxy contest or other
transaction aimed at obtaining control of Holdings. You should also read the
Section entitled "Anti-Takeover Laws" beginning on page 22.
ADVANCE NOTICE OF SHAREHOLDER PROPOSALS. The Holdings by-laws contain
provisions regulating the ability of a shareholder to cause business to be
brought before a shareholder meeting or to propose a nominee for election as a
director. These provisions are identical to those contained in the CP&L by-laws.
Although these provisions can be less advantageous to a party seeking control of
Holdings, they prevent surprise and provide a more orderly procedure for
conducting shareholder meetings. Additionally, these provisions will afford the
Holdings board more opportunity to consider shareholder proposals and to inform
Holdings shareholders, prior to the meeting, about these proposals and the
Holdings board's position as to them. To be properly brought before an annual or
special meeting of shareholders, business must be
- specified in the notice of meeting, or in any supplement to the notice,
given by or at the direction of the Holdings board,
- otherwise properly brought before the meeting by or at the direction of
the Holdings board, or
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- in the case of an annual meeting of shareholders, properly brought before
the meeting by a shareholder.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a shareholder or a nomination for
election as director to be made by a shareholder, the shareholder must have
given timely notice in writing to the Secretary of Holdings. To be timely, a
shareholder's notice must be received by the Secretary of Holdings not later
than the 60th day prior to the first anniversary of the immediately preceding
year's annual meeting. The notice must contain information specified in the
by-laws. With respect to the annual meeting to be held in 2000, a shareholder's
notice will be deemed timely if delivered to the Secretary of Holdings by
December 2, 1999. The Holdings by-laws do not provide a means by which a
Holdings shareholder can require that a special meeting of shareholders be
called or a shareholder proposal be considered at a special meeting.
If a shareholder attempts to bring business before a meeting or to make a
director nomination without complying with the procedures set forth in the
Holdings by-laws, the business may not be transacted at the meeting and the
nomination proposal need not be recognized. The Chairman of the Holdings board
has the power and duty to determine whether any business proposed to be brought
before the meeting was made in accordance with the procedures set forth in the
Holdings by-laws.
ISSUANCE OF PREFERRED STOCK. As described under the caption "Holdings'
Preferred Stock" beginning on page 18, the Holdings charter authorizes the
issuance of 20,000,000 shares of Holdings preferred stock, and the Holdings
board has the full authority and discretion to determine the terms of any series
of Holdings preferred stock. The Holdings board could designate the terms of
shares of preferred stock in a manner that could have the effect of discouraging
takeover attempts. The Holdings board does not have authority to designate
preferred stock with more than one vote per share.
These provisions are substantially similar to those contained in the CP&L
charter, except that the Holdings charter allows the board to designate
preferred stock with no general voting rights. Under the CP&L charter, each
share of $5 Preferred Stock and Serial Preferred Stock is entitled to one vote
per share.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Holdings common stock will be
Equiserve Trust Company, N.A.
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COMPARATIVE RIGHTS OF HOLDINGS AND CP&L SHAREHOLDERS
As North Carolina corporations, Holdings and CP&L are subject to the
provisions of North Carolina law governing corporations. The rights of CP&L
shareholders are based on North Carolina law, the CP&L articles of
incorporation--or charter--and the CP&L by-laws. In the share exchange, CP&L
shareholders will become holders of Holdings common stock. Their rights as
holders of Holdings common stock will then be governed by North Carolina law,
the Holdings charter and the Holdings by-laws. The material differences between
the rights of a CP&L shareholder and the rights of a holder of Holdings common
stock are summarized below.
AUTHORIZED CAPITAL
Holdings' authorized equity capitalization consists of 500,000,000 shares of
Holdings common stock, no par value per share, and 20,000,000 shares of
preferred stock, no par value per share. Other than the Holdings common stock
that will be issued and outstanding upon the consummation of the share exchange,
no other classes of capital stock of Holdings will be issued and outstanding
immediately after the share exchange. The Holdings board of directors will have
the power to issue preferred stock and to designate its rights and preferences,
except that preferred stock may not be issued with more than one vote per share.
CP&L's authorized equity capitalization consists of 200,000,000 shares of
CP&L 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 date of this document, only shares of
common stock, $5 Preferred Stock and Serial Preferred Stock are issued and
outstanding. The CP&L preferred stock--that is, the $5 Preferred Stock, the
Serial Preferred Stock and the Preferred Stock A, collectively--ranks prior to
the CP&L Preference Stock and the CP&L common stock. The CP&L Preference Stock
ranks prior to the CP&L common stock as to dividends and liquidation rights.
The shares of the several classes of CP&L preferred stock have varying
voting rights. If dividends payable on any class of CP&L preferred stock are in
default in an amount equivalent to four full quarterly payments or more per
share, the CP&L charter provides that the holders of CP&L preferred stock,
voting as a class, are entitled to elect the smallest number of directors
necessary to elect a majority of the full board of directors. All shares of $5
Preferred Stock and Serial Preferred Stock (including any issued in the future)
are entitled to one vote per share.
The shares of the several classes of CP&L preferred stock are subject to
specified redemption and other provisions, as set forth in the CP&L charter, and
have voting and other rights provided by law. After the share exchange, the CP&L
preferred stock will continue to be issued and outstanding equity securities of
CP&L, with the same designations, preferences and relative rights and powers,
and subject to the same restrictions and limitations, as existed prior to the
share exchange.
VOTING RIGHTS
The voting rights of Holdings common stock vary from those of CP&L common
stock in that, at the effective time of the share exchange, the Holdings common
stock will not be subject to, or be affected by, the voting rights of any
outstanding Holdings preferred stock.
DIVIDEND AND DISTRIBUTION RIGHTS
The rights of holders of CP&L common stock and Holdings common stock as to
dividends and distributions will be the same, except that:
- the rights of holders of CP&L common stock are subject to the preferences
prescribed for CP&L preferred stock under the CP&L charter, and
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- the rights of holders of Holdings common stock will be subject to the
preferences, if any, of Holdings preferred stock subsequently designated
by the Holdings board.
ANTI-TAKEOVER LAWS
North Carolina has two principal anti-takeover statutes, although a
corporation may elect not to be subject to them. The statutes are the
Shareholder Protection Act and the Control Share Acquisition Act, Articles 9 and
9A, respectively, of the North Carolina Business Corporation Act.
SHAREHOLDER PROTECTION ACT. The Shareholder Protection Act is a form of
"fair price" anti-takeover law. The purpose of such a law is to protect against
two-stage control transactions in which holders of shares not purchased by the
acquiror in the first stage--generally, the transaction that transfers control
of the corporation to the acquiror--are forced to accept a lower price in the
second stage, in which the acquiror eliminates minority shares. A "fair price"
statute makes it difficult for the acquiror to complete the second stage of the
transaction, unless shareholders in the second stage receive a "fair price" or
approve the acquisition by a specified vote.
In the absence of a statutory "fair price" and compliance with other
procedural provisions, the North Carolina Shareholder Protection Act requires
the affirmative vote of the holders of 95% of the voting shares of a public
corporation to approve a business combination of the corporation with any other
entity that beneficially owns 20% or more of the corporation's stock. In some
cases, the fair price and related provisions that would exempt the transaction
from the 95% approval vote might be difficult to satisfy. A 95% approval also
can be difficult to obtain. The directors of a corporation have no authority
under the Shareholder Protection Act to waive the high vote requirement for
specific transactions. The Shareholder Protection Act can function as a
deterrent in some types of hostile acquisition transactions, but the breadth of
the statutory provisions and the inability of a board of directors to exempt a
transaction from the application of the statute could in some cases prevent the
completion of some types of transactions that would be deemed desirable by the
board of directors and by a significant majority of shareholders.
CP&L is subject to the Shareholder Protection Act, but Holdings has elected
to opt out of the act. Holdings' election to opt out means that Holdings would
not have the statute's potential benefit of deterring some types of hostile
acquisition transactions. The opt out election does, however, give the Holdings
board and Holdings shareholders the ability to approve desirable business
combination transactions that they might otherwise be unable to approve because
of the Shareholder Protection Act's 95% vote approval threshold.
CONTROL SHARE ACQUISITION ACT. The North Carolina Control Share Acquisition
Act restricts the voting rights of a person who acquires "control shares" in a
covered corporation. Control shares are shares that, when added to all other
shares of the covered corporation beneficially owned by a person, would result
in that person holding 20%, 33 1/3% or over 50% of the voting power in the
election of directors. Under the statute, the control shares acquired have no
voting rights unless the disinterested shareholders grant voting rights to those
shares. If an interested shareholder acquires a majority of the outstanding
shares of the corporation and is granted voting rights by the disinterested
shareholders, the Control Share Acquisition Act provides that all shareholders,
other than the interested shareholder, have the right to require the corporation
to redeem their shares for a price not less than the highest price per share
paid by the interested shareholder in the control share acquisition.
CP&L is subject to the Control Share Acquisition Act, but Holdings has
elected to "opt out" of the act. As a result of Holdings' election to opt out of
the Control Share Acquisition Act, a purchaser of Holdings common stock in a
"control share acquisition" would have full voting rights without the need to
seek such rights from disinterested shareholders, and, therefore, would not have
the right to cause a special meeting of shareholders to be convened for the
purpose of seeking voting rights. The ability to require such a meeting can be
useful to a potential acquiror because, in addition to seeking
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voting rights, the potential acquiror can submit other proposals at the special
meeting, such as the election or removal of directors or an amendment to the
charter or by-laws.
CONFLICT OF INTEREST TRANSACTIONS
GENERAL. North Carolina law generally permits transactions involving a
North Carolina corporation and an interested director of that corporation if:
- the material facts of the transaction and the director's interest are
disclosed, and a majority of shares held by disinterested shareholders
entitled to vote on the transaction approves it;
- the material facts are disclosed, and a majority of disinterested
directors of the board of directors, or of a committee of the board of
directors, approves the transaction; or
- the transaction is fair to the corporation.
North Carolina law prohibits loans to directors or the guaranteeing of their
obligations by a North Carolina corporation unless:
- a majority of disinterested shareholders approve the loan or guarantee, or
- the corporation's board of directors determines that the loan or guarantee
benefits the corporation and either approves the specific loan or
guarantee or a general plan of loans and guarantees by the corporation.
In addition and subject to North Carolina law, the CP&L charter provides
that a director is not disqualified from office by dealing with CP&L as a
vendor, purchaser or otherwise or by transactions involving an interested
director, provided that the transaction is approved by either:
- a majority of a quorum of the CP&L board or of the Executive Committee of
the CP&L board, excluding the vote of the interested director, or
- the holders of a majority of all outstanding shares of stock of CP&L
entitled to vote.
Such approval avoids the liability of an interested director to account to
CP&L for any profit the director received from the transaction. The Holdings
charter does not contain any provisions with respect to conflict of interest
transactions. The Holdings charter does not include the provisions of the CP&L
charter because we believe the matter is addressed adequately by North Carolina
law.
DIRECTOR AND OFFICER LIABILITY; INDEMNIFICATION
Both the CP&L charter and the Holdings charter contain a provision,
authorized by North Carolina law, immunizing a director from personal liability
for breach of duty as a director to the fullest extent allowed by North Carolina
law. The CP&L by-laws and Holdings by-laws also provide directors and officers
with a right to be indemnified by the corporation against loss and expenses of
defense in actions asserting liability based on their status as directors or
officers. The scope of indemnity granted to the directors of CP&L and Holdings
is as broad as permitted by North Carolina law. The CP&L by-laws refer to
additional indemnification rights as set forth in a resolution of CP&L
shareholders dated December 31, 1943. That resolution addresses indemnity
generally and specific indemnification rights relating to conduct by officers or
directors pursuant to orders issued pursuant to laws applicable to public
utility companies and public utility holding companies. The specific indemnity
provisions are included in the Holdings by-laws.
Any amendment or repeal of the immunity or indemnification provisions will
not be effective as to any right or protection of a director pertaining to
service as a director up to the time the amendment or repeal was effective.
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AMENDMENT OF CHARTER AND BY-LAWS
The Holdings charter authorizes the Holdings board, in submitting to the
shareholders the board's recommendation for amendments to the Holdings charter,
to require a higher vote to pass the amendment than the vote otherwise required
by law or by the Holdings charter generally. This is consistent with relevant
provisions of North Carolina law that allow directors to condition their
submission to shareholders of a charter amendment that is proposed for adoption
by the shareholders, but varies from the CP&L provision that prohibits directors
from increasing the vote necessary for approval of a matter by shareholders. We
believe that it is preferable for the directors to retain the flexibility
regarding submissions to shareholders that is granted in the relevant provisions
of North Carolina law.
Holdings has not included in its charter or by-laws a provision included in
the CP&L by-laws that prohibits directors from amending the by-laws to increase
the size of a quorum for a meeting of shareholders. Under North Carolina law,
unless specifically permitted by its charter or by-laws, Holdings cannot
increase the size of a quorum for a meeting of shareholders. In the event that
Holdings seeks to amend its charter or by-laws to include a provision permitting
directors to increase the size of a quorum for a meeting of shareholders,
shareholder approval would be required under North Carolina law.
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BUSINESS OF HOLDINGS
After the share exchange occurs, Holdings will have no material assets other
than its ownership of stock of its subsidiaries, which initially will consist of
all of CP&L's outstanding common stock. At or about the time the share exchange
is completed, the name of Holdings will likely be changed to better reflect its
business operations going forward.
WE RECENTLY AGREED TO ACQUIRE FLORIDA PROGRESS CORPORATION
On August 22, 1999, CP&L, Holdings and Florida Progress Corporation entered
into an agreement and plan of exchange. The agreement provides for all of the
outstanding shares of common stock of Florida Progress to be acquired by
Holdings for approximately $5.3 billion. Each share of Florida Progress common
stock, at the election of the holder, will be exchanged for:
- $54.00 in cash; or
- the number of shares of Holdings common stock equal to the ratio
determined by dividing $54.00 by the average of the closing sale price per
share of Holdings common stock for the twenty (20) consecutive trading
days ending with the fifth trading day immediately preceding the closing
date; or
- a combination of cash and Holdings common stock.
The transaction has been approved by the boards of directors of Florida
Progress and CP&L. The transaction is expected to be completed within 12 months.
Completion of the transaction is subject to the satisfaction or waiver of
customary closing conditions, including, among others:
- the approval of shareholders of Florida Progress;
- the approval of shareholders of Holdings; and
- required regulatory approvals and reviews.
Florida Progress is a diversified utility holding company with assets of
$6.3 billion. Its principal subsidiary is Florida Power, which serves 1.3
million customers in Florida. Florida Progress' diversified operations include
rail services, marine operations and coal mining.
The share exchange and the Florida Progress acquisition are separate
transactions. We expect the share exchange to occur before the various approvals
required for the Florida Progress transaction are received. Accordingly, we
expect the share exchange to occur whether or not the Florida Progress
transaction occurs.
REGULATION OF HOLDINGS
CP&L became an "exempt" holding company under the Public Utility Holding
Company Act upon completion of its acquisition of North Carolina Natural Gas
Corporation. See "Regulatory Approvals Required to Complete the Share Exchange"
beginning on page 10.
Following completion of the share exchange, Holdings, as the owner of all of
the outstanding CP&L common stock, will become a "holding company" under PUHCA.
Holdings expects to be able to claim an exemption from most of the provisions of
PUHCA under Section 3(a)(1), as a holding company whose utility subsidiaries
generating material portions of its income are incorporated and carry on their
business substantially in a single state. As a result, there would be
limitations on Holdings' ability to expand operations of any utility subsidiary
outside of North Carolina, or make utility acquisitions outside of North
Carolina, without losing its exemption under PUHCA. In addition, prior approval
of the SEC would be required if Holdings were to acquire 5% or more of the
voting securities of any other electric or gas utility company.
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Under PUHCA and current SEC policies, there are limits on the extent to
which exempt holding companies may diversify into businesses not functionally
related to the electric and gas utility businesses. We do not expect these
limitations to have a material impact on Holdings in the near future.
We do not anticipate that Holdings will be considered a public utility under
the state laws of North Carolina or South Carolina. However, the State
Commissions may impose restrictions on Holdings' relationship with its public
utility subsidiaries.
DIRECTORS AND OFFICERS OF HOLDINGS
The incumbent directors of CP&L will also become the directors of Holdings
at the effective time of the share exchange. They will be elected to serve as
directors of Holdings in the same classes and for the same terms of service for
which they are serving as directors of CP&L. While there are no current plans to
alter the CP&L board, the boards of Holdings and CP&L may not, in the future,
mirror each other in size, composition or membership.
Upon effectiveness of the share exchange, Holdings' principal executive
officers are expected to be:
<TABLE>
<S> <C>
William Cavanaugh III................ Chairman of the Board, President and
Chief Executive Officer
Glenn E. Harder...................... Executive Vice President and Chief
Financial Officer
Robert B. McGehee.................... Executive Vice President, General
Counsel and Chief Administrative
Officer
William D. Johnson................... Senior Vice President and Corporate
Secretary
</TABLE>
These executive officers will continue to be executive officers of CP&L.
VALIDITY OF HOLDINGS COMMON STOCK
The validity of the shares of Holdings common stock to be issued in the
share exchange will be passed upon by Hunton & Williams, counsel to CP&L and
Holdings, Raleigh, North Carolina.
EXPERTS
The financial statements and related financial statement schedules
incorporated in this document by reference from the CP&L Annual Report on Form
10-K for the year ended December 31, 1998, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
OTHER BUSINESS
The board of directors does not intend to bring any business before the
meeting other than that stated in this document. The board knows of no other
matter to come before the meeting. If other matters are properly brought before
the meeting, it is the intention of the board of directors that the persons
named in the enclosed Proxy will vote on these matters pursuant to the Proxy in
accordance with their best judgment.
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FUTURE SHAREHOLDER PROPOSALS
Holdings expects to maintain the same annual meeting schedule as CP&L has
followed in the past. Accordingly, shareholder proposals submitted for inclusion
in the proxy statement for our 2000 annual meeting must be received no later
than December 2, 1999 at the Holdings principal executive offices, addressed to
the attention of:
William D. Johnson
Senior Vice President and Corporate Secretary
CP&L Holdings, Inc.
Post Office Box 1551
Raleigh, North Carolina 27602-1551
In the event that Holdings is unable to meet the anticipated 2000 annual
meeting schedule and the meeting date is changed by more than 30 calendar days
from May 12, 2000, shareholder proposals for Holdings' 2000 annual meeting must
be received at the address above a reasonable time before we print and mail our
proxy statement.
Any other proposal that a shareholder desires to be presented for action at
an annual meeting must be received by the Secretary of the Company no later than
the close of business on the 60th day prior to the first anniversary of the
immediately preceding year's annual meeting. The proposal must include a brief
description of the business desired to be brought before the meeting, the
shareholder's name and address, the class and number of shares owned by the
shareholder and disclosure of any material interest the shareholder may have in
the matter proposed.
WHERE YOU CAN FIND MORE INFORMATION
CP&L files annual, quarterly and special reports, proxy statements,
prospectuses and other information with the SEC. Our SEC filings are available
to the public over the Internet at the SEC's web site at http://www.sec.gov or
our web site at http://www.cplc.com. You may also read and copy any document we
file at the SEC's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. The SEC's public reference room in Washington is located
at 450 5th Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms.
Holdings filed a registration statement on Form S-4 (333- ) on August
31, 1999 to register with the SEC the Holdings common stock to be issued in the
share exchange. This document is a part of that registration statement and
constitutes a prospectus of Holdings. As allowed by the SEC's rules, this
document does not contain all of the information you can find in Holdings'
registration statement or the exhibits to that registration statement.
WHAT INFORMATION YOU SHOULD RELY ON
We have not authorized any person to give any information or to make any
representation that differs from, or adds to, the information discussed in this
document, in the other documents that we specifically incorporate by reference,
or in other documents we have publicly filed with the SEC. Therefore, if anyone
gives you different or additional information, you should not rely on it.
The information contained in this document speaks only as of the date of
this document unless the information specifically indicates that another date
applies. This document does not constitute an offer to exchange or sell, or a
solicitation of an offer to exchange or purchase, Holdings common stock, or to
ask for proxies, to or from any person to or from whom it is unlawful to direct
these activities. Under those circumstances, the solicitation and offer
presented by this document does not apply to you.
27
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Exhibits
<PAGE>
EXHIBITS
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF SHARE EXCHANGE
This AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Agreement"), dated as of
August 22, 1999, is between Carolina Power & Light Company, a North Carolina
corporation ("CP&L"), whose shares of Common Stock, no par value, will be
acquired pursuant to the "Share Exchange" provided for in this Agreement, and
CP&L Holdings, Inc., a North Carolina corporation ("Holdings"), which will
acquire the foregoing shares of Common Stock of CP&L. CP&L and Holdings are
hereinafter referred to, collectively, as the "Corporations."
RECITALS:
A. The authorized equity capital of CP&L consists of (i) 200,000,000 shares
of Common Stock, no par value, (the "CP&L Common Stock"), of which 159,589,744
shares are issued and outstanding (which number of issued and outstanding shares
is subject to change prior to the Effective Time (as hereinafter defined) of the
Share Exchange), (ii) 300,000 shares of $5 Preferred Stock (the "CP&L $5
Preferred Stock"), of which 237,259 shares are issued and outstanding, (iii)
20,000,000 shares of Serial Preferred Stock (the "CP&L Serial Preferred Stock"),
of which 350,000 shares are issued and outstanding, (iv) 5,000,000 shares of
Preferred Stock A (the "CP&L Preferred Stock A"), no shares of which are issued
and outstanding, and (v) 10,000,000 shares of Preference Stock (the "CP&L
Preference Stock"), no shares of which are outstanding (the CP&L $5 Preferred
Stock, the CP&L Serial Preferred Stock, the CP&L Preferred Stock A, and the CP&L
Preference Stock, collectively, the "CP&L Preferred Stocks"; and the CP&L
Preferred Stocks, together with the CP&L Common Stock, collectively, the "CP&L
Capital Stock").
B. Holdings is a wholly-owned subsidiary of CP&L with authorized capital
stock consisting of 500,000,000 shares of Common Stock, no par value (the
"Holdings Common Stock"), of which 100 shares are issued and outstanding and
owned by CP&L and 20,000,000 shares of Preferred Stock, no par value, no shares
of which are issued.
C. CP&L has in place the Employee Stock Purchase-Savings Plan, the 1997
Equity Incentive Plan, the Deferred Compensation Plan for Key Management
Employees, the Directors' Deferred Compensation Plan, the Executive Deferred
Compensation Plan, the Management Incentive Compensation Plan, the Non-Employee
Director Stock Unit Plan and, effective January 1, 2000, the Management Deferred
Compensation Plan (collectively, the "Employee Plans"), each of which will
continue after the Effective Time with certain amendments thereto.
D. The respective Boards of Directors of the Corporations deem it desirable
and in the best interests of the Corporations and the shareholders of CP&L that,
at the Effective Time, (i) Holdings acquire and become the owner and holder of
each share of CP&L Common Stock issued and outstanding at the Effective Time,
(ii) each share of CP&L Common Stock issued and outstanding immediately prior to
the Effective Time be automatically exchanged for one share of Holdings Common
Stock, and (iii) each holder of shares of CP&L Common Stock issued and
outstanding immediately prior to the Effective Time become the holder of a like
number of shares of Holdings Common Stock, all on the terms and conditions
hereinafter set forth.
E. The Board of Directors of each Corporation has approved and adopted this
Agreement, and the Board of Directors of CP&L has recommended that the
shareholders of CP&L approve and adopt the Share Exchange and this Agreement
pursuant to Section 55-11-03(b) of the North Carolina Business Corporation Act
(the "NCBCA").
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NOW, THEREFORE, the Corporations hereby agree as follows:
ARTICLE I
The Share Exchange and this Agreement shall be submitted to the holders of
CP&L Capital Stock for approval and adoption as provided by Sections
55-11-03(b), (e) and (f) of the NCBCA. The affirmative vote of both the holders
of (a) a majority of the shares of issued and outstanding CP&L Common Stock and
(b) a majority of all of the issued and outstanding shares of CP&L Capital
Stock, voting as a single class, shall be necessary to approve and adopt the
Share Exchange and this Agreement.
ARTICLE II
Subject to the terms and conditions of this Agreement, the Share Exchange
shall become effective immediately following the close of business on the date
of filing with the North Carolina Secretary of State (the "Secretary of State")
of Articles of Exchange pursuant to Section 55-11-05(a) of the NCBCA (the
"Articles"), or at such later time and date as may be stated in the Articles
(the "Effective Time").
ARTICLE III
A. At the Effective Time:
(i) each share of CP&L Common Stock issued and outstanding immediately
prior to the Effective Time, including whole and fractional shares of CP&L
Common Stock held by or issued under the Employee Plans, shall be
automatically exchanged for one share of Holdings Common Stock, which shares
shall be fully paid and nonassessable by Holdings;
(ii) Holdings shall acquire and become the owner and holder of each
issued and outstanding share of CP&L Common Stock so exchanged;
(iii) each share of Holdings Common Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and shall
thereupon constitute an authorized and unissued share of Holdings Common
Stock;
(iv) the former holders of CP&L Common Stock shall be entitled only to
receive shares of Holdings Common Stock in exchange therefor as provided in
this Agreement; and
(v) the directors of CP&L shall become the directors of Holdings.
B. Shares of the CP&L Preferred Stocks shall not be exchanged or otherwise
affected by or in connection with the Share Exchange. Each share of the CP&L
Preferred Stocks issued and outstanding immediately prior to the Effective Time
shall continue to be issued and outstanding following the Share Exchange.
C. As of the Effective Time, (i) the Employee Plans shall be appropriately
amended to provide for the issuance or delivery of Holdings Common Stock in lieu
of CP&L Common Stock and Holdings shall agree to issue or deliver Holdings
Common Stock, and (ii) the Employee Plans shall be appropriately amended to
refer to Holdings Common Stock in lieu of CP&L Common Stock, in each case on and
after the Effective Time pursuant thereto.
ARTICLE IV
The filing of the Articles with the Secretary of State and the consummation
of the Share Exchange shall be subject to satisfaction of the following
conditions at or prior to the Effective Time:
(1) the affirmative votes of the holders of CP&L Capital Stock pursuant
to, and as described in, Article I of this Agreement shall have been
received;
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(2) such orders, authorizations, approvals or waivers from the North
Carolina Utilities Commission and the South Carolina Public Service
Commission and from all other regulatory bodies, boards or agencies with
jurisdiction over the Corporations that are necessary to consummate the
Exchange and related transactions shall have been received, shall remain in
full force and effect, and shall not include, in the sole judgment of the
Board of Directors of CP&L, unacceptable conditions; and
(3) the Holdings Common Stock to be issued in connection with the Share
Exchange shall have been listed, subject to official notice of issuance, by
the New York Stock Exchange.
ARTICLE V
Following the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of CP&L Common Stock may, but shall
not be required to, surrender the same to Holdings' transfer agent for
cancellation and reissuance of a new certificate or certificates in such
holder's name or for cancellation and transfer, and each such holder or
transferee shall be entitled to receive a certificate or certificates
representing the same number of shares of Holdings Common Stock as the shares of
CP&L Common Stock previously represented by the certificate or certificates
surrendered. Until so surrendered or presented for exchange or transfer, each
outstanding certificate which, immediately prior to the Effective Time,
represents CP&L Common Stock shall be deemed and shall be treated for all
purposes to represent the ownership of the same number of shares of Holdings
Common Stock as though such surrender or exchange or transfer had taken place.
The holders of CP&L Common Stock at the Effective Time shall have no right at
and after the Effective Time to have their shares of CP&L Common Stock
transferred on the stock transfer books of CP&L (such stock transfer books being
deemed closed for this purpose at the Effective Time), and at and after the
Effective Time such stock transfer books may be deemed to be the stock transfer
books of Holdings.
ARTICLE VI
A. This Agreement may be amended, modified or supplemented, or compliance
with any provision hereof may be waived, at any time prior to the Effective Time
(including, without limitation, after receipt of the affirmative vote of holders
of CP&L Capital Stock as provided in Article IV(1) hereof), by the mutual
consent of the respective Boards of Directors of CP&L and of Holdings at any
time prior to the Effective Time; PROVIDED, HOWEVER, that no such amendment,
modification, supplement or waiver shall be made or effected if such amendment,
modification, supplement or waiver would, in the sole judgment of the Board of
Directors of CP&L, materially and adversely affect the shareholders of CP&L.
B. This Agreement may be terminated and the Share Exchange and related
transactions abandoned, at any time prior to the Effective Time (including,
without limitation, after receipt of the affirmative vote of holders of CP&L
Capital Stock as provided in Article IV(1) hereof), if the Board of Directors of
CP&L determines, in its sole judgment, that consummation of the Share Exchange
would for any reason be inadvisable or not in the best interests of CP&L or its
shareholders.
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IN WITNESS WHEREOF, each of the Corporations, pursuant to authorization and
approval given by its Board of Directors, has caused this Agreement to be
executed as of the date first above written.
<TABLE>
<S> <C> <C>
CAROLINA POWER & LIGHT COMPANY
By: /s/ WILLIAM CAVANAUGH III
-----------------------------------------
Name: William Cavanaugh III
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
</TABLE>
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<PAGE>
EXHIBIT B
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CP&L HOLDINGS, INC.
ARTICLE I
NAME
The name of the corporation is CP&L Holdings, Inc. (the "Corporation")
ARTICLE II
REGISTERED OFFICE AND AGENT
The street and mailing address of the registered office and the name and
mailing address of the registered agent of the Corporation in the State of North
Carolina is:
William D. Johnson
c/o Carolina Power & Light Co.
411 Fayetteville Street
Raleigh, Wake County, North Carolina 27601
ARTICLE III
PURPOSES
The purposes for which the Corporation is formed are to conduct the business
of a holding company as well as to transact any or all other lawful business,
not required to be specifically stated in these Articles of Incorporation, for
which corporations may be incorporated under the North Carolina Business
Corporation Act, as amended from time to time, and any legislation succeeding
thereto (the "NCBCA").
All references herein to "Articles of Incorporation" shall mean these
Amended and Restated Articles of Incorporation, as subsequently amended or
restated in accordance herewith and with the NCBCA.
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares that the Corporation shall have authority to
issue shall be 20,000,000 shares of Preferred Stock, no par value per share
(hereinafter called "Preferred Stock"), and 500,000,000 shares of Common Stock,
no par value per share (hereinafter called "Common Stock").
The following is a description of each of such classes of stock, and a
statement of the preferences, limitations, voting rights and relative rights in
respect of the shares of each such class:
1. AUTHORITY TO FIX RIGHTS OF PREFERRED STOCK. The Board of Directors
shall have authority, by resolution or resolutions, at any time and from
time to time to divide and establish any or all of the unissued shares of
Preferred Stock not then allocated to any series of Preferred Stock into one
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or more series, and, without limiting the generality of the foregoing, to
fix and determine the designation of each such series, the number of shares
that shall constitute such series and the following relative rights and
preferences of the shares of each series so established:
(a) The annual or other periodic dividend rate payable on shares of
such series, the time of payment thereof, whether such dividends shall be
cumulative or non-cumulative, and the date or dates from which any
cumulative dividends shall commence to accrue;
(b) the price or prices at which and the terms and conditions, if
any, on which shares of such series may be redeemed;
(c) the amounts payable upon shares of such series in the event of
the voluntary or involuntary dissolution, liquidation or winding-up of
the affairs of the Corporation;
(d) the sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
(e) the extent of the voting powers, if any, of the shares of such
series; provided, however, that no share of Preferred Stock shall entitle
its holder to more than one vote on any matter;
(f) the terms and conditions, if any, on which shares of such series
may be converted into shares of stock of the Corporation of any other
class or classes or into shares of any other series of the same or any
other class or classes;
(g) whether, and if so the extent to which, shares of such series may
participate with the Common Stock in any dividends in excess of the
preferential dividend fixed for shares of such series or in any
distribution of the assets of the Corporation, upon a liquidation,
dissolution or winding-up thereof, in excess of the preferential amount
fixed for shares of such series; and
(h) any other preferences and relative, optional or other special
rights, and qualifications, limitations or restrictions of such
preferences or rights, of shares of such series not fixed and determined
by law or in this Article III.
2. DISTINCTIVE DESIGNATIONS OF SERIES. Each series of Preferred Stock
shall be so designated as to distinguish the shares thereof from the shares
of all other series. Different series of Preferred Stock shall not be
considered to constitute different voting groups of shares for the purpose
of voting by voting groups except as required by the NCBCA or as otherwise
specified by the Board of Directors with respect to any series at the time
of the creation thereof.
3. RESTRICTIONS ON CERTAIN DISTRIBUTIONS. So long as any shares of
Preferred Stock are outstanding, the Corporation shall not declare and pay
or set apart for payment any dividends (other than dividends payable in
Common Stock or other stock of the Corporation ranking junior to the
Preferred Stock as to dividends) or make any other distribution on such
junior stock if, at the time of making such declaration, payment or
distribution, the Corporation shall be in default with respect to any
dividend payable on, or any obligation to redeem, any shares of Preferred
Stock.
4. REDEEMED OR REACQUIRED SHARES. Shares of any series of Preferred
Stock that have been redeemed or otherwise reacquired by the Corporation
(whether through the operation of a sinking fund, upon conversion or
otherwise) shall have the status of authorized and unissued shares of
Preferred Stock and may be redesignated and reissued as a part of such
series (unless prohibited by the articles of amendment creating such series)
or of any other series of Preferred Stock. Shares of Common Stock that have
been reacquired by the Corporation shall have the status of authorized and
unissued shares of Common Stock and may be reissued.
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5. VOTING RIGHTS. Subject to the provisions of the NCBCA or of the
By-Laws of the Corporation as from time to time in effect with respect to
the closing of the transfer books or the fixing of a record date for the
determination of shareholders entitled to vote, and except as otherwise
provided by the NCBCA or in resolutions of the Board of Directors
establishing any series of Preferred Stock pursuant to the provisions of
paragraph 1 of this Article IV, the holders of outstanding shares of Common
Stock of the Corporation shall exclusively possess voting power for the
election of directors and for all other purposes, with each holder of record
of shares of Common Stock of the Corporation being entitled to one vote for
each share of such stock standing in his name on the books of the
Corporation. Shares shall not be voted cumulatively for the election of
directors.
6. NO PREEMPTIVE RIGHTS. No holder of shares of stock of any class of
the Corporation shall, as such holder, have any right to subscribe for or
purchase (a) any shares of stock of any class of the Corporation, or any
warrants, options or other instruments that shall confer upon the holder
thereof the right to subscribe for or purchase or receive from the
Corporation any shares of stock of any class, whether or not such shares of
stock, warrants, options or other instruments are issued for cash or
services or property or by way of dividend or otherwise, or (b) any other
security of the Corporation that shall be convertible into, or exchangeable
for, any shares of stock of the Corporation of any class or classes, or to
which shall be attached or appurtenant any warrant, option or other
instrument that shall confer upon the holder of such security the right to
subscribe for or purchase or receive from the Corporation any shares of its
stock of any class or classes, whether or not such securities are issued for
cash or services or property or by way of dividend or otherwise, other than
such right, if any, as the Board of Directors, in its sole discretion, may
from time to time determine. If the Board of Directors shall offer to the
holders of shares of stock of any class of the Corporation, or any of them,
any such shares of stock, options, warrants, instruments or other securities
of the Corporation, such offer shall not, in any way, constitute a waiver or
release of the right of the Board of Directors subsequently to dispose of
other securities of the Corporation without offering the same to said
holders.
7. SHAREHOLDER PROTECTION ACT AND CONTROL SHARE ACQUISITION ACT. The
provisions of Articles 9 and 9A of the NCBCA shall not apply to acquisitions
of shares of any class of capital stock of the Corporation.
ARTICLE V
DIRECTORS
1. NUMBER. The number of directors shall be as specified in the By-Laws
of the Corporation, but such number may be increased or decreased from time
to time in such manner as may be prescribed in the By-Laws, provided that in
no event shall the number of directors be less than nine or more than
fifteen.
2. REMOVAL. Subject to the rights of the holders of any Preferred Stock
then outstanding, directors may be removed with or without cause by the
affirmative vote of a majority of the voting power of the then outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors ("Voting Stock"), voting together as a single voting
group.
3. VACANCIES. Subject to the rights of the holders of any Preferred
Stock then outstanding and to any limitations set forth in the NCBCA,
newly-created directorships resulting from any increase in the number of
directors and any vacancies in the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled solely
(i) by the Board of Directors or (ii) at an annual meeting of shareholders
by the shareholders entitled to vote on the election of directors. If the
directors remaining in office constitute fewer than a quorum of the
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Board, they may fill the vacancy by the affirmative vote of a majority of
the directors remaining in office.
ARTICLE VI
AMENDMENT OF ARTICLES
An amendment or restatement of the Articles of Incorporation requiring
shareholder approval shall be approved by a majority of the votes entitled to be
cast by each voting group that is entitled to vote on the matter, unless in
submitting any such amendment or restatement to the shareholders the Board of
Directors shall require a greater vote.
ARTICLE VII
IMMUNITY
To the fullest extent permitted by the NCBCA, a director of the Corporation
shall not be liable to the Corporation or any of its shareholders for monetary
damages for breach of duty as a director. Any amendment to or repeal of the
provisions of this Article shall not impair any right or protection of a
director pertaining to service as a director up to the effective time of such
amendment or repeal.
ARTICLE VIII
AMENDMENT OF BY-LAWS
In furtherance of, and not in limitation of, the powers conferred by the
NCBCA, the Board of Directors is expressly authorized and empowered to adopt,
amend or repeal the By-Laws of the Corporation. By-laws adopted by the Board of
Directors under the powers hereby conferred may be altered, amended or repealed
by the Board of Directors or by the shareholders having voting power with
respect thereto as provided herein. In the case of any such action by
shareholders, the affirmative vote of the holders of a majority of the voting
power of the then outstanding Voting Stock, voting together as a single voting
group, shall be required in order for the shareholders to alter, amend or repeal
any provision of the By-Laws or to adopt any additional by-law. Any by-law
adopted, amended or repealed by the shareholders may not be readopted, amended
or repealed by the Board of Directors unless the Articles of Incorporation or a
by-law adopted by the shareholders authorizes the Board of Directors to adopt,
amend or repeal that particular by-law or the By-laws generally.
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<PAGE>
EXHIBIT C
AMENDED AND RESTATED
BY-LAWS
OF
CP&L HOLDINGS, INC.
RALEIGH, NORTH CAROLINA
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. All meetings of the shareholders of CP&L
Holdings, Inc. (the "Corporation"), shall be held at such place, either within
or without the State of North Carolina, as may from time to time be fixed by the
Board of Directors of the Corporation (the "Board").
Section 2. ANNUAL MEETINGS. Beginning in the year 2000, the annual meeting
of the shareholders of the Corporation shall be held on the second Wednesday of
May in each year, if not a legal holiday, and if a legal holiday, then on the
next day not a legal holiday, at ten o'clock A.M., or at such other date, or
hour, and at such place as stated in the notice of the meeting as the Board of
Directors may determine. The annual meeting of shareholders for 1999 shall be
held on the date and time specified by the Board of Directors.
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders of the
Corporation may be held upon call by a majority of the Board of Directors or of
the Executive Committee, or by the Chairman of the Board, or by the President of
the Corporation, at such time as may be stated in the call and notice.
Section 4. NOTICE OF MEETINGS. Written notice of the time and place of
every meeting of shareholders may be given, and shall be deemed to have been
duly given, by mailing the same at least ten, but not more than sixty, days
prior to the meeting, to each shareholder of record entitled to vote at such
meeting, and addressed to him at his address as it appears on the records of the
Corporation, with postage thereon prepaid. Notice may also be given by any other
lawful means.
Section 5. LIST OF SHAREHOLDERS. In accordance with Section 55-7-20 of the
General Statutes of North Carolina, the Corporation, or an officer having charge
of the record of shareholders of the Corporation, shall prepare a list of
shareholders which shall be available for inspection by shareholders, or their
agents or attorneys.
Section 6. QUORUM; PROXIES. Shares entitled to vote as a separate voting
group may take action on a matter at a meeting only if a quorum of that voting
group exists. A majority of the votes entitled to be cast on the matter by the
voting group constitutes a quorum of the voting group on that matter. Once a
share is represented for any purpose at a meeting, it is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.
In the absence of a quorum at the opening of any meeting of shareholders, the
meeting may be adjourned by a majority of shares voting on a motion to adjourn.
Notice of adjournment other than announcement at the meeting need not be given
unless a new record
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date is or must be set for that adjourned meeting. At any adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the original meeting.
Section 7. VOTING OF SHARES. (a) When a quorum is present at any meeting,
the vote of the holders of a majority of the outstanding stock having voting
power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which by express
provision of any applicable statute or of the Articles of Incorporation a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
(b) Unless otherwise provided by law or the Articles of Incorporation, at
every meeting of the shareholders each shareholder shall be entitled to one vote
in person or by proxy for each share of such stock held of record by such
shareholder. Except where the transfer books of the Corporation have been closed
or a date has been fixed as a record date for the determination of its
shareholders entitled to vote, no share of stock shall be voted at any election
for directors which has been transferred on the books of the Corporation within
twenty days next preceding such election of directors.
Section 8. INSPECTORS. The Board of Directors in advance of any meeting of
shareholders may appoint two voting inspectors to act at any such meeting or
adjournment thereof. If they fail to make such appointment, or if their
appointees or any of them fail to appear at the meeting of shareholders, the
chairman of the meeting may appoint such inspectors or any inspector to act at
that meeting.
Section 9. CONDUCT OF MEETINGS. Meetings of the shareholders shall be
presided over by the Chairman of the Board of Directors, or, if he is not
present, the President, or, if the President is not present, a Vice President,
or if neither of said officers is present, by a chairman pro tem to be elected
at the meeting. The Secretary of the Corporation shall act as secretary of such
meetings, if present, but if not present, some person shall be appointed by the
presiding officer to act during the meeting. The officer of the Corporation
presiding over the meeting of shareholders shall have all the powers and
authority vested in presiding officers by law or practice, without restriction,
as well as the authority to conduct an orderly meeting and to impose reasonable
limits on the amount of time taken up in remarks by any one shareholder.
Section 10. BUSINESS PROPOSED BY A SHAREHOLDER. To be properly brought
before a meeting of shareholders, business must be (i) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors or (iii) otherwise properly brought before
an annual meeting by a shareholder of the Corporation who was a shareholder of
record at the time of the giving of notice provided for in Section 4 of these
By-Laws and who is entitled to vote at the meeting. In addition to any other
applicable requirements, for business to be properly brought before an annual
meeting by a shareholder, the shareholder must give timely notice of the
proposal in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be received by the Secretary of the Corporation at the
principal executive offices of the Corporation not later than the close of
business on the 60th day prior to the first anniversary of the immediately
preceding year's annual meeting; provided, however, that with respect to the
annual meeting to be held in 2000, a shareholder's notice must be received by
the Secretary of the Corporation at the principal executive offices of the
Corporation no later than December 3, 1999. In no event shall the public
announcement of an adjournment or postponement of an annual meeting or the fact
that an annual meeting is held after the anniversary of the preceding annual
meeting commence a new time period for the giving of a shareholder notice as
described above. A shareholder's notice shall set forth as to each matter the
shareholder proposes to bring before the meeting (i) a brief description of the
business desired to be brought before the annual meeting, including the complete
text of any resolutions to be presented at the annual meeting with respect to
such business, (ii) the reasons for conducting such business at the
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annual meeting, (iii) the name and address of record of the shareholder and the
beneficial owner, if any, on whose behalf the proposal is made, (iv) the class
and number of shares of the Corporation which are owned by the shareholder and
such beneficial owner, (v) a representation that the shareholder is a holder of
record of shares of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to propose such business, and
(vi) any material interest of the shareholder and such beneficial owner in such
business.
In the event that a shareholder attempts to bring business before a meeting
without complying with the procedures set forth in this Section 10, such
business shall not be transacted at such meeting. The Chairman of the Board of
Directors, or any other individual presiding over the meeting pursuant to
Section 9 of these By-Laws, shall have the power and duty to determine whether
any proposal to bring business before the meeting was made in accordance with
the procedures set forth in this Section 10, and, if any business is not
proposed in compliance with this Section, to declare that such defective
proposal shall be disregarded and that such proposed business shall not be
transacted at such meeting.
Section 11. NOMINATIONS BY SHAREHOLDERS. Subject to the rights of holders
of any securities or obligations of the Corporation conferring special rights
regarding election of directors, nominations for the election of directors shall
be made by the Board of Directors or by any shareholder entitled to vote in
elections of directors; provided however, that any shareholder entitled to vote
in the election of directors may nominate one or more persons for election as
directors only at an annual meeting and if written notice of such shareholder's
intent to make such nomination or nominations has been received, either by
personal delivery or by United States registered or certified mail, postage
prepaid, by the Secretary of the Corporation at the principal executive offices
of the Corporation not later than the close of business on the 60th day prior to
the first anniversary of the immediately preceding year's annual meeting;
provided, however, that with respect to the annual meeting to be held in 2000, a
shareholder's notice must be received by the Secretary of the Corporation at the
principal executive offices of the Corporation no later than December 3, 1999.
In no event shall the public announcement of an adjournment or postponement of
an annual meeting or the fact that an annual meeting is held after the
anniversary of the preceding annual meeting commence a new time period for the
giving of a shareholder's notice as described above. Each notice shall set forth
(i) the name and address of record of the shareholder who intends to make the
nomination, the beneficial owner, if any, on whose behalf the nomination is made
and of the person or persons to be nominated, (ii) the class and number of
shares of the Corporation that are owned by the shareholder and such beneficial
owner, (iii) a representation that the shareholder is a holder of record of
shares of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice, (iv) a description of all arrangements, understandings or
relationships between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder, and (v) such other information
regarding each nominee proposed by such shareholder as would be required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required to be disclosed, pursuant to the proxy rules
of the Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Directors, and shall include a consent
signed by each such nominee to serve as a director of the Corporation if so
elected. In the event that a shareholder attempts to nominate any person without
complying with the procedures set forth in this Section 11, such person shall
not be nominated and shall not stand for election at such meeting. The Chairman
of the Board of Directors, or any other individual presiding over the meeting
pursuant to Section 9 of these By-Laws, shall have the power and duty to
determine whether a nomination proposed to be brought before the meeting was
made in accordance with the procedures set forth in this Section 11 and, if any
proposed nomination is not in compliance with this Section 11, to declare that
such defective proposal shall be disregarded.
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ARTICLE II
DIRECTORS AND MEETINGS OF DIRECTORS
Section 12. NUMBER AND ELECTION OF DIRECTORS.
(a) The number of directors of the Corporation shall not be less than eleven
(11) nor more than fifteen (15). The authorized number of directors, within the
limits above specified, shall be determined by the affirmative vote of a
majority of the whole board given at any regular or special meeting of the Board
of Directors, provided that, the number of directors shall not be reduced to a
number less than the number of directors then in office unless such reduction
shall become effective only at and after the next ensuing meeting of the
shareholders for the election of directors.
(b) The directors shall appoint from among their number a Chairman, who
shall serve at the pleasure of the Board. Members of the Board of Directors of
the Corporation who are full-time employees of the Corporation shall retire from
the Board upon attaining the age of 65 years; provided, however, that the
Chairman of the Board of the Corporation shall be eligible to continue as a
member of the Board after attaining the age of 65 years and will be considered a
Director who is not employed full-time by the Corporation. Those persons who are
not employed full-time by the Corporation shall not be eligible for election as
a Director in any calendar year (or subsequent year) in which he or she has
reached or will reach the age of 71 years. Any Director who reaches the age of
71 during a term of office shall resign as of the first day of the month so
following unless otherwise determined by the Board.
(c) Except for the election of the initial directors whose terms are
classified pursuant to this By-Law, the election of directors shall be held at
the annual meeting of shareholders. The directors, other than those who may be
elected under circumstances specified in the Articles of Incorporation by the
holders of any class of stock having a preference over the Common Stock as to
dividends or in liquidation, shall be classified into three classes, Class I,
Class II and Class III, as nearly equal in number as possible. The directors of
Class I shall originally be elected for a term expiring at the annual meeting of
shareholders of the Corporation to be held in 2002; the directors of Class II
shall originally be elected for a term expiring at the annual meeting of
shareholders of the Corporation to be held in 2000; and the directors of Class
III shall originally be elected for a term expiring at the annual meeting of
shareholders of the Corporation to be held in 2001. The directors of each class
shall hold office until their respective successors are elected and qualified,
or until their earlier resignation or removal. At each annual meeting of
shareholders of the Corporation beginning in 2000, the successors to the class
of directors whose term expires at such meeting shall be identified as being of
the same class of directors they succeed and shall be elected to hold office for
a term expiring at the third succeeding annual meeting of shareholders. When the
number of directors is changed, any newly-created directorships or any decrease
in directorships shall be so apportioned among the classes by the Board of
Directors as to make all classes as nearly equal in number as possible;
provided, however, that no decrease in the number of directors shall shorten or
terminate the term of any incumbent director.
Section 13. VACANCIES.
Subject to contrary provisions in the Articles of Incorporation or elsewhere
in these By-Laws, in case of any vacancy in the number of directors through
death, resignation, disqualification, increase in the number of directors or
other cause, the remaining directors present at the meeting, by affirmative vote
of a majority thereof, though less than a quorum, may elect a successor to hold
office until the next shareholders' meeting at which directors are elected and
until the election of his successor.
Section 14. MEETINGS.
Regular meetings of the Board of Directors shall be held at times fixed by
resolution of the Board, and special meetings may be held upon the written call
of the Executive Committee, or by the
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Chairman of the Board, or by the President or by any two directors; and the
Secretary or officer performing his duties shall give reasonable notice of all
meetings of directors; provided, that a meeting may be held without notice
immediately after the annual election, and notice need not be given of regular
meetings held at times fixed by resolution of the Board. Meetings may be held at
any time without notice if all the directors are present, or if those not
present waive notice either before or after the meeting. All regular and special
meetings shall be held at the principal offices of the Corporation, provided
that the Board, from time to time, may order that any meeting be held elsewhere
within or without the State of North Carolina. A majority of the whole Board of
Directors shall constitute a quorum, and the act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless a greater proportion is required by the Articles of
Incorporation.
Section 15. TELEPHONE MEETINGS.
Members of the Board or any committee may participate in a meeting of the
Board or such committee by means of a conference telephone or other means of
communications whereby all directors participating may simultaneously hear each
other during the meeting, and participation by such means shall constitute
presence in person at such meeting.
Section 16. ACTIONS WITHOUT MEETINGS.
Any action that may be taken at a meeting of the Board or of a committee may
be taken without a meeting if a consent in writing, setting forth the action,
shall be signed, either before or after such action, by all of the directors or
all of the members of the committee, as the case may be. Such consent shall have
the same force and effect as a unanimous vote.
Section 17. GENERAL POWERS.
The business and affairs of the Corporation shall be managed by its Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things which are not by law or by the Articles of Incorporation
directed or required to be exercised or done by the shareholders; provided,
however, that the officers of the Corporation shall, without prior action of the
Board of Directors, perform all acts and things incidental to the usual and
ordinary course of the business in which the Corporation is engaged as
hereinafter provided by the By-Laws or as may hereafter be delegated by the
Board of Directors.
Section 18. COMMITTEES.
(a) A majority of the Board of Directors may create one or more committees
and appoint other members of the Board of Directors to serve on such Committees.
Each such committee shall have two or more members, who serve at the pleasure of
the Board of Directors. Any such committee may exercise authority over any
matters except those matters described in Section 55-8-25(e) of the General
Statutes of North Carolina. Each committee may make rules for the conduct of its
business. A majority of the members of such committee shall constitute a quorum.
(b) A majority of the whole Board of Directors, present at any meeting held
after their election in each year, may appoint an Executive Committee, to
consist of three or more directors, which Committee shall have and may exercise,
during the intervals between meetings of the Board, by a majority vote of those
present at a meeting, all the powers vested in the Board, except the following
matters as more fully described in Section 55-8-25(e) of the General Statutes of
North Carolina:
-- Authorize distributions;
-- Approve or propose to shareholders action that is by law required to be
approved by the shareholders;
-- Fill vacancies on the Board of Directors or on any of its Committees;
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-- Amend the Corporation's Articles of Incorporation pursuant to N.C.G.S.
Section55-10-02;
-- Adopt, amend or repeal the Corporation's By-Laws;
-- Approve a plan of merger not requiring shareholder approval;
-- Authorize or approve reacquisition of shares, except according to a
formula or method prescribed by the Board of Directors; or
-- Authorize or approve the issuance or sale or contract for sale of
shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, except that the Board of
Directors may authorize a committee (or a senior executive officer of the
Corporation) to do so within limits specifically prescribed by the Board
of Directors.
(c) A majority of the whole Board of Directors present at any meeting shall
have the power at any time to change the membership of such committee and to
fill vacancies in it. The Chairman of the Executive Committee shall be appointed
by the Board of Directors from the membership of the Executive Committee.
ARTICLE III
NOTICES
Section 19. NOTICE REQUIREMENTS.
(a) Notice may be communicated: in person; by telephone, telegraph,
teletype, or other form of wire or wireless communication, by facsimile
transmission; or by mail or private carrier. If these forms of personal notice
are impracticable as to one or more persons, notice may be communicated to such
persons by publishing notice in a newspaper in the county wherein the
Corporation has its principal place of business in North Carolina, or if it has
no principal place of business in North Carolina, the county wherein it has its
registered office in North Carolina; or by radio, television, or other form of
public broadcast communication.
(b) Written notice is effective at the earliest of the following:
(i) When received;
(ii) Five days after its deposit in the United States mail, as evidenced
by the postmark or based on the affidavit of the person depositing
the notice, if mailed with postage thereon prepaid and correctly
addressed;
(iii) On the date shown on the return receipt, if sent by registered or
certified mail, return receipt requested, signed by or on behalf of
the addressee. Anyone accepting the mail at the stated address and
signing the receipt shall be conclusively presumed to have acted on
behalf of the addressee.
(c) Oral notice is effective when actually communicated to the person to
whom given.
(d) If these By-Laws prescribe notice requirements for particular
circumstances, those requirements govern.
(e) No notice need be given any shareholder or director whose address is
outside of the United States and each shareholder located outside of the United
States must provide to the Corporation a mailing address in the United States to
which notices from the Corporation may be addressed. The Corporation shall not
be obligated to recognize any such address (or change of address) received less
than thirty days before the date on which the Corporation's notice is sent. Any
notice given by telegram or cable shall be deemed to be given when delivered to
and accepted for transmittal by an office of the transmitting corporation.
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Section 20. WAIVER OF NOTICE.
Whenever any notice is required to be given under the provisions of
applicable statutes or of the Articles of Incorporation or of these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice in apt time.
ARTICLE IV
OFFICERS, THEIR AUTHORITY, AND THEIR TERMS OF OFFICE
Section 21. OFFICERS OF THE CORPORATION.
The Board of Directors shall annually at its first meeting held after the
annual meeting of shareholders, or as soon thereafter as may be practical, elect
the officers of the Corporation, who shall consist of a President, one or more
Senior Executive Vice Presidents and Executive Vice Presidents, two or more
Senior Vice Presidents, three or more Vice Presidents, a Secretary, a Treasurer,
a Controller and such other officers or assistant officers and agents as may be
appointed by the Board of Directors. At other times, the Board of Directors or
any Committee to which it delegates the authority to do so may elect officers to
fill any new office or a vacancy in any office occurring by virtue of the
incumbent's death, resignation, removal or otherwise at any duly convened
meeting of the Board or of the Committee. The officer shall serve for the period
specified or until a successor is chosen. From time to time the Board of
Directors may also elect a Vice Chairman who shall have such duties as described
herein and as may from time to time be directed. Any two offices may be held by
the same person, but no officer may act in more than one capacity where action
of two or more officers is required. The Vice Chairman, if any, of the Board of
Directors shall be chosen from among the Directors, but the other officers need
not be directors of the Corporation.
Section 22. CHIEF EXECUTIVE OFFICER.
(a) The Board of Directors shall appoint the Chief Executive Officer, who
shall be either the Chairman, the Vice Chairman or the President of the
Corporation. In the event the Chief Executive Officer is unavailable at the time
for needed action, or in other circumstances as directed by the Chief Executive
Officer, then the Chairman, the Vice Chairman, if any, or the President if there
is no Vice Chairman, who is not then serving as Chief Executive Officer, shall
be the next officer in line of authority to perform the duties of Chief
Executive Officer. If the Chairman, the Vice Chairman and the President should
be unavailable at the time for needed action, or in other circumstances as
directed by the Chief Executive Officer, then the next officer in line of
authority to perform the duties of the Chief Executive Officer shall be a Senior
Executive Vice President or Executive Vice President as designated by the Chief
Executive Officer.
(b) Unless otherwise provided by the Board of Directors, the Corporation's
Chief Executive Officer is vested with full power, authority, and the duty, to
perform in person, and by delegation of authority to subordinate officers and
employees of the Corporation, all acts and things deemed by him to be reasonably
necessary or desirable to direct, handle, and manage, and in general carry on
the Corporation's business transactions authorized by its Articles of
Incorporation, in respect to all matters except those which by law must be
performed by the directors.
Section 23. REMOVAL AND RESIGNATION OF OFFICERS.
Any officer may be reassigned duties by appropriate members of senior
management at any time. Any officer may be removed from office at any time by
the Board of Directors, or by any Committee to which it delegates the authority
to remove officers from office, without prejudice to the rights of the officer
removed under an employment agreement in writing previously duly authorized by
the Board of Directors or the Executive Committee of the Board of Directors. Any
officer may resign at any time by
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giving written notice to the Board of Directors, the President or any other
officer of the Corporation. Such resignation shall take effect at the time
specified therein, and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 24. BOND.
The Board of Directors or the Chief Executive Officer of the Corporation may
require the Treasurer and any other officer, employee or agent of the
Corporation to give bond, in such sum and with such surety or sureties as either
shall determine, for the faithful discharge of their duties.
ARTICLE V
CAPITAL STOCK
Section 25. CERTIFICATED AND UNCERTIFICATED SHARES.
(a) The Board of Directors may authorize the issuance of some or all of the
shares of the Corporation's classes or series of capital stock without issuing
certificates to represent such shares. If shares are represented by
certificates, the certificates shall be in such form as required by law and as
determined by the Board of Directors. Certificates shall be signed by the
Chairman of the Board or the President and by the Secretary or Treasurer. The
signatures of any such officers upon a certificate may be facsimiles or may be
engraved or printed or omitted if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the Corporation itself or an
employee of the Corporation. If an officer who has signed or whose facsimile or
other signature has been placed upon a certificate ceases to hold the office
before the certificate is issued, the certificate may be issued by the
Corporation with the same effect as if he held the office on the date of
issuance.
(b) All certificates for shares shall be consecutively numbered (within
class or series designations, if desired) or otherwise identified and entered
into the stock transfer records of the Corporation. When shares are represented
by certificates, the Corporation shall issue and deliver to each shareholder to
whom such shares have been issued or transferred certificates representing the
shares owned of record by him. Upon a transfer of certificated shares, a new
certificate shall be issued only upon surrender of a certificate representing
such shares for cancellation, subject to the provisions for issuance of a new
certificate set forth in Section 26 of these By-Laws. When shares are not
represented by certificates, then within a reasonable time after the issuance or
transfer of such shares, the Corporation shall send the shareholder to whom such
shares have been issued or transferred a written statement of the information
required by law to be on certificates.
(c) If uncertificated shares are issued, the Corporation shall send each
holder of such shares a written statement containing the information required by
law.
(d) Transfer agents or registrars, or both, for one or more classes of the
stock of the Corporation may be appointed by the Board of Directors and may be
required to countersign certificates representing shares of such class or
classes.
Section 26. STOCK TRANSFER BOOKS AND TRANSFER OF SHARES.
The Corporation or its designated transfer agent or other agent, shall keep
a book or set of books to be known as the stock transfer books of the
Corporation, containing the name of each shareholder of record, together with
such shareholder's address and the number and class or series of shares held by
such shareholder. Shares of stock of the Corporation shall be transferable on
the stock books of the Corporation by the holder in person or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary or the transfer agent, but, except as hereinafter provided in the case
of loss, destruction or mutilation of certificates, no transfer of stock shall
be entered until the previous certificate, if any, given for the same shall have
been surrendered and canceled. Transfer of shares of the Corporation represented
by certificates shall be made on the stock transfer books of the
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Corporation only upon surrender of the certificates for the shares sought to be
transferred by the holder of record thereof or by such holder's duly authorized
agent, transferee or legal representative, who shall furnish proper evidence of
authority to transfer with the Secretary of the Corporation or its designated
transfer agent or other agent. All certificates surrendered for transfer shall
be canceled before new certificates for the transferred shares shall be issued.
Except as otherwise provided by law, no transfer of shares shall be valid as
against the Corporation, its shareholders or creditors, for any purpose, until
it shall have been entered in the stock records of the Corporation by an entry
showing from and to whom transferred.
Section 27. HOLDER OF RECORD.
Except as otherwise required by the NCBCA, the Corporation may treat the
person in whose name shares of stock of the Corporation (whether or not
represented by a certificate) stand of record on its books or the books of any
transfer agent or other agent designated by the Board of Directors as the
absolute owner of the shares and the person exclusively entitled to receive
notification and distributions, to vote, and otherwise to exercise the rights,
powers and privileges of ownership of such shares. The Corporation may assume
that the holder of record had full competency, capacity and authority to
exercise all rights of ownership, irrespective of any knowledge or notice to the
contrary or any description indicating a representative, pledge or other
fiduciary relation or any reference to any other instrument or to the rights of
any other person appearing upon the records of the Corporation or upon the share
certificate.
Section 28. RECORD DATE.
For the purpose of determining shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board may fix in advance a date
as the record date for any such determination of shareholders, such date in any
case to be not more than seventy days prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination shall apply to any
adjournment thereof unless the Board fixes a new record date, which it shall do
if the meeting is adjourned to a date more than 120 days after the date fixed
for the original meeting.
Section 29. LOST, DESTROYED OR MUTILATED CERTIFICATES.
In case of loss, destruction or mutilation of any certificate of stock,
another may be issued in its place upon proof of such loss, destruction or
mutilation and upon the giving of a bond of indemnity to the Corporation in such
form and in such sum as the Board may direct, provided that a new certificate
may be issued without requiring any bond when, in the judgment of the Board, it
is proper so to do. The Board of Directors may delegate to the Corporation's
Transfer Agent and Registrar authority to issue and register, respectively, from
time to time without further action or approval of the Board of Directors, new
certificates of stock to replace certificates reported lost, stolen or destroyed
upon receipt of an affidavit of loss and bond of indemnity in form and amount
and with corporate surety satisfactory to them in each instance protecting the
Corporation and them against loss. Such legal evidence of such loss or theft or
destruction shall be furnished to the Board of Directors as may be required by
them.
Section 30. TRANSFER AGENT AND REGISTRAR; REGULATIONS.
The Corporation may, if and whenever the Board of Directors so determines,
maintain in the State of North Carolina or any other state of the United States,
one or more transfer offices or agencies and also one or more registry offices
which offices and agencies may establish rules and regulations for the issue,
transfer and registration of certificates. No certificates for shares of stock
of the Corporation in respect of which a transfer agent and registrar shall have
been designated shall be valid unless countersigned by such transfer agent and
registered by such registrar. The Board of Directors may also make such
additional rules and regulations as it may deem expedient concerning the issue,
transfer and registration of shares represented by certificates and shares
without certificates.
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ARTICLE VI
GENERAL
Section 31. DISTRIBUTIONS. Subject to the provisions of the applicable
statutes and the Articles of Incorporation of the Corporation, dividends, either
cash or stock, upon the capital stock of the Corporation may be declared by the
Board of Directors at any meeting thereof.
Section 32. DEEDS, BONDS, AND CONTRACTS. Deeds, bonds, notes, mortgages
and contracts of the Corporation may be executed on behalf of the Corporation by
the President, a Senior Executive Vice President, an Executive Vice President,
or a Vice President, or any one of such other persons as shall from time to time
be authorized by the Board of Directors, and when necessary or appropriate may
be attested or countersigned by the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer. The corporate seal of the Corporation may
be affixed to deeds, bonds, notes, mortgages, contracts or stock certificates by
an appropriate officer of the Corporation by impression thereon, or, by order of
an appropriate officer of the Corporation, a facsimile of said seal may be
affixed thereto by engraving, printing, lithograph or other method.
Section 33. DEPOSITS. The monies of the Corporation shall be deposited in
the name of the Corporation in such bank or banks or trust Corporation or trust
companies as the Treasurer, with approval of the Chief Executive Officer, shall
from time to time select, and shall be drawn out only by checks or other orders
signed by persons designated by resolution by the Board of Directors.
Section 34. INTERPRETATION. As and when used in any of the foregoing
By-Laws the words "stockholder" and "stockholders" shall be deemed and held to
be synonymous with the words "shareholder" and "shareholders," and the word
"stock" shall be deemed and held to be synonymous with the words "share" or
"shares," respectively, as used in Chapter 55 of the General Statutes of North
Carolina.
ARTICLE VII
INDEMNITY OF OFFICERS AND DIRECTORS
Section 35. INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
(a) The Corporation shall reimburse or indemnify any past, present or future
officer or director of the Corporation for and against such liabilities and
expenses as are authorized by Sections 55-8-54, 55-8-55, 55-8-56 and 55-8-57 of
the General Statutes of North Carolina. Persons serving as officers or directors
of the Corporation or serving in any such capacity at the request of the
Corporation in any other Corporation, partnership, joint venture, trust or other
enterprise shall be provided reimbursement and indemnification by the
Corporation to the maximum extent allowed hereunder or under applicable law,
including without limitation Sections 55-8-54, 55-8-55, 55-8-56 and 55-8-57 of
the General Statutes of North Carolina.
(b) In addition to the reimbursement and indemnification provisions set
forth above, any person who at any time serves or has served (1) as an officer
or director of the Corporation, or (2) at the request of the Corporation as an
officer or director (or in any position of similar authority, by whatever title
known) of any other Corporation, partnership, joint venture, trust or other
enterprise or (3) as an individual trustee or administrator under any employee
benefit plan, shall have a right to be indemnified by the Corporation to the
fullest extent permitted by law against (i) all reasonable expenses, including
attorney's fees, actually and necessarily incurred by him in connection with any
pending, threatened or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, and whether or not brought by the
Corporation or on behalf of the Corporation in a derivative action, seeking to
hold him liable by reason of or arising out of his status as such or his
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activities in any of the foregoing capacities, and (ii) payments made by him in
satisfaction of any judgment, money decree, fine, penalty or settlement for
which he may have become liable in any such action, suit or proceeding;
provided, however, that the Corporation shall not indemnify any person against
liability or litigation expense he may incur on account of his activities which
were at the time taken, known or believed by him to be clearly in conflict with
the best interests of the Corporation.
(c) No past, present or future director or officer of the Corporation (or
his heirs, executors, and administrators) shall be liable for any act, omission,
step or conduct taken or had in good faith that (whether by condition or
otherwise) is required, authorized or approved by any order or orders issued
pursuant to: the Public Utility Holding Company Act of 1935; the Federal Power
Act; or any state statute regulating the Corporation or its subsidiaries by
reason of their being public utility companies or subsidiaries of public utility
holding companies; or any amendments to the foregoing laws. If this provision is
found by a court not to constitute a valid defense to any claim against such
director or officer, each director and officer (and his heirs, executors and
administrators) shall be reimbursed for, or indemnified against, all expenses
and liabilities received by him in connection with, or arising from, any such
action, suit or proceeding based on any act, omission, step or conduct described
above. Such expenses and liabilities include, but are not limited to, judgments,
court costs and attorneys' fees. The foregoing rights shall not be exclusive of
other rights to which any director or officer may otherwise be entitled and
shall be available whether or not the director or officer continues to be a
director or officer at the time of incurring such expenses and liabilities.
(d) The Board of Directors shall take all actions as may be necessary or
appropriate to authorize the Corporation to pay all amounts required under this
Section 35 of the By-Laws including, without limitation and to the extent deemed
to be appropriate, necessary, or required by law (1) making a good faith
evaluation of the manner in which the claimant for indemnity acted and of the
reasonable amount of indemnity due such individual, or (2) making advances of
costs and expenses, or (3) giving notice to, or obtaining approval by, the
shareholders of the Corporation.
(e) Any person who serves or has served in any of the aforesaid capacities
for or on behalf of the Corporation shall be deemed to be doing or have done so
in reliance upon, and as consideration for, the rights of reimbursement and
indemnification provided for herein. Such rights of reimbursement and
indemnification shall inure to the benefit of the legal representatives of such
individuals, shall include amounts paid in settlement and shall not be exclusive
of any other rights to which such individuals shall be entitled apart from the
provisions of this Section. No amendment to or repeal of any provision of this
Section 35 shall impair any right of a director or officer based on service in
such capacity up to the effective time of such amendment or repeal.
(f) The Corporation may, in its sole discretion, wholly or partially
indemnify and advance expenses to any employee or agent of the Corporation to
the same extent as provided herein for officers and directors.
(g) The provisions of this Section shall not limit the power of the
Corporation to agree to indemnify its directors, officers, employees or agents,
by contract or resolution to the fullest extent allowed by applicable law.
ARTICLE VIII
EMERGENCY BY-LAWS
Section 36. DEFINITIONS.
As used in these Emergency By-Laws.
(a) the term "period of emergency" shall mean any period during which a
quorum of the Board cannot readily be assembled because of some catastrophic
event.
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(b) the term "incapacitated" shall mean that the individual to whom such
term is applied shall not have been determined to be dead but shall be missing
or unable to discharge the responsibilities of his office; and
(c) the term "senior officer" shall mean the Chairman of the Board, the
Chief Executive Officer, the President, any Senior Executive Vice President,
Executive Vice President, Senior Vice President or Vice President, the
Treasurer, the Controller and the Secretary, and any other person who may have
been so designated by the Board before the emergency.
Section 37. APPLICABILITY. These Emergency By-Laws, as from time to time
amended, shall be operative only during any period of emergency. To the extent
not inconsistent with these Emergency By-Laws, all provisions of the regular
By-Laws of the Corporation shall remain in effect during any period of
emergency.
No officer, director or employee shall be liable for actions taken in good
faith in accordance with these Emergency By-Laws.
Section 38. BOARD OF DIRECTORS.
(a) A meeting of the Board may be called by any director or senior officer
of the Corporation. Notice of any meeting of the Board need be given only to
such of the directors as it may be feasible to reach at the time and by such
means as may be feasible at the time, including publication or radio, and at a
time less than twenty-four hours before the meeting if deemed necessary by the
person giving notice.
(b) At any meeting of the Board, three directors in attendance shall
constitute a quorum. Any act of a majority of the directors present at a meeting
at which a quorum shall be present shall be the act of the Board. If less than
three directors should be present at a meeting of the Board, any senior officer
of the Corporation in attendance at such meeting shall serve as a director for
such meeting, selected in order of rank and within the same rank in order of
seniority.
(c) In addition to the Board's powers under the regular By-Laws of the
Corporation to fill vacancies on the Board, the Board may elect any individual
as a director to replace any director who may be incapacitated and to serve
until the latter ceases to be incapacitated or until the termination of the
period of emergency, whichever first occurs. In considering officers of the
Corporation for election to the Board, the rank and seniority of individual
officers shall not be pertinent.
(d) The Board, during as well as before any such emergency, may change the
principal office or designate several alternative offices or authorize the
officers to do so.
Section 39. APPOINTMENT OF OFFICERS. In addition to the Board's powers
under the regular By-Laws of the Corporation with respect to the election of
officers, the Board may elect any individual as an officer to replace any
officer who may be incapacitated and to serve until the latter ceases to be
incapacitated.
Section 40. AMENDMENTS. These Emergency By-Laws shall be subject to repeal
or change by further action of the Board of Directors or by action of the
shareholders, except that no such repeal or change shall modify the provisions
of the second paragraph of Section 37 with regard to action or inaction prior to
the time of such repeal or change. Any such amendment of these Emergency By-Laws
may make any further or different provision that may be practical and necessary
for the circumstances of the emergency.
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EXHIBIT D
ARTICLE 13
DISSENTERS' RIGHTS
PART 1.
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES.
SECTION 55-13-01. DEFINITIONS.
In this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under G.S. 55-13-02 and who exercises that right when
and in the manner required by G.S. 55-13-20 through 55-13-28.
(3) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be
inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable
under all the circumstances, giving due consideration to the rate
currently paid by the corporation on its principal bank loans, if any,
but not less than the rate provided in G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on
file with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
SECTION 55-13-02. RIGHT TO DISSENT.
(a) In addition to any rights granted under Article 9, a shareholder is entitled
to dissent from, and obtain payment of the fair value of his shares in the
event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation (other than a
parent corporation in a merger under G.S. 55-11-04) is a party unless (i)
approval by the shareholders of that corporation is not required under
G.S. 55-11-03(g) or (ii) such shares are then redeemable by the
corporation at a price not greater than the cash to be received in
exchange for such shares;
(2) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, unless such
shares are then redeemable by the corporation at a price not greater than
the cash to be received in exchange for such shares;
(3) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than as permitted by G.S. 55-12-01,
including a sale in dissolution, but not
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including a sale pursuant to court order or a sale pursuant to a plan by
which all or substantially all of the net proceeds of the sale will be
distributed in cash to the shareholders within one year after the date of
sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it
(i) alters or abolishes a preferential right of the shares; (ii) creates,
alters, or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of
the shares; (iii) alters or abolishes a preemptive right of the holder of
the shares to acquire shares or other securities; (iv) excludes or limits
the right of the shares to vote on any matter, or to cumulate votes; (v)
reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under
G.S. 55-6-04; or (vi) changes the corporation into a nonprofit
corporation or cooperative organization;
(5) Any corporate action taken pursuant to a shareholder vote to the extent
the articles of incorporation, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares under
this Article may not challenge the corporate action creating his
entitlement, including without limitation a merger solely or partly in
exchange for cash or other property, unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
(c) Notwithstanding any other provision of this Article, there shall be no right
of dissent in favor of holders of shares of any class or series which, at
the record date fixed to determine the shareholders entitled to receive
notice of and to vote at the meeting at which the plan of merger or share
exchange or the sale or exchange of property is to be acted on, were (i)
listed on a national securities exchange or (ii) held by at least 2,000
record shareholders, unless in either case:
(1) The articles of incorporation of the corporation issuing the shares
provide otherwise;
(2) In the case of a plan of merger or share exchange, the holders of the
class or series are required under the plan of merger or share exchange
to accept for the shares anything except:
a. Cash;
b. Shares, or shares and cash in lieu of fractional shares of the
surviving or acquiring corporation, or of any other corporation
which, at the record date fixed to determine the shareholders
entitled to receive notice of and vote at the meeting at which the
plan of merger or share exchange is to be acted on, were either
listed subject to notice of issuance on a national securities
exchange or held of record by at least 2,000 record shareholders; or
c. A combination of cash and shares as set forth in sub-subdivisions a.
and b. of this subdivision.
(1925, c. 77, s. 1; c. 235; 1929, c. 269; 1939, c. 279; 1943, c. 270; G.S., ss.
55-26, 55-167; 1955, c. 1371, s. 1; 1959, c. 1316, ss. 30, 31; 1969, c. 751, ss.
36, 39; 1973, c. 469, ss. 36, 37; c. 476, s. 193; 1989, c. 265, s. 1; 1989 (Reg.
Sess., 1990), c. 1024, s. 12.18; 1991, c. 645, s. 12; 1997-202, s. 1.)
SECTION 55-13-03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing
of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection
are determined as if
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the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held on
his behalf only if:
(1) He submits to the corporation the record shareholder's written consent
to the dissent not later than the time the beneficial shareholder asserts
dissenters' rights; and
(2) He does so with respect to all shares of which he is the beneficial
shareholder.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
SECTION SECTION 55-13-04 TO 55-13-19. Reserved for future codification.
PART 2.
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
SECTION 55-13-20. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under G.S. 55-13-02
is submitted to a vote at a shareholders' meeting, the meeting notice must
state that shareholders are or may be entitled to assert dissenters' rights
under this Article and be accompanied by a copy of this Article.
(b) If corporate action creating dissenters' rights under G.S. 55-13-02 is taken
without a vote of shareholders, the corporation shall no later than 10 days
thereafter notify in writing all shareholders entitled to assert dissenters'
rights that the action was taken and send them the dissenters' notice
described in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this section, such
failure shall not invalidate any corporate action taken; but any shareholder
may recover from the corporation any damage which he suffered from such
failure in a civil action brought in his own name within three years after
the taking of the corporate action creating dissenters' rights under G.S.
55-13-02 unless he voted for such corporate action.
(1925, c. 77, s. 1; c. 235; 1929, c. 269; 1939, c. 5; c. 279; 1943, c. 270;
G.S., ss. 55-26, 55-165, 55-167; 1955, c. 1371, s. 1; 1969, c. 751, s. 39; 1973,
c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
SECTION 55-13-21. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under G.S. 55-13-02
is submitted to a vote at a shareholders' meeting, a shareholder who wishes
to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must actually receive,
before the vote is taken written notice of his intent to demand payment
for his shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a) is not
entitled to payment for his shares under this Article.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
SECTION 55-13-22. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under G.S. 55-13-02
is authorized at a shareholders' meeting, the corporation shall mail by
registered or certified mail, return receipt requested, a written
dissenters' notice to all shareholders who satisfied the requirements of
G.S. 55-13-21.
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(b) The dissenters' notice must be sent no later than 10 days after shareholder
approval, or if no shareholder approval is required, after the approval of
the board of directors, of the corporate action creating dissenters' rights
under G.S. 55-13-02, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than 30 nor more than 60 days after the date
the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1; 1997-485, s. 4.)
SECTION 55-13-23. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in G.S. 55-13-22 must
demand payment and deposit his share certificates in accordance with the
terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate
action.
(c) A shareholder who does not demand payment or deposit his share certificates
where required, each by the date set in the dissenters' notice, is not
entitled to payment for his shares under this Article.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
SECTION 55-13-24. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from the
date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
SECTION 55-13-25. PAYMENT.
(a) As soon as the proposed corporate action is taken, or within 30 days after
receipt of a payment demand, the corporation shall pay each dissenter who
complied with G.S. 55-13-23 the amount the corporation estimates to be the
fair value of his shares, plus interest accrued to the date of payment.
(b) The payment shall be accompanied by:
(1) The corporation's most recent available balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of payment, an
income statement for that year, a
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<PAGE>
statement of cash flows for that year, and the latest available interim
financial statements, if any;
(2) An explanation of how the corporation estimated the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under G.S.
55-13-28; and
(5) A copy of this Article.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1; c. 770, s. 69;
1997-202, s. 2.)
SECTION 55-13-26. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within 60 days after
the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under G.S. 55-13-22 and repeat the payment demand
procedure.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
SECTION 55-13-28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH CORPORATION'S
PAYMENT OR FAILURE TO PERFORM.
(a) A dissenter may notify the corporation in writing of his own estimate of the
fair value of his shares and amount of interest due, and demand payment of
the amount in excess of the payment by the corporation under G.S. 55-13-25
for the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under G.S. 55-13-25 is less
than the fair value of his shares or that the interest due is incorrectly
calculated;
(2) The corporation fails to make payment under G.S. 55-13-25; or
(3) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section unless he
notifies the corporation of his demand in writing (i) under subdivision
(a)(1) within 30 days after the corporation made payment for his shares or
(ii) under subdivisions (a)(2) and (a)(3) within 30 days after the
corporation has failed to perform timely. A dissenter who fails to notify
the corporation of his demand under subsection (a) within such 30-day period
shall be deemed to have withdrawn his dissent and demand for payment.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1; 1997-202, s. 3.)
SECTION 55-13-29: Reserved for future codification purposes.
PART 3.
JUDICIAL APPRAISAL OF SHARES.
SECTION 55-13-30. COURT ACTION.
(a) (See Editor's note) If a demand for payment under G.S. 55-13-28 remains
unsettled, the dissenter may commence a proceeding within 60 days after the
earlier of (i) the date payment is made under G.S. 55-13-25, or (ii) the
date of the dissenter's payment demand under G.S. 55-13-28 by
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filing a complaint with the Superior Court Division of the General Court of
Justice to determine the fair value of the shares and accrued interest. A
dissenter who takes no action within the 60-day period shall be deemed to
have withdrawn his dissent and demand for payment.
(a) Repealed by Session Laws 1997-202, s. 4, effective October 1, 1997.
(b) Reserved for future codification purposes.
(c) The court shall have the discretion to make all dissenters (whether or not
residents of this State) whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties must be
served with a copy of the complaint. Nonresidents may be served by
registered or certified mail or by publication as provided by law.
(d) The jurisdiction of the superior court in which the proceeding is commenced
under subsection (a) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The parties are entitled
to the same discovery rights as parties in other civil proceedings. The
proceeding shall be tried as in other civil actions. However, in a
proceeding by a dissenter in a corporation that was a public corporation
immediately prior to consummation of the corporate action giving rise to the
right of dissent under G.S. 55-13-02, there is no right to a trial by jury.
(e) Each dissenter made a party to the proceeding is entitled to judgment for
the amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1; 1997-202, s. 4;
1997-485, ss. 5, 5.1.)
SECTION 55-13-31. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under G.S. 55-13-30 shall
determine all costs of the proceeding, including the reasonable compensation
and expenses of appraisers appointed by the court, and shall assess the
costs as it finds equitable.
(b) The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in favor of either or any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this Article.
(c) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the
amounts awarded the dissenters who were benefited.
(1925, c. 77, s. 1; 1943, c. 270; G.S., s. 55-167; 1955, c. 1371, s. 1; 1969, c.
751, s. 39; 1973, c. 469, ss. 36, 37; 1989, c. 265, s. 1.)
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[Map of directions to CP&L's Special Shareholders' Meeting]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 55-8-51 through 55-8-57 of the North Carolina Business Corporation
Act (the "NCBCA") and the Charter and By-Laws of Holdings provide for
indemnification of the registrant's directors and officers in a variety of
circumstances, which may include for liabilities under the Securities Act of
1933, as amended. Holdings expects to retain insurance covering expenditures it
might incur in connection with the lawful indemnification of its directors and
officers for their liabilities and expenses. Officers and directors of Holdings
also have insurance that insures them against certain liabilities and expenses.
As authorized by the NCBCA, and to the fullest extent permitted by it,
Holdings' Charter provides that Holdings' directors and officers shall not be
liable to Holdings or any of its shareholders for monetary damages for breach of
duty. The NCBCA respects the applicability of these provisions as long as the
directors and officers do not engage in (i) acts or omissions that the director
or officer at the time of the breach knew or believed were clearly in conflict
with the best interests of the corporation, (ii) unlawful distributions, and
(iii) any transaction from which the director or officer derived an improper
personal benefit.
The NCBCA provides directors and officers with a right to indemnification
relating to official conduct when the director or officer has been wholly
successful in defense of a claim. In addition, a director or officer without the
right to indemnification may apply to a court for an order requiring the
corporation to indemnify the director or officer in a particular case.
The NCBCA also authorizes a corporation to indemnify directors and officers
beyond the indemnification rights granted by law. The Holdings By-Laws provide
that any person who is or was a director or officer of Holdings and any person
who at the request of Holdings serves or has served as an officer or director
(or in any position of similar authority) of any other corporation or other
enterprise, including as an individual trustee under any employee benefit plan,
shall have the right to be indemnified (and may be advanced expenses) against
liability and expenses incurred by that person in connection with any action,
suit or proceeding arising out of that person's status as a director or officer
of Holdings, provided that person's acts or omissions were not known or believed
by him or her to be clearly in conflict with the best interests of Holdings.
The Holdings By-Laws further provide that officers and directors shall not
be liable for any act, omission, step or conduct taken in good faith that is
required, authorized or approved by any order or orders issued pursuant to: the
Public Utility Holding Company Act of 1935; the Federal Power Act; or any state
statute regulating Holdings or its subsidiaries by reason of their being public
utility companies. Holdings' By-Laws authorize it to reimburse and indemnify any
director or officer to the fullest extent permitted by law against all
reasonable expenses and payments made by him in satisfaction of any judgment,
money decree, fine, penalty or settlement. The By-Laws also provide that these
rights of reimbursement and indemnification shall inure to the benefit of the
legal representatives of such directors or officers. Similarly, the By-Laws
permit Holdings, at its sole discretion, to indemnify and advance expenses to
any employee or agent of Holdings to the fullest extent permitted by law.
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ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
2 Agreement and Plan of Share Exchange, dated August 22, 1999, by and among Carolina Power & Light
Company and CP&L Holdings, Inc. (included as Exhibit A to the Proxy Statement/Prospectus contained in
Part I of this Registration Statement).
3.1 Articles of Incorporation of CP&L Holdings, Inc. (included as Exhibit B to the Proxy
Statement/Prospectus contained in Part I of this Registration Statement).
3.2 By-laws of CP&L Holdings, Inc. (included as Exhibit C to the Proxy Statement/Prospectus contained in
Part I of this Registration Statement).
5 Opinion of Hunton & Williams regarding the validity of the shares of common stock of CP&L Holdings,
Inc. to be issued in connection with the Plan of Share Exchange.
8 Opinion of Hunton & Williams regarding the federal income tax consequences of the Plan of Share
Exchange.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Hunton & Williams (included in Exhibits 5 and 8).
24 The Power of Attorney is contained on the signature page of this Registration Statement.
99.1 Consent of Leslie M. Baker, Jr. to be named a director.
99.2 Consent of Edwin B. Borden to be named a director.
99.3 Consent of David L. Burner to be named a director.
99.5 Consent of Charles W. Coker to be named a director.
99.6 Consent of Richard L. Daugherty to be named a director.
99.7 Consent of Robert L. Jones to be named a director.
99.8 Consent of Estell C. Lee to be named a director.
99.9 Consent of William O. McCoy to be named a director.
99.10 Consent of E. Marie McKee to be named a director.
99.11 Consent of John H. Mullin, III to be named a director.
99.12 Consent of Sherwood H. Smith, Jr. to be named a director.
99.13 Consent of J. Tylee Wilson to be named a director.
99.14 Form of Carolina Power & Light proxy card.
99.15 Article 13 of the North Carolina Business Corporation Act (included as Exhibit D to the Proxy
Statement/Prospectus contained in Part I of this Registration Statement).
</TABLE>
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ITEM 22. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in the volume of securities offered (if
the total dollar value of the securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. 1. The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
2. The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph C.1. immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the
Securities Act of 1933 and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to
II-3
<PAGE>
the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering
thereof.
D. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
E. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
F. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Raleigh, State of North
Carolina, on the 31st day of August, 1999.
<TABLE>
<S> <C> <C>
CP&L HOLDINGS, INC.
By: /s/ WILLIAM CAVANAUGH III
-----------------------------------------
Name: William Cavanaugh III
Title: Chairman of the Board,
President and Chief Executive Officer
</TABLE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints William Cavanaugh III and Robert B. McGehee and
each of them (with full power to act alone) as true and lawful
attorneys-in-fact, and stead, in any and all capacities, to sign any amendments
to this registration statement and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorneys-in-fact, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------------- ---------------------------------------------- ------------------
<S> <C> <C>
/s/ WILLIAM CAVANAUGH III President and Chief Executive Officer and August 31, 1999
------------------------------------ Chairman of the Board
William Cavanaugh III
/s/ GLENN E. HARDER Executive Vice President August 31, 1999
------------------------------------ and Chief Financial Officer
Glenn E. Harder (and principal accounting officer)
/s/ ROBERT B. MCGEHEE Executive Vice President, General August 31, 1999
------------------------------------ Counsel, Chief Administrative
Robert B. McGehee Officer and Director
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
2 Agreement and Plan of Share Exchange, dated August 22, 1999, by and among Carolina Power & Light
Company and CP&L Holdings, Inc. (included as Exhibit A to the Proxy Statement/Prospectus contained in
Part I of this Registration Statement).
3.1 Articles of Incorporation of CP&L Holdings, Inc. (included as Exhibit B to the Proxy
Statement/Prospectus contained in Part I of this Registration Statement).
3.2 By-laws of CP&L Holdings, Inc. (included as Exhibit C to the Proxy Statement/Prospectus contained in
Part I of this Registration Statement).
5 Opinion of Hunton & Williams regarding the validity of the shares of common stock of CP&L Holdings,
Inc. to be issued in connection with the Plan of Share Exchange.
8 Opinion of Hunton & Williams regarding the federal income tax consequences of the Plan of Share
Exchange.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Hunton & Williams (included in Exhibits 5 and 8).
24 The Power of Attorney is contained on the signature page of this Registration Statement.
99.1 Consent of Leslie M. Baker, Jr. to be named a director.
99.2 Consent of Edwin B. Borden to be named a director.
99.3 Consent of David L. Burner to be named a director.
99.5 Consent of Charles W. Coker to be named a director.
99.6 Consent of Richard L. Daugherty to be named a director.
99.7 Consent of Robert L. Jones to be named a director.
99.8 Consent of Estell C. Lee to be named a director.
99.9 Consent of William O. McCoy to be named a director.
99.10 Consent of E. Marie McKee to be named a director.
99.11 Consent of John H. Mullin, III to be named a director.
99.12 Consent of Sherwood H. Smith, Jr. to be named a director.
99.13 Consent of J. Tylee Wilson to be named a director.
99.14 Form of Carolina Power & Light proxy card.
99.15 Article 13 of the North Carolina Business Corporation Act (included as Exhibit D to the Proxy
Statement/Prospectus contained in Part I of this Registration Statement).
</TABLE>
II-6
<PAGE>
Exhibit 5
August 31, 1999
CP&L Holdings, Inc.
411 Fayetteville Street
Raleigh, North Carolina 27601-6111
Registration Statement on Form S-4
Relating to the Shares to be Issued by CP&L Holdings Inc.
---------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to CP&L Holdings, Inc., a North Carolina
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933 of 159,700,000 shares of its common stock (the "Common
Stock"). The Common Stock is to be issued in connection with the implementation
of a holding company structure in which Carolina Power & Light Company will
become a wholly-owned subsidiary of the Company. The transaction in which the
Common Stock will be issued is described in the Registration Statement on Form
S-4 (the "Registration Statement") that is being filed by the Company on the
date hereof with the Securities and Exchange Commission (the "Commission").
In rendering this opinion, we have relied upon, among other things, our
examination of such records of the Company and certificates of its officers and
of public officials as we have deemed necessary.
Based upon the foregoing and the further qualifications stated below,
we are of the opinion that when the Common Stock has been issued as described in
the Registration Statement, the Common Stock will be legally issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the references to this firm
under the heading "Validity of Holdings Common Stock" in the Proxy
Statement/Prospectus included therein.
Very truly yours,
/s/ Hunton & Williams
<PAGE>
Exhibit 8
August 31, 1999
Carolina Power & Light Company
411 Fayetteville Street Mall
Raleigh, NC 27601
CAROLINA POWER & LIGHT COMPANY
FORMATION OF HOLDING COMPANY
CERTAIN FEDERAL INCOME TAX MATTERS
--------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Carolina Power & Light Company ("CP&L"), a
North Carolina corporation, in connection with the proposed exchange (the
"Exchange") of all the outstanding shares of CP&L common stock for shares of
common stock of CP&L Holdings, Inc. ("Holdings"), a newly-formed, wholly-owned
subsidiary of CP&L, pursuant to the Agreement and Plan of Share Exchange, dated
as of August 22, 1999, between CP&L and Holdings (the "Agreement"). This opinion
letter is delivered to you in connection with a Registration Statement relating
to the Exchange to be filed under the Securities Act of 1933 (the "Registration
Statement").
CP&L has several outstanding classes of voting stock: common stock, $5
preferred stock, and serial preferred stock (the two classes of preferred stock
are collectively referred to herein as the "Preferred Stock"). In the Exchange,
each outstanding share of CP&L common stock will be exchanged for a share of
Holdings voting common stock. None of the CP&L Preferred Stock will be exchanged
in the Exchange. Each outstanding share of Holdings common stock held by CP&L
immediately before the Exchange will be canceled. As a result of the Exchange,
the common shareholders of CP&L will own all of the issued and outstanding stock
of Holdings, and Holdings will own all the issued and outstanding common stock
of CP&L. CP&L common shareholders will not be entitled to exercise dissenter's
rights with respect to the Exchange, but preferred shareholders will be entitled
to exercise such rights.
You have requested our opinion concerning certain federal income tax
consequences of the Exchange. In giving this opinion, we have reviewed the
Agreement, the Registration
<PAGE>
Carolina Power & Light Company
August 31, 1999
Page 2
Statement, and such other documents as we have considered necessary. In
addition, we have been advised by appropriate officers of CP&L as follows:
1. The fair market value of the Holdings common stock received by a
CP&L shareholder in the Exchange will be approximately equal to the fair market
value of the CP&L common stock surrendered in the Exchange.
2. No share of Holdings common stock will be issued for services
rendered to or for the benefit of Holdings in connection with the Exchange; none
of the compensation received by any shareholder-employee of CP&L will be
separate consideration for, or allocable to, any shares of CP&L common stock;
none of the shares of Holdings common stock received by any shareholder-employee
in the Exchange will be separate consideration for, or allocable to, any
employment agreement; and the compensation paid to any shareholder-employee will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
3. No share of CP&L common stock has been or will be redeemed directly
or indirectly (including, without limitation, through a partnership) by CP&L or
acquired directly or indirectly (including, without limitation, through a
partnership) by any subsidiary of CP&L in anticipation of the Exchange, except
that CP&L might purchase some shares of its common stock in open market
transactions prior to the Exchange, but CP&L will not solicit the purchase of
(and will not knowingly purchase) any shares of CP&L common stock from any
former shareholder of North Carolina Natural Gas Corporation. CP&L has not made
and will not make any extraordinary distribution with respect to its stock in
anticipation of the Exchange.
4. There is no plan or intention for Holdings or any subsidiary of
Holdings to acquire directly or indirectly (including, without limitation,
through a partnership) or to make any extraordinary distribution with respect to
any of the Holdings common stock issued in the Exchange, except that Holdings
might purchase some shares of its common stock in open market transactions after
the Exchange. Holdings will not solicit the purchase of (and will not knowingly
purchase) any shares of Holdings common stock from any former shareholder of
North Carolina Natural Gas Corporation.
5. No liability of any CP&L shareholder will be assumed by Holdings or
any other person in the Exchange, nor will any of the CP&L common stock be
acquired subject to any liability.
6. In the Exchange, Holdings will acquire at least 80 percent of (a)
the total combined voting power of all classes of CP&L voting stock, (b) each
class of CP&L nonvoting stock, and
<PAGE>
Carolina Power & Light Company
August 31, 1999
Page 3
(c) the total fair market value of all the outstanding stock of CP&L.
7. After the Exchange, CP&L will not issue additional shares of its
stock that would result in Holdings owning less than 80 percent of (a) the total
combined voting power of all classes of CP&L voting stock, (b) each class of
CP&L nonvoting stock, or (c) the total fair market value of all the outstanding
stock of CP&L.
8. Immediately after the effective time of the Exchange, CP&L will not
have outstanding any warrants, options, convertible securities, or any other
type of right pursuant to which any person could acquire stock in CP&L that
would result in Holdings owning less than 80 percent of (a) the total combined
voting power of all classes of CP&L voting stock, (b) each class of CP&L
nonvoting stock, or (c) the total fair market value of all the outstanding stock
of CP&L.
9. Except for the potential issuance of shares of Holdings common
stock in connection with the possible acquisition of Florida Progress
Corporation, there is no plan or intention for Holdings to issue additional
shares of its stock after the Exchange that would result in the former CP&L
common shareholders owning less than 80 percent of (a) the total combined voting
power of all classes of Holdings voting stock, (b) each class of Holdings
nonvoting stock, and (c) the total fair market value of all the outstanding
stock of Holdings.
10. Except for the potential issuance of shares of Holdings common
stock in connection with the possible acquisition of Florida Progress
Corporation, at and immediately after the effective time of the Exchange, there
will not be outstanding any warrants, options, convertible securities, or any
other type of rights or agreements pursuant to which any person could acquire
stock in Holdings that would result in the former CP&L common shareholders
owning less than 80 percent of (a) the total combined voting power of all
classes of Holdings voting stock, (b) each class of Holdings nonvoting stock,
and (c) the total fair market value of all the outstanding stock of Holdings.
11. CP&L common shareholders will not retain any rights in the CP&L
common stock after the Exchange.
12. On the effective date of the Exchange, the fair market value of
CP&L's assets will exceed the sum of CP&L's liabilities plus the amount of
liabilities, if any, to which its assets are subject.
13. Following the Exchange, CP&L will continue its historic business
or use a significant portion of its historic business assets in a business.
<PAGE>
Carolina Power & Light Company
August 31, 1999
Page 4
14. There is no indebtedness existing between (a) CP&L or any
subsidiary of CP&L and (b) Holdings.
15. There is no indebtedness existing between Holdings and any CP&L
common shareholder, and no indebtedness will be created in favor of any CP&L
common shareholder as a result of the Exchange.
16. CP&L shareholders will pay their expenses, if any, incurred in
connection with the Exchange.
17. Neither CP&L nor Holdings has any plan or intention (a) to
liquidate CP&L, (b) to merge CP&L into another entity, (c) to sell or otherwise
dispose of any stock of CP&L, or (d) to sell or otherwise dispose of any of
CP&L's assets except for (i) dispositions made in the ordinary course of
business and (ii) the possible distribution of all of the stock of one or more
subsidiaries of CP&L to Holdings.
18. There is no plan or intention to liquidate Holdings, to merge it
with any other entity, or to dispose of its assets other than in the ordinary
course of business.
19. After the Exchange, (a) less than 50 percent of the fair market
value of Holdings' assets (excluding cash, cash items and equivalents, accounts
receivable, and United States government securities) will consist of stocks and
securities and (b) less than 80 percent of the fair market value of Holdings'
assets will consist of: stocks, securities, other equity interests in
corporations, money, evidences of indebtedness, options, forward or futures
contracts, notional principal contracts and derivatives, foreign currency,
interests in common trust funds or publicly traded partnerships, precious
metals, interests in regulated investment companies or real estate investment
trusts, equity interests (other than in a corporation) that are readily
convertible into or exchangeable for any of the preceding assets, and interests
in an entity substantially all of the assets of which consist of any of the
preceding assets. For purposes of the preceding sentence, a corporation's assets
exclude stock and securities issued by any subsidiary at least 50 percent of the
voting power or 50 percent of the total fair market value of the stock of which
is owned by a corporation, but a corporation is treated as owning directly a
ratable share (based on the percentage of the fair market value of the
subsidiary's stock owned by the corporation) of the assets owned by any such
subsidiary.
20. At all times during the five-year period ending on the effective
date of the Exchange, no CP&L shareholder that is a nonresident alien or foreign
entity has owned directly or indirectly of record or, to the knowledge of CP&L,
beneficially more than five percent of the outstanding CP&L common stock.
<PAGE>
Carolina Power & Light Company
August 31, 1999
Page 5
21. Any shares of Holdings common stock received in exchange for
shares of CP&L common stock that were acquired in connection with the
performance of services and are subject to a substantial risk of forfeiture
within the meaning of section 83(c) of the Internal Revenue Code (the "Code")
will be subject to substantially the same risk of forfeiture after the Exchange.
On the basis of the foregoing, and assuming that the Exchange will be
consummated in accordance with the Agreement, we are of the opinion that (under
existing law) for federal income tax purposes:
1. The Exchange will be a reorganization within the meaning of section
368(a)(1)(B) of the Code or an exchange to which section 351(a) of the Code
applies.
2. Holdings will not recognize any gain or loss on the issuance of
Holdings common stock or the acquisition of CP&L common stock in the Exchange.
3. CP&L will not recognize any gain or loss on Holdings' acquisition
of CP&L common stock solely in exchange for shares of Holdings common stock in
the Exchange.
4. A CP&L shareholder will not recognize gain or loss on the exchange
of shares of CP&L common stock solely for shares of Holdings common stock in the
Exchange.
5. The aggregate basis of the shares of Holdings common stock received
by a CP&L shareholder in the Exchange will be the same as the shareholder's
aggregate basis in the shares of CP&L common stock exchanged therefor.
6. The holding period for shares of Holdings common stock received by
a CP&L shareholder in the Exchange will include the holding period for the
shares of CP&L common stock exchanged therefor, if such shares of CP&L common
stock are held as a capital asset on the effective date of the Exchange.
We are also of the opinion that the material federal income tax
consequences of the Exchange to CP&L common shareholders are fairly summarized
in the Registration Statement under the headings "Summary--How will the holding
company transaction affect my income taxes?" and "The Holding Company
Proposal--Material Federal Income Tax Consequences."
Except as set forth above, we express no opinion regarding any tax
consequences of the Exchange. This opinion may not be distributed, quoted in
whole or in part or otherwise reproduced in any document, or filed with any
governmental agency without our prior written consent. We consent to the use of
this opinion as an exhibit to the Registration Statement and to the references
to this firm in the Registration Statement under the aforementioned headings.
<PAGE>
Carolina Power & Light Company
August 31, 1999
Page 6
In giving this consent, we do not admit that we are within the category of
persons whose consent is required by section 7 of the Securities Act of 1933 or
the rules and regulations promulgated thereunder by the Securities and Exchange
Commission.
Very truly yours,
/s/ Hunton & Williams
<PAGE>
EXHIBIT NO. 23(1)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
CP&L Holdings, Inc. on Form S-4 of our report dated February 9, 1999, appearing
in the Annual Report on Form 10-K of Carolina Power & Light Company for the year
ended December 31, 1998 and to the reference to us under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Raleigh, North Carolina
August 30, 1999
<PAGE>
Exhibit 99.1
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, Leslie M.
Baker, Jr., expect to be elected to the Board of Directors of CP&L Holdings,
Inc., as described therein. As of the effective time of the Registration
Statement, I will not be a member of the Board of Directors of CP&L Holdings,
Inc., and I am not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 31, 1999 /s/ Leslie M. Baker, Jr .
- ---------------------- -------------------------------
Date Leslie M. Baker, Jr.
<PAGE>
Exhibit 99.2
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, Edwin B.
Borden, expect to be elected to the Board of Directors of CP&L Holdings, Inc.,
as described therein. As of the effective time of the Registration Statement, I
will not be a member of the Board of Directors of CP&L Holdings, Inc., and I am
not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 16, 1999 /s/ Edwin B. Borden
- ------------------------ -------------------------
Date Edwin B. Borden
<PAGE>
Exhibit 99.3
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, David L.
Burner, expect to be elected to the Board of Directors of CP&L Holdings, Inc.,
as described therein. As of the effective time of the Registration Statement, I
will not be a member of the Board of Directors of CP&L Holdings, Inc., and I am
not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 31, 1999 /s/ David L. Burner
- -------------------------- ---------------------------
Date David L. Burner
<PAGE>
Exhibit 99.5
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, Charles W.
Coker, expect to be elected to the Board of Directors of CP&L Holdings, Inc., as
described therein. As of the effective time of the Registration Statement, I
will not be a member of the Board of Directors of CP&L Holdings, Inc., and I am
not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 13, 1999 /s/ Charles W. Coker
- ------------------------ -------------------------
Date Charles W. Coker
<PAGE>
Exhibit 99.6
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, Richard L.
Daugherty, expect to be elected to the Board of Directors of CP&L Holdings,
Inc., as described therein. As of the effective time of the Registration
Statement, I will not be a member of the Board of Directors of CP&L Holdings,
Inc., and I am not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 16, 1999 /s/ Richard L. Daugherty
- ------------------- -----------------------------
Date Richard L. Daugherty
<PAGE>
Exhibit 99.7
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, Robert L.
Jones, expect to be elected to the Board of Directors of CP&L Holdings, Inc., as
described therein. As of the effective time of the Registration Statement, I
will not be a member of the Board of Directors of CP&L Holdings, Inc., and I am
not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 12, 1999 /s/ Robert L. Jones
- ---------------------- ---------------------------
Date Robert L. Jones
<PAGE>
Exhibit 99.8
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, Estell C.
Lee, expect to be elected to the Board of Directors of CP&L Holdings, Inc., as
described therein. As of the effective time of the Registration Statement, I
will not be a member of the Board of Directors of CP&L Holdings, Inc., and I am
not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 15, 1999 /s/Estell C. Lee
- --------------------- -------------------------
Date Estell C. Lee
<PAGE>
Exhibit 99.9
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, William O.
McCoy, expect to be elected to the Board of Directors of CP&L Holdings, Inc., as
described therein. As of the effective time of the Registration Statement, I
will not be a member of the Board of Directors of CP&L Holdings, Inc., and I am
not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 11, 1999 /s/ William O. McCoy
- ---------------------- -----------------------
Date William O. McCoy
<PAGE>
Exhibit 99.10
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, E. Marie
McKee, expect to be elected to the Board of Directors of CP&L Holdings, Inc., as
described therein. As of the effective time of the Registration Statement, I
will not be a member of the Board of Directors of CP&L Holdings, Inc., and I am
not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 13, 1999 /s/ E. Marie McKee
- --------------------- -------------------------------
Date E. Marie McKee
<PAGE>
Exhibit 99.11
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, John H.
Mullin, III, expect to be elected to the Board of Directors of CP&L Holdings,
Inc., as described therein. As of the effective time of the Registration
Statement, I will not be a member of the Board of Directors of CP&L Holdings,
Inc., and I am not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 12, 1999 /s/ John H. Mullin, III
- ------------------------ --------------------------------
Date John H. Mullin, III
<PAGE>
Exhibit 99.12
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, Sherwood
H. Smith, Jr., expect to be elected to the Board of Directors of CP&L Holdings,
Inc., as described therein. As of the effective time of the Registration
Statement, I will not be a member of the Board of Directors of CP&L Holdings,
Inc., and I am not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 12, 1999 /s/ Sherwood H. Smith, Jr.
- --------------------- ------------------------------
Date Sherwood H. Smith, Jr.
<PAGE>
Exhibit 99.13
Consent of Person About to Become A Director
(pursuant to Rule 438 under the Securities Act of 1933, as amended)
In connection with a Form S-4 filed by CP&L Holdings, Inc. with the
Securities and Exchange Commission (the "Registration Statement"), I, J. Tylee
Wilson, expect to be elected to the Board of Directors of CP&L Holdings, Inc.,
as described therein. As of the effective time of the Registration Statement, I
will not be a member of the Board of Directors of CP&L Holdings, Inc., and I am
not required to sign the Registration Statement.
I hereby consent to being named in the Registration Statement as a
future member of CP&L Holdings, Inc.'s Board of Directors, and to the filing of
the Registration Statement as contemplated by CP&L Holdings, Inc.
August 31, 1999 /s/ J. Tylee Wilson
- ---------------------------- ----------------------------
Date J. Tylee Wilson
<PAGE>
Exhibit 99.14
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
<TABLE>
<CAPTION>
DIRECTORS RECOMMEND VOTE FOR ITEM 1
CAROLINA POWER & LIGHT COMPANY
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
1. APPROVAL OF THE AGREEMENT AND PLAN OF / / / / / /
SHARE EXCHANGE BETWEEN THE COMPANY
AND CP&L HOLDINGS, INC.
2. IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS THAT IS PROPERLY BROUGHT BEFORE
THE MEETING OR ANY ADJOURNMENT THEREOF.
Mark box at right if an address change has been / /
noted on the reverse side of this card.
</TABLE>
-----------
Please be sure to sign and date this proxy. Date
- -----------------------------------------------------------
- -----------------------------------------------------------
Shareholder sign here Co- owner sign here
<PAGE>
- -------------------------------------------------------------------------------
DETACH CARD DETACH CARD
CAROLINA POWER & LIGHT COMPANY
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Card. The
issues relate to the organization and structure of your Company and require your
immediate attention and approval. Details are discussed in the enclosed proxy
materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the box on this Proxy Card to indicate how you would like your
shares to be voted, then sign the card, detach it and return your proxy vote in
the enclosed postage paid envelope.
Your vote must be received prior to the Special Meeting of Shareholders,
1999.
- -----------------,
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Carolina Power & Light Company
<PAGE>
CAROLINA POWER & LIGHT COMPANY
411 FAYETTEVILLE STREET, RALEIGH, NORTH CAROLINA 27601
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
PROXY. The undersigned hereby appoints William Cavanaugh III and Robert B.
McGehee, and each of them, as Proxies, with full power of substitution, to vote
the shares of stock of Carolina Power & Light Company registered in the name of
the undersigned, or which the undersigned has the power to vote, at the Special
Meeting of Shareholders of the Company to be held _______________,
_________________, 1999, at 10:00 a.m., and at any adjournment thereof, for the
proposal set forth on the reverse side hereof and upon other matters properly
brought before the meeting. The undersigned acknowledges receipt of the notice
of said Special Meeting and the proxy statement.
THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S).
UNLESS OTHERWISE SPECIFIED, IT WILL BE VOTED FOR THE DIRECTORS' PROPOSAL TO
APPROVE THE AGREEMENT AND PLAN OF SHARE EXCHANGE BETWEEN THE COMPANY AND CP&L
HOLDINGS, INC., AS SET FORTH IN THE PROXY STATEMENT.
- -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NOTE: Please sign exactly as name(s) appear(s) hereon. When signing as attorney,
executor, administrator, trustee or guardian, or as custodian for a minor,
please give full title as such. If a corporation, please have signed in full
corporate name by any authorized officer, giving full title. If a partnership,
sign in full partnership name by an authorized person, giving full title.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? COMPLETE BELOW.
NEW ADDRESS:
