UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-- --
Commission file number 1-3382
CAROLINA POWER & LIGHT COMPANY
(Exact name of registrant as specified in its charter)
North Carolina
(State or other jurisdiction of incorporation or organization)
56-0165465
(I.R.S. Employer Identification No.)
411 Fayetteville Street, Raleigh, North Carolina 27601-1748
(Address of principal executive offices) (Zip Code)
919-546-6111
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock (Without Par
Value) shares outstanding at July 31, 1997: 151,340,394
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Reference is made to the attached Appendix containing the Consolidated
Interim Financial Statements for the periods ended June 30, 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
For the Three, Six and Twelve Months Ended June 30, 1997,
As Compared With the Corresponding Periods One Year Earlier
-----------------------------------------------------------
Operating Revenues
------------------
For the three, six and twelve months ended June 30, 1997, operating
revenues were affected by the following factors (in millions):
Three Months Six Months Twelve Months
Weather ............................ $(43) $(91) $(140)
Customer Growth / Changes In
Usage Patterns ..................... 33 41 73
Power Agency ....................... (4) (20) (27)
NCEMC Load Loss .................... -- -- (47)
Price .............................. (8) (11) (19)
Sales to Other Utilities ........... 1 (7) (3)
Other .............................. 1 1 5
- ------------------------------------ ---- ---- -----
Total ......................... $(20) $(87) $(158)
===== ===== =====
The decrease in the weather component of revenue for the three, six and
twelve months ended June 30, 1997, is the result of milder than normal
temperatures in the current periods as compared to more extreme weather patterns
in the prior periods. The increase in customer growth / changes in usage
patterns component of revenue for all comparison periods is primarily a result
of economic growth within the Company's service territory. Sales to North
Carolina Eastern Municipal Power Agency (Power Agency) decreased for the six and
twelve months ended June 30, 1997, due to the impacts of milder weather, along
with the increased availability in the current period of generating units owned
jointly by the Company and Power Agency. Beginning in January 1996, North
Carolina Electric Membership Corporation (NCEMC) replaced 200 MW of load
capacity it formerly purchased from the Company with power purchases from
another supplier. For all comparison periods, part of the decrease in the price
component of revenue is attributable to a decrease in the fuel cost component of
revenue, along with the impact of changes to the NCEMC Power Coordination
Agreement, which became effective in January 1997.
Operating Expenses
------------------
The increase in fuel expense for the three months ended June 30, 1997,
reflects changes in the generation mix due to the refueling outage at the Harris
Nuclear Plant, which resulted in a higher ratio of fossil generation to total
generation in the current period. This increase is partially offset by a
decrease in deferred fuel costs due to under-recovery of fuel costs in the
current quarter. The decrease in fuel expense for the twelve months ended June
30, 1997, primarily reflects decreases in generation as a result of lower sales
during the current period.
Purchased power decreased for the three, six and twelve months ended
June 30, 1997, primarily due to amendments to electric purchase power agreements
between the Company and Cogentrix of North Carolina, Inc. and Cogentrix Eastern
Carolina Corporation, which became effective in September 1996.
The increase in other operation and maintenance expense for the three-
and twelve-month periods is primarily as a result of the timing of plant
outages. There were more outages in the current periods, resulting in higher
expense as compared to the prior periods.
In December 1996, the North Carolina Utilities Commission (NCUC)
authorized the Company to accelerate amortization of certain regulatory assets
over a three-year period beginning January 1, 1997. In March 1997, the South
Carolina Public Service Commission (SCPSC) approved a similar plan for the
Company to accelerate the amortization of certain regulatory assets, including
plant abandonment costs related to the Harris Nuclear Plant, over a three-year
period beginning January 1, 1997. Depreciation and amortization for the three,
six and twelve months ended June 30, 1997, includes approximately $17 million,
$34 million, and $34 million, respectively, related to accelerated amortization
of these regulatory assets. The increase in depreciation and amortization
expense for the three, six and twelve months ended June 30, 1997, also reflects
amortization of deferred Hurricane Fran operation and maintenance expenses of
approximately $3 million, $6 million and $10 million, respectively, in the
current periods.
Income tax expense decreased for all periods due to a decrease in
operating income and the impact of tax provision adjustments recorded in June
1996 and June 1997 for potential audit issues in open tax years.
Other Income
------------
Allowance for equity funds used during construction decreased for the
three, six and twelve months ended June 30, 1997, in accordance with the
application of the formula prescribed by the Federal Energy Regulatory
Commission. During the current periods, a greater proportion of the total
allowance for funds used during construction was credited to interest charges as
allowance for borrowed funds used during construction.
The increase in interest income for all periods is a result of $8.7
million of interest income that was recorded in the second quarter of 1997
related to an income tax refund.
The change in other income, net, for the three, six and twelve months
ended June 30, 1997, includes losses recorded in the current periods incurred in
the start-up phases of certain non-regulated investments and decreases in
certain income items, none of which is individually significant. Offsetting
these decreases in the current twelve-month period, was an adjustment of $22.9
million to the unamortized balance of abandonment costs related to the Harris
Nuclear Plant. See additional discussion of the abandonment adjustment in the
Retail Rate Matters section of Other Matters.
Interest Charges
----------------
Interest charges on long-term debt decreased for all reported periods
primarily due to reduced long-term debt balances. Also contributing to the
decrease in interest charges for the twelve-month period were refinancings of
long-term debt with lower interest cost commercial paper borrowings.
Other interest charges decreased for the twelve months ended June 30,
1997, primarily due to a $6 million interest accrual recorded in the prior
period related to the 1995 NCUC fuel order.
MATERIAL CHANGES IN LIQUIDITY AND CAPITAL RESOURCES
From December 31, 1996, to June 30, 1997
and From June 30, 1996, to June 30, 1997
----------------------------------------
Capital Requirements
--------------------
The Company did not issue long-term debt in the twelve-month period
ended June 30, 1997. The proceeds from the issuance of short-term debt and/or
internally generated funds financed the redemption or retirement of long-term
debt totaling $60 million and $135 million during the six and twelve months
ended June 30, 1997, respectively.
On July 1, 1997, the Company redeemed all 500,000 shares of $7.72
Serial Preferred Stock and all 350,000 shares of $7.95 Serial Preferred Stock,
both at a redemption price of $101 per share. On June 30, 1997, $84.4 million
was reclassified to current liabilities. The redemptions were funded with
additional commercial paper borrowings and/or internally generated funds.
The Company's capital structure as of June 30 was as follows:
1997 1996
------- -------
Common Stock Equity .................... 51.14% 49.32%
Long-term Debt ......................... 47.74% 47.99%
Preferred Stock ........................ 1.12% 2.69%
The Company's First Mortgage Bonds are currently rated "A2" by Moody's
Investors Service, "A" by Standard & Poor's and "A+" by Duff & Phelps. Moody's
Investors Service, Standard & Poor's and Duff & Phelps have rated the Company's
commercial paper "P-1," "A-1" and "D-1," respectively.
<PAGE>
OTHER MATTERS
Retail Rate Matters
-------------------
A petition was filed in July 1996 by the Carolina Industrial Group for
Fair Utility Rates (CIGFUR) with the NCUC, requesting that the NCUC conduct an
investigation of the Company's base rates or treat its petition as a complaint
against the Company. The petition alleged that the Company's return on equity
(which was authorized by the NCUC in the Company's last general rate proceeding
in 1988) and earnings are too high. In December 1996, the NCUC issued an order
denying CIGFUR's petition and stating that it tentatively found no reasonable
grounds to proceed with CIGFUR's petition as a complaint. In January 1997,
CIGFUR filed its Comments and Motion for Reconsideration to which the Company
responded. On February 6, 1997, the NCUC issued an order denying CIGFUR's Motion
for Reconsideration. On February 25, 1997, CIGFUR filed a Notice of Appeal of
the NCUC's decision with the North Carolina Court of Appeals. The Company filed
its brief in this matter on July 18, 1997. The Company cannot predict the
outcome of this matter.
In December 1996, the Company filed a proposal with the SCPSC to
accelerate amortization of certain regulatory assets, including plant
abandonment costs related to the Harris Nuclear Plant, over a three-year period
beginning January 1, 1997. In anticipation of approval of the proposal in 1997,
the unamortized balance of plant abandonment costs related to the Harris Nuclear
Plant was adjusted in 1996 to reflect the present value impact of the shorter
recovery period. This adjustment resulted in an increase in income of
approximately $14 million, after tax, in the fourth quarter of 1996. On March
20, 1997, the SCPSC approved the Company's accelerated amortization proposal.
Other Business
--------------
In 1996, the Company established a wholly owned subsidiary,
CaroCapital, Inc. (CaroCapital), which purchased a minority equity interest
(40%) in Knowledge Builders, Inc. (KBI), an energy-management software and
control systems company. On May 6, 1997, CaroCapital entered into a merger
agreement pursuant to which KBI was merged into CaroCapital. In connection with
the merger, the remaining KBI stock was exchanged for common stock of the
Company according to a market value formula. The merger resulted in the issuance
of approximately 604,000 shares of the Company's common stock (valued at $20.5
million) and a cash payment of $1.9 million. The merger agreement also provided
for incentive payments based on CaroCapital's future results of operations. If
earned, these additional payments will be made primarily in shares of the
Company's common stock. The merger was completed on June 5, 1997. Following the
completion of the merger, CaroCapital was renamed Strategic Resource Solutions
Corp., a North Carolina Enterprise Corporation.
Competition
-----------
On April 17, 1997, the North Carolina General Assembly approved
legislation establishing a 23-member study commission to evaluate the future of
electric service in the state. The members of the commission will be comprised
of legislators and representatives from retail customers, electric companies and
other interested parties. The commission will examine a wide range of issues
related to the cost and delivery of electric service, including the issue of
customer choice of electric providers. The commission will make an interim
report to the 1998 General Assembly and a final report in 1999. Also on April
17, 1997, a bill was introduced in the North Carolina House of Representatives
calling for retail electric competition. The bill would require that residential
customers be able to choose their provider by October 1, 1998, commercial
customers by January 1, 1999, and industrial customers by July 1, 1999. The
Company cannot predict the outcome of these matters.
On February 6, 1997, representatives in the South Carolina General
Assembly introduced a bill calling for a transition to full competition in the
electric utility industry beginning in 1998. No action was taken on this bill.
In addition, by letter dated May 6, 1997, the Speaker of the South Carolina
House of Representatives requested that the SCPSC prepare a proposal for the
deregulation and restructuring of electricity in South Carolina, with a report
date of January 31, 1998. The SCPSC has requested and received comments,
including those filed by the Company, on deregulation and has invited interested
parties to make presentations on August 19, 1997. The South Carolina General
Assembly's Utility Subcommittee has scheduled a series of hearings around the
state beginning this August in order to receive citizen input on the
deregulation issue. The Company cannot predict the outcome of these matters.
Numerous bills have been introduced in both the House and Senate of the
105th Congress concerning the restructuring of the electric utility industry.
There is little consensus among key provisions of the various bills. Some bill
sponsors have held workshops and hearings to discuss various aspects of
restructuring. No legislation has been passed to date in this session. More
restructuring-related bills are expected to be introduced later in the session.
The Company cannot predict the outcome of these matters.
Impact of New Accounting Standard
---------------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share,"
(SFAS-128), which changed the previous standards on computing and presenting
earnings per share. SFAS-128 is effective for fiscal years beginning after
December 15, 1997; earlier application is not permitted. The Company does not
expect the adoption of SFAS-128 to have a material impact on its financial
statements.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- ------- -----------------
Legal aspects of certain matters are set forth in Item 5 below.
Item 2. Changes in Securities
- ------- ---------------------
(Reference is made to the Company's 1996 Form 10-K, Other
Matters, paragraph 7, page 26. Reference is also made to the
Company's Form 10-Q for the quarter ended March 31, 1997, Item
5, paragraph 3.)
(a) Securities Sold. On June 5, 1997, the Company issued 603,872
shares of its Common Stock (Common Shares) in connection
with the merger of Knowledge Builders, Inc. (KBI) into a
wholly-owned subsidiary of the Company (CaroCapital, Inc., a
North Carolina Enterprise Corporation, since renamed
Strategic Resource Solutions, Corp.). Of these Common
Shares, 583,200 shares were issued as merger consideration
to the former holders of KBI common stock for KBI shares
that were canceled in the merger. The remaining 20,672 of
these Common Shares were issued to former holders of options
to purchase KBI common stock, as consideration for the
cancellation of those options.
Additional Common Shares (with a maximum market value at
time of issuance of $11.4 million) will be issued as merger
consideration to the former holders of KBI common stock. The
number of these additional Common Shares will depend on (A)
the results of operations of Strategic Resource Solutions,
Corp. for fiscal years 1998 through 2001 and (B) the market
value of Common Shares immediately prior to issuance.
Up to 20,672 additional Common Shares may be issued to
former holders of options to purchase KBI common stock.
These additional Common Shares would be issued on October
15, 1999, subject to continuation of employment with
Strategic Resource Solutions, Corp. through that date.
In connection with the merger, the Company also agreed to
make certain incentive compensation payments based upon
future performance of Strategic Resource Solutions, Corp.
through 2001. The payment obligations are subject to certain
vesting requirements. If vested, payments are payable
partially in restricted shares of Common Stock. The number
of shares to be issued, if any, cannot be determined at this
time.
(b) Underwriters and Other Purchasers. No underwriters were used
in connection with this issuance of Common Shares. Common
Shares (and the right to receive additional Common Shares
subject to certain conditions described above) were issued
(A) as merger consideration to former holders of KBI common
stock whose KBI shares were canceled in the merger and (B)
as consideration to former holders of options to purchase
KBI common stock, as consideration for the cancellation of
those options.
(c) Consideration. The consideration for the Common Shares
issued (and to be issued in the future as described above)
was the cancellation of former shares of KBI in the merger
and the cancellation of the KBI options as a condition
precedent to completion of the merger.
(d) Exemption from Registration Claimed. The Common Shares
described in this Item were (and will be) issued on the
basis of an exemption from registration under Section 4(2)
of the Securities Act of 1933. The Common Shares were issued
to a limited number of persons and subjected to restrictions
on resale appropriate for private placements, and
appropriate disclosure was made to all persons to whom
Common Shares were issued.
Item 3. Defaults upon Senior Securities ) Not applicable for the
- ------ ------------------------------- quarter ended June 30, 1997.
)
)
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
(a) The Annual Meeting of the Shareholders was held on May 7,
1997.
(b) The meeting involved the election of Class II directors.
Proxies for the meeting were solicited pursuant to
Regulation 14, there was no solicitation in opposition to
management's nominees as listed below, and all such nominees
were elected.
(c) The total votes for the election of directors were as
follows:
Class II .............. Votes For Votes Withheld
(Term Expiring in 2000)
Edwin B. Borden ....... 129,766,494 3,537,515
Richard L. Daugherty .. 129,724,639 3,579,370
Robert L. Jones ....... 129,574,585 3,729,424
The Board of Directors' proposal to approve the 1997 Equity
Incentive Plan was approved by the shareholders. The number
of shares voted for the proposal was 113,487,684 and the
number of shares voted against the proposal was 15,352,897.
<PAGE>
Item 5. Other Information
- ------- -----------------
1. (Reference is made to the Company's 1996 Form 10-K,
Generating Capability, paragraph 3.a., page 4.) With regard
to the construction of two new combustion turbine generating
units, located at the Company's Darlington County Electric
Plant near Hartsville, South Carolina, one unit began
operation on May 31, 1997, the other on June 12, 1997. These
units have a total generating capacity of approximately 240
MW.
2. (Reference is made to the Company's 1996 Form 10-K,
Generating Capability, paragraph 3.d., page 4.) With regard
to the Company's June 12, 1996, Request for Proposal for
purchasing peaking power, on July 14, 1997, the Company and
PECO Power Team, a division of PECO Energy Co., announced an
agreement for the Company to purchase up to 300 megawatts of
peaking power from PECO for the summer periods of 1999 to
2003.
3. (Reference is made to the Company's 1996 Form 10-K,
Competition and Franchises, paragraph 1.b., page 6.
Reference is also made to the Company's Form 10-Q for the
quarter ended March 31, 1997, Item 5, paragraph 1.) With
regard to the 23-member deregulation study commission
established by the North Carolina General Assembly, the
appointment of the commission members is not expected to
occur until this fall.
In South Carolina, 30 parties , including the Company, filed
comments regarding deregulation with the South Carolina
Public Service Commission (SCPSC) on June 30, 1997. Reply
comments were filed on July 21, 1997. Interested parties
have been invited to make presentations to the SCPSC on
August 19, 1997. The South Carolina General Assembly's
Utility Subcommittee has scheduled a series of hearings
around the state beginning this August in order to receive
citizen input on the deregulation issue.
The Company cannot predict the outcome of these matters.
4. (Reference is made to the Company's 1996 Form 10-K, Retail
Rate Matters, paragraph 2, page 12.) With regard to the
filing by Carolina Industrial Group for Fair Utility Rates
(CIGFUR) of a Notice of Appeal with the North Carolina Court
of Appeals, the Company filed its brief with the court on
July 18, 1997. The Company cannot predict the outcome of
this matter.
5. (Reference is made to the Company's 1996 Form 10-K, Retail
Rate Matters, paragraph 4, page 13.) With regard to the
annual fuel factor hearing before the North Carolina
Utilities Commission (NCUC), on June 5, 1997, the Company
filed its 1997 application proposing to lower the Company's
billing fuel factor from 1.109 cents/kwh to 1.097 cents/kwh.
The fuel factor hearing was held on August 5, 1997. The
Company anticipates receiving a final order from the NCUC in
September. The Company cannot predict the outcome of this
matter.
<PAGE>
6. (Reference is made to the Company's 1996 Form 10-K, Retail
Rate Matters, paragraph 5.a., page 14.) With regard to the
avoided cost proceedings with the NCUC, by order issued June
19, 1997, the NCUC approved the updated avoided cost rates
and provisions that were reflected in the Company's proposed
order.
7. (Reference is made to the Company's 1996 Form 10-K,
Environmental Matters, paragraph 2, page 15.) In an effort
to resolve ozone non-attainment issues in the Northeast,
Chicago, and Atlanta areas, the Environmental Protection
Agency (EPA) formed the Ozone Transport Assessment Group
(OTAG), a partnership involving the EPA and environmental
regulators from 37 states. At its final meeting on June 20,
1997, OTAG approved a recommendation endorsing a range of
potential reductions of utility Nitrogen Oxide (NOx)
emissions beyond the Phase II reductions. Specific reduction
targets will be proposed by the EPA on a state-by-state
basis. The EPA's final rulemaking for the individual states
is expected in late 1998. The Company cannot determine the
estimated costs for the further NOx reductions at this time.
The Company cannot predict the outcome of this matter.
8. (Reference is made to the Company's 1996 Form 10-K,
Environmental matters, paragraph 2, page 15) With regard to
revisions to existing air quality standards, the EPA issued
final regulations revising the ozone standard and
establishing a new fine-particulate standard on July 17,
1997. These regulations may require the installation of
additional control equipment at some of the Company's
fossil-fueled electric generating plants. The Company is
evaluating the impact of the new regulations on its
facilities and cannot determine the estimated costs of
additional controls which may be required for compliance
with the new standards. The Company cannot predict the
outcome of this matter.
9. (Reference is made to the Company's 1996 Form 10-K, Other
Matters, paragraph 1, page 24. Reference is also made to the
Company's Form 10-Q for the quarter ended March 31, 1997,
Item 5, paragraph 2.) With regard to the Independent
Consultant's Safety Inspection Report required to be filed
under Federal Energy Regulatory Commission (FERC) Regulation
18 CFR Part 12, the Company filed a response on April 24,
1997, to the FERC's letter dated February 27, 1997. In its
response, the Company agreed with some of the FERC's
comments and took exception to others. The Company has not
received a reply from the FERC as of this date. The Company
cannot predict the outcome of this matter.
10. (Reference is made to the Company's 1996 Form 10-K, Other
Matters, paragraph 7, page 26. Reference is also made to the
Company's Form 10-Q for the quarter ended March 31, 1997,
Item 5, paragraph 3.) With regard to the Company's
wholly-owned subsidiary, CaroCapital, Inc. (CaroCapital),
the merger with Knowledge Builders, Inc. was completed and
applications for authority to issue additional shares of the
Company's Common Stock in connection with the merger were
approved by the NCUC and the SCPSC on May 28, 1997, and June
5, 1997, respectively. Following the completion of the
merger, CaroCapital's board of directors recommended and its
sole shareholder (the Company) adopted a resolution
approving the change of CaroCapital's name to Strategic
Resource Solutions Corp., a North Carolina Enterprise
Corporation. Articles of Amendment to change the name were
filed with the North Carolina Secretary of State on June 16,
1997. See additional discussion of this transaction in Part
II, Item 2.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
------- --------------------------------
(a) Exhibits Filed:
Exhibit No. Description
3(i) Restated Charter of Carolina
Power & Light Company as amended
on May 10, 1996.
3(ii) By-Laws of Carolina Power &
Light Company as amended on
September 18, 1996.
*10(a) 1997 Equity Incentive Plan,
approved by the Company's
shareholders May 7, 1997, effective
as of January 1, 1997 (filed as
Appendix A to the Company's 1997
Proxy Statement, File No.
001-03382).
10(b) Performance Share Sub-Plan of the
1997 Equity Incentive Plan, adopted
by the Personnel, Executive
Development and Compensation
Committee of the Board of
Directors, March 19, 1997, (subject
to shareholder approval of the 1997
Equity Incentive Plan, which was
obtained on May 7, 1997).
(b) Reports on Form 8-K filed during or with respect to the
quarter:
None.
- -------------
*Incorporated herein by reference as indicated.
<PAGE>
SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAROLINA POWER & LIGHT COMPANY
(Registrant)
By /s/ Glenn E.Harder
---------------------
Glenn E. Harder
Executive Vice President and
Chief Financial Officer
By /s/ Bonnie V. Hancock
------------------------
Bonnie V. Hancock
Vice President and Controller
(and Principal Accounting Officer)
Date: August 13, 1997
<PAGE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
(ORGANIZED UNDER THE LAWS OF NORTH CAROLINA)
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(NOT AUDITED BY INDEPENDENT AUDITORS)
JUNE 30, 1997
STATEMENTS OF INCOME
(In thousands except per share amounts) Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1997 1996 1997 1996
- ------------------------------------------------------- --------- --------- ----------- ----------- ----------- -----------
Operating Revenues .................................... $ 666,023 $ 685,968 $ 1,382,107 $ 1,469,553 $ 2,908,270 $ 3,065,903
- ------------------------------------------------------- --------- --------- ----------- ----------- ----------- -----------
Operating Expenses
Fuel ................................................ 118,982 112,955 252,250 250,521 516,779 526,415
Purchased power ..................................... 92,545 105,688 174,164 211,677 375,041 422,822
Other operation and maintenance ..................... 185,846 173,363 341,809 342,763 729,186 716,503
Depreciation and amortization ....................... 120,128 93,408 239,000 185,886 440,041 369,242
Taxes other than on income .......................... 33,519 34,092 68,525 72,656 136,348 142,499
Income tax expense .................................. 21,836 67,172 82,865 144,267 208,361 309,134
Harris Plant deferred costs, net .................... 6,179 4,324 13,744 12,389 28,070 26,735
- ------------------------------------------------------- --------- --------- ----------- ----------- ----------- -----------
Total Operating Expenses ...................... 579,035 591,002 1,172,357 1,220,159 2,433,826 2,513,350
- ------------------------------------------------------- --------- --------- ----------- ----------- ----------- -----------
Operating Income ...................................... 86,988 94,966 209,750 249,394 474,444 552,553
- ------------------------------------------------------- --------- --------- ----------- ----------- ----------- -----------
Other Income
Allowance for equity funds used during construction . 55 1,187 116 2,222 (2,096) 3,675
Income tax credit ................................... 2,039 4,418 5,125 8,831 10,141 20,875
Harris Plant carrying costs ......................... 1,195 2,549 2,503 4,358 5,444 8,308
Interest income ..................................... 10,516 1,041 12,185 2,175 14,073 5,486
Other income, net ................................... (2,486) 5,799 (4,478) 11,998 20,863 12,795
--------- --------- ----------- ----------- ----------- -----------
Total Other Income ............................ 11,319 14,994 15,451 29,584 48,425 51,139
--------- --------- ----------- ----------- ----------- -----------
Income Before Interest Charges ........................ 98,307 109,960 225,201 278,978 522,869 603,692
--------- --------- ----------- ----------- ----------- -----------
Interest Charges
Long-term debt ...................................... 40,438 43,353 81,148 88,029 165,740 181,585
Other interest charges .............................. 4,905 4,993 10,317 11,905 17,567 26,763
Allowance for borrowed funds used
during construction .............................. (1,325) (1,042) (2,815) (1,958) (7,264) (4,267)
- ------------------------------------------------------- --------- --------- ----------- ----------- ----------- -----------
Net Interest Charges ......................... 44,018 47,304 88,650 97,976 176,043 204,081
- ------------------------------------------------------- --------- --------- ----------- ----------- ----------- -----------
Net Income ............................................ 54,289 62,656 136,551 181,002 346,826 399,611
Preferred Stock Dividend Requirements ................. (741) (2,402) (3,143) (4,804) (7,948) (9,609)
- ------------------------------------------------------- --------- --------- ----------- ----------- ----------- -----------
Earnings for Common Stock ............................. $ 53,548 $ 60,254 $ 133,408 $ 176,198 $ 338,878 $ 390,002
======================================================= ========= ========= =========== =========== =========== ===========
Average Common Shares Outstanding (Note 3) ............ 143,475 143,808 143,485 143,716 143,506 144,490
Earnings per Common Share (Note 3) .................... $ 0.37 $ 0.42 $ 0.93 $ 1.23 $ 2.36 $ 2.70
Dividends Declared per Common Share ................... $ 0.470 $ 0.455 $ 0.940 $ 0.910 $ 1.865 $ 1.805
See Suplemental Data and Notes to Consolidated Interim Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
BALANCE SHEETS
(In thousands)
June 30 December 31
<S> <C> <C> <C>
1997 1996 1996
- --------------------------------------------------------------------------------------------------------
ASSETS
Electric Utility Plant
Electric utility plant in service $ 9,968,079 $ 9,584,032 $ 9,783,442
Accumulated depreciation (3,966,186) (3,643,838) (3,796,645)
- --------------------------------------------------------------------------------------------------------
Electric utility plant in service, net 6,001,893 5,940,194 5,986,797
Held for future use 14,176 12,752 12,127
Construction work in progress 127,692 184,614 196,623
Nuclear fuel, net of amortization 200,359 175,968 204,372
- --------------------------------------------------------------------------------------------------------
Total Electric Utility Plant, Net 6,344,120 6,313,528 6,399,919
- --------------------------------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents 20,386 2,448 10,941
Accounts receivable 343,669 355,137 384,318
Fuel 62,120 58,094 60,369
Materials and supplies 127,039 124,245 122,809
Prepayments 54,197 58,359 65,794
Other current assets 40,271 30,651 27,808
- --------------------------------------------------------------------------------------------------------
Total Current Assets 647,682 628,934 672,039
- --------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
Income taxes recoverable through future rates 356,700 384,669 384,336
Abandonment costs (Note 3) 52,345 50,136 65,863
Harris Plant deferred costs 72,156 94,782 83,397
Unamortized debt expense 59,205 72,452 69,956
Miscellaneous other property and investments 381,148 499,424 489,334
Other assets and deferred debits 222,331 176,284 204,357
- --------------------------------------------------------------------------------------------------------
Total Deferred Debits and Other Assets 1,143,885 1,277,747 1,297,243
- --------------------------------------------------------------------------------------------------------
Total Assets $ 8,135,687 $ 8,220,209 $ 8,369,201
========================================================================================================
CAPITALIZATION AND LIABILITIES
Capitalization
Common stock equity $ 2,705,823 $ 2,636,175 $ 2,690,454
Preferred stock - redemption not required 59,376 143,801 143,801
Long-term debt, net 2,525,808 2,565,268 2,525,607
- --------------------------------------------------------------------------------------------------------
Total Capitalization 5,291,007 5,345,244 5,359,862
- --------------------------------------------------------------------------------------------------------
Current Liabilities
Current portion of long-term debt 43,436 138,258 103,345
Current portion of preferred stock (Note 5) 84,425 - -
Notes payable 93,900 80,749 64,885
Accounts payable 159,563 155,758 375,216
Interest accrued 38,873 42,462 39,436
Dividends declared 71,727 71,549 73,469
Deferred fuel credit 5,102 17,560 4,339
Other current liabilities 106,602 161,688 74,668
- --------------------------------------------------------------------------------------------------------
Total Current Liabilities 603,628 668,024 735,358
- --------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
Accumulated deferred income taxes 1,784,344 1,733,287 1,827,693
Accumulated deferred investment tax credits 227,145 237,484 232,262
Other liabilities and deferred credits 229,563 236,170 214,026
- --------------------------------------------------------------------------------------------------------
Total Deferred Credits and Other Liabilities 2,241,052 2,206,941 2,273,981
- --------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 6)
Total Capitalization and Liabilities $ 8,135,687 $ 8,220,209 $ 8,369,201
========================================================================================================
SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
Common stock $ 1,370,858 $ 1,384,712 $ 1,366,100
Unearned ESOP common stock (166,866) (178,514) (178,514)
Capital stock issuance expense (790) (790) (790)
Retained earnings 1,502,621 1,430,767 1,503,658
- --------------------------------------------------------------------------------------------------------
Total Common Stock Equity $ 2,705,823 $ 2,636,175 $ 2,690,454
========================================================================================================
- -----------------------------------------------------------------------------
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
STATEMENTS OF CASH FLOWS Three Months Six Months Twelve Months
(In thousands) Ended Ended Ended
June 30 June 30 June 30
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1997 1996 1997 1996
Operating Activities
Net income ........................................................$ 54,289 $ 62,656 $ 136,551 $ 181,002 $ 346,826 $ 399,611
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization ................................. 138,595 115,350 278,953 228,283 497,178 452,197
Harris Plant deferred costs ................................... 4,983 1,775 11,241 8,031 22,626 18,427
Deferred income taxes ......................................... (15,463) 12,639 (41,282) 27,265 62,271 124,457
Investment tax credit ......................................... (2,558) (2,610) (5,117) (5,221) (10,339) (9,459)
Allowance for equity funds used during construction ........... (55) (1,187) (116) (2,222) 2,096 (3,675)
Deferred fuel cost (credit) ................................... (8,851) 1,473 763 (9,936) (12,458) (26,585)
Net increase in receivables, inventories and prepaid expenses (18,703) (19,710) (35,517) (35,285) (65,025) (34,169)
Net increase (decrease) in payables and accrued expenses ...... (43,719) 29,302 (67,064) 10,687 (73,080) (22,102)
Miscellaneous ................................................. 136,900 20,488 170,957 26,232 209,576 34,633
- --------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities ................... 245,418 220,176 449,369 428,836 979,671 933,335
- --------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Gross property additions .......................................... (81,333) (81,022) (173,412) (169,500) (373,220) (297,168)
Nuclear fuel additions ............................................ (12,189) (9,825) (33,805) (35,898) (85,172) (77,934)
Contributions to external decommissioning trust ................... (7,723) (7,722) (18,021) (18,020) (30,684) (29,479)
Contributions to retiree benefit trusts ........................... - - (21,096) (24,700) (21,096) (24,700)
Allowance for equity funds used during construction ............... 55 1,187 116 2,222 (2,096) 3,675
Miscellaneous ..................................................... (18) (5,328) (1,206) (18,566) (10,686) (30,559)
- --------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities .......................(101,208) (102,710) (247,424) (264,462) (522,954) (456,165)
- --------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt .......................... - 10,700 - 276,257 73,743 276,300
Net increase (decrease) in short-term notes
payable (maturity less than 90 days) ............................ (55,300) 77,109 31,676 80,749 (57,931) 71,792
Retirement of long-term debt ...................................... - (135,971) (61,427) (391,475) (137,762) (440,524)
Purchase of Company common stock .................................. (23,418) (4,676) (23,418) (6,596) (42,030) (131,042)
Dividends paid on common and preferred stock ...................... (70,007) (67,782) (139,331) (135,350) (274,799) (267,848)
- --------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities .......................(148,725) (120,620) (192,500) (176,415) (438,779) (491,322)
- --------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents ................ (4,515) (3,154) 9,445 (12,041) 17,938 (14,152)
Cash and Cash Equivalents at Beginning of the Period ................ 24,901 5,602 10,941 14,489 2,448 16,600
- --------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period ......................$ 20,386 $ 2,448 $ 20,386 $ 2,448 $ 20,386 $ 2,448
================================================================================================================================
Supplemental Disclosures of Cash Flow Information
Cash paid during the period - interest ..............................$ 36,935 $ 48,188 $ 90,037 $ 103,390 $ 245,701 $ 203,231
income taxes .........$ 96,490 $ 39,735 $ 97,294 $ 40,390 $ 149,710 $ 176,942
Noncash Activities
In June 1997, CaroCapital, Inc., a wholly-owned subsidiary, purchased all
remaining shares of Knowledge Builders, Inc. (KBI). In connection with the
purchase of KBI, the Company issued $20.5 million in common stock and paid $1.9
million in cash. (Note 4)
See Supplemental Data to Consolidated Interim Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
SUPPLEMENTAL DATA Three Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (in thousands)
Residential $ 191,479 $ 204,385 $ 439,862 $ 488,663 $ 943,351 $ 1,013,157
Commercial 150,331 150,338 299,971 301,916 625,934 629,455
Industrial 184,613 178,985 355,505 342,229 734,864 723,519
Government and municipal 17,463 18,966 36,900 39,025 73,267 79,859
Power Agency contract requirements 19,627 23,422 28,746 48,874 76,666 103,418
NCEMC 46,480 54,293 100,700 124,430 210,923 281,237
Other wholesale 18,938 19,990 44,259 41,895 89,828 83,776
Other utilities 23,265 22,412 48,844 56,109 97,812 100,587
Miscellaneous revenue 13,827 13,177 27,320 26,412 55,625 50,895
- ----------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 666,023 $ 685,968 $ 1,382,107 $ 1,469,553 $ 2,908,270 $ 3,065,903
- ----------------------------------------------------------------------------------------------------------------------------------
Energy Sales (millions of kWh)
Residential 2,451 2,640 5,719 6,448 11,881 12,840
Commercial 2,342 2,335 4,629 4,657 9,587 9,594
Industrial 3,877 3,691 7,392 7,025 14,823 14,337
Government and municipal 284 319 610 655 1,219 1,343
Power Agency contract requirements 460 615 840 1,385 1,977 2,759
NCEMC 825 862 1,772 1,953 3,766 4,923
Other wholesale 480 503 1,047 983 2,078 1,963
Other utilities 1,026 1,080 2,185 2,652 4,433 4,410
- ----------------------------------------------------------------------------------------------------------------------------------
Total Energy Sales 11,745 12,045 24,194 25,758 49,764 52,169
- ----------------------------------------------------------------------------------------------------------------------------------
Energy Supply (millions of kWh)
Generated - coal 5,850 4,884 11,260 12,027 24,092 25,104
nuclear 4,743 5,805 10,615 10,484 20,416 20,541
hydro 253 211 571 523 931 894
combustion turbines 48 15 50 29 88 85
Purchased 1,367 1,828 2,582 3,724 6,152 7,613
- ----------------------------------------------------------------------------------------------------------------------------------
Total Energy Supply (Company Share) 12,261 12,743 25,078 26,787 51,679 54,237
- ----------------------------------------------------------------------------------------------------------------------------------
Detail of Income Taxes (in thousands)
Included in Operating Expenses
Income tax expense (credit) - current $ 41,115 $ 58,915 $ 129,823 $ 125,020 $ 166,753 $ 200,115
- deferred (16,721) 10,868 (41,841) 24,470 51,947 118,480
- investment tax credit adjustments (2,558) (2,611) (5,117) (5,223) (10,339) (9,461)
- ----------------------------------------------------------------------------------------------------------------------------------
Subtotal 21,836 67,172 82,865 144,267 208,361 309,134
- ----------------------------------------------------------------------------------------------------------------------------------
Harris Plant deferred costs-
investment tax credit adjustments (40) (74) (100) (149) (237) (297)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Included in Operating Expenses 21,796 67,098 82,765 144,118 208,124 308,837
- ----------------------------------------------------------------------------------------------------------------------------------
Included in Other Income
Income tax expense (credit) - current (3,297) (6,189) (5,684) (11,626) (20,465) (26,852)
- deferred 1,258 1,771 559 2,795 10,324 5,977
- ----------------------------------------------------------------------------------------------------------------------------------
Total Included in Other Income (2,039) (4,418) (5,125) (8,831) (10,141) (20,875)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income Tax Expense $ 19,757 $ 62,680 $ 77,640 $ 135,287 $ 197,983 $ 287,962
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATISTICS
Ratio of earnings to fixed charges 3.74 4.07
Return on average common stock equity 12.72% 15.03%
Book value per common share $ 18.82 $ 18.33
Capitalization ratios
Common stock equity 51.14% 49.32%
Preferred stock - redemption not required 1.12 2.69
Long-term debt, net 47.74 47.99
- --------------------------------------------------------------------------------------------------------------------------- -------
Total 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------------------------------
See Notes to Consolidated Interim Financial Statements.
</TABLE>
Carolina Power & Light Company
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Carolina Power & Light Company
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
--------------------------------------
A. Organization. Carolina Power & Light Company (the Company) is a public
service corporation primarily engaged in the generation, transmission,
distribution and sale of electricity in portions of North and South
Carolina. The Company has no other material segments of business.
B. Basis of Presentation. These consolidated interim financial statements
are prepared in conformity with the accounting principles reflected in
the financial statements included in the Company's 1996 Annual Report
to Shareholders and the 1996 Annual Report on Form 10-K. Due to
temperature variations between seasons of the year and the timing of
outages of electric generating units, especially nuclear-fueled units,
the amounts reported in the Statements of Income for periods of less
than twelve months are not necessarily indicative of amounts expected
for the year. The amounts are unaudited but, in the opinion of
management, reflect all adjustments necessary to fairly present the
Company's financial position and results of operations for the interim
periods. Certain amounts for 1996 have been reclassified to conform to
the 1997 presentation, with no effect on previously reported net income
or common stock equity.
In preparing financial statements that conform with generally accepted
accounting principles, management must make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial
statements and amounts of revenues and expenses reflected during the
reporting period. Actual results could differ from those estimates.
2. NUCLEAR DECOMMISSIONING
------------------------
In the Company's retail jurisdictions, provisions for nuclear
decommissioning costs are approved by the North Carolina Utilities
Commission (NCUC) and the South Carolina Public Service Commission
(SCPSC) and are based on site-specific estimates that include the costs
for removal of all radioactive and other structures at the site. In the
wholesale jurisdiction, the provisions for nuclear decommissioning
costs are based on amounts agreed upon in applicable rate agreements.
Based on the site-specific estimates discussed below, and using an
assumed after-tax earnings rate of 8.5% and an assumed cost escalation
rate of 4%, current levels of rate recovery for nuclear decommissioning
costs are adequate to provide for decommissioning of the Company's
nuclear facilities.
The Company's most recent site-specific estimates of decommissioning
costs were developed in 1993, using 1993 cost factors, and are based on
prompt dismantlement decommissioning, which reflects the cost of
removal of all radioactive and other structures currently at the site,
with such removal occurring shortly after operating license expiration.
These estimates, in 1993 dollars, are $257.7 million for Robinson Unit
No. 2, $235.4 million for Brunswick Unit No. 1, $221.4 million for
Brunswick Unit No. 2 and $284.3 million for the Harris Plant. The
estimates are subject to change based on a variety of factors
including, but not limited to, cost escalation, changes in technology
applicable to nuclear decommissioning, and changes in federal, state or
local regulations. The cost estimates exclude the portion attributable
to North Carolina Eastern Municipal Power Agency, which holds an
undivided ownership interest in the Brunswick and Harris nuclear
generating facilities. Operating licenses for the Company's nuclear
units expire in the year 2010 for Robinson Unit No. 2, 2016 for
Brunswick Unit No. 1, 2014 for Brunswick Unit No. 2 and 2026 for the
Harris Plant.
The Financial Accounting Standards Board (the Board) has reached
several tentative conclusions with respect to its project regarding
accounting practices related to closure and removal of long-lived
assets. The primary conclusions as they relate to nuclear
decommissioning are: 1) the cost of decommissioning should be accounted
for as a liability and accrued as the obligation is incurred; 2)
recognition of a liability for decommissioning results in recognition
of an increase to the cost of the plant; 3) the decommissioning
liability should be measured based on discounted cash flows using a
risk-free rate; and 4) decommissioning trust funds should not be offset
against the decommissioning liability. It is uncertain what impacts the
final statement may ultimately have on the Company's accounting for
nuclear decommissioning and other closure and removal costs. The Board
has announced that the effective date would be no earlier than 1998.
3. RETAIL RATE MATTERS
-------------------
A petition was filed in July 1996 by the Carolina Industrial Group for
Fair Utility Rates (CIGFUR) with the NCUC requesting that the NCUC
conduct an investigation of the Company's base rates or treat its
petition as a complaint against the Company. The petition alleged that
the Company's return on equity (which was authorized by the NCUC in the
Company's last general rate proceeding in 1988) and earnings are too
high. In December 1996, the NCUC issued an order denying CIGFUR's
petition and stating that it tentatively found no reasonable grounds to
proceed with CIGFUR's petition as a complaint. In January 1997, CIGFUR
filed its Comments and Motion for Reconsideration to which the Company
responded. On February 6, 1997, the NCUC issued an order denying
CIGFUR's Motion for Reconsideration. On February 25, 1997, CIGFUR filed
a Notice of Appeal of the NCUC's decision with the North Carolina Court
of Appeals. The Company filed its brief in this matter on July 18,
1997. The Company cannot predict the outcome of this matter.
In December 1996, the Company filed a proposal with the SCPSC to
accelerate amortization of certain regulatory assets, including plant
abandonment costs related to the Harris Plant, over a three-year period
beginning January 1, 1997. This accelerated amortization will reduce
income by approximately $13 million, after tax, in each of the three
years. In anticipation of approval of the proposal in 1997, the
unamortized balance of plant abandonment costs related to the Harris
Plant was adjusted in 1996 to reflect the present value impact of the
shorter recovery period. This adjustment resulted in an increase in
income of approximately $14 million, after tax, in the fourth quarter
of 1996. On March 20, 1997, the SCPSC approved the Company's
accelerated amortization proposal.
4. PURCHASE OF KNOWLEDGE BUILDERS, INC. (KBI)
------------------------------------------
On May 6, 1997, CaroCapital, Inc. (CaroCapital), a wholly owned
subsidiary of the Company, entered into a merger agreement pursuant to
which KBI was merged into CaroCapital. KBI is an energy-management
software and control systems company in which CaroCapital purchased a
40% equity interest in 1996. In connection with the merger, the
remaining KBI stock was exchanged for common stock of the Company
according to a market value formula. The merger resulted in the
issuance of approximately 604,000 shares of the Company's common stock
(valued at $20.5 million) and a cash payment of $1.9 million. The
merger agreement also provided for incentive payments based on
CaroCapital's future results of operations. If earned, these additional
payments will be made primarily in shares of the Company's common
stock. The merger was completed on June 5, 1997. Following the
completion of the merger, CaroCapital was renamed Strategic Resource
Solutions Corp., a North Carolina Enterprise Corporation.
5. PREFERRED STOCK REDEMPTION
--------------------------
On July 1, 1997, the Company redeemed all 500,000 shares of $7.72
Serial Preferred Stock and all 350,000 shares of $7.95 Serial Preferred
Stock, both at a redemption price of $101 per share. On June 30, 1997,
$84.4 million was reclassified to current liabilities. The redemptions
were funded with additional commercial paper borrowings and/or
internally generated funds.
6. COMMITMENTS AND CONTINGENCIES
-----------------------------
Contingencies existing as of the date of these statements are described
below. No significant changes have occurred since December 31, 1996,
with respect to the commitments discussed in Note 11 of the financial
statements included in the Company's 1996 Annual Report to
Shareholders.
A.Applicability of SFAS-71. As a regulated entity, the Company is
subject to the provisions of Statement of Financial Accounting
Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation," (SFAS-71). Accordingly, the Company records certain assets
and liabilities resulting from the effects of the ratemaking process,
which would not be recorded under generally accepted accounting
principles for non-regulated entities. The continued applicability of
SFAS-71 will require further evaluation as competitive forces,
deregulation and restructuring take effect in the electric utility
industry. In the event the Company discontinued the application of
SFAS-71, amounts recorded under SFAS-71 as regulatory assets and
liabilities would be eliminated. At June 30, 1997, the Company's
regulatory assets totaled $627.1 million. Additionally, the factors
discussed above could result in an impairment of electric utility plant
assets as determined pursuant to Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of."
B.Claims and Uncertainties. 1) The Company is subject to federal, state
and local regulations addressing air and water quality, hazardous and
solid waste management and other environmental matters.
Various organic materials associated with the production of
manufactured gas, generally referred to as coal tar, are regulated
under various federal and state laws. There are several manufactured
gas plant (MGP) sites to which the Company and certain entities that
were later merged into the Company had some connection. In this regard,
the Company, along with other entities alleged to be former owners and
operators of MGP sites in North Carolina, is participating in a
cooperative effort with the North Carolina Department of Environment,
Health and Natural Resources, Division of Waste Management (DWM) to
establish a uniform framework for addressing these MGP sites. The
investigation and remediation of specific MGP sites will be addressed
pursuant to one or more Administrative Orders on Consent between the
DWM and individual potentially responsible party or parties. The
Company continues to investigate the identities of parties connected to
individual MGP sites, the relative relationships of the Company and
other parties to those sites and the degree to which the Company will
undertake shared voluntary efforts with others at individual sites.
The Company has been notified by regulators of its involvement or
potential involvement in several sites, other than MGP sites, that
require remedial action. Although the Company cannot predict the
outcome of these matters, it does not expect costs associated with
these sites to be material to the results of operations of the Company.
The Company carries a liability for the estimated costs associated with
certain remedial activities at certain MGP and other sites. This
liability is not material to the financial position of the Company. Due
to uncertainty regarding the extent of remedial action that will be
required and questions of liability, the cost of remedial activities at
certain MGP sites is not currently determinable. The Company cannot
predict the outcome of these matters.
2) As required under the Nuclear Waste Policy Act of 1982, the Company
entered into a contract with the U. S. Department of Energy (DOE) under
which the DOE agreed to dispose of the Company's spent nuclear fuel.
The Company cannot predict whether the DOE will be able to perform its
contractual obligations and provide interim storage or permanent
disposal repositories for spent nuclear fuel and/or high-level
radioactive waste materials on a timely basis.
With certain modifications, the Company's spent fuel storage facilities
are sufficient to provide storage space for spent fuel generated on the
Company's system through the expiration of the current operating
licenses for all of the Company's nuclear generating units. Subsequent
to the expiration of these licenses, dry storage may be necessary.
3) In the opinion of management, liabilities, if any, arising under
other pending claims would not have a material effect on the financial
position, results of operations or cash flows of the Company.
7. IMPACT OF NEW ACCOUNTING STANDARD
---------------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share," (SFAS-128), which changed the previous standards on computing
and presenting earnings per share. SFAS-128 is effective for fiscal
years beginning after December 15, 1997; earlier application is not
permitted. The Company does not expect the adoption of SFAS-128 to have
a material impact on its financial statements.
Exhibit No. Description
3(I) Restated Charter of Carolina
Power & Light Company as amended
on May 10, 1996.
3(II) By-Laws of Carolina Power &
Light Company as amended on
September 18, 1996.
10(b) Performance Share Sub-Plan of the
1997 Equity Incentive Plan, adopted
by the Personnel, Executive
Development and Compensation
Committee of the Board of
Directors, March 19, 1997, (subject
to shareholder approval of the 1997
Equity Incentive Plan, which was
obtained on May 7, 1997).
27 Financial Data Schedule
RESTATED CHARTER
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation, pursuant to action by its shareholders,
hereby executes this Restated Charter for the purpose of integrating into one
document its Articles of Incorporation, entitled Agreement of Merger of
Tidewater Power Company with and into Carolina Power & Light Company and all
amendments thereto:
FIRST: The name of the corporation is Carolina Power & Light Company
("Company").
SECOND: The location of the principal office of the Company in the
State of North Carolina shall be at Raleigh.
THIRD: The object or objects for which the Company is to exist are the
following, to wit:
The object or objects of the Company and in aid thereof and in
addition thereto the following object or objects the enumeration of
which shall not limit or restrict or be held to limit or restrict in
any manner the object or objects of the Company, namely:
To acquire, buy, hold, own, sell, lease, exchange, dispose of,
finance, deal in, construct, build, equip, improve, use, operate,
maintain and work upon:
(a) Any and all kinds of plants and systems for the
manufacture, storage, utilization, supply, transmission, distribution,
or disposition of electricity, gas, water or steam, or power produced
thereby, or of ice and refrigeration, of any and every kind, or
telegraphs or telephones, or for the transmission of information, or
any thereof;
(b) Any and all kinds of street railways (except railroads)
and bus lines for the transportation of passengers and/or freight,
transmission lines, systems, appliances, equipment and devices and
tracks, stations, buildings and other structures and facilities;
(c) Any and all kinds of works, power plants, substations,
systems, tracts, machinery, generators, motors, lamps, poles, pipes,
wires, cables, conduits, apparatus, devices, supplies and articles of
every kind pertaining to or in anywise connected with the construction,
operation or maintenance of street railways (except railroads) and bus
lines or in anywise connected with the manufacture, purchase, use,
transmission, distribution, regulation, control or application of
electricity, gas, light, heat, refrigeration, ice, water, power,
telephones and telegraphs, or any other purposes;
To acquire, buy, hold, own, sell, lease, exchange, dispose of,
distribute, deal in, use, produce, furnish and supply electricity, gas, light,
heat, refrigeration, ice, water and power and any other power or force in any
form and for any purpose whatsoever;
To carry on the business of general brokers and dealers in
stocks, bonds, securities, mortgages and other choses in action, including the
acquisition thereof by original subscription; to make investments in such
property and to hold, manage, mortgage, pledge, sell, and dispose of the same in
like manner as individuals may do;
To carry on in States and jurisdictions when and where
permissible by the laws of such States and jurisdictions, the business of
constructing and operating or aiding in the construction and operation of street
railways, telegraph and telephone companies, gas and electric companies.
To acquire, organize, assemble, develop, build up and operate,
constructing and operating and other organizations and systems and to hire,
sell, lease, exchange, turn over, deliver and dispose of such organizations and
systems in whole or in part, and as going organizations and systems and
otherwise, and to enter into and perform contracts, agreements and undertakings
of any kind in connection with any or all of the foregoing purposes;
To do a general contracting business;
To purchase, acquire, hold, own, develop and dispose of lands,
interests in and rights with respect to lands and waters and fixed and movable
property, franchises, concessions, consents, privileges and licenses in its
opinion useful or desirable for or in connection with the foregoing purposes;
To underwrite, acquire by purchase, subscription or otherwise,
and to own, hold for investment or otherwise, and to use, sell, assign,
transfer, mortgage, pledge, exchange or otherwise dispose of real and personal
property of every sort and description and wheresoever situated, including
shares of stock, bonds, debentures, notes, scrip, warrants, securities,
evidences of indebtedness, contracts or obligations of any corporation or
corporations, association or associations, domestic or foreign, or of any firm
or individual of the United States or any state, territory or dependency of the
United States or any foreign country, or any municipality or local authority
within or without the United States, and also to issue in exchange therefor
stocks, bonds or other securities or evidences of indebtedness of the Company,
and while the owner or holder of any such property, to receive, collect and
dispose of the interest, dividends and income on or from such property and to
possess and exercise in respect thereto all of the rights, powers and privileges
of ownership, including all voting powers thereon;
To aid in any manner any corporation or association, domestic
or foreign, or any firm or individual, any shares of stock in which or any
bonds, debentures, notes, securities, evidences of indebtedness, contracts, or
obligations of which are held by or for the Company, directly or indirectly, or
in which, or in the welfare of which, the Company shall have any interest, and
to do any acts designed to protect, preserve, improve or enhance the value of
any property at any time held or controlled by the Company or in which it may be
at any time interested, directly or indirectly or through other corporations or
otherwise; and to organize or promote or facilitate the organization of
subsidiary companies.
IN FURTHERANCE AND NOT IN LIMITATION of the general powers
conferred by the laws of the State of North Carolina and of the objects and
purposes hereinbefore stated, it is hereby expressly provided that the Company
shall also have the following powers, that is to say:
To do any or all things set forth to the same extent
and as fully as natural persons might or could do, and in any part of
the world, and as principal, agent, contractor or otherwise, and either
alone or in conjunction with any other persons, firms, associations or
corporations;
To borrow money, to issue bonds, promissory notes,
bills of exchange, debentures and other obligations and evidences of
indebtedness, whether secured by mortgage, pledge or otherwise, or
unsecured, for money borrowed or in payment for property purchased or
acquired or for any other lawful object; to mortgage or pledge all or
any part of its properties, rights, interests and franchises, including
any or all shares of stock, bonds, debentures, notes, scrip, warrants
or other obligation or evidences of indebtedness at any time owned by
it;
To guarantee the payment of dividends upon any
capital stock and to endorse or otherwise guarantee the principal or
interest, or both, of any bonds, debentures, notes, scrip or other
obligations or evidences of indebtedness, or the performance of any
contract or obligation, of any other corporation or association,
domestic or foreign, or of any firm or individual in which the Company
may have a lawful interest, in so far and to the extent that such
guaranty may be permitted by law;
To purchase or otherwise acquire its own shares of
stock (so far as may be permitted by law), and its bonds, debentures,
notes, scrip, warrants or other securities or evidences of
indebtedness, and to cancel or to hold, sell, transfer or reissue the
same;
To do all and everything necessary or convenient for
the accomplishment of the objects herein enumerated, and in general to
carry on any lawful business, incidental, necessary or convenient to
any of said objects but nothing herein contained is to be construed as
authorizing the Company to carry on the business of railroads other
than street railways, or banking or insurance or of building and loan
associations.
Nothing herein shall be deemed to limit or exclude
any power, right or privilege given to the Company by law or construed
to give the Company any rights, powers or privileges not permitted by
the laws of the State of North Carolina to corporations organized under
the statutes of the State of North Carolina for the general purposes
for which the Company is organized.
The foregoing clauses shall be construed as objects,
purposes and powers and it is hereby expressly provided that the
foregoing specific enumeration shall not be held to limit or restrict
in any manner the powers of the Company.
FOURTH: The total number of the authorized shares of the Company is
135,300,000 shares divided into 300,000 shares of $5 Preferred Stock
(hereinafter called "$5 Preferred Stock"), 20,000,000 shares of Serial Preferred
Stock (hereinafter called "Serial Preferred Stock"), 5,000,000 shares of
Preferred Stock A (hereinafter called "Preferred Stock A"), 10,000,000 shares of
Preference Stock, (hereinafter called "Preference Stock"), and 100,000,000
shares of Common Stock, all without nominal or par value.
The preferences, limitations and relative rights of each said classes
of stock shall be as follows:
PREFERRED STOCKS AND COMMON STOCK
(1)(a) The Board of Directors is authorized to establish and issue at
any time and from time to time (i) one or more series of Serial Preferred Stock
which shall be of equal rank and identical in all respects except that there may
be variations between series in the following relative rights and preferences:
Dividend rates, redemption prices and the terms and conditions on which shares
may be redeemed, sinking fund provisions for the redemption or purchase of
shares, amounts payable upon voluntary or involuntary liquidation, and terms and
conditions on which shares may converted, if shares are issued with the
privilege of conversion, and bearing such series' designations, all as may be
fixed by the Board of Directors and stated or expressed in the resolution or
resolutions establishing the respective series of such stock, the authority for
which is hereby expressly vested in the Board of Directors, and (ii) one or more
series of Preferred Stock A which shall be of equal rank and identical in all
respects except that there may be variations between series in the following
relative rights and preferences: dividend rates, redemption prices and the terms
and conditions on which shares may be redeemed, sinking fund provisions for the
redemption or purchase of shares, the amounts payable upon voluntary or
involuntary liquidation, and terms and conditions on which shares may be
converted, if shares are issued with the privilege of conversion, and bearing
such series' designations, all as may be fixed by the Board of Directors and
stated or expressed in the resolution or resolutions establishing the respective
series of stock, the authority for which is hereby expressly vested in the Board
of Directors. So long as shares of any series of Preferred Stock A shall be
outstanding, no amendment or modification of the terms thereof fixed by the
resolution or resolutions of the Board of Directors establishing any such series
shall be made unless the holders of record of not less than a majority of the
number of shares of such series then outstanding shall consent thereto in
writing or by voting therefor in person or by proxy at a meeting of such holders
called for such purpose.
(b) The $5 Preferred Stock, the Serial Preferred Stock and the
Preferred Stock A are hereinafter sometimes referred to collectively as the
"Preferred Stocks," and the Serial Preferred Stock and the Preferred Stock A are
hereinafter sometimes referred to collectively as the "Serial Stocks."
(2)(a) The $5 Preferred Stock pari passu with the Serial Stocks shall
be entitled, in preference to the Preference Stock and the Common Stock, to
dividends at the rate of $5 per share per annum, and the Serial Stocks pari
passu with the $5 Preferred Stock shall be entitled, in preference to the
Preference Stock and the Common Stock, to dividends at the rate or rates as to
each series thereof fixed by resolution of the Board of Directors establishing
such series of Serial Stocks, payable as the Board of Directors may from time to
time determine. Dividends on the $5 Preferred Stock shall be cumulative from and
after April 1, 1926, or in the case of $5 Preferred Stock issued after April 1,
1926, from the date of issue of such $5 Preferred Stock unless the Company shall
have then established regular dividend periods with respect to its said $5
Preferred Stock, in which event the dividends shall be cumulative from the first
day of the current dividend period within which such $5 Preferred Stock shall be
issued. Dividends on each series of the Serial Preferred Stock shall be
cumulative from the first day of the current dividend period within which such
stock shall be issued and dividends on each share of Preferred Stock A shall be
cumulative from the date on which such share shall originally have been issued
and shall be payable quarterly on the first day of the months of January, April,
July and October. When the stated dividends are not paid in full on all shares
of the Preferred Stock such shares shall share pro rata in the payment of
dividends including accumulations, if any, in accordance with the sums which
would be payable on such shares if all dividends, including accumulations, if
any, were paid in full.
(b) In any distribution of assets other than by dividends from
surplus or profits, the Preferred Stocks shall also have a preference over the
Preference Stock and the Common Stock, until there shall have been paid or set
apart for payment (i) on each share of the Preferred Stocks issued prior to June
1, 1980, One Hundred Dollars ($100.00), and (ii) on each share of Preferred
Stock issued on or after June 1, 1980, the liquidation value thereof fixed by
resolution of the Board of Directors establishing such series of Preferred
Stock, plus in each case the amount, if any, by which dividends at the rate or
rates per annum fixed for such stock from and after the respective dates on
which dividends on such stock became cumulative to the date of such distribution
exceeds the dividends actually paid thereon or declared and set apart for
payment thereon. If, in any distribution of assets, the assets distributable
shall be insufficient to permit payment to the holders of the Preferred Stocks
of the full amounts to which they are respectively entitled as aforesaid, then
such assets shall be distributed pro rata among the holders of the Preferred
Stocks in proportion to the sums which would be payable on such distribution of
assets if all such sums were paid in full.
(c) If and so long as any quarterly dividend on any of the
Preferred Stocks shall be in arrears, or if any voluntary or involuntary
liquidation of the Company shall have been commenced and the amount payable with
respect to any of the Preferred Stocks on such liquidation shall have not been
paid in full, or if at any time the Company shall not have made all payments
then or theretofore due under the terms of the sinking fund for the purchase or
redemption of any series of Preferred Stock A, the Company shall not pay or
declare any dividends on, or make any other distribution on, or redeem, purchase
or otherwise acquire for value (including, without limitation, pursuant to any
sinking fund therefor) any shares of, the Common Stock, Preference Stock or any
other class of stock of the company ranking subordinate to the Preferred Stocks
as to the payment of dividends or the distribution of assets.
(3) The Preferred Stocks and the Preference Stock shall not receive any
dividends or shares in distribution in excess of the amounts herein expressly
provided, but after the payment of the dividends and/or shares in distribution
of assets to which the Preferred Stocks and the Preference Stock, respectively,
are entitled, in accordance with the provisions herein set forth, the Common
Stock, subject to the rights of any class of stock hereafter authorized, shall
receive all further dividends and shares in distribution.
(4) Each holder of the $5 Preferred Stock, Serial Preferred Stock
and/or Common Stock shall be entitled to one vote for each share of such stock
held by him.
(5) If and when dividends payable on any of the Preferred Stocks shall
be in default in an amount equivalent to four full quarterly payments or more
per share, and thereafter until all dividends on any of the Preferred Stocks in
default shall have been paid, the holders of all of the then outstanding
Preferred Stocks, voting as a class, shall be entitled to elect the smallest
number of directors necessary to constitute a majority of the full Board of
Directors, and the holders of the Common Stock, voting as a class, subject to
the rights of the holders of the Preference Stock, shall have the right to elect
the remaining directors of the company, anything herein or in the By-laws to the
contrary notwithstanding. The terms of office, as directors, of all persons who
may be directors of the Company at the time shall terminate upon the election of
a majority of the Board of Directors by the holders of the Preferred Stocks,
except that, if the holders of the Common Stock shall not have elected the
remaining directors of the Company because of the lack of a quorum consisting of
a majority of the outstanding Common Stock, and subject to the rights of the
holders of the Preference Stock, then such remaining directors shall be elected
by those directors whose term of office is thus terminated and who have not been
elected by the holders of the Preferred Stocks as a class; and, in that event,
such elected directors shall hold office for the interim period pending such
time as a quorum shall be present at a meeting of stockholders held for the
election of directors by the Common Stockholders as a class.
(6) If and when all dividends then in default on any of the Preferred
Stocks then outstanding shall be paid (and such dividends shall be declared and
paid out of any funds legally available therefor as soon as reasonably
practicable), the holders of the Preferred Stocks shall be divested of any
special right with respect to the election of directors, and the voting power of
the holders of the Preferred Stocks and the holders of the Common Stock shall
revert, subject to the rights of the holders of the Preference Stock, to the
status existing before the first dividend payment date on which dividends on any
of the Preferred Stocks were not paid in full; but always subject to the same
provisions for vesting such special rights in the holders of the Preferred
Stocks in case of further like default or defaults in dividends thereon. Upon
the termination of any such special voting right, the terms of office of all
persons who may have been elected directors of the Company by vote of the
holders of the Preferred Stocks, as a class, pursuant to such special voting
right shall forthwith terminate, and the resulting vacancies shall be filled by
the vote of a majority of the remaining directors.
(7) In case of any vacancy in the office of a director occurring among
the directors elected by the holders of the Preferred Stocks, voting as a class,
the remaining directors elected by the holders of the Preferred Stocks, by
affirmative vote of a majority thereof or the remaining director so elected if
there be but one, may elect a successor or successors to hold office for the
unexpired term of the director or directors whose place or places shall be
vacant. Likewise in case of any vacancy in the office of a director occurring
among the directors not elected by the holders of the Preferred Stocks, subject
to the provisions of subdivision (28) below, the remaining directors not elected
by the holders of the Preferred Stocks or the Preference Stock, by affirmative
vote of a majority thereof, or the remaining director so elected if there be but
one, may elect a successor or successors to hold office for the unexpired term
of the director or directors whose place or places shall be vacant.
(8) Whenever the right shall have accrued to the holders of the
Preferred Stocks to elect directors, voting as a class, then upon request in
writing signed by any holder of Preferred Stocks entitled to vote, delivered by
registered mail or in person to the president, a vice-president or secretary, it
shall be the duty of such officer forthwith to cause notice to be given to the
shareholders entitled to vote of a meeting to be held at such time as such
officer may fix, not less than ten (10) nor more than sixty (60) days after the
receipt of such request, for the purpose of electing directors. At all meetings
of stockholders held for the purpose of electing directors during such time as
the holders of the Preferred Stocks shall have the special right, voting as a
class, to elect directors, the presence in person or by proxy of the holders of
a majority of the outstanding Common Stock shall be required to constitute a
quorum of such class for the election of directors, and the presence in person
or by proxy of the holders of a majority of the outstanding Preferred Stocks
shall be required to constitute a quorum of such class for the election of
directors; provided, however, that the absence of a quorum of the holders of
stock of either such class shall not prevent the election at any such meeting or
adjournment thereof of directors by the other such class if the necessary quorum
of the holders of stock of such other class is present in person or by proxy at
such meeting or any adjournment thereof; and provided further that in the event
a quorum of the holders of the Common Stock is present but a quorum of the
holders of the Preferred Stocks is not present, then the election of the
directors elected by the holders of the Common Stock shall not become effective
and the directors so elected by the holders of the Common Stock shall not assume
their offices and duties until the holders of the Preferred Stocks, with a
quorum present, shall have elected the directors they shall be entitled to
elect; and provided further, however, that in the absence of a quorum of the
holders of stock of either class, a majority of the holders of the stock of the
class who are present in person or by proxy shall have power to adjourn the
election of the directors to be elected by such class from time to time without
notice other than announcement at the meeting until the requisite number of
holders of such class shall be present in person or by proxy, but such
adjournment shall not be made to a date beyond the date for the mailing of
notice of the next annual meeting of the Company or special meeting in lieu
thereof.
(9) Upon the affirmative vote of a majority of the shares of the issued
and outstanding Common Stock at any annual meeting or at any special meeting
called for the purpose, the $5 Preferred Stock may be redeemed in whole or in
part at any time at One Hundred Ten Dollars ($110) for each share of the $5
Preferred Stock redeemed plus the amount, if any, by which Five Dollars ($5) per
annum upon such shares from the date after which dividends thereon became
cumulative to the date of redemption exceeds the dividends actually paid thereon
or declared and set apart for payment thereon from such date to the date of
redemption. If, pursuant to such vote, less than all of the shares of the $5
Preferred Stock are to be redeemed, the shares to be redeemed shall be selected
by lot, in such manner as the Board of Directors shall determine, by an
independent bank or trust company selected for that purpose by the Board of
Directors.
(10) Upon the vote of a majority of the full Board of Directors the
Company may redeem any series of the Serial Stocks in whole or in part at any
time at the redemption price or prices fixed for said series of Serial Stocks by
resolution or resolutions of the Board of Directors establishing said series,
plus, as to each share or shares so redeemed, the amount, if any, by which the
rate of dividends per annum fixed for such share or shares redeemed from and
after the date on which dividends thereon became cumulative to the date of
redemption exceeds the dividends actually paid thereon or declared and set apart
for payment thereon from such date to the date of redemption. If, pursuant to
such vote, less than all of the shares of any series of the Serial Preferred
Stock are to be redeemed, the shares to be redeemed shall be selected by lot, in
such manner as the Board of Directors shall determine, by an independent bank or
trust company selected for that purpose by the Board of Directors. If, pursuant
to such vote, less than all of the shares of any series of the Preferred Stock A
are to be redeemed, the shares to be redeemed shall be selected pro rata or by
lot as the Board of Directors may determine in the resolution or resolutions
establishing each series of Preferred Stock A, or if not determined therein, in
any resolution adopted thereafter.
(11) Notice of the intention of the Company to redeem any shares of the
Preferred Stocks shall be mailed thirty days before the date of redemption to
each holder of record of the shares to be redeemed, at his last known post
office address as shown by the records of the Company. At any time after such
notice has been mailed as aforesaid the Company may deposit, or may cause its
nominee to deposit, the aggregate redemption price (or the portion thereof not
already paid in the redemption of shares so to be redeemed) with any bank or
trust company in the City of New York, a member of the Clearing House of the
City of New York, named in such notice, payable in amounts aforesaid to the
respective orders of the record holders of the shares so to be redeemed, on
endorsement and surrender of their certificates, and thereupon said holders
shall cease to be stockholders with respect to said shares and from and after
the making of such deposit said holders shall have no interest in or claim
against the Company or its nominee with respect to said shares, but shall be
entitled only to receive said moneys from said bank or trust company without
interest. If the shares to be redeemed shall be shares of the $5 Preferred Stock
or any series of Serial Preferred Stock, and if such deposit shall be made by
the nominee of the Company as aforesaid, such nominee shall upon such deposit
become the owner of the shares with respect to which such deposit is made and
certificates of stock may be issued to such nominee in evidence of such
ownership. The Company may require any shares of the $5 Preferred Stock or any
series of Serial Preferred Stock so called for redemption to be delivered, duly
assigned, to a nominee upon payment by such nominee to the holder of said shares
of all amounts payable on such redemption. Any shares of the $5 Preferred Stock
or any series of Serial Preferred Stock delivered to or acquired by the nominee
of the Company under the provisions hereof shall be converted into or exchanged
for such other securities of the Company and on such terms as on or before such
delivery or acquisition may have been provided by the Company in accordance with
the next three paragraphs hereof.
(12) The Company from time to time may sell any of its own stocks,
acquired by it at such price as may be fixed by its Board of Directors or
Executive Committee; provided, however, that any shares of any series of
Preferred Stock A redeemed, purchased or otherwise acquired (including, without
limitation, pursuant to the sinking fund therefor) by the Company shall be
cancelled and shall not be reissued as shares of such series, but shall be
restored to the status of authorized but unissued shares of Preferred Stock A.
(13) The Company, subject to the restrictions herein set forth, in
order to acquire funds with which to redeem any Preferred Stocks or Preference
Stock may issue and sell stock of any class then authorized but unissued, bonds,
notes, evidences of indebtedness, or other securities.
(14) The Board of Directors may at any time authorize the conversion or
exchange of the whole or any particular shares of the outstanding $5 Preferred
Stock or the Serial Preferred Stock, with the consent of the holder thereof,
into or for stock of any other class at the time of such consent then authorized
but unissued and may fix the terms and conditions upon which such conversion or
exchange may be made; provided that without the consent of the holders of record
of two-thirds of the shares of Common Stock outstanding given at a meeting of
the holders of the Common Stock called and held as provided by the By-laws or
given in writing without a meeting, the Board of Directors shall not authorize
the conversion or exchange of any $5 Preferred Stock or any Serial Preferred
Stock into or for Common Stock or authorize the conversion or exchange of any $5
Preferred Stock or any Serial Preferred Stock into or for Preferred Stock of any
other class, if by such conversion or exchange the amount which the holders of
the shares of $5 Preferred Stock or the Serial Preferred Stock so converted or
exchanged would be entitled to receive either as dividends or shares in
distribution of assets in preference to the Common Stock would be increased.
(15) No holder of any stock of the Company shall be entitled as of
right to purchase or subscribe for any part of any authorized stock of the
Company or of any additional stock of any class to be issued by reason of any
increase of the authorized Capital Stock of the Company or of any bonds,
certificates of indebtedness, debentures, or other securities convertible into
stock of the Company, but any authorized stock or any such additional authorized
issue of new stock or of securities convertible into stock may be issued and
disposed of by the Board of Directors to such persons, firms, corporations or
associations for such consideration and upon such terms and in such manner as
the Board of Directors may in their discretion determine without offering any
thereof, on the same terms or on any terms, to the stockholders then of record
or to any class of stockholders.
(16) A consolidation, merger or amalgamation of the Company with or
into any other corporation or corporations shall not be deemed a distribution of
assets of the Company within the meaning of any provision herein.
(17) No new class of stock shall hereafter be created or authorized
which is entitled to dividends or shares in distribution of assets on a parity
with or in priority to the $5 Preferred Stock nor shall there be created or
authorized any securities convertible into shares of any such stock, unless the
holders of record of not less than two-thirds of the number of shares of the $5
Preferred Stock then outstanding shall consent thereto in writing or by voting
therefor in person or by proxy at the meeting of stockholders at which the
creation or authorizing of such new class of stock or such convertible
securities is considered; and provided further that no new class of stock shall
hereafter be created or authorized which is entitled to dividends or shares in
distribution of assets in priority to the Serial Stocks nor shall there be
created or authorized any securities convertible into shares of any such stock,
unless the holders of record of not less than two-thirds of the number of shares
then outstanding of each class of the Serial Stocks so affected shall consent
thereto in writing or by voting therefor in person or by proxy at the meeting of
stockholders at which the creation or authorizing of such new class of stock or
such convertible securities is considered. Any vote creating or authorizing a
new class of stock may provide that all moneys payable by the Company with
respect to any class of stock thereby authorized shall be paid in the money of
any foreign country named therein or designated by the Board of Directors,
pursuant to authority therein granted, at a fixed rate of exchange with the
money of the United States of America therein stated or provided for and all
such payments shall be made accordingly. Any such vote may authorize any shares
of any class then authorized but unissued to be issued as shares of such new
class or classes.
(18) So long as any shares of the Preferred Stocks are outstanding, the
Company shall not, without the consent (given by vote at a meeting held pursuant
to notice containing a statement of such purpose) of the holders of a majority
of the total number of shares of the Preferred Stocks considered as one class,
then outstanding:
(a) Increase the total authorized amount of any class of the
Preferred Stocks; or
(b) Merge or consolidate with or into any other corporation or
corporations, unless such merger or consolidation, or the exchange, issuance or
assumption of all securities to be issued or assumed in connection with any such
merger or consolidation, shall have been ord-ered, approved or permitted by the
Securities and Exchange Commission under the provisions of the Public Utility
Holding Company Act of 1935 or by any successor commission or other regulatory
authority of the United States of America having jurisdiction over the exchange,
issuance or assumption of securities in connection with such merger similar to
that conferred upon the Securities and Exchange Commission by such Act; provided
that the provisions of this clause (b) shall not apply to a purchase or other
acquisition by the Company of franchises or assets of another corporation in any
manner which does not involve a merger or consolidation; or
(c) Issue shares of any of the Preferred Stocks or of any
other class of stock ranking prior to or on a parity with any of the Preferred
Stocks as to dividends or distributions, unless the net income of the company,
determined after provisions for depreciation and all taxes, and in accordance
with generally accepted accounting practices to be available for the payment of
dividends for a period of twelve (12) consecutive calendar months within the
fifteen (15) calendar months immediately preceding the issuance, sale or
disposition of such stock, is at least equal to twice the annual dividend
requirements on all outstanding shares of the Preferred Stocks and of all other
classes of stock ranking prior to, or on a parity with, any of the Preferred
Stocks as to dividends or distributions, including the shares proposed to be
issued, and unless the gross income of the Company for said period, determined
in accordance with generally accepted accounting practices (but in any event
after deducting the amount for said period charged by the Company on its books
to depreciation expense and all taxes) to be available for the payment of
interest, shall have been at least one and one-half times the sum of (i) the
annual interest charges on all interest bearing indebtedness of the Company and
(ii) the annual dividend requirements on all outstanding shares of the Preferred
Stocks and of all other classes of stock ranking prior to, or on a parity with
the Preferred Stocks as to dividends or distributions, including the shares
proposed to be issued. There shall be excluded from the foregoing computation,
interest charges on all indebtedness and dividends on all stock which are to be
retired in connection with the issue of such additional shares of stock. Where
such additional shares of stock are to be issued in connection with the
acquisition of new property, the net earnings of the property to be so acquired
may be included on a pro forma basis in the foregoing computation, computed on
the same basis as the net earnings of the Company; or
(d) Issue shares of the Preferred Stocks, or of any other
class of stock ranking prior to or on a parity with any of the Preferred Stocks
as to the payment of dividends or the distribution of assets, unless the
aggregate of the capital of the Company applicable to the Common Stock and the
surplus of the Company shall be not less than the aggregate stated value of the
Preferred Stocks, and of any other class of stock ranking prior to or on a
parity with any of the Preferred Stocks as to the payment of dividends or the
distribution of assets, to be outstanding immediately after the proposed issue
of such additional Preferred Stocks, excluding from the foregoing computation
all indebtedness and stock which are to be retired in connection with the issue
of such additional shares of Preferred Stocks, or of any other class of stock
ranking prior to or on a parity with any of the Preferred Stocks as to the
payment of dividends or the distribution of assets, provided that no portion of
the surplus of the Company which shall be used to meet the requirements of this
paragraph (d) shall, after the issue of such additional shares of Preferred
Stocks, or of any other class of stock ranking prior to or on a parity with any
of the Preferred Stocks as to the payment of dividends or the distribution of
assets, and until such shares or a like number of other shares of Preferred
Stocks, or of any other class of stock ranking prior to or on a parity with any
of the Preferred Stocks as to the payment of dividends or the distribution of
assets, shall have been retired, be available for dividends or other
distribution upon the Common Stock.
(19) So long as any shares of Preferred Stocks are outstanding the
Company shall not pay any dividends (other than dividends on Common Stock
payable by the issuance of Common Stock) on, or make any distribution on, or
redeem, purchase or otherwise acquire for value, any of its Common Stock or
Preference Stock or other stock, if any, subordinate to such Preferred Stocks as
to the payment of dividends or the distribution of assets, if, after giving
effect to any such payment, distribution, redemption, purchase or other
acquisition, the aggregate amount of such dividends, distributions, purchases
and acquisitions paid or made subsequent to December 31, 1945, exceeds (a) 50%
of the aggregate of net income available for Common Stock subsequent to December
31, 1945, if, at the end of the calendar month immediately preceding the
dividend declaration date, the Common Stock Equity is less than 20% of total
capitalization, including surplus, or (b) 75% of the aggregate of net income
available for Common Stock subsequent to December 31, 1945, if, at the end of
the calendar month immediately preceding the dividend declaration date, the
Common Stock Equity is less than 25% but at least 20% of total capitalization,
including surplus; provided that, when the Common Stock equity shall have
reached 25% of total capitalization, including surplus, all restrictions on the
payment of dividends on the Common Stock, or the purchase or acquisition of, or
distributions on, the Common Stock, shall be, so long as such ratio remains at
25% or above, eliminated; provided further that, after once having reached such
ratio of 25%, no dividends on or distributions, purchases or acquisitions of
Common Stock shall be paid or made, aggregating an amount in excess of 75% of
the current year's earnings otherwise available for Common Stock, if, after such
payment, distribution, purchase or acquisition, the ratio of the Common Stock
Equity to the total capitalization, including surplus, will be less than 25% but
not less than 20%; and provided further that, after having once reached a ratio
of 20%, no dividends on or distributions, purchases or acquisitions of Common
Stock shall be paid or made, aggregating an amount in excess of 50% of the
current year's earnings otherwise available for Common Stock, if, after such
payment, distribution, purchase or acquisition, the ratio of the Common Stock
Equity to the total capitalization, including surplus, will be less than 20%. As
used in this paragraph the term "Common Stock Equity" shall mean the aggregate
of (a) stated value of Common Stock of the Company (including proceeds from the
sale of issuance of Common Stock subsequent to December 31, 1945) and (b)
surplus.
(20) The consideration received by the Company from the issuance and
sale of any additional shares of Common Stock without nominal or par value shall
be entered in its capital stock account and the provisions of this paragraph
shall not be changed unless the holders of record of not less than two-thirds
(2/3) of the number of shares of the Preferred Stocks then outstanding, voting
as a single class, and of not less than two-thirds of the number of shares of
Common Stock then outstanding, voting separately as a class shall consent
thereto in writing or by voting therefor in person or by proxy at the meeting of
stockholders at which any such change is considered.
PREFERENCE STOCK
(21) The Board of Directors is authorized to issue at any time and from
time to time one or more series of Preference Stock as hereinafter provided.
(22) To the extent that variations in the designations, preferences,
limitations and relative rights as between series of the Preference Stock are
not established, fixed and determined herein, authority is hereby expressly
vested in the Board of Directors to fix and determine the designations,
preferences, limitations and relative rights of the shares of any series of such
Preference Stock hereinafter established, including authority to fix any one or
more of the following:
(a) The distinctive designations of such series and the number
of shares which shall constitute such series;
(b) The rate of dividend;
(c) The right of redemption, if any, and the price at and the
terms and conditions on which the shares may be redeemed;
(d) The amount payable upon shares in event of involuntary
liquidation;
(e) The amount payable upon shares in event of voluntary
liquidation;
(f) Sinking fund provisions, if any, for the redemption or
purchase of shares; and
(g) The terms and conditions on which shares may be converted,
if the shares of any series are issued with the privilege of
conversion.
(23) All shares of Preference Stock regardless of series shall be
identical with each other in all respects except as provided in subdivision (22)
above.
(24) The Preference Stock is subject to the prior rights and
preferences of the Preferred Stocks and all other classes of preferred stock of
equal rank therewith hereafter authorized.
(25) Subject to the prior rights and preferences of the Preferred
Stocks, the holders of Preference Stock of each series shall be entitled to
receive, out of any funds legally available for the purpose, when and as
declared by the Board of Directors, cumulative cash dividends thereon at such
rate per annum as fixed by resolution of the Board of Directors establishing
such series. Dividends on the Preference Stock of each series shall be payable
quarterly on the first day of the months of January, April, July and October in
each year or otherwise as the Board of Directors may determine prior to the
issue thereof. Dividends on Preference Stock of each series shall be cumulative
with respect to each share from such date, if any, as may be fixed by resolution
of the Board of Directors prior to the issue thereof or, if no such date is
established, from the date on which such shares shall originally have been
issued. Accumulation of dividends shall not bear interest.
(26) In the event of any partial or complete liquidation, dissolution
or winding up of the affairs of the Company, whether voluntary or involuntary,
before any distribution shall be made to the holders of any shares of Common
Stock, but subject to the prior rights and preferences of the Preferred Stocks,
the Preference Stock of each series shall be entitled, pari passu with all stock
of equal rank, to receive for each share thereof, out of any legally available
assets of the Company, the amount or amounts fixed therefor by resolution of the
Board of Directors establishing such series, plus, in each case, an amount equal
to all cumulated unpaid dividends thereon, whether or not declared or earned,
accrued to the date when payment of such preferential amounts shall be made
available to the holders of the Preference Stock; and the Preference Stock shall
be entitled to no further participation in such distribution.
If, upon any such liquidation, dissolution or winding up of
the affairs of the Company, the assets of the Company legally available for
distribution as aforesaid among the holders of the Preference Stock of all
series and all stock of equal rank shall be insufficient to permit the payment
to them of the full preferential amounts aforesaid, then the entire assets of
the Company so to be distributed shall be distributed ratably among the holders
of the Preference Stock of all series and of all stock of equal rank in
proportion to the full preferential amounts to which they are respectively
entitled.
A consolidation or merger of the Company, or a sale or
transfer of all or substantially all of its assets as an entirety shall not be
regarded as a "liquidation, dissolution or winding up of the affairs of the
Company" within the meaning of this subdivision (26).
(27) The Company may, unless otherwise prohibited by any provisions of
the Company's Charter, as amended, or by any resolution adopted by the Board of
Directors providing for the issuance of any series of Preference Stock of which
there are shares then outstanding, at its option, expressed by resolution of its
Board of Directors, at any time redeem the whole or any part of the Preference
Stock or of any series thereof at the time outstanding, by the payment in cash
for each share of stock to be redeemed of the then applicable redemption price
or prices as shall be fixed by resolution of the Board of Directors establishing
such series, plus, in any such case, a sum of money equivalent to all accrued
and cumulated unpaid dividends, whether or not declared or earned, thereon to
the date fixed for redemption.
Notice of any proposed redemption of shares of Preference
Stock shall be given by the Company by mailing a copy of such notice at least 30
days prior to the date fixed for such redemption to the holders of record of the
shares of Preference Stock to be redeemed, at their respective addresses
appearing on the books of the Company. Said notice shall specify the shares
called for redemption, the redemption price and the place at which and the date
on which the shares called for redemption will, upon presentation and surrender
of the certificates of stock evidencing such shares, be redeemed and the
redemption price therefor paid.
If less than all of the shares of any series of Preference
Stock then outstanding are to be redeemed, the shares to be redeemed shall be
selected by such method, either by lot or pro rata, as shall from time to time
be determined by resolution of the Board of Directors.
From and after the date fixed in any such notice as the date
of redemption, unless default shall be made by the Company in providing moneys
at the time and place specified for the payment of the redemption price pursuant
to said notice, all dividends on the shares of Preference Stock thereby called
for redemption shall cease to accrue and all rights of the holders thereof as
stockholders of the Company except the right to receive the redemption price,
but without interest, shall cease and determine; provided, however, the Company
may, in the event of any such redemption, and prior to the redemption date
specified in the notice thereof, deposit in trust, for the account of the
holders of the shares of Preference Stock to be redeemed, with any bank or trust
company located in the City of Raleigh, North Carolina, or the City of New York,
New York, named in such notice and having a capital, surplus and undivided
profits aggregating at least $5,000,000, all funds necessary for such
redemption, and thereupon all shares of the Preference Stock with respect to
which such deposit shall have been made shall forthwith upon the making of such
deposit no longer be deemed to be outstanding and all rights of the holders
thereof with respect to such shares of Preference Stock shall thereupon cease
and terminate, except the right of such holders to receive from the funds so
deposited the amount payable upon the redemption thereof, but without interest,
or, if any right of conversion conferred upon such shares shall not, by the
terms thereof, previously have expired, to exercise the right to conversion
thereof on or before the redemption date specified in such notice, unless such
right of conversion by the terms thereof expires at an earlier time, and then
only on or before such earlier time for the expiration of such right of
conversion. Any funds so set aside or deposited which, because of the exercise
of any right of conversion of shares called for redemption, shall not be
required for such redemption, shall be released or repaid forthwith to the
Company. Any funds so set aside or deposited, which shall be unclaimed at the
end of six years from such redemption date, shall be released or repaid to the
Company upon its request expressed in a resolution of its Board of Directors,
and any depositary thereof shall thereby be relieved of all responsibility in
respect thereof, after which release or repayment the holders of shares so
called for redemption shall look only to the Company for payment of the
redemption price, but without interest. Any interest on funds so deposited which
may be allowed by any bank or trust company with which such deposit was made
shall belong to the Company.
If and so long as any quarterly dividend on any series of the
Preferred Stocks or the Preference Stock shall be in arrears, the Company shall
not redeem, purchase or otherwise acquire, by way of sinking fund payments or
otherwise, any Preference Stock.
Whenever there shall be deposited or set aside the whole or
any part of the funds required to be deposited or set aside by the Company as a
sinking fund for any series of Preference Stock there shall be also deposited or
set aside at the same time the full amount or the same proportionate part, as
the case may be, of the funds, if any, then due to be deposited or set aside as
sinking fund for each other series of Preference Stock then outstanding.
All shares of Preference Stock which shall have been redeemed,
converted, purchased or otherwise acquired by the Company shall be retired and
cancelled and shall have the status of authorized but unissued shares of
Preference Stock.
(28) Except as otherwise provided by law, the holders of the Preference
Stock shall not have any right to vote for the election of directors or for any
other purpose except as set forth below.
In the event that at any time, or from time to time, when
dividends payable on any shares of Preference Stock shall be in default in an
amount equivalent to six quarterly dividends, or more, per share, and thereafter
until all dividends of Preference Stock in default shall have been paid, the
holders of the Preference Stock, voting as a single class separate from the
holders of all other classes of stock, shall be entitled to elect two directors,
subject to the prior rights of the holders of the Preferred Stocks. The terms of
office, as directors, of all persons who may be directors of the Company, except
those directors, if any, elected by the holders of the Preferred Stocks voting
separately as a single class, shall terminate upon the election of two directors
by the holders of the Preference Stock. Subject to the prior rights of the
Preferred Stocks and the Preference Stock, the holders of the Common Stock,
voting as a single class, shall have the right to elect the remaining directors
of the Company. If the holders of the Common Stock have not exercised their
right to elect directors of the Company because of the lack of a quorum
consisting of a majority of the Common Stock, then the said remaining directors
shall be elected by the directors whose term of office is thus terminated and
who have not been elected by the holders of the Preferred Stocks; and in that
event, such elected directors shall hold office for the interim period, pending
such time as a quorum of the Common Stock shall be present at a meeting held for
the election of directors.
If and when all dividends then in default on the Preference
Stock, then outstanding, shall be paid (and such dividends shall be declared and
paid out of any funds legally available therefor as soon as reasonably
practicable), the holders of the Preference Stock shall be divested of any
special right with respect to the election of directors, and the voting power of
the holders of the Preference Stock shall revert to the status existing before
the first dividend payment date on which dividends on any share of the
Preference Stock were not paid in full; but always subject to the same
provisions for vesting such special rights in the holders of the Preference
Stock in case of further like default or defaults on dividends thereon. Upon the
termination of any such special voting right, the terms of office of all persons
who may have been elected directors of the Company by vote of the holders of the
Preference Stock as a class, pursuant to such special voting right shall
forthwith terminate, and the resulting vacancies shall be filled by the vote of
a majority of the remaining directors.
In case of any vacancy in the office of a director occurring
among the directors elected by the holders of the Preference Stock voting as a
single class, separate from the holders of all other classes of stock, the
remaining director elected by the holders of the Preference Stock, may elect a
successor to hold office for the unexpired term of the director whose place
shall be vacant. In the event of simultaneous vacancies among directors elected
by the holders of the Preference Stock, an election, pursuant to the provisions
of this subdivision (28) will be held.
Whenever the right shall have accrued to the holders of the Preference
Stock to elect directors, voting as a single class, separate from the holders of
all other classes of stock, then upon request in writing signed by any holder of
the Preference Stock entitled to vote, delivered by registered mail or in person
to the president, a vice-resident or secretary of the Company, it shall be the
duty of such officer forthwith to cause notice to be given to the shareholders
entitled to vote at a meeting to be held at such time as such officer may fix,
not less than ten (10) nor more than sixty (60) days after the receipt of such
request, for the purpose of electing directors. At all meetings of shareholders
held for the purpose of electing directors during such time as the holders of
the Preference Stock shall have the special right, voting as single class,
separate from the holders of all other classes of stock to elect directors, the
presence in person or by proxy of the holders of a majority of the outstanding
Preference Stock shall be required to constitute a quorum of such class for
election of directors, and the presence in person or by proxy of the holders of
a majority of all other classes of stock outstanding at the time, and not
entitled to such special right, shall be required to constitute a quorum of such
other classes for the election of directors.
(29) So long as any shares of the Preference Stock shall remain
outstanding, no dividend (other than a dividend payable in shares of Common
Stock) shall be paid or declared, nor shall any distribution be made on Common
Stock and no Common Stock shall be redeemed, purchased, retired or otherwise
acquired either directly or indirectly, unless:
(i) All dividends on the Preference Stock of all series then
outstanding for all past quarterly dividend periods and for the current
quarterly dividend period shall have been paid or declared and a sum sufficient
for the payment thereof set apart; and
(ii) All sinking fund payments and all purchase fund payments
or other obligations of the Company for the periodic retirement of shares of
Preference Stock of all series then outstanding required to have been made or
performed by the Company shall have been made or performed.
(30) The affirmative approval of the holders of at least two-thirds
(2/3) of the Preference Stock at the time outstanding, voting as a class without
regard to series, shall be required for any amendment of the Company's Charter
altering materially any existing provision of the Preference Stock or for the
creation, or an increase in the authorized amount, of any class of stock (other
than the 300,000 authorized shares of $5 Preferred Stock and the 10,000,000
authorized shares of Serial Preferred Stock) ranking, as to dividends or assets,
prior to the Preference Stock, and the affirmative approval of the holders of at
least a majority of the Preference Stock at the time outstanding, voting as a
class without regard to series, shall be required for an increase in the
authorized amount of the Preference Stock or for the creation, or an increase in
the authorized amount, of any class of stock ranking, as to dividends or assets,
on a parity with the Preference Stock; provided, however, that if any amendment
of the Company's Charter shall affect adversely the rights of preferences of one
or more, but not all, of the series of Preference Stock at the time outstanding
or shall unequally adversely affect the rights or preferences of different
series of Preference Stock at the time outstanding, the affirmative approval of
the holders of at least two-thirds (2/3) of such shares of each such series so
adversely or unequally adversely affected shall be required in lieu of or (if
such affirmative approval is required by law) in addition to the affirmative
approval of the holders of at least two-third (2/3) of the outstanding shares of
Preference Stock as a class.
(31) No holder of Preference Stock shall have any preemptive right to
purchase, subscribe for or otherwise acquire securities of the Company upon the
issuance or sale by the Company of any type of security.
FIFTH: The period of the duration of the Company shall be nine hundred
and ninety-nine years from April 6, 1926.
SIXTH: The number of directors of the Company shall be fourteen. Seven
directors shall constitute a quorum. The names and addresses of the persons who
are currently serving as directors are:
Name Address
Daniel D. Cameron, Sr. 404 West Renovah Circle
Wilmington, NC 28401
Felton J. Capel 1009 West New Hampshire Avenue
Southern Pines, NC 28387
George H.V. Cecil 436 Vanderbilt Road
Biltmore, NC 28803
Charles W. Coker, Jr. Rt 5, Greenbrier Road
Hartsville, SC 29550
Margaret T. Harper 105 East Bay Street
Southport, NC 28461
Shearon Harris 2516 Wake Drive
Raleigh, NC 27608
L. H. Harvin, Jr. 935 Hargrove Street
Henderson, NC 27536
Karl G. Hudson, Jr. 2416 White Oak Road
Raleigh, NC 27609
J. A. Jones 3004 Sandia Drive
Raleigh, NC 27607
Edward G. Lilly, Jr. 612 Scotland Street
Raleigh, NC 27609
A.C. Monk, Jr. 207 West Church Street
Farmville, NC 27828
Sherwood H. Smith, Jr. 408 Drummond Drive
Raleigh, NC 27609
Horace L. Tilghman, Jr. 104 Oakenwald Street
Marion, SC 29571
John F. Watlington, Jr. 2020 Virginia Road
Winston-Salem, NC 27104
SEVENTH: The officers of the Company shall be as prescribed by its
Board of Directors and set forth in the Company's By-laws.
EIGHTH: All corporate powers shall be exercised by the Board of
Directors except as a otherwise provided by statute or by this Restated Charter.
NINTH: An Executive Committee may be appointed by and from the Board of
Directors in such manner and subject to such regulations as may be provided in
the by-laws, which committee shall have and may exercise, when the Board is not
in session, all the powers of said Board which may be lawfully delegated,
subject to such limitations as may be provided in the by-laws or by resolutions
of the Board.
TENTH: A director of the Company shall not be disqualified by his
office from dealing or contracting with the Company either as a vendor,
purchaser or otherwise, nor shall any transaction or contract of the Company be
void or voidable by reason of the fact that any director or any firm of which
any director is a member or any corporation of which any director is a
shareholder or director, is in anyway interested in such transaction or
contract, provided that such transaction or contract is or shall be authorized,
ratified or approved either (1) by a vote of a majority of a quorum of the Board
of Directors or of the Executive Committee without counting in such majority or
quorum any director so interested or member of a firm so interested or a
shareholder or director of a corporation so interested, or (2) by vote at any
stockholders' meeting of the holders of record of a majority of all the
outstanding shares of stock of the Company entitled to vote or by writing or
writings signed by a majority of such holders; nor shall any director be liable
to account to the Company for any profits realized by and from or through any
such transaction, or contract of the Company authorized, ratified or approved as
aforesaid by reason of the fact that he or any firm of which he is a member or
any corporation of which he is a shareholder or director, was interested in such
transaction or contract. Nothing herein contained shall create any liability in
the events above described or prevent the authorization, ratification or
approval of such contracts in any other manner provided by law.
ELEVENTH: The directors shall hold office after the expiration of their
terms until their successors are elected and have qualified. An increase in the
Board of Directors shall be deemed to create vacancies in the Board, to be
filled in the manner provided by the by-laws. Each director, so long as and if
required by law to be a stockholder of the Company but not otherwise, shall hold
at least one share of stock in the Company. The Board of Directors shall have
power to hold their meetings, to have one or more offices, and to keep the
corporate books (except such books as are required by law to be kept within the
State of North Carolina) outside of the State of North Carolina at such places
as may from time to time be designated by them.
The Board of Directors shall have power to authorize and cause to be
executed mortgages or deeds of trust which shall cover and create a lien upon
all or any part of the property of the Company of whatsoever kind and
wheresoever situated, whether then owned or thereafter acquired, and to provide
in any such mortgage or deed of trust that the amount of bonds or other
evidences of indebtedness to be issued thereunder and to be secured thereby
shall be limited to a definite amount or limited only by the conditions therein
specified.
The Board of Directors shall have power from time to time to fix and
determine and to vary the amount to be reserved as a working capital, to direct
and determine the use and disposition of the working capital, and to determine
the date or dates for the declaration and payment of dividends.
Any and all of the directors may at any time be removed without cause
assigned by the vote of the holders of a majority of the total number of shares
of the Company then issued and outstanding and entitled to vote thereon, given
at a meeting called for the purpose of considering such action.
TWELFTH: The Board of Directors shall have power and power is hereby
conferred upon them from time to time to adopt, amend, add to and repeal by-laws
for the Company and any by-laws so made or any provision thereof may be altered
or repealed by vote of the holders of a majority of the total number of shares
of the Company then issued and outstanding and entitled to vote thereon at any
annual meeting or at any special meeting of stockholders called for the purpose
of considering such action.
THIRTEENTH: Stockholders shall have no rights except as conferred by
statute or by the by-laws to inspect any book, paper or account of the Company.
FOURTEENTH: Upon the written consent or vote of the holders of a
majority in aggregate number of the shares of stock of the Company then
outstanding and entitled to vote, (1) every statute of the State of North
Carolina (a) increasing, diminishing, or in any way affecting the rights, powers
or privileges of stockholders of companies organized under the general laws of
said State, or (b) giving effect to the action taken by any part less than all,
of the stockholders of any such company, shall be binding upon the Company and
every stockholder and/or (2) amendments to the charter of the Company authorized
at the time of the making of such amendments by the laws of the State of North
Carolina may be made. No such written consent or vote shall decrease the amounts
which the holders of outstanding $5 Preferred Stock are entitled to receive as
dividends or in distribution of assets in preference to the holders of the
Common Stock or decrease the price at which the $5 Preferred Stock may be
redeemed, all as set forth in Article Fourth hereof, unless the holders of at
least 90% of the then outstanding $5 Preferred Stock consent in writing to or
vote for such decrease; nor shall any such written consent or vote (a) reduce
the percentage of the shares of outstanding $5 Preferred Stock required to take
any action for which the consent of a particular percentage of the shares of
outstanding $5 Preferred Stock is provided in Article Fourth hereof, or (b) make
any other amendment, alteration, change or repeal of the express terms of the $5
Preferred Stock then outstanding in a manner substantially prejudicial to the
holders thereof unless the holders of record of not less than two-thirds of the
number of shares of the $5 Preferred Stock then outstanding shall consent
thereto in writing or by voting therefor in person or by proxy at the meeting at
which said vote is cast.
FIFTEENTH: This Restated Charter was adopted by the shareholders of the
corporation on the 21st day of May, 1980 in the manner prescribed by law for
adopting a charter amendment; and it supersedes the original Articles of
Incorporation and all amendments thereto.
The number of shares of the corporation outstanding at the time of such
adoption was 51,684,509; and the number of shares entitled to vote thereon was
48,504,509.
The number of shares voted for such adoption was 37,053,564; and the
number of shares voted against such adoption was 522,776.
Such adoption does not give rise to dissenter's rights nor to class
voting rights for the reason that the only effect of this Restated Charter is to
set forth without change the corresponding provisions of the Articles of
Incorporation as heretofore amended.
IN WITNESS WHEREOF, this statement is executed by the President and
Secretary of the corporation this 22nd day of May, 1980.
CAROLINA POWER & LIGHT COMPANY
By Sherwood H. Smith, Jr.
President
By J. L. Lancaster, Jr.
Secretary
STATE OF NORTH CAROLINA )
COUNTY OF WAKE )
I, Marsha H. Manning, a notary public, hereby certify that on this 22nd
day of May, 1980, personally appeared before me Sherwood H. Smith, Jr. and J. L.
Lancaster, Jr., each of whom being by me first duly sworn, declared that he
signed the foregoing documents in the capacity indicated, that he was authorized
so to sign, and that the statements therein contained are true.
By Marsha H. Manning
Notary Public
My commission expires: June 28, 1982
<PAGE>
EXHIBIT A
CAROLINA POWER & LIGHT COMPANY
Excerpts from Minutes
Board of Directors - December 8, 1954
RESOLVED that the Board of Directors of Carolina Power & Light Company
does hereby create and establish an initial series of the Company's Serial
Preferred Stock and does hereby fix the designation, dividend rate, and
redemption prices of said series as follows:
(1) the designation of said initial series of the Company's
Serial Preferred Stock shall by "Serial Preferred Stock, $4.20 Series";
(2) the dividend rate of said initial series of the Company's
Serial Preferred Stock shall be $4.20 per share per annum;
(3) the redemption prices of said initial series of the
Company's Serial Preferred Stock shall be: for the period from January 12, 1955
to and including January 12, 1960, $104.25 per share; thereafter to and
including January 12, 1965, $103.25 per share; thereafter to and including
January 12, 1970, $102.50 per share; and thereafter $102.00 per share; plus, in
each case, as to each share redeemed, the amount, if any, by which $4.20 per
annum upon such share from and after the date upon which dividends thereon shall
become cumulative to the date of redemption exceeds the dividends actually paid
thereon or declared or set apart for payment thereon from such date to the date
of redemption,
said initial series of the Company's Serial Preferred Stock otherwise to have
the preferences, voting powers, restrictions, and qualifications which are
applicable to all shares of the Company's Serial Preferred Stock, irrespective
of series, as set forth in the Agreement of Merger of Tide Water Power Company
with and into Carolina Power & Light Company, dated December 12, 1951, as
amended; and further
RESOLVED that the calendar quarters of each year are hereby established
as the regular dividend periods for the Serial Preferred Stock, $4.20 Series, of
the Company; and further....
<PAGE>
EXHIBIT B
CAROLINA POWER & LIGHT COMPANY
Excerpts from Minutes
Board of Directors - January 17, 1967
RESOLVED, that the Board of Directors of Carolina Power & Light Company
does hereby create and establish and authorize the issuance of a new series of
the Company's Serial Preferred Stock and does hereby fix the designation,
dividend rate, and redemption prices of said series as follows:
(1) the designation of said new series of the Company's Serial
Preferred Stock shall be "Serial Preferred Stock, $5.44 Series";
(2) the Serial Preferred Stock, $5.44 Series, is hereby
authorized to be issued in the amount of 250,000 shares;
(3) the dividend rate of the Serial Preferred Stock, $5.44
Series shall be $5.44 per share per annum;
(4) the redemption prices of the Serial Preferred Stock, $5.44
Series shall be: for the period from January 24, 1967, to and including
January 24, 1974, $112 per share; thereafter to and including January
24, 1977, $105 per share; thereafter to and including January 24, 1982,
$103 per share; and thereafter $101 per share; plus, in each case, as
to each share redeemed, the amount, if any, by which $5.44 per annum
upon such share from and after the date upon which dividends thereon
shall become cumulative to the date of redemption exceeds the dividends
actually paid thereon or declared or set apart for payment thereon from
such date to the date of redemption, said Serial Preferred Stock, $5.44
Series, otherwise to have the preferences, voting powers, restrictions,
and qualifications which are applicable to all shares of the Company's
Serial Preferred Stock, irrespective of series, as set forth in the
Agreement of Merger of Tide Water Power Company with and into Carolina
Power & Light Company, dated December 12, 1951, as amended; and further
RESOLVED, that regular dividend periods for the Serial Preferred Stock
$5.44 Series, are hereby established as the period commencing January 24, 1967
to and including March 31, 1967 and thereafter as the quarterly periods
commencing April 1, July 1, October 1, and January 1 of each year.
<PAGE>
EXHIBIT C
STATEMENT OF CLASSIFICATION OF SHARES
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby executes this Statement of
Classification of Shares pursuant to Section 55-42 of the North Carolina General
Statutes relating to the preferences, limitations and relative rights of a
series of a class of its shares:
1. The name of the Corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Certificate of Amendment to the Charter of the corporation
adopted at a regular meeting of the shareholders duly convened and held on March
11, 1953, contained a resolution amending the Charter, which resolution, in
part, relates to the fixing of the preferences, limitations and relative rights
of the shares of Serial Preferred Stock of the corporation, and which authorizes
the Board of Directors to issue one or more series of Serial Preferred Stock
with such dividend rates, redemption prices and series designations as may be
fixed by resolution of the Board of Directors, which Certificate of Amendment is
on file in the Office of the Secretary of State of North Carolina, and is set
out below:
"The preferences, voting powers, restrictions, and
qualifications of each of said classes of stock shall be as follows:
"The term `Serial Preferred Stock' as used herein means
Preferred Stock of any series of the 200,000 shares authorized by this
Article Fourth. The Board of Directors is authorized to issue at any
time and from time to time one or more series of Serial Preferred Stock
with such dividend rates and redemption prices and bearing such series
designations as may be fixed by the Board of Directors and stated and
expressed in the resolution or resolutions establishing the respective
series of such stock, the authority for which is hereby expressly
vested in the Board of Directors."
The number of authorized shares of Serial Preferred Stock was increased to
1,000,000 by Articles of Amendment to the Charter adopted at a regular meeting
of the shareholders in May 1969, which Articles of Amendment are on file in the
Office of the Secretary of State of North Carolina.
3. On May 4, 1970, the Board of Directors of the corporation duly
adopted resolutions authorizing the issuance and sale of 300,000 shares of a new
series of Serial Preferred Stock, without par value, designated as "Serial
Preferred Stock, $9.10 Series" bearing a dividend rate of $9.10 per share per
annum; and with the following redemption prices: $112 per share for the period
May 12, 1970 through May 12, 1977; $105 per share thereafter through May 12,
1980; $103 per share thereafter through May 12, 1985; and $101 per share
thereafter. A copy of the resolutions creating and authorizing the issuance and
sale of the $9.10 Series and the Company's Serial Preferred Stock is attached
hereto and incorporated fully herein by reference.
IN WITNESS WHEREOF, this statement is signed by the executive vice
president and secretary of the corporation this 7th day of May, 1970.
CAROLINA POWER & LIGHT COMPANY
By W. Reid Thompson
Executive Vice President
ATTEST:
By R. S. Mallison
Secretary
<PAGE>
EXHIBIT D
STATEMENT OF CLASSIFICATION OF SHARES
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby executes this Statement of
Classification of Shares pursuant to Section 55-42 of the North Carolina General
Statutes relating to the preferences, limitations and relative rights of a
series of a class of its shares:
1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Certificate of Amendment to the Charter of the corporation
adopted at a regular meeting of the shareholders duly convened and held on March
11, 1953, contained a resolution amending the Charter, which resolution, in
part, relates to the fixing of the preferences, limitations and relative rights
of the shares of Serial Preferred Stock of the corporation, and which authorizes
the Board of Directors to issue one or more series of Serial Preferred Stock
with such dividend rates, redemption prices and series designations as may be
fixed by resolution of the Board of Directors, which Certificate of Amendment is
on file in the Office of the Secretary of State of North Carolina, and is set
out below:
"The preferences, voting powers, restrictions and
qualifications of each of said classes of stock shall be as follows:
"The term `Serial Preferred Stock' as used herein means
Preferred Stock of any series of the 200,000 shares authorized by this
Article Fourth. The Board of Directors is authorized to issue at any
time and from time to time one or more series of Serial Preferred Stock
with such dividend rates and redemption prices and bearing such series
designations as may be fixed by the Board of Directors and stated and
expressed in the resolution or resolutions establishing the respective
series of such stock, the authority for which is hereby expressly
vested in the Board of Directors."
The number of authorized shares of Serial Preferred Stock was increased to
1,000,000 by Articles of Amendment to the Charter adopted at a regular meeting
of the shareholders in May 1969, which Articles of Amendment are on file in the
Office of the Secretary of State of North Carolina.
3. On January 6, 1971, the Board of Directors of the corporation duly
adopted resolutions authorizing the issuance and sale of 350,000 shares of a new
series of Serial Preferred Stock, without par value, designated as "Serial
Preferred Stock, $7.95 Series" bearing a dividend rate of $7.95 per share per
annum; and with the following redemption prices: for the period from January 14,
1971, to and including January 14, 1976, $115 per share; thereafter to and
including January 14, 1979, $110 per share; thereafter to and including January
14, 1982, $107 per share; thereafter to and including January 14, 1985, $104 per
share; and thereafter $101 per share. A copy of the resolutions creating and
authorizing the issuance and sale of the $7.95 Series of the Company's Serial
Preferred Stock is attached hereto and incorporated fully herein by reference.
IN WITNESS WHEREOF, this statement is signed by a vice president and an
assistant secretary of the corporation this 13th day of January, 1971.
CAROLINA POWER & LIGHT COMPANY
By Charles F. Rouse
Vice President
ATTEST:
By J. L. Lancaster, Jr.
Assistant Secretary
(Corporate Seal)
<PAGE>
EXHIBIT E
STATEMENT OF CLASSIFICATION SHARES
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby executes this Statement of
Classification of Shares pursuant to Section 55-42 of the North Carolina General
Statutes relating to the preferences, limitations and relative rights of a
series of a class of its shares:
1. The name of the Corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Certificate of Amendment to the Charter of the corporation
adopted at a regular meeting of the shareholders duly convened and held on May
19, 1971, contained a resolution amending the Charter, which resolution, in
part, relates to the fixing of the preferences, limitations and relative rights
of the shares of Serial Preferred Stock of the corporation, and which authorizes
the Board of Directors to issue one or more series of Serial Preferred Stock
with such dividend rates, redemption prices and series designations as may be
fixed by resolution of the Board of Directors, which Certificate of Amendment is
on file in the office of the Secretary of State of North Carolina, and is set
out below:
(1) The term "Serial Preferred Stock" as used herein means
Preferred Stock of any series of the 5,000,000 shares authorized by
this Article Fourth. The $5 Preferred Stock and the Serial Preferred
Stock are hereinafter sometimes referred to collectively as the
"Preferred Stocks." The Board of Directors is authorized to issue at
any time and from time to time one or more series of Serial Preferred
Stock with such dividends rates and redemption prices and bearing such
series designations as may be fixed by the Board of Directors and
stated and expressed in the resolution or resolutions establishing the
respective series of such stock, the authority for which is hereby
expressly vested in the Board of Directors.
3. On September 6, 1972, the Board of Directors of the corporation duly
adopted resolutions authorizing the issuance and sale of $500,000 shares of a
new series of Serial Preferred Stock, without par value, designated as "Serial
Preferred Stock, $7.72 Series" bearing a dividend rate of $7.72 per share per
annum; and with the following redemption prices: for the period from September
14, 1972, to and including September 14, 1977, $115 per share; thereafter to and
including September 14, 1980, $110 per share; thereafter to and including
September 14, 1983, $107 per share; thereafter to and including September 14,
1986, $104 per share; and thereafter $101 per share. A copy of the resolutions
creating and authorizing the issuance and sale of the $7.72 Series of the
Company's Serial Preferred Stock is attached hereto and incorporated fully
herein by reference.
<PAGE>
IN WITNESS WHEREOF, this statement is signed by a Senior Vice President
and the Secretary of the corporation this 7th day of September, 1972.
CAROLINA POWER & LIGHT COMPANY
By Sherwood H. Smith, Jr.
Senior Vice President
Attest:
By J. L. Lancaster, Jr.
Secretary
(Corporate Seal)
<PAGE>
EXHIBIT F
STATEMENT OF CLASSIFICATION OF SHARES
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby executes this Statement of
Classification of Shares pursuant to Section 55-42 of the North Carolina General
Statutes relating to the relative rights and preferences of a series within a
class of its shares:
1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Certificate of Amendment to the Charter of the corporation
adopted at a special meeting of the shareholders duly convened and held on
October 23, 1973, contained a resolution amending the Charter, which resolution,
in part, relates to the fixing of the relative rights and preferences of a
series of Preferred Stock A of the corporation, and which authorizes the Board
of Directors to establish and issue one or more series of Preferred Stock A
which shall be of equal rank and identical in all respects except that there may
be variations between series in the following relative rights and preferences:
dividend rates, redemption prices, and the terms and conditions on which shares
may be redeemed, sinking fund provisions for the redemption or purchase of
shares, and terms and conditions on which shares may be converted, if shares are
issued with the privilege of conversion, and bearing such series' designations,
all as may be fixed by the Board of Directors and stated or expressed in the
resolution or resolutions establishing the respective series of such stock,
which Certificate of Amendment is on file in the office of the Secretary of
State of North Carolina, and is set out in part below:
(1) (a) The Board of Directors is authorized to establish and
issue at any time and from time to time (i) one or more series of
Serial Preferred Stock with such dividend rates and redemption prices
and bearing such series designations as may be fixed by the Board of
Directors and stated and expressed in the resolution or resolutions
establishing the respective series of such stock, the authority for
which is hereby expressly vested in the Board of Directors and (ii) one
or more series of Preferred Stock A which shall be of equal rank and
identical in all respects except that there may be variations between
series in the following relative rights and preferences: dividend
rates, redemption prices and the terms and conditions on which shares
may be redeemed, sinking fund provisions for the redemption or purchase
of shares, and terms and conditions on which shares may be converted,
if shares are issued with the privilege of conversion, and bearing such
series' designations, all as may be fixed by the Board of Directors and
stated or expressed in the resolutions establishing the respective
series of such stock, the authority for which is hereby expressly
vested in the Board of Directors. So long as shares of any series of
Preferred Stock A shall be outstanding, no amendment or modification of
the terms thereof fixed by the resolution or resolutions of the Board
of Directors establishing any such series shall be made unless the
holders of record of not less than a majority of the number of shares
of such series then outstanding shall consent thereto in writing or by
voting therefor in person or by proxy at a meeting of such holders for
such purpose.
3. On September 19, 1973, subject to the adoption by the shareholders
of the Amendment to the Charter of the corporation authorizing a class of stock
designated Preferred Stock A which Amendment was duly adopted by the
shareholders on October 23, 1973, the Board of Directors of the corporation duly
adopted resolutions authorizing the issuance and sale of 500,000 share of
Preferred Stock A, $7.45 Series, with a dividend rate of $7.45 per share per
annum; a mandatory sinking fund commencing in 1984 designed to redeem 20,000
shares annually at a redemption price of $100 per share; a noncumulative option
in the corporation to redeem not less than an additional 20,000 shares annually
at a redemption price of $100 per share up to a maximum of 120,000 shares in the
aggregate without premium; and redeemable at any time at prices ranging from
$115 per share to $101 per share, subject to certain limitations on refundings
prior to September 2, 1980.
The above description is qualified by reference to the resolutions
creating and authorizing the issuance of the corporation's Preferred Stock A,
$7.45 Series, which are attached hereto and incorporated herein by reference.
IN WITNESS WHEREOF, this statement is signed by a Senior Vice President
and an Assistant Secretary of the corporation this 23rd day of October, 1973.
CAROLINA POWER & LIGHT COMPANY
By Edward G. Lilly, Jr.
Senior Vice President
ATTEST:
By Robert M. Williams
Assistant Secretary
(Corporate Seal)
<PAGE>
EXHIBIT G
STATEMENT OF CLASSIFICATION OF SHARES
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby executes this Statement of
Classification of Shares pursuant to Section 55-42 of the North Carolina General
Statutes relating to the relative rights and preferences of a series within a
class of its shares:
1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Certificate of Amendment to the Charter of the corporation
adopted at a special meeting of the shareholders duly convened and held on
October 23, 1973, contained a resolution amending the Charter, which resolution,
in part, relates to the fixing of the relative rights and preferences of a
series of Serial Preferred Stock of the corporation, and which authorizes the
Board of Directors to establish and issue one or more series of Serial Preferred
Stock with such dividend rates and redemption prices and bearing such series
designations as may be fixed by the Board of Directors and stated and expressed
in the resolution or resolutions establishing the respective series of such
stock, which Certificate of Amendment is on file in the office of the Secretary
of State of North Carolina, and is set out in part below:
(l) (a) The Board of Directors is authorized to establish and
issue at any time and from time to time (i) one or more series of
Serial Preferred Stock with such dividend rates and redemption prices
and bearing such series designations as may be fixed by the Board of
Directors and stated and expressed in the resolution or resolutions
establishing the respective series of such stock, the authority for
which is hereby expressly vested in the Board of Directors and (ii) one
or more series of Preferred Stock A which shall be of equal rank and
identical in all respects except that there may be variations between
series in the following relative rights and preferences: dividend
rates, redemption prices and the terms and conditions on which shares
may be redeemed, sinking fund provisions for the redemption or purchase
of shares, and terms and conditions on which shares may be converted,
if shares are issued with the privilege of conversion, and bearing such
series' designations, all as may be fixed by the Board of Directors and
stated or expressed in the resolutions establishing the respective
series of such stock, the authority for which is hereby expressly
vested in the Board of Directors. So long as shares of any series of
Preferred Stock A shall be outstanding, no amendment or modification of
the terms thereof fixed by the resolution or resolutions of the Board
of Directors establishing any such series shall be made unless the
holders of record of not less than a majority of the number of shares
of such series then outstanding shall consent thereto in writing or by
voting therefor in person or by proxy at a meeting of such holders for
such purpose.
3. On February 20, 1974, the Board of Directors of the corporation duly
adopted resolutions authorizing the issuance and sale of 650,000 shares of a new
series of Serial Preferred Stock designated as "Serial Preferred Stock, $8.48
Series" bearing a dividend rate of $8.48 per share per annum; and with the
following redemption prices: for the period from February 28, 1974, to and
including February 28, 1979, $115 per share; thereafter to and including
February 28, 1982, $108 per share; thereafter to and including February 28,
1985, $105 per share; thereafter to and including February 28, 1988, $103 per
share; and thereafter $101 per share. A copy of the resolutions creating and
authorizing the issuance and sale of the $8.48 Series of the Company's Serial
Preferred Stock is attached hereto and incorporated fully herein by reference.
IN WITNESS WHEREOF, this statement is signed by a Senior Vice President
and the Secretary of the corporation this 22nd day of February, 1974.
CAROLINA POWER & LIGHT COMPANY
By Sherwood H. Smith, Jr.
Senior Vice President
ATTEST:
By J. L. Lancaster, Jr.
Secretary
(Corporate Seal)
<PAGE>
EXHIBIT H
STATEMENT OF CLASSIFICATION OF SHARES
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned Company hereby executes this Statement of
Classification of Shares pursuant to Section 55-42 of the North Carolina General
Statutes relating to the preferences, limitations and relative rights of a
series of a class of its shares:
1. The name of the Company is CAROLINA POWER & LIGHT COMPANY.
2. The Certificate of Amendment to the Charter of the Company adopted
at a regular meeting of the shareholders duly convened and held on May 19, 1971,
contained a resolution amending the Charter, which resolution, in part, relates
to the fixing of the preferences, limitations and relative rights of the shares
of Preference Stock of the Company, and which authorizes the Board of Directors
to issue one or more series of Preference Stock with such dividend rates,
redemption prices and series designations as may be fixed by resolution of the
Board of Directors, which Certificate of Amendment is on file in the office of
the Secretary of State of North Carolina, and is set out below:
PREFERENCE STOCK
(22) The Board of Directors is authorized to issue at any time and from
time to time one or more series of Preference Stock as hereinafter provided.
(23) To the extent that variations in the designations, preferences,
limitations and relative rights as between series of the Preference Stock are
not established, fixed and determined herein, authority is hereby expressly
vested in the Board of Directors to fix and determine the designations,
preferences, limitations and relative rights of the shares of any series of such
Preference Stock hereinafter established, including authority to fix any one or
more of the following:
(a) The distinctive designations of such series and the number of
shares which shall constitute such series;
(b) The rate of dividend;
(c) The right of redemption, if any, and the price at and the
terms and conditions on which the shares may be redeemed;
(d) The amount payable upon shares in event of involuntary
liquidation;
(e) The amount payable upon shares in event of voluntary
liquidation;
(f) Sinking fund provisions, if any, for the redemption or
purchase of shares; and
(g) The terms and conditions on which shares may be converted, if
the shares of any series are issued with the privilege of conversion.
3. On March 12, 1975, the Executive Committee of the Board of Directors
of the Company duly adopted resolutions authorizing the issuance and sale of
2,000,000 shares of the A Series of Preference Stock, without par value,
designated as "$2.675 Preference Stock, Series A" bearing a dividend rate of
$2.675 per share per annum; and with the following redemption prices: For the
period from March 20, 1975, to and including March 31, 1980, $27.68 per share;
thereafter to and including March 31, 1985, $26.50 per share; thereafter to and
including March 31, 1990, $25.75 per share; and thereafter $25.25 per share. A
copy of the resolutions creating and authorizing the issuance and sale of the A
Series of the Company's Preference Stock is attached hereto and incorporated
fully herein by reference.
IN WITNESS WHEREOF, this statement is signed by a Vice President and
the Secretary of the Company this 13th day of March, 1975.
CAROLINA POWER & LIGHT COMPANY
By William E. Graham, Jr.
Vice President
ATTEST:
By J. L. Lancaster, Jr.
Secretary
(Corporate Seal)
<PAGE>
EXHIBIT I
STATEMENT OF CLASSIFICATIONS OF SHARES
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby executes this Statement of
Classification of Shares pursuant to Section 55-42 of the North Carolina General
Statutes relating to the relative rights and preferences of a series within a
class of its shares:
1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Certificate of Amendment to the Charter of the corporation
adopted at a special meeting of the shareholders duly convened and held on
October 23, 1973, contained a resolution amending the Charter, which resolution,
in part, relates to the fixing of the relative rights and preferences of a
series of Preferred Stock A of the corporation, and which authorizes the Board
of Directors to establish and issue one or more series of Preferred Stock A
which shall be of equal rank and identical in all respects except that there may
be variations between series in the following relative rights and preferences:
dividend rates, redemption prices, and the terms and conditions on which shares
may be redeemed, sinking fund provisions for the redemption or purchase of
shares, and terms and conditions on which shares may be converted, if shares are
issued with the privilege of conversion, and bearing such series' designations,
all as may be fixed by the Board of Directors and stated or expressed in the
resolution or resolutions establishing the respective of such stock, which
Certificate of Amendment is on file in the office of the Secretary of State of
North Carolina, and is set out in part below:
(1) (a) The Board of Directors is authorized to establish and
issue at any time and from time to time (i) one or more series of
Serial Preferred Stock with such dividend rates and redemption prices
and bearing such series designations as may be fixed by the Board of
Directors and stated and expressed in the resolution or resolutions
establishing the respective series of such stock, the authority for
which is hereby expressly vested in the Board of Directors and (ii) one
or more series of Preferred Stock A which shall be of equal rank and
identical in all respects except that there may be variations between
series in the following relative rights and preferences: dividend
rates, redemption prices and the terms and conditions on which shares
may be redeemed, sinking fund provisions for the redemption or purchase
of shares, and terms and conditions on which shares may be converted,
if shares are issued with the privilege of conversion, and bearing such
series' designations, all as may be fixed by the Board of Directors and
stated or expressed in the resolutions establishing the respective
series of such stock, the authority for which is hereby expressly
vested in the Board of Directors. So long as shares of any series of
Preferred Stock A shall be outstanding, no amendment or modification of
the terms thereof fixed by the resolution or resolutions of the Board
of Directors establishing any such series shall be made unless the
holders of record of not less than a majority of the number of shares
of such series then outstanding shall consent thereto in writing or by
voting therefor in person or by proxy at a meeting of such holders for
such purpose.
3. On September 6, 1979 the Executive Committee of the Board of
Directors of the corporation duly adopted resolutions authorizing the issuance
and sale of 500,000 shares of Preferred Stock A, $8.75 Series, with a dividend
rate of $8.75 per share per annum; a mandatory sinking fund commencing in 1985
designed to redeem 20,000 shares annually at a redemption price of $100 per
share until 1999, after which 40,000 shares per year shall be redeemed; a
noncumulative option in the corporation to redeem not greater than an additional
20,000 shares annually (40,000 shares after 1999) at a redemption price of $100
per share which shall be credited against the sinking fund redemption
requirement in reverse chronological order; and which are redeemable at any time
at prices ranging from $108.75 per share to $100.00 per share, subject to
certain limitations on refinancings prior to September 1, 1989 and other
specified means of redemption.
The above description is qualified by reference to the resolutions
creating and authorizing the issuance of the corporation's Preferred Stock A,
$8.75 Series, which are attached hereto and incorporated herein by reference.
IN WITNESS WHEREOF, this statement is signed by a Senior Vice President
and an Assistant Secretary of the corporation this 7th day of September, 1979.
CAROLINA POWER & LIGHT COMPANY
By William E. Graham, Jr.
Senior Vice President
ATTEST:
By Robert M. Williams
Assistant Secretary
(Corporate Seal)
<PAGE>
EXHIBIT J
STATEMENT OF CLASSIFICATION OF SHARES
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby executes this Statement of
Classification of Shares pursuant to Section 55-42 of the North Carolina General
Statutes relating to the relative rights and preferences of a series within a
class of its shares:
1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Certificate of Amendment to the Charter of the corporation
adopted at a special meeting of the shareholders duly convened and held on
October 23, 1973, contained a resolution amending the Charter, which resolution,
in part, relates to the fixing of the relative rights and preferences of a
series of Preferred Stock A of the corporation, and which authorizes the Board
of Directors to establish and issue one or more series of Preferred Stock A
which shall be of equal rank and identical in all respects except that there may
be variations between series in the following relative rights and preferences:
dividend rates, redemption prices, and the terms and conditions on which shares
may be redeemed, sinking fund provisions for the redemption or purchase of
shares, and terms and conditions on which shares may be converted, if shares are
issued with the privilege of conversion, and bearing such series' designations,
all as may be fixed by the Board of Directors and stated or expressed in the
resolution or resolutions establishing the respective series of such stock,
which Certificate of Amendment is on file in the office of the Secretary of
State of North Carolina, and is set out in part below:
(1) (a) The Board of Directors is authorized to establish and
issue at any time and from time to time (i) one or more series of
Serial Preferred Stock with such dividend rates and redemption prices
and bearing such series designations as may be fixed by the Board of
Directors and stated and expressed in the resolution or resolutions
establishing the respective series of such stock, the authority for
which is hereby expressly vested in the Board of Directors and (ii) one
or more series of Preferred Stock A which shall be of equal rank and
identical in all respects except that there may be variations between
series in the following relative rights and preferences: dividend
rates, redemption prices and the terms and conditions on which shares
may be redeemed, sinking fund provisions for the redemption or purchase
of shares, and terms and conditions on which shares may be converted,
if shares are issued with the privilege of conversion, and bearing such
series' designations, all as may be fixed by the Board of Directors and
stated or expressed in the resolutions establishing the respective
series of such stock, the authority for which is hereby expressly
vested in the Board of Directors. So long as shares of any series of
Preferred Stock A shall be outstanding, no amendment or modification of
the terms thereof fixed by the resolution or resolutions of the Board
of Directors establishing any such series shall be made unless the
holders of record of not less than a majority of the number of shares
of such series then outstanding shall consent thereto in writing or by
voting therefor in person or by proxy at a meeting of such holders for
such purpose.
3. On February 20, 1980 the Executive Committee of the Board of
Directors of the corporation duly adopted resolutions authorizing the issuance
and sale of 180,000 shares of Preferred Stock A, $9.25 Series, with a dividend
rate of $9.25 per share per annum; which are redeemable at any time at prices
ranging from $109.00 per share to $100.00 per share, subject to certain
limitations on refinancings prior to March 1, 1985 and other specified means of
redemption.
The above description is qualified by reference to the resolutions
creating and authorizing the issuance of the corporation's Preferred Stock A,
$9.25 Series, which are attached hereto and incorporated herein by reference.
IN WITNESS WHEREOF, this statement is signed by a Senior Vice President
and an Assistant Secretary of the corporation this 20th day of February, 1980.
CAROLINA POWER & LIGHT COMPANY
By William E. Graham, Jr.
Senior Vice President
ATTEST:
By Robert M. Williams
Assistant Secretary
(Corporate Seal)
<PAGE>
ARTICLES OF AMENDMENT OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby executes these Articles of Amendment
for the purpose of amending its charter:
1. The name of the corporation is Carolina Power & Light Company.
2. The following amendment to the Eleventh Article of the Restated
Charter of the corporation was adopted by its shareholders of the 10th day of
May, 1989, in the manner prescribed by law:
To the fullest extent permitted by the North Carolina Business
Corporation Act as it exists or may hereafter be amended, 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.
3. The number of shares of the corporation outstanding at the time of
such adoption was 84,210,520, and the number of shares entitled to vote thereon
was 82,755,520. All classes entitled to vote on the amendment voted as one
class.
4. The number of shares voted for such amendment was 64,941,613, and
the number of shares voted against such amendment was 3,311,105.
5. The amendment herein effected does not give rise to dissenter's
rights to payment for the reason that the only effect of such amendment is to
eliminate directors' liability for monetary damages for certain breaches of
their duties as directors pursuant to N.C.G.S. Section 55-7(11).
IN WITNESS WHEREOF, these articles of amendment are signed by the
Senior Vice President and Assistant Secretary of the corporation this 19th day
of May, 1989.
CAROLINA POWER & LIGHT COMPANY
By /s/ Charles D. Barham, Jr.
------------------------------
Charles D. Barham, Jr.
SEAL Senior Vice President
By /s/ Robert M. Williams
------------------------------
Robert M. Williams
Assistant Secretary
State of North Carolina
County of Wake
I, Fay P. Frederick, a notary public, hereby certify that on this 19th
day of May, 1989, personally appeared before me Charles D. Barham, Jr. and
Robert M. Williams, each of whom being by me first duly sworn, declared that he
signed the foregoing document in the capacity indicated, that he was authorized
so to sign, and that the statements therein contained are true.
/s/ Fay P. Frederick
--------------------
Notary Public
My commission expires: March 11, 1991
<PAGE>
ARTICLES OF AMENDMENT
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby submits these Articles of Amendment
for the purpose of amending its Restated Charter.
1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Restated Charter of the corporation is hereby amended to
increase the authorized number of shares of Common Stock from 100,000,000 to
200,000,000 by amending the first paragraph of Article Fourth as follows:
a. The figure "135,300,000" there appearing shall be deleted
in its entirety and in lieu and substitution thereof the
figure "235,300,000" shall be added.
b. The figure "100,000,000" there appearing shall be deleted
in its entirety and in lieu and substitution thereof the
figure "200,000,000" shall be added.
As amended, the full text of the first paragraph of Article Fourth of
the corporation's Restated Charter is as follows:
FOURTH: The total number of the authorized shares of the Company
is 235,300,000 shares divided into 300,000 shares of $5 Preferred Stock
(hereinafter called "$5 Preferred Stock"), 20,000,000 shares of Serial
Preferred Stock (hereinafter called "Serial Preferred Stock"),
5,000,000 shares of Preferred Stock A (hereinafter called "Preferred
Stock A"), 10,000,000 shares of Preference Stock (hereinafter called
"Preference Stock"), and 200,000,000 shares of Common Stock, all
without nominal or par value.
3. Shareholder approval of the foregoing Amendment was obtained on the 13th day
of May, 1992, as required by the North Carolina Business Corporation Act.
This 27th day of May, 1992.
CAROLINA POWER & LIGHT COMPANY
By: /s/ Sherwood H. Smith, Jr.
---------------------------------
Title: Chairman/President and Chief Executive Officer
-----------------------------------------------------
<PAGE>
ARTICLES OF AMENDMENT
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby submits these Articles of Amendment
for the purpose of amending its Restated Charter.
1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Restated Charter of the corporation is hereby amended to
establish a variable range for the size of the Board of Directors by amending
Article SIXTH of the Restated Charter.
As amended, the full text of Article SIXTH of the
corporation's Restated Charter is as follows:
SIXTH: The number of directors constituting the Board of Directors
shall be determined in accordance with the Company's By-Laws. At least
fifty percent of the number of directors so determined shall constitute
a quorum.
3. Shareholder approval of the foregoing Amendment was obtained on the 10th day
of May, 1995, as required by the North Carolina Business Corporation Act.
This 10th day of May, 1995.
CAROLINA POWER & LIGHT COMPANY
By: /s/ Sherwood H. Smith, Jr.
------------------------------
Title: Chairman and Chief Executive Officer
--------------------------------------------
<PAGE>
ARTICLES OF AMENDMENT
OF
CAROLINA POWER & LIGHT COMPANY
The undersigned corporation hereby delivers for filing these Articles
of Amendment for the purpose of amending its Restated Charter.
1. The name of the corporation is CAROLINA POWER & LIGHT COMPANY.
2. The Restated Charter of the corporation was amended by a vote of the
shareholders in order to expand the purposes for which the corporation exists,
and to broaden the powers of the corporation by amending Article THIRD of the
Restated Charter.
As amended, the full text of Article THIRD of the corporation's
Restated Charter is as follows:
THIRD: The object or objects for which the Company is to exist are the
following, to wit:
The object or objects of the Company and in aid thereof and in
addition thereto the following object or objects the enumeration of
which shall not limit or restrict or be held to limit or restrict in
any manner the object or objects of the Company, namely:
To acquire, buy, hold, own, sell, lease, exchange, dispose of,
finance, deal in, construct, build, equip, improve, use, operate,
maintain and work upon:
(a) Any and all kinds of plants and systems for the manufacture,
storage, utilization, supply, transmission, distribution, or
disposition of electricity, gas, water or steam, or power produced
thereby, or of ice and refrigeration, of any and every kind, or
telegraphs or telephones, or for the transmission of information, or
any thereof;
(b) Any and all kinds of street railways and bus lines for the
transportation of passengers and/or freight, transmission lines,
systems, appliances, equipment and devices and tracks, stations,
buildings and other structures and facilities;
(c) Any and all kinds of works, power plants, substations,
systems, tracts, machinery, generators, motors, lamps, poles, pipes,
wires, cables, conduits, apparatus, devices, supplies and articles of
every kind pertaining to or in anywise connected with the construction,
operation or maintenance of street railways and bus lines or in anywise
connected with the manufacture, purchase, use, transmission,
distribution, regulation, control or application of electricity, gas,
light, heat, refrigeration, ice, water, power, telephones and
telegraphs, or any other purposes;
<PAGE>
To acquire, buy, hold, own, sell, lease, exchange, dispose of,
distribute, deal in, use, produce, furnish and supply electricity, gas, light,
heat, refrigeration, ice, water and power and any other power or force in any
form and for any purpose whatsoever;
To carry on the business of general brokers and dealers in stocks,
bonds, securities, mortgages and other choses in action, including the
acquisition thereof by original subscription; to make investments in such
property and to hold, manage, mortgage, pledge, sell, and dispose of the same in
like manner as individuals may do;
To carry on in States and jurisdictions when and where permissible
by the laws of such States and jurisdictions, the business of constructing and
operating or aiding in the construction and operation of street railways,
telegraph and telephone companies, gas and electric companies.
To acquire, organize, assemble, develop, build up and operate,
constructing and operating and other organizations and systems and to hire,
sell, lease, exchange, turn over, deliver and dispose of such organizations and
systems in whole or in part, and as going organizations and systems and
otherwise, and to enter into and perform contracts, agreements and undertakings
of any kind in connection with any or all of the foregoing purposes;
To do a general contracting business;
To purchase, acquire, hold, own, develop and dispose of lands,
interests in and rights with respect to lands and waters and fixed and movable
property, franchises, concessions, consents, privileges and licenses in its
opinion useful or desirable for or in connection with the foregoing purposes;
To underwrite, acquire by purchase, subscription or otherwise, and
to own, hold for investment or otherwise, and to use, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property of
every sort and description and wheresoever situated, including shares of stock,
bonds, debentures, notes, scrip, warrants, securities, evidences of
indebtedness, contracts or obligations of any corporation or corporations,
association or associations, domestic or foreign, or of any firm or individual
of the United States or any state, territory or dependency of the United States
or any foreign country, or any municipality or local authority within or without
the United States, and also to issue in exchange therefor stocks, bonds or other
securities or evidences of indebtedness of the Company, and while the owner or
holder of any such property, to receive, collect and dispose of the interest,
dividends and income on or from such property and to possess and exercise in
respect thereto all of the rights, powers and privileges of ownership, including
all voting powers thereon;
To aid in any manner any corporation or association, domestic or
foreign, or any firm or individual, any shares of stock in which or any bonds,
debentures, notes, securities, evidences of indebtedness, contracts, or
obligations of which are held by or for the Company, directly or indirectly, or
in which, or in the welfare of which, the Company shall have any interest, and
to do any acts designed to protect, preserve, improve or enhance the value of
any property at any time held or controlled by the Company or in which it may be
at any time interested, directly or indirectly or through other corporations or
otherwise; and to organize or promote or facilitate the organization of
subsidiary companies;
To engage in any lawful business authorized by the State of North
Carolina.
IN FURTHERANCE AND NOT IN LIMITATION of the general powers
conferred by the laws of the State of North Carolina and of the objects and
purposes hereinbefore stated, it is hereby expressly provided that the Company
shall also have the following powers, that is to say:
To do any or all things set forth to the same extent and as
fully as natural persons might or could do, and in any part of the
world, and as principal, agent, contractor or otherwise, and either
alone or in conjunction with any other persons, firms, associations or
corporations;
To borrow money, to issue bonds, promissory notes, bills of
exchange, debentures and other obligations and evidences of
indebtedness, whether secured by mortgage, pledge or otherwise, or
unsecured, for money borrowed or in payment for property purchased or
acquired or for any other lawful object; to mortgage or pledge all or
any part of its properties, rights, interests and franchises, including
any or all shares of stock, bonds, debentures, notes, scrip, warrants
or other obligation or evidences of indebtedness at any time owned by
it;
To guarantee the payment of dividends upon any capital stock
and to endorse or otherwise guarantee the principal or interest, or
both, of any bonds, debentures, notes, scrip or other obligations or
evidences of indebtedness, or the performance of any contract or
obligation, of any other corporation or association, domestic or
foreign, or of any firm or individual in which the Company may have a
lawful interest, in so far and to the extent that such guaranty may be
permitted by law;
To purchase or otherwise acquire its own shares of stock (so
far as may be permitted by law), and its bonds, debentures, notes,
scrip, warrants or other securities or evidences of indebtedness, and
to cancel or to hold, sell, transfer or reissue the same;
To do any and all things necessary or convenient for the
accomplishment of the objects herein enumerated, and in general to
carry on any lawful business, incidental, necessary or convenient to
any of said objects.
Nothing herein shall be deemed to limit or exclude any power,
right or privilege given to the Company by law or construed to give the
Company any rights, powers or privileges not permitted by the laws of
the State of North Carolina to corporations organized under the
statutes of the State of North Carolina for the general purposes for
which the Company is organized.
The foregoing clauses shall be construed as objects, purposes
and powers and it is hereby expressly provided that the foregoing
specific enumeration shall not be held to limit or restrict in any
manner the powers of the Company.
3. Shareholder approval of the foregoing Amendment was obtained on the
8th day of May, 1996, as required by the North Carolina Business Corporation
Act.
This 8th day of May, 1996.
CAROLINA POWER & LIGHT COMPANY
By: /s/ Sherwood H. Smith, Jr.
------------------------------
Title: Chairman and Chief Executive Officer
---------------------------------------------
B Y - L A W S
of
CAROLINA POWER & LIGHT COMPANY
Raleigh, North Carolina
(As Amended September 18, 1996)
Meetings of Stockholders
------------------------
Section 1. The annual meeting of the stockholders of the Company shall
be held at the principal office of the Company, 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, or
at such other place within or without the State of North Carolina as stated in
the notice of the meeting as the Board of Directors may determine.
Section 2. Special meetings of the stockholders of the Company 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 Company,
at the principal office of the Company or at such other place within or without
the State of North Carolina, and at such time, as may be stated in the call and
notice.
Section 3. Written notice of the time and place of every meeting of
stockholders 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 stockholder of record, entitled to vote at such meeting, and
addressed to him at his address as it appears on the records of the Company,
with postage thereon prepaid. Notice may also be given by any other lawful
means.
Section 4. In accordance with Section 55-7-20 of the General Statutes
of North Carolina, the Company, or an officer having charge of the record of
stockholders of the Company, shall prepare a list of stockholders which shall be
available for inspection by stockholders, or their agents or attorneys.
Section 5. The holders of a majority of the stock of the Company having
voting powers must be present in person or represented by proxy at each meeting
of the stockholders to constitute a quorum; absent such quorum, the meeting may
be adjourned by a majority of shares voting on a motion to adjourn. If such
adjournment is for less than thirty days, notice other than announcement at the
meeting need not be given. 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.
<PAGE>
Section 6. 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 Charter a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Section 7. The Board of Directors in advance of any meeting of
stockholders 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 stockholders, the
chairman of the meeting may appoint such inspectors or any inspector to act at
that meeting.
Section 8. Meetings of the stockholders 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 Company 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.
Section 9. Each holder of Preferred Stock and/or Common Stock shall at
every meeting of the stockholders be entitled to one vote in person or by proxy
for each share of such stock held by such stockholder. Except where the transfer
books of the Company have been closed or a date has been fixed as a record date
for the determination of its stockholders entitled to vote, no share of stock
shall be voted at any election for directors which has been transferred on the
books of the Company within twenty days next preceding such election of
directors.
Directors and Meetings of Directors
-----------------------------------
Section 10. (a) The number of directors of the Company 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. This
subsection (a) was adopted by the stockholders of the Company.
(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 Company who are full-time employees of the Company shall retire from the
Board upon attaining the age of 65 years; provided, however, that the Chairman
of the Board of the Company 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 Company. Those persons who are not employed
full-time by the Company 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.
<PAGE>
(c) The election of directors shall be held at the annual meeting of
stockholders. The directors, other than those who may be elected under
circumstances specified in the Company's Restated Charter, as it may be amended,
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, as
nearly equal in number as possible. The initial terms of directors first elected
or re-elected by the stockholders on the date this amendment to the By-Laws is
adopted shall be for the following terms of office:
Class I: One year
Class II: Two years
Class III: Three years
and until their successors shall be elected and shall qualify. Upon the
expiration of the initial term specified for each class of directors their
successors shall be elected for three-year terms or until such time as their
successors shall be elected and qualified. In the event of any increase or
decrease in the number of directors, the additional or eliminated directorships,
shall be classified or chosen so that all classes of directors shall remain or
become equal in number, as nearly as possible. This subsection (c) was adopted
by the stockholders of the Company.
Section 11. 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 12. 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 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 Company, 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 Charter.
<PAGE>
Section 13. The business and affairs of the Company shall be managed by
its Board of Directors, which may exercise all such powers of the Company and do
all such lawful acts and things which are not by law or by the Charter directed
or required to be exercised or done by the stockholders; provided, however, that
the officers of the Company 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 Company is engaged as hereinafter provided
by the By-Laws or as may hereafter be delegated by the Board of Directors. 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.
Section 14. 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;
- Amend the Company's Articles of Incorporation pursuant to N.C.G.S.
'55-10-102;
- Adopt, amend or repeal the Company'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.
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 Executive Committee may make rules for the conduct of its
business. A majority of the members of said Committee shall constitute a quorum.
The Chairman of the Executive Committee shall be appointed by the Board of
Directors from the membership of the Executive Committee.
Notices
-------
Section 15. Notices to directors or stockholders shall be in writing
and given personally or by mail to the directors and by mail to the stockholders
at their addresses appearing on the books of the Company; provided, however,
that no notice need be given any stockholder or director whose address is
outside of the United States. Notice by mail shall be deemed to be given at the
time when the same shall be mailed. Notice to directors may also be given
verbally, or by telegram, or cable, and any such notice shall be deemed to be
given when delivered to and accepted for transmittal by an office of the
transmitting company.
Section 16. Whenever any notice is required to be given under the
provisions of applicable statutes or of the Charter 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.
Officers, Their Authority, and Their Terms of Office
----------------------------------------------------
Section 17. The Board of Directors shall elect the officers of the
Company, 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. 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
Company. The Officers shall be chosen annually by the Board of Directors at its
first meeting held after the Annual Meeting of Stockholders, or as soon
thereafter as may be practical, and shall serve for the period specified or
until a successor is chosen.
Section 18. The Board of Directors shall appoint the Chief Executive
Officer who shall be either the Chairman, the Vice Chairman or the President of
the Company. 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.
Section 19. 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, without prejudice to the rights of the officer
removed under an employment agreement in writing previously duly authorized by
the Board of Directors or an Executive Committee of the Board of Directors. Any
officer may resign at any time by giving written notice to the Board of
Directors, the President or any other officer of the Company. 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. The Board of Directors or an Executive Committee of the Board of
Directors may fill any vacancy in any office occurring by virtue of the
incumbent's death, resignation, removal or otherwise at any duly convened
meeting of the Board.
Section 20. The Board of Directors or the Chief Executive Officer of
the Company may require the Treasurer and any other officer, employee or agent
of the Company to give bond, in such sum and with such surety or sureties as
either shall determine, for the faithful discharge of their duties.
Section 21. Unless otherwise provided by the Board of Directors, the
Company'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 Company, all acts and things deemed by him to be
reasonably necessary or desirable to direct, handle, and manage, and in general
carry on the Company's business transactions authorized by its Charter, in
respect to all matters except those which by law must be performed by the
Directors, including but not limited to the following: (a) constructing and
contracting for the construction of generating plants authorized by the
Directors; (b) operating and maintaining generating plants and appurtenant
works; (c) constructing, maintaining, and operating substations, lines and all
other facilities, appurtenant to the transmission, distribution and delivery of
electricity; (d) acquiring by direct purchase, gift, exchange, or by
condemnation, all rights of way, easements, lands, and estates in lands, flowage
and water rights; (e) acquiring, maintaining and disposing of tools, machinery,
appliances, materials, vehicles, and other appurtenant facilities; (f)
employing, and fixing compensation of, Company personnel (except that the
compensation of the Chief Executive Officer and the other Company employees who
are members of the Board shall be fixed by the Board of Directors) in compliance
with any procedures established by the Board; (g) borrowing money from time to
time for terms not exceeding three years, and in connection therewith pledging
the credit of the Company and executing unsecured loan agreements, promissory
notes, and other desirable instruments evidencing obligations to the lender; (h)
fixing the rates and conditions of service and dealing with regulatory bodies in
respect thereto, and promoting the use of electricity by means of sales
representatives, advertising and otherwise; (i) collecting and keeping accounts
of all monies due the Company and making and preserving records of the Company's
properties and accounts and fiscal affairs; and (j) possessing, preserving, and
protecting all property, assets, and interests of the Company and instituting,
prosecuting, intervening in, and defending actions and proceedings in any court
or before any administrative agency or tribunal affecting the Company's
interests and welfare.
Certificates of Stock
---------------------
Section 22. Every holder of stock in the Company shall be entitled to
have a certificate or certificates certifying the number of fully paid shares
owned by him in the Company which shall be in form consistent with law and with
the Charter of the Company and as shall be approved by the Board of Directors.
The stock certificates shall be signed by: 1) either the Chairman of the Board
of Directors or the President, and 2) either the Secretary or Treasurer. Such
signatures may be facsimile or other similar method.
Section 23. All transfers of stock of the Company shall be made upon
its books by authority of the holder of the shares or of his legal
representative, and before a new certificate is issued the old certificate shall
be surrendered for cancellation, provided that in case any certificate is lost,
stolen or destroyed, a new certificate therefor may be issued pursuant to the
provisions of Section 24 hereof.
Section 24. No certificate of shares of stock of the Company shall be
issued in place of any certificate alleged to have been lost or stolen or
destroyed, except upon the approval of the Board of Directors who may require
delivery to the Company of a bond in such sum as it may direct and subject to
its approval as indemnity against any claim in respect to such lost or stolen or
destroyed certificate; provided that the Board of Directors may delegate to the
Company'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 Company 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 25. The Board of Directors shall have power and authority to
make all such rules and regulations as it may deem expedient concerning the
issue, transfer, conversion and registration of certificates for shares of the
capital stock of the Company, not inconsistent with the laws of North Carolina,
the Charter of the Company and these By-Laws. The Board of Directors is
authorized to appoint one or more transfer agents and registrars for the capital
stock of the Company.
Section 26. The Board of Directors shall have power to close the stock
transfer books or in lieu thereof to fix record dates as authorized by law.
General
-------
Section 27. Subject to the provisions of the applicable statutes and
the Charter of the Company, dividends, either cash or stock, upon the capital
stock of the Company may be declared by the Board of Directors at any meeting
thereof.
Section 28. Deeds, bonds, notes, mortgages and contracts of the Company
may be executed on behalf of the Company by the 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 Company may be affixed to deeds,
bonds, notes, mortgages, contracts or stock certificates by an appropriate
officer of the Company by impression thereon, or, by order of an appropriate
officer of the Company, a facsimile of said seal may be affixed thereto by
engraving, printing, lithograph or other method.
Section 29. The monies of the Company shall be deposited in the name of
the Company in such bank or banks or trust company 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 30. 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.
Amendment of By-Laws
--------------------
Section 31. The Board of Directors shall have power from time to time
to adopt, amend, alter, add to, and repeal By-Laws for the Company by
affirmative vote of a majority of the directors then holding office, provided,
however, that the By-Laws may not be amended by the Board of Directors to
require more than a majority of the voting shares for a quorum at a
stockholder's meeting, or more than a majority vote at such meeting, except
where higher percentages are required by law. Any By-Laws so made or any
provisions thereof may be altered or repealed by vote of the holders of a
majority of the total number of shares of the Company then issued and
outstanding and entitled to vote thereon at any annual stockholders' meeting.
Additionally, any By-Law adopted, amended or repealed by the stockholders may
not be readopted, amended or repealed by the Board of Directors unless the
Charter or a By-Law adopted by the stockholders authorizes the Board of
Directors to adopt, amend or repeal that particular By-Law or the By-Laws
generally.
Indemnity of Officers and Directors
-----------------------------------
Section 32. (a) The Company shall reimburse or indemnify any past,
present or future officer or director of the Company for and against such
liabilities and expenses as are authorized by (1) a resolution adopted by the
Company's stockholders at a special meeting held on December 31, 1943, which is
made a part hereof as though incorporated herein, or (2) 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 Company or serving in any such capacity
at the request of the Company in any other corporation, partnership, joint
venture, trust or other enterprise shall be provided reimbursement and
indemnification by the Company 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 Company, or (2) at the request of the Company as an officer
of 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 Company 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 Company or on
behalf of the Company in a derivative action, seeking to hold him liable by
reason of or arising out of his status as such or his activities in any of the
foregoing capacities, and (ii) payments made by him in satisfaction of any
judgement, money decree, fine, penalty or settlement for which he may have
become liable in any such action, suit or proceeding; provided, however, that
the Company 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 Company.
(c) The Board of Directors shall take all action as may be necessary or
appropriate to authorize the Company to pay all amounts required under these
Sections 32(a),(b) and (c) 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 Company.
(d) Any person who serves or has served in any of the aforesaid
capacities for or on behalf of the Company shall be deemed to be doing or to
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.
(e) The Company may, in its sole discretion, wholly or partially
indemnify and advance expenses to any employee or agent of the Company to the
same extent as provided herein for officers and directors.
EXHIBIT A
TO
1997 EQUITY INCENTIVE PLAN
PERFORMANCE SHARE SUB-PLAN
This Performance Share Sub-Plan ("Sub-Plan") sets forth the rules and
regulations adopted by the Committee for issuance of Performance Share Awards
under Section 10 of the Plan. Capitalized terms used in this Sub-Plan that are
not defined herein shall have the meaning given in the Plan. In the event of any
conflict between this Sub-Plan and the Plan, the terms and conditions of the
Plan shall control. No Award Agreement shall be required for participation in
this Sub-Plan.
Section 1. Definitions
When used in this Sub-Plan, the following terms shall have the meanings as set
forth below, and are in addition to the definitions set forth in the Plan.
1.1 "Account" means the account used to record and track the number of
Performance Shares granted to each Participant as provided in Section
2.4.
1.2 "Award" as used in this Sub-Plan means each aggregate award of
Performance Shares as provided in Section 2.2.
1.3 "Peer Group" means the major electric utilities with nuclear and fossil
generation located in the eastern portion of the United States as set
forth in Attachment 1 to this Sub-Plan. The Committee may in its sole
discretion change the members of the Peer Group for future grants.
1.4 "Performance Period" for purposes of this Sub-Plan means three
consecutive Years beginning with the Year in which an Award is
granted.
1.5 "Performance Schedule" means Attachment 2 to this Sub-Plan, which sets
forth the Performance Measures applicable to this Sub-Plan.
1.6 "Performance Share" for purposes of this Sub-Plan means each unit of an
Award granted to a Participant, the value of which is equal to the
value of Company Stock as hereinafter provided.
1.7 "Salary" means the regular base rate of compensation payable by the
Company to a Participant on an annual basis as of the date an Award is
Granted. Salary does not include bonuses, if any, or incentive
compensation, if any. Such compensation shall not be reduced by any
deferrals made under any other plans or programs maintained by the
Company.
1.8 "Total Shareholder Return" means the total percentage return realized
by the owner of a share of stock during a relevant Year or any part
thereof. Total Shareholder Return is equal to the appreciation or
depreciation in value of the stock (which is equal to the closing value
of the stock on the last trading day of the relevant period minus the
closing value of the stock on the last trading day of the preceding
Year) plus the dividends declared during the relevant period, divided
by the closing value of the stock on the last trading day of the
preceding Year. Closing values for the stock on the dates given above
shall be those published in the Wall Street Journal. Total Shareholder
Return is intended to be the sole Performance Measure under this
Sub-Plan.
1.9 "Year" means a calendar year.
Section 2. Sub-Plan Participation and Awards
2.1 Participant Selection. Participants under this Sub-Plan shall be selected by
the Committee in its sole discretion as provided in Section 4.2 of the Plan.
2.2 Awards. Subject to any adjustments to be made under Section 2.5, the
Compensation Committee may, in its sole discretion, grant Awards to some or all
of the Participants in the form of a specific number of Performance Shares. The
total value of any Award shall not exceed the following limitations, based on
the Participant's Salary on the date that the Award is granted:
- ----------------------------------------- -------------------------------
Participant Award Limitation
- ----------------------------------------- -------------------------------
President/CEO 75% of Salary
- ----------------------------------------- -------------------------------
- ----------------------------------------- -------------------------------
Group Executives 50% of Salary
- ----------------------------------------- -------------------------------
- ----------------------------------------- -------------------------------
Department Heads and Key Managers*
Level I 30% of Salary
Level II 25% of Salary
Level III 20% of Salary
- ----------------------------------------- -------------------------------
*Levels shall be determined in the sole discretion of the Committee
2.3 Award Valuation at Grant. In calculating the limitations set forth in
Section 2.2, the value of each Performance Share shall be equal to the closing
price of a share of Stock on the last trading day before the Award is granted,
as published in the Wall Street Journal. Each Award is deemed to be granted on
the day that it is approved by the Committee.
2.4 Accounting and Adjustment of Awards. The number of Performance Shares
awarded to a Participant shall be recorded in a separate Account for each
Participant. The number of Performance Shares recorded in a Participant's
Account shall be adjusted to reflect any splits or other adjustments in the
Stock. If any cash dividends are paid on the Stock, the number of Performance
Shares in each Participant's Account shall be increased by a number equal to (i)
the dividend multiplied times the number of Performance Shares in each
Participant's Account, divided by (ii) the closing price of a share of Stock on
the payment date of the dividend, as published in the Wall Street Journal.
2.5 Performance Schedule and Calculation of Awards. Each Award shall become
vested on January 1 immediately following the end of the applicable Performance
Period, subject to adjustment in accordance with the following procedure:
(a) The Total Shareholder Return for the Company shall be determined
for each Year during the Performance Period, and shall then be averaged (the
"Company TSR").
(b) The average Total Shareholder Return for all Peer Group utilities
shall be determined for each Year during the Performance Period, and shall then
be averaged ( the "Peer Group TSR").
(c) The Peer Group TSR for the Performance Period shall be subtracted
from the Company TSR for the Performance Period. The remainder shall then be
used to determine the total number of vested Performance Shares using the
Performance Schedule, based on the number of Performance Shares in the
Participant's Account.
(d) The Performance Measures and the Performance Schedule will not
change during any Performance Period with regard to any Awards that have already
been granted. The Committee reserves the right to modify or adjust the
Performance Measures and/or the Performance Schedule in the Committee's sole
discretion with regard to future grants.
2.6 Payment Options. Except as provided in Section 3, Awards shall be paid after
expiration of the Performance Period. The Company will pay in cash to each
Participant the aggregate value of vested Performance Shares, which shall be
determined in accordance with Section 2.7. Payment shall be made as follows:
(a) 100% on or about April 1 of the Year immediately following
expiration of the Performance Period; or
(b) in accordance with an alternative payment election made by
Participant substantially in the form attached hereto as Attachment 3, provided
that such election is executed by the Participant and returned to the Vice
President, Human Resources Department no later than the end of the first Year of
the Performance Period. Once made, this election is irrevocable.
2.7 Valuation of Performance Shares. For the purposes of payment of under
Section 2.6, the aggregate value of vested Performance Shares shall be equal to
number of vested Performance Shares in the Participant's Account (after any
applicable adjustments under Section 2.5) multiplied times the closing price of
the Stock on the last trading day before payment of the Award, as published in
the Wall Street Journal.
Section 3. Early Vesting and Forfeiture
3.1 Normal Retirement, Early Retirement, Death, Disability, Divestiture or
Change in Control. If prior to expiration of the Performance Period the
Participant Retires, dies or becomes disabled, or in the event of a Divestiture
or a Change in Control during a Performance Period, the Participant's Award
shall immediately become vested, and the aggregate value of the Award shall be
paid in cash after being adjusted accordance with the following procedure:
(a) The Total Shareholder Return for the Company shall be determined
for each Year or partial Year, and a weighted average Total Shareholder Return
for the Company shall be calculated for the period between the first day of the
Performance Period and the date the Participant Retires, dies or becomes
Disabled, or the date of the Divestiture, or the date that the Change in Control
becomes effective (the "Prorated Company TSR").
(b) The average Total Shareholder Return for all Peer Group utilities
shall be determined for each Year or partial Year, and a weighted average Total
Shareholder Return shall be calculated for the period between the first day of
the Performance Period and the date the Participant Retires, dies or becomes
Disabled, or the date of the Divestiture, or the date that the Change in Control
becomes effective (the "Prorated Peer Group TSR").
(c) The Prorated Peer Group TSR for the Performance Period shall be
subtracted from the Prorated Company TSR for the Performance Period. The
remainder shall then be used to determine the total vested Performance Shares
using the Performance Schedule, based on the number of Performance Shares in the
Participant's Account.
(d) If the Participant Retires, the Award shall be paid in accordance
with the Participant's election as provided in Section 2.6. If the Participant
dies or becomes disabled, or in the event of a Divestiture or Change in Control,
payment shall be made in cash within a reasonable time after the Participant
dies or becomes Disabled, or within a reasonable time after the Divestiture or
Change in Control becomes effective, notwithstanding any election under Section
2.6. Payment upon death shall be made to the Participant's Designated
Beneficiary. The aggregate value of the vested Performance Shares shall be
determined in accordance with section 3.2.
3.2 Valuation of Performance Shares. For the purposes of payment of under
Section 3.1, the aggregate value of vested Performance Shares shall be equal to
the number of vested Performance Shares in the Participant's Account (after any
applicable adjustments under Section 3.1) multiplied times the closing price of
the Stock on the date that the Participant Retires, dies or becomes Disabled, or
on the date of the Divestiture or Change in Control (as applicable), as
published in the Wall Street Journal.
3.3 Termination of Employment. In the event that a Participant's employment with
the Company terminates for any reason other than Early Retirement, Normal
Retirement, death or Disability, any Award made to the Participant which has not
vested as provided in Section 2 shall be forfeited. Any vested Awards shall be
paid within a reasonable time after termination, notwithstanding any election to
defer the payment of any Award under Section 2.6.
4. Non-Assignability of Awards
The Awards and any right to receive payment under the Plan and this Sub-Plan may
not be anticipated, alienated, pledged, encumbered, or subject to any charge or
legal process, and if any attempt is made to do so, or a Participant becomes
bankrupt, then in the sole discretion of the Committee, any Award made to the
Participant which has not vested as provided in Sections 2 and 3 shall be
forfeited.
5. Amendment and Termination
This Sub-Plan shall be subject to amendment, suspension, or termination as
provided in Section 14.6 of the Plan.
32950
<PAGE>
ATTACHMENT 1
PEER GROUP LIST (1)
(TO BE ADDED LATER)
(1) Should any of the listed Peer Group utilities merge or consolidate with
another entity (other than another Peer Group utility), become bankrupt, or
reorganize, they shall be excluded from the Peer Group for the entire
Performance Period. Should any of the listed Peer Group utilities merge or
consolidate with another Peer Group utility, they shall be treated as a single
Peer Group utility for the entire Performance Period, and the Total Shareholder
Return for any period that they were two separate entities shall be the average
of the two.
<PAGE>
ATTACHMENT 2
PERFORMANCE SCHEDULE
PERFORMANCE SHARE CALCULATION (1)
If the Company TSR(2) minus Then the total vested Performance Peer Group TSR(2)
is: Share Award shall be multiplied by:
5% or better 2.00
4.0 - 4.99 1.75
3.0 - 3.99 1.50
2.0 - 2.99 1.25
1.0 - 1.99 1.00
(0.99) - 0.99 .50
(1.0) - (1.99) .25
(2.0) or less 0.00
(1) The number of Performance Shares as calculated above shall be paid in
accordance with the provisions of Section 2.5 and 2.6 of the Sub-Plan.
(2) For purposes of Section 3, the Prorated Company TSR and Prorated Peer Group
TSR shall be used, and the number of Performance Shares as calculated above
shall be paid in accordance with the provisions of Section 3.1 of the Sub-Plan.
<PAGE>
- --------------------------------------------------------------------------------
ATTACHMENT 3
- --------------------------------------------------------------------------------
Performance Share Sub-Plan
199_ Deferral Election Form
As an employee of Carolina Power & Light Company ("Company"), and a participant
in the Performance Share Sub-Plan of the 1997 Equity Incentive Plan
("Sub-Plan"), I hereby elect to defer payment of my Award otherwise payable to
me by the Company and attributable to services to be performed by me during the
Performance Period beginning on January __, 199__. This election shall apply to
[CHECK ONE]:
[ ] 100% of the Award [ ] 75% of the Award
[ ] 75% of the Award [ ] 25% of the Award
Upon vesting, I understand that my Award shall continue be recorded in my
Account as Performance Shares as described in the Sub-Plan and adjusted to
reflect the payment and reinvesting of the Company's common stock dividends over
the deferral period, until paid in full.
I hereby elect to defer receipt (or commencement of receipt) of my Award until
the date specified below, or as soon as practical thereafter [CHECK ONE]:
[ ] a specific date certain at least 5 years from expiration
of the Performance Period: 4 / 1 / *
-------------------------
(month/day/year)
[ ] the April 1 following the date of retirement
[ ] the April 1 following the first anniversary of my date of
retirement
* Notwithstanding my election above, if I elect a date certain distribution and
I retire before that date certain, I understand that the Company will commence
distribution of my account no later than the April 1 following the first
anniversary of the date of retirement, or as soon as practical thereafter, even
though said date is earlier than 5 years from expiration of the Performance
Period.
I hereby elect to be paid as described in the Sub-Plan in the form of [CHECK
ONE]:
[ ] a single payment [ ] annual payments commencing on the date
set forth above and payable on the
anniversary date thereof over:
a two year period a three year period
a four year period a five year period
I understand that I will receive "earnings" on those deferred amounts when they
are paid to me.
I understand that the election made as indicated herein is irrevocable and that
all deferral elections are subject to the provisions of the Sub-Plan, including
provisions that may affect timing of distributions.
I understand and acknowledge that my interests herein and my rights to receive
distribution of the deferred amounts may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered, or subjected to any charge or legal
process, and if any attempt is made to do so, or I become bankrupt, my interest
may be terminated by the Committee, which, in his sole discretion. I further
understand that nothing in the Sub-Plan shall be interpreted or construed to
require the Company in any manner to fund any obligation to me, or to my
beneficiary(ies) in the event of my death.
- --------------------------------------------- ----------------------------
(Signature) (Date)
- --------------------------------------------- ----------------------------
(Print Name) (Company Location)
Received:
Agent of Chief Executive Officer
- --------------------------------------------- ----------------------------
(Signature) (Date)
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM (CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF JUNE 30,
1997) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000017797
<NAME> CAROLINA POWER & LIGHT COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $6,344,120
<OTHER-PROPERTY-AND-INVEST> $381,148
<TOTAL-CURRENT-ASSETS> $647,682
<TOTAL-DEFERRED-CHARGES> $540,406
<OTHER-ASSETS> $222,331
<TOTAL-ASSETS> $8,135,687
<COMMON> $1,203,992
<CAPITAL-SURPLUS-PAID-IN> ($790)
<RETAINED-EARNINGS> $1,502,621
<TOTAL-COMMON-STOCKHOLDERS-EQ> $2,705,823
$0
$59,376
<LONG-TERM-DEBT-NET> $2,525,808
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $43,436
$84,425
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $2,716,819
<TOT-CAPITALIZATION-AND-LIAB> $8,135,687
<GROSS-OPERATING-REVENUE> $1,382,107
<INCOME-TAX-EXPENSE> $82,865
<OTHER-OPERATING-EXPENSES> $1,089,492
<TOTAL-OPERATING-EXPENSES> $1,172,357
<OPERATING-INCOME-LOSS> $209,750
<OTHER-INCOME-NET> $15,451
<INCOME-BEFORE-INTEREST-EXPEN> $225,201
<TOTAL-INTEREST-EXPENSE> $88,650
<NET-INCOME> $136,551
$3,143
<EARNINGS-AVAILABLE-FOR-COMM> $133,408
<COMMON-STOCK-DIVIDENDS> $134,445
<TOTAL-INTEREST-ON-BONDS> $81,148
<CASH-FLOW-OPERATIONS> $449,369
<EPS-PRIMARY> $0.93
<EPS-DILUTED> $0.93
</TABLE>
