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Exhibit 1
NORTH CAROLINA NATURAL GAS CORPORATION
[Title of Debt Security]
UNDERWRITING AGREEMENT
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___________, ____
To the Representative named in Schedule I hereto
of the Underwriters named in Schedule II hereto
Dear Sirs:
The undersigned North Carolina Natural Gas Corporation (the "Company") hereby
confirms its agreement with each of the several Underwriters hereinafter named
as follows:
1. Underwriters and Representative. The term "Underwriters" as used herein
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shall be deemed to mean the firm or corporation or the several firms or
corporations named in Schedule II hereto and any underwriter substituted as
provided in paragraph 6, and the term "Underwriter" shall be deemed to mean one
of such Underwriters. If the firm or firms listed in Schedule I hereto (the
"Representative") are the same as the firm or firms listed in Schedule II
hereto, then the terms "Underwriters" and "Representative," as used herein,
shall each be deemed to refer to such firm or firms. The Representative
represents that it has been authorized by the Underwriters to execute this
Agreement on their behalf and to act for them in the manner herein provided.
All obligations of the Underwriters hereunder are several and not joint. If
more than one firm is named in Schedule I hereto, any action under or in respect
of this Agreement may be taken by such firms jointly as the Representative or by
one of the firms acting on behalf of the Representative, and such action will be
binding upon all the Underwriters.
2. Description of Securities. The Company proposes to issue and sell its
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debt securities of the designation, with the terms and in the amount specified
in Schedule I hereto (the "Securities") in one or more new series under a
governing indenture (the "Indenture") between the Company and
______________________, as trustee (the "Trustee"), in substantially the form
heretofore delivered to the Representative.
3. Representations and Warranties of the Company. The Company represents and
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warrants to each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-3 (No. 333-_______)
(the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), for the registration of up to an aggregate of
$300,000,000 of the Company's debt securities (the "Registered Securities")
as described in the Registration Statement. As of the date hereof, the
Company has sold Registered Securities in the aggregate amount of
$_____________. The
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Registration Statement has been declared effective by the Commission, and
the Indenture has been qualified under the Trust Indenture Act of 1939 Act,
as amended (the "1939 Act"). The term "Registration Statement" shall be
deemed to include all amendments thereto to the date hereof and all
documents incorporated by reference therein (the "Incorporated Documents").
The prospectus included in the Registration Statement, as it is to be
supplemented by a prospectus supplement, dated on or about the date hereof,
relating to the Securities (the "Prospectus Supplement"), and all prior
amendments or supplements thereto (other than amendments or supplements
relating to securities of the Company other than the Securities), including
the Incorporated Documents, is hereinafter referred to as the "Prospectus."
Any reference herein to the terms "amend, " "amendment" or "supplement"
with respect to the Registration Statement or the Prospectus shall be
deemed to refer to and include the filing of any document under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), deemed to
be incorporated therein after the date hereof and prior to the termination
of the offering of the Securities by the Underwriters; and any references
herein to the terms "Registration Statement" or "Prospectus" at a date
after the filing of the Prospectus Supplement shall be deemed to refer to
the Registration Statement or the Prospectus, as the case may be, as each
may be amended or supplemented prior to such date.
(b) Prior to the termination of the offering of the Securities, the
Company will not file any amendment to the Registration Statement or
supplement to the Prospectus which shall not have previously been furnished
to the Representative or of which the Representative shall not previously
have been advised or to which the Representative shall reasonably object in
writing and which has not been approved by the Underwriter(s) or their
counsel acting on behalf of the Underwriters.
(c) The Registration Statement, at the time and date it was declared
effective by the Commission, complied, and the Registration Statement, the
Prospectus and the Indenture, at the date the Prospectus is filed with, or
transmitted for filing to, the Commission pursuant to Rule 424 under the
Securities Act ("Rule 424") and at the Closing Date, will comply, in all
material respects, with the applicable provisions of the Securities Act and
the 1939 Act and the applicable rules and regulations of the Commission
thereunder; the Registration Statement, at the time and date it was
declared effective by the Commission, did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Prospectus, at the date it is filed with, or transmitted for filing to, the
Commission pursuant to Rule 424 and at the Closing Date, will not contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the foregoing representations and warranties in this
subparagraph (c) shall not apply to statements or omissions made in
reliance upon and in conformity with information furnished herein or in
writing to the Company by the Representative or by or on behalf of any
Underwriter through the Representative expressly for use in the Prospectus
or to any statements in or omissions from the Statement of Eligibility
(Forms T-1) of the Trustee under any Indenture. The Incorporated Documents,
when they were filed with the Commission, complied in all material respects
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder; and any documents so filed and
incorporated by reference subsequent to the date hereof and prior to the
termination of the offering of the Securities by the Underwriters will,
when they are filed with the Commission, comply in all material respects
with the requirements of the Exchange Act and the rules and regulations of
the Commission thereunder; and, when read together with the
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Registration Statement and the Prospectus, none of such documents included
or includes or will include any untrue statement of a material fact or
omitted or omits or will omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(d) The financial statements incorporated by reference in the
Registration Statement present fairly the financial condition and
operations of the Company at the respective dates or for the respective
periods to which they apply; such financial statements have been prepared
in each case in accordance with generally accepted accounting principles
consistently applied throughout the periods involved; and ______________,
who have audited certain of the financial statements, are independent
public or independent certified public accountants as required by the
Securities Act or the Exchange Act and the rules and regulations of the
Commission thereunder.
(e) Except as reflected in, or contemplated by, the Registration
Statement and the Prospectus, since the respective dates as of which
information is given in the Registration Statement and Prospectus, and
prior to the Closing Date, there has not been any material adverse change
in the financial condition, earnings, business affairs or business
prospects of the Company; and since such dates and prior to the Closing
Date, there has not been any material transaction entered into by the
Company other than transactions contemplated by the Registration Statement
and Prospectus or transactions arising in the ordinary course of business.
The Company has no material contingent obligation that is not disclosed in
the Registration Statement and Prospectus.
(f) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof on the part of the Company to be fulfilled
have been duly authorized by all necessary corporate action of the Company
in accordance with the provisions of its charter (the "Charter"), by-laws
and applicable law.
(g) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not result in a breach of any of the
terms or provisions of, or constitute a default under, the Charter, the
Company's by-laws, applicable law or any indenture, mortgage, deed of trust
or other agreement or instrument to which the Company is now a party or any
judgment, order, writ or decree of any government or governmental authority
or agency or court having jurisdiction over the Company or any of its
subsidiaries or any of their assets, properties or operations.
(h) The Securities conform in all material respects to the description
contained in the Prospectus.
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and
to conduct its business as contemplated under this Underwriting Agreement
and the other agreements to which it is a party, and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the financial condition, earnings, business affairs or
business prospects of the Company and its subsidiaries considered as a
whole.
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(j) The outstanding capital stock of the Company has been duly
authorized and validly issued and is fully paid and non-assessable and is
not subject to preemptive or other similar rights.
(k) The Company does not have any significant subsidiaries as defined
in Rule 1-02 of Regulation S-X promulgated under the Securities Act.
(l) The Indenture (A) has been duly authorized, executed and delivered
by the Company, and, assuming due authorization, execution and delivery by
the Trustee, constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms,
subject to (i) applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or similar laws affecting creditor's rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity and except
the effect on enforceability of federal or state law limiting, delaying or
prohibiting the making of payments outside the United States); and (B)
conforms in all material respects to the description thereof in the
Prospectus.
(m) The Securities have been duly authorized by the Company and, when
issued and authenticated in the manner provided for in the Indenture and
delivered against payment of the required consideration therefor, will
constitute valid and legally binding obligations of the Company, entitled
to the benefits of the Indenture enforceable against the Company in
accordance with its terms, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transferor or similar
laws affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity and except the effect on enforceability of
federal or state law limiting, delaying or prohibiting the making of
payments outside the United States). Such Securities rank and will rank on
a parity with all unsecured and unsubordinated indebtedness of the Company
that is outstanding on the date hereof.
(n) Neither the Company nor any of its subsidiaries is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "1940 Act").
(o) Except as described in or contemplated by the Prospectus, there
are no pending actions, suits or proceedings against or affecting the
Company or any of its subsidiaries or properties which are likely in the
aggregate, to result in any material adverse change in the financial
condition, earnings, business affairs, or business prospects of the Company
and its subsidiaries considered as a whole or which are likely in the
aggregate to materially and adversely affect the consummation of this
Agreement or the transactions contemplated herein or therein.
(p) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the
Company of its obligations hereunder in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions herein contemplated or for the due execution, delivery or
performance of the Indenture by the Company, except such as have been
already obtained or as may be required under the Securities Act or state
securities laws and except for the qualification of the Indenture under the
1939 Act.
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4. Purchase and Sale. On the basis of the representations, warranties and
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covenants herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each of the Underwriters, severally and not
jointly, and each such Underwriter agrees, severally and not jointly, to
purchase from the Company, the respective principal amount of Securities set
forth opposite the name of such Underwriter in Schedule II hereto at the
purchase price set forth in Schedule I hereto.
5. Reoffering by Underwriters. The Underwriters agree to make promptly a
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bona fide public offering of the Securities to the public for sale as set forth
in the Prospectus, subject, however, to the terms and conditions of this
Agreement.
6. Time and Place of Closing; Default of Underwriters.
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(a) Payment for the Securities shall be made at the place, time and
date specified in Schedule I hereto against delivery of the Securities at
the office of ________________ [name and address of the Trustee], or such
other place, time and date as the Representative and the Company may agree.
The hour and date of such delivery and payment are herein called the
"Closing Date." Payment for the Securities shall be by wire transfer of
immediately available funds against delivery to The Depository Trust
Company or to _________________, as custodian for The Depository Trust
Company, in fully registered global form registered in the name of Cede &
Co., for the respective accounts specified by the Representative not later
than the close of business on the business day prior to the Closing Date or
such other date and time not later than the Closing Date as agreed by The
Depository Trust Company or _____________________. For the purpose of
expediting the checking of the certificates by the Representative, the
Company agrees to make the Securities available to the Representative not
later than 10:00 A.M., on the last full business day prior to the Closing
Date at said office of ________________ [the Trustee].
(b) If one or more of the Underwriters shall, for any reason permitted
hereunder, cancel its obligation to purchase hereunder and to take up and
pay for the principal amount of the Securities to be purchased by such one
or more Underwriters, the Company shall immediately notify the
Representative, and the remaining Underwriters shall have the right, within
24 hours of receipt of such notice, either to take up and pay for (in such
proportion as may be agreed upon among them) or to substitute another
Underwriter or Underwriters, satisfactory to the Company, to take up and
pay for the principal amount of the Securities which such one or more
Underwriters did not purchase. If one or more Underwriters shall, for any
reason other than a reason permitted hereunder, fail to take up and pay for
the principal amount of the Securities to be purchased by such one or more
Underwriters, the Company shall immediately notify the Representative, and
the remaining Underwriters shall be obligated to take up and pay for (in
addition to the respective principal amount of the Securities set forth
opposite their respective names in Schedule II hereto) the principal amount
of the Securities which such defaulting Underwriter or Underwriters failed
to take up and pay for, up to a principal amount thereof equal to, in the
case of each such remaining Underwriter, 10% of the principal amount of the
Securities set forth opposite the name of such remaining Underwriter in
said Schedule II, and such remaining Underwriters shall have the right,
within 24 hours of receipt of such notice, either to take up and pay for
(in such proportion as may be agreed upon among them), or to substitute
another Underwriter or Underwriters, satisfactory to the Company, to take
up and pay for, the remaining principal amount of the Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If
any unpurchased Securities still remain, then the Company or the
Representative shall be entitled to an additional period of 24 hours within
which to procure
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another party or parties, members of the National Association of Securities
Dealers, Inc. (or if not members of such Association, who are not eligible
for membership in said Association and who agree (i) to make no sales
within the United States, its territories or its possessions or to persons
who are citizens thereof or residents therein and (ii) in making sales to
comply with said Association's Rules of Fair Practice) and satisfactory to
the Company, to purchase or agree to purchase such unpurchased Securities
on the terms herein set forth. In any such case either the Representative
or the Company shall have the right to postpone the Closing Date for a
period not to exceed three full business days from the date agreed upon in
accordance with this paragraph 6, in order that the necessary changes in
the Registration Statement and Prospectus and any other documents and
arrangements may be effected. If (i) neither the non-defaulting
Underwriters nor the Company has arranged for the purchase of such
unpurchased Securities by another party or parties as above provided and
(ii) the Company and the non-defaulting Underwriters have not mutually
agreed to offer and sell the Securities other than the unpurchased
Securities, then this Agreement shall terminate without any liability on
the part of the Company or any Underwriter (other than an Underwriter which
shall have failed or refused, in accordance with the terms hereof, to
purchase and pay for the principal amount of the Securities which such
Underwriter has agreed to purchase as provided in paragraph 4 hereof),
except as otherwise provided in paragraph 7 and paragraph 8 hereof.
7. Covenants of the Company. The Company covenants with each Underwriter
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that:
(a) As soon as possible after the execution and delivery of this
Agreement, the Company will file the Prospectus with the Commission
pursuant to Rule 424, setting forth, among other things, the necessary
information with respect to the terms of offering of the Securities. The
Company will promptly deliver to the Representative and to counsel for the
Underwriters, to the extent not previously delivered, one fully executed
copy or one conformed copy, certified by an officer of the Company, of the
Registration Statement, as originally filed, and of all amendments thereto,
heretofore or hereafter made, (other than those relating solely to
securities other than the Securities), including any post-effective
amendment (in each case including all exhibits filed therewith and all
documents incorporated therein not previously furnished to the
Representative), including signed copies of each consent and certificate
included therein or filed as an exhibit thereto, and will deliver to the
Representative for distribution to the Underwriters as many conformed
copies of the foregoing (excluding the exhibits, but including all
documents incorporated therein) as the Representative may reasonably
request. The Company will also send to the Underwriters as soon as
practicable after the date of this Agreement and thereafter from time to
time as many copies of the Prospectus as the Representative may reasonably
request for the purposes required by the Securities Act.
(b) During such period (not exceeding nine months) after the
commencement of the offering of the Securities as the Underwriters may be
required by law to deliver a Prospectus, if any event relating to or
affecting the Company, or of which the Company shall be advised in writing
by the Representative shall occur, which in the Company's opinion should be
set forth in a supplement to or an amendment of the Prospectus in order to
make the Prospectus not misleading in the light of the circumstances when
it is delivered to a purchaser, or if it is necessary to amend the
Prospectus to comply with the Securities Act, the Company will forthwith at
its expense prepare and furnish to the Underwriters and dealers named by
the Representative a reasonable number of copies of a supplement or
supplements or an amendment or amendments to the Prospectus which will
supplement or amend the Prospectus so that as supplemented or amended it
will comply with the Securities Act and will not contain any untrue
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statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading. In case
any Underwriter is required to deliver a Prospectus after the expiration of
nine months after the commencement of the offering of the Securities, the
Company, upon the request of the Representative, will furnish to the
Representative, at the expense of such Underwriter, a reasonable quantity
of a supplemented or amended prospectus, or supplements or amendments to
the Prospectus, complying with Section 10(a) of the Securities Act.
(c) The Company will make generally available to its security holders,
as soon as reasonably practicable, but in any event not later than 16
months after the end of the fiscal quarter in which the filing of the
Prospectus pursuant to Rule 424 occurs, an earning statement (in form
complying with the provisions of Section 11(a) of the Securities Act, which
need not be certified by independent public accountants) covering a period
of twelve months beginning not later than the first day of the Company's
fiscal quarter next following the filing of the Prospectus pursuant to Rule
424.
(d) The Company will use its best efforts promptly to do and perform
all things to be done and performed by it hereunder prior to the Closing
Date and to satisfy all conditions precedent to the delivery by it of the
Securities.
(e) The Company will advise the Representative promptly of the filing
of the Prospectus pursuant to Rule 424 and of any amendment or supplement
to the Prospectus or Registration Statement or of official notice of
institution of proceedings for, or the entry of, a stop order suspending
the effectiveness of the Registration Statement and, if such a stop order
should be entered, use its best efforts to obtain the prompt removal
thereof.
(f) The Company will use its best efforts to qualify the Securities,
as may be required, for offer and sale under the Blue Sky or legal
investment laws of such jurisdictions as the Representative may designate,
and will file and make in each year such statements or reports as are or
may be reasonably required by the laws of such jurisdictions; provided,
however, that the Company shall not be required to qualify as a foreign
corporation or dealer in securities, or to file any general consents to
service of process under the laws of any jurisdiction.
8. Payment of Expenses. The Company will pay all expenses incident to the
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performance of its obligations under this Agreement, including (i) the printing
and filing of the Registration Statement and the printing of this Agreement,
(ii) the delivery of the Securities to the Underwriters, (iii) the fees and
disbursements of the Company's counsel and accountants, (iv) the expenses in
connection with the qualification of the Securities under securities laws in
accordance with the provisions of paragraph 7(f), including filing fees and the
fees and disbursements of counsel for the Underwriters in connection therewith,
and in connection with the preparation of the Blue Sky Survey and any Legality
Memorandum, such fees and disbursements not to exceed $5,000, (v) the printing
and delivery to the Underwriters of copies of the Registration Statement and all
amendments thereto, of the preliminary prospectuses, and of the Prospectus and
any amendments or supplements thereto, (vi) the printing and delivery to the
Underwriters of copies of the Blue Sky Survey and Legality Memorandum, and (vii)
the preparation, execution, filing and recording by the Company of the Indenture
(such filing and recordation to be promptly made, after execution and delivery
of such Indenture to the Trustee under the Indenture in the counties in which
the mortgaged property of the Company is located); and the Company will pay all
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taxes, if any (but not including any transfer taxes), on the issue of the
Securities and the filing and recordation of the Indenture.
The fees and disbursements of Underwriters' counsel shall be paid by the
Underwriters (subject, however, to the provisions of the preceding paragraph
requiring payment by the Company of fees and expenses not to exceed $5,000);
provided, however, that if this Agreement is terminated in accordance with the
provisions of paragraph 9, 10 or 12, the Company shall reimburse the
Representative for the account of the Underwriters for the fees and
disbursements of Underwriters' counsel. The Company shall not be required to
pay any amount for any expenses of the Representative or of any other of the
Underwriters except as provided in paragraph 7 and in this paragraph 8. The
Company shall not in any event be liable to any of the Underwriters for damages
on account of the loss of anticipated profit.
9. Conditions of Underwriters' Obligations. The several obligations of the
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Underwriters to purchase and pay for the Securities shall be subject to the
accuracy of the representations and warranties on the part of the Company as of
the date hereof and the Closing Date, to the performance by the Company of its
obligations to be performed hereunder prior to the Closing Date, and to the
following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall be in effect on the Closing Date; no proceedings for that
purpose shall be pending before, or, to the Company's knowledge, threatened
by, the Commission on the Closing Date; and the Representative shall have
received, prior to payment for the Securities, a certificate dated the
Closing Date and signed by the Chairman, President or a Vice President of
the Company to the effect that no such stop order is in effect and that no
proceedings for such purpose are pending before or, to the knowledge of the
Company, threatened by the Commission.
(b) At the time of execution of this Agreement, or such later date as
shall have been consented to by the Representative, there shall have been
issued and on the Closing Date there shall be in full force and effect
orders of the North Carolina Utilities Commission authorizing the issuance
and sale of the Securities, none of which shall contain any provision
unacceptable to the Representative by reason of its being materially
adverse to the Company (it being understood that no such order in effect on
the date of this Agreement and heretofore furnished to the Representative
or counsel for the Underwriters, contains any such unacceptable provision).
(c) At the Closing Date, the Representative shall receive favorable
opinions from: (1) Hunton & Williams, of counsel to the Company, which
opinion shall be satisfactory in form and substance to counsel for the
Underwriters, and (2) counsel for the Underwriters (which counsel may rely
as to all matters of North Carolina law upon the opinions of William D.
Johnson, Esq., counsel to and Secretary for the Company) to the effect
that:
(i) the Indenture has been duly and validly authorized by all
necessary corporate action, has been duly and validly executed and
delivered, and is a valid and legally binding obligation of the
Company enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws affecting the rights of
mortgagees and other creditors, and by general equitable principles
and any implied covenant of good faith and fair dealings;
(ii) the Indenture has been duly qualified under the 1939 Act;
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(iii) assuming authentication by the Trustee in accordance with
the Indenture and delivery to and payment for the Securities by the
Underwriters, as provided in this Agreement, the Securities have been
duly and validly authorized, executed and delivered and are legal,
valid and binding obligations of the Company enforceable in accordance
with their terms, except as limited by bankruptcy, insolvency or other
laws affecting the rights of mortgagees and other creditors, and by
general equitable principles and any implied covenant of good faith
and fair dealings, and are entitled to the benefits of the Indenture;
(iv) the statements made in the Prospectus under the caption
"Description of Debt Securities" and in the Prospectus Supplement
under the caption "Description of the Notes," insofar as they purport
to constitute summaries of the documents referred to therein, are
correct in all material respects;
(v) this Agreement has been duly and validly authorized,
executed and delivered by the Company;
(vi) the Registration Statement, at the time and date it was
declared effective by the Commission, and the Prospectus, at the time
it was filed with, or transmitted for filing to, the Commission
pursuant to Rule 424, (except as to the financial statements and other
financial and statistical data constituting a part thereof or
incorporated by reference therein, upon which such opinions need not
pass), complied as to form in all material respects with the
requirements of the Securities Act and the 1939 Act and the applicable
instructions, rules and regulations of the Commission thereunder; the
documents or portions thereof filed with the Commission pursuant to
the Exchange Act and deemed to be incorporated by reference in the
Registration Statement and the Prospectus pursuant to Item 12 of Form
S-3 (except as to financial statements and other financial and
statistical data constituting a part thereof or incorporated by
reference therein, upon which such opinions need not pass), at the
time they were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act and the
applicable instructions, rules and regulations of the Commission
thereunder; the Registration Statement has become effective under the
Securities Act and, to the best of the knowledge of said counsel, no
stop order suspending the effectiveness of the Registration Statement
has been issued and not withdrawn and no proceedings for a stop order
with respect thereto are threatened or pending under Section 8 of the
Securities Act;
(vii) nothing has come to the attention of said counsel that
would lead them to believe that the Registration Statement, at the
time and date it was declared effective by the Commission, contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, at the time it was
filed with, or transmitted for filing to, the Commission pursuant to
Rule 424 or at the Closing Date, included or includes an untrue
statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading
(except as to financial statements and other financial and statistical
data constituting a part of the Registration Statement or the
Prospectus or incorporated by reference therein, upon which such
opinions need not pass); and
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(viii) orders have been entered by the North Carolina Utilities
Commission authorizing the issuance and sale of the Securities; to the
best of the knowledge of said counsel, said orders are still in force
and effect; and no further filing with, approval, authorization,
consent or other order of, any public board or body (except such as
have been obtained under the Securities Act and as may be required
under the state securities or Blue Sky laws of any jurisdiction) is
legally required for the consummation of the transactions contemplated
in this Agreement.
(d) At the Closing Date, the Representative shall receive from William
D. Johnson, Esq., counsel to and Secretary for the Company, a favorable
opinion in form and substance satisfactory to counsel for the Underwriters,
to the same effect with respect to the matters enumerated in subdivisions
(i) through (v) and subdivisions (vii) and (viii) of subparagraph (c) of
this paragraph 9 as the opinions required by said subparagraph (c), and to
the further effect that:
(i) the Company is a validly organized and existing corporation
and is in good standing under the laws of the State of Delaware and is
duly qualified to do business and is doing business in the State of
North Carolina;
(ii) the Company is duly authorized by its Charter to conduct
the business which it is now conducting as set forth in the
Prospectus;
(iii) the issuance and sale of the Securities have been duly
authorized by all necessary corporate action on the part of the
Company;
(iv) except as described in or contemplated by the Prospectus,
there are no pending actions, suits or proceedings against or
affecting the Company or any of its subsidiaries or properties which
are likely in the aggregate, to result in any material adverse change
in the business, property, financial condition, earnings, business
affairs, or business prospects of the Company and its subsidiaries
considered as a whole or which are likely in the aggregate, to
materially and adversely affect the consummation of this Agreement or
the transactions contemplated herein or therein; and
(v) the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof will not result in a breach of any
of the terms or provisions of, or constitute a default under, the
Charter, the Company's by-laws, applicable law or any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company is now a party or any judgment, order, writ or decree of any
government or governmental authority or agency or court having
jurisdiction over the Company or any of its subsidiaries or any of
their assets, properties or operations.
(e) At the Closing Date, the Representative shall have received from
______________ a letter, dated the Closing Date, confirming that they are
independent certified public accountants within the meaning of the
Securities Act and the Exchange Act, and of the applicable published rules
and regulations thereunder, and stating in effect that: (i) in their
opinion, the audited financial statements incorporated by reference in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Securities Act or the Exchange
Act, as applicable, and of the published rules and regulations thereunder;
(ii) based on the performance of the procedures specified by the American
Institute of Certified Public Accountants for review of interim financial
information as described in
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Statement on Auditing Standards ("SAS") No. 71, Interim Financial
-----------------
Information, on the unaudited financial statements incorporated by
-----------
reference in the Registration Statement, inquiries of officials of the
Company responsible for financial and accounting matters and reading the
minutes of meetings of the Board of Directors, of the Executive Committee
of the Board of Directors and of the shareholders, nothing came to their
attention that caused them to believe that (A) the unaudited financial
statements incorporated by reference in the Registration Statement do not
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act or the Exchange Act, as applicable, and
the published rules and regulations thereunder or any material
modifications should be made for them to be in conformity with generally
accepted accounting principles applied on a basis substantially consistent
with that of the most recent audited financial statements incorporated by
reference in the Registration Statement; or (B) at the date of the latest
available interim balance sheet read by them and at a subsequent date not
more than three days prior to the date of the letter, there was any change
in the capital stock or long-term debt of the Company, or at the date of
the latest available interim balance sheet read by them, there was any
decrease in net assets as compared with the amount shown on the most recent
balance sheet incorporated by reference in the Registration Statement,
except for changes or decreases that the Registration Statement discloses
have occurred or may occur, for declarations of dividends, for common stock
sales under _________________ [employee benefit plans], or for changes or
decreases that are described in the letter; and (iii) covering such other
matters as the Representative shall reasonably request.
(f) At the Closing Date, the Representative shall receive a
certificate of the Chairman, President or a Vice President of the Company,
dated the Closing Date, to the effect that the representations and
warranties of the Company in this Agreement are true and correct as of the
Closing Date.
(g) All legal proceedings taken in connection with the sale and
delivery of the Securities shall have been satisfactory in form and
substance to counsel for the Underwriters.
In case any of the conditions specified above in this paragraph 9 shall not
have been fulfilled or waived by 2:00 P.M. on the Closing Date, this Agreement
may be terminated by the Representative by delivering written notice thereof to
the Company. Any such termination shall be without liability of any party to
any other party except as otherwise provided in paragraphs 7 and 8.
10. Conditions of the Company's Obligations. The obligations of the Company
---------------------------------------
to deliver the Securities shall be subject to the following conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall be in effect on the Closing Date, and no proceedings for
that purpose shall be pending before or threatened by the Commission on the
Closing Date.
(b) Prior to 12:00 Noon, New York Time, on the day following the date
of this Agreement, or such later date as shall have been consented to by
the Company, there shall have been issued and on the Closing Date there
shall be in full force and effect orders of the North Carolina Utilities
Commission authorizing the issuance and sale by the Company of the
Securities, none of which shall contain any provision unacceptable to the
Company by reason of its being materially adverse to the Company (it being
understood that no such order in effect as of the date of this Agreement
contains any such unacceptable provision).
11
<PAGE>
In case any of the conditions specified in this paragraph 10 shall not have
been fulfilled at the Closing Date, this Agreement may be terminated by the
Company by mailing or delivering written notice thereof to the Representative.
Any such termination shall be without liability of any party to any other party
except as otherwise provided in paragraphs 7 and 8.
11. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person who controls any Underwriter within the meaning of Section
15 of the Securities Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Securities Act or under any other statute or common law
and to reimburse each such Underwriter and each such controlling person for
any legal or other expenses (including to the extent hereinafter provided,
reasonable counsel fees) incurred by them, when and as incurred, in
connection with investigating any such losses, claims, damages or
liabilities or in connection with defending any actions, insofar as such
losses, claims, damages, liabilities, expenses or actions arise out of or
are based upon any untrue statement, or alleged untrue statement, of a
material fact contained in the Registration Statement, any preliminary
prospectus or the Prospectus, or in the Registration Statement or
Prospectus as amended or supplemented (if any amendments or supplements
thereto shall have been furnished), or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that the
indemnity agreement contained in this paragraph 11 shall not apply to any
such losses, claims, damages, liabilities, expenses or actions arising out
of, or based upon any such untrue statement or alleged untrue statement, or
any such omission or alleged omission, if such statement or omission was
made in reliance upon and in conformity with information furnished herein
or in writing to the Company by any Underwriter through the Representative
for use in the Registration Statement, any preliminary prospectus or the
Prospectus, or any amendment or supplement to either thereof, or arising
out of, or based upon, statements in or omissions from that part of the
Registration Statement which shall constitute the Statement of Eligibility
under the 1939 Act (Forms T-1) of the Trustee under the Indenture, and
provided, further, that the indemnity agreement contained in this paragraph
11 shall not inure to the benefit of any Underwriter (or of any person
controlling such Underwriter) on account of any such losses, claims,
damages, liabilities, expenses or actions arising from the sale of the
Securities to any person if a copy of the Prospectus (excluding documents
incorporated by reference therein) shall not have been given or sent to
such person by or on behalf of such Underwriter with or prior to the
written confirmation of the sale involved, unless such Prospectus failed to
correct the omission or misstatement. The indemnity agreement of the
Company contained in this paragraph 11 and the representations and
warranties of the Company contained in paragraph 3 hereof shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any Underwriter or any such controlling person and shall
survive the delivery of the Securities. The Underwriters agree to notify
promptly the Company, and each other Underwriter, of the commencement of
any litigation or proceedings against them or any of them, or any such
controlling person, in connection with the sale of the Securities.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, its officers and directors, and each person
who controls the Company within the meaning of Section 15 of the Securities
Act, against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the
Securities Act or under any other statute or common law, and to reimburse
each of them for
12
<PAGE>
any legal or other expenses (including, to the extent hereinafter provided,
reasonable counsel fees) incurred by them, when and as incurred, in
connection with investigating any such losses, claims, damages, or
liabilities, or in connection with defending any actions, insofar as such
losses, claims, damages, liabilities, expenses or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus or the Prospectus as amended or supplemented (if any amendments
or supplements thereto shall have been furnished), or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, if such
statement or omission was made in reliance upon and in conformity with
information furnished herein or in writing to the Company by such
Underwriter or through the Representative on behalf of such Underwriter for
use in the Registration Statement, any preliminary prospectus or the
Prospectus or any amendment or supplement to either thereof. The indemnity
agreement of all the respective Underwriters contained in this paragraph 11
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company or any other Underwriter,
or any such controlling person, and shall survive the delivery of the
Securities. The Company agrees promptly to notify the Representative of the
commencement of any litigation or proceedings against the Company or any of
its officers or directors, or any such controlling person, in connection
with the sale of the Securities.
(c) The Company and each of the Underwriters agree that, upon the
receipt of notice of the commencement of any action against it, its
officers and directors, or any person controlling it as aforesaid, in
respect of which indemnity may be sought on account of any indemnity
agreement contained herein, it will promptly give written notice of the
commencement thereof to the party or parties against whom indemnity shall
be sought hereunder. The Company and each of the Underwriters agree that
the notification required by the preceding sentence shall be a material
term of this Agreement. The omission so to notify such indemnifying party
or parties of any such action shall relieve such indemnifying party or
parties from any liability which it or they may have to the indemnified
party on account of any indemnity agreement contained herein if such
indemnifying party was materially prejudiced by such omission, but shall
not relieve such indemnifying party or parties from any liability which it
or they may have to the indemnified party otherwise than on account of such
indemnity agreement. In case such notice of any such action shall be so
given, such indemnifying party shall be entitled to participate at its own
expense in the defense or, if it so elects, to assume (in conjunction with
any other indemnifying parties) the defense of such action, in which event
such defense shall be conducted by counsel chosen by such indemnifying
party (or parties) and satisfactory to the indemnified party or parties who
shall be defendant or defendants in such action, and such defendant or
defendants shall bear the fees and expenses of any additional counsel
retained by them; but if the indemnifying party shall elect not to assume
the defense of such action, such indemnifying parties will reimburse such
indemnified party or parties for the reasonable fees and expenses of any
counsel retained by them, as such expenses are incurred; provided, however,
if the defendants (including any impleaded parties) in any such action
include both the indemnified party and the indemnifying party, and counsel
for the indemnified party shall have concluded, in its reasonable judgment,
that there may be a conflict of interest involved in the representation by
such counsel of both the indemnifying party and the indemnified party, the
indemnified party or parties shall have the right to select separate
counsel, satisfactory to the indemnifying party, to participate in the
defense of such action on behalf of such indemnified party or parties (it
being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel representing the
indemnified parties who are parties to such action).
13
<PAGE>
(d) If the indemnification provided for in subparagraphs (a) or (b)
above is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Underwriters, on the other hand, from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
on the one hand, and of the Underwriters, on the other hand, in connection
with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on
the one hand, and the Underwriters, on the other hand, in connection with
the offering of the Securities pursuant to this Agreement shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the total underwriting discount
received by the Underwriters, in each case as set forth on the cover of the
Prospectus, bear to the aggregate initial public offering price of the
Securities as set forth on such cover. The relative fault of the Company,
on the one hand, and the Underwriters, on the other hand, shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the Company or
by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this paragraph (d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this paragraph (d). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each
person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this paragraph (d) are
several in proportion to the number of Securities set forth opposite their
respective names in Schedule II hereto and not joint.
(e) For purposes of this paragraph 11, it is understood and agreed
that the only information provided by the Underwriters for inclusion in the
Registration Statement and the Prospectus was as follows:
________________________________________________.
12. Termination Date of this Agreement. This Agreement may be terminated by
----------------------------------
the Representative at any time prior to the Closing Date by delivering written
notice thereof to the Company, if on or after the date of this Agreement but
prior to such time (a) there shall have occurred any general suspension of
trading in securities on the New York Stock Exchange, or there shall have been
established
14
<PAGE>
by the New York Stock Exchange or by the Commission or by any federal or state
agency or by the decision of any court any limitation on prices for such trading
or any restrictions on the distribution of securities, or (b) there shall have
occurred any new outbreak of hostilities, including, but not limited to, an
escalation of hostilities which existed prior to the date of this Agreement or
any national or international calamity or crisis, the effect of which on the
financial markets of the United States shall be such as to make it
impracticable, in the reasonable judgment of the Representative, for the
Underwriters to enforce contracts for the sale of the Securities, or (c) the
Company shall have sustained a substantial loss by fire, flood, accident or
other calamity which renders it impracticable, in the reasonable judgment of the
Representative, to consummate the sale of the Securities and the delivery of the
Securities by the several Underwriters at the initial public offering price or
(d) there shall have been any downgrading or any notice of any intended or
potential downgrading in the rating accorded the Company's securities by any
"nationally recognized statistical rating organization" as that term is defined
by the Commission for the purposes of Securities Act Rule 436(g)(2), or any such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of the Securities or any
of the Company's other outstanding debt, the effect of which, in the reasonable
judgment of the Representative, makes it impracticable or inadvisable to
consummate the sale of the Securities and the delivery of the Securities by the
several Underwriters at the initial public offering price. This Agreement may
also be terminated at any time prior to the Closing Date if in the reasonable
judgment of the Representative the subject matter of any amendment or supplement
to the Registration Statement or Prospectus (other than an amendment or
supplement relating solely to the activity of any Underwriter or Underwriters)
filed after the execution of this Agreement shall have materially impaired the
marketability of the Securities. Any termination hereof pursuant to this
paragraph 12 shall be without liability of any party to any other party except
as otherwise provided in paragraphs 7 and 8.
13. Miscellaneous. The validity and interpretation of this Agreement shall
-------------
be governed by the laws of the State of New York. Unless otherwise specified,
time of day refers to New York City time. This Agreement shall inure to the
benefit of, and be binding upon, the Company, the several Underwriters, and with
respect to the provisions of paragraph 11, the officers and directors and each
controlling person referred to in paragraph 11, and their respective successors.
Nothing in this Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. The term
"successors" as used in this Agreement shall not include any purchaser, as such
purchaser, of any of the Securities from any of the several Underwriters.
14. Notices. All communications hereunder shall be in writing or by telefax
-------
and, if to the Underwriters, shall be mailed, transmitted by any standard form
of telecommunication or delivered to the Representative at the address set forth
in Schedule I hereto and if to the Company, shall be mailed or delivered to it
at 411 Fayetteville Street, Raleigh, North Carolina 27601-1748, attention of
___________________.
15. Counterparts. This Agreement may be simultaneously executed in
------------
counterparts, each of which when so executed shall be deemed to be an original.
Such counterparts shall together constitute one and the same instrument.
16. Defined Terms. Unless otherwise defined herein, capitalized terms used
-------------
in this Underwriting Agreement shall have the meanings assigned to them in the
Registration Statement.
15
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed duplicate hereof whereupon it
will become a binding agreement between the Company and the several Underwriters
in accordance with its terms.
Very truly yours,
NORTH CAROLINA NATURAL GAS CORPORATION
By :
------------------------------------
Authorized Representative
Accepted as of the date first
above written, as Underwriter
named in, and as the Representative
of the other Underwriters named in, Schedule II.
[NAME OF REPRESENTATIVE]
By
---------------------------------------
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<PAGE>
SCHEDULE I
Underwriting Agreement dated __________, ____
Registration Statement No. 333-_____
Representative and Address:
Designation: [Title of debt securities]
Principal Amount: $___________
Indenture dated as of ________, ____
Date of Maturity: ___________, ____
Interest Rate: ____% per annum, payable ________ __ and __________ __ of each
year, commencing ____________, ____.
Purchase Price: _____% of the principal amount thereof, plus accrued interest
from _______________ to the date of payment and delivery.
Public Offering Price: ____% of the principal amount thereof, plus accrued
interest from ___________ to the date of payment and delivery.
Redemption Terms:
Closing Date and Location: _______________, 2000; Hunton & Williams, 421
Fayetteville Street Mall, Raleigh North Carolina 27601
17
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SCHEDULE II
Underwriters Principal Amount
------------ ----------------
TOTAL.........................
18
