PUBLIC SERVICE COMPANY
OF NORTH CAROLINA, INCORPORATED
DEBENTURE PURCHASE AGREEMENT
Dated as of June 25, 1992
$32,000,000
8.75% Senior Debentures due June 30, 2012
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EXPLANATORY STATEMENT
This is a composite conformed copy of the five separate Debenture
Purchase Agreements, each dated as of June 25, 1992, between Public Service
Company of North Carolina, Incorporated and the respective purchasers named in
Schedule I thereto. Such Debenture Purchase Agreements are identical in form
except for the purchaser address on page one and the signatures of the
respective purchasers, which are set forth below:
THE TRAVELERS INDEMNITY COMPANY
By: /s/ Brian M. Smith
Name: Brian N. Smith
Title: Assistant Investment Officer
THE TRAVELERS LIFE AND ANNUITY COMPANY
By: /s/ Brian N. Smith
Name: Brian N. Smith
Title: Assistant Investment Officer
THE TRAVELERS INSURANCE COMPANY
By: /s/ Brian N. smith
Name: Brian M. Smith
Title: Assistant Investment Officer
AMERICAN UNITED LIFE INSURANCE COMPANY
By: /s/ Kent R. Adams
Name: Kent R. Adams
Title: Vice President
MODERN WOODMEN OF AMERICA
By: /s/ W. B. Foster
Name: W. B. Foster
Title: President
<PAGE>
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
DEBENTURE PURCHASE AGREEMENT
Dated as of June 25, 1992
S32, 000,000
8.75% Senior Debentures due June 30, 2012
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TABLE OF CONTENTS
Page
SECTION 1. PURCHASE AND SALE OF DEBENTURES 1
1.1 Issue of Debentures. 1
1.2 The Closing
1
SECTION 1. PURCHASE AND SALE OF DEBENTURES 1
1.1 Issue of Debentures. 1
1.2 The Closing
1
SECTION 1. PURCHASE AND SALE OF DEBENTURES 1
1.1 Issue of Debentures. 1
1.2 The Closing
1
SECTION 1. PURCHASE AND SALE OF DEBENTURES 1
1.1 Issue of Debentures. 1
1.2 The Closing 1
SECTION 1. PURCHASE AND SALE OF DEBENTURES 1
1.1 Issue of Debentures. 1
1.2 The Closing 1
1.3 Purchase for Investment 2
1.4 Failure to Deliver 2
1.5 Other Agreements 3
1.6 Expenses 3
SECTION 2. WARRANTIES AND REPRESENTATIONS 4
2.1 Subsidiaries 4
2.2 Corporate Organization and Authority 4
2.3 Business, Property and Indebtedness 5
2.4 Financial Statements 5
2.5 Full Disclosure 6
2.6 Pending Litigation 6
2.7 Title to Properties 7
2.8 Sale Legal and Authorized 7
2.9 No Defaults 8
2.10 Governmental Consent 8
2.11 Taxes 8
2.12 Use of Proceeds 9
2.13 Private Offering 10
2.14 Compliance with Law 10
2.15 Restrictions on the Company and Subsidiaries 11
2.16 ERISA 11
2.17 Utility Status 13
2.18 Holding Company Act Status 13
2.19 Investment Company Act 13
SECTION 3. CLOSING CONDITIONS 13
3.1 Opinion of Company Counsel 13
3.2 Opinion of Special Counsel 13
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3.3 Warranties and Representations True as of Closing
Date 14
3.4 Compliance with this Agreement 14
3.5 Officers' Certificate 14
3.6 Proceedings Satisfactory 14
3.7 Necessary Approvals 14
3.8 Private Placement Number 15
3.9 Other Sales 15
SECTION 4. PURCHASERS' SPECIAL RIGHTS 15
4.1 Direct Payment 15
4.2 Delivery Expenses 16
4.3 Issue Taxes 16
SECTION 5. PREPAYMENTS
5.1 Required Prepayments 16
5.2 Option to Prepay at Premium 17
5.3 Notice of Optional Prepayment 17
5.4 Partial Payment Pro Rata 17
SECTION 6. REGISTRATION; SUBSTITUTION OF DEBENTURES 17
6.1 Registration of Debentures 17
6.2 Exchange of Debentures 18
6.3 Replacement of Debentures . 18
SECTION 7. COMPANY COVENANTS 19
7.1 Payment of Taxes and Claims 19
7.2 Rule 144 Transfer 19
7.3 Leases 19
7.4 Merger and Consolidation 19
7.5 Acquisition of Debentures 20
7.6 Transactions with Affiliates 21
7.7 Compliance with Law; Corporate Existence 21
7.8 Maintenance of Office 22
7.9 Limitation on Funded Debt 23
7.10 Limitation on Current Debt 23
7.11 Limitation on Debt Secured by Indenture 24
7.12 Intercompany Debt 26
7.13 Liens and Encumbrances 26
7.14 Distributions 28
7.15 Sale of Assets 29
SECTION 8. INFORMATION AS TO COMPANY 29
8.1 Financial and Business Information 29
8.2 Officers' Certificates 31
9.3 Accountants' Certificate 32
8.4 Delivery of Certified Financial Statements 32
8.5 Inspection 32
8.6 Use of Information 33
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SECTION 9. EVENTS OF DEFAULT. 33
9.1 Nature of Events 33
9.2 Default Remedies 35
9.3 Annulment of Acceleration of Debentures. 36
SECTION 10. INTERPRETATION OF THIS AGREEMENT 36
10.1 Terms Defined 36
10.2 Accounting Principles 45
10.3 Directly or Indirectly 45
10.4 Governing Law 45
SECTION 11. MISCELLANEOUS 45
11.1 Notices 45
11.2 Reproduction of Documents 46
11.3 Survival 46
11.4 Successors and Assigns 46
11.5 Amendment and Waiver 47
11.6 Duplicate Originals 48
Schedule I -- Purchase Amount and Address; Money Transfer and Notification
Instructions
Exhibit A -- Form of Debenture Exhibit B
Exhibit B
Part I -- List of Subsidiaries and Affiliates
Part II -- List of Debt of the Company
Part III-- Pending Litigation
Exhibit C -- Form of Company Counsel's Closing Opinion
Exhibit D -- Form of Special Counsel's Closing Opinion
Exhibit E -- Subordination Provisions of Notes
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PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
400 Cox Road, P.O. Box 1396
Gastonia, North Carolina 28053-1398
DEBENTURE PURCHASE AGREEMENT
$32,000,000
8.75% Senior Debentures Due June 30, 2012
Dated as of June 25, 1992
Modern Woodmen of America
1701 1st Avenue
Rock Island, IL 61201
Attn: Investment Department
Ladies and Gentlemen:
Public Service Company of North Carolina, Incorporated, a North Carolina
corporation (the "Company") , hereby agrees with you as follows:
SECTION 1. PURCHASE AND SALE OF DEBENTURES
1.1 Issue of Debentures.
The Company will authorize and issue $32,000,000 in aggregate principal
amount of its 8.75% Senior Debentures due June 30, 2012 (the "Debentures")
pursuant to this Agreement. The Debentures will mature, will bear interest and
will otherwise be substantially in the form set out in Exhibit A.
1.2 The Closing.
The Company hereby agrees to sell to you and you hereby agree to
purchase from the Company, in accordance with the provisions of this Agreement,
the aggregate principal amount of the Debentures shown opposite your name on
Schedule I, at 100% of the principal amount thereof.
Subject to satisfaction of the conditions precedent set forth in
Section 3, the closing of your purchase shall be held at 10:00 A.M. Charlotte
time on June 26, 1992 (the "Closing Date").
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PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
400 Cox Road, P.O. Box 1398
Gastonia, North Carolina 28053-1398
DEBENTURE PURCHASE AGREEMENT
$32,000,000
8.75% Senior Debentures Due June 30, 2012
Dated as of June 25, 1992
The Travelers Indemnity Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Capital Finance Division
Ladies and Gentlemen:
Public Service Company of North Carolina, Incorporated, a North Carolina
corporation (the "Company"), hereby agrees with you as follows:
SECTION 1. PURCHASE AND SALE OF DEBENTURES
1.1 Issue of Debentures.
The Company will authorize and issue $32,000,000 in aggregate principal
amount of its 8.75% Senior Debentures due June 30, 2012 (the "Debentures")
pursuant to this Agreement. The Debentures will mature, will bear interest and
will otherwise be substantially in the form set out in Exhibit A.
1.2 The Closing.
The Company hereby agrees to sell to you and you hereby agree to
purchase from the Company, in accordance with the provisions of this Agreement,
the aggregate principal amount of the Debentures shown opposite your name on
Schedule I, at 100% of the principal amount thereof.
Subject to satisfaction of the conditions precedent set forth in
Section 3, the closing of your purchase shall be held at 10:00 A.M. Charlotte
time on June 26, 1992 (the "Closing Date").
<PAGE>
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
400 Cox Road, P.O. Box 1398
Gastonia, North Carolina 28053-1398
DEBENTURE PURCHASE AGREEMENT
$32,000,000
8.75% Senior Debentures Due June 30, 2012
Dated as of June 25, 1992
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Capital Finance Division
Ladies and Gentlemen:
Public Service Company of North Carolina, Incorporated, a North Carolina
corporation (the "Company"), hereby agrees with you as follows:
SECTION 1. PURCHASE AND SALE OF DEBENTURES
1.1 Issue of Debentures.
The Company will authorize and issue $32,000,000 in aggregate principal
amount of its 8.75% Senior Debentures due June 30, 2012 (the "Debentures")
pursuant to this Agreement. The Debentures will mature, will bear interest and
will otherwise be substantially in the form set out in Exhibit A.
1.2 The Closing.
The Company hereby agrees to sell to you and you hereby agree to
purchase from the Company, in accordance with the provisions of this Agreement,
the aggregate principal amount of the Debentures shown opposite your name on
Schedule I, at 100% of the principal amount thereof.
Subject to satisfaction of the conditions precedent set forth in
Section 3, the closing of your purchase shall be held at 10:00 A.M. Charlotte
time on June 26, 1992 (the "Closing Date").
<PAGE>
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
400 Cox Road, P.O. Box 1398
Gastonia, North Carolina 28053-1398
DEBENTURE PURCHASE AGREEMENT
$32,000,000
8.75% Senior Debentures Due June 30, 2012
Dated as of June 25, 1992
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Capital Finance Division
Ladies and Gentlemen:
Public Service Company of North Carolina, Incorporated, a North Carolina
corporation (the "Company"), hereby agrees with you as follows:
SECTION 1. PURCHASE AND SALE OF DEBENTURES
1.1 Issue of Debentures.
The Company will authorize and issue $32,000,000 in aggregate principal
amount of its 8.75% Senior Debentures due June 30, 2012 (the "Debentures")
pursuant to this Agreement. The Debentures will mature, will bear interest and
will otherwise be substantially in the form set out in Exhibit A.
1.2 The Closing.
The Company hereby agrees to sell to you and you hereby agree to
purchase from the Company, in accordance with the provisions of this Agreement,
the aggregate principal amount of the Debentures shown opposite your name on
Schedule I, at 100% of the principal amount thereof.
Subject to satisfaction of the conditions precedent set forth in
Section 3, the closing of your purchase shall be held at 10:00 A.M. Charlotte
time on June 26, 1992 (the "Closing Date").
<PAGE>
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
400 Cox Road, P.O. Box 1398
Gastonia, North Carolina 28053-1398
DEBENTURE PURCHASE AGREEMENT
$32,000,000
8.75% Senior Debentures Due June 30, 2012
Dated as of June 25, 1992
Securities Department
American United Life Insurance Company
Post Office Box 368
Indianapolis, IN 46206
Ladies and Gentlemen:
Public Service Company of North Carolina, Incorporated, a North Carolina
corporation (the "Company"), hereby agrees with you as follows:
SECTION 1. PURCHASE AND SALE OF DEBENTURES
1.1 Issue of Debentures.
The Company will authorize and issue $32,000,000 in aggregate principal
amount of its 8.75% Senior Debentures due June 30, 2012 (the "Debentures")
pursuant to this Agreement. The Debentures will mature, will bear interest and
will otherwise be substantially in the form set out in Exhibit A.
1.2 The Closing.
The Company hereby agrees to sell to you and you hereby agree to
purchase from the Company, in accordance with the provisions of this Agreement,
the aggregate principal amount of the Debentures shown opposite your name on
Schedule I, at 100% of the principal amount thereof.
Subject to satisfaction of the conditions precedent set forth in
Section 3, the closing of your purchase shall be held at 10:00 A.M. Charlotte
time on June 26, 1992 (the "Closing Date").
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at the offices of Moore & Van Allen, 3000 NationsBank Plaza, Charlotte, NC
28280. At the closing the Company will deliver to you, against payment by you in
immediately available funds credited to the Company's Treasurer's Account No.
706-5900162 at First Union National Bank, Gastonia, North Carolina (ABA
#0530-0021-9), the Debentures shown opposite your name on Schedule I hereto,
dated the Closing Date and registered as provided in Schedule I, unless you
otherwise request. The Debentures shall be printed or typewritten and shall be
delivered to you in fully registered form without coupons.
1.3 Purchase for Investment.
You represent to the Company that you are purchasing the Debentures for
your own account for investment or resale under Rule 144A adopted pursuant to
the Securities Act of 1933, as amended (the "Act") or on behalf of one or more
separate accounts over which you have sole investment discretion and with no
present intention of distributing the Debentures or any part thereof, but
without prejudice, however, to your right at all times to sell or otherwise
dispose of all or any part of the Debentures under an effective registration
statement under the Act, or under an exemption from such registration available
under the Act or to otherwise be and remain in control of the disposition of all
of your property. It is understood that, in making the representations set out
in Section 2.13, the Company is relying, to the extent applicable, upon your
representation as aforesaid. You also represent that no part of the funds being
used by you to pay the purchase price of the Debentures hereunder constitutes
assets allocated to any "separate account" (as defined in Section 3 of ERISA)
maintained by you in which any "employee benefit plan" (as defined in Section 3
of ERISA) identified in the list referred to in Section 2.16(e) participates to
the extent of 10% or more. You further represent that you are a qualified
institutional buyer within the meaning of Rule 144A. Your purchase of the
Debentures hereunder shall constitute a reaffirmation by you, as of the Closing
Date, of your representations set forth in this Section.
1.4 Failure to Deliver.
If, at the closing, the Company fails to tender to you the Debentures
to be purchased by you or if the conditions specified in Section 3 have not been
fulfilled or waived by you, you may thereupon elect to be relieved of all
further obligations under this Agreement. Nothing in this Section shall operate
to relieve the Company from any of its obligations hereunder or to waive any of
your rights against the Company.
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1.5 Other Agreements.
Simultaneously herewith the Company is executing separate agreements
(such other agreements being herein called "Other Agreements" and, together with
this Agreement, collectively called the ("Agreements") with the other purchasers
named in Schedule I hereto (the "Other Purchasers") similar in all respects
hereto, under which the Other Purchasers agree to purchase from the Company the
Debentures in the principal amounts set forth opposite their names in Schedule I
hereto and make the same representations to the Company as you have made herein
in Section 1.3. The purchase made by each purchaser is to be a separate purchase
from the Company by such purchaser, and each sale and delivery of the Debentures
to each purchaser is to be a separate sale and delivery by the Company to such
purchaser.
1.6 Expenses.
Whether or not the Debentures are sold, the Company will pay all
expenses relating to the Agreements including but not limited to:
(a) the cost of reproducing the Agreements and the Debentures;
(b) the reasonable fees and disbursements of your special counsel;
(c) the cost of any fees of Dillon, Read & Co. Inc. and of any
other agents, brokers or dealers (other than any agent, broker
or dealer, if any, specifically employed by you in connection
with your purchase of the Debentures) or otherwise incurred in
connection with the sale of the Debentures, together with any
filing fees and the costs associated with the acquisition of a
private placement number;
(d) your reasonable out-of-pocket expenses;
(e) the cost of delivering to your home office, insured to
your satisfaction, the Debentures purchased by you at the
closing; and
(f) all expenses, costs, outlays and reasonable attorneys'
fees relating to (i) amendments, waivers or consents pursuant
to, or the enforcement and protection of your rights under,
the provisions of the Agreements, or the Debentures, or (ii)
the enforcement of any provisions of, or the collection of
amounts due you under, the Debentures or the Agreements, or
(iii)
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the preparation for, negotiations regarding, consultations concerning
or the defense of legal proceedings involving any claim or claims made or
threatened against you arising out of the Agreements or the Debentures.
The obligations of the Company under this Section 1.6 shall survive the
transfer, payment or redemption of the Debentures and the termination of this
Agreement.
SECTION 2. WARRANTIES AND REPRESENTATIONS
The Company warrants and represents to you that:
2.1 Subsidiaries.
Exhibit B to this Agreement correctly identifies (i) each of the
Company's Subsidiaries, its jurisdiction of incorporation and the percentage of
its Voting Stock owned by the Company and each other Subsidiary and (ii) each of
the Company's Affiliates (other than Subsidiaries) and the nature of the
affiliation. The Company and each subsidiary is the legal and beneficial owner
of all of the shares of Voting Stock it purports to own of each Subsidiary, free
and clear in each case of any Lien. All such shares have been duly issued and
are fully paid and non-assessable.
2.2 Corporate Organization and Authority.
The Company and each Subsidiary
(i) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation,
(ii) has all requisite power and authority to own and
operate its Properties and to carry on its business
as now conducted and, with respect to the Company, as
presently proposed to be conducted, and
(iii) has duly qualified and is authorized to do business
and is in good standing as a foreign corporation in
each jurisdiction where the character of its
Properties or the nature of its activities makes such
qualification necessary, except where failure to
qualify would not materially and adversely affect the
Properties, business, prospects, profits or condition
(financial or otherwise) of the Company and its
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Subsidiaries taken as a whole or the ability
of the Company to perform its obligations
under the Debentures or the Agreements.
2.3 Business, Property and Indebtedness.
(a) The Annual Report on Form 10-K of the Company for the year
ended September 30, 1991, the Quarterly Reports on Form 10-Q
of the Company for December 31, 1991 and March 31, 1992 and
the Current Report on Form 8-K dated June 25, 1992, each filed
with the Securities and Exchange Commission (collectively, the
"Form 10-K") and the Offering Memorandum correctly describe
the general nature of the business and principal Properties of
the Company and its Subsidiaries;
(b) Exhibit B to this Agreement correctly lists all outstanding
indebtedness for borrowed money (including all Financing
Leases and Purchase Money Mortgages) and all Guarantees of the
Company and its Subsidiaries.
2.4 Financial Statements.
(a) The Company has furnished you with the consolidated balance
sheets of the Company and Subsidiaries as of September 30 of each
of the fiscal years 1987, 1988, 1989, 1990 and 1991 together, in
each case, with the related statements of income, retained
earnings and cash flows or changes in financial position for the
fiscal years ended on such dates, all containing opinions of
Arthur Andersen & Co., independent public accountants, and with
the unaudited consolidated balance sheet of the Company and
Subsidiaries as of March 31, 1992 together with the unaudited
statements of income, and cash flows for the six months ended
March 31, 1992. Said financial statements (subject, in the case
of the unaudited March 31, 1992 statements, to year-end
adjustments) are correct and complete in all material respects
and fairly present the financial condition of the Company and
Subsidiaries as of the respective dates of said balance sheets
and the results of the operations of the Company and Subsidiaries
for the respective periods covered by said statements of income
and cash flows and have been prepared in accordance with
generally accepted accounting principles consistently applied.
(b) Except as specifically disclosed in the Form 10-K, the
Offering Memorandum or Exhibit B hereto, since September 30,
1991, there has been no change in the
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business, prospects, profits, Properties or condition
(financial or otherwise) of the Company or any Subsidiary or
the ability of the Company to perform its obligations under
the Debentures or the Agreements, except changes in the
ordinary course of business, none of which individually or in
the aggregate has been materially adverse.
2.5 Full Disclosure.
The Form 10-K and the Offering Memorandum delivered to you in
connection with the offering of the Debentures and the financial statements
referred to in Section 2.4, as updated by the information contained in Exhibit B
hereto, do not, nor does this Agreement or any written statement furnished by
the Company to you in connection with the negotiation of the sale of the
Debentures, contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein or herein not
misleading. The Company does not know of any fact (other than matters of a
general economic nature) which the Company has not disclosed to you in writing
which materially affects adversely nor, so far as the Company can now reasonably
foresee, will materially affect adversely the Properties, business or operations
of the Company and its Subsidiaries taken as a whole or the ability of the
Company to perform its obligations under the Debentures or the Agreements.
2.6 Pending Litigation.
Except as disclosed in the Form 10-K or in Exhibit B to this Agreement,
there are no proceedings or investigations pending, or to the knowledge of the
company threatened, against or affecting the Company or any Subsidiary in or
before any court, governmental authority or agency or arbitration board or
tribunal which, individually or in the aggregate, might materially and adversely
affect the Properties, business, prospects, profits or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole or the ability
of the Company to perform its obligations under the Debentures or the
Agreements. Neither the Company nor any Subsidiary is in default with respect to
any order of any court, governmental authority or agency or arbitration board or
tribunal or in violation of any laws or governmental rules or regulations where
such default or violation might materially and adversely affect the Properties,
business, prospects, profits or condition (financial or otherwise) of the
company and its Subsidiaries taken as a whole or the ability of the Company to
perform its obligations under the Debentures or the Agreements.
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2.7 Title to Properties.
The Company, and each Subsidiary, has good and marketable title in fee
simple (or its equivalent under applicable law) to all the real Property, and
has good title to all the other Property, it purports to own, including that
reflected in the most recent balance sheet referred to in Section 2.4 (except as
sold or otherwise disposed of in the ordinary course of business), free from
Liens not permitted by the Agreements.
2.8 Sale Legal and Authorized.
(a) The execution and delivery of the Agreements and the issue,
authentication and sale of the Debentures, have each been duly
authorized by all necessary corporate action and the
Agreements and the Debentures, when issued hereunder for
value, will each constitute a legal, valid and binding
obligation of the Company enforceable in accordance with their
respective terms (subject to general equitable principles and
to applicable bankruptcy, reorganization, insolvency,
fraudulent conveyance and similar laws affecting the
enforcement of creditor's rights generally).
(b) The sale of the Debentures by the Company and compliance by
the Company and each Subsidiary with all of the provisions of
the Agreements and of the Debentures are within the corporate
powers of the Company and each Subsidiary.
(c) The execution and delivery of the Agreements, the offer, issue,
sale and delivery of the Debentures and compliance by the Company
with the terms and provisions of the Agreements and the
Debentures will not conflict with, result in any breach of any of
the provisions of, constitute a default under, or result in the
creation of any Lien upon any Property of the Company or any
Subsidiary under the provisions of, any agreement, charter
instrument, by-law or other instrument to which the Company is a
party or by which it may be bound or to which any of its Property
is subject or any order, judgment, decree, statute, law or
regulation to which the Company or any of its Property is
subject.
(d) There are no limitations in any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is
now a party or by which the Company or any Subsidiary may be
bound which restrict its right or ability to issue the
Debentures or indebtedness of any kind or to pay principal,
premium or interest on any
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indebtedness other than the Agreements and the agreements and
instruments referred to in Section 2.3(b) and
described in Exhibit B to this Agreement.
2.9 No Defaults.
No event has occurred and no condition exists which, upon the issue of
the Debentures, would constitute a Default or an Event of Default under the
Agreements or any indenture, agreement or other instrument to which the Company
is a party or by which it may be bound. Neither the Company nor any Subsidiary
is in violation in any material respect of any term of its Certificate of
Incorporation or any agreement, charter instrument, by-law or other instrument
to which it is a party or by which it or any of its Property may be bound.
2.10 Governmental Consent.
Neither the nature of the Company or of any Subsidiary or any of their
respective businesses or Properties, nor any relationship between the Company or
any Subsidiary and any other Person, nor any circumstance in connection with the
offer, issue, sale or delivery of the Debentures is such as to require a
consent, approval or authorization of, or filing, registration or qualification
with, any governmental authority on the part of the Company or any Subsidiary as
a condition to or in connection with the execution and delivery and performance
of the Agreements or the offer, issue, sale or delivery of the Debentures,
except the approval by the Commission of the issuance and sale of the
Debentures; provided, however, that no representation is made with respect to
securities matters covered by Section 2.13 hereof.
2.11 Taxes.
(a) The federal income tax returns of the Company and its
Subsidiaries for fiscal years through September 30, 1957 are
considered closed and no material issues relating to such
years remain outstanding.
(b) The North Carolina tax returns of the Company and its
Subsidiaries for fiscal years through September 30,1986 are
considered closed and no material issues relating to such
years remain outstanding. North Carolina tax returns for
fiscal years subsequent to September 30, 1986 remain open.
(c) All tax returns required to be filed by the Company or any
Subsidiary in any jurisdiction have in fact been filed, and
all taxes, assessments, fees and other
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governmental charges which have been levied upon the Company
or any Subsidiary, or upon any of their respective Properties,
income or franchises, which are due and payable have been paid
or will be paid prior to the final due date thereof, except
for any taxes, assessments, fees and other governmental
charges the amount, applicability or validity of which is
currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has set aside on its books
reserves (segregated to the extent required by generally
accepted accounting principles) deemed by it to be adequate.
Neither the Company nor any Subsidiary knows of any proposed
material additional tax assessment against it.
(d) In the opinion of the Company's executive officers, the
provisions for taxes on the books of the Company and each
Subsidiary are adequate for all open years, and for its
current fiscal period, and the amount of the reserve for
federal income taxes reflected in the consolidated balance
sheet of the Company and its Subsidiaries as of September 30,
1991 is adequate for such federal income taxes, if any, as may
be payable by the Company and its Subsidiaries for the fiscal
years ended September 30, 1988 through September 30, 1991, the
only open years.
2.12 Use of Proceeds.
The Company will apply the net proceeds from the sale of the Debentures
(a) to reduce or retire short-term indebtedness and (b) for general corporate
purposes. None of the transactions contemplated in this Agreement (including,
without limitation thereof, the use of the proceeds from the sale of the
Debentures) will violate or result in a violation of Section 7 of the Securities
Exchange Act of 1934, as amended, or any regulations issued pursuant thereto,
including, without limitation, Regulations C, T and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter II. Neither the Company nor
any Subsidiary owns or intends to carry or purchase any "margin stock" within
the meaning of said Regulation G, including margin securities originally issued
by it. None of the proceeds from the sale of the Debentures will be used to
purchase or carry (or refinance any borrowing the proceeds of which were used to
purchase or carry) any "margin security" within the meaning of the Securities
Exchange Act of 1934, as amended.
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2.13 Private Offering.
Neither the Company nor Dillon, Read & Co. Inc. (the only Person
authorized or engaged by the Company as agent, broker, dealer or otherwise in
connection with the offering or sale of the Debentures or any other similar
Security of the Company) has offered any of the Debentures or any similar
Security of the Company for sale to, or solicited offers to buy any thereof
from, or otherwise approached or negotiated with respect thereto with, any
prospective purchaser, other than you, the other Purchasers and 12 other
institutional investors, each of which was offered all or a portion of the
Debentures or any similar Security at private sale for investment. The Company
agrees that neither the Company nor anyone acting on its behalf will offer the
Debentures or any part thereof or any similar Securities for issue or sale to,
or solicit any offer to acquire any of the same from, anyone so as to bring the
issuance and sale of the Debentures within the provisions of Section 5 of the
Act. The Company agrees that, within a period of six months after the Closing
Date, it will not issue any Securities similar to the Debentures in a manner
which would cause the Debentures to be considered to be part of a public
offering of securities within the meaning of the Act.
2.14 Compliance with Law.
(a) Except as set forth under Sections 2.14(b) and (c), neither the
Company nor any Subsidiary:
(i) is in violation of any laws, ordinances, governmental
rules or regulations to which it is subject; or
(ii) has failed to obtain any certificates of public
convenience and necessity, operating rights licenses,
permits, franchises, other governmental
authorizations, rights of way, easements, patents,
copyrights, trademarks or trade names, or rights
thereto, necessary to the ownership of its Property
or to the conduct of its business,
which violation or failure to obtain might materially and
adversely affect the business, prospects, profits, Properties
or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole or the ability of the Company to
perform its obligations under the Agreements or the
Debentures.
<PAGE>
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(b) Environmental Laws. To the best of the Company's
knowledge after due inquiry, except as disclosed
------------------ in Note 9 of the consolidated
financial statements for the fiscal year ended
September 30, 1991 referred to in Section 2.4 ("Note
9"), and in the Preliminary Evaluation of Former
Manufactured Gas Plants dated June 1992 prepared for
the Company by Geraghty & Miller, Inc. (the
"Evaluation"), neither the Company nor any Subsidiary
is in violation in any material respect of any
applicable zoning ordinances or any applicable
Environmental Laws and has not acquired, incurred or
assumed, directly or indirectly, any material
contingent liability in connection with the release of
any Hazardous Material, which violation or liability
might materially and adversely affect the business,
prospects, profits, Properties or condition (financial
or otherwise) of the Company and its Subsidiaries taken
as a whole or the ability of the Company to perform its
obligations under the Agreements or the Debentures.
(c) To the best of the Company's knowledge, except as set forth in
Note 9, the Evaluation or Exhibit B, neither the Company nor
any Subsidiary is the subject of any evaluation under CERCLA
which might result in aggregate liability to the Company and
its Subsidiaries in excess of $50,000.
2.15 Restrictions on the Company and Subsidiaries.
Neither the Company nor any Subsidiary is a party to any contract or
agreement, or subject to any charter or other corporate restriction, which
materially and adversely affects its business, Property, assets or financial
condition.
2.16 ERISA.
(a) Relationship of vested Benefits to Pension Plan Assets.
The present value of all benefits vested
------------------------------------------------------
under all "employee pension benefit plans," as such
term is defined in Section 3 of ERISA, maintained by
the Company and any other corporation or other trade or
business under common control with the Company as
determined under Sections 414(b) and 414(c) of the
Internal Revenue Code of 1986, as amended (a "Common
Control Entity"), as from time to time in effect
(herein called the "Pension Plans") subject to Title IV
of ERISA, did not, as of July 31, 1991, the last annual
valuation date, exceed the value of the assets of such
Pension Plans allocable to such vested benefits.
<PAGE>
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(b) Prohibited Transactions. To the best of the Company's
knowledge after due inquiry, neither the Company nor
----------------------- any Common Control Entity, nor
any of the Pension Plans or any trusts created
thereunder, nor any trustee or administrator thereof,
has engaged in a "prohibited transaction," as such term
is defined in Section 4975 of the Internal Revenue Code
of 1986, as amended, or described in Section 406 of
ERISA, which could subject the Company, any Common
Control Entity, the Pension Plans, or any of them, any
such trust, or any trustee or administrator thereof, or
any party dealing with the Pension Plans or any such
trust to the tax or penalty on prohibited transactions
imposed by said Section 4975 or by Section 502(i) of
ERISA. The issuance, sale and delivery of the
Debentures by the Company hereunder will not involve
any "prohibited transaction" within the meaning of
Section 4975 of the Internal Revenue Code of 1986, as
amended, or ERISA. The warranty and representation by
the Company in the preceding sentence is made in
reliance upon your representation in Section 1.3.
(c) Reportable Events. Neither any of the Pension Plans subject to Title IV
of ERISA nor any trusts created thereunder have been terminated, nor
have there been any "reportable events," as that term is defined in
Section 4043 of ERISA, other than reportable events for which the
notice requirement of Section 4043 has been waived pursuant to
regulations issued thereunder, since the effective date of ERISA. The
Company has not at any time made, and is not obligated to make,
contributions to any Multi-employer Plan (as defined in Section 3(37)
of ERISA).
(d) Accumulated Funding Deficiency. Neither any of the Pension Plans
subject to Part 3 of Title I of ERISA nor any trusts created thereunder
have incurred any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA (whether or not waived), since the
effective date of ERISA.
(e) List of Benefit Plans. The Company has delivered to you a
complete and correct list of (i) all employee benefit plans
with respect to which the Company or any Common Control Entity
is a party in interest and (ii) all employee benefit plans
maintained by affiliates of the Company. As used in this
Section 2.16(e), the terms "employee benefit plans" and "party
in interest" shall have the respective meanings assigned to
such terms in Section 3 of ERISA, and the term "affiliate"
shall have the meaning assigned to such term in Section
407(d)(7) of ERISA.
<PAGE>
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2.17 Utility Status.
The Company is a natural gas local distribution company subject to
regulation as a public utility by the Commission.
2.18 Holding Company Act Status.
The Company is not a "holding company" or a "subsidiary company" or an
"affiliate" of a holding company or of a subsidiary company of a holding company
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
2.19 Investment Company Act.
The Company is not an investment company or a person directly or
indirectly controlled by or acting on behalf of an investment company within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 3. CLOSING CONDITIONS
Your obligation to purchase and pay for the Debentures to be delivered
to you at the closing on the Closing Date shall be subject to the following
conditions precedent:
3.1 Opinion of Company Counsel.
You shall have received from Moore & Van Allen, counsel for the
Company, an opinion, in substantially the form of Exhibit C to this Agreement,
dated the Closing Date. Such opinion shall be supplemented to cover such other
matters incident to the transactions contemplated by this Agreement as you may
reasonably request.
3.2 Opinion of Special Counsel.
You shall have received from Messrs. Day, Berry & Howard, your special
counsel, an opinion, in substantially the form of Exhibit D to this Agreement,
dated the Closing Date. Such opinion shall be supplemented to cover such other
matters incident to the transactions contemplated by this Agreement as you may
reasonably request.
<PAGE>
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3.3 Warranties and Representations True as of Closing Date.
(a) The warranties and representations contained in Section 2
shall (except as affected by transactions contemplated by this
Agreement) be true in all material respects on the Closing
Date with the same effect as though made on and as of that
date.
(b) The Company shall not have taken any action or permitted any
condition to exist which would have been prohibited by Section
7 hereof if such Section had been binding and effective at all
times during the period from March 31, 1992 to and including
the Closing Date.
3.4 Compliance with this Agreement.
The Company shall have performed and complied in all
material respects with all agreements and conditions contained
herein which are required to be performed or complied with by
the Company before or at the closing.
3.5 Officers' Certificate.
You shall have received a certificate dated the
Closing Date and signed by the President or a Vice President
and the Treasurer or an Assistant Treasurer of the Company,
certifying that each of the conditions specified in Sections
3.3, 3.4, 3.7(b) and 3.9 have been fulfilled.
3.6 Proceedings Satisfactory.
All proceedings taken in connection with the sale of
the Debentures and all documents and papers relating thereto
shall be satisfactory to you and your special counsel. You and
your special counsel shall have received copies of such
documents and papers as you or they may reasonably request in
connection therewith or as a basis for your special counsel's
closing opinion, all in form and substance satisfactory to you
and your special counsel.
3.7 Necessary Approvals.
(a) The Company shall have obtained the requisite approval of all
regulatory bodies to which it is subject for the issuance and
sale of the Debentures, including specifically the written
approval of the Commission.
(b) The approval referred to in (a) above shall be in full force
and effect and is being complied with, such approval shall not
be the subject of any pending or threatened attack or appeal,
by direct proceedings or otherwise, and the period during
which an appeal may be taken shall have lapsed.
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(c) You shall have received a copy, certified by the appropriate
officer, of the approval specifically referred to in (a)
above.
3.8 Private Placement Number.
You shall have received evidence satisfactory to you of the acquisition
by the Company of a Private Placement Number for the transactions contemplated
by this Agreement, issued by the CUSIP Service Bureau of Standard & Poor's
Corporation (in cooperation with the Securities valuation Office of the National
Association of Insurance Commissioners).
3.9 Other Sales.
On the Closing Date, the Company shall sell (and receive the purchase
price for) all the Debentures to be sold and delivered on the Closing Date
pursuant to the terms and provisions of the Other Agreements, as the Other
Agreements were originally entered into. The aggregate principal amount of the
Debentures to be sold to each of the Other Purchasers on such Closing Date is
set forth in Schedule I hereto.
SECTION 4. PURCHASERS' SPECIAL RIGHTS
4.1 Direct Payment.
Notwithstanding anything to the contrary in the Agreements or the
Debentures, the Company will pay all amounts payable with respect to any
Debentures held by each holder of Debentures which has given written notice to
the Company (such as the written direction given in Schedule I to this
Agreement) requesting that the provisions of this Section shall apply (without
any presentment of such Debentures and without any notation of such payment
being made thereon) by crediting the account of such holder in any bank in the
United States as may be designated in writing by such holder (accompanied by
sufficient information to identify the source and application of such funds)
with good funds available on such payment date, or in such other manner or to
such other address in the United States as may be designated in writing by such
holder. The holder of any of the Debentures to which this Section applies agrees
(A) that in the event it shall sell or transfer any of the Debentures, prior to
the delivery of such Debentures to the purchaser or transferee (a) it will (i)
make a proper notation thereon of the portion of the
<PAGE>
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Debenture which has been redeemed, or (ii) surrender the Debenture in exchange
for a new Debenture representing the then outstanding principal amount of the
Debentures being sold or disposed of and the principal amount of the Debentures
held by such holder after such sale or disposition, and (b) it will promptly
notify the Company of the name and address of the transferee of the Debentures
being sold or disposed of; and (B) to indemnify the Company for any losses
incurred by the Company as a direct result of such holder's failure to comply
with the requirements of clause (A) above. Any person to whom this Section 4.1
applies agrees that Debentures which are redeemed in full or paid on maturity
will be surrendered to the Company against such payment in accordance with the
terms of the Agreements.
4.2 Delivery Expenses.
If you surrender any Debenture to the Company pursuant to the
Agreements, the Company will pay the cost of delivering to or from your home
office from or to the Company, insured to your satisfaction, the surrendered
Debenture and any Debenture issued in substitution or replacement for the
surrendered Debenture.
4.3 Issue Taxes.
The Company will pay all taxes in connection with the original issuance
of the Debentures (other than taxes based on income or ownership of the
Debentures) and in connection with any amendment or modification of the
Debentures or the Agreements and will hold you harmless without limitation as to
time against any and all liabilities with respect to all such taxes, including
any interest and penalties assessed or asserted in connection therewith. The
obligations of the Company under this Section 4.3 shall survive the transfer,
payment or redemption of the Debentures and the termination of this Agreement.
SECTION 5. PREPAYMENTS
5.1 Required Prepayments.
(a) In addition to paying the entire remaining principal
amount and interest due on the Debentures at maturity, the Company will prepay,
and there shall become due and payable, $3,200,000 principal amount of the
Debentures on June 30 in each year beginning on June 30, 2003 and ending June
30, 2012, inclusive. Each such prepayment shall be at l00% of the principal
amount prepaid, together with interest accrued thereon to the date of
prepayment.
<PAGE>
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(b) The Company's exercise of any partial prepayment option in
Section 5.2, or the acquisition of any Debentures by the Company, shall not
reduce or otherwise affect its obligation to make any prepayment required by
Section 5.1(a).
5.2 Option to Prepay at Premium.
The Company may prepay the Debentures in whole or part at any
time, in multiples of $1,000,000, by payment of the principal amount then being
prepaid, plus accrued interest on the principal amount so prepaid to the
prepayment date, plus the Make-Whole Premium.
5.3 Notice of Optional Prepayment.
The Company will give notice of any optional prepayment of the
Debentures to each holder of the Debentures not less than 30 days nor more than
60 days before the date fixed for prepayment, specifying (a) such date, (b) the
section of this Agreement under which the prepayment is to be made, (c) the
principal amount of the Debentures and of such holder's Debentures to be prepaid
on such date, and (d) the Make-Whole Premium, and accrued interest applicable to
the prepayment. Notice of prepayment having been so given, the principal amount
of the Debentures specified in such notice, together with the Make-Whole
Premium, and accrued interest thereon, shall become due and payable on the
prepayment date.
5.4 Partial Payment Pro Rata.
If there is more than one Debenture outstanding at any time the
aggregate principal amount of each required or optional partial payment of the
Debentures shall be allocated among the outstanding Debentures in proportion, as
nearly as practicable, to the respective unpaid principal amounts of the
Debentures. For the purpose of this Section 5.4 only, any Debentures reacquired
by the Company shall be deemed to be outstanding.
SECTION 6. REGISTRATION; SUBSTITUTION OF DEBENTURES
6.1 Registration of Debentures.
The Company will cause to be kept at its office maintained pursuant to Section
7.8, a register for the registration and transfer of the Debentures. The names
and addresses of the holders of the Debentures, the transfer thereof and the
names addresses of the transferees of any of the Debentures will be registered
in the register. The Person in whose name any Debenture is registered shall be
deemed and treated as the owner and holder thereof for all purposes of the
Agreements, and the Company shall not be affected by any notice or knowledge to
the contrary.
<PAGE>
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6.2 Exchange of Debentures.
Upon surrender of any Debenture to the Company at its office maintained
pursuant to Section 7.8, the Company, upon request, will as promptly as
possible, but in any event within 10 Business Days, execute and deliver, at its
expense (except as provided below), new Debentures in exchange therefor, in
denominations of at least $100,000 (except as may be necessary to reflect any
principal amount not evenly divisible by $100,000), in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Debenture. Each
such new Debenture (a) shall be payable to such Person as the surrendering
holder may request and (b) shall be dated and bear interest from the date to
which interest has been paid on the surrendered Debenture or dated the date of
the surrendered Debenture if no interest has been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any transfer.
6.3 Replacement of Debentures.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any
Debenture and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided, if the holder of the
Debenture is an institutional investor having capital, surplus
and earnings aggregating at least $10,000,000, its own
unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation of the
Debenture,
the Company at its expense will execute and deliver within 10 Business Days a
new Debenture of like tenor, dated and bearing interest from the date to which
interest has been paid on the lost, stolen, destroyed or mutilated Debenture or
dated the date of such lost, stolen, destroyed or mutilated Debenture if no
interest has been paid thereon.
<PAGE>
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SECTION 7. COMPANY COVENANTS
7.1 Payment of Taxes and Claims.
The Company will, and will cause each Subsidiary to, pay, before they
become delinquent,
(a) all taxes, assessments and governmental charges or
levies imposed upon it or its Property, and
(b) all claims or demands of any kind (including but not
limited to those of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons)
which, if unpaid, might result in the creation of a
Lien upon its Property;
provided that items of the foregoing description need not be paid while being
contested in good faith and by appropriate proceedings, if and for so long as
such adequate book reserves, if any, as shall be required by generally accepted
accounting principles have been established with respect thereto.
7.2 Rule 144 Transfer.
The Company will, so long as you or your nominee shall hold any of the
Debentures, give you such information as you may reasonably require for the
purpose of completing Form 144 or any other applicable form promulgated by the
Securities and Exchange Commission under the Act in connection with any proposed
sale by you of any of the Debentures pursuant to Rule 144 or Rule 144A (or any
comparable provisions) issued by the Securities and Exchange Commission under
the Act including, but not limited to, (i) the name, address and telephone
number of the Company, (ii) the Company's IRS identification number, and (iii)
the Company's file numbers for filing reports under the Securities Exchange Act
of 1934.
7.3 Leases.
The Company will not lease its Property as an entirety or substantially
as an entirety to any Person or Persons (in one transaction or a series of
related transactions).
7.4 Merger and Consolidation.
The Company will not, and will not permit any Subsidiary to, become a
party to a merger or consolidation or sell, lease or otherwise dispose of its
assets as an entirety or substantially as an entirety; provided that (1) a
Subsidiary may merge or consolidate with or sell, lease or
<PAGE>
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otherwise dispose of its assets as an entirety or substantially as an entirety
to the Company, another Subsidiary or a corporation which becomes a Subsidiary
as a result of such merger or consolidation or such sale, lease or disposal and
which immediately after the consummation of such merger or consolidation or such
sale, lease or disposal, and after giving effect thereto, no Default or Event of
Default would exist, or (2) the Company may merge or consolidate with another
corporation, if all of the following conditions are met:
(i) the corporation which results from such merger or
consolidation (the "surviving corporation") is
solvent and organized under the laws of the United
States or a jurisdiction thereof;
(ii) the due and punctual payment of the principal of and
premium, if any, and interest on all of the
Debentures, according to their tenor, and the due and
punctual performance and observance of all the
covenants in the Debentures and the Agreements to be
performed or observed by the Company, are expressly
assumed in writing by the surviving corporation; and
(iii) immediately following the consummation of such
merger, and after giving effect thereto, (A) the
Company would be permitted by Section 7.9 to incur at
least $1 of additional Funded Debt; and (B) no
Default or Event of Default would exist.
No such consolidation, merger or transfer shall have the effect of releasing
Public Service Company of North Carolina, Incorporated (or any other corporation
which at the time shall have assumed the obligations of the Company under the
Agreements and the Debentures) from its obligations under the Agreements and the
Debentures.
7.5 Acquisition of Debentures.
The Company will not, and will not permit any Subsidiary to, directly
or indirectly, acquire or make any offer to acquire any Debentures unless the
Company or such Subsidiary has offered to acquire Debentures, pro rata, from all
holders of the Debentures and upon the same terms; provided that the Company may
acquire (but may not make any offer to acquire) all Debentures of any Person
(other than a Subsidiary or an Affiliate) who holds less than $1,000,000
aggregate principal amount of Debentures.
<PAGE>
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7.6 Transactions with Affiliates.
Neither the Company nor any Subsidiary will enter into any transaction,
including, without limitation, the purchase, sale exchange of Property or the
rendering of any service, with any Affiliate except in the ordinary course of
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate, or on such terms as may be
specifically required, either directly or indirectly, by the Commission, or
except for transactions that will not, individually or in the aggregate,
materially and adversely affect the business, prospects, profits, Properties or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole.
7.7 Compliance with Law; Corporate Existence.
(a) The Company will promptly comply and will cause each
Subsidiary to comply with all laws, ordinances, governmental
rules or regulations to which it is subject (including,
without limitation, all Environmental Laws), the violation of
which might, individually or in the aggregate, materially and
adversely affect the business, prospects, profits, Properties
or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole or the ability of the Company to
perform its obligations under the Agreements or the
Debentures.
(b) The Company will, and will cause each Subsidiary to,
preserve and keep in full force and effect its corporate
existence and all licenses, permits, franchises or other
governmental authorizations necessary to the ownership of
its Property or to the conduct of its business, which
failure to preserve or to keep in full force and effect
might materially and adversely affect the business,
prospects, profits, Properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a
whole or the ability of the Company to perform its
obligations under the Agreements or the Debentures;
provided, however, that nothing in this paragraph (b) shall
prevent (i) the abandonment or termination of the corporate
existence, licenses, rights and franchises of any
Subsidiary, or the abandonment or termination of any rights,
licenses and franchises of the Company, if, in the opinion
of the Board of Directors of the Company or such Subsidiary,
any such abandonment or termination is
<PAGE>
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in the best interest of the Company or such Subsidiary and not
disadvantageous in any material respect to the holders of the
Debentures, or (ii) a transaction otherwise permitted by
Section 7.4 hereof.
(c) The Company will, and will cause each Subsidiary to, maintain
its Property in all material respects in good condition and
make all necessary renewals, replacements, additions,
betterments and improvements thereto; provided, however, that
nothing in this paragraph (c) shall prevent the Company or any
of its Subsidiaries from discontinuing the operation and the
maintenance of any of its Properties if such discontinuance
is, in the opinion of the Board of Directors of the Company or
such Subsidiary, desirable in the conduct of its business and
not disadvantageous in any material respect to the holders of
the Debentures.
(d) The Company will, and will cause each Subsidiary to, maintain,
with financially sound and reputable insurers, insurance with
respect to its Properties and business against such casualties
and contingencies, of such types (including public liability
insurance) and in such amounts as is customary in the case of
corporations of established reputations of a similar size engaged
in the same or a similar business and similarly situated;
provided, however, nothing in this Section shall prohibit the
Company from maintaining a system of self-insurance, or causing
or permitting any of its Subsidiaries to maintain a system of
self-insurance, to the extent permitted by applicable law,
against the risks referred to above, but only if and to the
extent such risks are at the time customarily self-insured by
companies of a similar size engaged in similar business in
accordance with good business practice.
(e) The Company will, and will cause each Subsidiary to, keep
proper books of records and accounts, all in accordance with
generally accepted accounting principles.
7.8 Maintenance of Office.
The Company will maintain an office in the State of North Carolina
where notices, presentations and demands in respect of the Agreements or the
Debentures may be made upon it. Such office shall be maintained at 400 Cox Road,
P.O. Box 1398, Gastonia, North Carolina 28053-1398 until such time as the
<PAGE>
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Company shall notify the holders of the Debentures of a change of location.
7.9 Limitation on Funded Debt.
The Company will not, and will not permit any Subsidiary to, incur or
in any manner become liable for, any Funded Debt, other than:
(a) Funded Debt issued by a Subsidiary to the Company or another
Subsidiary;
(b) Additional unsecured Funded Debt so long as after giving
effect thereto and to any concurrent transactions:
(i) The sum of (A) Consolidated Funded Debt, plus (B)
Excess Current Debt will not exceed 70% of
Consolidated Capitalization; and
(ii) Earnings Available for Fixed Charges for a period of
any 12 consecutive calendar months within the 15
calendar months. next preceding the month in which
such incurrence or liability is proposed shall be at
least equal to 175% of Fixed Charges; and
(c) Debt of the Company or a Subsidiary secured by a Lien
permitted by any of clauses (vii) through (x) of Section 7.13.
7.10 Limitation on Current Debt.
The Company will not, and will not permit any Subsidiary to, create, assume,
incur or suffer to exist any Current Debt, except that the Company may create,
assume or incur unsecured Current Debt and maintain the same outstanding;
provided, however, that such Current Debt shall not, subject to the next
provision, for a period of 60 consecutive days (herein called a "Cleandown
Period") during each period of twelve consecutive calendar months beginning on
October 1 in each year (commencing with such period beginning October 1, 19g1),
exceed an amount equal to 5% of Consolidated Capitalization (any amount of
Current Debt outstanding on any date in excess of such amount being herein
called "Excess Current Debt"); and provided, further, that the requirements of
the immediately preceding provision shall be deemed satisfied if for each of any
sixty (60) consecutive days during such twelve month period, the Company would
be entitled to incur additional unsecured Funded Debt, in compliance with the
tests in Section 7.9(b), in an amount at least equal to the amount of Excess
Current Debt outstanding on such day, and bearing interest at a rate per annum
which is the weighted average of the rates respectively borne by each item of
Current Debt of the Company then outstanding.
<PAGE>
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7.11 Limitation on Debt Secured by Indenture.
(a) Except as permitted by subsection (b) of this Section 7.11, the
Company will not create, assume or incur any liability for
borrowed money secured by the Indenture not outstanding on the
date hereof and listed on Exhibit B hereto, or refund, extend or
renew any such outstanding liability for borrowed money secured
by the Indenture, or create, assume or incur any other Funded
Debt evidenced by mortgage bonds or other Securities purporting
to be secured by a Lien on all or substantially all of the
Company's Property, including without limitation any such bonds
or securities issued pursuant to a general and refunding or
similar indenture, whether or not at the time constituting a Lien
on such Properties junior to that of the Indenture.
(b) If (x) all Debt and other amounts secured by the Indenture shall
have been paid in full and the Indenture discharged in accordance
with the terms thereof, and if the Company at any time thereafter
shall elect to enter into a new mortgage bond indenture
constituting a first Lien on all or substantially all of its
Property to secure Debt to be evidenced by bonds issued from time
to time thereunder, or (y) the Company shall at any time elect to
enter into a new mortgage bond indenture constituting a second
Lien subject to the Lien of the Indenture on all or substantially
all of the Property subject to the Lien of the Indenture (any
such new indenture referred to in subclauses (x) or (y) above
being herein referred to as the "New Indenture"), then in either
such event the Company may subject its Property to the Lien of
the New Indenture if all the following conditions are complied
with:
(i)at the time of execution and delivery of the New Indenture, the
Company shall, by written notice to the holders of the outstanding
Debentures, given not more than 90 nor less than 60 days in advance of
the execution and delivery of the New Indenture, offer to such holders
the opportunity to exchange their Debentures for a series of bonds
(herein, the "New Bonds") to be issued pursuant to the New Indenture
(such offer to include an undertaking by the Company to pay all
expenses in connection with the exchange, including reasonable fees and
disbursements of one special counsel for the holders of the Debentures
effecting such exchange);
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(ii) the New Bonds shall bear interest (both before and after default) at
the same respective rates as the Debentures and shall have terms as to
redemption and final maturity, as are then applicable to the
Debentures;
(iii) the New Bonds shall be secured by and entitled to the benefits of the
New Indenture equally and ratably with all other bonds issued and to be
issued thereunder from time to time, and the holders of the New Bonds
shall be entitled to vote ratably with all other holders of such bonds
in accordance with the respective principal amounts thereof held by
each (subject to the following clause (iv));
(iv) the New Indenture, or the indenture supplemental thereto creating the
New Bonds, shall contain covenants and definitions (substantially the
same as the covenants appearing in this Section 7 and appurtenant
definitions as in effect at the time of such exchange) applicable to
the Company and its Subsidiaries at least so long as the New Bonds
shall be outstanding, which may be amended or waived only by the
holders of 66 2/3% in aggregate principal amount of the New Bonds from
time to time outstanding;
(v) the New Indenture and the New Bonds shall in all other respects also be
satisfactory in form and substance to all holders of the Debentures and
to their special counsel in their reasonable discretion; and
(vi) each holder of the Debentures then outstanding shall, pursuant to an
exchange agreement in form and substance satisfactory to all holders of
the Debentures and to their special counsel and containing both
standard and appropriate terms and conditions (including receipt of
satisfactory legal opinions) to the obligation to do so, in fact
exchange its Debentures for a like principal amount of New Bonds.
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7.12 Intercompany Debt.
Neither the Company nor any Subsidiary will become liable for, renew or
extend, or permit its Property to become subject to a Lien securing, any
Intercompany Debt which is not a Subordinated Debt.
7.13 Liens and Encumbrances.
Neither the Company nor any Subsidiary will (A) cause or permit or (B)
agree or consent to cause or permit in the future (upon the happening of a
contingency or otherwise), any of its Property, whether now owned or hereafter
acquired, to be subject to a Lien except:
(i) the Lien of the Indenture and the Lien permitted upon
compliance with the requirements of Section 7.11(b);
(ii) Liens securing taxes, assessments or governmental
charges or levies or the claims or demands of
materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons, provided the
payment thereof is not at the time required by
Section 7.1;
(iii) Liens created by or resulting from any litigation or
legal proceeding which is currently being contested
in good faith by appropriate proceedings, if such
reserve or other appropriate provision, if any, as
shall be required by generally accepted accounting
principles shall have been made therefor;
(iv) Liens not arising in connection with Debt that do not
in the aggregate materially impair the use or value
of the Property of the Company or a Subsidiary in the
conduct of its business;
(v) reservations, exceptions, encroachments, easements,
rights of way, covenants, conditions, restrictions,
leases and other similar title exceptions or
encumbrances affecting real Property, provided they
do not in the aggregate materially reduce the value
of the Property or materially interfere with its use
in the ordinary conduct of the owning company's
business;
(vi) the Liens (including Financing Leases) listed in
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Exhibit B to this Agreement securing obligations not in excess of those
stated in Exhibit B;
(vii)Liens (including Financing Leases) securing Purchase Money
Mortgages, provided that
(1) no such Lien shall extend to or cover any other Property
of the Company or of such Subsidiary, as the case may be,
other than improvements to the Property subject to such
Lien and, in the case of any improvements to real
Property, the Lien related to such improvements may extend
to unimproved real Property upon which the construction
will occur,
(2) the aggregate principal amount of the Debt secured by all
such Liens in respect of any such Property shall not
exceed 75% of the cost (as determined by the Board of
Directors of the Company) of such Property at the time of
acquisition thereof, and
(3) at the time of acquisition of any such Property or at the
time of creation of any Lien within 90 days after the
acquisition, completion of construction or commencement of
full operation of any such Property and after giving
effect thereto, the Company shall be entitled to incur at
least $1 of additional Funded Debt under Section 7.9;
(viii) in the case of any corporation which hereafter is merged or
consolidated with or into the Company or becomes a Subsidiary,
Liens in respect of its Property existing at the time such
corporation is merged or consolidated with or into the Company or
becomes a Subsidiary, provided that
(1) no such Lien shall extend to or cover any other Property
of the Company or of such Subsidiary, as the case may be,
other than improvements to the Property subject to such
Lien, and
(2) the aggregate principal amount of the Debt secured by all
such Liens in respect of any such Property shall not
exceed 75% of the total cost to the Company of such
Property;
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(ix) the extension, renewal or replacement of any Lien
in respect of Property of the Company or a Subsidiary
permitted by the foregoing clauses (vi), (vii) or
(viii) in respect of the same Property theretofore
subject thereto or the extension, renewal or
replacement (without increase of principal amount) of
the Debt secured thereby, provided that (1) such Lien
is the first and only extension, renewal or
replacement of the existing Lien and (2) such Lien
shall not extend to or cover any Property not subject
to the existing Lien and improvements thereto;
(x) Liens securing Debt of the Company and its
Subsidiaries so long as (1) the aggregate principal
amount of all such outstanding Debt does not exceed
5% of Consolidated Capitalization; and (2) after
giving effect thereto the Company shall be entitled
to incur at least $1 of additional Funded Debt under
Section 7.9; and
(xi) Liens securing Intercompany Debt permitted by Section
7.12.
7.14 Distributions.
(a) Neither the Company nor any Subsidiary will declare, make or become
obligated to make any Distribution unless, immediately after giving effect
thereto:
(i) the sum of Distributions declared, made or obligated,
for the period subsequent to December 31, 1991 would
not exceed $15,000,000 plus 85% (or minus 100% in
case of a net loss) of Consolidated Net Income
accumulated after December 31, 1991 plus the net
proceeds to the Company of any issuance by the
Company after December 31, 1991 of common stock,
preferred stock or (but only to the extent actually
converted) Debt convertible into common stock; and
(ii) no Default or Event of Default shall have. occurred and
be continuing.
(b) The Company will not become obligated to make a Distribution which
is payable more than ninety days after authorization.
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7.15 Sale of Assets.
Neither the Company nor any Subsidiary will, except in the ordinary
course of business, sell, lease, transfer or otherwise dispose of any of its
assets; provided that the foregoing restriction does not apply to the sale of
assets, if all of the following conditions are met:
(i) the amount of such assets (valued at fair market
value, as determined by the Board of Directors of the
Company), together with all other assets of the
Company and Subsidiaries previously disposed of
(other than in the ordinary course of business) as
permitted by this Section 7.15 or by Section 7.4
during the then current fiscal year of the Company
does not exceed 5% of Consolidated Capitalization as
at the beginning of such year; and
(ii) in the opinion of the Board of Directors of the
selling company, the sale is for fair value and is in
the best interests of such company.
SECTION 8. INFORMATION AS TO COMPANY
8.1 Financial and Business Information.
The Company will deliver to you in duplicate, if at the time you or
your nominee holds any Debentures (or if you are obligated to purchase any
Debentures), and to each other holder of the then outstanding Debentures:
(a) Quarterly Statements - as soon as practicable after the end of
each of the first three quarterly fiscal periods in each
fiscal year of the Company, and in any event within 60 days
thereafter, copies of:
(i) an unaudited consolidated balance sheet of the Company and
its Subsidiaries as at the end of that fiscal quarter, and
(ii) unaudited consolidated statements of income and cash
flows of the Company and its Subsidiaries, for that
fiscal quarter and (in the case of the second and
third fiscal quarters) for the portion of the fiscal
year ending with that fiscal quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous
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fiscal year, all in reasonable detail and certified by a principal
financial officer of the Company as presenting fairly the financial
condition of the companies being reported upon and as having been
prepared in accordance with generally accepted accounting principles
consistently applied (subject to year-end audit adjustments);
(b) Annual Statements - as soon as practicable after the end of each fiscal
year of the Company, and in any event within 90 days thereafter, copies
of:
(i) consolidating and consolidated balance sheets of the Company
and its Subsidiaries, as at the end of
that fiscal year, and
(ii) consolidating and consolidated statements of income and
consolidated statements of retained earnings and cash flows of
the Company and its Subsidiaries for that fiscal year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and, in the case of said
consolidated statements and balance sheets, accompanied by an opinion
thereon of the accountants named in Section 2.4 or other independent
public accountants of recognized national standing selected by the
Company, which opinion shall be in scope and substance satisfactory to
you, and, in the case of said consolidating statements and balance
sheet, certified by a principal financial officer of the Company to be
correct and complete and to present fairly the information contained
therein;
(c) Audit Reports - promptly upon receipt thereof, one copy of each report
as to material inadequacies in accounting controls submitted to the
Company or any Subsidiary by independent accountants and of each report
submitted in connection with any annual, interim or special audit made
by them of the books of the Company or any Subsidiary;
(d) SEC and Other Reports - promptly upon their becoming available, copies
of (i) each financial statement, report, notice or proxy statement sent
by the Company to shareholders generally or to other holders of
Securities of the Company or any of its Subsidiaries (other than to the
Company or another Subsidiary as such holder), and of each regular or
periodic report and any registration statement (other than registration
<PAGE>
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statements on Form S-8 prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Company with or
received by such Person in connection therewith from, any securities
exchange or the Securities and Exchange Commission or any successor
agency; and (ii) all annual financial reports filed by the Company or
any Subsidiary with the Commission or with the Federal Energy
Regulatory Commission.
(e) Notice of Default or Event of Default under the Indenture -
immediately upon becoming aware of the existence of any
condition or event which constitutes a default or event of
default under the Indenture, a written notice specifying the
nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto;
(f) Notice of Default or Event of Default - immediately upon
becoming aware of the existence of any condition or event
which constitutes a Default or an Event of Default, a written
notice specifying the nature and period of existence thereof
and what action the Company is taking or proposes to take with
respect thereto;
(g) Notice of Claimed Default - immediately upon becoming aware
that the holder of any Debenture or of any evidence of
indebtedness or other Security of the Company or any
Subsidiary has given notice or taken any other action with
respect to a claimed default or event of default, a written
notice specifying the notice given or action taken by such
holder and the nature of the claimed default or event of
default and what action the Company is taking or proposes to
take with respect thereto; and
(h) Requested Information - with reasonable promptness, such other
data and information as from time to time may be reasonably
and in good faith requested, and any information required by
Rule 144A under the Act to be provided to a holder or
prospective purchaser of any Debentures.
8.2 Officers' Certificates.
Each set of financial statements delivered to you or any other holder
of the Debentures pursuant to Section 8.1(a) or 8.1(b) will be accompanied by a
certificate of the Chief Executive Officer or President or a Vice President and
the
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Treasurer or an Assistant Treasurer of the Company stating that the signers have
reviewed the relevant terms of this Agreement and have made, or caused to be
made, under their supervision, a review of the transactions and condition of the
Company and its Subsidiaries from the beginning of the period covered by the
statement of earnings then being furnished and setting forth the information
(including detailed calculations) required in order to establish whether, at any
time during the period covered by the statement of earnings then being
furnished, any Default or Event of Default existed, provided that in the event
that any such Default or Event of Default shall have occurred, such certificate
shall so specify and shall state whether such Default or Event of Default has
been cured or is continuing.
8.3 Accountants' Certificate.
Each set of annual consolidated financial statements delivered pursuant
to Section 8.1(b) will be accompanied by a certificate of the accountants who
certify such financial statements, stating that they have reviewed this
Agreement and stating further, whether, in making their audit, such accountants
have become aware of any Default or Event of Default under this Agreement and,
if any such Default or Event of Default then exists, specifying the nature and
period of existence thereof.
8.4 Delivery of Certified Financial Statements.
Concurrently with the delivery to you and to each other holder of the
Debentures of the certified annual financial statements pursuant to Section
8.1(b), the Company will mail one further copy of each such statement to
Securities Valuation Office
National Association of Insurance Commissioners
195 Broadway
New York, New York 10007
8.5 Inspection.
The Company will permit any of your representatives, while you or your
nominee holds any of the Debentures, or the representatives, of any other holder
of the Debentures, to visit and inspect any of the Properties of the Company or
any Subsidiary, to examine all the books of account, records, reports and other
papers of the Company and any Subsidiary, to make copies and extracts therefrom,
and to discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants (and by this
provision the Company authorizes said accountants to discuss the finances and
affairs of the Company and any Subsidiary), all at
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such reasonable times, as often as may be reasonably requested, and, so long as
no Default or Event of Default exists, at the expense of the holder so
requesting.
8.6 Use of Information.
You agree to employ procedures designed to reasonably maintain the
confidential nature of any and all written information received by you pursuant
to the provisions of Section 8 which has not already been, or does not
subsequently become through no act or omission by you, publicly disclosed so as
to render it no longer confidential and which was not already in your
possession; provided that nothing herein shall prevent the holder of any
Debenture from delivering copies of any financial statements and other documents
delivered to such holder, and disclosing any other information disclosed to such
holder by or on behalf of the Company or any Subsidiary, in connection with or
pursuant to this Agreement to: (i) such holder's directors, officers, employees,
agents, attorneys and accountants; (ii) any other holder of any Debenture; (iii)
the National Association of Insurance Commissioners and any other regulatory
body having jurisdiction over such holder; (iv) any Person to which such holder
transfers or proposes to transfer all or any part of such Debenture, provided
such Person has agreed in writing to be bound by the provisions of this Section
8.6; (v) any independent rating agency for the purposes of rating the Company's
or any Subsidiary's debt instruments or such holder's ownership thereof; and
(vi) any other Person to which such delivery may be necessary or appropriate (a)
in compliance with any law, rule, regulation or order applicable to such holder,
(b) in response to any subpoena or other legal process, or (c) in connection
with any litigation to which such holder is a party.
SECTION 9. EVENTS OF DEFAULT.
9.l Nature of Events.
An "Event of Default" shall exist if any of the following occurs and is
continuing:
(a) Principal or Premium Payments - failure to pay principal or
premium on any Debenture on or before the date such payment is
due;
(b) Interest Payments - failure to pay interest on any Debenture
on or before the fifth day next following the date such
payment is due;
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(c) Particular Covenant Defaults - failure to comply with any covenant
contained in Section 7.4 or Section 7.6 ---------------------------- or
Sections 7.9 through 7.11 or in Sections 7.13 through 7.15;
(d) Other Defaults - failure to comply with any other provision of this
Agreement, which continues for more than -------------- 30 days;
(e) Warranties or Representations - any warranty or representation by or on
behalf of the Company contained in this Agreement or in any instrument
delivered under or in reference to this Agreement is false or incorrect in
any material adverse respect as of the date as of which they were made;
(f) Default on Other Debt - failure by the Company or any Subsidiary to pay any
other Debt in an aggregate principal amount of at least $1,000,000 when
due, or a condition shall exist permitting other Debt of the Company or any
Subsidiary in an aggregate outstanding principal amount of at least
$5,000,000 to become or be declared due prior to its stated maturity;
(g) Involuntary Bankruptcy Proceedings - a custodian receiver, liquidator or
trustee of the Company or any ----------------------------------
Subsidiary, or of any of the Property of either, is appointed or takes
possession and such appointment or possession remains in effect for more
than 60 days; or the Company, or any Subsidiary, is adjudicated bankrupt or
insolvent; or an order for relief is entered under the Federal Bankruptcy
Code against the Company or any Subsidiary; or a petition is filed against
the Company or any Subsidiary under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
law of any jurisdiction, whether now or hereafter in effect, and shall
continue undismissed, or unstayed and in effect, for a period of 60 or more
days;
(h) Voluntary Petitions - the Company or any Subsidiary files a petition in
voluntary bankruptcy or seeking relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or consents to the filing of any petition against it
under any such law;
<PAGE>
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(i) Assignments for Benefit of Creditors, etc. - the Company or a
Subsidiary makes a general assignment for the benefit of its
creditors, or generally fails to pay its debts as they become
due, or consents to the appointment of or taking possession by
a custodian, receiver, liquidator or trustee of the Company or
a subsidiary or of all or a substantial part of the Property
of either; or
(j) Undischarged Final Judgments - final judgment or judgments for
the payment of money aggregating in excess of $100,000 is or
are outstanding against one or more of the Company and its
Subsidiaries and any one of such judgments has been
outstanding for more than 30 days from the date of its entry
and has not been discharged in full or stayed.
9.2 Default Remedies.
(a) If an Event of Default described in Section 9.1(a) or 9.1(b)
exists, any holder of Debentures may, at its option, exercise any right, power
or remedy permitted by law, including but not limited to the right by notice to
the Company to declare the Debentures held by such holder to be immediately due
and payable. If any other Event of Default exists, the holder or holders of at
least 25% in outstanding principal amount of the Debentures (exclusive of
Debentures owned by the Company, Subsidiaries and Affiliates) may exercise any
right, power or remedy permitted by law, including but not limited to the right
by notice to the Company to declare all the outstanding Debentures immediately
due and payable. Upon any such declaration the principal of the Debentures
declared due shall become immediately due and payable together with all interest
accrued thereon without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, and the Company will immediately
pay the entire principal of and interest accrued on such Debentures together
with the Make-Whole Premium; provided that the Make-Whole Premium with respect
to each Debenture shall be due and payable upon such declaration only if (x)
such event is an Event of Default specified in any of paragraphs (a), (b), (c),
(d) or (f) of Section 9.1, (y) you shall have given to the Company, at least 10
Business Days before such declaration, written notice stating your intention so
to declare the Debentures to be immediately due and payable and identifying one
or more such Events of Default whose occurrence on or before the date of such
notice permits such declaration and (z) one or more of the Events of Default so
identified shall be continuing at the time of such declaration. In the case of
any of the Events of Default specified in clauses (g), (h) or (i) of Section 9.1
with respect to the Company, without any notice to
<PAGE>
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the Company or any other act by the holders of the Debentures, the principal of
all of the Debentures, together with accrued interest, shall become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Company.
(b) No course of dealing or delay or failure on the part of any holder
of the Debentures to exercise any right shall operate as a waiver of such right
or otherwise prejudice such holder's rights, powers and remedies. The Company
will pay or reimburse the holders of the Debentures, to the extent permitted by
law, for all costs and expenses, including but not limited to reasonable
attorneys' fees, incurred by them in collecting any sums due on the Debentures
or in otherwise enforcing any of their rights.
9.3 Annulment of Acceleration of Debentures.
If a declaration is made pursuant to Section 9.2(a), the holders of at
least 66 2/3% of the outstanding principal amount of the Debentures (exclusive
of Debentures owned by the Company, subsidiaries and Affiliates) may annul such
declaration and the consequences thereof if no judgment or decree has been
entered for the payment of any monies due pursuant to such declaration and if
all sums payable under the Debentures and this Agreement (except principal,
interest or premium which has become due solely by reason of such declaration)
have been duly paid. No such annulment shall extend to or waive any subsequent
Default or Event of Default.
SECTION 10. INTERPRETATION OF THIS AGREEMENT
10.1 Terms Defined.
As used in this Agreement (including Exhibits), the following terms
have the respective meanings set forth below or in the Section indicated:
Act - Section 1.3.
Affiliate - a Person (other than a Subsidiary) (1) which directly or
indirectly controls, or is controlled by, or is under common control with, the
Company, (2) beneficially owns or holds 10% or more of any class of the Voting
Stock of the Company or (3) 10% or more of the Voting Stock (or in the case of a
Person which is not a corporation, 10% or more of the equity interest) of which
is owned by the Company or a Subsidiary; provided, that the term "Affiliate"
shall not include any exploration and development entity in which, on the date
of this Agreement, the Company or its subsidiaries have a minority ownership
interest.
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The term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Agreements - Section 1.5.
Business Day - any day other than a Saturday, Sunday or a national,
Connecticut, North Carolina or New York holiday.
CERCLA - the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.
Cleandown Period - Section 7.10.
Closing Date - Section 1.2.
Commission - the North Carolina Utilities Commission or any successor
thereto.
Common Control Entity - Section 2.16(a).
Consolidated Capitalization - at any date, means the sum of (A)
Consolidated Funded Debt, plus (B) Consolidated Tangible Net Worth.
Consolidated Current Assets - at any date, means the amount at which
the current assets of the Company and all Subsidiaries would be shown on a
consolidated balance sheet at such date, but excluding any amount on account of
current assets which do not constitute Tangible Assets.
Consolidated Funded Debt - at any date, means the amount, without
duplication, of the Funded Debt of the Company and all Subsidiaries at such
date, determined on a consolidated basis.
Consolidated Net Income - for any period, means net earnings after
income taxes of the Company and its Subsidiaries determined on a consolidated
basis, but excluding:
(1) any gain arising from (i) any write-up of assets, or from (ii) the
acquisition of any Securities of the Company or any Subsidiary, or
from (iii) the sale or other disposition of assets (other than
Consolidated Current Assets) to the extent that the aggregate amount
of such gain on all such sales exceeds the aggregate amount of losses
from the sale, abandonment or other disposition of assets (other than
Consolidated Current Assets);
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(2) earnings of any Person realized prior to the date (i) it becomes a
Subsidiary or its assets are acquired by merger or otherwise by the
Company or a Subsidiary, or (ii) it becomes a successor to the Company
or acquires the assets of the Company;
(3) any interest in the undistributed earnings of any Person (other than a
Consolidated Subsidiary) in which the Company or any Subsidiary has an
ownership interest, provided that any earnings excluded pursuant to
this clause (3) may be included in the year in which they are actually
received as distributions;
(4) any portion of the earnings of any Subsidiary which for any reason is
unavailable for payment of dividends to the Company or any other
Subsidiary;
(5) the proceeds of any life insurance policy; and
(6) any deferred credit (or amortization of deferred credit) arising from
the acquisition of any Person.
Consolidated Subsidiary - any Subsidiary whose financial results are
consolidated with those of the Company in the consolidated financial statements
of the Company and Subsidiaries.
Consolidated Tangible Net Worth - at any date, means the amount at
which shareholders' equity would be stated at such date on a consolidated
balance sheet of the Company and its Subsidiaries less minority interests in
Subsidiaries and less any amount which would be reflected on such balance sheet
for assets which are not Tangible Assets.
Consolidated Total Assets - at any date, means the amount at which the
total assets of the Company and all Subsidiaries would be shown on a
consolidated balance sheet at such date, but excluding any amount on account of
total assets which do not constitute Tangible Assets.
Current Debt - all Debt which would, in accordance with generally
accepted accounting principles, constitute short term debt, and in any event
includes all such Debt with a maturity one year or less after the date of
determination (except any such Debt included in Funded Debt by reason of clause
(B) of the definition thereof)
Debentures - Section 1.1
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Debt - with respect to any Person, means its Current Debt and Funded
Debt.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice or both, became an Event of Default.
Distribution - means:
(1) dividends or other distributions on capital stock of the Company
(except distributions in such stock); and
(2) the redemption, retirement or acquisition of such stock or of
warrants, rights or other options to purchase such stock (except when
solely in exchange for such stock) and any other payment or
distribution (other than those specified in clause (1) above) made
directly or indirectly with respect to the capital stock of the
Company, except any payment of the principal or of any prepayment
charge, if any, of Debt which is convertible into capital stock of the
Company.
Any Distribution of Property other than cash shall be valued at the greater of
book or fair market value.
Earnings Available for Fixed Charges - for any period, means
Consolidated Net Income for such period plus the net amount deducted in the
determination thereof for (i) Fixed Charges, and (ii) taxes.
Environmental Laws - all applicable federal, state or local statutes,
laws, ordinances, codes, rules, regulations and guidelines (including consent
decrees and administrative orders), relating to public health and safety and
protection of the environment, including, without limitation, CERCLA, RECRA, the
Occupational Safety and Health Act of 1970, and laws and regulations
establishing quality criteria and standards for air, water, land and toxic
wastes.
ERISA - means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
Evaluation - Section 2.14(b).
Event of Default - Section 9.1.
Excess Current Debt - Section 7.10.
Financing Lease - any lease which is shown or is required to be shown
in accordance with generally accepted accounting
<PAGE>
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principles as a liability on a balance sheet of the lessee thereunder.
Financing Lease Obligation - means the obligation of the lessee under a
Financing Lease. The amount of a Financing Lease Obligation at any date is the
amount at which the lessee's liability under the Lease would be required to be
shown on its balance sheet at such date.
Fixed Charges - means, for any period, the sum of all amounts which
would, in accordance with generally accepted accounting principles, be deducted
in computing net income for such period on account of (1) interest on Debt,
including imputed interest in respect of Financing Lease Obligations, and (2)
amortization of debt discount and expense.
Funded Debt - means all Debt which would, in accordance with generally
accepted accounting principles, constitute long term debt, and in any event
includes (A) any Debt with a maturity more than one year after the date of
determination, (B) any Debt outstanding under a revolving credit or similar
agreement providing for borrowings (and renewals and extensions thereof) over a
period extending more than one year from the date of determination
notwithstanding that any such Debt may be payable on demand or within one year
after such date, (C) any Financing Lease Obligation and (D) any Guaranty with
respect to Funded Debt of another person.
Guaranty - means any guarantee or other contingent liability, direct or
indirect, with respect to any Debt of another Person, through an agreement or
otherwise, including without limitation, (A) any endorsement (otherwise than for
collection or deposit in the ordinary course of business) or discount with
recourse or undertaking substantially equivalent to or having similar economic
effect of a guarantee with respect to any such Debt, and (B) any agreement (1)
to purchase, or to advance or supply funds for the payment or purchase of, any
such Debt, (2) to purchase, sell or lease Property, products, materials or
supplies, or transportation or services, primarily for the purpose of enabling
such other Person to pay the Debt or to assure the owner thereof against loss
regardless of the delivery or non-delivery of the Property, products, materials
or supplies or transportation or services, or (3) to make any loan, advance,
capital contribution or other investment in such other Person to assure a
minimum equity, working capital or other balance sheet condition for any date,
or to provide funds for the payment of any liability, dividend or stock
liquidation payment, or otherwise to supply funds to or in any manner invest in
such other Person. The amount of any Guaranty shall be equal to the outstanding
principal amount of the Debt guaranteed.
<PAGE>
-41-
Hazardous Material - any of the following: (i) any "hazardous
substance," as defined by CERCLA; (ii) any "hazardous waste," as defined by
RECRA; (iii) any petroleum product; or (iv) any pollutant or contaminant or
hazardous, dangerous or toxic chemical material or substance within the meaning
of any other Environmental Law.
Indenture - the Indenture dated as of January 1, 1952, executed and
delivered by the Company to the Marine Midland Trust Company of New York as
predecessor-in-interest to Marine Midland Bank, N.A., as amended and
supplemented from time to time.
Intercompany Debt - any Debt of a Subsidiary to the Company or to
another Subsidiary or of the Company to a Subsidiary.
IRS - the Internal Revenue Service of the United States or any
successor agency.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether the interest is
based on common law, statute or contract, and including but not limited to the
security interest lien arising from a mortgage, encumbrance, pledge, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes.
The term "Lien" shall include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting Property. For the purposes of this
Agreement, the Company or a Subsidiary shall be deemed to be the owner of any
Property which it has acquired or holds subject to a Financing Lease or a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes, and such retention or vesting shall be deemed to create a Lien on the
Property.
Make-Whole Premium - at any time with respect to any portion of the
Debentures being paid as a result of a prepayment or as a result of acceleration
due to the existence of an Event of Default, means, the greater of 0 or that
amount obtained by subtracting (i) the sum of the principal amount of such
Debentures (or the portion thereof) being prepaid or accelerated, as the case
may be, and the amount of interest thereon accrued to the prepayment date or
acceleration date, as the case may be, from (ii) the sum of the Current Value
(as hereinafter defined) of all amounts of principal and interest on such
Debentures (or the portion thereof) being prepaid or accelerated, as the case
may be, that would otherwise have become due on and after the date of such
determination if such Debentures were not being
<PAGE>
-42-
prepaid or accelerated, as the case may be, (each such amount of principal or
interest being referred to herein as an "Amount Payable"). The "Current Value"
of any Amount Payable means such Amount Payable discounted (on a semiannual
basis) to its present value on the date of determination on the basis of the
Treasury Yield (as hereinafter described), in accordance with the following
formula:
Current Value = Amount Payable
(1 + d/2)n
where "d" is the sum of (i) 50 basis points plus (ii) the Treasury Yield per
annum expressed as a decimal, and "n" is an exponent (which need not be an
integer) equal to the number of semiannual periods and portions thereof (any
such portion of a period to be determined by dividing the number of days in such
portion of such period by the total number of days in such period, both computed
on the basis of twelve 30-day months in a 360-day year) between the date of such
determination and the due date of the Amount Payable. The "Treasury Yield" shall
be determined at 12:00 noon Hartford, Connecticut time on the second Business
Day prior to the date of prepayment or acceleration, as the case may be, by
reference to the "on-the-run" yields of U.S. Treasury Securities found on page
500 of the Telerate System (or, if such information is no longer available, any
publicly available source of similar market data and date acceptable to the
holder or holders of at least 51% in principal amount of the Debentures being
prepaid or accelerated), having a maturity equal to the then remaining weighted
average life to maturity of all Amounts Payable (the "Remaining Life"), computed
by dividing (1) the sum of all Amounts Payable into (2) the total of the
products obtained by multiplying (A) the amount of each Amount Payable by (B)
the number of years (calculated to the nearest one-twelfth) which will elapse
between the date as of which such computation is made and the due date of the
Amount Payable. If the Remaining Life is not equal to the maturity of an
"on-the-run" U.S. Treasury Security, the Treasury Yield shall be obtained by
linear interpolation (calculated to the nearest one-twelfth of a year) from the
yields of (a) the actively traded "on-the-run" U.S. Treasury Security having a
maturity closest to and greater than the Remaining Life and (b) the actively
traded "on-the-run" U.S. Treasury Security having a maturity closest to and less
than the Remaining Life, except that if the Remaining Life is less than one
year, the yield on such actively traded "on-the-run'.' U.S. Treasury Securities
adjusted to a constant maturity of one year shall be used. The Treasury Yield
shall be computed to the fifth decimal place (one thousandth of a percentage
point) and then rounded to the fourth decimal place (one hundredth of a
percentage point).
<PAGE>
-43-
New Bonds - Section 7.11(b).
New Indenture - Section 7.11(b).
Note 9 - Section 2.14(b).
Offering Memorandum - The Offering Memorandum dated March 1992 prepared by
Dillon, Read & Co. Inc. in connection with the offering of the Debentures.
Operating Lease - Any lease of Property under which the Company or a
Subsidiary is liable as lessee, or is liable by Guaranty of the obligations of
another Person or lessee, other than (i) a Financing Lease or (ii) a lease under
which the Company or a Subsidiary is lessor.
Pension Plans - Section 2.16(a).
Person - an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political subdivision
thereof.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Money Mortgage - any Lien on Property existing at the time of
the original acquisition by the Company or a Subsidiary of such Property or
securing Debt incurred to finance all or a portion of the purchase price or cost
of construction of Property (or to refinance construction Debt upon completion
of such improvement).
RECRA - the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., as amended from time to ----- -- --- time.
Related Person - any Person (whether or not incorporated) which is
under common control with the Company within the meaning of Section 414(c) of
the Internal Revenue Code of 1996, as amended, or of Section 4001(b) of ERISA.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Senior Debt - Exhibit E.
Subsidiary - a corporation of which the Company owns, directly or
indirectly, more than 50% of the Voting
----------
Stock.
<PAGE>
-44-
Subordinated Debt - any Intercompany Debt which is subordinated to the
payment of the Senior Debt on terms substantially in the form set forth in
Exhibit E hereto.
Tangible Assets - all assets except:
(1) deferred charges, other than deferred gas costs;
(2) patents, copyrights, trademarks, trade names, franchises, good
will, experimental expense and all other assets which are deemed
intangibles, but only to the extent such intangibles were included as
assets or deducted from liabilities in computing Consolidated Tangible
Net Worth;
(3) treasury stock; and
(4) all investments in exploration ventures or in Subsidiaries other
than (i) investments in Subsidiaries engaged in the business of the
gathering, transmission, distribution or storage of natural gas or the
distribution of propane, but such investments shall be included as part
of Tangible Assets only to the extent that such investments are
included in the Company's rate base or are recognized as allowable
expenses of the Company for rate-making purposes pursuant to the rules
and regulations of, or orders issued by, the Commission and (ii)
investments in exploration ventures or in Subsidiaries engaged in the
types of businesses set forth in clause (i) above which are not so
allowed rate base treatment or recognized as allowable expenses by the
Commission for rate-making purposes, provided that investments not
deducted from Tangible Assets pursuant to this clause (ii) shall be
limited to an aggregate value not in excess of 10% of the remaining
Consolidated Total Assets of the Company and its Subsidiaries.
Voting Stock - Securities the holders of which are ordinarily, in the
absence of contingencies, entitled to elect the corporate directors (or Persons
performing similar functions).
Wholly-Owned Subsidiary - any Subsidiary, all of the equity Securities
(except directors' qualifying shares) of which are owned by the Company and/or
the Company's other Wholly-Owned Subsidiaries.
<PAGE>
-45-
10.2 Accounting Principles
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, this shall, where applicable, be done in accordance with generally
accepted accounting principles at the time in effect, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
10.3 Directly or Indirectly
Where any provision in this Agreement refers to action to be taken by
any person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such Person
including actions taken by or on behalf of any partnership in which such Person
is a general partner and all liabilities of such partnerships shall be
considered liabilities of such Person for purposes of this Agreement.
10.4 Governing Law
This Agreement shall be governed by and construed in accordance with
New York law.
SECTION 11. MISCELLANEOUS
11.1 Notices
(a) All communications under this Agreement shall be in writing
and shall be given by telecopy, telex, facsimile, first class
mail, postage prepaid, overnight courier or personal delivery,
(i) if to you, at your address shown in Schedule
I hereto, marked for attention as there
indicated, or at such other address as you
may have furnished the Company in writing,
or
(ii) if to the Company, at its address shown at
the beginning of this Agreement, Attention:
Chief Executive Officer (facsimile number:
(704) 861-8966) or at such other address as
the Company may have furnished in writing to
you and all other holders of the Debentures
at the time outstanding.
<PAGE>
-46-
(b) Any notice so addressed shall be deemed to be given when so
delivered by hand, or 3 days after being so mailed, or 1 day
after being so presented for overnight courier delivery, or
upon confirmation of receipt after being so transmitted by
telecopy, telex or facsimile.
11.2 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications which may hereafter be
executed, (b) documents received by you at closing of your purchase of the
Debentures (except the Debentures themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to you, may
be reproduced by you at your sole cost and expense, or by the Company at its
sole cost and expense, by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process and you or the Company, as the
case may be, may destroy any original document so reproduced. You and the
Company agree and stipulate that any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you or by the Company in the regular course of
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
11.3 Survival.
All warranties, representations, and covenants made by the Company
herein or on any certificate or other instrument delivered by it or on its
behalf under this Agreement shall be considered to have been relied upon by you
and shall survive the delivery to you of the Debentures regardless of any
investigation made by you or on your behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Company hereunder.
11.4 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties. The provisions of this Agreement
are intended to be for the benefit of all holders, from time to time, of the
Debentures, and shall be enforceable by any such holder, whether or not an
express assignment to such holder of rights under this Agreement has been made
by you or your successor or assign.
<PAGE>
-47-
11.5 Amendment and Waiver.
(a) Requirements. This Agreement may be amended, and the observance of any
term of this Agreement may ------------ be waived, with (and only with) the
written consent of the Company and the holders of at least 66 2/3% in principal
amount of the Debentures at the time outstanding (exclusive of Debentures then
owned by the Company, any Subsidiaries and any Affiliates); provided that no
such amendment or waiver of any of the provisions of Sections 1 through 4 shall
be effective as to you unless consented to by you in writing; and provided
further, that no such amendment or waiver shall, without the written consent of
the holders of all the outstanding Debentures, (i) subject to Section 9.3,
change the amount or time of any prepayment or interest, or (ii) amend this
Section 11.5.
(b) Solicitation of Holders. So long as any outstanding Debentures are
owned by you, the Company will ----------------------- not directly or
indirectly solicit, request or negotiate for or with respect to any proposed
waiver or amendment of any of the provisions of this Agreement, or the
Debentures unless each holder of the Debentures (irrespective of the amount of
Debentures then owned by it) shall be informed thereof by the Company and shall
be afforded the opportunity of considering the same and shall be supplied by the
Company with sufficient information to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver or
consent effected pursuant to the provisions of this Section 11.5 shall be
delivered by the Company to each holder of outstanding Debentures forthwith
following the date on which the same shall have been executed and delivered by
the holder or holders of the requisite percentage of outstanding Debentures. The
Company will not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any holder of the Debentures as consideration for or as an
inducement to the entering into by any such holder of any waiver or amendment of
any of the terms and provisions of this Agreement or the Debentures unless such
remuneration is concurrently paid, on the same terms, ratably to the holders of
all of the Debentures then outstanding.
Cc) Binding Effect. Any such amendment or waiver shall apply equally to all
the holders of the Debentures and shall be binding upon them and upon each
future holder
<PAGE>
-48-
of any Debentures and upon the Company whether or not such
Debentures shall have been marked to indicate such amendment
or waiver. No such amendment or waiver shall extend to or
affect any obligation not expressly amended or waived or
impair any right which follows therefrom.
11.6 Duplicate Originals.
Two or more duplicate originals of this Agreement may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument.
<PAGE>
-49-
If this Agreement is satisfactory to you, please so indicate by signing
the acceptance at the foot of a counterpart of this Agreement and return such
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.
Very truly yours,
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
By: /s/ Robert D. Voight
Name: Robert D. Voight
Title: Senior Vice President -Finance and
Treasurer
The foregoing is hereby accepted as of the date first above written.
(Signature of Purchaser -See Explanatory Statement
Inside Front Cover)
<PAGE>
SCHEDULE I
(page 1 of 5)
This Schedule to the foregoing Agreement with respect to the Debentures
of the Company sets forth the maturity date, interest rate and the aggregate
principal amount of the Debentures to be purchased by each Purchaser and the
money transfer and notice instructions for each Purchaser.
Aggregate Principal
Purchaser Registration Amount of Purchase
The Travelers Insurance Company TRAL & CO Company $3,000,000
PAYMENT AND NOTICE INSTRUCTIONS
In the case of all payments on account of the Notes in accordance with Section
4.1, by:
(a) crediting (in the form of federal funds bank wire transfer or
other funds available on the date of payment) its Account
entitled The Travelers Insurance Company - Consolidated
Private Placement Account No. 910-2-587434 in
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA #021000021
and (b) providing sufficient information with such wire transfer to
identify the source and application of such funds;
with a notice of any such payment (and all other notices in respect of
payment) to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Securities Department - Cashier
In the case of all other communications:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Facsimile Telephone No. 203-954-5243
Attention: Capital Finance Division
<PAGE>
SCHEDULE I
(page 2 of 5)
This Schedule to the foregoing Agreement with respect to the Debentures
of the Company sets forth the maturity date, interest rate and the aggregate
principal amount of the Debentures to be purchased by each Purchaser and the
money transfer and notice instructions for each Purchaser.
Aggregate Principal
Purchaser Registration Amount of Purchase
The Travelers Life and TRAL & CO $15,500,000
Annuity Company
PAYMENT AND NOTICE INSTRUCTIONS
In the case of all payments on account of the Notes in accordance with Section
4.1, by:
(a) crediting (in the form of federal funds bank wire transfer or
other funds available on the date of payment) the Account
entitled The Travelers Insurance Company - Consolidated
Private Placement Account No. 910-2-587434 in
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA #021000021
and (b) providing sufficient information with such wire transfer to
identify the source and application of
such funds;
with a notice of any such payment (and all other notices in respect of
payment) to:
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Securities Department - Cashier
In the case of all other communications:
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183-2030
Facsimile Telephone No. 203-954-5243
Attention: Capital Finance Division
<PAGE>
SCHEDULE I
(page 3 of 5)
This Schedule to the foregoing Agreement with respect to the Debentures
of the Company sets forth the maturity date, interest rate and the aggregate
principal amount of the Debentures to be purchased by each Purchaser and the
money transfer and notice instructions for each Purchaser.
Aggregate Principal
Purchaser Registration Amount of Purchase
The Travelers TRAL & CO $1,500,000
Indemnity Company
PAYMENT AND NOTICE INSTRUCTIONS
In the case of all payments on account of the Notes in accordance with Section
4.1, by:
(a) crediting (in the form of federal funds bank wire transfer or
other funds available on the date of payment) the Account
entitled The Travelers Insurance Company - Consolidated
Private Placement Account No. 910-2-587434 in
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA #021000021
and (b) providing sufficient information with such wire transfer to
identify the source and application of such funds;
with a notice of any such payment (and all other notices in respect of
payment) to:
The Travelers Indemnity Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Securities Department - Cashier
In the case of all other communications:
The Travelers Indemnity Company
One Tower Square
Hartford, Connecticut 06183-2030
Facsimile Telephone No. 203-954-5243
Attention: Capital Finance Division
<PAGE>
SCHEDULE I
(page 4 of 5)
This Schedule to the foregoing Agreement with respect to the Debentures
of the Company sets forth the maturity date, interest rate and the aggregate
principal amount of the Debentures to be purchased by each Purchaser and the
money transfer and notice instructions for each Purchaser.
Aggregate Principal
Purchaser Registration Amount of Purchase
--------- ------------ ------------------
American United Life 4 Debentures, 3 @ $7,000,000
Insurance Company $2,000,000 and 1 @
$1,000,000, each
registered in the
name of American
United Life Insurance Company
PAYMENT AND NOTICE INSTRUCTIONS
In the case of all payments on account of the Notes in accordance with Section
4.1, by:
(a) crediting (in the form of federal funds bank wire transfer or
other funds available on the date of
payment) its Account No. 32032-50 in
Bank One
Indianapolis Trust Cage
16th Floor
111 Monument Circle
Indianapolis, IN 46277
ABA #0740-0001-0
and (b) providing sufficient information with such wire transfer to
identify the source and application of such funds;
with a notice of any such payment (and all other notices in respect of payment)
and all other communications:
Securities Department
American United Life Insurance Company
Post Office Box 368
Indianapolis, IN 46206
Facsimile Telephone # 317-263-1225
<PAGE>
SCHEDULE I
(page 5 of 5)
This Schedule to the foregoing Agreement with respect to the Debentures
of the Company sets forth the maturity date, interest rate and the aggregate
principal amount of the Debentures to be purchased by each Purchaser and the
money transfer and notice instructions for each Purchaser.
Aggregate Principal
Purchaser Registration Amount of Purchase
Modern Woodmen Modern Woodmen $5,000,000
of America of America
PAYMENT AND NOTICE INSTRUCTIONS
In the case of all payments on account of the Notes in accordance with Section
4.1, by:
(a) crediting (in the form of federal funds bank wire transfer or
other funds available on the date of payment) its Account
entitled Modern Woodmen of America Account No. 347-904-5 in
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60690
ABA No. 071-000-288
and (b) providing sufficient information with such wire transfer to
identify the source and application of
such funds;
with a notice of any such payment (and all other notices in respect of payment)
and all other communications to:
Modern Woodmen of America
1701 1st Avenue
Rock Island, IL 61201
Attn: Investment Department
Facsimile Tel. # 309-786-1701
<PAGE>
EXHIBIT A
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
8.75% Senior Debenture due June 30, 2012
$
, 1992
Public Service Company of North Carolina, Incorporated (the "Company"),
a North Carolina corporation, for value received, hereby promises to pay to or
registered assigns the principal sum of Dollars ($ ) on June 30, 2012; and to
pay interest (computed on the basis of a 360-day year of twelve 30-day months)
on the unpaid principal balance hereof from the date of this Note at the rate of
8.75% per annum, semi-annually on the thirtieth day of June and the thirty-first
day of December in each year, commencing with the payment date next succeeding
the date hereof, until the principal amount hereof shall become due and payable;
and to pay on demand interest on any overdue principal (including any overdue
prepayment of principal) and premium, if any, and (to the extent permitted by
applicable law) on any overdue payment of interest, at the rate of 9.75% per
annum.
Payments of principal, premium, if any, and interest shall be made in
such coin or currency of the United States of America as at the time of payment
is legal tender for the payment of public and private debts by wire transfer of
immediately available funds to the registered holder hereof at the address shown
in the register maintained by the Company for such purpose, or, at the option of
the holder hereof, in such manner and at such other place in the United States
of America as the holder hereof shall have designated to the Company in writing.
This Debenture is one of an issue of Senior Debentures of the Company
issued in an aggregate principal amount limited to $32,000,000 pursuant to the
Company's Debenture Purchase Agreements dated as of June 25, 1992 between the
Company and The Travelers Insurance Company, The Travelers Life and Annuity
Company, The Travelers Indemnity Company, American United Life Insurance Company
and Modern Woodmen of America and is entitled to the benefits thereof. As
provided in such Agreements, this Debenture is subject to prepayment, in whole
or. in part, with a Make-Whole Premium as specified in said Agreements. The
Company agrees to make required prepayments on account of said Debentures in
accordance with the provisions of said Agreements.
<PAGE>
-2-
This Debenture is a registered Debenture and is transferable only by
surrender thereof at the principal office of the Company in Gastonia, North
Carolina, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of this Debenture or its attorney duly
authorized in writing.
Under certain circumstances, as specified in said Agreements. the
principal of this Debenture may be declared due and payable in the manner and
with the effect provided in said Agreements.
This Debenture and said Agreements are governed by and construed in
accordance with New York law.
(Corporate Seal)
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
By______________________________________________
Name:___________________________________________
Title:____________________________________________
<PAGE>
EXHIBIT B
TO THE DEBENTURE
PURCHASE AGREEMENT
I. LIST OF SUBSIDIARIES AND AFFILIATES
A Subsidiaries
State of
Name of Subsidiary Incorporation Parent %
Ownership
PSNC Natural Resources NC Public Service Company 100
Corporation ('NRC") of North Carolina, Inc.
Tar Heel Energy Corporation NC NRC 100
PSNC Production Corporation NC NRC 100
PSNC Exploration Corporation NC NRC 100
PSNC Propane Corporation NC NRC 100
B Affiliates
None
II. INDEBTEDNESS OF COMPANY
Principal Amount
Description of Debt Outstanding at 5/31/92 Description of Security
A. First Mortgage Bonds
7 3/8% Series G, due 1993 $3,319,000 General Assets of Company
9 7/8% Series H, due 1995 $3,694,000 General Assets of Company
8% Series I, due 1998 $4,400,000 General Assets of Company
9% Series 3, due 1992 $ 760,000 General Assets of Company
B Senior Debentures
8.65% due 2002 $25,000,000 Unsecured
10% due 2003 25,000,000 Unsecured
10% due 2004 43,000,000 Unsecured
C. Interim Bank Loans
Principal Amount Description of
Bank Outstanding at 6/08/92 Security
Central Carolina Bank & Trust Co. $1,000,000 Unsecured
Wachovia Bank of North Carolina, N.A. 1,500,000 Unsecured*
NationsBank of North Carolina, N.A. 3,000,000 Unsecured
Signet Bank 4,000,000 Unsecured
Trust Company Bank 1,500,000 Unsecured*
First Union National Bank of 3,000,000 Unsecured
North Carolina
Branch Banking & Trust Co. 1,000,000 Unsecured
* Promissory note grants lender a lien in all assets in lender's possession.
D. Intercompany Debt
Principal Amount Description of
Borrower Lender Outstanding at May 31, 1992 Security
-------- ------ --------------------------- -----------
PSNC Natural Resources Tar Heel Energy $9,903,917 Certain ownership
Corporation ("NRC") Corporation interests in
exploration and
development
programs
Tar Heel Energy Corporation Public Service Company $20,502,744 Unsecured
of North Carolina, Inc.
and NRC
PSNC Exploration Corporation NRC $
2,304,801 Unsecured
PSNC Production Corporation NRC ($ 8,975,750)
Certain ownership
interests in
exploration and
development
programs
PSNC Propane Corporation NRC $10,684,496 Unsecured
III PENDING LITIGATION
1. In the Matter of Application of the Attorney General for an Investigation of
the Reasonableness of the Weather Normalization Adjustment Trackers Approved for
Piedmont Natural Gas Company, Public Service Company of North Carolina and North
Carolina Natural Gas Corporation, Docket No.G-100. Sub 61. On April 15, 1992,
the North Carolina Attorney General filed a petition asking for the repeal by
the North Carolina Utilities Commission (the "Commission") of the Weather
(Normalization Adjustment rider approved by the Commission )for the Company on
the grounds that such rider constitutes an unjust and unreasonable rate. The
Commission entered an order on April 29, 1992 asking for suggestions on how to
proceed with the Attorney General's petition. The Company filed a response to
such order on May 20, 1992.
No further action has been taken by the Commission to date.
2. Worthy Brothers Pipeline Corporation V. Public Service Company of North
Carolina V. Stupp Corporation. In March 1991, Worthy Brothers Pipeline Company
("Worthy") filed a complaint against the Company seeking approximately
$2,800,000 for extra work performed under a construction contract for the
construction of a gas transmission line. The Company has joined Stupp
Corporation, a vendor of allegedly defective pipe material, as a party to the
lawsuit. The Company is vigorously defending the lawsuit, which is still in the
discovery stage.
<PAGE>
EXHIBIT C
MOORE & VAN ALLNN
ATTORNEYS AT LAW
3000 NCNB PLAZA
CHARLOTTE, N.C. 28280-8085
Telephone (704) 331-1000
June 26, 1992
To the Purchasers listed on Schedule I
to the Debenture Purchase Agreements
c/o Day, Berry & Howard
CityPlace
Hartford, Connecticut 06103-3499
Re: Debenture Purchase Agreements (the "Agreements") dated as of June 25.
1992 by and among Public Service Company of North Carolina. Incorporated and the
Purchasers listed on Schedule I thereto (the "Purchasers")
Ladies and Gentlemen:
We have acted as North Carolina counsel to Public Service Company of
North Carolina, Incorporated, a Worth Carolina corporation (the "Company"), in
connection with the transactions contemplated by the Agreements between the
Company and you. All capitalized terms defined in the Agreements are used with
the same meanings, unless otherwise defined, in this opinion letter..
We have examined an executed copy of the Agreements and the Debentures
registered in your name and originals or copies, certified or otherwise
identified to our satisfaction, of such other documents, corporate records and
certificates of public officials and of corporate officers, and have made such
investigations of law, as we deemed appropriate for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies. As to certain factual matters, we have relied to the extent deemed
appropriate by us upon certificates and representations of the Company and its
officers delivered pursuant to the Agreement or delivered herewith and the
representations of the Company contained in the Agreements.
In rendering the opinions expressed below, we have assumed, with
respect to all the documents referred to in this opinion letter, that (except as
to the Company):
<PAGE>
Purchasers
June 26, 1992
Page 2
(i) Such documents have been duly authorized by, have been
duly executed and delivered by, and constitute legal, valid, binding
and enforceable obligations of, all the parties to such documents;
(ii) all signatories to such documents have been duly
authorized; and
(iii) all the parties to such documents are duly organized and
validly existing and have the power and authority (corporate or other)
to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, we are of the opinion that:
(1) Each of the Company and each subsidiary (i) is a corporation
validly existing and, to the best of our knowledge, in good standing under the
laws of its jurisdiction of incorporation, (ii) has all requisite corporate
power and corporate authority to own and operate its Properties and to carry on
its business as now conducted, and (iii) has duly qualified and is authorized to
do business in, and, to the best of our knowledge, is in good standing as a
foreign corporation in, each jurisdiction where the character of its Properties
or the nature of its activities makes such qualification necessary, except where
failure to qualify would not materially and adversely affect the Properties,
business or financial condition of the Company and its subsidiaries taken as a
whole or the ability of the Company to perform its obligations under the
Debentures or the Agreements.
(2) To the best of our knowledge, except as specifically described in
the Form 10-K or in Exhibit B to the Agreements, there are no proceedings or
investigations pending or threatened against or affecting the Company or any
subsidiary in any North Carolina court or before any North Carolina governmental
authority or arbitral board or tribunal, which involve a substantial risk of
materially and adversely affecting the Properties, business or financial
condition of the Company and its subsidiaries taken as a whole or the ability of
the Company to perform its obligations under the Agreements or the Debentures.
To the best of our knowledge, neither the Company nor any subsidiary is in
default with respect to any order of any North Carolina court, governmental
authority or arbitral board or tribunal.
<PAGE>
Purchasers
June 26, 1992
Page 3
(3) The Board of Directors of the Company has duly authorized the
execution and delivery of the Agreements and the Debentures. The Agreements and
the Debentures have been duly executed and delivered to you.
(4) The Agreements and the Debentures by their terms are stated to be
governed by the law of the State of New York. We express no opinion as to
whether any court would give effect to the choice of flew York law provided for
in the Agreements and the Debentures. However, if the Agreements and the
Debentures were stated to be governed by and construed in accordance with the
laws of the State of North Carolina, or if a North Carolina court were to apply
the laws of the State of North Carolina to the Agreement. and the Debentures,
each of the Agreements and the Debentures would constitute the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforcement thereof nay be limited by general equitable principles and
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting the enforcement of creditors rights
generally.
(5) The execution and delivery of the Agreements, the offer, issue,
sale and delivery of the Debentures by the Company and compliance by the Company
with the terms and provisions of the Agreements and the Debentures are within
its corporate powers, and will not (a) result in any breach of any material
provision of, constitute a default under, or result in the creation of any Lien
upon any of the Property of the Company or any Subsidiary under the provisions
of, any material agreement or other material instrument known to us to which the
Company or any subsidiary is a party or by which it may be bound or to which any
of its Property is subject or (b) violate any order, judgment or decree known to
us, or any North Carolina or Federal statute, law or regulation, to which the
Company or any Subsidiary or any of their respective Properties are subject;
provided, however, we give no opinion relating to federal or North Carolina
securities laws except as set forth in paragraphs 8 and 9 below, or (c) violate
the respective charter instruments or by-laws of the Company or any subsidiary.
(6) There are no provisions in any indenture (including the Indenture),
mortgage, deed of trust or other agreement or instrument known to us to which
the Company is now a party or by which the Company is bound which prohibit the
payment of principal of, or premium or interest on, the Debentures.
(7) The issuance of the Debentures has been duly approved by the
commission; such approval is in full force and effect and
<PAGE>
Purchasers
June 26, 1992
Page 4
has not been stayed or suspended and is not the subject of any pending, or to
the best of our knowledge, threatened attack or appeal; such approval is
sufficient to enable the Company to perform its obligations under the Agreements
and the Debentures the order of the Commission approving the Debentures is
subject to appeal, but the Debentures, when issued and sold pursuant to or in
reliance on and in accordance with such order, shall be valid and binding in
accordance with their terms; no other consent, approval or authorization of, or
filing, registration or qualification with, any North Carolina or Federal
governmental authority on the part of the Company or any Subsidiary is required
in connection with the execution and delivery of the Agreements or the offer,
issue, sale or delivery of the Debentures; provided, however, that the opinion
set forth in this paragraph (7) is limited by the effect of Worth Carolina
General Statutes Section 62-153, which authorizes the commission to disapprove
any contract that it finds to be unjust or unreasonable and made for the purpose
or with the effect of concealing, transferring or dissipating the earnings of a
public utility; provided further, we give no opinion relating to Federal or
North Carolina securities laws except as set forth in paragraphs 8 and 9 below.
(8) None of the transactions contemplated in the Agreements (including,
without limitation thereof, the use of the proceeds by the Company from the sale
of the Debentures as described in the Agreements) will violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934, as amended, or
any regulations issued pursuant thereto, including, without limitation,
Regulations G, T and x of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter II.
(9) It is not necessary in connection with the offer or sale of the
Debentures to register such Debentures under the Securities Act of 1933, as
amended, or to comply with any requirement of the Trust Indenture Act of 1939,
as amended.
(10) To the best of our knowledge, neither the company nor any
subsidiary is a party to any contract or agreement which restricts the right or
ability of such corporation to issue Debt of any kind, other than (i) the
Agreements, (ii) the Indenture, and (iii) the agreements and instruments
referred to in section 2.3(b) of the Agreements and listed in Exhibit B thereto.
To the best of our knowledge, neither the Company nor any Subsidiary has agreed
or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its Property, whether now owned or hereafter
acquired, to be subject to a Lien other than the Lien of the Indenture.
<PAGE>
Purchasers
June 26, 1992
Page 5
(11) The Company is a natural gas local distribution company subject to
regulation as a public utility by the Commission.
(12) The issue and sale of the Debentures are in substantial conformity
with the provisions of the order of the Commission, except for such
nonconformity's that will not affect the validity or enforceability of the
Debentures.
(13) No North Carolina taxes are required to be paid in connection
with the issuance and sale of the Debentures.
In addition to the qualifications set forth above, our opinion set
forth above is subject to the following qualifications:
(i) Our opinion in paragraph 4 is subject to the requirement
that the parties to the Agreements act with reasonableness and in good
faith to the extent required by applicable law.
(ii) In rendering our opinion in paragraphs 5 and 7, we express
no opinion as to (a) any violation of law, rule or regulation that is
applicable to any Purchaser, or that results solely from the status of
any Purchaser as an insurance company or facts relating specifically to
any Purchaser, including, without limitation, any restrictions on legal
investments, or (b) any action or filing which is required solely as a
result of the status of any Purchaser as an insurance company, or facts
relating specifically to any Purchaser.
(iii) Our opinion set forth in paragraph 5 above as to the lack
of violation of the provisions of any laws of, and the obtaining of all
necessary governmental approvals from, any governmental authority or
regulatory body of the United States or the State of North Carolina is
based solely upon a review of those laws that, in our experience, are
normally applicable to transactions of the type contemplated by the
Agreements.
(iv) Our opinion expressed above is limited to the laws of the state of
North Carolina and the Federal laws of the United States, and we do not express
any opinion herein concerning any other law. Without limiting the generality of
the foregoing, we express no opinion as to the effect of the law of any
jurisdiction other than the State of North Carolina which may limit the rates of
interest legally chargeable or collectible.
<PAGE>
Purchasers
June 26, 1992
Page 6
(v) To the extent our opinion is qualified by the phrase "'To the
best of our knowledge"' or "'known to us", it is based solely upon (a)
an officer's certificate of Robert D. Voigt, the Company's Senior Vice
President-Finance and Treasurer, a copy of which is attached hereto,
(b) the representations and warranties of the Company set forth in the
Agreements, including the information contained on Exhibit B thereto,
(c) the actual knowledge of George V. Manna and Jeffrey S. Hay who are,
respectively, the litigation partner of Moore & Van Allen who is
responsible for handling litigation matters and the corporate partner
who is responsible for handling corporate and securities matters for
which we have been retained as counsel by the Company, and (d) with
respect to the opinion set forth in paragraph 1, certificates of
existence or good standing provided by relevant governmental agencies.
(vi) With respect to The opinion set forth in paragraph 9 above,
we have relied on the letter from Dillon, Read & Co. Inc. dated as of
June 23, 1992 with respect to the factual matters stated therein. A
copy of such letter is attached hereto.
(vii) with respect to the opinion set forth in paragraph (7)
above, to the best of our knowledge, there are no reported decisions in
which North Carolina General Statutes Section 62-153 has been invoked
by the Commission to invalidate any arms-length agreement between a
utility and a nonaffiliate.
The opinion contained herein is being rendered to you in connection
with the execution and delivery by the Company of the Agreement. and the
transactions contemplated thereby and may not be relied upon by any other party
or for any other purpose.
Very truly yours,
<PAGE>
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED OFFICER'S CERTIFICATE
The undersigned, Robert V. Voigt, senior Vice President-Finance and
Treasurer of PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED, a
corporation organized and existing under the laws of the State of North Carolina
(the "Company"), does hereby certify that:
1. As senior Vice President-Finance and Treasurer, I am familiar with
the business and affairs of the Company and with the proceedings taken by the
Company in connection with the transactions contemplated by the Debenture
Purchase Agreements (the "Agreements"; except as otherwise defined herein, all
terms used herein and defined in the Agreements shall have the meaning assigned
to them therein) dated as of June 25, 1992 by and among the Company and the
purchasers listed on schedule I thereto.
2. I am familiar with the terms of the Agreements and the Debentures
and make this certificate with the intent that it will be relied upon by Moore &
Van Allen as a basis for their opinion with respect to this transaction.
3. To the best of my knowledge, the Company and each subsidiary have
paid all franchise taxes and filed all annual and other reports required to be
paid or filed in each jurisdiction set forth opposite their respective names on
Annex I hereto. To the best of my knowledge, neither the Company nor any
subsidiary has taken any action which might cause it not to continue to be in
good standing or impair its corporate existence or its authorization to transact
business in any jurisdiction set forth opposite its name on Annex I hereto.
4. Neither the Company nor any subsidiary has any office or employee in
any jurisdiction other than those jurisdictions set forth opposite its name on
Annex I hereto.
5. Except as specifically described in the Form 10-K or in Exhibit B to
the Agreements, there are no proceedings or investigations pending or (to the
best of my knowledge) threatened against or affecting the Company or any
Subsidiary in any North Carolina court or before any North Carolina governmental
authority or arbitral board or tribunal, which involve a substantial risk of
materially and adversely affecting the Properties, business or financial
condition of the Company and its subsidiaries taken as a whole or the ability of
the Company to perform its obligations under the Agreements or the Debentures.
Neither the Company nor any subsidiary is in default with respect to any order
of any North Carolina court, governmental authority or arbitral board or
tribunal.
6. The execution and delivery of the Agreements, the offer, issue, sale
and delivery of the Debentures by the Company and compliance by the Company with
the terms and provisions of the Agreements and the Debentures will not (a)
result in any breach of any material provision of, constitute a default under,
or result in the creation of any Lien upon any of the Property of the Company or
any subsidiary under the provisions of, any material agreement or other material
instrument to which the Company or any subsidiary is a party or by which it may
be bound or to which any of its Property is subject or (b) violate any order,
judgment or decree to which the Company or any subsidiary or any of their
respective Properties are subject.
7. There are no provisions in any indenture (including the
Indenture), mortgage, deed of trust or other agreement or instrument to which
the Company is now a party or by which the Company is bound which prohibit the
payment of principal of, in premium or interest on, the Debentures.
8. Neither the Company nor any subsidiary is a party to any contract or
agreement which restricts the right or ability of such corporation to issue Debt
of any kind, other than (i) the Agreements, (ii) the Indenture, and (iii) the
agreements and instruments referred to in Section 2.3(b) of the Agreements and
listed in Exhibit B thereto. Neither the Company nor any Subsidiary has agreed
or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its Property, whether now owned or hereafter
acquired, to be subject to a Lien other than the Lien of the Indenture.
IN WITNESS Whereof', I have set forth my hand as of the 26th day of
June, 1992.
Robert D. Voigt, Senior Vice President-Finance and
Treasurer
<PAGE>
ANNEX I
List of Jurisdictions
Name Jurisdiction
1. Public Service Company of North Carolina *
North Carolina, Incorporated
2. PSNC Natural Resources Corporation North Carolina *
3. Tar Heel Energy Corporation North Carolina *
Texas
Louisiana
Alabama
4. PSNC Production Corporation North Carolina *
Texas
Louisiana
5. PSNC Exploration Corporation North Carolina *
Texas
Louisiana
6. PSNC Propane Corporation North Carolina *
South Carolina
* Jurisdiction of incorporation
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, New York 10022
212-906-1000
June 23, 1992
Day, Berry & Howard
Cityplace
Hartford, CT 06103-3499
Attention: Michael Halloran
Public Service Company of North Carolina, Inc ("the Company")
400 Cox Road
Gastonia, NC 28O53-1398
Re: $32,000,000 8.75% Senior Debentures Due May 2012 ("the Debentures")
Dear Sir and Madam:
With regard to the above referenced Debentures and Section 2.13 the
Debenture Purchase Agreement dated as of June 25,1992 among the Company
and the Purchasers of such Debentures listed therein, Dillon, Read & Co.
Inc., as agent for the Company, has not offered the Debentures or any
similar securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with,
any person other the then the Purchasers and not more than 12 other
accredited investors, as that term is defined in Rule 501 of Regulation
D, promulgated by the SEC pursuant to the Securities Act of 1933, as
amended (the "Securities Act").
Sincerely Yours,
David M. Dickson, Jr.
Vice-President
<PAGE>
EXHIBIT D
June , 1992
[Name of Purchaser]
Ladies and Gentlemen:
This opinion is delivered to you pursuant to Section 3.2 of the
Debenture Purchase Agreement dated as of June 25, 1992 (the "Agreement"),
between you and Public Service Company of North Carolina, Incorporated (the
"Company"). In connection with this opinion, we have examined the documents
delivered on the Closing Date and have examined or caused to be examined such
other papers, documents and records, have made such examination of law and have
satisfied ourselves as to such other matters as we have deemed relevant and
necessary to enable us to express the opinions set forth below. In such
examination we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as certified copies and the
authenticity of the originals of such latter documents. All of the terms used
herein that are defined in the Agreement shall have the same meaning when used
herein unless the context otherwise requires.
Based upon the foregoing, we are of the opinion that:
(1) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of North Carolina.
(2) The Board of Directors of the Company has duly authorized the
execution and delivery of the Agreement, and the Agreement constitutes the
legal, valid and binding obligation of the Company enforceable in accordance
with its terms, except as enforcement thereof may be limited by general
equitable principles and by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally.
(3) The execution and delivery of the Agreement, the offer, issue, sale
and delivery of the Debentures and compliance by the Company with the terms and
provisions of the Agreement and the Debentures will not conflict with, result in
any breach of any of the provisions of, constitute a default under, or result in
the creation of any Lien upon any Property of the Company under the provisions
of the Articles of Incorporation or the by-laws of the Company.
<PAGE>
[Purchaser]
Page 2
(4) The issuance of the Debentures has been duly approved by the
Commission; such approval is sufficient to enable the Company to perform its
obligations under the Agreement and the Debentures; and no other consent,
approval, or authorization of, or filing, registration or qualification with,
any federal or North Carolina governmental authority or other Person on the part
of the Company is required in connection with the execution and delivery of the
Agreement or the offer, issue, sale or delivery of the Debentures.
(5) None of the transactions contemplated in the Agreement
(including, without limitation thereof, the use of the proceeds from the sale of
the Debentures) will violate or result in a violation of section 7 of the
securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II.
(6) The offer, issuance, sale and delivery of the Debentures under the
circumstances contemplated by the Agreement are exempt transactions under the
Securities Act of 1933, as amended, and do not, under existing law, require the
registration of the Debentures under said Securities Act or compliance with any
requirement of, the Trust Indenture Act of 1939, as amended.
(7) The Debentures have been duly executed and delivered to you and are
legal, valid and binding obligations of the Company enforceable in accordance
with their terms, except as enforcement thereof may be limited by general
equitable principles and by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally.
In rendering the foregoing opinion we have also (i) relied as to
certain factual matters on information obtained from public officials and (ii)
assumed without verification the accuracy of the statements contained in
certificates, agreements and other documents delivered to you or other parties
in connection with this transaction and the closing thereof.
In giving our opinion as to the matters set forth in paragraphs (1) and
(4) above, we are, with your consent, relying entirely on the opinion of Messrs.
Moore & Van Allen being delivered to you on the date hereof. We have reviewed
said opinion and the scope and form thereof is satisfactory to us and in our
opinion you and we are justified in relying thereon.
<PAGE>
[Purchaser)
Page 3
Very truly yours,
DAY, BERRY & HOWARD
<PAGE>
EXHIBIT E
SUBORDINATION PROVISIONS OF NOTES
The [name of issuer] hereby agrees that: (i) all indebtedness
(including without limitation principal, premium, if any, and interest)
evidenced by this note is hereby expressly made, and shall be, subordinate and
subject in right of payment to the prior payment in full of all Senior Debt (as
hereinafter defined); (ii) no payment of any kind with respect to this note
shall be made by [name of issuer) if the principal amount of any of the Senior
Debt shall have become due and payable, whether pursuant to a declaration of
acceleration or otherwise, and all amounts then due and payable shall not then
have been fully paid; (iii) in the event of (a) any insolvency or bankruptcy
case or proceeding or other similar case or proceeding under any federal or
state bankruptcy or similar law, or any receivership, liquidation, arrangement,
relief, reorganization or other similar case or proceeding in connection
therewith, relative to Public Service Company of North Carolina, Incorporated
(herein the "Company") or [name of issuer) or to their respective creditors, as
such, or to their respective assets, or (b) any liquidation (total or partial),
dissolution, reorganization, arrangement, adjustment, protection, composition,
relief or other winding up of the Company or [name of issuer) or their
respective debts, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company or [name of
issuer], then and in any such event the holders of Senior Debt shall be entitled
to receive payment in full in cash of all amounts due or to become due on or in
respect of all senior Debt (including interest thereon accruing after the
commencement of any such proceeding), or provision shall be made for such
payment in a manner accepted by the holders of a majority in principal amount of
the Senior Debt, before the holder of this note may retain any payment or other
distribution of cash, property or securities on account of this note, and to
that end the holders of this note agree to promptly pay over or deliver, or
cause to be paid over or delivered, in the manner provided for payment and
delivery in clause (iv) below, to the holders of Senior Debt or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior Debt
may have been issued, as their respective interests may appear, any such payment
or distribution which may be payable or deliverable by or on behalf of the
Company or [name of issuer] or any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person in any such case, proceeding, dissolution,
liquidation or other event described above to the
<PAGE>
[Purchaser]
Page 2
holders of this note, for application or in payment in full of the Senior Debt
(including interest thereon accruing after the commencement of any such
proceeding), after giving effect to any concurrent payment or distribution to
the holders of the Senior Debt, before any such payment or distribution shall be
retained by any holder of this note; and (iv) any payment or distribution (a
"Wrongful Payment") of any character (whether in cash, property, or securities)
which shall be received and retained by a holder of this note in contravention
of any of the terms of the foregoing provisions shall be held in trust for the
benefit of, and forthwith paid over and delivered, in the same form as received
(with any necessary endorsement), directly to the holders of Senior Debt or
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of the Senior Debt
may have been issued, as their respective interests may appear, for application
to the payment in full of the Senior Debt after giving effect to any concurrent
payment or distribution to or for the holders of the Senior Debt.
As used herein, the term "Senior Debt" means principal of (and premium)
and interest on, with respect to (a) all indebtedness of the Company evidenced
by the Debentures issued pursuant to the Debenture Purchase Agreements (herein,
the "Agreements")dated as of June 25, l992 between Public Service Company of
North Carolina, Incorporated and The Travelers Insurance Company, The Travelers
Life and Annuity Company, The Travelers Indemnity Company, American United Life
Insurance Company and Modern Woodmen of America, and (b) amendments, renewals,
extensions, modifications and refundings of any such Debentures so long as such
amendment, renewal, extension modification or refunding does not (1) increase
the principal amount, rate of interest (direct or indirect, including, without
limitation imputed interest) or such amounts payable with respect to the
Debentures.
All terms used herein shall have the meanings set forth in the
Agreements.
