CAROLINA POWER & LIGHT COMPANY
Extendible Notes due October 28, 2009
UNDERWRITING AGREEMENT
October 25, 1999
Merrill Lynch, Pierce, Fenner & Smith Inc.
250 Vesey Street
New York, New York 10281
Dear Ladies and Gentlemen:
The undersigned Carolina Power & Light Company (the "Company") hereby
confirms its agreement with Merrill Lynch, Pierce, Fenner & Smith Inc. (the
"Underwriter") as follows:
1. Underwriter. The term "Underwriter" as used herein shall be deemed
to mean the addressee of this Agreement.
2. Description of Securities. The Company proposes to issue and sell
its debt securities of the designation, the terms and in the amount specified in
Schedule I hereto (the "Securities") in one or more new series under a governing
indenture (the "Indenture") between the Company and The Chase Manhattan Bank, as
trustee (the "Trustee"), in substantially the form heretofore delivered to the
Underwriter.
3. Representations and Warranties of the Company. The Company
represents and warrants to the Underwriter that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (No.
333-69237) (the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), for the registration of up to
an aggregate of $1,500,000,000 of the Company's First Mortgage Bonds,
Senior Notes and Debt Securities (collectively, the "Registered
Securities") in unallocated amounts, as each is defined in the
Registration Statement. The Registration Statement has been declared
effective by the Commission, and the Indenture has been qualified under
the Trust Indenture Act of 1939 Act, as amended (the "1939 Act"). The
term "Registration Statement" shall be deemed to include all amendments
to the date hereof and all documents incorporated by reference therein
(the "Incorporated Documents"). The prospectus included in the
Registration Statement, as supplemented by a preliminary prospectus
supplement, dated October 18, 1999, relating to the Securities (the
"Preliminary Prospectus Supplement"), and all prior amendments or
supplements thereto (other than amendments or supplements relating to
securities of the Company other than the Securities), including the
Incorporated Documents, is hereinafter
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referred to as the "Preliminary Prospectus." The prospectus included in
the Registration Statement, as it is to be supplemented by a prospectus
supplement, dated on or about the date hereof, relating to the
Securities (the "Prospectus Supplement"), and all prior amendments or
supplements thereto (other than amendments or supplements relating to
securities of the Company other than the Securities), including the
Incorporated Documents, is hereinafter referred to as the "Prospectus."
Any reference herein to the terms "amend," "amendment" or "supplement"
with respect to the Registration Statement or the Prospectus shall
refer to and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), deemed to be
incorporated therein after the date hereof and prior to the termination
of the offering of the Securities by the Underwriter, and any
references herein to the terms "Registration Statement" or "Prospectus"
at a date after the filing of the Prospectus Supplement shall be deemed
to refer to the Registration Statement or the Prospectus, as the case
may be, as each may be amended or supplemented prior to such date. As
of the date hereof, the Company has sold Registered Securities in the
aggregate amount of $400,000,000.
(b) Prior to the termination of the offering of the
Securities, the Company will not file any amendment to the Registration
Statement or supplement to the Prospectus which shall not have
previously been furnished to the Underwriter or of which the
Underwriter shall not previously have been advised or to which the
Underwriter shall reasonably object in writing and which has not been
approved by the Underwriter or its counsel acting on behalf of the
Underwriter.
(c) The Registration Statement, at the time and date it was
declared effective by the Commission, complied, and the Registration
Statement, the Prospectus and the Indenture, at the date the Prospectus
is filed with, or transmitted for filing to, the Commission pursuant to
Rule 424 under the Securities Act ("Rule 424") and at the Closing Date,
will comply, in all material respects, with the applicable provisions
of the Securities Act and the 1939 Act and the applicable rules and
regulations of the Commission thereunder; the Registration Statement,
at the time and date it was declared effective by the Commission, did
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Prospectus, at the date it
is filed with, or transmitted for filing to, the Commission pursuant to
Rule 424 and at the Closing Date, will not contain an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
foregoing representations and warranties in this subparagraph (c) shall
not apply to statements or omissions made in reliance upon and in
conformity with information furnished herein or in writing to the
Company by the Underwriter expressly for use in the Prospectus or to
any statements in or omissions from the Statements of Eligibility
(Forms T-1 and T-2), as applicable, of the Trustees under any
indenture. The Incorporated Documents, when they were filed with the
Commission, complied in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder, and any documents so filed and incorporated by
reference subsequent to the date hereof and prior to the termination of
the offering of the Securities by the Underwriter will, when they are
filed with the Commission, comply in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder; and, when read together with the Registration
Statement and the Prospectus, none of such documents included or
includes or will include any untrue statement of a material fact or
omitted or omits or will omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
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(d) The financial statements incorporated by reference in the
Registration Statement present fairly the financial condition and
operations of the Company at the respective dates or for the respective
periods to which they apply; such financial statements have been
prepared in each case in accordance with generally accepted accounting
principles consistently applied throughout the periods involved; and
Deloitte & Touche LLP, who have audited certain of the financial
statements, are independent public or independent certified public
accountants as required by the Securities Act or the Exchange Act and
the rules and regulations of the Commission thereunder.
(e) Except as reflected in, or contemplated by, the
Registration Statement and the Prospectus, since the respective dates
as of which information is given in the Registration Statement and
Prospectus, and prior to the Closing Date, there has not been any
material adverse change in the business, property, financial condition,
earnings, business affairs, or business prospects of the Company and
its subsidiaries considered as a whole, and since such dates and prior
to the Closing Date, there has not been any material transaction
entered into by the Company other than transactions contemplated by the
Registration Statement and Prospectus or transactions arising in the
ordinary course of business. The Company has no material contingent
obligation which is not disclosed in the Registration Statement and
Prospectus.
(f) The consummation of the transactions herein contemplated
and the fulfillment of the terms hereof on the part of the Company to
be fulfilled have been duly authorized by all necessary corporate
action of the Company in accordance with the provisions of its charter
(the "Charter"), by-laws and applicable law.
(g) The consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not result in a breach of
any of the terms or provisions of, or constitute a default under, the
Charter, the Company's by-laws, applicable law or any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company is now a party or any judgment, order, writ or decree of any
government or governmental authority or agency or court having
jurisdiction over the Company or any of its subsidiaries or any of
their assets, properties or operations.
(h) The Securities conform in all material respects to the
description contained in the Prospectus.
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of North Carolina with corporate power and authority to own, lease and
operate its properties and to conduct its business as contemplated
under this Underwriting Agreement, the Remarketing Agreement, the
Remarketing Agency Agreement and the other agreements to which it is a
party, and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
financial condition, earnings, business affairs or business prospects
of the Company and its subsidiaries considered as a whole.
(j) The outstanding capital stock of the Company has been duly
authorized and validly issued and is fully paid and non-assessable and
is not subject to preemptive or other similar rights.
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(k) The Company does not have any significant subsidiaries as
defined in Rule 1-02 of Regulation S-X promulgated under the Securities
Act.
(l) The Indenture (A) has been duly authorized, executed and
delivered by the Company, and, assuming due authorization, execution
and delivery by the Trustee, constitutes a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar
laws affecting creditor's rights generally and (ii) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity and except the effect on enforceability
of federal or state law limiting, delaying or prohibiting the making of
payments outside the United States); and (B) conforms in all material
respects to the description thereof in the Prospectus.
(m) The Securities have been duly authorized by the Company
and when issued and authenticated in the manner provided for in the
Indenture and delivered against payment of the consideration therefor
specified in the Officer's Certificate, will constitute valid and
legally binding obligations of the Company, entitled to the benefits of
the Indenture enforceable against the Company in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transferor or similar laws
affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity and except the effect on enforceability
of federal or state law limiting, delaying or prohibiting the making of
payments outside the United States). The Securities will be in the form
set forth in Schedule I, and each registered holder of Securities is
entitled to the benefits of the Indenture. Such Securities rank and
will rank on a parity with all unsecured and unsubordinated
indebtedness of the Company that is outstanding on the date hereof and
on each Remarketing Reset Date as contemplated in the Remarketing
Agreement or that may be incurred thereafter. The Securities will be
effectively subordinated to the prior claims of all holders of the
Company's First Mortgage Bonds, issued pursuant to a Mortgage and Deed
of Trust dated as of May 1, 1940, as amended or supplemented, and
Senior Notes, issued pursuant to an Indenture (For Senior Notes) dated
as of March 1, 1999, as amended or supplemented.
(n) Neither the Company nor any of its subsidiaries is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "1940 Act").
(o) Except as described in or contemplated by the Prospectus,
there are no pending actions, suits or proceedings against or affecting
the Company or any of its subsidiaries or properties which are likely
in the aggregate, to result in any material adverse change in the
business, property, financial condition, earnings, business affairs, or
business prospects of the Company and its subsidiaries considered as a
whole or which are likely in the aggregate to materially and adversely
affect the consummation of this Agreement, the Remarketing Agreement,
the Calculation Agency Agreement, the Remarketing Agency Agreement, the
Indenture, the Notes or the transactions contemplated herein or
therein.
(p) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the
performance by the Company of its obligations hereunder in connection
with the offering, issuance or sale of the Securities hereunder or the
consummation of the transactions herein contemplated or for the due
execution, delivery or performance of the
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Indenture by the Company, except such as have been already obtained or
as may be required under the Securities Act or state securities laws
and except for the qualification of the Indenture under the 1939 Act.
4. Purchase and Sale. On the basis of the representations, warranties
and covenants herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to the Underwriter, and the Underwriter
agrees to purchase from the Company, all of the Securities at the purchase price
set forth in Schedule I hereto.
5. Reoffering by Underwriter. The Underwriter agrees to make promptly a
bona fide public offering of the Securities to the public for sale as set forth
in the Prospectus, subject, however, to the terms and conditions of this
Agreement.
6. Time and Place of Closing. Payment for the Securities shall be made
at the place, time and date specified in Schedule I hereto against delivery of
the Securities at the office of The Chase Manhattan Bank, 450 West 33rd Street,
New York, New York 10001, or such other place, time and date as the Underwriter
and the Company may agree. The hour and date of such delivery and payment are
herein called the "Closing Date." Payment for the Securities shall be by wire
transfer of immediately available funds against delivery to The Depository Trust
Company or to The Chase Manhattan Bank, as custodian for The Depository Trust
Company, in fully registered global form registered in the name of Cede & Co.,
for the respective accounts specified by the Underwriter not later than the
close of business on the business day prior to the Closing Date or such other
date and time not later than the Closing Date as agreed by The Depository Trust
Company or The Chase Manhattan Bank. For the purpose of expediting the checking
of the certificates by the Underwriter, the Company agrees to make the
Securities available to the Underwriter not later than 10:00 A.M., on the last
full business day prior to the Closing Date at said office of The Chase
Manhattan Bank.
7. Covenants of the Company. The Company covenants with the Underwriter
that:
(a) As soon as possible after the execution and delivery of
this Agreement, the Company will file the Prospectus with the
Commission pursuant to Rule 424, setting forth, among other things, the
necessary information with respect to the terms of offering of the
Securities. The Company will promptly deliver to the Underwriter and to
counsel for the Underwriter, to the extent not previously delivered,
one fully executed copy or one conformed copy, certified by an officer
of the Company, of the Registration Statement, as originally filed, and
of all amendments thereto, heretofore or hereafter made, (other than
those relating solely to securities other than the Securities),
including any post-effective amendment (in each case including all
exhibits filed therewith and all documents incorporated therein not
previously furnished to the Underwriter), including signed copies of
each consent and certificate included therein or filed as an exhibit
thereto. The Company will also send to the Underwriter as soon as
practicable after the date of this Agreement and thereafter from time
to time as many copies of the Prospectus as the Underwriter may
reasonably request for the purposes required by the Securities Act.
(b) During such period (not exceeding nine months) after the
commencement of the offering of the Securities as the Underwriter may
be required by law to deliver a Prospectus, if any event relating to or
affecting the Company, or of which the Company shall be advised in
writing by the Underwriter shall occur, which in the Company's opinion
should be set forth in a supplement to or an amendment of the
Prospectus in order to make the Prospectus not misleading
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in the light of the circumstances when it is delivered to a purchaser,
or if it is necessary to amend the Prospectus to comply with the
Securities Act, the Company will forthwith at its expense prepare and
furnish to the dealers named by the Underwriter a reasonable number of
copies of a supplement or supplements or an amendment or amendments to
the Prospectus which will supplement or amend the Prospectus so that as
supplemented or amended it will comply with the Securities Act and will
not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading. In case the Underwriter is required to
deliver a Prospectus after the expiration of nine months after the
commencement of the offering of the Securities, the Company, upon the
request of the Underwriter, will furnish to the Underwriter, at the
expense of the Underwriter, a reasonable quantity of a supplemented or
amended prospectus, or supplements or amendments to the Prospectus,
complying with Section 10(a) of the Securities Act.
(c) The Company will make generally available to its security
holders, as soon as reasonably practicable, but in any event not later
than 16 months after the end of the fiscal quarter in which the filing
of the Prospectus pursuant to Rule 424 occurs, an earnings statement
(in form complying with the provisions of Section 11(a) of the
Securities Act, which need not be certified by independent public
accountants) covering a period of twelve months beginning not later
than the first day of the Company's fiscal quarter next following the
filing of the Prospectus pursuant to Rule 424.
(d) The Company will advise the Underwriter promptly of the
filing of the Prospectus pursuant to Rule 424 and of any amendment or
supplement to the Prospectus or Registration Statement or of official
notice of institution of proceedings for, or the entry of, a stop order
suspending the effectiveness of the Registration Statement and, if such
a stop order should be entered, use its best efforts to obtain the
prompt removal thereof.
(e) The Company will use its best efforts to qualify the
Securities as may be required, for offer and sale under the Blue Sky or
legal investment laws of such jurisdictions as the Underwriter may
designate, and will file and make in each year such statements or
reports as are or may be reasonably required by the laws of such
jurisdictions; provided, however, that the Company shall not be
required to qualify as a foreign corporation or dealer in securities,
or to file any general consents to service of process under the laws of
any jurisdiction. The fees and disbursements of Underwriter's counsel
shall be paid by the Underwriter (subject, however, to the provisions
of paragraph 8 requiring payment by the Company of fees and expenses
not to exceed $5,000); provided, however, that if this Agreement is
terminated in accordance with the provisions of paragraph 9, 10 or 12,
the Company shall reimburse the Underwriter for the fees and
disbursements of Underwriter's counsel. The Company shall not be
required to pay any amount for any expenses of the Underwriter except
as provided in this paragraph 7 and in paragraph 8. The Company shall
not in any event be liable to the Underwriter for damages on account of
the loss of anticipated profit.
8. Payment of Expenses. The Company will pay all expenses incident to
the performance of its obligations under this Agreement, including (i) the
printing and filing of the Registration Statement and the printing of this
Agreement, (ii) the delivery of the Securities to the Underwriter, (iii) the
fees and disbursements of the Company's counsel and accountants, (iv) the
expenses in connection with the qualification of the Securities under securities
laws in accordance with the provisions of paragraph 7(e), including filing fees
and the fees and disbursements of counsel for the Underwriter in connection
therewith, and in connection with the preparation of the Blue Sky Survey and any
Legality
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Memorandum, such fees and disbursements not to exceed $5,000, (v) the printing
and delivery to the Underwriter of copies of the Registration Statement and all
amendments thereto, of the preliminary prospectuses, and of the Prospectus and
any amendments or supplements thereto, (vi) the printing and delivery to the
Underwriter of copies of the Blue Sky Survey and Legality Memorandum, and (vii)
the preparation, execution, filing and recording by the Company of the Indenture
(such filing and recordation to be promptly made, after execution and delivery
of such Indenture to the Trustee under the Indenture in the counties in which
the mortgaged property of the Company is located); and the Company will pay all
taxes, if any (but not including any transfer taxes), on the issue of the
Securities and the filing and recordation of the Indenture.
9. Conditions of Underwriter's Obligations. The obligations of the
Underwriter to purchase and pay for the Securities shall be subject to the
accuracy of the representations and warranties of the Company as of the Closing
Date, to the performance by the Company of its obligations to be performed
hereunder prior to the Closing Date, and to the following further conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall be in effect on the Closing Date; no
proceedings for that purpose shall be pending before or, to the
Company's knowledge, threatened by the Commission on the Closing Date;
and the Underwriter shall have received, prior to payment for the
Securities, a certificate dated the Closing Date and signed by the
Chairman, President or a Vice President of the Company to the effect
that no such stop order is in effect and that no proceedings for such
purpose are pending before or, to the knowledge of the Company,
threatened by the Commission.
(b) At the time of execution of this Agreement, or such later
date as shall have been consented to by the Underwriter, there shall
have been issued and on the Closing Date there shall be in full force
and effect orders of the North Carolina Utilities Commission and the
South Carolina Public Service Commission authorizing the issuance and
sale of the Securities, none of which shall contain any provision
unacceptable to the Underwriter by reason of its being materially
adverse to the Company (it being understood that no such order in
effect on the date of this Agreement and heretofore furnished to the
Underwriter or counsel for the Underwriter, contains any such
unacceptable provision).
(c) At the Closing Date, the Underwriter shall receive
favorable opinions from: (1) Hunton & Williams, counsel to the Company,
which opinion shall be satisfactory in form and substance to counsel
for the Underwriter, and (2) Winthrop, Stimson, Putnam & Roberts,
counsel for the Underwriter, in each of which opinions (except as to
subdivision (viii) of this subparagraph (c), as to which Winthrop,
Stimson, Putnam & Roberts need express no opinion) said counsel (except
Hunton & Williams as to North Carolina law) may rely as to all matters
of North Carolina and South Carolina law upon the opinions of William
D. Johnson, Esq., Senior Vice President and Corporate Secretary for the
Company, and Nelson Mullins Riley & Scarborough, L.L.P., respectively,
to the effect that:
(i) The Indenture has been duly and validly
authorized by all necessary corporate action, has been duly
and validly executed and delivered, and is a valid and legally
binding obligation of the Company enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency or
other laws affecting mortgagees' and other creditors' rights
and by general equitable principles and any implied covenant
of good faith and fair dealings;
(ii) The Indenture has been duly qualified under the
1939 Act;
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(iii) Assuming authentication by the Trustee in
accordance with the Indenture and delivery to and payment for
the Securities by the Underwriter, as provided in this
Agreement, the Securities have been duly and validly
authorized, executed and delivered and are legal, valid and
binding obligations of the Company enforceable in accordance
with their terms, except as limited by bankruptcy, insolvency
or other laws affecting mortgagees' and other creditors'
rights and by general equitable principles and any implied
covenant of good faith and fair dealings, and are entitled to
the benefits of the Indenture;
(iv) The statements made in the Prospectus under the
caption "Description of Debt Securities" and under the caption
"Description of the Notes," insofar as they purport to
constitute summaries of the documents referred to therein, are
correct in all material respects;
(v) This Agreement has been duly and validly
authorized, executed and delivered by the Company;
(vi) The Registration Statement, at the time and date
it was declared effective by the Commission, and the
Preliminary Prospectus and Prospectus, at the time each was
filed with, or transmitted for filing to, the Commission
pursuant to Rule 424 (except as to the financial statements
and other financial and statistical data constituting a part
thereof or incorporated by reference therein, upon which such
opinions need not pass), complied as to form in all material
respects with the requirements of the Securities Act and the
1939 Act and the applicable instructions, rules and
regulations of the Commission thereunder; the documents or
portions thereof filed with the Commission pursuant to the
Exchange Act and deemed to be incorporated by reference in the
Registration Statement, the Preliminary Prospectus and the
Prospectus pursuant to Item 12 of Form S-3 (except as to
financial statements and other financial and statistical data
constituting a part thereof or incorporated by reference
therein, upon which such opinions need not pass), at the time
they were filed with the Commission, complied as to form in
all material respects with the requirements of the Exchange
Act and the applicable instructions, rules and regulations of
the Commission thereunder; the Registration Statement has
become effective under the Securities Act and, to the best of
the knowledge of said counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued
and not withdrawn and no proceedings for a stop order with
respect thereto are threatened or pending under Section 8 of
the Securities Act;
(vii) Nothing has come to the attention of said
counsel that would lead them to believe that the Registration
Statement, at the time and date it was declared effective by
the Commission, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading. Nothing has come to the attention of said counsel
that would lead them to believe that (x) the Preliminary
Prospectus, at the time it was filed with, or transmitted for
filing to, the Commission pursuant to Rule 424, included an
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading or (y) the Prospectus, at the time
it was filed with, or transmitted for filing to, the
Commission pursuant to Rule 424 or, as amended or
supplemented, at the Closing Date, included or includes an
untrue statement of a material fact or omitted or omits to
state a
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material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading (except as to financial statements
and other financial and statistical data constituting a part
of the Registration Statement, the Preliminary Prospectus or
the Prospectus or incorporated by reference therein, upon
which such opinions need not pass); and
(viii) Orders have been entered by the North Carolina
Utilities Commission and the South Carolina Public Service
Commission authorizing the issuance and sale of the
Securities; to the best of the knowledge of said counsel, said
orders are still in force and effect; and no further filing
with, or approval, authorization, consent or other order of,
any public board or body (except such as have been obtained
under the Securities Act and as may be required under the
state securities or Blue Sky laws of any jurisdiction) is
legally required for the consummation of the transactions
contemplated in this Agreement.
(d) At the Closing Date, the Underwriter shall receive from
William D. Johnson, Esq., Senior Vice President and Corporate Secretary
for the Company, a favorable opinion in form and substance satisfactory
to counsel for the Underwriter, to the same effect with respect to the
matters enumerated in subdivisions (i) through (v) and subdivisions
(vii) and (viii) of subparagraph (c) of this paragraph 9 as the
opinions required by said subparagraph (c), and to the further effect
that:
(i) The Company is a validly organized and existing
corporation and is in good standing under the laws of the
State of North Carolina and is duly qualified to do business
as an electrical utility and is doing business in that State
and in the State of South Carolina;
(ii) The Company is duly authorized by its Charter to
conduct the business which it is now conducting as set forth
in the Prospectus;
(iii) The Company has valid and subsisting
franchises, licenses and permits free from burdensome
restrictions and adequate for the conduct of its business;
(iv) The information contained in the Prospectus that
is stated therein to have been made in reliance upon the
opinion of said counsel has been reviewed by said counsel and
is correct;
(v) The issuance and sale of the Securities have been
duly authorized by all necessary corporate action on the part
of the Company;
(vi) Except as described in or contemplated by the
Prospectus, there are no pending actions, suits or proceedings
against or affecting the Company or any of its subsidiaries or
properties which are likely in the aggregate, to result in any
material adverse change in the business, property, financial
condition, earnings, business affairs, or business prospects
of the Company and its subsidiaries considered as a whole or
which are likely in the aggregate, to materially and adversely
affect the consummation of this Agreement, the Remarketing
Agreement, the Remarketing Agency Agreement, the Calculation
Agency Agreement, the Indenture, the Notes or the transactions
contemplated herein or therein.
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(vii) The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not
result in a breach of any of the terms or provisions of, or
constitute a default under, the Charter, the Company's
by-laws, applicable law or any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is
now a party or any judgment, order, writ or decree of any
government or governmental authority or agency or court having
jurisdiction over the Company or any of its subsidiaries or
any of their assets, properties or operations.
In said opinion such counsel may rely as to all matters of South
Carolina law (except as to subdivision (iii) of this subparagraph (d))
on the opinion of Nelson Mullins Riley & Scarborough, L.L.P., and as to
all matters of New York law on the opinion of Hunton & Williams.
(e) At the Closing Date, the Underwriter shall receive from
Nelson Mullins Riley & Scarborough, L.L.P., a favorable opinion in form
and substance satisfactory to counsel for the Underwriter, to the
effect that:
(i) As recognized in a South Carolina Public Service
Commission Order on Remand dated July 9, 1990, (1) the Company
is an electrical utility engaged in the business of
generating, transmitting, distributing and selling electric
power to the general public in the States of South Carolina
and North Carolina, and (2) the Company conducts its South
Carolina retail operations subject to the jurisdiction of the
South Carolina Public Service Commission pursuant to South
Carolina Code Annotated, Sections 58-27-10 et seq. (1976 as
amended);
(ii) The Company is duly qualified to transact
business in the State of South Carolina; and
(iii) The South Carolina Public Service Commission
has entered an order authorizing the issuance and sale of the
Registered Securities; and no further filing with, or
approval, authorization, consent or other order of, any public
board or body of the State of South Carolina (except as may be
required under the Blue Sky laws of the State of South
Carolina) is legally required for the issuance and sale of the
Securities.
(f) At the time of execution of this Agreement and at the
Closing Date, the Underwriter shall have received from Deloitte &
Touche LLP letters, dated respectively the date of this Agreement and
the Closing Date, confirming that they are independent certified public
accountants within the meaning of the Securities Act and the Exchange
Act, and of the applicable published rules and regulations thereunder,
and stating in effect that: (i) in their opinion, the audited financial
statements incorporated by reference in the Registration Statement and
Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Securities Act or the
Exchange Act, as applicable, and of the published rules and regulations
thereunder; (ii) based on the performance of the procedures specified
by the American Institute of Certified Public Accountants for review of
interim financial information as described in Statement on Auditing
Standards ("SAS") No. 71, Interim Financial Information, on the
unaudited financial statements incorporated by reference in the
Registration Statement, inquiries of officials of the Company
responsible for financial and accounting matters and
10
reading the minutes of meetings of the Board of Directors, of the
Executive Committee of the Board of Directors and of the shareholders,
nothing came to their attention that caused them to believe that (A)
the unaudited financial statements incorporated by reference in the
Registration Statement and Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act or the Exchange Act, as applicable, and the published
rules and regulations thereunder or any material modifications should
be made for them to be in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
most recent audited financial statements incorporated by reference in
the Registration Statement and Prospectus; or (B) at the date of the
latest available interim balance sheet read by them and at a subsequent
date not more than five days prior to the date of each such letter,
there was any change in the capital stock or long-term debt of the
Company, or at the date of the latest available interim balance sheet
read by them, there was any decrease in net assets as compared with the
amount shown on the most recent balance sheet incorporated by reference
in the Registration Statement and Prospectus, except for changes or
decreases that the Registration Statement and Prospectus disclose have
occurred or may occur, for declarations of dividends, for common stock
sales under the Automatic Dividend Reinvestment and Customer Stock
Ownership Plan and Stock Purchase-Savings Plan, or for changes or
decreases that are described in such letter; and (iii) covering such
other matters as the Underwriter shall reasonably request.
(g) At the Closing Date, the Underwriter shall receive a
certificate of the Chairman, President or a Vice President of the
Company, dated the Closing Date, to the effect that the representations
and warranties of the Company in this Agreement are true and correct as
of the Closing Date.
(h) All legal proceedings taken in connection with the sale
and delivery of the Securities shall have been satisfactory in form and
substance to counsel for the Underwriter.
In case any of the conditions specified above in this paragraph 9 shall
not have been fulfilled or waived by 2:00 P.M. on the Closing Date, this
Agreement may be terminated by the Underwriter by delivering written notice
thereof to the Company. Any such termination shall be without liability of any
party to any other party except as otherwise provided in paragraphs 7 and 8.
10. Conditions of the Company's Obligations. The obligations of the
Company to deliver the Securities shall be subject to the following conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall be in effect on the Closing Date, and no
proceedings for that purpose shall be pending before or threatened by
the Commission on the Closing Date.
(b) Prior to 12:00 Noon, New York Time, on the day following
the date of this Agreement, or such later date as shall have been
consented to by the Company, there shall have been issued and on the
Closing Date there shall be in full force and effect orders of the
North Carolina Utilities Commission and the South Carolina Public
Service Commission authorizing the issuance and sale by the Company of
the Securities, none of which shall contain any provision unacceptable
to the Company by reason of its being materially adverse to the Company
(it being understood that no such order in effect as of the date of
this Agreement contains any such unacceptable provision).
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In case any of the conditions specified in this paragraph 10 shall not
have been fulfilled at the Closing Date, this Agreement may be terminated by the
Company delivering written notice thereof to the Underwriter. Any such
termination shall be without liability of any party to any other party except as
otherwise provided in paragraphs 7 and 8.
11. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person who controls the Underwriter within the
meaning of Section 15 of the Securities Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Securities Act or under any other
statute or common law and to reimburse the Underwriter and each such
controlling person for any legal or other expenses (including to the
extent hereinafter provided, reasonable counsel fees) incurred by them
(when and as incurred) in connection with investigating any such
losses, claims, damages or liabilities or in connection with defending
any actions, insofar as such losses, claims, damages, liabilities,
expenses or actions arise out of or are based upon any untrue
statement, or alleged untrue statement, of a material fact contained in
the Registration Statement, any preliminary prospectus or the
Prospectus, or in the Registration Statement or Prospectus as amended
or supplemented (if any amendments or supplements thereto shall have
been furnished), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the
indemnity agreement contained in this paragraph 11 shall not apply to
any such losses, claims, damages, liabilities, expenses or actions
arising out of, or based upon any such untrue statement or alleged
untrue statement, or any such omission or alleged omission, if such
statement or omission was made in reliance upon and in conformity with
information furnished herein or in writing to the Company by the
Underwriter for use in the Registration Statement, any preliminary
prospectus or Prospectus, or any amendment or supplement to either
thereof, or arising out of, or based upon, statements in or omissions
from that part of the Registration Statement which shall constitute the
Statement of Eligibility under the 1939 Act (Form T-1) of the Trustee
under the Indenture, and provided, further, that the indemnity
agreement contained in this paragraph 11 shall not inure to the benefit
of the Underwriter (or of any person controlling the Underwriter) on
account of any such losses, claims, damages, liabilities, expenses or
actions arising from the sale of the Securities to any person if a copy
of the Prospectus (excluding documents incorporated by reference
therein) shall not have been given or sent to such person by or on
behalf of the Underwriter with or prior to the written confirmation of
the sale involved, unless such Prospectus failed to correct the
omission or statement. The indemnity agreement of the Company contained
in this paragraph 11 and the representations and warranties of the
Company contained in paragraph 3 hereof shall remain operative and in
full force and effect regardless of any investigation made by or on
behalf of the Underwriter or any such controlling person and shall
survive the delivery of the Securities. The Underwriter agrees to
notify promptly the Company of the commencement of any litigation or
proceedings against it, or any such controlling person, in connection
with the sale of the Securities.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, its officers and directors, and each person who controls the
Company within the meaning of Section 15 of the Securities Act, against
any and all losses, claims, damages or liabilities, joint or several,
to which they or any of them may become subject under the Securities
Act or under any other statute or common law, and to reimburse each of
them for any legal or other expenses (including, to the extent
hereinafter provided, reasonable counsel fees) incurred by them (when
and as incurred) in connection with investigating any such losses,
claims, damages, or liabilities, or in
12
connection with defending any actions, insofar as such losses, claims,
damages, liabilities, expenses or actions arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any preliminary
prospectus or Prospectus as amended or supplemented (if any amendments
or supplements thereto shall have been furnished), or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon and in conformity
with information furnished herein or in writing to the Company by the
Underwriter for use in the Registration Statement, any preliminary
prospectus or the Prospectus or any amendment or supplement to either
thereof. The indemnity agreement of the Underwriter contained in this
paragraph 11 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Company, or
any such controlling person, and shall survive the delivery of the
Securities. The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against the Company
or any of its officers or directors, or any such controlling person, in
connection with the sale of the Securities.
(c) The Company and the Underwriter agree that, upon the
receipt of notice of the commencement of any action against it, its
officers and directors, or any person controlling it as aforesaid, in
respect of which indemnity may be sought on account of any indemnity
agreement contained herein, it will promptly give written notice of the
commencement thereof to the party or parties against whom indemnity
shall be sought hereunder. The Company and the Underwriter agree that
the notification required by the preceding sentence shall be a material
term of this Agreement. The omission so to notify such indemnifying
party or parties of any such action shall relieve such indemnifying
party or parties from any liability which it or they may have to the
indemnified party on account of any indemnity agreement contained
herein if such indemnifying party was materially prejudiced by such
omission, but shall not relieve such indemnifying party or parties from
any liability which it or they may have to the indemnified party
otherwise than on account of such indemnity agreement. In case such
notice of any such action shall be so given, such indemnifying party
shall be entitled to participate at its own expense in the defense or,
if it so elects, to assume (in conjunction with any other indemnifying
parties) the defense of such action, in which event such defense shall
be conducted by counsel chosen by such indemnifying party (or parties)
and satisfactory to the indemnified party or parties who shall be
defendant or defendants in such action, and such defendant or
defendants shall bear the fees and expenses of any additional counsel
retained by them; but if the indemnifying party shall elect not to
assume the defense of such action, such indemnifying parties will
reimburse such indemnified party or parties for the reasonable fees and
expenses of any counsel retained by them, as such expenses are
incurred; provided, however, if the defendants (including any impleaded
parties) in any such action include both the indemnified party and the
indemnifying party, and counsel for the indemnified party shall have
concluded, in its reasonable judgment, that there may be a conflict of
interest involved in the representation by such counsel of both the
indemnifying party and the indemnified party, the indemnified party or
parties shall have the right to select separate counsel, satisfactory
to the indemnifying party, to participate in the defense of such action
on behalf of such indemnified party or parties (it being understood,
however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel representing the indemnified
parties who are parties to such action).
(d) If the indemnification provided for in subparagraphs (a)
or (b) above shall be unenforceable under applicable law by an
indemnified party, each indemnifying party agrees to contribute to such
indemnified party with respect to any and all losses, claims, damages,
liabilities and expenses for which each indemnification provided for in
such subparagraphs (a) or
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(b) shall be unenforceable, in such proportion as shall be appropriate
to reflect the relative fault of each indemnifying party on the one
hand and the indemnified party on the other in connection with the
statements or omissions which have resulted in such losses, claims,
damages, liabilities, and expenses, as well as any other relevant
equitable considerations; provided, however, that no indemnified party
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act), shall be entitled to contribution from
any indemnifying party not guilty of such fraudulent misrepresentation.
Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or the indemnified
party and each such party's relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement
or omission. The Company and the Underwriter agree that it would not be
just and equitable if contributions pursuant to this subparagraph 11(d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to above.
(e) For purposes of this paragraph 11, it is understood and
agreed that the only information provided by the Underwriter for
inclusion in the Registration Statement and the Prospectus was as
follows: second, fourth and fifth paragraphs of the section in the
Prospectus Supplement entitled "Underwriting."
12. Termination Date of this Agreement. This Agreement may be
terminated by the Underwriter at any time prior to the Closing Date by
delivering written notice thereof to the Company, if after the date hereof and
prior to such Closing Date (a) there shall have occurred any general suspension
of trading in securities on the New York Stock Exchange, or there shall have
been established by the New York Stock Exchange or by the Commission or by any
federal or state agency or by the decision of any court any limitation on prices
for such trading or any restrictions on the distribution of securities, or (b)
there shall have occurred any new outbreak of hostilities, including, but not
limited to, an escalation of hostilities which existed prior to the date of this
Agreement or any national or international calamity or crisis, the effect of
which on the financial markets of the United States shall be such as to make it
impracticable, in the reasonable judgment of the Underwriter, for the
Underwriter to enforce contracts for the sale of the Securities, or (c) the
Company shall have sustained a substantial loss by fire, flood, accident or
other calamity which renders it impracticable, in the reasonable judgment of the
Underwriter, to consummate the sale of the Securities and the delivery of the
Securities by the Underwriter at the initial public offering price or (d) there
shall have been any downgrading or any notice of any intended or potential
downgrading in the rating accorded the Company's securities by any "nationally
recognized statistical rating organization" as that term is defined by the
Commission for the purposes of Securities Act Rule 436(g)(2),or any such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of the Securities or any
of the Company's other outstanding debt. This Agreement may also be terminated
at any time prior to the Closing Date if in the reasonable judgment of the
Underwriter the subject matter of any amendment or supplement to the
Registration Statement or Prospectus (other than an amendment or supplement
relating solely to the activity of the Underwriter filed after the execution of
this Agreement shall have materially impaired the marketability of the
Securities. Any termination hereof pursuant to this paragraph 12 shall be
without liability of any party to any other party except as otherwise provided
in paragraphs 7 and 8.
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13. Miscellaneous. The validity and interpretation of this Agreement
shall be governed by the laws of the State of New York. Unless otherwise
specified, time of day refers to New York City time. This Agreement shall inure
to the benefit of, and be binding upon, the Company, the Underwriter, and with
respect to the provisions of paragraph 11, the officers and directors and each
controlling person referred to in paragraph 11, and their respective successors.
Nothing in this Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. The term
"successors" as used in this Agreement shall not include any purchaser, as such
purchaser, of any of the Securities from any of the Underwriter.
14. Notices. All communications hereunder shall be in writing or by
telefax and, if to the Underwriter, shall be mailed, transmitted by any standard
form of telecommunication or delivered to the Underwriter at the address set
forth above and if to the Company, shall be mailed or delivered to it at 411
Fayetteville Street, Raleigh, North Carolina 27601-1748, attention of Mark F.
Mulhern, Treasurer.
15. Counterparts. This Agreement may be simultaneously executed in
counterparts, each of which when so executed shall be deemed to be an original.
Such counterparts shall together constitute one and the same instrument.
16. Defined Terms. Unless otherwise defined herein, capitalized terms
used in this Underwriting Agreement shall have the meanings assigned to them in
the Registration Statement.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed duplicate hereof
whereupon it will become a binding agreement between the Company and the
Underwriter in accordance with its terms.
Very truly yours,
CAROLINA POWER & LIGHT COMPANY
By : /s/ Mark F. Mulhern
------------------------------
Authorized Representative
Accepted as of the date first
above written, as Underwriter.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By: /s/ Mary E. Ryan
------------------------------
Authorized Representative
15
SCHEDULE I
Underwriting Agreement dated October 25, 1999
Registration Statement No.: 333-69237
Designation: Extendible Notes due October 28, 2009
Principal Amount: $500,000,000
Indenture dated as of October 28, 1999
Date of Maturity: October 28, 2009
Interest Rate: During the period from and including October 28, 1999 to but
excluding July 28, 2000, a rate equal to LIBOR plus a spread of 0.33% per annum,
reset monthly and payable monthly on or about the 28th of each month, commencing
November 28, 1999; during any subsequent period, a floating interest rate, or a
fixed interest rate, with an applicable spread , to be determined by the Company
and the Remarketing Agent as set forth in the Prospectus Supplement.
Purchase Price: 99.875% of the principal amount thereof.
Public Offering Price: Varying prices relating to prevailing market prices at
the time of sale.
Redemption Terms: Redeemable on and after July 28, 2000, or repayable at the
option of the holders, under certain circumstances, as described in the
Prospectus Supplement.
Closing Date and Location: October 28, 1999; Hunton & Williams, One Hannover
Square, 421 Fayetteville Street Mall, Raleigh, North Carolina 27601
16