EXHIBIT 1
PROGRESS ENERGY, INC.
Common Stock
UNDERWRITING AGREEMENT
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August 14, 2001
To the Representative named in Schedule I hereto
of the Underwriters named in Schedule II hereto
Dear Ladies and Gentlemen:
The undersigned, Progress Energy, Inc. (the "Company"), hereby confirms its
agreement with each of the several Underwriters hereinafter named as follows:
1. Underwriters and Representative. The term "Underwriters" as used
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herein shall be deemed to mean the firm or corporation or the several firms or
corporations named in Schedule II hereto and any underwriter substituted as
provided in paragraph 6 hereof, and the term "Underwriter" shall be deemed to
mean one of such Underwriters. The term "Representative" as used herein shall be
deemed to mean the firms named in Schedule I hereto, collectively. If any firm
named in Schedule I hereto is also named on Schedule II hereto, then the terms
"Underwriters" and "Representative," as used herein, shall each be deemed to
refer to such firm. The firms named in Schedule 1 hereto represent, jointly and
severally, that they have been authorized by the Underwriters to execute this
Underwriting Agreement (this "Agreement") on their behalf and to act for them as
Representative in the manner herein provided. All obligations of the
Underwriters hereunder are several and not joint. Any action under or in respect
of this Agreement may be taken by either of the firms listed in Schedule I
hereto as the Representative, and such action will be binding upon all the
Underwriters.
2. Description of Securities. The Company proposes to issue and sell to
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the several Underwriters 11,000,000 shares of its common stock (no par value) in
the amount specified in Schedule I hereto (the "Firm Shares"). The Company also
proposes to issue and sell to the several Underwriters not more than an
additional 1,650,000 shares of its common stock (no par value) (the "Option
Shares") if and to the extent the Representative shall have determined to
exercise, on behalf of the Underwriters, the right to purchase such shares of
common stock granted to the Underwriters in paragraph 4 hereof. The Firm Shares
and the Option Shares are hereinafter collectively referred to as the "Shares."
The shares of common stock (no par value) of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Stock."
3. Representations and Warranties of the Company. The Company represents
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and warrants to each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-3 (No. 333-49920)
(the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities
Act"), for the registration of up to an aggregate of $4,000,000,000 of the
Company's securities (the "Registered Securities") as described in the
Registration Statement. As of the date hereof, the Company has sold
Registered Securities in the aggregate amount of $3,200,000,000. The
Registration Statement has been declared effective by the Commission. The
term "Registration Statement" shall be deemed to include all amendments
thereto to the date hereof and all documents incorporated by reference
therein (the "Incorporated Documents"). The prospectus included in the
Registration Statement, as supplemented by a preliminary prospectus
supplement, dated August 6, 2001, relating to the Shares, and all prior
amendments or supplements thereto (other than amendments or supplements
relating to Registered Securities other than the Shares), including the
Incorporated Documents, is hereinafter referred to as the "Preliminary
Prospectus." The prospectus included in the Registration Statement, as it
is to be supplemented by a prospectus supplement dated August 14, 2001
relating to the Shares (the "Prospectus Supplement"), and all prior
amendments or supplements thereto (other than amendments or supplements
relating to Registered Securities other than the Shares), including the
Incorporated Documents, is hereinafter referred to as the "Prospectus." Any
reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement or the Prospectus shall be deemed to
refer to and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), deemed to be
incorporated therein after the date hereof and prior to the termination of
the offering of the Shares by the Underwriters; and any references herein
to the terms "Registration Statement" or "Prospectus" at a date after the
filing of the Prospectus Supplement shall be deemed to refer to the
Registration Statement or the Prospectus, as the case may be, as each may
be amended or supplemented prior to such date.
(b) Prior to the termination of the offering of the Shares, the
Company will not file any amendment to the Registration Statement or
supplement to the Prospectus which shall not have previously been furnished
to the Representative or of which the Representative shall not previously
have been advised or to which the Representative shall reasonably object in
writing and which has not been approved by the Representative or counsel
for the Underwriters acting on behalf of the Underwriters.
(c) The Registration Statement, at the time and date it was declared
effective by the Commission, complied, and the Registration Statement and
the Prospectus, 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 (as defined herein), will comply, in
all material respects, with the applicable provisions of the Securities 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
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(c) shall not apply to statements or omissions made in reliance upon and in
conformity with information furnished herein or in writing to the Company
by the Representative or by or on behalf of any Underwriter through the
Representative expressly for use in the Prospectus. 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 Shares by the Underwriters
will, when they are filed with the Commission, comply in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder; and, when read together with the
Registration Statement and the Prospectus, none of such documents included
or includes or will include any untrue statement of a material fact or
omitted or omits or will omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(d) The historical 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; the pro forma
combined financial statements in the Company's Current Report on Form 8-
K/A, filed with the Commission on January 24, 2001 and incorporated by
reference in the Prospectus, comply as to form, in all material respects,
with the applicable accounting requirements of Rule 11-02 of Regulation S-
X, and the assumptions and pro forma adjustments were reasonable and
properly applied, at the time of the filing of the Form 8-K/A, to the
historical amounts in the compilation of those statements; and Deloitte &
Touche LLP and KPMG LLP, each of which has audited certain of the financial
statements, are each 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 as
of the Closing Date, (i) there has been no material adverse change in the
condition, financial or otherwise, earnings, property, business affairs or
business prospects of the Company and its subsidiaries considered as a
whole; (ii) there has been no material transaction entered into by the
Company or any of its significant subsidiaries (as such term is defined in
Rule 1-01(w) of Regulation S-X) of the Company (each a "Significant
Subsidiary" and each of which is listed on Schedule III hereto) other than
transactions contemplated by the Registration Statement and Prospectus or
transactions arising in the ordinary course of business; (iii) the Company
has no material contingent obligation that is not disclosed in the
Registration Statement and Prospectus; and (iv) there has been no dividend
or distribution of any kind declared, paid or made by the Company or,
except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by
the Company or any of its subsidiaries of any class of capital stock.
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(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 articles of incorporation (the
"Articles"), by-laws and applicable law.
(g) The consummation of the transactions contemplated herein and in
the Registration Statement (including the issuance and sale of the Shares
and the use of the proceeds from the sale of the Shares as described in the
Prospectus under the caption "Use of Proceeds") 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 or Repayment Event (as defined below) under,
the Articles, the Company's by-laws, applicable law or any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any Significant Subsidiary 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 that, in the case of any such
breach, default or Repayment Event, would have a material adverse effect on
the condition, financial or otherwise, earnings, property, business affairs
or business prospects of the Company and its subsidiaries considered as a
whole. As used herein, a "Repayment Event" means any event or condition
which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any Significant Subsidiary of the Company.
(h) The Shares 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; each Significant Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its organization; each of the Company and each Significant
Subsidiary has corporate power and authority to own, lease and operate its
properties and to conduct its business as contemplated under this Agreement
and the other agreements to which it is a party; and each of the Company
and each Significant Subsidiary 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 condition,
financial or otherwise, earnings, property, business affairs or business
prospects of the Company and its subsidiaries considered as a whole.
(j) The authorized capital stock of the Company is 20,000,000 shares
of preferred stock and 500,000,000 shares of common stock, of which no
shares of preferred stock and 206,089,274 shares of common stock are issued
and outstanding (except for subsequent issuances, if any, pursuant to this
Agreement, or pursuant to agreements or employee benefit plans referred to
in the Prospectus). The shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of
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the Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
(k) The issued and outstanding capital stock of each Significant
Subsidiary has been duly authorized and validly issued and is fully paid
and non-assessable; and the common capital stock of each Significant
Subsidiary is owned by the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equitable right.
(l) The issuance of the Shares has been duly authorized by the Company
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights.
(m) The Common Stock (other than the Shares) is and, upon issuance the
Shares will be, listed on the New York Stock Exchange.
(n) Neither the Company nor any of its subsidiaries is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "1940 Act").
(o) Except as described in or contemplated by the Prospectus, there
are no pending actions, suits or proceedings against or affecting the
Company or any of its subsidiaries or properties which are likely in the
aggregate, to result in any material adverse change in the financial
condition, earnings, business affairs, or business prospects of the Company
and its subsidiaries considered as a whole or which are likely in the
aggregate to materially and adversely affect the consummation of this
Agreement or the transactions contemplated herein or therein.
(p) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the
Company of its obligations hereunder in connection with the offering,
issuance or sale of the Shares hereunder or the consummation of the
transactions herein contemplated, except such as have been already obtained
or as may be required under the Securities Act or state securities laws.
(q) Neither the Company nor any of its subsidiaries is in violation of
its charter or by-laws or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or other agreements or instruments to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound or to
which any of the property or assets of the Company or any of them is
subject except for such defaults that would not result in a material
adverse change in the condition, financial or otherwise, earnings,
property, business affairs or business prospects of the Company and its
subsidiaries considered as a whole.
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(r) Except as described in the Registration Statement and except as
would not, singly or in the aggregate, result in a material adverse change
in the condition, financial or otherwise, earnings, property, business
affairs or business prospects of the Company and its subsidiaries
considered as a whole, neither the Company nor any of its subsidiaries is
in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof.
(s) There are no persons with registration rights or other similar
rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the Securities Act.
4. Purchase and Sale.
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(a) 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 each of the Underwriters, severally and not
jointly, and each such Underwriter agrees, severally and not jointly, to
purchase from the Company, the respective number of Shares set forth
opposite the name of such Underwriter in Schedule II hereto at a price of
$38.60 per share (the "Purchase Price").
(b) On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the Company agrees
to sell to the Underwriters the Option Shares, and the Underwriters shall
have a right to purchase, severally and not jointly, 1,650,000 Option
Shares at the Purchase Price. Option Shares may be purchased as provided in
this paragraph 4 in whole or in part from time to time, on the Closing Date
and up to two times thereafter as provided herein, solely for the purpose
of covering overallotments made in connection with the offering of the Firm
Shares. If any Option Shares are to be purchased, each Underwriter agrees,
severally and not jointly, to purchase the number of Option Shares (subject
to such adjustments to eliminate fractional shares as the Representative
may determine) that bears approximately the same proportion to the total
number of Option Shares to be purchased as the number of Firm Shares set
forth in Schedule II hereto opposite the name of such Underwriter bears to
the total number of Firm Shares.
(c) The Company hereby agrees that, without the prior written consent
of the Representative, it will not during the period ending 90 days after
the date of this Agreement (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant for the sale of or otherwise
transfer or dispose of, directly or indirectly, or to register or announce
the sale or offering of any shares of common stock of the Company or any
securities convertible into or exercisable or exchangeable for such common
stock or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequences of ownership of such common stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of such common stock or such other securities, in cash or
otherwise.
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(d) The foregoing subparagraph (c) shall not apply to (i) the Shares
to be sold hereunder; (ii) the issuance by the Company of shares of common
stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof of which the Underwriters have been
advised in writing and to which both Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney Inc. have consented; (iii) the
issuance or grant of shares of common stock or options or rights to
purchase shares of common stock pursuant to the Company's benefit and
compensation plans including, but not limited to, the Stock Purchase--
Savings Plan, the Equity Incentive Plan, the Savings Plan for Employees of
Florida Progress Corporation and an employee stock option plan to be
adopted by the Company, in amounts and on terms consistent with those
plans; (iv) the issuance or grant of shares of common stock or options or
rights to purchase shares of common stock in connection with the Progress
Energy Investor Plus Plan; and (v) agreements or arrangements in connection
with acquisition transactions involving the issuance or sale of shares of
common stock or relating to options, rights, warrants or any securities
convertible into or exercisable or exchangeable for shares of common stock,
where the acquisition transactions are consummated more than 90 days after
the date of the Prospectus.
5. Reoffering by Underwriters. The Underwriters agree to make promptly a
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bona fide public offering of the Shares to the public for sale as set forth in
the Prospectus, subject, however, to the terms and conditions of this Agreement.
The Company is further advised by the Underwriters that the Shares are to be
offered by the Underwriters to the public initially at $40.00 a share (the
"Public Offering Price") and to certain dealers selected by the Representatives
at a price that represents a concession not in excess of $0.84 a share under the
Public Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $0.10 a share, to any Underwriter or to
certain other dealers. It is understood that after such initial offering the
several Underwriters reserve the right to vary the offering price and further
reserve the right to withdraw, cancel or modify such offering without notice.
6. Time and Place of Closing; Default of Underwriters.
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(a) Payment for the Firm Shares shall be made at the place, time and
date specified in Schedule I hereto against delivery of the Shares to the
office of the Representative, or such other place, time and date as the
Representative and the Company may agree. Payment for the Firm Shares shall
be by wire transfer of immediately available funds against delivery of the
Firm Shares to the Representative or upon its order at the office of the
Representative, at 10:00 A.M., New York City time, on the third business
day (unless postponed in accordance with the provisions of paragraph 12
hereof) following the date of this Agreement, or if pricing takes place
after 4:30 P.M. New York City time, on the fourth business day following
the date of this Agreement (unless postponed in accordance with the
provisions of paragraph 12 hereof), or at such other time on the same or
such other earlier date, as shall be agreed upon by the Representative and
the Company. The hour and date of such delivery and payment are herein
referred to as the "Closing Date."
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(b) Payment for all or any portion of the Option Shares shall be made
from time to time by or on behalf of the several Underwriters by the wire
transfer of immediately available funds to the Company's account. Such
payment shall be made upon delivery of such Option Shares to the
Representative or upon its order at the office of the Representative, at
10:00 A.M., New York City time, on the third business day (unless postponed
in accordance with the provisions of paragraph 12 hereof) following the
giving of the notice described below, but in no event on more than three
such dates, each as shall be designated in written notices from the
Representative to the Company of the Representative's determination, on
behalf of the Underwriters, to purchase a number, specified in said
notices, of Option Shares, or on such other date as shall be agreed upon by
the Representative and the Company. The time and date of any such payments
are hereinafter referred to as an "Option Closing Date" (the Closing Date
or any Option Closing Date, as applicable, is hereinafter referred to as
the "Relevant Closing Date"). The notices of a determination to exercise
the option to purchase all or any portion of the Option Shares and of an
Option Closing Date may be given at any time within 30 days after the date
of this Agreement.
(c) On the Relevant Closing Date, the Company shall deliver, or cause
to be delivered a credit representing the Firm Shares or the Option Shares,
as the case may be, to an account or accounts at The Depository Trust
Company as designated by the Representative for the accounts of the
Representative and the several Underwriters against the irrevocable release
of a wire transfer of immediately available funds for the amount of the
purchase price therefor. Time shall be of the essence, and delivery at the
time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
(d) If, on the Relevant Closing Date, one or more of the Underwriters
shall, for any reason permitted hereunder, cancel its obligation to
purchase hereunder and to take up and pay for the number of Shares to be
purchased by such one or more Underwriters on such Relevant Closing Date,
the Company shall immediately notify the Representative, and the remaining
Underwriters shall have the right, within 24 hours of receipt of such
notice, either to take up and pay for (in such proportion as may be agreed
upon among them) or to substitute another Underwriter or Underwriters,
satisfactory to the Company, to take up and pay for the number of Shares
which such one or more Underwriters did not purchase. If one or more
Underwriters shall, for any reason other than a reason permitted hereunder,
fail to take up and pay for the number of Shares to be purchased by such
one or more Underwriters, the Company shall immediately notify the
Representative, and the remaining Underwriters shall be obligated to take
up and pay for (in addition to the number of Shares otherwise to be
purchased by such remaining Underwriters on such Relevant Closing Date) the
number of Shares which such defaulting Underwriter or Underwriters failed
to take up and pay for, up to a number thereof equal to, in the case of
each such remaining Underwriter, 10% of the number of Shares otherwise to
be purchased by such remaining Underwriters on such Relevant Closing Date,
and such remaining Underwriters shall have the right, within 24 hours of
receipt of such notice, either to take up and pay for (in such proportion
as may be agreed upon among them), or to substitute another Underwriter or
Underwriters, satisfactory to the Company, to take up and pay for, the
remaining number of Shares which the
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defaulting Underwriter or Underwriters agreed but failed to purchase. If
any unpurchased Shares still remain, then the Company or the Representative
shall be entitled to an additional period of 24 hours within which to
procure another party or parties, members of the National Association of
Securities Dealers, Inc. (or if not members of such Association, who are
not eligible for membership in said Association and who agree (i) to make
no sales within the United States, its territories or its possessions or to
persons who are citizens thereof or residents therein and (ii) in making
sales to comply with said Association's Rules of Fair Practice) and
satisfactory to the Company, to purchase or agree to purchase such
unpurchased Shares on the terms herein set forth. In any such case either
the Representative or the Company shall have the right to postpone the
Relevant Closing Date for a period not to exceed three full business days
from the date agreed upon in accordance with this paragraph 6, in order
that the necessary changes in the Registration Statement and Prospectus and
any other documents and arrangements may be effected. If (i) neither the
non-defaulting Underwriters nor the Company has arranged for the purchase
of such unpurchased Shares by another party or parties as above provided
and (ii) the Company and the non-defaulting Underwriters have not mutually
agreed to offer and sell the Shares other than the unpurchased Shares, then
this Agreement, or the obligations of the several Underwriters to purchase
Option Shares on a date which is after the Closing Date, as the case may
be, shall terminate without any liability on the part of the Company or any
Underwriter (other than an Underwriter which shall have failed or refused,
for any reason not permitted hereunder, to purchase and pay for the number
of Shares which such Underwriter has agreed to purchase as provided in
paragraph 4 hereof), except as otherwise provided in paragraph 7 and
paragraph 8 hereof.
7. Covenants of the Company. The Company covenants with each Underwriter
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that:
(a) As soon as possible after the execution and delivery of this
Agreement, the Company will file the Prospectus with the Commission
pursuant to Rule 424, setting forth, among other things, the necessary
information with respect to the terms of offering of the Shares. The
Company will promptly deliver to the Representative and to counsel for the
Underwriters, to the extent not previously delivered, one fully executed
copy or one conformed copy, certified by an officer of the Company, of the
Registration Statement, as originally filed, and of all amendments thereto,
heretofore or hereafter made, (other than those relating solely to
Registered Securities other than the Shares), including any post-effective
amendment (in each case including all exhibits filed therewith and all
documents incorporated therein not previously furnished to the
Representative), including signed copies of each consent and certificate
included therein or filed as an exhibit thereto, and will deliver to the
Representative for distribution to the Underwriters as many conformed
copies of the foregoing (excluding the exhibits, but including all
documents incorporated therein) as the Representative may reasonably
request. The Company will also send to the Underwriters as soon as
practicable after the date of this Agreement and thereafter from time to
time as many copies of the Prospectus and any preliminary prospectus
supplement as the Representative may reasonably request for the purposes
required by the Securities Act.
(b) During such period (not exceeding nine months) after the
commencement of the offering of the Shares as the Underwriters may be
required by law to deliver a
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Prospectus, if any event relating to or affecting the Company, or
of which the Company shall be advised in writing by the Representative
shall occur, which in the Company's opinion should be set forth in a
supplement to or an amendment of the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances when it is
delivered to a purchaser, or if it is necessary to amend the Prospectus to
comply with the Securities Act, the Company will forthwith at its expense
prepare and furnish to the Underwriters and dealers named by the
Representative a reasonable number of copies of a supplement or supplements
or an amendment or amendments to the Prospectus which will supplement or
amend the Prospectus so that as supplemented or amended it will comply with
the Securities Act and will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading. In case any Underwriter is
required to deliver a Prospectus after the expiration of nine months after
the commencement of the offering of the Shares, the Company, upon the
request of the Representative, will furnish to the Representative, at the
expense of such Underwriter, a reasonable quantity of a supplemented or
amended prospectus, or supplements or amendments to the Prospectus,
complying with Section 10(a) of the Securities Act.
(c) The Company will make generally available to its security
holders, as so on as reasonably practicable, but in any event not later
than 16 months after the end of the fiscal quarter in which the filing of
the Prospectus pursuant to Rule 424 occurs, an earning statement (in form
complying with the provisions of Section 11(a) of the Securities Act, which
need not be certified by independent public accountants) covering a period
of twelve months beginning not later than the first day of the Company's
fiscal quarter next following the filing of the Prospectus pursuant to Rule
424.
(d) The Company will use its best efforts promptly to do and perform
all things to be done and performed by it hereunder prior to the Relevant
Closing Date and to satisfy all conditions precedent to the delivery by it
of the Shares.
(e) The Company will advise the Representative promptly of the filing
of the Prospectus pursuant to Rule 424 and of any amendment or supplement
to the Prospectus or Registration Statement or of official notice of
institution of proceedings for, or the entry of, a stop order suspending
the effectiveness of the Registration Statement and, if such a stop order
should be entered, use its best efforts to obtain the prompt removal
thereof.
(f) The Company will use its best efforts to qualify the Shares, as
may be required, for offer and sale under the Blue Sky or legal investment
laws of such jurisdictions as the Representative may designate, and will
file and make in each year such statements or reports as are or may be
reasonably required by the laws of such jurisdictions; provided, however,
that the Company shall not be required to qualify as a foreign corporation
or dealer in securities, or to file any general consents to service of
process under the laws of any jurisdiction.
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8. Payment of Expenses. The Company will pay all expenses incident
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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 Shares to the Underwriters, (iii)
the fees and disbursements of the Company's counsel and accountants, (iv)
the expenses in connection with the qualification of the Shares under
securities laws in accordance with the provisions of subparagraph (f) of
paragraph 7 hereof, including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith, and in connection with
the preparation of the Blue Sky Survey and any Legality Memorandum, such
fees and disbursements not to exceed $5,000, (v) the printing and delivery
to the Underwriters of copies of the Registration Statement and all
amendments thereto, of the preliminary prospectuses, and of the Prospectus
and any amendments or supplements thereto and (vi) the printing and delivery
to the Underwriters of copies of the Blue Sky Survey and Legality
Memorandum; and the Company will pay all taxes, if any (but not including
any transfer taxes), on the issue of the Shares.
The fees and disbursements of Underwriters' counsel shall be paid by
the Underwriters (subject, however, to the provisions of the preceding
paragraph requiring payment by the Company of fees and expenses not to
exceed $5,000); provided, however, that if this Agreement is terminated in
accordance with the provisions of paragraph 9, 10 or 12 hereof, the Company
shall reimburse the Representative for the account of the Underwriters for
the reasonable fees and disbursements of Underwriters' counsel. The Company
shall not be required to pay any amount for any expenses of the
Representative or of any other of the Underwriters except as provided in
paragraph 7 hereof and in this paragraph 8. The Company shall not in any
event be liable to any of the Underwriters for damages on account of the
loss of anticipated profit.
9. Conditions of Underwriters' Obligations. The several obligations
---------------------------------------
of the Underwriters to purchase and pay for the Shares shall be subject to
the accuracy of the representations and warranties on the part of the
Company as of the date hereof and the Closing Date, to the performance by
the Company of its obligations to be performed hereunder prior to the
Closing Date, and to the following further conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement shall be in effect on the Closing Date; and no
proceedings for that purpose shall be pending before, or, to the
Company's knowledge, threatened by, the Commission on the Closing
Date. The Representative shall have received, prior to payment for the
Shares, 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 Closing Date, the Representative shall receive
favorable opinions from (1) Hunton & Williams, of counsel to the
Company, which opinion shall be satisfactory in form and substance to
counsel for the Underwriters, and (2) Pillsbury Winthrop LLP, counsel
for the Underwriters (which counsel may rely as to all matters of
North Carolina law upon the opinions of William D. Johnson, Esq.,
Executive Vice President, General Counsel and Secretary for the
Company) to the effect that:
-11-
(i) assuming delivery to and payment for the Shares by the
Underwriters, as provided in this Agreement, the Shares will be
validly issued, fully paid and non-assessable;
(ii) the shareholders of the Company are not entitled to
statutory preemptive or, to such counsel's knowledge, other similar
contractual rights to subscribe for the Shares, and the Shares have
been duly authorized for listing on the New York Stock Exchange;
(iii) the form of the certificates for the Shares conforms in all
material respects to the requirements of the North Carolina Business
Corporation Act and the New York Stock Exchange;
(iv) the statements made in the Prospectus under the captions
"DESCRIPTION OF CAPITAL STOCK--Common Stock Listing" and "DESCRIPTION
OF CAPITAL STOCK--Common Stock," 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 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 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 data constituting a part thereof or incorporated by
reference therein, and that part of the Registration Statement that
constitutes a Statement of Eligibility on Form T-1, 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; and
(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
-12-
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; and 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 material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading (except, in each case, as to financial statements and
other financial data constituting a part of the Registration
Statement, the Preliminary Prospectus or the Prospectus or
incorporated by reference therein, and that part of the Registration
Statement that constitutes a Statement of Eligibility on Form T-1,
upon which such opinions need not pass);
provided, however, that Pillsbury Winthrop LLP will not provide the opinion
contained in subparagraphs (b)(ii) or (b)(iii) (as to the requirements of
the North Carolina Business Corporation Act) of this paragraph 9.
(c) At the Closing Date, the Representative shall receive from
William D. Johnson, Esq., Executive Vice President, General Counsel and
Secretary for the Company, a favorable opinion in form and substance
satisfactory to counsel for the Underwriters, to the same effect with
respect to the matters enumerated in subdivisions (i) through (v) and
subdivision (vii) of subparagraph (b) of this paragraph 9 as the opinions
required by said subparagraph (b), 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; each Significant Subsidiary is a validly organized
and existing corporation and is in good standing under the laws of
the jurisdiction of its organization; and the Company and each of
its subsidiaries is qualified as a foreign corporation in each
state where the failure to be so qualified would have a material
adverse effect on the Company and its subsidiaries considered as a
whole;
(ii) each of the Company and each Significant Subsidiary is
duly authorized by its articles of incorporation to conduct the
business which it is now conducting as set forth in the
Prospectus;
(iii) the issuance and sale of the Shares have been duly
authorized by all necessary corporate action on the part of the
Company;
(iv) the authorized capital stock of the Company is
20,000,000 shares of preferred stock and 500,000,000 shares of
common stock; the shares of issued
-13-
and outstanding capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-
assessable; and none of the outstanding shares of capital stock of
the Company was issued in violation of the preemptive or other
similar rights of any securityholder of the Company;
(v) to the best of his knowledge, there are no persons
with registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the Securities Act;
(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 Significant Subsidiary
which are likely in the aggregate, to result in any material
adverse change in the business, property, financial condition,
earnings, business affairs, or business prospects of the Company
and its subsidiaries considered as a whole or which are likely in
the aggregate, to materially and adversely affect the consummation
of this Agreement or the transactions contemplated herein or
therein;
(vii) the consummation of the transactions contemplated
herein and in the Registration Statement (including the issuance
and sale of the Shares and the use of the proceeds from the sale
of the Shares as described in the Prospectus under the caption
"Use of Proceeds") 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 or Repayment Event under, the Articles, the
Company's by-laws, applicable law or any indenture, mortgage, deed
of trust or other agreement or instrument to which the Company or
any Significant Subsidiary 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
that, in the case of any such breach, default or Repayment Event,
would have a material adverse effect on the condition, financial
or otherwise, earnings, property, business affairs or business
prospects of the Company and its subsidiaries considered as a
whole;
(viii) an appropriate order of the Commission with respect to
the sale of the Shares under the Public Utility Holding Company
Act of 1935, as amended (the "Holding Company Act"), has been
issued, and such order remains in effect at this date and
constitutes valid and sufficient authorization under the Holding
Company Act for the sale of the Shares as contemplated by this
Agreement; and
(ix) 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 Shares
hereunder or the consummation of the transactions herein
contemplated, except such as have been already obtained or as may
be required under the Securities Act or state securities laws.
-14-
(d) The Representative shall have received on the date
hereof and shall receive on the Closing Date from Deloitte &
Touche LLP a letter in form and substance satisfactory to the
Representative, addressed to the Representative containing
statements and information of the type ordinarily included in
accountants' SAS 72 "comfort letters" to underwriters with respect
to the financial statements and certain financial information
contained in or incorporated by reference into the Prospectus,
including the pro-forma combined financial information contained
in the Form 8-K/A filed by the Company on January 24, 2001.
(e) At the Closing Date, the Representative shall receive
a certificate of the Chairman, President or a Vice President of
the Company, dated the Closing Date, to the effect that the
representations and warranties of the Company in this Agreement
are true and correct as of the Closing Date.
(f) All legal proceedings taken in connection with the
sale and delivery of the Shares shall have been satisfactory in
form and substance to counsel for the Underwriters.
(g) At the Closing Date an order or orders of the
Commission pursuant to the Holding Company Act permitting the
issuance and sale of the Shares shall be in full force and effect
and all provisions of such order or orders heretofore entered are
deemed acceptable to the Representative and the Company, and all
provisions of such order or orders hereafter entered shall be
deemed acceptable to the Representative and the Company unless
within 24 hours after receiving a copy of any such order either
shall give notice to the other to the effect that such order
contains an unacceptable provision.
(h) At the Relevant Closing Date, the Shares shall have
been approved for listing on the New York Stock Exchange, subject
only to official notice of issuance.
(i) At the date of this Agreement, the Representative
shall have received an agreement substantially in the form of
Exhibit A to Schedule IV hereto signed by the persons listed on
Schedule IV hereto.
(j) If the Underwriters exercise their option provided in
paragraph 4(b) hereof to purchase all or any portion of the Option
Shares, the representations and warranties of the Company
contained herein and the statements in any certificates furnished
by the Company or any subsidiary of the Company hereunder shall be
true and correct as of each Option Closing Date and, at each
Option Closing Date, the Representative shall have received:
(i) Officers' Certificate. A certificate, dated such
---------------------
Option Closing Date, of the Chairman, President or a Vice
President of the Company confirming that the certificates
delivered at the Closing Date pursuant to paragraphs 9(a) and
9(e) hereof remain true and correct as of such Option Closing
Date.
(ii) Opinion of Counsel for the Company. The favorable
----------------------------------
opinion of Hunton & Williams, of counsel to the Company,
together with the favorable opinion of William D. Johnson,
Esq., Executive Vice President, General Counsel and Secretary
for the Company, each in form and substance satisfactory to
-15-
counsel for the Underwriters, dated such Option Closing Date,
relating to the Option Shares to be purchased on such Option
Closing Date and otherwise to the same effect as the opinions
required by paragraphs 9(b) and 9(c), respectively, hereof.
(iii) Opinion of Counsel for the Underwriters. The
---------------------------------------
favorable opinion of Pillsbury Winthrop LLP, counsel for the
Underwriters, dated such Option Closing Date, relating to the
Option Shares to be purchased on such Option Closing Date and
otherwise to the same effect as the opinion required by paragraph
9(b) hereof.
(iv) Bring-down Comfort Letter. A letter from
-------------------------
Deloitte & Touche LLP, in form and substance satisfactory to the
Representative and dated such Option Closing Date, substantially
in the same form and substance as the letters furnished to the
Representative pursuant to paragraph 9(d) hereof, except that the
"specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than three days prior to such
Option Closing Date.
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 Relevant Closing
Date, this Agreement or, in the case of any condition to the purchase of Option
Shares, on a date which is after the Closing Date, the obligations of the
several Underwriters to purchase the relevant Option Shares, may be terminated
by the Representative by delivering written notice thereof to the Company. Any
such termination shall be without liability of any party to any other party
except as otherwise provided in paragraphs 7 and 8 hereof.
10. Conditions of the Company's Obligations. The obligations of the
---------------------------------------
Company to deliver the Shares shall be subject to the conditions set forth in
the first sentence of subparagraph (a) of paragraph 9 hereof and in subparagraph
(g) of paragraph 9 hereof. In case these conditions shall not have been
fulfilled at the Closing Date, this Agreement may be terminated by the Company
by mailing or delivering written notice thereof to the Representative. Any such
termination shall be without liability of any party to any other party except as
otherwise provided in paragraphs 7 and 8 hereof.
11. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter, each officer and director of each Underwriter and each
person who controls any Underwriter within the meaning of Section 15
of the Securities Act, or Section 20 of the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Securities Act
or under any other statute or common law and to reimburse each such
Underwriter, each such officer and director 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
-16-
statement, or alleged untrue statement, of a material fact contained
in the Registration Statement, any preliminary prospectus or the
Prospectus, or in the Registration Statement or Prospectus as amended
or supplemented (if any amendments or supplements thereto shall have
been furnished), or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the
indemnity agreement contained in this paragraph 11 shall not apply to
any such losses, claims, damages, liabilities, expenses or actions
arising out of, or based upon any such untrue statement or alleged
untrue statement, or any such omission or alleged omission, if such
statement or omission was made in reliance upon and in conformity with
information furnished herein or in writing to the Company by any
Underwriter through the Representative expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus,
or any amendment or supplement to any thereof,; and further provided,
however, that the Company shall not be liable to any Underwriter under
the indemnity agreement in this subsection (a) with respect to any
preliminary prospectus to the extent that any such loss, claim, damage
or liability of such Underwriter results from the fact that such
Underwriter sold Shares to a person as to whom the Company establishes
that there was not sent by commercially reasonable means at or prior
to the written confirmation of such sale, a copy of the Prospectus or
of the Prospectus as then amended or supplemented in any case where
such delivery is required by the Securities Act if the Company has
previously furnished copies thereof sufficient in quantity to such
Underwriter and the loss, liability, claim, or damage of such
Underwriter results from any untrue statement or omission of a
material fact contained in the preliminary prospectus which was
identified in writing at such time to such Underwriter and corrected
in the Prospectus or in the Prospectus as then amended or supplemented
and such correction would have cured the defect giving rise to such
loss, claim, damage or liability. The indemnity agreement of the
Company contained in this paragraph 11 and the representations and
warranties of the Company contained in paragraph 3 hereof shall remain
operative and in full force and effect regardless of any investigation
made by or on behalf of any Underwriter or any such officer or
director or any such controlling person and shall survive the delivery
of the Shares. The Underwriters agree to notify promptly the Company,
and each other Underwriter, of the commencement of any litigation or
proceedings against them or any of them, or any such controlling
person, in connection with the sale of the Shares.
(b) Each Underwriter severally, and not jointly, agrees to
indemnify and hold harmless the Company, its officers and directors,
and each person who controls the Company within the meaning of Section
15 of the Securities Act, or Section 20 of the Exchange 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 connection with defending any
actions, insofar as such losses, claims, damages, liabilities,
expenses or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement, any preliminary prospectus or the
Prospectus as amended or supplemented (if any amendments or
supplements thereto shall have been furnished), or
-17-
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished herein or
in writing to the Company by such Underwriter or through the
Representative on behalf of such Underwriter expressly for use in the
Registration Statement, any preliminary prospectus or the Prospectus
or any amendment or supplement to any thereof. The indemnity agreement
of all the respective Underwriters contained in this paragraph 11
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company or any other
Underwriter, or any such controlling person, and shall survive the
delivery of the Shares. The Company agrees promptly to notify the
Representative of the commencement of any litigation or proceedings
against the Company or any of its officers or directors, or any such
controlling person, in connection with the sale of the Shares.
(c) The Company and each of the Underwriters agree that, upon
the receipt of notice of the commencement of any action against it,
its officers and directors, or any person controlling it as aforesaid,
in respect of which indemnity may be sought on account of any
indemnity agreement contained herein, it will promptly give written
notice of the commencement thereof to the party or parties against
whom indemnity shall be sought hereunder. The Company and each of the
Underwriters agree that the notification required by the preceding
sentence shall be a material term of this Agreement. The omission so
to notify such indemnifying party or parties of any such action shall
relieve such indemnifying party or parties from any liability which it
or they may have to the indemnified party on account of any indemnity
agreement contained herein if such indemnifying party was materially
prejudiced by such omission, but shall not relieve such indemnifying
party or parties from any liability which it or they may have to the
indemnified party otherwise than on account of such indemnity
agreement. In case such notice of any such action shall be so given,
such indemnifying party shall be entitled to participate at its own
expense in the defense or, if it so elects, to assume (in conjunction
with any other indemnifying parties) the defense of such action, in
which event such defense shall be conducted by counsel chosen by such
indemnifying party (or parties) and satisfactory to the indemnified
party or parties who shall be defendant or defendants in such action,
and such defendant or defendants shall bear the fees and expenses of
any additional counsel retained by them; but if the indemnifying party
shall elect not to assume the defense of such action, such
indemnifying parties will reimburse such indemnified party or parties
for the reasonable fees and expenses of any counsel retained by them,
as such expenses are incurred; provided, however, if the defendants
(including any impleaded parties) in any such action include both the
indemnified party and the indemnifying party, and counsel for the
indemnified party shall have concluded, in its reasonable judgment,
that there may be a conflict of interest involved in the
representation by such counsel of both the indemnifying party and the
indemnified party, the indemnified party or parties shall have the
right to select separate counsel, satisfactory to the indemnifying
party, to participate in the defense of such action on behalf of such
indemnified party or parties (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel representing the indemnified parties who are
parties to such action). Each of the Company and the several
Underwriters agrees that without the other party's prior written
consent, which consent
-18-
shall not be unreasonably withheld, it will not settle, compromise or
consent to the entry of any judgment in any claim in respect of which
indemnification may be sought under the indemnification provisions of this
Agreement, unless such settlement, compromise or consent (i) includes an
unconditional release of such other party from all liability arising out of
such claim and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of such other party.
(d) If the indemnification provided for in subparagraphs (a) or (b)
above is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Underwriters, on the other hand, from
the offering of the Shares pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
on the one hand, and of the Underwriters, on the other hand, in connection
with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on
the one hand, and the Underwriters, on the other hand, in connection with
the offering of the Shares pursuant to this Agreement shall be deemed to be
in the same respective proportions as the total net proceeds from the
offering of the Shares pursuant to this Agreement (before deducting
expenses) received by the Company and the total underwriting discount
received by the Underwriters, in each case as set forth on the cover of the
Prospectus, bear to the aggregate initial public offering price of the
Shares as set forth on such cover. The relative fault of the Company, on
the one hand, and the Underwriters, on the other hand, shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this subparagraph (d) were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this subparagraph (d). No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this subparagraph (d), each
person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as such Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this subparagraph (d) are
-19-
several in proportion to the number of Shares set forth opposite their
respective names in Schedule II hereto and not joint.
(e) For purposes of this paragraph 11, it is understood and agreed
that the only information provided by the Underwriters expressly for use in
the Registration Statement and the Prospectus was as follows: on page S-18,
under the caption "UNDERWRITING," the second and fourth paragraphs under
the list of underwriters, on page S-19 the fifth and sixth paragraphs, and
on page S-20 the second paragraph (with all of such paragraph after the
first three sentences having been provided solely by Merrill Lynch, Pierce,
Fenner & Smith Incorporated).
12. Termination Date of this Agreement. This Agreement, or the obligations
----------------------------------
of the several Underwriters to purchase Option Shares on a date which is after
the Closing Date, may be terminated by the Representative at any time prior to
the Relevant Closing Date by delivering written notice thereof to the Company,
if on or after the date of this Agreement but prior to such time (a) there shall
have occurred any general suspension of trading in securities on the New York
Stock Exchange, or there shall have been established 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 or any material adverse change in the financial
markets of the United States, the effect of which outbreak, escalation,
calamity, crisis or material adverse change on the financial markets of the
United States shall be such as to make it impracticable, in the reasonable
judgment of the Representative, for the Underwriters to enforce contracts for
the sale of the Shares, or (c) the Company or any Significant Subsidiary shall
have sustained a substantial loss by fire, flood, accident or other calamity
which renders it impracticable, in the reasonable judgment of the
Representative, to consummate the sale of the Shares and the delivery of the
Shares by the several Underwriters at the initial public offering price or (d)
there shall have been any downgrading or any notice of any intended or potential
downgrading in the rating accorded the Company's securities by any "nationally
recognized statistical rating organization" as that term is defined by the
Commission for the purposes of Securities Act Rule 436(g)(2), or any such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of the Shares or any of
the Company's outstanding debt, the effect of which, in the reasonable judgment
of the Representative, makes it impracticable or inadvisable to consummate the
sale of the Shares and the delivery of the Shares by the several Underwriters at
the initial public offering price or (e) there shall have been declared, by
either Federal or New York authorities, a general banking moratorium. This
Agreement (or such obligation to purchase Option Shares) may also be terminated
at any time prior to the Relevant Closing Date if in the reasonable judgment of
the Representative the subject matter of any amendment or supplement to the
Registration Statement or Prospectus (other than an amendment or supplement
relating solely to the activity of any Underwriter or Underwriters) filed after
the execution of this Agreement but prior to such time shall have materially
impaired the marketability of the Shares. 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 hereof.
-20-
13. Miscellaneous. The validity and interpretation of this Agreement
-------------
shall be governed by the laws of the State of New York. Unless otherwise
specified, time of day refers to New York City time. This Agreement shall inure
to the benefit of, and be binding upon, the Company, the several Underwriters,
and with respect to the provisions of paragraph 11 hereof, 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 Shares from
any of the several Underwriters.
14. Notices. All communications hereunder shall be in writing or by
-------
telefax and, if to the Underwriters, shall be mailed, transmitted by any
standard form of telecommunication or delivered to the Representative at the
address set forth in Schedule I hereto and if to the Company, shall be mailed or
delivered to it at 411 Fayetteville Street, Raleigh, North Carolina 27601-1748,
attention of Thomas R. Sullivan, 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 Agreement shall have the meanings assigned to them in the
Registration Statement.
[The remainder of this page has intentionally been left blank.]
-21-
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed duplicate hereof whereupon it
will become a binding agreement between the Company and the several Underwriters
in accordance with its terms.
Very truly yours,
PROGRESS ENERGY, INC.
By: /s/ Thomas R. Sullivan
--------------------------------
Authorized Representative
Accepted as of the date first
above written, as Underwriter
named in, and as the Representative
of the other Underwriters named in, Schedule II.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Brant Meleski
---------------------
Brant Meleski
Vice President
SALOMON SMITH BARNEY INC.
By: /s/ Peter H. Kind
---------------------
Peter H. Kind
-22-
SCHEDULE I
Underwriting Agreement dated August 14, 2001
Registration Statement No. 333-49920
Representative and Address:
Merrill Lynch & Co.
4 World Financial Center
New York, New York 10080
Attention: Mary Ryan
Salomon Smith Barney Inc.
388 Greenwich Street
34th Floor
New York, New York 10013
Attention: Peter Kind
Designation: Common Stock
Amount: 11,000,000 shares
Purchase Price: $38.60 per share
Public Offering Price: $40.00 per share.
Closing Date and Location: August 20, 2001; Hunton & Williams, 421 Fayetteville
Street Mall, Raleigh, North Carolina 27601
SCHEDULE II
Underwriter Number of
----------- ---------
Shares
------
Merrill Lynch, Pierce, Fenner & Smith 3,702,600
Incorporated..................................................
Salomon Smith Barney Inc...................................... 3,702,600
J.P. Morgan Securities Inc.................................... 1,023,660
Morgan Stanley & Co. Incorporated............................. 1,007,325
Lehman Brothers Inc........................................... 898,425
First Union Securities, Inc................................... 555,390
A.G. Edwards & Sons, Inc...................................... 55,000
Edward D. Jones & Co., L.P.................................... 55,000
----------
Total...................................................... 11,000,000
==========
SCHEDULE III
Significant Subsidiaries
------------------------
Carolina Power & Light Company
Florida Progress Corporation
Florida Power Corporation
SCHEDULE IV
Persons Executing Lock-Up Agreements
------------------------------------
William Cavanaugh III
William S. Orser
Robert B. McGehee
Tom D. Kilgore
Donald K. Davis
Fred N. Day, IV
H. William Habermeyer, Jr.
William D. Johnson
Peter M. Scott III
Edwin B. Borden
David L. Burner
Charles W. Coker
Richard L. Daugherty
W. D. Frederick, Jr.
Richard Korpan
William O. McCoy
E. Marie McKee
John H. Mullin, III
Richard A. Nunis
J. Tylee Wilson
Jean Giles Wittner
Exhibit A
---------
[Form of Lock-Up Agreement]
August , 2001
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and
Salomon Smith Barney Inc.
as Representatives of the several
Underwriters to be named in the
within-mentioned Underwriting Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering by Progress Energy, Inc.
-------------------------------------------------
Dear Sirs:
The undersigned, an officer and/or director of Progress Energy, Inc. (the
"Company"), understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch") and Salomon Smith Barney Inc. ("Salomon")
propose to enter into an Underwriting Agreement (the "Underwriting Agreement")
with the Company providing for the public offering of shares (the "Securities")
of the Company's common stock (no par value) (the "Common Stock"). In
recognition of the benefit that such an offering will confer upon the
undersigned as an officer and/or director of the Company, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned agrees with each underwriter to be named in the
Underwriting Agreement that, during a period of 90 days from the date of the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Merrill Lynch and Salomon, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer, directly or indirectly, or announce the
sale of of any shares of the Company's Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or make any
demand for or exercise any right with respect to the registration of the
foregoing under the Securities Act of 1933, as amended, or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. Notwithstanding the
foregoing, nothing in this agreement shall prohibit or otherwise restrict the
undersigned from making (i) a transfer to a family member or family trust,
provided the transferee or transferees thereof agree in writing to be bound by
this restriction, (ii) a transfer to a transferee or transferees as a bona fide
gift or gifts, provided the transferee or transferees thereof agree in writing
to be bound by this restriction or (iii) a distribution to partners or
shareholders of such person, provided that the distributees thereof agree in
writing to be bound by the terms of this restriction.
Very truly yours,
Signature:___________________________
Print Name:__________________________