Exhibit 1
PROGRESS ENERGY, INC.
6.05% Senior Notes due 2007
6.85% Senior Notes due 2012
UNDERWRITING AGREEMENT
----------------------
April 11, 2002
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 named in Schedule II hereto
as follows:
1. Underwriters and Representatives. The term "Underwriters" as used
--------------------------------
herein shall be deemed to mean the several firms 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 I 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
-------------------------
its debt securities of the designation, with the terms and in the amount
specified in Schedule I hereto (the "Securities") in one or more new series
under a governing indenture dated as of February 15, 2001 (the "Indenture")
between the Company and Bank One Trust Company, N.A., as trustee (the
"Trustee"), in substantially the form heretofore delivered to the
Representative.
3. Representations and Warranties of the Company. The Company
---------------------------------------------
represents 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.
333-69738) ("Registration
Statement No. 333-69738") under the Securities Act of 1933, as amended (the
"Securities Act"), for the registration of $1,000,000,000 aggregate amount
of the Company's securities. Registration Statement No. 333-69738 was
declared effective by the Commission on October 24, 2001. The Company has
also filed with the Commission a registration statement on Form S-3 (No.
333-81278) ("Registration Statement No. 333-81278") for the registration of
$2,000,000,000 aggregate amount of the Company's securities (the
"Additional Registered Securities") as described therein. Registration
Statement No. 333-81278 was declared effective by the Commission on
February 7, 2002. Registration Statement No. 333-81278 contained a combined
prospectus for the sale of $2,494,000,000 of the Company's securities,
$494,000,000 of which remain unsold under Registration Statement No.
333-69738 (together with the Additional Registered Securities, the
"Available Registered Securities"). As of the date hereof, the Company has
sold none of the Available Registered Securities. Registration Statement
Nos. 333-69738 and 333-81278 are hereinafter referred to collectively as
the "Registration Statement." 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
combined prospectus included in Registration Statement No. 333-81278, 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, including the Incorporated
Documents, is hereinafter referred to as the "Prospectus." Any reference
herein to the terms "amend," "amendment" or "supplement" with respect to
the Registration Statement or the Prospectus shall be deemed to refer to
and include the filing of any document under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), deemed to be incorporated therein
after the date hereof and prior to the termination of the offering of the
Securities by the Underwriters; and any references herein to the terms
"Registration Statement" or "Prospectus" at a date after the filing of the
Prospectus Supplement shall be deemed to refer to the Registration
Statement or the Prospectus, as the case may be, as each may be amended or
supplemented prior to such date.
(b) Prior to the termination of the offering of the Securities, the
Company will not file any amendment to the Registration Statement or
supplement to 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 Underwriters or their
counsel acting on behalf of the Underwriters.
(c) The Registration Statement, at the time and date each 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
each 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
-2-
transmitted for filing to, the Commission pursuant to Rule 424 and at the
Closing Date, will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing representations and
warranties in this subparagraph (c) shall not apply to statements or
omissions made in reliance upon and in conformity with information
furnished herein or in writing to the Company by the Representative or by
or on behalf of any Underwriter through the Representative expressly for
use in the Prospectus or to any statements in or omissions from the
Statement of Eligibility (Form T-1) of the Trustee under the Indenture. The
Incorporated Documents, when they were filed with the Commission, complied
in all material respects with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder; and any
documents so filed and incorporated by reference subsequent to the date
hereof and prior to the termination of the offering of the Securities by
the Underwriters will, when they are filed with the Commission, comply in
all material respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder; and, when read together
with the 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 in
the United States consistently applied throughout the periods involved; and
Deloitte & Touche LLP, which has audited certain of the financial
statements, is an independent public or certified public accountant 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 to9 the Closing Date, (i) there has been no material adverse change
in the business, properties, results of operations or financial condition
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; and (iii) neither the Company
nor any of its subsidiaries has any material contingent obligation that is
not disclosed in the Registration Statement and Prospectus.
(f) The Company has full power and authority to execute, deliver and
perform its obligations under this Agreement. The execution and delivery of
this Agreement, the
-3-
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 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 or Repayment Event (as
defined below) under, the articles of incorporation or the by-laws of the
Company or any Significant Subsidiary, 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 Significant
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 business, properties, results of operations or
financial condition 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 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; 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 business,
properties, results of operations or financial condition 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.
(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.
-4-
(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 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); and (B)
conforms in all material respects to the description thereof in the
Prospectus. The Indenture has been qualified under the Trust Indenture Act
of 1939 (the "1939 Act").
(m) The Securities have been duly authorized by the Company and, when
issued and authenticated in the manner provided for in the Indenture and
delivered against payment of the required consideration therefor, will
constitute valid and legally binding obligations of the Company, entitled
to the benefits of the Indenture and enforceable against the Company in
accordance with their terms, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transferor or similar
laws affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity and except the effect on enforceability of
federal or state law limiting, delaying or prohibiting the making of
payments outside the United States). Such Securities rank and will rank on
a parity with all unsecured and unsubordinated indebtedness of the Company.
(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,
properties, results of operations or financial condition of the Company and
its subsidiaries considered as a whole or which are likely in the aggregate
to materially and adversely affect the consummation of this Agreement or
the transactions contemplated herein or therein.
(p) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the
Company of its obligations hereunder in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions herein contemplated or for the due execution, delivery or
performance of the Indenture by the Company, except such as have been
already obtained or as may be required under the Securities Act or state
securities laws and except for the qualification of the Indenture under the
1939 Act.
(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,
-5-
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
business, properties, results of operations or financial condition of the
Company and its subsidiaries considered as a whole.
(r) Except as described in the Registration Statement and except as
would not, in the aggregate, result in a material adverse change in the
business, properties, results of operations or financial condition 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.
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 each of the Underwriters, severally and
not jointly, and each such Underwriter agrees, severally and not jointly, to
purchase from the Company, the respective principal amount of Securities of each
series set forth opposite the name of such Underwriter in Schedule II hereto at
the purchase price set forth in Schedule I hereto.
5. Reoffering by Underwriters. The Underwriters agree to make promptly
--------------------------
a bona fide public offering of the Securities to the public for sale as set
forth in the Prospectus, subject, however, to the terms and conditions of this
Agreement.
6. Time and Place of Closing; Default of Underwriters.
---------------------------------------------------
(a) Payment for the Securities shall be made at the place, time and
date specified in Schedule I hereto against delivery of the Securities at
the office of Bank One Trust Company, N.A., One North State Street,
Chicago, Illinois 60670-0126, or such other place, time and date as the
Representative and the Company may agree. The hour and date of such
delivery and payment are herein called the "Closing Date." Payment for the
Securities shall be by wire transfer of immediately available funds against
delivery of the Securities to The Depository Trust Company or to Bank One
Trust Company, N.A., as custodian for The Depository Trust Company, in
fully registered global form registered in the name of Cede & Co., as
nominee for The Depository Trust Company, for the respective accounts
specified by the Representative not later than the close of business on the
business day prior to the Closing Date or such other date and time not
later than the Closing Date as agreed by The Depository Trust Company
or Bank One Trust Company, N.A. For the purpose of expediting the checking
of the certificates by the Representative, the Company agrees to make the
Securities available to the Representative not later than 10:00 A.M., on
the last full business day prior to the Closing Date at said office of Bank
One Trust Company, N.A.
(b) If one or more Underwriters shall, for any reason other than a
reason permitted hereunder, fail to take up and pay for the principal
amount of the Securities of
-6-
any series to be purchased by such one or more Underwriters, the Company
shall immediately notify the Representative, and the remaining Underwriters
shall be obligated to take up and pay for (in addition to the respective
principal amount of the Securities of such series set forth opposite their
respective names in Schedule II hereto) the principal amount of the
Securities of such series which such defaulting Underwriter or Underwriters
failed to take up and pay for, up to a principal amount thereof equal to,
in the case of each such remaining Underwriter, 10% of the principal amount
of the Securities of such series set forth opposite the name of such
remaining Underwriter in said Schedule II, and such remaining Underwriters
shall have the right, within 24 hours of receipt of such notice, either to
take up and pay for (in such proportion as may be agreed upon among them),
or to substitute another Underwriter or Underwriters, satisfactory to the
Company, to take up and pay for, the remaining principal amount of the
Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase. If any unpurchased Securities still remain, then the
Company or the Representative shall be entitled to an additional period of
24 hours within which to procure 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 Conduct Rules)
and satisfactory to the Company, to purchase or agree to purchase such
unpurchased Securities on the terms herein set forth. In any such case
either the Representative or the Company shall have the right to postpone
the Closing Date for a period not to exceed three full business days from
the date agreed upon in accordance with this paragraph 6, in order that the
necessary changes in the Registration Statement and Prospectus and any
other documents and arrangements may be effected. If (i) neither the
non-defaulting Underwriters nor the Company has arranged for the purchase
of such unpurchased Securities by another party or parties as above
provided and (ii) the Company and the non-defaulting Underwriters have not
mutually agreed to offer and sell the Securities other than the unpurchased
Securities, then this Agreement shall terminate without any liability on
the part of the Company or any Underwriter (other than an Underwriter which
shall have failed or refused, in accordance with the terms hereof, to
purchase and pay for the principal amount of the Securities which such
Underwriter has agreed to purchase as provided in paragraph 4 hereof),
except as otherwise provided in paragraph 7 and paragraph 8 hereof.
7. Covenants of the Company. The Company covenants with each
------------------------
Underwriter that:
(a) As soon as possible after the execution and delivery of this
Agreement, the Company will file the Prospectus with the Commission
pursuant to Rule 424, setting forth, among other things, the necessary
information with respect to the terms of offering of the Securities. The
Company will promptly deliver to the Representative and to counsel for the
Underwriters, to the extent not previously delivered, one fully executed
copy or one conformed copy, certified by an officer of the Company, of the
Registration Statement, as originally filed, and of all amendments thereto,
heretofore or hereafter made, (other than those relating solely to
Registered Securities other than the Securities), including any
post-effective amendment (in each case including all exhibits filed
-7-
therewith and all documents incorporated therein not previously furnished
to the Representative), including signed copies of each consent and
certificate included therein or filed as an exhibit thereto, and will
deliver to the Representative for distribution to the Underwriters as many
conformed copies of the foregoing (excluding the exhibits, but including
all documents incorporated therein) as the Representative may reasonably
request. The Company will also send to the Underwriters as soon as
practicable after the date of this Agreement and thereafter from time to
time as many copies of the Prospectus as the Representative may reasonably
request for the purposes required by the Securities Act.
(b) During such period (not exceeding nine months) after the
commencement of the offering of the Securities as the Underwriters may be
required by law to deliver a Prospectus, if any event relating to or
affecting the Company, or of which the Company shall be advised in writing
by the Representative shall occur, which in the opinion of the Company or
the Representative 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 Securities, the Company, upon the request of the Representative,
will furnish to the Representative, at the expense of such Underwriter, a
reasonable quantity of a supplemented or amended prospectus, or supplements
or amendments to the Prospectus, complying with Section 10(a) of the
Securities Act.
(c) The Company will make generally available to its security holders,
as soon as reasonably practicable, but in any event not later than 16
months after the end of the fiscal quarter in which the filing of the
Prospectus pursuant to Rule 424 occurs, an earning statement (in form
complying with the provisions of Section 11(a) of the Securities Act, which
need not be certified by independent public accountants) covering a period
of twelve months beginning not later than the first day of the Company's
fiscal quarter next following the filing of the Prospectus pursuant to
Rule 424.
(d) The Company will use its best efforts promptly to do and perform
all things to be done and performed by it hereunder prior to the Closing
Date and to satisfy all conditions precedent to the delivery by it of the
Securities.
(e) The Company will advise the Representative promptly of the filing
of the Prospectus pursuant to Rule 424 and of any amendment or supplement
to the Prospectus or Registration Statement or of official notice of
institution of proceedings for, or the entry of, a stop order suspending
the effectiveness of the Registration Statement and, if
-8-
such a stop order should be entered, use its best efforts to obtain the
prompt removal thereof.
(f) The Company will use its best efforts to qualify the Securities,
as may be required, for offer and sale under the Blue Sky or legal
investment laws of such jurisdictions as the Representative may designate,
and will file and make in each year such statements or reports as are or
may be reasonably required by the laws of such jurisdictions; provided,
however, that the Company shall not be required to qualify as a foreign
corporation or dealer in securities, or to file any general consents to
service of process under the laws of any jurisdiction.
8. Payment of Expenses. The Company will pay all expenses incident to the
-------------------
performance of its obligations under this Agreement, including (i) the printing
and filing of the Registration Statement and the printing of this Agreement,
(ii) the delivery of the Securities to the Underwriters, (iii) the fees and
disbursements of the Company's counsel and accountants, (iv) the expenses in
connection with the qualification of the Securities under securities laws in
accordance with the provisions of subparagraph (f) of paragraph 7 hereof,
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith, such fees and disbursements (excluding
filing fees) not to exceed $7,500, (v) the printing and delivery to the
Underwriters of copies of the Registration Statement and all amendments thereto
and of the Prospectus and any amendments or supplements thereto, (vi) the
printing and delivery to the Underwriters of copies of the Blue Sky Survey, and
(vii) the preparation and execution, and any 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); and the Company will
pay all taxes, if any (but not including any transfer taxes), on the issue of
the Securities and any filing and recordation of the Indenture.
The fees and disbursements of Underwriters' counsel shall be paid by the
Underwriters (subject, however, to the provisions of the preceding paragraph
requiring payment by the Company of fees and disbursements (excluding filing
fees) not to exceed $7,500); 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 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 Securities shall be subject to the
accuracy of the representations and warranties on the part of the Company as of
the date hereof and the Closing Date, to the performance by the Company of its
obligations to be performed hereunder prior to the Closing Date, and to the
following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall be in effect on the Closing Date; and no proceedings for
that purpose shall be pending before, or, to the Company's knowledge,
threatened by, the Commission on the
-9-
Closing Date. The Representative shall have received, prior to payment for
the Securities, a certificate dated the Closing Date and signed by the
Chairman, President or a Vice President of the Company to the effect that
no such stop order is in effect and that no proceedings for such purpose
are pending before or, to the knowledge of the Company, threatened by the
Commission.
(b) At the 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
opinion of William D. Johnson, Esq., Executive Vice President, Corporate
Secretary and General Counsel for the Company) to the effect that:
(i) the Indenture has been duly and validly authorized by all
necessary corporate action, has been duly binding obligation of the
Company enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws affecting the rights of other
creditors, and by general equitable principles and any implied
covenant of good faith and fair dealings;
(ii) the Indenture has been duly qualified under the 1939 Act;
(iii) assuming authentication by the Trustee in accordance with
the Indenture and delivery to and payment for the Securities by the
Underwriters, as provided in this Agreement, the Securities have been
duly and validly authorized, executed and delivered and are legal,
valid and binding obligations of the Company enforceable in accordance
with their terms, except as limited by bankruptcy, insolvency or other
laws affecting the rights of other creditors, and by general equitable
principles and any implied covenant of good faith and fair dealings,
and are entitled to the benefits of the Indenture;
(iv) the statements made in the Prospectus under the caption
"Description of Debt Securities" and in the Prospectus Supplement
under the caption "Description of the Senior Notes," insofar as they
purport to constitute summaries of the documents referred to therein,
constitute accurate summaries of the terms of such documents 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 each was
declared effective by the Commission and the Prospectus, at the time
it was filed with, or transmitted for filing to, the Commission
pursuant to Rule 424 (except as to the financial statements and other
financial and statistical data constituting a part thereof or
incorporated by reference therein, upon which such opinions need not
pass), complied as to form in all material respects with the
requirements of the Securities Act and the 1939 Act and the applicable
instructions, rules and
-10-
regulations of the Commission thereunder; the documents or
portions thereof filed with the Commission pursuant to the
Exchange Act and deemed to be incorporated by reference in the
Registration Statement and the Prospectus pursuant to Item 12 of
Form S-3 (except as to financial statements and other financial
and statistical data constituting a part thereof or incorporated
by reference therein and that part of the Registration Statement
that constitutes the 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 each 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; and nothing has
come to the attention of said counsel that would lead them to
believe that 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 as to financial statements
and other financial and statistical data constituting a part of
the Registration Statement or the Prospectus or incorporated by
reference therein and that part of the Registration Statement
that constitutes the Statement of Eligibility on Form T-1, upon
which such opinions need not pass).
(c) At the Closing Date, the Representative shall receive from
William D. Johnson, Esq., Executive Vice President, Corporate
Secretary and General Counsel 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), (iii), (v) and (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;
-11-
(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 Securities have been duly
authorized by all necessary corporate action on the part of the
Company;
(iv) except as described in or contemplated by the
Prospectus, there are no pending actions, suits or proceedings
against or affecting the Company or any Significant Subsidiary
which are likely in the aggregate, to result in any material
adverse change in the business, property, results of operations
or financial condition 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;
(v) the consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not
result in a breach of any of the terms or provisions of, or
constitute a default or Repayment Event under, the articles of
incorporation or by-laws of the Company or any Significant
Subsidiary, 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 business, properties,
results of operations or financial condition of the Company and
its subsidiaries considered as a whole;
(vi) an appropriate order of the Commission with respect to
the sale of the Securities 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 Securities as contemplated by
this Agreement; and
(vii) no filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations
hereunder in connection with the offering, issuance or sale of
the Securities hereunder or the consummation of the transactions
herein contemplated or for the due execution, delivery or
performance of the Indenture by the Company, except such as have
been already obtained or as may be required under the Securities
Act or state securities laws and except for the qualification of
the Indenture under the 1939 Act.
(d) The Representative shall have received on the date hereof and
shall receive on the Closing Date from each of Deloitte & Touche LLP
and KPMG LLP, a
-12-
letter 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 audit reports, financial
statements and certain financial information contained in or incorporated
by reference into the Prospectus.
(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 Securities 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
Securities 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) The Company shall have complied with all notice-filing and other
requirements, if any, of the North Carolina Utilities Commission, the
Public Service Commission of South Carolina and the Florida Public Service
Commission with respect to the issuance and sale of the Securities (except
as described in Section 3(p) hereof).
In case any of the conditions specified above in this paragraph 9 shall not
have been fulfilled or waived by 2:00 P.M. on the Closing Date, this Agreement
may be terminated by the Representative by delivering written notice thereof to
the Company. Any such termination shall be without liability of any party to any
other party except as otherwise provided in paragraphs 7 and 8 hereof.
10. Conditions of the Company's Obligations. The obligations of the
---------------------------------------
Company to deliver the Securities 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 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
-13-
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 statement, or alleged untrue
statement, of a material fact contained in the Registration Statement 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 (i) 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 or the Prospectus, or any amendment or
supplement to either thereof, or (ii) arose out of, or was 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. 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 Securities.
The Underwriters agree to notify promptly the Company, and each other
Underwriter, of the commencement of any litigation or proceedings against
them or any of them, or any such controlling person, in connection with the
sale of the Securities.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, its officers and directors, and each person
who controls the Company within the meaning of Section 15 of the Securities
Act, against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the
Securities Act or under any other statute or common law, and to reimburse
each of them for 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 or the
Prospectus as amended or supplemented (if any amendments or supplements
thereto shall have been furnished), or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such statement or omission
was made in reliance upon and in conformity with information furnished
herein or in writing to the Company by such Underwriter or through the
Representative on behalf of such Underwriter expressly for use in the
Registration Statement or the Prospectus or any amendment or supplement to
either
-14-
thereof. The indemnity agreement of all the respective Underwriters
contained in this paragraph 11 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Company
or any other Underwriter, or any such controlling person, and shall survive
the delivery of the Securities. The Company agrees promptly to notify the
Representative of the commencement of any litigation or proceedings against
the Company or any of its officers or directors, or any such controlling
person, in connection with the sale of the Securities.
(c) The Company and each of the Underwriters agree that, upon the
receipt of notice of the commencement of any action against it, its
officers and directors, or any person controlling it as aforesaid, in
respect of which indemnity may be sought on account of any indemnity
agreement contained herein, it will promptly give written notice of the
commencement thereof to the party or parties against whom indemnity shall
be sought hereunder. The Company and each of the Underwriters agree that
the notification required by the preceding sentence shall be a material
term of this Agreement. The omission so to notify such indemnifying party
or parties of any such action shall relieve such indemnifying party or
parties from any liability which it or they may have to the indemnified
party on account of any indemnity agreement contained herein if such
indemnifying party was materially prejudiced by such omission, but shall
not relieve such indemnifying party or parties from any liability which it
or they may have to the indemnified party otherwise than on account of such
indemnity agreement. In case such notice of any such action shall be so
given, such indemnifying party shall be entitled to participate at its own
expense in the defense or, if it so elects, to assume (in conjunction with
any other indemnifying parties) the defense of such action, in which event
such defense shall be conducted by counsel chosen by such indemnifying
party (or parties) and satisfactory to the indemnified party or parties who
shall be defendant or defendants in such action, and such defendant or
defendants shall bear the fees and expenses of any additional counsel
retained by them; but if the indemnifying party shall elect not to assume
the defense of such action, such indemnifying parties will reimburse such
indemnified party or parties for the reasonable fees and expenses of any
counsel retained by them, as such expenses are incurred; provided, however,
if the defendants (including any impleaded parties) in any such action
include both the indemnified party and the indemnifying party, and counsel
for the indemnified party shall have concluded, in its reasonable judgment,
that there may be a conflict of interest involved in the representation by
such counsel of both the indemnifying party and the indemnified party, the
indemnified party or parties shall have the right to select separate
counsel, satisfactory to the indemnifying party, to participate in the
defense of such action on behalf of such indemnified party or parties (it
being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel representing the
indemnified parties who are parties to such action). Each of the Company
and the several Underwriters agrees that without the other party's prior
written consent, which consent 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.
-15-
(d) If the indemnification provided for in subparagraphs (a) or (b)
above is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Underwriters, on the other hand, from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
on the one hand, and of the Underwriters, on the other hand, in connection
with the statements or omissions or alleged statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Underwriters, on the
other hand, in connection with the offering of the Securities of any series
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
of such series pursuant to this Agreement (before deducting expenses)
received by the Company and the total underwriting discount received by the
Underwriters with respect to such series, in each case as set forth on the
cover of the Prospectus, bear to the aggregate initial public offering
price of such Securities as set forth on such cover. The relative fault of
the Company, on the one hand, and the Underwriters, on the other hand,
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this 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
several in proportion to the principal amount of Securities of each series
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 herein or otherwise
for inclusion in Registration Statement No. 333-81278 and the Prospectus
was as follows: under the
-16-
caption "Underwriting" in the Prospectus Supplement, the second, third and
fourth sentences in the second paragraph, the third sentence of the third
paragraph, the entire fifth paragraph and the entire sixth paragraph. In
addition, First Union Securities, Inc. has furnished for inclusion in
Registration Statement No. 333-81278 and the Prospectus, the entire eighth
paragraph under the caption "Underwriting" in the Prospectus Supplement.
First Union Securities, Inc. shall be solely responsible for the
information in such eighth paragraph.
12. Termination Date of this Agreement. This Agreement may be terminated
----------------------------------
by the Representative at any time prior to the Closing Date by delivering
written notice thereof to the Company, if on or after the date of this Agreement
but prior to such time (a) there shall have occurred any general suspension of
trading in securities on the New York Stock Exchange, or there shall have been
established 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
trading in any securities of the Company shall have been suspended or limited by
any exchange or on the over-the-counter market, 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 outbreak, escalation,
calamity, or crisis shall be such as to make it impracticable, in the reasonable
judgment of the Representative, for the Underwriters to enforce contracts for
the sale of the Securities, or (c) the Company 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 Securities and the delivery of the
Securities by the several Underwriters at the initial public offering price or
(d) there shall have been any downgrading or any notice of any intended or
potential downgrading in the rating accorded the Company's securities by any
"nationally recognized statistical rating organization" as that term is defined
by the Commission for the purposes of Securities Act Rule 436(g)(2), or any such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of the Securities or any
of the Company's other outstanding debt, the effect of which, in the reasonable
judgment of the Representative, makes it impracticable or inadvisable to
consummate the sale of the Securities and the delivery of the Securities by the
several Underwriters at the initial public offering price or (e) there shall
have been declared, by New York or federal authorities, a general banking
moratorium. This Agreement may also be terminated at any time prior to the
Closing Date if, in the reasonable judgment of the Representative, the subject
matter of any amendment or supplement to the Registration Statement or
Prospectus (other than an amendment or supplement relating solely to the
activity of any Underwriter or Underwriters) filed after the execution of this
Agreement shall have materially impaired the marketability of the Securities.
Any termination hereof pursuant to this paragraph 12 shall be without liability
of any party to any other party except as otherwise provided in paragraphs 7 and
8 hereof.
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 hereof, and
-17-
their respective successors. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successors" as used in this Agreement
shall not include any purchaser, as such purchaser, of any of the Securities
from any of the several Underwriters.
14. Notices. All communications hereunder shall be in writing or by
-------
telefax and, if to the Underwriters, shall be mailed, transmitted by any
standard form of telecommunication or delivered to the Representative at the
address set forth in Schedule I hereto and if to the Company, shall be mailed or
delivered to it at 411 Fayetteville Street, Raleigh, North Carolina 27601-1748,
attention of 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 Registration
Statement No. 333-81278.
[The remainder of this page has been intentionally left blank.]
-18-
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
-----------------------------
Accepted as of the date first
above written, as Underwriter
named in, and as the Representative
of the other Underwriters named in, Schedule II.
BANC OF AMERICA SECURITIES LLC
By: /s/ Lily Chang
--------------------------------
Title: Principal
-----------------------------
SALOMON SMITH BARNEY INC.
By: /s/ Igor V. Zaitsev
---------------------------------
Title: Director
------------------------------
-19-
SCHEDULE I
Representative and Addresses:
Banc of America Securities LLC
Bank of America Corporate Center
NC1-007-08-01
100 North Tryon Street
Charlotte, North Carolina 28255
Salomon Smith Barney Inc.
388 Greenwich Street
34th Floor
New York, New York 10013
Designation:
6.05% Senior Notes due 2007
Principal Amount: $350,000,000.
Purchase Price: 99.362% of principal amount.
Public Offering Price: 99.962% of principal amount, plus accrued
interest from date of issuance to date of
payment and delivery.
Interest Rate: 6.05% per year.
Maturity Date: April 15, 2007
6.85% Senior Notes due 2012
Principal Amount: $450,000,000.
Purchase Price: 99.243% of principal amount.
Public Offering Price: 99.893% of principal amount, plus accrued
interest from date of issuance to date of
payment and delivery.
Interest Rate: 6.85% per year.
Maturity Date: April 15, 2012
Indenture Dated as of: February 15, 2001.
Interest Payment Dates: Interest on each series of the Senior Notes
will be payable semi-annually in arrears on
pril 15 and October 15, commencing October
15, 2002.
Redemption Terms: The Company may redeem some or all of the
Senior Notes of each series at any time at
the redemption prices
described under "Description of the Senior
Notes--Optional Redemption" in the
prospectus supplement, plus accrued interest
to the date of redemption.
Closing Date and Location: April 17, 2002; Hunton & Williams, 421
Fayetteville Street Mall, Raleigh, North
Carolina 27601.
I-2
SCHEDULE II
Underwriter Principal Amount of:
--------------------------------------
2007 Notes 2012 Notes
------------ ------------
Banc of America Securities LLC ........................................ 112,000,000 144,000,000
Salomon Smith Barney Inc. ............................................. 112,000,000 144,000,000
J.P. Morgan Securities Inc. ........................................... 31,500,000 40,500,000
Banc One Capital Markets, Inc. ........................................ 31,500,000 40,500,000
Goldman, Sachs & Co. .................................................. 31,500,000 40,500,000
First Union Securities, Inc. .......................................... 31,500,000 40,500,000
Total ............................................................. $350,000,000 $450,000,000
============ ============
SCHEDULE III
Significant Subsidiaries
------------------------
Carolina Power & Light Company
Progress Capital Holdings, Inc.
Florida Progress Corporation
Florida Power Corporation