EXHIBIT 1.3
$225,000,000
PIEDMONT NATURAL GAS COMPANY, INC.
MEDIUM-TERM NOTES, SERIES E
AGENCY AGREEMENT
____________________, [_____]
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
SunTrust Capital Markets, Inc.
BB&T Capital Markets, a division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇▇▇▇▇ & Company LLC
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
1. INTRODUCTION. Piedmont Natural Gas Company, Inc., a North
Carolina corporation (the "Issuer"), confirms its agreement with each of you
(individually, an "Agent" and collectively, the "Agents") with respect to the
issue and sale from time to time by the Issuer of up to $225,000,000 aggregate
principal amount of its Medium-Term Notes, Series E, Due Not Less Than Nine
Months from Date of Issue registered under the registration statements referred
to in Section 2(a) (any such Medium-Term Notes, being hereinafter referred to as
the "Securities", which expression shall, if the context so admits, include any
permanent global Security). Securities may be sold pursuant to Section 3 of this
Agreement or as contemplated by Section 11 of this Agreement in an aggregate
amount not to exceed the amount of Registered Securities (as defined in Section
2(a) hereof) registered pursuant to such registration statements reduced by the
aggregate amount of any other Registered Securities sold otherwise than pursuant
to Sections 3 and 11 of this Agreement. The Securities will be issued under the
Indenture, dated as of April 1, 1993, between Piedmont Natural Gas Company,
Inc., a New York corporation (the "Predecessor Company"), and Citibank, N.A., as
trustee (the "Trustee"), as amended by the First Supplemental Indenture, dated
as of February 25, 1994, among the Issuer, the Predecessor Company and the
Trustee, and the Second Supplemental Indenture, dated as of June 15, 2003,
between the Issuer and the Trustee (collectively, the "Indenture").
The Securities shall have the terms described in the
Prospectus referred to in Section 2(a) as it may be amended or supplemented from
time to time, including any supplement to the Prospectus that sets forth only
the terms of a particular issue of the Securities (a "Pricing Supplement").
Securities will be issued, and the terms thereof established, from time to time
by the Issuer in accordance with the Indenture and the Procedures (as defined in
Section 3(d) hereof).
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
represents and warrants to, and agrees with, each Agent as follows:
(a) The Issuer meets the requirements for use of Form S-3
under the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations ("Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") and has filed with the
Commission two registration statements on such form (No. 333-10628 and
333-62222), including a prospectus, relating to equity and debt
securities of the Issuer, including the Securities (such equity and
debt securities, the "Registered Securities"), which have become
effective under the Act. Such registration statements, as amended as of
the Closing Date (as defined in Section 3(e) hereof), are hereinafter
referred to as the "Registration Statements", and the prospectus and
the preliminary prospectus supplement relating to the Securities
included in such Registration Statements, as supplemented as of the
Closing Date, including all material incorporated by reference therein,
is hereinafter referred to as the "Prospectus." Any reference in this
Agreement to amending or supplementing the Prospectus shall be deemed
to include the filing of materials incorporated by reference in the
Prospectus after the Closing Date, and any reference in this Agreement
to any amendment or supplement to the Prospectus shall be deemed to
include any such materials incorporated by reference in the Prospectus
after the Closing Date. The Registration Statements, as such
Registration Statements may be amended or supplemented, meet the
requirements set forth in Rule 415(a)(1)(x) and (a)(2) under the Act
and complies in all material respects with said Rule.
(b) On the effective date of each part of the
registration statements relating to the Registered Securities and each
post-effective amendment thereto and the date hereof, such registration
statement conformed in all respects to the requirements of the Act, the
Rules and Regulations, the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act") and the rules and regulations under the Trust
Indenture Act (the "Trust Indenture Act Rules and Regulations") and did
not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, and on the Closing Date, the
Registration Statements and the Prospectus, and at each of the times of
acceptance and of delivery referred to in Section 6(a) hereof and at
each of the times of amendment or supplementing referred to in Section
6(b) hereof (the Closing Date and each such time being herein sometimes
referred to as a "Representation Date"), the Registration Statements
and the Prospectus as then amended or supplemented will conform in all
material respects to the requirements of the Act, the Trust Indenture
Act and the Rules and Regulations, and none of such documents will
include any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they
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were made, not misleading, except that the foregoing does not apply to
statements in or omissions from any of such documents based upon
written information furnished to the Issuer by any Agent specifically
for use therein. The Indenture, including any amendment and supplements
thereto, pursuant to which the Securities will be issued, will conform
with the requirements of the Trust Indenture Act and the Trust
Indenture Act Rules and Regulations.
(c) The documents incorporated or deemed to be
incorporated by reference in the Registration Statements and the
Prospectus when they became effective or at the time they were or
hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the Act and the Rules
and Regulations the Securities Exchange Act of 1934 (the "1934 Act"),
as amended, and the rules and regulations of the Commission thereunder
(the "1934 Act Regulations").
(d) The financial statements of the Issuer and its
consolidated subsidiaries included or incorporated in the Registration
Statements and Prospectus fairly present the financial condition of the
Issuer and its consolidated subsidiaries as of the dates indicated and
the results of operations and cash flows for the periods therein
specified in conformity with accounting principles generally accepted
in the United States consistently applied throughout the periods
involved (except as otherwise stated therein). The pro forma financial
statements and the related notes thereto included or incorporated in
the Registration Statements and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(e) The Issuer and each of its significant subsidiaries
within the meaning of Regulation S-X (individually a "Subsidiary" and
collectively the "Subsidiaries") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification wherein it
owns or leases material properties or conducts material business; and
all of the outstanding shares of capital stock of each Subsidiary have
been duly authorized and validly issued and are fully paid and
non-assessable, and, except as otherwise set forth in the Prospectus,
all outstanding shares of capital stock of the Subsidiaries are owned
by the Issuer either directly or through wholly owned subsidiaries free
and clear of any perfected security interest and any other security
interest, claims, liens or encumbrances.
(f) The Indenture and the Securities have been duly
authorized, the Indenture has been duly qualified under the Trust
Indenture Act and executed and delivered and constitutes, and the
Securities, when duly executed, authenticated, issued and delivered as
contemplated herein and in the Indenture, will constitute, valid and
legally binding obligations of the Issuer enforceable in accordance
with its terms, subject, as to
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enforcement, to applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization, arrangement or other similar
laws now or hereafter in effect affecting the rights of creditors
generally and general principles of equity and rules of law governing
and limiting the availability of specific performance, injunctive
relief and other equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(g) There is no pending or threatened action, suit or
proceeding before any court or governmental agency, authority or body
or any arbitrator involving the Issuer or any of its subsidiaries of a
character required to be disclosed in the Registration Statements which
is not disclosed in the Prospectus, there is no statute required to be
described in the Prospectus that is not described as required, and
there is no franchise, contract or other document of a character
required to be described in the Registration Statements or the
Prospectus, or to be filed as an exhibit, which is not described or
filed as required, and the descriptions in the Registration Statements
and Prospectus of statutes, legal and governmental proceedings,
contracts and other documents are accurate and fairly present the
information required to be shown.
(h) The Issuer's authorized equity capitalization is as
set forth in the Prospectus (if contained therein).
(i) No consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
of the transactions contemplated by this Agreement in connection with
the issuance and sale of the Securities by the Issuer, except such as
have been obtained and made under the Act and the Trust Indenture Act
and as may be required under state securities laws and such other
approvals as have been obtained.
(j) The execution, delivery and performance of the
Indenture or this Agreement, the issue and sale of the Securities, the
consummation of the other transactions herein contemplated or the
fulfillment of the terms hereof will not conflict with, result in a
breach of, or constitute a default under the Articles of Incorporation
or By-laws of the Issuer or the terms of any indenture or other
agreement or instrument to which the Issuer or any of its subsidiaries
is a party or bound, or any statute, rule, order or regulation
applicable to the Issuer or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over the Issuer or any of its subsidiaries; and the
Issuer has full power and authority to authorize, issue and sell the
Securities as contemplated by this Agreement.
(k) This Agreement has been duly authorized, executed and
delivered by the Issuer.
(l) The Issuer and its subsidiaries have all necessary
franchises or permits for natural gas operations in all communities now
served, except as set forth in the Registration Statements and except
where the failure to be so authorized by franchise or permit does not
materially affect the right of the Issuer or such subsidiary to the use
of its properties or the conduct of its business; and the franchises of
the Issuer and its
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subsidiaries referred to in the Registration Statements are good and
valid except for and subject only to such defects as may be set forth
or referred to in the Registration Statements, and such others as do
not materially affect the right of the Issuer or such subsidiary to the
use of its properties or the conduct of its business, and said
franchises impose no materially burdensome restrictions.
(m) Except as described in the Registration Statement and
except as would not, singly or in the aggregate, result in a material
adverse effect on the condition of the Issuer or in its financial
position or results of operations:
(i) the business, assets and properties of the
Issuer are and have been operated and maintained in compliance
with all applicable federal, state, city, county and local
environmental protection laws and regulations (collectively,
the "Environmental Laws");
(ii) no event has occurred which, with or without
the passage of time or the giving of notice, or both, would
constitute non-compliance by the Issuer with, or a violation
by the Issuer of, the Environmental Laws; and
(iii) the Issuer has not caused or permitted to
exist, as a result of an intentional or unintentional act or
omission, a disposal, discharge or release of solid wastes,
pollutants or hazardous substances, on or from any site which
currently is or formerly was owned, leased, occupied or used
by it in violation of the Environmental Laws.
(n) Except as described in the Registration Statement and
except as would not, singly or in the aggregate, result in a material
adverse effect on the condition of the Issuer or in its financial
position or results of operations, (a) no labor dispute with the
employees of the Issuer or any subsidiary exists or, to the knowledge
of the Issuer, is imminent, and (b) the Issuer is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors.
(o) The Issuer is a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended (the
"Holding Company Act") that is exempt from all provisions of the
Holding Company Act, except Section 9(a)(2) thereof, by order of the
Commission pursuant to Section 3(a)(5) thereof. Neither the execution,
delivery and performance by the Issuer of this Agreement or the
issuance of the Securities violates any provision of the Holding
Company Act or any rules or regulations thereunder.
3. APPOINTMENT AS AGENTS; AGREEMENT OF AGENTS; SOLICITATIONS
AS AGENTS.
(a) Subject to the terms and conditions stated herein,
the Issuer hereby appoints each of the Agents as an agent of the Issuer
(such appointment to be effective with respect to each Agent as set
forth in Section 16 hereof) for the purpose of soliciting or receiving
offers to purchase the Securities from the Issuer by others. So long as
this Agreement shall remain in effect with respect to any Agent, the
Issuer shall not, without
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the consent of any such Agent, solicit or accept offers to purchase
Securities otherwise than through one of the Agents (except as
contemplated by Section 11 hereof); provided, however, that, subject to
all of the terms and conditions of this Agreement and any agreement
contemplated by Section 11 hereof, the foregoing shall not be construed
to prevent the Issuer from selling at any time any Registered
Securities in a firm commitment underwriting pursuant to an
underwriting agreement that does not provide for a continuous offering
of such Registered Securities, and, in the case of such sales, no
commission will be payable to the Agents with respect to such sales.
(b) On the basis of the representations and warranties
contained herein, but subject to the terms and conditions herein set
forth, each Agent agrees, as agent of the Issuer, to use its reasonable
best efforts when requested by the Issuer to solicit offers to purchase
the Securities upon the terms and conditions set forth in the
Prospectus, as from time to time amended or supplemented.
Upon receipt of notice from the Issuer as contemplated by
Section 4(b) hereof, each Agent shall suspend its solicitation of offers to
purchase Securities until such time as the Issuer shall have furnished it with
an amendment or supplement to the Registration Statements or the Prospectus, as
the case may be, contemplated by Section 4(b) and shall have advised such Agent
that such solicitation may be resumed.
The Issuer reserves the right, in its sole discretion, to
instruct the Agents to suspend solicitation of offers to purchase the Securities
commencing at any time for any period of time or permanently. As soon as
reasonably practicable, but in any event not later than one Business Day after
receipt of notice from the Issuer, the Agents will forthwith suspend
solicitation of offers to purchase Securities from the Issuer until such time as
the Issuer has advised the Agents that such solicitation may be resumed. For the
purpose of the foregoing sentence, "Business Day" shall mean any day that is not
a Saturday or Sunday, and that in The City of New York is not a day on which
banking institutions generally are authorized or obligated by law or executive
order to close.
The Agents are authorized to solicit offers to purchase
Securities as described in the Prospectus, as amended or supplemented and only
in a minimum aggregate amount of $100,000. Each Agent shall communicate to the
Issuer, orally or in writing, each reasonable offer to purchase Securities
received by it as agent. The Issuer shall have the sole right to accept offers
to purchase the Securities and may reject any such offer, in whole or in part.
Each Agent shall have the right, in its discretion reasonably exercised, without
notice to the Issuer, to reject any offer to purchase Securities received by it,
in whole or in part, and any such rejection shall not be deemed a breach of its
agreement contained herein.
No Security which the Issuer has agreed to sell pursuant to
this Agreement shall be deemed to have been purchased and paid for, or sold by
the Issuer, until such Security shall have been delivered to the purchaser
thereof against payment by such purchaser.
(c) At the time of delivery of, and payment for, any
Securities sold by the Issuer as a result of a solicitation made by, or
offer to purchase received by, an Agent, the
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Issuer agrees to pay such Agent a commission in accordance with the
schedule set forth in Exhibit A hereto.
(d) Administrative procedures respecting the sale of
Securities (the "Procedures") shall be agreed upon from time to time by
the Agents and the Issuer. The initial Procedures, which are set forth
in Exhibit B hereto, shall remain in effect until changed by agreement
among the Issuer and the Agents promptly confirmed in writing. Each
Agent and the Issuer agree to perform the respective duties and
obligations specifically provided to be performed by each of them
herein and in the Procedures. The Issuer will furnish to the Trustee a
copy of the Procedures as from time to time in effect, and will furnish
the Trustee a copy of the Procedures promptly after any change therein.
(e) The documents required to be delivered by Section 5
hereof shall be delivered at the office of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ &
Sutcliffe LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, not later
than 10:00 A.M., New York City time, on the date of this Agreement or
at such later time as may be mutually agreed by the Issuer and the
Agents, which in no event shall be later than the earlier of (i) the
time at which the Agents commence solicitation of purchases of
Securities hereunder or (ii) the time any Securities are purchased to
Section 11 hereof, such time and date being herein called the "Closing
Date."
(f) Each Agent agrees to keep and maintain confidential
any information provided by the Issuer pursuant to the second sentence
of Section 4(c) or Section 4(g) and known by such Agent to be
non-public, until such information is announced or otherwise disclosed
to the general public.
4. CERTAIN AGREEMENTS OF THE ISSUER. The Issuer agrees with
the Agents that it will furnish to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, counsel
for the Agents, one (1) signed copy and three conformed copies of the
registration statements relating to the Registered Securities, including all
exhibits, in the form that they became effective and of all amendments thereto
and that, in connection with each offering of Securities,
(a) The Issuer will advise each Agent promptly of any
proposal to amend or supplement the Registration Statements or the
Prospectus and will afford the Agents a reasonable opportunity to
comment on any such proposed amendment or supplement (other than any
Pricing Supplement that relates to Securities not purchased through or
by such Agent); and the Issuer will also advise each Agent of the
filing and effectiveness of any such amendment or supplement and of the
institution by the Commission of any stop order proceedings in respect
of the Registration Statements or of any part thereof and will use its
best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act and no suspension
of solicitation of offers to purchase Securities pursuant to Section
3(b) or this Section 4(b) shall be in effect (any such time and any
time when either any Agent shall own any Securities with the intention
of reselling them or the Issuer has accepted an offer to purchase
Securities but the related settlement has
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not occurred being referred to herein as a "Marketing Time"), any event
occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein not misleading, or if it is necessary at any such time to amend
the Prospectus to comply with the Act, the Issuer will promptly notify
each Agent to suspend solicitation of offers to purchase the
Securities; and if the Issuer shall decide to amend or supplement the
Registration Statements or the Prospectus, it will promptly advise each
Agent by telephone (with confirmation in writing) and, subject to the
provisions of subsection (a) of this Section, will promptly prepare and
file with the Commission an amendment or supplement which will correct
such statement or omission or an amendment which will effect such
compliance and will supply any such amended or supplemented Prospectus
to such Agent in such quantities as such Agent may reasonably request.
Notwithstanding the foregoing, if, at the time any such event occurs or
it becomes necessary to amend the Prospectus to comply with the Act,
any Agent shall own any of the Securities with the intention of
reselling them, or the Issuer has accepted an offer to purchase
Securities but the related settlement has not occurred, the Issuer,
subject to the provisions of subsection (a) of this Section, will
promptly prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an
amendment which will effect such compliance and will supply any such
amended or supplemented Prospectus to such Agent in such quantities as
such Agent may reasonably request. Neither the Agents' consent to, nor
their delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 5.
(c) The Issuer will file promptly all documents required
to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act. In addition, on or prior to the date on which
the Issuer makes any announcement to the general public concerning
earnings or concerning any other event which is required to be
described, or which the Issuer proposes to describe, in a document
filed pursuant to the 1934 Act, the Issuer will furnish the information
contained or to be contained in such announcement to each Agent,
confirmed in writing and, subject to the provisions of subsections (a)
and (b) of this Section, will cause the Prospectus to be amended or
supplemented to reflect the information contained in such announcement.
The Issuer also will furnish each Agent with copies of all other press
releases or announcements to the general public. The Issuer will
immediately notify each Agent of any downgrading in the rating of the
Securities or any other debt securities of the Issuer or any proposal
to downgrade the rating of the Securities or any other debt securities
of the Issuer by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act),
or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the Issuer
(other than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading of such
rating), as soon as the Issuer learns of such downgrading, proposal to
downgrade or public announcement.
(d) As soon as practicable, after the date of each
acceptance by the Issuer of an offer to purchase Securities hereunder,
but in any event not later than the Applicable Availability Date (as
defined below), the Issuer will make generally available to its
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security-holders an earnings statement covering a period of at least 12
months beginning after the Applicable Effective Date (as defined below)
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 thereunder. For the purpose of the preceding sentence only,
"Applicable Effective Date" means the latest of (i) the effective date
of the registration statements relating to the Registered Securities,
(ii) the effective date of the most recent post-effective amendment to
such registration statements to become effective prior to the date of
such acceptance, and (iii) the date of filing of the Issuer's most
recent Annual Report on Form 10-K filed with the Commission prior to
the date of such acceptance, and "Applicable Availability Date" means
(A) the 45th day after the end of the fourth fiscal quarter following
the fiscal quarter that includes the Applicable Effective Date or (B)
if such fourth fiscal quarter is the last quarter of the Issuer's
fiscal year, the 90th day after the end of such fourth fiscal quarter.
(e) The Issuer will furnish to each Agent copies of the
Registration Statements, including all exhibits, the Prospectus and all
amendments and supplements to such documents (including any Pricing
Supplement), in each case as soon as available and in such quantities
as are reasonably requested.
(f) The Issuer will arrange for the qualification of the
Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as the Agents designate
and will continue such qualifications in effect so long as required for
the distribution; provided, however, that in connection therewith the
Issuer shall not be required to qualify as a foreign corporation or as
a dealer in securities in any jurisdiction in which it is not so
qualified other than the State of New York or to file a general consent
to service of process in any jurisdiction.
(g) So long as any Securities are outstanding, the Issuer
will furnish to the Agents, (i) as soon as practicable after the end of
each fiscal year, a copy of its annual report to stockholders for such
year, (ii) as soon as available, a copy of each report or definitive
proxy statement of the Issuer filed with the Commission under the 1934
Act or mailed to stockholders, and (iii) from time to time, such other
information concerning the Issuer as the Agents may reasonably request;
provided, however, that the Issuer need furnish exhibits to the reports
specified in clause (ii) only to the extent requested by the Agents.
(h) The Issuer will pay all expenses incident to the
performance of its obligations under this Agreement or any agreement
contemplated by Section 11 hereof and will reimburse each Agent for any
expenses (including reasonable fees and disbursements of counsel)
incurred by it in connection with qualification of the Securities for
sale and determination of their eligibility for investment under the
laws of such jurisdictions as such Agent may designate and the printing
of memoranda relating thereto, for any fees charged by investment
rating agencies for the rating of the Securities, for any filing fee of
the National Association of Securities Dealers, Inc. relating to the
Securities, for expenses incurred by each Agent in distributing the
Prospectus and all supplements thereto (including any Pricing
Supplement), for costs incurred by each Agent in advertising any
offering of Securities and for each Agent's reasonable expenses
(including the reasonable fees and disbursements of counsel to the
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Agents) incurred in connection with the establishment or maintenance of
the program contemplated by this Agreement or otherwise in connection
with the activities of the Agents under this Agreement.
5. CONDITIONS OF OBLIGATIONS. The obligation of each Agent, as
agent of the Issuer, under this Agreement at any time to solicit offers to
purchase the Securities is subject to the accuracy, on the date hereof, on each
Representation Date and on the date of each such solicitation, of the
representations and warranties of the Issuer herein, to the accuracy, on each
such date, of the statements of the Issuer's officers made pursuant to the
provisions hereof, to the performance, on or prior to each such date, by the
Issuer of its obligations hereunder, and to each of the following additional
conditions precedent:
(a) The Prospectus, as amended or supplemented as of the
date hereof, as of any Representation Date or date of such
solicitation, as the case may be, shall have been filed with the
Commission in accordance with the Rules and Regulations and no stop
order suspending the effectiveness of the Registration Statements or of
any part thereof shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Issuer
or any Agent, shall be contemplated by the Commission and any request
of the Commission for additional information (to be included in the
Registration Statements or the Prospectus) shall have been complied
with to the Agent's satisfaction.
(b) Neither the Registration Statements nor the
Prospectus, as amended or supplemented as of the date hereof or as of
any Representation Date or date of such solicitation, as the case may
be, shall contain any untrue statement of fact which, in the opinion of
any Agent, is material or omit to state a fact which, in the opinion of
any Agent, is material and is required to be stated therein or is
necessary to make the statements therein not misleading, other than any
statement contained in, or other matter omitted from, the Registration
Statements or Prospectus in reliance upon, and in conformity with,
information furnished in writing by the Agents to the Issuer expressly
for use in the Registration Statements or Prospectus.
(c) There shall not have occurred (i) any change, or any
development involving a prospective change, in or affecting
particularly the business or properties of the Issuer and its
subsidiaries on a consolidated basis which, in the judgment of such
Agent, makes it impracticable or inadvisable to proceed with the
soliciting of offers to purchase the Securities as contemplated by the
Registration Statements or the Prospectus, (ii) any downgrading in the
rating of the Securities or any other debt securities of the Issuer by
any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Act), or any public announcement
that any such organization has under surveillance or review its rating
of any debt securities of the Issuer (other than any announcement with
positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating), (iii) any suspension or
limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Issuer
on any exchange or in the over-the-counter market if, in the judgment
of such Agent, any such event or any condition giving rise thereto or
existing
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concurrently therewith makes it impracticable or inadvisable to proceed
with the solicitation of offers to purchase, or sales of, Securities on
the terms and in the manner contemplated by the applicable Pricing
Supplement and the Prospectus, (iv) any banking moratorium declared by
Federal or New York authorities, (v) the occurrence of any material
disruption in the settlement or clearing services shall have occurred,
or (vi) any outbreak or escalation of hostilities, any declaration of
war by Congress or any other substantial national or international
calamity or emergency if, in the judgment of such Agent, the effect of
any such outbreak, escalation, declaration, calamity or emergency makes
it impractical or inadvisable to proceed with solicitations of offers
to purchase, or sales of, Securities on the terms and in the manner
contemplated by the applicable Pricing Supplement and the Prospectus.
(d) At the Closing Date, the Agents shall have received
an opinion, dated the Closing Date, of Nelson, Mullins, ▇▇▇▇▇ &
Scarborough, L.L.P., counsel for the Issuer, to the effect that:
(i) The Issuer and each of its Subsidiaries has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and
conduct its business as described in the Prospectus, and is
duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction which
requires such qualification and wherein it owns or leases
material properties or conducts material business; and all of
the outstanding shares of capital stock of each Subsidiary
have been duly authorized and validly issued and are fully
paid and non-assessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of the
Subsidiaries are owned by the Issuer either directly or
through wholly owned subsidiaries free and clear of any
perfected security interest and, to the best knowledge of such
counsel, any other security interest, claim, lien or
encumbrance;
(ii) The Indenture has been duly authorized,
executed and delivered by the Issuer, has been duly qualified
under the Trust Indenture Act and constitutes a valid and
legally binding obligation of the Issuer enforceable in
accordance with its terms, subject, as to enforcement, to
applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization, arrangement or other similar laws
now or hereafter in effect affecting the rights of creditors
generally and general principles of equity and rules of law
governing and limiting the availability of specific
performance, injunctive relief and other equitable remedies
(regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(iii) The documents incorporated by reference in
the Prospectus (other than the financial statements and
supporting schedules included therein or omitted therefrom, as
to which such counsel expresses no opinion), when they were
filed with the Commission complied as to form in all material
respects with the
11
requirements of the 1934 Act and the rules and regulations of
the Commission thereunder.
(iv) Any series of Securities established on or
prior to the date of such opinion has been duly authorized and
established in conformity with the Indenture, the Master Note
has been duly executed by the Company and, when the terms of a
particular Security and of its issuance and sale have been
duly authorized and established by all necessary corporate
action in conformity with the Indenture and this Agreement,
and communicated to the Trustee as provided in the Officer's
Certificate delivered pursuant to Section 2.01 and 2.04 of the
Indenture, and such Security delivered against payment as
contemplated by this Agreement, such Security will have been
duly issued and will constitute a valid and legally binding
obligation of the Issuer enforceable in accordance with its
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization,
arrangement or other similar laws now or hereafter in effect
affecting the rights of creditors generally and general
principles of equity and rules of law governing and limiting
the availability of specific performance, injunctive relief
and other equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at
law), and the Securities, when so issued and delivered and
sold, will conform, in all material respects, to the
description thereof contained in the Prospectus, it being
understood that such counsel may assume that at the time of
the issuance, sale and delivery of each Security (a) the
authorization of such series will not have been modified or
rescinded and there will not have occurred any change in law
affecting the validity, legally binding character or
enforceability of such Security, and (b) that neither of the
issuance, sale and delivery of any Security, nor any of the
terms of such Security, nor compliance by the Issuer with such
terms, will violate any then applicable law, any agreement or
instrument then binding upon the Issuer or any restriction
then imposed by any court or governmental body having
jurisdiction over the Issuer;
(v) To the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving the Issuer or any of its subsidiaries of
a character required to be disclosed in the Registration
Statements by Item 103 of Regulation S-K which is not
disclosed in the Prospectus, there is no statute required to
be described in the Prospectus that is not described as
required, and there is no franchise, contract or other
document of a character required to be described in the
Registration Statements or Prospectus, or to be filed as an
exhibit, which is not described or filed as required; and the
descriptions in the Registration Statements and Prospectus of
statutes, legal and governmental proceedings, and other
matters of law (other than (i) descriptions under the caption
"Material United States Federal Income Tax Consequences" in
the Prospectus and (ii) the matters covered by the opinion
required by Section 5(d)(xi) herein), the Issuer's certificate
of incorporation and bylaws, contracts and other documents are
correct in all material respects and fairly present the
information required to be shown;
12
(vi) The Registration Statements have become
effective under the Act, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) under
the Act specified in such opinion on the date specified
therein, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration
Statements or of any part thereof has been issued and no
proceedings for that purpose have been instituted or are
pending or contemplated under the Act, and the registration
statements relating to the Registered Securities and each
post-effective amendment thereto, as of their effective date,
the Registration Statements and the Prospectus, as of the
Closing Date, and any amendment or supplement thereto, as of
its date, complied as to form in all material respects with
the requirements of the Act, the Trust Indenture Act and the
Rules and Regulations; such counsel has no reason to believe
that the registration statements relating to the Registered
Securities and each post-effective amendment thereto, as of
their effective date, the Registration Statements or the
Prospectus, or any amendment or supplement, as of their
respective effective or issue dates and at the Closing Date,
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; it
being understood that such counsel need express no opinion as
to the financial statements or other financial data contained
in the Registration Statements or the Prospectus and that such
counsel may rely solely on certificates of officers of the
Issuer with respect to statistical data contained in the
Registration Statements or the Prospectus;
(vii) The Issuer's authorized equity
capitalization is as set forth in the Prospectus (if contained
therein);
(viii) No consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation of the transactions contemplated by this
Agreement in connection with the issuance and sale of the
Securities by the Issuer, except such as have been obtained
and made under the Act and the Trust Indenture Act and as may
be required under state securities laws and such other
approvals (specified in such opinion) as have been obtained
(it being understood that such counsel may assume with respect
to each particular Security that the inclusion of any
alternative or additional terms in such Security that are not
currently specified in the Prospectus or the forms of
Securities examined by such counsel would not require the
Issuer to obtain any regulatory consent, authorization or
approval or make any regulatory filing in order for the Issuer
to issue, sell and deliver such Security);
(ix) The execution, delivery and performance of
the Indenture or this Agreement, the issue and sale of the
Securities, the consummation of the other transactions herein
contemplated or the fulfillment of the terms hereof will not
conflict with, result in a breach of, or constitute a default
under the Articles of Incorporation or By-laws of the Issuer
or the terms of any indenture or other agreement or instrument
known to such counsel and to which the Issuer or any of its
subsidiaries is a party or bound, or any statute, rule, order
or regulation known
13
to such counsel to be applicable to the Issuer or any of its
subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction
over the Issuer or any of its subsidiaries; and the Issuer has
full power and authority to authorize, issue and sell the
Securities as contemplated by this Agreement (it being
understood that such counsel may assume with respect to each
particular Security that the inclusion of any alternative or
additional terms in such Security that are not currently
specified in the Prospectus or the forms of Securities
examined by such counsel will not cause the issuance, sale or
delivery of such Security, the terms of such Security, or the
compliance by the Issuer with such terms, to violate any of
the court orders or laws specified in this paragraph or to
result in a default under or a breach of any of the agreements
specified in this paragraph);
(x) This Agreement has been duly authorized,
executed and delivered by the Issuer;
(xi) The Issuer and its subsidiaries have all
necessary franchises or permits for natural gas operations in
all communities now served, except as set forth in the
Registration Statements and except where the failure to be so
authorized by franchise or permit does not, in the opinion of
such counsel, materially affect the right of the Issuer or
such subsidiary to the use of its properties or the conduct of
its business; and the franchises of the Issuer and its
subsidiaries referred to in the Registration Statements are
good and valid except for and subject only to such defects as
may be set forth or referred to in the Registration
Statements, and such others as do not, in the opinion of such
counsel, materially affect the right of the Issuer or such
subsidiary to the use of its properties or the conduct of its
business, and said franchises impose no materially burdensome
restrictions; and
(xii) The Issuer is a "holding company" within the
meaning of the Holding Company Act that is exempt from all
provisions of the Holding Company Act, except Section 9(a)(2)
thereof, by order of the Commission pursuant to Section
3(a)(5) thereof. Neither the execution, delivery and
performance of this Agreement nor the issuance of the
Securities violates any provision of the Holding Company Act
or any rules or regulations thereunder.
In rendering such opinion, such counsel may (A)
state, except as to certain matters involving the absence of the need
to obtain the approvals of the South Carolina Public Service Commission
and the Tennessee Regulatory Authority for the transactions
contemplated herein, its opinion is limited to the federal laws of the
United States and the laws of the State of North Carolina and (B) rely,
as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Issuer and public officials. In
addition, the opinion to be delivered pursuant to Sections 5(d)(iii)
and 5(d)(xi) may be given by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President,
Corporate Counsel and Secretary of the Issuer, in lieu of Nelson,
Mullins, ▇▇▇▇▇ & Scarborough, L.L.P.
14
(e) On the date hereof and at the Closing Date, the
Agents shall have received a certificate, dated the Closing Date, of
the President or any Vice President and a principal financial or
accounting officer of the Issuer in which such officers, shall state
that, to the best of their knowledge after reasonable investigation,
(i) the representations and warranties of the Issuer in this Agreement
are true and correct, (ii) the Issuer has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, (iii) no stop order
suspending the effectiveness of the Registration Statements or of any
part thereof has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission, and (iv)
subsequent to the date of the most recent financial statements included
or incorporated by reference in the Prospectus, there has been no
material adverse change in the financial position or results of
operations of the Issuer and its subsidiaries, except as set forth in
or contemplated by the Prospectus.
(f) At the Closing Date, the Agents shall have received a
letter, dated the Closing Date, of Deloitte & Touche LLP confirming
that they are independent public accountants within the meaning of the
Act and the applicable published Rules and Regulations thereunder and
stating in effect that:
(i) In their opinion, the financial statements
and schedules examined by them and included in the
Registration Statements and Prospectus comply in form in all
material respects with the applicable accounting requirements
of the Act and the related published Rules and Regulations;
(ii) On the basis of a reading of the latest
available interim financial statements of the Issuer; carrying
out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which
would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of
the minutes of the meetings of the stockholders, directors and
the audit committee of the Company and Subsidiaries; and
inquiries of officials of the Issuer who have responsibility
for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them
to believe that:
(A) the unaudited consolidated financial
statements, if any, included in the Prospectus do not
comply in form in all material respects with the
applicable accounting requirements of the Act or the
1934 Act and the related published Rules and
Regulations or any material modification should be
made to such unaudited consolidated financial
statements for them to be in conformity with
accounting principles generally accepted in the
United States;
(B) the unaudited capsule information, if
any, included in the Prospectus does not agree with
the amounts set forth in the unaudited consolidated
financial statements from which such capsule
information was derived or was not determined on a
basis substantially consistent with that of the
audited financial statements included in the
Prospectus;
15
(C) the unaudited pro forma consolidated
condensed financial statements, if any, included in
the Prospectus do not comply as to form in all
material respects with the applicable accounting
requirements of the Act or the 1934 Act and the
published rules and regulations of the Commission
thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the
compilation of those statements,
(D) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than five days
prior to the Closing Date, there was any change in
the capital stock (except for the issuance of common
stock under the Company's Employee Stock Purchase
Plan, Executive Long-Term Incentive Plan and Dividend
Reinvestment and Stock Purchase Plan) or any increase
in short-term indebtedness or long-term debt of the
Issuer and consolidated subsidiaries or, at the date
of the latest available balance sheet read by such
accountants, there was any increase in consolidated
net current liabilities or any decrease in
consolidated net assets, as compared with amounts
shown on the latest balance sheet included in the
Prospectus; or
(E) for the period from the date of the
latest income statement included in the Prospectus to
the closing date of the latest available income
statement read by such accountants there were any
decreases, as compared with the corresponding period
of the previous year, in consolidated operating
revenues, utility operating income, or net income, or
in the ratio of earnings to fixed charges;
except in all cases set forth in clauses (D) and (E) above for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(iii) They have compared specified dollar amounts
(or percentages derived from such dollar amounts) and other
financial information contained in the Prospectus (in each
case to the extent that such dollar amounts, percentages and
other financial information are derived from the general
accounting records of the Issuer and its subsidiaries subject
to the internal controls of the Issuer's accounting system or
are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a
reading of such general accounting records and other
procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in
such letter.
All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included in the
Prospectus for purposes of this subsection.
16
(g) The Agents shall have received from ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ & Sutcliffe LLP, counsel for the Agents, such opinion or
opinions, dated the Closing Date, with respect to the validity of the
Securities, the Registration Statements, the Prospectus, the
conclusions of law set forth under the caption "Material United States
Federal Income Tax Consequences" in the Prospectus and other related
matters as they may require, and the Issuer shall have furnished to
such counsel such documents as they request for the purpose of enabling
their, to pass upon such matters. In rendering such opinion, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ & Sutcliffe LLP may rely as to all matters governed by North
Carolina law and to the matters relating to state regulatory consents
and approvals upon the opinion of Nelson, Mullins, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇,
L.L.P., counsel for the Issuer.
(h) Subsequent to the execution of this Agreement (1) the
Issuer shall not have received notice that either ▇▇▇▇▇'▇ Investors
Service Inc. ("Moody's") or Standard & Poor's Ratings Group, a division
of ▇▇▇▇▇▇-▇▇▇▇, Inc. ("S&P") intends to reduce, or is considering a
reduction in, the ratings of any of the Issuer's debt securities unless
Moody's or S&P's intention to so reduce or consideration of such a
reduction is then publicly known and (2) the Issuer's debt securities
shall be rated as investment grade debt by Moody's and S&P.
(i) On the date hereof and at the Closing Date, the
Agents shall have received a letter, dated the Closing Date, of
Deloitte & Touche LLP, regarding the financial statements and other
financial information of North Carolina Natural Gas Corporation
included or incorporated by reference in the Prospectus. Such letter
shall be in substantially the form of the letter from Deloitte & Touche
LLP regarding the Issuer's financial statements pursuant to Section
5(f) or in such other form reasonably acceptable to the Agents.
The Issuer will furnish the Agents with such conformed copies
of such opinions, certificates, letters and documents as they may reasonably
request.
6. ADDITIONAL COVENANTS OF THE ISSUER. The Issuer agrees that:
(a) Each acceptance by the Issuer of an offer for the
purchase of Securities shall be deemed to be an affirmation that its
representations and warranties contained in this Agreement are true and
correct at the time of such acceptance and a covenant that such
representations and warranties will be true and correct at the time of
delivery to the purchaser of the Securities as though made at and as of
each such time, it being understood that such representations and
warranties shall relate to the Registration Statements and the
Prospectus as amended or supplemented at each such time. Each such
acceptance by the Issuer of an offer for the purchase of Securities
shall be deemed to constitute an additional representation, warranty
and agreement by the Issuer that, as of the settlement date for the
sale of such Securities, after giving effect to the issuance of such
Securities, of any other Securities to be issued on or prior to such
settlement date and of any other Registered Securities to be issued and
sold by the Issuer on or prior to such settlement date, the aggregate
amount of Registered Securities (including any Securities) which have
been issued and sold by the Issuer will not exceed the amount of
Registered Securities registered pursuant to the Registration
Statements.
17
(b) Each time that the Registration Statements or the
Prospectus shall be amended or supplemented (other than by a Pricing
Supplement), the Issuer shall, (A) concurrently with such amendment or
supplement, if such amendment or supplement shall occur during a
Marketing Time, or (B) at or immediately prior to commencement of the
next Marketing Time if such amendment or supplement shall not occur
during a Marketing Time, furnish the Agents with a certificate, dated
the date of delivery thereof, of the President or any Vice President
and a principal financial or accounting officer of the Issuer, in form
satisfactory to the Agents, to the effect that the statements contained
in the certificate covering the matters set forth in Section 5(e)
hereof which was last furnished to the Agents are true and correct at
the time of such amendment or supplement, as though made at and as of
such time or, in lieu of such certificate, a certificate of the same
tenor as the certificate referred to in Section 5(e); provided,
however, that any certificate furnished under this Section 6(b) shall
relate to the Registration Statements and the Prospectus as amended or
supplemented at the time of delivery of such certificate and, in the
case of the matters set forth in clause (ii) of Section 5(e), to the
time of delivery of such certificate.
(c) At each Representation Date referred to in Section
6(b), the Issuer shall (A) concurrently if such Representation Date
shall occur during a Marketing Time, or (B) at or immediately prior to
commencement of the next Marketing Time if such Representation Date
shall not occur during a Marketing Time, furnish the Agents with a
written opinion or opinions, dated the date of such Representation
Date, of counsel for the Issuer, in form satisfactory to the Agents, to
the effect set forth in Section 5(d) hereof; provided, however, that to
the extent appropriate such opinion or opinions may reconfirm matters
set forth in a prior opinion delivered under Section 5(d) or this
Section 6(c); provided further, however, that any opinion or opinions
furnished under this Section 6(c) shall relate to the Registration
Statements and the Prospectus as amended or supplemented at the time of
delivery of such opinion or opinions and shall state that the
Securities sold in the relevant Applicable Period have been duly
executed, authenticated, issued and delivered and constitute valid and
legally binding obligations of the Issuer enforceable in accordance
with their terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, moratorium, reorganization, arrangement or other similar
laws now or hereafter in effect affecting the rights of creditors
generally and general principles of equity and rules of law governing
and limiting the availability of specific performance, injunctive
relief and other equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and
conform to the description thereof contained in the Prospectus as
amended or supplemented at the relevant settlement date or dates for
the sale of such Securities. For the purpose of this Section 6(c),
"Applicable Period" shall mean with respect to any opinion delivered
pursuant to this Section 6(c) the period commencing on the date of the
most recent prior opinion delivered under Section 5(d) or this Section
6(c) and ending on the date of delivery of the opinion to be delivered
pursuant to this Section 6(c).
(d) At each Representation Date referred to in Section
6(b) on which the Registration Statements or the Prospectus shall be
amended or supplemented to include additional financial information,
the Issuer shall cause Deloitte & Touche LLP (A) concurrently if such
Representation Date shall occur during a Marketing Time, or (B) at
18
or immediately prior to commencement of the next Marketing Time if such
Representation Date shall not occur during a Marketing Time, to furnish
the Agents with a letter, addressed jointly to the Issuer and the
Agents and dated the date of delivery of such letter, in form and
substance satisfactory to the Agents, to the effect set forth in
Sections 5(f) and 5(i) hereof; provided, however, that to the extent
appropriate such letter may reconfirm matters set forth in prior
letters delivered by Deloitte & Touche LLP pursuant to Sections 5(f)
and 5(i) or this Section 6(d); provided further, however, that any
letter furnished under this Section 6(d) shall relate to the
Registration Statements and the Prospectus as amended or supplemented
at the time of deliver of such letter, with such changes as may be
necessary to reflect changes in the financial statements and other
information derived from the accounting records of the Issuer.
(e) On each settlement date for the sale of Securities,
the Issuer shall, if requested by the Agent that solicited or received
the offer to purchase any Securities being delivered on such settlement
date, furnish such Agent with a written opinion or opinions, dated the
date of delivery thereof, of counsel for the Issuer, in form
satisfactory to such Agent, to the effect set forth in clauses (i),
(ii) and (iii) of Section 5(d) hereof; provided, however, that any
opinion furnished under this Section 6(e) shall relate to the
Prospectus as amended or supplemented at such settlement date and shall
state that the Securities being sold by the Issuer on such settlement
date, when delivered against payment therefor as contemplated by this
Agreement, will have been duly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of
the Issuer enforceable in accordance with their terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, moratorium,
reorganization, arrangement or other similar laws now or hereafter in
effect affecting the rights of creditors generally and general
principles of equity and rules of law governing and limiting the
availability of specific performance, injunctive relief and other
equitable remedies (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and will conform to the
description thereof contained in the Prospectus as amended or
supplemented at such settlement date.
(f) The Issuer agrees that any obligation of a person who
has agreed to purchase Securities to make payment for and take delivery
of such Securities shall be subject to (i) the accuracy, on the related
settlement date fixed pursuant to the Procedures, of the Issuer's
representation and warranty deemed to be made to the Agents pursuant to
the last sentence of subsection (a) of this Section 6, and (ii) the
satisfaction, on such settlement date, of each of the conditions set
forth in Sections 5(a), (b) and (c), it being understood that under no
circumstance shall any Agent have any duty or obligation to exercise
the judgment permitted under Section 5(b) or (c) on behalf of any such
person.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Issuer will indemnify and hold harmless each
Agent against any losses, claims, damages or liabilities, joint or
several, to which such Agent may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
a Registration Statement, the
19
Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, 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, and will reimburse each Agent for any legal or other
expenses reasonably incurred by such Agent in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
Issuer will not be liable to such Agent in any case to the extent that
any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any of such documents in reliance upon and in
conformity with written information furnished to the Issuer by such
Agent specifically for use therein, unless such loss, claim, damage or
liability arises out of the offer or sale of Securities occurring after
such Agent has notified the Issuer in writing that such information
should no longer be used therein.
(b) Each Agent will indemnify and hold harmless the
Issuer against any losses, claims, damages or liabilities to which the
Issuer may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a Registration Statement,
the Prospectus or any amendment or supplement thereto, or any related
preliminary prospectus or preliminary prospectus supplement, or arise
out of or based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Issuer by such
Agent specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Issuer in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, unless such loss, claim, damage
or liability arises out of the offer or sale of Securities occurring
after the Agent has notified the Issuer in writing that such
information should no longer be used therein. The Issuer acknowledges
that the statements set forth in the last paragraph of the cover page
and under the heading "Plan of Distribution" in any preliminary
Prospectus and the Prospectus constitute the only information furnished
in writing by or on behalf of such Agent for inclusion in the documents
referred to in the forgoing indemnity, and you as Agents confirm that
such statements are correct.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under subsection (a) or (b) above,
notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party (i) will not relieve it
from any liability which it may have to any indemnified party under
subsection (a) or (b) above unless and to the extent such failure
prejudices the indemnifying party of substantial rights or defenses and
(ii) will not, in any event, relieve it from any liability which it may
have to any indemnified party otherwise than under subsection (a) or
(b) above. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the
20
commencement thereof, the indemnifying party will be entitled to
appoint counsel satisfactory to such indemnified party to represent the
indemnified party in such action; provided, however, that if the
defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to defend such action
on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election
so to appoint counsel to defend such action and approval by the
indemnified party of such counsel, the indemnifying party will not be
liable to such indemnified party under this Section 7 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party
shall have employed separate counsel in accordance with the proviso to
the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel (plus any local counsel), approved by the Agents
in the case of paragraph (a) of this Section 7, representing the
indemnified parties under such paragraph (a) who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying
party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such
clause (i) or (iii). No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or
claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability
arising out of such action or 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 any indemnified party.
(d) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits
received by the Issuer on the one hand and any Agent on the other from
the offering pursuant to this Agreement of the Securities which are the
subject of the action or (ii) if the allocation provided by clause (i)
above 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 Issuer on the one
hand and any Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
as well as any other relevant equitable considerations. The relative
benefits received by the Issuer on the one hand and any Agent on the
other shall
21
be deemed to be in the same proportions as the total net proceeds from
the offering pursuant to this Agreement of the Securities which are the
subject of the action (before deducting expenses) received by the
Issuer bear to the total discounts and commissions received by such
Agent from the offering of such Securities pursuant to this Agreement.
The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuer or such Agent and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Issuer and each Agent agree that it would not be just and equitable
if contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the Agents 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
subsection (d). The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), no Agent shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities which are the subject of the action and which were
distributed to the public through it pursuant to this Agreement or upon
resale of Securities purchased by it from the Issuer exceeds the amount
of any damages which such Agent has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of each Agent in this subsection (d)
to contribute are several, in the same proportion which the amount of
the Securities which are the subject of the action and which were
distributed to the public through such Agent pursuant to this Agreement
bears to the total amount of such Securities distributed to the public
through all of the Agents pursuant to this Agreement, and not joint.
(e) The obligations of the Issuer under this Section 7
shall be in addition to any liability which the Issuer may otherwise
have and shall extend, upon the same terms and conditions, to each
person, if any, who controls each Agent within the meaning of the Act;
and the obligations of each Agent under this Section 7 shall be in
addition to any liability which each Agent may otherwise have and shall
extend, upon the same terms and conditions, to each director of the
Issuer (including any person who, with his consent, is named in the
Registration Statements as about to become a director of the Issuer),
to each officer of the Issuer who has signed the Registration
Statements and to each person, if any, who controls the Issuer within
the meaning of the Act.
8. STATUS OF EACH AGENT. In soliciting offers to purchase the
Securities from the Issuer pursuant to this Agreement and in assuming its other
obligations hereunder (other than offers to purchase pursuant to Section 11),
each Agent is acting individually and not jointly and is acting solely as agent
for the Issuer and not as principal. Each Agent will use its reasonable best
efforts to assist the Issuer in obtaining performance by each purchaser whose
offer to
22
purchase Securities from the Issuer has been solicited by such Agent and
accepted by the Issuer, but such Agent shall have no liability to the Issuer in
the event any such purchase is not consummated for any reason. If the Issuer
shall default on its obligations to deliver Securities to a purchaser whose
offer it has accepted, the Issuer (i) shall hold the Agents harmless against any
loss, claim or damage arising from or as a result of such default by the Issuer,
and (ii) in particular, shall pay to the Agents any commission to which they
would be entitled in connection with such sale.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective indemnities, agreements, representations, warranties and other
statements of the Issuer or its officers and of the Agents set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Agent, the Issuer or any of their respective representatives, officers or
directors or any controlling person and will survive delivery of and payment for
the Securities. If this Agreement is terminated pursuant to Section 10 or for
any other reason, the Issuer shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 4(h) and the obligations of the
Issuer under Sections 4(d) and 4(g) and the respective obligations of the Issuer
and the Agents pursuant to Section 7 shall remain in effect. In addition, if any
such termination shall occur either (i) at a time when any Agent shall own any
of the Securities acquired pursuant to Section 11 hereof and shall have informed
the Issuer of its intention of reselling them or (ii) after the Issuer has
accepted an offer to purchase Securities and prior to the related settlement,
the obligations of the Issuer under the second to last sentence of Section 4(b),
under Sections 4(a), 4(c), 4(e) and 4(f) and, in the case of a termination
occurring as described in (ii) above, under Sections 3(c), 6(a), 6(e) and 6(f)
and under the last sentence of Section 8, shall also remain in effect.
10. TERMINATION. This Agreement may be terminated for any
reason at any time by the Issuer as to any Agent or by such Agent insofar as
this Agreement relates to such Agent, upon the giving of one day's written
notice of such termination to the other parties hereto. Any settlement with
respect to Securities placed by an Agent occurring after termination of this
Agreement shall be made in accordance with the Procedures and each Agent agrees,
if requested by the Issuer, to take the steps therein provided to be taken by
such Agent in connection with such settlement.
11. PURCHASES AS PRINCIPAL. From time to time, any Agent may
agree with the Issuer to purchase Securities from the Issuer as principal and
(unless the Issuer and such Agent may otherwise agree) such purchase shall be
made in accordance with the terms of a separate agreement (a "Purchase
Agreement") in the form attached hereto as Exhibit C (or any such other form as
may be agreed to between the Issuer and such Agent) with such additional
provisions relating to the terms of the Securities and of the purchase and sale
(and, if applicable, resale) thereof as shall be set forth in the Purchase
Information delivered pursuant to the Procedures, and such Agent's compensation
shall, unless otherwise agreed between the Issuer and such Agent, be the amount
thereof set forth in the Pricing Supplement. For the purposes of Section 12 of
this Agreement the term "Purchaser" shall refer to each of you acting solely as
principal hereunder and not as agent.
23
12. CONDITIONS TO THE OBLIGATIONS OF A PURCHASER. The
obligations of a Purchaser to purchase Securities pursuant to any Purchase
Agreement will be subject to the accuracy of the representations and warranties
on the part of the Issuer herein as of the date of the respective Purchase
Agreement and as of the settlement date for the sale of such Securities, to the
performance and observance by the Issuer of all covenants and agreements herein
and therein contained on its part to be performed and observed and to the
following additional conditions precedent:
(a) No stop order suspending the effectiveness of the
Registration Statements, as amended from time to time, shall have been
issued and no proceedings for that purpose shall have been instituted
or threatened.
(b) Except to the extent modified by the respective
Purchase Agreement, the Purchaser shall have received, appropriately
updated in a manner consistent with Section 5 hereof, (i) a certificate
of the Issuer, dated as of the settlement date, to the effect set forth
in Section 5(e), (ii) the opinion or opinions of Nelson, Mullins, ▇▇▇▇▇
& Scarborough, L.L.P., counsel to the Issuer, dated as of the
settlement date, to the effect set forth in Section 5(d), (iii) the
opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, counsel for the
Purchaser, dated as of the settlement date, to the effect set forth in
Section 5(g) and (iv) letter of Deloitte & Touche LLP, dated as of the
settlement date, to the effect set forth in Sections 5(f) and 5(i).
(c) The conditions set forth in Section 5(c) shall have
been satisfied.
(d) Prior to the settlement date, the Issuer shall have
furnished to the Purchaser such further information, certificates and
documents as the Purchaser may reasonably request.
(e) Subsequent to the execution of any Purchase
Agreement, there shall not have been any decrease in the ratings of any
of the Issuer's debt securities by Moody's, S&P or D&P.
If any of the conditions specified in this Section 12 shall
not have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in the Purchase Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Purchaser and its counsel,
the Purchase Agreement and all obligations of the Purchaser thereunder may be
canceled at, or at any time prior to, the respective settlement date by the
Purchaser. Notice of such cancellation shall be given to the Issuer in writing
or by telephone or transmitted by any standard form of telecommunication
confirmed in writing.
13. NOTICES. Except as otherwise provided herein, all notices
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
shall be directed to it at 4 World Financial Center, New York, New York 10080,
Attention: [_________________]; and notices to the Issuer shall be directed to
it at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
24
▇▇▇▇▇▇▇▇▇, Treasurer; or in the case of any party hereto, to such other address
or person as such party shall specify to each other party by a notice given in
accordance with the provisions of this Section 13. Any such notice shall take
effect at the time of receipt.
14. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the parties hereto, their respective successors and assigns,
the officers and directors and controlling persons referred to in Section 7 and,
to the extent provided in Section 6(f), any person who has agreed to purchase
Securities from the Issuer, and no other person will have any right or
obligation hereunder.
15. GOVERNING LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such executed counterparts shall
together constitute one and the same Agreement.
16. EFFECTIVE DATE. Notwithstanding anything to the contrary
herein, this Agreement shall become effective with respect to an Agent only upon
execution and delivery of its counterpart to this Agreement.
[Remainder of page intentionally left blank]
25
If the foregoing correctly sets forth our agreement, please
indicate your acceptance hereof in the space provided for that purpose below.
Very truly yours,
PIEDMONT NATURAL GAS COMPANY, INC.
By: __________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By: _________________________________
Name:
Title:
BB&T CAPITAL MARKETS, A DIVISION OF ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇▇▇, INC.
By: _________________________________
Name:
Title:
SUNTRUST CAPITAL MARKETS, INC.
By: _________________________________
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO., L.P.
By: _________________________________
Name:
Title:
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
By: _________________________________
Name:
Title:
▇▇▇▇▇▇▇▇▇ & COMPANY LLC
By: _________________________________
Name:
Title:
27
EXHIBIT A
The Issuer agrees to pay each Agent a commission equal to the following
percentage of the principal amount of Securities sold to purchasers solicited by
such Agent:
Commission Rate
(as a percentage of
Term principal amount)
------------------------------------ -----------------------
From 9 months to less than 1 year .125%
From 1 year to less than 18 months .150
From 18 months to less than 2 years .200
From 2 years to less than 3 years .250
From 3 years to less than 4 years .350
From 4 years to less than 5 years .450
From 5 years to less than 6 years .500
From 6 years to less than 7 years .550
From 7 years to less than 10 years .600
From 10 years to less than 15 years .625
From 15 years to less than 20 years .700
From 20 years to 30 years .750
Greater than 30 years To be determined at the
time of sale
A-1
EXHIBIT B
ADMINISTRATIVE PROCEDURES
The Medium-Term Notes, Series E due nine months or more from their
issue date (the "Notes") are to be offered on a continuing basis by Piedmont
Natural Gas Company, Inc., a North Carolina corporation (the "Issuer"). ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, SunTrust Capital Markets, Inc., BB&T
Capital Markets, a division of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc., ▇▇▇▇▇▇▇▇▇ & Company
LLC, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., L.P., and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC, as agents
(individually, an "Agent" and collectively, the "Agents"), have each agreed to
use reasonable best efforts to solicit offers to purchase the Notes. No Agent
will be obligated to purchase Notes for its own account. The Notes are being
sold pursuant to an Agency Agreement, dated [___________] (the "Agency
Agreement"), among the Issuer and the Agents, and will be issued pursuant to an
Indenture, dated as of April 1, 1993, between Piedmont Natural Gas Company,
Inc., a New York corporation (the "Predecessor Company") and Citibank, N.A., as
trustee (the "Trustee"), as amended by the First Supplemental Indenture, dated
as of February 25, 1994, among the Issuer, the Predecessor Company and the
Trustee (collectively, the "Indenture"). The Notes will rank equally and ratably
with all other unsecured and unsubordinated indebtedness of the Issuer and will
have been registered with the Securities and Exchange Commission (the
"Commission"). For a description of the terms of the Notes and the offering and
sale thereof, see the sections entitled "Description of Notes," "Material United
States Federal Income Tax Considerations" and "Underwriting" in the Prospectus
Supplement relating to the Notes, dated [___________], attached hereto and
hereinafter referred to as the "Prospectus Supplement", and the sections
entitled "Description of Debt Securities", and "Plan of Distribution" in the
Prospectus relating to the Notes, dated [__________], attached hereto and
hereinafter referred to as the "Prospectus".
Unless otherwise specified in the applicable Pricing Supplement, the
Notes will be issued in book-entry form (each, a "Book-Entry Note") and will be
represented by a fully registered master global note certificate (the "Master
Global Note"). The Master Global Note shall be in a form approved by the Issuer,
the Agents, The Depository Trust Company ("DTC") and the Trustee. Prior to the
issuance of any Notes, the Trustee shall authenticate the Master Global Note and
hold it as custodian for DTC. Except under the limited circumstances described
in the Indenture, beneficial owners of Book-Entry Notes will not be entitled to
receive a certificate representing such Notes.
At the option of the Issuer, Notes may also be issued in certificated
form. Prior to accepting any offer to purchase Notes in certificated form, the
Issuer shall deliver to the Trustee an adequate supply of duly executed
certificated Notes.
Administrative procedures and specific terms of the offering are
explained below -- Part I indicating procedures applicable to all Notes, Part II
indicating specific procedures for Book-Entry Notes, and Part III indicating
specific procedures for Notes issued in certificated form. Administrative and
record keeping responsibilities will be handled for the Issuer by its Treasury
Department. The Issuer will advise the Agents in writing of those persons
handling
B-1
administrative responsibilities with whom the Agents are to communicate
regarding offers to purchase Notes and the details of their delivery.
Unless otherwise defined herein, terms defined in the Indenture (or any
applicable Board Resolution referred to therein related to the Notes) shall be
used herein as therein defined.
PART I: ADMINISTRATIVE PROCEDURES APPLICABLE TO ALL NOTES
Issue Date
Each Note will be dated the date of its authentication. Each Note will
also bear an original issue date (the "Issue Date") which, with respect to any
such Note (or portion thereof), shall mean the date of its original issuance and
shall be specified therein. The Issue Date will remain the same for all Notes
subsequently issued upon transfer, exchange or substitution of a Note,
regardless of their dates of authentication.
PRICE TO PUBLIC; DENOMINATIONS; REGISTRATION
Except as otherwise specified in a Pricing Supplement, each Note will
be issued at 100% of principal amount. The minimum denominations of the Notes
will be $100,000 and integral multiples of $1,000 in excess thereof. Notes will
be issued only in fully registered form.
MATURITIES; MINIMUM PURCHASE; CALCULATION OF INTEREST
Each Note will mature on a date, selected by the purchaser and agreed
to by the Issuer, which will be nine months or more from its Issue Date. The
minimum aggregate amount of Notes which may be offered to any purchaser will be
$100,000.
Interest on each interest-bearing Note will be calculated and paid in
the manner described in such Note and in the Prospectus Supplement and the
applicable Pricing Supplement. Unless otherwise set forth therein, interest on
Fixed Rate Notes (including interest for partial periods) will be calculated on
the basis of a 360-day year of twelve 30-day months and will not accrue on the
31st day of any month. Interest on Floating Rate Notes, except as otherwise set
forth therein, will be calculated on the basis of actual days elapsed and a year
of 360 days, except that in the case of a Floating Rate Note for which the Base
Rate is the Treasury Rate, interest will be calculated on the basis of the
actual number of days in the year.
REDEMPTION/REPAYMENT
If indicated in the applicable Pricing Supplement, the Notes of a
particular tenor will be subject to redemption in whole or in part (subject to
applicable minimum denominations), at the option of the Issuer on and after an
initial redemption date as set forth in the applicable Pricing Supplement and in
the applicable Note. The redemption price will be set forth in the applicable
Pricing Supplement and in the applicable Note.
If indicated in the applicable Pricing Supplement, the Notes of a
particular tenor will be subject to repayment at the option of the holders
therefore in accordance with the terms of the Notes on a repayment date as set
forth in the applicable Pricing Supplement and in the applicable
B-2
Note. The repayment date or dates and repayment price will be set forth in the
applicable Pricing Supplement and in the applicable Note.
PROCEDURES FOR ESTABLISHING THE TERMS OF THE NOTES
The Issuer and the Agents will discuss from time to time the rates to
be borne by the Notes that may be sold as a result of the solicitation of offers
by the Agents. Once any Agent has recorded any indication of interest in Notes
upon certain terms, and communicated with the Issuer, if the Issuer plans to
accept an offer to purchase Notes upon such terms, it will prepare a Pricing
Supplement to the Prospectus, as then amended or supplemented, reflecting the
terms of such Notes and, after approval from the Agents, will arrange to have
the Pricing Supplement filed via ▇▇▇▇▇ with the Commission pursuant to Rule
424(b)(3) under the Securities Act of 1933, as amended, no later than the fifth
Business Day following the earlier of the date of determination of the
settlement information described below or the date such Pricing Supplement is
first used. The Issuer will supply at least 10 copies of the Prospectus, as then
amended or supplemented, and bearing such Pricing Supplement, to the Agent who
presented the offer (the "Presenting Agent"). No settlements with respect to
Notes upon such terms may occur prior to such filing and the Agents will not,
prior to such filing, mail confirmations to customers who have offered to
purchase Notes upon such terms. After such filing, sales, mailing or
confirmations and settlements may occur with respect to Notes upon such terms,
subject to the provisions of "Delivery of Prospectus" below.
If the Issuer decides to post rates and a decision has been reached to
change interest rates, the Issuer will promptly notify each Agent. Each Agent
will forthwith suspend solicitation of purchases. At that time, the Agents will
recommend and the Issuer will establish rates to be so "posted". Following
establishment of posted rates and prior to the transmitting or filing described
in the preceding paragraph, the Agents may only record indications of interest
in purchasing Notes at the posted rates. Once any Agent has recorded any
indication of interest in Notes at the posted rates and communicated with the
Issuer, if the Issuer plans to accept an offer at the posted rate, it will
prepare a Pricing Supplement reflecting such posted rates and, after approval
from the Agents, will arrange to have the Pricing Supplement filed via ▇▇▇▇▇
with the Commission and will supply at least 10 copies of the Prospectus, as
then amended or supplemented, and bearing such Pricing Supplement, to the
Presenting Agent at the address listed on Annex A attached hereto. No
settlements at the posted rates may occur prior to such filing and the Agents
will not, prior to such filing, mail confirmations to customers who have offered
to purchase Notes at the posted rates. After such filing, sales, mailing of
confirmations and settlements may resume, subject to the provisions of "Delivery
of Prospectus" below.
Outdated Pricing Supplements, and copies of the Prospectus to which
they are attached (other than those retained for files), will be destroyed.
SUSPENSION OF SOLICITATION; AMENDMENT OR SUPPLEMENT
As provided in the Agency Agreement, the Issuer may instruct the Agents
to suspend solicitation of offers to purchase at any time. As soon as reasonably
practicable, but in no event later than one Business Day after notice from the
Issuer, the Agents will each forthwith suspend
B-3
solicitation until such time as the Issuer has advised them that solicitation of
offers to purchase may be resumed.
If the Agents receive the notice from the Issuer contemplated by
Section 3(b) or 4(b) of the Agency Agreement, they will promptly suspend
solicitation and will only resume solicitation as provided in the Agency
Agreement. If the Issuer is required, pursuant to the second sentence of Section
4(b) of the Agency Agreement, to prepare an amendment or supplement, it will
promptly furnish each Agent with the proposed amendment or supplement; if the
Issuer decides to amend or supplement the Registration Statements or the
Prospectus relating to the Notes, it will promptly advise each Agent and will
furnish each Agent with the proposed amendment or supplement in accordance with
the terms of the Agency Agreement. The Issuer will file such amendment or
supplement with the Commission, provide the Agents with copies of any such
amendment or supplement, confirm to the Agents that such amendment or supplement
has been filed with the Commission and advise the Agents that solicitation may
be resumed.
Any such suspension shall not affect the Issuer's obligations under the
Agency Agreement; and in the event that at the time the Issuer suspends
solicitation of offers to purchase there shall be any offers already accepted by
the Issuer outstanding for settlement, the Issuer will have the sole
responsibility for fulfilling such obligations. The Issuer will in addition
promptly advise the Agents and the Trustee if such offers are not to be settled
and if copies of the Prospectus as in effect at the time of the suspension may
not be delivered in connection with the settlement of such offers.
ACCEPTANCE OF OFFERS
Each Agent will promptly advise the Issuer, at its option orally or in
writing, of each reasonable offer to purchase Notes received by it, other than
those rejected by such Agent. Each Agent may, in its discretion reasonably
exercised, without notice to the Issuer, reject any offer received by it, in
whole or in part. The Issuer will have the sole right to accept offers to
purchase Notes and may reject any such offer, in whole or in part. Prior to
accepting any offer the Issuer will have the specific terms of the Notes
approved by the Finance Committee of the Board of Directors. If the Issuer
accepts or rejects an offer, in whole or in part, the Issuer will promptly
notify the Presenting Agent.
CONFIRMATION
For each accepted offer, the Presenting Agent will issue a confirmation
to the purchaser, with a separate confirmation to the Issuer's Treasury
Department, setting forth the Purchase Information (as defined under "Details
for Settlement" in Part II for Book-Entry Notes and in Part III for certificated
Notes) and delivery and payment instructions; provided, however, that, in the
case of the confirmation issued to the purchaser, no confirmation shall be
delivered to the purchaser prior to the delivery of the Prospectus referred to
below.
DELIVERY OF PROSPECTUS
A copy of the Prospectus as most recently amended or supplemented on
the date of delivery thereof (except as provided below) must be delivered to a
purchaser prior to or simultaneously with the earlier of delivery of (i) the
written confirmation provided for above,
B-4
and (ii) any Note purchased by such purchaser. (For this purpose, entry of a
Same Day Funds Settlement System ("SDFS") delivery order through DTC's
Participant Terminal System to credit a Book-Entry Note to the account of a
Participant purchasing, or acting for the purchaser of a Book-Entry Note, shall
be deemed to constitute delivery of such Book-Entry Note). Subject to the
foregoing, it is anticipated that delivery of the Prospectus, confirmation and
Notes to the purchaser will be made simultaneously at settlement. The Issuer
shall ensure that the Presenting Agent receives copies of the Prospectus and
each amendment or supplement thereto (including appropriate Pricing Supplements)
in such quantities and within such time limits as will enable the Presenting
Agent to deliver such confirmation or Note to a purchaser as contemplated by
these procedures and in compliance with the first sentence of this paragraph.
If, since the date of acceptance of a purchaser's offer, the Prospectus shall
have been supplemented solely to reflect any sale of Notes on terms different
from those agreed to between the Issuer and such purchaser or a change in posted
rates not applicable to such purchaser, such purchaser shall not receive the
Prospectus as supplemented by such new supplement, but shall receive the
Prospectus as supplemented to reflect the terms of the Notes being purchased by
such purchaser and otherwise as most recently amended or supplemented on the
date of delivery of the Prospectus.
AUTHENTICITY OF SIGNATURES
The Issuer will cause the Trustee to furnish the Agents from time to
time with the specimen signatures of each of the Trustee's officers, employees
or agents who have been authorized by the Trustee to authenticate Notes, but no
Agent will have any obligation or liability to the Issuer or the Trustee in
respect of the authenticity of the signature of any officer, employee or agent
of the Issuer or the Trustee on any Note or Master Global Note.
ADVERTISING EXPENSES
The Issuer will determine with the Agents the amount of advertising
that may be appropriate in offering the Notes. Advertising expenses will be paid
by the Issuer.
BUSINESS DAY
"Business Day" means any day which is not a Saturday or Sunday and is
not a day on which banking institutions are generally authorized or obligated by
law or executive order to close in The City of New York and, with respect to
LIBOR Notes, any day on which dealings in deposits in U.S. Dollars are
transacted in the London interbank market.
TRUSTEE NOT TO RISK FUNDS
Nothing herein shall be deemed to require the Trustee to risk or expend
its own funds in connection with any payment made to the Issuer, the Agents,
DTC, or to the holder of any Note, it being understood by all parties that
payments made by the Trustee to the Issuer, the Agents, DTC, or to the holder of
any Note shall be made only to the extent that funds are provided to the Trustee
for such purpose.
B-5
PART II: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its obligations under a letter dated [___________] (the
"Letter") from the Issuer and the Trustee to DTC and a Medium-Term Note
Certificate Agreement (the "MTN Certificate Agreement") between the Trustee and
DTC dated as of [__________] and its obligations as a participant in DTC,
including DTC's SDFS.
ISSUANCE
All Book-Entry Notes will be represented initially by a single Master
Global Note in fully registered form without coupons. The Master Global Note
will be dated and issued as of the date of its authentication by the Trustee.
The Master Global Note will not represent any Note in certificated form.
IDENTIFICATION NUMBERS
The Issuer has arranged with the CUSIP Service Bureau of Standard &
Poor's Corporation (the "CUSIP Service Bureau") for the reservation of a series
of CUSIP numbers (including tranche numbers), such series consisting of
approximately 25 CUSIP numbers and relating to Book-Entry Notes. The Issuer has
obtained from the CUSIP Service Bureau a written list of such reserved CUSIP
numbers and has delivered such list to the Trustee and DTC. The Trustee will
assign CUSIP numbers serially to Book-Entry Notes as described below under
Settlement Procedure "C". DTC will notify the CUSIP Service Bureau periodically
of the CUSIP numbers that the Trustee has assigned to Book-Entry Notes. The
Trustee will notify the Issuer at any time when fewer than 10 of the reserved
CUSIP numbers remain unassigned to Book-Entry Notes; and the Issuer will reserve
25 additional CUSIP numbers for assignment to Book-Entry Notes. Upon obtaining
such additional CUSIP numbers, the Issuer shall deliver a list of such
additional CUSIP numbers to the Trustee and DTC.
REGISTRATION
The Master Global Note will be registered in the name of Cede & Co., as
nominee for DTC, on the Debt Security Register maintained under the Indenture.
The beneficial owner of a Book-Entry Note (or one or more indirect participants
in DTC designated by such owner) will designate one or more participants in DTC
(the "Participants") to act as agent or agents for such owner with respect to
such Book-Entry Note in connection with the book-entry system maintained by DTC,
and DTC will record in book-entry form, in accordance with instructions provided
by such Participants, a credit balance with respect to such Book-Entry Note in
the account of such Participants. The ownership interest of such beneficial
owner in such Book-Entry Note will be recorded through the records of such
Participants or through the separate records of such Participants and one or
more indirect participants in DTC. So long as Cede & Co. is the registered owner
of the Master Global Note, DTC will be considered the sole owner and holder of
the Book-Entry Notes represented by the Master Global Note for all purposes
under the Indenture.
B-6
TRANSFERS
Transfers of beneficial interest in a Book-Entry Note will be
accomplished by book entries made by DTC and, in turn, by Participants (and, in
certain cases, one or more indirect participants in DTC) acting on behalf of
beneficial transferors and transferees of such Note.
EXCHANGES
The Trustee may upon notice to the Issuer deliver to DTC and the CUSIP
Service Bureau at any time a written notice of consolidation specifying (i) the
CUSIP numbers of two or more outstanding Book-Entry Notes having the same
interest rate, Stated Maturity and other terms, and for which interest (if any)
has been paid to the same date, (ii) a date, occurring at least thirty days
after such written notice is delivered and at least thirty days before the next
Interest Payment Date (if any) for such Notes, on which such Book-Entry Notes
shall be exchanged for a single replacement Book-Entry Note, and (iii) a new
CUSIP number to be assigned to such replacement Book-Entry Note. Upon receipt of
such a notice, DTC will send to its Participants (including the Trustee) a
written reorganization notice to the effect that such exchange will occur on
such date. Prior to the specified exchange date, the Trustee will deliver to the
CUSIP Service Bureau a written notice setting forth such exchange date and the
new CUSIP number and stating that, as of such exchange date, the CUSIP numbers
of the Book-Entry Notes to be exchanged will no longer be valid. On the
specified exchange date, the Trustee will exchange such Book-Entry Notes for a
single Book-Entry Note bearing the new CUSIP number and a new Original Issue
Date, which shall be the most recent Interest Payment Date to which interest has
been paid or duly provided for on the predecessor Book-Entry Notes, and the
CUSIP numbers of the exchanged Book-Entry Notes will, in accordance with CUSIP
Service Bureau procedures, be cancelled and not immediately reassigned.
REDEMPTION
The Trustee will comply with the terms of the Letter with regard to
redemptions of the Book-Entry Notes. In the case of Book-Entry Notes stated by
their terms to be redeemable prior to Stated Maturity, at least 60 calendar days
before the date fixed for redemption (the "Redemption Date"), the Issuer shall
notify the Trustee of the Issuer's election to redeem such Book-Entry Notes in
whole or in part and the principal amount of such Book-Entry Notes to be so
redeemed. At least 30 calendar days but not more than 60 days prior to the
Redemption Date, the Trustee shall notify DTC of the Issuer's election to redeem
such Book-Entry Notes. The Trustee shall notify the Issuer and DTC of the CUSIP
numbers of the particular Book-Entry Notes to be redeemed either in whole or in
part. The Issuer, the Trustee and DTC will confirm the amounts of such principal
and any premium and interest payable with respect to each such Book-Entry Note
on or about the fifth Business Day preceding the Redemption Date of such
Book-Entry Note. The Issuer will pay the Trustee, in accordance with the terms
of the Indenture, the amount necessary to redeem each such Book-Entry Note or
the applicable portion of each such Book-Entry Note. The Trustee will pay such
amount to DTC at the times and in the manner set forth herein. Promptly after
payment to DTC of the amount due on the Redemption Date for such Book-Entry
Note, the Trustee shall make the appropriate entry on its records to cancel any
such Book-Entry Note redeemed in whole and shall deliver an appropriate debit
advice to the Issuer. If a Book-Entry Note is to be redeemed in part, the
Trustee will make the appropriate
B-7
entry on its records to cancel the portion of such Book-Entry Note to be
redeemed and the remaining portion of such Book-Entry Note shall bear the same
CUSIP number.
DENOMINATIONS
Book-Entry Notes will be issued in principal amounts of $100,000 or any
amount in excess thereof that is an integral multiple of $1,000.
INTEREST
Standard & Poor's Corporation will use the information received in the
pending deposit message described under Settlement Procedure "C" to include the
amount of any interest payable and certain other information regarding the
related Book-Entry Note in the appropriate daily or weekly bond report published
by Standard & Poor's Corporation.
PAYMENTS OF PRINCIPAL AND INTEREST
(a) Payments of Interest Only. Promptly after each Record Date,
the Trustee will deliver to the Issuer and DTC a written notice specifying by
CUSIP number the amount of interest to be paid on each Book-Entry Note on the
following Interest Payment Date (other than an Interest Payment Date coinciding
with Maturity) and the total of such amounts. DTC will confirm the amount
payable on each Book-Entry Note on such Interest Payment Date by reference to
the daily or weekly bond reports published by Standard & Poor's Corporation. The
Issuer will pay to the Trustee the total amount of interest due on such Interest
Payment Date (other than at Maturity), and the Trustee will pay such amount to
DTC at the times and in the manner set forth below under "Manner of Payment".
(b) Payments at Maturity. On or about the first Business Day of
each month, the Trustee will deliver to the Issuer and DTC a written list of
principal, premium, if any, and interest to be paid on each Book-Entry Note
maturing in the following month. The Issuer, the Trustee and DTC will confirm
the amounts of such principal, premium, if any, and interest payments with
respect to each such Book-Entry Note on or about the fifth Business Day
preceding the Maturity of such Book-Entry Note. The Issuer will pay to the
Trustee, as the paying agent, and the Trustee in turn will pay to DTC, the
principal amount of and premium, if any, on such Book-Entry Note, together with
interest due at such Maturity at the times and in the manner set forth below
under "Manner of Payment". Promptly after payment to DTC of the principal and
interest and premium due at the Maturity of such Book-Entry Note, the Trustee
will make the appropriate entry on its records to cancel such Book-Entry Note
and shall deliver an appropriate debit advice to the Issuer.
(c) Manner of Payment. The total amount of any principal, premium,
if any, and interest due on Book-Entry Notes on any Interest Payment Date or at
Maturity shall be paid by the Issuer to the Trustee in funds available for use
by the Trustee as of 9:30 a.m., New York City time, on such date. The Issuer
will make such payment on such Book-Entry Notes by wire transfer to the Trustee.
The Issuer will confirm instructions regarding payment in writing to the
Trustee. Prior to 10:00 a.m., New York City time, on each maturity date or as
soon as possible thereafter, following receipt of such funds from the Issuer,
the Trustee will pay by wire transfer
B-8
(using Fedwire message entry instructions in a form previously specified by DTC)
to an account at the Federal Reserve Bank of New York previously specified by
DTC, in funds available for immediate use by DTC, each payment of principal,
premium, if any, and interest due on Book-Entry Notes on any maturity date. On
each Interest Payment Date, interest payment shall be made to DTC in same day
funds in accordance with existing arrangements between the Trustee and DTC.
Thereafter, on each such date, DTC will pay, in accordance with its SDFS
operating procedures then in effect, such amounts in funds available for
immediate use to the respective Participants in whose names the Book-Entry Notes
are recorded in the book-entry system maintained by DTC. NEITHER THE ISSUER NOR
THE TRUSTEE SHALL HAVE ANY DIRECT RESPONSIBILITY OR LIABILITY FOR THE PAYMENT BY
DTC TO SUCH PARTICIPANTS OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON
THE BOOK-ENTRY NOTES.
(d) Withholding Taxes. The amount of any taxes required under
applicable law to be withheld from any interest payment on a Book-Entry Note
will be determined and withheld by the Participant, indirect participant in DTC
or other person responsible for forwarding payments and materials directly to
the beneficial owner of such Note.
SETTLEMENT
The receipt by the Issuer of immediately available funds in payment for
a Book-Entry Note and entry by the Presenting Agent of an SDFS deliver order
through DTC's Participant Terminal System to credit such Note to the account of
a Participant purchasing, or acting for the purchase of, such Note, shall
constitute "settlement" with respect to such Note. All orders accepted by the
Issuer will be settled from one to five Business Days from the date of the sale
pursuant to the timetable for settlement set forth below unless the Issuer and
the purchaser agree to settlement on a later date.
DETAILS FOR SETTLEMENT
For each offer accepted by the Issuer, the Presenting Agent will
communicate to the Issuer's Treasury Department by telephone, electronic or
facsimile transmission or other acceptable means, the following information (the
"Purchase Information"):
(i) Principal amount of each Note (in authorized
denominations) to be purchased.
(ii) Issue price, interest rate if fixed or
Initial Interest Rate and interest rate basis if floating,
Spread or Spread Multiplier, maximum or minimum interest
rates, interest calculation dates, Index Maturity, Interest
Determination Date, Interest Reset Date, interest rate reset
period, interest payment period, Record Dates and Interest
Payment Dates (as such capitalized terms are defined in either
the Indenture or the Prospectus Supplement), in each case, to
the extent applicable.
(iii) Any index to determine the amounts of
payments of principal and any premium and interest.
B-9
(iv) Maturity of each Note.
(v) Redemption, repayment or sinking fund
provisions, if any, of each Note.
(vi) If an Original Issue Discount Note, the
Yield to Maturity and the initial accrual period of original
issue discount.
(vii) Issue Date of each Note.
(viii) Settlement date for each Note.
(ix) Presenting Agent's commission (to be paid in
the form of a discount from the proceeds remitted to the
Issuer upon settlement).
The Issue Date of, and the settlement date for, Notes will be the same.
SETTLEMENT PROCEDURES
Settlement Procedures with regard to each Book-Entry Note sold by the
Issuer through an Agent shall be as follows:
(A) The Presenting Agent will advise
the Issuer by telephone of the Purchase Information
with respect to each Book-Entry Note to be issued.
(B) The Issuer will advise the Trustee
by electronic or facsimile transmission or by another
mutually acceptable method of the information set
forth in Settlement Procedure "A" above and the name
of the Presenting Agent.
(C) The Trustee will assign a CUSIP
number to such Book-Entry Note and advise the Issuer
by telephone of such CUSIP number. The Trustee will
enter a pending deposit message through DTC's
Participant Terminal System, providing the following
settlement information to DTC (which shall route such
information to Standard & Poor's Corporation and
Interactive Data Corporation) and the Presenting
Agent.
a. The applicable information set
forth in Settlement Procedure "A".
b. Initial Interest Payment Date
for such Book-Entry Note, number of days by
which such date succeeds the Record Date and
the amount of interest payable on such
Interest Payment Date per $1,000 principal
amount of Book-Entry Notes.
c. CUSIP number of such Book-Entry
Note.
B-10
d. Whether such CUSIP number will
be assigned to any other Book-Entry Note (to
the extent known at such time).
e. Interest payment periods.
f. Numbers of the participant
accounts maintained by DTC on behalf of the
Trustee and the Presenting Agent.
(D) DTC will credit such Book-Entry
Note to the Trustee's participant account at DTC.
(E) The Trustee will enter an SDFS
deliver order through DTC's Participant Terminal
System, with respect to each Book-Entry Note to be
issued, instructing DTC to (i) debit such Book-Entry
Note to the Trustee's participant account and credit
such Book-Entry Note to the Presenting Agent's
participant account and (ii) debit the Presenting
Agent's settlement account and credit the Trustee's
settlement account for an amount equal to the price
of such Book-Entry Note less such Agent's commission.
The entry of such a deliver order shall constitute a
representation and warranty by the Trustee to DTC
that (i) the Master Global Note has been delivered
and authenticated and (ii) the Trustee is holding
such Master Global Note pursuant to the MTN
Certificate Agreement.
(F) The Presenting Agent will enter an
SDFS deliver order through DTC's Participant Terminal
System, with respect to each Book-Entry Note to be
issued, instructing DTC (i) to debit such Book-Entry
Note to the Presenting Agent's participant account
and credit such Book-Entry Note to the participant
accounts of the Participant with respect to such
Book-Entry Note and (ii) to debit the settlement
accounts of such Participant and credit the
settlement account of the Presenting Agent for an
amount equal to the price of such Book-Entry Note.
(G) Transfers of funds in accordance
with SDFS deliver orders described in Settlement
Procedures "E" and "F" will be settled in accordance
with SDFS operating procedures in effect on the
settlement date.
(H) The Trustee, upon confirming
receipt of such funds, will transfer to the Issuer by
wire transfer the amount transferred to the Trustee
in accordance with Settlement Procedure "E", in funds
available for immediate use, to a bank account
designated by the Issuer in its wire transfer
instructions to the Trustee.
(I) The Presenting Agent will confirm
the purchase of each Book-Entry Note to the purchaser
either by transmitting to the Participant with
respect to such Book-Entry Note a confirmation order
or orders
B-11
through DTC's institutional delivery system or by
mailing a written confirmation to such purchaser.
SETTLEMENT PROCEDURES TIMETABLE
For orders of Book-Entry Notes solicited by an Agent, and accepted by
the Issuer for settlement on the first Business Day after the sale date,
Settlement Procedures "A" through "I" set forth above shall be completed as soon
as possible but not later than the respective times (New York City time) set
forth below:
Settlement Procedure Time
-------------------- -------------------------------
A-B 11:00 a.m. on the sale date
C 2:00 p.m. on the sale date
D 10:00 a.m. on settlement date
E-F 2:00 p.m. on settlement date
G 4:45 p.m. on settlement date
H-I 5:00 p.m. on settlement date
If a sale is to be settled more than one Business Day after the sale
date, Settlement Procedures "A", "B" and "C" shall be completed as soon as
practicable but not later than the times specified above on the first Business
Day after the sale date. In connection with a sale which is to be settled more
than one Business Day after the sale date, if the initial interest rate for a
Floating Rate Note is not known at the time that Settlement Procedure "A" is
completed, Settlement Procedures "B" and "C" shall be completed as soon as such
rates have been determined, but no later than 11:00 a.m. and 2:00 p.m.,
respectively, on the second Business Day before the settlement date. Settlement
Procedures "G" and "H" are subject to extension in accordance with any extension
of Fedwire closing deadlines and in the other events specified in the SDFS
operating procedures in effect on the settlement date.
If settlement of a Book-Entry Note is rescheduled or cancelled, the
Issuer shall notify the Trustee, and upon receipt of such notice, the Trustee
will deliver to DTC, through DTC's Participant Terminal System, a cancellation
message to such effect by no later than 2:00 p.m., New York City time, on the
Business Day immediately preceding the scheduled settlement date.
FAILURE TO SETTLE
If the Trustee has not entered an SDFS deliver order with respect to a
Book-Entry Note pursuant to Settlement Procedure "E", then upon written request
(which may be evidenced by facsimile transmission) of the Issuer, the Trustee
shall deliver to DTC, through DTC's Participation Terminal System, as soon as
practicable, but no later than 2:00 p.m. on any Business Day, a withdrawal
message instructing DTC to debit such Book-Entry Note to the Trustee's
participant account. DTC will process the withdrawal message, provided that the
Trustee's participant account contains a principal amount of such Book-Entry
Notes that is at least equal to the principal amount to be debited. The Trustee
will make appropriate entries in the Trustee's records and so advise the Issuer.
If withdrawal messages are processed with
B-12
respect to all the Book-Entry Notes identified by a single CUSIP number, the
CUSIP number assigned to such Book-Entry Notes shall, in accordance with CUSIP
Service Bureau procedures, be cancelled and not immediately reassigned.
If the purchase price for any Book-Entry Note is not timely paid to the
Participants with respect to such Book-Entry Note by the beneficial purchaser
thereof (or a person, including an indirect participant in DTC, acting on behalf
of such purchaser), such Participant and, in turn the Presenting Agent for such
Book-Entry Note may enter an SDFS deliver order through DTC's Participant
Terminal System debiting such Book-Entry Note to such Agent's participant
account and crediting such Book-Entry Note free to the participant account of
the Trustee and shall notify the Trustee and the Issuer thereof. Thereafter, the
Trustee, (i) will immediately notify the Issuer, once the Trustee has confirmed
that such Book-Entry Note has been credited to its participant account, and the
Issuer shall immediately transfer by Fedwire (in immediately available funds) to
the Presenting Agent an amount equal to the price of such Book-Entry Note which
was previously sent by wire transfer to the account of the Issuer maintained at
the Trustee in accordance with Settlement Procedure "H", and (ii) the Trustee
will deliver the withdrawal message and take the related actions described in
the preceding paragraph. The Presenting Agent will not be entitled to any
commission with respect to any Book-Entry Note which the purchaser does not
accept and make payment for. Such debits and credits will be made on the
settlement date, if possible, and in any event not later than 5:00 p.m. on the
following Business Day. If such failure shall have occurred for any reason other
than failure by the Presenting Agent to perform its obligations hereunder or
under the Agency Agreement, the Issuer will reimburse the Presenting Agent on an
equitable basis for its loss of the use of funds during the period when the
funds were credited to the account of the Issuer.
Notwithstanding the foregoing, upon any failure to settle with respect
to a Book-Entry Note, DTC may take any actions in accordance with its SDFS
operating procedures then in effect.
PART III: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
Before accepting any offer to purchase Notes in certificated form, the
Issuer will prepare the forms of Notes and provide the Trustee with an adequate
supply of such Notes.
INTEREST PAYMENTS
On the fifth Business Day immediately preceding each Interest Payment
Date, the Trustee will furnish the Issuer with the total amount of the interest
payments to be paid on such Interest Payment Date. The Trustee will provide
monthly to the Issuer's Treasury Department a list of the principal and interest
to be paid on Notes maturing in the next succeeding month. The Trustee will
assume responsibility for withholding taxes on interest paid as required by law
to the extent holders have not produced a taxpayer identification number (TIN).
PAYMENT AT MATURITY
Upon presentation of each Note at Maturity, the Trustee (or a duly
authorized Paying Agent) will pay the principal amount thereof, together with
any premium and accrued interest due at Maturity. Such payment will be made in
immediately available funds, provided that the
B-13
Note is presented in time for the Trustee (or any such Paying Agent) to make
payment in such funds in accordance with its normal procedures. The Issuer will
provide the Trustee (and any such Paying Agent) with funds available for
immediate use for such purpose. Notes presented at Maturity will be cancelled by
the Trustee as provided in the Indenture.
DETERMINATION OF SETTLEMENT DATE
The receipt of immediately available funds by the Issuer from the
Presenting Agent in payment for a Note and the authentication and issuance of
such Note shall, with respect to such Note, constitute "settlement". All offers
accepted by the Issuer will be settled on the third Business Day next succeeding
the date of receipt unless otherwise agreed by any purchaser, the Issuer and the
Trustee. The settlement date shall be specified upon receipt of an offer. Prior
to 3:00 p.m., New York City time, on the Business Day prior to the settlement
date, the Issuer will instruct the Trustee to authenticate and deliver the Notes
no later than 2:15 p.m., New York City time, on the settlement day.
DETAILS FOR SETTLEMENT
For each offer accepted by the Issuer, the Presenting Agent will
communicate to the Issuer's Treasury Department by telephone, electronic or
facsimile transmission or other acceptable means, the Purchase Information prior
to 3:00 p.m., New York City time, on the Business Day prior to the applicable
settlement date. For certificated Notes "Purchase Information" shall refer to
the terms of the Notes described under "Details of Settlement" in Part II and
the following additional information:
a. Exact name in which the Note or
Notes are to be registered (the "registered
owner").
b. Exact address of the registered
owner and, if different, the address for
delivery, notices and payment of principal
and premium and interest.
c. Taxpayer Identification Number
(TIN) of the registered owner.
d. Delivery address for each Note.
The Issue Date of, and the settlement date for, Notes will be the same.
Before accepting any offer to purchase Notes to be settled in less than three
Business Days, the Issuer will verify that the Trustee will have adequate time
to prepare and authenticate the Notes.
Immediately after receiving the details for each offer from the
Presenting Agent (but in no event later than 3:00 p.m. on the Business Day prior
to the settlement date for such Notes), the Issuer will, after recording the
details and any necessary calculations, communicate the Purchase Information by
electronic or facsimile transmission or other acceptable means, to the Trustee.
The Trustee will assign to and enter on each Note a transaction number.
B-14
SETTLEMENT; NOTE DELIVERIES AND CASH PAYMENT
Upon the receipt of appropriate documentation and instructions from the
Issuer the Trustee will cause the Notes to be completed and authenticated and
hold the Notes for delivery against confirmation from the Issuer of receipt of
payment.
The Trustee will deliver the Notes in accordance with instructions from
the Issuer, to the Presenting Agent, as the Issuer's agent, for the benefit of
the purchaser against receipt therefor by stamping the delivery receipt with the
date and time received and returned. If the Presenting Agent in any instance
advances its own funds, the Issuer shall not use any of the proceeds of such
sale to acquire securities.
The Presenting Agent, as the Issuer's agent, will deliver the Notes
(with the written confirmation provided for in Part I above) to the purchaser
thereof against payment therefor by such purchaser. Delivery of any confirmation
or Note will be made in compliance with "Delivery of Prospectus" in Part I.
FAILS
In the event that a purchaser shall fail to accept delivery of and make
payment for a Note on the settlement date, the Presenting Agent will notify the
Trustee and the Issuer by telephone, confirmed in writing. If such Note has been
delivered to the Presenting Agent, as the Issuer's agent, the Presenting Agent
shall return such Note to the Trustee. If funds have been advanced by the
Presenting Agent for the purchase of such Note, the Issuer will, immediately
upon receipt of confirmation from the Trustee of receipt of such Note, debit its
account for the amount so advanced and shall refund the payment previously made
by the Presenting Agent in immediately available funds. Such payments will be
made on the settlement date for such Note, if possible, and in any event not
later than the Business Day following such settlement date. If any failure
described in this paragraph shall have occurred for any reason other than the
failure of the Presenting Agent to provide the Purchase Information to the
Issuer or to provide a confirmation to the purchaser, the Issuer will reimburse
the Presenting Agent on an equitable basis for its loss of the use of funds
during the period when they were credited to the account of the Issuer.
Immediately upon receipt of the Note in respect of which the fail
occurred, the Trustee will cause the Debt Security Registrar to make appropriate
entries to reflect the fact that the Note was never issued and the Note will be
cancelled and disposed of as provided in the Indenture.
B-15
ANNEX A
Agents' Addresses for
Delivery of the Prospectus
with the Pricing Supplement
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: [__________]
SunTrust Capital Markets, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: [__________]
BB&T Capital Markets, a division of
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
[_____________________]
Attention: [__________]
▇▇▇▇▇▇▇▇▇ & Company LLC
[_____________________]
Attention: [___________]
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., L.P.
[_____________________]
Attention: [___________]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
[_____________________]
Attention: [___________]
▇-▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
_________, 200_
Piedmont Natural Gas Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Treasurer
The undersigned agrees to purchase the following principal amount of
the Securities described in the Agency Agreement dated _________, 200_ (the
"Agency Agreement"):
Principal Amount $________________
Interest Rate ___%
Maturity Date ____________
Discount __% of Principal Amount
Price to be paid to Issuer (in
immediately available funds) $________________
Commission to Agent $________________
Settlement Date __________
Except as otherwise expressly provided herein, all terms used herein
which are defined in the Agency Agreement shall have the same meanings as in the
Agency Agreement. The terms Agent and Agents, as used in the Agency Agreement,
shall be deemed to refer only to the undersigned for purposes of this Agreement.
This Agreement incorporates by reference all of the provisions of the
Agency Agreement, (including any amendment entered into pursuant thereto by the
Issuer and the undersigned Agent, to the extent applicable), except provisions
of the Agency Agreement relating specifically to solicitation by the Agents, as
Agents, and except that (i) the last sentence of Section 7(d) shall not be
applicable; and (ii) the term "this Agreement", as used in Section 7(d) of the
Agency Agreement, shall be deemed to refer to this Agreement (and not the Agency
Agreement) except that in the fifth sentence such term shall be deemed to refer
to the Agency Agreement. [Insert other appropriate changes.] You and we agree to
perform, to the extent applicable, our respective duties and obligations
specifically provided to be performed by each of us in the Procedures.
Our obligation to purchase Securities hereunder is subject to the
accuracy on the above Settlement Date of your representations and warranties
contained in Section 2 of the Agency Agreement (it being understood that such
representations and warranties shall be deemed to be made as of the date of this
Purchase Agreement and references to the Registration Statements and Prospectus
shall be deemed to relate to the Registration Statements and the Prospectus as
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amended at such Settlement Date specified above) and to your performance and
observance of all covenants and agreements contained in Sections 4 and 6
thereof. Our obligation hereunder is also subject to the following conditions:
(a) the satisfaction, at such Settlement Date, of each of
the conditions set forth in subsections (a) and (b) and (d) through (g)
of Section 5 of the Agency Agreement (it being understood that each
document so required to be delivered shall be dated such Settlement
Date and that each such condition and the statements contained in each
such document that relate to the Registration Statements or the
Prospectus shall be deemed to relate to the Registration Statements or
the Prospectus, as the case may be, as amended or supplemented as of
the date hereof and at the time of settlement on such Settlement Date)
and except that the opinion described in Section 5(d) shall be modified
so as to state that the Securities being sold on such Settlement Date,
when delivered against payment therefor as provided in the Indenture
and this Agreement, will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations
of the Issuer enforceable in accordance with their terms, subject only
to the exceptions as to enforcement set forth in clause (iii) of
Section 5(d) of the Agency Agreement, and will conform to the
description thereof contained in the Prospectus as amended or
supplemented at such Settlement Date; and
(b) there shall not have occurred between the date hereof
and the above Settlement Date (i) any change, or any development
involving a prospective change, in or affecting particularly the
business or properties of the Issuer or its subsidiaries which, in our
judgment, materially impairs the investment quality of the Securities;
(ii) any downgrading in the rating of the Securities of any other debt
securities of the Issuer by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Act), or any public announcement that any such organization has under
surveillance or review its rating of the Securities or any other debt
securities of the Issuer (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of
trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Issuer on any exchange
or in the over-the-counter market if, in our judgment, any such event
or any condition giving rise thereto or existing concurrently therewith
makes it impracticable or inadvisable to proceed with the solicitation
of offers to purchase, or sales of, Securities on the terms and in the
manner contemplated by the applicable Pricing Supplement and the
Prospectus; (iv) any banking moratorium declared by Federal or New York
authorities; (v) the occurrence of any material disruption in
settlement or clearing services shall have occurred; or (vi) any
outbreak or escalation of hostilities, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in our judgment, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for
the Securities on the terms and in the manner contemplated applicable
Pricing Supplement and the Prospectus.
In further consideration of our agreement hereunder, you agree that
between the date hereof and the above Settlement Date, you will not offer or
sell, or enter into any agreement to
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sell, any debt securities of the Issuer in the United States, other than sales
of Securities, borrowings under your revolving credit agreements and lines of
credit, the private placement of securities and issuances of your commercial
paper.
[Insert appropriate provisions as agreed to between the parties hereto
regarding responsibility for expenses.]
If for any reason our purchase of the above Securities is not
consummated, the respective obligations of you and the undersigned pursuant to
Section 7 shall remain in effect.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
executed counterparts shall together constitute one and the same Agreement.
[INSERT NAME OF PURCHASER]
By: _________________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
PIEDMONT NATURAL GAS COMPANY, INC.
By: ____________________________________
Name:
Title:
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