EXHIBIT 4.05
Debenture Purchase Agreement
$43,000,000 10.00% Senior Debentures
Due December 1, 2004
Dated as of December 5, 1989
TABLE OF CONTENTS
Page No.
1. ISSUANCE OF DEBENTURES 1
1.1 Authorization
1.2 Purchase and Sale of Debentures; the Closing 1
2. REPRESENTATIONS OF THE COMPANY 2
2.1 Organization and Authority of the Company 2
2.2 Business, Properties and Other Information
Regarding the Company 2
2.3 Incorporation, Good Standing, Ownership of Shares
of Subsidiaries 2
2.4 Financial Statements 3
2.5 Compliance with Laws, Other Instruments of the Company, Etc 3
2.6 Litigation; Observance of Statutes, Regulations and
Orders 4
2.7 Governmental Authorizations, Etc. 4
2.8
Taxes 4
2.9 Title to Properties; Leasehold
Interests 5
2.10 Franchises, Etc. 5
2.11 Compliance with ERISA 5
2.12 Private Offering by the Company 5
2.13 Solvency 6
2.14 Use of Proceeds; Margin Regulations 6
2.15 Existing Debt 6
2.16 Holding Company Act Status 6
2.17 Investment Company Act 6
3. REPRESENTATIONS Of THE PURCHASER 6
3.1 Purchase of Debentures 6
3.2 Source of Funds 6
4. CONDITIONS OF CLOSING 7
4.1 Proceedings Satisfactory 7
4.2 Representations True, Etc.; Officer's Certificate 7
4.3 Opinion of Counsel for the Company 7
4.4 Legality 9
5. FINANCIAL STATEMENTS AND INFORMATION 9
6. INSPECTION 11
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7. PREPAYMENT OF THE DEBENTURES, ETC. 11
7.1 Mandatory Prepayments of Debentures 11
7.2 Optional Prepayment with Yeild-Maintenence Premium
of Debentures 12
7.3 Notice of Optional
Prepayment 12
7.4 Allocation of Prepayments 12
7.5 Surrender of Debentures; Notation Thereon 12
7.6 Purchase of Debentures 12
8.
COVENANTS 12
8.1 To Keep Books 12
8.2 Payment of Taxes; Corporate Existence;
Maintenance of Properties;
Compliance with Laws 12
8.3 Insurance 13
8.4 Limitation on Debt 13
8.5 Limitation on Liens 15
8.6 Restricted Payments 17
8.7 Consolidation, Merger or Disposition of Assets 17
8.8 Transactions with Affiliates 18
9. DEFINITIONS 18
9.1 Certain Definitions 18
9.2 Yeild-Maintenance Terms 22
9.3 Accounting Terms 23
10. EVENTS OR DEFAULT; REMEDIES 23
10.1 Events of Default Defined; Acceleration of Maturity 23
10.2 Other Remedies 25
11. REGISTRATION, TRANSFER AND EXCHANGE OF ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. LOST, ETC., DEBENTURES 26
13. AMENDMENT AND WAIVER 26
14. HOME OFFICE PAYMENT 26
15. LIABILITIES OF THE PURCHASER 27
16. TAXES 27
17. MISCELLANEOUS 27
17.1 Expenses 27
17.2 Delayed Delivery Fee 27
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Page No.
17.3 Reliance on and Survival of Representations 28
17.4 Successors and Assigns; Rights of Certain
Institutional Holders of the Debentures 28
17.5 Persons Deemed Owners; Participations 28
17.6 Communications 28
17.7 Governing Law 29
17.8 Counterparts 29
17.9 No Oral Change 29
PURCHASER SCHEDULE Principal Amounts of Debentures
to be Purchased;
EXHIBIT A Form of 10.00% Senior Debenture
due December 1, 2004
EXHIBIT B Subsidiaries
EXHIBIT C Debt
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
▇▇▇ ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
DEBENTURE PURCHASE AGREEMENT
As of December 5, 1989
To the Purchaser Whose Name
Appears in the Acceptance
Form at the End Hereof
Ladies and Gentlemen:
PUBLIC SERVICE COMPANY or NORTH CAROLINA, INCORPORATED, a North Carolina
Corporation (the "Company" and as further defined in Section 9), hereby agrees
with you as follows:
1. ISSUANCE OF DEBENTURES.
1.1. Authorization. The Company has duly authorized an issue of its
10.00% Senior Debentures due December 1, 2004 (The "Debentures", which term, as
used herein, shall include all Debentures delivered in substitution or exchange
for any of said Debentures, or in subsequent substitutions or exchange for any
of said Debentures, or in subsequent substitutions or exchanges, pursuant to
this Agreement and, where applicable, shall include the singular number as well
as the plural), in an aggregate principal amount of $43,000,000. The Debentures
will mature, will bear interest and will otherwise be substantially in the form
annexed hereto as Exhibit A.
1.2. Purchase and Sale of Debentures: the Closing. Subject to the terms
of this Agreement, the Company agrees to sell to you and you agree to purchase
from the Company Debentures in the aggregate principal amount set forth opposite
your name in the Purchaser Schedule attached hereto, at a purchase price of 100%
of the principal amount thereof.
The closing for the sale and purchase of the Debentures shall be held at
your offices at Four Gateway Center, Newark, New Jersey on December 5,1989 or
such other date as shall be mutually satisfactory to the Company and you (the
"Closing Date"). On the Closing Date the Company will deliver to you one or more
Debentures, each registered in your name, in any denominations (multiples of
$100,000), and in the aggregate principal amount of such Debentures to be
purchased by you, all as you may specify by timely notice to the Company (or, in
the absence of such notice, one Debenture registered in your name), duly
executed and dated the Closing Date. The purchase price shall be paid by
surrender by you to the Company for cancellation of the Company's 12.26% Series
L First Mortgage Bonds, due 1998, payable to you and now outstanding in the
principal amount of $18,000,000 which shall be credited at the outstanding
principal amount thereof plus interest accrued thereon to the Closing Date and
by transfer of immediately available funds to First Union National Bank,
Gastonia, North Carolina for credit to the Company's account #706-▇▇▇▇▇▇▇ at
such bank for the balance.
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2. REPRESENTATIONS OF THE COMPANY. The Company represents and warrants
to you as follows:
2.1. Organization and Authority of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of North Carolina, and has full power and authority to own or hold
under lease the property it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver this
Agreement and the Debentures and to perform its obligations hereunder and
thereunder. The Company is not, and neither the character of the properties
owned or held under lease by it or the nature of the business transacted by it
requires it to be, qualified as a foreign corporation in any jurisdiction.
2.2. Business. Properties and Other Information Regarding the Company. The
Company is subject to the reporting requirements of Section 13 of the
Securities Exchange Apt of 1934, as amended, and has delivered to you
copies of
A. its Annual Report on Form 10-K for its fiscal year ended September 30,
1988, filed pursuant to Section 13 (a) of said Act;
B. its Quarterly Report on Form 1O-Q for its fiscal quarter ended June 30,
1989, tiled pursuant to Section 14 of said Act.
C. the Proxy Statement for its annual meeting of stockholders on January 29,
1989. filed pursuant to Section 14 of said Act.
Said reports and proxy statement together with all regular and periodic
reports and proxy statements required to be filed by the Company with the SEC
pursuant to said Act since June 30, 1989 have been filed or will be filed on or
before the required filing date and are herein collectively called the "SEC
Reports", which term shall also include on the Closing Date all further reports
and proxy statements which the Company may theretofore have furnished pursuant
to Section 5F.
As of their respective dates neither the SEC Reports nor this Agreement
or any other document, certificate or written statement furnished to you by the
Company in connection with the transactions contemplated hereby contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements therein not misleading. Since the date of the
Quarterly Report on Form l0-Q referred to in the foregoing Subsection B, there
have been no material changes in the business, operations or principal
properties of the Company or of the Company and its Subsidiaries taken as a
whole, other than changes referred to in subsequent SEC Reports which have not
either individually or in the aggregate materially affected adversely its
business, operations or properties. The Company does not know of any fact (other
than matters of a general economic nature) which materially affects adversely
or, so far as the Company can now reasonably foresee, will materially affect
adversely (i) the business, operations or properties of the Company or of the
Company and its Subsidiaries taken as a whole, or (ii) the ability of the
Company to perform its obligations under this Agreement and the Debentures.
2.3. Incorporation. Good Standing. Ownership of Shares of Subsidiaries.
Exhibit B hereto contains a complete and correct list of the Company's
Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its incorporation, the jurisdictions wherein it is qualified to
do business as a foreign corporation, and the percentage of shares of each class
outstanding owned by the Company and each other Subsidiary.
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All of the outstanding shares of each of said Subsidiaries shown in
Exhibit B as being owned by the Company and its Subsidiaries have been validly
issued, are fully paid and nonassessable and are owned by the Company or one of
its Subsidiaries free and clear of any Lien. No Subsidiary owns any shares of
the Company.
Each of said Subsidiaries is a corporation duly organized, validly
existing an in good standing under the jaws of the jurisdiction of its
incorporation, and has full power and authority to own or hold under lease the
property it purports to own or hold under lease and to transact the business it
transacts and proposes to transact. Each of said Subsidiaries is duly qualified
as a foreign corporation and is in good standing in each jurisdiction in which
the failure so to qualify might materially adversely affect the business,
operations, properties or condition (financial or other) of the Company, or of
the Company and its Subsidiaries taken as a whole.
2.4. Financial Statements. The Company has delivered to you copies of
consolidated balance sheets and statements of capitalization of the Company and
its Subsidiary or Subsidiaries, as the case may be, as of the last day of each
of the fiscal years ended December 31, 1983 through December 31, 1985 and
September 30, 1986 through September 30, 1989, inclusive, and the related
consolidated statements of income, retained earnings and sources of funds used
for construction of the Company and its Subsidiary or Subsidiaries,. as the case
may be, for each of said fiscal years, all with reports thereon by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co., independent public accountants.
All the above-mentioned financial statements (including in each case the
related schedules and notes) are correct and complete and fairly present the
consolidated financial position of the Company and its Subsidiary or
Subsidiaries, as the case may be, as of the respective dates of said balance
sheets and the consolidated results of their operations for the respective
periods covered by said statements of income, retained earnings and sources of
funds used for construction and have been prepared in accordance with GAAP
consistently applied by the Company and its Subsidiaries throughout the periods
involved, except as set forth in the notes thereto. There are no material
liabilities, contingent or otherwise1 of the Company or any Subsidiary as of
September 30, 1989 not reflected in said consolidated balance sheet as of said
date. Since September 30. 1989 there have been no changes (whether or not
covered by insurance) in the assets, liabilities or financial position of the
Company or of the Company and its Subsidiaries from that set forth in said
consolidated balance sheet as of said date, other than changes in the ordinary
course of business and changes described in subsequent SEC Reports (none of
which changes, either individually or in the aggregate, has been materially
adverse).
2.5. Compliance with Laws. Other Instruments of the Company, Etc. The
consummation of the transactions contemplated by this Agreement and the
performance of the terms and provisions of this Agreement and the Debentures
will not (i) contravene, result in any breach of, or constitute a default under,
or result in the creation of any Lien in respect of any property of the Company
or any Subsidiary under, any indenture, mortgage, deed of trust, bank loan or
credit agreement, corporate charter, by-law or other agreement or instrument to
which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective properties may be bound or affected, (ii)
conflict with or result in a breach of any of the terms, conditions or
provisions of any Order of any court, arbitrator or Governmental Body applicable
to the Company or any Subsidiary or (iii) violate any
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provision of any statute or other rule or regulation of any Governmental Body
applicable to the Company or any Subsidiary.
As used in this Agreement, the term "Governmental Body" includes any
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign; and the term "Order"
includes any order, writ, injunction, decree, judgment, award, determination,
direction or demand.
2.6. Litigation: Observance of Statutes. Regulations and Orders. There
are no actions, suits investigations or proceedings pending or, to the knowledge
of the Company, threatened against or affecting the Company or any Subsidiary or
any property of the Company or of any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Body (except actions,
suits or proceedings of the character normally incident to the kind of business
conducted by the Company or such Subsidiary which in the aggregate, if adversely
determined, would not materially affect adversely the business, operations or
properties of the Company, or of the Company and its Subsidiaries taken as a
whole, or the ability of the Company to perform its obligations under this
Agreement and the Debentures).
Neither the Company nor any Subsidiary is in default under any Order of
any court, arbitrator or Governmental Body; and neither the Company nor any
Subsidiary is subject to or a ▇▇▇▇▇ to any Order of any court or Governmental
Body arising out of any action, suit or proceeding under any statute or other
law respecting antitrust, monopoly. restraint of trade, unfair competition or
similar matters. Neither the Company nor any Subsidiary is in violation of any
statute or other rule or regulation of any Governmental Body. including, without
limitation, laws and regulations relating to environmental requirements (such as
requirements in respect of air, water and noise pollution) and to employment
practices (such as practices in respect to discrimination, health and safety),
the violation of which might materially affect adversely the business,
operations or properties of the Company, or of the Company and its Subsidiaries
taken as a whole, or the ability of the Company to perform its obligations under
this Agreement and the Debentures.
2.7. Governmental Authorizations, Etc. Except for an appropriate order
of the North Carolina Utilities Commission which is in full force and effect and
not subject to further review, (the "Commission Order"), no consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Body (as such term is defined in Section 2.5) is required for the validity of
the execution and delivery or for the performance by the Company of this
Agreement or the Debentures.
2.8. Taxes. The Company and its Subsidiaries have filed all tax returns
which are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable by them, to the extent the same have become
due and payable and before they have become delinquent, except for any taxes and
assessments the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which the
Company or a Subsidiary, as the case may be, has set aside on its books reserves
(segregated to the extent required by GAAP) deemed by it to be adequate. The
Company does not know of any proposed material tax assessment against the
Company or any Subsidiary, and in the opinion of the Company all tax liabilities
are adequately provided for on the books of the Company and its Subsidiaries.
The Federal income tax liabilities of the Company and its Subsidiaries have been
determined by the Internal Revenue Service and paid for all fiscal years up to
and including the fiscal year ended December 31, 1984.
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2.9. Title to Properties; Leasehold Interests. The Company and each
Subsidiary has good and marketable title in fee simple to such of its fixed
assets as are real property, and good and valid title to the other assets
necessary for the conduct of its business as now being carried on and proposed
to be carried on, subject to no Lien, except as permitted by Section 8.5. The
Company and its Subsidiaries enjoy peaceful and undisturbed possession under all
leases under which they operate, and all of such leases are valid, subsisting
and in full force and effect. None of such leases contains any provision
restricting the incurrence of liabilities by the lessee, or any unusual or
burdensome provision which materially affects adversely or in the future may (so
far as the Company can now reasonably foresee) materially affect adversely the
operations of the Company or any Subsidiary under such lease.
2.10. Franchise, Etc. The Company and its Subsidiaries possess all valid
certificates of convenience and necessity, operating rights, licenses, permits,
franchises, authorizations, Orders of Governmental Bodies, rights-of-way,
easements, patents, copyrights, trademarks and trade names, or rights thereto,
free from burdensome restrictions, required to conduct their respective
businesses substantially as now conducted and as currently proposed to be
conducted, without any known conflict with the rights of others.
2.11. Compliance with ERISA. No employee benefit plan established or
maintained by the Company or by any Subsidiary or to which either the Company or
any Subsidiary has made contributions, which is subject to Part 5 of Subtitle B
of Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 412 of the Internal Revenue Code of 1986 (the "Code"), had
an accumulated funding deficiency (as such term is defined in Section 302 of
ERISA or Section .412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of such plan heretofore ended and the assets of each
such plan are sufficient to provide all benefit commitments thereof as
contemplated under Section 4041 (a) of ERISA. No liability to the Pension
Benefit Guaranty Corporation (other than required insurance premiums; all of
which have been paid) has been incurred with respect to any such plan and there
has not been any reportable event within the meaning of ERISA and the
regulations promulgated thereunder, or any other event or condition, which
presents a material risk of termination of any such plan by the Pension Benefit
Guaranty Corporation. Neither any such plan nor any trust created thereunder,
nor any trustee or administrator thereof, has engaged in a prohibited
transaction (as such term is defined in Section 4975 of the Code or Section 406
of ERISA) that could subject any such plan, trust, trustee or administrator of
the Company or any Subsidiary to any tax or penalty on prohibited transactions
imposed under said Section 4975 or ERISA. No material liability has been
incurred with respect to any multi-employer plan, within the meaning of Section
4001(a)(3) of ERISA, as a result of the complete or partial withdrawal by the
Company or any of its Subsidiaries from such a multi-employer plan under Section
4201 or 4204 of ERISA; nor has the Company or any such Subsidiary been notified
by any such multi-employer plan that such multi-employer plan is in
reorganization or insolvency under and within the meaning of Section 4241 or
4245 of ERISA or that such multi-employer plan intends to terminate or has been
terminated under Section 4041A of ERISA.
2.12. Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has offered the Debentures or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other than you.
Neither the Company nor anyone acting on its behalf has taken, or will take, any
action which would subject the issuance or sale of the Debentures to Section 5
of the Securities Act of 1933 as amended.
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2.13. Solvency. The Company is, and upon giving effect to the issuance
of the Debentures on the Closing Date will be, a "solvent institution", as said
term is used in Section 1405(c) of the New York Insurance Law, whose
"obligations are not in default as to principal or interest", as said terms are
used in said Section 1405(c).
2.14. Use of Proceeds: Margin Regulations. The Company will apply the
proceeds of the sale of the Debentures to prepay the Company's $18,000,000
12.26% Series L First Mortgage Bonds, due 1998, in their entirety, to repay
short-term bank loans outstanding and to fund the Company's 1990 construction
program. No part of the proceeds from the sale of the Debentures will be used,
and no part of the proceeds of such short. term loans was used, directly or
indirectly, for the purpose of buying or carrying any "margin stock" within the
meaning at Regulation G of the Board of Governors of the Federal Reserve System
(12 CRF 207), or for the purpose of purchasing or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CRF 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CRF' 220). Such margin stock
constitutes less than 25% of the assets of the Company and its Subsidiaries, and
the Company covenants and agrees that such margin stock will not at any time
hereafter prior to the payment in full of the Debentures constitute 25% or more
of the assets of the Company and its Subsidiaries.
2.15. Existing Debt. Annexed hereto as Exhibit C is a complete and
correct list of all outstanding Debt of the Company as of November 30,1989 and
its Subsidiaries as of October 31, 1989, showing as to each item of such Debt
the principal amount outstanding and a brief description of any security
therefor. with respect to each item of Debt listed in Exhibit C, prior to the
Closing Date the Company shall have delivered to your counsel a true and
complete copy of each instrument evidencing such Debt or pursuant to which such
Debt was issued or secured (including each amendment, consent, waiver or similar
instrument in respect thereof), as the same is in effect on the date of this
Agreement). Neither the Company nor any Subsidiary is in default in the
performance or observance of any of the terms, covenants or conditions contained
in any instrument evidencing Debt listed in Exhibit C or pursuant to which such
Debt was issued or secured and no event has occurred and is continuing which.
with notice or lapse of time or both, would constitute such a default.
2.16. Holding Company Act Status. The Company is not a "holding company"
or a "subsidiary company" or an "affiliate" of a holding company or of a
subsidiary company of a holding company within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
2.17. Investment Company Act. The Company is not an investment company
or a person directly or indirectly controlled by or acting on behalf of an
investment company within the meaning of the Investment Company Act of 1940, as
amended.
3. REPRESENTATIONS OF THE PURCHASER. You represent to the Company as
follows:
3.1. Purchase of Debentures. On the Closing Date you will purchase the
Debentures to be purchased by you for your own general account, for investment
and not with a view to the distribution or resale of such Debentures, subject,
however, to any requirement of law that the disposition of your property be at
all times within your control.
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3.2. Source of Funds. No part of your purchase hereunder will be made
out of the assets of any separate account maintained by you in which any
employee benefit plan has an interest. As used herein, the terms "separate
account" and "employee benefit plan" shall have the respective meanings assigned
to them in ERISA.
4. CONDITIONS OF CLOSING. Your obligation to purchase and pay for the
Debentures to be purchased by you hereunder shall be subject to the conditions
hereinafter set forth:
4.1. Proceedings Satisfactory. All proceedings taken in connection
with the issue of the Debentures and the consummation of the transactions
contemplated hereby and all documents and papers relating thereto shall he
satisfactory to you and your counsel, and you and your counsel shall have
received copies of such documents and papers (including, without limitation,
officially certified copies of the Commission Order), all in form and
substance satisfactory to you and your counsel, as you or he may reasonably
request in connection therewith.
4.2. Representations True Etc.; Officer's Certificate. All
representations and warranties of the Company contained in Section 2 shall
(except as affected by the transactions hereby contemplated) be true on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date; the Company shall have
performed all agreements on its part required to be performed under this
Agreement on or prior to the Closing Date; no Default or Event of Default
shall have occurred and be continuing; the Company shall not have taken any
action which would have been prohibited by Section 8.4; the Company shall not
have taken any action which would have been prohibited by Section 8.6; the
Company shall not have consolidated with, merged into, or sold, leased,
transferred or otherwise disposed of all or substantially all of its assets to
any Person (whether or not the same would have been permitted by Section 8.7);
the Commission Order shall have been obtained and shall be in full force and
effect, not subject to further review or appeal and valid and sufficient to
permit the issuance, sale and delivery of the Debentures and the performance
of the terms of this Agreement and the Debentures; all terms and conditions,
if any, contained in the Commission Order required to be satisfied on or to
the Closing Date shall have been duly-satisfied; no-suit, action or proceeding
shall be pending or, threatened in respect of the Commission Order in which an
appeal therefrom or review thereof is being sought; the Company shall have no
intention to appeal from the Commission Order or seek review-thereof; there
shall have been no amendment or revocation of the Commission Order; there
shall have been no stay or suspension of the Commission Order by any court
having jurisdiction with respect thereto; and you shall have received a
certificate signed by the President or an Executive Vice President of the
Company, dated the Closing Date, to the effect that the facts required to
exist by this Section exist on the Closing Date.
4.3. Opinion of Counsel for the Company. You shall have received an
opinion dated the Closing Date from ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇, counsel for the
Company, in form and substance satisfactory to you as to;
A. the valid existence and good standing of the Company under the
laws of the State of North Carolina, and the corporate power of the Company to
own or hold under lease the property it purports to own or hold under lease
and to transact the business it transacts as described in the SEC Reports, to
execute and deliver this Agreement and the Debentures and to perform the
provisions hereof and of the Debentures,
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B. the due authorization, execution and delivery by the Company of
this Agreement and the legality, validity, binding effect and enforceability
hereof against the Company in accordance with its terms;
C. the due authorization, execution and delivery of the Debentures
being purchased by you on the Closing Date, and the legality, validity,
binding effect and enforceability thereof against the Company in accordance
with their terms;
D. The due authorization by an appropriate order of the North
Carolina Utilities Commission of the offer, issuance, sale and delivery of the
Debentures as contemplated by this Agreement and the consummation of the
transactions contemplated by the Agreement; said order being in full force and
effect; all terms and c6nditions, if any, contained in said order required to be
satisfied on or prior to the Closing Date having been duly satisfied and
performed; no suit, action nor proceeding being, to the knowledge of such
counsel, pending or threatened in which an appeal from said order or any review
thereof is being sought; said order being final and not subject to appeal by any
party other than the Company; said order not having been revoked or amended and
any amendment or revocation of said order after the issuance, sale or delivery
of the Debentures not invalidating the Debentures or altering, diminishing or
voiding the obligations of the Company under this Agreement or the Debentures;
there having been no stay or suspension of said order by any court having
jurisdiction with respect thereto; and the absence or satisfaction of any other
requirement for any consent, approval or authorization of, or registration,
filing or declaration with, any federal or North Carolina Governmental Body for
the validity of the execution and delivery or for the performance by the Company
of this Agreement or the Debentures;
E. the exemption of the offer, issuance, sale and delivery of The
Debentures being purchased by you on the Closing Date from the registration
requirements of the Securities Act of 1933, as amended, and the exemption from
qualification of an indenture in respect of said Debentures under the Trust
Indenture Act of 1939, as amended, under the circumstances contemplated by this
Agreement;
F. the consummation of the transactions hereby contemplated and the
performance of the terms and covenants of this Agreement and the Debentures not
resulting in any breach of, or constituting a default under, or resulting in the
creation of any Lien in respect of any property of the Company under, the
Companys' corporate charter or by-laws:
G. the due organization of the Company under the laws of the State o
North Carolina;
H. the due incorporation, valid existence and good standing of each
Subsidiary under the laws of the jurisdiction of its incorporation, and the
corporate power of each Subsidiary to own or hold under lease the property it
purports to own or hold under lease and to transact the business which it on the
Closing Date is transacting;
I. the due qualification and good standing of each Subsidiary as a
foreign corporation in each jurisdiction where in the opinion of said counsel
the failure so to qualify might materially- adversely affect the business,
operations, properties or condition (financial or other) of the Company, or of
the Company and its Subsidiaries taken as a whole;
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J. the due authorization, valid issuance, full payment and
nonassessability of all shares of each Subsidiary outstanding on the Closing
Date, and the good and valid title of the Company or one of its Subsidiaries on
the Closing Date to all then outstanding shares of each such Subsidiary, and
other securities, which it purports to own of each such Subsidiary, free and
clear of any Lien;
K. the consummation of the transactions hereby contemplated and the
performance of the terms and covenants of this Agreement and the Debentures not
resulting in any breach of, or constituting a default under, or resulting in the
creation of any Lien in respect of any property of the Company or any subsidiary
under, the Company's or any Subsidiary's corporate charter or by-laws or under
any indenture, mortgage, deed of trust, bank loan or credit agreement, or other
agreement or instrument, to which the Company or any Subsidiary is a party or by
which the Company or any subsidiary or any of their respective properties may be
bound or affected;
L. there being no actions, suits or proceedings pending or, to the
knowledge of such counsel, threatened (or any basis therefor known to such
counsel) against or affecting the Company or any subsidiary or any property of
the Company or any Subsidiary in any court or before any arbitrator of any kind
or before or by any Governmental Body.(except actions, suits or proceedings of
the character normally incident to the kind of business conducted by the Company
or any Subsidiary which in the aggregate, if adversely determined would not
materially adversely effect the business, operations or properties of the
Company or of the Company and its Subsidiaries taken as a whole);
M. the Company having all such valid franchises, licenses, rights,
rights-of-way, easements and permits, free from burdensome restrictions, as are
necessary for the conduct of the business and operations which the Company
conducts;
N. the issuance and sale of the Debentures not involving a violation of
Regulation G, T or X or any other rule or regulation of the Board of Governors
of the Federal Reserve System pursuant to Section 7 of the Securities Exchange
Act of 1934 as amended; and
O. such other matters incident to the transactions contemplated hereby
as you or your counsel may reasonably request.
4.4. Legality. On the Closing Date, the Debentures to be purchased by
you hereunder shall be a legal investment for you under the laws of each
jurisdiction to which you may be subject and you shall have received such
certificate or other evidence as you may reasonably request as to compliance
with this condition.
5. FINANCIAL STATEMENTS AND INFORMATION. The Company will furnish to
you, so long as you shall be obligated to purchase or shall hold any of the
Debentures, and to each other institutional holder of any of the Debentures, in
duplicate:
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A. as soon as available and in any event within 60 days after the end of
the first, second and third quarterly accounting periods in each fiscal year of
the Company, copies of a consolidated balance sheet and statement of
capitalization of the Company and its Subsidiaries as of the end of such
accounting period and of the related consolidated statements of income, retained
earnings and sources of funds used for construction of the Company and its
Subsidiaries for such accounting period and for the portion of the fiscal year
ended with the last day of such quarterly accounting period, all in reasonable
detail, prepared in accordance with GAAP (consistently applied except as set
forth in the notes thereto) and stating in comparative form the respective
consolidated figures for the corresponding date and period in the previous
fiscal year and all certified by the principal financial officer of the Company
to present fairly the information contained therein, subject to year-end and
audit adjustments;
B. as soon as available and in any event within 90 days after
the end of each fiscal year of the Company,
(1) (a) copies of a consolidated balance sheet and statement of
capitalization of the Company and its Subsidiaries as of the end of such fiscal
year and of the related consolidated statements of income, retained earnings and
sources of funds used for construction of the Company and its Subsidiaries for
such fiscal year, all in reasonable detail prepared in accordance with GAAP
(consistently applied except as set forth in the notes thereto) and stating in
comparative form the respective consolidated figures as of the end of and for
the previous fiscal year, and (b a consolidating balance sheet of the Company
and its Subsidiaries as of the end of such fiscal year and of the related
consolidating statement of income of the Company and its Subsidiaries for such
fiscal year, all in reasonable detail, prepared in accordance with GAAP
(consistently applied except as set forth in the notes thereto) and as to the
consolidated statements, certified to the Company by independent public
accountants of recognized standing selected by the Company whose certificate
shall be in scope and substance satisfactory to you and, as to the consolidating
statements certified by the principal financial officer of the Company to be
correct and complete and to present fairly the information contained therein,
and
(2) a written statement of the accountants referred to in clause (1)
above stating that in making the examination necessary for their report on such
financial statements they obtained no knowledge of any Default or Event of
Default or, if such accountants shall have obtained knowledge of any Default or
Event of Default, specifying the nature and status thereof;
C. concurrently with the financial statements for each quarterly
accounting period and for each fiscal year of the Company, furnished pursuant to
Subsections A and B of this Section, a certificate of the President or an
Executive Vice President of the Company containing computations demonstrating
compliance during such accounting period or fiscal year, as the case may be,
with Sections 8.4 and 8.6, and stating that, based upon such examination or
investigation and review of this Agreement, no Default or Event of Default
exists or to the knowledge of the Company has existed during such period or, if
a Default or Event of Default shall exist or have existed, specifying the nature
and period of existence thereof and what action the Company has taken, is taking
or proposes to take with respect thereto;
D. promptly after the receipt thereof by the Company, copies of any
reports as to material inadequacies in accounting controls submitted to the
Company by independent accountants in connection with any audit of the Company
or of any Subsidiary made by such accountants;
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E. promptly after receipt thereof by the Company, copies of each audit
report submitted to the Company or any Subsidiary by independent accountants in
connection with any annual, interim or special audit made by them of the books
of the Company or any Subsidiary;
F. promptly after the same are available, copies of (1) all such proxy
statements. financial statements and reports as the Company shall send or make
available generally to any of its security holders or as any Subsidiary shall
send or make available generally to any of its security holders (other than the
Company or another Subsidiary), and copies of all regular and periodic reports
and of all registration statements (other than on Form S-8 or a similar form)
which the Company or any Subsidiary may file with the SEC or with any securities
exchange, and (2) all annual financial reports filed by the Company or any
Subsidiary with the North Carolina Utilities Commission or with the Federal
Energy Regulatory Commission;
G. immediately after becoming aware of the existence of a Default or
Event of Default, a certificate of the Chairman of the Board, the President,
Executive Vice President or a principal financial officer of the Company
specifying the nature and period of existence thereof and what action the
Company or a Subsidiary, as the case may be, is taking or proposes to take with
respect thereto;
H. immediately upon becoming aware that the holder of any evidence of
indebtedness of the Company (including Bonds of any series outstanding under the
Indenture) or the Trustee under the Indenture has given notice or taken any
other action with respect to a claimed default, a written notice specifying the
notice given or action taken by such holder or the Trustee and the nature of the
claimed default and what action the Company is taking or proposes to take with
respect thereto;
I. immediately upon becoming aware of any condition or event which
constitutes or, after notice or lapse of time or both, would constitute a
default specified in Section 11.01 of Article Eleven of the Indenture, a written
notice specifying the nature and period of existence thereof, and what action
the Company has taken, is taking or proposes to take with respect thereto; and
J. with reasonable promptness, such other information relating to the
performance of the provisions of this Agreement and the Debentures and the
business, affairs and financial condition of the Company and its Subsidiaries as
you or any such holder may from time to time reasonably request.
The Company will keep at its principal executive office a true copy of
this Agreement (as at the time in effect), and cause the same to be available
for inspection at said office during normal business hours by any holder of a
Debenture or any prospective purchaser of a Debenture designated by the holder
thereof.
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6. INSPECTION. So long as you shall be obligated to purchase, or you or
any other institutional holder shall hold, any of the Debentures, any officer,
employee or agent designated in writing by you or such holder shall have the
right, at your or such other holders expense, to visit and inspect, at
reasonable times and intervals, any of the properties of the Company and of its
Subsidiaries, to examine the books of account and records of the Company and of
its Subsidiaries, to be provided with copies and extracts therefrom, to discuss
the affairs, finances and accounts of the Company and of its Subsidiaries with,
and to be advised as to the same by, its and their officers and employees, and
its and their independent public accountants, all at such reasonable times and
intervals as you or such other holder may desire. The Company will likewise
afford you and such other holder the opportunity to obtain any information, to
the extent the Company possesses such information or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of any of the
representations and warranties made by the Company hereunder.
7. PREPAYMENT OF THE DEBENTURES, ETC. The Debentures may not be
purchased or prepaid prior to their final maturity except as provided in this
Section
7.1. Mandatory Prepayments of Debentures. On December 1, 1995 and on each
December 1 thereafter to and including December 1, 2004 (so long as any of the
Debentures shall be outstanding), the Company will prepay $4,300,000 aggregate
principal amount of the Debentures (or, if less, the unpaid balance thereof).
Each such prepayment under this Section shall be at the principal amount so to
be prepaid, together with accrued interest thereon to the date of such
prepayment, without prepayment charge, and allocated as provided in Section 7.4.
No prepayment of less than all of the Debentures pursuant to Section 7.2 shall
relieve the Company to any extent of its obligation to make the prepayments of
principal on the Debentures required by this Section 7.1.
7.2 Optional Prepayment With Yield-Maintenance Premium. The Debentures
shall be subject to prepayment, in whole at any time or from time to time in
part (in multiples of $5,000,000), at the option of the Company, at 100% of the
principal amount so prepaid plus interest thereon to the prepayment date and the
Yield-Maintenance Premium, if any, with respect to the Debenture.
7.3. Notice of Optional Prepayment. The Company shall give notice of its
intent to repay the Debentures pursuant to Section 7.2 by giving written notice
thereof to each holder of the Debentures, which notice shall be given not less
than 30 nor more than 60 days prior to the date fixed for such prepayment in
such notice and the amount so to be prepaid. Upon the giving of notice of any
prepayment as provided in this Section, the Company will prepay on the date
therein fixed for prepayment the principal amount of the Debentures so to be
prepaid as specified in such notice, together with interest accrued thereon to
such date fixed for prepayment, plus the Yield Maintenance Premium (if any).
7.4. Allocation of Prepayments. In the event of any prepayment of less
than all of the outstanding Debentures, the Company will allocate the principal
amount so to be prepaid (but only in units of $1,000) among the Debentures in
proportion, as nearly as may be, to the respective unpaid principal amounts
thereof.
7.5. Surrender of Debentures: Notation Thereon. Subject to the
provisions of Section 14, the Company may, as a condition of payment of all or
any part of the principal of, prepayment charge, if any, and interest on, any
Debenture, require the holder to present such Debenture for notation of such
and, if such Debenture be paid in full, require the surrender thereof.
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7.6. Purchaser of Debentures. The Company will not, and will not permit
any Subsidiary to, acquire directly or indirectly by purchase or otherwise any
of the outstanding Debentures except by way of payment or prepayment in
accordance with the provisions of the Debentures and of the Agreement.
8. COVENANTS. The Company covenants and agrees that until any Debenture
is issued, it will perform all the covenants in Sections 8.1 through 8.3 and
that so long as any Debenture shall be outstanding it shall perform all the
covenants contained in 8.1 through 8.8, inclusive.
8.1. To Keep Books. The Company will, and will cause each of its
Subsidiaries to, keep proper books of record and account, all in accordance with
GAAP.
8.2. Payment of Taxes: Corporate Existence: Maintenance of Properties:
Compliance with Laws. The Company will, and will cause each of its Subsidiaries
to,
A. pay and discharge or cause to be paid and discharged all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or upon any of its property, real, personal or mixed, or upon
any part thereof, when due, as well as all lawful claims for labor, materials
and supplies which, if unpaid, might by law become a Lien upon its property;
provided, however, that neither the Company nor any Subsidiary shall be required
to pay any such tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate proceedings, and if such reserve or other appropriate provision, if
any, as shall be required by GAAP shall have been made therefor;
B. do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, licenses, rights and franchises;
provided, however, that nothing in this Subsection shall prevent (1) the
abandonment or termination of the corporate existence, licenses, rights and
franchises of any Subsidiary, or the abandonment or termination of any rights,
licenses and franchises of the Company, if, in the opinion of the Board, any
such abandonment or termination is in the best interest of the Company and not
disadvantageous in any material respect to the holders of the Debentures, or (2)
a transaction otherwise permitted by Section 8.7;
C. maintain and keep, or cause to be maintained and kept, its properties
in good repair, working order and condition, and from time to time make or cause
to be made all needful and proper repairs, renewals, replacements and
improvements so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Subsection shall prevent the Company or any of its Subsidiaries
from discontinuing the operation and the maintenance of any of its properties if
such discontinuance is, in the opinion of the Board, desirable in the conduct of
its business and not disadvantageous in any material respect to the holders of
the Debentures; and
D. comply in all material respects with all applicable statutes,
regulations and Orders of, and all applicable restrictions imposed by. any
Governmental Body, in respect of the conduct of its business and the ownership
of its properties (including without limitation applicable statutes, regulations
and Orders relating to equal employment opportunities and environmental
standards or controls), except such as are being contested in good faith by
appropriate proceedings.
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8.3. Insurance. The Company will insure and keep insured, and will cause
each of its Subsidiaries to insure and keep insured, with financially sound and
reputable insurers, so much of their respective properties, and such insurance
shall be in such amounts (and with such deductibles), as companies engaged in a
similar business in accordance with good business practice customarily insure
properties of a similar character against loss by fire or explosion and from
other causes. In addition, the Company will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurers public liability
insurance against claims for personal injury, death or property damage suffered
by others upon or in or about any premises occupied by it or occurring as a
result of its ownership, maintenance or operation of any gas distribution lines,
automobiles, trucks or other vehicles, aircraft or other facilities or as a
result of the use of products manufactured, constructed or sold by it or
services rendered by it, and such other insurance, in such amounts (and with
such deductibles) as is usually carried by companies engaged in a similar
business and as is in accordance with good business practice. Notwithstanding
the foregoing sentence, nothing in this Section shall prohibit the Company from
maintaining a system of self-insurance, or causing or permitting any of its
Subsidiaries to maintain a system of self-insurance, to the extent permitted by
applicable law, against the risks referred to in said sentence, if and to the
extent such risks are at the -time customarily self-insured by companies engaged
in a similar business in accordance with good business practice.
8.4. Limitation on Debt. A. The Company will not, and will not permit any
Subsidiary to, create, assume or incur any Funded Debt other than
(1) Funded Debt of a Subsidiary to the Company or another Subsidiary;
(2) Subject to the last sentence of this Subsection A, and to the
following Subsection B, additional unsecured Funded Debt of the Company if, on
the date of the proposed incurrence thereof and after giving effect thereto and
to the retirement of any Funded Debt being concurrently retired
(a) Consolidated Funded Debt would not exceed 70% of Consolidated
Capitalization, and
(b) Consolidated Net Income Available for Fixed Charges would be less
than 175% of Fixed Charges, determined in each case with respect to the period
of twelve consecutive calendar months ended next preceding the date of
determination and, in the case of said Fixed Charges, determined on a pro forma
basis as if the Debt proposed to be incurred (but not any Debt to be retired
with the proceeds thereof) had been outstanding at all times during such
twelve-month period; and
(3) Debt of the Company or a Subsidiary secured by a Lien permitted by any
of Sections ▇.▇▇ (7) through (12), inclusive.
For the purpose of determining compliance with the foregoing clause 2 of this
Subsection A in connection with the proposed incurrence on any date (the
"Incurrence Date") of additional unsecured Funded Debt, if the Incurrence Date
is on or after July 3 and on or before August 31 in any year and as of such date
the Company has not previously maintained Short-Term Debt in an amount equal to
or less than 5% of Consolidated Capitalization for each of sixty (60)
consecutive days during the period beginning on the preceding October 1 as
required by the following Subsection C, then Funded Debt outstanding on the
Incurrence Date shall be deemed to include all Excess Short-Term Debt
outstanding on the Incurrence Date, and such outstanding Debt shall be deemed to
bear interest at a rate per annum which is the weighted average of the rates
respectively borne by each item of Short-Term Debt of the Company then
outstanding
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B. The Company will not create, assume or incur any Debt secured by the
Indenture not outstanding on the date hereof, or refund, extend or renew any
such outstanding Debt secured by the Indenture, or create, assume or incur any
other Funded Debt evidenced by mortgage bonds or other securities purporting to
be secured by a Lien on all or substantially all of the Company's properties or
assets, including, without limitation, any such bonds or securities issued
pursuant to a general and refunding or similar indenture, whether or not at the
time constituting a Lien on such properties junior to that of the Indenture.
C. The Company will not, and will not permit any Subsidiary to, create,
assume, incur or suffer to exist any Short-Term Debt, except that the Company
may create, assume or incur unsecured Short-Term Debt and maintain the same
outstanding; provided, however, that such Short-Term Debt shall not, subject to
the next provision, for a period of 60 consecutive days (herein called a
"Cleandown Period") during each period of twelve consecutive calendar months
beginning on October 1 in each year (commencing with such period beginning
October 1, 1989), exceed an amount equal to 5% of Consolidated Capitalization
(any amount of Short-Term Debt outstanding on any date in excess of such amount
being herein called "Excess Short-Term Debt"); and provided, further, that the
requirements of the immediately preceding provision shall be deemed satisfied if
for each of any sixty (60) consecutive days during such twelve month period, the
Company would be entitled to incur additional unsecured Funded Debt, in
compliance with the tests in Section 8.4A (2) (a) and (b) but disregarding the
last sentence of Section 8.4A, in an amount at least equal to the amount of
Excess Short-Term Debt outstanding on such day, and bearing interest at a rate
per annum which is the weighted average of the rates respectively borne by each
item of Short-Term Debt of the Company then outstanding.
8.5. Limitation on Liens. A. The Company will not, and will not
permit any Subsidiary to. create, assume, incur or suffer to be created,
assumed or incurred or to exist any Lien in respect of any property of any
character of the Company or such Subsidiary (whether held on the date
hereof or hereafter acquired), excluding, however from the operation of
this Section,
(1) the Lien of the Indenture;
(2) Liens securing Debt of a Subsidiary to the Company or another
Subsidiary;
(3) Liens for taxes or assessments or other governmental charges
or levies, either not yet due and payable or to the extent that nonpayment
thereof shall be permitted by the provision of Section 8.2A;
(4) Liens created by or resulting from any litigation or legal
proceeding which is currently being contested in good faith by appropriate
proceedings, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(5) Liens not arising in connection with Debt that do not in the
aggregate materially impair the use or value of the properties or assets
of the Company or a Subsidiary in the conduct of its business;
(6) Liens (including Capital Leases) securing Debt of the Company
outstanding as of November 20, 1989 and its Subsidiaries outstanding as of
October 31, 1.989 as specified in Exhibit C or otherwise securing Debt
incurred after such date without violation of the closing condition in the
fourth clause of Section 4.2;
-15-
(7) subject to the following Subsection B, Liens in respect of
property of a corporation at the time such corporation becomes a
Subsidiary, which Liens were not. created in contemplation thereof and do
not extend to any other property;
(8) subject to the following Subsection B, Liens on Property at the
time the Company acquires such property, which Liens were not created in
contemplation thereof and do not extend to any other property;
(9) subject to the following Subsection B, Liens on property of a
corporation at the time such corporation merges into or consolidates with
the Company, which Liens were not created in contemplation thereof and do
not extend to any other property;
(10) subject to the following Subsection B, Liens (including
Capital Leases) securing Debt of the Company incurred to finance all or
some of the purchase price or cost of construction of property (or to
refinance construction Debt upon completion), provided
(1) the Lien does not extend to any other property (except
that in the case of any construction the Lien related to the
construction may extend to unimproved real property upon which the
construction will occur), and
(2) the Debt secured by the Lien may not be incurred more
than 90 days after the latest to occur of the acquisition, completion
of construction or commencement of full operation of the property;
(11) any Lien extending, renewing or replacing in whole or in part a
Lien ("existing Lien") permitted by the foregoing Clause 6, 7, 8, 9, or 10,
provided (i) the Lien is the first and only extension, renewal or replacement of
the existing Lien, (ii) the Lien does not extend to any property not subject to
the existing Lien and improvements thereto and (iii) the Debt secured by the
Lien does not exceed the Debt secured at the time by the existing Lien; or
(12) subject to the following Subsection B, Liens securing Debt of the
Company and its Subsidiaries, the aggregate principal amount of which at any one
time outstanding does not exceed 5% of Consolidated Capitalization at such time.
B. The Company will not, and will not permit any Subsidiary to (1)
acquire any property (whether directly or through acquisition of a corporation
which upon such acquisition becomes a Subsidiary or through merger into itself
or consolidation with another corporation owning such property), if the property
so acquired shall be subject to Liens securing Debt in an aggregate outstanding
principal amount in excess of 75% of the total cost to the Company or such
Subsidiary, as the case may he, of acquiring such property (whether directly or
through acquisition or a Subsidiary, or by merger or consolidation, as
aforesaid), or
(2) create, assume, incur or suffer to be created, assumed or incurred or to
exist any Lien (otherwise permitted by Clause 7, 8, 9, 10, or 12 of the
foregoing Subsection A) unless immediately after giving effect thereto and to
the application of the proceeds thereof and to the retirement of any Debt
concurrently being retired, the Company shall be entitled to incur at least $1
of additional unsecured Funded Debt pursuant to Section 8.4A (2).
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C. For purposes of this Section 8.5, any Lien existing on property when
acquired shall be deemed to have been created at that time; and any Lien
existing on property of a corporation at the time such corporation merges into
or consolidates with the Company or a Subsidiary, and any Debt secured by any
such Lien, shall be seemed to have been created at that time.
D. Notwithstanding the foregoing provisions of this Section 8.5 (x) if
all Debt and other amounts secured by the Indenture shall have been paid in full
and the Indenture discharged in accordance with the terms thereof, and if the
Company at any time thereafter shall elect to enter into a new mortgage bond
indenture constituting a first Lien on all or substantially all of its
properties and assets to secure Debt to be evidenced by bonds issued from time
to time thereunder, or (y) the Company shall at any time elect to enter into a
new mortgage bond indenture constituting a second Lien on all or substantially
all the properties and assets subject to the Lien of the Indenture (any new
mortgage bond indenture of the character specified in the foregoing clause (x)
or (y) being herein called a "New Indenture"); the Lien of the New Indenture
shall not be deemed to violate this Section 8.5 if all the following conditions
are complied with:
(1) at the time of execution and delivery of the New Indenture, the
Company shall, by written notice to the holders of the outstanding
Debentures, given not more than 90 nor less than 60 days in advance of the
execution and delivery of the New Indenture, offer to such holders the
opportunity to exchange their Debentures for a series of bonds to be issued
pursuant to the New Indenture (such offer to include an undertaking by the
Company to pay all expenses in connection with the exchange, including
reasonable fees and disbursements of one special counsel for the holders
effecting such exchange);
(2) the bonds to be received by such holders upon such exchange
shall bear interest (both before and after default) at the same respective
rates as those borne by the Debentures and shall have terms as to
redemption and final maturity the same as those then applicable to the
Debentures;
(3) such bonds shall be secured by and entitled to the benefits of
the New Indenture equally and ratably with all other bonds issued and to
be issued thereunder from time to time, and the holders thereof shall be
entitled to vote ratably with all other holders of such bonds in
accordance with the respective principal amounts thereof held by each
(subject to the following subparagraph 4);
(4) the New Indenture, or the indenture supplemental thereto
creating such series of bonds, shall contain covenants and definitions,
applicable to the Company and its Subsidiaries at least so long as said
series of bonds shall be outstanding and which may be amended only by the
holders of 66 2/3% in aggregate principal amount of the bonds of such
series from time to time outstanding, substantially the same as the
covenants appearing in this Section 8 and appurtenant definitions as in
effect at the time of such exchange,
(5) the New Indenture shall in all other respects also be
satisfactory in form and substance to the holders of the Debentures in
their reasonable discretion; and
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(6) each holder of any outstanding Debentures shall, pursuant to
an exchange agreement in form and substance satisfactory to all holders of
Debentures and containing appropriate conditions (including receipt of
satisfactory legal opinions) to the obligation to do so, in fact exchange
its Debentures for a like principal amount of bonds issued under the New
Indenture.
8.6. Restricted Payments. The Company will not, directly or
indirectly, make any Restricted Payment unless, after giving effect to any
such action,
A. the aggregate amount of all Restricted Payments made during the
period commencing on December l, 1989 and ending on and including the date of
such action (the "Computation Period") shall not exceed $15,000,000 plus 85% (or
in the case of a net loss, minus 100%) of Consolidated Net Income for the
Computation Period, plus the net proceeds to the Company of issuances during the
Computation Period of common stock, preferred stock or (to the extent actually
converted) Debt convertible into common stock, and
B. no Default or Event of Default shall have occurred and be
continuing.
The Company will not permit any of its Subsidiaries to make any
Restricted Payments, and will not declare any dividend payable more than 90 days
after the date of declaration thereof.
8.7. Consolidation. Merger or Disposition of Assets. A. The Company
will not, and will not permit any Subsidiary to, directly or indirectly,
consolidate or merge with, or sell, lease or otherwise dispose of all or
substantially all of its assets to, any person, except that
(1) a Subsidiary may permit any corporation to be merged into
such Subsidiary or may consolidate with or merge into or sell, lease or
otherwise dispose of its assets as an entirety or substantially as an
entirety to the Company or to another Subsidiary or to a corporation which
thereupon becomes a Subsidiary, provided that immediately after any such
consolidation, merger or other disposition no Default or Event of Default
shall have occurred and be continuing;
(2) the Company may permit any corporation to be merged into the
Company or may consolidate with or merge into or sell or otherwise (except
by lease) dispose of its assets as an entirety or substantially as an
entirety to any solvent corporation organized in the United States of
America which expressly assumes in Writing the due and punctual payment of
the principal of, and interest and prepayment charges on, the Debentures
and the due and punctual performance of the obligations of the Company
hereunder and under the Debentures, provided that immediately after any
such consolidation, merger or other disposition (a) no Default or Event of
Default shall have occurred and be continuing and (b) the Company would be
entitled to incur $1 of additional Funded Debt pursuant to Section 8.4A
(2).
No such consolidation, merger or transfer shall have the effect of releasing
Public Service Company of North Carolina, Incorporated (or any other corporation
which at the time shall have assumed the obligations of the Company under this
Agreement and the Debentures) from its obligations under this Agreement and the
Debentures.
B. The Company will not lease its assets as an entirety or
substantially as an entirety to any person or persons (in one transaction
or a series of. related transactions).
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C. The Company will not cause, suffer or permit any Subsidiary to sell,
lease or otherwise dispose of any substantial portion of its assets (other than
as permitted in the foregoing Subsection A), except that any Subsidiary may
effect such a sale, lease or other disposition if and to the extent that the
aggregate fair market value (as determined by the Board) of all assets so sold,
leased or otherwise disposed of in any fiscal year of the Company and its
Subsidiaries would not exceed 5% of Consolidated Capitalization as at the
beginning of the fiscal year.
8.8. Transactions with Affiliates. The Company will not, and will not
permit any Subsidiary to, engage in any transaction with an Affiliate (other
than the Company or a Subsidiary) on terms more favorable to the Affiliate than
would have been obtainable in arm's length dealing, other than transactions that
will not (individually or in the aggregate) materially affect adversely the
business, operations or properties of the Company, or of the Company and its
Subsidiaries taken as a whole.
9. DEFINITIONS
9.1. Certain Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Affiliate" means, with respect to any person, any other person directly
or indirectly controlling, controlled by, or under common control with, such
person. For this purpose, "control" means the power, direct or indirect, or one
person to direct or cause direction of the management and policies of another,
whether by contract, through voting securities or otherwise.
"Board" means the Board of Directors of the Company or a committee
consisting of three or more directors of the Company having authority to
exercise, when the Board of Directors is not in session, the power of the Board
of Directors (subject to any designated limitations) in the management of the
business and affairs of the Company.
"Bonds" means First Mortgage Bonds of any series issued and outstanding
under the Indenture.
"Capital Lease" means any lease of property which, in accordance with
GAAP, should be capitalized on the lessee's balance sheet or for which the
amount of the asset and liability thereunder as if so capitalized should be
disclosed in a note to such balance sheet; and "Capital Lease Obligation" means
the amount of the liability which should be so capitalized or disclosed.
"Cleandown Period" -- the meaning specified in Section 8.4C.
"Closing Date" -- the meaning specified in Section 1.2.
"Commission Order" -- the meaning specified in Section 2.7.
"Company" means the corporation that originally executed this Agreement
as the seller of the Debentures until any corporation becomes a successor or
transferee in a transaction permitted by Section 8.7A, and thereafter shall mean
any such successor or transferee corporation.
"Consolidated Capitalization" means the sum of (A) Consolidated Funded
Debt, plus
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(B) Consolidated Tangible Net Worth.
"Consolidated Funded Debt" and "Consolidated Short-Term Debt" mean,
respectively, the Funded Debt and Short-Term Debt of the Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income Available for Fixed Charges" means Consolidated
Net Income plus all amounts deducted in the computation thereof on account of
Fixed Charges and taxes.
"Consolidated Net Income" means the consolidated net income of the
Company and its Subsidiaries, determined in accordance with GAAP, excluding
A. The proceeds of any life insurance policy,
B. any gain arising from (1) the sale or other disposition of any assets
(other than current assets) to the extent that the aggregate amount of the gain
exceeds the aggregate amount of losses from the sale, abandonment or other
disposition of assets (other than current assets), (2) any write-up of assets,
or (3) the acquisition of outstanding Debt securities of the Company or any
Subsidiary,
C. any amount representing any interest in the undistributed earnings of
any other person (other than a consolidated Subsidiary),
D. any earnings, prior to the date of acquisition of any person
acquired in any manner, and any earnings of any Subsidiary accrued prior to
becoming a Subsidiary,
E. any earnings of a successor to or transferee of the assets of the
Company prior to becoming such successor or transferee,
F. any deferred credit (or amortization of a deferred credit) arising
from the acquisition of any person, and
G. any portion of the net income of any Subsidiary which for any
reason is unavailable for payment of dividends to the Company or to another
Subsidiary
"Consolidated Tangible Net Worth" means the total stockholders' equity
in the Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, less the aggregate net amount of (A) all shares of capital
stock held in Treasury; (B) all licenses, patents, copyrights, trade names,
trade marks, goodwill, experimental or organizational expense, unamortized debt
discount and expense, and all other assets which under GAAP are deemed
intangible, to the extent, if any, that they were included in consolidated
assets or deducted from consolidated liabilities in computing stockholders
equity; (C) all deferred charges, excluding Deferred Gas Costs and (D) all
outstanding investments in exploration ventures or in Subsidiaries other than
(i) investments in Subsidiaries in the business of gathering, transmission,
distribution or storage of natural gas or the distribution of propane to the
extent such investments are included in the Company's rate base or are
recognized as allowable expenses of the Company for rate making purposes
pursuant to the rules and regulations of, or Orders issued by, the North
Carolina Utilities Commission, any agency succeeding to its functions, or any
other Governmental Body or court having jurisdiction over the Company rates
charged to customers, and (ii) investments in exploration ventures or
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in Subsidiaries engaged in the types of businesses set forth in clause (i)
above which are not subject to rate base treatment or recognized as allowable
expenses by any Governmental Body for rate-making purposes; provided, however,
that investments not deducted from Consolidated Tangible Net Worth pursuant to
this clause (ii) shall be limited to an aggregate value of 10% of consolidated
total assets of the Company and its Subsidiaries
"Debt" means any obligation for borrowed money (including, without
limitation, bonded indebtedness), but in any event shall include (A) an
obligation owed for all or any part of the purchase price of property or other
assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included' in current
liabilities and incurred in respect of property purchased in the ordinary course
of business, (B) any obligation secured by any Lien in respect of property even
though the person owning the property has not assumed or become liable for the
payment of such obligation, (C) any Capital Lease Obligation, and (D) any
Guarantee with respect to Debt (of the kind otherwise described in this
definition) of any person.
"Default" means any default or other event which, with notice or the
lapse of time or both, would constitute an Event of Default-
"Event of Default" -- the meaning specified in Section 10.1.
"Excess Short-Term Debt" - - the meaning specified in Section 8.4C.
"Fixed Charges" means the sum of all amounts which would, in accordance
with GAAP, be deducted in computing net income on account of (I) interest on
Debt, including imputed interest in respect of Capital Lease Obligations, and
(2) amortization of debt discount and expense.
"Funded Debt" means all Debt which would, in accordance with GAAP,
constitute long term debt, and in any event includes (A) any Debt with a
maturity more than one year after the date of determination, (B) any Debt
outstanding under a revolving credit or similar agreement providing for
borrowings (and renewals and extensions thereof) over a period extending more
than one year from the date of determination notwithstanding that any such Debt
may be payable on demand or within one year after such date, (C) any. Capital
Lease Obligation and CD) any Guarantee with respect to Funded Debt of another
person
"GAAP" means generally accepted accounting principles as in effect in
the United States at the time of application to the provisions hereof.
"Governmental Body" -- the meaning specified in Section 2.5.
"Guarantee" means any guarantee or other contingent liability, direct or
indirect, with respect to any Debt of another person, through an agreement or
otherwise, including, without limitation, (A) any endorsement (otherwise than
for collection or deposit in the ordinary course of business) or discount with
recourse or undertaking substantially equivalent to or having similar economic
effect of a guarantee with respect to any such Debt, and (B) any agreement (1)
to purchase, or to advance or supply funds for the payment or purchase of, any
such Debt, (2) to purchase, sell or lease property, products, materials or
supplies. or transportation or services, primarily far the purpose of enabling
such other person to pay the Debt or to assure the owner thereof against loss
regardless of the delivery or non-delivery of the property, products, materials
or supplies or transportation or services, or (3) to make any loan, advance,
capital
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contribution or other investment in such other person to assure a
minimum equity, working capital or other balance sheet condition for any date,
or to provide funds for the payment of any liability, dividend or stock
liquidation payment, or otherwise to supply funds to or in any manner invest in
such other person. The amount of any Guarantee shall be equal to the outstanding
principal amount of the Debt guaranteed.
"Incurrence Date" - - the meaning specified in Section 8.4A.
"Indenture" means that certain Indenture dated as of January 1, 1952,
executed and delivered by the Company to The Marine Midland Trust Company of New
York (to which Marine Midland Bank, N.A., is successor), as at any time amended
or supplemented.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction).
"New Indenture" -- the meaning specified in Section 8.5D.
"Order" - - the meaning specified in Section 2.5.
"Outstanding" with respect to the Debentures, shall mean all Debentures
from time to time issued pursuant to this Agreement, or delivered in
substitution or exchange for any such Debentures, or in subsequent substitutions
or exchanges, as herein provided, but said term shall not for purposes of
Sections 10.1 or 13 include any Debenture owned by the Company or any Affiliate
of the Company.
"Person" or "person" shall include an individual, a corporation, an
association, a partnership, a trust or estate, a government, foreign or
domestic, and any agency or political subdivision thereof, or any other entity.
"Restricted Payment" means
A. The declaration of any dividend on, or the incurrence of any
liability to make any other payment or distribution in respect of, any
shares of the Company (other than one payable solely in its common stock),
or
B. any payment or distribution on account of the purchase, redemption or
other retirement of any shares of the Company, or of any warrant, option or
other right to acquire such shares, or any other payment or distribution (other
than pursuant to a dividend theretofore declared or liability theretofore
incurred as specified in Subsection A), made in respect thereof, either directly
or indirectly, except any payment on account of the principal of any prepayment
charge, if any. on convertible Debt.
The amount of any restricted Payment in property shall be deemed to be the
greater of its fair market value (as determined by the Board) or its net book
value.
"SEC" means the Securities and Exchange Commission or any Governmental
Body succeeding to such of its authority as may from time to time be relevant to
this Agreement and the transactions contemplated hereby.
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"SEC Reports" - - the meaning specified in Section 2.2.
"Short-Term Debt" means all Debt which would, in accordance with GAAP,
constitute short term debt, and in any event includes all such Debt with a
maturity one year or less after the date of determination (except any such Debt
included in Funded Debt by reason of Clause (B) of the definition thereof in
this Section).
"Subsidiary" of any designated corporation means any corporation at
least a majority of the Voting Stock of which is at the time owned by the
designated corporation and/or one or more of its Subsidiaries. Except as
otherwise expressly indicated herein, references to Subsidiaries shall mean
Subsidiaries of the Company.
"Voting Stock" means capital stock having voting power under ordinary
circumstances to elect a majority of directors.
"Weighted Average Term" of any Debt means at any time the number of
years obtained by dividing the then remaining dollar-years of such Debt by the
then outstanding principal amount of such Debt; and the "remaining dollar-years"
of any Debt means at any time the amount obtained by (a) multiplying the amount
of each then remaining installment, sinking fund, serial maturity or other
required payment, including payment at final maturity, by the number of years
(calculated to the nearest one-twelfth) which will elapse between the time in
question and the making of that payment and (b) totaling all of the products
obtained in (a).
9.2. Yield-Maintenance Terms.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which commercial banks in New York City are required or
authorized to be closed.
"Called Principal" shall mean, with respect to the Called
Principal of any Debenture, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to the -Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called
Principal of any Debenture, the yield to maturity implied by (i) the yields
reported as of 10:00 A.M. (New York City time) on the Business Day next
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace Page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for
the latest day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.l5 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury ▇▇▇▇ quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between reported yields.
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"Remaining Average Life" shall mean, with respect to the
Called Principal of any Debenture, the number of years (calculated to the
nearest one-twelfth year) obtained by dividing (i) such Called Principal into
(ii) the sum of the products obtained by multiplying (a) each Remaining
Scheduled Payment of such Called Principal (but not of interest thereon) which
will elapse between the Settlement Date with respect to such.
Called Principal and the scheduled due date of such Remaining Scheduled Payment.
"Settlement Date" shall mean, with respect to the Called
Principal of any Debenture, the date on which such Called Principal is to be
prepaid pursuant to Section 7.2 or is declared to be immediately due and payable
pursuant to Section 10, as the context requires.
"Yield-Maintenance Premium" shall mean, with respect to any
Debenture, a premium equal to the excess, if any, of the Discounted Value of the
Called Principal of such Debenture over the sum of (i) such Called Principal
plus (ii) interest accrued thereon as of (including interest due on) the
Settlement Date with respect to such Called Principal. The Yield-Maintenance
Premium shall in no event be less than zero.
9.3. Accounting Terms. All accounting terms used herein which are not
expressly defined in this Agreement have the meanings respectively given to them
in accordance with GAAP, all computations made pursuant to this Agreement shall
be made in accordance with GAAP, and all balance sheets and other financial
statements shall be prepared in accordance with GAAP.
10. EVENTS OF DEFAULT; REMEDIES
10.1. Events of Default Defined: Acceleration of Maturity. If any of the
following events ("Events of Default") shall have occurred and be continuing
(whatever the reason for such Event of Default and whether it shall be voluntary
or involuntary or by operation of law or otherwise), that is to say:
A. default shall be made in the due and punctual payment of all or any
part of the principal of or prepayment charge, if any, on any Debenture when and
as the same shall become due and payable (whether at stated maturity, by
acceleration, by mandatory prepayment or otherwise);
B. default shall be made in the due and punctual payment of any interest
on any Debenture when and as such interest shall become due and payable, and
such default shall have continued for a period of five days;
C. default shall he made in the performance or observance of any
covenant, agreement or condition contained in Sections 8.4 to 8.8, inclusive;
D. default shall he made in the performance or observance of any other
covenant, agreement or condition contained in this Agreement or any Debenture
and such default shall have continued for a period of 30 days;
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E. the Company or any Subsidiary shall not pay any other Debt in an
aggregate principal amount of at least $1,000,000 when due, or a condition shall
exist permitting other Debt of the Company or a Subsidiary in an aggregate
outstanding principal amount of at least $5,000,000 to become or be declared due
prior to its stated maturity, except a condition in respect of a Guarantee of
the Company or a Subsidiary if the Company or such Subsidiary shall duly perform
its obligations in respect of such Guarantee;
F. the Company or any Subsidiary shall (I) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (2) be
generally unable to pay its debts as such debts become due, (3) make a general
assignment for the benefit of its creditors, (4) commence a voluntary case under
the Federal Bankruptcy Code (as now or hereafter in effect), (S) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(6) fail to controvert in a timely or appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under such
Bankruptcy Code, (7) take any action under the laws of any jurisdiction
analogous to any of the foregoing, or (8) take any corporate action for the
purpose of. effecting any of the foregoing;
G. a proceeding or case shall be commenced, without the application or
consent of the Company or any Subsidiary in any court of competent jurisdiction,
seeking (I) the liquidation, reorganization, dissolution, winding up, or
composition or readjustment of its debts, (2) the appointment of a trustee,
receiver, custodian, liquidator or the like of it or of all or any substantial
part of its assets, or (3) similar relief in respect of it, under any law
providing for the relief in respect of it, under any law providing for the
relief of debtors, and such proceeding or case shall continue undismissed, or
unstayed and in effect, for a period of 60 days; or an order for relief shall he
entered in an involuntary case under such Bankruptcy Code against the Company or
any Subsidiary; or action under the laws of any jurisdiction analogous to any of
the foregoing shall be taken with respect to the Company or any Subsidiary and
shall continue unstayed and in effect for any period of 60 consecutive days;
H. any representation or warranty made by the Company in this Agreement
or in any certificate or other instrument delivered hereunder or pursuant hereto
or in connection with any provision hereof shall prove to be false or incorrect
in any material adverse respect on the date as of which made or shall be
breached; or
I. final judgement or judgements for the payment of money aggregating at
least $100,000 shall be rendered against the Company or a Subsidiary and the
same shall remain undischarged for a period of 30 days during which execution
shall not be effectively stayed;
then (a) if such event is an Event of Default specified in Subsection F or G of
this Section 10 with respect to the Company, all of the Debentures at the time
outstanding shall automatically become immediately due and payable at par
together with interest accrued thereon, without presentment, demand, protest or
notice of any kind, alt of which are hereby waived by the Company, and (5) if
such event is any other Event of Default, you may at your option, by notice in
writing to the Company, declare all of the Debentures to be, and all of the
Debentures shall thereupon be and become, immediately due and payable together
with interest accrued thereon and together with the Yield-Maintenance Premium,
if any, with respect to each Debenture without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Company,
provided that the Yield-Maintenance Premium, if any, with respect to each
Debenture shall be due and payable upon such declaration only if (x) such event
is. an Event of Default specified in any of Subsections
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A,B,C,D, or E of this Section 10, (y) you shall have given to the Company, at
least 10 Business Days before such declaration, written notice stating your
intention so to declare the Debenture to be immediately due and payable and
identifying one or more such Events of D6fault whose occurrence on or before the
date of such notice permits such declaration and (z) one or more of the Events
of Default so identified shall be continuing at the time of such declaration.
10.2. Other Remedies. If any Event of Default or Default shall occur and
be continuing, the holder of any Debenture may proceed to protect and enforce
its rights under this Agreement and such Debenture by exercising such remedies
as are available to such holder in respect thereof under applicable law, either
by suit in equity or by action at law, or both, whether for specific performance
of any covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Debenture is intended to be exclusive of any
other remedy, and each and every such remedy shall he cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
The Company covenants that, if it shall default in the making of any
payment due under any Debenture or in the performance or observance of any
agreement contained in this Agreement. it will pay to the holder thereof such
further amounts, to the extent lawful, as shall be sufficient to pay the costs
and expenses of collection or of otherwise enforcing such holders rights,
including counsel fees and expenses.
11. REGISTRATION, TRANSFER AND EXCHANGE OF DEBENTURES. The Company will
keep at its principal executive office a register in which, subject to such
reasonable regulations as it may prescribe, but at its expense (other than
transfer taxed, if any), it will provide for the registration and transfer of
the Debentures.
The holder of any Debenture may, at such holder's option, surrender the
same for transfer or exchange at said office, or at the place of payment named
in such Debenture, accompanied in the case of a transfer by a written instrument
of transfer in form reasonably satisfactory to the Company duly executed by the
holder thereof or by such holder's attorney duly authorized in writing. In case
any holder shall so request transfer or exchange of any Debenture, the Company
at its expense will deliver in exchange therefor one or more new Debentures, as
requested by such holder, in the same aggregate unpaid principal amount as the
unpaid principal amount of the Debenture so surrendered, each dated the later of
the date of, or the date to which interest has been paid on, the Debenture so
surrendered.
The Company and any agent of the Company may treat the person in whose
name any Debenture is registered as the owner of such Debenture for the purpose
of receiving payment of the principal of and interest on such Debenture and for
all other purposes whatsoever, whether or not such Debenture be overdue.
12. LOST, ETC., DEBENTURES. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any Debenture (the affidavit of your Treasurer or Assistant Treasurer, or other
responsible official, or that of a like officer or official of any institutional
holder which is your Affiliate, setting forth the circumstances with respect to
such loss, theft, destruction or mutilation to be accepted as satisfactory
evidence thereof), and (in case of loss, theft or destruction) a letter of
indemnity satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation of such Debenture, the Company will make and deliver in lieu of
such Debenture a new Debenture in the Same form and unpaid principal amount,
dated the later of the date of, or the date to which interest has been paid
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on, the Debenture in lieu of which such new Debenture is made and delivered. In
the case of you or any other institutional holder of any of the Debentures, your
or such holder's own unsecured agreement of indemnity shall be deemed
satisfactory to the Company.
13. AMENDMENT AND WAIVER. A. Any term, covenant, agreement or condition
of this Agreement or of the Debentures may, with the consent of the Company, be
amended, or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), by one or more
substantially concurrent written instruments signed by the holder or holders of
at least 66 2/3% in aggregate unpaid principal amount of the Debentures at the
time outstanding; provided, however, that
(1) no such amendment or waiver shall (a) change the rate or extend the
time of payment of interest on any of the Debentures or modify any of the
provisions of this Agreement or of the Debentures with respect to the payment or
prepayment of principal thereof or the purchase thereof, (b) reduce the
percentage of holders of Debentures required to approve any such amendment or
effectuate any such waiver, or (c) amend this Section, without the consent of
the holders of all the Debentures then outstanding; and
(2) no such waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon.
B. Any amendment or waiver pursuant to Subsection A of this Section
shall apply equally to all the holders of the Debentures and shall be binding
upon them, upon each future holder of any Debenture and upon the Company. No
notation need be made on the Debentures at the time outstanding in respect of
any such amendment or waiver, but any Debenture executed and delivered
thereafter may, at the option of the Company, bear a notation referring to any
such amendment or waiver then in effect.
14. HOME OFFICE PAYMENT. Notwithstanding anything to the contrary in
this Agreement or the Debentures, the Company will pay or cause to be paid to
you at your address and in the manner set forth in the Purchaser Schedule, at
your address and in the manner set forth in the Purchaser Schedule, or at such
other address or in such other manner as you may designate to the Company in
writing, all amounts payable in respect of the principal of or prepayment charge
or interest on any Debenture held by you without presentation or surrender of
such Debenture. Promptly after payment of any Debenture in full you agree, upon
the written request of the Company, to surrender such Debenture at its office
address set forth at the head of this Agreement, or to the Company or its agent
at the place of payment designated therein. You agree that before selling,
transferring or otherwise disposing of any Debenture, you will cause to be
marked thereon the date to which interest thereon has been paid. The Company
agrees that the provisions of this Section shall inure to the benefit of any
other institutional holder of any Debenture that shall have agreed to comply
with the requirements of this Section.
I5. LIABILITIES OF THE PURCHASER. Neither this Agreement nor any
acquisition or disposition of any of the Debentures shall be deemed to create
any liability or obligation of you or any other holder of any Debenture to
enforce any provision hereof or of any of the Debentures for the benefit or on
behalf of any other person who may be the holder of any Debenture.
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16. TAXES. The Company will pay all taxes (including interest and
penalties, but not including income taxes) which may be payable in respect of
the execution and delivery of this Agreement or of the execution and delivery
(but not the transfer) of any of the Debentures or of any amendment of, or
waiver or consent under or with respect to, this Agreement or of any of the
Debentures, and will save you and all subsequent holders of the Debentures
harmless against any loss or liability resulting from nonpayment or delay in
payment of any such tax. The obligations of the Company under this Section shall
survive the payment of the Debentures.
17. MISCELLANEOUS.
17.1. Expenses. The Company agrees, whether or not the transactions
hereby contemplated shall be consummated, to pay all reasonable expenses
incident to such transactions (including all document production and other
expenses, the fees and disbursements of your counsel for their services with
relation to such transactions and all expenses in connection with the shipping
to and from your office or the office of your nominee of the Debentures upon
original issuance thereof and upon any exchange or substitution pursuant to the
provisions of the Debentures or this Agreement), and to reimburse you for any
out-of-pocket expenses in connection therewith. The Company also agrees to pay
all expenses incurred by you (including without limitation counsel fees) in
connection with any amendment or requested amendment of, or waiver or consent or
requested waiver or consent under or with respect to, this Agreement or any of
the Debentures, whether or not the same shall become effective. The Company also
agrees that it will pay, and will save you and all subsequent holders of the
Debentures harmless against, any loss or liability resulting from the nonpayment
or delay in payment of any placement fees and other obligations to pay. any
agent or broker in connection with the transactions hereby contemplated. The
obligations of the Company under this Section shall survive the payment of the
Debentures.
17.2. Delayed Delivery Fee. If the Closing Date shall not occur on or
prior to December 6. 1989, the Company agrees to pay you a delayed delivery fee
(the "Delayed Delivery Fee") for the period from October 25, 1989 to the Closing
Date. The Delayed Delivery Fee will be payable monthly in arrears commencing
December 6, 1989 and will be calculated as of October 25, 1989 in an amount
computed by multiplying (i) 10.00% minus an alternative investment rate as
determined by you, by (ii) $43,000,000 and by (iii) a fraction the numerator of
which is the number of days from October 25, 1989 to the Closing Date and a
denominator of 365.
17.3. Reliance on and Survival of Representations. All agreements,
representations and warranties of the Company herein and in any certificates or
other instruments delivered pursuant to this Agreement shall (A) be deemed to be
material and to have been relied upon by you, notwithstanding any investigation
heretofore or hereafter make by you or on your behalf, an (B) survive the
execution and delivery of this Agreement and your purchase of Debentures, and
shall continue in effect so long as any Debenture is outstanding and thereafter
as provided in Section 16 and 17.1.
17.4. Successors and Assigns; Rights of Certain Institutional Holders of
the Debentures. This Agreement shall bind and inure to the benefit of and be
enforceable by the Company and its permitted successors and assigns hereunder,
you and your successors and assigns, and, in addition, shall inure to the
benefit of and be enforceable by each person who shall from time to time be a
holder of any of the Debentures delivered hereunder; provided, however, that the
benefits of Sections 5, 6 and 14, and the last sentence of 12, shall be
specifically limited as provided therein.
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17.5 Persons Deemed Owners; Participations. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name any
Debenture is registered as the owner and holder of such Debenture for the
purpose of receiving payment of principal of and premium, if any, and interest
on such Debenture and for all other purposes whatsoever, whether or not such
Debenture shall be overdue, and the Company shall not be affected by notice to
the contrary. Subject to the preceding sentence, the holder of any Debenture may
from time to time grant participations in all or any part of such Debenture to
any Person on such terms and conditions as may be determined by such holder in
its sole and absolute discretion.
17.6. Communications. All communications and notices provided for
herein shall be delivered, or mailed by registered mail, postage
prepaid, and addressed as follows:
A. if delivered to the Company, at the address set forth at the
head of this Agreement;
B. if to you, to the appropriate address set forth in Schedule I;
and
C. if to any other Person who is the registered holder of an outstanding
Debenture, to the address for the purposes of such holder as it appears on the
register of the Company maintained pursuant to Section 11.
The address for any purpose hereof of the Company may be changed at any
time and from time to time and shall be the most recent such address furnished
in writing by the Company to you and to each other Person who is the registered
holder of any outstanding Debenture. The address for any purpose hereof of you,
or any other Person who is the holder of any outstanding Debenture may be
changed at any time and from time to time and shall be the most recent such
address furnished in writing by you or by such other Person, as the case may be,
to the Company.
Any notice or other communication herein provided to be given to the
holders of all' outstanding Debentures shall be deemed to have been duly given
if delivered as aforesaid (or, if mailed as aforesaid, upon actual receipt
thereof) to each of the holders of Debentures at the time outstanding at the
address for such purpose of such holder as it appears on the register of the
Company maintained pursuant to Section 11.
17.7. Governing Law. This Agreement and the Debentures and (unless
otherwise provided) all amendments, supplements, waivers and consents relating
hereto or thereto shall be governed by and construed in accordance with the laws
of the State of North Carolina.
17.8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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17.9. No Oral Change. This Agreement may not be changed, modified,
terminated or discharged, or any provision hereof waived, orally, but only by an
agreement in writing and signed by the party against whom enforcement of any
change, modification, termination, discharge or waiver is sought.
If you are in agreement with the foregoing, please sign the form of
acceptance in the space below provided and return the same to the Company,
whereupon this Agreement shall become a binding agreement between you and the
Company.
Very truly yours,
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
By: s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Executive Vice President, Chief Operating
Officer and Chief Financial Officer
The foregoing Agreement is
hereby accepted as of the date
first above written.
The Prudential Insurance Company of America
By: s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Debentures
to be
Purchased
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA $43,000,000
All payments on account of Debentures held by such purchaser shall be made
by wire transfer of immediately available funds for credit to:
Account ▇▇. ▇▇▇-▇▇-▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust Company of New York
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Each such wire transfer shall set forth the name of the Company, the full
title (including the coupon rate and final maturity date) of the
Debenture, a reference to "Security No. 744516\B2", the due date and
application (as among principal, premium and interest) of the payment
being made.
Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Power Funding Associates
Four Gateway Center-Second Floor
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Regional Vice President
Eastern Region
Tax Identification No.: ▇▇-▇▇▇▇▇▇▇
-31-
EXHIBIT A
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
10.00% Senior Debenture due December 1, 2004
No.
R
,
19
$
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED, a North Carolina
corporation (the "Company"), for value received, hereby promises to pay to
______________________ or registered assigns, on December 1, 2004, the principal
sum of ____________________Dollars (or so much thereof as shall not have been
prepaid), and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) on the unpaid principal hereof from that date hereof at the rate
of 10.00% per annum, payable semi-annually on December 1 and June 1 in each
year, commencing on June 1, 1990, until said principal sum shall have become due
and payable, and to pay interest (so computed) on any overdue principal and
prepayment charge, if any, and (to the extent permitted by applicable law) on
any overdue interest, from the due date thereof, until the obligation of the
Company with respect to the payment thereof shall be discharged, at a rate per
annum from time to time equal to the greater of (a) 12.00% or (ii) the rate of
interest publicly announced by ▇▇▇▇▇▇ Guaranty Trust Company of New York from
time to time in New York as its' Prime Rate. Payments of principal, Yield
Maintenance Premium, if any, and interest shall be made at the main office of
▇▇▇▇▇▇ Guaranty Trust Company of New York in New York City or at such other
place as the holder hereof shall designate to the Company in writing, in lawful
money of the United States of America.
This Debenture is issued pursuant to a Debenture Purchase Agreement
dated as of December 5, 1989 entered into by the Company and the purchaser
listed on the Purchaser Schedule attached to said Debenture Purchase Agreement,
and the holder of this Debenture is entitled to enforce the provisions and enjoy
the benefits thereof.
The Company is required by said Debenture Purchase Agreement to make
mandatory prepayments on this Debenture on December 1, l995 and on each December
1 thereafter to and including December 1, 2004. The Company may at its election
prepay this Debenture in whole at any time or from time to time in part with a
Yield Maintenance Premium, and the maturity hereof may be accelerated following
an Event of Default, all as provided in said Debenture Purchase Agreement, to
which reference is made for the terms and conditions of such rights as to
prepayment or acceleration.
Transfer of this Debenture is registrable on the debenture register of
the Company upon presentation of this Debenture for registration of transfer,
accompanied by a written instrument of transfer in form satisfactory to the
Company duly executed by the holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures for the same aggregate unpaid
principal amount will be issued to the designated transferee or transferees. As
provided in said Debenture Purchase Agreement, the Debenture is exchangeable for
a like aggregate unpaid principal amount of Debentures of a different
denomination, as requested by the holder surrendering the same.
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The Company and any agent of the Company may treat the person in whose name this
Debenture is registered as the owner hereof for the purpose of receiving payment
of the principal of and Yield Maintenance Premium, if any, and interest hereon
as herein and in said Debenture Purchase Agreement provided and for all other
purposes, whether or not this Debenture be overdue.
PUBLIC SERVICE COMPANY OF NORTH
CAROLINA, INCORPORATED
By: s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Executive Vice President,
Chief Operating Officer and
Chief Financial Officer
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EXHIBIT B
All of the Subsidiaries of Public Service Company of North Carolina,
Incorporated
(1) PSNC Natural Resources Corporation, a North Carolina Corporation. All of
the outstanding stock of PSNC Natural Resources Corporation is owned by
Public Service Company of North Carolina, Incorporated.
(2) Tar Heel Energy Corporation, a North Carolina Corporation and is
qualified to do business as a foreign corporation in Texas, Louisiana
and Alabama. All of the outstanding stock of Tar Heel Energy Corporation
is owned by PSNC Natural Resources Corporation.
(3) PSNC Production Corporation, a North Carolina Corporation and is
qualified to do business as a foreign corporation in Texas and
Louisiana. All of the outstanding stock of PSNC Production Corporation
is owned by PSNC Natural Resources Corporation.
(4) PSNC Exploration Corporation, a North Carolina Corporation and is
qualified to do business as a foreign corporation in Texas and
Louisiana. All of the outstanding stock of PSNC Exploration Corporation
is owned by FSNC Natural Resources Corporation.
(5) PSNC Propane Corporation, a North Carolina Corporation. PSNC Propane
Corporation is qualified to do business as a foreign corporation in
South Carolina. All of the outstanding stock of PSNC Propane Corporation
is owned by PSNC Natural Resources Corporation.
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EXHIBIT C
Page 1 of 2 Pages
LIST OF ALL OUTSTANDING DEBT OP THE COMPANY
AND ITS SUBSIDIARIES
Description of Debt Principal Amount Outstanding
of the Company at November 30, 1989 Description of Security
-------------- -------------------- -----------------------
First Mortgage Bonds:
4 7/8% Series E, due 1990 2,000,000 General Assets of Company
6% Series F, due 1992 3,396,000 General Assets of Company
7 3/8% Series G, due 1993 3,957,000 General Assets of Company
9 7/8% Series H. due 1995 4,290,000 General Assets of Company
8% Series I, due 1998 5,120,000 General Assets of Company
9% Series J, due 1992 2,300,000 General Assets of Company
12.26% Series L, due 1998 18,000,000 General Assets of Company
Senior Debentures:
8.65% due 2002 25,000,000 Unsecured
10% due 2003 25,000,000 Unsecured
Description of Debt Principal Amount Outstanding Description of
of the Company at November 30, 1989 Security
-------------- -------------------- --------------
Interim Bank Loans:
Note dated October 12, 1989 payable to
Wachovia Bank & Trust Company, N. A. 8,000,000 Unsecured
Note dated October 24, 1989 payable to
Wachovia Bank & Trust Company, N.A. 4,000,000 Unsecured
Note dated November 28, 1989 payable to
First Union National Bank 3,500,000 Unsecured
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EXHIBIT C
Page 2 of 2 Pages
Description of Debt Principal Amount Outstanding
of the Subsidiaries* at October 31, 1989 Description of Security
-------------------- ------------------- -----------------------
PSNC Natural Resources Corporation,
advances from and note payable to
Tar Heel Energy Corporation $15,246,005 Assets in exploration and
development programs in
which ratepayer funding
was involved
Tar Heel Energy Corporation, advances
from the Company 17,860,289 Unsecured
PSNC Exploration Corporation, advances
from PSNC Natural Resources Corporation 2,450,139 Unsecured
PSNC Production Corporation, note
payable, net of advances, to PSNC Natural
Resources Corporation (4,638,891) Assets in exploration and
development programs in
which ratepayer funding
was involved
PSNC Propane Corporation, advances from
PSNC Natural Resources Corporation 4,016,751 Unsecured
PSNC Propane Corporation Notes Payable:
Note dated May 1, 1985 payable to
▇. ▇. ▇▇▇▇▇▇ and Sons Oil Company, Inc. 95,866 Unsecured
Note dated September 26, 1985 payable to
▇▇▇▇▇▇▇ Oil Company 127,529 Unsecured
Note dated December 16, 1986 payable
to ▇. ▇. ▇▇▇▇▇▇ and family 70,800 Unsecured
* All dept of subsidiaries, excluding notes payable, is offset by corresponding
receivables held among such subsidiaries and the Company.
-36-
